Wright Prospecting pays out $700m

The descendants of iron ore pioneer Peter Wright have received total dividends of $702 million over the past three years, according to recently lodged financial statements that also reveal the big legal expenses they have paid.

Wright Prospecting Pty Ltd has lodged annual reports with Asic for the past 20 years, after discovering it was not covered by the grandfathering rules that allow some large proprietary companies to not disclose their financials.

It’s latest audited report, for the year to June 2018, shows revenue of $193 million and a net profit of $127 million.

Its income is primarily from mining royalties and stem from a deal struck by the late Peter Wright and his business partner, the late Lang Hancock, with Rio Tinto in the 1960s.

The company was paid $103 million as its share of income from the Hancock & Wright partnership and a further $88 million of mining royalties paid direct.

Similar payments would be made to Gina Rinehart’s company Hancock Prospecting, which has become an iron ore miner in its own right.

Wright Prospecting is jointly owned by Angela Bennett’s company AMB Holdings and VOC Group, which is owned by Leonie Baldock and Alexandra Burt

They are the daughters of Mrs Bennett’s brother, the late Michael Wright.

The company paid $173 million in dividends in FY18, $106 million in FY17 and a massive $423 million in FY16.

Dividends paid in prior years were not as large but were nonetheless mouth-watering.

For the six years to June 2015, dividends averaged $93.8 million per year.

This reflects the impact of increased iron ore production and high iron ore prices over the past decade.

However, even before the iron ore boom that started in the early 2000s, Wright was highly profitable by most standards.

In the year to June 1998, for instance, it had a net profit of $11.5 million on revenue of $20.3 million.

The bumper dividend payout in FY16 followed the appointment in late 2015 of several professional directors to the company’s board, including chairman Ian Cochrane (who is also a director of VOC) and Michael Ashforth (who is a director of AMB).

The directors evidently decided the company's net assets, which had grown to $348 million at 30 June 2015, were better off in the hands of its shareholders.

Apart from raking in mining royalties, the company’s main activity is fighting legal battles with Mrs Rinehart and others over ownership of mining tenements in the Pilbara.

As a result, it has spent an average of $7.25 million per year over the past four years on legal expenses.

The amount of money at stake was highlighted by Wright’s win in a long-running case against Rio Tinto subsidiary Mount Bruce Mining.

That resulted in Wright being paid a net $150 million between 2013 and 2015 in respect of royalties on the disputed Channar and Eastern Range mines.

While the Mount Bruce action was undertaken jointly with Hancock Prospecting, Wright's biggest legal win was against Hancock.

A long-running case that completed last year found that Wright owns 50 per cent of the giant Rhodes Ridge iron ore deposit; previously Hancock had claimed a 25 per cent stake.