Borthwick issue at 80 pence

Press, 26 July 1976, Page 14

Borthwick issue at 80 pence

NZPA staff correspondent London Thomas Borthwick and Sons, Ltd. the international meat trading group with a large investment in the Ne>v Zealand meat industry, is making a public issue of 15 million ordinary’ shares of 50P at a premium of 30P a share.

Morgan Grenfell and Com-i pany, Ltd, merchant bank, which is handling the share issue, said that of the 15 million shares being offered, 12,750,000 were new shares, which would raise about £9.5M for Borthwicks. The remainder are being sold by existing shareholders. The offer will be advertised on Monday, and the application list will open on Thursday. Part of the issue will be underwritten in Australia. The Borthwicks group owns three meat processing works in New Zealand — at Feilding, Waitara and Waingawa. Accounts for the year to September 30 showed that New Zealand trading accounted for 75 per cent of I the group’s profit. The prospectus for the share issue said the group bought 5,367,000 New Zealand lambs last year. Sales to the United Kingdom of New Zealand lamb in 1975 were worth about £2SM. Commenting in advance of news of the share issue, the

ißritish “Meat Trades Journal” said that Borthwick has chosen a difficult time for the issue, because the market has been stagnant for months, and two public company issues this year have flopped. “But the company can hold out the near certainty of impressive earnings this year as bait for investors. After a loss of more than E13.6M, pretax in 1974, Borthwick returned to the black last year with a profit of £2M after tax and minorities, representing earning rates of more than 20 per cent on capital, and ten per cent on shareholders’ funds.

“This year will probably be even better. The City is looking for turnover up from £2O7M to £2SOM or more, and remembers that in cyclical commodity trades like meat the feasts can be as spectacular as the famines,” the journal said. In the prospectus the chairman (Dr W. A. Bullen) says pre-tax profits for the six months to March 31 amounted to £4M. The directors forecast, “in

the absence of unforeseen circumstances” a pre-tax profit for the full year of not less than £7.3M. Capital now being raised will strengthen the financial position of the group, and will facilitate further expansion, Dr Bullen says. “W*orld consumption of meat is growing, and Australia and New Zealand are becoming increasingly important as meat exporting countries. The directors therefore consider that the outlook for business is encouraging and that the group’s share of the world market for meat will continue to increase. “The directors also intend to develop new areas of activity, based on the existing trade in meat and byproducts, in order to broaden the base of the group's business,” Dr Bullen says. More than 70 per cent of the Borthwicks group assets are in Australia, where there are six meat processing works and a sheep skin processing plant, and New Zealand,