Derek Pain: Star-performing Booker's board worth every penny

Np Pain, No Gain

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.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

News
Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
News
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
news
Life and Style
Buyers of secondhand cars are searching out shades last seen in cop show ‘The Sweeney’
motoringFlares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own