Little to cheer at Vaux
Wednesday 13 December 1995
He should hardly have been surprised by the reaction of the City, which was disappointed by the headline profit number of pounds 31.8m and a modest 3.6 per cent rise in the dividend to 10.2p. Analysts also had their worst fears confirmed by the curate's egg of a divisional split which showed buoyant hotels and managed pubs offset by Vaux's core tenanted pubs and its main diversification, nursing homes.
Vaux picked up a lot of its 792 tenancies recently as part of the restructuring of the brewing industry since the beer orders and it is becoming increasingly clear that it acquired an extremely mixed bag. According to the company's own estimate only a fifth of sales are through pubs it considers to be in a good location, in good condition and with good facilities.
That would not matter so much if most of the remainder were not in such poor locations that upgrading them is not a viable option. Buying a market for Vaux's brewery output seemed like a good idea but getting rid of a long tail of underperforming pubs is a heavy price to pay.
In Vaux's part of the world, the closure of the Durham collieries, a greater enthusiasm than elsewhere for the attractions of the National Lottery and a steady stream up the A1 of vans loaded down with illegal booze from the Continent, led to a 6.3 per cent decline in beer sales, a poor showing compared with a 4 per cent slide in the tied market as a whole.
In nursing homes, underlying profits were flat. Delays in registration of new residents meant that they were spending less time in the homes than was previously the case. Uncertainty over the funding of long-term care added to the uncertainty.
After sharply higher rents, however, profits slipped a worrying 14 per cent and it is not wholly apparent what Vaux has to offer that a specialist in the area does not.
These two problem areas took the shine off an impressive performance from Swallow Hotels, where occupancy increased to 68 per cent, equal to the best ever achieved, and profits grew a useful 25 per cent to pounds 19.7m. Managed pubs, flavour of the month in the City, increased 12 per cent to pounds 7.6m although that is still only half the profit from tenancies.
On the basis of a prospective price/earnings ratio of 14, the shares are high enough, especially given the slow growth ahead. The shares should be supported by their high yield but they won't excite.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 The secret report that helps Israelis to hide facts
- 3 Danish TV reporter is all business up top, all party down below
- 4 Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
- 5 Businessman charged £75 for three small bottles of water in London hotel
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...