Boddington lifts profit and payout: Imminent sale of restaurant rump in London will set seal on change of strategy begun six years ago

BODDINGTON is close to selling a large part of the rump of its restaurant business in London. The sale would put the seal on a change in strategy that started nearly six years ago.

Denis Cassidy, chairman, said offers were being considered on two of the London outlets. If sold, that would leave one small site and the two larger Bentley's restaurants.

Boddington, which is focusing on developing its pub estate, nursing homes, drinks wholesaling and leisure activities, yesterday reported an underlying 10.9 per cent increase in annual pre-tax profits to pounds 28m.

Including the one-off pounds 14.7m gain from last summer's sale of its shares in the Devenish pub group, property profits, and restaurant losses the stated pre-tax result rose from pounds 22m to pounds 41.2m.

Boddington's shares held steady at 275p amid yesterday's volatility on the stock market. Analysts were heartened by a 10 per cent increase in the total dividend to 8.03p and a positive statement on trading since the 2 January year-end.

'All divisions performed well in 1993 . . . and trading for the first eight weeks of this year has been ahead of last year,' Mr Cassidy said.

Boddington's 475 pubs saw trading profits dip 3.7 per cent to pounds 21.8m, although the previous year's result included an extra week's trading and income from 15 more pubs.

The company is concentrating more on larger managed pubs, of which it has 278, and slowly reducing the size of its tenanted estate.

Hubert Reid, managing director, said food sales had risen by 17.5 per cent to 15 per cent of turnover in pubs. He saw no reason it could not be increased to 30 per cent.

A six-year beer supply agreement has been struck with Whitbread, replacing the five-year contract put in place when Whitbread bought Boddington's brewing interests.

Boddington refused to divulge the contract terms, but analysts believe they are better than before. 'They must be buying beer cheaper, which should be reflected in profits,' said Kevin Feeny, analyst at Henderson Crosthwaite.

The six Village leisure hotels, which have 543 rooms and 14,000 members, made pounds 2.8m, up from pounds 1.6m. Another opening is planned this year.

Drinks wholesaling profits were static at pounds 7.5m, mainly reflecting the impact of the beer price war being waged by the big brewers, particularly Bass and Courage.

Trading profits in health care, encompassing 16 nursing homes and one for the elderly and mentally infirm, were also flat at pounds 3.2m because of problems caused by last April's Care in the Community Act.

Occupancy levels have since picked up and were just short of 94 per cent at the year-end.

(Photograph omitted)

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