HOTELS and leisure group De Vere suffered a 78 per cent fall in half-year profits after taking a '9.3m hit for VAT, the Warrington-based chain announced today.

Pre-tax profits for the six months to March 30 slumped to '3.6m after the exceptional charge.

De Vere made provisions after a December tribunal hearing concerning golf and leisure subscription income between April 1997 and December 1999, which the group had treated as being exempt from VAT. Lawyers for the company are considering an appeal.

Profits before tax and exceptional items were down 5.4 per cent, from '15.9m to '15m. Operating profits were level at '22.7m.

Turnover was up 7.2 per cent, from '140.1m to '150.2m. Interim dividend is 4p.

Chairman Peter Daresbury said trading conditions have remained challenging since April, but are in line with expectations. Group sales are up 3.4 per cent.

Meanwhile, he announced that the process to find a successor to chief executive Paul Dermody has begun.

Handover

Mr Dermody, who lives in Worsley, Salford, will have served 40 years with the company by October. He said today: "I shall continue until the right person has been found to be my successor, and a smooth handover has taken place."

The group owns 21 De Vere Hotels, including the Ryder Cup venue, The Belfry, the De Vere Whites, at Bolton's Reebok Stadium, and Mottram Hall, near Prestbury, Cheshire.

Mr Dermody announced plans to spend up to '3m at the De Vere Mottram Hall, to improve facilities and create more bedrooms.

In addition, De Vere owns 14 Village Hotels and 15 Greens fitness clubs. New Village Hotels are in the pipeline in Maidstone, Birmingham and Bournemouth.

Half-year turnover in the De Vere Hotels division was up 2.5 per cent at '86.2m, but pre-tax profits before exceptionals fell 6.9 per cent to '20.6m.

Village Hotels grew turnover by 15.1 per cent to '36.5m. Profits were up 10.2 per cent to '9.8m.

Greens' turnover rose 37.7 per cent to '14.9m. Profits were up 56.1 per cent at '3.3m.

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