BELHAVEN, Scotland’s leading regional brewer, has continued its remarkable success story in its latest trading half, delivering its eighth consecutive set of record interim results since itsflotation seven years ago.
The company has been a miniature contra-thinker in a drinks industry that in recent years has moved steadily towards focus: many of its rivals big and small either concentrating on brewing or pub retailing.
Confounding conventional orthodoxy, however, both Belhaven’s operations have made significant strides, the fact that the twin profit contributions are of the same general magnitude showing the attention devoted to them.
South of the Border, the two drinks companies that have stuck similarly to this dual template are Greene King and Wolverhampton & Dudley, but doing a good job in both brewing and the pub sector is increasingly a minority interest.
Belhaven yesterday announced a 26 per cent rise in pre-tax profits on 19 per cent jump in turnover, along with an 11 per cent hike in the dividend.
With last summer’s well-supported GBP 25 million stock market rights issue taking Belhaven’s borrowings-to-shareholders’ funds ratio down sharply from 95 to 36 per cent, the company also looks well-placed to expand further both organically and by acquisition.
It currently has more than 200 outlets and its target for the end of 2005 is 300 – an increase of nearly 50 per cent.
Chief executive Stuart Ross’s criteria for acquisitions is well- documented: done in small batches, often ones and twos, of a reasonable size to push through good barrelage and keep returns up, and freehold rather than leasehold to give management a greater operational flexibility.
Meanwhile, it has become a group in the drinks sector renowned for not springing unpleasant surprises.
The steady-as-she-goes philosophy has worked well since Belhaven’s 1996 flotation, with the swirling takeover activity around the group in the sector largely ignored. Ross’s credo is obviously if it ain’t broke, don’t fix it.
Glazer move fuels bid talk
SO NOW we know what many suspected: it was US sports tycoon Malcolm Glazer who was behind the big new stake-building in Manchester United FC late last week.
He paid more than GBP 30m to take his stake in United, at the heart of takeover rumours, up from 10 to 14 per cent. The sports baron is now the second biggest shareholder, and within striking distance of the leading shareholders, Irish racehorse and financial magnates JP McManus and John Magnier.
United’s party line is it’s business as usual, Glazer views his stake as an investment etc. Ho-hum. Cynically, any stake in any company can be seen as an investment right up until the time a takeover bid is launched.
United’s chief executive, David Gill, said he and colleagues met Glazer in Tampa last week to explain its recent good results and where they saw the club going commercially. If Glazer is only interested in the football club as an investment, Gill has nothing to berate himself with about his presentational skills, then.
A GBP 30m stock market splurge after two or three hours of company promotion is something of a rarity, except perhaps in the madness of the dotcom boom. It is believed the seller to Glazer was Lansdowne Partners, the specialist hedge fund having no doubt taken a decent turn on its investment in United. Things remain interestingly poised.
David downs Goliath
IT USUALLY gives a pleasing glow to the neutral when a small business stares down a major player in negotiations over a collaboration where both want a bigger share of the pie. Celltech, the British biotech group, has done just that with Pfizer, taking back the rights to its new drug hope, CDP 870, from the world’s biggest drugs firm after they failed to agree terms to renegotiate a deal.
It looks like the market was relieved as well, Celltech’s shares jumping 6 per cent on the group’s decision to either go it alone on developing the potential dollars 1 billion-a-year rheumatoid arthritis treatment or seek another partner.
Pfizer had been holding out for a much bigger slice of future revenues from CDP 870. To be fair to the US giant, it inherited the rights to the drug after completing its acquisition of Pharmacia two years ago, and that Pharmacia/Celltech deal was thought by the industry to be one of the most generous to a biotech company ever awarded.
It was widely estimated by the industry, although not officially confirmed by Celltech, that it was entitled to 40 per cent of profits CDP 870 eventually made, as well as milestone payments up to dollars 280m (GBP 163m).
Analysts said yesterday’s share price movement at Celltech suggests the market believes there will be something of a small queue to take Pfizer’s place.
