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 British tourists 'murdered' in Thailand: Pair's bloodied bodies found naked on Koh Tao beach
- 2 Vivienne Westwood says 'Yes' to Scottish Independence by declaring: 'I hate England'
- 3 Welcome to Cameroon, where drinking Baileys can lead to imprisonment
- 4 Lego breaks out of the toy box and heads for the gallery
- 5 Vogue under fire for 'Big Booty' article
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...