Estimated fair value, page-3

Its a difficult one to predict, nhawk. Everyone would like to know, but i think the only thing that is reasonably certain is that it won't be anywhere near the recent property settlement.

As has been mentioned before, the standard insurance industry commercial 'Loss of Profits' cover (Business Interruption) is the difference in 'insurable gross profit' between the 12 months immediately following the loss to the 12 months prior to the loss. However, this figure is then adjusted against financial year records, and probably most notably, takes into account 'trends' in the business in the period the subject of the claim - the 12 months following the loss (collapse of the seawall).

One important note here is the definition of 'insurable gross profit', as it differs from a traditional 'accounting gross profit', or even what most business people would think would be 'gross profit'.

Finally, you don't have to be a forensic accountant to work out that the biggest 'trend' in the period the subject of MGX's claim was the dramatic slide in the io price. I would imagine this will have a huge impact on the amount they ultimately receive.

And thats before you get to the logistical issue that MGX have with regard to this claim, in that they are not negotiating with one specific insurer, but probably 12-15 'co-insurance line' insurers, who each have to sign off on the calculations and settlement.

I tried at one stage to come up with some ball-park calculations based on a lot of assumptions, but it did my head in and i gave up.

We'll all just have to wait n see.