Gunns chief argues losses due to period of transition

The annual net loss after tax compares to a 2010 net profit of $28.5 million and reflects a business in transition, managing director Greg L'Estrange said last night. In a review of asset values, Gunns found impairments including $218.1 million against Auspine assets, a 19 per cent reduction in the value of the Tasmanian forest assets to $406 million, and $77 million in provisions against MIS-related assets.

A strategic restructure has seen Gunns exit native forests and sell off a series of assets in a shift to a plantation-based business, eventually feeding the planned $2.3 billion Tamar pulp mill.

Gunns met guidance of underlying earnings before interest and tax at $41.6 million. In a presentation to analysts, the company claimed net equity of $1.5 billion, down 27 per cent on the previous year.

However, it remains in a trading halt, now three weeks old, originally called with its shares at 20.5?, as it negotiated a settlement with the Tasmanian government for exiting contracts from public native forests. The company also faces a deadline for "substantial commencement" of the pulp mill, required by August 30, or state environmental permits will lapse.

The analysts were told Gunns had undertaken substantial investment of more than $200 million, and works on the project to meet this requirement, but Tasmanian Premier Lara Giddings said the meaning of substantial commencement might need to be tested by the courts.