Profits beat every forecast in the Square Mile. The group has recovered more quickly than the most optimistic analyst expected. Eighteen months ago it was swamped with debt, saddled with a disastrous computer services arm, had more than pounds 100m at risk in satellite broadcasting, and faced the alarming possibility of losing its TV franchise in the North-west.
Now - a pounds 163m rights issue and a new chief executive, Gerry Robinson, later - gearing is down from 50 to 39 per cent and falling fast, the computer services arm is in profit, and the BSkyB stake could prove to be a big moneyspinner. And Granada TV retained its franchise for a song.
Fully diluted earnings per share grew by 92 per cent in the year to 26 September. The final dividend was lifted from 4.5p to 4.95p, making a total of 7.7p, up 10 per cent. Interest and dividend cover have both more than doubled. All this without any help from the economy, as the chairman, Alex Bernstein, was quick to point out.
The shares rose 25p to 334p yesterday. Shareholders who took up their rights last year at 140p must wonder whether now is a good time to bank some profit. Every good run eventually comes to an end, as Terry - now back in jail - knows to his cost. There are a few worries ahead. Granada could forgo more than pounds 20m if it loses its VAT battle with Customs and Excise. The core TV rental business, which still accounts for more than half of operating profits, is mature.
Those caveats aside, however, Granada still looks appealing. Rental is not moribund because of massive sales of satellite subscriptions, insurance and other peripheral lines. TV could yield substantial cost savings from production and sales joint ventures. Programme sponsorship is another opportunity barely exploited: Coronation Street alone could command pounds 15m. Higher margins can be squeezed from motorway service stations.
The group sits on a prospective multiple of less than 15 times earnings, assuming pre-tax profits of pounds 153m this year. That is cheap compared with several leisure operators . Buy.