Investment: Drinking to a pounds 4.3m profit

COMING A day after Marks & Spencer described the past few months as the worst for consumer spending in almost half a century, yesterday's figures from Old English Pub Company (OEP) look remarkable.

The leisure group, which runs 175 country inns and hotels, produced a 90 per cent rise in pre-tax profits to pounds 4.3m in the half year. Like- for-like sales were up a respectable 4.2 per cent in the half and, although there has been a slight slowdown in October, same pub sales are still 3.5 per cent ahead in current trading.

This is at a time when many pub and leisure groups have had their hopes dented by the wet summer and the World Cup factor.

How has OEP managed it? Part of the answer is through a heavy acquisition programme which saw 34 pubs added in July and another 12 last month.

OEP targets run-down properties that it can quickly spruce up. It injects a quality food offer and derives a quick boost in sales.

Added to this is OEP's target market of the over-45 "greys", which it says are less influenced by things like the World Cup. It says its three income streams - food, which accounts for 44 per cent of sales, hotel rooms (20 per cent) and drinks (36 per cent ), are more balanced than some competitors that are more weighted towards the drinks take.

OEP's shares, which jumped 22p to 264.5p yesterday, are still well down on their 384p peak in the spring. On Hoare Govett's full-year forecast of pounds 9.1m the shares trade on a forward rating of 13. That looks about right for a company that seems to have a winning formula but is still exposed to the vagaries of consumer spending