Guernsey-based Phaunos Timber Fund issues interim statement, highlights US$17M equity raising in Q1 by East African investment Green Resources
May 11, 2012
– Interim Management Statement
Phaunos Timber Fund Limited ("Phaunos" or the "Company") the Authorised Closed-ended Investment Scheme managed by FourWinds Capital Management (the "Investment Manager") established to invest in timberland and timber-related assets on a global basis, today issues its Interim Management Statement for the period from 1 January 2012 to 11 May 2012 (the "Period").
Financial Position and Performance
The Company manages a global timberland portfolio. The latest published audited net asset value ("NAV") per ordinary share of the Company ("Ordinary Share") at 31 December 2011 was US$1.04, corresponding to a NAV of US$558.8 million at the Company level. At 11 May 2012 the Company held approximately US$22.4 million in cash including cash to fund working capital and for outstanding investment commitments.
The Company announced on 19 April 2012 that it is proposing to declare a final dividend in respect of the year ended 31 December 2011 of US$0.025 gross per Ordinary Share, with an ex-dividend date of 27 June 2012, a record date of 29 June 2012 and a payment date of 27 July 2012. Shareholders' approval of the dividend is being sought at the Annual General Meeting of the Company to be held on 21 June 2012.
Phaunos continues to focus on realizing the value in its portfolio, emphasizing cash flow generation and controlling costs. The Company's mature plantations continue to provide replicable cash flows, and the portfolio is well positioned to benefit from economic expansion in its target markets. The portfolio is fully invested and operations on the farms are going well and are consistent with our expectations for the plantations.
At 11 May 2012, recent developments in the Company's portfolio included:
Timber market growth is beginning to shift from China to the Western Hemisphere as China's economic growth rate is slowing from over 10% per year to a little over 7% per year. Timber consumption in China will remain high, but it is not anticipated to increase as fast as it did over the last decade. This is offset to some extent by increasing demand in the US and Brazil. New housing construction, especially of multi-family/apartment units, in the US is increasing (albeit at only half the long-term average rate) and Brazil is experiencing the beginning of a construction boom as it is preparing to host the World Cup (2014) and the Summer Olympic Games (2016). The Company, by virtue of its broad geographic diversification, is well-positioned to benefit from these strengthening markets.
Foreign Exchange Movements
During the Period, the US dollar has weakened against the New Zealand dollar and the Norwegian krone, and strengthened against the Brazilian real.
Phaunos is unhedged, so foreign exchange movements are incorporated directly into the Company's net asset value. The Company believes that over time a well-diversified basket of currencies is self-hedging and the cost of a hedging strategy cannot be justified over the medium or long term.
Cash Flow Management
The Investment Manager continues to explore ways to smooth the cash flows, including:
On 12 April 2012 Mr Keith Oates retired as Chairman of the Board and as a Director. He was succeeded as Chairman by Sir Henry Studholme, existing non-executive Director of Phaunos and former Chairman of the Audit Committee. On 19 April 2012 Sir Henry Studholme was replaced as Chairman of the Audit Committee by Ian Burns.
Phaunos is a Guernsey-domiciled closed-ended investment company authorised by the GFSC. Its ordinary shares are listed on the Main Market of the London Stock Exchange and on the Channel Islands Stock Exchange. The Company's investment objective is to provide shareholders with attractive long term total returns, expected to be in the form of capital appreciation but with some income, through a diversified portfolio of timberland and timber-related investments. The Company's investments are managed by FourWinds Capital Management. The Company's portfolio consists of timberland and timber-related investments across 6 continents. As at 31 December 2011, the Company's audited NAV was US$558.8 million (being US$1.04 per Ordinary Share).
The Company has sought investments that meet or exceed the guidelines set out in the Sustainable Forestry Initiative and, wherever possible and practicable, to certify the lands under the Forest Stewardship Council guidelines.
The Company's ticker is PTF.