Red Sea Hotels, the Israeli company that has initiated a strong attack on the performance of Gresham Hotels and demanded major changes in the make-up of the board, has itself incurred heavy losses.

The company's annual report shows that it had a net loss last year of €7.9 million on turnover of €33 million after net profits of €16 million on turnover of €46 million in 2000.

The sharp fall in turnover is largely due to the discontinuation of the consolidation of the group's medical operations in eastern Europe which contributed €16.5 million to turnover in 2000.

The annual report also shows that Red Sea had total assets of €311 million against bank debt and long-term liabilities of €204 million

Gresham itself reports its full-year results today.

These are expected to show a sharp fall in profits as a result of what analysts have described as "the triple whammy" of the foot-and-mouth disease outbreak, the global economic slowdown and the effect of the September 11th bombings on the tourism industry.

Goodbody Stockbrokers has forecast a 3 per cent fall in revenue of €54.5 million while profits before exceptional items are forecast to fall 59 per cent to €3.8 million. Goodbody is expecting an exceptional charge of €7.6 million to reflect the writedown of the value of the Carat Hotel in Hamburg and costs associated with the sale and leaseback of the Royal Marine in D·n Laoghaire.

But the figures are inevitably going to be overshadowed by the continuing row with Euro Sea Hotels, a subsidiary of Red Sea.

The market will expect Gresham to use the opportunity to set out its strategy for the company's future and to reassert its view that Euro Sea should make a full bid.

For its part, Euro Sea is undoubtedly going to use the poor results to attack the board's past performance.