Forests' year result put on hold

By PAM GRAHAM

Investors looking forward to an update on the sale of Fletcher Challenge Forests' timberland estate today - and news of the company's full-year result - will have to wait.

The company has been granted an extension to today's cut-off for June 30 balance date profit reports and will now report on September 12.

Fletcher Forests said it needed more time to work on the valuation of its forests in its annual accounts and the deferral was not linked to the sale of its forest estate, which it still expected to complete by the end of the year.

The company has put forests with a book value of $1.2 billion on the block. The company is not obliged to comment on the sale at the profit announcement, but the market is ready with questions.

Carter Holt Harvey has indicated a $900 million writedown in the value of forests in its books this year but it has a different accounting treatment, carrying its forests at historic cost.

Fletcher Forests marks its forests to market value each year, discounting cashflows from them based on prices of logs over three years.

With log prices at more than 10-year lows, a valuation based on three years of prices is higher than current market prices.

The company said it was likely to change the discount rate and the log price series it used.

The sale of the estate will also set a market price, and it is being eagerly watched by analysts for their valuation calculations. A sale of cutting rights by the company in January was at 85 per cent of book value.

How the sale is progressing has been tightly held, with few leaks, as has the sale of the Central North Island Forest Partnership estate.