The Investment column: The going turns good at Ascot

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The Independent Online
Howard Dyer, chairman of Ascot Holdings, and his management team at last seem to be getting to grips with the group once known as Control Securities. About time too, shareholders may say. Before yesterday they had seen their shares slump nearly 100p from the 387p they hit just before last summer's pounds 287m takeover of David Abell's Suter conglomerate.

But they bounced 7.5p to 296p after Ascot Holdings revealed encouraging progress. The profit figures were rendered largely meaningless by the change to a December year-end and the impact of the acquisition, so pre- tax profits cut to pounds 5.9m in the latest nine months are not fairly compared with the pounds 19.5m achieved in the previous 12 months to March. However, the 3.9p-a-share final dividend is the first since 1991.

The confidence behind that payment is supported by the reduction of the post-Suter debt from pounds 118m to around pounds 72.7m currently, after disposals topping pounds 70m in the past 12 months or so.

Gearing of 207 per cent is thus less than half the level of six months ago. With another 141 pubs left from the Control era and property at the US air base at Lakenheath in Suffolk which generates annual rent of pounds 2.9m, borrowings could be below pounds 50m by the end of this year.

There will also be substantial further disposals from the Suter businesses, where it has been decided that only two of the four divisions are to be kept.

Specialist engineering, including refrigeration, will definitely stay, raising pro forma profits for the last full year by 8 per cent to pounds 11.3m.

Chemicals also looks a candidate, although profits were flat at pounds 11.7m. Most of the pounds 5.7m cost savings achieved so far have been in these two divisions.

Full-year profits of pounds 29m for the group would put Ascot Holding's shares on a forward multiple of 11. Good value.