Western Australian-based Indian Sandalwood grower, TFS Corporation, has announced today its interim results for the first half of the year and advised that it expects an increase in full year net profit after tax of at least 15%, and 13% on an earnings pe
Western Australian-based Indian Sandalwood grower, TFS Corporation, has announced today its interim results for the first half of the year and advised that it expects an increase in full year net profit after tax of at least 15%, and 13% on an earnings per share basis.
The company's forecast is based on an expected new products sale of at least 650 hectares for the full year.
Reported earnings for the opening half of the year increased by over 300% to $3.1 million, and at the EPS level by in excess of 250% to 1.7 cents per share. The result was achieved on the back of a significant increase in new product sales, to 128 hectares, in what remains a markedly seasonally weaker half to the financial year.
Full announcement pasted below:
TFS Corporation (TFS), the Western Australian-based Indian sandalwood grower, today announced its interim results for the six months ended 31 December 2007 and provided guidance in respect of anticipated growth in full year net profit after tax.
Reported earnings for the opening half of the year increased by over 300% to $3.1 million, and at the EPS level by in excess of 250% to 1.7 cents per share. The result was achieved on the back of a significant increase in new product sales, to 128 hectares, in what remains a markedly seasonally weaker half to the financial year.
In recognition of the improved first half performance and the company's positive earnings outlook, TFS has increased its interim fully franked dividend by 11%, to 1 cent per share.
"Whilst this is an encouraging start to the year," said Frank Wilson, Executive Chairman "as with prior years, our full year result will be heavily skewed to the second six months owing to the traditional concentration of Managed Investment Scheme (MIS) sales in the months of March to June."
The company recently officially released its new MIS product, TFS Sandalwood Project 2008, and as previously advised expects to record new product sales of at least 650 hectares for the full year, which would represent an increase in excess of 16% over FY07. 120 hectares of the sales concluded in the opening half were in respect of this new offering.
Based on projected sales of 650 hectares, TFS is now pleased to advise that it expects an increase in full year net profit after tax of at least 15%, and 13% on an earnings per share basis.
"As we stated at the Annual General Meeting in November, the company is confident of another strong advance in earnings this year. The broader and deeper distribution network which TFS has established will enable increased sales of our MIS product, which commands certainty of 100% tax deduction given its forestry classification," said Mr Wilson.
TFS continues to increase its available land bank for future Indian sandalwood plantings through a variety of initiatives, including:
-
The acquisition in the half of two further properties in the Kununurra Ord River Irrigation Area, adding 235 hectares of suitable land;
-
Negotiation of a long term lease agreement with the Kununurra Waringarri Aboriginal Corporation for the use of approximately 175 hectares of land; and
-
Negotiation of an option to lease a further 300 hectares in the Kununurra region, currently subject to due diligence to determine suitability for plantation.
After taking into account the allocation of land for planting in the 2008 season, TFS retains a land bank of approximately 3,100 hectares suitable for Indian sandalwood cultivation. Plantings in the 2008 season will include the first 50 hectares at the substantial Kingston Rest property, which was acquired in 2007.
At 31 December 2007 net debt stood at approximately $26.1 million, equating to gearing (net debt to equity) of 33%. Subsequent to period-end, as announced on 12 February 2008, the company completed the partial sale of its loan book to a subsidiary of the Commonwealth Bank of Australia (CBA) for a sum in excess of $23 million, leaving TFS in a net debt-free position as at that date.
In addition, CBA has agreed to act as preferred financier for the TFS 2008 project and for the company's future TFS 2009 project. The availability of such external finance is expected to increase the proportion of cash sales concluded by TFS, with concurrent benefit to future balance sheet strength, cash flow and financial flexibility.
"The outlook for TFS is bright, with a significant land bank in place, considerable infrastructure and human resource capability established in the Kununurra region and a strong financial position from which to pursue further growth opportunities. These factors will allow the company to significantly increase its MIS sales and plantations over both the short and longer term, against a backdrop of rising Indian sandalwood prices and growing interest in our product and capabilities from potential customers in the global fine fragrance and cosmetics industry, as borne out by the recently-announced oil supply agreement with Lush," Mr Wilson added.
