ASX-LISTED agricultural land investment firm, Duxton Farms, has reported a net loss after tax of $3M for the half year ending December 31, a substantial drop from a profit of $815,828 result for HY22.
Duxton’s main asset, the 22,883ha Forbes Aggregation in central New South Wales, lost most of its winter crop, and management was unable to plant a summer crop due to prolonged rain and flooding.
The company was integrating its recent acquisition, Piambie in north-west Victoria, and leased Northern Territory asset, Mountain Valley Station, into its operations during HY23.
Therefore, both properties were unable to stem the losses from the Forbes Aggregation recorded in the half.
Duxton Farms chairman Ed Peter said the company was significantly impacted by “the costliest natural disaster in modern Australian history” during HY23.
“Like many of our neighbours, we lost the majority of our winter crop to inundation and the community has spent a great deal of the past few months dealing with the fallout of the flooding,” Mr Peter said in a letter to shareholders.
“The flooding peaked in late November 2022 both in the town of Forbes and on farm, and the operations team was able to start harvesting the surviving winter crop in late December.”
Mr Peter said despite the disappointing financial result, there were some positives for the half.
“[W]e have been able to harvest more crop of a substantially higher quality than originally anticipated, which is a silver lining that demonstrates the capability, discipline and resolve of the operations team in an exceptionally challenging year.”
He said the livestock enterprise “fared better than expected” due to minimal losses from the flood event and the addition of an ample supply of feed stockpiled on farm.
Summer-crop planting planned for late 2022 was not possible at the Forbes Aggregation due to flooding.
“In lieu of cotton, the team have worked hard to plant as much land to forage sorghum as possible, which will contribute towards maintaining our feedstocks into the next financial year.”
Mr Peter said the outlook for the 2023-24 season should provide better results for the company.
“Looking forward, it appears as though the 2023-24 season is going to treat us a little better, as at this stage La Niña conditions appear to be easing, which should hopefully allow the company to operate a full season unimpeded.
“Were this to eventuate, the NSW aggregation would be exceptionally well-placed to demonstrate its productive capacity as broadacre farming properties.”
He said Duxton’s main focus for the rest of the financial year will be to continue working towards incorporating Piambie and Mountain Valley Station into the portfolio.
This includes commencing buying into declining cattle prices to restock Mountain Valley and readying the aggregation for fodder-crop cultivation and a rainfed cotton trial.
The recent harvest at Piambie was still being completed by the previous owner, with Duxton currently in the early stages of implementing a new production system for the property.
Mr Peter said the experiences of the half has compelled the company to push forward with plans to diversify to other agricultural areas.
He said the lease of Mountain Valley Station and the purchase of Piambie, both executed in HY23, were just the beginning of the process.
“I have spent the past 24 months working with the board to develop an updated and targeted strategy to diversify the company’s assets to provide investors with exposure to new geographies, commodities, and production systems, which I believe will prove to be transformative in nature as the company develops over the next decade.
“The board are currently working on several other compelling opportunities, both in terms of new land acquisitions and existing land developments, and we hope to be in a position to announce these to market in the next few months.”
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