No quick fix for First Leisure

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Michael Grade has wasted no time in making his presence felt at the head of First Leisure, the bingo to nightclub business founded by his uncle, Lord Delfont. Heads have already begun to roll since he was appointed executive chairman last month. The top four executives at its ailing bingo business have been given their marching orders. Nick Tamblyn, the board member responsible for the bingo division, is also on his way out.

This management upheaval, together with the undisclosed pay-off for former chief executive John Conlan, who resigned earlier this year to make way for Mr Grade, is likely to cost First Leisure pounds 2.4m.

Mr Grade's reforms have not come a moment too soon. First Leisure has clearly lost its way in recent years. Pre-tax profits for the half-year to April fell to pounds 17.2m from pounds 18.1m before. The main culprit was the bingo division, which made a loss of pounds 1.3m. Like-for-like sales at the Ritz and Riva bingo hall chains have slumped an alarming 25 per cent.

Mr Grade hopes that the new bingo management, poached from Rank, will be able to turn the business around by paying out more money in prizes, improving the facilities on offer and splashing out more on marketing. But there is no quick fix. The business will probably lose another pounds 1.3m in the second half.

Elsewhere, prospects for the health club operation look encouraging, even if last month it bought the upmarket Riverside health and fitness chain for what looks a full price of pounds 61m. Mr Grade plans to roll out further clubs around the country over the next few years.

First Leisure's other divisions, including nightclubs, bars and leisure attractions such as the Blackpool Tower, are showing steady but hardly spectacular growth. BZW forecasts ful- year profits of pounds 42.6m, putting the shares, down 21p to 315p, on a prospective multiple of 17. Mr Grade will need all his showbiz flair to turn First Leisure into a go-go leisure stock. Until he can demonstrate some real progress, the shares look high enough.