Financial analysis tectona_grandis

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Greenwood management financial report for Teak plantations in Costa rica. Greenwood management has substantial forestry investments situated primarily in Brazil and Canada. This report is a financial report specifically regarding Teak grown in Costa rica.

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Financial analysis tectona_grandis

  1. 1. Tectona grandis – Financial Analysis Annex
  2. 2. Table of Contents Basic variables...............................................................................................................................................................................................................3 Costs Table Variable definitions....................................................................................................................................................................................4 Scenario Matrix Table...................................................................................................................................................................................................6 Scenario Matrix Table Definitions................................................................................................................................................................................7 Tabulated results of NPV, NFV, IRR - 4 scenarios.....................................................................................8 Tabulated costs – applicable to all 4 scenarios..........................................................................................10 Graph 1: Wood at Mill yard & Land Lease Scenario................................................................................11 Graph 2: Wood at Millyard & Land Purchase Scenario............................................................................12 Graph 3: Stumpage & Land Lease Scenario.............................................................................................13 Graph 4: Stumpage & Land Purchase Scenario........................................................................................14
  3. 3. Basic variables Species: Tectona grandis Land Purchase Cost: 5000 per hectare Land Lease Cost: 1000 per hectare Interest Rate: 1% - 8% (-13%) En patio: GWM harvests the timber and delivers it “at the millyard” (en patio de aserradero) En pie: contractor harvests the timber and pays a price to GWM, called as “stumpage” and “stumpage price” Timber price source: www.officinaforestal.cr Variables calculated: Net Present Value ((NPV), Net Future Value (NFV), Internal Rate of Return (IRR)
  4. 4. Costs Table Variable definitions Variable AGE Actions Vtcc V (Vtree*N) THINNED (remaining) V_12_UB REMAINING REMOVED_Volume_Total REMOVED_V_12cm_Top_Diameter (Rough) Definition The age of the plantation Prescriptions and management tasks (Volume total con corteza) Total volume without bark which is residual to the stand after a thinning operation Total volume without bark until a top minimum log diameter of 12 cm Total Volume Removed (from a thinning or harvesting operation) Removed Volume from an operation until a top minimum log diameter of 12 cm N trees removed Number of trees removed Stumpage Price The Stumpage price per cubic meter Mill Yard Price The Mill yard price per cubic meter Stumpage income The income from the specific Stumpage sale Mill yard income The income from the specific Mill Yard sale STUMPAGE Thinning cost The thinning cost for the stumpage sale
  5. 5. Variable Thinning cost Transport Thinned logs Pruning cost Maintenance and Management cost Final harvest and transportation cost (for PATIO) STUMPAGE costs ENPATIO Costs Land purchase cost Land Lease cost Seedling cost (included in the establishment cost) Establishment Cost PLUS-MINUS PATIO PLUS-MINUS STUMPAGE Definition Thinning cost of the Mill Yard Sale Operation Transport of thinned logs Prunning Cost – usually at early ages, until 4-7 meters Several re-occuring costs The Final harvest and transportation cost applicable to the Mill Yard Operation Total Stumpage Costs Total At Mill Yard Costs Per Hectare Land Purchase Cost Per Hectare Land Lease Cost As below The cost of plantation establishment (Income) Minus (Costs) for the At Mill Yard Management Option (Income) Minus (Costs) for the Stumpage Management Option
  6. 6. Scenario Matrix Table NPV, NFV, IRR analysis was done for each of the 4 scenarios below, using as input the growth of the Species Tech Report, and the price information avaliable. Land Lease Land Lease x Wood at mill yard Wood at mill yard Land Purchase Land Purchase x Wood at mill yard VARIABLE INTEREST RATE VARIABLE INTEREST RATE NPV, NFV, IRR 1.00% - 13% NPV, NFV, IRR 1.00% - 13% Land Lease x Stumpage Stumpage Land Purchase x Stumpage VARIABLE INTEREST RATE VARIABLE INTEREST RATE NPV, NFV, IRR 1.00% - 13% NPV, NFV, IRR 1.00% - 13%
  7. 7. Scenario Matrix Table Definitions Term used Definition of term Wood at mill yard Wood is harvested and delivered to Mill Yard, receives a price at millyard In spanish: “en patio de aserradero” Stumpage Wood is sold as standing trees, plantation owner receives a price for the wood sold In Spanish: “en pie” Land Lease Leasing of the plantation property Land Purchase Purchasing of the plantation property NFV Net Future Value NPV Net Present Value IRR Internal Rate of Return
  8. 8. Tabulated results of NPV, NFV, IRR - 4 scenarios
  9. 9. Tabulated costs – applicable to all 4 scenarios
  10. 10. Graph 1: Wood at Mill yard & Land Lease Scenario
  11. 11. Graph 2: Wood at Millyard & Land Purchase Scenario
  12. 12. Graph 3: Stumpage & Land Lease Scenario
  13. 13. Graph 4: Stumpage & Land Purchase Scenario

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