Newsletter to Investors 5 April 2001


Dear Client,

Here's a note on some general matters relevant to all our investors.

Tax Deduction Certificates
The Partnership Accountants say the Auditors will receive their files next week so in a further two weeks or so we'll be expecting to send you a copy of last year's financial statements and your deduction certificate. Before then we should have unaudited figures if anyone needs those sooner.

Drought & Storm
None of the forests we are establishing for our partnerships have been noticeably affected by drought or the recent NW storm. Indeed Leslie Hills and Glens of Tekoa, where the majority of our plantings are, have had good growth seasons with sufficient rain and little wind. The Marlborough sites have been drier but the first half of the season was good so they have grown well and are in good shape.

Carbon Credits
This possibility seems to have faded somewhat. The politicians of the world were always unlikely to agree on the subject. The media and so-called environmentalists (another type of politician) may try to alarm us with dire warnings about global warming, but the anthropomorphic greenhouse effect is still only theory supported solely by computer models. There is also a growing counter-lobby arguing that the degree of warming likely is small and likely to be a good thing on the whole. So we'll see what happens next. I expect our government will remain on the side of the worried believers because it is of course very politically correct to be appear concerned by global warming.

New Project
This is steadily taking shape. It will be on four properties, three of which will have short rotation Douglas-fir regimes and one a clearwood Radiata stand. Returns will be similar but contributions will be simpler.
The minimum share will be a one-off payment of $5,000 then a flat annual contribution of less than $200 for 29 years. We may allow the single payment to be paid over a year or two. So it is very affordable.
Most of it should be planted this winter/spring but we have been slow getting the Investment Statement and Prospectus out on the market because the priority for us is to properly manage existing forests and partnerships. We have also been spending time looking at securing institutional investment to fund large scale joint ventures as we have many thousands of hectares we could access if the investors can be found.

Demise of Fletcher Forests
The poor financial performance of Fletchers and CHH over many years has been and continues to be in stark contrast to the majority of our forest industries, most of which have been and still are good profitable enterprises. These two formerly NZ owned companies routinely cite 'poor log prices' as the cause of their poor performance. But log prices are not 'low'. They go up and down a bit but are and have always been sufficiently profitable for the efficient grower. I am not alone in suggesting the demise of Fletchers and the continued flat performance of CHH is nothing to do with log prices or anything related to forestry, but is about poor management and bad decisions. Recent discussions with experts in this area have confirmed this view and we should hope that both companies will be taken over by successful businesses before too much longer. We will then no longer have to suffer the mistaken but widespread view that equates 'forestry' with Fletchers and according, failure. Many of us (myself not excepted!) have learned that buying shares in forestry companies is not a good way to get exposure to forestry, it just exposes you to the share market and the risk of poor company management.


Kind regards

Charles Etherington

Manager of the Partnership

Warren Forestry Ltd, New Zealand forestry investment provider
Warren Forestry Ltd, New Zealand forestry investment providerWarren Forestry Ltd, New Zealand forestry investment providerWarren Forestry Ltd, New Zealand forestry investment provider