Snooze outweighs booze at Vaux; The Investment Column
Wednesday 18 December 1996
Those results saw pre-tax profits rise 9 per cent to a best-ever pounds 34.8m (pounds 31.8m), earnings per share were also the best the group has achieved at 19.35p and the dividend, which has grown every year since 1969, edged ahead from 10.2p to 10.6p.
As with all misleading perceptions, the prevailing view of Vaux, however, has a grain of truth at its centre. The area around the company's Sunderland base has suffered enormous de-industrialisation and its 749 tenancies include a long tail of dingy boozers in areas no pub chain would choose now. The transfer of a senior manager from the 163-strong managed pub chain to tenancies is a tacit admission that the company has been slow to churn the bottom end of the estate.
As a result, profits from tenancies, still a significant contributor to the group total, fell 12 per cent to pounds 12.9m, taking the shine off a good performance from managed outlets, up 17 per cent to pounds 9m, and brewing, where returns rose 27 per cent to pounds 4.5m despite another forced widening of discounts to both tenants and free trade landlords. Brewing has benefited from cost-cutting and plainly has a future as a niche player in an increasingly consolidating market.
Beer is only half the picture at Vaux, however, a fact sometimes overlooked by investors. The snooze side of the equation is arguably much more attractive than the booze, with the Swallow Hotels chain consistently winning plaudits for the quality of its 30 mainly four-star sites. Profits in the year rose pounds 4.3m to pounds 24.1m, after occupancy levels increased from 68 to 72 per cent.
The hotel cycle should have a way to run yet and two new hotels in Liverpool and Huntingdon should keep the momentum going. Sir Paul maintains that the costs involved would not be justified by the benefits in rating terms of demerging the two sides of the group, but it is an issue that management will have to keep under consideration if the shares continue to languish.
On the basis of forecast profits of pounds 37.3m, the shares trade on a prospective price/earnings ratio of 12, and offer a yield of 5.5 per cent. Against a backcloth of such slow growth, neither ratio makes the shares look particularly attractive compared with rivals Greene King and Wolverhampton & Dudley.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...
£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...