Investment: One veteran's snappy return to leisure trade

No Pain, No Gain: Our Man's Portfolio
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The Independent Online
BACKING A tried and tested professional is often a rewarding investment policy. Springwood may still be an obscure leisure group but it is growing quickly and the man putting together the pieces has done it all before - twice.

Adam Page has spent a lifetime in the leisure industry. He created a discotheque chain he sold to Whitbread; then descended on Midsummer Inns, which he turned into a broadly based leisure group before, in controversial circumstances, selling to European Leisure.

After two successes many a man would have retired or at least adopted a more sedate business lifestyle - a few non- executive chairmanships, perhaps? But Mr Page bankrolled a new leisure venture and was happy to run the show on a day-to-day basis.

Early progress was predictably slow. And with an eye on speeding things Mr Page cast around for a quoted vehicle, eventually alighting on a sleepy timber merchant, J O Walker. Last year the timber side was taken out of Springwood by interests related to Mr Page with some pounds 5m going into the leisure operations. Since then expansion has gathered pace. Three centres were opened in the second half of last year and earlier this year three acquired from the Rank leisure group. More buys are thought to be in the pipeline.

Springwood now has about 20 centres, often under the Zanzibar banner. The focus is on venues accommodating up to 2,500 people; they incorporate at least one large bar, live music, dancing, a nightclub and a restaurant.

The target market is much broader than that of many rivals. Springwood tolerates even customers facing their half-century.

The leisure market is growing again and well-run chains, such as Northern Leisure and Springwood, are prospering. The millennium celebrations could provide a huge boost.

Springwood has the advantages of low borrowings, gearing at the year end was 28 per cent, and most of its properties are freehold. Profits last year, after a loss on the timber sale, were pounds 1.4m. Nigel Popham, at small company stockbroker Teather & Greenwood, is looking for pounds 2.5m this year; then pounds 4m. He guess-estimates profits for 2001 - settling for pounds 5m, but such a prediction could, of course, be hopelessly overtaken by expansion.

The shares at 131.5p are on 12.5 times this year's earnings and are an obvious addition to the no pain, no gain portfolio. In the past 12 months they have been as high as 151.5p and as low as 64p.

Mr Page, with almost 40 per cent of the capital, is not averse to a rewarding takeover bid. His first quoted venture was Midsummer Inns. It was born as the commercial arm of the Camra traditional beer pressure group. Although Camra has been a successful consumer pressure group it was not too hot when it came to the sobering business of actually running pubs. Mr. Page used the company as a platform for a broad leisure build- up.

With some leading night club players, such as Rank and First Leisure, cutting back on their chains there is every chance gems will fall into the Page lap. No doubt he is monitoring carefully the merger between Allied Leisure, a bowling alley and Burger King chain, and his old sparring partner European Leisure, which acquired Midsummer after Mr Page agreed a deal then changed his mind.

The Allied/Euro combination has indicated Euro's discotheques and nightclubs, some dating back to the old Midsummer group, may not have much of a future in the enlarged group and could be put up for sale.