Forest Enterprises – Creating wealth. Naturally.
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Investor Update, Summer 2020
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We’re pleased to be ending the year in good form after what 2020 threw at us all. I’d like to thank our staff, investors and contractors for their support of Forest Enterprises which is much appreciated.
The general election heralded a new Minister of Forestry, Stuart Nash MP. We welcome the Minister’s deep understanding of New Zealand forestry. We look forward to the positive impact the Minister will have on our sector given he also holds the Economic & Regional Development and Small Business portfolios.
Like most, we are really looking forward to the summer break. Please note our offices are now closed and we’ll return in the new year on Monday 11 January.
Best wishes for the holiday season from all of us at Forest Enterprises.
Bert Hughes, CEO
18 December 2020
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In this issue:
- Highlights of 2020
- Secure your shares in our newest investments
- Regional update
- Harvesting footage from Emerald Hills forest
- Our privacy policy updated
- News from the forestry sector
- The log market
- New Trusts Act 2019 and transferring your shares
- Changes to forest insurance
- Update on the secondary market
- Frequently Asked Questions
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Highlights of 2020
It was a memorable year for Forest Enterprises for many good reasons worth celebrating:
- Implemented our 4th Collective Harvest Joint Venture, the Blairlogie Group
- Began supplying new domestic customers from our Gisborne harvest, including to Kiwi Lumber which reopened the sawmill at Matawhero
- Held a number of investor updates online including the MIS Annual Meetings which were well attended and very well received
- Forest Enterprises was a finalist in the Supporting Gold category of the 2020 Wellington Gold Awards
- Met with many new and existing investors in person as we travelled the country, holding updates in Queenstown, Dunedin, Christchurch, Nelson, Wellington, Palmerston North, Napier, Tauranga and Auckland
- Achieved Forest Stewardship Council® Forest Management certification for the 15,000ha estate we manage on behalf of an institutional forestry fund manager
- Adopted new LiDAR technology for improved measurement of forest inventory
- Trialed and implemented paperless dockets in Gisborne running WSX with cartage contractor Williams & Wilshier
- All Gisborne harvesting and earthworks contractors achieved Safetree Contractor Certification
- Made significant leaps in harvest technology, implementing mechanisation and remote-controlled systems whilst working towards eliminating high-risk jobs
- 875,000 tonnes harvested
- 1.3 million trees planted
- Welcomed 7 new staff members who have brought great energy and new skills
- Welcomed many new clients who have invested with Forest Enterprises for the first time
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Our Covid experience
Forest Enterprises embraces Zoom! Our year can be summed up by this photo of one our weekly online team meetings.
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Secure your shares in our newest investments
If you’re thinking about investing for a second rotation, or would like to top up your existing shareholding in these investments, please contact our Marketing Manager Nikki Coulmann to secure your shares. To learn more about the investment offers and download a Product Disclosure Statement, head to our website at the links below:
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Gisborne update
New domestic customers for our Gisborne harvest means that our domestic supply from the region is now around 20%, which is up markedly from a very low base historically.
Our 2020 Gisborne harvest was around 300,000 tonnes, and we replanted 470,000 seedlings (470 hectares) this year.
The photo below is of timber produced by Kiwi Lumber in Gisborne from logs we supplied. The logs we’re producing from Gisborne have a particular stiffness quality which is in high demand from mills producing timber framing for construction.
For a very good demonstration of a Gisborne harvest operation, watch the short video below of harvesting in the Emerald Hills Forest.
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Wairarapa update
CentrePort and KiwiRail invested around $8 million this year to expand the log hub and upgrade the rail siding at Waingawa near Masterton to cater for the increased regional wood flow and improve distribution efficiency. The log storage footprint available to Forest Enterprises has doubled. (Photo below courtesy of CentrePort.)
Every week, around 7,000 tonnes of logs (equivalent to about 230 truck & trailer loads) go by train from Wairarapa to CentrePort, helping to reduce the number of truck movements over Remutaka Hill. Almost all Forest Enterprises export logs are now transported to the Port by rail.
2020 was a record year in Wairarapa for harvest and replanting. We harvested a total 575,000 tonnes (250,000t for our managed investments), of which 42% was supplied to domestic customers. And we replanted almost 830,000 seedlings (830 hectares). Thinning activity also resumed for the first time in many years, in the Ngatawhai Group Forest.
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Harvest in Emerald Hills Forest
The Speirs crew has been logging in the Emerald Hills Forest, and Blake Speirs put together this fantastic footage of his team, the forest setting and range of equipment on site. It showcases the innovative mechanised harvesting operation he has become known for, which has improved the safety and productivity of his logging.
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We’ve updated our privacy policy
New Zealand’s new Privacy Act 2020 came into force on 1 December 2020, and we have therefore reviewed and updated the Forest Enterprises Privacy Policy. This Policy governs our use of your personal information.
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NZ Forestry Facts & Figures 19/20
- 1.697 million hectares is the estimated net stocked plantation forest area at 1 April 2019 – a small decrease from 2018
- In 2019, a record 35.9 million cubic metres was harvested from NZ forests, up slightly from 2018
- $6.32 billion was the value of all forestry exports to December 2019 – of this, $3.45 billion of export revenue for the year was from logs
- MPI predicts the value of forest product exports will fall in 2020 behind that of horticulture for the first time
- MPI anticipates that the value of forest product exports will stay flat at $6.3 billion until 2024, down from the June 2019 high of $6.96 billion
- Forest Enterprises jumped to 12th largest commercial planted forest manager
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Spring 2020 edition of Forestry Bulletin
The Forest Owners Association brought us the latest NZ forestry news in the Spring 2020 edition of the Forestry Bulletin published in October.
In this issue – An app to beat the bugs, Tairawhiti debris flood repeat handled better this time, and a plan to transform the forest industry…
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Want to contribute to a new online Forestry Knowledge Hub?
Te Uru Rākau is building a new website to provide easy access to key information about New Zealand’s forestry sector.
MPI Programme Manager Kirstie Lester is looking for volunteers from the public to help make sure this resource is useful and meets the needs of users, and provide feedback directly to the design agency to ensure the website looks, feels and reads well. Who better to contribute than a forestry investor?
To volunteer and learn more about what’s required of you for this project, please contact Kirstie by email kirstie.lester@mpi.govt.nz
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The log market
The graph below shows Forest Enterprises 37-month log price average to October 2020. There was no export log price set in February 2020 as the Chinese were not buying at any price.
This report is produced quarterly. Feel free to sign up to receive these regularly by email.
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New Trusts Act 2019 and transferring your shares
If you are a trustee of a family trust, you will need to familiarise yourself with the new Trusts Act 2019 which comes into effect on 30 January 2021. About 15% of Forest Enterprises clients are family trusts.
Click to learn more about how the changes might affect you, and the tax considerations of transferring your Forest Enterprises shares into or out of a trust.
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Changes to forest insurance
Since the latest annual Financial Reports were published, there have been some changes to the insurance policy for our managed forests from the annual renewal (to 31 August 2021).
The master policy remains organised by Insurance Facilitators Pty Ltd, an Australian-based specialist forestry and crop insurance provider. However, the insurer is now HDI Global Specialty SE – Australia (HDI) which has been assigned a Standard & Poor’s financial strength rating of A+ (Strong).
There were limited cover options available. We had to accept terms less favourable than last year to the excess and the first loss maximum, with premiums being on average 17% higher. Of the alternative quotes we received, they were even less favourable than our incumbent insurer.
The excess has increased from 0.75% to 1.5% of the Sum Insured for each Forest Location with Area Damage, subject to a minimum of $10,000 and maximum $2.5m in every Single Cause. The first loss cover remains $6m for wind cover, but has reduced from $30m to $25m for fire cover.
We continue to see insurance as an important part of risk management and note that the investment documentation requires forest and other insurance is in place.
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Update on the secondary market
Forest Enterprises facilitates a secondary market for investors who need to exit their Forest Enterprises investment prior to harvest. We average around one sale per month.
There are normally a few months around balance date when the secondary market is not available to investors while the valuations are being updated. If you are considering selling your shares, contact our Customer Services Manager, Sean Roberts on 06 370 6368. Please note a Listing Fee applies and Brokerage is charged on a successful sale.
Conversely, if you’d like us to keep you informed of new secondary market investment opportunities, please click below.
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Frequently Asked Questions
We answer a range of investor questions in the FAQ section on our website. The following are the most common we’ve received lately:
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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.
You have received this Forestry Update communication because you are a current Forest Enterprises Investor and we think it important to keep you informed of matters relevant to the New Zealand forest industry and to our company as your Manager, and therefore your investment. This update is sent by email only. If you would like to unsubscribe from future Forestry Updates, simply click this link: Unsubscribe
Our privacy policy was updated in December 2020. If you want more information about our privacy policy, please visit this page.
©2020 Forest Enterprises Limited. All rights reserved.
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