Derek Pain: Booker defies recession to carry on the fight

Derek Pain

Booker, the cash and carry chain, has emerged as a star of the no pain, no gain portfolio. As the nation suffered a deep and unrelenting recession, the shares have climbed from a starting point of 24.4p to top 42p this week.

True, they have been helped along by the recent rally, but their display also reflects a strong trading performance that must, at least to some extent, refute the belief that corner shops and village stores are meekly surrendering before the force of the supermarket onslaught.

Many of Booker's 400,000 customers are small shopkeepers. Others include publicans and restaurateurs – two categories that have been, supposedly, major casualties of the economic downturn.

In a trading update last week the group, which escaped the cold and often disastrous Icelandic embrace, reported interim like-for-like sales up 7.7 per cent (compared with a 1.1 per cent increase last time). Somewhat surprisingly, even tobacco sales were up – by 5.1 per cent. In addition, the group's debt is down to £4m against £28.9m.

Interim figures will appear next month and there are hopes that full year profits, expected in May, should come in at around £53m, up from £47.2m last year and £36.2m a year earlier. Not long ago, Booker was written off – said to be operating in a dying industry.

Another constituent, Lighthouse, a wealth management group, has fared less well. Although gross profit is higher, the interim pre-tax figure has slumped from £442,000 to £56,000. Still, the group is returning to the dividend list with a 0.2p-a-share distribution, which actually represents two payments – one is for last year, the other related to the half-year figures.

Amortisation charges have hit the pre-tax return, and with around £12m in the bank – and no debt – Lighthouse could, in more normal times, have expected a handsome interest contribution. But near-zero rates have put paid to any such benefit. Instead, it is just another example of the topsy-turvy world we now inhabit. The wealth group is being forced to suffer the same hardship many small savers, often pensioners, are experiencing in these straitened times.

The dividend, the promise of a "progressive" payment policy, and cautiously optimistic comments from the chairman, David Hickey, suggest the portfolio should retain the shares, despite their debilitating performance. I paid 17.5p and watched them hit 35p. As I write, the price is 10.25p.

I mentioned last week that Pubs'n'Bars, the small pub chain that joined the portfolio last year, had become even smaller. Its decision to put a subsidiary, Moorgate Taverns, into administration has reduced its estate to 94 outlets. The troubled group paid £9.3m (including debt) in shares for Moorgate nearly two years ago. The shares were priced at 29p for the deal.

It seems that Moorgate traded at a loss and the slump in pub values led to loan conditions being breached. Its chief executive, Mel Belligero, says the administration will save Pubs'n'Bars £150,000 in yearly interest charges.

As I have said before, Pubs'n'Bars is a problem share. This latest move is hardly calculated to improve shareholder sentiment. The temptation to sell the shares – now around 5p – is strong, but the portfolio has already endured so much pain from this misguided investment and the remaining cash pot is now so small that, on balance, there seems little point in bailing out. So I'm holding on, hoping Belligero and friends will eventually serve up a cheerful round.

My latest portfolio recruit, SnackTime, the snacks and chilled drinks vending machine business, was on the takeover trail only hours after I alighted on the shares, swallowing its main rival, MBM Business Systems, in a £1.5m cash transaction.

The acquisition should quickly become earnings enhancing. In the year to end March, MBM produced profits of £301,000. The merger lifts SnackTime to around 20,000 vending machine sites in this country and Eire, which has probably elevated it to market leader.

MBM operates through franchisees under the Snack in the Box framework. It was established 14 years ago.

SnackTime, now adding hot drinks to its vending range, is still hungry for deals. It is looking around in the UK and has its sights on Europe as well.

The portfolio picked up the shares at 119p and, following the MBM deal, the price rose to 125p.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Day In a Page

    Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

    Blundering Blair quits as Middle East peace envoy – only Israel will miss him

    For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
    Fifa corruption arrests: All hail the Feds for riding to football's rescue

    Fifa corruption arrests

    All hail the Feds for riding to football's rescue, says Ian Herbert
    Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

    The Kurdish enclave still resisting the tyranny of Assad and Isis

    In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
    How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

    How I survived Cambodia's Killing Fields

    Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
    Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

    How Stephen Mangan got his range

    Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
    The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

    The ZX Spectrum is back

    The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
    Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

    Even the screenwriter pours scorn on Grace of Monaco biopic

    The critics had a field day after last year's premiere, but the savaging goes on
    Menstrual Hygiene Day: The strange ideas people used to believe about periods

    Menstrual Hygiene Day: The strange ideas people once had about periods

    If one was missed, vomiting blood was seen as a viable alternative
    The best work perks: From free travel cards to making dreams come true (really)

    The quirks of work perks

    From free travel cards to making dreams come true (really)
    Is bridge the latest twee pastime to get hip?

    Is bridge becoming hip?

    The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
    Long author-lists on research papers are threatening the academic work system

    The rise of 'hyperauthorship'

    Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
    The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

    The rise of Lego Clubs

    How toys are helping children struggling with social interaction to build better relationships
    5 best running glasses

    On your marks: 5 best running glasses

    Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
    Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

    'Ben Stokes gives everything – he’s rubbing off on us all'

    Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada