Greene King trading update

[OLTB]

I intend to rely on the fact that my HYP is well diversified, do nothing with my HYP today, and as early as it is, I'm going to sit in the garden, drinking a shandy.

Ian.

Ian, make sure it's Old Speckled Hen just to boost their sales a bit more.

Cheers, OLTB.

[Arborbridge]

This is one of those awkward times. Do we just trust in Greene King management, or hold off?

This morning, Greene King has fallen and as a consequence the yield is now 5.7% - bringing it to top up place No 3 in my HYPTUSS. Currently, I've put an order on for the next cheap dealing day, which is Monday. That's in addition to BT, by the way.

This company has never disappointed, and my instinct is the "stay with the program" - however, I'm aware of the saying about catching a falling knife

Arb.

[torata]

According to Dividend Data, Greene King has more than 18 years of annually rising dividends.
I think it's going to take more than a 1.2pc fall in LFL sales for them to think about breaking that trend.

torata

[Bouleversee]

Have any of the other dividend cutters had a similar dividend history or had they always been erratic?

[Arborbridge]

Have any of the other dividend cutters had a similar dividend history

Tesco might be a case.

[Gengulphus]

PS has anyone else had their shareholder vouchers yet?

I received mine about 2-3 weeks ago.

But I've got some of my shares in my CREST account, and holding shares in a CREST account or as certificates is needed to ensure that the company knows you even exist as a shareholder!

If you hold them in a nominee account, all the company knows of its own knowledge is that the broker's nominee company is a shareholder. I don't know whether they automatically send the nominee company a book of vouchers, but if they do, it will just be one book among all of the broker's clients who hold Greene King shares...

By all accounts, Greene King are willing to send books of vouchers to shareholders who hold their shares in nominee accounts - but they're not proactive about it (i.e. they don't ask brokers for a list of their clients who hold 100+ shares), so the shareholder has to ask the broker to tell the company. And brokers vary about how co-operative they are about such requests from their clients, varying from very co-operative to completely refusing to do it... And the fact that they do it one year doesn't automatically mean they'll do it every year thereafter, so even with a co-operative broker you might have to ask them each year.

More generally, for shareholders with nominee accounts to get shareholder perks, the co-operation of both the company and the broker are required. I've certainly seen companies with shareholder perks say that only registered shareholders (i.e. those holding in CREST accounts or as certificates) can get the perk; at the opposite extreme, I get four sets of Marks & Spencer shareholder discount vouchers each year (which is vastly more vouchers than I ever actually use!) despite only having one registered shareholding and never having asked any of my nominee brokers to apply for them - presumably Marks & Spencer are quite proactive about getting shareholder lists from nominee brokers.

Gengulphus

[grimer]

I think iweb get sent a big wedge of vouchers that they then send out to those people that register for shareholder benefits.

[Horsey]

Disappointing though it is, with the SP being down 12.5% as I type, I'm not going to allow any knee-jerk reactions get the better of me. I intend to rely on the fact that my HYP is well diversified, do nothing with my HYP today, and as early as it is, I'm going to sit in the garden, drinking a shandy.

Ian.

Ian, surely you should have said you are off to a Greene King tavern for a shandy

[jackdaww]

I sold most of mine a few weeks ago
May buy in again soon.

[monabri]

Share price fall is equivalent to 3 years of dividends in a single day!

[Arborbridge]

I sold most of mine a few weeks ago
May buy in again soon.

Sounds like some of us are giving up HYP in favour of a trading strategy

[Arborbridge]

Share price fall is equivalent to 3 years of dividends in a single day!

Well, Monabri, you could always morph from HYP into a growth harvesting investor.
In the past, Greene King has had some quite large variations in SP, so this does not concern me at present.


Arb.

[Gengulphus]

When was the last time GNK or MARS cut their dividend - I'm guessing 2008/9 financial crisis.

Marston's in 2009 - see http://www.marstons.co.uk/investors/sha ... d-history/. It was done as a simple cut to each of the 2009 final and the 2010 interim, which resulted in decreases both between the 2008 and 2009 totals and between the 2009 and 2010 totals, but it was essentially one cut. (By the way, this isn't the only way that a company can handle a need for a dividend cut discovered late in its financial year, after an interim has already been paid - my recent post viewtopic.php?f=15&t=7253&p=79331#p79331 describes DS Smith handling it a different way.)

Greene King's equivalent page is https://www.greeneking.co.uk/investor-c ... dividends/, and it doesn't show any dividend cuts. But it doesn't go back far enough to show some awkward-looking figures (which I've obtained from annual reports back to 2000 that I've got archived on my hard drive - ones before 2010 no longer appear to be available on the company website, but the figures should be verifiable by looking for the corresponding result RNSes on Investegate):

2009: 7.3p interim, 15.1p final (an apparent total of 22.4p, more than the 21.5p for 2010)
2008: 7.3p interim, 18.7p final (an apparent total of 26.0p, more than the apparent 22.4p for 2009)
2007: 6.45p interim, 16.45p final (an apparent total of 22.9p)
2006: 5.80p interim, 14.35p final (an apparent total of 20.15p)
2005: 5.225p* interim, 12.925p* final (an apparent total of 18.15p*)
... previous history back to 2000 (omitted for brevity) shows no cuts, apparent or otherwise ...

* There was a subsequent 2-for-1 share split, so I've halved these from the actual declared dividends per share.

So apparently cuts in 2009 and 2010, or possibly a single cut which affected two years' totals, as for Marston's. However, the 2009 final report gives an "Adjusted dividend per share p††" history as 14.6p, 16.2p, 18.4p, 20.9p, 21.0p, and the "††" footnote says "Adjusted dividend per share reflects the impact of the bonus element of the post year end rights issue." Checking up on that, the company had a rights issue announced on 23 Apr 2009 (see https://www.investegate.co.uk/greene-ki ... 00150301R/) and completed on 29 May 2009 (see https://www.investegate.co.uk/greene-ki ... 00149923S/ and https://www.investegate.co.uk/greene-ki ... 01480087T/). The end of the company's 2008/9 financial year was on 3 May 2009, so in the middle of the rights issue, but the corresponding final results didn't come out until 2 July 2009, after its end. So all of the dividends I've listed above except the 2009 final were adjusted for the rights issue for fair comparison purposes, by a factor of slightly over 0.8.

Why is that a fair comparison? Basically because a rights issue involves a sort of share split: rights are split off from shares, and part of the value of the shares goes into the rights. And if you don't take up the rights, either you sell them yourself or the company effectively does it for you - that's what the last of the above links is about. So basically, if you don't take up your rights and so come out of the rights issue with an unchanged number of shares, you've sold a part of your shareholding - in the case of GNK's 2009 rights issue, a bit under 20% of it. Each post-rights issue share was therefore equivalent to only a bit over 80% of a pre-rights issue share and so should only get a bit over 80% of its dividend for fair comparison purposes - just as a few years earlier, each post-split share was equivalent to only 50% of a pre-split share and so should only be counted as getting 50% of its dividend for fair comparison purposes.

There is a small difference between the two situations, though: the 50% figure for the share split is completely clear, but the just-over-80% figure for the rights issue will have varied a bit between shareholders, depending on exactly when their (effective) sale took place. In that context, I don't regard the tiny change from 20.9p for 2008 to 21.0p for 2009 as an increase in any meaningful sense - almost certainly some shareholders will have seen tiny increases, some tiny decreases, depending on exactly how they handled the rights issue. So I would say that Greene King hasn't cut its dividend since at least 2000 - but it did for all practical purposes hold it in 2009. So not quite a perfect 18-year record - but about as close as you can get without actual perfection!

Gengulphus

[Wizard]

..I don't know whether they automatically send the nominee company a book of vouchers, but if they do, it will just be one book among all of the broker's clients who hold Greene King shares...

By all accounts, Greene King are willing to send books of vouchers to shareholders who hold their shares in nominee accounts - but they're not proactive about it (i.e. they don't ask brokers for a list of their clients who hold 100+ shares), so the shareholder has to ask the broker to tell the company. And brokers vary about how co-operative they are about such requests from their clients, varying from very co-operative to completely refusing to do it... And the fact that they do it one year doesn't automatically mean they'll do it every year thereafter, so even with a co-operative broker you might have to ask them each year...

Well, as coincidence would have it I can say with some certainty that what you say is not correct in the case of HL, my vouchers arrived today. I never asked HL for them and that makes at least two holders through HL that have had them (OLTB said he had been sent them by HL a while back). The letter with them was dated 30th August so not sure why it took so long to get to me. My wife had a quick look on the GNK website and it appears we are blessed with a njmber of GNK pubs very close to us that do decent food. Now all I need to do is see if I can use as many voichers as possinle to get some of my capital losses back .

Terry.

[Wizard]

Share price fall is equivalent to 3 years of dividends in a single day!

I will not worry about that if they continue to pay the dividend without cutting. But given the run you have had I can completely understand why this seems like an ominous fall.

Terry.

[kempiejon]

Ah, that's where is forum lark comes into it's own, I was reminded to chase up Halifax, by way of online to chat, and they're e-mailing greene king confirming my eligibility and hopefully vouchers will be forth coming.

[monabri]

Was the trading update *REALLY* that bad to cause the share price fall of 15% today?

- Like-for-like sales at Greene King's Pub Company business fell by 1.2% year-on-year (for the 18 weeks)
- The company said it will address challenges in the value food sector through capital investment, by upgrading and repositioning
pubs as well as making selective disposals.
- Greene King said it continues to deliver "strong returns and cash" in the Brewing & Brands and Pub Partners divisions.
- Pub Partners saw an increase in like-for-like net profit of 1.4%
- Greene King added that it is on track to deliver GBP45.0 million in cost savings for the year ending April 30, 2018

Seems you only have to mention the word "challenging" and this instantly leads to a downgrade.

GNK dividends paid were ~£93M per annnum - hopefully with the dividend cover and being on track to deliver £45M of savings the divi will be upheld.

[OLTB]

Come on chaps - let's Doris-up (HYP equivalent of man-up) and carry on carrying on. In ten years time no one will remember 8th Sept 2017 and Greene King will still be selling beer and reasonably priced Sunday carverys.

Cheers, OLTB.

[Arborbridge]

I agree OLTB, which is why my buying order stays on for Monday. With luck, if the price does not bounce back, I will have a buy at the lowest of my prices since 2010.

Arb.

[UncleEbenezer]

Heard an item on the wireless about the government regulator reporting. Something about alleged unfair treatment by pubcos of their tenant publicans. Could that be a contributor to falls in both Greene King and Marstons?

Re: shareholder perks. I don't hold either of those pubcos, but for some time I've held Whitbread in my H-L SIPP. I had to ask H-L about claiming the shareholder perks, and getting them has been a bit hit-and-miss, but it seems to be working smoothly now (though many Costa staff seem confused by my shareholder card).