Derek Pain: Essenden back and I'm hoping for same result

No Pain, No Gain

I have, as indicated last week, enlisted another addition to the no pain, no gain portfolio. Little-known Essenden, the latest recruit, has the added distinction of being offered the chance of a repeat performance. It has been in the wars during recent years, but is now showing signs that it has at last got its act together.

Once known as Allied Leisure and running bars, fast-food restaurants and tenpin bowling alleys, it was the subject of a controversial takeover bid and then, as Georgica, concentrated on tenpin bowling and snooker centres. It was as the Georgica incarnation that it joined the portfolio in 2005. The shares were sold, at a handsome profit, when the group started talking about splitting into two.

Essenden took on the tenpin bowling operation. I had already sold because a demerger of any sort complicates the portfolio’s structure. Each investment, for simplicity’s sake, is confined to a £5,000 outlay. To retain that level would entail topping up two shareholdings, which could be an unrewarding exercise. Far better, I feel, to sell at a profit. However, my sale was unnecessary as the snooker business was sold for £34.9m with Essenden, now with 33 tenpin centres, soldiering on as a quoted company.

Still, dumping the shares turned out to be the right decision. Tenpin bowling (and the snooker side) failed to thrive after going their separate ways. It could be argued that Essenden’s shares were the equivalent of some 800p some years ago. Nowadays they are 24p after falling into the penny-dreadful category.

Although the price has slumped, calculating the extent of the fall is not straightforward. Not only is the tenpin/snooker split a major influence, but Essenden has gone down the route of dividing its shareholders’ interests into equity and loan notes. The notes, all 21.4 million of them, are traded on the fringe ISDX (formerly Plus) market at around 31.5p. They once approached their par value of 100p.

The group’s revival stems from the appearance as chief executive of Nick Basing. He joined in 2009 and set about reorganising the business. Slowly the seemingly perennial dark days were replaced by growing optimism. In its last full year a pretax profit was achieved, only to be annihilated by tax charges. In the first half of the current year a £780,000 pre-tax profit, with £535,000 left after the Exchequer take, was booked. Mr Basing, who formerly ran upmarket restaurant chains, unloaded some properties and reshaped and improved the remaining sites.

Leisure is a tough, hard business, particularly in these cash-conscious days. But he is confident. While acknowledging the difficulties ahead, Mr Basing says: “This is now a fit and healthy company.”

Essenden has some significant shareholders. Biggest, with 29.9 per cent, is North Atlantic Value, hailing from the Christopher Mills investment stable; Trefick, the Isle of Man active investment fund, where the veteran businessman Jack Petchey is the major influence, has 19.4 per cent, and old-established Schroder’s sits on a 14.7 per cent stake.

Shares of last week’s recruit, Findel, enjoyed a rousing time, moving from 7.1p a share when I penned my comments to 9p before publication. I’m sorry readers were unable to buy at the same level as the portfolio but the shares (as I write they are a little below 9p) remain, in my view, a buy.

Finally, Mears. The support services group has issued an upbeat trading statement and cemented its role as the major social-housing maintenance group by buying, for £24m, a smaller rival, Morrison Facilities Services. Stockbroker N+1 Singer is impressed by the deal, suggesting that the Mears management will quickly improve the lot of loss-making Morrison. The broker has lifted its target price from 345p to 390p. Should the shares hit Singer’s 390p – they are around 309p – it would represent a new peak. Since the company floated on the stock market in the 1990s at 10p, the best level is 385p. The portfolio has already enjoyed one Mears windfall – buying at 23p and selling at 84p.

It returned to the stock, investing at 272p in 2008. So another successful run would be welcome. Of course, the same sentiment applies to Essenden, my other second-time-around constituent.

yourmoney@independent.co.uk

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
  • Get to the point
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

    Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

    £24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Business Analyst - Financial Services - City, London

    £50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

    SThree: Trainee Recruitment Consultant

    £18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

    SThree: Trainee Recruitment Consultant

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

    Day In a Page

    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
    Public relations as 'art'? Surely not

    Confessions of a former PR man

    The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
    Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

    Bill Granger's luxurious sweet treats

    Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
    London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

    The mother of all goodbyes

    Paula Radcliffe's farewell to the London Marathon will be a family affair
    Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

    Steven Naismith: 'We know we must do better'

    The Everton forward explains the reasons behind club's decline this season
    Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

    Michael Calvin's Last Word

    Praise to Wenger for having the courage of his convictions