17TH CHINA INTERNATIONAL FAIR FOR INVESTMENT AND TRADE: 8-11 SEPTEMBER 2013 INVESTMENT AND TRADE OPPORTUNITIES IN ZIMBABWE WITH FOCUS ON ALLIED TIMBERS ZIMBABWE (PRIVATE) LIMITED By Dr Joseph Kanyekanye Group Chief Executive Officer – Allied Timbers & Chairman – Timber Producers Federation of Zimbabwe E-Mail : jkanyekanye@alliedtimbers.co.zw Website : www.alliedtimbers.co.zw

Presentation Introduction Zimbabwe Reloaded Forecasted GDP Growth Forecasted Sectoral Areas of Competitive Advantage What we seek Allied Timbers Opportunities Thanks

Introduction Stability and political unity since 2009 Resource rich country with arable land PLUS agric/industry link Education – unquestionably Mugabe legacy GDP growth averaging 7% in last 2 years “The arm of commerce has borne away the gates of a strong city, oceans no longer divide but link” Frederick Douglas 1818-1895 Constraints – I refuse

Zimbabwe Reloaded Gold reserves estimated at $billions but currently producing 12mt per year but capacity to do 50mt/year exists Abundant Nickel under care but can produce 10 000 tonnes Second largest PGM in Zimbabwe worth $400billion. 4 projects on feasibility stage. Abundant coal reserves at 2.7 million tonnes production/year Chrome production rose 167% in 2010 to 517 000t. Zimbabwe Kimberlitic diamonds at 4 million carats and alluvial reserves can account for at least ¼ of world production Manufacturing recovery One stop shop CZI as a partner: invitation, co-operation agreement, enhance trade

ZIMBABWE FORECASTS % p.a. 2011 2012 9,3 7 6 13 10 GDP Growth Inflation – end year 6 Interest Rates (USD) 13 10 Source: Hawkins 2010

ZIMBABWE SECTORAL GROWTH % p.a. 2011 2012 Agriculture 25.0 15.0 Mining 45.0 55.0 Manufacturing 9.5 12.0 Distribution 8.0 10.0 Tourism 6.0 Source: CZI2011

Key areas of competitiveness in Zimbabwe Clothing and textile industry Agro-Processing Chemicals & Tourism Manufacturing - Food Pharmaceuticals Metals and Minerals Technology Wood and furniture

WHAT WE SEEK INCREASED 2 WAY TRADE: HUNT IN PACKS WIN – WIN RELATIONS WITH THE ADVENT OF GLOBALISATION – INTERNATIONAL INVESTMENT HASSLE FREE BUSINESS FREE OF TOO MUCH REGULATION “LOOK EAST’ INVESTMENT THINKING INVITATION TO ZIMBABWE INDUSTRIES AS NEW INVESTORS ESPECIALLY ON VALUE ADDITION LINES OF CREDIT: $2B JV PARTNERS: EQUITY, TECHNOLOGY TRANSFER, BUSINESS OPPRTUNITIES, INTERNATIONAL LEASING INNOVATIVE LONG TERM FUNDIN PROCUREMENT AND TRADE

2. SECTOR: AGRICULTURE FORESTRY) Plantations Sawmilling Value addition Retailing and Wholesaling Exports companies

LOCATION OF THE PROJECT MANICALAND & MIDLANDS PROVINCE

COMPANY PROFILE 4.1.2 SAWMILLING 4.1.1 PLANTATION DEVELOPMENT Allied Timbers Zimbabwe (Pvt) owns 60% of all the plantations in Zimbabwe. The Company maintains a 25 year tree cycle that enables it to harvest 30000m3 or 360000m3 of round logs per month and per year respectively. Allied Timbers Zimbabwe is the market leader in providing timber products locally. 4.1.2 SAWMILLING Allied Timbers Zimbabwe owns Erin Estate, Stapleford Estate and Nyangui Estate in Nyanga District, Chimanimani Estate and Gwendingwe Estate in the Chimanimani District of Manicaland. The Company operates a sawmill in each of the above Estates. At Cashel Estate the Company operates a mobile sawmill. In Nyangui Estate and Maswera Forest the Company has contracts for sawmilling with Indigenous Business Contractors. The expected pine timber production in year is 120 000m³ in year.

4.1.3 POL MANUFACTURING The Company produces 4000m3 of poles at Mtao and Ngungunyana Estate of which 2400m3 is treated at Mtao Estate while the balance of 1600m3 of raw poles is exported to Botswana per month.

ROOF TRUSSES MANUFACTURING The Company operates roof trusses plants Zimbabwe and Botswana. TIMBER RETAILING The Company has six timber retail outlets in Harare, Chitungwiza, Gweru, Mutare, Masvingo and Bulawayo.

CHALLENGES FACING THE COMPANY MARKETING Exports markets to the region are mainly to South Africa, Botswana and Namibia. 50% of timber produced is exported while the remaining 50% is sold locally. In addition the Company has factories that produce roof trusses in Harare and Bulawayo, finger jointed timber at its Mutare Factory and treated poles at Mtao Estate. Export markets are more attractive because of the certainty of payment while poor liquidity in the local market results in customers paying their accounts late. Both local and exports markets are insatiable. The Company also retails its products in all major towns of Zimbabwe. CHALLENGES FACING THE COMPANY Ageing machinery resulting in high repairs and maintenance costs. Long outstanding debts as customers are failing to service their accounts on time Non availability of long term funding in the market Working capital constraints 

LOAN FUNDING The Company needs around USD7 million to modernize its four major sawmills. Description Units Required Unit Cost Total Sawmill 4 USD600,000 USD2,400,000 Bell Skidders 10 USD200,000 USD2,000,000 Bell Telelogers 8 USD150,000 USD1,200,000 Roads Rehabilitation 4 sites USD1,400,000 Grand Total   USD7,000,000 The Company will prefer a long term loan for 3-5 years at favorable interest rates below 9% per annum. From the projected output of 120,000m³ in a year the company is expected to yield USD26,400,000 in year in terms of revenue. Assuming that the cost of sales will be around 60% net profit will be around USD10,560,000 From the above it is quite evident that this is a very liquid project with a payback period of less than one year Return on investment of more than 51% in the first year.

INVESTMENT OPPORTUNITIES Lumber manufacture Power Generation Pulp and Paper Exports Machinery Supply CCA/Creosote Imports Charcoal Production Particleboard manufacture Furniture Manufacture Forestry Match Production Small scale sawmilling Construction – timber homes

‘I am not smart, I spend more time on the problem than other people" - Albert Einstein Dr. Joseph Kanyekanye – Group Chief Executive Officer 4th Floor Angwa City Building , Cnr Julius Nyerere Way and Nkwame Nkrumah Avenue Harare, Zimbabwe Landline : +263 75209/71 Cell : +263 772 249 059 E-Mail : jkanyekanye@alliedtimbers.co.zw Website : www.alliedtimbers.co.zw 17