Investment Review December 2016


We have now completed three years as an investment holding company in the hotels, leisure and property industries, following us ceasing to be primarily a hotel operating and management company in December 2013.
It has been a successful three years with dividends/capital profits of 76 per cent over the three years. Our major holdings remain Intercontinental Hotels, Accor Hotels, Compass Catering and Sodexo Catering in the hotel/leisure sector and in the property business our main holdings remain building companies Persimmon, TaylorWimpey, Berkeley and Redrow. All these companies have made record profits and increased dividends in 2016

The next three months to March 2017 will see trading statements and/or results from our eight major holdings which should justify retention and indeed increased investment.

Persimmon.  Results on 27th February should be another record and with cash balances of £913 million at December compared with £570 million last year, this should reflect in increased dividend distribution and share price.

TaylorWimpey. Trading Statement due this week on the 11th and expect the position here to emulate Persimmon. TW has already forecast a 30% dividend hike.

Berkeley Homes Group.  Interim figures in December were excellent and profits for the next two years are already forecast at record levels. The company is beginning to purchase its own shares which will benefit remaining shareholders long term.

Redrow Homes.  Interim results due on 8th February with another record profit and increased dividend expected. Like Berkeley it plans a possible purchase of its own shares with surplus capital.

Building Industry Summary. The value  of our holdings was hit by nearly 30 per cent after the Brexit vote for no logical reason, but we expect to recover all this drop in value by June followed by further increases in the latter part of the year.

Intercontinental Hotels Group will produce its final figures on 21st February with a record profit and substantial cash funds following disposal of most of its properties last year in favour of management contracts. The hotel industry continues to restructure following the merger of Starwood/Marriott, the Chinese owned HNA group acquisitions worldwide and the Accor purchase of Fairmont/Raffles Group, thus we may see IHG featuring in 2017.

Accor Hotels produces its results on 22nd February which will be the first to include its great acquisition of Fairmont. The end of March should see the group hiving off its properties into a new company and leaving Accor to concentrate on management operations and the integration of new subsidiaries with concierge services  and One Fine Stay accommodation facilities as part of the creation of unique brands.This move should be reflected in the share price.

Compass Catering based in England and Sodexo Catering based in France are two of the world's largest and best catering companies each operating in over 50 countries and providing a sound solid profit base and increasing dividends with income internationally in different currencies as a hedge within world trade.

Hotel/Catering Summary, another year of growth expected and increased value of our holdings expected from rationalisation /expansion internationally.

Management /Consultancy contracts are continuing into 2017  with existing clients, and we will continue to make new investments in the leisure industry.