MURRAY Goulburn had nearly $170 million sitting in the bank just months after saying it had no money to pay farmers extra for their milk and the business had to be sold to Saputo Inc.
The cash stockpile has emerged in a business acquisition report prepared by Saputo compulsorily required to be lodged with Canadian regulatory authorities under continuous disclosure laws.
The report, lodged in Canada last Friday, details Murray Goulburn’s finances for the nine months to March 31 this year and compares them with the corresponding period in 2016-17.
Saputo bought MG’s business on May 1 this year, after which it paid the Australian dairy company $1.31 billion.
The unaudited accounts show MG had an unprecedented $169 million as cash on hand on March 31.
At all six-monthly and full-year reporting periods since 2008, cash on hand varied between $5 million and $35 million.
The nine-month accounts also raise questions about MG’s profits during 2017-18.
In February this year, Murray Goulburn released its half-year accounts for the year ended December 31, 2017, showing a pre-tax profit of $35.1 million — the highest level in four years.
It was on target to produce the highest pre-tax profit on record — potentially overtaking the $57.5 million profit it reported in 2015-16.
But the accounts compiled by Saputo show MG’s pre-tax profit had slumped to $2.4 million by March 31 this year — a $32.7 million reversal in just three months.
A dairy industry source, who did not wish to be named, said global dairy prices had recovered by this stage and were “stabilising at a very acceptable level”.
“The accounts would indicate that at a worst-case scenario, the business was breaking even or better than breaking even at the time it was being sold,” the source said.
“It was a profitable business.
“Their excuse that they needed to sell the business because they couldn’t afford to pay the money for milk to keep the factories alive and the business alive appear to be false, based on the accounts released by Saputo.
“As a consequence, they have let down all their supplier farmers and their unit holders.”
Murray Goulburn issued a statement to the Australian Securities Exchange on Monday saying it had no involvement in the preparation of the nine-monthly financial statements of the co-operative.
“The BAR (business acquisition report) has been prepared by Saputo using certain of Saputo’s and MG’s respective financial statements and is not a report prepared or filed on behalf of MG,” the statement said.
“MG cautions reliance on the Saputo filings to the extent these relate to or incorporate unaudited interim financial statements of MG.”
Saputo did not respond to questions on the nine-month accounts and referred them to Murray Goulburn Legacy company secretary Richa Pura.
MG did not respond to The Weekly Times by deadline yesterday.
Meanwhile, Saputo chief executive Lino Saputo, in Australia to address dairy farmers, has foreshadowed the sale of MG’s defunct Rochester factory.
Mr Saputo said the company would eventually sell the Rochester plant.
“Right now, our hands are full with the Koroit divestiture,” Mr Saputo said. “And then we’ve got the project of MG Trading, which will eventually be divested.
“Somewhere along the line we will have to see what the location or the value of Rochie going forward.”
Mr Saputo said the buyer of the Koroit factory would be announced “in the next month or two” and the deal concluded by the end of December.
By: PETER HEMPHILL
Source: The Weekly Times