AWI withholds updated levy income and reserves data from WoolPoll voters

Terry Sim, September 17, 2018

AUSTRALIAN Wool Innovation is withholding key levy income and reserves information from shareholders voting in the 2018 WoolPoll ballot.

WAFarmers last week disclosed that AWI has already budgeted for an annual expenditure of $110 million for the next four years, based on a continuing 2pc levy, and currently has $121 million in reserves, up from the $115m estimated in the WoolPoll voter information memorandum.

However, although the 2018-18 accounts have been finalised, AWI is yet release these figures generally to its shareholders.

WAFarmers Livestock Council vice president Steve Maguire said AWI’s 2017-18 accounts “have been done.”

“They know what their figures are,” he said.

AWI has also twice refused to release to Sheep Central the current and 2017-18 reserves, or the amount of money raised in levies in 2017-18.

When AWI chief executive officer Stuart McCullough was today again asked to supply updated AWI budget, levy income and reserves information, a statement was issued saying: “AWI’s shareholders will receive the audited financial accounts of the company posted on Monday 22 October.

“This is consistent with the process for the release of audited financial accounts every other year.”

Australian Wool Innovation is urging its shareholders to vote to continue the current 2 percent levy on their gross proceeds for a further three years from 2019, in the WoolPoll 2018 ballot that opens on 17 September and closes at 5pm (AEDT) on 2 November 2018. The five WoolPoll 2018 voting options are 0 percent, 1.5pc, 2pc, 2.5pc and 3pc.

Mr McGuire said despite AWI finalising its 2017-18 accounts, the company has also not disclosed how much money it has actually spent in the last financial year.

He said growers voting in the 2018 WoolPoll should know what AWI’s current reserves are and how much was spent last year.

“They should know that and they should know how much they spent last year, they can put out updated information.

“There is no reason to withhold this information, it’s just secret squirrel s….”

What is AWI planning for its $35m discretionary reserve?

Mr McGuire also queried why AWI want to hold $35 million in discretionary reserves.

“Why have they got $35 million sitting there for an opportunity, have they got something in mind?

“It just seems like a lump of money they want to quarantine for something – God knows what.”

Mr McGuire believed AWI should not be allocating money for “things that may or may not happen” or just for “play money”.

“That should be my play money, which should be in my pocket, for me to go and play with.

“People seem to forget, this is wool growers’ money, this not AWI’s money; AWI does not go out and work hard for this money.”

Mr McGuire conceded that the AWI board had a mandate to budget expenditure on behalf of wool growers.

“It certainly does, but we must not forget that they money is not coming out of thin air; it is coming out of wool growers’ pockets.”

In the WoolPoll 2018, voter information memorandum, AWI said the board introduced a $35 million discretionary reserve in 2017-18 “to enable AWI to manage the cyclical nature of wool prices, by ‘banking’ any significant increase in income”. The discretionary reserve is set aside for building resilience and a buffer to protect R&D and marketing projects in the event of a downturn in wool prices, and for investment in new, major R&D or marketing opportunities as they arise, AWI said.

AWI lobbying for 2pc on revised figures

AWI has recently been lobbying wool industry leaders to support a 2pc vote in the 2018 ballot by using revised wool production and price levels, and an assumed $110 million in expenditure for the next four years.

But at current wool prices, Mr McGuire believed that even if the 2018-19 wool supply dropped below the 322 million kilograms currently forecast, AWI would still achieve its budget.

“They have to do a budget assuming 2pc, but then to turn around and say that we have to have 2pc, because that’s what we have budgeted for, is circular reasoning – it’s the cart before the horse.

“Even with 1.5pc, even with the drought, they will still get more money than they have ever had,” he said.

“They seem to want 2pc for stuff they might do.

“I’m saying that is not good enough; you need to have a really good reason for every dollar you take and if you don’t have a good reason for it, leave it in the growers’ pockets.”

AWI is claiming in the WoolPoll 2018 voter information memorandum that a 2pc levy will build the company’s capacity to deliver more through current core R&D and marketing programs, and maintain its forward contracts, operating, emergency animal and discretionary reserves at “a responsible level.”

AWI has also said it is not viable to maintain the level of investment in research and development and marketing at 1.5pc in the long term. The company has said it would have no capacity to invest in new investment opportunities and no buffer in its budget against any future wool price volatility, meaning existing programs may have to be discontinued.

Click here for more information on WoolPoll 2018 and the voter information memorandum, including AWI’s publicly available budget levy assumptions.


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  1. David McKenzie, September 17, 2018

    It would seem that AWI has something to hide from its shareholders.

  2. Paul Favaloro, September 17, 2018

    Once again the arrogance of AWI is on show. More smoke and mirrors. As with the 10-year director term, they do what suits them; not what is in the best interest of shareholders. Surely, if they want our support, they would provide all the relevant and up-to-date information available.

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