Great Southern Group
 |
|
| Public | |
| Traded as | ASX: GTP |
| Industry | Managed investment schemes |
| Founded | 1987 (public 1999) |
| Headquarters | Perth, Western Australia |
|
Key people
|
David Griffiths (chairman), Cameron Rhodes (Managing Director), John Young (founder and board member) |
| Products |
Pulpwood Beef cattle |
| Revenue | A$444 million (2008) |
| (loss) A$63.8 million (2008) | |
|
Number of employees
|
430 (2008) |
| Website | www.great-southern.com |
Great Southern Group was a group of Australian companies that was notable as the country's largest agribusiness managed investment scheme (MIS) business.
The company was founded in 1987 and became a public company in 1999. It expanded its MIS business rapidly in the 2000s, supported by favourable tax regulations for these types of investments. Most of the Group's business was in plantation forestry to supply woodchips for the pulp and paper industry, but in the 2000s it diversified into high-value timbers, beef cattle, olives, viticulture, and almond production. The company's after-tax profit peaked at A$132 million in 2006, but by 2008 had deteriorated to a A$63 million loss.
The Great Southern companies attracted debate and criticism associated with the operation of managed investment schemes generally, and the environmental performance of their Tiwi Islands operation in particular. On 16 May 2009, as a result of worsening economic conditions and regulatory issues, the GSL, GSMAL, GSF and other subsidiaries of GSL entered into voluntary administration. Ferrier Hodgson was assigned as liquidator of Great Southern Group. The collapse of Great Southern Group, in conjunction with the failure of another high-profile agribusiness company, Timbercorp, led to three separate Australian parliamentary committee inquiries into the MIS industry.
The Great Southern Group in 2008 formed Australia's largest managed agribusiness investment scheme operation. The company comprised a parent entity, Great Southern Plantations Limited (from 2007 renamed Great Southern Limited), and over forty subsidiaries, almost all wholly owned. Those subsidiaries held or operated Great Southern's businesses, including providing management services.
At the centre of Great Southern's operations were management investment schemes (referred to as MIS schemes). MIS schemes are a mechanism by which investors' funds are pooled to invest in a common business enterprise. A "responsible entity" (such as Great Southern) controls the routine administration of the investments. In primary production schemes such as those managed by Great Southern, investors are the growers of products (such as forestry plantations), with an agreement with the company to manage the investment "to plant, establish and maintain the trees until they are harvested at maturity". Investors in Great Southern generally purchased lots (typically of 1 hectare) on land owned or leased by Great Southern. Thus investors owned the plantations, but the land assets belonged to the company. While investors owned individual woodlots, risks and returns were distributed across all investors in individual projects, with growers sharing "the average yield at harvest for the entire Project...rather than the return from their individual woodlot". These were not high rates of return for the length of investment involved. Some of the schemes relied upon the rationale that investors would retire and therefore receive income from the scheme when their marginal tax rate was lower than at the time of initial investment. Based on this premise some schemes were claiming a rate of return after tax of eight to nine percent. Others suggested the schemes were a poor investment likely to achieve only six percent return.
...
Wikipedia