N.Z. Farmers’ Co-op Liquidity Improves

Press, Volume CVIII, Issue 31802, 5 October 1968, Page 20

N.Z. Farmers ’ Co-op Liquidity Improves

Although the last trading year for the New Zealand Farmers’ Co-operative Association of Canterbury, Ltd, Christchurch, has been a difficult one in most phases, the depressed prospects for the year were clearly recognised from the outset, says the chairman (Mr G. Gibson) in the annual report.

Economies of operation were effective in reducing the cost structure and the influence of these measures will continue in the current year, he says.

As announced, group profit for the year to July 31 fell $12,139, or 5.3 per cent, to 5217.246. However, a capital profit from sale of assets and devaluation increased capital reserves by $38,431 to $599,058. In the previous year, a capital dividend of $12,997 was included in the profit, so on a comparable basis, the trading profit for the latest year is up $972.

Dividend Cover

The steady 8 per cent dividend again requires $176,000 and is covered more than 1.2 times by trading profit. The earning rate on average shareholders’ funds is down from 4.9 to 4.6 per cent while the rate on capital is down from 10.4 to 9.9 per cent. Working capital improved $227,675 to $3,442,566 to give a current ratio of 2.3 to 1. Strong Position The company is in a strong position financially to handle appropriate growth opportunities as the economy expands, says Mr Gibson.

Retail trade declined in the latest year and the process of reducing inventories to a more appropriate level of sales inevitably involves some cost, he says. A similar position applied in the motor division where used car trading was conducted at a reduced sales level on a falling market.

Export Earnings

Commission earnings from wool and land also declined. Export trading by the grain and seed departments was very satisfactory. The latest profit is after providing $42,951 less for depreciation at $156,850 and $46,804 less for tax at $135,486. The tax provision is lower because of the export sales incentive scheme to develop export trading.

. Export trading by tne grain ) and seed departments was ■ very satisfactory. The latest profit is after - providing $42,951 less for des preciation at $156,850 and t $46,804 less for tax at s $135,486. The tax provision is r lower because of the export sales incentive scheme to de--11 velop export trading. I Shareholders’ Funds I Shareholders’ funds are $83,051 higher at $4,775,318 ; with ordinary capital steady ; at $2.2m. Other sources of • funds were from a $123,088 • rise in term liabilities to $2,544,982 and a fall of

$36,567 in fixed assets to $3,253,520. These funds were used to increase working capital by $227,675 and investments $15,031 to $624,214. Current assets are $689,407 lower at $6,145,006 with debtors $242,423 lower at $3,531,758 and hire purchase accounts down $446,865 to $2,600,095, Current liabilities are $917,082 lower at $2,702,440 with bank overdraft down $903,048 to $178,884.