Global still has look of winner despite setback

During my three-week absence, the 16 constituents of the no-pain, no-gain portfolio have turned in a relatively encouraging performance, although the stock market has failed lamentably to offer much Christmas cheer.

During my three-week absence, the 16 constituents of the no-pain, no-gain portfolio have turned in a relatively encouraging performance, although the stock market has failed lamentably to offer much Christmas cheer.

The dreaded profit warning has, I'm afraid, devastated one of our once-winning shares and some other constituents, perhaps not unexpectedly, produced disappointing profits while I was enjoying the Lanzarote sunshine.

But with only one of our winners becoming a loser, the portfolio remains comfortably in the black.

Global, the food group, is the casualty. The shares arrived at 20p in May last year and touched 33p earlier this year. Evidence that margins were under pressure emerged with the yearly figures, and this month came the warning that profits would be below the expected £8m. The shares are now bumping along at 15p.

For the time being I intend to retain Global's portfolio membership. Until this month's hiccup it had performed well and seemed likely to emerge as a powerful food group. There would appear to be a good chance the setback is of a temporary nature and the group could soon rediscover its appetite for growth. If, however, it has lost its way - and that is always the danger when a hitherto successful management stumbles - then the shares will be given the old heave-ho.

Lynx, Merrydown and Stagecoach have also failed to impress. Poor figures had already been signalled by Lynx, a computer group. In the event, the £7.5m against £9.5m was not too bad although it was a long way below the sort of figure the stock market had once expected. The group intends to split itself into two although just how this will be achieved has not been disclosed. The shares are 90p against the 216.5p at which they joined the portfolio. Merrydown, a cider maker, rolled out modest interim profits. It has clearly recovered from the disasters of a few years ago, although Christmas trading is crucial to its current year's performance.

Stagecoach suffered a 29 per cent interim profits fall, largely on the back of bus problems in this country and America. Since then it has been hit by the rail turmoil. Quite clearly the group will experience a wretched year. But when I tipped the shares I was looking for a recovery and did not expect short-term success, although there is always the hope of a management buyout. The price is 57p, against the 80p I paid.

It is, of course, not all gloom. Safeway, the supermarket chain, increased interim profits by 10 per cent to £166m - a performance that ensured its return to the Footsie.

And City of London, the investment and public relations group, lifted half-year profits 11.5 per cent to £380,000 and there are hopes at least one of its three high-risk, hi-tech investments, Direct Broadcasting Corporation, will be floated on AIM next year. The group's internet interests continue to enhance the group's appeal. The public relations business and the investment portfolio give the group the distinction of merging the possible and still distant rewards of the internet with the ability to pay increased dividends.

Weeks, an engineering consultancy, enjoyed an even more impressive interim profits gain - 31 per cent to £630,000. The group is scoring from increased environmental legislation and is also one of the few beneficiaries of the erratic weather.

Inter Link Foods is another winner to be in action. It is buying cake maker Hepworth & Whittles for £4m, mostly in loan notes but including some cash and shares. Inter Link is also raising £5.8m through a placing and open offer at 265p a share and expects to spend about £2.8m of the cash being raised on acquisitions.

The group has displayed an ability to turn round troubled companies and has an option to buy William Lusty, a once heavily loss-making but now profitable group. But Hepworth & Whittles is a successful business, making adjusted profits of just over £600,000 in its last financial year.

Finally, Allied Domecq. The drinks group was one of the portfolio's first recruits and recently produced a splendid set of figures. However, has it caught the stock market on the hop by bowing out of the auction for the Seagram drinks portfolio? It's a brave move as the Seagram spirits cabinet was seen as a once-in-a-lifetime opportunity for Allied to catch up with industry giant Diageo. But Allied has already prised two champagne brands from Seagram and has high hopes of collecting its Captain Morgan rum. It could, therefore, enjoy a considerable consolation prize and avoid what the stock market feared most - overpaying.