March 16, 2007

 

New Zealand's Seales eyes IPO to boost expansion

 

 

Growing demand for high tech livestock feeding systems could see another rural sector company attempt a sharemarket listing.

 

The managing director of livestock provider Seales in Morrinsville, north of New Zealand, said he is looking to float the company he bought 10 years ago once it completes an expansion project.

 

Ross Hyland, who also owns 75 percent of Seales, said while he expected increased revenues and profit growth from the expansion, going to the market for more capital was inevitable.

 

Hyland said he is eyeing an IPO to push through with the company's acquisition plans to maintain its growth.

 

Seales specialises in dairy cow nutrition but it also provides feed for pig, poultry, deer and goat farms in the New Zealand market, which includes products made to individual farmers' specifications.

 

The company's revenue has climbed over 25 percent a year in the past six years due to demand for its livestock feed.

 

Seales is spending $5 million in new plant and equipment to boost production capacity six fold to about 100,000 tonnes of compounded pelleted feed a year. It currently has the capacity to produce about 15,000 tonnes

 

It is hoped that state-of-the-art processing technologies will extract maximum value from corn.

 

Seales has also invested in precision in-shed feeding systems that allow farmers to manage individual cow feed intakes electronically.

 

About 85 percent of its customers come from the greater Waikato in the northern area, which spans from Pukekohe to Taupo.

 

Hyland said he was keen to increase Seales' presence in Taranaki in the west where at the moment only 2 to 4 percent of its customers are based, adding the company will have its presence nationwide once expansion plans have been laid out.

 

Seales has an annual turnover of $8 million and the current expansion was expected to boost revenue about 30 percent in the next two to three years, Hyland said.

 

Earnings before interest and tax, according to Hyland, is forecast to be about $600,000 to $700,000 in the financial year ending February 28, 2007 and then a similar profit is expected for fiscal 2008.