Jennings Brothers

BUY

07/05/2004

Lakeland brewer and North West pub operator Jennings reported solid results for the year to February. Turnover increased 5.4% to �17.24m and pre-tax profits improved 13.5% to �2.85m. InnVentures, the company's leased and tenanted pub division, represents 65% of turnover, which rose 14.7% to �11.3m. During the period, it acquired nine pubs for �3m, bringing the total to 126 pubs. 87% of the estate is now leased and a partnership scheme has been adopted. Due to its 'quality' acquisition stance, purchases have not been as thick and fast as hoped. The free trade, brewing and brands business, also increased its turnover and its latest offering, Cumberland Ale, enjoyed 24% growth. In March, the company relaunched Ward's Best Bitter and its inital distribution to 110 pubs in its native South Yorkshire has been 'encouraging'. Chairman John Rudgard commented that despite the constant talk of consolidation in the industry, the only way to stave off potential offers is by success. However, he did not deny being open to offers. Interestingly in the past year, Cumbrian rival Robinson's Brewery has increased its stake in Jennings by 8.99% to 23.99%. Gearing reached 72.5% but with a 5.3% NAV increase to 258p underpinning the shares and consensus forecasts of �3.1m pre-tax and an EPS of 21p, the prospective p/e of 12 makes this a proposition not to miss.