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CER Group stocks drops 12% on Australian provisions

By Phil Boeyen, ShareChat Business News Editor

Monday 25th August 2008

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CER Group shares fell 12% after the developer of biological controls announced NZ$5.8 million in charges against its Australian investments.

The shares fell to 2.3 cents and have tumbled about 65% in the past 12 months. The provisions resulted in a first-half pretax loss of NZ$6.8 million, the company said in a statement today. Sales rose 13% to NZ$3.1 million.

The provisions are a setback for CER, which acquired its Vital Resource Management unit in Australia a year ago for NZ$5 million to gain contracts for bio-fertilisers with Queensland sugar cane growers. Demand for the products has been hurt by a depressed sugar market, amid weak sales and soaring prices for fuel and chemicals, it said today.

"Prospects for sales in the critical forthcoming spring season are now significantly in doubt," CER said. Despite growth in sales, the company has concerns about "the sustainability of VRM's income base."

CER has cash reserves of NZ$700,000 as at June 30 and about NZ$900,000 in credit lines, enough to meet the company's trading requirements, it said.

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