TFS Corporation - Sandelholzproduzent
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ASX RELEASE MARKET UPDATE: PLANTATION SALES ON TRACK TO EXCEED FORECAST 4th May, 2010 TFS would like to update the market on the current state of its plantation sales program and revenue model for FY10 and beyond. Key Points: 2010 Wholesale Sales Update • Global Institutional Forestry Investment By June 30, TFS will have completed sales of at least 300 ha under its 2010 Beyond Carbon investment project. The client base involved is distinctly European institutional and ultra high net worth individuals.
Emirates Joint Venture In May TFS Emirates joint venture partner EIG is launching a forestry fund as part of its commitment to assist in raising at least 200 ha per annum of new plantation investment for TFS from middle eastern sources- closing date for this fund is 30 June 2010. Global Sales confirms revenue shift International sale of hectares confirms a significant shift in the sustainability of TFS’s revenue model for FY10 and future years to come. • • 2009 Wholesale Sales 350 ha Update Part funds received on 350ha from 2009 wholesale investor with balance expected in FY10.
1. Global Institutional Forestry Investment Over the last year TFS has delivered non-MIS sales to diversify its MIS retail sales to include a wholesale institutional investor base. This has entailed restructuring our Indian Sandalwood Investment project for a different client base and marketing the project on a global basis.
Institutional investment in this sector over the last two decades has averaged investment flows in the vicinity of US$2.5b per annum. Throughout this process TFS has discovered significant global interest for the TFS offering which will serve to de-risk TFS’ revenue base over the medium to longterm, as TFS attracts institutional customers willing to consider longer term investment horizons. Through the course of FY10 TFS embarked on a marketing campaign for its 2010 wholesale project which has seen a number of distribution relationships develop.
One such relationship TFS has developed is with a European investment firm who demonstrated a desire and a capability of sourcing wholesale investors on a repetitive basis for the TFS Indian Sandalwood Project. Due diligence on this counterparty has provided TFS confidence that it has secured a valuable means of product distribution to achieve ongoing sales, with greater certainty within the wholesale non MIS investment program. This European distribution partner has committed to sourcing over 300 ha in cash sales in FY10, with a commitment to ....
ASX RELEASE AAA RATED US BASED INSTITUTION COMMITS TO TFS SANDALWOOD PLANTATIONS 26 May 2010 Highlights • • • AAA rated US based Institution enters into an Investment Management Agreement pursuant to which TFS will manage a 180 hectare Indian sandalwood plantation to be planted in FY10 . Investment by the Institution over the life of the plantation excluding performance bonuses to TFS anticipated to be circa $20m. Secures option to plant an additional 180ha per annum for next 5 years to 2015 with this investment anticipated to be, approximately, $100m if all options are exercised.
Australian agribusiness TFS Corporation (ASX: TFC) has signed a confidential Investment Management Agreement (IMA) with a US based institutional investor potentially worth $120 million over six years. The IMA is subject to and conditional upon the settlement of a related land acquisition agreement with TFS. The land acquisition agreement is conditional on, amongst other things, the Investor obtaining Foreign Investment Board approval.
Under the IMA TFS is paid an upfront payment for the purchase of land and establishment of the plantation, annual payments for plantation management, and a performance bonus upon a hurdle rate of return being achieved by the investor. This investment is in addition to the recently announced (May 4) forecast of 500 hectares of NonMIS sales, and puts TFS on track to sell over 500 hectares of Non-MIS in FY10 up over 40% on FY09 Non-MIS sales. “This institutional investment continues the rapid and fundamental transformation of TFS from a company heavily reliant on yearly MIS sales and its associated income to one that will receive its investment and income from predominantly more stable institutional and private sector sources,” TFS Executive Chairman Frank Wilson said.
“Even in a tumultuous economic environment, TFS’s forestry products continue to attract the support of leading global institutions and private investors by entering longer term investment agreements. This gives TFS the revenue stability to deliver on its strategy of becoming the world’s leading integrated Sandalwood supplier.” “Our strategy to restructure our products to attract institutional investors has proven to be the right one in the wake of the MIS market fallout. Together with the continuing increase in profitability of our sandalwood processing arm Mt Romance, TFS is well positioned as our first Indian Sandalwood plantations are harvested in the next three years,” Mr Wilson said.
Indian Sandalwood sits in the high return category compared to traditional ....
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About TFS Corporation
Phone: 08 9221 9466
Fax: 08 9221 9477
GIGS : Materials
Shares on Issue : 189310000
Profile: TFS Corporation Ltd (TFS) is engaged in management and operation of forestry plantations, and the provision of finance. Its principal activities include promotion of sandalwood-managed investment schemes; management and maintenance of sandalwood plantations; ownership and leasing of land; provision of finance; ownership of sandalwood plantations, and undertaking the production and ...
Activities: Managed Investment Schemes company in Indian Sandalwood Industry
02 June 2010
• ATO Product ruling 2010/12
• Project capacity is 1,000 ha with subscriptions being available in 0.25 ha woodlots
• Establishment fee is $3,900 per woodlot (ex GST)
• Minimum subscription of 250 ha is required for the Project to proceed
• Plantations to be established in the Wheatbelt region of Western Australia
• No allowance for earnings from the Project has been made in TFS’ FY 10 earnings guidance
Following the release of ATO Product Ruling 2010/12, TFS is pleased to announce the launch of its inaugural native Australian Sandalwood Project for retail investors. TFS is a specialist Indian sandalwood (Album) plantation owner and manager, and the establishment of a plantation project for the native species of Australian sandalwood (Spicatum) is a natural extension of TFS’ core business and operations as a vertically integrated sandalwood products company.
TFS is already a producer of native Australian sandalwood oil through the processing business of Mt. Romance (MRA) which sells oil and related products to the European fragrance industry, India, China and Taiwan. TFS’ established production capacity and end market customer base enable TFS to process raw material into finished products and distribute these to global customers.
Australian sandalwood is complimentary to Indian sandalwood as they serve distinct product segments. Indian sandalwood is used in high-end cosmetics and luxury fragrances, as well as having widespread religious and cultural applications in India and Asia. Australian sandalwood has typically been used for incense in China, Taiwan and south east Asia and also has usage in fragrances and cosmetics. Australian sandalwood sells at a significant discount to the premium Indian sandalwood.
TFS notes that no allowance has been made in its FY 10 earnings guidance for earnings from this new project.
TFS would also like to clarify a report made in today’s West Australian newspaper. TFS has executed an agreement with WA Sandalwood Plantations Pty Ltd (WASP) to be the plantation contractor for the Project, under the supervision of TFS. TFS is not making any investment in WASP, nor in any of WASP’s Australian sandalwood plantations. TFS is simply engaging WASP as a plantation contractor.
02 July 2010
Sandalwood grower and processor, TFS Corporation (TFS), has today announced total sales of approximately 1,088 hectares of Indian Sandalwood an increase of 6% on FY09.
Non MIS Sales
TFS has achieved sales from non-MIS institutional investors of 782 hectares, representing an increase of 120% on FY09.
TFS has closed its retail MIS for FY10 having accepted applications for approximately 306 hectares of the Indian Sandalwood project for the FY10 financial year, down 54% on FY09.
FY10 Earnings Guidance
Following this sales result, TFS advises that it maintains its FY10 earnings guidance.
“We are extremely pleased with this sales result which is in line with the forecast we made at the outset of the financial year, and which is testimony to the appeal of our Indian Sandalwood product,” said Frank Wilson, Executive Chairman. “Given the dramatic decline in overall MIS sales in Australia in FY10, we believe this outcome vindicates our strategy to move away from reliance on MIS and reflects the strong long term market outlook for Indian sandalwood products and the growing recognition of our company’s future position as a leading industrial company supplying sandalwood oil and sandalwood by-products to a robust and growing global market.”
TFS expects to release its full year results during the week commencing 23 August 2010.
31st August 2010 ASX Release TFS Beats Earnings Guidance as it Transforms Business Model Highlights • • • • • • • Cash NPAT of $26.7m achieved growth of 14.7% ahead of guidance of 10%+ 2H Dividend of 3.5 cps declared amounting to full year dividend of 4.75 cps, up 11.8% Successfully transformed business model from solely MIS with revenue from Non-MIS sales accounting for 73% of cash operating revenue MRA rebounded strongly with EBITDA of $5.4m, growth of 58% v guidance of 20%, achieving a record result Balance sheet remains strong with low gearing at 19% and interest cover @10.5x Outlook is positive with wholesale deal flow to settle in FY11 following completion of land subdivision at Kingston Rest End market opportunities continue to develop in positive direction TFS Executive Chairman Frank Wilson said TFS had delivered a strong result in difficult trading conditions. “The business model has been successfully transitioned away from solely MIS, and evolved into one with a diverse mix of plantation and processing related sales.” “We are seeing increased demand from wholesale investors from a variety of regions, including the USA, Europe and Asia and we expect their prominence in the TFS revenue profile to continue to grow”, Mr Wilson said. “The performance of our processing division at Mount Romance was particularly pleasing as it demonstrates the resilience and underlying demand for sandalwood products in global markets”.
FY10 Results TFS Corporation Ltd (TFS) (ASX: TFC) today announced a rise in Comprehensive Income after Tax of $41.4m for the year to June 30, 2010. This result is an increase of 18.8% reported in the previous corresponding period (pcp). In addition to the core operating performance, this result reflects the inclusion of both non-cash items such as deferred fees, tree revaluations, as well as the new accounting standard (AASB101) that encompasses the treatment of land that is either sold for cash or held for re-sale.
Deferred fees were up 31% to $11.1m reflecting the rise in the size of the plantation estate over recent years. Cash flow from these fees will be realised as the harvest program commences in 2013. Revenue from tree revaluation was flat v pcp principally due to exchange rate movement.
The after tax contribution from land to the Comprehensive Income result was $4.3m. TFS has declared a 2H10 dividend 3.5 cps, up 16.7% on pcp, payable on 22 December 2010 and the record ....
TFS is pleased to advise that a $47m plantation investment by a middle eastern sovereign wealth fund, referred to in ASX release 23 December 2010 has settled with initial proceeds of approximately $27m (inclusive of GST) received. A further $13m in annual management and investment service fees will be received by TFS over the life of the investment, plus an additional $9.6m has been allocated to the purchase of MIS grower woodlots in the secondary market.
The settlement occurred post the receipt of formal approval from the Foreign Investment Review Board (FIRB) as referred to in the December update.
The settlement of this transaction concludes a key transaction for TFS and reinforces the success of TFS’ initiative to develop an institutional investment product for the wholesale market. It is worth noting that arrangements with this investor also include a 5 year option and, if all options are exercised the total investment by the sovereign wealth fund over the life of the project, excluding performance fees and the direct investment into secondary market purchases of MIS Indian Sandalwood grower woodlots will be approximately $240m.
The settlement of this transaction along with two rounds of investment from a AAA rated US investor, provide a strong foundation for the continued success of this new business segment and global recognition of the sound fundamentals underpinning TFS’ Indian Sandalwood business.
The settlement of this transaction also reflects the conclusion of all structural issues enabling ease of foreign investment into plantations managed and owned by TFS. Subsequently, the timing of the receipt of funds should in general now be aligned with the sales and planting cycle, such that the strong underlying cash flows of TFS will become transparent for the investment community.
TFS has a very strong pipeline of institutional investor interest which forms the back drop to TFS’ recent FY11 forecast of circa $70m at the operating cash flow line.
As referred to in the December update, part of the proceeds from this settlement will be applied to paying down bank debt to circa $33m.
As the MIS market continues to be subdued, the wisdom of the TFS board and management to diversify its sources of investment flows to a more reliable and stable customer base becomes even clearer. In FY11, investment flows from the institutional market should again increase their prominence. TFS is exceptionally pleased that it has been able to grow its earnings through the GFC and the decline in the MIS sector. As noted in the AGM, TFS expects to increase its FY11 cash earnings again by at least 10%.