Greenalls disappoints with first-half pounds 25.7m

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The Independent Online
ANALYSTS' share recommendations for Greenalls were put on hold yesterday after the pubs and hotels group announced interim profits at the bottom end of expectations.

Pre-tax profits for the six months to 26 March rose nearly 10 per cent to pounds 25.7m, but some analysts had been looking for as much as pounds 28m.

A 5 per cent lift in the interim dividend to 5.08p was also slightly below some expectations.

The shares fell 13p to 414p as the stock market absorbed a round of profit downgradings for the full year. Forecasts, which extended to pounds 68m, have been cut to around pounds 64.5m. Main cause of the disappointing interims was a profit fall from pounds 3.4m to pounds 2.5m in drinks and services, largely a contract packaging operation.

Pubs, the core business, increased operating returns by 7.7 per cent to pounds 22.2m, helped by acquisitions and growth of high margin food sales. Some pounds 11m was spent on developing the pubs side in the first half and a further pounds 27m is planned for the second six months.

The capital expenditure programme has been accelerated by last October's pounds 86m rights issue, which helped to trim first half interest payments from pounds 9.3m to pounds 8.5m.

The branded pub restaurants and accommodation lodges lifted profits from pounds 3.1m to pounds 3.4m.

UK hotels, which trade as De Vere, remained depressed. Although room occupancy levels bounced from 53 to 62 per cent, operating profits remained static at pounds 6.1m with room rates falling from pounds 50 to pounds 44 a night.

The six US hotels, which Greenalls wants to sell, lost pounds 575,000 against pounds 677,000 last time.