Australian Darley Posts $27M Loss

Australian Darley is forced to cut jobs after another financial loss.

Sheikh Mohammed, the Dubai crown prince and the ultimate shareholder of Darley operations, suffered a $27 million loss last year and will have to cut jobs to boost its bottom line, according to the Sydney Morning Herald.

The racing and breeding operation did post an improvement on a previous $246 million loss, according to its latest accounts filed with the Australian corporate regulator.

The reality of this hit was a loss of nearly 30 jobs at Darley’s Twin Hills stud in Cootamundra and as a result the breeder was not a big buyer at this year’s yearling sales.

Australia is just one of six countries to house Darley divisions, along with operations in Britain, Ireland, the United States, France, and Japan.

The operation in Australia may not be the only one financially affected. Forbes magazine has reported that Sheik Mohammed’s personal wealth decreased by nearly one-third to $12 billion last year, and Darley’s ability to “continue as a going concern is dependent upon the continued financial support of its ultimate shareholder (Sheikh Mohammed),” according to Darley’s directors.

In 2008 Darley Australia expanded its Australian operations with a reported $500 million purchase from Bob Ingham of the Woodlands Estate. Darley Australia posted a rise in revenue to $99.6 million last year, up from $94.3 million. But its cost of sales and administrative expenses jumped sharply, reflecting the merged operations, according to the Morning Herald.

A one-time revaluing of the operation’s “biological assets” resulted in a net gain of $16 million, up from a net of zero the prior year, and helped mitigate the loss, according to the Sydney newspaper. The company has an enormous net asset deficiency that has climbed to $916 million from $839 million the prior year.

The accounts filed with regulators by Darley director’s clearly acknowledge how reliance the future of the company is on Sheikh Mohammed: “Given the company’s present and anticipated trading performance and the extent of the net asset deficiency there is uncertainty as to whether the financial support of the ultimate shareholder will remain in place up until such time as the company is able to meet its obligations without the continued support off its ultimate shareholder. Should the above support be withdrawn, there is significant uncertainty whether the company can continue as a going concern.”