Horticulture a key area

Press, 29 October 1981, Page 25

Horticulture a key area

R. W. Saunders. Ltd, believes that horticulture in New Zealand, with its potential for exports, will provide a profitable area of investment in the next few years, according to a special section in the company's annual report. The special section is headed “Horticulture — an industry with a future." although it does not deal specifically with the Christchurch clothing company's diversification into kiwifruit and persimmon growing in North Auckland. “Although many problems will need to be examined, including the evaluation of new varieties and crops, the diversity of the industry, crop yields and economics, and regional and national research, we believe solutions will be found," the report states.

Many people agreed that there was considerable potential for expansion in the agricultural industries. Among the options the potential for horticultural development was particularly good, it said.

In the directors’ report

the chairman (Mr W. A. Hadlee) said the horticultural partnership at Matakana (North Auckland) was growing about 15ha of kiwifruit and 4ha of persimmons. Although Matakana was not widely recognised as a horticultural area, the plants were thriving and progress was ahead of schedule. At Warkworth (10km south of Matakana) 85 per cent of this year's kiwifruit crop was up to export standard, he said.

“Horticulture in New Zealand is in its early stages and some risks must be expected. “But the price paid for the land and the method of development point to a profitable investment at Matakaria, even if the price of kiwifruit does show some downturn."

The partnership had accepted the offer of an additional 40ha of land adjacent to the existing block. The development of this land would proceed more slowly than on the original block, and careful consideration would be given to the type of crops to be grown. On trading in apparel, Mr Hadlee said that the directors were pleased with the

market penetration by the Saunders' ranges of basic merchandise.

The company had not become involved with the import licence quota scheme. It had always been a major aim to protect the job prospects of employees, and the importing of apparel was incompatible with this objective.

“High wage increases may at some future date compel us to import, but this step would be taken with great reluctance," he said.

It took time and patience to develop an export market, but sales were being made to Canada and there was encouraging progress in establishing markets in the United States.

Any expansion of the group’s apparel and textile activities must be considered in relation to known and anticipated economic policies, Mr Hadlee said.

A number of prospects had been considered, but rejected. However, shareholders could be assured that if a potentially profitable opportunity presented itself, expansion in the textile industry would be pursued.

The group net profit rose 2.2 per cent to $440,713 in the year to July 19, on gross trading revenue up 8.6 per cent to $1,070,069. The yearly sales figure is not disclosed, which, the auditors state, is a departure from the statement of standard accounting practice No. 9 issued by the New Zealand Society of Accountants.

The profit was after providing $222 more for depreciation at $54,731, and $706 more for tax at $349,578. Horticultural development costs rose $59,269 to $94,022. Shareholders’ funds rose $304,021 to $3,339,255, including the ordinary capital up $100,124 to $700,237 after the one-for-six bonus issue last November.

A recommended final 10c a share gives a steady 20c a share (20 per cent) annual rate on capital increased by the bonus issue. The dividend requirement is $140,048, and it is covered 3.2 times by the profit.

Working capital rose $276,374 to $2,361,461, and the current ratio improved from 3.1 to 3.3 to one.