Cockatoo Ridge hits stormy waters

Cockatoo Ridge hits stormy waters

Cockatoo Ridge Wines has taken itself into administration after succumbing to a tough period for the Australian wine industry.

Cockatoo Ridge management said yesterday (20 January) that it has voluntarily appointed BDO Kendalls as administrator for the South Australia wine firm.

Poor trading means that Cockatoo Ridge is "likely to become insolvent" in its fiscal third quarter, which runs to the end of March, management said.

The firm's collapse is a long way from the glamour of early 2008, when it unveiled ex-Miss Australia Erin McNaught as the face of the Cockatoo Ridge brand.

Its subsequent demise highlights a painful period for Australia's wine industry, which is producing between 20m and 40m cases more than it is selling annually, according to official figures.

Cockatoo Ridge was upbeat in its most recent trading update, issued in July 2009.

Sales, it said at the time, had made "pleasing progress" and costs had been cut by AUD2m (US$1.8m) per year.

But the warning signs were there, with the group adding that it would potentially sell off non-core assets as it worked with its auditors to reduce debt.

Accounts filed in February last year show that the group breached banking covenants in the half-year to the end of December 2008.

It reported losses of AUD54.8m for the six months, against profits of AUD4m a year earlier. A collapse in bulk wine demand saw half-year net sales tumble to AUD9.5m, against AUD18.5m a year earlier.

No dividend was proposed for shareholders, while net cash flow plummeted to AUD302,000, against AUD829,000 in 2007.

Liabilities exceeded the value of assets by AUD15.3m at the end of the half-year period, prompting auditor Deloitte Touche Tohmatsu to warn of a "material uncertainty" about Cockatoo's ability to continue as a going concern.