Gresham's new board of directors has begun a strategic review of the hotel group covering all aspects of the company, including its publicly quoted status.
The review, which is expected to last a couple of months, is considering everything from board composition to the suitability of Gresham's business model, from possible alliances and franchises to cost structures, chief executive Mr Patrick Coyle said.
Among the issues it is considering is the appointment of a seventh director and a new chairman following the removal of Mr Seán Henneberry from the post at an extraordinary meeting in August.
Gresham's largest shareholder, the Israeli-based Red Sea consortium, succeeded in having four of the company's directors deposed at that time, replacing them with three of its own nominees.
Releasing its interim results yesterday, Gresham said the battle for control of the board had cost the group €1.1 million. Mr Henneberry and Gresham's business development director, Mr David Bunworth, received €500,000 between them for termination of contracts. The balance was spent on professional fees.
Meanwhile, the group said it faced a difficult and challenging environment in the first half, resulting in a slump in operating profits to €1.8 million from €4 million a year earlier. Turnover was also down to €26.8 million from €27.5 million in the 26 weeks to August 1st.
The board has suspended the interim dividend, deferring a decision on the size of the full-year dividend until the company's final results are known. Mr Coyle said the move did not indicate a change in dividend policy. "We do pay a dividend and it is our intention to continue doing so," he said.
Market sources expressed disappointment that the group had not paid the dividend, one of the key attractions of investing in Gresham in the past. "It's not encouraging," one said.
While the group's average room rate was maintained at €87 in the first half, occupancy slipped to 73 per cent from 75 per cent. The domestic market performed well, growing by 10 per cent, while the British market also grew by 5 per cent.
But Mr Coyle said the volume growth was at the expense of rate while the US market recorded a sharp decline of 15 per cent with no evidence of a recovery in sight.
A trend to late booking had reduced visibility but the group anticipated a better second half as the impact of the September 11th attacks on last year's results unwinds.
Gresham said the difficult trading environment was compounded by sharp increases in operating costs in the first-half. Its insurance premiums rose by 87 per cent, hitting the bottom line to the tune of €600,000. Labour costs also rose by 5 per cent, costing the group €550,000 in the six-month period.
The shares closed one cent lower at €0.64 yesterday.
