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Investment Column: Ushers offers attractive discount

As expected, Ushers of Trowbridge opted for a pretty conservative multiple of earnings on which to pitch its second attempt at coming to the market. The 110p a share announced yesterday puts a price tag of pounds 109m on the regional brewer and pub owner, an undemanding historic price- earnings ratio of 11.5 times.

That represents an attractive discount to the sector and market, which reflects understandable caution from broker Panmure Gordon after the failed flotation attempt two years ago when investors worried about the company's dependence on one large brewing contract from Courage.

The discount was certainly a big enough incentive to attract subscribers for two-and-a-half to three times the 37 million shares on offer and a reasonable premium looks assured when dealings start next Monday.

Ushers in its present form was put together through a management buy- in by ex-Grand Met brewing executives in 1991. The brewery came from Grand Met while 433 pubs were acquired from Courage. Since then more pubs have been bought to build an integrated group with 541 outlets and a range of other contracts for both brewing and packaging. That troublesome Courage contract is now much less important in group terms.

The current management has performed well so far but it faces an uphill struggle from hereon in. A concentration on tenancies makes Ushers unfashionable to a market in love with managed estates and the performance of other regional brewers suggests the consolidation of the industry has done little for anyone but the majors. Manns, the one national brand, is not strong.

That said, Ushers is plainly well run and after the flotation will no longer be constrained by high levels of debt. With profits for the year to October pencilled at pounds 15.3m, and with a tax charge of only 26 per cent, the shares trade on a prospective p/e ratio of 9. Good value.