Derek Pain: Star-performing Booker's board worth every penny
Np Pain, No Gain
Saturday 16 July 2011
Investors are rightly appalled by boardroom greed. Particularly obnoxious is the culture that richly rewards mediocrity, even outright failure. But sometimes shareholder anger is misplaced. A prime example occurred last week – at the yearly meeting of Booker, the star of the No Pain, No Gain portfolio.
Some shareholders, under the influence of advisory group PIRC, voted against the cash and carry group's remuneration report and against the election or re-election of directors. At times the opposition seemed to command around a fifth of the votes. Directors who endured resistance included Charles Wilson, the chief executive. It seems the granting of share options caused some distress. I am no fan of the options system (I prefer salary incentives) but these days a company that does not offer options could find itself at a disadvantage when recruiting.
It is, I believe, unfair for shareholders to assail Booker's board where salaries are far from excessive. More importantly, the condemnations ignored the startling success of the group since Mr Wilson and his team got to grips with a business that seemed to have lost its way. He is a former Marks & Spencer director and when he switched to Booker, retail tycoon Sir Philip Green remarked that the move was like a footballer transferring from the mighty AC Milan to little Scunthorpe United.
Not long after the group returned to the stock market through a reverse takeover of a loss maker in 2007, the shares were around 15p. As I write they are 74p after topping 77p. Profits progress has been outstanding. From £6.3m, the pre-tax figures have soared to £71.4m. Not many companies have exceeded Booker's growth. And, judging from the retail woes we hear about daily, the group clearly operates in an exceedingly difficult market.
The advance reflects credit on the management and as a shareholder I am immensely satisfied and believe the board is currently worth every penny it earns. It will, however, be hard retaining such dramatic progress. I would not be surprised if revenue growth slows but I expect continued headway in the next few years. The first 12 weeks of the current yearproduced encouraging trading, although a few extenuating influence like the weather and Easter contributed. Nevertheless, sales rose 9.5 per cent with tobacco turnover up 10.1 per cent as customers rushed to beat signalled duty increases. Besides running 172 cash and carry warehouses, Booker also embraces delivery and internet services. The group has around 460,000 customers, including convenience shops and pubs. Its sales network also embraces cinemas and even prisons. Besides developing its warehouses it is making strenuous efforts to increase the delivery side.
And there are high hopes its fledgling venture in India will eventually reap rich rewards. Progress has so far been slow with one warehouse in Mumbai and another about to open. A joint venture outlet is near to completion in another Indian city.
The portfolio descended on Booker at 24.5p in January 2009. The shares are its best performing constituent. There is, however, a danger of falling in love with a high flyer and ignoring the need to offload when problems start to loom. As a safeguard I have set a 55p downward limit on the shares. During the portfolio's 12-plus year's existence it has on occasions been far too slow to sell; not only to reap profits but also curb losses. For example, I did not unload restaurant chain Prezzo when the shares were around their 95p peak, eventually departing at 60p. And, I should have sold such disasters as Profile Media and Pubs'n'Bars at the first hints of serious difficulties, but lamentably failed to do so.
I am not, however, at all bearish about Booker, despite the parlous state of the retail environment. In my judgement the shares, although highly rated, are not overpriced and should continue to make relative progress whatever happens to the stock market as a whole. An outstanding record does not necessarily make any share worth buying – the investment adage that the past does not guarantee future performance, springs to mind. Nevertheless, as steward of a portfolio, it is wise to try and accommodate all eventualities. Still, I will be intensely disappointed if I do have to sell Booker at 55p.
10 tips for taking out a personal loan
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Pension firms must ask consumers more questions, says City Watchdog
Number of serially under-performing investment funds has increased by a fifth, survey reveals
- 3 Russian girl takes her own life after parents find pornography on her computer
- 4 Ball pool for adults opens in London
- 5 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
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
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