Wool Equities doubles annual loss as scouring cutbacks hit returns
Sept. 12 (BusinessDesk) - Wool Equities, which develops and markets wool for its grower shareholders, doubled its annual loss amid cut backs in the scouring sector.
The Christchurch-based company posted a loss of $1.7 million, or 0.05 cents per share, in the year ended June 30, from a loss of $889,000, or 0.06 cents, a year earlier, it said in a statement.
Revenue surged to $326,000 from $50,000 a year earlier, though chairman Clifford Heath said the board's failure to win over shareholders to buy scourer New Zealand Wool Services International will cost the sector dearly.
"Our lack of success with this endeavour, we unfortunately believe, will permanently adversely affect returns for woolgrowers, New Zealand's export returns, and by direct connection most of our shareholders," Heath said. "The costs of this failed bid for price stability are seen in this report."
Wool Equities unsuccessfully tried to raise funds from its shareholders to buy WSI, whose two biggest shareholders are in receivership. The deal would have blocked a rival bid from Cavalier Wool Holdings, which has received Commerce Commission approval to buy the assets and create a nationwide monopoly.
Heath said the company's future is brighter with a manufacturing unit and property investment showing good returns and can "chart a path forward with some certainty of outcome."
The company had been previously been relying on the interest from bank deposits for income as the Wool Board Disestablishment Co (DisCo) wound itself down and transferred some $300 million of tax assets to Wool Equities.
The wind-up had been delayed by two unsuccessful lawsuits, the second of which involved parties associated with the production and marketing of Saxon merino brand wool and was delayed by accusations of impropriety by a Court of Appeal judge.
The shares last traded at 10.5 cents, valuing the company at $3.2 million.