Derek Pain: The high spirits have abated, but Marston's still has pedigree

Shares in Marston's, the brewer, pub owner and long- time constituent of the No Pain, No Gain portfolio, have suffered since hitting their high point.

The group has not had to issue a profit warning, as so many others have, but booze shares have not been in particularly high spirits and quite a few of them have felt the economic pinch.

Last year Marston's hit 165p. The price has since faltered, and as I write, it is down to 143p, despite quite encouraging results.

Pre-tax profits were slightly lower at £83m, due to a shorter working year and pub disposals. But a series of one off, non-cash charges, often relating to pub sales and onerous leases, left the Pedigree and Brakspear brewer nursing a £50.7m loss.

Nearly 400 pubs, mostly relatively small with few dining facilities, were sold during the year and a further 200 are due for the chop this year, leaving about 1,500 outlets.

The 100th new-build pub/restaurant was opened in September and a further 25 are due to appear this financial year.

The resultant estate will be composed mostly of managed pub-restaurants and franchised pubs – a combination that should take them out of reach of the House of Commons vote that, if it ever becomes law, will adversely influence the tenanted pub side of the industry.

Marston's range of beers did well with the Hobgoblin brand scoring during the Halloween period, lifting its year's sales by 4 per cent.

The year's dividend is increased 5 per cent to 6.7p a share and chairman Ralph Findlay is confident the group's reshaping is nearly over. He says a good start has been made to the current year and adds: "There are some signs of modest economic improvement."

Stockbroker The Share Centre is among the City fraternities saying buy.

The latest recruit to the portfolio, the aspiring restaurant chain Fulham Shore, enjoyed quite a feast after I selected the shares and wrote about the company in this column last Saturday. The difference between my 9.5p price and the Friday close of 12.125p was quite substantial. I am sorry any reader attempting to follow my guidance would have to swallow such a disadvantage.

I feel the shares – as I write, they are 14p – are still worth while, but some of their attraction has obviously been dissipated by such an advance.

Some years ago, when I descended on another restaurant group, Prezzo, the shares jumped between putting pen to paper and publication. Yet anyone who ignored the increase eventually made a substantial profit.

Last week I wondered whether the brewer Greene King was still prepared to capture another constituent, the Spirit Pub Co. My doubts stemmed from the controversial Commons vote relating to tenanted pubs. Well, it seems the deal will go ahead. Documents will be out before Christmas and the scheme of arrangement should be completed in the first half of next year.

I have already indicated that I will sell before the conclusion of a bid that is mostly in shares. I have nothing against the brewer but acceptance would jeopardise the portfolio's policy of pumping £5,000 into each constituent. With Spirit shares above 100p, the portfolio will have more than doubled its money.

With the Spirit reward, the portfolio has, despite descending on Fulham, quite a cash pile that I will use for additions. I certainly don't intend it to burn a hole in the portfolio's pocket.

yourmoney@independent.co.uk