Derek Pain: Hargreaves continues to fire on all fronts

No Pain, No Gain

Hargreaves Services, the current star of the No Pain, No Gain portfolio, seems to be thriving despite the hand-wringing gloom that has enveloped large chunks of our industrial landscape.

Chief executive Gordon Banham has completed what should be an earnings-enhancing deal and revealed that trading is running ahead of expectations. So City forecasts suggesting profits will hit £25m this year could be inaccurate. Just how well the coal-to-waste-disposal group is performing should become evident in a couple of weeks when interim figures appear.

The latest deal should help fuel profits progress. Hargreaves has borrowed £9m to buy the 50 per cent of Coal4Energy it did not already own. It set up the company, now the country's largest domestic and industrial coal supplier, with UK Coal nearly three years ago. In its last full year, Coal4Energy produced profits of £1.9m before tax and management charges. The deal should, Banham believes, have a "significant" impact on group second-half profits.

The idea is that Coal4Energy, which controls smokeless briquette maker Maxibrite, will continue to sell more than 250,000 tons a year from UK Coal, as well as Hargreaves' own production.

The portfolio descended on Hargreaves shares two years ago at 417p. They are now around 520p after topping 640p in the boom days.

Although the shares continue to perform quite well, my one other portfolio winner at the turn-of-the-year calculation has failed lamentably to hold its modest gain. blotted its copybook with a profits warning. The shares have fallen to 27p against the portfolio's 30.5p buying price.

Sales appear to be running some 3 per cent lower and the company has undertaken to pay for some of the promotional campaigns that franchisees would usually finance. Consequently, margins are under pressure. Year's profits are expected to be "slightly below" the £2.4m achieved last year. The tougher climate has encouraged researcher Hardman & Co to reduce its forecast. Against an earlier estimate of £2.3m, analyst Sonia Kaur is now looking for just over £2m in the year ending March, with a modest improvement pencilled in for next year.

Clearly, some of the small and medium-sized businesses that accommodates, through its 300 or so (mostly franchised) outlets, are feeling the recessionary pinch.

But Kaur expects dividends to increase. At its last balance-sheet date, had more than £3.5m tucked away. Remarkably in these low-interest-rate days, its shares offer a yield exceeding 10 per cent.

Still, the profit warning was not entirely devoid of encouraging developments. A presence in the US has at last been achieved, with a master franchise granted to a commercial printer in Florida. Two outlets are due to open soon and although is probably only covering its US costs at the moment, the potential is obviously considerable. However, many a British company has viewed the US as a happy stamping ground only to retire battered, bewildered and defeated. By adopting the franchise route, Printing. com should, I believe, have removed any danger of wounding losses.

The group has other, still rather modest, overseas interests. Clearly, if the domestic performance is repeated on foreign soil, the outlook would be transformed. But patience is needed – success will not appear overnight.

Pubs 'n' Bars, the little pub chain, has also rolled out a cautious statement. Its shares bump along at a sobering 3p against the 23.5p the portfolio splashed out. In the last quarter of last year, turnover fell 2.3 per cent, although Christmas trading was more cheerful. Pubs 'n' Bars is heavily borrowed, and with the booze business under intense pressure, the shares are friendless. The portfolio intends to hang on, although it could be argued I should have called time some months ago.

For the year, profits, before any special influences, could be around £500,000. At the interim stage, the dividend lapsed as the 100-strong chain strove to retain cash as the trading environment deteriorated. Pubs 'n' Bars' sinking share price – with a capitalisation of a mere £950,000 – mirrors the performance of much bigger peers, such as Punch Taverns.

Yet chairman Seamus Murphy has a defiant message. He says the group's "convivial, traditional, non-fashion-dependent pubs will prove to be a resilient business with good growth prospects over the longer term".

Luis Suarez looks towards the crowd during the 2-1 victory over England
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trade Desk Specialist (Linux, Windows, FIX, Finance, Networks)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (Linux, Windows, FIX...

    Associate CXL Consultant

    £40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

    Project Manager - ETRM/CTRM

    £70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

    C#.NET Developer

    £300 - £350 per day: Harrington Starr: C#.NET Developer C#, WPF,BLL,MVVM, SOA...

    Day In a Page

    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform