TFS Sandalwood 2015 Project
A total area of over 9,000 hectares is currently under management by TFS and by mid-2015 approximately 1,500 hectares of additional Indian Sandalwood will have been planted on behalf of growers. TFS is a specialist grower and manager of Indian Sandalwood plantations and its current plantations. Trial plantations grown by the WA Department of Conservation and Land Management (CALM) in the mid-1980s and early 1990s established that Indian Sandalwood grows extremely well in the tropical climate and black clay soils of the Ord River Irrigation Area (ORIA) and were the forerunners of the successful large scale plantations first established by TFS in 1999.
The experienced plantation management team of TFS is advised by Expert Foresters Peter Kimber, Richard Fremlin and our large team of expert foresters and agricultural experts and is supported by the TFS Board of Directors who have extensive experience in managing Indian Sandalwood MIS Projects.
The Opportunity
With the world market price of heartwood from Indian Sandalwood increasing on average by 14% per annum compound over the past 14 years, TFS has recognised that the continuing demand for Indian Sandalwood, together with the diminishing supply from natural stands worldwide creates a great opportunity for Australia to become a major supplier of Indian Sandalwood in the future.The primary value of Indian Sandalwood lies in the heartwood of the tree, from which the highly sought after oil can be extracted. For thousands of years, Sandalwood oil has been used in perfumes, cosmetics, soaps and incense as well as for therapeutic and medicinal purposes.
Strong government support (at both State and Commonwealth level) for the plantation forestry industry is expected to assist TFS to develop Australia’s potential for future export earnings in this area.
Sandalwood Lots
Each Sandalwood Lot covers an area of one twelfth of a hectare (1/12th Ha) and is leased to the investor by TFS until harvest. TFS will establish and maintain the plantation for investors until the plantation is ready for harvest. Harvesting of the plantation is expected to occur in Year 14 - 16 after the plantation has been established. The investor’s sandalwood trees will be sold as cleaned logsInvestment Options
The following Establishment Fee, Upfront Annual Fee and Upfront Rent is payable on application:- Establishment Fees (including GST) are as follows:
| Number of Sandalwood Lots applied for by Applicant | Fee per Lot |
| 1 - 11 lots | $6,875 |
| 12 or more lots | $6,600 |
- Upfront Fees (including GST) is as follows:
| Fee | Fee per Lot |
| Upfront Annual Fee | $412 |
| Upfront Rent | $138 |
| Cash Rebate | 4.00% |
| Closing Date | CLOSED |
| Minimum Investment | $6,250 (ex GST) |
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Application Cost per Lot (ex GST) |
$6,250 (up to 11) $6,000 (12 or more) |
| Term of Project | Approx. 15-17 years |
| Finance available | Yes |
| ATO Product Ruling | 2015/5 |
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Finance Package | |
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Investors are also required to pay Annual Fees and Rent on an annual basis until year 14 after the establishment
period. Annual investors may elect not to pay Annual Fees and Rent by way of an annual election. In exchange for
the deferral TFS will receive an additional share of the Gross Proceeds of Sale, ranging from 1% - 3% plus GST per
annum, depending on the year in which the decision is made.
Indian Sandalwood heartwood sold at an average of approximately $150,000 per tonne (on small volumes) at the State of Tamil Nadu Forestry Department and Kerala auctions held in India in July 2014. Our independent expert believes that the price should continue to rise at approximately 5% p.a for the life of the project however it should be noted that the price of heartwood from Indian auctions relate to mature wild sourced trees. These do not necessarily reflect anticipated prices for 14 to 16 year old plantation sourced heartwood.
Where investors borrow to purchase the lots via Arwon Finance Pty Ltd they will be required to fully insure their Sandalwood Lots until all loan monies are repaid.
A Product Ruling from the Australian Taxation Office (ATO) has been issued (2015/5), to confirm the deductibility of these Fees.
Growers should be aware that Product Ruling 2015/5 is based on the precise arrangements identified in the Ruling. If the arrangement described in the Ruling is materially different from the arrangements actually carried out, the Ruling has no binding effect on the Commissioner and will be withdrawn or modified. Growers are recommended to read the Product Ruling in its entirety and seek their own professional taxation advice concerning the taxation implications to them of investing in TFS Sandalwood Project 2015.
Their values:
• Best practice management.
• Ongoing research and development into Indian sandalwood to protect and benefit Growers’ investments.
• Assess project risks and maintain and develop processes to limit these risks.
TFS uses research, innovation and expertise to minimise the risks inherent in a pioneering project, with the aim of achieving the best possible outcome for Growers.
In addition to research into cultivation techniques the TFS Group is active in end market development for Indian sandalwood products.
TFS Corporation Ltd (ABN 97 092 200 854) listed on the Australian Securities Exchange (ASX) in December 2004 (ASX Code: TFC).
The TFS Group is a vertically integrated Sandalwood products company and in July 2008 acquired Mount Romance Australia Pty Ltd, the leading global distiller of Western Australian sandalwood oil and a producer of Sandalwood consumer products.
TFS is a wholly-owned subsidiary of TFS Corporation Ltd and has the benefit of an experienced group of Directors (for more information on the Directors, refer to the ‘Corporate Management’ section of the PDS).
Renowned for its fragrant and medicinal properties, Indian Sandalwood has a wide range of uses in the global fragrance, incense, worship and carving industries.
The Indian Sandalwood tree is a parasite, making cultivation highly specialised. This factor, alongside its strong demand in Asia, the Middle East and in the global fragrance industry, have led to the deforestation of Santalum album in its native environments of India, Indonesia and Timor.
TFS Assumptions
The yield of a sandalwood plantation will vary from site to site. Based on the Expert Forester’s Report contained in the Product Disclosure Statement, TFS has assumed each Sandalwood Lot should have a survival rate of approximately 35 trees per Sandalwood Lot at 1/12 of a hectare and those 35 trees should produce approximately 22.5kg of oilbearing heartwood (being 0.785 tonnes) per Sandalwood Lot.Indian Sandalwood heartwood sold at an average of approximately $150,000 per tonne (on small volumes) at the State of Tamil Nadu Forestry Department and Kerala auctions held in India in July 2014. Our independent expert believes that the price should continue to rise at approximately 5% p.a for the life of the project however it should be noted that the price of heartwood from Indian auctions relate to mature wild sourced trees. These do not necessarily reflect anticipated prices for 14 to 16 year old plantation sourced heartwood.
Insurance
TFS will endeavour to arrange for a suitable insurance policy for investors which covers, as a minimum, property lost, destroyed or damaged by fire. Insurance is at the cost of the grower.Where investors borrow to purchase the lots via Arwon Finance Pty Ltd they will be required to fully insure their Sandalwood Lots until all loan monies are repaid.
Taxation Benefits
All Establishment Fees and Annual Fees and Rent for the TFS Sandalwood Project 2015 are 100% tax deductible in the financial year of payment.A Product Ruling from the Australian Taxation Office (ATO) has been issued (2015/5), to confirm the deductibility of these Fees.
Growers should be aware that Product Ruling 2015/5 is based on the precise arrangements identified in the Ruling. If the arrangement described in the Ruling is materially different from the arrangements actually carried out, the Ruling has no binding effect on the Commissioner and will be withdrawn or modified. Growers are recommended to read the Product Ruling in its entirety and seek their own professional taxation advice concerning the taxation implications to them of investing in TFS Sandalwood Project 2015.
The TFS Group
The TFS Group aims to become the world’s leading producer of indian sandalwood and related products in a sustainable, ethical and environmentally-responsible way. The experienced team at TFS deliver first-class plantation management with the aim of providing investors with the best growth, yields and returns.Their values:
• Best practice management.
• Ongoing research and development into Indian sandalwood to protect and benefit Growers’ investments.
• Assess project risks and maintain and develop processes to limit these risks.
TFS uses research, innovation and expertise to minimise the risks inherent in a pioneering project, with the aim of achieving the best possible outcome for Growers.
In addition to research into cultivation techniques the TFS Group is active in end market development for Indian sandalwood products.
TFS Corporation Ltd (ABN 97 092 200 854) listed on the Australian Securities Exchange (ASX) in December 2004 (ASX Code: TFC).
The TFS Group is a vertically integrated Sandalwood products company and in July 2008 acquired Mount Romance Australia Pty Ltd, the leading global distiller of Western Australian sandalwood oil and a producer of Sandalwood consumer products.
About Tropical Forestry Services Ltd
TFS was incorporated in 1997, and commenced planting commercial plantations on behalf of growers in 1999. Since that time it has established over 9,000 hectares of Indian sandalwood plantations on behalf of over 3,400 individual Growers and institutional investors. By mid 2015 a further approximately 1,500 hectares of Indian sandalwood will have been planted on behalf of Growers and companies associated with TFS.TFS is a wholly-owned subsidiary of TFS Corporation Ltd and has the benefit of an experienced group of Directors (for more information on the Directors, refer to the ‘Corporate Management’ section of the PDS).
About Indian Sandalwood
Sandalwood is one of the world’s most valuable hardwoods, selling for over A$100,000 per tonne of heartwood (Tamil Nadu Forestry Department Auctions).Renowned for its fragrant and medicinal properties, Indian Sandalwood has a wide range of uses in the global fragrance, incense, worship and carving industries.
The Indian Sandalwood tree is a parasite, making cultivation highly specialised. This factor, alongside its strong demand in Asia, the Middle East and in the global fragrance industry, have led to the deforestation of Santalum album in its native environments of India, Indonesia and Timor.