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Investment Summary
The major drivers of future wood demand will be global
population, living standards and timber’s cost competitiveness
relative to substitute products.
What is Willmott Forests
offering
Willmott Forests is offering
an investment in a softwood
plantation where Growers
will be carrying on a
business of forestry
operations to produce
softwood sawlogs and
pulplogs. The primary use of
softwood sawlogs sold in
Australia is the production
of structural sawn timber
used in house construction
and this market is dominated
by softwood. The investment
offers the potential for
sound returns combined with
appropriate investor safe
guards.
How
is the Project structured
Each Grower under this
Product Disclosure Statement
enters into two Agreements
with the Manager.
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1 |
Forestry Management
Agreement (for further details refer to page 65)
- Part 1: Preparation and Planting;
- Part 2: Maintenance. |
|
2 |
Land Tenancy Agreement (for
further details refer to page 63
of the PDS) |
How much will it cost
The cost is $4,290 per Woodlot (including GST)
(0.5 of a hectare).
There are no annual on-going fees for
maintenance of plantations or the granting of
Land Tenancy of land until Harvest.
Under the Forestry Management Agreement, Growers
are required to pay $4,290 (including of GST)
per Woodlot for preparation and planting (Part
1), and 7% of the Gross Timber Proceeds received
from the harvesting of trees for maintenance of
the Plantations (Part 2).
Under the Land Tenancy Agreement, Growers will
be granted a right to occupy an identifiable
area of land. The rent per Woodlot will be equal
to 2% of Gross Timber Proceeds received from the
harvesting of trees, payable at the time of
harvesting.
The Harvesting Fee charged to the Grower for
engaging the Manager to arrange for the
marketing and harvesting of their timber is 1%
of Gross Timber Proceeds. For further details
refer to pages 8-9
of
the PDS
- The Process.
What are the payment
options
CASH: Cost per Woodlot = $4,290
(including GST)
TERMS: The Manager offers 12 months
interest free terms
FINANCE: MIS Funding No.1 Pty Limited
will provide approved Growers with a finance
facility for 100% of the Woodlot investment
(including GST). The actual loan options and
indicative interest rates are as follows:
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3 Years at 11% interest p.a. |
All principal and interest options are
available with a 36 month Interest Only
Period. |
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5 Years at 11% interest p.a. |
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7 Years at 11% interest p.a. |
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10 Years at 11% interest
p.a. * |
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15 Years at 11% interest
p.a. * |
* a
minimum investment of 10 Woodlots is
required for 10 and 15 Year loan
options.
The above interest rates are
indicative interest rates only and based on the
relevant ‘MIS Funding No.1 Cost of Funds (fixed
rate)’ rate as at 11 May 2006. The actual rate
will be set and fixed for the period of the loan
on 30 June in the financial year of investment.
For further details refer to page 68 - Section
10.7. MIS Funding No.1 Pty Limited may in its
absolute discretion offer individual loan terms
to Growers that differ from the above. However,
the terms of these individual loans will not be
materially different to those set out in Product
Ruling PR2006/127 and PR 2006/128 issued by the
ATO.
Repayments are due on the last business day
(Victoria) of each month commencing on July in
the financial year of the investment.
How does the Project
work?
Growers apply for one or more Woodlots and, if
accepted, Willmott Forests will:
- administer the Project;
- grant a right to occupy the land to Growers;
- seek registration of a Forestry Right in relation to Project Land granted to Growers under the PDS (refer to pages 8 and 22 of the PDS for further details);
- obtain planning and development approval;
- provide Growers with regular reports;
- prepare the plantation site(s);
- plant at a minimum rate of 550 seedlings per Woodlot;
- grow trees to produce quality sawlogs;
- manage the plantations through to Clear Fell (i.e. Year 25);
- arrange harvesting operations (unless the Manager is notified otherwise by the Grower - refer to pages 8-9 of the PDS for further details); and
- distribute harvesting proceeds to the Grower.
Demand for end product
As world demand for forest products is
increasing, supply is becoming more restricted.
Softwood continues to replace hardwood in the
traditional markets, most importantly in house
framing and other construction activities. Pinus
radiata has captured the major portion of the
house framing market and is now used in
virtually all building and furniture
applications.
No on-going fees until
harvest
Once the initial Woodlots have been issued,
other than annual insurance premiums payable
after the Stocking Guarantee expires, Growers do
not have to pay any other fees until harvesting
which commences with the 1st Thinning
anticipated at Year 13.
100% tax deductibility
The cost of the Woodlot (excluding GST) is 100%
tax deductible. The GST component will be either
tax deductible or able to be claimed as a GST
input credit, depending on the individual
circumstances of the Grower. The Australian
Taxation Office has issued Product Ruling PR
2006/127 in respect of the Project that confirms
the tax treatment for the Growers who enter the
Project on or before 30 June 2007 and PR
2006/128 for Growers who enter the Project after
30 June 2007 and before 30 June 2008.
Stocking Guarantee
The Manager provides the Grower with a Stocking
Guarantee for a period of two years from the
date the Grower is registered as the holder of
the Woodlot. After the period covered by the
Stocking Guarantee, it is compulsory for the
Grower to maintain their own Standing Timber
insurance. For further information, refer to
page 23
of the PDS.
Willmott Forests
Established in 1980, Willmott Forests is an
integrated forestry company that plants,
manages, harvests, processes, supplies and
replants softwood resource. Willmott Forests is
a Quality Endorsed, publicly listed company with
a market capitalisation in excess of $95.6
million (as at 30 June, 2006). Willmott Forests
manages over 30,000 hectares of commercial
plantations on behalf of more than 3,400
individual Growers via managed investment
projects. The majority of these plantations are
located in south-east New South Wales and
north-east Victoria. Key Features Of the world’s
raw materials, timber is one of the very few
that is renewable, sustainable and
environmentally friendly. There is probably no
other raw material which is so versatile.
The above is an extract from the Willmott
Forest Project 2007 Product Disclosure
Statement. |
