22 JULY 1972, Page 31

Account gamble

Juicy speculation

John Bull

A share which has moved in the niost interesting fashion over the last six months is Fruit & Produce Exchange of Great Britain.

Most investors will never have heard of this company for it has seldom or never been in the headlines. However, on someone's buying list it has been a frequent feature. It is only capitalised at about £i million but there is quite a free market in the shares and though they are only quoted in the Stoc.k Exchange Official List, under the listed dealing in the Financial Times it will be noted there have been frequent markings over recent months.

I feel sure that when the group's full year's results to March 31 are announced on about July 25 they will create a flurry of activity. And with no director control or large outside interests there is likely to be talk of rationalisation moves.

First, however, something about this little known company. Fruit and Produce Exchange is simply a fruit produce broker, importer, wholesaler, merchant and victualler. It has had a cyclical trading record affected by a multitide of factors such as a glut of oranges at Christmas — the traditional peak selling period. Its Birmingham branch also came under pressure in 1970 and investigations revealed defalcations, misappropriations and falsification of branch records. Freight rates and dock strikes as well have to be studied when loking at the record book. But what of the immediate future? In the first half of the year to last September, pre-tax profits were £110,000 more than the £72,000 made in the whole of 1970-71. For the whole year I would expect to see pre-tax profits of at least £25,000. At the current price of 25p the shares are thus selling at eleven times earnings of 27 per cent.

However, much of the property was in the books at 1969 valuation. Also, since then Fruit & Produce has bought the half of Southampton Fruit Exchange that it did not previously own. If certain planning permission was forthcoming this could prove a very valuable asset indeed. Add to this the takeover attractions — Geest Industries (the banana people) have been rumoured to be interested and shrewd Slater Walker's man, Michael Buckley of London and Perth Securities, might well be interested in the victualling side of the business (F & P has victualled ships in Southampton since Henry IV's day) — and then one has a first-class Speculation.