Derek Pain: 'You can't go far wrong with cakes and beer in hard times'

Patisserie and Marston's have boosted the No Pain, No Gain portfolio's profits

Two constituents of the No Pain, No Gain portfolio have hit the profits jackpot. One is a new boy, recruited this year; the other an old timer, a long- standing member.

Patisserie, a relatively young company, arrived in May, whereas Marston's, which can trace its lineage back to 1834, has been around for six years.

Both shares are above my buying price. The cake shop and café chain was purchased at 285.8p, and brewer Marston's at 95p. As I write Patisserie, mainly known for its Patisserie Valerie brand, is standing at 336p and the brewer, famed for such bitters as Pedigree and Brakspear, at 172p.

Serial entrepreneur Luke Johnson runs Patisserie and is a major shareholder. Earlier this year the company, floated at 170p a pop, promised to join the dividend list. It has done so with a 1.67p-a-share maiden distribution.

Pre-tax profits emerged at £14.6m, up 40 per cent. Revenue, helped by afternoon teas and personalised and fancy cakes, was up 20 per cent to £91.9m. The group, which now has 166 shops, opened 26 and plans a further 20 more in its current year.

Marston's, too, is on the expansion trail. It opened 25 pub/restaurants in its past year and plans a further 22 this year, including five accommodation lodges. The group has transformed its pub estate in recent years.

Its chain has been cut from around the 2,200 mark to 1,567, with pub grub much to the fore. The pubs ditched have in the main been low-barrel outlets but the group has retained its more promising pubs with licensees offered leases and franchises.

Pub/restaurants became the theme around the time I alighted on the shares. Since then, 134 of these hostelries have been built.

There are high hopes that the group's upsurge will continue into the current year. In the second half of the year revenue jumped considerably, helped by the Thwaites brewing acquisition.

In the year, pre-tax profits advanced 10 per cent to £91.5m. Final dividend is up 4.7 per cent to 4.5p a share, making 7p for the year.

Experienced analyst Douglas Jack at stockbroker Numis retains his 180p target price and believes the shares deserve an "add" rating.

Both Patisserie and Marston's exude confidence. Mr Johnson says: "We are well positioned for future organic growth and acquisitions."

Ralph Findlay, Marston's chief executive, observes: "At this early stage of the current year, trading has begun well and we look forward to building on this momentum ... to deliver another year of good progress."

A maiden dividend and an increased payment from two portfolio constituents may contrast with my comments last week about the collapse of dividend cover and the threat to future payments.

I remain worried about the overall level of dividends but cakes and beer obviously provide solace in these difficult times. And I think the dividend-paying portfolio members should continue to prosper.

The search for another candidate to take the portfolio's strength from "unlucky thirteen" continues.

As I mentioned last week, dividends are not a major concern to me. I would like to spread the portfolio's interests, which has ruled out a number of candidates such as brewer Greene King.

Still, I may settle for a company that rivals one of the existing firms rather than venture into new territory just for the sake of it.