Old English Inns continues to be hit by the foot-and-mouth crisis and reduced tourism which have contributed to profits being slashed.
With the further blow of the fuel crisis and heavy flooding, pre-tax profits for the year to April 1, excluding exceptional property losses, were down from £5.9m to £2.8m.
But the company hopes for a recovery once foot-and-mouth disease has been stamped out because of improvements to its pub estate and systems.
Chief executive Colin Mayes said trading conditions remained "challenging" because of the disease which has hit about 60 per cent of its core estate.
But he said: "We are confident that, once the countryside and all associated amenities have been officially reopened, the momentum we witnessed at the end of last year will return to the business."
Taking into account property losses, the bottom-line figures showed last year's annual pre-tax profit of £6.173m transformed into a pre-tax loss of £3.241m. Operating profit was down from £10.1m to £7.3m.
Old English has developed a central reservations system along with operational improvements, changes to its menus and better deals with its suppliers.
It has also teamed up with Cumbrian brewer Jennings Brothers, London brewer Young's and pub operator Mill House Inns to market and sell their accommodation.
About £3.6m has been invested in its estate, which is now made up of 164 outlets. Of these, 94 have accommodation with a total of 1,914 rooms.
It has sold 25 outlets for £13m to improve the overall quality of the estate and is on course to sell another 10. Another £2.6m was spent on acquiring two large outlets.
This was carried out during an annus horribilis for the company, which also included:
- the fuel crisis in September, which led to cancellations from customers worried about petrol supplies
- flooding in October, which led to six of its pubs being closed for up to two weeks and two being closed until spring 2001
Chairman Eric Walters said: "The short term is difficult to predict with the continuing problems of foot-and-mouth and the expected reduction in the number of inbound tourists."
But he said the company was "encouraged by our like-for-like sales" since the beginning of April.
"This reflects our ability to adapt to difficult trading conditions and the strategic benefits from the investment and changes that we have made to the business," he said.