Regent rethinks its pub strategy

REGENT INNS, floated on the stock market last April, is in the final throes of a strategic rationalisation that involves the disposal of about seven small country pubs, writes John Shepherd.

The company said it wanted to concentrate on larger urban pubs and was also considering expanding beyond its London base with acquisitions in Birmingham, Manchester or Glasgow.

Regent, which has 39 pubs, yesterday announced an increase in first-half pre-tax profits from pounds 604,000 to pounds 1.03m, and made bullish noises about prospects.

The shares, floated at 135p, held steady at 254p amid yesterday's fallout on the stock market.

Patrick Moorsom, chairman, said: 'New acquisitions are trading to anticipated levels and their contributions will be more significant for the remainder of the year.

'At current trading levels average turnover per pub is now 14 per cent higher than a year ago.'

Turnover in the six months to 1 January improved from pounds 6.5m to pounds 7.2m. Some 80 per cent of sales are drinks, with the rest coming from food and machines.

The interim dividend is 1.75p, representing one-third of the total expected payout for the year.

Clive Watson, finance director, said Regent was benefiting from buying-power, with annual beer sales set to run at about 25,000 barrels by the summer. It buys beer from Bass, Courage and Young's.

Planned acquisitions will take gearing from 16 per cent of pounds 17m of shareholders' funds to about 35 per cent at the year-end.

'We don't want to get over- geared, however, and 60 per cent is about tops, subject to interest cover,' he said.

First-half interest charges were pounds 72,000, covered 14.6 times by operating profits. Pre-tax profits were struck after pounds 41,000 ( pounds 10,000) of disposal profits.