Courage gives S&N a boost

The Investment Column

With the beer industry braced for an imminent OFT decision on the proposed takeover of Carlsberg-Tetley by Bass, Scottish & Newcastle yesterday kicked off a busy week for Britain's brewers with a better- than-expected set of half-year figures.

Pre-tax profits were 26 per cent higher at pounds 195m, helped by a full six- month contribution from last year's Courage deal. But what impressed the market most was S&N's ability to grow earnings per share by 18 per cent in a year when one of its main businesses - Center Parcs - again turned in a poor performance. Profits there were down pounds 5m, hit by the economic problems of northern Europe as well as one-off costs in the Benelux countries and pounds 1m of redundancy charges.

S&N chief executive Brian Stewart denies that Center Parcs is a concept that has peaked and points to UK occupancy rates of 91 per cent and rising spend per head figures both in the UK and Europe. However, speculation continues that the business may be sold, although a float of the continental Center Parcs is another possibility

The division which wrong-footed analysts was brewing, where the re-named Scottish Courage business improved profits by a better-than-expected 67 per cent to pounds 90m. S&N has been building margins rather than chasing sales with its stable of brands, which include Theakston's, John Smith's and McEwan's. Some pounds 18m of costs have been taken out so far, with pounds 45m planned for the full year.

With the economy improving in the south of England faster than in the north, management admits these results would not have looked as good without the Courage deal.

In retailing, S&N lags behind Whitbread in the development of themed pubs and restaurants. However, it is starting to motor with 35 Chef & Brewer pub-restaurants planned for this year and an eventual target of 150. Another format earmarked for roll-out is Barras & Co, the community pub brand started earlier his year.

With a forward price-earnings of 14, assuming full-year profits hit pounds 380m, S&N shares are trading at a discount to rivals such as Whitbread and Bass, the latter of which reports later this week. S&N shares jumped 22p to 661p yesterday and would rise further if management can demonstrate that Center Parcs is on the mend. A strong hold.

Ascot head is worth backing

Ascot Holdings' pedigree is hardly of the sort to inspire confidence. Better known in its old guise as Control Securities, the one-time pubs to hotels group was formerly the vehicle of disgraced businessman Nazmu Virani. Not content with its own colourful past, this summer Ascot paid pounds 290m for Suter, the mini-conglomerate whose name is synonymous with that of its controversial chairman, David Abell.

But if anyone is going to help Ascot escape its history, it is chairman and chief executive Howard Dyer, who is credited with turning round Hamleys, the toyshop group.

Mr Dyer is busy turning Ascot on its head, so yesterday's interim results showing pre-tax profits sliding from pounds 8.8m to pounds 1.2m in the six months to September are pretty meaningless as a guide to the future. The figures reflect a divestment programme which has seen the group raise over pounds 200m from disposals since Mr Dyer's arrival in 1991. He expects to raise close to pounds 40m more over the next two years from selling most of the former Control assets of pubs and other properties.

That will all be needed, as gearing has soared to 244 per cent since the Suter acquisition. But Mr Dyer is confident of paying that down easily within a two- to three-year timetable mainly through the disposal of two of Suter's four divisions.

Specialist engineering will definitely be kept. The Searle refrigeration equipment business and Floform spark plug electrode operations both have strong market shares. Chemicals also looks safe. That leaves the automotive arm and a rag-bag ranging from drills to beauty care mostly likely to be on the block early next year.

Profits of pounds 28m next year, assuming no Suter disposals, would put the shares, up 1.5p at 326.5p, on a forward p/e ratio of 14. Worth backing the man, even if it may be a while before a clear picture of the business emerges.

BTG's patent potential

Shares in BTG, the old British Technology Group, have been among the best performers on the stock market in the last year, rising from a low of 700p to last night's pounds 24.375p.

Ownership of potentially lucrative patents lies behind the shares rise. BTG patents whacky inventions and licenses the intellectual property rights to big groups like Zeneca and SmithKline Beecham and biotech companies, including Peptide Therapeutics, and earns royalties in return.

BTG owns over 9,000 patents but the most exciting prospect is Torotrak, a fuel-saving variable transmission system developed in-house and licensed to nine vehicle manufacturers, including Ford and Toyota.

Ultimately Torotrak could replace cars' gearbox system, making for a lighter, more fuel efficient system with fewer moving parts.

Japanese investment bank Yamaichi reckons Torotrak could be worth up to pounds 1bn, compared with BTG's current market value of pounds 427m.

In the meantime, a final payment estimated at pounds 2m for BTG's Pyrethrin crop protection insecticide allowed the group to post interim pre-tax profits of pounds 170,000 versus a pounds 2.1m loss a year ago, though BTG is cautious about whether it will remain in the black for the full year.

A proposed one-for-five share split should improve marketability. Yamaichi's estimated net present value ranges from pounds 400m to pounds 3bn, implying a share price potential of up to pounds 170. Interesting, but speculative.

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star