Buoyant Granada set to launch sale of motorway sites
Thursday 21 November 1996
The chain of 21 service sites could fetch about pounds 300m, and is believed to have attracted expressions of interest from petrol and food retailers, as well as brewing giant Whitbread.
The news emerged as Granada announced sharply higher pre-tax earnings for the 1995-96 fiscal year, including for the first time results from Forte, the hotels group won by Granada following a bitter pounds 3.9bn takeover battle early this year.
Profits soared 37 per cent to pounds 480m in the year ending 30 September, which included eight months of Forte earnings. Gerry Robinson, Granada's chairman, added that a mid-battle promise to enhance Forte's profitability by pounds 100m was "well on track", with pounds 40m in enhancements already made. The dividend has been set at 13p for the year, up 11 per cent.
Charles Allen, the group's chief executive, said: "These are excellent results, and they prove that we have done what we said we would do following the Forte takeover." The key moves have been to reduce overheads, restructure the hotels operations from 11 to three main units, and consolidate the catering businesses, including roadside restaurants, by introducing new menus and higher prices.
The company has also embarked on a large-scale disposals programme, aimed at reducing net debt, which stood at pounds 3.5bn at the end of the year, giving gearing of 322 per cent. Earmarked for sale, in addition to Welcome Break, are the Exclusive hotels and a stake in the Savoy Group. The first of the Exclusives, the Hyde Park, was sold for pounds 86m this week to a unit of Jardine Matheson.
Continuing operations, including the company's extensive media side, were sharply ahead year on year. Granada Media Group, which includes the two ITV licences, Granada and London Weekend Television, reported operating profits of pounds 163m, up 17 per cent. The restaurant and catering business, not counting the roadside sites of Little Chef and Happy Eater inherited from Forte, was ahead 25 per cent on a pro-forma basis. The rental operations were only 3 per cent up year on year, however, reflecting the mature nature of the business.
Despite the figures, shares in Granada dropped 10p to 882.5p yesterday, but analysts said the decline was linked to persistent rumours on the Continent about a possible takeover bid by Granada for troubled hotelier Accor. "We have not approached Accor, and have no intention to do so," Mr Allen said yesterday.
Mr Allen also said for the first time publicly that Granada had no intention of bidding for Manchester United, the Premier League football club, despite persistent rumours that Granada was among the potential predators.
"We would have no interest in such a one-off purchase. It just doesn't make any sense," Mr Allen said.
Mr Robinson conceded that the market might begin to question the "conglomerate" status of Granada, in light of recent high-profile demergers.
"Yes, you could do it. We currently have two large businesses, operating in their own right. But we have no plans to do so in the short or medium term."
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