FAQs

Click on the question to get the answer.

What are the Irish Forestry Funds?
What are the tax implications when the share matures?
What is the average shareholder’s investment?
What might be the factors that have influenced new investment into forestry?
Who verifies your figures and are they independently verified?
What are my shares worth?
How has the global financial crisis affected Irish forestry?

Why invest in Irish forestry?
Why invest in Ireland?


What are the Irish Forestry Funds?

The Irish Forestry Funds is a collective term for the 30 Public Limited Company funds which the promoters have launched since 1997. The Irish Forestry Funds were designed to facilitate investment in Irish forestry as an asset class for low-entry level investors with a minimum investment of €750 and an average investment level of €3,500. The concept was also designed to reduce risk by spreading ownership across multiple forestry holdings within each company. The initial six fund companies were for an investment period of 30 years and as the market for semi-mature timberlands grew, the Forestry Investment Plans (which have now matured) were launched to facilitate an approximate 10 year investment term and the forestry Growth Plans were then designed to facilitate an approximate 12 year investment term.

The following list of companies comprises the Irish Forestry Funds.

The Second Irish Forestry Fund Plc
The Third Irish Forestry Fund Plc
The Fourth Irish Forestry Fund Plc
The Fifth Irish Forestry Fund Plc
The Sixth Irish Forestry Fund Plc
The Seventh Irish Forestry Fund Plc

The Forestry Investment Plan Plc
The Second Forestry Investment Plan Plc
The Third Forestry Investment Plan Plc
The Fourth Forestry Investment Plan Plc
The Fifth Forestry Investment Plan Plc
The Sixth Forestry Investment Plan Plc
The Seventh Forestry Investment Plan Plc
The Eighth Forestry Investment Plan Plc
The Ninth Forestry Investment Plan Plc
The Tenth Forestry Investment Plan Plc
The Eleventh Forestry Investment Plan Plc
The Twelfth Forestry Investment Plan Plc

The Forestry Growth Plan Plc
The Second Forestry Growth Plan Plc
The Third Forestry Growth Plan Plc
The Fourth Forestry Growth Plan Plc
The Fifth Forestry Growth Plan Plc
The Sixth Forestry Growth Plan Plc
The Seventh Forestry Growth Plan Plc
The Eighth Forestry Growth Plan Plc
The Ninth Forestry Growth Plan Plc
The Tenth Forestry Growth Plan Plc
The Eleventh Forestry Growth Plan Plc
The Twelfth Forestry Growth Plan Plc

The Irish Forestry Funds is the largest private forest-owning group of companies in Ireland.


What are the tax implications when the share matures?

Profits from the occupation of woodland managed on a commercial basis are exempt from Income and Corporation Tax. The Irish Forestry Funds have been designed to take advantage of these provisions. Profits arising from the sale of the underlying lands may be taxable in accordance with tax legislation. Profits from the sale of the underlying land will constitute a small fraction of the total returns. Returns generated from other sources will be taxable.

Under current legislation distributions, to the extent that they represent profits made from the occupation of woodland managed on a commercial basis, are exempt from Income and Corporation Tax. To the extent that distributions are made out of non-exempt profits they will be taxable in the hands of the Investor and dividend withholding tax may also apply to the taxable portion of the distribution. However, in accordance with legislation introduced by the Finance Act 2006, where an Investor avails of relief’s or exemptions from tax in any year, which in aggregate exceed €125,000, a restriction of such relief’s may apply and in consequence not all of any distribution made from the profits derived from the occupation of woodland managed on a commercial basis may be treated as exempt exempt but USC may be payable on any gain made by shareholders and we recommend that shareholders seek independent advice in this regard. Any amount so disallowed may be carried forward for use in the following years.

TOP^

 


What is the average shareholder’s investment?

TOP^

The average investment level is €3,500.


What might be the factors that have influenced new investment into forestry?

Many individuals have switched from an over-dependence on equities to using forestry to spread their investment portfolios. Over the Long term forestry is stable, secure and relatively predictable. According to investment guru Jeremy Grantham, Chairman of the US based fund managers Grantham, Mayo Van Otterloo, investment in timber has outperformed the Standard & Poor’s index since 1910. Furthermore he recently stated in a Financial Times interview that ‘trees are the only asset class to go up in three out of the four market collapses of the 20th century’.

TOP^

Who verifies your figures?

The projections are independently assessed.

All the Irish Forestry Funds are audited by Deloitte & Touche


What are my shares worth?

The sales price achieved for your company’s forestry assets is the only real determination of the share value. The independently produced forest growth valuation figure provided in the annual financial statements (i.e. the financial value attributable to the biological growth in the trees) enable shareholders to identify the continued physical performance of their forests.
In prior years, an Accounting Value was used to give some indication to shareholders as to how the company was progressing. The Accounting Value comprised the capitalised cost of land and forests acquired by the company along with capital grants received, retained profits and independently assessed forest growth divided by the number of shares issued. Put simply – the cost of the company assets divided by the number of shares issued. Recent market event history proved this method to be inaccurate in attempting to attribute a meaningful value to each share.

The investing purchaser of a semi-mature forest portfolio, must wait several years before timber will be ready for market as the forest reaches its’ clearfell.  Therefore they are not acquiring felled timber to process and sell but rather they are investing into the future productivity of the forests and each different investor then takes a different view on valuations – hence the complexity of valuing shares in any individual Forestry Fund. Additionally the relative lack of transactions in the marketplace has meant that undue reliance should not be attributed to single transactions – a single transaction does not a market make.!

TOP^

How has the global financial crisis affected Irish forestry?

The worst financial crisis since 1929 has affected all asset classes including forestry. Notwithstanding our additional domestic banking and property bubble crises, Irish forestry has proved resilient to some of the worst effects and has continued to make positive returns over the past number of years to our investors. Indeed, the forestry sector as a whole has done extremely well over recent years, demonstrating how strong the asset class is in general.  In a market bereft of liquidity the positive returns received by forestry investors is testament to the high quality of the forest portfolio estate that makes up the Irish Forestry Funds’ portfolios and has made overseas investors conscious of the advantages of investing in Irish forestry instead of entering our European neighbours’ forestry sectors. The distinct market characteristics of the Irish timber market ensure that demand for logs as a final product at clearfell and demand for thinnings, during the latter half of the forest plantation crop period, remains robust. This demand characteristic underpins the attractiveness of the Irish forest estate and is likely to continue to do so until at least the end of the 21st century.

A unique feature of forestry investment is the fact that forest owners may decide to hold off selling their asset until market conditions improve whilst their stock of trees continue to grow and add biological value. No other asset class has this unique benefit but this demands patience in difficult economic times.  The global economic crisis highlights two positive benefits of investing in forestry:  Firstly, the continued strength of demand for timber has, in part, demonstrated how robust the asset class is while secondly, forestry’s ability to literally grow through recession must be kept in mind when valuing the asset (be it for sale or for reporting purposes). We continuously keep in mind the fact that the sale of timber from a forest that is today in mid-rotation will happen long after the recession has ended!


Why invest in Irish forestry?

  • Irish forests are premium assets when compared to their international counterparts and we have growth rates of up to three times faster than our European neighbours.
  • Profits from Irish forestry are free from Corporation and Income Tax under current legislation but may be liable to USC and we recommend that shareholders seek independent advice in this regard.
  • Irish forests attract capital grants and premia payments as the Irish government recognises the strategic importance of the Irish forestry sector.
  • Irish forests benefit from one of the most extensive road networks in any developed country on which to deliver its logs to market.
  • Progressive legislation safeguards the industry against speculative short-term interests.
  • Demand for timber products are forecasted to nearly double by 2050 and the modern domestic processing sector is currently undersupplied with logs and the demand will continue to grow in the long term.
  • From an international perspective land ownership is constitutionally guaranteed for Irish citizens and non-Irish citizens alike.
  • Economic and democratic stability underpins the low risk associated with Irish forest ownership.
  • Our nearest neighbour – the UK – is the second largest importer of sawn timber on the planet and remains chronically undersupplied with its own domestic timber resources. Ireland is the largest exporter of MDF to the UK.
  • Advanced cadastral system for land registration and boundary protection.

 

TOP^

Why invest in Ireland?

Ireland has one of the most open economies in the world with an attractive tax regime focused on promoting growth and encouraging sustainable economic activities. Ireland is a politically stable, democratic member of the EU and has a progressive legislative system which promotes a safe and secure environment in which to conduct business.

Ireland punches above its weight in International rankings:
For example, consider the following facts about Ireland:

  • The largest exporter of Infant formula in the world: 1 in 7 formula-fed babies drink infant formula produced in Ireland.   Source: FAOSTAT
  • 5th largest exporter of beef in the world and 2nd in Europe after the Netherlands Source: FAOSTAT
  • 50% of the world’s aircraft on lease is managed in Ireland  Source: IAA College Ireland Conference
  • €1.9 trillion in funds are administered from Ireland     Source: `Irish Funds Industry Association
  • Largest net exporter (exports – imports) of pharmaceuticals in the world
  • 7th largest exporter in the world
  • 8 of top 10 pharmaceutical companies have operations in Ireland Source: WTO Time Series Trade Statistics.
  • 50% of the world’s leading financial services companies are based in Ireland Source: IDA Ireland
  • The 10th largest investor in the US, with hundreds of companies employing more than 120,000 people across the US Source: Enterprise Ireland & US Bureau of Economic Analysis.
  • Investment from the US into Ireland is greater than US investment into China, India, Brazil and Russia combined.  Source: US Bureau of Economic Analysis.
  • 130 Irish companies employ more then 8,000 people in China. Source: Enterprise Ireland

 

 

We use cookies to improve our website and your experience when using it. Cookies used for the essential operation of the site have already been set. To find out more about the cookies we use and how to delete them, see our Cookie policy.

I accept cookies from this site.