KEY POINTS:
Carter Holt Harvey's first set of accounts under the ownership of billionaire Graeme Hart show a loss.
Carter Holt made a bottom-line loss of $5 million in the six months to June 30, 2006, according to accounts filed to the Companies Office signed off by Mr Hart and director Bryce Murray.
That compared to a $130 million profit in the year to December 2005 in the last set of accounts delivered by the country's largest forestry company when it was a share market heavyweight.
That annual profit was down sharply on the $569m the year before and was below analysts' forecasts as the high New Zealand dollar, and low commodity prices hit the big exporter.
In the six months to June 30 last year, the company's total revenue was $1.83 billion, of which $195m was generated internally, leaving $1.635b from external sales.
The operating profit before finance costs, tax, depreciation and amortisation was $161m in the six month period.
Then a long list of restructuring costs and charges chipped away at that profit to leave red ink on the bottom line of the operating statement.
Mr Hart spent $3.3b buying Carter Holt Harvey, completing the deal in March 2006, and at June 30 the company had total equity of $3.7b, according to its balance sheet.
That is the amount left when the total assets of $5.33b are deducted from liabilities of $1.58b. The equity comprised share capital of $1.77b and retained earnings of $1.83b.
The assets include goodwill of $144m and other intangible assets of $86m.
A breakdown of the assets showed $3.95b were in New Zealand and $1.11b were in Australia as at June 30 last year. That will have changed since the sale of the bulk of the forest assets in New Zealand.
Carter Holt was the country's largest forest owner even after sales of its forests before Mr Hart took over and he has since sold the forests and kept wood supply arrangements for processing mills.
The June 30 accounts showed the forests were worth $1.25b, up $8m from December. The bulk of those assets were later bought by investment funds managed by Hancock Timber Resource Group.
According to Thomson Financial, the bulk forests sold to Hancock for US$992m ($1.487b). This suggests the forests were sold above book value, which will be a gain in the operating statement of future accounts.
The forest valuation used an assumption of a weighted average price for the wood resource of $67 per cubic metre, down from a long run average of $85 per cubic metre.
Carter Holt's six month accounts confirm what was suspected -- that a lot of Mr Hart's effort has got into restructuring the company's head office in Manukau and the wood products business.
There were $90m of restructuring and non-recurring costs in the six month period, including $19m for redundancies, $50m for asset impairment and $14m for environmental provisions. These include a number of sites where soils and groundwater are contaminated from past use of treatment chemicals.
"The group is committed to a proactive programme of remediation and dealing with historical contamination," a note to the accounts says.
The company spent $134m in a six month period on distribution costs and $168m on selling and administration costs. It had net foreign exchange gains of $47m.
As the company is wholly owned by Rank Group there was no interim dividend.
At June 30 the company had borrowings and loans of $538m, the great bulk of which were repayable in more than five years and the great bulk of which were denominated in US dollars.
The prospects of the forest sale, since concluded, was signalled in post balance date events in the accounts along with the planned sale of the Plantation Timber Products business in China, closure of the Bell Bay MDF operation in Tasmania and repurchase of US dollar debentures as part of a refinancing.
Analysts always expected Mr Hart to sell the forests. They believe the key to the ultimate success of his foray into forestry will be what he does with Carter Holt's pulp mills and how well the wood processing and retail distribution businesses are reshaped.
- NZPA
