16/07/2008 - 22:00

Great Southern to cut staff numbers

16/07/2008 - 22:00

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Managed investment scheme provider Great Southern Ltd has begun cutting its workforce across Australia after producing a poor sales result for the year.

Managed investment scheme provider Great Southern Ltd has begun cutting its workforce across Australia after producing a poor sales result for the year.

Spokesperson David Ikin said the Perth-based company would layoff more than 25 of its 600 workers over the coming weeks.

"We are currently carrying out a review of our business operations and our costs and part of that review includes staff," he told WA Business News.

"Regrettably some redundancies will be made in the sales and marketing department."

It was a disappointing year for Great Southern, with MIS sales down 24 per cent from 2007 to reach $315 million.

"The result was driven by a number of adverse factors, particularly general market conditions and investor confidence, uncertainty regarding MIS generally and delays in finalising the company's pulpwood plantation project," chief executive Cameron Rhodes said.

Like most in the MIS industry, Great Southern has faced uncertainty after a draft ruling issued by the Australian Tax Office in April 2007 effectively withdrew tax-deductibility for non-forestry MIS.

Depending on the outcome of a test case mounted in the Federal Court, it could be the end of non-forestry MIS in their current form, which Mr Ikin said accounts for 30 per cent of Great Southern's total sales.

Perth-based Arafura Pearls Ltd chief executive Andrew Hewitt said it would be a "crime" to abolish the tax-effective non-forestry MIS products.

Although such investments were not a major part of Arafura's operations, they were used to fund the company's expansion plans.

"Agribusiness in Australia has always found it difficult to raise capital," Mr Hewitt said.

"If the tax office was to succeed then it would capture 30,000 farming enterprises in Australia of which a third, at best, would be marginal and not have any income streams."

Arafura reported $4.3 million in MIS project sales this year, compared to $9.8 million last year.

Another company to review its operations in light of uncertainty is Futuris Ltd subsidiary ITC Ltd, which this year posted MIS sales down almost 40 per cent on 2007, totalling $37 million.

ITC spokesperson Michael Clarke said "challenging market conditions" had contributed to the outcome.

"We will be conducting a review on current operations as we always do post June 30," he told WA Business News.

"It would be premature for us to predict any outcome or any cause of action other than to say we will focus on the delivery of our products and focus on what the market is looking for."

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