Has FT turned the corner?

A bit of lipstick makes no difference.

It’s still a pig.

Resources Minister Harriss’ media release that accompanied FT’s 2015 Annual Return was a pathetic attempt to gloss over the reality of FT’s situation.

The cardinal rule when assessing the financials of an insolvent entity is to skip the income statement and focus instead on the cash flow statement detailing what comes in and goes out the door.

The 2015 cash flow statement reveals things are worse.

Federal Hotels' predicament

Federal Hotels’ disappointing 2015 financials lodged last week with ASIC highlights its current predicament coinciding with the shock horror realisation that its exclusive gaming license may not continue into perpetuity under existing generous terms and conditions.

Net operating profit after tax was $20 million, down from $21 million in the previous year.

The profit soon disappeared with banks grabbing $9 million and shareholders $15 million.

Notwithstanding that Federal Hotels have $100 million worth of capital expenditure projects on the drawing board including redeveloping Wrest Point and Launceston Country Club casinos plus a new hotel at Port Arthur the shareholders appetite for dividends continued unabated, a craving that has seen $162 million vanish from company coffers in the past 10 years.

We now hear that Federal Hotels will put a handbrake on investment in Tasmania if it does not get certainty over a gaming license in the State.