On 31 Oct 05 AWF announced to the Market that CLS had up to 800 people. I’ll have to revise my wages liability to $400k for each week of outstanding pay. They could well be up for more than 4 weeks arrears giving a liability of at least $1.6m.
Of these 800 people it is likely that many have been underpaid. It looks like AWF will pay out these shortfalls. If it works out to be an average of $1 an hour for 800 people for a year then we have another $1.66m liability.
Holidays and ACC will be payable on these amounts so here is another $260,000 in cash gone.
If CLS is worth 20 cents in the dollar does this mean Spring Creek is now only worth $360,000 – a $1.4m loss.
How much are liquidation costs, I’ve no idea - lets say $50k.
Simon hull has already flagged that for YE 2007 there is going to be “a challenge to achieve year end net growth” and this was before the CLS problems.
AWF could be up for $4m in costs associated with CLS so definitely a challenge on last years $3m NPAT and only $803k by 06/07 half year. This is one sick puppy!
So where is the profit warning to the Market?