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.
Debt in Britain: Numbers seeking help on how to cope with mounting bills goes up by more than half in three years
Bargain Hunter: BT improves its mobile reception with 'incredibly competitive' deals
Help to Buy Isa Q&A: Are they real help for first-time buyers or simply a vote-winner for the 2020 election?
Offset your mortgage and save thousands
Simon Read: 'It went below the radar but you could be eligible for a tax break on your savings'
- 3 Gamers confess the worst things they've done in The Sims
- 4 Germanwings crash: 'Andreas Lubitz planned to marry pregnant girlfriend', claims German report
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£18000 - £20000 per annum: Recruitment Genius: A Client Services Assistant is ...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Day In a Page
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
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 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
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station