Derek Pain: SnackTime looks hungry for further growth

No Pain, No Gain

Shares of SnackTime arrived on AIM a few months before the junior market crashed. They have survived the bloodbath reasonably well and now seem set to make headway.

I have been on the trail of the little group, capitalised at around £9m, for some time and could be tempted to recruit the shares to the no pain, no gain portfolio. I will probably decide after I have seen the yearly report and accounts, which should appear early next month.

Last week the group, which supplies drink and snack vending machines to a variety of sites, produced a 64 per cent profits advance to £202,000. Sales surged from £3.8m to £6.7m.

The shares, floated in December 2007, at 144p, jumped from around 100p to 119p following the figures. They have been as low as 70p. With many AIM shares still deep in the mire such a display, although far from exciting, is quite tolerable.

SnackTime has a national spread of vending machines. They are usually situated in relatively small units, such as offices, shops and factories, which are not large enough to support catering facilities. Fire and police stations, as well as hospitals, are also targeted. Machines are loaned free with SnackTime retaining ownership.

The group generates income from the profit margins on the drinks and snacks it sells. Prices are said to be in line with those charged by many retailers, and from "contributions" from its suppliers – Mars, Britvic, PepsiCo (Walkers) and Coca-Cola. The smallest cabinet is only 10 inches deep and, therefore, easily tucked away when space is in short supply.

Its free loan policy is clearly capital intensive. A major factor in the decision to float was the stock market's cash-raising ability. The share sale raised £3m and, around the turn of the year, a further £1m was pulled in by selling shares at 90p and issuing convertible loan notes.

When it was launched in 2001 by marketing men Blair Jenkins, who is now chief executive, and Ian Forde, the commercial director, the group was privately funded. Then Elderstreet Investments, the vehicle of serial entrepreneur Michael Jackson, injected £1m before a further £1.2m was raised with Elderstreet contributing £100,000.

Jackson, a former chief of the Sage computer group, is chairman of SnackTime and has a 1.2 per cent stake. Elderstreet has around 30 per cent. He has a knack of backing small and successful companies.

Access Intelligence, a computer group that once graced the portfolio, is one that attracted him, although he arrived after the portfolio had departed. Since he took charge and conducted cash injections, as well as indulging in takeover action, Access's prospects have improved significantly.

The possibility of more cash-calls could restrain SnackTime's shares in the short term. And with directors and City institutions accounting for 85 per cent of the capital, there is not much of a free share market. With credit likely to become more easily available as the recession recedes, SnackTime could be tempted to tap the banks and avoid more share issues. And I would expect, perhaps through acquisitions, more shares to come into the public domain. The group is looking around for deals.

Although displaying understandable cautiousness – what company chief offers unbridled optimism these days? – Jenkins talks about the group achieving "significant growth" last year, and anticipates further expansion in the months ahead with the economic climate prompting more companies to adopt the vending machine route. But the recession appears to have been a factor in forcing SnackTime, based at Wokingham, Berkshire, to withdraw machines "from a larger than anticipated number of customers".

Besides growing its spread of machines the group, with five main distribution depots, is planning to introduce a system for outlets that are too small for the loan policy and is also launching hot drink facilities.

There is, as I am sure some of SnackTime's vending machine customers acknowledge, many a slip 'Twix cup and lip. And small caps are obviously more risky than blue chips. But there seems every chance that this little group has descended on a niche corner of what is a highly competitive market. There is also the possibility that its growing presence could prompt a predator to strike. Any deal, of course, would need the blessing of the board.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

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

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Audit Manager Central Functions

    To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

    Credit Risk Audit Manager

    Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week