Revenue and Assets
All projections of investment returns are based on current productivity yields and market prices. Yields are expected to increase significantly as methods of husbandry improve, and market prices will vary with the price of crude oil. Both are selling into the energy market, after all. Whatever happens to prices day to day, however, the long-term trend is upwards, due entirely to increasing demand.
If Green Oil prices were (as an example) to increase by 6% a year, the returns in the Green Oil Programme, starting at 30%, would be over 50% in year 10 and over 81% by year 30. Remember that years 1 to 10 are based on a 60% revenue share for the tree owner and years 11 onwards are based on 30% share. Please note that years 1 and 2 show reduced revenues of one-third and two-thirds respectively – the figure of 30% is the underlying base.
Nobody knows what will happen to green oil prices in the future and there are no guarantees, express or implied in the following chart. The chart simply represents what would happen if prices were to increase by 6% a year in the future. In practice, they will not increase by this amount: it may be less or it may be more, and no decision to purchase or not to purchase should be made on the basis of this chart
Investment Returns if Prices increase by 6% a year
Year |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
% Return |
10.0% |
21.1% |
33.7% |
35.7% |
37.9% |
40.1% |
42.5% |
45.1% |
47.8% |
50.7% |
Year |
11 |
12 |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
% Return |
26.9% |
28.5% |
30.2% |
32.0% |
33.9% |
35.9% |
38.1% |
40.4% |
42.8% |
45.4% |
Year |
21 |
22 |
23 |
24 |
25 |
26 |
27 |
28 |
29 |
30 |
% Return |
48.1% |
50.1% |
54.0% |
57.3% |
60.7% |
64.4% |
68.2% |
72.3% |
76.7% |
81.3% |
Whilst a 6% annual increase is only an illustration of what might happen, it gives an idea that the stated return rates of 30% are likely to be minimum levels.
The potential for capital asset growth is equally exciting. An investor’s £1.25 per tree buys an immature tree (a seedling) on marginal low-value land. The price we have placed on this tree, including management, infrastructure, husbandry and administration is the £1.25. In effect it is an oil well and, like any other oil well, once it is brought into production with many years’ ahead of it, its value increases. Although an asset’s price finds its own level over time, it is considered reasonable to expect the value of each tree to have increased from £1.25 to £3.12 within three years on the basis of the anticipated future revenue stream.
As a member of Greendaq®, the Programme Managers will be working to ensure that investor’s assets can be traded on the exchange. Liquidity (the ability to turn assets into cash) can have a substantial effect on the value of those assets.
