The one-for-four rights issue, at 195p a share, will raise pounds 263m net of expenses. It is the group's first cash call since its flotation in 1989. NFC was born out of the state-owned National Freight Corporation via an employee buyout 11 years ago.
It has been a celebrated exponent of employee involvement, with workers, their families and pensioners owning more than 40 per cent of the shares. The core current employee holding has slipped to 14 per cent and is likely to be further diluted by the rights issue.
BZW, the issue's sponsor, has devised a novel scheme, offering small shareholders 14p for each rights share they don't take up.
The cash call will leave the company with net cash of pounds 89m. Peter Sherlock, the new chief executive recruited this year, said the money was needed to allow NFC to take advantage of the growing market for its logistics and removals services.
He said the money would be used to fund acquisitions and organic growth. 'The point to grasp is the sheer scale of opportunity in both logistics and removals. The world market for outside contracting of distribution services is currently pounds 100bn and strong growth is forecast. We need to be in a strong position to have the freedom to grasp opportunities as they arise.'
The decision to make the cash call came out of a strategic review initiated by Mr Sherlock, which concluded that NFC should focus on two core areas - logistics and moving services. It led to the merging of the group's UK transport business, BRS, and the logistics company, Exel. Reorganisation costs of pounds 45m were offset by a pounds 50m profit on the sale of NFC's waste management company.
Mr Sherlock said part of the reorganisation charge would be used to invest in training and in information technology. He expected a 20 to 25 per cent payback on the investment in the medium term.
Operating profits before exceptional items rose 2 per cent to pounds 116.7m on turnover that was 1 per cent higher at pounds 1.9bn. The one black spot was Lynx, the parcels company, which lost pounds 10.1m at the operating level against a pounds 1.5m loss last time. Mr Sherlock said that new management had been installed, but acknowledged that Lynx was not a core business and that all options, including its sale, were open.
The total dividend rises 7 per cent to 7p on earnings per share of 15.9p (11.9p). The shares, which had fallen this week following the leak of the rights issue, rose 13p to 247p.
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