An investment thats always growing SIFF is an asset-backed, income - - PowerPoint PPT Presentation

An investment that’s always growing

SIFF is an asset-backed, income generating investment

• ffering capital growth of a

highly valued global commodity

SIFF INVESTMENT PROCESS

DRIVERS OF FORESTRY RETURNS

Biological Growth (65%) Forestry Grants (35%)

RETURN ON INVESTMENT

Per hectare costing €10,000 @ 8% compound for 15 years = €31,722 less €10,000 = €21,722: 1. Annual Forestry Premiums: €7,650 from €510 per hectare paid over 15 years 2. Capital Growth: €14,072 profit from sale of semi-mature forestry on maturity

Area and Species Growth Rate Stocking Density Age Tree Top Height Roads Timber Prices Productivity Area

To predict the future value of an investment is extremely important when appraising any investment opportunity.

The following factors were given careful consideration when valuing the forestry plantation:

Based on the current Coillte Timber Prices in the Coford/Growfor Timber yield models Yield class is 24. Crop will produce an average of 24m3 of timber per hectare per year 35 hectares 90% Sitka Spruce / 10% diverse Plantation is 15 years old The stocking density is 80% Regarded as fully stocked Productivity area is 80% Sitka Spruce top height is 12m Plantation is served by public road A forest road has being constructed into the site

Data source: Coford.ie

FORESTRY VALUATION

VALUATION METHODOLOGY

WHY FORESTRY?

UNIQUE CHARACTERISTICS OF FORESTRY

Biological growth is unique - always positive and irreversible Independent of economic factors that affect financial markets Preserves value during financial market turmoil

• 1. Positively correlated to

stock market increase

• 2. Increased during global

financial market crisis

• 3. Effective hedge against

inflation risk

FORESTRY RETURNS:

How do these unique characteristics fit into an overall investment portfolio? INCREASED RETURN AND REDUCED RISK

FORESTRY VS TRADITIONAL ASSETS

• EU supply reduced by 20% due to ban on illegal timber.
• ONLY 3 EU countries have supply to meet demand.
• Ireland timber shortage 1.5 million tons by 2020.
• EU timber shortage 316 million tons by 2030.
• India and China facing critical shortages.
• Agriculture and livestock feeding leading causes.
• Large areas of South America, Africa & Asia gone.
• Replaced with: Agriculture, cash crops, bio fuels, palm oil.

DEFORESTATION CRITICAL SUPPL Y SHORTAGE

• Increasing by 700,000 per week.
• 1 billion increase from 1999 to 2012.
• 10+ billion total by 2050.
• 70% increase to $15 trillion by 2025.
• 50% world timber consumed by EU, US & Japan alone.
• China building 50 cities the size of London next 20 years.
• Huge movement in world population from rural to urban.
• Drive for low-cost renewable energy.
• Adding new demand pressures.
• Pressure to reduce emissions increases use of biofuels.
• Driven by Kyoto Protocol and EU directives.

WHY IRELAND?

WORLD-BEATING GROWING CONDITIONS

€181

Per Hectare

€510

Per Hectare

x3

HUGE INCREASE IN GOVERNMENT GRANT

FORESTRY GRANTS

Forestry grants cover cost of establishment and

• ngoing management

Irish Government has long-term commitment to providing forestry grants

“The profits accruing to an individual or company from the

• ccupation of woodlands managed
• n a commercial basis are exempt

from income tax and corporation tax” (secti tion n 232 Taxes es Consolid solidation ation Act 1997(“TCA”))

TAX EFFICIENCY

• No income tax
• No capital gains tax
• No corporation tax
• No cap on earnings from

forestry grants

• Distributions from Fund are

tax exempt

IRELAND IS A LOW-RISK LOCATION

Low-risk location Low incidence of extreme weather conditions Healthiest forests in EU

FORESTRY REGULATION Forest stry ry regula ulatio ion n increas eases s productivit ductivity

TRANSPARENT PROPERTY LAW Ireland’s property laws offer transparent

• wnership rights –

clean title Legal advisor to SIFF:

• 1. Extensive expertise in

Property Law & Conveyancing

• 2. President of Law Society of

Ireland 2014-15

• 3. Distinguished career

THRIVING FORESTRY INDUSTRY

• Timber industry running at 50%

capacity due to shortage of supply

• Cutting-edge technology reduces

cost of extraction

• Average export over 80%
• Coillte export over 90%
• Easy route to market
• France, Benelux & UK

Thriving iving timber processi sing ng industry creates s demand nd Close to p populated EU economies s – huge ge market demand nd

WHY SIFF?

Specialist Management Team

Ensures investors access to leading

industry professionals at every step

• f the investment process

PROVEN MANAGEMENT TEAM

Asset Manager Auditor Legal Advisor and Custodian Forestry Contractor Independent Forestry Consultant

SIFF ASSET MANAGEMENT INVESTMENT STRATEGY

Fire Wind Frost Animal damage Site selection Disease Third party

ALL MITIGATED BY SIFF RISK FACTORS I PRODUCTIVITY

RISK FACTORS I NON-PRODUCTIVITY

Future supply and demand for timber Forestry grants Tax risk Inflation risk Currency risk

STRUCTURE OF SIFF

TERMS OF SIFF

• Investment structure is a Limited

Partnership (LP) established under Irish law.

• LP is a low-cost structure, tax efficient

and in a regulated environment.

• Investors subscribe capital for shares

in the partnership.

• Investors have limited liability up to

the amount invested.

• 100% ownership by investors of land

and forestry assets.

• Annual distribution paid from forestry

grants less Fund expenses.

• Final distribution from the sale of semi-

mature forestry assets.

• No investment lock in – share in

partnership transferable at any time.

• No leveraging of monies in Fund.
• 1% annual management charge.
• 20% performance-based bonus only
• n gross return in excess of 8%
• 10% set up cost with 90% allocation.
• Detailed terms and conditions set out

in Limited Partnership Agreement available on request from SIFF Asset Management.

An investment that’s always growing