Ethical-Times-Summer-Newsletter-2013

1. 2,173 55,000 acres currently new trees planted protected in our per week during Forestry Easement peak season Trust EthicalTimes tm Summer newsletter 2013 this issue... 2013 Harvests completed Harvesting anddevelopment As another successful harvesting season ends, ourreturns were once again inline with our projections After another successful harvest,we share our plans for the future Plantation update Robert Brown reports on the progressof our Chimurria plantation Pallet production Why Ethical Forestry is such animportant part of the fruitexport chain Growing together We are pleased to report that our 2013 harvests werecompleted on time and our payouts are once againinline with our projections. Investors who had theirtrees harvested during this period are now receivingtheir returns. Step into virtually any supermarket in the UK and you willfind crates of pineapples and bananas from Costa Rica.As a respected supplier of pallets and wood to CostaRica’s food packaging industry, we share some interestingstatistics about the industry and why, as suppliers ofwood, Ethical Forestry are an important part of the fruitexport chain. As our Workers’ Co-operative gainsmomentum, we share our goalsand ethos behind the project 2013 has been an exceptionally busy year both in theUK and Costa Rica. As the demand for our productscontinues to grow, so have our facilities. We haveexpanded our workforce, purchased 14 new plantationsand are increasing our San Carlos nursery’s output from25,000 new trees per week to 55,000. Market report Why is the ONF’s timber marketreport so important? You can also read about our Workers’ Co-operative,developed to provide our growing workforce with themeans to create a sustainable food source. On the back page you will find our popular ‘Investor’sstory’, where Simon Gibbons shares his and his family’sexperience of Ethical Forestry. Inside this edition you can read more about our expansionplans as well as the recent harvesting of Formaleta, Teak,Melina, Acacia and other mixed species. Investor’s story We hope you enjoy this newsletter and, as always, wewelcome any comments. Investor, Simon Gibbons, shareshis thoughts and experienceof investing with us Due to popular demand, we are continuing our Chimurriaplantation update seen in the previous two newsletters.This section chronicles the impressive growth of 325,000+Melina trees over an 11-month period, photographedfrom the same position. The Ethical Forestry team Ethical Forestry Ltd, 80 Holdenhurst Road, Bournemouth, Dorset, BH8 8AQ telephone 0800 075 30 10 emailenquiries@ethicalforestry.com

2. Operations update 2013 expansion planspush ahead of target As ever, all our departments in both the UK and Costa Rica are busy with operations. But it’s our harvesting, plantation acquisition, land preparationand nursery teams that are particularly active. To cope with the rise in demand for our investments, our land acquisition team, headed by Professor Ignacio Rodríguez Varela, recently surveyed numerous potentialsites and purchased 14 new plots. Covering 3,429 acres, they allow us to plant overone million new trees for our investors. We own all of the sites unencumbered, whichare registered with the Costa Rican Land Registry. Careful consideration was given to the new sites and from detailed analysis we knowthey have the right topography and soil for strong and healthy plantations. To provide trees for these new plantations, our nursery team is increasing theSan Carlos nursery’s output capacity from 25,000 new trees per week to 55,000. Like all our new sites, they are undergoing rapid changes such as land preparation,the creation of new houses for our resident caretakers and their families as well asthe development of road infrastructure and access. Preserving the natural forests adjacent to our plantations is an important part of ouroperations, so we have assigned approximately 35% of this new land to our ForestryEasement Trust, bringing the trust’s protected land to over 2,100 acres. The safeguarding of the rare and endangered tree species within these newly protected zones lies with our expert Dendrologist, Ariel Rodriguez Guitierrez. With anincredible passion for his work, Ariel will support us in our conservation efforts acrossour 14 new sites by collecting the rare and endangered trees’ seeds and strategicallyplanting their saplings. This process is integral to our operations and guidingprinciples, and one we know Ariel is committed to. 25,000 new trees per week to 55,000 Top two: As part of our field study research, our Forestry Engineers gather growth data from mature trees Middle: Forestry Engineers harvesting Below: Logs harvested from 4-year-old Melina trees arrive at our timber mBottom: A panoramic shot of harvested Acacia at our timber mill

3. To cope with the high demand for our investments, our expansionplans have seen the acquisition of 14 new plots during the first half of 2013 Meanwhile, the growth-harvest cycle continues for our investors While our 14 new plots are developed and our nursery’s capacity increased,our harvesting team, which includes our Forestry Engineers, GPS specialistsand extraction teams, have successfully completed the 2013 harvest onbehalf of our investors. As always, it has been a methodical process. Before harvesting began, ourinvestors were sent a harvesters’ report outlining the proposed course ofaction and recommending which trees should be harvested and whichshould be left to continue growing. Once our investors approved theirreports, our Forestry Engineers surveyed their trees and checked the GPSpoints against our tree management database. They then harvested the selected trees, producing our investors’ returns. This process will be repeatedthroughout the term of their investments until the final harvest, when alltheir remaining trees are harvested. During all this activity, our protected zones have been alive with Costa Rica’s fascinating wildlife. Our timber mill Plant Manager, Loyal Clarke, recently came across a curious sloth that had wandered out of the abuttingprotected zone and into our timber mill. With a keen interest in animals andtheir protection, Loyal aided it back into the safety of the forest. With our successful land acquisition, development of our nursery and theharvesting of our investors’ trees, it’s a busy time for everyone. We will keepyou updated on the progress of our 14 new plantations as well as the othernew plots that are currently being reviewed. Top: Our nursery will soon be producing 55,000 new trees per weekduring peak season Middle: Loyal carries an inquisitive sloth from our timber mill back into the protectedRight: An exotic hawkmoth larvae that mimics a snake to deter predatorsRight bottom: Fer-de-lance and coral snakes photographed on our plantationsBelow centre: Stack of sold Teak and Acacia awaiting shipment at our timber mill

4. Growing to plan As our Chimurria plantation reaches its first birthday,we share its impressive growth rates Our Chimurria plantation is a typical example of the many sites withinour portfolio. Since the purchase and development of the land, whichwe first reported on in our autumn 2012 newsletter, it has grown Our resident photographer, Norbert, says: “Photographing the plantations to tryand encapsulate the size of the trees and the area covered is a real challenge.It’s only when you step into the plantations do you get a sense of scale, wherefield after field seems to roll on forever.” healthy and strong. Over the coming months, our team of Forestry Engineers will tend the325,000+ Melina trees on this plantation individually. Undertaking careful The main image below shows the rolling fields of the plantation’s Melina trees 11 months after planting. To show the plantation’s development, their growthcan be compared to the images in our two previous newsletters (available todownload at www.ethicalforestry.com). pruning to ensure the trees continue to grow tall and straight, they will also be‘sealed & healed’ to protect them and keep them healthy. As previously reported, 132.57 hectares (327.58 acres) of this plantation hasbeen placed within our Forestry Easement Trust to protect the land and theecosystems within it. While the commercial trees are being tended to, ourDendrologist, Ariel Rodriguez, will document and safeguard the rare andendangered species both in and outside the protected areas. The series of photographs on the opposite page show the growth of thisMelina plantation photographed from the same position over an 11-monthperiod. Starting with the planting of Melina saplings in August 2012, theirprogress is tracked to June 2013. During this time the average height of thetrees has increased from 1.5 feet to over 17.5 feet. After just 11 months, the average height of these Melina trees has grown from 1.5 feet to over 17.5 feet

5. The remarkable growthof our Melina August 2012 September 2012 October 2012 Young Melina saplings are planted andGPS coordinates allocated to each one Just one month after planting, the Melinasaplings are already thriving Director, Robert Brown, stands next to the sameMelina trees 3 months after planting November 2012 January 2013 June 2013 Directors Robert Brown, Stephen Greenawayand Matthew Pickard stand amongst the sameMelina trees 4 months after planting UK Business Development Manager,Jerry Thomas, stands under the canopy of thesame Melina trees 5 months after planting Every tree we plant has unique GPS coordinatesregistered on our tree management database June 2013 Robert Brown stands amongst Melina treesplanted 11 months previously

6. Fruit export is big business Go into virtually any supermarket in Europe orAmerica and you will find crates of pineapplesand bananas exported from Costa Rica She goes on to add: “In 2001 Costa Rica exported 322,000 tonnes of pineapples.It now exports in excess of 1.8 million along with 2.3 million pallets carryingbananas. With the export trend rising and the wood supply chain from naturalforests reducing, the need for sustainable plantations such as ours is becomingincreasingly necessary to ensure this major contribution to the country’seconomy continues.” Since Christopher Columbus first encountered the pineapple in 1493,the humble, spiky fruit has arguably travelled just as far, if not further.It’s now a regular feature in most supermarkets and convenience storesaround the world. Costa Rica is currently the third largest producer of pineapples in the world,producing around 1,870,000 kilo tonnes per annum mainly for export to Europe,the USA and Canada. The main producer is the Philippines (2,198), the secondbeing Thailand (1,894). To export these vast quantities, Costa Rica now produces over 5.5 million palletsper annum. Producing this amount of pallets every year requires a reliable,steady supply of logs to keep the chain operating. In the 2012 ‘Wood in Costa Rica’ report by the ONF (The Costa Rican NationalForestry Office), they state the following statistics: ‘In 2011, 919,014 cubic metres of roundwood (log) were consumed, 73.7% ofwhich came from sustainable plantations, 23.4% from agricultural land and 2.9%from the forests. 50% of this wood was used for pallet production, 28.5% forconstruction, 16.8% for furniture and 2.2% for other uses.’ Geri Brown, Director and Head of Sales for Ethical Forestry Costa Rica, says:“By working closely with fruit exporters who recognise our reliable supply chainand uncompromising attitude towards sustainability and quality, we supply asteady stream of pallets and pallet kits for their thriving agricultural operationswithin the region.” A typical pineapple plantation Approximately 5.5 million pallets are used for the exportation of fruit products from Costa Ricaevery year Our guarantee: every pallet we produce bares our seal of sustainability and quality A popular supermarket commodity: pineapples from Costa Rica

7. Working together Self-sufficiency through our Workers’ Co-operative As part of our sustainability programme, we’ve launched our Workers’Co-operative. Designed to create and maintain a healthy, self-sufficient andsustainable food source for our workers, we aim to significantly improvequality of life by providing them with the facilities and means to thrive. Supplying the co-operative with land, seeds, facilities, livestock and materials,the initiative is supported by Ethical Forestry but run by our employees. Workersplant, manage and tend the land, crops and animals, giving them a reliable, high-quality food source that is local to them. Olivier GutierezMalespin, who manages theco-operative, tends to the aubergines Green chillies - a common ingredient in CostaRican cuisine The funds generated from the sale of the goods are then reinvested into furtherfacilities, reinforcing the initiative’s inherent sustainability. The Workers’ Co-operative includes: • A continual reinvestment programme ensuring infrastructure growth • Adding nursery loop tunnels to continue growing crops throughout the rainy season • The development of a free range chicken enclosure housing approx. 250 chickens producing approx. 225 eggs per day and 500 cubic metres of droppings per annum to be used for compost production • The growing of vegetables such as corn, cassava, plantain, tomatoes, peppers and green beans, as well as fruit such as passion fruit and papaya The Workers’ Co-operative, coupled with our ethos of offering the best workingconditions, good wages and staff education is testament to our belief that wecannot have a healthy and growing business unless our community of workersis receiving the best support we can give them. Corn grown and tended by Olivier Olivier harvests radishes - just one of themany foods grown by the co-operative ONF - Timber market report Official facts and figures produce positive reports As the leading provider of sustainable timber investments, it’s vital we get the trends and statistics surrounding our industry from a dependable andreliable source. Costa Rica’s National Forestry Office (ONF) is just that. Equivalent to the UK’s Forestry Commission, the ONF is Costa Rica’s leadingauthority on its woodland. Their primary task is to provide forestry statistics to MINAET (the Costa RicanMinistry of Environment, Energy and Telecommunications). To do this, the organisation collects data from hundreds of sources within thecountry, enabling them to compile a reliable report on the country’s performance. With an emphasis on protecting, expanding and promoting the sustainablemanagement of Costa Rica’s woodlands, the ONF also works to increase thecountry’s market value, ensuring profitability is at its best. The ONF distributes national and international information about timbermarkets, costs, prices, trends, buyers and more. Which is why as growers of manyof the country’s most popular timber species, we make sure we’re always up tospeed with their latest reports.

8. An investor’s story If you would like to appear in An investor’s story, please contactpeter.bowdler@ethicalforesty.com Written by Sarah andSimon Gibbons Finding the right investmentfor their family’s needs “ After my wife Sarah and I gave careful consideration to our pension fund in which we were achieving between 3% and 8% returns but averaging around 4%, andwith inflation running at around 2.5% on our savings, we decided to investigatethe alternative investment market, which led us to Ethical Forestry. At first we thought the figures were perhaps too good to be true, but with manynews reports on the global timber supply chain reducing and demand for timberproducts rising year-on-year, we contacted them and arranged to visit theiroffices in Bournemouth. What struck us most about the company was the professionalism, both intheir attitude and work environment. Specialising in just one area, theirlevel of expertise was clear from the outset. After going through the figures in detail, from Melina growth rates to its currentmarket value, we quickly warmed to the prospect of investing. Our next hurdle was the concern for the security of our investment. This was quickly overcome by having the comfort of a tree replacement guarantee for the first three years, rights to the land on which our trees would be planted throughout the term and individual GPS points for every tree. The environmentalbenefits were also an important consideration for us; we want to leave the worlda better place for our son, Cameron. Cameron liked the investment too so as a family we invested, both for our pension and a sum from Cameron’ssavings that will generate income for his university fees or home deposit. ” Print and protect How we reduce the environmental impact of our printed marketing materials You’ll notice that we feature the World Land Trust’s logo on our brochures and leaflets. This is because we endeavour to reduce our carbon footprintby using Carbon Balanced Paper where possible. Considered the most sustainable method of producing and distributing paper, itis carbon balanced, or offset, by the international conservation charity, the WorldLand Trust. By using Carbon Balanced Paper we’re able to support this extremely worthwhilecharity in protecting threatened habitats and their biodiversity. The World LandTrust has already saved 40,770 tonnes of CO2, protecting 1,677 acres of threatenedforest and natural habitat, so it’s clearly an incredibly effective initiative and onewe’re committed to. Additionally, we always encourage people to download material from ourwebsite in PDF format rather than print it off, and only send out brochures andleaflets when necessary. To learn more about the great work the World Land Trust does, visit their website www.worldlandtrust.org 100% recycled paper Ethical Forestry is committed to the successful future of our planet. This newsletter is printed on recycled paper producedusing 100% recycled waste at a mill that has been awarded the ISO140001 certificate for environmental management. The pulp used in thisproduct is bleached using a totally chlorine free (TCF) process. We only used 100% vegetable inks in the printing of this brochure. 251kgs of CO2 has been balanced in the production of this newsletter, preserving 21.08 m2 of ecologically important standing forest under imminent threat of clearance. This newsletter is designed and published with respect for the environment, please recycle if no longer required. For more information on our ethical investments or to speak with an advisor, please call us free on 0800 075 30 10 or visitwww.ethicalforestry.com