Rothmans expects big things from acquisitions

Press, 24 October 1984, Page 29

Rothmans expects big things from acquisitions

The full ownership of Ballin Rattray, Ltd, has greatly expanded the trading and investment base of the Rothmans Industries, Ltd, group, and provides a number of opportunities for expansion — particularly within the retail and distribution industries. The managing director, Mr R. H. Matthew, says this is his review with the annual accounts for the year ended June 30. He says that the group’s various interests now fall in four broad operating divisions: © Tobacco (manufacture, distribution, and trademark ownership). © Liquor (retail, wholesale, and hotels and taverns). © Grocery (supermarkets and wholesale distribution). © Other, which includes Travelodge (50 per cent owned), property development, printing and packaging, Fairbairn Wright, Saudi

New Zealand Capital Corporation (12.5 per cent interest), fruit juice production, ’ photolithography, glasshouse manufacture, a computer bureau, a confectionery distributor, and a firm making umbrellas, carry-bags, and dinghies. The group also holds a 9.5 per cent interest in Coal and Energy New Zealand, Ltd.

Mr Matthews says that although several of the group’s interests experienced some constraint on trading margins because of the Government price freeze, the group had a good trading year over all. Much progress was made in improving the profitability of a number of nontobacco operations, and this, with a much improved performance from Ballin Rattray will provide a significant proportion of the group’s earnings in the current year. The company’s cigarette

brands collectively achieved market growth during the year, and the profitability of the company’s domestic tobacco operations was satisfactory, he says.

Since balance date the Liquorland operation — consisting of 30 fully-owned and 10 franchise outlets — has achieved substantial sales and profit growth. A number of the smaller hotels and taverns are being sold and the remainder will provide opportunities for expanding the Liquorland arid Green Bottle Store concepts, Mr Matthews says. The Countdown retail operation is the leader of the group’s various interests in terms of return on net funds employed. Ten of these foodmarkets are established in Christchurch (4), Ashburton, Dunedin (3) and Invercargill (2). Four more will be opened soon in Nelson, Christchurch, Timaru, and Oamaru. ' * . Total sales for the year -H--including only three months trading from Balliri Rattray — rose 43 per cent to $302 million; for the current -year sales are forecast to exceed < $550 million. As previously' reported, group tax-paid profit increased 22.8 per cent to $16,054,000, after providing 18.8 per cent more for tax at $9,442,000, and 30.1 per cent more for depreciation at $3,368,000. The dividend for the year was raised from 22 to 23.5 per cent, the whole of it tax-free. It is covered 2.9 times by profit. The return on average shareholders’ funds improved from 18.3 to 19.8. per cent.

The ratio of current assets to current liabilities fell from 1.82:1 to 1.26:1, and the proprietary ratio declined from 59.2 per cent to 42.0 per cent. The fully-diluted met asset backing was 208 c compared with 222 c the previous balance date. .