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TFS Lifts Profit by 23% in 1H16

TFS Lifts Profit by 23% in 1H16
Sandalwood plantation sales were up 50% with strong demand from all investor groups
Feb 26, 2016 By Imran Valibhoy Tags: TFC

TFS Corporation Limited (ASX:TFC) released a strong financial report for the first half of FY16 showing a 23% rise in profit.

The consolidated net profit after tax of the group was $67.4 million, a 23% increase on the $55 million earned in the previous interim period. Subsequently, earnings per share were lifted from 16.92 cents per share to $19.87 cents per share.

The group’s cash revenue increased 17% to $60.7 million. Cash EBITDA rose 29% on the prior year. Overall plantation sales were up 50% with strong demand from all investor groups. The cash balance improved from $30 million to $52 million during the period.

TFS Signs Multi-Year Agreements

TFS signed multi-year agreements with Chinese and Indian buyers, whereby 100% of the group’s owned wood from the 2016 and 2017 harvests has now been forward sold at US$4,500 per kilogram of oil. The annual harvest which is due in May is expected to yield more than 300 tonnes of heartwood, up tenfold on FY15. 

The group’s Managing Director, Frank Wilson commented on the agreements: “I am delighted we have signed new agreements with wood buyers in China and India at attractive prices for TFS. With our existing contracts with Galderma and Lush Cosmetics, I am very pleased to announce that we have now forward sold all of the TFS owned yield from the forthcoming two harvests.”

Principal activities during the period include the promotion of Sandalwood plantation investment to institutional investors, manufacturing and distribution of Indian and Australian Sandalwood oil to end customers including Nestle-owned Galderma.

TFS acquired Santalis Pharmaceuticals Inc. and ViroXis Corporation in July 2015, which contributed revenues of $0.153 million and $0.073 million respectively.

Outlook

TFS reaffirms guidance for FY16 Cash EBITDA to be between 5% and 10% more than FY15. The group also expects to establish a further 1,500 hectares of plantings in FY16.

The upbeat announcement sent TFC up 23% to $1.64 as at 11:10 AM (AEDT).

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Imran Valibhoy Author: Imran Valibhoy Feb 26, 2016

Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.

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