Queens Moat's new valuations under attack: Struggling hotel group announces pounds 46m loss

QUEENS Moat Houses, the financially distressed hotels group under investigation by the Department of Trade and Industry, faced renewed controversy over property values as it announced its annual results yesterday.

The group lost pounds 46.4m before tax in the year to January, against pounds 1.04bn the previous year after an pounds 804m write-down in the value of its properties. It has now revalued them upwards by pounds 100m to pounds 915m.

Meanwhile, Royal Bank of Scotland, a former member of the banks' steering committee co-ordinating a refinancing, caused consternation by selling some of its debt in QMH. Dealers said Royal sold about pounds 10m. QMH has pounds 1.43bn of debts.

The latest property valuations were by Jones Lang Wootton, the chartered surveying firm that caused an outcry when it produced a figure for 1992/93 some pounds 500m lower than a rival calculation by Weatherall Green and Smith.

QMH has 101 hotels in the UK, 37 in Germany, seven in France, six in Belgium and 26 in the Netherlands. The value of the UK chain is up 21 per cent, while the remainder is down 7 per cent in sterling terms.

John Bairstow, who founded QMH and resigned as chairman last year, said: 'Sarcastically, you could say the values take into account the poor performance of the current administration.'

Denis Woodhams, founder of the shareholder action group, said: 'Values haven't gone up by that much in the last 12 months, have they? We think it is an admission that the last values were wrong.'

Andrew Coppel, drafted in as chief executive nine months ago, hit back sharply at the criticisms. 'We did an awful amount of due diligence on the 1992/93 figure, and we have gone through the same methodology,' he said.

An increase in the value of each room in the UK from pounds 45,500 to pounds 55,000 was not an unreasonable number when compared with competitors, he added.

'The valuation was not entirely unexpected given the improving trading conditions in the UK. We don't think it is fair to say that it is an admission that we got it (1992/93) wrong,' Mr Coppel said.

On RBS's debt sale, he said: 'Obviously it is preferable that members of the steering committee do not sell debt during the restructuring process.' QMH owes money to more than 60 banks.

The company also announced yesterday that Cazenove is to replace BZW and Beeson Gregory as company broker ahead of a possible relisting this summer. The shares were suspended at 47.5p a year ago.

Better trading in the UK enabled QMH to make operating profits of pounds 18.4m for the year to January, against a pounds 700,000 loss in 1992/93.

The figure included a pounds 3.7m contribution from housebuilding and leisure businesses, since disposed of, and a pounds 3.8m loss from the Ashford property development and construction arm.

Profits were bolstered further by adding pounds 26m of the property revaluation - the difference between cost and actual value. There was also an exceptional foreign currency gain of pounds 13.9m.

But interest charges of pounds 110m, down from pounds 112.6m, produced a taxable loss of pounds 46.4m.