Derek Pain: It's getting tough, but is it time to swallow losses?

No Pain, No Gain

The no pain, no gain portfolio has endured a bleak quarter. Although its star constituent, the Booker cash and carry chain, produced another heroic display, overall "profits" fell to a little over £91,000 – one of the lowest levels since the banking disaster started to wreak havoc with the world's financial equilibrium.

The £10,000 fall that occurred in the three months is not, however, unexpected. After all, the portfolio has had to contend with some savage reverses, with Hargreaves Services, SnackTime and TEG in the firing line. In addition the portfolio lost more than half its money on the now departed Rivington Street Holdings, its only Plus player.

Shares in Rivington, which last summer topped 50p, are now limping along at a miserable 2.25p; the portfolio managed to escape at 13p. I am still trying to decide whether to swallow losses on SnackTime and TEG and I am even wondering whether it is worth hanging on to Hargreaves, for long an outstanding constituent. The shares have slumped following problems at its Maltby coal mine in Yorkshire that will hit this year's profits. Until the setback Hargreaves could do no wrong, with some stockbroker researchers bestowing a 1,500p target price on the shares. It may be an uncomfortable fact but once a stock market darling hits trouble it is extremely difficult for it to recapture former glories.

At the moment the portfolio is still nursing handsome profits on the former high flyer. The Maltby setback will not influence last year's figures, due in September. It will be interesting to discover whether, perhaps, the difficulties are less severe than earlier thought. I am in no rush to sell but I want to protect what is left of the portfolio's profit.

TEG, where takeover hopes have swirled, has successfully raised about £2m to tide it over should expected payments not materialise on time. The composting technology group, which enjoyed an oversubscription, could still deliver handsome rewards although the share price crash illustrates the stock market's highly cautious attitude.

But it is not all doom and gloom. Booker, following its proposed £140m takeover of rival Makro, has topped 90p. And Whitbread, which last week rolled out an encouraging trading statement, has once again exceeded 2,000p. The former brewer achieved a first-quarter sales advance of 13.9 per cent with its Costa Coffee division managing a remarkable upsurge.

Avation, the aircraft leasing group, also offered a high-flying trading update for the year just ended but its shares slipped a little. Chairman Jeff Chatfield says group revenue should advance some 30 per cent to about £21m, with income increasing as the leased fleet continues to grow.

It is a deal to supply aircraft to a combination of two Australian airlines, Virgin Blue and the AIM-traded Skywest, that is the main thrust. The group has already supplied six aircraft and is contracted to provide another nine, six of them in the current year. Altogether, with various packages, Avation could provide a total of 40 aircraft.

It seems likely that Avation's shares will be listed in Singapore, to run alongside the full London quotation. Such a Far East presence could, Mr Chatfield feels, encourage Asian investors to take more interest in the company. He adds to the current tax debate by pointing out that the headline rate of tax in Britain is 24 per cent against 17 per cent in Singapore, where the company is based.

Since joining the portfolio, Avation has made progress. Of course, acquiring plans is expensive – it has raised £4m through share placings in the past year – but it appears to have established a fairly lucrative formula. Pre-tax profits increased from £3.5m to £5.6m last year and the dividend lifted 66 per cent. The group controls another airborne leasing company, the AIM-traded Capital Lease Aviation, capitalised at £16m.

Avation is, I believe, the only company to move from the fringe Plus market, where it arrived at 4p, to full listing without stopping at AIM on the way. Its progress is a testimony to the value of Plus, which has been saved, after an acrimonious confrontation. The inter-dealer broker Icap splashed out £500,000 for the little stock market after initially offering just £1.