Apple Fields to stay in the rural area

Press, 9 December 1988, Page 20

Apple Fields to stay in the rural area

Apple Fields will continue to investigate opportunities in the rural area, according to the company’s annual report. The executive directors of the listed Christchurch-based orchardist say that the continued expansion into orcharding this year, and more recently, the involvement in dairy farming, are a reflection of this. The company announced yesterday that it will begin truffle farming in Christchurch. It is developing 3ha of land on the outskirts of the city, and will be planting 1800 truffle seedlings. The directors say that in the business sector there is a definite tendency to attribute more to those companies producing something. There is also a realisation that primary production, especially in competitive areas, will continue to be New Zealand’s main foreign currency earner. In apple marketing there have been a number of developments this year. The Apple and Pear Marketing Board’s monopoly in the local market had been criticised by some big supermarket chains; the European Community had imposed a quota on apple imports; marketing efforts had been increased in the United States; and Closer Economic Relations negotiations will lead to New Zealand apples being available in Australia.

Also the Government is undertaking a review of producer boards and there is renewed optimism about access to the Japanese market within two years, they say.

Apple Fields had entered the debate on the pricing policies of the Apple and Pear Marketing Board, believing that when price smoothing between varieties is eliminated the returns to the company

will be considerably higher than budgeted. The company’s orchards are predominantly planted in premium variety apples, and the directors say that it is these varieties which will first make up the lucrative European quota. The premium varieties, coupled with innovative New Zealand growers, would make this country the main supplier in the top end of the apple market for some years to come, they say. And the expansion of the U.S. market and impending entry’ into the Japanese and Australian markets are exciting prospects. As reported, the total profit was $1,122,000 in the year ended September 30, compared with the previous corresponding period. The result included an extraordinary profit of $480,000 ($259,000 loss previously) because of a decrease in the company tax rate.

Turnover more than doubled from $2.2 million to $4,583,000 and after expenses the pre-tax profit was $1,497,000 ($637,000). Tax took $544,000 more at $848,000 and depreciation $104,000 more at $172,000.

The directors have recommended a maiden final dividend of 2.5 c a share (5 per cent). The company had predicted in its prospectus that it would not pay a dividend until 1992. The dividend requirement is $239,000 and it is covered 4.7 times by the profit.

Shareholders’ funds rose $11.9M to $16,351,000, including ordinary capital up $3.9M to $4,928,000 after shares were issued for acquisitions and the cover conversion of options.

Working capital dropped $354,000 to $lOB,OOO. The net asset backing a 50c ordinary share was 166 c (210).