The reduction in gross proceeds for deferring the annual service fee for the 2008 MIS project is::
Years 1 to 6: 4% plus GST.
Years 7 to 10: 3% plus GST.
Years 11 to 12: 2% plus GST.
The worked example in the PDS (page 11) shows the following
Column 1
Column 2
Column 3
0
Year
Annual fee $ per 1/6 Ha
% gross proceeds paid to TFC to defer annual fee
1
2010
1,200
4
2
2011
1,224
4
3
2012
1,248
4
4
2013
1,273
4
5
2014
1,299
4
6
2015
1,325
4
7
2016
1,351
3
8
2017
1,378
3
9
2018
1,406
3
10
2019
1,434
3
11
2020
1,463
2
12
2021
1,492
2
13
2022
0
14
2023
0
15
Total
40
An independent “expert” research estimated after tax rate of return for the ‘pay your annual fees’ at 8% to 15.5% whereas the ‘defer you fees’ alternative at 7.6% to 13.9%. Therefore it is superior to pay your annual fees.
TFC reported: (http://www.tfsltd.com.au/files/1014/6252/7921/First_Buy_Back_Offers_Made_to_Acquire_MIS_Assets.pdf ) “The majority of growers in the TFS2000 Project deferred their annual management fees and can expect to generate a 3.4x return (pre-tax) on their investment, providing an annualised Internal Rate of Return of 9.9% (pre-tax). Growers who pre-paid their management fees can expect to achieve a 3.2x return (pre-tax) and the small number of growers who paid their annual management fees a 1.8x return (pre-tax).”
For the 2000 project it was superior to defer the annual fees. This suggests the 2000 project had a more favourable (to the grower) formula then the formula that applies to the 2008 project.
TFC Price at posting:
$1.55 Sentiment: Buy Disclosure: Held
