The Investment Column: SFI Group

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The Independent Online
The Investment Column: SFI Group

SFI GROUP, the renamed Surrey Free Inns, may be a smaller player in Britain's consolidating pubs sector, but it has no shortage of ideas. The rapidly growing group, which improved annual profits by 38 per cent to pounds 7.4m last year, has only 65 pubs but plans to open 45 more over the next two years. Most of the development will be in its two branded pub chains. These are the 26-strong group of Litten Tree pubs, which change from a traditional boozer in the daytimeinto entertainment venues by night, and the 12-strong Bar Med, a theme bar chain and the more successful of the two.

The group is focusing on organic growth, but there's scope for acquisitions. SFI admits it would be interested in Greenalls' Squares bars and Millers Kitchen food pubs if Greenalls opts for break-up.

Meanwhile, SFI plans to strip itself, via demerger, of its table dancing clubs, which trade as For Your Eyes Only. Before that can take place, more venues and a longer trading record will be required.

SFI shares have enjoyed a good run, up from 107p in October to 243p yesterday. Though margins have been squeezed by higher head office costs, a like- for-like sales increase of 2.1 per cent is respectable in this market. Assuming profits of pounds 10.5m this year the shares trade on a forward multiple of 16. With the recovery in consumer spending set to continue, and Bar Med about to achieve its potential, the shares represent decent value.