Ann: TFS Delivers Record Half Year Profit and Upgrades Guidance, page-24

　

I personally find Takeprofits posts a little puzzling?

First he is states that TFS is “burning” through $58M in cash? Clearly these funds went to establishing new plantations on behalf of the growers, and would not have been “burnt” if they had not been so successful in selling trees to the overseas & HNW investors in the first instance? Another $37M was spent on land and secondary market tree purchases, so clearly TFS believe in themselves and the product.

The debt has not “ballooned”? From what I can see the debt has stayed the same @ USD150M? I understand that the devaluation in the AUD has impacted on the AUD amount, however the fact that they receive the payments for the Oil sales from Galderma (and any others) in USD is a natural hedge against the debt that they have in USD? When you factor in that TFS will start receiving a regular USD income that will exceed the interest repayments on the Bond, it’s my understanding that a weaker AUD will actually benefit the company, particularly in the future when the larger plantations are harvested.

Takeprofits is also critical in the way that TFS value the trees. You may want to speak with the company directly but it’s my understanding that the Australian accounting standards dictate that the increase in the value of the tree must be taken as profits on the PL. Imagine if TFS revalue the trees based on a $4500USD per kg oil valuation……

He also suggest that Harvard & Church are not a valid reason to invest? Both are highly successful conservative funds (Church $6B+ & Harvard $36B). My guess is that they would have put TFS through the wringer before investing.

To my recollection TFS have not reported profits (only losses) in the half yearly accounts before now, due to the fact that the vast majority of sales are generated in the last half of the FY. When you consider this, it makes a compelling argument to invest (IMO).