Elders turnaround ‘all but complete’

17 Dec, 2015 06:13 PM
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Elders managing director Mark Allison.
2015 was a year of stabilisation
Elders managing director Mark Allison.

OPTIMISM was in the air at Elders’ annual general meeting in Adelaide today, as managing director Mark Allison labelled the company’s turnaround “all but complete”.

“This time last year, I stood before you and remarked on the story of Elders’ survival,” Mr Allison said.

“This year, it’s a different story - 2015 was a year of stabilisation, positive progress and robust preparation for growth.”

While Elders was back in black in 2014, the company’s financial performance was much healthier in 2015, recording a $38.3 million statutory profit in the 12 months to September 30 – well up on the $3m achieved in the previous year.

Led by strong livestock returns, increased retail earnings and interest cost savings, the improvements were enough to get Elders readmitted to the ASX 300 index in September following a three-year hiatus.

Chairman Hutch Ranck said all staff - agents, retail staff and senior managers - had contributed to the turnaround.

“Our consistent improvement, year-on-year, reflects the vision and commitment of our management team and the hard work of employees across Australia, China and Indonesia,” he said.

Mr Ranck said the company had achieved zero term debt following seven years of debt reduction.

“For too long, our debt levels have been an issue of concern for shareholders and the board alike, so this milestone has played a key role in Elders’ turnaround story,” he said.

“With zero term debt, we are in a strong position to be able to shift our focus from debt repayment and we are directing our cashflow towards the eight point plan.”

But, he said dividend payments were still a couple of years away.

“I understand for many long-standing shareholders, there has been considerable time between dividends, and while I understand we still have some work to do before you view our performance as acceptable, I hope you can see the significant progress that has been made in our vision to create value for stakeholders.”

Major company achievements included the launch of the online livestock auction platform livestock.com.au, the introduction of a seasonal livestock financing facility, and the launch of a new online grain system.

“Also, Elders sent the first shipment of live slaughter cattle from Australia to China under the new health protocols established pursuant to the China-Australia Free Trade Agreement,” Mr Allison said.

“While our approach to capitalising on future opportunities in China will be measured and methodical, this was a key milestone for Elders and the wider Australian industry.”

Mr Allison said significant progress had also been made on the company’s eight point plan.

“The eight point plan is our blueprint for becoming an efficient user of capital and a business that produces acceptable returns for all our stakeholders while servicing our customers’ needs,” he said.

“I’m pleased that after two years’ solid progress, we remain on-track to deliver the financial commitment of the eight point plan.

“Of course we’ll experience challenges from the weather and markets, but that’s the business we’re in.”

He said the company’s top priorities for 2016 would be safety performance, operational performance, key relationships, and efficiency and growth.

“You can be confident that Elders is back. We are doing what we said we would do, and we are focussed on servicing our customer needs and the future growth of our business,” he said.

Several motions were carried at the meeting, including the election of Robyn Clubb to the board, the re-election of Mr Ranck and an amendment to Elders’ constitution capping board numbers at eight.

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Jacinta Rose

Jacinta Rose

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READER COMMENTS

Jock Munro
19/12/2015 11:13:46 AM

Why is Elders CEO Mark Allison on the board of grains advocacy organisation GGL? Is this a perfect example of a conflict of interest?
Mark2
22/12/2015 3:17:15 PM

Well well, how times have changed. Not so long ago a previous CEO of this outfit told a friend of mine that the livestock and rural merchandise sector was the small end of the business and proceeded to sack most of the people who brought the business through the door. Like blowies heading for a recently deceased sheep....
Cowboy Charlie
31/12/2015 4:03:16 PM

Mr Munro, this is a perfect example of a skills-based non-executive director adding significant value to an organisation trying to do the best for its grain producer members. You need to base your comments on fact and the fact is that Elders does not trade grain directly and secondly as a 25 year Fellow of the Australian Institute of Companies Directors with public, private and not for profit board experience, Mr Allison is more than aware of any potential conflicts of interest. Sadly, your comments are increasingly uninformed and ill-based.
Jock Munro
1/01/2016 2:14:41 PM

Cowboy, If Mr Alison was employed by GGL and he had no conflicts of interest that would be quite okay. However at present, he is not a grain grower and he is the CEO of Elders a company which extracts margins from GGL grain producer members. Mr Alison cannot serve both the interests of Grain Grower Ltd members and Elders shareholders. GGL has some real issues and it does appear that things are about to get worse because it is widely believed that the Board would like to introduce a selection committee process for the appointment of directors- Mark Allison of Elders could end up as Chair!
Investor
15/01/2016 7:32:13 AM

Far more shareholder value has been destroyed than created during the time Mr Ranck and Mr Allison have been on the board of Elders. The numbers in the 2009 capital raising prospectus have been shown to be a work of fiction. It would have been far more honest of the company to enter a reorganisation than to mislead investors into pouring more equity into the business only to subsequently tear it up by selling assets way below the projected values in order to pay down unsustainable debts, Mr Ranck and Mr Allison played their part and should have removed Malcolm Jackman as CEO far earlier.

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