Phaunos Timber Fund Investor Presentation 25 April 2017

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1 Phaunos Timber Fund Investor Presentation 25 April 2017

Stafford representatives Stephen Addicott Partner, Stafford

experience in plantation management, timberland appraisals, due

Marek Guizot Investment Manager, Stafford Timberland Marek is a

2 Stafford representatives Stephen Addicott Partner, Stafford Timberland Stephen is a professional forester with 25 years experience in plantation management, timberland appraisals, due diligence and investment modelling. Marek Guizot Investment Manager, Stafford Timberland Marek is a professional forester with over 20 years experience of forestry, primarily in Africa and Latin America. 2

3 Contents Phaunos 2016 Investor Presentation 1. Phaunos Overview 2. Phaunos Turnaround 3. Dividend Proposal 4. Market Update 5. Stafford s Capability & 2017 Continuation Vote 3

4 Phaunos Timber Fund overview 1 A listed global timberland company 2 7 underlying investments on 3 continents Phaunos investment 3 Interests in 150,000 ha of sustainable plantations 4 US$ 301.3m¹ NAV of timberland assets ¹ As at 31 December

Phaunos ownership : 23% NAV 46% Mata Mineira Country : Brazil Planted area : 9,500 ha Main species :

5 Phaunos investment portfolio Matariki Forests Country : New Zealand Planted area : 115,000 ha Main species : Radiata pine Rotation length : years Main markets : Domestic sawmills and sawlog exports Phaunos ownership : 23% NAV 46% Mata Mineira Country : Brazil Planted area : 9,500 ha Main species : Eucalyptus Rotation length : 8 years Main markets : Charcoal and paper & packaging Phaunos ownership : 100% NAV 11% 5

ownership : 100% 10% NAV Aurora Forestal Country : Uruguay Planted area : 11,000 ha Main species

6 Phaunos investment portfolio Eucateca Country : Brazil Planted area : 7,300 ha Main species : Eucalyptus Rotation length : 8 years Main markets : Biomass (agricultural drying) Phaunos ownership : 100% 10% NAV Aurora Forestal Country : Uruguay Planted area : 11,000 ha Main species : Pine Rotation length : 23 years Main markets : Own integrated sawmill Phaunos ownership : 24% 9% NAV 6

Phaunos ownership : 100% GTFF Country : USA Planted area : 4,600 ha Main species : Poplar Rotation

7 Phaunos investment portfolio Pradera Roja Country : Uruguay Planted area : 3,300 ha Main species : Eucalyptus Rotation length : 23 years NAV 7% Main markets : Domestic sawmills or sawlog exports Phaunos ownership : 100% GTFF Country : USA Planted area : 4,600 ha Main species : Poplar Rotation length : 12 years NAV 5% Main markets : Domestic sawmills and sawlog exports Phaunos ownership : 17% 7

8 Phaunos Turnaround

9 Improving results following Phaunos turnaround Key Metric YE 2015 YE 2016 Comments Net Asset Value (NAV) US$ 278.8m US$ 301.3m Steady improvement from a realistic base NAV/Share US$ 0.49 US$ 0.55 Assisted by share buybacks Revenues US$ 16.3m US$ 9.5m Minimise volatility by debt reduction and market access Operating expenses (excl. non-cash costs) (US$ 8.4) (US$ 7.3m) Reduced from (US$ 22m) in Asset sales US$ 9.3m US$ 27.6m Cash held US$ 25.6m US$ 45.6m Higher risk assets reduced from 36% in mid-2014 to 13%. US$15m reserve and surplus for investments/capital return Share buybacks & dividends (US$ 0.3m) (US$ 9.1m) Has supported share price increases. Share Price US$ 0.35 US$ 0.41 Net Profit/(Loss) (US$ 10.5m) US$ 18.3m Consistent narrowing of discount A reflection of the turnaround completed to date 9

10 Asset Nav (USD m) Portfolio NAV (USD m) Phaunos performance in 2016 NAV NAV for underlying investments The NAV for Phaunos increased by 8% to USD 301.3m. Matariki s NAV increased by 11%, largely due to good log prices. NAV growth for the Brazilian assets (Mata Mineira & Eucateca) was relatively flat in local currency, but BRL appreciation resulted in a combined increase of 25% in USD-terms Uruguayan assets (Aurora Forestal & Pradera Roja) were largely flat 1. Non-core assets 2 reduced in line with ongoing asset sales. 1 Reduction in Pradera Roja is due to the repatriation of cash from 2015 standing timber sales 2 GTFF, NTP and Green China 10

11 USD million Phaunos performance in 2016 Operating profit (excl. asset sales & non cash items) Total income came to USD 9.5m. This decreased from US$ 16.3m in 2015 since the large standing timber sale made in Brazil was not repeated in Income & costs Income Cash costs 11

12 USD million Phaunos performance in 2016 Asset sales Phaunos objective has been and remains the sale of assets that are: High risk (our target level is less than 10%). Non-yielding High cost Total income from asset sales and return of capital amounted to USD 27.6m. Phaunos has reduced its share of high risk assets from 36% in mid-2014 to 13% at the end of Asset sales and return of capital * Green China Eucateca (partial) Pradera Roja (partial) GTFF Green Resources Eucateca (Alto Jauru) Sale contracted Sale under negotiation Jun-14 Dec-16 * Forecast Lower risk Medium risk 36% 36% 20% 13% Higher risk 66% 28% 12

13 USD million Phaunos performance in 2016 Cash position Phaunos cash position increased significantly to USD 45.6m during Cash held at year-end The increase is due primarily to return of capital and asset sales. This provides a buffer for operational costs in the event revenues dip unexpectedly, as well as the possibility to: Continue our programme of share buybacks Support dividend payments Take advantage of Stafford s existing pipeline of investment opportunities in the secondary market * * Note : After share buybacks and dividends totalling US$ 9.1m 13

USD cents per share Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr USD/share Phaunos performance in 2016 Share price & buybacks The share price increased by 17% from USD 0.

14 USD cents per share Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr USD/share Phaunos performance in 2016 Share price & buybacks The share price increased by 17% from USD 0.35 to USD 0.41 over the course of the year. The share price has increased a further 7% to USD 0.44 in Q In 2016 a total of 19.1 million shares were bought back at an average price of USD 0.39 (total spend USD 7.5m). The NAV per share has increased to USD 0.55, and the share price discount has narrowed from 29% in 2015 to 25% at end At the end of Q1 the share price discount was 20% Phaunos share price +17% Phaunos share price vs. NAV Q2017 NAV per share Share Price 14

15 Dividend Proposal

16 US cents per share Phaunos dividends Commencement of regular dividends Phaunos paid a US 0.3 cent/share interim dividend in The Board has proposed that a final dividend of US 1.6 cent/share, totaling USD 8.9m, be paid following the AGM in June. The total dividend of US 1.9 cent/share for 2016 is equivalent to 3.5% of NAV. Phaunos expects to pay regular dividends going forward and is targeting a sustainable annual distribution of at least US 1.9 cents/share 1. Dividends will be paid twice a year. The total distribution expected for 2017 is therefore US 2.55 cents/share, or 5.8% yield on the Q share price of USD Dividend payments outlook dividend 2017 dividend (forecast) 2018 dividend (forecast) 1 The ability to match or exceed this target will depend on a number of variables and should not be interpreted as a profit forecast. 16

17 Volume (million m 3 ) Net cash flow (US$ million) Sustainable dividends from increasing wood flow Wood flows increasing Cash flow positive Annual harvest Trend line ( ) Estimate Estimate High Low ¹ Post-Continuation Vote f Sustainable revenue outlook is supported by increasing wood flows. Looking ahead, Stafford estimates the current portfolio can provide sustainable net cash flow of US$ 5m to 11m in addition to capital appreciation Cashflow can be improved by re-investment of cash together with further diversification 17

18 Market update

19 Phaunos market exposure Revenue exposure by geography 1 Revenue exposure by product/sector 1 US Brazil Uruguay Pulp & paper Wood-based panels India S.Korea Other Charcoal/pig-iron Carbon China New Zealand Sawmills Finished sawtimber Electricity generation 1 Based on Phaunos 2017 budget Despite its large weighting towards New Zealand assets, Phaunos has a well-diversified market exposure, with scope to improve this further by increasing wood sales from its Brazilian assets as market conditions improve. 19

NZD Consents approved (annualised) Dec-05 Sep-06 Jun-07 Mar-08 Dec-08 Sep-09 Jun-10 Mar-11 Dec-11 Sep-12 Jun-13 Mar-14 Dec-14 Sep-15 Jun-16 Thousands Wood Markets New Zealand New Zealand is the world

20 NZD Consents approved (annualised) Dec-05 Sep-06 Jun-07 Mar-08 Dec-08 Sep-09 Jun-10 Mar-11 Dec-11 Sep-12 Jun-13 Mar-14 Dec-14 Sep-15 Jun-16 Thousands Wood Markets New Zealand New Zealand is the world s largest exporter of softwood logs. Its forests are typically not more than 150 km from a port. Buoyant housing construction sector is maintaining high local sawlog demand Single Multi Export demand is driven by China. Average increase in export sawlog price China South Korea India 20 Japan Other Domestic (NZD/ton) Export (NZD/JAS m3) 20

21 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar USD/1,000 board feet Jun-71 Dec-74 Jun-78 Dec-81 Jun-85 Dec-88 Jun-92 Dec-95 Jun-99 Dec-02 Jun-06 Dec-09 Jun-13 Dec Softwood imports (Million m3) US housing starts (000's pa) Wood Markets China & United States China has a huge wood deficit and its growing demand has been met by imports, particularly from New Zealand Housing starts in the US are steadily increasing following the crisis. 2,500 2,000 1,500 1, New Zealand Russia North America Australia Other From 2017 China has banned all harvesting of its natural forest which accounted for almost 30% of its timber (both soft- & hardwood). Domestic - natural forest Average sawtimber prices have trended upwards over the past 18 months million m 3 Imports (logs & sawtimber) Domestic - plantations

22 Stafford Timberland & Continuation Vote

Funds Under Management (US$ bn) Stafford Timberland 2.3bn 500m 10.

Investment IRR ² An Investment Manager with specialist skills and proven track record 2.

0 Funds Under Management Stafford Timberland Phaunos Team of experienced forestry

Extensive network Access to unique proprietary deals, often in the secondary market. 0.

23 Funds Under Management (US$ bn) Stafford Timberland 2.3bn 500m 10.1% Timberland funds under management 1 $ Invested over the past 18 months Secondary & Co- Investment IRR ² An Investment Manager with specialist skills and proven track record Funds Under Management Stafford Timberland Phaunos Team of experienced forestry professionals. 12 year track record. Extensive network Access to unique proprietary deals, often in the secondary market Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16 ¹ In US$ as at March 2017, contributing towards US$ 4.8bn under management of Stafford Capital Partners ² Since inception to 31 December Across 58 secondary and co-investment transactions 23

24 2017 continuation vote At the AGM on 19 June 2017, Phaunos will be seeking a 5-year continuation of the Company. The case for continuation is that 1 Stafford has completed the first phase of the Phaunos turnaround strategy announced in mid In 2016 the Phaunos NAV/share increased 12%, and the share price increased 17%. 3 Positive operating cash flows, together with asset sales, have increased cash reserves to a level which will allow for ongoing share buybacks, sustainable dividends, and potential new investments. 4 Phaunos provides low-cost and liquid exposure to the timberland asset class. 5 Stafford has the deal flow, knowledge, and ability to expand the Company. Phaunos is now in a position to deliver on its vision of being a Globally diversified, listed timberland fund, with potential to provide yields of 3-5% p.a. and NAV growth of 3-5% p.a., managed in accordance with ESG best practice. 24

25 Disclaimer Stafford Capital Partners Limited ("Stafford") is distributing this strategy presentation in its capacity as manager of Phaunos Timber Fund Limited (the "Company") The Company is a Guernsey domiciled Authorised Closed-ended investment scheme pursuant to section 8 of the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended and rule 6.02 of the Authorised Closed-ended Investment Schemes Rules 2008 published by the Guernsey Financial Services Commission. The Ordinary Shares of the Company are admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange s main market. In distributing this presentation Stafford is relying on the fact that all recipients are qualified investors' within the meaning of section 86(7) of Financial Services and Markets Act 2000 ( FSMA ) who are also (i) investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (''FPO"); or (ii) high net worth companies within the meaning of Article 49 of the FPO; or.(iii) members of the Company within the meaning of Article 43(2) of the FPO; or (iv) certified high net worth individuals within the meaning of Article 48 of the FPO; or (v) certain sophisticated investors within the meaning of Article 50(1) of the FPO (each a "relevant person"). Persons who do not fall within any of these definitions should not rely on this document nor take any action upon it. The document is only exempt if it is distributed to these exempt categories of recipients. This document has not been approved as a financial promotion or otherwise by a person who is authorised under FSMA for the purposes of section 21 of FSMA and rules made under such legislation or any other applicable securities laws of any other territory. Approval will be required unless the recipient of this promotion is a relevant person. This presentation has not been, and will not be, reviewed or approved by the Financial Conduct Authority ("FCA") or any other authority or regulatory body. Stafford is issuing this strategy presentation exclusively as manager of the Company and will not be responsible to anyone other than the Company for providing regulatory and legal protections afforded to customers (as defined in the rules of the FCA) nor for providing advice in relation to the contents of this document on any matter, transaction or arrangement referred to in it. None of Stafford nor the Company, nor any of their respective directors, officers or employees makes any representation or warranty, express or implied, as to the accuracy or completeness of the information or reasonableness of any opinions contained in this strategy presentation. Stafford is authorised and regulated by the FCA, but has not authorised the contents of, or any part of, this document for the purposes of Section 21 of FMSA. To the fullest extent permitted by law, none of Stafford nor the Company (nor their respective members, directors, officers, employees, agents or representatives) nor any other person accepts any liability whatsoever for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this document or its contents or otherwise in connection with the subject matter of this document. The contents of this strategy presentation are not to be construed as legal, financial or tax advice. This document should not be distributed in whole or in part to other parties. This strategy presentation is being supplied to shareholders and other relevant persons and solely for their information and does not constitute or contain any invitation or offer to any person to subscribe for, otherwise acquire, or dispose of any Ordinary Shares in the Company or advise persons to do so in any jurisdiction. This strategy presentation does not constitute a recommendation regarding the Ordinary Shares of the Company. Some statements contained in this presentation are or may be forward-looking statements, including without limitation any forecasts or projections. Actual results may differ from those expressed in such statements, depending on a variety of factors. Any forward-looking information contained in this strategy presentation has been prepared on the basis of a number of assumptions, only some of which are set out in the presentation, which may prove to be incorrect, and accordingly, actual results may vary. For the avoidance of doubt, nothing in this strategy presentation is intended to constitute a profit forecast. The value of any investment may fall over time and you may receive back less than you invested. Stafford Capital Partners Limited is incorporated in England under registered number and its registered office is at 4th Floor, 24 Old Bond Street, London, W1S 4AW, England. 25

PHAUNOS TIMBER FUND LIMITED ANNUAL REPORT & CONSOLIDATED FINANCIAL STATEMENTS

PHAUNOS TIMBER FUND LIMITED ANNUAL REPORT & CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2016 Front cover: Radiata Pine Plantation, Matariki, New Zealand. Phaunos Timber Fund Limited