Ethical Timestm

Autumn newsletter 2011

this issue...Our Nurseries

See how our trees start life andhow they are planted

Taking GPS PointsHow we register investors’trees and build our TreeManagement Database

Harvesting treesSee how the trees are harvested andtransported for processing

Our New Timber MillThe bespoke processing plant forpreparing sustainable logs for sale

New Costa Ricanhead office springs into life.

Welcome to the Autumn 2011 newsletter. We are pleased to announce the recentacquisition of the new Costa Rican head office based in the San Carlos region.

Meet an investor...Barry Worby explains whyhe invested

ChinaThe latest figures on China’s highdemand for timber

Supporting TheCommunity Programme

Caretakers take residence

This hub houses our offices & milling productionline, which has been specifically designed to processsustainable logs from our plantations. San Carlos willalso be the location for the region’s new nurseries,housing up to 100,000 new trees at any one time.Robert Brown, our respected expert on greenhousedevelopment and management, and head of EthicalForestry Costa Rica, is overseeing this project.

The constant reinvestment and development ofSan Carlos extends further than the commercialrequirements of our business. We are also investing intothe wellbeing of our employees (currently 42). We arefocused on building a positive work environment thatultimately leads to esteemed jobs and an organisationthat resonates positively.

As part of our Support The Community Programme,new caretakers’ houses are being built on the San Carlossite. Geri Brown is overseeing staff training seminarscovering a multitude of topics from health & safety to

personal money management. As a consequence ofour caring employment philosophy, word has spreadquickly throughout the region creating a flurry of peopleenquiring when jobs become available, confirming ourethos is working.

Investors often ask us many questions regarding theplanting, GPS points, harvesting and processing. Insidewe share with you a typical Ethical Forestry day startingat the nurseries, harvesting trees and ending with thefinal sawn lumber.

We are also asked by investors if they can see investorcase studies. As you will no doubt appreciate, this hasproved a difficult task due to investor confidentiality.Fortunately, Barry Worby, a recent investor, shares hisstory about why and how much he invested.

We hope you enjoy the newsletter and always welcomevalued feedback. Thank you, the Ethical Forestry Team.

For more information on our ethical investments or to speak with an advisor, please call us free on 0800 075 30 10 or visit www.ethicalforestry.com

From Start to FinishWe pride ourselves on our care & management of investors’ trees,our customer service and the fact that we manage the wholeprocess from seed to saleable lumber.

The Nursery...

Rapid growth...The average height of a 2 weekold sapling is 6 inches, whereasa 6 week old tree is

approximately 2ft high.

Each individual greenhouse houses around 50,000seedlings at any one time.

The careful selection of genetically pure seedsensures all of our trees get the best start in life.

Preparing the land...

Planting.

Prior to planting...Angie Fernandez, our head forestry engineer, studies a plantationmap with the plantation caretaker and forestry engineer.

Before any young sapling can be planted,the ground is cleared of potentiallycompeting foliage to ensure the saplingsare unhindered during the first stagesof growth.

Planted with care...Each sapling is carefully planted by ourgovernment approved forestry engineers.

Taking GPS coordinates...Investing at every stage..

We believe that by constantlyinvesting and reinvesting inthe best available equipmentensures we give investors thebest service possible.

Identifying each tree...Every tree that we plant is given uniqueGPS coordinates and registered on ourtree management database.

Harvesting trees.

Checking before harvesting...Before any tree can be felled on our plantations,we check the GPS coordinates to ensure we areharvesting the correct tree.

AssessmentBefore any tree is harvested, the GPScoordinates are referenced to our treemanagement database.

Prior to felling, the clearance ischecked by our forestry engineers.Trunks are cut into the ideal lengthto optimise the returns for the treesbeing felled.

The logs are stacked ready fortransportation to our timber mill.

Transporting & catagorising...MINAET certification Log classificationEvery delivery we receive is cross During the process of classification,checked against the MINAET certificat each log is individually measured andissued by our government approved catagorised in piles of similar size.

forestry engineer.

Awaiting processingCatagorised logs sit on the patioawaiting loading into the hopper -the first stage in turning them intosawn lumber.

The first stage...Logs are loaded into thehopper and automaticallydropped into the feeder.Each log is rotated by eyeto ensure the most timberis extracted from each log.

Centre blockThe most valuable part of the logis the centre block. The size of thisdepends on the thickness of thelogs. The larger the log, the largerthe extracted core section.

The finalproduct...1: A pre-sawn log

2: The centre block

3: Off cuts used for the woodpackaging industry

Off cutsThe off cuts removed when extractingthe centre core are planed and sold tothe wood packaging industry.

An Investor’s Story Written by Barry Worby

Barry Worby explains why he invested with Ethical Forestry“I was looking to invest some money. I looked at the

buy-to-let market but with property being so high in pricestill, plus interest rates being so low, it was not a goodinvestment at the time.”

“I also looked at stocks and shares plus possibly ISA’s (recommended to meby an IFA) but the country/world is/was in such an unsettled state they werenot an option. I sat at my computer and thought laterally, I came acrossEthical Forestry. I also found other companies selling a similar idea butEthical Forestry seemed better to me.

As I am 53 years old, I am not ready to retire but looking at my pensions Iwould have had a very basic, in fact almost breadline existence. I decidedto invest into the Accumulator for this purpose but not through apension scheme for several reasons. I have also invested an additionalamount that will bring me an increasing income from year 4, which willreduce the amount of daily work I need to do, so I can get on with thethings I like doing.

My last investment was a gift to my two daughters. I invested into theAccumulator, which will hopefully help them in their life and I can enjoy (Ihope) watching them spend, invest or save the money while I am still alive.So many people leave money to their children when they die so they arenot here to watch them use the money.”

China’s Timber DemandContinues to grow

During the first half of 2011 China imported 20.75 million cubicmetres of logs worth US$3,918.7 million, up 25 percent involume and 35 percent in value over the same period last year.

Of the total, imports of softwood logs were 15.09 million cubic metres,(US$2,319.9 million), up 33 percent in volume and 84 percent in value. Importsof hardwood logs were 5.66 million cubic metres, valued at US$1,598.8 million,up 8 percent in volume and 11 percent in value.

As China’s population continues to expand in line with the global populationgrowth (projected as much as 55.88% by 2050 - UN) over the coming decades,

the demand for timber shows no signof abating.

Caretakers takeresidence

We are pleased to announcethat the caretakers’ residenceare now completed on ourCocobolo plantation.The house is located on the top of asmall hill overlooking the plantation, ariver and wild rainforest adjacent to our

plantation. Our Supporting The CommunityProgramme is currently preparing the build ofour new caretaker & nursery manager residences on theSan Carlos site. We will give you an update in the next newsletter.

For more information on our ethical investments or to speak with an advisor, please call us free on 0800 075 30 10 or visit www.ethicalforestry.com

SIPPsCan you afford to ignore the facts?77% of Britons are retiring with their pensions providingan income of less than £2,000 per year!

SIPPs have been around for some time but have gained in popularityin recent years. This has gathered momentum since A Day (the biggestshake up in pension rules for more than a decade), with the result thatSIPPs have entered the mainstream.

SIPPs (Self Invested Personal Pensions) are revolutionising the way investorsare saving for retirement. More than half a million people have switched, withrecord numbers transferring every day.

As the market has grown, it has also changed, with the result that there aredifferent types of SIPP available

The SIPP is popular because:-It is a simple structure

There are generous tax benefitsYou control your own destiny

There is freedom of investment (but watch the rules)It is now easier to make substantial contributionsMost people are eligible for one (even babies)It’s an ideal way to build wealth over the long termin a tax free environment

As the market has grown so it has also changed - as markets always do, withthe average fund value dropping. Once, the SIPP was the preserve of the highnet-worth individual and whilst that segment of the market continues to grow,the growth in smaller funds is significantly greater. Since the main objectiveof “simplification” was to get more people to take responsibility for their

retirement, this development is unsurprising.

Did you know youcan use your SIPP tobuy Ethical Forestryhardwoods and stilltake advantage ofthe tax benefits?

You can transfer as many pensions as you wish. All of the following areokay to transfer:

• Personal & stakeholder pensions• Other SIPPs

• Protected rights pensions

• Retirement Annuity Contracts (RACs)

• Additional Voluntary Contribution Plans (AVCs)

• Free Standing Additional Voluntary Contribution plans (FSAVCs)

• Executive Pension Plans (EPPs)

Between your 55th and 75th birthdays, you can normally take up to 25% ofyour SIPP as a tax free cash lump sum, and use the remainder to provide ataxable income before your 78th birthday.

Picture the day you finish working. You will finally have the freedom to do whatyou want, when you want. But will your private pension(s) provide you withenough? The shocking statistic is that 77% of Britons are retiring with theirpensions providing an income of less than £2,000 per year! Making the mostof your existing pensions has therefore never been so important.

There are a number of different types of SIPP; care should be taken in selectingan appropriate structure and you should seek the advice of your IndependentFinancial Adviser. However, if you don’t have a financial adviser, Ethical Forestryare happy to recommend one to you.

F

Acacia before first thinning harvest

For more information on our ethical investments or to speak with an advisor, please call us free on 0800 075 30 10 or visit www.ethicalforestry.com