Bottom Line: Bowthorpe queries
Friday 17 December 1993
It has funded a string of acquisitions over the years through profit-generated cash but latterly has had to resort to borrowings. Gearing has risen to 55 per cent. The cash call will clear debt and give Bowthorpe scope to snap up more of the kind of medium-sized company it has bought to date.
However, it will be hard to reinvest the rights proceeds in the short term to earn anything like its current return on assets. Bowthorpe is forecasting a healthy 18 per cent increase in pre-tax profits for this year, but the lion's share of that gain comes thanks to exchange rate movements. With a large exposure to Germany, a question mark hangs over the strength of Bowthorpe's underlying ability to grow profits, even before the impact of the rights issue.
A thoughtful management team has produced rock-solid profits growth during the past few recession-hampered years. For that reason this rights issue deserves support.
But with more shares in issue, the company will have to work hard to squeeze out the kind of earnings growth shareholders now expect, which could hold back the shares.
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 Rashida Jones speaks out against male-centric porn saying 'women should have sex and feel good about it'
Boris Johnson claims porn-obsessed Islamic jihadists are 'literally w*****s'
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Putin opponent reveals Russian President's daughter's secret identity
Ball pool for adults opens in London
Gay couple buy JebBushForPresident.com web domain, and refuse to sell
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...