Advice costs Savoy 10% profits

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The Independent Online
The Savoy Group spent more than pounds 500,000 on professional advisers during Granada's successful bid for its largest shareholder Forte last January. The cost of the advice knocked more than 10 per cent from interim profits at the luxury hotel group, it emerged yesterday.

Those profits showed the continuing benefit of a far-reaching overhaul of the group under new managing director Ramon Pajares, the Spanish hotelier parachuted in from the Four Seasons group to revitalise the prestigious but underperforming company.

Sir Ewen Fergusson, chairman, warned that a shortage of available rooms due to the refurbishment would hold back profits in the second half. "The high rate of financial improvement seen in the first half is unlikely to be maintained", he added.

The refocusing of the Savoy Group on its core hotels and restaurants under Mr Pajares will continue next month when the company raises pounds 6m from the sale of a collection of central London flats and houses.

The property sale, which will result in an unspecified exceptional profit at the year end, follows last year's disposal of excess stocks of wine, which resulted in a one-off pounds 817,000 profit, and the disposal of other non-core operations including Camelot Chauffeur Drive.

Next March will see the conclusion of a pounds 60m programme to restore the group's hotels, which include Claridge's, the Connaught and the Berkeley.

The benefits of that programme showed through in interim results for the six months to June, announced yesterday, which saw profits for the half year rise 40 per cent before exceptional items to pounds 4.9m, from pounds 3.5m in the first half of 1995.

There is still no news on the fate of the 68 per cent stake in Savoy acquired by Granada as part of its takeover of Forte. Granada said then that it would seek a buyer for the shares.