2,173 72,000acres currently new trees plantedprotected in our per week duringForestry Easement peak season

Trust

Ethical Timestm

Spring newsletter 2014

this issue...Costa Rica diary

After a successful 2013, thenew year brings with it someexciting developments

Big plans underwayWith demand for our investmentson the increase, we’ve startedconstruction on our brand new HQ

Fact fileWe introduce you to a rare treespecies protected under ourForestry Easement Trust

Plantation spotlightWe explain what it takes to turnunused land into a professional

Growing demand calls forongoing expansionWe’ve seen 2014 in with the same energy thatmade last year such a success

Directors, Matthew Pickard and Robert Brown,amongst 15-month-old Melina trees

forestry plantation

Investor’s storyInvestor, Brenda Lawson, explainswhy an ethical investment in treessuits her lifestyle and beliefs

Supporting our workersSee what some of our workers get upto in their time off, and how we’re ableto support them in their pursuits

Abraham Lincoln stated, “Give me six hours to chopdown a tree and I will spend the first four sharpeningthe axe.” Proper planning certainly prevents poorperformance: an adage we stick to vehemently.

As demand for our products continues to grow, planningour expansion is as important as it’s always been, and assuch, we’ve kept our foot on the growth pedal. This meansgrowing our staff, growing our operations, investing innew machinery such as our new kiln and nursery fans,and - of course - buying new plantations.

We’re currently reviewing many prospective sites, which- subject to our rigorous checks and processes - showgreat potential. And once we’re satisfied the land reachesour criteria, it will be purchased using Stewart Land TitleGuarantee to ensure the land is incontrovertibly ours.

In this newsletter you can read about our most recent

new San Carlos region Headquarters. Designed to sitnaturally in the beautiful surroundings, this is an excitingdevelopment and an important step in accommodatingour ever-growing staff.

The impressive new building will also house our salesdepartment, allowing them to showcase our timberproducts to national and international buyers.

Ever keen to meet new and existing investors, we’ll beattending exhibitions throughout the year and will keepyou abreast of dates. Or, if you’d like to visit our UK orCosta Rica head offices, we’d be very pleased to oblige

- just give us a call.

We hope you enjoy this edition of Ethical Times, which -as always - includes stunning wildlife photography of ourprotected zones.

expansion project- the development of our brand The Ethical Forestry team

Ethical Forestry Ltd, 80 Holdenhurst Road, Bournemouth, Dorset, BH8 8AQ telephone 0800 075 30 10 email enquiries@ethicalforestry.com

Costa Rica diaryNew plantations, new nursery infrastructure annew headquarters - it’s a busy start to 2014

As ever, we’re pleased to welcome the new year in with a flurry of activity.There are some exciting developments in the pipeline, all of which comeafter a successful 2013.

Our UK team regularly visit Costa Rica so they can personally oversee ouroperations. Matthew Pickard, Managing Director, headed up the last visitin November 2013, during which he experienced all our developmentsfirst-hand.

During his busy trip, Matthew managed to visit every one of our plantations andas you can see from the photographs, these are all fine examples of the healthand growth of our investors’ trees. In the bottom right photo opposite, youcan see Matthew and our Costa Rica Director, Robert Brown, standing next toan impressive 9-year-old Teak tree, growing on our San Cristobal plantation.

Matthew also visited our Workers’ Cooperative, which he was pleased to seeis developing rapidly. The cooperative’s manager, Olivier Gutierez Malespin,showed him the recent harvests, which included lettuce, onions and leeksto name but a few - all valuable contributions towards a healthy and self-sufficient food source for our workers.

Matthew says: “Every time I visit our operations in Costa Rica I’m met with suchlively and positive activity. It’s great to immerse myself in the various facets,from walking around our plantations to meeting our workers. It’s somethingI look forward to every trip, and I’m keen to see our new projects in full

swing next time I visit.”

Amongst a hubbub of activity, our nursery has been fitted with new fans,which have been installed to create the right environment for our seeds to

grow healthy and strong. Controlled air movement is important tonursery plant growth because it regulates temperature, avoids pocketsof humidity, diffuses carbon dioxide and prevents the development

Top: Robert Brown tours ourRío Celeste plantation withMatthew Pickard

Left: Matthew Pickard sees howquickly our Workers’ Cooperativehas grown

Right: We photographed thisstunning Grey Hawk (Buteo nitidus)on our Chimurria plantation - justone of the many inhabitants livingthroughout our plantationsBottom: Our nursery is fullyequipped with the latest

horticultural technology

“ This stage of the investment is crucial,which is why we’re continually investing inthe best infrastructure, as well as ensuring

our expertise is on top of its game.”of airborne diseases. By controlling our nursery’s airflow in this way, we’re able tomaintain an ideal environment for our saplings. The images below show the fansstrategically placed to achieve the best air circulation.

Costa Rica Director, Robert Brown, says: “Successfully growing seeds into saplingsthat are strong enough to be field planted requires not only knowledge, but alsoindustry-leading equipment.”

As part of our continual development, we’re always exploring new plantation

acquisitions. One of our recent purchases is the beautiful Santa Rita - a plantationof just over 1000 acres, 410 of which we’ve already placed into our ForestryEasement Trust. Ex-cattle grazing land, Santa Rita is a typical exampleof how we’re able to turn pasture into healthy, forested area. What’sparticularly special about Santa Rita is its impressive 200-acre area of wildforest (pictured right), which is the largest uninterrupted expanseof protected area within our Forestry Easement Trust.

Whilst filming a piece on this fascinating plot, our Director, Robert Brown,was lucky enough to have a glass frog fall onto his head - a tiny, translucentfrog not much bigger than a thumb nail (pictured right).

As demand for our investments grow, so does our workforce, which is why2014 brings with it the development of a brand new San Carlos region

Headquarters. We’ve chosen to share the formative stage of this project withinthis newsletter - see overleaf for more details on this exciting addition to ourCosta Rica operations.

Every year sees more development, more plantation acquisitions and moreinsights into the abundant wildlife that lives in and around our plantations.2014 is lining up to be exactly the same. There are many exciting projectsto look forward to, all of which we’ll feature in our upcoming newsletters.

Top: Our Santa Rita plantation, just two monthsafter planting. And pictured below it, our largestuninterrupted expanse of Forestry Easement Trust

- an impressive 200 acres

Above right: A resident of our Santa Rita plantation, thistiny glass frog has transparent skin through which youcan see its digestive track and beating heart

Right: To show you just how fast our Melina grows, we’vephotographed this particular tree on our Chimurriaplantation at every stage - here it is at just 15 months’ old.To see its progress, visit our website gallery

Bottom right: Robert Brown and Matthew Pickardstand next to an impressive 9-year-old Teak tree onour San Cristobal plantation

Never ones to sit still…There’s an exciting development taking placeamid our Costa Rica operations

A B C D E F G I J K L

1

2

With the start of 2014, we’ve set in motion the construction of ourSan Carlos region Headquarters - yet another step in our on-going

expansion. Designed by a local architect, our aim is to create a buildingthat blends effortlessly into the environment whilst providing an

ergonomic and pleasant workspace for our ever-growing teams.

We’ve already broken ground, and as you can see from the pictures it’s an3

impressive project. Always keen to minimise our carbon footprint, our HQ willbe constructed using sustainably sourced wood from our plantations wherever

Architect’s plans of the new San Carlos region Headquaters

Construction is now underway for our San Carlos region Headquarters

possible. And because over 90% of Costa Rica’s power comes from renewablesources and ranked 2nd behind Switzerland in environmental sustainability, weknow the building will be powered ethically.

At 6,334 square feet, our HQ will house our Engineers, Management,Research & Development, GIS (Geographic Information System) departmentsand our all-important Sales team, who will use the building to showcase ourwood products to national and international buyers. There’s also a dedicated25-person classroom for employees, students and wood related guilds andassociations. And of course there will be a reception, conference room andcafeteria. We’ve also made sure the building includes ‘outside-in’ areas,which we hope will invite the beauty of the surrounding environmentinto the workplace.

We know our staff are keen to make themselves at home in this impressivebuilding, and we very much look forward to showing you the photos

throughout its progress.

In the meantime, it’s businessas usual - which, as always, is a bustle of activity!

Forestry Easement Trust fact fileAnother rare tree species safeguarded byour Forestry Easement Trust

In our last newsletter, we introduced you to the magnificent Kapoktree, which at 40 metres tall is truly a sight to behold. In this edition,we’ve chosen to feature this Danto amarillo tree, which lives on ourChimurria plantation. As you can see from the photograph, this is abeautiful and lush species and one we’re very proud to protect

under our Forestry Easement Trust.

An evergreen species, our Danto amarillo stands 30 metres tall and has a

1 metre diameter trunk. With very robust and heavy wood, this species isideal for structural timber and as such it has been severely depleted throughlogging - all the more reason to safeguard those still standing.

also collects the seeds of the rare and endangered tree species within ourplantations, grows them into saplings within our nursery and then replantsthem within our protected zones.

We have many different tree species within the zones we protect and we lookforward to introducing them in our upcoming newsletters. In the meantime,we’llcontinue to expandour Forestry Easement Trust alongside taking care ofour investors’ trees.

ChimurriaConsidering this species is very rare on the Atlantic slope, it’s important we doeverything we can to ensure it grows healthily. But because it lives amongstour commercial trees, we must also make sure our investors’ Melina is not

encumbered in any way by its presence.

To achieve this careful balance within all our plantations, we plant ourcommercial trees far enough away from the protected tree so that the canopydoes not hinder their growth. You can see from the photograph that thecorridors of 15-month-old, 20ft tall Melina trees stretch as far as the eye can seeon our 4km long plantation and have ample room to grow, whilst the health ofour Danto amarillo tree is safeguarded.

Lot 2Total area: 425.302879 ha10˚43’09.76” N - 84˚33’14.23” W

Lot 4

Lot 3

Danto amarilloSideroxylon capiri

Lot 5

Lot 1

Metres

Although regeneration of this species is rare, its fruits provide food for a

variety of animals, particularly primates, who in turn disperse the seeds. Thissymbiotic relationship between our trees and the wildlife around them isincredibly important to us, which is yet another reason why we set up our

Forestry Easement Trust. And to give nature a helping hand, our Dendrologist

Danto amarilloGenus SideroxylonSpecies capiri

Height up to 35 metresDiameter up to 1.2 metres

Trunk cylindrical, grey-brown to light red,exfoliating in small rectangular

sheetsCrown branches high on the stem with arounded crown

Special Very heavy, yellow coloured woodfeatures with high resistance and durability

Withour Danto amarillo tree standing amongst rows of 15-month-old Melina, you cansee how our ForestryEasement Trust works in harmony with our commercial trees

The road to success...

How we build great plantationsWe’d like to introduce you to our recent plantation acquisition,San Andrés. At 843 acres in total, we’ve identified 553 acres of plantableland and placed 290 acres into our Forestry Easement Trust. But, farfrom simply purchasing land and then planting trees, we go throughrigorous procedures to transform every plantation into professionalcommercial forestry land.

Having already passed our initial tests, which include soil samples andtopography checks, San Andrés was ready for transformation.

First and foremost, appropriate infrastructure needed to be built. This meanscreating reliable roads and, where necessary, bridges that allow us to accessthe plantation easily. It’s important we have good access to every one of ourcommercial trees, so we make sure every tree we plant is no further than200 metres from any given road. This way, not only can we approach the treeswithout difficulty, but they can also be easily transported to our timber millonce harvested.

With the rainy season running from May through to December, our roads mustwithstand wet weather and be accessible throughout the year. This meansidentifying places of incline and placing extra gravel to reinforce the ground.

We make sure every tree we plant is no furtherthan 200 metres from any given road

To reinforce our roads against wet weather, we lay extra gravel where the landnaturally inclines

With 12.5km of road already built on San Andrés, it’s a significant and importantstage in plantation preparation.

The natural waterways that occur on our plantations help support an array ofbiodiversity, and the connecting wetlands aid in erosion control, water filtrationand serve as storage for ground water supplies. Therefore, with the beautiful riverRío Pocosol running through San Andrés, it’s vital our activities do not disturbit. To put it simply, this means planting around it and building bridges over it.Keen to utilise our own wood when building bridges, in this instance we gainedpermission from MINAE (Costa Rica’s Ministry of Environment and Energy) to

Waterways play an important role in the health of our plantations, which is why weprotect those we come across

With its long root structure and fast growth, vetiver grass minimises soil erosion

San Andrés prior to work commencing

Matthew Pickard and the Ethical Forestry team look on as our impressive Corteza tree istransported to San Andrés for the construction of bridges

fell and use a Corteza tree that had been struck by lightning on our Santa Ritaplantation. It’s all part of becoming self-sufficient and making the most of theresources available to us.

Similarly, we like to make the most of our plantations’ plantable areas, andbecause not all areas are appropriate for Melina, we also plant trees that aremore suited to the varying topographies. On this plantation, we’ve planted PinkCedar on the steeper inclines, which, due to its ability to fix nitrogen from theatmosphere, is more suitable to the shallower, less fertile soil found on steepbanks. We’ve also planted Cebo on the wetter ground, which although slowergrowing, lends itself well to areas too wet for Melina. By diversifying the treespecies on our plantations, we utilise space, help keep the soil healthy andprovide a variety of wood to our timber mill.

As you can imagine, the health of our soil is incredibly important. To maintain ahigh quality, once a month Costa Rica’s leading soil expert performs a soil auditon our plantations. It’s this on-going examination and quality control that getssuch good results.

Once a month Costa Rica’s leading soil expertperforms a soil audit on our plantations

As well as soil health, an obvious priority for us is the management of soil erosion.As with all our forestry practices, we adopt an industry recognised method tocontrol it, which in this case is the Universal Soil Loss Equation (USLE). Balancingthis with other techniques such as the use of vetiver grass, which, with its 2m

Keen to utilise our own resources, this bridge was made using a tree that had been struckby lightning on our Santa Rita plantation

Caretaker, Ronald Picado Arroyo and his wife, Velay Patricia Berrocal, who live and workon San Andrés

long roots helps reinforce the land, we’re able to strengthen our soil’s structureand prevent erosion.

When it comes to transforming purchased land into a commercial forestryplantation, it’s not just a case of A to B. It takes expert knowledge, professionaltechniques and hard work to implement the correct infrastructure that will notonly allow access to our trees, but also reinforce the ground on which they’regrown. With planting well underway, this plantation will ultimately hold 214,179commercial trees, making San Andrés a benchmark addition to our plantationportfolio. We look forward to updating you on its progress!

An investor’s story Written byBrenda Lawson

If you would like to appear inAn investor’s story, please contact

newsletter@ethicalforesty.com

Managing my moneyfor the future

“ As the owner of ‘Ambleside B&B’ Tetbury, in the Cotswolds, I amfortunate to run a business that supports my belief in sustainability

and my passion for out-of-season travel. The B&B has solar panels toheat the water, a wood burning stove and, where possible, breakfastsare made using local, organic ingredients.

As a semi retiree, managing my money for the future is an importantand challenging issue. At a time when the stock market was

particularly sluggish, I decided to explore alternative investmentsand discovered Ethical Forestry, which ticked several boxes, includingsome very attractive projected returns on investment. Admittedly, Iencountered some resistance: “It looks a bit too good to be true” beinga common response. But after endlessly grilling a very patient MarkFinn at the company’s head office, I decided to invest.This gave me the perfect excuse to visit Costa Rica, and a trip to EthicalForestry’s operations was arranged. I had been eager to see Costa Rica’srainforests and wildlife for sometime, so it was an exciting opportunityfor me. Directors Robert Brown and his wife Geri picked me up frommy hotel and drove me to the Chimurria plantation. What a delightfulcouple they are - full of knowledge and passion for the business.It was quite a thrill to see the plantation on which my trees are growingand also witness the incredible growth stages of the Melina. They alsotook me to visit their head office, timber mill and nursery where theseedlings were being transplanted.

I was very impressed with the whole set up and particularlyliked the allotments dedicated to growing vegetables for theworkforce - an initiative called ‘The Workers’ Cooperative’.

I came away with a totally positive feeling about the company,which certainly enhanced my holiday. My two sons, who are bothself-employed in ethical businesses, are now looking into

Ethical Forestry as a pension investment.”

Investing in our employeesA happy workforce isn’t just about the

working day, it’s about the downtime, tooWith Costa Rica’s exceptional landscape, it isn’t surprising that manyof our workers spend their days off in the great outdoors - and ourEthical Forestry cycling team is just one example.

Covering a range of positions in Ethical Forestry including nursery, factoryfloor and plantation workers, this energetic bunch don their cycling gear mostweekends to pedal the country’s exciting terrain.

As mountain biking is very popular throughout Costa Rica, cycling events areheld regularly and are a good excuse for our workers to get competitive. Usuallyclad in their own gear, we thought we’d provide them with their very own EthicalForestry get-up, and as you can see from the pictures, they can’t be missed!

This particular event in Santa Rosa saw 980 cyclists pedal their way around40 kilometres of countryside, with our team in and amongst the best of

them. And to bolster them even further, we decided to sponsor the event.

Go Team Ethical Forestry!