Department store chain House of Fraser, a recommendation of ours from 2002, turned on the high street charm to deliver a robust set of results for the year to January. Total turnover fell slightly to £700.6 million (£710.7 million) but pre-tax profits improved 19 per cent to £18.6 million.

Like-for-like gross transactions grew 0.4 per cent and, in a development that bodes very well for the future, gross transactions are already ahead in the first seven weeks of the new financial year by 0.7 per cent.

During the year, HoF opened a new boutique-style store in the City of London with a stronger focus on designer brands. This outlet currently has the highest sales densities in the entire portfolio.

The company has a strong pipeline of new stores in development, which should add 700,000 sq ft to its portfolio, although it has disposed of its stores in Inverness, Paisley and part of its Maidstone store, for a loss on disposal of £400,000. However, its 50 per cent joint venture with British Land – BL Fraser – disposed of its freehold interest of its Darlington store for £2.1 million profit.

Following a property revaluation in January, the value of the properties has improved £36.2 million to £255.7 million. Average net debt during the year was £111.1 million (£110.7 million) and, while it closed its pension scheme to new employees in March 2002, the net pension deficit is £74.6 million. This seems eminently manageable as this debt was reduced during the period by a welcome £12.1 million.

Broker Arbuthnot rates the company as a buy on, amongst other positives, the significant amount of new space soon to be available for sales. On top of this, there is much speculation that a bidder for the company may still emerge in the months ahead. Up 39.4 per cent from our original recommendation price of 73p to the current 101.75p, the shares are not to be sold. Hold.