Friday, March 29, 2024

Penalty planned for late payers

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Wools of New Zealand is going after shareholders to recover unpaid money owing on the Wool Market Development Commitment.
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The directors might also give notice to cancel shares where the funds were unpaid and recover the costs of the process, they said in the latest annual report.

The accounts for the year ended June 30 had a provision for a $1.03 million write-down relating to payments being more than 90 days late.

Wool growers signed up to WoolsNZ and the commitment in 2013.

The payment was set at 20c/kg of wool produced until June next year.

The company had about 750 shareholders but only 60% transacted with the company.

The others were still obliged to pay the commitment.

The scheme had raised nearly $11m since 2013, with $7.2m of it invested in marketing and innovation activities including the GlacialXT and Kiteq technologies for which the group had high hopes.

The latest year’s payment was the lowest over the five years and coincided with the collapse of strong wool prices.

The payment total was $1.63m, down from $2.65m in 2016, and payments of $2.1m, $2.25m, and $2.28m in the 2013 to 2015 years.

To reward shareholders meeting their full payment obligations through to the end of next June, WoolsNZ was planning a share options issue, with one share issued for every dollar contributed. Shareholders in arrears would be ineligible.

WoolNZ’s net revenues excluding agency payments relating to wool delivery to scour for the year were steady at $15.4m.

Operating profit before the commitment impact was $1.18m, a good improvement on the previous year’s $581,000 but the write-down reduced the surplus to $142,769.

There were also finance costs of $595,432, mainly foreign exchange losses, leading to a pre-tax loss of $452,663, reduced to $321,000 by a tax credit.

In the previous year, foreign exchange gains had pushed the bottom-line profit to $1.48m.

At balance date WoolsNZ had total assets of $8.8m and shareholders’ funds of $5.24m. A year earlier, equity was at $5.2m, helping fund total assets of $11.32m.  Nearly $2m of borrowings were repaid in the latest year.

WoolsNZ had operating cashflow of $1.47m, compared to an outflow of $1.79m previously.

The year had been one of the most challenging for strong wool, chairman Mark Shadbolt and chief executive Rosstan Mazey said in the report.

Global demand for wool continued to trend downwards and traditional importing countries, notably China, had increased domestic production.

The fall in volumes to China had a significant impact on NZ’s overall export effort, they said.

A strong NZ dollar had also been an obstacle.

WoolsNZ had worked hard to maintain contracted wool volumes with international partners and in securing forward contract prices to provide growers with an element of certainty in a vulnerable market.

In a low-priced market it was challenging to conclude fair-value contracts but WoolsNZ believed it was continuing to deliver strong forward prices.

It was clear that continued investment in the branded model, underpinned by innovation, was essential for the group to provide a differentiated approach to build greater demand for NZ wool, the directors said.

GlacialXT, the new scour process achieving cleaner, whiter, brighter and more consistent wool would open up new contracts, with the Middle East as a target market, and deliver opportunities not previously available for strong wool.

The Kiteq dye process would increase colour opportunities for wool and give better resistance to light. No longer would synthetic products be able to claim a relative advantage for resistance to light-fade, the directors said.

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