This is John Young being interviewed by the ASX in in June 06,I...

This is John Young being interviewed by the ASX in in June 06,I haven't found any 07,but note the the similarity of 06 with 05,notice also the financial arrangement spin fotr the investor taking a loan .

If you are in a legal action may I suggest to use these quotes from the MD of Great Southern Plantations.Stuff like recourse on the trees,sleazy way,not unlike Gunns in the spin doctoring
666 666 666 666

Gunns Tattslotto numbers above

1
Attention ASX Company Announcements Platform
Lodgement of Open Briefing
Great Southern Plantations Limited
1205 Hay Street
West Perth, Western Australia 6005
Date of lodgement: 16-Jun-2006
Title: Open Briefing. Great Southern. MD on Sales and Outlook
Record of interview:
corporatefile.com.au
Great Southern Plantations Limited has announced sales of agribusiness income
products of $143 million for FY06, an increase of approximately 180 percent on
FY05, and your forestry project still remains open. How do you assess this sales
performance?
MD John Young
Were very pleased with our sales performance because the introduction and sale
of a number of different agricultural investment products, namely wine grapes,
olives and cattle, is a deliberate long term strategy that will underpin the future
growth of the company. We believe weve achieved the highest market share
within non-forestry agricultural investment products, and we expect to maintain
the largest share of the plantation project market. This sales success demonstrates
the strength of our distribution network, our management and resources and our
ability to develop, package and distribute diversified investment products to a
growing market.
Despite a number of our new projects coming to market late this year, weve
achieved this high level of sales within a short time frame and without detriment to
our existing business. Given that we already have Product Disclosure Statements
available for all our existing projects for FY07 and the majority of product rulings
have already been issued, were well placed to build on our success next year and
beyond.
2
corporatefile.com.au
Last year non-forestry projects accounted for around 14 percent of total sales.
Based on sales to date and your expectations for the balance of FY06, nonforestry
projects will apparently account for around 30 percent of your total sales.
Why have you diversified into non-forestry income products, and what are your
future plans for these products?
MD John Young
There are a number of reasons for our diversification strategy. In the past we
focused on our plantations because to be successful in forestry it is vital to achieve
large scale operations with an optimum, sustainable level of resources. However,
our plantations have now reached a level of maturity at which sales can continue at
current levels while we look for additional growth opportunities. Alternative
agricultural investment projects provide an attractive base for our future growth.
There are a number of agricultural commodities with international markets, strong
potential demand and opportunities for economies of scale that we can distribute
through our large distribution network. We therefore see income agricultural
products contributing a rising proportion of our total sales.
corporatefile.com.au
Why are these income agricultural products proving to be popular with investors?
MD John Young
More and more investors are seeking alternative investments and our newer
projects are delivering a tax efficient, alternative diversified investment with
regular income streams, which are particularly attractive to older investors whose
retirement savings are under funded. With the new changes to superannuation,
building investments and income outside superannuation is increasingly important.
These products are not purely about tax deductions, they provide a diversified
investment with regular income and competitive returns.
corporatefile.com.au
How do the profitability and capital expenditure requirements of these new
products compare with the plantations projects?
MD John Young
All our products are expected to provide a return above our cost of capital.
Expanding our products to include annual income generating products enables us
to manage our capital more effectively and reduces our dependence on raising new
equity to grow. In previous years the capex requirement of growing our sales by
approximately 50 percent per annum has been a challenge. Now that forestry has
achieved critical mass were placing greater emphasis on balance sheet
management resulting in slower group sales growth, but providing a lower risk
profile, as well as allowing us to reduce our cost of capital.
In addition, with increasing sales of income agricultural products well derive a
higher proportion of revenues from on-going management fees and will be less
reliant on new product sales. For each income agricultural product sales dollar we
expect to generate a further two dollars of revenue in future management fees over
3
the life of the projects. Whilst ongoing costs will also be incurred against such
revenue, we can achieve higher gross revenues on a lower sales growth rate.
corporatefile.com.au
The hardwood plantations project has historically been your major investment
product. Whats the outlook for plantation project sales as we approach the end of
June 2006?
MD John Young
While sales are currently 30 percent higher than the same time last year, we
anticipate closing the project at around the same level of sales as last year as an
annual establishment level of around 35,000 hectares is the optimum in terms of
land availability and capital requirements. Well announce final plantation sales in
the first week of July.
corporatefile.com.au
In May the Treasurer announced tax rate reductions and new tax thresholds. Do
you expect that this will have any impact on sales in FY07 and beyond?
MD John Young
No, I dont believe so. Even ignoring the tax deductions, our projects are
attractive investments providing diversification and investment in agricultural
commodities with growth markets and the potential for high, regular income
streams. Were providing investors with the opportunity to participate in corporate
agriculture, which brings unique benefits, not only in efficiencies and economies
of scale, but also the opportunity to participate in an emerging, competitive and
sustainable industry that can take advantage of growth prospects in the Asia
Pacific region. The changes to the tax rates should make these products even more
attractive, as the income generated will be taxed at lower rates which should
produce a higher after tax return on investment.
corporatefile.com.au
Youve indicated that your group sales will be higher in FY06 than last year.
What is the outlook for your FY06 earnings?
MD John Young
Whilst our revenue will certainly be higher than last year, our cost structure will be
substantially higher. Subject to final sales to 30 June, and excluding the impact of
accounting for our land under AIFRS, I expect a modest increase in net profit after
tax for the current financial year on an AIFRS comparable basis and a modest
increase in EPS, even with the impact of conversion of TREES and new share
issues during last year.
FY06 has been a year of consolidation and building a platform for the future.
Weve consolidated our plantation business and made substantial capital
expenditure savings on land, particularly through the strategic acquisition of
Sylvatech which gives us access to land on the Tiwi Islands. However, given its
remote location, the operating costs of this plantation operation are higher.
4
Our fixed costs have risen substantially in FY06. To manage the quadrupling of
sales over the last few years and the introduction of multiple products our business
functions, such as accounting and finance, compliance, administration, IT, HSE,
etc have required investment in systems with the capacity to provide a sound
platform for future continued grow. In addition, we have had to expand our sales
team to cope with the expanding market and multiple products in the coming
years.
Whilst our operating cashflow will be ahead of last year, our profit margins will be
lower than previous years levels. However, we now have a sustainable cost
structure that will facilitate future growth in earnings.
corporatefile.com.au
You flagged last year that one of the biggest impacts to the company of AIFRS is
the carrying value of plantation land. How will these changes affect your FY06
results?
MD John Young
We own the majority of the land used in our plantations project which we regard
as an investment that will increase in value over time. Under the new international
accounting standards our investment property land is required to be recorded at
fair value, and this value needs to reflect the encumbrance of the lease given to
growers and the deferral of rental streams.
This AIFRS accounting treatment will add a degree of volatility to future earnings
as an accounting loss is expected to be booked when the land is first leased to
growers. This loss, however, is expected to reverse progressively over the
following years as the lease term reduces to expiry and the land becomes
unencumbered again.
In any financial year, assuming no major changes to the assumptions underlying
land values, the net impact on earnings will reflect the expected initial fair value
accounting loss from land leased that year to growers and the expected accounting
gain in fair value of the opening land bank at the end of the year, as the leases to
investors will be one year closer to expiry by the years end.
For FY06 we expect the net impact to earnings from plantation land accounting to
be a loss as during the year we acquired a large amount of land and leased it to
investors. This expected net loss impact on earnings is accounting in nature and is
not a cash outflow.
In the future, given that we expect to hold new plantation sales at around current
levels, we expect the net impact to earnings from AIFRS accounting for our land
to become earnings positive. The size and value of our land bank is expected to
increase to a level at which the accounting gain arising from the leases that are
closer to expiry at the end of the year should more than offset the accounting loss
arising from land which has been leased to new growers.
5
corporatefile.com.au
You mentioned earlier that you are more focused on capital management. What
steps have you taken to improve capital management?
MD John Young
In addition to the land bank acquired with Sylvatech, the continued growth of
income agricultural products as well as the rotation of our existing plantation land
bank are providing more capital efficiencies. Our strong balance sheet and our
new income projects are allowing us to use gearing more efficiently, although we
intend to remain conservatively geared compared with our major competitors.
Initially, weve put a new $250 million facility in place with ANZ Bank to fund
the acquisition of cattle and vineyard properties, and we expect to increase our use
of debt in future.
Were also currently working with ANZ Investment Bank to potentially raise
around $200 million through a structured finance transaction of our pulpwood land
bank. We currently expect that recourse on any such financing could be limited to
a separate land bank trust entity and we hope to complete any transaction by the
end of the 07 calendar year.
Weve also recently revised our loan securitisation arrangements with Adelaide
Bank under which well have no credit exposure at all to the investor loans that we
securitise. Our cashflow will increase as there will be no collateral or security
withheld and if, as we expect, the transactions are off balance sheet well have a
cleaner and more meaningful balance sheet.
corporatefile.com.au
There have been recent media reports suggesting that Managed Investment
Schemes (MIS) are having negative impacts on rural areas and are detrimental to
various agricultural sectors. Whats your comment on that?
MD John Young
On the contrary I believe that MIS are positively impacting rural areas and are
beneficial to a number of various agricultural sectors. Great Southern is targeting
commodities which are produced in large scale operations and for which there are
large international markets. We are bringing efficiencies, employment
opportunities and economic and social benefits, particularly to rural areas. Were
participating in corporate agriculture and our business dealings are often between
other corporates. Were not dealing in small niche products with limited domestic
markets, which are more suited to smaller operators. Australia has a real
opportunity to be a major world player within the agricultural sector, especially in
the rapidly growing Asian markets, but well only realise this potential if
companies can own and operate large scale, efficient enterprises.
corporatefile.com.au
Finally, what is the outlook for FY07?
MD John Young
With the continued success and maturity of our plantations project and the success
this year of our cattle, organic olives and vineyards projects, were well placed to
6
build on past achievements, particularly given that we have product immediately
available for sale in FY07. The market for these diversified, tax efficient
investments with income streams is growing which will enable us to both grow
existing product and to look at new opportunities.
corporatefile.com.au
Thank you John.
_________________________________________________________________
For further information about Great Southern Plantations, please visit www.greatsouthern.
com.au or call Great Southern on 1800 258 348.
For previous Open Briefings with Great Southern Plantations or to receive future
Open Briefings by e-mail, visit www.corporatefile.com.au
DISCLAIMER: Corporate File Pty Ltd has taken reasonable care in publishing the information contained in this Open Briefing.