ELDERS Rural Holdings, the unprofitable rural services company, has had its annual accounts tagged by its auditor because of uncertainties including its ability to continue to rely on financial support of 50 per cent owner Elders Ltd.
The net loss narrowed to $NZ5.89 million ($A4.80 million) in the 12 months ended September 30, from a loss of $NZ10 million ($A8.15 million) a year earlier, the Auckland-based company's annual report shows.
Sales fell to $NZ121 million ($A98.65 million) from $NZ132 million ($A107.62 million).
Notes to the accounts say that based on cashflow forecasts, the company is dependent on continued financial support from ASX-listed Elders Ltd, its ultimate controlling company.
The Adelaide-based company has undertaken to provide that support for 12 months though it "has also incurred losses and is dependent on continued support from its bank to continue as a going concern," the notes say.
"This creates some doubt as to the ultimate parent's ability to provide support to the group."
Adding to the uncertainty, Elders put its entire Rural Services division, which includes the Elders Rural group in New Zealand, up for sale last October.
Directors of the New Zealand business made the judgment that a new owner would provide continued support, the notes say.
Auditor Ernst & Young listed three fundamental uncertainties when it signed off on Elders Rural's latest accounts, including the uncertainty of continued support from the parent, its ability to recover $NZ6.29 million ($A5.13 million) of deferred tax assets if a sale goes ahead and the ability of the parent to recover $NZ48.9 million ($A39.87 million) in receivables from subsidiaries.
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