Gina Rinehart’s private company Hancock Prospecting Pty Ltd has belatedly revealed the scale of its income and profits by lodging annual returns for 2010 and 2011 with the Australian Securities and Investments Commission, after previously arguing it should not be required to do so.
Hancock Prospecting recorded a net profit of $1.19 billion for the year to June 2011, on revenue of $2.37 billion, making it one of Western Australia’s largest and most profitable companies, after listed companies Wesfarmers, Woodside and Fortescue Metals Group.
The 2011 result was a big jump on 2010, when the company achieved a net profit of $688 million on revenue of $1.41 billion.
The company paid dividends of $12.5 million and $6.1 million for the two financial years.
Prior to lodging its accounts on Christmas Eve, the most recent public information was for the 2009 financial year, when the company reported a net profit of $225 million on sales of $738 million.
The surge in profits and sales reflected increased production from Hancock’s major income-producing asset – a 50 per cent interest in the Hope Downs iron ore mine, operated by Rio Tinto – and higher iron ore prices.
Hancock also earns royalties from a deal negotiated by Mrs Rinehart’s father, the late Lang Hancock, and his business partner, the late Peter Wright.
The Hancock accounts do not break down the different sources of income.
However, separate accounts for the company named Hope Downs Iron Ore show that the Rio joint venture contributed the vast bulk of Hancock’s earnings.
Hope Downs Iron Ore earned a net profit of $1.08 billion on sales of $2.2 billion in the 2011 financial year.
Hancock’s third major asset is a 70 per cent shareholding in Roy Hill Holdings, the company that is looking to develop the namesake iron ore mine in the Pilbara.
Asian groups POSCO, Marubeni, China Steel Corporation and STX invested US$3.2 billion last year to acquire a 30 per cent interest in Roy Hill; however the company is still seeking to lock-in an estimated $7 billion of debt finance to allow for completion of the project.
In addition, Hancock owns various coal assets in Queensland. In late 2011, it struck a US$735 million deal with India’s GVK to sell one of its coal projects.
Hancock and related entities applied in late 2011 for relief from having to lodge financial reports, reportedly on the basis that their accounts would reveal commercially sensitive information.
ASIC declined the relief application in March last year, and the matter went to the Administrative Appeals Tribunal.
The accounts give some insight into the stakes in the legal dispute between Mrs Rinehart and three of her children, who are fighting over control of a 23 per cent shareholding in Hancock Prospecting.
Hancock is also engaged in a legal dispute with Wright Prospecting over the control of Hope Downs royalty payments.
