No Pain, No Gain: City gloom casts a shadow over Lighthouse

For months, shares of Lighthouse, the financial management group, held up well, seemingly largely immune from the money crisis rocking the world. The No Pain, No Gain portfolio alighted on them at 17.5p in the summer of 2006. At one time, the price hit 35p; it then suffered a relapse. Even so, as the credit crunch continued to spread despondency, the shares bobbed around the lower 20s, suggesting that the company was performing quite well.

But uninspiring interim profits have demonstrated that even accountants are feeling the pinch. At the pre-tax level, Lighthouse produced £442,000, against £786,000. And the second six months are expected to be even more debilitating, with the stockbroker Shore Capital indicating that profits have disappeared by slashing its year's forecast from £1.5m to just £400,000.

It is not surprising, then, that the shares now reside at a rather uncomfortable 15p, putting the portfolio's holding, for the first time, in the red.

There is no doubt that Lighthouse's fading performance came as a surprise to the stock market. When the group acquired rival Sumus for £12.6m earlier this year, it accompanied the deal with a declaration of record profits. For good measure, the chairman, David Hickey, said he looked forward to reporting "further significant progress".

With near-term prospects so uninviting, there is a clear case for selling the shares. Indeed, I would not attempt to deter any investor from retiring, even if it meant chalking up a loss. But the portfolio, having lost the chance of banking profits, will hang around, if somewhat reluctantly.

Hickey does his best to put a brave face on the setback. He notes that cash balances have increased by 61 per cent to £12.3m, and that funds under advice are up 12 per cent at £6.3bn. He says the "prudent" strategy that has been introduced should "protect original trading expectations for 2009 and beyond". An interim dividend is being paid.

Still, Shore has cut its longer-term profit forecasts substantially. Next year, it anticipates £1.9m, down from £3.2m. For the following 12 months it is on £2.6m (£4.5m). The stockbroker thinks the stock is undervalued. Certainly the shares, even on revised calculations, may appear to be cheap. But I believe that they offer little short-term comfort, though the cash pile compares favourably with a capitalisation of only £19m.

From number crunching to wine making. Interim profits from English Wines Group, the Chapel Down producer, are not exactly sparkling – but neither are they flat. Adjusted pre-tax profits are up 10 per cent to £14,000; the operating loss is £21,000, a slight improvement.

EWG is the portfolio's only Plus representative. The shares were picked up at 20p and, rather like Lighthouse, went on to record a cheerful gain before City gloom cut the price to 17.5p. Still, I regard EWG as very much a long-term investment.

In its last full year, it achieved profits of £86,000 from sales of £2.5m. Interim turnover was up slightly at £1.1m. Internet tipster Tom Winnifrith expects this year's profits to emerge at around £200,000. There are hopes that sales will grow to more than £5m in a few years, giving the only English wine maker with a City share presence a profits ferment in the region of £1m.

Its backers include the serial investor Nigel Wray and the hotelier Richard Balfour-Lynn. Directors have almost 70 per cent of the capital.

The Plus market, of course, could not expect to be immune from the devastation that has occurred on the London Stock Exchange and its junior off-shoot, AIM – though it could be argued that, on the whole, its constituents have performed relatively well. Plus is now quite entangled with shares that are traded on the main market and AIM. It has become an increasingly active alternative to the LSE, particularly on the small-cap front. Its expansion has added to the pressure that the traditional exchange is experiencing from upstart share markets.

LSE shares are well down from their peak, hovering around 800p (providing a £2.2bn capitalisation) against what was a high of near 2,000p. The AIM-traded Plus is also in the doldrums at 7.5p, a modest £22m capitalisation. The five-year high is 39p. In the half-year ending June, Plus lost £2.4m compared with a £3m deficit in the previous full year.

Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
peopleJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Finacial products from our partners
Property search
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

    Technical BA - Banking - Bristol - £400pd

    £400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

    Account Management Strategy Manager

    £38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

    Business Analyst Consultant (Financial Services)

    £60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

    £60000 per annum: Harrington Starr: A leading provider in investment managemen...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice