Title

Elders faces possible class action

Database

Electronic Media Monitoring Service 

Date

26-06-2010 08:22 AM

Source

ABC Canberra 666

Parl No.

 

Channel Name

ABC Canberra 666

Start

26-06-2010 08:22 AM

Abstract

 
End

26-06-2010 08:57 AM

Cover date

2010-06-26 08:22:45

Citation Id

325913

Enrichment

 
Reporter

JACKSON, Elizabeth

Speaker

BOURKE, Emily

URL

Open Item 

Parent Program URL
Text online

No

Media Deleted

False

System Id

emms/emms/325913

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Elders faces possible class action -

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One of Australia's most prominent rural services companies is facing a possible class action by
disgruntled shareholders. Earlier this week Elders announced a significant downgrade in profits and
shareholders are furious that their investments are now worth just a fraction of what they paid for
them.

ELIZABETH JACKSON: One of Australia's most prominent rural services companies is facing a possible
class action by disgruntled shareholders. Earlier this week Elders announced a significant
downgrade in profits and shares in the company plunged by more than 50 per cent.

Shareholders are furious that their investments are now worth just a fraction of what they paid for
them, and they're seeking legal advice.

Emily Bourke reports.

EMILY BOURKE: The week began with Elders telling the market it was downgrading its profit forecast
and that the rural services group was now expecting a full-year loss of up to $14 million. The news
shocked the market and sent shares into freefall.

While the company clawed back some value, shareholders are angry and they've asked law firm Slater
& Gordon to investigate.

The firm's principal lawyer is James Higgins.

JAMES HIGGINS: This is an investigation into some extraordinary circumstances about this company's
recent profit announcement. It may lead to a shareholder class action if it's found that the
company failed to properly inform the market prior to this market disclosure.

EMILY BOURKE: The company's original prospectus forecast a profit of around $55 million, and James
Higgins says Elders' announcement this week was a bolt from the blue.

JAMES HIGGINS: From time to time businesses get events which impact on their business and that's
life, but we've got a situation where consistent representations were made to its investors about
the company's performance month in, month out.

And the evidence of the fact that how extraordinary this situation is, is in the share market
decline. The announcement led to a 50 per cent decline in the share price; that does not happen
every day in the business world.

EMILY BOURKE: Elders has blamed the company's revised earnings on low prices for farm supplies and
subdued real-estate activity, and the company says it's taking steps to minimise the losses and cut
costs where it can. But Elders has already been going through some serious changes.

PAUL JENZ: Agricultural earnings are volatile. When you're going through major restructure, again,
it's volatile. So my view is it was a difficult mix.

EMILY BOURKE: Paul Jenz is an agribusiness analyst from Austock Securities.

PAUL JENZ: The company's midway through a very tricky restructuring period; it's a very tricky time
to have forecasts out there. We would suggest as when the prospectus is put together that is was an
optimistic forecast and along the way Elders has given some indication that that was the case.

EMILY BOURKE: And he adds the restructuring was inherently risky.

PAUL JENZ: They were trying to lift the return on investor capital dramatically. When you go
through those sorts of changes, you know, in an established industry when you've got peers that are
doing partly differently, it's a very high-risk approach. We certainly build in a lot of
conservatism into our forecasts as did perhaps some of the other investors.

EMILY BOURKE: No one from Elders was available for comment, but the company issued a media release
saying it's committed to its continuous disclosure and governance obligations and that it's
complied with these obligations in full.

ELIZABETH JACKSON: Emily Bourke with that report.