The positive review of our holdings in January has sadly been damaged by the
effects of Covid 19 and the resultant reduction in business, particularly in the
hotel and leisure Industries.
At the onset of the pandemic we disposed of our interests in Hyatt Hotels, Pierre
Et Vacances, Melia Hotels and Shangrila Hotels, whilst keeping just a nominal
holding in Accor Hotels. It is hard to see an early recovery in these stocks as
travel will take time to recover.
Our portfolio remains invested in property and house building for both short term
and long term growth, and we intend to increase our private equity investments
in the next 12to 18 months as business starts to recover.
The past six months has seen us maintain capital values, but dividends have
been cancelled or postponed by all of our investments to conserve cash funds,
although all these businesses remain profitable, and should continue to expand
in the course of 2021.
Investment Review. December 2019.
The return of a Conservative government and the avoidance of
Armageddon has enabled our funds to finish the year with a further improvement in the value of our portfolio, and the expectation that resolution of Brexit trade terms by next December will result in increased investment and development of the UK economy.
Our portfolio of holdings continues to produce increased profits and dividends, from all our investments.
Housebuilding and property holdings should benefit from the governments commitment to increase social housing allied to the deregulation of planning regulations which currently restrict expansion of the industry. We continue to have major interests in
TaylorWimpey. Plc.
Persimmon Homes. Plc.
Redrow Homes. Plc
with smaller holdings in
Bellway plc
Crest Nicholson plc
Hotel and Leisure interests continue to benefit from the growth of the luxury tourist market and increasing international business travel. We continue to add to our interest in Accor Hotels (France) with additional investments in
Pierre et Vacances. (France).
Hyatt Hotels Corporation. ( USA )
Melia Hotels International (Spain).
Shangrila Hotels Asia. (China )
Private company interests in which we have direct management involvement continue to grow in the media industry and will benefit from the resolution of trade relations with Europe later this year.
Our Operations have been a success this year, with capital profits and income since we ceased to manage our own hotels and properties six years ago, havlng risen by 186%, an average of 31% p.a. Each of the 10 holdings in our portfolio is looking good for 2020, in particular Accor, TaylorWimpey and Persimmon each with provisional profit figures being released in January.
Gordon A S Currie
Investment Review. September 2019
The past three months has seen continued progress with all our holdings,
and results are encouraging although share prices have not reflected this
due to the continuing uncertainties of Brexit.
Results from our major holdings in the past 3 months are as follows:
TaylorWimpey. Company is cautious about position post Brexit and awaiting
the solution, but sales still up by 1% , profits down 10% but
expected to return an increase in second half once a clearer
picture of the future can be seen. Dividend for the 6 months
increased from 2.44p to 3.84p.
Persimmon Company has resolved most of problems of the rapid growth
of the last few years when quality suffered from the large
Increase in home completions.A further 5 weeks is scheduled
to allow more time to complete homes with the minimum of
snags and maximum of quality standards,resulting in a sales
reduction of 4%, and decreased profit of 4%. Sales enquiries
remain at record levels and profits should continue to rise
again with this new management policy in place from now on,
as should dividends
Redrow Homes Results for the full year to June were once again excellent,
with profits up £26 m to £406 m, and the final dividend
Increased from 19p to 20.5p with another record year
anticipated in 2020. The quality and range of Redrow Homes
continues in our view to be the most attractive in the market.
ACCOR Hotels. First half figures continued the trend of previous periods,
reflecting the major acquisitions of the past 4 years,with
sales up by 27% and EBITA up by 30%. The range of brands
continues to grow and the consolidation of its activities
S should now begin to produce increased profits and dividends.
We continue to increase our holdings in Accor.
Private company Investments
Our holdings here continue to grow and our media interests
will shortly open an office in Berlin as the corporate world
adjusts to the effects of Brexit. Whatever that may be !!!!!
Investment Review. June 2019.
We have completed our fifth financial year since ceasing to manage hotels and
concentrate our activities on hotel developments and investment.
The past 12 months has produced a record level of profits and dividend income,
with the capital value of our holdings being maintained at its 2018 level.
In the past eight months since our last month review we have taken account of political
uncertainties and not increased the number of our holdings, but increased the
amounts invested in both Accor Hotels and Persimmon, which are both regarded
as long term investments.
REVIEW of MAJOR HOLDINGS
Hotels & Catering
Accor Hotels, based in Paris, continues to expand, and following the excellent
2018 results, produced an increase in revenue of 34% in the first 3 months of
2019,following the acquisition of Movenpick & Mantra, of which 8.8% was on a
like for like basis. It has just acquired 85% of Orbis Hotels in Europe which
will be reflected in the release of additional funds for expansion.
Visits to Accor operations in Vietnam and Cambodia, following The Fairmont
Barbados ,will be followed shortly to those in France, Morocco and Africa, where
major expansion is planned.
Intercontinental Hotels holdings are to be replaced in the future by new holdings
in the growth of the luxury hotel/resort market.
Building & Construction.
Both profits and dividends have continued to increase in the past 8 months in
our three main holdings,
TaylorWimpey
Persimmon
Redrow Homes
Demand for new homes continues to grow, and regardless of political policies
of any future government will we believe continue, albeit there may be a trend
to more social housing, but there is little reason not to see a steady rise in profits
and dividends, allied to improved production methods and product innovation.
Media Interests
Further expansion of these unquoted holdings continues, and we will continue
to finance their growth.
Meet the Leader Ltd has now reached the first stage of its expansion, reflected
In its update website meettheleader.com, with the provision of an extended range of services
and activities.
The future
We intend to maintain all our holdings as long term investments, and will
continue to finance our media interests, but restricting further activities until
the current political problems with Brexit are resolved.
At present, levels of revenue and profits in all our holdings continue to improve.
with resultant increases in dividends and management fees income anticipated.
INVESTMENT REVIEW SEPTEMBER 2018
Our portfolio has once again produced an excellent return in the past five months,
with increased profits and dividends. Capital Values are static pending the final
outcome of the Brexit negotiations, and a satisfactory conclusion should result
In further growth in all our holdings
REVIEW OF MAJOR HOLDINGS
Hotels and Catering
Accor Group. SA
Continues with its planned expansion as a broad based hotel/ leisure group
with further acquisitions in Asia and Africa plus strategic investments with
partners in South America and the United States.
Profit for the six months rose to €291 million with a further €2179 million from
asset disposal providing funds to continue major expansion. Profit for the full
year is forecast at €700 million with a further dividend increase.
Intercontinental Hotels Plc
Continues to grow but nothing inspiring here thus we have reduced our
holding although this is a good business with increasing profits and dividends.
N H Hotels. SA
Minor Hotels Group from Thailand bought a deal breaking 38% holding here
which precluded other bidders and is to takeover this potentially very attractive
group, thus we disposed of our holding.
Building and Construction
Persimmon Plc
Sales, profits and dividends all continue to grow in this York based group which
has the best profit margins in the industry, aided by subsidiaries producing timber
frames, bricks and tiles.
Profits for the six months to June increased by 13% and, with future sales orders
already 6% ahead of last year, we expect a further profit and dividend increase
in 2019 giving a yield of over 10%. The group trading names of Persimmon and
Charles Church are well regarded nationally.
Net cash funds now £1154 million. (£1109 million)
Taylorwimpey. Plc
A similar sales and profits position to Persimmon with a high dividend yield. We
have increased our holding here where the group includes a rapidly growing
subsidiary in Spain.
Net cash funds now £529 million (£429 million)
Redrow. Plc
Based in Flint in North Wales, it has major developments in the outer London
area and has grown rapidly based on a reputation for quality and efficiency.
Profit in the year to June increased by 21% and dividend by 65% with the
Group moving into a net cash position for the first time, and forecasting a
further profit and dividend rise in 2019.
Media Interests
These continue to expand with our omnichannel content creation business
moving into new offices in Holborn and increasing both its client base and
product range.
Film and Television interests continue to grow with new offices acquired in
Glasgow as an adjunct to its base at Battersea Studios in London.
INVESTMENT REVIEW: JAN - APRIL 2018
Once again our portfolio has had a successful 4 months, regardless of geo political
problems and financial restrictions in Eastern Europe, but further changes have been made
in our quoted hotel investment holdings.
Dividend income and Capital Profits total 11% in the past four months
Investment in our private companies will be expanded as in both film/television and in
the provision of content for the media there has been a large increase in demand, with one of our film interests having opened a second facilities office in Glasgow in addition to its
main base at Battersea Studios in London.
Review of Major Investments
Hotels and Catering
ACCOR HOTELS has updated its results with the first quarter's figures to March
showing excellent sales and REVPAR figures, ahead of the industry average.
Following its Australian acquisition last autumn, it has acquired Movenpick
Hotels in Switzerland with some 80 hotels and 40 in the pipeline which dovetails
with its existing operations. There are also some smaller link-ups to develop in the
future,and with a near £3.5 billion in surplus cash from the sale of 55% of Hotelinvest
there is scope to acquire further strategic investments particularly in South America
and Africa.
INTERCONTINENTAL HOTELS (IHG)
Latest figures are good but not up to expectations so far, although the development
policy of creating a cheaper brand and expanding into the luxury market makes sense.
What is odd is that they have purchased a part of Regent Hotels, a dated brand which
never achieved its ambitions, and this week has added 13 tired and really unattractive
hotels in the UK to their proposed luxury portfolio. Most of these properties have been
on the market over the past 30 years and are not the hotels we can see as part of a
luxury brand for the next generation. Accordingly we are reducing our holding in
IHG, although we appreciate there has been an impressive increase in share price.
N H HOTELS GROUP SA has followed last year's encouraging results with an excellent
first quarters figures and every indication of a very successful 2018. Its portfolio of
mid range hotels in Europe and in South America is attractive in catering for the big
demand that already exists in this market, and we believe NH has the dedicated hotel
management to achieve success and develop in the hospitality industry as a customer
friendly business, similar in outlook to that of our other main investment Accor.
We have increased our Investment in NH Hotels to reflect these views.
Building and Construction
All our holdings continue to do well with sales / profits and dividends all ahead of last
year. The remuneration problem at Persimmon was resolved at the AGM but was a
perfect example of the capitalist system at its worst, and the final solution was a fudge
which would not have happened if the large shareholders had taken responsibility for
their investment.
FILM MEDIA. TELEVISION
All of our companies continue to grow steadily with further investment planned to
finance expansion in these rapidly changing markets
Exemplary service in action at the Royal Palm Marrakech
Wednesday 28th March 2018.- my wife Barbara's birthday when I always take her out for dinner. We decided on the Caravanne restaurant at the Fairmont Royal Palm Hotel, near Marrakech, and took the afternoon flight from London, planning to spend two days there and then three days at the Al Medina hotel in the coastal town of Essaouria.
Dinner was excellent but my breathing became difficult and the hotel called a doctor. Forty five minutes later I was in an emergency ambulance with lights flashing and siren on, bound for Marrakech – my last recollection of that night.
Next day I regained consciousness in a pristine hospital room with several Moroccan medical staff staring down at me. In what became almost a surreal situation a very English voice said, "I am Dr Amrani and you were admitted here at the Private CIM Cardiac Clinic last night from the Fairmont Hotel. I have been a heart surgeon at London's Harefields Hospital for more than 20 years. (England's top cardiac hospital ) and I live in London at Harrow on The Hill but today I have two operations here in Marrakech."
He then advised me I was in a very serious condition and needed a quadruple bypass operation. When I asked how serious this was, his response was simply that "if we operate now there is a very good chance of success," and he would rearrange one of his other operations. The next morning I awoke in intensive care to be told by Dr Amrani that the operation had been a success, and I am eternally grateful to him,his anaethetist and all his team.
Back at the Fairmont, Barbara had returned four hours after my admittance, to get all the help and assistance from the night manager and his staff. A member of staff even visited the Clinic to be updated on the position.
Shortly after flowers and get well card were signed by the manager and staff were delivered to her room. My son and daughter arrived later from London and were allocated the last room in the hotel – a beautiful villa in the grounds at a room rate, until I came out of Intensive care.
After a week in the Clinic I convalesced at the hotel for two weeks and experienced a level of help, service and friendliness from every member of staff in all departments, such as I could not have imagined after 50 years of hotel ownership.
Afif Salibi, the General Manager and all his staff exemplify hotelkeeping at its best.
INVESTMENT REVIEW: six months to March 2018
We regret that due to unforeseen circumstances this was not produced as scheduled but after
THE INTERLUDE
we will issue a REVIEW for the four months to April 2018.
ONWARDS AND UPWARDS
PERSIMMON Plc produced final figures yesterday better than expected with profits up
25% to £977.m. ( £782m ) and the interim dividend up from 25p to 125p, which with a
final dividend of 110p, makes the total annual dividend 245p, an increase of 74%.
Allied to this is a resolution of the botched bonus scheme, and the announcement that
for the next three years there will be 245p minimum dividends paid each year.
TAYLORWIMPEY Plc has today announced record profits of £812m ( £733m ) with profits/
dividends up by 11% and an increased order book into the new year.
Last year saw the resolution of the historical problem with long leaseholds, and the cost
has been absorbed in the 2017 Accounts, thus we can expect another record year in
2018.
The FD told me two years ago he expected they would be bigger than Persimmon by now
but they still have some way to go. This is however a company with strong management which
could now grow faster as it has a successful operation developing in Spain.
Finally ACCOR HOTELS in France has just announced the finalisation of the disposal of 55% of its
property owning subsidiary for £ 4.4billion to a group of investment funds, thus giving the
group the capital to expand and develop its operations without recourse to borrowing.
The group also intends to commence a buy back of 10% of its equity, which with the
rapid growth in China, Africa and South America, makes Accor an even more attractive
investment for the future.
A TALE OF TWO HOTEL COMPANIES
Last week the accounts came out for two of our hotel and leisure investments: Intercontinental Hotel Group on Feb 20th 2018 and Accor Hotels, the following day. The key points are as follows:
Intercontinental Hotels Group
* Profits increased by 14.7%.and dividend by 11.0% in line with expectations.
* The main news is that the long-awaited management reorganisation by its new full time
CEO is now taking place and this should be reflected in much improved profits from 2019 onwards allied to the resumption of the capital dividends from the annual creation of cash surplus to requirements.
Accor Hotels
* Profits increased by 66.4%. Dividend remains the same pending the forthcoming
disposal of 80% of the group’s property division which will finance the outstanding
growth of the company and further improve profits in 2019.
* The range of Accor's activities in the hotel industry is unique with a range of brands
catering for all prices, age groups and the provision of extensive concierge services,
luxury home rentals and digital travel platforms.
* The past year has seen the acquisition of the Orient Express, 26 hotels in Brazil and
127 hotels in Australia.
Two sets of accounts being released within 24 hours of each other got me thinking how the two companies compared and what, if any, effect this had on their financial success. My thoughts:
IHG is efficient, well organised, formal and is in the business of letting rooms. it caters primarily for business but not the growing luxury market or the travel hungry millennial market.
It has a new CEO, former CCO Keith Barr, which should see some welcome changes to improve what is a very good business.
Accor is also a very good business but slightly has the edge on IHG due to its emphasis on hospitality. Accor hotels are friendly, super efficient and makes guests feel incredibly welcome and that, in my experience, has always been the X factor that turns a good hotel great. Accor are truly in the hospitality industry, as I have experienced myself in the last 18 months in their hotels in London, Vancouver, Paris, Strasbourg, Biarritz and Ho Chi Minh City. I will soon be staying in their hotels in Moscow, Sochi and Warsaw so will report back.
HELLO, GOODBYE AND WELCOME BACK
The past month has seen more turbulence in the market as regards quoted investments but this does not affect our views on how we see our portfolio. We have however made one change in February. Following the sale of part of our holding in Compass Group plc in January, we disposed of the balance in February, following a decision of Compass to increase directors remuneration to a figure which we consider excessive.
Our investment in TAYLORWIMPEY has been further increased as its profits, dividends and enthusiastic management should ensure the company is an excellent long term holding.
Our portfolio has been augmented with a reinvestment in Spanish Hotel Group N H HOTELS following the decision of the Chinese HNA group to dispose of its 30% holding thus allowing the board to develop the business successfully with a booming tourist market in Spain and a robust market for the NH city hotels division in Europe (or to merge with another mid market group in Europe). NH now needs 18 months to concentrate on its business after the board problems of the past two years, and in particular expand its hotel interests in Spanish-speaking South America. We expect to see positive results here in 18 months for this new holding.
STAYING STEADFAST IN STOCK MARKET VOLATILITY
Are we reviewing any of our quoted investments as a result of the Stock Exchange
turbulence of the last few days? Emphatically no as all our holdings are in sound
well managed companies with substantial funds available/on deposit and earning
increasing profits/ dividends.
This week has seen the half year figures from REDROW, with sales up 20%, profits up
26% and dividend up 50%, all in line with our expectations. A surprise was to learn
that the company's spectacular site in Colindale, North London is ahead of
schedule which augurs well for another set of record figures and increased dividend
in the next six months.
PERSIMMON has figures due on the 27th February which should emulate REDROW, and
with the appointment of a new Chairman, resolve the problem of the Management
Incentive Scheme which has arisen from profits far exceeding those originally envisaged.
INVESTMENT REVIEW. SIX MONTHS to DECEMBER 2017
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.
Investment Review Six months to June 2017
As the past six months have included the election, we excluded the April Review and now update to June 2017
Our portfolio continues to grow in value, but we have made two changes to reflect our current views:
SODEXO has been excluded as it is moving away from its traditional food based operations and, in particular, moves into prison management as a future growth area which is not appealing to us. Latest figures show revenue not reaching budgets, and our experience of its catering has been disappointing, which confirms our decision to disinvest prior to subsequent share price reaction.
PIERRE ET VACANCES is an addition to our portfolio, providing self catering and leisure activities for the tourist market primarily in France but the acquisition of a Chinese shareholder opens the way to major development in the large China Market. There is also an interesting property potential in financing the residential element of its units.
COMPASS CATERING continues its record of increasing profits and dividends with a more attractive customer base than erstwhile Sodexo a main competitor. Compass has produced a 20% revenue increase this year with a 24% profit increase. Dividend is up 6% to 11.20p as expected but there is an extra 61p special dividend from surplus cash generated, all of which has helped the share price. Forecast is for steadily increasing profits in foreseeable future.
INTERCONTINENTAL HOTELS GROUP as anticipated increased its profits by more than expected, and increased the dividend by 11% to 49p per share, and for good measure paid a Special Dividend of 156p extra per share. Profits are expected to grow with new hotel openings on a weekly basis and it will be interesting to see the results of a new and very experienced CEO in the next 12 months.
ACCOR HOTELS GROUP is the French alternative to England's IHG but differs in several ways. Much of its operations are European/Asian based in countries where French influence was dominant and less in the US, but the recent acquisition of FAIRMONT/RAFFLES hotels and expansion in Latin America holds great potential. Allied to this is the Accor acquisition of several travel/reservation organisations and interests to make the group capable of providing an all inclusive range of leisure services. Accor is also marketing a different range of accommodation and catering facilities to the Millenials Market, as distinct from the other major hotel groups.
EBIT increased last year to £m 696 from £m665 and in the current year it has commenced disposal of major properties, so the results for 2017/8/9 should successfully reflect this new business model.
THE BUILDING/PROPERTY INDUSTRY
Our holdings continue to concentrate on house building
PERSIMMON HOMES produced another set of record results for 2016 in February with profits up 23% and the 110p forecast dividend augmented by an extra 25p special dividend. A TRADING UPDATE in June has indicated business rising faster than expected since February, with a very strong provincial market demand, and one can expect another substantial rise in dividend in the next 12 months.
TAYLORWIMPEY produced another set of record figures with a 20% profit increase, a 50% increase in its basic dividend and a 9.20 per share special dividend payable this week. We can also expect news on a further large special payment for next year and a resurgent share price.Latest figures are scheduled for 1st August.
BERKELEY HOMES GROUP more than exceeded expectations with a 53% increase in profits and its anticipated 100p dividend for the six months, and has indicated substantial increase on the basis of existing orders for the next three years.Buying of its own shares is making the share price increasingly more attractive.
REDROW HOMES is the smallest of our main portfolio but has great potential. Based in North Wales it has developed its business successfully into the South East,Kent, Berkshire and outer London avoiding the difficult central London area.The latest profits rose by some 35% and the dividend by 50% and we expect further rapid growth when the Annual figures are issued in September.
CAPITAL POSITION
It is now three years and six months since we sold our last hotel and concentrated on hotel investment and leisure management. In this period we have earned 114% profit in dividends and capital gains on our portfolio of investments.
MANAGEMENT CONTRACTS
In the past six months we have acquired a new client in the field of Media Content and Publishing in addition to our existing film/television interests.
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.
Investment review September
Investment Review: July to September 2016
The past three months has been interesting with profits on our International Hotels and Catering holdings offsetting post Brexit losses on our UK Building and Construction holdings both allied to the effects of sterling's devaluation against the dollar and the euro.
A positive response from the Government to Brexit augurs well for our economy and we continue to focus our portfolio on some 50% of holdings in UK based high yielding building and construction companies not affected by the international value of the pound; and 50% of our holdings in international companies with lower yields which will benefit from sterling devaluation as most of their profits emanate outwith the UK.
Building & Construction Holdings
Persimmon produced six months' sales figures ahead of expectations with a 29% increase in profits and a similar increase expected in the next six months. The company announced it would increase dividends by at least 45% over the next 5 years and we could see this increased further. The next Management Trading update is on 3rd November which should allay any remaining doubts on Brexit affecting house building, and help the share price to return to its pre Brexit level.
Taylorwimpey continues to grow steadily with profits for the past six months 12% ahead of last year and we expect a greater increase in the current six months. On the dividend front the company has stated that for the coming year based on future trading expectations, the total dividend will be increased to 13.8% from10.9% an increase of 26%,as which should see the share price back to pre Brexit levels with the business unaffected by the referendum and prophets of gloom.Berkeley Homes Group once again produced excellent figures and confirmed a large increase in profits up until 2018. The image of being a city/central London builder only was corrected by showing it has some 20+ sites in the South East and is not materially affected by a quieter market in Central London. With a strong cash backed Balance Sheet and a guaranteed dividend for the next three years based on the current order book to yield 8%, we expect the share price to recover to pre Brexit levels quickly. The current shareprice is said to be being manipulated by Hedge Fund operators who will be proved wrong in our opinion. It has a potential share price increase of 30% to last years level.
Redrow Homes is our favourite holding in this sector having produced another set of record figures and announced a 54% increase in its order book for new homes as compared with last year in spite of Brexit. In the year to June, profits are up 23% and the dividend increased by 50%, four times covered. Now on a P/E of 8 we have increased our holdings here. The company proposes to take power to buy back its shares when deemed advantageous to do so as the share price remains low and it could be to existing shareholders benefit to do so.Being based in North Wales may not be a fashionable place for a PLC but the company operates throughout England &Wales and has a particularly attractive new site to build 2900 new homes in Colindale in North London.
Hotel and Catering Holdings
All have done well in the past three months as their international profits have benefited from the fall in the pound against the Euro and the Dollar.
Intercontinental Hotels: continues to progress with new openings and technological developments. The share price continues to rise helped by the 20% devaluation of the pound which should add a near 20% increase in the value of profits and dividends. The next quarterly update on trading is on 21st October.
Accor Hotels: this French based chain has perhaps the most interesting of futures. After an Investors day teach in at Accor's Head Office in Paris last week we are increasing our holding here. Accor differs from the other four mainly North American based major hotel groups in that its base is France with a strong presence in the mid-Far East, Africa, Russia and South America and in July it acquired three top international brands:
Fairmont based in Canada
Raffles in the Far East
Swisshotel in Europe.This gives it 17 different brands covering all sectors of the industry. It is developing its brands in China in partnership with Huazu jointly and Huazu has taken an 11% stake in Accor. Concurrent with this Jin Jiang Holdings from China has acquired a 12% holding in Accor and other major shareholders include Quatar and Saudi government holdings. A major restructuring to put its properties into a separate company and sell part of its capital will release £3.5 billion to Accor to develop its hotel chain. In CEO Sebastien Bazin it has a far seeing and imaginative leader to create a uniquely successfull business.
Compass Catering Group: continues to grow soundly and steadily with more improved results in its third quarter. Sales continue to rise in line with new contracts and we are benefitting again here as it is a UK group with 90% of its earnings out of the UK. Although perhaps the biggest contract catering business in the world it still has only about 5% of the market giving great growth potential.
Sodexo: the French equivalent of Compass but stronger internationally in some countries than Compass, it has seen a 10% increase in its share price and dividend this year. Interestingly one of its major sales increases this year has been in England.
PORTFOLIO CHANGES
NH Hotels has produced a substantial increase in profits but the anticipated resolution of the boardroom problems caused by a hedge fund attacking the largest shareholder the Chinese HNA group, have now moved to the courts which is potentially serious. Hedge funds should never be able to sack a company's very successfull management and this situation has made us decide to sell what is potentially a great investment which may be ruined by this dispute.
Mitchell & Butler: having visited some of their new developments and experienced their operations over the past three months, these were disappointing and did not provide confidence that MAB was on the road to recovery. Latest sales figures were poor and below others in the industry thus we were not persuaded the management can succeed in winning against the ever improving competition in the catering business.We have sold our initial small investment here at cost.
FILMS & TELEVISION
Clients here have had a very successful summer in both the UK and in Europe.
Investment portfolio: post Brexit and with a new PM
After an eventful two months we can review our portfolio again and see than the view we took five weeks ago has proved wise after a few difficult days in the immediate aftermath of the referendum vote.
Our building industry holdings dropped temporarily in value as the damage done to shares by hedge funds trying to knock down the industry were proved wrong, and all our investments continue to trade at maximum or near maximum levels, with record order books. It will take almost 20 years to build sufficient numbers of new homes to meet demand.
PERSIMMON produced provisional figures for the six months to June with sales up by 12% on last year, profits up and sales through May and June unaffected by Brexit.
REDROW where shares halved after completely unjustified lies and rumours of disaster, announced provisional figures six weeks early stating profits this year will be ahead of expectations, after private house sales were 46% ahead of last year and the current order book is 50% ahead of last year. Not only are the number of houses being sold increasing but selling prices are also rising and the continuing shortage of housing leaves market fundamentals unchanged. Final figures will be published on 6th September,with a large dividend increase expected.
TAYLORWIMPEY is another of our holdings and here again they see no adverse affects from Brexit and we anticipate another record year here,with record profits and a dividend increase already forecast.
BERKELEY GROUP has stated that there has been little effect from Brexit to date and that they have a broad based business not dependent on multi rich foreign customers.This is in response to Hedge Funds trying to damage this very successful business.I have no doubt Chairman Tony Pidgley will silence those trying to damage Berkeley.
Hotel and Catering Investments.
INTERCONTINENTAL HOTELS continues to do well with more hotels being added to the group throughout the year and here we have benefitted from the decreasing value of the pound as 80% of profits are ex the UK and the UK hotels should benefit from incoming tourist numbers into Britain due to the decreased pound/dollar/euro rates. Final figures and a dividend increase are expected at the end of July.
ACCORHOTELS are expected to produce encouraging figures at the end of July with the added attraction that the effects of the FAIRMONT/RAFFLES acquisitions will be a feature of future profits, and we will get news of the major link with a Chinese hotel chain to create a group is some 6500 hotels. ACCOR has a particularly successful marketing strategy which we consider to be the best in the industry as it develops a massive customer base of satisfied visitors and maintains online contact with all on a regular basis, unlike the other chains. ACCOR has now become our largest holding in this industry.
NH Hotels in SPAIN now increasingly features in our portfolio. HNA the Chinese Hotel and Leisure conglomerate has in addition to its 29% holding in the company, recently acquired CARLSON Hotels in the US, which in turn gave it a 51% holding in REZIDOR hotels in Belgium, the main competitor to NH in many European Cities.
This has caused ructions in both companies with the Chinese Directors leaving the NH Board, but once the dust settles the two companies in conjunction with their mutual Chinese Investors could create a major hotel chain with a distinctive European/Spanish/South American base,and we would hope for a positive development in the next 12months,
COMPASS group continues as a world leader in contract catering and services, this being reflected in a steadily increasing share price from an international trading base with increasing profits and dividends.
SODEXO is the French based equivalent of Compass and once again has produced some excellent figures with an improving share price. It's international business is more biased to former French territories where Compass does not have representation.
MITCHELL &. BUTLER is the sleeping giant of the UK catering/bar business. We sold our previous holding here some 9 years ago at 860p per share before the company suffered from major management and share holder problems which have lasted for years
The shares are now only 270p each and with some 1500 properties/sites the only way now should be upwards. It has new management which has been in place for more than a year and is slowly upgrading and modernising its estate, which needs to get new brands to replace the outdated Harvester, O'neils, Vintage Inn, Brown's,etc outlets with bars/restaurants for the 21st century.
Now profitable and dividend paying we believe the major shareholders should be planning a successfull future for this group.With the biggest shareholder living in the Bahamas with all its sunshine and colourful Caribbean colours, one might question why some of the new schemes being introduced are 50 shades of gray ,and not warm welcoming colours?
As an investment it does not meet our normal criteria but at this level the only way must be onwards and upwards.
FILMS & TELEVISION
Our clients, the CHOCOLATE FILMS GROUP continues to have a very successful year with a full programme of productions and film making both in the UK and in Europe
Autumn Investment Review. This will now be at the end of September by which time it will reflect the initial success of the new government lead by Theresa May
Wishing all friends and clients a most enjoyable holiday
Investment portfolio update
In advance of the forthcoming EU Referendum we have reviewed our current holdings and will continue to hold existing investments whilst adding to our hotel/catering interests. Why now? This is an opportune time to do so for a number of reasons
1. Digital technology is transforming use of hotels for both business and leisure activities and it has opened up new markets worldwide. Mobile devices and the internet have changed people's concept of how to engage and what to expect from hotels. Now guests anywhere with the latest technology can book their travel in greater comfort and immediacy, with many guests now making travel arrangements within 24hours of arrival. Also. technological developments within hotels have enabled owners to reinvent management and marketing structures to increase occupancy,food and beverage revenue and REVPAR.
2. Technology is enabling tour and travel operators to increase their business substantially and develop richer insights into guests needs,enabling more personalised services and consumer tailored offers.
3. Tech has developed a new market for alternative lodging providers which existing hotel groups are now embracing as part of their long term expansion into an increasingly diverse marketplace,where they can develop quickly and securely backed by an experienced management with a sound financial base.
4. Our current holdings are being increased in:
IHG. (Intercontinental), with its base in England and its international interests mainly in the US , Europe and China
NH Hotels with its base in Spain,Latin America and Europe, and set to benefit strongly from tourism in Spain,Portugal, France and Italy as Turkey,Greece and Egypt suffer politically.
Accor with its French base and international interests in former French territories and China and with a growing involvement in the branded residences business through digital platforms of Squarebreak and the Oasis Collection. The recent additions of the Fairmont, Raffles and Swisshotel chains will give Accor new top brand names to develop in the Luxury Market particularly in North America where there is a latent demand for new properties.
The Building Industry.
Analysts and self styled experts continue to criticise the nations house builders which in turn has hit share prices by 10% this year.In our view there is no logic in this as all the major house builders are working to near capacity subject to Planning Approvals.
The past month has seen updated figures from Taylor Wimpey with its order book up 16% in the first. 15 weeks of 2016 and another good dividend increase anticipated from the very strong cash flow now being generated.
June will see figures from Berkeley Homes and a record dividend is expected on the back of profits ahead of expectations.
Contract Catering Services
This week has seen a very satisfactory increase in both profits and dividends from Compass, the worlds largest company in this service industry, based here in Chertsey in Surrey.
Soon to report is Sodexo based in France and like Compass operating in most major countries internationally,with further profit and dividend increases expected.
Summary
Our portfolio continues to do well and should continue to improve from a sound base regardless of the forthcoming Referendum
Tip for the summer -non financial for all friends and clients !
If you are lucky enough this summer to be visiting the Chichester Festival Theatre,the Brasserie restaurant there serves one of the best pre theatre dinners,(from a local caterer-----Caper & Berry,) that I have enjoyed.Only equalled by the Opera Theatre on the LAKE at BREGENZ in Austria.
Spring Investment Review April. 2016
Our portfolio continues to prosper in particular with our hotel and catering holdings.
IHG has been much in the news with the anticipated acquisition of Starwood by Marriott now agreed, after a failed last ditch attempt by a Chinese Group to increase the offer. Thus IHG remains independent but is now well behind Marriott and Hilton in size.Interest in the shares continues with the large anticipated special dividend due in May and another good year forecast.
We have increased our position in Accor which is now more pro active having absorbed Raffles and Fairmont into the group.
In catering Compass Group continues its steady growth in profits and share value with expansion of its customer base strong in North America.
In the building industry we have disposed of our holding in Gallifordtry, even though its results were good because its construction division is much involved in Scotland where economic activity is slowing and likely to get worse as the drive for independence grows with likely financial instability. In turn we have invested further in REDROW Plc with a soundly based customer base throughout England and Wales, and potential substantial profits expected in the next 2/3 years.
Pending the Referendum Vote in June we do not expect any major changes as all our holdings should continue to prosper whatever the outcome.
Our managed client business has had a record three months with increased business in Europe unlikely to be effected by political changes.In the past month I have visited leisure interests in France and Spain where business looks very encouraging on the back of tourism problems in Greece,Turkey and the Middle East.
A quick visit to San Sebastián confirmed to me that Spain's Basque Country now has the finest restaurants in Europe and in the Maria Christina Hotel a unique and superb operation within the Starwood Chain, which Marriott could not improve.
Leisure investments in 2016
We are now two months into the new year and after the juggling around with share prices by hedge/fund managers which takes place every Dec/Jan we can look at things objectively.
The hotel industry continues to expand worldwide with Europe growing surprisingly in 2016. There are 865 new projects in various stages of development including 95 from Intercontinental and 72 from Accor, our two main holdings in this section of the leisure industry.
Accor continues to do well in spite of short term damage to bookings from terrorist attacks in its home base of France and it has made strategic moves internationally with the acquisition of Fairmont Hotels, together with meaningful stakes in two companies in the AirBNB bookings business, thus we anticipate our holding here will recover well by the year end.
IHG has just produced excellent figures, an 11% dividend increase and a special dividend of around 80p per share from the proceeds of the sale of its HongKong and Paris Hotels. Future forecasts are encouraging with some 100,000 new rooms in the pipeline, and a strong cash flow which makes our continued holding here look good. Interestingly IHG CEO Richard Solomons received a hotelier of the year award.
The contract catering industry continues to grow steadily and profitably with our two interests here, UK based Compass and France based Sodexo both producing good figures and dividends from a strong international base which will cover any short term political changes in Europe. Both groups will remain as two of our top investments.
Building rooms be it in hotels or houses has more than justified our holdings so far this year. There is much negative rubbish written about the future problems of the building industry but the figures produced in the past two months show only too clearly that there is a great future not only short term but in particular long term, as shown by the latest figures from our holdings here and other companies in the industry.
This month
1 Persimmon Homes has profits up over 30% and an increased dividend from the forecast 10p to 110p with a forecast of at least 110p for each of the next 5years.
2. Gallifordtry has produced a 20% profit increase and18% dividend hike.
3. Redrow Homes has doubled its interim dividend an forecast a 60% + final increase.
March will see figures from TaylorWimpey and we can expect at least 25% increase in both profits and dividends from this very successful group.
To summarise we anticipate retaining all our existing holdings in the hotel, catering and building industries during 2016 and beyond.
Leisure Management in 2016
Our clients here continue to prosper with steady growth in the film and television/video industries
Consultancy services:
* The past three months has included visits to Mauritius and Colombia to review new developments
* There will be visits shortly to France, to Spain where tourism is growing fast again helped by the adverse situations in the Middle East and to Greece where the immigrant problem is seemingly not able to be resolved in the near future.
Future Reviews will be made monthly updating our associates and clients as the year progresses.