No Pain No Gain: SnackTime keeps eating into profits


Are we set for another share shopping spree in the run up to Christmas? For a variety of reasons the stock market invariably indulges in what many regard as a seasonal pantomime that sends prices surging ahead. Even after the festivities, the round of new year tips often adds a little momentum to what is usually a cheerful atmosphere.

In the past 30 years or so there have been only around half-a-dozen occasions when some form of Santa boom failed to materialise as investors felt buffeted by the then prevailing economic or political winds. I don’t expect the world’s present recession to have a negative impact this year.

Why should Christmas offer such investment joys? One obvious reason is the festive holiday itself. In the run-up, many top people are away from their desks, leaving what has been described as skeleton staffs minding the shops. And trading is often thin with much of it on the buy side.

But other factors come into play. Window dressing by fund managers chasing bonuses is one; another is that, with so many leading dealers away, the subordinates left in charge are much more likely to run with a cheerful herd.

Next week I plan to produce the quarterly update on the No Pain, No Gain portfolio. If we are to get a Christmas uplift it should then be stirring and that should help my calculations. Mind you, some recent trading figures from a quartet of constituents have caused some concern.

Marston’s, the brewer and pub owner, is excused any criticism. On the surface, yearly figures look horrendous but such an impression is down to the vagaries – not to say stupidities – of our accounting system. The group incurred a statutory loss of £223m, largely the result of a property revaluation. Yet revenue advanced 5.5 per cent, underlying pre-tax profits rose 9.2 per cent to £87.8m and dividends were lifted 5 per cent. Not surprisingly Marston’s shares, as I write, are at their highest for more than three years, helping the portfolio’s profits.

SnackTime, the vending machine group, is the one letting the side down. Half-year turnover fell 13 per cent and the pre-tax loss, inflated by exceptional charges, reached £1.6m against a modest profit last time. The group is busy reorganising and cost cutting. It hopes to reduce the loss “significantly” in the second six months. The shares, at 14p, capitalise the company at a mere £2.3m. The portfolio paid 119p a share. I am hanging on – hoping for a recovery. Anyway it is too late to dump the shares as the portfolio’s initial £5,000 outlay has already almost disappeared.

My hopes that Findel’s prospects are improving were confirmed by interim figures. The half-year loss was reduced and some sections of the business are clearly doing well although the Kleeneze door-to-door operation is feeling the pinch. Group sales are running 7.7 per cent ahead of last year. The shares have lost some of their exuberance at around 7.5p.

Shares of Aviation, the aircraft leasing group, have also given up some altitude. It has taken delivery of another new ATR 72 aircraft – its ninth – which is joining the group’s leased fleet. But profit expectations have been pulled back after the sale of a subsidiary that had an impact on the last set of profits which, at £5.2m, were much lower than expected. Stockbroker WH Ireland now expects a performance for the present year of £5.9m. For next year, the broker is looking for around £7.5m which is near the result some envisaged for the year just gone.

Elsewhere, TEG, the green-technology enterprise, has started ground work at its important £21m waste-disposal unit in Dagenham, East London. The plant is expected to be operational in early 2014. The group’s shares hover a little below 5p against an 8p buying price. TEG will run the venture in which it has a 24.5 per cent stake.

Finally, Whitbread leisure group, one of the portfolio’s Footsie stocks. Stockbroker Numis has upgraded the shares from hold to buy and lifted its target price to 2650p. The broker is impressed with the Costa Coffee offshoot and believes it will benefit from the adverse publicity and controversy surrounding the tax position of archrival Starbucks. The portfolio paid 1105p. Price is now around 2400p.