SCOTTISH & Newcastle dismissed suggestions yesterday that it was considering selling its Center Parcs holiday villages subsidiary, adding that it was instead deciding where to build the next one.

The operations were affected by higher than expected opening costs in Germany and dull trading in Holland and Belgium, but chief executive Brian Stewart said that not only were bookings well ahead but Center Parcs was still a growth business.

In the year to April it saw operating profits ease 2% to #82m despite a 7% rise in turnover to #365m. The much smaller Pontins saw its return drop by 12% to #3.6m, partly due to the sale of four sites and capital investment in two more rewarding properties.

Group profits before tax and exceptional charges rose 16.3% to #308m.

That has allowed the dividend total to increase by 8.2% to 19.43p with a 12.88p final.

Although the City was looking for some indication as to likely progress at Center Parcs, where the 9% to 10% return on assets was described by Mr Stewart as not good enough, most attention concentrated on the progress in integrating Courage into the Edinburgh-based company's brewing activities.

The #425m acquisition is on course to deliver the #45m to #46m of savings promised for this year and #75m for 1997-98.

Overall group beer volumes held about steady despite the inevitable disruption. This includes the loss of 1600 jobs, half of which have already gone. At Carlsberg-Tetley, meanwhile, discussions between its Allied Domecq parent and potential acquisitor Bass are still continuing.

The rationalisation cost, which is taken as an exceptional, amounted to #151m.

S&N's own beer turnover increased, with margins helped by a better mix and also some slight narrowing of wholesale discounts - brands such as Beck's and Theakston's did particularly well.

Courage, which brought in the valuable John Smith's brand, contributed #36.7m of operating profit in 37 weeks.

Although there are around 80 brands, with new lines still being added, there has been no pruning of the portfolio, despite what some had expected.

The pub estate saw a powerful performance from the managed houses, where the benefits of the #700m acquisition of the Chef & Brewer chain continue to flow through.

There are great hopes for the Greyhound experiment which will be extended to 140 Chef & Brewer outlets over the next three years.

Tenancies brought in a reduced contribution as the number of pubs fell by 221 to 781 to comply with competition regulations following the acquisitions.

Capital expenditure will rise by #30m to #260m with most of the increase devoted to pub retailing.

Current year profits are pencilled in at between #365m and #370m, producing earnings per share growth of about 15%, which should satisfy most shareholders.

S&N has been doing all the right things in recent years particularly in its large corporate deals. Selling Thistle Hotels and buying Center Parcs, Chef & Brewer and then Courage gives some certainty as to profits flow for the next two or three years.

FACT FILE

Final 1995-96 1994-95

Turnover #2969m #2021m

Pre-tax profit #308m #264m

EPS 39.0p 36.2p

Dividend 19.43p 18.25p