Bass's bigger splash proves a winner

It has taken a long time for the City to come round to Sir Ian Prosser's view of the world, but finally he seems to be winning over the sceptics. Over the past year, Bass shares have outperformed the rest of the stock market by around a tenth; support for the stock is growing by leaps and bounds. It was not always thus. When it splashed out more than pounds 1bn on the Holiday Inn hotel chain in 1989, there were cries of horror. Why on earth was a brewer expanding into hotels, was the question on everyone's lips.

Bass's approach to the beer orders - to sell most of its tied estate as rapidly as possible - drew an equally hostile response. Both strategies are in the process of being vindicated. Holiday Inn is producing all the right numbers while the company's swift and robust response to the beer orders has succeeded in wrong-footing most competitors.

There is still some residual doubt about whether such a powerful brewer should be expanding into the leisure industry as aggressively as Bass is, but even this is beginning to go. The main strands of the leisure market are rapidly converging. Sir Ian's vision of a company that tries to tap profitably into all aspects of discretionary spending and personal leisure time, be that pubs, bingo halls, betting shops or fitness centres, must be the right one. Bass is proving to be a master of extracting the last penny of loose change from customers' pockets. Selective bolt-on acquisitions - such as the recent purchase of the Harvester pub chain - have enriched the formula.

The ability to throw pounds 10m of capital spending a week at existing businesses underlines the company's financial strength. The result of the high capital spending in the year to 30 September was an 11.3 per cent leap in taxable profits to pounds 599m, despite the effects of the lottery. Analysts have pencilled in pounds 650m for next year. With gearing at just 23 per cent, Bass plainly has scope for a big acquisition. Anything is possible, but the current rumour, Ladbroke, seems unlikely. Bass simply does not need hotel property assets like Ladbroke's. Much more logical would be Carlsberg Tetley, but the rationalisation of the beer industry involved might be too much even for this Government's relaxed approach to mergers policy.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore