Bottom Line: War brewing after S&N deal

SCOTTISH & Newcastle, for years the UK's largest regional brewer, is firmly in the premier league. Pre-tax profits of pounds 222m for the year to 1 May are only 5 per cent less than Whitbread's 1993/94 result.

This promotion was due to the acquisition of the Chef & Brewer chain during the second half, which accounted for most of the group's 21.5 per cent overall growth in profits.

That said, S&N did well to hold its position in a pub and beer market ravaged by declining consumption and a fierce price war.

But S&N's core geographical customers are fortunately positioned far enough way from the fiercest price-war hostilities.

Indeed the purchase of C&B may trigger further fighting between Courage and Bass as S&N slowly introduces its beers into its new acquisition.

The company's 2,000-strong managed-house estate will benefit from an increased proportion of food sales even if its 800 tenancies remain a sticky area.

At the same time Center Parcs holiday villages continue to grow despite the recession in mainland Europe.

Profits may consolidate this year and the share price rise of about 20 per cent of the past 12 months is unlikely to be repeated. But a yield of 4.5 per cent is attractive even if a price/earnings ratio of 14, assuming pounds 266m pre- tax, is a premium rating.

(Graph omitted)