Wools of New Zealand well set for end of grower-funding
Wools of New Zealand (WNZ) Chairman Mark Shadbolt says the company is making strong commercial progress with an expected
maiden profit for the 2016 financial year.
Shadbolt was responding to a recent shareholder comment in a local rural newspaper that the company would “almost
certainly fail” without income from farmers’ Wool Market Development Commitment (WMDC).
“To the contrary, WNZ is making investments that are reducing the company’s reliance on the WMDC.”
Shadbolt says for the year ended June 30, 2016, WNZ expects a maiden operating profit of more than $600,000 and a net
after-tax profit of more than $1.1 million.
WNZ’s grower shareholders committed to pay the WMDC out of their clip when they funded the company in a capital-raise in
“We’ve always known and planned for the WMDC to conclude in June 2018 and thereafter for the business to be in a
position to be self supporting and profitable.”
Initially, WNZ was totally reliant on WMDC.
However, over time WNZ’s reliance on the WMDC had been steadily decreased as WNZ developed other revenue streeams.
In 2013/14, WMDC was $2.2m representing 20 per cent of gross revenue. For 2015/16 the expected WMDC would be $2.6m
representing less than 8 per cent of expected total revenue.
WNZ expected its revenues would continue to increase due to ongoing increased commercial activity. The WMDC would
increase in dollar terms through to 2018 but continue to decrease as a percentage of WNZ’s total gross revenue.
Shadbolt says it is regretful that the shareholder called for the Financial Markets Authority to “look at WNZ
performance and vs Prospectus and call the directors to account.”
“The company’s performance met its prospectus targets to the 2014 financial year and there were no prospectus-related
commitments after that year.
“As a grower I am bitterly disappointed with the ongoing destructive behaviour of individuals and entities who would
rather see the ongoing exodus of growers rather than a thriving and prosperous sheep industry.”
WNZ expected its revenue to keep rising as it did more business. Income from the WMDC would also rise, but only because
it was handling more wool.
WNZ has made strong progress in the past 15 months, rolling out an improved ‘Direct to Scour’ processing and sales
model, investing in new technology to differentiate WNZ fibre and increasing the value of WNZ brands and grower
Shadbolt said some of the investment, like Oritain traceability, GlacialXT and Kiteq had attracted government investment
to get products to market faster.