Newbury Racecourse has received outline planning permission to radically expand the range of services provided at its horse racing ground in Berkshire. Following approval from the West Berkshire Council the firm will be able to build 1,500 residential units, a hotel, improved golf facilities and expand conference and events services on the premises. The move forms part of the company’s plans to turn the area around its racetrack into a variety of leisure, entertainment and events businesses. Once planning permission is confirmed the business expects the project to take 10 years to complete. No details have been released regarding the anticipated cost of the development programme. The news follows Newbury’s recent announcement of a £5.7 million, two for one rights issue, being carried out in order to pay down debt (£9.9 million in creditors as at 30th June 2009) and fund expansion plans.

Shares in Newbury have lost 14% of their value since the start of 2010 and are currently trading at a new all-time low of 600p. At the current mid-price the company is capitalised at £28.7 million, trading on a historic multiple of 56 and at a sizeable 86% premium to net assets of £15.4 million held at the half-year end in June. With investors also facing dilution if the rights issue is approved we believe the shares continue to look overvalued. Sell.