Mr Brierley confident of continued growth

Press, 6 November 1984, Page 24

Mr Brierley confident of continued growth

PA Wellington Brierley Investments, Ltd, will inevitably become New Zealand’s largest listed company, according to its chairman, Mr Ron Brierley. Looking at the company’s growth philosophy he says in the Brierley annual report: “Our future projections are based on a foreseeable inevitability that we will become New Zealand’s largest listed company. “This is not a role we particularly seek. It is simply the inescapable consequence of a • realistic growth plan which is consistent with our present corporate structure.” In terms of market capitalisation, the company is probably now the third or fourth largest company, he says. The board believes it can continue to produce a growth rate well above the average, Mr Brierley says. “It does not accept a slowing down as an inevitable consequence of the attainment of a certain level of size.” It believes there are still a number of relatively conventional opportunities in New Zealand which would support a reasonable rate of progress. “If we did nothing else but retain our present portfolios, our future record might be a lot better than investment analysts would reasonably expect,” he said.

“If that is supplemented by suitable acquisitions — and there are still many smaller companies in New Zealand which would be very sensible additions to the group — the outlook becomes even more promising.” But there is a limit to what could be achieved within the confines of the New Zealand economy, he says. Therefore Brierley has looked overseas. It already has a “magnificent” asset in its Industrial Equity, Ltd, shareholding. Its next move would be in respect of the Industrial Equity (Pacific), Ltd, incorporated in Hong Kong, which held a selected portfolio of shares in Asian, United Kingdom and American public companies. Shareholders could be assured, however, that moves

overseas were a natural extension of Brierley’s “tried and true principles,” Mr Brierley said. “We have no false illusions nor excessive ambitions regarding geographical expansion, but firmly believe that a properly planned enlargement of the scope of our portfolio investments offers enormous opportunities.” The growth plan for the 1980 s will include.— ® A strong home base, with substantial holdings in a range of growth industries. The company’s role as provider of capital would not be an alternative to the development of independent management skills and strategies; O A commitment to the Australian economy, mainly through Industrial Equity; Q Selective investment in publicly listed companies'in other countries. As reported earlier, Brierleys had a record profit of $46.7 million for the year ended June 30. Mr Brierley says the final dividend is 10 per cent, which makes a total of 15 per cent for the year. It has been paid from tax exempt sources and will be free of tax in the hands of shareholders who have not elected otherwise, he says. It is proposed to make a one-for-five cash issue at $2 a share to raise $66 million, which would be followed by a one-for-five bonus, including cash issue shares. The paid up ordinary capital after the issues will be $ll9 million in 238 million 50c shares. The issue is by far the biggest Brierleys has made but should be measured in

the context of the additional Bunting shares to existing capital, the New Zealand dollar devaluation and the momentum of the increased scale of operation, he says. Depending on future results, the directors intend to progressively move the dividend rate up to 20 per cent. In a review of the year, Mr Brierley says that over 15 months there have been 15 formal take-over offers (seven successful and two current), purchases and sales of Wattie and CUB shares, three mergers, the establishment of unsecured banking facilities of $350 million, the acquisition of new or increased strategic shareholdings, including new subsidiaries: Baillie Farmers Motors, Ltd, Cooks NZ Wine Co. Ltd, The DIC, Ltd, Hauraki Enterprises, Ltd, Lanes Industries, Ltd, Quill Humphreys, Ltd, and Williamson Jeffery, Ltd. The merger with Bunting and Company, Ltd, was the outstanding event of the year, with the increased shareholding in The Higbee Company and current tender offer for all of its capital, Mr Brierley says. The Higbee Company operates 11 department stores in north-east Ohio, with annual sales of SUS24S million and provides Brierley with a sound trading base in America, he says. The share portfolio shows a dramatic jump to $509 million — from $209 million last year and $9.7 million ten years ago. Major shareholdings had increased from 46 public companies in New Zealand last year to 60 companies this year.