Smaller Companies: Wembley supporters thin on the ground

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The Independent Online
WEMBLEY was yesterday packed with Sheffield Wednesday and Arsenal supporters for the Coca-Cola cup final. Unfortunately the same cannot be said about the size of the company's own following in the City.

Few analysts research the company, and those who do have come up with a band of forecasts for this Thursday's full-year results announcement as wide as the hallowed turf; from breakeven to pounds 4.5m pre-tax to be precise.

The only directional certainty for holders of the shares since the beginning of 1989 has been downwards - from 139p to less than 20p.

Failure this year to make some of the leisure sector's prime assets yield a good return will surely bury any remaining goodwill afforded to the incumbent management.

The company has had more than a fair hearing. For too long it has failed to recognise just how exposed it has been to discretionary spending.

Not only is there no guarantee that pop stars will pull in the crowds at concerts, but there is no rule that says that those who turn up will buy profitable goodies such as programmes, scarves and hot-dogs.

There is no art form to forecasting trading numbers for Wembley - it is a guessing game. An analysis of the company's published statements on trading shows why.

On 12 April 1991 Wembley reported a rise in pre-tax profits for 1990 from pounds 11.2m to pounds 13.2m.

Despite a fall in the second half, the accompanying press release said: 'The strong performance of the Wembley complex reflects the significant benefits of capital expenditure programmes in recent years. The underlying profitability, unique opportunities and net asset value of these businesses give the board confidence.' The Gulf war and recession were not mentioned.

Five months later on 27 September, Wembley announced that 1991 first-half profits had crashed from pounds 15.5m to pounds 709,000.

Sir Brian Wolfson, chairman, said: 'The short-term outlook shows little sign of improvement in 1991, but looking forward to 1992, there is strong evidence signifying a substantial upturn in performance.'

Four months later on 24 January 1992, Wembley made a pounds 37m rights issue, conceded that the Gulf war had affected business and estimated that 1991 would show a loss of up to pounds 8.5m.

The actual result was an pounds 8.4m loss.

September 1992: half-year results show a bounce in pre-tax profits from pounds 709,000 to pounds 2.5m. However, an unusual cautionary stance on trading prospects and a savage cut in the interim dividend from 0.9p to 0.2p caught investors by surprise. The shares fell 7p to 18p.

Four months later in January 1993 the company warned that analysts' profit forecast for the previous year's trading were too optimistic. Second-half results for 1992 were likely to be worse that the pounds 2.5m profit achieved in the first half.

Investors who forked out 30p a share for 1992's rights issue can only feel aggrieved. And it will be a long time before they hear the famous Wembley roar.

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