GTP 0.00% 12.0¢ great southern limited

Timber Plays - GNN GTP TIM

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    July 23, 2002

    RURAL tax schemes have taken a big hit with large numbers of high-income earners walking away from projects this year.

    The flow of funds to June 30 had slumped almost 50 per cent on last year to just $300 million said industry analyst Shane Kelly.

    The managing director of the Agribusiness Research group said the industry could not expect any swift turnaround.

    "There were 45 projects in the market, with 14 accounting for 80 per cent of sales," he said.

    This compared with the 80 projects promoted to the pre-June 30 market a year ago.

    Mr Kelly said any recovery would be slow and depend on continued improvement in the quality of investment projects.

    He said funds had dropped from upwards of $550 million a year ago.

    The falls were further bad news for an industry which this year sought to clean up its image after tens of thousands of investors endured the ignominy of being branded "tax cheats" by the Tax Office and the Australian Securities and Investments Commission a year ago.

    A clampdown on numerous industry cowboys has cut the flow of funds to this sector from the $850 million investors committed in 1999-2000, and the $1.2 billion promoters raised the previous year.

    Mr Kelly, whose company offers independent analysis and advice on farm investments, blamed three factors for the result:

    THE tax office win in the Budplan case;

    CAUTION by financial planners and investors, and;

    PROFESSIONAL indemnity issues.

    Timber, rather than olives and horticultural crops, attracted the big pre-June 30 money.

    Tasmanian forester Gunns Plantation led the market and, unlike so many others, closed off its offer oversubscribed after raising $60 million this year.

    Runners up were Great Southern Plantations ($56 million) and Timbercorp ($51 million).

    "Gunns have really made the market sit up and take notice," said Mr Kelly.

    "Their result is a combination of a keenly priced product backed by an excellent marketing campaign and strong research house support."

    The market continues to be divided by size, with projects either raising above $50 million or below $20 million.

    Despite the slump, there were some success stories.

    Willmott Forests ($7.5 million) continued to dominate the long-rotation pine market and Australian Olives ($9.5 million) provided a strong challenge to Timbercorp in the olive market.

    Watershed Wines ($7.4 million) from the Margaret River, performed well in what was a tough end-of-year for wine companies in general, Mr Kelly said.

    Probably the most impressive performance apart from Gunns Plantations was that of low-profile Northern Territory based Exotic Timbers of Australia, which raised $12 million by targeting previously untapped markets throughout regional Western Australia, South Australia and Northern Territory.

    Great Southern Plantations increased sales by 33 per cent on last year.

    Herald Sun

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