The FPC continues to provide a significant contribution to the economies of the State and many communities throughout the south-west of Western Australia.
This financial year, an operating profit result of $0.03 million has been achieved after taking into account an additional amortisation expense of $2.2 million.
This result is contributed to by all forest business segments returning a profit before amortisation of licences and right of use assets.
The profit earned by the FPC has enabled the investment of $11.6 million in building the State’s softwood estate, native forest and sandalwood resource regeneration programs.
During 2018–2019, a dividend of $1.04 million was paid to the State Government for the 2017–2018 year.
Pricing arrangements
Pricing arrangements are determined by a variety of factors including requirements under the Forest Products Act 2000.
Section 59 of the Act prescribes the costs that are to be factored into a price for forest products. Contracts include indexation or an alternative escalation mechanism to minimise financial risk to the FPC.
The following table details a summary of our corporate performance against the financial outcomes and targets detailed in the Statement of Corporate Intent.
| Target 2018-19 ($ millions) | Actual 2018-19 ($ millions) | Variance ($ millions) | |
|---|---|---|---|
| Financial targets | |||
| Total expenses (sourced from Statement of Comprehensive Income) | 130.7 | 126.3 | 4.4 |
| Total income (sourced from Statement of Comprehensive Income) | 135.9 | 126.3 | (9.6) |
| Total equity (sourced from Statement of Financial Position) | 365.2 | 264.6 | (100.6) |
| Net increase / (decrease) in cash held (sourced from Statement of Cash Flows) | (7.1) | 0.9 | 8.0 |
| Financial outcomes | |||
| Timber revenues | 134.3 | 115.9 | (18.4) |
| Operating profit | 5.2 | 0.0* | (5.2) |
| Net profit / (loss) after tax | (9.4) | 1.4 | 10.8 |
| Closing cash balance | 23.5 | 31.4 | 7.9 |
| Dividends paid | - | 1.0 | 1.0 |
| Target 2018-19 (%) | Actual 2018-19 (%) | Variance (%) | |
|---|---|---|---|
| Performance measures | |||
| Return on assets | 1.4% | 0.0% | -1.4% |
| Return on equity | 1.4% | 0.0% | -1.4% |
| Operating profit to timber revenues | 3.9% | 0.0% | -3.9% |
*Due to a change in Accounting Policy, the FPC achieved an operating profit result of $0.03 million after taking into account an additional amortisation expense of $2.2 million as per note 5.2.1.