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How will profits be generated?

Timberland returns have three sources: biological growth, as well as changes in timber prices and land values.

1. Biological growth. The largest component of timberland returns is the biological growth of the timber. It is not affected by economic or market conditions. It is also expected to be consistent and reliable, leading to gradual compounding of returns from increasing timber volume as well as unit price. Biological growth is affected by: soil nutrients, climate, rainfall, tree type and growing season.

2. Timber price changes (‘In Growth’). As timber grows its potential use also can change, which can lead to significant increases in value. During an economic downturn, when prices may be temporarily depressed, harvests can be delayed to coincide with an upturn in demand, known as ‘storing on the stump’.

3. Changes in land values. Land prices in Uruguay have grown at an annual average rate of 21% over the last 10 years and 6.7% over the last 20 years.

What will BDU III sell?

Timber sales would make the largest contribution to revenue, followed by land sales, as showen below:

Contribution to revenue

Investment cash flow

Cash Flow

Where will the certificates be quoted?

Certificates will be quoted on the Bolsa Electrónica de Valores S.A. (Montevideo).