Issuu on Google+

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.

2


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

Land Concentration per Region (hectares)

hectares of land

Vidin

Haskovo

3% 4%

 Highly concentrated large-scale agricultural land portfolio

4%

Burgas

19%

5%

 67% of the total land is concentrated in only 5 regions – Vidin, Haskovo, Burgas, Vratsa, and Targovishte  65% of the land is leased

Vratsa

8%

Targovishte 16%

8% 10%

12% 11%

Veliko Tarnovo Montana Yambol

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

Leased vs. Non-leased Land (%)

 Key advantage of the presented investment is the capital growth potential due to the stable development of the sector and increasing prices of agricultural land (please, refer to slide 6)

Leased

35%

Nonleased 65%

3


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%

4


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%  GDP – EUR 40.8 billion  Competitive cost for skilled labor compared to other EU Corporate Tax Level (%)

countries 30%

24%

25% 20% 15%

16%

18%

19%

19%

20%

15% 10% 10% 5% 0% Bulgaria Czech Romania Poland Hungary Slovakia Slovenia Greece Republic

5


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 160,000

 Growing but still limited number of major players in the sector  Stable activity and increasing prices, despite the economic downturn

120,000 80,000

40,000 0 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: Southern Latitude Investments & Management’s research

 Land prices significantly lower compared to countries with

Average Sale Price of Agricultural Land

similar climate and geographic location

(EUR / hectare) € 2,710

€ 3,000

 Increasing amounts of subsidies from the EU and local Government

€ 2,454

€ 2,500 € 2,000

€ 1,994

€ 1,534 € 1,227

€ 1,500 € 1,000

€ 1,892

€ 1,790

€ 869

€ 1,023

€ 500 €0 2005 2006 2007 2008 2009 2010 2011 Source: Southern Latitude Investments & Management’s research

2012

2013

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


AGRICULTURAL INDUSTRY - CONTINUED  Historically, the agricultural sector has been a key part of the Production Value at Basic Price 2013

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

(million EUR) 14,000

 Climate favoring the cultivation of numerous crops

12,000

 Current production levels are achieved with limited availability

10,000 8,000

of irrigation systems; hence, growth potential is expected to

6,000

materialize with further investment in irrigation

4,000

 Many farming machinery dealerships active in Bulgaria with

2,000 0 Bulgaria Croatia

service centers

Czech Greece Hungary Romania Slovakia Slovenia Republic

Source: EuroStat

Tomatoes Production 2012

Wheat Production 2013

(1,000 tons)

(tons / hectare)

120

6.0

100

5.0

80

4.0

60

3.0

40

2.0

20

1.0

0

0.0 Bulgaria

Croatia

Czech Republic

Hungary

Slovakia

Bulgaria

Czech Republic

Hungary

Romania

Slovenia

Source: EuroStat Source: EuroStat

7


Inv teaser project seed (2014 04)