Challenge may help Colyer Watson

Press, 9 February 1983, Page 29

Challenge may help Colyer Watson

Colyer Watson Holdings, Ltd, the meat by-products group, saw little prospect of any significant improvement in prices for its commodities on international markets, said the chairman, Mr C. R. Pearce, in the annual report.

The company had encountered these problems in varying degrees before. Although they represented a direct challenge, requiring good management and administrative skills, they should enhance, rather than inhibit, the ability to trade profitably. The directors were confident about the new activities of the North Canterbury Wool and Fellmongery, Ltd, (NCFW) providing an increasingly important contribution to the over-all profit of the company, he said.

The difficulties of the investment in NCWF were outlined in the last annual report, and just before the end of the latest financial year arrangements were completed to acquire the 50 per cent holding of Canterbury By-Products Industries, Ltd (in receivership) and the withdrawal of the receivership on NCWF, which be-

came a wholly-owned subsidiary of Colyer Watson.

The deal was reached after the establishment of a supply of skins from the Sockburn abattoirs, now upgraded to meet the new exporting standards, by the new owners of the plant. The transaction involved restructuring NCWF and renegotiating outstanding matters related to the construction of the new plant, Mr Pearce said.

During the year, the 50 per cent interest in Southland Tannery, Ltd, was sold to Southland Frozen Meat, Ltd, because of its ability to supplement the production with alternative raw material for processing from their killing plants.

There had been a decline in the number of hides for processing and marketing at the tannery, because of the extensive killing in capital stock in Southland in the preceding years. "This must have a prejudicial effect on the future viability of the plant in its present production pattern,” Mr Pearce said.

The group net profit, after extraordinary items, fell 49.3 per cent to $1,030,000 in the

year to October 1. There was an extraordinary loss of $130,000, compared with a profit of $661,000 previously. Also included were equity profits of $293,000 ($160,000 loss previously). Group turnover fell 13.2 per cent to $61,319,000.

The profit was after providing $59,000 less for depreciation at $183,000. No tax was payable because export incentives exceeded taxable profits, which had been included in the trading profit. The group has reduced its accumulated tax losses $168,500 to $3,444,500. A recommended final dividend of 3.5 c a share gives an annual rate of 10c a share (10 per cent), the maximum permitted under the dividend freeze regulations. No dividends were recommended in the previous year by the directors. The dividend rate is covered 4.1 times by the profit. Shareholders' funds rose $938,000 to $6,121,000, including steady issued capital at $2.5 million.

Working capital increased $473,000 to $2,388,000, and the current ratio was steady at 1.2 to one.