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Bottom Line: Boddington cheer

BODDINGTON is the cream of Manchester in more ways than one. The beer, owned and produced by Whitbread, is a best-seller, while Boddington the company is going from strength to strength.

Solid annual results, released yesterday, further reinforce the logic of Boddington's radical change of strategy in 1988. The common thread of its odd mixture of businesses in pubs, nursing homes, drinks and leisure villages is at root retailing with the emphasis on customer service.

The quality approach produced an underlying 10.9 per cent rise in pre-tax profits to pounds 28m. About pounds 31m is on the cards this year.

Boddington will pump another pounds 33m into development this year. Pubs and leisure will absorb pounds 10m each, drinks wholesaling pounds 8m and health care pounds 5m. This all adds up to just five, perhaps six, points on the current gearing of 29 per cent.

Running parallel with that development, it should be able to squeeze better margins out of pubs by increasing food turnover from 15 per cent of sales and should benefit from a new six-year beer supply agreement with Whitbread.

At 275p, the shares are trading on a prospective p/e of 14.1 and a gross yield of 4 per cent, assuming a 7 per cent dividend increase to 8.6p. Those who feel brave enough to buy in the current volatile climate should invest in Boddington.