I'm having a cursory glance at the results at the moment and on first glance it clearly appears to be the work of new management. So frequently I see new management come into a company and they do write downs and the like with their first reporting, I guess it is to make them look better when future year results are so much better.
I'm a bit lost on some of the write downs though, why write down the cost of the feasibility study? Why write off the value of the infrastructure? Surely the value of the newly put in place infrastructure hasn't dropped by $15m this quickly? Land and infrastructure combined cost of $36m and they've written this down to $20m.
Also on the 2012 crop, adversely affected by rain during critical harvest period? Why are we just learning about this now? There was no mention of this until today? Hopefully with WA orchards producing a crop in 2013 the increased geographic spread will reduce somewhat the impact of adverse weather conditions.
Underlying EBIT? Well at least they beat the forecast underlying EBIT as announced to the market on 4/6/12. Although I am confused as to why the underlying EBIT for the managed orchards differs from the reported EBIT. Also, for the purposes of putting a valuation on the company the question remains as to what underlying EBIT would have been assuming normal growing/processing conditions.
Another area of concern is the increased corporate costs. Underlying corporate costs increased 12.4% which seems excessive to me.
If you take the Olam orchards from the underlying figures we would have been lucky to breakeven.
What date is the AGM being held?
SHV Price at posting:
$1.25 Sentiment: Hold Disclosure: Held
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(20min delay)