Regent brews up bid interest

INVESTMENT COLUMN

Shares in Regent Inns have proved a heady brew since the managed pub operator came to the full market in 1993. Floated at 135p, they have been one of the sector's best performers and shot up another 27p to 827p yesterday on yet another bumper set of results.

Regent's forte is smart bars and pubs aimed at young trendies principally within the M25. The majority are not themed bars, like those operated by the rival JD Wetherspoon chain, but up-market watering holes, often in unusual locations. A large number are in Grade Two listed buildings such as former post offices, banks and even fire stations.

So far it has 54 bars with a further 13 under development, awaiting licensing or planning permission. It has identified a site in Chester which will be its first foray outside the London. More are planned for the Midlands and the North.

The Outback Inn, Regent's first themed bar, in London's Covent Garden, has proved a success since it opened late last year and further sites are planned.

Regent has clearly capitalised on the shift away from the back-street boozer. But unusually it does not push food sales. Stripping out two food- oriented outlets, food accounts for only 11 per cent of Regent's sales with drinks accounting for 80 per cent.

Yesterday's results showed that the Regent formula is working well. Pre- tax profits for the half year to December were up 85 per cent to pounds 3.5m. Sales were 37 per cent higher at pounds 14.4m.

Regent has done so well that it has started to attract takeover speculation. Any of the big brewers such Bass or Whitbread might be interested. House broker Greig Middleton is forecasting full-year profits of pounds 7.2m, which puts the shares on a forward rating of 21. Highly rated, but while the speculation lasts a strong hold.