Leisure group De Vere unveiled a 28 per cent hike in profits as it stepped up a campaign to persuade investors not to back the sale of its hotels division.

The owner of Brighton's Grand hotel said profits of £19.3 million in the 26 weeks to March 28 maintained its record of outperforming its rivals.

De Vere is under pressure from investor Guinness Peat Group (GPG), which has formally offered £118 million to add 25 per cent of shares to its current ten per cent stake.

GPG claims the company has not done enough to enhance shareholder value and is seeking representation on the board to secure the sale of its 21 hotels in the UK.

Directors of De Vere hit back with a warning to shareholders they would lose the right to an interim dividend of 4.28p if they sold shares to GPG.

They said the GPG offer was "wholly inadequate" and a distraction, while it was better to review the 21 hotels on a site-by-site basis than sell them off in one big chunk.

The response came less than 24 hours after GPG admitted it got its numbers wrong in a document sent to shareholders outlining its offer.

GPG said a table supporting its argument the hotels would be better off as a private firm "contained inaccuracies and should not be relied upon by De Vere shareholders".

But its stance on selling the hotels remained unchanged and GPG promised to send a new letter to put across its case.

De Vere also operates 15 health and fitness clubs trading as Greens, 14 village leisure clubs and distillers G&J Greenall.

De Vere said turnover rose 2.8 per cent to £154.4 million in the six months as demand for conference facilities picked up.

Friday April 30, 2004