The AACo-s half year 2009 report, released yesterday, makes for interesting reading.
It includes, ‘a provision for potential liability related to a sublease taken out by Great Southern Plantations.’ But no further details – exactly where, when, what and how much – have been publicised.
An item listed under ‘Contingent Assets’ is also interesting: ‘On 21 May 2008 and 26 May 2008 AACo commenced proceedings against Elders Limited relating to the purchase of product during the years 2002 to 2005’. Apparently this results from the claimed omission of Elders to include a particular product in a fertility treatment for cattle (but no other details could be easily found). Odd that commencement of this legal action got through at a time when Elders was a subsidiary of Futuris, major AACo shareholder. (Futuris has since changed names, and is now known as Elders.) It will be very interesting to see what transpires – whether there will be an out of court settlement, or a court case.
AACo financial problems surely commenced on a spectacular scale when $100 million was paid to Heytesbury Beef for Anthony Lagoon and Eva Downs (northern Barkly Tableland) in July 2006. At the time this purchase was viewed as very unwise by many in the northern beef industry, and it fairly directly ended up as was originally predicted – in the necessity to sell other stations down the track, to reduce ballooning debt. These included Gulf properties and Rockhampton Downs (southern Barkly Tableland) to the Harris family for just $37 million. Thank goodness the AACo was saved from spending $105 million on Tipperary and Litchfield, a piece of madness if ever there was.
The AACo’s half year results are very straightforward, well laid out and informative. Cattle stations owned by the AACo are listed, mapped and a very telling aerial image of Gulf flooding is included. I can’t help wondering about the contrast between these AACo financial reports and those produced by Great Southern Limited. The difference is blindingly obvious.
Northern Australian cattle stations have had a very tough trot due to drought then flood. This underlines the intelligence of old timers like Kidman, who bought across a wide geographic spread. Only a complete fool would think it wise to centralise property ownership in two regions that are more than likely to be hit by the same climatic calamities simultaneously – eg the Territory’s Barkly Tableland and Queensland’s Gulf country. Historically, when there are severe floods, both these regions go under water, although they are between 1,000 and 2,000 km apart. Smart pastoral companies own properties down in the Channel Country too. That way, they may well suffer flood losses in the north, but their Channel Country properties will receive a great flood – so they get a benefit in the south from a bad situation in the north. It is also worth mentioning – the Barkly Tableland region has a few good years and a few bad years out of every decade, on average. Droughts are made worse by overstocking, and this is particularly the case in the black soil Mitchell and Flinders grass downs country of northern inland Queensland, the Barkly Tableland, and parts of the southern Kimberley region of Western Australia. Flog hardy Mitchell grass tussocks hard enough and they just won’t regenerate like they do if treated with more respect.
Also in the AACo’s financial statements is the goodbye to Chief Executive Officer Stephen Toms and AACo Chief Operating Officer David Connolly, and the headhunting for replacements.
Tags: Pastoral companies