Vaux chairman may retire within a year

Sir Paul Nicholson looks set to retire from his role as chairman of North East brewer Vaux within 12 months.

It is strongly rumoured that the company wants to replace him with a chief executive, to be recruited from outside the company. Sir Paul, 59, intends to scale down his role to a non-executive level.

Vaux would make no official comment on Sir Paul's future, but he may retire on his 60th birthday.

A 14 per cent rise in Vaux's interim pre-tax profits failed to disguise a mixed performance from its pubs division.

Although managed pubs profits increased by almost 14 per cent, profits at tenanted houses fell by 12 per cent.

Analysts and company insiders say Vaux needs to review its strategy.

One said: "The tenanted pubs and the brewery are quite simply a drag on profits."

Sir Paul warned of the "dangerous" level of expenditure on large branded pubs by rival companies. He said he preferred to concentrate on improving and upgrading existing pubs.

Frank Nicholson, Vaux MD, echoed concerns expressed by Greenalls about the effect of the minimum wage on beer prices.

Current starting pay for Vaux employees is £3.23 per hour.

He said the £4.28 recommended by the Unison union would cost more than £2m and require "a significant rise in beer prices."

In the six months to March 15 Vaux's pre-tax profits were £15.2m, boosted by a strong performance from the Swallow Hotel Chain.

The sale of the nursing homes business St. Andrews is now complete.

Sir Paul said: "This allows us to concentrate on our four core businesses — hotels, tenanted pubs, managed pubs and brewing. In addition, the sale proceeds will allow us to accelerate the rate of investment in these businesses."