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Current and future projects
In releasing its latest annual results, Six Continents revealed a depressing trading environment. Pre-tax profit fell 24% and turnover 10.5% in the 12 months to September 2002. The group reported a slowdown in its hotel division, where a fall-off in business travel has reduced occupancy in its London and European hotels in particular.

Hotel investment fell back after the acquisition of Posthouse the previous year. In Europe, hotel investment has been concentrated on major refurbishments of the Inter-Continental brand (where 1600 rooms were renovated), and the rebranding of the former Posthouse estate throughout the UK. Almost 70 of the old Posthouse hotels have been rebranded so far. Against a very uncertain trading environment, the outlook for hotel investment looks dull.

In the retail sector, trading over the 12 months to September 2002 was relatively good. Investment slipped to £277m in 2002 when the group concentrated on converting independent or recently acquired properties to its own brands. During the year £163m was spent on outlet acquisitions, conversions and expansions, and £55m on the conversion of former Allied Domecq pubs to Six Continents brands. Retail capital expenditure will fall over the short term as the group switches from expansion to targeting its most profitable locations.

Essential information
In October 2002, Six Continents moved to complete its transformation from brewer to a hotels group, with details of a proposed demerger of its hotel arm from the pubs and restaurant business. As part of the deal shareholders will receive close to £700m and the two divisions will trade as separate entities.

Hotel activity remains dominated by the USA, although brands are strengthening in the UK and Europe. One of the major UK projects is the planned £80m refurbishment of the Mayfair Inter-Continental hotel. The group has, however, recently received an offer for this property. About 50% of the group's capital investment is UK-related, and the majority of this goes to the leisure sector, where the group operates 2105 pubs and restaurants. Six Continents says it is reviewing all its capital expenditure plans prior to the planned demerger in 2003.