No Pain, No Gain: Excellent performance fails to meet expectations

Merrydown, the little cider and adult soft drink group, this week failed to excite the stock market and, I suspect, left many shareholders a shade disappointed. True, its year's results were excellent. Well up to expectations. But an even better performance had been anticipated by some of us.

Merrydown, the little cider and adult soft drink group, this week failed to excite the stock market and, I suspect, left many shareholders a shade disappointed. True, its year's results were excellent. Well up to expectations. But an even better performance had been anticipated by some of us.

In my younger days there was a general belief that a company would top, by perhaps as much as 10 per cent, profit forecasts, particularly those made by its house stockbroker. So when, earlier this year, Merrydown said profits would exceed stock market forecasts and its own stockbroker, Teather & Greenwood, upgraded its estimate to £1.7m, I thought more than £1.8m was in the barrel.

Well, that T&G figure was uncannily accurate. Merrydown produced £1.72m. Either there was a slight sales slowdown in the dying weeks of its financial year or the old policy of underplaying scheduled results to leave "a little extra for the stock market" was forgotten. I realise my disappointment exhibits a large degree of churlishness but I think the initial reaction of the group's shares - a mere 0.5p gain to 94p - suggests my point has some merit and support. Still, I must not let my own expectations obscure what is truly a remarkable performance.

The £1.72m profit represents a cool 26 per cent advance; turnover was up 20 per cent at £20.3m, with once again the Shloer soft drink providing most of the sparkle. For a little company like Merrydown (capitalisation only £21.3m) to outpace much bigger rivals and turn Shloer into the best-selling adult soft drink in the land is a considerable achievement. To add to the celebrations the group's cider sales, which had stagnated for years, recorded a four per cent increase with its vintage brand up 10 per cent.

Merrydown has a colourful history. Three ex-prisoners of war, who got the taste for making cider and wine when they were behind barbed wire, launched the business in 1946, each investing £100. Since then the company has had its ups and downs and when the present management arrived it was, not for the first time, feeling the pinch. The chairman, Andrew Nash, and the chief executive, Nigel Freer, decided to concentrate most of their efforts on Shloer, a Swiss drink that had been around for years without attracting much interest.

They repositioned it as an adult drink and the rest, as they say, is history. Last year Shloer sales advanced 30 per cent and, with a planned baby bottle push aimed at pubs, it should make further headway this year.

Messrs Nash and Freer also avoided the worst excesses of the cider market, refusing to get drawn into some of the madcap promotions so beloved of other cider makers. But as the industry has stabilised, their low-key approach is reaping rewards and cider is no longer the poor relation of the group.

Merrydown is cash rich and will probably indulge in more share buy-backs. It is again increasing the dividend - this time by 29 per cent. The no pain, no gain portfolio recruited the shares at 35.5p. They took a time to get going, but once the success of the Nash/Freer policy became evident they have been one of my strongest performers. I am happy to stay with the shares, although I may temper my profit expectations. As Shloer continues to grow there is always the chance of takeover action. SHS, a privately owned food and drink group, has a 10.5 per cent interest.

S&U, the finance group which is now the longest-serving member of the portfolio, is going well according to a very brief statement at last week's shareholders' meeting when the chairman, Derek Coombs, said trading continued to make encouraging progress and "I remain confident for the year as a whole".

I alighted on S&U in April 1999 at 292.5p; the shares are now 522.5p. Since I recruited S&U it has encountered a few problems although the shares have, with the exception of one difficult hiccup, remained above my buying price.

There is little doubt it is a well and tightly run group. One of its main attractions is the dividend yield - a heady 5.5 per cent. The no pain, no gain portfolio has always attempted to provide a happy blend of relatively safe high-yielding shares and low or non-yielders where prospects are perceived to be encouraging. S&U, with its strong share performance, has offered the best of both worlds and I see no reason why it should not remain in the portfolio.

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

News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Bruce, left, with Cream bandmates Ginger Rogers, centre, and Eric Clapton in 1967
people
PROMOTED VIDEO
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
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

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker