C.F.C.A. coped well in difficult circumstances

Press, Volume CXV, Issue 33995, 8 November 1975, Page 21

C.F.C.A. coped well in difficult circumstances

The problems of liquidity and profitability have been adequately handled and, with the increased contribution from shareholders and a reasonable profit. Canterbury Farmers Co-operative Association,, Ltd, is well placed to expand when the opportunity offers, says the chairman (Mr G.Slater) in his annual review.

The stabilitv and growth of companies is dependent on Government policies, and during the past year, the profit of C.F.C.A. has been directly reduced by regulations affecting equal pay, retail margins, interest rates, hire purchase and wage orders, he says. “The Government should' recognise that companies must be permitted to operate in an economic climate that makes progress possible. Only with reasonable profits can continued employment be maintained and development made possible.” Expenses were 12.6 per ce«t higher at $2.2m, in the year to July 31, compared with the previous year, and the majority of the increase was because of rising salaries and wages, and the cost of interest on borrowed funds. But this increase was less than the 17.7 per cent increase experienced previously. “Although the further application of equal pay had a significant effect, the effort to reduce expenditure on all items has maintained profit at a reasonable level,” Mr Slater says. The drop in the price of wool from 153.8 c a kilo in the 1973-74 year to 95.8 c a kilo had an adverse effect as predicted. The fall in sheep and cattle prices reduced farm incomes and farm development.

Stringent hire purchase regulations had an adverse effect on trading in the meter division, while the machinery division remained steady. The record demand for seeds in the previous year fell away sharply and werli commodity prices dropped, and adverse weather also affected the produce division. The general merchandise and coal division had a satisfactory result. Sales in home appliances and wines and spirits increased, but farm merchandise, particularly fertiliser, suffered from a reduced demand. In the year under review the over-all turnover fell 13 per cent to 519.6 m. Land,

stock and wool fell 32 per cent, grain and seeds 11 per cent, but motor and machinery rose 2 per cent, drapery 10 per cent, and general merchandise 6 per cent. As announced, the group net profit fell 26.2 per cent to $307,572, on the record profit achieved in the 1973-74 vear. The result was after providing $48,454 less for tax at $245,975, but $1430 more for depreciation at $109,107. Interest on mortgages fell $2298 to $39,484 The earning rate on shareholders’ funds was 9.2 per cent compared with 14.2 per cent previously. The dividend of 12c a share (12 per cent) requires $167,476, and is covered 1.8 times by the profit. Last year

a dividend of 15c a share (15 per cent) was paid, but this included a bonus dividend of 5c a share. Working capital rose $453,423 to $2,416,493. and the current ratio increased from 1.5 to 1.6 times to 1. Shareholders’ equity rose to 41.5 per cent; shareholders’ funds rose by $451,554 to $3,567,710 including capital increased from sl.2m to sl.6m because of the bonus issue. Capita) reserves stand at $147,821, and revenue reserves at s).Bm. The shares last sold ati 123 c, for a dividend yield of 9.8 per cent and an earnings yield of 17.1 per cent. The price-earnings ratio is 5.8, and the net asset backing 231 c a 100 c share.