No Pain, No Gain: In World Cup year, five-a-side is top of the league

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The Independent Online

Five-a-side football is becoming a real money-spinner. While a great many members of the various professional leagues struggle to make ends meet, two quoted companies are displaying the sort of off-the-pitch skills that elude so many famous - and not so famous - football clubs.

Goals Soccer Centres and Powerleague, each running five-a-side venues, are achieving outstanding profits progress. Their financial performances must make them the envy of the near-bankrupt constituents of the professional game.

Naturally, their shares reflect their success. I am particularly pleased with the exceptional performance of GSC, recruited to the No Pain, No Gain portfolio a year ago. The shares had already enjoyed a strong run when I descended on them. I was hesitant about buying, wondering whether I had left it too late; they had arrived on the market at 62p in December 2004. By the time I became aware of them, they looked to be ahead of the game. But, gritting my teeth, I splashed out 125.5p a time. After annual results figures announced last week, they are 239p. And, on normal valuations, they are now on an even more exotic rating.

However, GSC, the creation of managing director Keith Rogers, has clearly established a winning formula and I'm happy to stick with it. Pre-tax profits - still by far the best barometer of achievement - advanced a remarkable 355 per cent to £2.8m. Unlike many young, fast-growing companies, GSC is confident enough to join the dividend list, paying a maiden 0.5p a share. Profits this year, stockbroker WH Ireland estimates, should hit £5.2m; £6.9m is possible next time.

The £2.8m out-turn should not have come as a surprise to the stock market; after all, when I alighted on the shares the projected year's result was £2.9m. And Ireland's £5.2m estimate is not far ahead of the figure floating around a year ago.

So what prompts the share strength? There are several factors. One is the group's progress in its first year of quoted life, which confirms its outstanding growth potential. Another is the 2006 World Cup in Germany; it should increase five-a-side interest. And there are partnership deals signed with Umbro, the sports kit group, and sports drink Powerade. More such liaisons are expected.

I've heard no takeover rumours, but, in these hectic days of corporate activity, I would not be surprised if some predator is hovering. Five-a-side football would certainly make an attractive addition to many leisure groups. Whitbread, for example, could summon up interest. So could a cash-rich private equity group. GSC has 18 centres and a further nine or so in sight, including a possible venue at Regent's Park in London.

GSC's shares were floated a few months ahead of Powerleague, a company where Rogers was one of the early players. Although Powerleague has more centres (32 with five planned), GSC has the larger capitalisation; £100m to £65m.

My success with GSC has, however, been nullified by the performance of Access Intelligence, an online support services group. I paid 9p for the shares; they are now 6.5p. But I am staying on board; it is a promising enterprise. And I believe it will eventually deliver. The year's results were not too bad, although below my expectations. I'd anticipated a "true" pre-tax profit. But the ubiquitous goodwill amortisation charge (here, £185,000) had to be logged in, and a £175,000 "profit" became a £10,000 loss.

Still, the figures represent a sharp improvement on the previous year. And progress is likely to continue. The company's City adviser, Corporate Synergy, is looking for profits a little above £600,000 this year, with £940,000 likely next. If it is on target, the shares are cheap. Certainly one of the directors, Colin Davies, thinks they are worth picking up - he paid 8p a time to lift his interest to 4 per cent.

Access put through two acquisitions last year and I would not be surprised if more were clinched. It is a lean, mean tiddler with a head-office staff of just four and a capitalisation of less than £4m.

Rentokil Initial, one of my two Footsie constituents, continues to slim. It has sold its security guard operations in this country and in Canada for £105m. I think Rentokil achieved a good price for what are low-yielding functions.

Since Doug Flynn became chief executive last year, it has sold other bits and pieces and is indulging in a major reorganisation. But with dividends capped, investors have yet to be lured by its new trim shape.

cash@independent.co.uk

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