Retail Decisions to Double From Here

ok

brief analysis as promised on fuelserv

op profit (£000) Exceptionals (£000) Pre Exceptionals (£000)

2002 2354 139 2215
2003 3892 (15m) 639 3253(15m) pro rata 12m = 2602
2004 3823 437 3386


So pre exceptionals, fuelserv looks like it's growing at 20% pa

This is good

Assuming that 2005 is 20% up less the same for own IT costs (currently paid by DHL and not recharged) means EBIT of £3.4m for 2005. PBT (tax at 30%) is therefore £2.25m

Acqusition cost plus expenses is £26m. This puts the acquisition on a PE of 11.6x

This is reasonable if Fuelserv is growing - not if it's not.

The segmental analysis doesn't give much idea about sensitivity to oil price

I am also concerned that the levels of exceptionals are very high and mainly result from customer to Fuelserv reconciliations! Clearly the systems are a mess!!!

Bottom line is that the deal is not compelling in my mind, although it could prove to be good in time.

Short term we will be driven by sentiment - and whether the new shareholders at 21p dump their stock if smallcaps continue to be sold off as part of a wider market malaise.

So to buy or not our 21p entitlement shares - long term, probably ok as an entry level. Short term, no bounce back and potential drift down.

I will not make up my own mind until as late as possible