Shares in Manchester television and leisure group Granada Group Plc, jumped 13p to 504p in early trading yesterday after the company turned in record pre-tax profits of #103m, up 51% for the six months to April 2, and said it is confident that more growth is on the cards. Indeed so strong have the figures been that analysts have had to upgrade their forecasts and Mark Finnie at NatWest Markets is now looking at approximately #250m for full-year pre-tax profit, up from his previous estimate of #240m. The group, whose activities span rental, computer services, television and catering, saw expansion in all areas with #11.8m of the pre-tax growth coming from existing subsidiaries and a further #27.1m resulting from acquisitions, principally from the purchase last year of the Sutcliffe Catering and Spring Grove Services companies. The largest contributor was the rental division, now expanded to include satellite equipment and mobile telephones, where profits rose 4.8% to #52.4m, while profits from its television division jumped 64% to #34.8m. Granada’s first half was dominated by the acquisition of LWT Holdings Plc, where problems in the integration of the broadcaster had previously driven down Granada’s share price.
Computer services
The new acquisition contributed #4.7m to Granada’s pre-tax profits in the one month between acquisition and the end of the half year. In the computer services division, the group was able to improve its net margins by sharing overheads between the call-out business and the rental service operations and focussing on higher margin business. Although turnover dropped 9% to #69m, #29m overseas and #40m in the UK, profits before tax and interest grew 10% to #4.4m. Granada blames the sluggish growth of turnover in Continental Europe on sluggish economies and while geographical and product coverage is being extended, material growth from these businesses will only come as local economies improve. The only blot on Granada’s copy-book was the announcement of the failure of its #1.4m bid to run the UK national lottery, which went to Camelot Plc. However the company still hopes to become involved in the televising the weeekly winning lotto show. Gerry Robinson, the group’s chief executive, believes that the independent television companies really have to have a serious look at competing with the BBC for it but although Camelot is still undecided about who will screen the lottery, the BBC looks most likely to win. The group boosted its dividend by 10% to 3.33 pence, in line with expectations, and was upbeat on prospects ahead. We have developed a group of highly cash-generative companies operating in strong, predictable markets and we are confident that they will continue to produce good profit growth in future, Robinson said. In a separate announcement, Granada’s Granada Service and Business Communications has launched a new division for network users. The new operation, which will employ 400 local area network engineers, will offer network project services – planning and design, implementation, project management, product supply and installation, a hotline support service, and network management services – consultancy, capacity and contingency planning, network auditing and health checks, remote and on-site network monitoring and management, it reports.
Content from our partners
