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Great Southern Almond Income 2008 Project

Great Southern Almond Income 2008 Project
Cash Rebate 8.25%
Closing Date CLOSED
Minimum Investment $5,000 (ex GST)
Term of Project 19 years
Research AAG 4 stars
Adviser Edge 4 stars
Lonsec Recommended
ATO Product Ruling 2007/102
Telephone: 1800 258 348
Fax (Applications): (08) 9321 1666
Fax (Finance): (08) 9321 9940

Almonds are widely regarded as the world’s most versatile nut and are highly sought after for their health benefits. Australia has ideal growing regions and is becoming the player to watch in the international market.

Through the Great Southern 2008 Almond Income Project, investors can participate in a well structured and managed investment, with access to a relatively secure and sustainable water supply.

The opportunity
The Great Southern 2008 Almond Income Project provides investors with the opportunity to commercially grow almonds and participate in the rapidly expanding international almond industry.

The Project will produce high quality almonds to be sold locally and internationally, and will provide investors with expected sound returns as well as excellent taxation benefits.

Why Great Southern?

Great Southern is widely regarded as Australia’s leading agribusiness investment manager, with a track record of success over 19 years and with over 40,000 investors. Great Southern’s horticultural projects are among Australia’s largest, and utilise world class operations and technologies.

The company’s net assets as at 30 September 2007 exceeded $765 million, including approximately 3.5 million hectares of prime and pastoral agricultural land, owned or held by long term lease across Australia. Great Southern Limited is an S&P/ASX200 listed company.

The industry: a positive global outlook

The versatility of the almond and an increased global awareness of the numerous health benefits have been key contributors to the industry’s rapid growth during the last 20 years.

Almonds are grown in over 40 countries, however the United States is considerably the largest producer, contributing to approximately 80% of the total world almond supply.

Other significant producers include Spain with 11% of global production, followed by Greece and Australia accounting for approximately 3% respectively.

The global demand for almonds has more than doubled over the past decade, from 311,000 tonnes in 1998 to 657,000 tonnes in 2007.

Australia’s almond production has increased significantly during the past five years, to 26,000 tonnes in 2007, at an estimated gross value of production in the range of $150 million. Australia is the fourth largest almond producer, however is anticipated to become the second largest by 2015 following the high level of plantings in recent years.

In 2006/07, Australia exported around 6,565 tonnes of almonds to its two largest export destinations, India and New Zealand, and other destinations such as the United Kingdom, France, Spain and the United Arab Emirates.

Australia’s almond industry is well placed geographically to capitalise on the growing demand in the Asia Pacific region. Other key factors expected to assist in increasing its international market share include a counter seasonal production to the US, more reliable climatic conditions, access to good quality irrigation water and high level of skilled management.

These have resulted in levels of productivity and quality that are better and more consistent than other producers, and accordingly will allow Australian almond producers to remain competitive with the world’s largest producers, including California.

The Great Southern water advantage
Although located in the Murray Darling basin area, the properties do not rely on the river system for water, but rather bore water, otherwise known as groundwater. The almond groves are situated directly above a series of underground aquifers which hold approximately 60,000,000 megalitres of water and cover an area of 5,600 square kilometres. Water entitlements are secured through long term lease agreements to match the maximum requirements of the almond grove of 15 megalitres per hectare per annum for the duration of the Project.

The use of ground water over surface water has several advantages. Ground water entitlements are generally more reliable as they are not impacted to the same degree by the fluctuations in availability, and water can be stored underground without evaporation loss.

Timely application of irrigation water is vital to the development and yield potential of commercial almond groves. The Project’s drip irrigation system utilises equipment to automatically monitor the tree’s water requirements at any given time, providing the Project with another significant advantage.

Project structure
Minimum investment Invest in as little as 1 almondlot ($13,727 + GST), payable over 5 financial years:
$5,000 in 2008 and $2,182 + GST in 2009, 2010, 2011 and 2012.
Term Approximately 19 years.
Tax deductibility The initial application fee and the annual management and licence fees in 2009 and 2010 are 100% tax deductible, as confirmed by Product Ruling PR 2007/102. For further information, please refer to Project features below.
Finance options Flexible finance options are available, including 12 months interest free, and a range of principal and interest options. Options include financing the initial management fee, plus ongoing management and licence fees for up to the first 4 years of the Project.
Ongoing costs Investors will be responsible for paying a fixed fee of $2,400 (incl. GST) for ongoing management services, licence fees and insurance premiums for 1 July 2008 to 30 June 2012. From 1 July 2012 investors will pay a fixed licence fee of $1,300 (plus GST) indexed annually to CPI or 2.5%, whichever is the greater, an ongoing management fee equal to 45% of the almond revenue and insurance costs, all of which will be deducted from the almond revenue. The insurance cost and ongoing fees and expenses will be 100% tax deductible in the year incurred.
Returns Growers are entitled to receive total almond revenue from year 5 of the Project onwards, from which operating fees and expenses will, if sufficient, be deducted. Where the revenue is insufficient to meet these expenses, a shortfall may be payable by growers.
Almond sales Great Southern has negotiated a 19 year almond crop supply agreement with Almondco Australia Limited (Almondco), whereby Almondco will prepare, market and use its best endeavours to sell the almonds from the Project. For further information please refer to the Product Disclosure Statement.

Project features

Your investment is supported by the following: 
The Australian Taxation Office (ATO) Product Ruling PR 2007/102† confirms the application fee in 2008 and the annual management and licence fees for the following two years are 100% tax deductible. Under current taxation legislation the ongoing management fee for 2011 and 2012 should also be 100% tax deductible.
Full insurance is expected to be available and will provide security for investors in the event of loss of crop or income as covered by the policy.
A stocking guarantee confirms there will be an average of 280 almond trees per hectare 12 months after the commencement of the Project.
Great Southern pools harvest proceeds, which enables investors to share equitably in the expected revenue, regardless of differences in yields that may result from individual almondlots.
An independent almond expert has been engaged to inspect the Project and report to investors on its progress.
An investor can enter into a joint venture agreement and participate in the Project with another investor (such as a self managed super fund), whereby each party shares both the costs and expected returns.

The growing regions
The land to be used in the Project is located near Hillston in New South Wales.

The site selection criteria included the suitability of climate for growing almonds. Other major criteria are the water retention aspects of the soils and a soil profile with a high suitability for growing almond trees. Hillston is known as a production centre for agricultural commodities including citrus, wine grapes, cotton, potatoes and cherries.

The sites have been physically assessed by an independent almond expert and the soils, hydrology and topography have been subject to rigorous testing.

The Great Southern 2008 Almond Income Project – an overview

Great Southern will lease land and water rights for the Project at a location near Hillston in New South Wales from Riverbank, a registered managed investment scheme managed by Great Southern. A fully automated computer controlled irrigation system waters the grove and maintenance is carried out, including pest and weed control and the application of fertiliser.
The Project will be comprised of newly planted and established one year old almond trees, on individual almondlots of 0.25 hectares. Growers are expected to receive revenue from year five of the Project onwards, from which operating fees and expenses will be deducted, if sufficient.
The almond trees will be those recognised as being the most appropriate species to produce almonds for sale in Australian and international markets. The trees are expected to reach full production approximately seven years after planting, during which time harvest yields are expected to increase.
The almond groves will be managed and maintained on behalf of investors by Great Southern and its contractor, Great Southern Farming Pty Ltd. Great Southern has entered into an almond supply agreement with Almondco Australia Ltd (Almondco), whereby Almondco will prepare, market and use its best endeavours to sell the produce.

IMPORTANT: The information contained in this document is by way of general summary only and has been prepared without taking into account a person’s individual objectives, financial situation or needs. Before making any decision to acquire an interest in the Great Southern 2008 Almond Income Project ARSN 127 947 960 (the ‘Project’) a person should consider the appropriateness of the information to their individual objectives, financial situation and needs and if necessary seek advice from suitably qualified professional. Interests in the Project are not yet available but Great Southern Managers Australia Limited (AFSL 240 787) will be the issuer of the Project and intends to issue a Product Disclosure Statement (“PDS”) for the Project in 2007 which details the terms of the Project. Anyone wishing to invest should consider the contents of the PDS and complete the attached application. The information is provided in good faith and believed by Great Southern Securities Pty Limited AFSL 240 788 to be accurate at the date of issue. However, no representation or warranty is made as to the accuracy, reliability or completeness of this information. Except to the extent that statutory liability cannot be excluded, Great Southern Securities Pty Limited and its related entities, directors, employees, and agents accept no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters (expressed or implied) arising out of, contained in or derived from, or for any omissions from, the information contained herein.

† The Product Ruling is only a ruling on the application of the taxation law and is in no way expressly or impliedly a guarantee or endorsement of the commercial viability of the Project, of the soundness or otherwise of the Project as an investment, or of the reasonableness or commerciality of any fees charged in connection with the Project. The Product Ruling is only binding on the Commissioner of Taxation if the Project is implemented in the specific manner provided in the Product Ruling.

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