Forum Archive Index - March 2002

[Derek <dkw@paradise.net.nz>]

Chris,

Personally I don't count paper profits on shares as real profits.
Fortunately the IRD seems to agree (at least for NZ shares). 

But I guess re-valuing a companies assets is useful in some circumstances,
especially in regard to property companies.  I don't think it makes much
sense for FFS though since it has such a huge inventory and time lag to
market. With say $1 b in trees, if log prices rose 10% in a year then would
FFS really make $100 m profit? Then if the next year log prices fell 10%
would they make $100 m loss? 

Michael,
>Can you enlighten me as to whether property
>companies do this if the value of their buildings were to rise?  

Sorry, I don't know. The FFS statement clearly indicated that it included
the revaluation so I guess that if they did this then property companies
would clearly indicate it as well.

"Earnings before interest and tax (EBIT), before unusual items, were $41
million (including an increase in the value of the company's forest estate
of $17 million), compared to $8 million in the six months to June 2001(1)."


Regards,
Derek







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