Despite a flat performance at Granada Group Plc’s Computer Services division, the leisure and television company is starting to experience concrete growth after two years of heavy cost-cutting. In line with analysts’ expectations, interim pre-tax profits rose 71.5% to UKP68.1m, although turnover was flat at UKP640.2m. Operating profit at the London-based group also increased 16.5% to UKP82.4m, reflecting margin improvements especially at the television and leisure businesses. Although Granada’s acquisition in the first half of catering and laundering firm, Sutcliffe, cost it UKP360m, which is anticipated to push gearing up to 80% by the end of 1993, chief executive, Gerry Robinson said he expects the purchase to significantly boost earnings by next year. And he anticipates the company will be cash again position by 1997. Without the Sutcliffe purchase, gearing was estimated to be about 22%. The board is recommending an interim dividend of 3.03 pence, a 10% rise on 1992. Despite the good news elsewhere in the group, third party maintenance provider, Granada Computer Services failed to see any real growth. According to chairman Alex Bernstein, it has taken longer than expected to secure the large contracts the business is targetting, particularly as in the current environment customers are delaying making decisions. Still, he said, a significant level of contracts were renewed this year, and the division has won sizable new business with Allied Irish Bank and American Airlines, although no details were available. And last year’s slim-lining measures have shown through in a further improvement in operating margin over the same period last year, he added. Operating profit rose 8.1% to UKP4m, despite a 1% drop in turnover to UKP76.3m. Bernstein feels that overall the results reflect Granada’s strong management team and the strength and reliability of our portfolio of businesses -profit growth, he said was achieved without any apparent improvement in consumer spending.
