Investment Column: Noddy could save Trocadero

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The Independent Online
CYNICAL observers suggest that Trocadero, the AIM-quoted stock which is looking for a new title, should be called "Troubled Troc", the name that seems to preface any article about the group.

Segaworld, the hi-tech amusement arcade that was meant to transform the giant leisure complex in London's West End, has flopped. Losses of pounds 31.6m last year show just how badly things have gone awry. But the figures contain a host of write-offs aimed at laying the ghost of the past, and there are signs that Trocadero is about to pull itself out of trouble.

The group's new management, led by John Conlan and Nick Tamblyn, the dynamic duo which built up First Leisure, have already started to reshape the business. Trocadero has managed to persuade its notoriously difficult Japanese partners to scrap entry fees. Next come new bars and restaurants to try and entice the millions that have traditionally hurried past the site. Segaworld will still struggle to break even this year but the reforms are working and, at the very least, the site should no longer act as a significant drain on earnings.

Segaworld's problems have also obscured the group's hidden gem. It owns the publishing and film rights to the Enid Blyton estate and has huge potential to exploit characters like Noddy and the Famous Five, a process that has only just begun.

Analysts forecast 1998 profits of pounds 3m-pounds 4m. But that figure is in itself meaningless. At the moment Trocadero is effectively a cash shell. Most of its net assets of pounds 70m, equivalent to 14p a share, are made up of money it has in the bank or due to receive from property sales. And that figure does not include the value of the Enid Blyton rights, which must be worth well in excess of the 4.75p a share that the current price of 18.75p implies. Throw in a recently acquired bar business, which has great promise, and the shares begin to look very cheap.