Does Ushers have pulling power?

Why should anyone buy shares in Ushers? We take a look.

Ushers has issued its Pathfinder Prospectus in preparation for tomorrow's Stock Exchange flotation.

It is the company's second attempt at a float and analysts are keen to judge whether the company will be worth their money this time around.

They have been looking at what has changed since the company first knocked on the City's doors in late 1995.

Ushers was set up in 1991 as a management buy-in and soon became one of Britain's larger regional brewers. It now has 541 pubs and plans to grow this number through acquisition.

Its pub acquisitions have been designed to increase the average size of its pubs and therefore their profitability. Some of the 433 pubs it bought from Cou-rage seven years ago were total dross.

But Ushers has made a go of any pub that looked as if it could stand on its own two feet.

Its national badging programme and beer brands — such as Founders Ale and the Four Seasons stable — offer small pubs like the Morning Star in Datchet, Berkshire, a two-pronged competitive edge.

As it enters the market the brewer found time to make light of its worries. It launched Spring Fever, "brewed with oats to mark the frivolity of the season".

Less than 10 per cent of the estate, just 37 pubs, have been disposed of in nearly six years.

The brewer agreed to a limiting contract brewing arrangement with the then Courage, and this was regarded as something as a millstone even in 1995, when analysts were looking at the first float.

This agreement has now been all but replaced with a series of more lucrative and specialist deals with other brewers and supermarkets such as Asda.

Ushers is no Regent or Wetherspoon but it does offer fair profits.

These increased from just under £10.5 million in 1995 to just over £11 million in 1996. The performance reflects some of the £32.8 million investment in pubs and beer brands since 1991.

It plans to invest a further £6.7 million in the pubs and expects a rate of return of 20 per cent per year.

Ushers can also point to the redemption of its preference share and mezzanine capital by taking on additional borrowings.

If analysts go along with the plot, the float will reduce Ushers borrowings and improve cash flow and investment opportunities.

Ushers claimed it was unjustly hit in 1995 by analyst prejudices against tenanted companies. There is evidence that this attitude has softened in recent years as such outfits have reorganised and diversified.

Chief executive Roger North was particularly vitriolic about the analysts — especially the day he announced the float had collapsed — and they were sometimes less than kind about him.

His reputation as an autocrat is legion and he is the only person listed in a section marked "highly experienced management team" in a recent document for analysts.

Finance director Martin Coles and production director Peter Humphrey had wide experience with Grand Met.

Perhaps the appointment of J Sainsbury's deputy chairman Tom Vyner as non-executive director will smooth relations.

His arrival at Ushers can do nothing but improve City confidence in the company at this vital time.

But the City also likes Ushers' growing managed estate, now numbering 19 pubs.

Ushers' tenants can expect to be made forcefully aware of the company's plans to ensure that its brands "displace" non-Ushers beers in its own pubs. Ushers brands already account for two out of every three pints sold in its own pubs.

Ushers' ales attract a high margin and the brewer is expanding its freetrade sales.

Its tenants have been a vociferous bunch as many feel they have not been properly listened to within the company. Its ability to recruit top quality licensees may be tempered by this lasting reputation as word of mouth is one of the industry's main recruiting tools.

But its awards for brewing quality will enable it to attract prestigious clients on the contract brewing side. It already brews Steinlager, Amstel and Miller Genuine Draft.

It plans to double capacity at the Trowbridge Brewery with an investment of £9 million, but this will be a phased development financed from borrowings based on anticipated revenues from signed and sealed brewing contracts.

This is an example of the sort of adventurous caution the City often approves of. It loves successful gamblers, despises failures and has a healthy respect for the other 99 per cent of companies.

Analysts are pleased with the company's success in cost control.

North, former managing director at Grand Met Brewing, has turned a dog's breakfast into a nicely-cooked plate of bacon and eggs.

The float may add some tasty trimmings if prospective shareholders are convinced — as they should be — that Ushers is worth a modest flutter.