THE City impatiently awaits the appointment of Vaux Group's new chief executive.

Executive chairman Sir Paul Nicholson hopes to announce the name within several weeks and, in due course, Sir Paul will take up a non-executive role.

However, he indicated that he will stay very closely involved in the business. Until then analysts remain uncertain as to where the Sunderland-based brewer and owner of Swallow Hotels is going. That question is likely to remain unanswered for some time until the new incumbent's plans are revealed.

Vaux is a company of two halves, with little overlap between the highly-regarded hotels side and the more mundane brewing and pub retailing interests.

The City would like it to sell the two breweries in Sunderland and Sheffield and for it to concentrate on exploiting its pubs, which do not seem to be making progress against industry majors such as Whitbread. However, Sir Paul is adamant that brewing will be retained, partly in deference to a tradition going back more than 100 years.

That immediately restricts the new chief executive's scope for action in a business that, overall, is returning a low level of investment on capital employed and where early improvement is unlikely, given the relatively low incomes in its main trading

areas compared with in the rest of Britain.

Expansion by Swallow is likely to be limited to openings at a rate of perhaps two a year. Sensible acquisition prospects are restricted due to the sector's buoyancy. The feeling is that Vaux needs a little more drive than at present and a better sense of direction.

Analysts were pulling back their forecasts for its full-year profits by about #1m to an increase from #38.3m to #40.5m. Regrettably, the stock looks a dull hold.