N.Z. Light Leathers may he out of the cold

Press, Volume CXVI, Issue 34128, 14 April 1976, Page 25

N.Z. Light Leathers may he out of the cold

New Zealand Light Leathers. Ltd. which accumulated losses of 51.156.647 since its formation in 1973, may be over the worst; sales are improving, both in quantity and in prices obtained.

But, says the chairman (Mr L. C. Ryan) in the annual report for the year to September 30, the forecasts made in the prospectus will not be met, and it is most unlikely that a dividend will be paid for the year ending September 30, 1977. Mr Ryan says that the year proved extremely difficult, because of a serious downturn in the economies of countries which purchase New Zealand crust tanned lamb pelts.

This adversley affected both sales volume and selling prices. “Subtantial stocks of finished goods on .hand at balance date were : valued at the net realisable value at that date.

“A considerable portion of the loss for the year has therefore resulted from the necessity to the value stocks of finished goods on hand below cost,” says Mr Ryan. Although New Zealand Light Leathers. Ltd, wrote down the value of its finished goods to a figure below cost, there was still a solid inventory build-up in the year to September 30.

The full accounts show that stocks at balance date rose $734,155 to $2,411,405 ■ — emphasising the acute • sales problem the company Rencountered during the year, j As already reported in a 'preliminary statement the I Washdyke light leathers tanjnery incurred a net loss of I $697,162. This brought ac-

cumulated losses up to I $1,156,647. The loss was reached after providing $88,347 more for depreciation at $117,145 and paying $103,115 more in interest charges at $139,609. There was no tax. But sales have shown a substantial improvement during the first quarter of the current financial year and have been made at prices significantly higher jthan those used for stock [valuation in the accounts, Mr Ryan says. The company has made progress in its market penetration and the

outlook is more encouraging than it was 12 months ago.

The accounts show current liabilities $254,744 higher at $987,687, and term loansl $500,000 higher at sl.sm. Paid capital amounts to $2,992,550 and after deducting the accumulated losses shareholders’ funds stand at $1,835,903. Current Assets are $ 7 8 1,0 0 0 higher at $2,613,000, almost solely due to the stock build-up.

Fixed assets total $1.59m and intangibles have been written down from $137,977 to $103,483.

The latest year’s performance puts the company well astray in its prospectus estimates in the 1973 public float.

After an intensive worldwide feasibility study the company came to the conclusion that after two years of Josses it would be in profit by 1975.

The estimate was for a $220,000 loss for 1974 but that year’s loss was $294,944. The 1975 year was. expected to produce a $52,000 profit. but the losses mounted to $697,172.

Dividends of 10 per cent were expected to start, flowing in 1977. but Mr Ryan now says that adherence to the forecast is not possible and it is most unlikely that there will be a dividend for the 1977 September year.