The Investment Column: Belgo

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The Independent Online
WHO SAYS the Belgians are boring? Belgo was a dream come true for penny share fans last year, jumping from 2.5p to 12p, giving the Belgian beer and mussels business a value of 123m.

The company justified the hike yesterday, posting a near 12-fold annual profits increase to pounds 4.6m from its 14 restaurants and bars. Sales skyrocketed 554 per cent to pounds 27.1m, boosted by the pounds 13.5m acquisition of Caprice Holdings, owner of London's Ivy restaurant. Like-for-like sales growth was a more pedestrian 3 per cent, but that at least looks good compared to barely positive like-for-like figures from Pizza Express, another restaurant chain conceived by Belgo chairman Luke Johnson.

Belgo, whose core restaurants boast 121 Belgian beers and 20 different ways to cook mussels, is diversifying into Turkish, Italian and French Vietnamese food through its Signature group of restaurants. In February, Belgo opened its first Bierodrome Belgian beer emporium. International expansion continues apace, with the chain exporting the Belgian experience to Dublin, New York and Jersey. The company sees more opportunities in the US.

The risk is that Belgo expands too quickly. It has grown from two restaurants to 14 in just 18 months and chief executive Andy Bassadone sees 50 outlets as a realistic target for the future. Keeping quality consistent across the chain will be essential if the brand is to attain any of the strength of similar concepts like Pizza Express.

Analysts expect full-year pre-tax profits of pounds 7.2m, and earnings of 0.55p per share. Investors who believe the Belgian concept will find favour with a wider population will find the shares, unmoved at 7.75p yesterday, attractive.

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