November 4, 2011

 

Dairy Australia's net assets show increase

Dairy Australia's net assets rose in the previous financial year, plans to lower reserves notwithstanding.

 

At the end of the financial year, net assets totalled AUD31.4million (US$32.5million) - a 23% rise in the previous year.

 

But according to the industry body, these assets will be down to less than AUD9million (US$9.3million) by the end of 2016, even with a 10% levy increase factored in - significantly less than its aim of a "prudent minimum" of AUD13.1million (US$13.6million).

 

Last year, Dairy Australia signalled reserves would be cut to $12.7million (US$13.1million) in the next five years, and the intention remains to reduce reserves to a minimum of AUD13.1million (US$13.6million) in five years.

 

Dairy Australia managing director, Ian Halliday, said one of the most significant reasons for the increase in assets was a change in the way it estimates levy income.

 

According to the annual report, the result was the Dairy Service Levy income was AUD3.8million (US$3.9million) more than expected.

 

"In future years, the effect is estimated to be less than AUD0.3million (US$3.1million) per annum," the report said.

 

Mr Halliday said program expenditure during the next five years would total AUD292million (US$302million).

 

"Over that period the income we expect to receive totals AUD270million (US$279million), assuming a levy increase of 10% he said.

 

"The shortfall of AUD22million (US$23million) will be funded by reducing our net assets.

 

"At the end of that planning period we forecast reserves to be less than AUD9million (US$9.3million)."

 

Mr Halliday said without a 10% levy increase it would "be unable to provide the (research and development) and industry service included in the Strategic Plan".

 

The largest portion of research and development investment in the next five years, according to the Strategic Plan, would be in the area of "productivity and adding value" at 41.4%.

 

Supply chain and markets, at 23.2%, was the next biggest spending priority, then innovation skills at 10.7%.

 

Government matching payments for the past financial year was AUD18.787million (US$19.459million), a drop of 4.35% from 2009 to 2010 due to the lower rolling average of the gross value of whole milk produced.

 

Company expenditure was AUD51.248million (US$53.086million) and the largest investment was AUD33.822million (US$35.040million) on research and development.

 

Milk production was up 0.9% to 9.1billion litres.