This marks the 4th anniversary of our expansion as a leisure/property management and
investment company. Return on our holdings during the four years including dividends and
capital appreciation has now reached 143% with our portfolio continuing to forecast further
increased profits in 2018, as detailed below.
The current portfolio continues to be Accor Hotels, Intercontinental Hotels and Compass Group
Catering in the Hotel/Restaurant Industry, and Persimmon, Redrow, Taylor Wimpey and Berkeley
in the property/building Industry. All public company holdings, private investments and management contracts continue to grow in the film/television and media industry and in July we
extended our media interests into the provision of content and online facilities with the
formation of Meet The Leader Ltd. which is already developing successfully.
MAJOR INVESTMENTS. 2017/2018
ACCOR HOTELS Group
This Paris based organisation has grown extensively in the past year to create a more broadly
based group to include the provision of private luxury house rentals through a new division, One Fine Stay, International Concierge Services through Jean Paul and a range of new
hotel brands aimed at the Millennials market. Currently it is acquiring Mantra Hotels,the second
largest chain in Australia,and has acquired strategic investments in the BANYAN and RIXOS
hotel chains together with allied Management contracts.It continues to grow its existing
brands.
Plans are in hand to offload its freehold properties into a separate property company in the coming year, thus providing ample funds of £3 billion for further expansion in the future.
I have visited 10 Fairmont/Sofitel Accor hotels in 2016/2017. All were excellent and a reflection of a really well managed hotel group.
We have increased our investment in Accor during the year, where the share price has
increased by 20%, and expect a good increase in profits as the recent acquisitions/financing take effect in 2018/19.
INTERCONTINENTAL HOTELS
The past year has produced an increase of 19% in the share price after a year of steady growth and improved Rev Par allied to benefitting from the strength of the dollar, with over 60% of the business in the US.
During the year we have seen the appointment of a new CEO with no non executive
appointments, which should lead to an improvement in expansion and development,
particularly into the Leisure Market where groups like Marriott/Hilton are doing well.
Expansion into China looks to continue successfully and we see further increases in profit
and dividend in the coming year, to which can be added benefits from the proposed drop
in US taxation rates.
COMPASS GROUP
A good year again for the world's largest catering group with increased profits, dividend
and an additional special dividend from surplus cash flow.
The Group now seems to be in a semi mature market, yet with steady organic growth,
but no exciting developments scheduled, and just a steady increase in annual dividends and
profits, thus we have reduced our holding here to reflect the situation.
Share price growth last year was only 2%.
PERSIMMON
Another record year for this York based housebuilding company. This company continues
to grow every year based on its two main brands: Charles Church in the upper price range
and Persimmon in the main family market. It has no committments to the luxury London
market but has offices throughout the rest of the UK.
Innovation is interesting as it has a developing Space 4 business building timber frames
and has just completed construction of its own brickworks in Yorkshire,thus ensuring supply
delivery and maximising profit margins.
Profit and dividend both increased by 23% last year and a similar increase may be expected
for 2017 when the results are announced on February 27th. An indication is given from the
31st December bank balance of £1.3 billion of surplus cash (£900m ) thus we can hope
for another good payout as part of the Capital Return Plan. The share price rose last year by
some 54%.
There is a problem at present as the executive profit sharing scheme was poorly planned
and paying out more than is reasonable. The Chairman and Accountant who were responsible have resigned and should be replaced by the end of February, enabling the reconstructed Board to resolve the matter.
None of this affects the fact that this is a top class well managed business.
It does however beg the question of the quality of the professional advice received in planning
the scheme, which has one really good feature in that the top 140 executives and the
management were all included.---and the results are there to see in the profits growth.
We continue to retain our holdings in Persimmon as a long term investment until the UK
housing shortage is resolved. If ever.
REDROW HOMES
This company based in Flint, North Wales, is similar to the York based Persimmon.
It has a product range in the middle market but with some great development sites on the
Outskirts of London-- Colindale in North London and in Kent on London's eastern Outskirts.--
with operations throughout the UK.
Profits last year rose by 26% and the dividend by a massive 70% which has seen the share price rise by 53% in the past year, and a further increase in profits and dividends is likely with the current year. Interim figures will be announced on 8 th of February.
Founder Steve Morgan goes non executive this year but leaves John Tutte a very strong and well respected new CEO at the helm of this very successful business, in which we increased our holding during the past year.
TAYLORWIMPEY
This company based in High Wycombe has been a major player in housebuilding for over 60
years and it is growing rapidly from a South of England base.
Profits here have risen from £225m to £750m over the past 5 years and are continuing to
grow strongly.
Dividend policy here is to pay a basic dividend based on assets twice yearly and a special dividend based on profits each July. This gives a total of 13.8 p for 2018, and a further 15%
might be expected for next year as current sales are at record levels.
During the past year we have increased this holding while the share price has shown an
increase of 34%. The 2017 results will be declared at the end of February together with
an indication of the increased special dividend for 2019.
BERKELEY GROUP
The latest annual figures here were even better than anticipated,with profits up from £530m
to £812m resulting in a 49% increase in the share price
The six months results to October are up further and future profit increases are likely to continue.
The dividend policy here is to pay a minimum of 110p per share each 6 months, subject to the
number of shares the company repurchases in the market,thus the full dividend is not paid in cash,but this is reflected in the share price as fewer shares are in circulation.
The company has a unique business model as it specialises in difficult sites, mostly within the
M25 and in central London and its developments are a feature of 21st century London.
Berkeley is a first class business and complementary to our other three major property
Investment holdings.
MANAGEMENT CONTRACTS
These continue as our private clients consolidate their interests in the media industry.