Vaux cuts value of hotel chain by pounds 118m

VAUX, the north-eastern brewing and leisure group, has slashed pounds 118m from the value of its hotel chain.

The revaluation of Swallow Hotels, the first since 1988, reduces the book value of the hotel chain by one-third from pounds 348m to pounds 230m. The move means each room in Vaux's 34-strong chain is valued at pounds 61,000 against pounds 91,000 previously.

Overall group pre-tax profits for the year to 3 October dropped by 10 per cent from pounds 34.3m to pounds 30.9m.

Vaux said the decision was prompted 'as the recession has caused severe asset depreciation across many areas of UK property'. However, the reappraisal - the size of which took analysts by surprise - has had no impact on annual profits. The pain of the write-off is taken by the group's balance sheet, where the revaluation reserve now stands at pounds 105m, down from pounds 221m this time last year.

Trading in hotels, which account for 31 per cent of turnover, also continued to be poor. Profits rose 1 per cent to pounds 12.5m but occupancy levels and the rate Vaux managed to charge per room declined. Paul Nicholson, chairman, described the prospects for hotels as patchy.

Trading profit from brewing increased 27 per cent to pounds 19.5m, but largely because Vaux expanded its estate of pubs. Vaux, which brews Samson strong ale and supplies Labatt's Canadian lager under licence, has taken advantage of the Beer Order regulations, buying outlets as large brewers have been forced to reduce the size of their estates.

Vaux also owns 21 nursing homes and is building a further five. It raised profits from the division to pounds 4m from pounds 3.2m and widened profit margins from 28 to 31 per cent.

Trading profit across the group rose to pounds 39m. However, increased borrowings to fund the expansion in pubs and nursing homes pushed interest charges up to pounds 12.3m from pounds 7.6m. Earnings per share fell to 19p from 20.3p but the annual dividend was raised from 9.2p to 9.35p.

The stock market took the asset write-down in its stride. The exposure to hotels makes Vaux attractive to investors looking to capitalise on the early signs of economic recovery.

Shares in the group rose 6p to 216p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones