Wolves' go-it-alone strategy starts to pay off

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The Independent Online

Wolverhampton & Dudley, Britain's biggest regional brewer, yesterday reported solid trading across its pub estate, further vindicating its shareholders' rejection of a hostile bid from Pubmaster last year.

The group, which brews Banks's and Marston's Pedigree beers, said like-for-like sales at its centrally managed community pubs had risen by 4 per cent in the 16 weeks to 19 January. This increase, however, dropped to 2.5 per cent when the remaining 50 pubs earmarked for disposal were included. Underlying sales at Wolves's tenanted pubs rose by 1 per cent, while the volume of Banks's and Pedigree beer sold outside of pubs and bars increased by 7.6 per cent.

Old Monk, the owner of the South African-themed Springbok Bars, has also performed well in recent months. It said pre-tax profits for the six months to 27 October had soared by 61 per cent to £628,000. Turnover rose 41 per cent to £14.7m.

Old Monk is also looking for a finance director, after Jon Hale resigned "to pursue other opportunities in the leisure industry".

Wolves's shares have soared by more than 25 per cent since shareholders rejected Pubmaster's 513p-a-share bid. Yesterday they slipped 12.5p to 625p, after shareholders approved the board's plans for an 80p special dividend. The £76m payout replaced an earlier pledge to return £100m to shareholders via a share buyback at 491p. A further £24m market purchase is planned for the coming months.

Analysts said Wolves's defence ­ of which returning cash to shareholders was a key part ­ had refocused the management on the group's core strengths. The group has retreated from a foray into the high street and is looking to sell its 38-strong chain of Pitcher & Piano outlets, which are located in city centres. The bars are expected to fetch around £50m.

It has cut net debt to £413m from £450m, helped, in part, by disposal proceeds. The group expects to appoint a new finance director within the next few weeks.

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