PUBS and brewing group Scottish & Newcastle has reported a dip in turnover but insisted its restructuring was paying dividends.

The Edinburgh firm, which owns Newcastle Brown, has been overhauled recently, with leisure operations scaled back in favour of brewing.

A number of pubs as well as holiday villages Pontin's and Centre Parcs have been sold and S&N is now focusing on big brand lagers and bitters such as Beck's, Kronenbourg and John Smith's.

The shake-up meant income for the six months to October 28 slipped from £2.17bn to £2.13bn, although pre-tax profits before one-off costs edged up from £241.1m to £242.8m.

Chairman Brian Stewart said: "We believe that these results are in line with expectations for the restructured business.

"Given that we have faced not the easiest of trading conditions, this is a strong performance. More importantly, they are indicative of the inherent strength of the reshaped group."

Turnover in the UK beer division slipped from £1bn to £990.5m, although operating profits were up 5.2 per cent at £108m.

S&N said its five major brands increased their volume by 1.8 per cent. Their share of total branded sales now stands at 83 per cent.

In the pubs division, turnover and operating profits were both down after the sale of 661 outlets and 169 operations were converted into tenanted pubs.

S&N now has 1,460 managed outlets and turnover for its retained operations was up 7.5 per cent, at £484.2m, while operating profits were 7.3 per cent ahead at £106.2m.

Bottom-line pre-tax profits for the six months period were £184.5m, up on last year's pre-tax loss of £95.6m.

* Staff at Newcastle Breweries are to move into the Citygate building from the nearby Newcastle Breweries tower block in Gallowgate next year.

Newcastle Breweries employs about 50 staff there, in sales support, marketing, customer services and personnel.