Derek Pain: Comeback pays off for Findel – and me

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The Independent Online

Findel, recruited to the No Pain, No Gain portfolio a year ago, has proved a lucky strike. Enlisted at the equivalent of 142p, the shares are, as I write, around 260p – a splendid performance for what amounts to a recovery play.

The home-shopping and educational-supplies group has produced figures that indicate its comeback is on track and profits are just around the corner. A far cry, therefore, from a few years ago when it experienced a disastrous time, weighed down by debt and forced into an £81m cash call. Back then, before problems became apparent, the shares were riding at the equivalent of more than 3,000p.

In the last half year, revenue climbed from £231.7m to £243.6m with the pre-tax loss – as usual these days there is more than one figure on offer – put at just over £3m against a corresponding £11.9m. Express Gifts, a leading mail-order group, and the education business were behind the improvement. Between them they account for some 75 per cent of Findel's operations. Two minor divisions, Kleeneze and Kitbag, had tougher experiences. Sales at Kleeneze, a doorstep retailer, continued to decline although the reversal slowed and Kitbag, an online sports retailer, also lost ground.

With trading so far in the second six months described as "encouraging", further progress should be achieved. Stockbroker Cantor Fitzgerald says profits of £22.5m for the year are possible. The portfolio arrived when the shares were trading at 7p, but one of those cosmetic share consolidations lifted the buying price to 142p.

SnackTime, the vending-machine group, is the dog of the portfolio. A half-time statement failed to offer much encouragement.

Interim, pre-tax loss is £685,000 with sales down 6.6 per cent at £9.5m. Still, the deficit has been sharply reduced from last year. Even so the riddle is just how Russian billionaire Boris Belotserkovsky will react to the latest misadventure. He has rather cleverly built an 8 per cent stake without disturbing the share price too much. Will he continue to buy, mount a bid, stay in the background or retire disillusioned? Time will tell.

SnackTime has had a difficult run. Over-expansion contributed to its difficulties. The portfolio bought the shares at 119p. They are now about 13p.

Marston's, the brewer and pub owner managed to catch the stock market on the hop with its year's results. Pre-tax profits came in below expectations at £88.4m (before £18.6m of exceptional charges) although revenue improved 9 per cent to £782.9m and the year's dividend is lifted by 5 per cent to 6.4p a share. The group continues to unload unwanted pubs. A further 202 have been sold for £90m and more disposals are on the way as Marston's concentrates on its more upmarket, food-led outlets. It opened 22 newly built pub/restaurants in the year and has created more than 100 since it decided to open food/drink outlets on new sites. The shares fell more than 3 per cent on the figures but have since recovered some of the ground lost.

Finally, analysts at Barclays have provided some cheer for the portfolio's most profitable constituents. Shares of both Booker, the cash and carry chain, and leisure group Whitbread, hit new highs following bullish comments from the investment house.

Booker has been helped on its way as the target price was lifted to 187p with talk of internet developments. And Barclays continues as a fan of Whitbread, reiterating its overweight rating.

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