Investment Column: Tough first year for Ushers

LEGAL NOTE: - Reference to Ushers is incorrect. Ushers does not brew Miller Lite, it brews Miller Genuine Draft but does not market it.

Edited Peter Thal Larsen

Shareholders were no doubt drowning their sorrows last night after the latest figures from Ushers of Trowbridge. In its first year as a public company, the Wiltshire-based regional brewer unveiled pre-tax profits of pounds 11.3m, up from pounds 10.6m, but well down on the original estimates when it floated in March last year. Not that the gloom was unexpected. Management had warned in November that things had got tough.

Still, those who took a punt on Ushers at the time of the flotation will feel hard done by. At the time, investors were told that problems which held up a flotation three years before were history. And most thought a flotation price of 110p - a discount to rivals like Mansfield and Fullers - would shield them from trouble. Not so. After a 2p rise yesterday they languish at 72p.

So what has gone wrong? Most of the problems came when a five-year contract with Courage came to a halt. Then Ushers found itself out of pocket after Miller Light, which the group brews under licence, failed to capture drinkers' imaginations.

Roger North, the pugnacious chief executive, now says these ructions really are in the past. He insists that underlying financial performance remains strong, pointing to like-for-like profits growth of 10 per cent from the pub estate.

Mr North and his chairman, Tom Vyner, think the shares are undervalued. They were in the market yesterday buying up 30,000 shares each and are seeking permission to buy back shares from their investors.

On 1998 profit estimates of pounds 14.5m, the shares trade on a future multiple of around 6.5. Even for the depressed regional brewing sector, that's low. But having disappointed so soon after flotation, management needs to show it is back on the right path before anyone buys these shares.