Ethical Timestm

Winter newsletter 2013

this issue...Costa Rica diary

UK Directors, Matthew Pickardand Stephen Greenaway, reporton their recent visit.

Plantation updateSee the remarkable growthof Melina in a series

of photographs.

Meet our DendrologistAriel Rodriguez Guitierrez explainshow we help to protect the

forests in our care.

University challengeGerardo Ulloa explains the benefitsof our close relationship with

Continually growing…As another successful year comes to a close we look forwardto 2013, which promises to be equally expansive

Row upon row, field after field of young Melina trees on one of our new plantations

During 2012 our 25-acre Costa Rican head office explore the protected zones nestled within one of oursaw the implementation and completion of our new plantations and photograph the resident wildlife.

nursery, which is capable of producing up to 25,000Costa Rica’s universities.

2013 calendarTake a peek at our new calendar,currently being sent to investors.

Investor’s storyInvestor, Paul Robinson, shareshis thoughts and experienceof investing with us.

new trees per week.

We also completed our scheduled harvests, paidour investors their projected returns and purchasedmore plantations.

Plans for 2013 are set to follow a similar timetable.Harvests will commence during the first quarter, whichwill create a busy and productive period for both ourForestry Engineers and sawmill.

We’ll also continue to purchase more plantations andconcentrate on managing our expanding portfolio.

Inside this issue we’ll show you the development andgrowth of one of 2012’s new plantations, Chimurria.

You can also read the latest Costa Rica diary, which reportson our UK Directors’ visit in November 2012. As well as

Our passionate Dendrologist, Ariel Rodriguez Guitierrez,explains how we enhance the forests within our Trust byplanting and protecting rare and endangered species.Plus, Gerardo Ulloa reports on our ever-growingrelationship with Costa Rica’s universities, who we’reworking with on several sustainable forestry research anddevelopment studies.

Finally, we’re pleased to announce that our popularcalendar is now being sent to our investors. This vibranthomage to Costa Rica’s wildlife includes the elusive andendangered puma, one of which regularly roams one ofour plantations.

We hope you enjoy this newsletter, and as always wewelcome any comments or suggestions.

overseeing our operations, they took the opportunity to 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 diaryIn November 2012, Directors Matthew Pickard and

Stephen Greenaway toured our Costa Rican operationHere Matthew shares his experience.

I regularly visit Costa Rica, along with my colleagues, to review ourever-expanding portfolio of plantations and operations.

Stephen and I enjoyed our tour with Robert Brown, one of our Costa Ricanbased Directors, and are pleased to report that our plantations, nurseriesand staff are thriving.

We arrived in ‘green season’ - Costa Rica’s term for the rainy season - anddespite only seeing brief spells of sunshine during the ten days we werethere, the humidity and heat were a big contrast to the wintery UK. Butthe rain was a welcome sight; when it comes to growing healthy trees,abundant rain is an essential part of the process. This was confirmed bythe sea of green trees that welcomed us on the plantations.

We also saw that our nurseries are just as thriving. It’s wonderful to see somany healthy new saplings all growing steady and strong in preparationfor field planting.

As part of our sustainability programme we’ve launched our workers’co-operative, where I witnessed the allocated land abundant with fresh,organic food. It’s great to see our staff harvesting these crops, which willprovide food for them and their families.

The co-operative, coupled with our ethos of offering the best workingconditions, good wages and staff education, is clearly invaluable to ourworkers. Not only does it give them sustainable, healthy food, it alsooffers some self-sufficiency. It’s only a small part of our operation,

but it’s clearly appreciated.

During the trip I also had the opportunity to explore the wild junglesunder the protection of our Forestry Easement Trust. The Trust allows us topreserve and enhance our existing wild forests, and by planting new, fastgrowing sustainable plantations we’re able to balance the need for carbon

As a keen photographer, these wild environmentoffer a utopia of opportunities to get some reallyshots. The vibrant forests are alive with a cacophoof bird cries, an abundance of flora and a wide vaof insects, arachnids and amphibians, such as the

jeans poison dart frog and the beautiful Rufous Motmot,which I was fortunate to photograph.

I look forward to my next trip, scheduled for early 2013,when I hope to see or even photograph the elusive puma.

Top: Stephen Greenaway,Matthew Pickard andRobert Brown survey5-month-old Melina treesRight: One of our nurseryteam members in ourdispatch area

Below: Matthew Pickardand Stephen Greenawaypose with some of

Ethical Forestry’sstaff from the SanCarlos region

“By preserving and eour existing wild forests, andby planting new, fast growingsustainable plantations, we balancthe need for carbon sequestrationwith environmental preservation”

Top: A corridor of thriving trees on one ofour plantations

Top right: A sloth hangs from a tree near one ofour plantations. The green colouration is causedby harmless algae inhabiting its fur

Above right: Matthew Pickard and Robert Brownstand next to a wall of wild forest protectedby our Forestry Easement Trust

Left: Robert Brown discusses the growth ratesof Melina saplings with Matthew Pickard

Right: Robert Brown and Stephen Greenawayexplore the wild jungle protected by ourForestry Easement Trust

Bottom Left: Matthew Pickard indulges in hispassion for photography

Bottom Right: A blue jeans poison dart frogand a Rufous Motmot, photographed byMatthew Pickard

Plantation update...Following on from our Autumn 2012 newsletter, we share withyou the remarkable progress of our Chimurria plantation

In the UK we’re used to seeing trees grow at a certain pace. Compared to thespeed at which our Melina trees grow, it can only be described as slow.

In just five months a Melina sapling will reach an average height of over six feet;just one of the reasons why we’ve chosen the species for our plantations.

But thriving trees don’t just happen - they need fastidious management andideal geographical and environmental conditions. By carefully selecting ourplantations and their locations, we’re able to cultivate a sustainable forestryspecies and yield high volumes of timber.

For every plantation we own, ourForestry Management Team producesa comprehensive 3D map accurateto 2cm, highlighting the elevationand road infrastructure.

1Kilometer

Identifying MelinaThe image below shows 5-month-old Melina trees covering a small area of ourChimurria plantation’s undulating fields. You can see that the shape of Melinais distinctive. Bushy in profile, the leaves are very large, enabling the tree toabsorb as much sunlight as possible for maximum photosynthesis. The moresun absorbed, the better the growth.

We continually shape and prune our Melina trees to encourage growth andhealth. By consistently removing the lower branches we’re able to focus theenergy on the trunk, which produces a less bushy, more traditional shape.After each cut we apply a fungicide to seal-and-heal the tree and preventinfection. This constant care and attention supports the tree’s rapid growthand helps produce timber.

We’ve included a series of photographs at the base of this page to illustratejust how quickly Melina grows over a five month period. You can see theremarkable difference from staking out the prepared land to the impressiveheight and health of a typical 5-month-old tree.

This extraordinary growth continues throughout the growth cycle of thespecies, culminating in fully mature 12-year-old trees with an averageheight of 100ft.

“The average height of a 5-month-old Melina tree is already over six feet”

The remarkable growthof our Melina

July 2012 August 2012 September 2012After the land is prepared, it’s staked out Young Melina saplings are planted and After just one month the Melina saplingsfor field planting GPS coordinates allocated to each one are already thriving

Robert Brown stands next to a typical 5-month-old Melina tree that measures over six feet highA corridor of 18-month-old Melina trees photographed after pruning. The blue spots on the trunks showwhere branches have been removed and sealed-and-healed using our proprietary formula

October 2012 November 2012 November 2012Robert Brown stands next to Robert Brown, Stephen Greenaway and Robert Brown stands amongst3-month-old Melina trees Matthew Pickard stand amongst 5-month-old Melina trees

5-month-old Melina trees

Creating the perfect treesDendrologist, Ariel Rodriguez Guitierrez, shares his quest to protectthe rare and endangered trees within our care

Ariel stands next to an endangered Sideroxylon capiri tree (commonly known as Danto Amarillo) withinone of our plantations, from which he collects saplings for replanting

Fact FileName: Ariel Rodriguez Guitierrez

Role: Dendrologist - the botanical study of trees and other woody plantsQualification: Graduate Diploma of Engineering Career in Forestry andWildlife, Universidad Técnica Nacional (UTN)

Currently studying for a Bachelor’s Degree in Forestry and Wildlife

As part of our Plantation Management Team, Ariel is always busy.Fortunately for Ariel, being actively involved with plantation managementand tree preservation is his dream job; in his words, “It’s not work to me.It’s my passion.”

Before we purchase any new plantation, our Forestry Management Teamundertakes an extensive feasibility study to evaluate its suitability.

Many prospective plantations are rejected for a variety of reasons, such as poorsoil quality or poor irrigation. For the plantations that are selected and purchased,this signifies the start of a unique relationship with Ariel and the trees within it.Once purchased, Ariel inspects every part of the plantation by foot and createsan extensive species inventory, registering all rare and endangered trees.He then marks and records each tree on our tree management database byallocating unique GPS coordinates to each one.

Outside of the protected areas that fall within our Forestry Easement Trust, healso identifies the common tree species that require felling prior to the newsustainable forests being planted.

Felling these common species trees is an essential part of the process becauseit allows room for the fast growing sustainable plantations to thrive unhindered.Nothing is wasted from these fellings; the harvested trees are processed andturned into saleable timber in our timber mill.

Gerardo Ulloa and Ariel discuss protected trees within one of our Melina plantations

As his relationship with the plantation develops, Ariel keeps a close eye on therare and endangered trees, watching for when they produce their invaluablefruit that carries - in the case of the Sideroxylon capiri - their seeds.

Ariel explains, “The rare and endangered Sideroxylon capiri tree producesfruit that falls to the ground between July and August, yielding an average of280 seeds per kilo of fruit. I carefully collect the fruit, extract the seeds, growthe saplings and replant them around our plantation borders and within theprotected zones. By doing this with this species - and other rare and endangeredspecimens - we’re helping to regenerate them.”

This scrupulous practice of monitoring, watching and caring is ongoing andduplicated across our large portfolio of plantations that sit in clusters acrossCosta Rica. As we continue to purchase more and more plantations, the processof care and protection will escalate allowing us, and particularly Ariel, to achievethe mutual goal of preserving and enhancing the plethora of trees, flora andwildlife nestled within our plantations.

University challenge

Gerardo Ulloa and universitystudent, María José Paniagua, takemeasurements within one of our

Melina plantations

Gerardo Ulloa explains the benefits of a close relationship with Costa Rica’s universitiesAs the head of the department of Forestry Information, one of my duties isto oversee and implement projects with universities.

These projects allow us to help the students in a really worthwhile area of study,and once they’ve graduated some may even become part of the Ethical Forestryteam. The projects also give students invaluable on-site experience on a workingplantation. The exchange of new theories, implementation of fresh ideas andsharing of research and data creates a close relationship, expanding both theirknowledge and ours.

We’re currently involved in a fascinating project with María José Paniagua, who’sstudying for a degree in Forestry Engineering at the National University (UNA).As part of her course María is required to undertake a field study, and aftercontacting Ethical Forestry we were pleased to help. We set María the task ofevaluating what happens to soil quality when Melina is planted with two well-known plantation species - Acacia mangium (Acacia) and Acrocarpus fraxinifolius.Acacia mangium and Acrocarpus fraxinifolius are part of the Fabaceae family - avariety of plants that have the capacity to fix nitrogen and improve soil fertility.The study hopes to show that the inter-planting of these species may result inbetter growth due to constant improvement of the soil during the cycle.

Gerardo and Michael Huertas Cedeño lecture a class of university students within one of our nurseries

Standing alone from our investors’ trees, the inter-planted site has beenplanted alongside a Melina-only area, which will allow María to make accuratecomparisons. Next year María will continue to take measurements from bothsites on a regular basis, and we’re looking forward to finding out what shediscovers. In the meantime, our Forestry Engineers will monitor both sitescarefully and work closely with María to produce accurate results.

We look forward to welcoming María back to our Research and DevelopmentTeam in 2013, and I’ll let you know how the project goes in future newsletters.

Gerardo and María stand amongst young Melina trees

The new 2013 Ethical Forestry calendarCapturing some of Costa Rica’s beautiful wildlife

Our new 2013 calendar, packed with vibrant imagery, is now available and being sent to all of our investors. Within this edition is the puma, one of which regularlyroams one of our plantations. You’ll also find the Pacific green turtle, the basilisk ‘Jesus Christ’ lizard and the distinctive yellow blunt-headed tree snake.

Send a calendar to a friend...If you’d like to send a free copy of our 2013 calendar to a friend, colleague or family member, please supplyus with the recipient’s name, address and a short message using the contact details below. We will arrangefor a calendar to be sent to them with a personal note from yourself, while stocks last. To order a calendar call0800 075 30 10 or email us at friend@ethicalforestry.com

An investor’s story Written by Paul Robinson

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

peter.bowdler@ethicalforesty.com

I first met Ethical Forestry by chance atThe Property Investor Show in February

“ I spoke with Business Development Manager, Jerry Thomas, at their exhibition stand andspent over an hour talking to him. I was highly impressed by their professionalism, expertiseand potential returns. I left the exhibition feeling incredibly curious about their proposition,as it all sounded slightly too good to be true; other woodland investments I’d read about wereprohibitively expensive and mainly UK based.

After months of research and countless calls and emails to the ever-knowledgeable Jerry,I decided to further pursue my curiosity and visit their offices in Bournemouth. I met the

founder of the company, Matthew Pickard, along with numerous staff members, as I wantedto know more about the actual business and the people behind it, especially as they would beplaying such a pivotal part in my retirement. After this meeting I decided to invest £80,000 intheir Accumulator product by merging my under performing personal pensions into a SIPP.

I would highly recommend Ethical Forestry as a genuine investmentproposition, especially as part of a balanced portfolio.Next year I turn 40, so planning for my retirement is a real priority. Historically I haveinvested in a handful of buy-to-let properties in the UK and abroad, and I also try to maximisemy ISA allowance each year by investing in mainly UK stocks and investments. This is the firstinvestment I have made that ticks so many boxes, from the way the company is set up, tolooking after its employees in Costa Rica, to the amount of carbon that is neutralised witheach tree planted. If the projected returns are delivered over the next 24 years my familyand I shall be very happy indeed to have invested in Ethical Forestry. In the meantime,we’re really looking forward to heading out to Costa Rica next year to meet everyoneand to see our investment and the trees for ourselves. ”

Ethical Forestry is not regulated by the Financial Services Authority and does not offer any advice about any regulated or unregulated investments, either within this newsletter or elsewhere. Please consult an Independent Financial Advisor prior to making any decision to buy our products.Our products are not regulated investments. Their value may rise or fall and no guarantees of future performance in respect of income or capital growth are given either expressly or by implication, and you may not get back the full amount you pay for them. Ethical Forestry shall not be heldliable to anyone for any errors, omissions or inaccuracies within this newsletter under any circumstances or for any loss or damage which may arise from the use of any of the information or detail contained herein.

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