Elders in re-capitalisation talks
Can Elders rise from the ashes of its $505 million loss?
The South Australian agribusiness today flagged re-capitalisation of the company as a “pure-play agribusiness”.
Posting its financial results for the 2013 financial year, Elders confirmed previous advice to the market that its losses had topped the half-billion dollar mark as it continued to restructure the once-dominant business.
It also incurred an operating loss and retains more than $255 million debt.
Elders reported underlying gross earnings as a loss of $42 million compared to last financial year’s profit of $8.2 million.
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“The loss was largely driven by $(442.2) million in non-recurring impairment charges, particularly to intangibles, and the de-recognition of tax assets along with other non-recurring items associated with divestments and restructuring to become a pure-play agribusiness,” the company’s statement said.
“Challenging seasonal and market conditions also impacted the result.
“The non-recurring items include $(201.8) million from divestment of the Automotive business, $(159.3) million relating to the impairment of intangibles within Rural Services offset by profits on divestment of a portion of the Elders Insurance JV, a $(38.1) million write-down of tax assets, a $(16.7) million loss on forestry related items, and an additional $(26.3) million for restructuring costs and losses on discontinued operations.”
Elders Limited managing director Malcolm Jackman said today the restructure of Elders was almost complete.
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“The 2013 year marks the near completion of a five year process of rationalisation and restructuring of assets, operations, finances and carrying values in order to refocus Elders on its core strength and historical purpose – rural services,” he said.
“Without trying to diminish or overlook the costs to many of the stakeholders involved, we are relieved to have finally reached that goal.
“Elders can finally focus all of its management and staff attention on operating our core business and serving our customers.
“With the completed divestment of Futuris Automotive, the near-completion of the forestry wind-up program, and continued support from our financiers, Elders is again a pure-play agribusiness.”
Jackman said Elders was continuing discussions with a number of parties that have expressed interest in re-capitalising the company on the basis of its sole focus, brand and network strength as a pure-play agribusiness.
“At this time no binding or complete proposals have been received and the company will keep the market informed as appropriate.”
Elders said earnings before interest and tax (EBIT) in the rural services business in 2013 were affected by a $24.2 million charge related to accounting discrepancies in Elder’s live export business.
The charge was needed to restate the global livestock trading balance sheet after the company identified that trading results had not been recorded in line with accounting policies.
Investigations were continuing into the accounting irregularities.
Elders said current evidence pointed to likely inappropriate, and potentially fraudulent, activity.
Shares in Elders were steady at 12 cents.
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