Derek Pain: Raise a glass to Booker's elevation from AIM
No Pain, No Gain
Saturday 13 June 2009
Within the next few weeks Booker, the cash-and-carry chain, is due to graduate from AIM, the junior share market, to full listing. Elevation to the top tier follows the melting of its Icelandic connections and the appearance of a quite scintillating set of profits.
The shares were recruited to the no pain, no gain portfolio at 24.5p a year ago. The price is now around 35p, capitalising the group at £521m.
The graduation will mean that three portfolio constituents are fully listed. Mears, the support services group, made the transition last year. Whitbread, embracing budget hotels, coffee shops and pub/restaurants, is a long-standing member of the upper class.
Booker arrived on AIM two years ago when it reversed into a largely internet wholesaler. In an earlier incarnation it was fully quoted. It then became a victim of the Icelandic marauders who, before the island's banking implosion, seemed intent on dominating the UK's retail fraternity.
What appears to be the last lingering link with the Nordic invaders – a 22 per cent shareholding – has been placed, widening Booker's institutional support. The move upmarket should further strengthen the group's institutional involvement as AIM is out of bounds to many City fund managers. Others are just reluctant to get involved in the more risky junior market.
The figures and prospects should endear it to all shareholders, big and small. At the pre-tax level, profits rose 30 per cent to £47.2m and debt was cut 47 per cent to £24.9m. The dividend was also increased. Profits should comfortably exceed £50m in the current year.
When chief executive Charles Wilson, formerly of Marks & Spencer, took charge, Booker was a rather dull cash-and-carry operator, supplying corner shops, many wilting under pressure from giant supermarkets. It seemed that much of its future was already behind it. But Wilson has broadened the group's appeal. The C&C business has been reinvigorated and internet sales have soared. Its customer spread has widened significantly with caterers playing an increasingly important role. And its distribution division is recruiting more shops; even the prison service has become a customer. Pubs, accounting for some 3,000 kegs of beer a week, are also on board.
The first overseas C&C is due to open in Mumbai later this year with many of Booker's customers advocating the Indian excursion.
I am pleased to see that shares of another portfolio constituent, Nighthawk Energy, the oil and gas group, appear to have settled after their crash last week. I repeat that the sale of minority stakes in its Jolly Ranch field was an excellent deal and I regard the shares, around 46p at the time of writing, as cheap. Indeed, last week's assessment report on two other Nighthawk developments prompted stockbroker Daniel Stewart to ponder whether the fields were worth up to 30p a share. With the Jolly deal suggesting a 47p-a-share valuation and a further 5p a share in cash, Nighthawk, on all calculations, must be substantially undervalued.
One inhibiting influence, which must be coming to an end, is selling by institutions – and others – that acquired shares when Nighthawk indulged in what it regarded as essential 20p placings, raising £10m. Such exercises, often at knockdown prices, can store up discomfort for other shareholders, who see their existing investment badly bruised. Once the short termers have finished profit-taking – and I am not criticising them – the price should make headway.
Finally, English Wines Group, the portfolio's only Plus stock. The shares have nudged my 20p buying price following proposals to raise £1.1m selling convertible loan notes, mainly to leading shareholders.
Placings to a privileged few have never been my favourite method of cash-raising. But with this exercise costing a mere £20,000 it would be churlish to protest although, if fully converted, it would increase EWG's capital by 26 per cent at 10p a share.
The cash is needed to buy an increasing supply of grapes – as more vineyards come into production – and extra processing equipment. Improvements will also be carried out to the company's Chapel Down Winery in Kent.
The expected cash infusion had an uplifting influence on the shares, offering another reason not to object. The price climbed from 15p to 20p, before easing to 18p.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens