Allied Leisure to tighten payouts

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ALLIED Leisure is changing its dividend policy, to ensure that future payments are covered at least twice by earnings per share, writes John Shepherd.

The tenpin bowling and nightclub group yesterday honoured its promise of a maintained final dividend of 3.25p, despite having to dip into reserves to meet the payment.

Results for the year to 16 July showed a drop in pre-tax profits from pounds 3.1m to pounds 2.2m, reflecting lower attendances, a fall in spend per head and discounting on admission charges to nightclubs.

Richard Carr, chairman, said there was still no sign of any recovery, and 'currently the board can detect no increase in consumer confidence'.

The pre-tax profits were erased by a full extraordinary pounds 3m provision for closure of Allied's six theme bars. The retained loss was pounds 2.9m, against a positive pounds 959,000 the previous year.

Earnings per share, before the extraordinary charge, fell from 12.2p to 5.26p, offering dividend cover of just 1.6 times.

Besides the drain on reserves, Allied's gearing was pushed from 24 to 51 per cent, mainly because of the costs of opening two Megabowls in Dundee and Preston.

Allied expects to cut gearing by using internal cash flows to repay 'a reasonable amount of term debt'. Net borrowings at the year- end were pounds 14.3m.

Capital expenditure this year will involve pounds 2.2m for the company's 15th Megabowl, sited in Coventry, and a pounds 1.5m revamp of its nightclub in Bournemouth.