Experience priceless for Great Southern

As the sector’s dominant player, agribusiness investment manager Great Southern Ltd is used to successfully weathering legislative storms. And the latest ATO tax challenge for non-forestry MIS will be no different, according to executive director and general manager Cameron Rhodes.

This confidence is founded on some solid results, with Great Southern posting its fourth successive year of record results in 2006, including project sales of $457 million in 2006 and a 5 per cent net profit increase to $132.9 million. And the company is poised to increase sales after an early, over-subscribed close to its cattle project late last month.

Great Southern has also amassed a land bank of more than 2.5 million hectares, including one of the country’s largest private plantation estates and the world’s largest organic olive grove, and has established itself as one of the country’s top five cattle operators.

With the company’s net assets currently totalling $756 million, Mr Rhodes believes Great Southern’s economy of scale and experience in the industry would help it through this latest challenge.

“We are in an industry that can be susceptible to change,” he told WA Business News.

“I think one of the good things from our point of view is that we’ve been around for a long time, and we’ve clearly been able to demonstrate our adaptability in being able to adapt to change very quickly.”

But despite such strong fundamentals, shareholders have had less reason to be upbeat.

Since June 2006, the company’s share price has plunged 40 per cent, from $3.43 to $2.04.

At Great Southern’s AGM last month, managing director John Young told shareholders the primary causes for the drop in share price were from external factors, including the government’s review of forestry MIS tax arrangements in May 2006, and the previous day’s announcement on non-forestry MIS projects.

Mr Rhodes said the company, along with its industry peers, had urged the government and the ATO to urgently resolve the matter to confirm future arrangements and deliver some confidence back to the market.

“What the industry needs is certainty. Until the government and the ATO articulate where we’re at and what it means, we’re going to have that uncertainty over our head,” he said.

While Great Southern has made no concrete plans regarding the future of its non-forestry projects, the company will this year focus strongly on reviewing its product mix, while concentrating on new areas of opportunity and diversifying its revenue base.

The launch of a new high-value timber project this year, to complement its woodchip project, will further cement its core business in forestry, which currently represents 70 per cent of its sales.

“We never lost faith in forestry…We see it as a great time to be looking at these alternative products and looking at the high-value end of forestry,” Mr Rhodes said. “Australia is very well suited to be a major player on the forestry scene.”

He said the company was maintaining a positive outlook for MIS and the agricultural industry in general, with Australia well positioned to be a major world player, particularly with its close proximity to China and South-East Asia.

“We still very much believe in the agricultural industry,” he said.

“The world markets are getting smaller, but if were going to be able to compete worldwide, particularly with other countries with subsidies etc, the only way we can do that is to be efficient in agriculture.

“That’s why we believe the MIS is such an important component in that.”