Frost defies the sceptics
THE INVESTMENT COLUMN
During that period the company has grown rapidly, reaching 236 outlets by the end of last year. Despite sharp fluctuations in the petrol price as the major players scrabbled for share in what is a pretty mature market, earnings have pushed ahead nicely.
Frost was transformed in July, however, when it snapped up almost 200 petrol stations from Burmah Castrol for pounds 83m. Overnight, it became Britain's fifth largest petrol retailer, just behind Texaco, but ahead of Mobil, Jet and Q8.
The deal, financed by a one-for-three rights issue, was completed after the end of the half year, which meant that interim profits announced yesterday told only half the story. They were, however, sparkling figures - pre- tax profits up 15 per cent to pounds 5.6m led to a 21 per cent rise in earnings per share and allowed a dividend 19 per cent higher at 3.2p to be paid.
It will clearly be a defining acquisition for the company and analysts believe the full effects will only show through after a couple of years. Frost believes there is enormous scope to reduce costs and increase volumes - Burmah operated a similar number of stations to Frost with three times as many staff - which explained the full price it was prepared to pay.
On the basis of forecast profits of pounds 15m this year and pounds 21m next time, the shares, unchanged yesterday at 246p, stand on a prospective p/e of 15. They deserve a premium to the market, but with the uncertainty of the integration, the shares are now high enough.
- 1 Moscow voted the world's unfriendliest city
- 2 The excuses your boss is most likely to believe when you call in sick
- 3 I'm pansexual – here are the five biggest misconceptions about my sexuality
- 4 More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
- 5 If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Senior British politicians tell David Cameron: When dead children are being washed up on beaches, it's time to act
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don’t change Europe’s attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...
Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...