The public transcript of the 4th July 2011 Leg Co inquiry into FT’s financial performance has now been posted on line.
In an answer in writing to a question on notice, it was disclosed that the minimum operating cash flow surplus for FT is in the order of $20 million, needed to fund necessary capital expenditure including outstanding TCFA obligations.In 2010 the operating cash flow was $12 million negative. Bob refused to publicly disclose the cash flow deficit for 2011. He would only do it in camera. It is likely to be of similar magnitude to 2010, a far cry from what is needed.
The impact of these revelations cannot be overstated. FT is very close to insolvency.
Bob won’t have Hans anymore to support him. Hans has just done a Bartlett.And then there was the disastrous confession from Bob that the value of FT’s trees had crashed ... yet again.
In Bob’s words:
“You might be aware that last year, for the first time, we underwent an external valuation ... they valued our forest estate last year at around $300 million. We got them in again this year to do a revaluation ... They have given us a valuation this year of $206 million, which is a reduction of about 31 per cent”.I made a slightly facetious observation in my previous post, that the time will soon arrive when the unfunded superannuation liability will equal the value of the trees.
Well that time is nigh.What is owing in regard to unfunded superannuation is barely covered by the tree value.
All FT’s equity has vanished.
Sixteen years ago FT was entrusted with the care of the State’s forests. After spending over $450 million on new assets and plantations, half of which has been provided by the Feds, the trees are only worth $206 million. Details of this magnificent achievement are being forwarded to the Guinness Book of Records.
FT might survive in the short term, but it is highly unlikely that it can service its liabilities in the medium term without major reform.