Upbeat Stakis eyes acquisitions

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The Independent Online
BY JOHN SHEPHERD More hotel acquisitions are in the pipeline at Stakis, which was on the verge of going under three years ago. Sir Lewis Robertson, chairman, who was drafted in as a company doctor in 1991, yesterday delivered a very upbeat annual tradingreport and hinted strongly that Stakis would soon dip into its £70m pot of spending money.

Profits before tax for the year to 2 October were at the top end of analysts' expectations at £20.2m. The result compared with £9.4m, and prompted a round of upgrading of analysts' expectations for this year from an original consensus of £26m to almost £28m.

The result did benefit from £750,000 of property disposal profits, rate rebates of £1.3m and a reduction in interest charges from £18.3m to £11.8m.

Sir Lewis, who will soon retire and be succeeded by Richard Cole-Hamilton, said trading since the year-end had continued to improve, with hotel occupancies and room rates rising, and spending in the company's casinos increasing a further 10 per cent. He added: "There is concrete evidence that Stakis has for at least a year been no longer a recovery, but rather a growth company."

The company's balance sheet, awash with debts and weighed down with hundreds of negative-equity properties when Sir Lewis took charge, now radiates a gearing ratio of just 28 per cent. That would rise to 48 per cent if Stakis spent all its available banking facilities of £70m, which includes £20m left over from last year's £67m rights issue.

David Michels, chief executive, said that while Stakis was keen to buy more individual hotels and casinos, "we are still looking for larger opportunities". However, he added: "Our objective is only to run hotels and casinos."

Stakis spent almost £34m on acquisitions in 1993/94, which took its hotel room stock from 3,795 to 4,254. Hotel occupancy nudged up from 68.4 to 69.3 per cent, and the room rate rose by £1.88 a night to £41.66. Occupancy since the year-end has risen to almost 70 per cent, and the room rate to £43.01.

There will be a final dividend of 0.9p for 1993/94, lifting the total payout 55 per cent to 1p.