Some £13 million has been added to the value of Jurys Hotel Group as the share price spurted 30p to a record high of 470p, following better-than-expected interim results. This brings the value of the group up to £207 million.
Pre-tax profit rose by 36 per cent from £7.9 million to £10.76 million in the six months ended October 31st 1997. The growth in sales was a more modest 26 per cent from £29.3 million to £37.1 million and the already plump margins were increased from 27 per cent to 29 per cent. Further strong growth is anticipated for the second half with brokers' projections for the full year likely to be upgraded. Trading in November and December was higher than the comparable period in the previous year. Group director of finance and corporate affairs, Mr Barry Sheehan, said the full year should produce "another record" trading period. No specific projections have been made but the group should push profits up from £13.8 million to at least £17.5 million. Jurys' latest results were enhanced by a favourable £300,000 conversion of sterling profits into pounds. The group also had an extra four months contribution from the Custom House Inn, six months from Jurys Belfast Inn and five months from Jurys Inn Limerick. These accounted for almost half of the growth in sales. "The strong financial performance can be attributed to a combination of the buoyant conditions in our key markets in Ireland and Britain and average room rate improvements right across the group," said managing director, Mr Peter Malone. "We have also continued to expand group operations in line with our corporate strategy of achieving a segmental and geographical balance."
Mr Sheehan said the higher profit margins reflect the group's policy of "optimising rates" and its group purchasing which continues to reduce costs. Occupancy was in the low 80's, "a shade above last year".
Reflecting real growth, earnings per share rose from 14.5p to 19.0p. Shareholders are to benefit with a 20 per cent increase in interim dividend to 3.12p. A scrip alternative is not being offered due to the tax credit changes in the budget. Apart from the three new inns it plans to build, no further developments are being contemplated, said Mr Sheehan. Construction work on Jurys London Inn in Islington, London, is on schedule and is on target to commence trading in May. It has received planning permission for the new 190 bedroom Jurys Inn in Edinburgh. The inn, scheduled for opening in July, is being developed in conjunction with the owner of the building, Capital Land Holdings. The building located near the new Scottish Parliament will be rented from Capital on a 25 year lease. The third proposed development is the 250 bedroom Jurys Inn in Manchester which will be located adjacent to the new international concert hall and the GMEX Exhibition Centre. Expected to cost £15 million, averaging £60,000 sterling per room, it is subject to planning permission but the group expects it to open in May 1999.
The group is in a strong financial position with a gearing of 7 per cent. This is expected to be a low 10 per cent to 15 per cent after the building of the three new inns have been financed. The shares at 470p (12 months low 292p) are on a prospective p/e of 6.7 which are discounting further strong growth.
