Crunch time in almond orchards
Get your mind out of the gutter - these are almonds, 1600 hectares of trees struggling out of the sandy soil a couple of hundred kilometres north of Perth.
The two orchards are owned by Select Harvests, which controls more than 60 per cent of Australia's almond supply.
It's headed by Paul Thompson, the former boss of tissue, diaper and dunny roll business SCA Hygiene Australasia.
The way the WA operation is going some of those tissues might come in handy because this is one Christmas grip likely to bring tears to the eyes. Select has slashed the value of the orchards by $59.5 million, leaving the trees with a book value of $5 million - a write-down that pushed it to a loss of $19.5 million for the six months to the end of 2012. CBD hears the company shelled out plenty to buy top-notch irrigation systems for the trees, with mixed results.
Some of the older trees are nearly four years old and already bearing fruit; younger trees planted in sandier soil are reportedly in poorer shape. So much so that the talk among locals in nearby fishing village Leeman (formerly Snag Island) is that last week the orchards were shut down.
Select says there's no kernel of truth to the rumour and nothing has changed since it updated the market last month.
At that time, it was clear the orchards weren't all they'd been cracked up to be. Select said power and water costs were more than 50 per cent higher in WA than at its east coast orchards, and hoped-for investors in the project had failed to materialise.
"Management will now plan to realise the optimal value of this asset, which may include a sale as a going concern," the company told the ASX.
A month on and there's not yet any sign of a buyer.
Man of many hats
Future Fund chairman David Gonski was juggling his hats again on Monday. Fresh from banishing tobacco companies from his $82 billion kingdom and conducting a review of the entire Australian education system, Gonski was guest of honour at the Australian Securities and Investments Commission's annual shindig in Sydney on Monday night. He took the opportunity to expound on the perils of high-frequency trading, but in doing so had to be careful not to trip over some of his discarded headgear.
"I should add here absolutely a declaration that I am no longer the chairman of the ASX," he said.
Game playing
Cyprus is on the brink of financial collapse; Peter Drake's LM Investment Management has failed, putting at risk hundreds of millions of dollars; and cold calling scammers are running amok on the Gold Coast.
So what was ASIC boss Greg Medcraft talking about at the conference? Why, ASIC's online game, of course. Medcraft plugged the game, MoneySmart Town, from the stage after a complaint from fellow panellist Howard I. Wetston, QC, the chairman of the Ontario Securities Commission, that kids learn better from video games than other methods.
CBD can't play MoneySmart Town - access is restricted to primary school kids signed up to social network Skooville. Apparently, players must keep their virtual family "happy and healthy by making smart financial decisions" such as buying a home, getting a job and keeping to a budget. Sounds depressingly like real life.
We told you so
As predicted, Herald & Weekly Times editor-in-chief Phil Gardner has left the Herald Sun in favour of a job with Fox Sports (see CBD, March 4). His last day was Sunday and he starts the new gig, which has to do with integrating Fox Sports and the newspaper sports sections, in a few weeks.
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Frequently Asked Questions about this Article…
Select Harvests' WA orchards — about 1,600 hectares north of Perth — have struggled in sandier soil. The article reports younger trees in the sandier blocks are in poorer shape while some of the older trees (nearly four years old) are already bearing fruit. Local rumours the orchards were shut down were denied by the company.
Select Harvests took a $59.5 million write-down on the WA orchards, leaving the trees with a book value of $5 million. That write-down contributed to a reported loss of $19.5 million for the six months to the end of 2012.
The company told the market that power and water costs in WA were more than 50% higher than at its east coast orchards. The article also notes Select invested in top‑notch irrigation systems with mixed results, which affected overall costs.
Select Harvests said management would plan to ‘realise the optimal value of this asset,’ which may include a sale as a going concern. The article notes that a month after that announcement there was no sign of a buyer.
Select Harvests is headed by Paul Thompson, the former boss of SCA Hygiene Australasia. The article mentions his prior consumer‑products executive experience but does not draw a direct conclusion about how that background affected the orchards' performance.
The article points to sandier soil in parts of the WA plantings, mixed results from irrigation investments, and the relative youth of many trees — younger trees in sandier blocks are reportedly in poorer shape while older trees are producing.
At the Australian Securities and Investments Commission event, David Gonski spoke about the perils of high‑frequency trading. He also made a point of saying he is no longer the chairman of the ASX.
MoneySmart Town is an online game promoted by ASIC that aims to teach primary school children financial skills — keeping a virtual family 'happy and healthy' by making smart decisions like getting a job, sticking to a budget and buying a home. Access is restricted to primary school kids signed up to the Skooville social network.
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