Bowling-to-snooker hall group Georgica today put into motion plans to dispose of its loss-making Allied Leisure business.
The London-based company is offering to transfer its stake in the Allied operation to landlords in return for reduced rental claims.
Georgica, which also owns Rileys snooker and pool halls, warned a failure to reach agreement would lead to it halting financial support for Allied – currently at “unacceptable” levels.
Uncertainty is also hanging over the future of the 12 Megabowl bowling centres as high rental costs have lead managers to review its place within the group.
The move to dispose of Allied Leisure comes in spite of an improved performance in the division, with operating losses lowered to £3.1m for the year to 28 December from £4m in 2002.
The Allied portfolio of 33 franchised Burger King restaurants, nine 10-pin bowling centres and seven pubs and nightclubs are poorly located and in a state of disrepair, Georgica said.
Agreements clinched with six landlords in January last year had reduced annual rents and property costs by £2.3m but Allied remained the tenant of several unlettable properties.
Chairman Don Hanson said the disposal of Allied Leisure would “reduce debt, reduce complexity and improve our financial results”.
Shares in Georgica climbed 4% afterwards.
Georgica, which was set up by leisure entrepreneur Nicholas Oppenheim to buy Allied Leisure four years ago, cut pre-tax losses to £7.5m during the year from £11.2m and forecast a stronger performance in 2004.
Renegotiated supply contracts have generated annual savings of more than £1m at Megabowl, but Hanson said more agreements were needed or it may be forced out of the group.
New management has been appointed and a revised pricing policy has been introduced, while the head office of its bowling arm is being relocated from Leicestershire to Northampton.
In addition, refurbishment of its 38 10-pin businesses will begin soon while a continual improvement in its operating performance was also expected.
There was better news at the 154-strong chain of Rileys snooker halls with same-outlet sales rising 4.1% during 2003 and 9.5% since the beginning of the new financial year.
The strong trading performance was based on better operational management and an ongoing programme to renovate properties, many of which have not been revamped for 15 years.
The group revealed plans to refurbish 44 outlets this year as sales at the new-format Rileys improved 19.3% during 2003.
Georgica said it intends to recommend a dividend or launch a share buyback scheme later in the year “should trading continue at present levels”.
References: EGi News 15/03/04
