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 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 2 West poised to join forces with President Assad in face of Islamic State
- 3 Mother fed her daughter tapeworms to make her skinny for pageant
- 4 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 5 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
West poised to join forces with President Assad in face of Islamic State
Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – as hunt begins for killer
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
£30000 - £45000 per annum: Harrington Starr: A global investment management fi...
£65000 - £75000 per annum: Harrington Starr: Senior Network Engineer-(CCIE, CC...
£70000 - £80000 per annum: Harrington Starr: Senior Network Analyst - (CCIE, C...
£60000 - £80000 per annum: Harrington Starr: Senior Network Engineer-(Design, ...