Phaunos Strategy Outline December 2015 Stafford Timberland - PowerPoint PPT Presentation

Phaunos Strategy Outline December 2015 Stafford Timberland

Disclaimer  Stafford Capital Partners Limited ("Stafford") is distributing this strategy presentation in its capacity as manager of Phaunos Timber Fund Limited (the "Company") The Company is a Guernsey domiciled Authorised Closed-ended investment scheme pursuant to section 8 of the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended and rule 6.02 of the Authorised Closed-ended Investment Schemes Rules 2008. The Ordinary Shares of the Company are admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange’s main market.  In distributing this presentation Stafford is relying on the fact that all recipients are qualified investors' within the meaning of section 86(7).of FSMA who are also (i) investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (''FPO"); or (ii) high net worth companies within the meaning of Article 49 of the FPO; or.(iii) members of the Company within the meaning of Article 43(2) of the FPO; or (iv) certified high net worth individuals within the meaning of Article 48 of the FPO; or (v) certain sophisticated investors within the meaning of Article 50(1) of the FPO (each a "relevant person"). Persons who do not fall within any of these definitions should not rely on this document nor take any action upon it. The document is only exempt if it is distributed to the exempt categories of recipients. This document has not been approved as a financial promotion or otherwise by a person who is authorised under FSMA for the purposes of section 21 of FSMA and rules made under such legislation or any other applicable securities laws of any other territory. Approval will be required unless the recipient of this promotion is a relevant person. This presentation has not been, and will not be, reviewed or approved by the Financial Conduct Authority ("FCA") or any other authority or regulatory body.  Stafford is issuing this strategy presentation exclusively as manager of the Company and will not be responsible to anyone other than the Company for providing regulatory and legal protections afforded to customers (as defined in the rules of the Financial Conduct Authority) nor for providing advice in relation to the contents of this document on any matter, transaction or arrangement referred to in it. None of Stafford nor the Company, nor any of their respective directors, officers or employees of Stafford makes any representation or warranty, express or implied, as to the accuracy or completeness of the information or opinions contained in this strategy presentation .  Stafford is authorised and regulated by the FCA, but has not authorised the contents of, or any part of, this document. To the fullest extent permitted by law, none of Stafford nor the Company (nor their respective members, directors, officers, employees, agents or representatives) nor any other person accepts any liability whatsoever for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this document or its contents or otherwise in connection with the subject matter of this document. The contents of this strategy presentation are not to be construed as legal, financial or tax advice. This document should not be distributed in whole or in part to other parties.  This strategy presentation is being supplied to shareholders solely for their information and does not constitute or contain any invitation or offer to any person to subscribe for, otherwise acquire, or dispose of any Ordinary Shares in the Company or advise persons to do so in any jurisdiction. This strategy presentation does not constitute a recommendation regarding the Ordinary Shares of the Company.  Some statements contained in this presentation are or may be forward-looking statements, including without limitation any forecasts or projections. Actual results may differ from those expressed in such statements, depending on a variety of factors. Any forward-looking information contained in this strategy presentation has been prepared on the basis of a number of assumptions, only some of which are set out in the presentation , which may prove to be incorrect, and accordingly, actual results may vary.  For the avoidance of doubt, nothing in this strategy presentation is intended to constitute a profit forecast.  The value of any investment may fall over time and you may receive back less than you invested. 2

Introduction  Key achievements of the past 18 months  Where are we now?  The potential: existing portfolio and possible expansion Green China Loc.: China NTP Loc.: USA Mata Mineira Loc.: Brazil GTFF Loc.: USA Aurora Loc.: Uruguay GRAS Loc.: East Africa Matariki Loc.: New Zealand Eucateca Loc.: Brazil Pradera Roja Loc.: Uruguay 3

The achievements of the past 18 months include... 49% cost reduction* Financial Turnaround  Cost reductions of 49%  An increase in revenues of 25%  The closure of the Phaunos Boston office for a USD 2m/annum saving  Cash held has increased from USD 4m to USD 21m 25% revenue increase* Active Management  The replacement of the Eucateca and Pradera property managers  Reaching agreement with the other major shareholders of GTFF for the sale of the fund’s underlying assets  Expected portfolio debt reduction from USD 244m to USD 13m (95%) including an equity:debt infusion for Matariki at NAV 95% portfolio debt reduction** Asset Sales Programme Pending finalisation of  USD 2.5m completed Matariki debt reduction and asset sales  Agreement in principle for a further USD 37m of assets sales * Reported on a cash basis Source: Phaunos budgets: 2013, 2014, 2015f 4 ** Subject to asset sales

We are well advanced in selling all non-core assets… GRAS  14% of 40,000 ha pine/eucalypt plantations  Assets held for sale and negotiations taking place  No further capital to be provided by Phaunos Upper forecast: 105% NAV Anticipated forecast: 101% NAV Non-core NTP Lower forecast: 95% NAV targeted for  In discussion to bring forward outstanding loan of USD Sale 800,000 Green China  100% of 4,000 ha of pine Green China  Terms agreed moving to sale agreement  Sale price consistent with June 30, 2015, NAV NTP  USD 1.5m reduction in annual operating costs GRAS GTFF  17% of a 11,400 hectare poplar plantation & sawmill  Agreement reached amongst investors to sell underlying GTFF assets  Sale of underlying land has commenced  Expected to realise 85-90% of June 30, 2015, NAV over time Pradera Roja  In the process of selling 3 of 9 properties, representing 20% of planted area  Sale of remaining plantations to be considered should opportunity arise Eucateca  Targeting sale of teak assets  2 of 4 teak properties sold at 41% above NAV Subject to completion, total sales are expected to realise 95%  Other 2 teak properties under sale exclusivity agreement  Sale of eucalypt plantations to be considered should to 105% of June 30, 2015 NAV opportunity arise * Portion of sales proceeds is on a deferred cash basis, revenue may be adjusted 5

…and have lowered the portfolio risk profile Past: Too much risk Present: Sale of higher risk assets Future: Balanced Higher Risk 9% Higher Risk - Offer Higher agreed 9% Risk 10% Lower Risk Higher Risk Lower Risk 35% 36% 44% Lower Risk Higher Risk - Medium 52% Sold 5% Risk Medium Risk 38% 32% Medium Risk Medium Risk - 29% Offer agreed 1% Source: Phaunos budgets: 2013, 2014, 2015f 6

Net Asset Value – realistic and stabilised Phaunos Portfolio Indicative NAV FX adjusted June 30, 2015 NAV June 30 2015, to December 31 2015 NAV adjusted for FX up to November 30, 2015 NAV: USD 269 m (USD 0.47 per share) * NAV: USD 265m (USD 0.47 per share) * NAV: USD 250m (USD 0.44 per share) * NAV noted is a range based on best forecast of Stafford Timberland and is subject to change  The estimated FX adjusted NAV at November 30, 2015 is USD 269m or 47 cents per share  Stafford estimates an indicative forecast NAV at December 31, 2015, of between USD 250m and USD 265m or between 44 and 47 cents per share subject to the finalisation of annual accounts, independent valuations and further foreign exchange movements. Source: Phaunos budgets: 2013, 2014, 2015f 7

Positive cash flows in 2015 leading to future sustainable yields Sustainable Revenues Existing Portfolio Overview 2017 – 20 2015 USD millions 2014 FORECAST EXISTING * 15 – 17 Gross Annual Revenue 9.0 16 Annual Costs (16.0) (14) (7) - (8) of which; Capital Expenditure (4.9) (5) (2.5) - (3.0) Operational Expenditure (11.1) (9) (4.5) - (5.0) 9 – 10 Net Cash (7.0) 2 Yield on NAV 0.0% 0.7% 3 - 4% Reducing Costs Looking Ahead  More sustainable yields from Matariki  Operational expenditure to reduce from 10m to 5m from 2016  Potential to expand investments off a low existing cost base  Expected NAV growth averaging 3-5% over the coming years 8 * Subject to proposed re-investment of USD20 m sale proceeds