BIL cashed-up, ready for action

Press, 20 November 1989, Page 13

BIL cashed-up, ready for action

Brierley Investments, Ltd, is strongly cashed up and ready for investment action, the annual report shows. At June 30, the company had $739 million in cash, with $7BO million more to come this year, in settlement from its sale of the stake in Industrial Equity, Ltd.

In addition, BIL has undrawn credit lines of $2.5 billion. The chief executive of BIL, Mr Paul Collins, said in last year’s report that it was the company’s strongest balance sheet yet. This year, he says: "In reviewing the 1989 balance sheet this comment is even more appropriate and certainly underscores our view at BIL that 'cash is king’.”

As previously reported, the consolidated sales of the company for the year ended June 30 were $6,184 billion, 13 per cent down on the previous year. On those sales, BIL made an after-tax profit of $365,461 million, 38 per cent up on the previous year. In the latest year there are no equity accounted profits, while there were SB.3M the previous year. In the current year, profit from Air New Zealand is likely to be equity accounted. The sale of lEL has seen the New Zealand share of Brierley group sales rise from 45 per cent to 53 per cent and the British share rise from 21 per cent to 43 per cent.

Total shareholders’ funds at June 30 were $2.4728 billion, 13 per cent up.

Goodwill now stands at $182,687,000, compared with $96,244,000. The increase is assessed on the purchase of Industrial Equity (Pacific) shares from lEL. lEP is the Brierley group’s Hong Kong-based international arm. Sir Ronald Brierley, who relinquishes the chairmanship on January 1 to become founder president, said in the report that the continued success of Industrial Equity (Pacific) had become one of BlL’s main strengths and BIL welcomed the opportunity to increase its share-

holding (70 per cent) with the purchase of lEL’s interest earlier this year. Although much of lEP’s profit (such as the Cal Mat and Ultramar sales in 1988-89 and Equity and Law and Higbee in the previous year) appeared to be of a “one off” character, these gains represented substantial investment and management input largely unrewarded in earlier years. This emphasised lEP’s long term strategy; which was identical to that of BIL at a similar stage of its development in the 19705, he said.

lEP was BlL’s major source of exponential growth in the foreseeable future, both in respect of its established U.K. and U.S. portfolios and also selected investments in emerging new markets, which it was now examining more closely. The imminence of 1992 of almost complete financial deregulation in the EEC was a big influence in European markets, but so far relatively little noticed in Australia and New Zealand. "lEP is at the forefront of those companies which stand to benefit from an early identification with this trend,” Sir Ronald said.

“Our major new geographical expansion to date is a significant investment in the French retail group, Galeries Lafayette, Nouvelles Galeries Reunies and Bazar de I’Hotel de Ville, which is already showing a healthy surplus on our book value. We are also directly involved in France through lEP’s 66 per cent owned subsidiary, Tozer Kemsley and Millboum (Holdings), pic, which is one of Europe’s largest motor vehicle distributors,” Sir Ronald said.

TKM had been a notable success

in its own right since BIL took control in 1985 and was rapidly becoming a valuable company in the motor trade with its numerous franchises throughout the world.

Notwithstanding the effects of the “crash,” BIL shares seem to have been a remarkable investment over the years as the following statistic illustrates. From January 1,1980, to September, 1989, the Barclays Index increased by 556 per cent, whereas BIL shares have increased by 5000 per cent for the same period. That is — BIL shares have multiplied in value 50 times over in the past ten years.

The report shows that the ANZ Banking Group is BlL’s largest shareholder, holding 5.92 per cent of the shares on issue. The AMP Society is next with 5.08 per cent, and Sir Ronald Brierley’s stake is third, at 3.77 per cent followed by the Bank of New Zealand with 3.38 per cent.

Almost 75,000 of BlL’s 184,842 shareholders hold 1000 shares or fewer. The company has 176,137 shareholders in New Zealand, and 6752 in Australia. The New Zealand shareholders hold 88 per cent of the shares on issue.

Share parcels under marketable size (100 shares) are held by 8512 people. The company has not adopted in its articles the provision which the Stock Exchange now allows, enabling the firm to acquire compulsorily non-marketable parcels. But there is a note in the accounts saying the directors have the right to refuse registration of a transfer if it will result in a nonmarketable parcel.