Ethical-Times-Autumn-Newsletter-2013

1. 2,173 72,000 acres currently new trees planted protected in our per week during Forestry Easement peak season Trust EthicalTimes tm Autumn newsletter 2013 this issue... Sustainable forestry equalsa sustainable future Operations update With our 2013 expansion plansunderway, we show you a mapof our Costa Rican operations It’s an undeniable fact that as global population andthe economy rise, so does deforestation Costa Rican diary Meet our photographer and findout why doing justice to ourplantations is a tricky business The GlobalForest ResourcesAssessment2010 Being transparent Find out why the exhibitionswe attend are important to usand our investors New kiln infrastructure In the past decade alone, around 
130 million hectaresof forest were lost. are backed by political and social commitment, sustainableforestry has become a priority. But sustainable forestry mustcontinue to evolve if it’s to have a profound impact on thefuture of the world’s economy and the environment. As part of our ongoing development,our new kiln provides yet anotherexit route for our products Throughout history, reliance on the world’s natural forestshas gone hand-in-hand with economic development.Wood has, after all, been the primary building materialand fuel since prehistoric times. But with worldpopulation expected to reach 9 billion by 2050 and theeconomy having almost tripled in the last two decades,continuing dependence on the unethical degradation offorests is not only lethal to the economy at large, but alsothe future of the planet and its inhabitants. The good news is that the estimated loss of forest areaat the global level declined from 16 million hectares peryear in the 1990s to an estimated 13 million hectares peryear between 2000 and 2010. Clearly, the importanceof protecting our natural forests is becoming more andmore accepted, and we’re passionate about being partof the progress. Plantations at night Our recent bat study reveals thebat species in one of our protectedzones and how they help keepour forests healthy In an eco-friendly economy, more wood 
will be used forenergy as the use of fossil fuels decreases. But if woodproducts are produced from non-sustainable sources,the result will be deforestation, which is bad news for theplanet. The emergence of alternative, sustainable supplychains for the timber industry are clearly vital if we’re toalleviate the pressure on our natural rainforests. We’re committed to managing our plantations sustainablyfor the benefit of the environment, the communityand a greener economy. And by using the very bestforestry practices and employing the finest GovernmentApproved Forestry Engineers to manage them, wecan offer investments that are both commercially andethically sound. Investor’s story Investor, Michael Wadham, explainswhy an ethical investment in treesis so important to him In countries like Costa Rica where sound forest practices The Ethical Forestry team Ethical Forestry Ltd, 80 Holdenhurst Road, Bournemouth, Dorset, BH8 8AQ telephone 0800 075 30 10 emailenquiries@ethicalforestry.com

2. Brasilia III 345.69 acres 177.66 acres protected S MA Santa Cecilia 347.06 acres 145.74 acres protected MAN Legacy Brasilia II plantations 419.87 acres 192 acres 202.72 acres protected T A F M S MA El Encanto 207.65 acres 57.41 acres protected S M Brasilia I Río Celeste 172.03 acres 366.12 acres 58.86 acres protected 124.08 acres protected S MA S MM Costa Rica operations October 2013 With the successfulimplementation of our Operations: S Sold outM MelinaT Teak 2013 expansion plans, weshare with you our currentoperations map A Acacia F FormaletaM Mixed species We’re often asked where our Costa Ricanhead office and plantations are located. Sowe thought we’d publish our October 2013 N Native species Cocobolo operations map, which details exactly where ourplantations are located, as well as our Legacy Sable plantations and head office site, which includesour timber mill and nursery. As we continue toacquire more sites we’ll update this map andkeep you informed in future newsletters. MahoganySpanish CedarPurple HeartPink Ceder

3. Santa Rita San Cristobal 1007.36 acres 326.68 acres protected 897.10 acres 320.85 acres protected M S M T A N Cocobolo 339.72 acres 114.60 acres protected S MAN San Andrés 805.56 acres 254.52 acres protected M Chimurria 1050.95 acres 357.32 acres protected S MA San Carloshead quarters Patio where harvested logs are stored Nursery and germination houses EthicalForestrytimber mill Workers in the San Carlos Timber Mill

4. Plantation update New plantations, new protected landand new photo opportunities… As we purchase more plantations, our Forestry Easement Trust continuesto grow. And as our Forestry Easement Trust grows, we’re given moreopportunities to document its wildlife with stunning photography, which isour chance to create a pictorial story we know our investors are keen to see. One of our new plantations, Rio Celeste, is no exception. Located in the Guatusoregion of Costa Rica and with the magnificent Rio Samen River running throughit, we’ve placed its wild forests into the expert care of our Forestry Easement Trust,bringing the trust’s total protected land to 2,173 acres. We’re excited to see our new acquisition develop and grow as our other plantationshave done. And in order to keep our investors up-to-date with its progress, we’llphotograph every step of the way. Our photographer, David Roberts (Norbert), was on hand to photograph the newplantation and the beauty of its protected forests, as well as capture the brillianceof the river; the lifeblood of any healthy habitat and a hub for much of Costa Rica’sdiverse wildlife. Having worked for Ethical Forestry since incorporation, Norbert has the enviabletask of regularly travelling to Costa Rica to photograph and film the story of ouroperations, from the impressive growth rates of our plantations through to theexpansion of our Forestry Easement Trust and the wildlife it protects. But doingjustice to the sheer scale and beauty of our plantations and protected forests isno easy task. When it boils down to it, it’s Norbert’s passion that produces suchspectacular shots. Top: Out on a limb. Norbert setting up for the long exposure shot of the beautifulRio Celeste river with the resulting image below it Below: Just some of the wildlife spotted on our land held within our Forestry Easement Trust on Reo Celeste. 1: Ringed snail-eating snake Sibonannulatus 2: Blue jeans poison-dart frog Oophagapumilio 3: Leaf-litter toad Rhaebohaematiticus4: Green and black poison dart frog Dendrobatesauratus

5. “Because of the crystal clear river that runs through it, Rio Celesteis an incredibly special plantation and my personal favourite.” Norbert says: “My trips to Costa Rica are a real adventure. To get the verybest shots of our plantations I’m up at first light dealing with the heat,humidity and biting insects (for some reason the ants love me!), onlystopping when the sun starts to set. It gets dark very quickly, and as thelocals say, “the devil comes out at night”. It can be really challenging, photograph. But just one year on and they’re over 20ft with closed canopy -not easy for exposure or achieving a bird’s eye view. In order to do justice to thegrowth I have to get creative with my resources - the top of our Land Rover helps!” As with all our plantations, Chimmuria is a fantastic example of how quickly ourtrees grow with expert care and management. Norbert’s latest photographsare a testament to this, and it’s safe to say he’s succeeded in conveying its sheerscale. However, this extraordinary growth will continue, culminating in fully but I love every minute of it.” With the hums, squawks and buzzes of the forest around him, Norbertmanaged to capture the beauty of the river and the wildlife includingpoison dart frogs, cat-eyed snakes and stingless bees, to name but a few. mature trees with an average height of over 95ft… He adds: “Because of the crystal clear river that runs through it, Rio Celesteis an incredibly special plantation and my personal favourite. It was an So standing on top of a Land Rover may not cut it! We’re keen to constantly update our investors on the development of all ouroperations in Costa Rica, and will continue to do so with the best photographyand information available. Looking at our latest shots, you will appreciate whywe’ve chosen our fast growing tree species and why this stunning country absolute dream to explore and photograph what I found.”And capturing the incredible growth rates of Melina is just as challenging…As just one example of the impressive growth rates of all our plantations,we chose to track the progress of Chimmuria, of which readers willremember from previous newsletters. Having photographed thisplantation from the outset, Norbert visited Chimmuria on the firstanniversary of planting and was impressed attracts so many nature-loving tourists every year. To see more photographs of our plantations and protected zones, visit ourwebsite’s gallery at: www.ethicalforestry.com by how quickly our investors’ trees havegrown since he last photographed them Top: Norbert filming with directorRobert Brown on Rio Celeste 7 months previously. Left: Always looking for the perfectshot, however it is achieved “From walking through shoulder heighttrees to being dwarfed under the canopyof the same trees 7 months later is morethan impressive. Right: Director Robert Brown standsnext to 1-year-old Melina trees Bottom: Directors Robert and Geri Brown discussing the new infrastructurebeing carried out on our Santa Ritaplantation prior to field plantingPanoramic: Rio Celeste prior to planting But conveying this in photography andfilm isn’t straightforward. Shoulder heighttrees at 4-months-old are simple to

6. Join us… At Ethical Forestry we believe in being totally transparent about our business, which is why ourdoors are always open in the UK and Costa Ricafor those who wish to drop in to discuss anyfacet of our operations. But we know it isn’t always feasible to visit our headoffice in Bournemouth and far less so for Costa Rica. For this reason, over the coming year we will be exhibiting at many of the UK’s best venues, startingin October with the Property Investor Show at ExCeL,London and the London Investor Show at OlympiaCentral, Hammersmith. If you would like to visit us atone of our up-and-coming shows, please contact usfor the latest exhibition information. New kiln boosts our export trade The exportation of pallets is an integral part of our operationsand it’s vital we follow international regulations As part of our continuous investment into Ethical Forestryinfrastructure and development, we’ve recently purchased a new kilnfor the treatment of our pallets for exportation. This new additionto our operations will boost our pallet export trade significantly,providing yet another robust exit route for our products. Dedicated to maintaining environmentally sound operations as wellas commercial efficiency, we chose this particular kiln because of itsspecial features: • Designed to run on sawdust generated from our timber mill, a sustainable process using natural by-products from our operations In 2006, the International Plant Protection Convention (IPPC)implemented the International Standards for Phytosanitary Measures • Chosen for both its efficiency and ability to dry Melina for products such as flooring, finger joints and panelling for the furniture industry 15 (ISPM15) in Costa Rica - a set of guidelines regulating woodpackaging material for international trade. To put it simply, the strictcontrols reduce the risk of introducing and spreading tree peststhrough the heat treatment of wood, which is exactly what ournew kiln has been designed to do. • Initial kiln space will allow for the treatment of 1,200 pallets over an 8 hour period • Our boiler has a 500,000 kcal/h capacity, allowing expansion to 4 kilns and an output of 2,400 pallets every 4 hours Constructed using the latest technology, our kiln heats our wood to aminimum temperature of 56ºC for at least 30 minutes. Only then arewe permitted to display the IPPC certification symbol that shows ourpallets are safe to ship. This is an exciting new acquisition and represents the first phase ofour kiln infrastructure. We’ll be sure to keep you updated on ourkiln development programme in future newsletters. Example of the kilns we will be in installing Construction underway for Kiln location at our San Carlos timber mill

7. Plantations at night... Bat study reveals the health ofour protected zones Within the protected zones of our Forestry Easement Trust, there’s an abundance of diverseand fascinating wildlife. Some endangered, others Baqueano don Orlando and Student Angie Liz VarelaCampos survey one of the protected zones on the Chimmuriaplantation to select suitable sites for the mist nets common, but all crucial to a healthy ecosystem. We’re always keen to learn more about thehealth of our protected zones and the wildlifewithin them, so when Angie Liz Varela Campos,a student of Forestry Engineering and WildlifeManagement at Costa Rica’s National TechnicalUniversity, asked if she could carry out a studyof the bat population within our Chimmuriaplantation’s protected zones, we were morethan happy to oblige. We’re keen to continue protecting the manydifferent species within our Forestry EasementTrust. And as part of our support for localenvironmental research, we’ll also continueto enjoy a close relationship with the NationalTechnical University. In the meantime, we’ll keepyou informed of any interesting studies carriedout on our plantations in future newsletters. The mist nets used are designed to catch bats without harm Working alongside Ethical Forestry’sDendrologist, Ariel Rodriguez, and supervisedby local Baqueano, don Orlando, who’s intimateknowledge of the area and biodiversity is secondto none, the team set up camp in our protectedforests for eight nights with the sole purpose ofrevealing which of Costa Rica’s 133 bat species arepresent in our protected zones. With a ‘mist net’to catch the bats safely, a gauge to measure batlengths and a ‘Pesola’ to weigh them, three smallsites were selected for sampling, which you cansee in the images provided. Using natural ink made from the sap of a local treeto ensure the same bat wasn’t recorded more thanonce, 27 individual bats were identified of whichthere were 9 different species: the Jamaican fruitbat, the pygmy fruit-eating bat, the chestnutshort-tailed bat, Seba’s short-tailed bat, thecommon vampire bat, the little yellow-shoulderedbat, the black myotis, the proboscis bat and thewhite-throated round-eared bat. Don Orlando and Angie inspecting one of the three mist nets Not only are bats a natural controller of insects - an individual insectivore eats thousands ofinsects a night - other bat species will eat nectar,pollen and fruit, pollinating several plants anddistributing seeds whilst feeding. Since bats playsuch an important role in maintaining the healthof forests, they show that our protected zonesare rich and thriving ecosystems. As Angie says:“These are very healthy forests.” A black myotis bat Body and wingspan measurements being taken

8. An investor’s story Written byMichael Wadham If you would like to appear inAn investor’s story, please contact newsletter@ethicalforesty.com Putting the Elm back into Elmstead “ I’m passionate about trees. As a volunteer for UK woodland charities,I’ve been lucky to be involved in some wonderful projects where I’ve planted thousands of trees. And as a tree warden for the market village ofElmstead, I’ve recently planted Dutch Elm resistant elm trees in a bid to‘Put the elm back into Elmstead’ - pardon the pun! Although I live in the UK, I visit Costa Rica annually where I’m fortunate toown a house situated on 25 acres of land on the beautiful Osa Peninsula.Costa Rica is an amazing country steeped in culture and the warmth ofthe people, complimented by modern cities - a far cry from the typicalnaïve perception of a Third World central American country. Many factors of the investment appealed to me such as the remarkablerate at which Melina trees grow, producing fully mature trees in just 12years; the process and importance of commercial, sustainable forests andthe vital role they play in providing a sustainable wood source; and Ethical Forestry’s transparent approach and how they openly publish information,in particular their Land Registry details on the Costa Rican Land Registrywebsite (which as a land owner in Costa Rica I’m familiar with). As my 18-month project with a US biotech company nears fruition,I’m looking forward to starting my MSc in Agroforestry at Bangor (whichhas close links with CATIE in Costa Rica - Ethical Forestry’s high-gradeseed supplier) and of course, receiving my investment returns. ” The Forestry EasementTrust fact file In this edition, we introduce you to the magnificent Kapok tree We’re passionate about trees. But we don’t just grow them for investments,we also protect the many precious species we come across whenpurchasing new plantations. This is just one of the reasons why we set upour Forestry Easement Trust. For every plantation we purchase, we placeprotected wild forest into our expert care. As well as protecting wild forests, our Dendrologist also surveys the site’s plantable area, marking out and registering all the trees he finds, taking special note of the rare and endangered species. Far from cutting them down, we plant our saplings around them, giving them and our commercialtrees plenty of room to grow. A resident of our San Andrés plantation, this beautiful Kapok tree is justone of the many trees we protect. And there’s a very good reason forit. Regarded as living monuments, their branches are always decoratedwith dozens of plant species, making them a habitat in themselves.This particular Kapok tree boasts orchids on its limbs, not to mention an Kapok fact file abundance of vines and wild fauna. Genus: CeibaSpecies: pentandraHeight: up to 65 metersDiameter: up to 3 meters Considered the most impressive tree species in Costa Rica’s forests becauseof its great height and broad crown, this Kapok tree stands approximately 40 metres in height with an impressive 156cm diameter trunk at DBH(Diameter Breast Height). With our Costa Rican Director, Robert Brown,standing at its base, you really can appreciate its magnificent scale. Trunk: cylindrical, smooth, greyish Crown: an open umbrella shape This Kapok tree is just one inhabitant of our Forestry Easement Trust. Withinthe zones we protect, we have many different species of both fauna andflora, all of which have their own fascinating facts. We’ll be introducing youto the interesting wildlife we come across throughout our newsletters, Special features Very large buttresses stabilise thegiant; large spines protrude fromthe trunk to discourage damage;many plants and animals growand live in its branches and will continue to expand our Forestry Easement Trust in order to helpsafeguard Costa Rica’s wonderful natural environment.