It was refreshing to read Gordon Bradbury comments ( HERE ) pointing out the neglect of financial sustainability in so many of the proposed solutions to the seemingly intractable forest problems.
Ta Ann Tasmania Pty Limited (TAT), the current leading light of the Tasmanian timber industry finally revealed the extent of its accumulated losses with the belated lodgement of its 2012 annual financial report with ASIC in late June 2013.
The losses of $10.2 million on revenue of $28 million means losses now total $26.8 million. TAT doesn’t have bank borrowing. Its losses have been financed by its parent which is now owed $28.2 million.
It’s probably just a coincidence that the compensation from the IGA of $26 million resulting from the proposed reduction in wood supply from public native forests, is almost the same as the amount owed to the parent company. It was thought that some of the compensation might be used to build value adding production facilities like a plywood mill but Prime Minister Mr Kevin Rudd has just committed a further $7.5 million from IGA funds for that purpose.
It‘s difficult to work out how the compensation was calculated. After all TAT makes losses. It makes operating losses even before overheads are taken into account. In other words it sells its product to its parent at a loss. It doesn’t even cover factory costs let alone overheads. If the parent company is adding value which it reputedly does with the manufacture of plywood, then it looks suspiciously like profit shifting. If it’s good enough for Google Apple and Microsoft why not Te Ann?
It does beg the question which entity is to be compensated? If it’s the local company TAT then any calculation of compensation could be a negative number. If it makes losses at the factory level a reduction in wood supply may well reduce the losses. If the compensation is a negative number then doesn’t that mean that TAT should pay us for agreeing to a reduction in wood supply? It appears that at least 75% of factory costs are the variable expenses of logs labour and electricity which means reducing throughput may reduce losses.
Not that TAT pays electricity as billed. It’s in dispute with Aurora Energy for $1.8 million. It is hoped that any dispute with a Government owned business is resolved before any government hands over more money to TAT.
Maybe the party to be compensated is TAT’s parent company? To the extent the parent adds value to the product supplied by TAT and makes a profit then maybe the loss of wood supply by TAT will have flow through effects.
But that would mean the best of both worlds for the Group. Shift profits overseas but retain the ability to claim compensation locally for any subsequent loss of overseas profits.
…
The financial accounts suggest TAT has revised both its future revenue and its life expectancy.
It’s difficult to interpret TAT’s figures with any confidence.
…
In the other 3 of the past 4 years the factories have made a loss before overheads.
…
TAT’s factories are little more than sheltered workshops. Even if TAT was environmentally sustainable it is not financially viable. It will struggle to survive given its current modus operandi. Even with price capping via a long term wood supply agreement it doesn’t make profits onshore . The miserable amounts of payroll and FBT tax remitted to Governments are dwarfed by the assistance received and probably by the profits shifted offshore.
The cheerleaders for special species want price control. They want to socialise losses and privatise gains if possible. TAT has gone a stage further. It secured fixed prices but shifts profits offshore and parades itself as an onshore beggar eligible for more handouts.
…
Nothing’s changed. The new forest industry is not yet at square one.
Read the full article, Tasfintalk here
• John Hawkins: Download Ta Ann’s financial statements:
TA_ANN_TASMANIA_PTY_LTD_2012_FINANCIAL_STATEMENTS.pdf
The release today announced by Prime Minister Rudd of more than $7 million extra dollars into the coffers of Ta Ann under the TFA brings the total funds paid by the taxpayer to this totally underserving company to some $35 million dollars.
I attach the Ta Ann accounts for the Financial year ending December 31 2012 a year in which the company made a loss of $10,203,367.
The accounts show that Ta Ann employs 82 people and has accumulated losses since incorporation in 2005 of $26,187,756.
How welcome therefore is the addition of our money, public money, taxpayer’s hard earned money to the financial disaster that is Ta Ann?
No more and no less than $35 million dollars in less than 3 months of public funds to completely wipe out its debts obtained in part as a result of contracts gifted to the company by its current managing director whilst CEO of Forestry Tasmania.
Oh to be so lucky!
Only in your corrupt Tasmania.
• Ta Ann’s $10 million loss, here … all predicted early last year by TT’s John Lawrence, A dog: The financial truth about Ta Ann Tasmania, here
• Gordon Bradbury, in Comments: Another brilliant headshot to the corpse from John Lawrence. But as forest industry apologist Mark Poynter has recently said, the forest industry is on a moral crusade. To stop logging public native forests would be “morally reprehensible”. It hasn’t been about business or profits for at least the last 20 years. It’s about saving our corrupt, decadent souls. And if that means wasting billions of taxpayer and investor dollars and destroying the forests then so be it. A very small price to pay in this jihad. I wonder if BHP is trying to save our souls whilst mining iron ore and coal? At least they are making a decent profit for the corrupted here-and-now.
• Christine Milne: Logging writ large if Tony Abbott becomes Prime Minister
• Use the TT NEWS Dropdown menu (top nav bar) for breaking news on the Rudd/Abbott promises …
