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Great Southern High Value Timber 2008 Project

Great Southern High Value Timber 2008 Project
Cash Rebate 8.25%
Closing Date CLOSED
Minimum Investment $12,500 (ex GST)
Term of Project 17-19 years
Research AAG 3¾ stars
Adviser Edge 3¾ stars
ATO Product Ruling 2007/70

Tropical timbers teak and African mahogany have long been regarded for their natural beauty and durability and are used extensively for furniture and appearance grade timber.

By becoming a grower in the Great Southern 2008 High Value Timber Project, investors can commercially grow these highly valued timbers to ease pressure on Australia’s native forests and its dependence on imports; and provide global markets with a renewable substitute for diminishing native supplies.

The opportunity
The Great Southern 2008 High Value Timber Project provides investors with the opportunity to commercially grow plantation teak and African mahogany in Australia’s northern regions, which is suited to the production of tropical hardwood species.

Investors will participate by leasing woodlots to supply sawlogs suitable for furniture and appearance grade timber, to both domestic and international markets.

The Project will provide investors with 100% tax deductibility and expected returns from the sale of timber.

Applications received between 1 July 2007 and 30 June 2008 (inclusive), or such earlier date as the Project closes, and accepted by the Responsible Entity, will participate in the 2008 Project.

The Responsible Entity does not in any way guarantee applications will be accepted and has the right to accept or reject an application in its sole discretion.

Why Great Southern?
Great Southern is widely regarded as Australia’s leading agribusiness investment manager, with a track record of success over 19 years and nearly 40,000 investors. Great Southern’s forestry estate is one of Australia’s largest and more than 100 million trees have been planted to date.

The company’s net assets as at 31 March 2007 exceeded $714 million, including over 3 million hectares of prime and pastoral agricultural land, owned or held by long term lease across Australia. Great Southern Limited is an S&P/ASX200 listed company.

The industry: from native to renewable
The global high value timber industry is typified by dwindling supplies due to restraints on the logging of native forests and illegal logging practices, coupled with increasing demand.

Demand for high value teak and African mahogany timber, both locally and internationally, has increased steadily for decades and has intensified in recent years, driven in no small part by the rapidly expanding building and furniture industries. Demand for teak comes primarily from China, Thailand and India, while the USA and China are currently the largest global importers of African mahogany. The Asia Pacific region accounts for 90% of all tropical timber imports.

Supply of both teak and African mahogany is constrained in their native countries due to over-logging, dwindling supplies and resultant restrictions. Myanmar currently dominates the global teak export trade, however it is perceived that supplies are beginning to rapidly diminish. Malaysia, where illegal logging is widespread, is the third largest producer of tropical logs, and contributed 41% of global tropical log exports in 2005. Globally, just 17% of total roundwood teak production was exported during 2000.

African mahogany is predominantly sourced from Africa where it is a native species; however over-logging has resulted in increased limitations on the quantity of exports.

In Australia, high value timber needs have historically been met by native Jarrah and Karri from Western Australia, and a range of eucalypts on the eastern seaboard – roughly 94% of hardwood roundwood removals in 2005/06 were native-sourced. The sizable demand for high value timber in Australia far outweighs supply, which has largely been met by imports from Indonesia and Malaysia. Each year Australia imports approximately $500 million in tropical logs from these countries.

Continuing local and international supply shortages brought about by bans on logging of native forests and the crack down on illegal logging, as well as a shift in consumer preference to renewable timber resources is expected to lead to increasing demand for plantation generated tropical timber.

Experts believe Australia is poised to become a competitive contender in the high value timber industry by utilising its advanced silvicultural practices, suitable northern growing regions and proximity to significant markets such as South East Asia.

Project features
Your investment is supported by numerous security features. 
• The Australian Taxation Office (ATO) Product Ruling PR2007/70 confirms the investment is 100% tax deductible† in the first year.
• Insurance is expected to be available (subject to availability) to provide security for investors in the event of loss of timber or income subject to the terms of the policy.
• An Independent Forester is engaged to oversee and report to investors on the ongoing management of the Project.
• A stocking guarantee confirms that there will be a minimum of 85% of the original number of trees 12 months after planting.
• Great Southern pools harvest proceeds, which manages the inevitable risk associated with some woodlots performing better than others.
• The Project will be diversified across two product types, teak and African mahogany, and across different geographical locations, thereby reducing risk.

The growing regions
Growing regions for the Great Southern 2008 High Value Timber Project may include Northern Territory and Queensland, or other regions in Australia which Great Southern determines suitable for the commercial production of high value timber hardwood.

The map below shows more specific areas being targeted by Great Southern.



 

Project structure
Minimum investment Invest as little as one woodlot ($12,500 + GST). Each woodlot is 0.5 hectares and will comprise 50% of both teak and African mahogany.
Term Approximately 17-19 years after planting
Tax deductibility Investments are 100% tax deductible in the first year of investment. The ATO has issued Product Ruling PR2007/70 in relation to the Project†.
Finance options Flexible finance options are available, including 12 months interest free, and a range of principal and interest loans.
No ongoing costs (other than insurance) All ongoing management costs will be borne by Great Southern or via your harvest proceeds. You will only be required to pay compulsory insurance and an insurance administration fee.
Returns Investors are expected to receive returns from their investment from commercial thinnings during the life of the Project, and at final harvest, approximately 17-19 years after planting.
Timber sales Great Southern will use its best endeavours to sell the timber produce for the maximum practicable price available after consideration of all relevant factors.

Benefits
 The Project offers an excellent opportunity to participate in and benefit from the Australian high value timber industry. 
• 100% tax deductibility
• An expected income return to investors
• Numerous security features
• The risk management benefits of portfolio diversification
• Flexible finance options including 12 months interest free
• Established and experienced forestry team

The Great Southern 2008 High Value Timber Project – an overview 
• Great Southern carefully assesses land for the plantations before it is included in the Projects. Each woodlot is 0.5 hectares in size.
• Plantation management plans are prepared and land is categorised for suitability. This includes aerial photogrammetry techniques and global positioning technology.
• Great Southern prepares the land for planting.
• Plant material is sourced from various suppliers to reduce risk, and the seedlings are planted. Each woodlot will comprise of 50% of each teak and African mahogany.
• Trees are monitored and maintained on your behalf by Great Southern, this includes pruning, weed control and application of fertiliser as necessary.
• It is expected that trees will be commercially thinned at different stages during the Project.
• Final harvest is expected to be completed approximately 17-19 years after planting.
• It is intended that the timber produce obtained from the commercial thinnings and final harvest will be sold or exported for use as furniture and appearance grade timber.

IMPORTANT: The information contained in this summary is by way of general summary only and has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before making any decision to acquire an interest in the Great Southern 2008 High Value Timber Project ARSN 123 529 233 (the ”Project”) a person should consider the appropriateness of the information to their individual objectives, financial situation and needs and if necessary seek advice from a suitably qualified professional. Great Southern Managers Australia Limited AFSL 240 787 is the issuer of the Project and has issued a Product Disclosure Statement (“PDS”) for the Project which details the terms of the Project. Anyone wishing to invest should consider the contents of the PDS and complete the above application. The information is provided in good faith and believed by Great Southern Securities Pty Limited AFSL 240 788 to be accurate at the date of issue. However, no representation or warranty is made as to the accuracy, reliability or completeness of this information. Except to the extent that statutory liability cannot be excluded, Great Southern Securities Pty Limited and its related entities, directors, employees, and agents accept no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters (expressed or implied) arising out of, contained in or derived from, or for any omissions from, the information contained herein.

† The Product Ruling is only a ruling on the application of the taxation law and is in no way expressly or impliedly a guarantee or endorsement of the commercial viability of the Project, of the soundness or otherwise of the Project as an investment, or of the reasonableness or commerciality of any fees charged in connection with the Project. The Product Ruling is only binding on the Commissioner of Taxation if the Project is implemented in the specific manner provided in the Product Ruling.
Simply download an Investment Brochure/PDS above. It’s that easy!
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