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Southern Latitude Investments & Management

Materializing Wealth

Project Seed Agricultural Portfolio Bulgaria April 2014 office@sl-im.com www.sl-im.com Southern Latitude Investments & Management


Statement of Limiting Conditions The information and (any) analyses contained herein are the property of Southern Latitude Investments and Management (hereinafter referred to as the “Consultant”), and may not be copied or distributed without the express consent of the Consultant.

By review of the present document you agree to be bound by the terms of this Statement of Limiting Conditions.

The information contained herein has been provided by the company owner of the project presented herein (hereinafter referred to as the “Company”). The Consultant has relied on the truth, accuracy, and completeness of the provided information. Certain parts of the information are preliminary in nature and subject to adjustments reconsideration, and/or modification. The Consultant makes no representations as to the accuracy or completeness of the information contained herein and expressly disclaims any liability associated therewith.

The current document shall in no way be considered a solicitation to any party to participate or support a particular course of action or transaction.

Material non-public and/or confidential information is contained in this document ("Confidential Information"). Accordingly, any such Confidential Information obtained through your receipt of the current document, and any analyses of such information, is to be considered strictly confidential. Distribution of this document or disclosure of any Confidential Information set forth herein to any party other than the intended recipient of the current document is expressly prohibited without the prior written authorization of the Consultant and Company.

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Description  One of the largest agricultural-land portfolios in Bulgaria – 6,780 hectares of land

Land Concentration per Region (hectares)

4%

 Highly concentrated large-scale agricultural land portfolio

 67% of the total land is concentrated in only 5 regions – Vidin, Haskovo, Burgas,

3% 4%

Vidin Haskovo Burgas Vratsa Targovishte Veliko Tarnovo Montana 16% Yambol Stara Zagora Shumen Other

18%

5% 8%

Vratsa, and Targovishte 8%

 65% of the land is leased

10%

12% 11%

 Suitable for long-term investment without the necessity to actively cultivate the land due to the large share of leased land

 Key advantage of the presented investment is the capital growth potential due to

Leased vs. Non-leased Land (%)

35% Leased Nonleased

the stable development of the sector and increasing prices of agricultural land (please, refer to slide 6)

65%

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Portfolio Concentration & Deal Structure  Sale price (total) – EUR 21.16 million (VAT excluded)

 Sale price (per hectare) – EUR 3,120 (VAT excluded) SUMMARY PER REGION Size Region (hectares) Vidin 1,250.2 Haskovo 1,082.3 Burgas 781.3 Vratsa 760.0 Targovishte 678.6 Veliko Tarnovo 553.3 Montana 539.5 Yambol 347.1 Stara Zagora 298.0 Shumen 219.0 Other 270.9

Share (%) 18.4% 16.0% 11.5% 11.2% 10.0% 8.2% 8.0% 5.1% 4.4% 3.2% 4.0%

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Bulgaria at a Glance  Population – 7,365,000 (2011)

 EU member since 2007

 Currency – Bulgarian lev pegged to the euro

 The lowest corporate tax in the EU – 10%

Corporate Tax Level (%)

18%

19%

19%

20%

Pola n d

Hu n ga

ia Slova k

ia Sloven

24%

0%

16%

Ro m a n

10%

15%

Cze ch

40% 20%

 GDP – EUR 40.8 billion

Gree ce

lic

5

ry

ia

Re p u b

countries

a Bulg a ri

 Competitive cost for skilled labor compared to other EU


Agricultural Industry – Growth Drivers  The agricultural sector is one of the most stable in the

Annual Volumes of Sold Agricultural Land (hectares)

country and has been expanding in recent years 1 60 00

sector

0 8 00 00

 Growing but still limited number of major players in the

0 20 1 3

2 01 2

20 1 1

20 10

2 00 9

20 0 8

20 07

2 00 6

downturn

20 05

200 4

 Stable activity and increasing prices, despite the economic

Source: Southern Latitude Investments & Management’s research

Average Sale Price of Agricultural Land (EUR / hectare)

200 0

similar climate and geographic location

400 0

 Land prices significantly lower compared to countries with

1227.1 869.2 1022.58

Source: Southern Latitude Investments & Management’s research NB: Please, note that the prices above are blended prices for all 10 categories of land based on the farming qualities of the transacted land

6

2 01 3

20 12

2 01 1

2 01 0

20 0 9

200 8

2 00 7

20 0 6

20 0 5

Government

2454.2 2709.85

0

 Increasing amounts of subsidies from the EU and local

1789.52 1533.88 1891.78 1994.04


Agricultural Industry - continued  Historically, the agricultural sector has been a key part of Production Value at Basic Price 2013 (million EUR)

the Bulgarian economy; hence, availability of expertise in the sector and specialized universities

0

 Current production levels are achieved with limited

20 00 0

 Climate favoring the cultivation of numerous crops

 Many farming machinery dealerships active in Bulgaria with service centers Tomatoes Production 2012 (1,000 tons)

Wheat Production 2013 (tons / hectare) 6 4 2 0

2 00

lic

lic

Source: EuroStat

7

ia Slo ve n

ia

ry

Re p u b

Ro m a n

Hu n g a

Cze ch

ry

R ep ub

ia Slo vak

Hu n ga

Czech

Croa ti a

a Bulg a ri

a Bulg a ri

0

Source: EuroStat

ia Slo ven

lic

Source: EuroStat

ia Slo va k

ia

ry

Ro m a n

Hu n g a

Re p u b

irrigation

Gree ce

Cze ch

expected to materialize with further investment in

Croatia

a Bulg a ri

availability of irrigation systems; hence, growth potential is


Inv teaser project seed (2014 04) v5 final