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Sep 27, 2006

Allco all at sea adding up

David Coe’s Allco Finance Group hasn’t been having the best of runs. Allco Equity Partners has had trouble taking anything over and now we discover the company has trouble managing its own accounts.

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David Coe’s Allco Finance Group hasn’t been having the best of runs. Allco Equity Partners has had trouble taking anything over and now we discover the company has trouble managing its own accounts. What’s more, its board full of prominent names doesn’t seem to care.

Lisa Murray has the story for the Smage – Allco has been juggling its numbers to make them fit the bottom line. In August Allco announced a loss of $13.7 million from associates and joint ventures while receivables stood at $50.6 million.

A month later in the annual report, the associates loss had magically turned into a $13.7 million profit, while the receivables neatly dropped to $23.1 million, leaving the net cash flow position unchanged.

It’s not of Australian Pharmaceuticals standard, where many millions of dollars in profit simply go missing in the computer system, but it’s hardly confidence inspiring in an outfit that is supposed to be financially nimble.

What’s worse is that the esteemed board must have thought no-one would notice if it did a bit of juggling. There was no announcement made to the stock exchange, no correction issued, just the new numbers tucked away in the annual report’s fine print. Never explain, never apologise.

So who are the directors Allco investors are supposed to trust? Well David Coe is the executive chairman, which might help explain why the board apparently acquiesced to the funny accounting. The bloke who’s meant to be keeping an eye on the chairman in this situation, though, is the deputy chairman – Bob Mansfield, of McDonalds, Optus and Telstra fame. A John Howard mate, like Geoffrey Cousins.

The other independent directors are the experienced Barbara Ward, Neil Lewis and Sir Rod Eddington, who really should know better. On the other hand, Rod’s a News Corp man – and they certainly know how to go along with whatever an executive chairman might want.

Allco shares finished the last financial year nudging up towards the mid-$12s. They’re down a few more cents to $9.90 on our deadline.

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