gwd forestry - acacia mangium project (1)

AcaciaMangium(White Teak)

Brazilian Forestry Investments

1Brazilian Forestry Investments

©GWP Engenharia Florestal e Participações ltda - Rua Monteiro Lobato, 143, Bairro Vila Regina, Barreiras, Bahia, Brazil. CNPJ 13.334.034/001-45. GWP Engenharia Florestal e Participações ltda is part of the Greenwood Group of companies, and a subsidiary operating company ofGWP Engineering Limitada, Praça General Humberto Delgado, 267, 4000-288 Porto, Portugal.

Acacia Mangium (White Teak)

Who are we and what we offer

We have been actively involved in forestry operations for several years. In 2008 we were the first company to introduce a mutually beneficial business model that allowed outside investments into Brazilian agroforestry.

Our Acacia project is one of the most exciting investment opportunities in our forestry portfolio because of its diversity of end user markets where the possibilities are vast and varied. Simply put, we plant, manage and harvest the trees and process the timber in order to obtain the best possible prices under the direction of our clients.

The entire process is managed by us from the forest to the final product.

The key to the success of this product is the research and development by our in-house forestry specialists in conjunction with UTAD (Universidad

The following pages are designed to give you a clear overview of the Acacia project. They explain where the explosive demand for high value Acacia derived products will come from, together with the outlook for Brazilian economy and of course the expected returns from this project.

‘Wood prices are forecast to rise steeply in the next ten years as demand continues to outstrip supply.’

de Tras-os-Montes e Alto Douro). GWD’s partnership with UTAD has been, and continues to be, instrumental in this area. Our partnership with UTAD is designed to be mutually beneficial — having links to forestry research centres such as UTAD provides access to forestry data, studies and market trends which are invaluable tools for long term planning.

GWD Forestry is a European Forestry Management

company with European offices in the heart of Porto, Portugal (the historic and socio-economic ties between Portugal and Brazil make our location in

Porto a natural choice), administrative and operational offices in the city of Barreiras, Bahia State, Brazil and a number of associate offices worldwide.




The Acacia Mangium Project

through a progressive tree selection process.

For a summary of the Acacia Mangium Project

For the Key Investment Factors for Acacia Mangium

GWD’s principle goal for the project is to produce Grade 1 quality, kiln dried, sawn and prepared wood,

See page 3 See page 4





For the purposes of this presentation, we are using a one hectare unit of Acacia to illustrate how the project works.

• The total cost of one hectare of Acacia is €14,950, including all management fees

• 1250 Acacia trees are planted on each hectare of land

• The growth cycle is 9 years

• There are 2 ‘thinnings’ during the 9 year project cycle (See Appendix 4 for a definition of ‘thinnings’)

• The 1st thinning removes 593 trees at year 3 for energy production

• The 2nd thinning removes 297 trees at year 6 for energy production

• The final harvest at year 9 removes the remaining trees for the production of Grade 1 timber

• Acacia Mangium produces on average 39.40 cubic metres of stacked wood per hectare, per year in the region where the projects are located

• Our growth forecasts are based on a more conservative annual yield of 31.4 cubic metres per hectare

• The total yield from one hectare of Acacia over 9 years is projected to be 283 cubic metres of ‘stacked wood’ (See Appendix 3 for a definition of ‘stacked wood’)

We can market Acacia in all kinds of profitable ways to maximize returns for our clients. Click on our diagram below to see how our project works.

Fig. 1. End user markets.

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Key Investment Factors >>

GWD’s principle goal for the project is to produce Grade 1 quality, kiln dried, sawn and prepared wood, through a progressive tree selection process.





There are a number of important points to note regarding this investment which highlights the enormous potential of the Acacia project. These will be expanded upon later in the report.

Key Investment Factors• Acacia Mangium is a very durable

hardwood that suits the conditions in Bahia State, Brazil. Advantages include:

9 Uniform colour

9 Easy to care for and maintain

9 Durable and strong timber

9 ECO friendly

• Acacia is used for furniture, construction material and its highest value end product, white teak veneer

• 2 million houses are planned to be constructed under the Brazilian Government Programme called ‘My house, My life’. This is explained in more detail in the ‘Demand for Acacia’ section of this brochure

• The housing deficit in Brazil is currently 7.2 million and as a result, Brazil’s construction market is our preferred exit

• By supplying the Brazilian internal market, freight and logistics costs are kept to a minimum

• There is currently explosive demand for high value wood products as a result of the increasing affluence of the Brazilian ‘middle classes’. During the last decade over 23 million people rose to “middle class”

• Net returns are projected to be in excess of 14.5% per annum over the term

• Investment levels begin at €7,625

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Acacia M. Project <<

• GWD Forestry intends to use its own wood processing centre to allow greater freedom to our clients in terms of exit options

• GWDForestry are successfully growing plantationsof Acacia now, in West and Central Bahia




Acacia Mangium ProductsWithin the Acacia project there are two separate products

for our clients to obtain returns on.

Acacia sold as energy via charcoal or logs.

Product 1

Acacia Energy

Fully grown trees for Grade 1 Premium quality timber

Product 2

Acacia Premium




Acacia Mangium Products

Product 1 - Acacia Energy

Thinning 1 - (Year 3)

This 1st thinning is expected to produce 23 cubic metres of stacked wood per hectare.The wood converts to 15.6 cubic metres of stacked charcoal which is sold to energy markets.

The return from the first thinning of one hectare is expected to be €848.79 (15.6 x €54.41) (See Appendix 6).

Thinning 2 - (Year 6)

The 2nd thinning is expected to produce 73 cubic metres of stacked wood per hectare. This wood converts to 49.64 cubic metres of charcoal which is to be sold to energy markets.

The return from the second thinning of one hectare is expected to be€2700.91 (49.64 x €54.41).

Total Revenue from Acacia Energy The total thinning revenue per hectare is forecast to be €3549.70 (€2700.91 + €848.79).(See Projections and Fees Table)

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Product 2

Acacia Premium >>

GWD Forestry’s charcoal price forecast for 2016 is R$130.6 (€54.41), based on the average price per cubic metre of charcoal in 2011 (See Appendix 1 for charcoal price chart from January 2011 to April 2012).




Acacia Mangium Products

Product 2 - Acacia Premium

Acacia Premium - (Year 9)

• The final harvest of the Acacia is expected to take place at year 9

• 297 trees will be harvested at this stage

• The trees are predicted to produce 187 cubic metres of stacked wood

• The stacked wood is expected to produce 74 cubic metres of kiln dried, premium quality timber for use as high quality flooring or other high value wood products

• 9 mature Acacia trees produce approximately 100 square metres of 19 mm thick flooringOne hectare of Acacia produces approximately 3,300 square metres of flooring* (*calculation formula - 297/ 9 = 33 33 x 100 = 3,300)

At the time of publication, the wholesale price of 19mm, Grade 1 Acacia flooring is approximately R$26.70 (€11.12) per square metre. Retail prices are in excess of €27 per square metre.

The expected revenue from the wholesale Acacia flooring will be €36,696.00 (3,300 m2 x €11.12)

After factoring 4% inflation over 9 years, the expected revenue from sale of wholesale flooring from 1 hectare will be €52,299.85 (See Appendix 2 - Projections and Fees). The current rate in Brazil is 5.1 %.

Acacia Energy & Acacia Premium Revenue The expected Gross Revenue, per hectare from Acacia Energy (€3,549.70) and Acacia Premium (€52,299.85) is €55,850.

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Product 1

Acacia Energy <<

GWD Forestry are forecasting returns using the basic wholesale prices for 2012, but reserve the right to explore retail markets under direction of the investor.




The Demand for Acacia

According to the National Housing Secretary, the Brazilian Government is to invest R$ 71.7 billion (approx. €29.87 billion) in building two million homes in the

second phase of the ‘My House, My Life’ programme.

My House, My Life is a vital part of the Brazilian Government’s growth acceleration programme. The Brazilian government’s website explains here.

There can be no doubt that the Brazilian construction and house building industry is poised for explosive growth. High quality wood will enjoy unprecedented demand in the foreseeable future.

When Government policy matches your investment objectives, you are on the right track — My house, My life initiative does exactly this!

Brazil’s Booming Economy

Brazil has overtaken the UK as the world’s 6th-largest economy, it expects to follow last year’s 7% GDP growth with a 4% advance in 2012 and similar growth in the next few years.

According to the Centre for Economic and Business Research (CEBR), Brazil’s GDP totalled $2.469 trillion in 2011, while the UK’s GDP was $2.420 trillion.

Tim Ohlenburg, senior economist at CEBR, says “Brazil overtaking the UK is an indicator of the shift towards emerging markets in the global economy.”

The timing of the Brazilian Government initiative offers

a unique opportunity for GWD Forestry and its investors.

The Brazilian Government Initiative – “My House, My Life”





Olympics and World Cup

According to a recent study commissioned by the Ministry of Sports, the Summer Olympics (Rio de Janeiro, 2016) and the FIFA World Cup (2014), will inject $51.1 billion into Brazil’s economy and add 120,000 jobs annually.

Future Demand for Wood

It should be noted that commodity prices such as wood are forecast to rise well above the prevailing rates of inflation. See diagram below.

FUTURE DEMAND FOR WOOD 2010-2030

Population Demand for Wood

10

9

8

7

6

5

4

3

2

1

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

• Global population expansion

• Increase in life expectancy

• Change in consumer behaviour

• Economic growth

• Restrictions on native (non-plantation) wood harvesting

• Wood as energy source

Billi

on(s

)




Map of Plantation - Barrinha Satellite image of Barrinha plantation

Location of Projects

GWD Forestry have a cluster of plantations in Bahia State ranging from 500 hectares to 1000 hectares plus. The plantations operate around a central hub of operations. . The images below show the exact location and layout of the Barrinha plantation – the 1st phase of the Acacia project to be released to investors.




Below are some pictures of the Acacia project in progress.





Performance Fee Performance fees of 10% will apply to the NET profits at the end of the term. Fees will be NOT be applicable on the initial sum of investment.

Investment Basics

Projections and Fees

PLOT SIZE (HECTARES)

UNIT COST (€)

TOTAL MAINTENANCE

FEES (€)

ACACIA ENERGY (YEARS 3 AND 6) (€)

ACACIA PREMIUM (YEAR 9) (€)

PERFORMANCE FEE (€)

NET RETURN (€)

IRR %

0.5 6,278 1,350 1,775 26,150 2,030 25,895 14.54

1 12,250 2,700 3,550 52,300 4,090 51,760 14.80

1.5 17,916 4,050 5,325 78,450 6,181 77,594 15.05

2.5 29,553 6,750 8,875 130,750 10,332 129,292 15.16

5 57,575 13,500 17,750 261,499 20,817 258,432 15.42

10 110,250 27,000 35,500 522,999 42,125 516,374 15.86

50 505,313 135,000 177,500 2,614,993 215,218 2,577,275 16.73

Projected investment returns 14.54% to 16.73% per annum.

Investment term 8-10 Years [projected for year 9].




The Next Step

To invest in the Acacia Mangium Project, please follow the simple steps below.

1. Speak to your account manager and decide the investment level suitable for you.

2. A €500 holding fee – either by credit or debit card – will secure the position.

3. You will receive two simplified agreements that will need to be signed. One agreement is returned to us and the other copy is retained for your own records.

4. Forward the balance by bank transfer.

5. We’ll send you the Ownership Certificate.

It’s as easy as that!

For more information, please call our European Sales Centre direct on 0034 971 221 156

skype:greenwood61?call




Appendices

Appendix 1 – Charcoal Price Chart

Período R$/mdc

ene-11

feb-11

mar-11

abr-11

may-11

jun-11

jul-11

ago-11

sep-11

oct-11

nov-11

dic-11

ene-12

feb-12

mar-12

abr-12




Appendices

Appendix 2 – Brazil Inflation Rate




Appendices

Appendix 3 – Stacked Wood Definition

Stacked wood - Stacked wood is wood that has been put in piles and has air gaps between the logs.

Appendix 4 – Thinning DefinitionThinning - Thinning reduces tree density and competition and concentrates growth on fewer, high-quality trees, whilst also offering a nominal revenue stream in the early years. The initial over-planting of trees helps the forestry manager select the strongest and most viable trees for the final harvest to produce the best Grade 1 timber possible.

An allowance of 5% mortality (63) trees before the first thinning has been made.

Appendix 5 – Grade 1 Timber DefinitionGrade 1 timber - provides a clear cutting of medium length and width timber. Best suited for furniture, cabinets, flooring and a multitude of solid wood manufactured products. The No.1 grade includes a range of boards which will yield from 66.66% to 83.33% of clear wood in cuttings at least 3” wide by 3’ long or 4” by 2’.

Appendix 6 For the purposes of this illustration, a conversion rate of €1 = R$ 2.40 was used (the mid-price on April 12th 2012).





Fig. 1. End user markets.




Map of Plantation - Barrinha





Location of ProjectsSatellite image of Barrinha plantation





FUTURE DEMAND FOR WOOD 2010-2030

Population Demand for Wood

10

9

8

7

6

5

4

3

2

1

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

• Global population expansion

• Increase in life expectancy

• Change in consumer behaviour

• Economic growth

• Restrictions on native (non-plantation) wood harvesting

• Wood as energy source

Billi

on(s

)

gwd forestry - acacia mangium project (1)

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