For the nine months ended 30 June 2015
The 41st year of Primary Wool Co-operative has seen the building of the relationship with our new joint venture partner, Carrfields. The renaming of the joint venture company Carrfields Primary Wool Ltd, branded CP Wool, took place after balance date and the Carr family are very keen to see the wool business continue to grow. After the Co-operative helped facilitate the establishment of NZ Yarn, Carrfields Primary Wool took a majority share, with a number of farmers also investing. Craig Carr has taken charge of the day to day wool business and Howie Gardner has taken over the Chairmanship of Carrfields Primary Wool Ltd.
Read the Primary Wool Co-operative Prospectus and Financials here
Chairman’s Report
For the nine months ended 30 June 2015
The 41st year of Primary Wool Co-operative has seen the building of the relationship with our new joint venture partner, Carrfields. The renaming of the joint venture company Carrfields Primary Wool Ltd, branded CP Wool, took place after balance date and the Carr family are very keen to see the wool business continue to grow. After the Co-operative helped facilitate the establishment of NZ Yarn, Carrfields Primary Wool took a majority share, with a number of farmers also investing. Craig Carr has taken charge of the day to day wool business and Howie Gardner has taken over the Chairmanship of Carrfields Primary Wool Ltd.
Financial Results
Our operating profit reflects the change to a June balance date in line with Carrfields Primary Wool and the Carr group. Our rebate expense was up and overhead expenses down, so the result proportionately was slightly ahead of last year before an impairment of $144,000 on our loan to Bruce Woollen Mill and shares in Wool Equities. Earnings from our investment in Carrfields Primary Wool increased as their market share increased, reflecting an overall profit for the financial year.
Just Shorn™
Just Shorn™ was launched in Australia through the Carpet One Franchise last year and has grown at a very satisfactory rate. It has proved far easier in Australia than the United States where people lack knowledge of wool. October has seen a soft launch of Just Shorn™ in New Zealand through the Harrisons Carpet One franchise with sales already exceeding expectations.
Wool Equities Ltd
Our efforts to restructure WEL and its subsidiary Bruce Woollen Mill proved very frustrating. After obtaining 5% of the WEL shareholding and over 90% approval from WEL shareholders to restructure the company, the WEL Board prevented the necessary actions taking place. Prior to this, the Co-operative paid off a large number of creditors at Bruce Woollen Mill, were represented on their Board and picked up their financial management as agreed but were frustrated by debtors not paying for yarn, leading to continued cash flow shortages. By June, orders were sufficient to break-even but cash from debtors dried up leading to continued holdups in production. Since balance date, Bruce has been put into receivership but is operating with production above pre-receivership levels. There have been a number of expressions of interest for the business. There is a shortage of spinning in the fine wool area, with a six month waiting list in one of the remaining mills, with demand increasing.
Directors
During the year, Martin Udale resigned as Director to pursue other business interests. Martin brought commercial and business acumen from outside the industry that contributed significantly to the Board. We thank Martin for this contribution and wish him well for the future. The Board have discussed replacements and believe the best geographical representation and skill contribution will be achieved by canvassing members and seeking an appointment as part of the 2016 Annual General Meeting.
Shareholding
Our 93 new members contributed $164,100 fresh capital over the nine months bringing the value of rebate and ordinary shares to $3.6M. We welcome all new members and look forward to yet more growth as farmers continue to see the benefit of being part of the Co-operative.
Our Directors, along with our Secretary and his staff had an increased workload due to our industry-good involvements and the joint venture changes but continued to perform their roles efficiently and cheerfully. Thank you to you all.
M B de Lautour
Chairman
Read the full Primary Wool Co-operative Prospectus and Financial here