Tranz Rail posts loss of $2.58m

By PAM GRAHAM

Tranz Rail yesterday reported a bottom-line loss of $2.58 million for the year to June 30 after writing off $32.7 million of tax losses.

The bottom line was an improvement on last year's $122.7 million loss, which was weighed down by $96 million of one-time items.

Earnings before interest and tax (ebit) were $40 million, up from $25.2 million last year and in line with forecasts in mid-June.

Managing director Michael Beard acknowledged original forecasts for the year of $55 million had not been achieved.

Chief financial officer John Loughlin said: "We have said in the past that we expect to make ebit of $48 million next year and the first two trading months suggest we are running a little bit ahead of that in terms of earnings and our cash position is quite a lot stronger than we forecast."

The company's audit report has an unqualified opinion with a statement of fundamental uncertainty referring to financing facilities.

Directors said the accounts were prepared on the basis that the company was a going concern but if facilities maturing on June 30 next year were not renewed, the company might not be able to continue to operate, affecting the value of assets and liabilities. Tax losses that can be used against earnings in the future are counted as assets if companies believe they will make enough profit in the future to use them.

Loughlin said Tranz Rail did not have sufficient certainty it would earn enough to use up all of its tax losses. It still carried $137 million of losses as assets after this year's write-off.

Loughlin, who is also a director, said the ball was in Toll Holdings' court with respect to the Australian company's 95c a share offer for the company. Tranz Rail was "keen to help them" provided fair value was delivered to shareholders. The current bid was not found to be fair by an independent report and directors have rejected it.

The company is benefiting from the high kiwi dollar because the lease on the Awatere ferry is in US dollars. The removal of foreign exchange cover after an argument with Citigroup last year is working the company's way. It had foreign exchange gains of $12.8 million.

Total revenue was $609.7 million, up from $601.8 million last year. Beard said bulk revenue was 2.1 per cent ahead of last year mainly due to a 16 per cent rise in revenue from hauling coal. Tranz Rail shares closed at 99c yesterday.