Investor Update, December 2018

In this update

  • Steve Wilton retires
  • Bert Hughes finalist in Good Employer Awards
  • Forest Call: Telling the forest story
  • Log price trending well
  • Gisborne District Council’s forest visits
  • Government supports forestry in regional development
  • Positive response to our new investment

A productive year
2018 has been a productive year, full of milestones:

  • We established our new Gisborne regional office and added two new Gisborne-based forestry staff in July to manage our expanding harvest programme in the region.
  • Our 50th managed investment scheme was released in October, the Wairarapa Group Forest Investment – New Zealand’s first forestry MIS to be released under the new financial markets regime.
  • We hosted four Members of Parliament in 2018, most notably was the visit by Forestry Minister Shane Jones last month (more below).
  • Throughout the year we progressed the harvest scheduling and the collective harvest proposals for our managed investments. This project was complex and resource-intensive but we believe very worthwhile for all investors. Voting is underway and will continue in the new year for remaining investments.
  • From February we had a change of leadership at Forest Enterprises with Steve Wilton selling down his company shares – all Directors increased their shareholdings and Dan Fraser, our Gisborne Regional Manager, became a shareholder on 1 April.
  • We said goodbye to two respected colleagues who retired from Forest Enterprises after 25+ years of valued service: former Managing Director Steve Wilton in October (more below) and Customer Services Manager Merv Jones in June.

Happy Holidays
Summer close-down is from 5pm on Friday 21 December until 8am Monday 7 January. Should you need to reach us, our main contact phone number is available 24/7.

On behalf of the Forest Enterprises team, I wish you a safe and enjoyable holiday season.

Bert Hughes, CEO

Wairarapa Group Forest Investment

Our newest forestry investment is open for applications.

  • 970-hectare second-rotation pine forest in the Wairarapa
  • Minimum initial investment $9,200 for 200 shares plus annual contributions & annual investor administration fee
  • Total projected contribution is $20,647* per 200 shares
  • Additional shares may be purchased at $46 per share
  • Projected harvest years (income) 2039-2045
  • Return on Investment $115,531* gross
  • Gross IRR 8.53%*

* Based on 2% p.a. inflation-adjusted cashflow and a 36-month log price series 

Download the Product Disclosure Statement to learn more, or contact Nikki Coulmann – 027 55 44 325, [email protected]

LEARN MORE

The issuer of the shares in Wairarapa Group Forest Investment is the licensed Manager, Forest Enterprises Limited, and the offeror is Forest Enterprises Growth Limited. The Product Disclosure Statement for the offer is available for downloading from www.forestenterprises.co.nz or can be viewed on www.companiesoffice.govt.nz/disclose.

Steve Wilton retires after remarkable period of achievement

After 27 years, former Forest Enterprises shareholder and Managing Director Steve Wilton retired on 31 October.

Steve, with Dave Jervis, led the growth of Forest Enterprises in the 1990s to create New Zealand’s leading full-service forest investment provider, building on what Charles Wallis founded in 1972.

With great passion and focus, Steve engaged our investors, protected their rights and returns, and created a legacy for Forest Enterprises we are very proud to be a part of.

Steve deservedly received a Fellowship from the New Zealand Institute of Forestry this year for his contribution to the forestry sector. We are pleased that he remains involved in forestry as a member of the Forest Growers Levy Trust board. The Trust helps advance the New Zealand plantation forestry industry domestically and internationally.

Read more about Steve’s achievements here.

From all of us at Forest Enterprises –
Thank you Steve.

PHOTO  Steve Wilton (far right) pictured at his retirement celebration on 13 October, with Forest Enterprises founder Charles Wallis (left) and former shareholder and forestry director Dave Jervis (centre). Front row L-R: Ann Wallis, Barbara Wilton and Teresa Jervis.

Bert Hughes finalist in MPI Good Employer Awards

Forest Enterprises’ CEO Bert Hughes was one of two forestry executives recognised in the Ministry of Primary Industries’ inaugural Good Employer Awards this year.

Bert was a finalist in the Innovative Employment Practices Award. This distinguishes employers who are committed to providing great employment conditions and have put in place new or innovative programmes, processes, or practices in their business. There was stiff competition in this category.

Bert’s nomination recognised his forte for attracting talent from other industries with desirable transferable skills, and inspiring them to move to small-town New Zealand and become passionate about forestry.

We congratulate Kevin & Kylie Ihaka of Forest Protection Services who won the Employee Development Award, and were Highly Commended for the Safe & Healthy Work Environment Award.

More about the awards and finalists here.

PHOTO  Bert Hughes pictured at the awards evening at Parliament on 27 November 2018.

Telling the forest story: Forest Call

Forestry has come out of the shadows into the spotlight. Our industry is undoubtedly New Zealand’s main weapon against climate change by locking up vast amounts of carbon dioxide from the atmosphere. We export more than $6 billion worth of forest products a year. And we need to get better at preventing debris going down rivers in floods.

Telling our story is overdue. So, broadcaster Don Carson takes us through what forestry is all about in a 10-part series, Forest Call.

In Episode 8, Don visits Forest Enterprises’ Ormond Forest in Gisborne with Dan Fraser to talk about our strategies for harvest management on the East Coast.

WATCH EPISODES

https://www.youtube.com/watch?v=jH0RLxhArkA

Long-run average log prices still trending well

Log price fluctuations experienced out of China during September was normal and short-lived, and typical of commodity exports. Forest Enterprises long-run average log prices are still trending in the right direction. Exposure to the market over a longer period is more likely to result in achieving the long-run average log price from your harvest.

Each month we report to investors with harvesting forests on the log prices we achieved from our Wairarapa log sales, and show log price trends over a 37-month period. This report is a good proxy for our log sales ex Gisborne.

Click below to read the November 2018 Log Market Analysis. If you’d like to receive this report regularly by email, please contact us.

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Gisborne District Council’s forest visits

In light of the slash issues in Gisborne in June 2018, Forest Enterprises facilitated two visits to our forests for Gisborne District councillors and staff on behalf of Eastland Wood Council.

No prosecutions or notices were served against Forest Enterprises, so consequently we provided neutral ground for various forest owners and council staff to meet and discuss the debris issues encountered by other forest owners in the district.

“It was a very good opportunity for the councillors and staff to see active forestry and harvest operations first-hand”, said Dan Fraser, Forest Enterprises’ Gisborne Regional Manager. “Feedback was that the visits helped their understanding of environmental management in forestry.”

Protection of native plantings, riparian margins, extensive slash management strategies and new road infrastructure practices were observed. Attendees also saw first-hand the significant steps being taken to balance the safety of workers with good environmental outcomes.

The two visits (September and December) included a mix of Eastland Wood Council representatives, Gisborne District councillors, council planners, their engineers and staff involved in the resource consenting process. It was the first visit to a forest for some and a good learning experience. The feedback was positive, and it was a very important process for building relationships and continual improvement.

PHOTO  Forest Enterprises’ Gisborne Team while hosting Gisborne District Council personnel in Ormond Forest in September 2018. In hi vis (L-R): Forest Operations Manager Dave Grogan, Harvest Forester Georgia Paulson and Gisborne Regional Manager Dan Fraser.

Government supports forestry in regional development

‘Trees, transport and training’ was the theme of the discussion between Wairarapa’s forestry stakeholders and Minister of Forestry (and Regional Economic Development) Shane Jones during his visit to Masterton in November. His response was positive – “If it’s training and infrastructure, if it’s a need to work with landowners so the value of forest[ry] is better understood, direct my attention to them and I will get cracking and seek to deliver them”.

Forest Enterprises, alongside logging and transport contractors and the local mills, briefed the Minister on the issues and opportunities for growth in the region, in a meeting facilitated by the Southern North Island Wood Council.

Like other primary industries, forestry is critically short of labour, and attracting work-ready staff and training them is a big challenge. Much of the training is on-the-job which requires a huge investment in time and resources by employers. This is one of the reasons why our CEO Bert Hughes was recognised in the Primary Industries’ Good Employer Awards.

Optimising the rail link between the Wairarapa and Port of Wellington remains a priority. Forest Enterprises CEO Bert Hughes hosted Minister Jones, Minister Ron Mark and Kieran McAnulty MP at the Waingawa Rail Hub to demonstrate the operation of this essential infrastructure. One additional service per day would increase by 50% what Forest Enterprises transports by rail, to around 210,000 tonnes per year. Read the Wairarapa Times-Age article from 15 November 2018.

Forest Enterprises has also had positive discussions with the Southern North Island Wood Council and the region’s four Mayors (South Wairarapa, Carterton, Masterton and Tararua) about forestry and wood sector development initiatives in light of the region’s new Wairarapa Economic Development Strategy.

PHOTO  At Waingawa Rail Yard 13 November 2018, L-R: Erica Kinder (Southern North Island Wood Council), Minister Ron Mark, Steve Chapple (C3), Minister Shane Jones, Bert Hughes (Forest Enterprises), Kieran McAnulty MP, Guy Farman (Farman Turkington Forestry) and Craig Allen (C3).

Positive response to our investment

Uptake of the Wairarapa Group Forest Investment since its release is proving to be a positive signal of demand for forestry investment.

“We’re encouraged by the response from what was essentially a soft-launch in October, and confident ahead of our sales and marketing initiatives commencing in the new year”, said Bert Hughes. “What’s especially pleasing is that the average investment is about twice the minimum share parcel size.”

Clients investing with us for the first time comprise 40% of the new investment’s shareholders. Referral from our existing investors is the most common reason for choosing Forest Enterprises, followed by word of mouth and online search.

Reasons our clients are investing in high quality forests:

  • to supplement retirement income like Kiwisaver
  • for their children and grandchildren
  • to change the weighting of their investment portfolio towards sustainability
  • to directly invest in a renewable resource that reduces atmospheric carbon
  • to increase the spread of harvest years for regular cashflow
  • for geographic diversity from existing forest investment locations

A second new-issue forestry investment is expected to be released in Q1 of 2019.

PHOTO  Aerial view of Rangiora Forest, one of three forest properties comprising the 970-hectare Wairarapa Group Forest Investment.

LEARN MORE

Forest Enterprises
5 Papawai Place, Masterton 5810
PO Box 128, Masterton 5840, New Zealand
Office +64 6 370 6360  |  [email protected]
forestenterprises.co.nz

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Forest Enterprises is the business name of Forest Enterprises Growth Limited and its subsidiary Forest Enterprises Limited. Forest Enterprises Limited is licensed under the Financial Markets Conduct Act 2013 to manage Managed Investment Schemes (excluding managed funds) which are primarily invested in forestry assets.

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