Property drop sends Ladbroke plunging

THE COLLAPSE in property values seriously damaged last year's results for Ladbroke, owner of Hilton hotels, betting shops, Texas Homecare, and Vernons Pools.

A pounds 146.7m exceptional property provision left pre-tax profits at pounds 40.1m, compared with the previous year's pounds 210.4m. The total of write-downs to date is pounds 336m.

The results included a gain of nearly pounds 35m on hotel and property disposals, which under the pending FRS3 accounting standard will be excluded from operating profits. Under FRS3, pre-tax profits would have been just pounds 5.2m

Reaction in the City, however, was calmed by a 2 per cent dividend increase to 11.15p. The payment is almost completely uncovered by earnings per share, which dived from 16.12p to 0.11p. The shares eased 1p to 199p.

Analysts were also heartened by more openness about the company's figures, something it has been criticised for lacking in the past. 'Open government will do them favours,' one said.

Overall operating profits fell by 6 per cent to pounds 292m. The make-up of the trading picture was mixed.

Profits from hotels declined from pounds 163.8m to pounds 151.7m, and included an pounds 11m boost from currency movements. Average occupancy rates around the world improved. Cyril Stein, chairman, said: 'The top end of the London market is doing very well, but Japan is no different from the last six months. Germany is mixed.'

Looking ahead for hotels, he said bookings from Americans were 'very encouraging', partly reflecting the stronger dollar. Japanese travellers 'are similarly booking on a large scale'.

In betting, the average stake, which fell in 1991 for the first time in living memory, was static but volumes improved. Total profits from the racing division rose marginally from pounds 64.5m to pounds 64.8m.

The result would have been pounds 8m better but for the closure of betting shops in Flanders, Belgium, due to a large rise in local betting taxes, and continuing problems at the racetrack in Minnesota.

Returns from Texas Homecare, however, were knocked in the second half. Black Wednesday hit consumer confidence, Mr Stein said. In addition, margins were poorer, with retailing profits declining from pounds 47.5m to pounds 43.8m, despite a rise in turnover from pounds 652.9m to pounds 693.8m.

Losses in the property division, net of interest, increased from pounds 12.4m to pounds 35.4m. 'We remain committed to reducing our portfolios but only by achieving prices that reflect the realistic value of the properties,' Mr Stein said.