BREWERY group Scottish & Newcastle (S&N) has announced its first ever annual loss.

Despite that, the group, which brews Newcastle Brown and owns big name brands such as Foster's, Kronenbourg and John Smiths, said its restructuring programme was set to strengthen the company.

The restructuring programme has seen S&N scale back its operations to focus on brewing.

During the financial year, S&N sold its holiday villages business, Pontins and Center Parcs, and bought a 49 per cent stake in Portugeuse brewer Centralcer.

Center Parcs was bought by DB Capital Partners and Pierre & Vacances for about £700m, while the Pontins business was sold to Manor Parcs, operated by entrepreneur Trevor Hemmings, for £30m.

S&N has also embarked on a scaling down of its pubs business, selling 646 of the 740 selected for sale. These have been sold to Enterprise Inns and Noble House Leisure.

The group expects to sell the remaining pubs by the end of this month.

S&N has not quit the pub business altogether and operates about 1,500 leased outlets.

The group, which plans to sell off its Scottish Courage brewing company, has so far axed more than 1,300 jobs at the division, to make it a more attractive proposition to a potential bidder.

The corporate wheeler-dealing took its toll on the group's bottom line, with pre-tax loss for the year to April 29 of £272.1m, compared to a pre-tax profit of £262m in the previous year.

The profits were hit by nearly £700m (£699.6m) of one-off costs associated with the restructuring charges.

This was despite an increase in turnover from £3.57bn to £4.33bn.

Chairman Brian Stewart said: "The last year has seen enormous change in the scale, scope and potential of the company.

"Inevitably, these initiatives have led to substantial exceptional costs.

"The challenge is to maintain the progress now being made within the refocused group."

Mr Stewart said that S&N was now "in a better position to deliver future growth than we have been for several years", adding that the beer division had performed "well up to expectations".

The group's leisure venues now concentrate on four market sectors - pub restaurants, lodge hotels, branded pubs and large traditional pubs.

Once the last pubs earmarked for disposal have been sold - finance director Derek Wilkinson said he was "confident" the deal would go through within the next couple of weeks - the overhaul will be complete. Future growth was now in the beer division, said Mr Wilkinson, who also indicated that the group was on the look-out for more European acquisitions. Shareholders will receive a total dividend of 28.16p, a four per cent increase on last year's payout.