TFS Corporation Ltd Investor Presentation 2 September 2013

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Important notice and disclaimer

This presentation has been prepared by TFS Corporation Ltd (TFS).

This presentation is not a financial product or investment advice or recommendation, offer or invitation by any person or to any person to sell or purchase securities in TFS in any jurisdiction. This presentation contains general information only and does not take into account the investment objectives, financial situation and particular needs of individual investors. Investors should make their own independent assessment of the information in this presentation and obtain their own independent advice from a qualified financial adviser having regard to their objectives, financial situation and needs before taking any action.

No representation or warranty, express or implied, is made as to the accuracy, completeness, reliability or adequacy of any statements, estimates, opinions or other information, or the reasonableness of any assumption or other statement, contained in this presentation. Nor is any representation or warranty (express or implied) given as to the accuracy, completeness, likelihood of achievement or reasonableness of any forecasts, prospective statements or returns contained in this presentation. Such forecasts, prospective statements or returns are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of TFS.

To the maximum extent permitted by law, TFS and its related bodies corporate, directors, officers, employees, advisers and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use or reliance on anything contained in, or omitted from, this presentation.

An investment in TFS securities is subject to investment and other known and unknown risks, some of which are beyond the control of TFS. TFS does not guarantee any particular rate of return or the performance of TFS securities.

The distribution of this presentation including in jurisdictions outside Australia, may be restricted by law. Any person who receives this presentation must seek advice on and observe any such restrictions.

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Financial Review – article dated 30 August 2013

"These guys own 2440 hectares of Indian sandalwood plantations. If the prices remain constant, they're going to generate nearly $2 billion of operating profit over the next 15 years. It's the most interesting deep value story that I'm aware of," Mr Michell said.

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Independent Non-Executive Chairman

• Mr Patrick O'Connor B.Com, SEP Stanford (USA), FAICD, has agreed to join the board as an independent non-executive Chairman in early September 2013.

• Mr O'Connor is the non-executive Deputy Chairman of Perilya Limited

(ASX:PEM), Chairman of Xceed Resources Limited (ASX:XCD) and Bravura Capital Pty Ltd and a Non-Executive Director of SAS Telecom Pty Ltd.

• Mr O'Connor has held the roles of Chairman and for a period

Executive Chairman of Perilya Limited, the operator of the Broken Hill mine in NSW Australia, leading up to the change of control by Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd (China's third largest zinc producer).

• Mr O'Connor also spent 9 years as a director of the Water

Corporation in WA, four years as its Chairman and was previously the Managing Director of Macraes Mining Company Limited, during which time he oversaw the development of the Macraes Gold Project and the acquisition of the Reefton Gold Project in New Zealand.

• Mr O'Connor was also the Chief Executive Officer for Oceana Gold

Limited at the time of its listing on the ASX and remained for a period as a non-executive director.

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FY13 Company Snapshot

Capital Structure Share price (as at 30 August 2013) 62c

Shares on issue 279,621,829

Market Cap $173.37m

Cash at 30 June 2013 $56.52m

Net Debt $107.64m

Earnings per share 19.9cps

NTA per share 81c

Gearing (net debt / net debt + equity) 24.9%

$0.34

$0.39

$0.44

$0.49

$0.54

$0.59

Price (AUD)

Price history for the period: 1 year (29 Aug 2012 - 29 Aug 2013)

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FY13 result and outlook

Operations overview

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FY13 result

Total Revenue

$187.7m

Cash EBITDA

$51.8m

Net profit after tax

$55.7m

Earnings per share

19.9cps

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FY13 statutory result

Net profit after tax increased by 115.4% from FY12 to $55.7 million

Cash net profit after tax increased by 223.9% to $21.3 million

Cash EBITDA increased by 117.8% to $51.8 million

FY13 ($m) FY12 ($m)

Cash operating revenue 119.8 85.4

Revenue from recognition of deferred fees 3.0 18.0

Gain on revaluation of biological assets 12.4 10.2

Gain on settlement of trade debtor 50.5 10.3

Total revenue 185.7 123.9

Total expenses 84.70 68.9

EBITDA 101.0 55.0

Depreciation and amortisation 6.1 4.8

EBIT 94.9 50.2

Net Interest and finance costs 15.1 14.2

Tax 24.1 10.1

Net profit after tax 55.7 25.9

Earnings per share 19.9 cps 9.3 cps

Cash earnings per share 7.6 cps 2.0 cps

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FY13 cash earnings

Cash EBITDA increased 117.8% to $51.8m

Fees from the sale of investment products to wholesale, retail and private high wealth investors increased 62.3% to $83.2m

― $59.7m revenue from Beyond Carbon wholesale investors, $18.4m from high net wealth investors and $5.1m from MIS retail investors

Operating costs from core activities increased by 0.25%

FY13 ($m) FY12 ($m)

Establishment fees 83.2 51.2

Recurring fees 11.4 10.3

Product sales 18.4 16.3

Land sales - -

Plantation sales - -

Interest revenue (operating) 4.1 4.9

Other revenue 2.7 2.7

Total ‘cash’ revenue 119.8 90.5

‘Non Cash’ expenses / adjustments (2.3) (7.0)

Operating expenses (65.7) (59.6)

Cash EBITDA 51.8 23.9

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Capital position

Increase in TFS plantation ownership as part of the strategic plan – post balance date total TFS plantation ownership = 2,440 hectares.

Plantation value increased by 123% to $191.5 million

US$150 million of senior secured notes which mature in June 2018 continue to provide long term funding flexibility at a time when commercial banks are reducing exposure to agricultural activities

FY13 ($m) FY12 ($m)

Cash and equivalents 56.5 55.1

Receivables 127.6 129.9

PP&E 93.5 68.8

Tree assets 191.4 85.7

Intangible assets 85.5 84.1

Other 60.6 68.3

Total Assets 615.1 491.9

Accounts payable 28.6 26.5

Financial liabilities 178.1 147.0

Other 83.7 49.5

Total Liabilities 290.4 223.0

Net assets 324.6 268.9

Gearing (net debt / net debt + equity) 24.9% 25.4%

Net tangible assets per share ($) $0.81 $0.64

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FY13 result and outlook

Operations overview

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Key milestones

TFS has achieved significant milestones since listing in 2004

Used Government research and tax incentives to establish first plantings in ORIA (pre-IPO)

IPO with market capitalisation of $31 million

Large scale project for 2,000 ha at KR

Management practices to improve leading to rapid rise in survival rates

Record plantings and survival rates

Acquire MRA for vertical integration strategy

Invest in Forestry R&D

Develop global sales team for Sandalwood product markets

Create wholesale investment product to diversify from MIS

KR becomes Australia’s largest irrigation project development and is completed on schedule and budget and fully committed

Indian Sandalwood oil sells for c.US$2,000/kg

Diversify from MIS into institutional customer base and land bank

Planning commences for first harvest

Indian Sandalwood oil sells for c.US$2,500/kg

Annual planting capacity reaches 1,500 ha

Secures balance sheet with US$150m debt raising

Achieves record cash flows

Trial harvest validates basic forestry assumptions

Strong demand for MIS with the 2006 limited pre-release sold within a month

Acquisition of an additional 517 hectares in the ORIA region

First harvest to commence September 2013

The divestment of a portfolio of MIS loans to a large global credit fund for approximately $22.4m

Strength of results enables dividend payment

Appointment of independent non-executive Chairman

TFS Indian Sandalwood oil sells for US$4,000/kg

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Integrated business model

Control of supply and quality through ‘soil to oil’ approach

2. Cultivation of Sandalwood seedlings and plantation establishment

Largest purpose built Indian Sandalwood nursery in the world with capacity to produce over 500,000 seedlings per season

3. Plantation management

Specialist forestry management operations encompassing planting, maintenance and harvesting of plantation assets for TFS and wholesale / retail investors

Significant development of IP for commercial Sandalwood operations

Suitable land in tropical climate regions acquired for the establishment of plantations

1. Sourcing of plantation land

4. Processing

Specialist processing and distilling facilities located at Mount Romance

Capacity to process 1,200 tonnes of Sandalwood per annum

5. Marketing and distribution

International marketing of Sandalwood heartwood, oil and various end-user products

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Plantation assets

Strategically located plantation assets across Northern Australia – risk diversification

Geographically diversified plantation assets TFS:

― Manages approx 7,600 ha of established Indian Sandalwood plantations

― Owns 1,892 ha of unplanted land that will be developed and planted over the next 2-3 years

Geographic Allocation

― 5,665 ha in and around the Ord River Irrigation Area (East Kimberly, WA)

― 802 ha in the Burdekin region (Queensland)

― 1,156 ha in the Douglas Daly region (Northern Territory)

Ownership Allocation (approx)

― 32% - TFS (owned direct and indirect interest)

― 31% - Retail investors (after allocation of TFS indirect interest)

― 37% - Institutional investors

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First commercial harvest

The first harvest is expected to commence in September 2013

The harvest will consist of approximately 144ha, planted in 1999 and 2000, forming part of the company’s initial sandalwood projects entitled East Kimberley Sandalwood Project No.1 and TFS Sandalwood Project No. 2

While initial yields will be much lower than originally forecast in 1998 in the EKS prospectus, pricing to be achieved is expected to be considerably higher than forecast

All plantations subsequent to the initial EKS and TFS 2 plantations (144ha) have significantly higher survival rates and will have higher yields (see graph on page 17).

TFS Sandalwood Primary Processing Centre (“PPC”)

― TFS has acquired approximately $600k on capital equipment for use in the harvest

― TFS staff have been deployed and trained in the area and ready to commence operations

― PPC is on track to be commissioned for the 3 September start date

― PPC produces cleaned logs ready for wood export or oil distillation

TFS exploiting its first mover advantage with first commercial harvest on track

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Processing operations and expertise

Acquired in August 2008, Mount Romance is the world’s largest “state of the art” distiller of Sandalwood oil

― 1,200 tonnes per annum processing capacity

― Established supply relationships with some of the world’s leading perfume and cosmetic producers

― Efficiency focus with capacity to expand if required

While Mount Romance currently processes between 600 to 700 tonnes of Australian Sandalwood, it will also process Indian Sandalwood following the first harvest which will commence in September 2013

Mount Romance also retails Australian Sandalwood aromatherapy, cosmetics and beauty products in 3 regional tourist locations

Mount Romance facility provides significant processing capability to TFS’ operations

Mount Romance – machinery used for oil distillation Mount Romance secondary processing facility

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Survival rates and expected heartwood yield

Survival rates and expected heartwood yields have steadily increased over the history of our plantations, as depicted in the following worksheet. The majority of mortality occurs within the first 2 years of planting. This survival enhancement demonstrates how TFS has refined and improved its intellectual property and silvicultural techniques over time. It also demonstrates the embedded value of our plantations to TFS shareholders, MIS growers, and Beyond Carbon investors.

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Questions

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