After a delay of several months in completing the accounts Primary Wool reported a loss of $394,776 for the year ended June 30, 2018, following a $2.36 million loss a year earlier.
The directors say they believe the company can meet its obligations when they fall due.
Directors Howie Gardner and Hamish de Lautour have agreed to provide financial support. Since June 30 payments of $10,000 from Gardner and $20,000 from de Lautour have been received and $1.95m of shareholder loans have been converted to redeemable preference shares.
The loans include a long-standing one of $1.65m from chairman Bay de Lautour. The notes to the accounts say the company has promised to service the loan taken out by him to provide the support, if required in certain circumstances.
The three directors also each made loans of $100,000 to the company in 2017.
The notes also say the 2019 cashflow budget requires limited cash injections and the requirements can be reduced further by reductions in directors’ fees, which the directors will do if necessary.
Primary Wool is essentially a holding company for its 50%-owned Carrfields Primary Wool (CPW) business. CPW now owns about 70% of Christchurch-based NZ Yarns. In his report Bay de Lautour said NZ Yarn still finds it difficult to generate the volume of orders it would like.
NZ Yarn has been looking for further investors and since balance date hemp interests have taken a 12% stake.
The co-op’s equity-accounted share of the CP Wool loss was $87,000, compared to a loss of $1.64m in 2017.
Primary Wool has advanced $2.175m to CP Wool as a loan at 10% interest, payable on demand. Repayment is not expected in the next year and the directors said the advance is considered to form part of the company’s investment in CP Wool.
Primary Wool used to get income from selling wool sacks to shareholders but that role has been taken on by CP Wool.
The annual report shows at June 30 Primary Wool had total assets of $2.22m, total liabilities of $2.02m and shareholders’ funds of $196,000.
The equity position has increased from $93,524 a year earlier, partly from the subscriptions from new shareholders joining the co-operative.
Shareholders received rebates of $379,704 on the 2017 year but no rebate was paid on the 2018 result.
The operating cash outflow was $303,143, compared to an outflow of $418,313 previously.
