Nedlands-based TFS Corporation has altered the accounting treatment of four managed investment schemes after its auditor proposed changes to align with new guidelines introduced in 2014.
Nedlands-based TFS Corporation has altered the accounting treatment of four managed investment schemes after its auditor proposed changes to align with new guidelines introduced in 2014.
Eleventh-hour discussions over the appropriate accounting treatment forced TFS to delay the release of its annual results from Friday until today.
The company’s audit committee chairman, John Groppoli, said the auditors, EY, have acknowledged the treatment of MIS schemes is highly subjective.
Previously TFS recognised only its direct interests in Indian sandalwood trees within each MIS.
Under the new policy, TFS consolidates entire MIS projects where it is the manager and has a 30 per cent equity interest in the scheme.
This applies to four schemes established between 2004 and 2007.
“EY concur with the company’s treatment and agree that the change should have been raised with the company much earlier in the audit process,” Mr Groppoli said.
“Importantly, the consolidation of these schemes has zero impact on TFS’s financial position and does not alter the company’s net earnings, cash position or the valuation methodology of the sandalwood plantations.”
TFS’s financial report showed a solid result for the year to June 30, with profit up 37 per cent to $113 million.
In a statement, TFS said the result was driven by a 35 per cent increase in sandalwood product sales, and a 29 per cent rise in lease and management fees relating to plantations it manages.
The sandalwood producer posted a 12 per cent rise in cash revenue to $151.2 million, mainly from the sale of new plantations to investors and from plantation management services.
TFS also recorded a big jump in non-cash revenue to $166.8 million, after increasing the assumed future sale price of its sandalwood oil.
The total estate under management increased 16 per cent to 10,583 hectares.
The company declared a final dividend of 3 cents per share, fully franked, unchanged from last year.
Chief executive Frank Wilson said the company made excellent progress in exceeding key financial and operational goals.
“We have started FY16 with positive momentum. We are receiving strong demand for investments in our Indian sandalwood plantations and expect to grow our margins by increasing plantation prices in FY16,” Mr Wilson said.
“Coupled with rising sandalwood product sales we expect further improvement in our profit and cash generation.”
The company expects EBITDA to increase by between 5 per cent and 10 per cent in FY16, while an annual harvest is expected to deliver higher volumes, which will enable TFS to distribute to new markets.
Shares in TFS closed 4.5 cents higher at $1.54 each.
