gamesinvestor
19 Sep 2016
Cash Quite a bit freed up of late with ARM, Premier Farnell both being acquired in my wad, and deciding today to dump my only exposure to banks (HSBC), at a profit - phew!!!Should I bung 30% of it into FSTA?Pension doesn't look too onerous -- will the property manifest itself into an even higher share price, or is a P/E of 18.4 too lofty for a company set to grow at 5-6%?Games -- mind you with 26 pubs still closing a week, maybe GNK; FSTA; Mitchels, Marstons will be the only games in town at some point? -- Oh and Whitbread of course, assuming you are mainly a Columbian coffee quaffer!!
CashQuack
18 Sep 2016
Re: Property Interesting stuff, LK and Games. Looking at the fundamental here, there has been a near doubling of dividends since 2010 when I first bought these shares. The share price has also doubled!The only thing that is going to see Fuller's sell up is if a huge percentage of our population go teetotal. That said, out here in the sticks pubs are bristling at lunch time with sit down diners, not hearty beer swillers and smokers. Changed times. If Fuller's took leave of its senses and decided to develop its pubs rather than sell beer (as implied in my last note about looking after the bottom line rather than customers), I am certain their estate would be far more valuable than the balance sheets suggest. It is the conservative nature of this business that makes it one of the safest things on the stock market. Long may it continue.
LK Hyman
18 Sep 2016
Re: Property Games,"Would be more interesting if ... they paid a decent divi."I wouldn't worry too much about that. Provided their return on capital employed is well above of their cost of capital FSTA will be adding value, and that value will eventually be reflected in the share price.You could always sell a few shares every year if you want to create a synthetic dividend, though I appreciate that the spread and commission make that a bit pricey.I suspect that far too many people are overly influenced by the dividend yield into thinking that a share is either "cheap" (if the yield is high) or "expensive" (if the yield is low).Modigliani and Miller were right when they said that the divi policy of a firm (in certain circumstances) has no impact upon the value of the firm.LKH on the flybridge
gamesinvestor
17 Sep 2016
Re: Property "Well, I don't know the answer to that question, but it is consoling to know that one owns a small chunk of the whole which is worth so much more than the value declared on the face of the balance sheet." LK, I like the 404 pub guide is a useful measure. Now I've not been living in a time warp, but £1.5M is about the price of a low end 1 bed flat in prime London. So the underlying value could be, well massive.It's probably not unreasonable to assume the figure at closer to £3-5M.However, even assuming the family decided pubs were a waste of time, could they get change of use on such prime locations, and get a full residential or other commercial value?Games -- interesting. Would be more interesting if, and because said value doesn't look like being unlocked, they paid a decent divi.
LK Hyman
17 Sep 2016
Re: Property Games,"Anybody taken a closer look at the real value of Fullers property and compared it with what's on the books?"I've not done anything systematic on this front but it is instructive to spread the latest balance sheet number for property plant and equipment of £533.8m over the 404 pubs and hotels (including The Stable properties). This gives an average book value per outlet of £1.32 million. 88% of their outlets are owned on a freehold basis and, presumably, most of the remaining 12% are on long leases, but let's just assume that the long leases have no value, so that pumps up the value of the average freehold site to a nice round £1.5m. That number attributes nil value to the brewery site which is owned freehold, I believe.If one were meticulous it would be interesting to go around the whole freehold estate and value each site but a mark one eyeball inspection of each site on the website suggests, intuitively, that the market value of the average site is a lot higher than £1.5 million. You just have to look at sites such as The Admiralty on Trafalgar Square, the Barrowboy and Banker in London Bridge, the Old Bank of England in Fleet Street and the London hotels and the shedloads of other high value London sites to know that the idea that the average value of £1.5 million is far too low, even given that there are a few boozers out in the bundu of Hampshire that might be worth less than that average number.Of course it's all very well to believe that the market value of the estate is much higher than the book value but how does one unlock that value, given that the best ones will never be sold, given the family control of the voting structure? Well, I don't know the answer to that question, but it is consoling to know that one owns a small chunk of the whole which is worth so much more than the value declared on the face of the balance sheet.LKH on the flybridge
gamesinvestor
17 Sep 2016
Property Sorry to keep bangin on ere, but I'm keen to dig a little deeper :-Anybody taken a closer look at the real value of Fullers property and compared it with what's on the books?Balance Sheet 26-Mar-16 28-Mar-15 29-Mar-14 30-Mar-13 31-Mar-12Assets Property, Plant & Equipment 533.80 471.90 434.80 414.80 400.50This shows the property has grown from £400M to £533M in 5 years. ---> 33% growthBorrowings have gone from £142M to £184M ----> 30% growthAfter Tax profit has gone from £23.7M to £33M -----> 39% - so this seems to be outpacing commitments -- testament to how well managed the team is I suppose.Still the ratio of borrowings to post tax profit is £184M/£33M -- about 5.6X -- a bit high, but with interest rates so low it's probably pretty good leverage.Anybody got a handle on the pension in terms of it's size and how much it's in surplus or deficit?Games
gamesinvestor
17 Sep 2016
The Directors Most seem to be keen to take money off the table at and around the £10 mark.Richard has sold twice now in the last 3 months -- don't know if that's for a valid tax reason or he's invested in Greene King or somat (sorry that was silly of me!).Looking at the list of shareholders at the bottom, they are relatively modest and it doesn't look like the family holding is highlighted.Traded Action Notifier Price Amount Value15-Sep-16 Sell Richard Fuller 101.00p 100,000 £101,000.0028-Jul-16 Sell Richard Fuller 1,000.00p 4,636 £46,360.0028-Jul-16 Sell James Douglas 1,000.00p 9,827 £98,270.0028-Jul-16 Sell Simon Emeny 1,000.00p 13,598 £135,980.0028-Jul-16 Sell Jonathon Swaine 1,000.00p 6,890 £68,900.00Holdings :-Notifier Holding Value*M J Turner 68,628 £726,084.23John M Dunsmore 15,377 £162,688.66Lynn Fordham 9,916 £104,911.28Jonathon Swaine 8,447 £89,369.26Alastair Kerr 3,941 £41,695.78Major Shareholdings:-Notifier** Holding ValueBlackRock Inc 3,283,342 £34,737,758.11Aberdeen Asset Management plc 3,215,252 £34,017,365.91Ameriprise Financial Inc. and its group 1,924,597 £20,362,236.11Guinness Peat Group plc and subsidiary companies 1,848,939 £19,561,774.48AEGON UK Group 1,571,738 £16,628,987.92Games
gamesinvestor
15 Sep 2016
Re: Greene King v Fuller Smith & Turner "I have a gut feeling that GNK interest payments per £ of debt are a lot more than FSTA. Any numbers on that?"Pya, I'll look into this a little deeper, but a couple of things stand out :-Operating cash flow comparison -- FSTA - £60M ---- GNK -- £244M -- last financial yearNet cash flow from investing activities - FSTA - (74.7M) --- GNK - (6.5M)Net cash flow from finance activities - FSTA 15.7M ---- GNK - (72.7M)In terms of committed finances on at least this annual boundary, Greene King's outgoings represent 32.5% of operating cash flow.FSTA's represents 98% of operating cash flow.These numbers in both cases must include allocations for dividend payments -- and Greene King is approx 4.5% right now compared to 1.8% for FSTA.I think the balance sheets in both cases are reasonable, as both own considerable property.Games -- I've fired off a few questions to GNK's investor relations
gamesinvestor
15 Sep 2016
Re: Greene King v Fuller Smith & Turner "I have a gut feeling that GNK interest payments per £ of debt are a lot more than FSTA. Any numbers on that?"Pya, I'll look into this a little deeper, but a couple of things stand out :-Operating cash flow comparison -- FSTA - £60M ---- GNK -- £244M -- last financial yearNet cash flow from investing activities - FSTA - (74.7M) --- GNK - (6.5M)Net cash flow from finance activities - FSTA 15.7M ---- GNK - (72.7M)In terms of committed finances on at least this annual boundary, Greene King's outgoings represent 32.5% of operating cash flow.FSTA's represents 98% of operating cash flow.These numbers in both cases must include allocations for dividend payments -- and Greene King is approx 4.5% right now compared to 1.8% for FSTA.I think the balance sheets in both cases are reasonable, as both own considerable property.Games -- I've fired off a few questions to GNK's investor relations
Pyatnitsky
15 Sep 2016
Re: Greene King v Fuller Smith & Turner Thanks for the numbers. I do own both but sold down Greene King at £7.89 on the Spirit acquisition as I didn't like GNK taking on more debt..I have a gut feeling that GNK interest payments per £ of debt are a lot more than FSTA. Any numbers on that?
gamesinvestor
14 Sep 2016
Re: Greene King v Fuller Smith & Turner Cash, You have a good point regarding customer care and it's certainly one to keep an eye on.I made my decision to opt for Greene King based on it's superior return on investment over the last 5 years and the relative price at the time -- Greene King is currently on offer at a low price compared to the underlying worth of the business. Fullers price is well, fuller than GNK right now.The numbers are outlined in my earlier post.If FSTA comes on offer I'll buy it as well, if not it'll still get some of my trade when I'm in London.Games -- also slightly influenced by the appointment of the new chairman and his dig into his pockets to buy quite a few shares early in the year and again in July.
CashQuack
14 Sep 2016
Re: Greene King v Fuller Smith & Turner I had a very much larger stake in Greene King four or five years back than I have ever had in Fuller's having bought GKN at a good price but then sold at a substantial profit. Had I held on the profit would have been far greater. I needed to sell shares at the time and I decided on Greene King shares as I had, of course, visited many of their pubs as well as Fullers. Why not the other way around, as my profit on Fullers was much greater in terms of percentage gain? First, Fuller's is family owned and has a very long term outlook. Second, the dissatisfaction at the time of many GKN tenants was very evident compared to a far more positive attitude in Fuller's run houses. There has been a massive sale of GKN pubs of late and naturally this will have improved "efficiency" and the bottom line. There comes a point when a business ceases to look after its customers and from then on only looks after its bottom line. But in ignoring its customers it then erodes its source of wealth. It is a fine line to tread, especially in a country that has fine tuned the art of treating the customer with contempt A La Fawlty Towers. Personally, the standard of Fuller's pubs is far higher than Greene King and as a regular contributor to the good pub guide, I know a class act when I see one.
gamesinvestor
14 Sep 2016
The Young's Brewing Bit """Wells & Young's Brewing, with Charles Wells having a 60% stake and Young & Co 40%, went into operation on 2 October 2006. Wells & Young's is now responsible for brewing, distributing and marketing Charles Wells's and Young & Co's brands at the Eagle Brewery in Bedford. In August 2011, Charles Wells purchased Young's stake in Wells and Young's. Following a full rebrand in early 2015, the company went back to its roots and now trades as Charles Wells once again, reuniting the different arms of the business under its founding name.""Games -- just a small piece of history to chew on!!
gamesinvestor
14 Sep 2016
The Young's Brewing Bit """Wells & Young's Brewing, with Charles Wells having a 60% stake and Young & Co 40%, went into operation on 2 October 2006. Wells & Young's is now responsible for brewing, distributing and marketing Charles Wells's and Young & Co's brands at the Eagle Brewery in Bedford. In August 2011, Charles Wells purchased Young's stake in Wells and Young's. Following a full rebrand in early 2015, the company went back to its roots and now trades as Charles Wells once again, reuniting the different arms of the business under its founding name.""Games -- just a small piece of history to chew on!!
gamesinvestor
14 Sep 2016
Re: Greene King v Fuller Smith & Turner "Shepherd Neame or Young's"Funny you should mention these guys, only on Saturday did I try this one and very nice it was too:-[link] Young's, from a brewing perspective anyhow, is now owned by Charles Wells and they moved all the brewing to Bedfordshire.Games : - 1/2 way through a bottle of Captain Morgan -- so my tastes are changing ---- all in moderation of course, responsible drinking etc -- purely medicinal!!
