Calculating our Projections

Using the historical growth rate of Melina trees we can calculate the average value of timber produced from each tree.

We know our trees

In Costa Rica, a tree cannot be legally felled without the authorisation of an official forestry engineer known as a Regent. Our trees are grown and harvested under strict guidelines imposed by Regents. Our Regents have harvested and measured Melina trees at every age throughout the growth cycle of this species, therefore enabling us to give as accurate projections as possible. When we sell your lumber, we use the standard Commercial Lumber Grading System (CLGS) for valuing your harvests. The table below shows the individual tree value during the growth cycle of Melina over 12 years using the CLGS.

Projected individual tree value

The graph below shows the projected value of each tree on specific years throughout your investment. These projections are based on a timber price increase of 7%; e.g. at year 10, your trees are projected to be worth £320.55 each.

Historic sales values for Melina

Our projections are based on lumber prices increasing at a rate of 7% per annum. However, between 2005 - 2011, Melina lumber sales values have achieved the following average growth per annum over this period;

The average sales growth across sectors is calculated by taking the sum of;

1: The average sales value growth for furniture grade cut lumber - 14.33%

2: The average sales value growth for pallet grade cut lumber - 19.50%

3: The average sales value growth for pallet grade logs - 19.67%

and dividing it by 3. ( 1:1 4.33% + 2: 19.50% + 3: 19.67% = 17.83% )

Care and management fees

Care and management fees are the costs for growing, maintaining, harvesting, milling and preparing your trees for sale. A 6% charge is applied for this harvesting/managing service. If you select to appoint another party to harvest and manage your trees, the 6% fee will still apply.

Notes to Melina projections

The projections and the explanatory notes are provided for you to better understand the process of growing and harvesting trees.

1 Our projections are based upon a conservative timber price per board foot for the first thinning harvests, increasing at an annual rate of 7% for the subsequent thinning harvests and the final harvest.

2 The projections are based upon the price of timber increasing at 7% per year. However, according to the ONF (Costa Rica National Forestry Office) prices for Melina between 2005 - 2011 have increased, on average, at 17.83% per annum. A contributing factor is that Costa Rica has started importing timber as local producers cannot keep up with the demand.

3 Our professional foresters, who monitor the growth profiles of your trees, will report on their condition and advise you on the best actual harvest dates and number of trees to be harvested. We use a combination of our experience and the latest published silviculture practices derived from years of experience in plantation management. You have the option to harvest as many trees as you wish, at any time.

4 Several additional months may be required after any thinning harvests to mill, dry and grade your timber, and prepare it for sale on either the local or international export market.

5 Melina Accumulator™ investments are based on today’s land costs, plantation costs and currency exchange rates. Prices may be higher or lower but in all instances your future tree purchases will be your decision. At any time you can decide to stop the reinvestment of further trees during the projected 24 year term.

6 Melina has been grown across Costa Rica since 1966 and  has progressively become more popular. By 2004, 65,000 hectares had been planted, at the time this represented 94% of the total area reforested with this species in Central America. In 2008, 227,528,576 board feet of Melina was used in Costa Rica. This number represents 59% of all lumber sourced from forestry plantations within Costa Rica that year.

7 The usable height and diameter in our projections are based upon sample trees cut down and measured by our forestry engineers in Costa Rica.

8 Our tree volumes are calculated using an adaptation from Smalian's formula. These projections are based upon the volume of the trunk and do not include the additional wood volume that may be obtained from the larger branches in the later harvests.

9 The amount of marketable wood per tree is stated in cubic metres. There are 12 board feet in a cubic foot of timber and 424 board feet in a cubic metre of timber.

10 There is currently a withholding tax applied by the Costa Rica Government on all money taken out of the country for which you are liable. This is taken at source and NOT accounted for in the projections. You should speak to your tax advisor for legitimate means of offsetting this against your UK Tax or find more information at http://www.hmrc.gov.uk/manuals/dtmanual/DT5201.htm 

11 While we believe these estimates of growth, costs and yields to be fair and reasonable, we cannot guarantee the future value of your trees, nor the timber proceeds you will receive from the harvest. We encourage you to seek the counsel of an independent professional who can evaluate the accuracy of these projections.