$6.3m deficit

Wa­ter pol­icy partly to blame for Mur­ray Ir­ri­gation loss

Southern Riverina news - - NEWS -

Wa­ter poli­cies like the Mur­ray Dar­ling Basin Plan and wa­ter shar­ing rules which re­strict ir­ri­gation al­lo­ca­tions to the lo­cal area are partly to blame for sig­nif­i­cant fi­nan­cial losses at Mur­ray Ir­ri­gation Lim­ited in the 2017/2018 year.

At its AGM on Thurs­day night, the com­pany re­vealed it fin­ished the 12 months with a $6.3 mil­lion deficit in its earn­ings be­fore in­ter­est and tax (EBIT).

It was sig­nif­i­cantly higher than last year’s EBIT deficit of $2.4 mil­lion.

Its net loss be­fore tax and Pri­vate Ir­ri­gation In­fra­struc­ture Op­er­a­tors Pro­gram rev­enue was al­most $5.2 mil­lion.

The pre­cast con­crete side of the busi­ness, MILCast, fin­ished the year with a net profit of $5.1 mil­lion, which MIL CEO Michael Rene­han said was a turn­around from last year’s MILCast loss, be­cause of a 57 per cent in­crease in sales.

MIL chair­man Phil Snow­den said due to the re­sults pre­sented at the meet­ing, the un­der­ly­ing theme was the fi­nan­cial sus­tain­abil­ity of the com­pany and its share­hold­ers.

One of the key mes­sages out of the meet­ing was that Mur­ray Ir­ri­gation would con­tinue to con­trib­ute to the eco­nomic pros­per­ity of the re­gion by es­tab­lish­ing its de­liv­ery foot­print as a pre­mier agri­cul­tural in­vest­ment lo­ca­tion not con­strained by the Barmah Choke.

‘‘The board’s ma­jor ob­jec­tive is to work with re­gional stake­hold­ers in mit­i­gat­ing the neg­a­tive im­pacts of wa­ter re­form and re­tain­ing ex­ist­ing wa­ter in the re­gion,’’ Mr Snow­den said.

‘‘Con­tribut­ing fac­tors (to the EBIT loss) are nu­mer­ous and they are not lim­ited to a re­duc­tion of about a third of the wa­ter en­ti­tle­ments in our area through the basin plan, a re­duc­tion in wa­ter en­ti­tle­ments but vir­tu­ally no re­duc­tion in the area of our op­er­a­tions and the costs of ser­vic­ing it, a re­duc­tion in earn­ings from re­serves/in­vest­ments re­flect­ing the na­tion­wide low in­ter­est rates and the ab­sence of a canal agree­ment dur­ing that year.

‘‘It is worth not­ing that the five per cent ef­fi­ciency al­lo­ca­tion to share­hold­ers in Septem­ber was worth about $20 mil­lion and that an al­lo­ca­tion last year had a value of $9.7 mil­lion (2017 it was $2.4 mil­lion; 2016 was $13.6 mil­lion and 2015 $2.6 mil­lion).

‘‘Im­proved pro­to­cols for the main­te­nance of the sys­tem will help to achieve a break even EBIT.

‘‘The board will con­sider many op­tions to ad­dress EBIT and we will be shar­ing our vi­sion and seek­ing feed­back from meet­ings planned with share­hold­ers in Fe­bru­ary.

‘‘We are par­tic­u­larly mind­ful of the very dif­fi­cult cir­cum­stances our cus­tomers are in this sea­son.’’

In his chair­man’s re­port, Mr Snow­den said many ex­ter­nal fac­tors in­ter­fered with the new board’s re­solve to con­cen­trate solely on the com­pany fol­low­ing a tu­mul­tuous time, but said cli­mate, drought, the price of wa­ter, wa­ter re­form and the Basin Plan, ‘‘and the politi­ci­sa­tion of it’’, also de­manded at­ten­tion in the last fi­nan­cial year.

‘‘The bot­tom line is that about one-third of the wa­ter en­ti­tle­ments have left the com­pany’s ser­vice area.

‘‘The com­pany ear­lier part­nered with sev­eral lo­cal en­ti­ties in fund­ing the prepa­ra­tion of in­de­pen­dent re­search that in­di­cated, in an av­er­age sea­son, a $120 mil­lion loss in re­gional pro­duc­tion, a loss of rice pro­duc­tion of about 30 per cent and a re­duc­tion in dairy of one fifth.

‘‘About eight months later, the MDBA claimed that since 2001 in our re­gion, only seven per cent of the 37 per cent de­cline in agri­cul­tural em­ploy­ment was due to the Basin Plan.

‘‘Re­gard­less of the ac­cu­racy, or not, of those fig­ures, that is a mas­sive hit to re­gional pros­per­ity.’’

Mr Snow­den said the board was al­ready ex­plor­ing a range of op­tions to re­ward and en­cour­age wa­ter use in the Mur­ray Ir­ri­gation foot­print, which would be can­vassed and pre­sented at the share­holder meet­ings next year.

‘‘This com­pany ex­ists to de­liver wa­ter long-term and cost ef­fec­tively,’’ he said.

‘‘We want to in­crease the util­i­sa­tion of Mur­ray Ir­ri­gation as­sets to an op­ti­mum point where us­age is bal­anced against the ca­pac­ity of the Mul­wala Canal.

‘‘We also want to drive com­pany poli­cies that share the ben­e­fits and we will be look­ing closely at the most eq­ui­table ba­sis to dis­trib­ute wa­ter sav­ings and div­i­dends.

‘‘In ad­di­tion to these com­mit­ments, we will work with river op­er­a­tors and en­vi­ron­men­tal wa­ter hold­ers to max­imise the ef­fi­ciency of the en­tire Mur­ray sys­tem.

‘‘Mur­ray Ir­ri­gation also has its own longterm strate­gic agenda to be an au­thor­i­ta­tive voice in the sec­tor and will work col­lab­o­ra­tively with gov­ern­ments for the ben­e­fit of all.’’

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.