Eyes down at First Leisure: Half-time profits improve as pounds 20m acquisition goes through

FIRST Leisure is expanding into the bingo business by paying pounds 20m for Nudge Leisure, owner of seven clubs.

The deal, completed early yesterday, capped First Leisure's interim results, which were at the top end of City expectations with pre-tax profits rising from pounds 11.67m to pounds 12.2m.

Analysts had been expecting First Leisure, which has interests in discos, ten-pin bowling, theatres and resorts, to move into bingo.

The purchase of Nudge, which operates mainly in the Midlands, has been funded by a placing of 5.65 million First Leisure shares at 353p each, which compares with yesterday's closing price of 364p, down 1p.

John Conlan, chief executive, said: 'We have had aspirations to move into bingo for some time.'

The Nudge clubs, which have an average capacity in excess of 1,000, made taxable profits of pounds 2.5m on turnover of pounds 9.6m in the year to 31 March.

Mr Conlan said Nudge would be developed 'through a process of new builds', much the same way the company has expanded its chains of bowling outlets to 24 and discos to 35.

Up to three clubs may be opened annually, entirely self-funded by the cash-generative bingo business.

Steady sales of drinks helped First Leisure to lift operating profits from discos from pounds 6.1m to pounds 7.5m in the half-year to 2 May. The company added that the increase was achieved despite competitors cutting prices, attempting to boost attendances.

'Any fool can discount,' Mr Conlan said. First Leisure had increased attendances, he said, by 'pricing for value'.

In bowling, which increased profits from pounds 7.2m to pounds 7.6m, the company has been offering all-inclusive pricing packages.

'The market for price increases is fragile,' said Mr Conlan, who remains cautious about the strength of the economic recovery.

Resorts, spearheaded by the Blackpool Tower, lifted profits from pounds 1.4m to pounds 1.67m in the seasonally unfavourable first half. Trading over the Easter and May Day bank holidays was ahead of last year.

Analysts expect First Leisure, which has raised its interim dividend from 1.88p to 2p, to make about pounds 34m for the year, up from pounds 31m, and pounds 40m in 1993/94.

(Photograph omitted)