INHABITANTS
KOMSOMOLETS AGROCOMPANY A new player among leaders of the Russian agricultural industry
Presentation for investors A fast-track expansion strategy for cultivating 300,000 hectares
March 2019 Contents
Summary 2-7
Business overview 8-20
Rapeseed production 21-27
Market 28-32
Strategy 33-37
Financial model 38-50
Appendix: financial status 51-59
STRICTLY CONFIDENTIAL VINCERE CAPITAL 1 Investment opportunity summary
STRICTLY CONFIDENTIAL VINCERE CAPITAL 2 mln rub EBITDA 2018 Producer and exporter of 190 33%+ margin rapeseed in the Russian Far East
c/ha crop yield achieved Index Value 25+ (pilot fields) High-quality of produced Oil content 46,9% rapeseed Erucic acid 0% Oil admixture 2% mln rub of equity investment Impurities 0,4% 386 in 2014-2018 Moisture 7% 90 units ths ha of sowing, harvesting and other Chernyshevsky district 112 land-bank in a long-term machinery 30,2 Sretensky district lease ths ha Shilkinsky district 11 ths ha 1,8 Uletovsky district ths ha . Highly effective top-management team 17,6 Krasnokamensky district and crop production experts (agronomists, ths ha technologists and engineers) 51,1 ths ha . Proven technology of rapeseed cultivation Zabaikalsk Mongolia China . KEY DATA Arable land Komsomolts was established in 2014 by brothers Valery and Ivan Nagel on the base ths ha of state-owned “Breeding farm “Komsomolets” and is the largest in the Russian Far East producer and exporter of rapeseed to China with a 15% share (>21 ths tons) according to the results of 2018 agricultural year 163 Komsomolets is a rapidly developing company which generates profit from the very first year. Shareholders fully reinvest profit for further development 101 The land-bank amounts to 112,000 ha, which is leased by Komsomolets for 49 years. 3 3 50 The procedure of signing lease agreements for additional 125,000 ha is underway 2 17 17 30 1 4 11 15 14 The total size of arable land in Zabaikalskiy region is 1,4 mln hectares. Up to 2020 2015 2016 2017 2018 2019П 2024П 2029П Komsomolets will additionally acquire long-term lease-rights for 60,000+ ha of most Rapeseed Other fertile land and this allow Komsomolets to become one of the largest agro-producers in Russia with 300,000 ha land-bank Rapeseed production
. DIRECT ACCESS TO THE LARGEST MARKET ths tons 3,0 The total harvest of oilseeds is exported to China, the world largest consumer (18.5 2,5 2,5 mln tons) and importer (4.7 mln tons in 2017) of rapeseed 2,5 1,7 2,0 Purchase contracts are signed with 3 largest wholesale companies in North China 1,6 1,5 1,3 1,2 1,5 . UNIQUE TRANSPORT ACCESSIBILITY 125 The transport route from the Company warehouses to the border with China at 1,0 Zabaikalsk boundary railway check point does not exceed 400 km. Loading of the 75 23 0,5 finished product is implemented from the Company railway siding at Chernyshevsk 14 21 5 station, which is the hub for grain delivered by trucks 1 0,0 2015 2016 2017 2018 2019П 2024П 2029П . HIGH QUALITY OF PRODUCT Rapeseed Yield t/ha In China rapeseed is processed to produce oil consumed for food similarly with olive oil in western countries Total revenue The use of rapeseed in food industry stipulates high requirements for quality of raw mln rub material, and rapeseed from Zabaikalskiy region ideally meets them (highest oil content, zero content of erucic acid, minimal level of contaminants and moisture) 10 869 . PROSPECTS OF GROWTH 1 065 5 476 To cultivate available land bank in the size of 300,000 hectares by 2030 32 102 308 596 To apply a successful experience of pilot fields for the entire arable land and achieve 2015 2016 2017 2018 2019П 2024П 2029П rapeseed yield of 2.5 tons/ hectare in 2024 To sign contracts with processing companies Total EBITDA (without planned subsidies)
To develop processing facility for production of high-margin products mln rub Without considering 55% 56% 65% 33 mln rub of To attract a long-term and low-cost financing from Far East Development Fund for 55% received subsidies 40% construction of an elevator 32% 32% 45% 22% 35% To become an anchor resident of the advanced special economic zone 6 075 25% “Chernyshevsk” to be established in the framework of integration of Zabaikalskiy 3 036 15% 0% 346 193 5% region into the Russian Far East 23 123 -5% STRICTLY CONFIDENTIAL 2015 2016 2017 2018 VINCERE2019П 2024ПCAPITAL 2029П 4 Investment highlights (1/2)
ths ha . The last chance to build from scratch a great success story in the Russian agriculture. The potential land-bank expansion lands in all the rest regions are allocated and it is practically impossible to gather them into a 300 single massif without purchasing the existing players with an extra pay . Zabaikalskiy region has stayed in the background of investors’ attention for a long time, and this allowed the Company to gather single massifs of most fertile lands in the region . At present the Company has lease-rights for 112,000 ha, by 30/09/2019 it will have acquired lease-rights for another 125,000 ha. The Company is now searching for another 60,000- 70,000 ha of best land in close to the Company available land-bank.
. The raised capital will be used to finance the investment program for 2019-2020, which will Self-sustainable allow to cultivate 50,000 ha of idle lands . Business marginality will show and reinvest profits in the amount ensuring a further organic equity story growth without attraction of new equity-investments (only reinvestment of profits and bank loans)
. In 5 years the Company will launch its IPO on Singapore or Hong Kong Exchange, for which IPO in 2024 a holding structure in the relevant jurisdiction will be created . The Company EV in 2024 at the current multiples (EV/EBITDA 8-10х) will make up 24.3-30.4 billion rubles
Company Country Mcap, $M EV, $M Revenue EBITDA EV/Revenue EV/EBITDA 2017A 2018F 2019F 2017A 2018F 2019F 2017A 2018F 2019F 2017A 2018F 2019F
WILMAR INTERNATIONAL LTD SINGAPORE 14 490 35 543 45 463 44 085 43 085 2 185 2 124 2 217 0,78x 0,81x 0,82x 16,27x 16,73x 16,03x KUALA LUMPUR KEPONG BHD MALAYSIA 6 213 7 106 3 236 2 941 3 444 560 500 525 2,20x 2,42x 2,06x 12,69x 14,23x 13,53x GOLDEN AGRI-RESOURCES LTD SINGAPORE 2 369 5 216 6 052 6 585 7 619 802 687 419 0,86x 0,79x 0,68x 6,51x 7,60x 12,44x UNITED PLANTATIONS BHD MALAYSIA 1 336 1 158 383 302 312 160 129 119 3,02x 3,83x 3,71x 7,23x 8,97x 9,72x BUMITAMA AGRI LTD INDONESIA 812 1 233 376 392 486 138 144 188 3,28x 3,14x 2,54x 8,92x 8,57x 6,57x SAWIT SUMBERMAS SARANA TBK P INDONESIA 786 1 014 201 189 221 104 101 99 5,05x 5,35x 4,59x 9,75x 10,03x 10,26x BUNGE LTD USA 8 189 16 438 60 991 61 347 57 161 1 066 1 769 1 537 0,27x 0,27x 0,29x 15,42x 9,29x 10,69x ARCHER-DANIELS-MIDLAND CO USA 25 358 32 328 65 204 67 286 67 633 3 561 3 760 3 840 0,50x 0,48x 0,48x 9,08x 8,60x 8,42x KWS SAAT SE GERMANY 1 971 2 083 1 275 1 274 1 302 222 203 211 1,63x 1,63x 1,60x 9,38x 10,27x 9,89x GRAINCORP LTD-A AUSTRALIA 1 509 2 180 3 235 2 685 3 265 206 163 225 0,67x 0,81x 0,67x 10,60x 13,41x 9,68x CHINA AGRI-INDUSTRIES HLDGS HK 1 919 4 006 12 974 13 991 15 408 478 516 617 0,31x 0,29x 0,26x 8,39x 7,76x 6,50x SLC AGRICOLA SA BRAZIL 1 168 1 526 671 750 816 187 202 230 2,28x 2,04x 1,87x 8,16x 7,54x 6,62x
Mean value 1,74x 1,82x 1,63x 10,20x 10,25x 10,03x Median 1,25x 1,22x 1,21x 9,23x 9,13x 9,81x
STRICTLY CONFIDENTIAL VINCERE CAPITAL 5 Investment highlights (2/2)
cash-in . The attracted equity-investment will be fully used for Company development, the founders’ 100% partial withdrawal from business is not considered
billion rub . From 2021 the Company will start paying dividends to its shareholders of dividends payable . The Company will be able to pay dividends due to achieving sustainability based on net profit 37+ and balanced attraction of working capital and investment loans for 2021-2031.
. Over just 4 years the Company has developed a strong credit reputation (partner banks: Bankable story Sberbank and Rosselkhozbank) . The Company was the first in the Far Eastern Federal District who in September 2017 issued 1-year bonds for middle market companies for 30 mln rub. The bonds were successfully paid off. . New 3-year bonds were issued in August 2018 for 40 mln rub
. In 2019 the Company for the first time will prepare IFRS statements for 2018 Western management . By 2020 IFRS statements standards will be introduced both in the process of management standards accounting and annual financial reporting
. In future on the base of crop farming the Company will organize mixed feed manufacture to Vertical integration develop its stock-raising profile . Historically the Company has a status of a purebred establishment, breeding Australian merinos with fine wools. In 1980 sheep stock was as much as 35,000 animals, and the company was a large producer of mutton and sheep milk . At present the Company shareholders fully focus on crop farming, while sheep stock in the amount of less than 1,000 animals is kept to preserve the status of a purebred establishment with an eye toward the future development
STRICTLY CONFIDENTIAL VINCERE CAPITAL 6 Proposal for investor
. The Company is close to its debt growth cap (Debt/EBITDA>4.5) . Cultivation of another 47,000 ha in 2019-2020 and an ambitious investment program for up to 2020 in the amount of 1.9 billion rub will require about 3 billion rub of financing . Taking into account a large debt burden, the Company needs investor’s capitalization support in the amount of 1 billion rub; without such additional capitalization the Company is able to bring under cultivation no more than 20,000- 25,000 ha over 2 years . Investor’s funds will be used for purchase of machinery (700 mln) and working capital financing (300 mln) in 2019- 2020 . Investor’s funds will also form a shareholders’ equity in the amount required by banks, which along with growth of EBITDA for 2019 up to 346 mln rub (with no regard for additional 346 mln rub of subsidies) will make it possible to attract new development loans . Investor is offered a share of 25% proceeding from the Company value of 3 bln rub (pre-money) . From 2021 the Company will start paying out dividends . Investor’s IRR will make up 30%+ for 2021-2031 . IRR will exceed 40% provided the subsidies for recovery of capex and plowing of virgin lands are received
mln rub. Investments Diovidends 1 698 1 282 1 085 1 253 868 621 807 746 421 501 42% IRR (subsidies included) 138
(562) (442) 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 1 bln rub 1 597 (cash-in) 1 186 1 155 987 573 690 653 % IRR (w/o subsidies) 309 433 32 44 183
(562) (442) 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
STRICTLY CONFIDENTIAL VINCERE CAPITAL 7
Консервативный сценарий:Доходность целевая инвестора урожайность рапса 18 ц/га млн руб. Инвестиции Дивиденды 1 313 935 1 030 686 770 % IRR (вкл. субсидии) 539 503 35 349 411 476 121
(562) (442) 1 млрд руб 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 (cash-in) 1 193 876 882 660 445 414 24% IRR (без субсидий) 219 322 306 27 111
(562) (442) 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Business overview
STRICTLY CONFIDENTIAL VINCERE CAPITAL 8 Land-bank
By 2020 Komsomolets intends to increase its land-bank up to 300,000 ha, becoming one of the largest landowners in Russia. The increase is scheduled for account of putting into use the best idle land in the territory of Zabaikalskiy region
Comments The Company land-bank and plans for its expansion
. THE LARGEST LANDOWNER IN ZABAIKALSKIY REGION thousand ha thousand ha As of 26.12.2018 Komsomolets agrocompany set up the land- bank in the amount of 112,000 ha in 5 districts of Zabaikalskiy 112 300 region (Krasnokamennsky, Chernyshevsky, Uletosky, Sretensky, Shilkinsky districts) The rights for land plots: 95% of land are under a long term lease (49 years), 5% are fully owned by the Company 1% 10% . PERSPECTIVE REGION Zabaikalskiy region ranks among TOP-3 Far East regions on 16% the availability of fertile land. The lands in Amur and Irkutsk 46% regions are already in use, whereas Zabaikalskiy region has about 1 mln ha of idle lands 27% . PLANS ON EXPANSION . - The Company intends to increase its land-bank up to 300,000 ha by 2020 Krasnokamensky district Chernyshevsky district Prospective districts for land-bank expansion: Krasnokamensky Uletovsky district Sretensky district (74,000 ha); Shilkinsky (37,000 ha), Nerchinsky (30,000 ha), Shilkinsky district Chernyshevsky (28,000 ha); Sretensky (11,000 ha)
Chernyshevsky district Land resources of Zabaikalskiy region
Sretensky district ths ha Shilkinsky district 5%
952 Uletovsky district 1 436
95% Krasnokamensky district 291
193 Lease Ownership Actual sowing Unused tillage Idle land Total Presence of Komsomolets agrocompany
STRICTLY CONFIDENTIAL VINCERE CAPITAL 9 Team
Nagel Valery Konstantinovich, 44 Gurulyov Sergey Vladimirovich, 35 Chairman of the Board of Directors Director Education: Education: . Chita State Technical University, 2000: Banking . The Siberian State Technological University, and finance Krasnoyarsk . University: City University, London, . Specialization – Forestry engineer . Faculty: Banking and International Finance . Business School: Cass Business School, London. Faculty: Finance and Investment Experience: . Since September 9, 2018 – member of the Committee on Agrarian Policy and Nature Management of the Legislative Assembly for Zabaikalskiy region, III convocation Experience: . 2012 – 2017 – Deputy director on general matters of ZAO “Zabaikalskaya . Head and co-owner of a diversified group of companies: Investment Company" . Agriculture . 2011 – 2012 – commercial agent of OOO “Baris" . Beer and nonalcoholic production . 2009 – 2011 – forester of OOO “Express" . Production of building materials . 2007 – 2008 – expert on forestry matters of ZAO “Zabaikalskaya Investment . Construction Company" . Occupied leading positions in investment-financial groups: . 2006 – 2007 – master-shipbuilder of OOO "РСУ" . Keiser Beratung AG, Project Manager, London . 2003 – 2006 – state inspector on safeguarding of the “Alkhanai” National Park . Private investment fund, Investment Manager, London . Otranto Capital co-owner, Investment boutique attracting investments to . Participated in issuing and implementation of investment projects, being realized Russian mining projects, London by ZAO «Zabaikalskaya Investment Company» . Administration of the division of over 500 employees in number . Work experience in building and construction
Lishtaev Sergey Viktorovich, 37 Sklyar Alexey Vladimirovich, 39 Plant cultivation technologist Crop protection agronomist Education: Education: . The Altai State Agrarian University . The Altai State Agrarian University. Specialization – agronomist Specialization – agronomist Work experience: Work experience: . AO «Orbita» - agricultural enterprise with . OAO «Svobodny» – Chief agronomist, 21,000 ha of cultivated land o f– agronomist Director . AO АГАU «Uchkhoz.Prigorodny» – seed . OOO «Agrofirm Cheremnovskaya» – Chief production farm, production of cereal, oil, agronomist and legume seeds
STRICTLY CONFIDENTIAL VINCERE CAPITAL 10 Description of products
Basic characteristics Volume
Index Value ths ton
Oil content 46,9% 300 Erucic acid 0% Oil admixture 2% 250 Impurities 0,4% Rapeseed 200
Index Value 150 274 283 257 Protein content 10%-15% 240 220 Ash level <1,75% 100 190 203 168 Grain-unit 833 g/l 138 50 97 Impurities 1,0%-4,5% 81 Wheat 65 34 0 Index Value 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Grain-unit 570 g/l Impurities 2% Sales structure Grain impurity 2% Moisture 14,5% Barley ths ton 6 13 Index Value 25 5 Grain-unit 460 g/l 2 13 1 1 1 1 1 1 1 1 1 1 1 1 1 92 1 1 Impurities 1% 4 51 Grain impurity 2% 5 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 34 283 Moisture 13,5% 3 18 Oat 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 6 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Index Value 1 101 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Impurities 3% 0 Oil admixture 6% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2019 2031 Moisture 13% Flax Rapeseed Wheat Barley Oat Flax
STRICTLY CONFIDENTIAL VINCERE CAPITAL 11 Availability of machinery
. Today the Company has about 90 units of new modern machinery to carry out a complete range of works starting from idle land plowing and to yield harvesting . Moreover, Komsomolets has more than 100 units of mechanisms, such as harrows, rollers, cultivators, ploughs, etc.
Sowing machines Spraying machines for chemicals and 12 13 desiccation
Комплексов для разбрасывания удобрений 3 . 2 МТЗ-1221 РУМ 10м3 каждый Combine harvester and multipurpose Units of tractor machinery, incl. 21 new . 1 Туман 2М 2м3 34 self-propelled mowers 30+ Versatile and Kirovets Комплексов для дискования паров . К744Р4 БДП-6.4 (6 было и 6 новых) 12 . Гурулев
Комплексов для вспашки целины, боронования, дискования, культивации 19 . К701 (Бт-26) плн 8 35 ЛАДМАСТЕР БДП-6.4 . К700 плн 8-35 плн ЛАДМАСТЕР . К701 плн 8 35 ЛАДМАСТЕР . К744Р4 плн 8-35плн ладмастер11м . Гурулев
STRICTLY CONFIDENTIAL VINCERE CAPITAL 12 https://rostselmash.com/products/grain_harvesters/ACROS_585_550/ Availability of machinery: sowing
Sowing complex Horsh Pronto 6 DC
. Even closing depth of seeds along the entire field owing to the predetermined upright difference between running of soil-puck maker and sowing boots . Address fertilizing (PPF-System) in inter-row spacing . Effective width 6 m . Sowing bin capacity 3 500 l . Speed 10-20 km/h 6 DC 3 un. Sowing complex Horsh Pronto 12 SW
. Even closing depth of seeds along the entire field owing to the predetermined upright difference between running of soil-puck maker and sowing boots . Address fertilizing (PPF-System) in inter-row spacing . Effective width 12 m . Two-section bin capacity 17 000 l 12 SW 1un. . Speed 10-20 km / h Sowing complex Horsh Pronto 10 NT
. Designated for direct seeding . Rigid hitch between the seeder’s frame and bin enables to transfer a part of bin’s weight on sowing boots, corrugated disks loosen soil in front of each puck maker and crumble up organic waste . Effective width 10.4 m un. . Two-section bin capacity 12 000 l 10 NT 4 . Speed 10-20 km / h Pneumatic sowing machine Lemken Solitair 12
. Is equipped with large tires for careful operation on soil . Sowing shafts are driven by an engine with electronic control for dosing. Dosing units enable having an even flow of sowing material and effective cross allocation. . Effective width 12 m . Seed bin 5 800 l . Speed 10-20 km / h SOLITAIR 12 4 un. STRICTLY CONFIDENTIAL VINCERE CAPITAL 13 https://rostselmash.com/products/grain_harvesters/ACROS_585_550/ Availability of machinery: fertilizing and spraying
Self-driven sprayer Versatile SP 275 . Rod stabilization system for high precision and even SP 275 working solution injection . Norm of product injection is set up by an operator in the form of a constant value and is automatically maintained irrespective of alterations in the sprayer’s motion speed . Performance 1 200 ha / 24 h . Fuel consumption 0.5-0.9 l / ha un. . Engine power 275/235 HP 6 . Pour out norm from 50 l / ha . Main tank capacity 4 500 / 3 800 l
Sowing machine Tuman 2M
. Equipped with low pressure tires – minimal negative impact on soil . High floatation and light weight are perfectly suitable for plant treatment in their early vegetation period upon a wet soil without making tire tracks and avoiding plant damage . Effective width 10.4 m . Performance up to 60 ha / h . Tank capacity 1 000 l
TUMAN 2 6 un. Self-driven sprayer Bars ОС-3000
. High clearance 135 cm (grain version) or 160 cm (tilled version), which allows conducting desiccation of tilled crops . Sprayer nozzles ID-K of different sizes form small drops which trajectories remain stable at wind speed up to 7 m/sec . Rods adjusted by height provide effective spraying for any landscape . Effective width 24 m BARS 3000 1 un. . Main tank capacity 3 000 l STRICTLY CONFIDENTIAL VINCERE CAPITAL 14 https://rostselmash.com/products/grain_harvesters/ACROS_585_550/ Availability of machinery: harvesting
Grain harvesters ACROS 585 . Designated for the fields with high and average crop ACROS yield . Performance 4.15 ha / h 585 . Fuel consumption 2.2 l / ton . Engines YaMZ (280 HP) and Cummins (300 HP) . Equipped with thresh-separator device with a large drum (800 mm) and key straw willow . High-performance off-loading device with speed up to un. 90 l per sec 27 . Hopper with increased capacity (9 000 l) . Hydro pulsars mounted at the hopper bottom allow off- loading grain with moisture up-to 35%
Grain harvester VECTOR 410 . Портальная конструкция ведущих и управляемых . Optimal for small size fields 410 мостов с уборочным . Hopper capacity 6000 l клиренсом 1000 мм . Separation 95%, drum diameter 800 mm обеспечивает необходимый . Fuel consumption 1.9 kg / ton транспортный просвет, косилка беспрепятственно . Power 210 HP un. 1 перемещается над валками любой высоты и ширины
Multipurpose self-propelled mowers . Allows mowing and placing in windrows, which provides KSU-1 complete ripening after mowing and is ideal for separate harvesting . Performance 5.8-10.5 ha / h . Fuel consumption 2.5 l / ha un. . Power 157 HP, speed 15-20 km / h 6
STRICTLY CONFIDENTIAL VINCERE CAPITAL 15 Посевной комплекс Horsh Pronto 6 DC
. Равномерная глубина заделки семян по всему полю благодаря предопределенному различию по вертикали между ходом почвоуплотнителя и высевающих сошников . Адресное внесение удобрений (PPF-System) в междурядья . Рабочая ширина 6 м . Емкость посевного бункера 3 500 л . Скорость 10-20 км / ч 6 DC 12 ед.
https://rostselmash.com/products/grain_harvesters/ACROS_585_550/ Availability of machinery: new tractor fleet
Rostselmash Tractor Versatile 570 DT
. Equipped with a caterpillar motion system and tandem frame of supporting rollers of unique construction, with two degrees of freedom which allows: . even distribution of tractor mass upon contact patch . decrease of soil tightening and slip coefficient . Performance 24 ha / h . Engine power 575 HP
570 DT 1un. . Fuel tank capacity 1 800 l Rostselmash Tractor RSM 2375
. Equipped with Cummins engine of series QSM 11 with power of 375 HP . Working speed from 4.8 to 13 km/ h . Hydraulic system performance 170 l / min . Fuel tank capacity 871 l . Maintenance-friendly: all lubrication points are reachable from the ground level, embedded visual gages in almost each and every tank allow a quick check of oil level in hydraulic, RSM 2375 4 un. differential and transmission systems Кirovets К-742
. General purposes agricultural tractor, all wheel drive with a steering frame . Power 428 HP . Weight lifting capacity 8 500 kg . Equipped with a set of wheels doubling, set of caterpillars or wide-profile tires К-744Р4 16 un.
STRICTLY CONFIDENTIAL VINCERE CAPITAL 16 Production materials supply chain
Resources supply chain (seeds, fertilizers, plant protection, fuel & lubricant and spare parts) is well arranged in Komsomolets agrocompany. Purchase and delivery are executed in the period of agricultural works completion before a new season Basic elements of supply chain Description Choice of suppler 1 Seeds Rape seeds Supply of seeds most adapted to . Supplier: Rapool (Germany) the region conditions to obtain the . Delivery method: automobile transportation maximal crop yield . Packing: 10 kg (paper bag) Supply – on a timely basis . Period/term of delivery: December-March (20-25 days) 1 . Storage: warehouse 2 Fertilizers Amorphous, sulphur-amorphous, ammonium saltpeter Supply of fertilizers considerably . Suppliers: Fosagro raising seed yield . Method of delivery: railway transportation Supply – on a timely basis . Packing: 1 ton (big-bag) . Period/term of delivery: December-March (20-25 days) 5 2 . Storage: warehouse 3 Crop protection agents
Pesticides and herbicides . Suppliers: August Crop complex protection against . Method of delivery: railway transportation destructive insects and diseases . Period/term of delivery: December-March (20-25 days) Supply – on a timely basis . Storage: warehouse
4 Fuel-lubrication materials 4 3 Diesel fuel and petrol Cooperation with the suppliers who . Supplier: OOO ТТК «Soyuz» have their own storage bases and . Method of delivery: automobile transportation . Period: during production period can secure fuel delivery to the . Storage: fuel tanks at the production facility enterprise in the quickest possible way 5 Spare parts for agricultural machinery Filters, complete units for seeders, other parts . Suppliers: Rostselmash, LEMKEN, Horsh, PTZ Cooperation with the suppliers who . Method of delivery: railway transportation have an elaborated pattern of spare . Period: during production period parts supply to the region . Storage: warehouse
STRICTLY CONFIDENTIAL VINCERE CAPITAL 17 Delivery diagram
Description of logistic chain Key logistic objects
. Logistic chain of the Company includes the following stages: Products dispatch stations Crop production is collected from the fields by harvesters and shipped in bulk into automobile transport (KAMAZ trucks with cargo-carrying Transshipment dispatch stations capacity of 20 tons) Railroad KAMAZ trucks deliver plant products to production bases in the territory of Zabaikalskiy region: to Bogdanovka settlement in Krasnokamensky Radius of crop harvesting district, Komsomolskoye settlement in Chernyshevsky district, Ust- Narinzor settlement in Sretensky district. In prospects the fourth production base will be set up in Ulety settlement. At the production bases the plant production after cleaning is delivered to warehouses or polyethylene “sleeves” for storage . It is planned to build up farm silos on the production bases in Komsomolskoye and Bogdanovka settlements for storage of 130,000 and 60,000 tons, respectively After cleaning the products are packed in polypropylene bags (40-42 kg) and shipped into railroad cars of load-capacity 66 tons at Chernyshevsk- Zabaikalskiy railway station From the above station the plant production is delivered to Manzhouli, Zhanna the nearest railroad station in the territory of China Transshipment to automobile transport is fulfilled on the near-border railroad stations in China and from there the products are delivered to Bukachacha the end-user consumers 60 km Chernyshevsk Chita 20 km
Mogzon Sretensk
Areal of field adjoining to bases Ulety
km 40 km 80 km 80 Krasnokamensk 60 Priargunsk 20 Zabaikalsk 8 Manchuria Krasnokamesk town Chernyshevsk settl. Sretensk settl. Nikolaevskoe settl. Presence of Komsomolets agrocompany
STRICTLY CONFIDENTIAL VINCERE CAPITAL 18 Logistics
Logistic route of production distribution
Delivery to production Delivery of products to Delivery to the state border Unloading of products and Crop harvesting from the fields bases railway shipping stations and destination r/way station delivery to consumers
Harvesting is made in: Production bases are located in a The packed products are delivered by Products are delivered to Zabaikalsk Products are unloaded from railway close proximity to the fields: the trucks to the following railway railway station to undergo phyto- cars with its further loading into . Krasnokamenk district stations: sanitary control procedures automobile transport for delivery to . Chernyshevsk district . Bogdanovka settlement end-user consumers in Manchuria . Uletovsky district . Komsomolskoye settlement . Chernyshevsk-Zabaikalsky (China) . Sretensky district . Ust-Narinzor settlement . Shilkinsky district
Key indicators Sales to China
ths ton kg – weight of grain carriers rented Flax «SLEEVE» one bag of 40 products 20 64 three-layer polyethylene Rape system (60mх2.7m) for KAMAZ trucks of products storage 20 t each tons – grain carrier 14 capacity rub/ton/km – 60 delivery expenditures storages of 4 to railway stations 3 1,000 m capacity days – 1 carrier 20 each 161 storage-hoppers of turn-round 3 20 54 m capacity 4 ths rub. – loading cost packing lines with per 1 railway car ths rub/ ton – capacity of 50 bags 10 2 railway transportation cost 17 5 per minute 3 2019 2031
STRICTLY CONFIDENTIAL VINCERE CAPITAL 19 Products storage
Komsomolets agrocompany uses a modern high-technology method for a long-term storage of plant products. After harvesting products are cleaned and packed in polymer “sleeves”
Comments Technological process
. Polymer sleeves for grain storage Grain delivery and Grain packing into Grain storage Grain unloading Site preparation are a cost-effective method for raw loading sleeves (up to 12 months) from sleeves materials storage. The main point of technology is to prevent an access for air (oxygen) when storing grain . Three-layer polymer sleeves are modern high-technology product produced by method of a three- layer extrusion with a layer-by-layer differentiated modification. The layers are inseparable, each made Technology of different polymers with various additives and stabilizers Grain storage in polymer sleeves is based on airtight storage principle . Grain packing into a sleeve is Sunlight Upper layer has a maximum made with the help of a custom thickness to prevent Respiratory process of compounds incoming with mechanical damages machine “bagger” grain flow, absorbs oxygen and generates carbon dioxide . Upon filling completion polymer Supreme sunlight sleeves for grain storage are reflection Atmosphere in the sleeve is saturated with СО2 and hermetically sealed on both sides Black layer lacks of О2, thus stops ability of insects and fungi to to protect from external impact and prevents heating invade create an anaerobic environment inside a bag . Procured fodder conserves its quality during entire storage period. Advantages The given method of storage allows minimizing fodder losses. mln rub CAPEX OPEX Period of raw material storage is 1- Sleeve . Low expenses 1.5 years 3 1 . Low losses of nutrients
Storage 13 0,5 . Optimized conditions for preservation . Accurate sorting and scalability Elevator 84 6 . Per 1 ha – up to 5,000 tons. Flexibility in selecting the site Storage costs for 5,000 tons
STRICTLY CONFIDENTIAL VINCERE CAPITAL 20 Rapeseed production
STRICTLY CONFIDENTIAL VINCERE CAPITAL 21 Rapeseed – general information
Climate of Zabaikalye fits well for rapeseed growing based on sum of active temperatures and characteristics of black soil. Lack of precipitation is compensated by the plant taproot penetration into deep soil layers Key factors about rapeseed Main parameters of Zabaikalian climate
. Kind of herb plants pertaining to Cabbage genus of Cabbage or Cruciform family. Sum of active temperatures It is the result of crossing of cabbage and turnip . Long day annual plant, cold resistant, requires moisture and fertility, shows good growth in moderate climate zone . Sorts of winter rape: Optimal for rapeseed growth 1800-2100С Late maturity — more than 310 days Mid season — 280-310 days
Early maturing — less than 280 days 1 950 1 849 1 849 1 849 1 900 . Sorts of spring rape: Late maturity — more than 110 days Krasnokamensky Chernyshevsky Sretensky Shilkinsky Zabaikalsky Kray Mid-season — 90-110 days (South) Early maturing — less than 80 days
Requirements for growing conditions Precipitation, mm/year . Spring rapeseed comes up at a temperature of 1-3°C, winter rapeseed - at 0.1°C. Seedlings can stand cold temperature as low as -5°C (mature plant as low as - 8°C), optimal temperature for germination 14-17 °C 700 th . Seedlings appear on the 4-6 day after sowing, blossoming begins in 40-50 days 380 after seedlings . Sum of active temperatures to form rapeseed yield - 1800-2100°C, green mass - Optimal for rapeseed Zabaikalsky region 780-800°C . During vegetation period consumes 1.5-2 times more water (optimal level 600— 800 mm precipitation per year) than grain cultures. During dry years rapeseed Soil yield reduces substantially, good yield is on moderately salted soil with acidity level close to optimal (pH 6.5—6.8) mln ha of black soil . Due to deep penetrating taproot the plant consumes water and nutrients from with high water permeability and low deeper layers of soil to compensate the influence of unfavorable climate 1.4 conditions water retention ability . Does not stand wet soil and proximity of ground water, swampy and heavy clayey areas . Better growth is observed in deep structural loamy and clayey soil enriched with microelements and nutrients with water permeable subsoil
STRICTLY CONFIDENTIAL VINCERE CAPITAL 22
ТОП-10 фраз по показам в ноября Application of Rapeseed
Rapeseed in Zabaikalye has a zero content of erucic acid, high content of oil and minimal level of impurities that makes it an ideal raw material for foodstuff production (rapeseed oil, etc.)
Application of rapeseed
FOODSTUFF INDUSTRY . Rapeseed is used for foodstuff purposes for production of rapeseed oil that is mostly popular in ANIMAL FEEDING STUFF China and Japan TECHNICAL APPLICATION . Meal and press cake produced by extraction or . One of the basic targets when breeding varieties for . Rapeseed oil contains the following fatty acids: pressing of oil out of rapeseed contain up to foodstuff purpose are increase of oil content in seeds palmitic, stearin, oleic, linolenic, eicosanoic, 42% of protein meeting the standards of Food and increase of its quality due to absence of an erucic and Agricultural Organization of UN on amino erucic acid that cannot fully degrade in human . For technical purposes it is necessary to use acid composition. Nevertheless, its value is organism that might be a reason for fat deposit in the varieties containing one or another fatty restricted by the presence of sulfur-containing muscles and damage of cardiac muscle acids in its composition. For example, technical compounds — glycosinolates, which are oil . A high content of linolenic acid adding a rank taste is oils (hydraulic and lubricating) and biofuel must glycosides and are derivatives of amino acids; not desirable have a high content of erucic acid, while oil under the impact of myrosinase ferment they . For the varieties with foodstuff purposes a high designated for production of synthetic degrade into poisonous substances in the content of oleic acid (up to 70%) is desirable detergents and perfumery products – high animal organism . For rapeseed oil used in margarine production to content of lauriс acid . Feeding purposes require rapeseed variety with harden fats it is necessary to have an increased high quality of both seeds and green mass, content of palmitic and stearin acids as well as liquid increased content of protein balanced as regard fats of oleic acid to amino acid content, and low level of . Vegetable oil made of such varieties has increased glycosinolates consumer performance (namely, there is no unpleasant flavor and greenish tint)
STRICTLY CONFIDENTIAL VINCERE CAPITAL 23 Stages of rapeseed growing
1 Soil preparation 2 Sowing 3 Fertilizing Harrowing – hoeing of soil surface by harrows or rotation hoes. Spring rapeseed has got clearly expressed properties of a Rapeseed requires sufficient quantity of mineral fertilizers Protects ground from drying, mixes occasionally and even an long daylight time hours plant, it needs very early sowing time. since for 1 ton seed formation it pulls out of the soil: nitrogen outer layer of soil, destroys a soil cork and weeds and thins Experiences obtained in 6 regions of Belorussia and Ukraine 48-80 kg, phosphorus 18-40 kg, potassium 25-100 kg, calcium out thick plant seedlings Polesye showed that every day of sowing delay in comparison 30-150 kg, magnum 5-15 kg, sulphur 30-45 kg with the earliest possible sowing time, results in decrease of For spring rapeseed nitrogen fertilizers are put in parts. 2/3 of Packing of soil before sowing provides shallow even seeding harvesting approximately by 40 kg/ha/day. Sowing rates are norm – for pre-sowing cultivation, and the rest – for nutrition or and accelerates appearance of young crops 80-100 seeds/m2. Hybrid varieties of Rapool company top dressing at a rosette-start bud stage (Germany) are used as seeds
Fungicidal chemical treatment 6 Chemical treatment on vegetation 5 Chemical treatment, pretreatment 4
Fungicidal treatment allows to protect different parts of Vegetative treatments allow to protect plants against aero Seed pretreatment – application of agents for deactivation of vegetating plants against contamination by plant pathogenic genic infections (powdery mildew, brown rust, leaf blotch and causative agents of fungi and bacteria diseases that are fungi and bacteria by delay of beginning of epiphytotic or other leaf blights, late blight, early blight and others), improve invaded through seeds, planting material and soil. decrease of infection speed mainly transmitting by air crops quality, help in reducing stress caused by pesticide Pretreatment also: Germs of many diseases are in an active phase in the course treatment, raising heat and drought resistance, growth strengthening of secondary roots . protects seeds and seedlings against affect by phyto- of nearly entire vegetation period evolving several generation pathogenic organisms cycles Retention and adherence of contact agent on plant surface is of great importance. Retention means agent’s ability to stand . reduces damages of seedlings with root rot as well as More often the first spraying is carried out at appearance of pests being in soil the first signs of disease, and next – in certain intervals against destructing impact of various nature factors depending on duration of fungicide action and weather . reduces traumatic damage of seeds, activates conditions protective properties for prevention of microorganisms appearance . Stimulates plants growth and development
7 Chemical treatment against pests 8 Desiccation 9 Rapeseed harvesting
Insecticidal protectant penetrates into seeds and spreads Desiccation – is a dehydration of plant tissues by means of Harvesting begins in the middle of August and may last till the along a plant as it grows. Pests destruction takes place during their treatment with chemical agents. It is applied to ease first half of September several hours after eating machinery harvesting process 5-15 days prior to its beginning The Rostselmash machinery, namely Acros 585, is used there. Partially it destructs perennial weeds in fields, owing to which For careful harvesting a specified accessory for cutter, with convenient conditions for sowing the next culture from the width of cut 6/7/9 m is used that reduces3-4 times losses rotation are created during cutting and enables to collect additionally 30–100 kg of grains per 1 ha depending upon crop yield
STRICTLY CONFIDENTIAL VINCERE CAPITAL 24 Production calendar
Description Calendar
Production cycle of Agrocompany Komsomolets comprises 7 key Year 0 processes: . Development of fallow/idle land 1. Purchasing of production materials (including seeds, fuel & lubricant, plant protection means, fertilizes, spare parts for Year 1 agricultural machinery). Purchasing terms assume advance January-March payments (December-January). Upon approval by banks of . Prepayment and supply of materials credit limits to cover working capital requirements, April Komsomolets pays the balance for production materials . Soil preparation (harrowing, soil rolling) (March) May 2. Soil preparation is carried out until April 28 for creation of favorable conditions for sowing and growing of plants. Main . Seed pretreatment before sowing operations – soil rolling (provision of optimal contact between . Sowing seeds and hard surface of soil) and harrowing (destruction of . Fertilizing soil cork, weeds, removal of plant leave-offs) . Chemical treatment 3. Sowing campaign (is carried out until May 10). Includes seed June pretreatment, their sowing as well as fertilizing and chemical . Repeated fertilizing treatment of soil . Chemical treatment on plant vegetation 4. Crop tending (from May 10 till end of August). It includes a complex of actions aimed at protection of seedlings in the . Chemical treatment using fungicides course of vegetation, weeds elimination, plant protection . Insecticidal chemical treatment against pests and diseases, creation of favorable conditions July for culture growth . Chemical treatment against pests 5. Harvesting starts in the end of August and lasts till end of August October. It is started by straight-cutting in the phase of full ripe, . Desiccation at seeds moisture level of 9 - 12% August-September 6. Drying and packing of crop. Seeds are dried until moisture level of 8-9%, with preliminary cleaning them from impurities. . Harvesting The dried up harvest is stored in “sleeves” until it is sold out . Drying and warehousing of crops 7. Crop sales. Depending on the type products are shipped either October-December in bulk (wheat, oat, barley) or are packed in bags (rapeseed, . Packing in bags for shipment flax). Marketing of products lasts until March next year . Sales of grain
Year 2 January-March . Sales of crops left from the previous year
STRICTLY CONFIDENTIAL VINCERE CAPITAL 25 Sowing pattern
Crop rotation Sowing schedule
. Сrop rotation is a scientifically proven alteration of agricultural plants and fallow soil in time and in the territory, enabling to avoid soil fatigue . Due to plants rotation it is achievable to maintain in soil an optimal ratio of 49,9 nutrition substances and microelements; and preceding plants help growing 61,3 ample crop of those cultures which will be planted next year 54,6 . If the same type of cultures is planted every year there will be a deficit of the 13,4 47,2 10,0 element which was the most needed. Owing to rotation concept the necessary 26,8 balance of useful substances is maintained: soil properties are used according to 47,0 12,3 20,0 10,9 the planned concept and deficit of elements is replenished by subsequent 29,9 24,5 21,8 cultures 9,4 9,4 41,3 . According to the obtained experience on rapeseed growing in the fields of 18,8 18,9 74,5 88,1 Zabaikalsky, Altaisky and other regions, the Company agronomists set up an 34,6 6,0 71,7 optimal field rotation plan, as follows: 12,0 68,8 st 25,2 8,3 48,8 1 year – rapeseed is grown after idle land development 60,1 16,5 2nd year - rapeseed fields are used for wheat, barley and oat 6,9 22,0 13,8 46,5 rd 3 year - the above field are planted with flax 5,0 6,9 41,7 67,0 4th year – the flax fields are sown with wheat, after that the land rests for one 5,4 10,1 49,9 8,8 35,8 54,6 67,2 year in order to start the new cycle 15,0 61,3 5,6 47,2 . During 2019-2030 the Company intends to put into cultivation 269,000 ha of 7,2 20,8 47,0 3,9 34,6 29,9 fallows and the total cultivated land-bank will make up 300,000 ha 2,3 12,1 2,6 25,2 41,3 5,2 41 47 47 . Taking into consideration the requirements of crop rotation the target size of 5,7 22,0 22 25 35 30 10 16 rapeseed sowing is expected to exceed 60,000+ ha. Wheat will become the 13,6 0 5 55 nd th 22 basic auxiliary culture, since it is sown on the 2 and 4 years after fallow land 25 25 25 25 25 22 20 20 20 20 20 raising, after rapeseed and flax respectively 0 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Idle lands Fallow Rapeseed Wheat Barley Annual grass Oat Flax
Field rotation plan
Idle lands Wheat (lands that are not plowed up, but are suitable for plowing and Rapeseed Barley Flax Wheat sowing, have been out of use for a Fallow long period of time) Oat
STRICTLY CONFIDENTIAL VINCERE CAPITAL 26 Rape seeds
The Company uses a balanced set of hybrid seeds of Rapool company (German) with vegetation period from 80 to 100 days that enables starting harvesting earlier and on the whole planning a regular harvesting campaign optimally using the available machinery
Grade / characteristics Salsa Kl Solar Kl Trapper Smilla
high Crop yield (from 1 to 5) 5 5 5 5 low high Oil content (from 1 to 5) 5 5 5 4 low Height of a plant high 4 (from 1 to 5) 3 2 2 low Initial blossom late 3 (from 1 to 5) 2 1 1 early late Ripening (from 1 to 5) 3 2 early 1 1 high Persistence to diseases (from 1 to 5) 5 5 5 5 low high Drought hardness (from 1 to 5) 5 5 5 5 low
Standing ability high (from 1 to 5) 4 4 5 4 low high Persistence to dehiscence 5 5 5 5 (from 1 to 5) low
. Intensive growth at initial stages, deep . High adaptability, universality and short . The earliest ripening of the grade allows . An early ripening grade is of a special root system, stands well against vegetation period starting harvesting by 5-7 days earlier, interest for farms engaging in spring stresses . High oil content that is rather critical in spacious areas rapeseed in more northern regions having a relatively short vegetation . Ideal in fields weeded with problematic . Good standing ability against lodging . Compact, low-growing hybrid with plenty period and cruciferous plants and seed cast, persistence to diseases of side scions, with dense and evenly ripening follicular packs which stands . Homorganic sowings, even ripening, . Applied in the regions with a high risk hard against even strong wind compact follicular pack make easy due to moisture limitation harvesting reducing losses of crop down to minimum possible level
STRICTLY CONFIDENTIAL VINCERE CAPITAL 27 Rapeseed market
STRICTLY CONFIDENTIAL VINCERE CAPITAL 28 Russian market
Regional review of rapeseed production in the RF The largest producers of rapeseed oil mln rub
№ Description Region Sales 1 ZAO SODRYZHESTVO SOYA Kaliningrad region 37 412 2 OOO MEZ UG RUSI Rostov region 21 748 3 ZAO SAMARAAGROMPERERABOTKA Samara region 11 018 4 OAO “IRKUTSKY MZHK” Irkutsk region 10 323 5 OOO VOLZHSKY TERMINAL Saratov region 9 551 Tula region 6 OOO SOROCHINSKY MEZ Orenburg region 7 748
Ryazan region 7 AO КМEZ Republic of Tatarstan 6 919 8 AO ORELMASLO Oryol region 5 086 Lipetsk region Tatarstan Krasnoyarsk region 9 AO MZHK ARMAVIRSKY Krasnodar region 3 894 Stavropol region Omsk region 10 OOO KUBANMASLO-EMZ Krasnodar region 3 509 Novosibirsk region 11 OAO URYUPINSKY MEZ Volgograd region 3 332 12 OOO NMEZ Stavropol region 2 113 Kemerovo region Zabaikalsky region Altay region 13 ZAO VERKHOVSKY MKZ Voronezh region 1 674 14 OOO YUZHNY POLUS Krasnodar region 1 435 15 OOO ZAVODOUKOVSKY OIL PLANT Tyumen region 1 168 Regions growing rapeseed 16 OOO FLORENTINA Krasnodar region 1 052 Other regions Factories on rapeseed processing
Rapeseed planted acreage in the RF Production of rapeseed oil in the RF
ths ha ths ton 2018 2017 2018 in % vs. Share in all crops, % № Region 2017 The RF 1 582 1 024 154 2 1 Omsk region 157 84 186 5 2 Altay region 138 51 272 3 3 Republic of Tatarstan 120 59 203 4 4 Krasnoyarsk region 114 57 201 8 378 5 Novosibirsk region 97 50 193 4 358 344 6 Tula region 85 71 120 10 311 7 Kemerovo region 70 60 116 8 245 201 8 Stavropol region 57 64 88 2 171 9 Lipetsk region 54 41 131 4 10 Ryazan region 53 39 136 6 … … … … … … 27 Zabaikalsky region 17 14 126 9 2011 2012 2013 2014 2015 2016 2017
STRICTLY CONFIDENTIAL VINCERE CAPITAL 29 World market (1/2)
Market description Production volume
. Rapeseed is the second important oilseed plant in the world after soybeans mln ton Rapeseed share in the world-wide production of oilseeds made up 12% 600 57344 57545 42 in 2018/2019 season 39 45 43 48 47 50 In 2018/19 season rapeseed production achieved 70 mln tons (-5% vs. 69 74 70 2017/2018 season and +21% vs. 2008/2009 season) . The world largest rapeseed producers (data for 2018/2019 season): 349 339 369 Canada: 21 mln tons ЕU countries: 20 mln tons China: 13 mln tons 2016/17 2017/18 2018/19 India: 6 mln tons Soybeans Rapeseed Sunflower Cutton Arachis Palm kernel Copra . Russia in 2018/2019 season grew more than 2 mln tons of rapeseed: Planted acreages reached 1.5 mln ha. Crop yield – 14.3 c/ha Growth of rapeseed gross crop was possible due to significant Production break-down by countries expansion of rapeseed sowing – harvested acreages in 2018 increased mln ton by 63%
. Rapeseed consumption in the world reached 70.7 mln tons. The world 1 9 2 9 2 8 largest consumers are: 21 22 20 7 6 6 ЕU: 24.1 mln tons 69 74 70 China: 18.5 mln tons 13 13 13 Canada: 9.6 mln tons Japan: 2.5 mln tons 20 21 21 . Russia rapeseed consumption is about 1.5 mln tons . Segments of rapeseed consumption: food, forage for farm livestock, biofuel 2016/17 2017/18 2018/19
EU Canada China India RF Others
World prices for rapeseed products Rapeseed consumption per country (2018F)
1 300 mln ton 14,8 70,7 1 100 900 763 2,5 1,3 700 500 436 9,6 300 18,5 100 275
24,1
Oil Meal Rapeseed EU China Canada Japan Russia Others Total
Sources: USDA, FAO OECD, ROSSTAT
STRICTLY CONFIDENTIAL VINCERE CAPITAL 30 World market (2/2)
The largest rapeseed consumption markets Application of rapeseed mln ton Кey sectors of rapeseed application:
Feed for livestock
9,6 Oil-fat 24,1
18,5 2,5 Biofuel 6,0
Cosmetics
71 mln ton Detergents World rapeseed consumption* The largest markets of rapeseed consumption Fertilizers Turnover Export** Import** 1% 5% 9% 10% 7% Paints 12% 10% 48% 24 mln ton 54% 20% World turnover of rapeseed* 25% Lacquer
Canada EU Australia EU China Japan Mexico Others Ukraine Russia Others
Sources: USDA, FAO OECD Note: * Data for 2018 ** Data for 2017 STRICTLY CONFIDENTIAL VINCERE CAPITAL 31 China market (1/2)
Market description Rapeseed production / consumption in China
. China is the third largest world rapeseed producer (12.9 mln t), mln ton assenting to Canada and ЕU, nevertheless it is an essentially Rapeseed production >1 000 ths ton/year Production less than rapeseed consumption in the Celestial Empire (18.5 Rapeseed production >100 ths ton/year mln t), the deficit of which has to be replenished for account of imported products 2018/19 12,9 10,6 7,0 30,4 Rapeseed production >5 ths ton/year . Deficit of lands applicable for agriculture and stagnated harvesting slow down growth of oilseeds production . More than half of the total rapeseed yield in China is harvested in Sichuan, Hubei and Hunan provinces 2017/18 13,3 10,2 6,7 30,1 0,04 МТ . Rapeseed seedlings and harvesting in China reduced in 2018 0,2 МТ 0,4 МТ by 3% as compared with 2017 year in response to lowering profit of producers due to cessation of state support for 2016/17 13,1 9,9 6,6 29,6 0,02 МТ rapeseed producers 0,02 МТ . In April 2018 China’s State Council approved 25% duty on 0,3 МТ 0,4 МТ Rape Rapeseed meal Oil 0,5 МТ import of soybeans from the USA that may cause import 0,4 МТ 0,4 МТ increase of rapeseed, rapeseed cake and meal to meet 0,06 МТ 0,8 МТ livestock-raising requirements for feeding 2,1 МТ 2,9 МТ 0,2 МТ . Considering the above-mentioned circumstances and essential 0,5 МТ 0,7 МТ idle lands in the Far East, Russian companies possess of Consumption 2,0 МТ considerable potential in gaining the priority positions at China’s 0,9 МТ 0,01 МТ food-stuff market 4,7 . Export of rapeseed from Russia to China in 2017 amounted to 0,5 МТ 0,02 МТ 0,02 МТ 18,5 108.1 ths ton 13,8 . As per December 2018, 252 Russian companies have a right to export rapeseed to China Own production Import Consumption . In May 2018 the Chinese Government decreased VAT for sale and import of agricultural products including oilseeds from 11% to 10% to stimulate development of agriculture and related Rapeseed import to China The largest importers branches mln ton . Canada is the monopolist in rapeseed supply to the Chinese Company Volume, ths ton (2016) Share market. In 2017 Canada exported to China 4.3 mln tons of rapeseed 0,1 0,1 Yihai Kerry 745 21% 0,1 Canada . Yihai Kerry (affiliated enterprise Wilmar International), Chinatex, Chinatex 733 21% COFCO, Dongguan Fuzhiyuan, Xiamen Yinxiang Oil are the largest companies importing rapeseed. These companies import Mongolia COFCO 522 15% over 80% rapeseed to China annually 4,7 4,7 4,5 Russia Dongguan Fuzhiyuan 484 14% 3,6 4,5 Australia Xiamen Yinxiang Oil 428 12% Others 653 17%
2015 2016 2017 Total 3 565 100%
STRICTLY CONFIDENTIAL VINCERE CAPITAL 32 Strategy
STRICTLY CONFIDENTIAL VINCERE CAPITAL 33 Strategy
Balanced strategy of intensive and extensive growth
Storage and processing Development of land-bank Yield improvement infrastructure development
. To become the leader in the Russian . To achieve stable rapeseed yield 25+ . To construct own elevator Far East as to amount of farmland hundred kg/ha . To upgrade the existing and build up . To acquire lease-rights to 190,000 ha in . To introduce smart farming technologies, new barn-floors the best districts of Zabaikalye and control in real time condition of soil and . To launch a drying line expand the total land-bank up to 300,000 plants at all stages of growth . To launch a new packing line ha . To use new herbicide varieties, . To set up the own oil-extraction plant for . To expand farmland from 32,000 ha in maximally fit for getting high yield in production of premium rapeseed oil 2018 up to 153,000 ha in 2025 Zabaikalye without erucic acid for food usage . To sow in 2031 245,000 ha of tilled field, . To optimize a rapeseed sowing period and to have another 55,000 ha fallow from 20 to 10 days . To keep on equipping with the best . To timely make spraying and treatment agricultural machinery (sowing of crops complexes, sprayers, grain-harvesting . To optimize a period of rapeseed combines, tractor fleet, mechanisms for harvesting campaign to 10 days (equally soil treatment and cultivation, etc.) to sowing period providing harvesting sequence) . To accumulate the best world experience of rapeseed leading producers on using technologies . To arrange the own laboratory to carry out plant analysis in the course of vegetation
STRICTLY CONFIDENTIAL VINCERE CAPITAL 34 Strategy: accelerated land-bank development
. In 2019 the Company will lease 125,000 ha of new land Land-bank, ths ha . The remaining average lease term under the issued agreements is 47 years To sign new lease 237 agreements . New agreements are concluded for 49 years 112 . The project has the status of the project of regional significance, lands are allocated on a priority basis without holding auctions 2018 2019
. The Company has accumulated a sufficient managerial and Seeds, ths ha operating experience and is ready for accelerated scaling up of business . Within a period of 2019 - 2030 it is scheduled to put into agricultural turnover 20,000-25,000 ha of new lands annually in the best areas 233 213 245 of Zabaikalsky region 179 210 165 To develop land-bank 153 131 87 123 68 53 31 35 41 47 47 10 16 5 22 25 30 55 22 25 25 25 25 25 22 20 20 20 20 20 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Idle lands Fallows Seeds
. The Company intends to continue massive investments in acquisition of machinery and mechanisms . For preparation to an agricultural campaign-2019 to develop 22,000 ha of idle lands and increase efficiency of treatment of already Парк техники для освоения 15 тыс га cultivated lands, an investment program for 506 mln rub is formed and partially financed 25 . It is planned to acquire the following: 15 15 15 15 15 15
. Tractor Versatile 570 DT Посевные Катки для Опрыскиватели Зерноуборочные Комплексы для Комплексы для Комплексы для Investment in комплексы прикатывания комбайны разбрасывания дискования боронования, machinery . Sowing complexes Horsh удобрений дискования . Atomized mixture complex for production of mother and working Инвестиции в технику, mixtures of mineral fertilizers and plant protection agents млн руб . Autonomous automated mobile dosing unit of working mixtures of plant protection agents, etc 15 15 15
2014-2018 2019-2023 2024-2018
STRICTLY CONFIDENTIAL VINCERE CAPITAL 35 Strategy: yield improvement
. Long sowing terms lead to a threat of exposure to drought season. Length of sowing, days Length of harvesting, Thus, seedlings may not appear until the first rain. By harvesting days To increase efficiency season such plants are not fully ripen and as a result, grain of sowing and becomes rill and underdeveloped harvesting campaign . Long harvesting terms lead to crop yield loss due to chill and 20 20 scattering by wind, to improve efficiency of combines it is required 10 10 to acquire tankers-transfers 2018 2020 2018 2020
Rapeseed yield, hundred kg/ha . Diverse machinery fleet, namely spraying and fertilizing machines, Пшеница provides a proper functioning and timely fertilization at any weather conditions. Spraying device Tuman-2М excellently proved itself in conditions of over wetting (operates in a functional manner after 23 25 rain, owing to a climatic system of low pressure wheels it does not 17 20 destroy plants) 15 . Setting up of the own laboratory on spectrum analysis of plant leaf 2018 2019 2020 2021 2022 for timely analysis of lack of microelements in soil and for correction To increase crop yield of fertilization program 24 25 Лен Ячмень 23 23 . Application of drones to monitor operator’s gaps, efficiency of 20 21 sowing complexes as for density of planting, pest-animals 15
23 25 23 25 17 20 20 15 15 17
2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022
. Timely and full treatment of field using herbicides against weeds. 1st grade rapeseed yield share, % While harvesting weeds are not separated from useful product, a high share of weed seeds may lead to losses . Observation of optimal climate conditions while harvesting (optimal humidity 8-9%). Harvesting at moisture level over 12% leads to additional ”dead waste“ Rapeseed gross crop yield, ths ton To minimize yield . Modern solutions on smart farming: losses . Robotic tractors control for prevention of path overlapping (2 cm 95% 84% vs. 50 cm), that raises efficiency of seeds and fertilizers usage 1,4 1,1 7,8 7,5 . Device allowing to control a path straightness and form a crop yield map 2018 Увеличение земель Рост урожайности 2022 в обработке
2018 2023
STRICTLY CONFIDENTIAL VINCERE CAPITAL 36 Strategy: infrastructure development
Construction of elevator Packing line
Drying line Oil extraction plant
STRICTLY CONFIDENTIAL VINCERE CAPITAL 37 Financial model
STRICTLY CONFIDENTIAL VINCERE CAPITAL 38 Key assumptions
1 . The Model assumes development of 269,000 ha of idle land by 2030. Rapeseeds share in crop rotation grows from 14,000 ha to 67,000 ha. Rapeseed target yield is 25 hundred kg/ha by 2024 Production and . Crop rotation includes also wheat, barley, oat and flax. Crop yield for these cultures is 16-18 hundred kg/ha . Owing to investment program of infrastructure and technical equipment development rapeseed losses will reduce from 8% down to 4%, 1st grade rapeseed revenue share will increase from 86% to 95% by 2023. . Sale price for rapeseed is taken as 30 rub/kg (corresponds to actual price of 2018), flax – 28 rub/kg, wheat and barley– 11 rub/kg, oat – 8 rub/kg. From 2020 growth of price for agricultural products is assumed at the level of inflation. It is assumed that 80% of crops will be sold during the current year, 20% - next year
2 . Direct COGS is calculated on the basis of technological diagrams data and includes: expenses for payroll, fuel & lubricant, seeds, fertilizers and plant protection agents. . General production and administrative expenses: At present the Company staff comprises of about 400 employees. Development of business will involve a growth of this number up to 1 915 people (+1476 engaged in production and 39 - in administration). Payroll taking into account social charges of production and managerial personnel (without field workers having piecework wages being shown in direct COGS) and growth of wages will increase from 110 mln rub in 2019 to 645 mln rub in 2031. Export duty for rapeseed – 6.5% of product price net of transportation expenses Taxes: VAT on the sale 10%, other VAT 20%, income tax 0%, property tax 2% of fixed assets book value, land tax 1.5% of cadastral value of land in OPEX ownership, lease of land 23 rub/ha. Social charges on payroll: government pension fund – 22% , social insurance fund – 2.9%, medical insurance fund – 5.1%; personal income tax – 13% Provision is made for regulations valid in the territories of priority social and economic development, including some tax exemptions and reduction of contributions to the government pension fund to 8% for 10 years Other expenditures are taken at a level of 886 rub/ha of cultivated land including development of idle lands. Area of the cultivated land-bank is a driver for increase of other expenditures with coefficient of 50%, which reflects economies of the scale . The Model takes account of the subsidies for idle land cultivation – 4,600 rub/ha and recovery of 50% CAPEX for machinery and construction and installation works
3 . CAPEX for acquisition of machinery and equipment for massive land-bank development from 30,000 ha in 2018 to 300,00 ha in 2030 will come to 9.9 bln rub in projected prices including VAT . Investment in infrastructure will come to 3 bln rub in projected prices with VAT for construction of an elevator CAPEX and working . From 2020 an annual capital repair is envisaged at 2.5% level of fixed assets book value capital . Investment in idle land development and treatment of fallows will make up 2.6 bln rub, they are capitalized in fixed assets and depreciated during 5 years . Term of machinery depreciation comes to 10 years, infrastructure objects – 25 years . Accounts receivable turnover – 30 days, accounts payable – 45 days. Prepayment of production consumables (fuel & lubricant, seeds, fertilizers, plant protection agents) is processed in 1-2 quarter of each year
4 . Investment program is financed by means of bank loans for 5 year term at 5% annual interest . Short-term loans are raised at 5% interest rate for development of idle lands, fallows treatment and carrying out main activity during cropping. Period of all short- term loans is one year Financing . The model envisages dividend payout once a year in the 2nd quarter (upon realization of the last year crop yield and after clarification of Company’s needs in reinvestment of net profit) in case of availability of free cash. Taking into account financing needs for business growth dividend payout starts from 2021. Dividend payout ratio in 2021 is 35% and by 2026 increases up to 90-95% of free cash
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 39 CAPEX schedule
Total needs in investment for 2019-2031 come to 17.7 bln rub incl. VAT CAPEX
Sources of funds Uses of funds
Agricultural machinery and equipment
1 090 2 943 Investment loans 1 525 17% Infrastructure 600 Working capital loans (for 2 087 3% idle land and fallows) 1 003 6% 17 656 Investors 17 656 Maintenance CAPEX mln rub 10 495 mln rub 9 955 2 615 59% Loan by Far East 15% Development Fund 3 000
Free cash flow Fallow treatment
Idle land involvement Investment schedule
mln2 500 rub
2 000
1 500
2 284 1 000 1 515 1 648 1 697 1 466 1 328 1 299 1 185 1 171 1 289 500 1 082 1 114 578
0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
STRICTLY CONFIDENTIAL VINCERE CAPITAL 40 Crop harvesting
Crop yield Crop yield losses
hundred kg/ha %
25,0 22,5
18,0 18,0 18,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 16,0 16,0 16,0 23% 23% 23%
11% 12% 12% 11% 12% 12% 11% 12% 12% 8% 6% 4%
2019 2021 2024 2019 2021 2024 Rapeseed Wheat Barley Oat Flax Rapeseed Wheat Barley Oat Flax
Output in standard weight
ths ton
61,5 75,5 20,1 58,2 67,2 15,0 40,2 16,4 29,9 57,9 18,4 36,8 32,7 14,1 14,2 36,8 50,9 141 28,2 28,3 119 9,0 31,0 42,6 17,9 110 10,4 115 20,7 12,4 96 78 24,8 75 27,1 7,6 57 8,08,6 15,1 67 13,2 6,9 24 161 161 10,7 33 131 147 5,8 113 113 120 95 3,92,8 74 72 7,8 39 53 21 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Rapeseed Wheat Barley Oat Flax
STRICTLY CONFIDENTIAL VINCERE CAPITAL 41 Prices and Sales
Sales prices
ths rub / ton
48 46 45 44,5 43 43,0 41,6 41 40,1 40 38,7 38 37,3 37 35,8 35 34,4 34 33,0 31 33 31,7 30 30,4 28,0 29,3
18 16,317 16,917 17,5 14,615 15,215 15,716 13,013 13,514 14,114 13,2 11,5 11,912 12,413 11,5 11,9 12,4 12,8 11,0 9,8 10,2 10,7 11,1 8,3 8,7 9,1 9,4
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Rapeseed Wheat Barley Oat Flax
Revenue
mln rub
2 837,9 3 158,4 251,0 662,4 2 314,5 2 702,0 198,7 524,3 2 403 188,8 2 066,9 498,3 220,9 2 011 583,0 1 463,4 161,6 426,4 1 646 1 752,4 144,2 1 869 380,4 1 246 268,8101,9 1 353 1 378,1 992,3 1 032 95,8 252,7 321,6121,9 7 552 663 6 923 738,9 882 6 082 181,971,5 5 193 5 475 248,7 322 139,476,9 3 953 4 439 177,9 367 3 164 70,381,3 2 316 2 763 68,626,163,5 1 032 1 552 479 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Rapeseed Wheat Barley Oat Flax
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 42 Production technology (direct costs)
Payroll Fuel & lubricant
Rub/ ha 624 Diesel l/ha 584 578 @47 rub/l
42 42 39 37 463 34 31 428 20
Idle land Fallow Rapeseed Wheat Barley Oat Flax
256 256 Petrol l/ha @40 rub/l
2,1 2,1 2,0 1,7 1,8 1,6 1,0
Idle land Fallow Rapeseed Wheat Barley Oat Flax Idle land Fallow Rapeseed Wheat Barley Oat Flax
Consumables
Rapeseed Wheat Barley Oat Flax Description Consumption norm Consump. Price, rub Consump. Price rub Consump. Price, rub Consump. Price, rub Consump. Price, rub Pretreatment l/ton seeds 10,0 2 223 1,7 40 1,8 40 1,6 40 1,0 40 Pretreatment l/ton seeds 4,0 255 0,4 825 0,5 825 0,5 554 1,4 1 980 Seeds Kg/ha 1,7 688 0,4 825 - - - - 4,3 255 Seeds Kg/ha 2,5 13 200,0 10 200,0 10 180,0 8 55,0 13 Fertilizers Kg/ha 60,0 20 ------Fertilizers Kg/ha 100,0 11 79,4 11 79,4 11 79,4 11 60,0 20 Liquid fertilizers Kg/ha 180,0 25 ------Herbicides l/ha 0,3 850 ------Herbicides l/ha 1,0 585 0,2 850 0,2 935 0,2 935 0,1 850 Herbicides l/ha 0,3 2 128 2,0 243 1,0 483 0,3 622 0,0 3 488 Herbicides l/ha 0,6 944 0,3 418 0,3 599 - - 1,0 585 Herbicides l/ha 0,5 247 ------2,0 445 Herbicides l/ha 1,0 743 ------Herbicides l/ha 2,0 243 ------
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 43 Financial indicators
Profit generation process (2024)
mln rub
86 244 42 220 78% 378 250 582 289 53% 167 676 614 31% 179 260 5 476 4 255 4 255 3 216 3 036 3 098 2 838
Revenue Payroll Fuel & Pretreatment Seeds Fertilizers Herbicides Gross Logistics Payroll & Export Taxes and EBITDA Subsidies Depreciation % Net income & social lubricant profit social duty other Leasing charges charges expenses
Sales and cost structure (2024) Forecast EBITDA and profitability EBITDA
Sales Cost 3,4% mln rub EBITDA Рентабельность EBITDA
7,0% 57% 58% 57% 58% 57% 57% 25,2% 9 000 56% 55% 56% 56% 60% 31,0% 7 762 8 000 49% 7 354 18,0% 44% 50% 7 000 5 476 1 221 6 182 6 075 2,2% 50,6% mln rub mln rub 6 000 5 229 40% 5,9% 32% 5 000 4 335 4 105 30% 20,0% 4 000 16,1% 20,5% 2 956 3 036 3 000 20% 2 024 2 000 1 184 695 10% Rapeseed Wheat Barley Oat Flax Fertilizers Herbicides Fuel&lubricants 1 000346
Seeds Payroll Pretreatment - 0% 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 44 Forecast financial and operating data (1/2)
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Total Land-bank 130 210 300 300 300 300 300 300 300 300 300 300 300 Lease ths ha 126 204 291 291 291 291 291 291 291 291 291 291 291 Ownership ths ha 4 6 9 9 9 9 9 9 9 9 9 9 9 Cultivated land-bank 53 78 103 128 153 178 200 220 240 260 280 300 300 Idle lands ths ha 22 25 25 25 25 25 22 20 20 20 20 20 - Fallows ths ha - 0 10 16 5 22 25 35 41 30 47 47 55 Rapeseed ths ha 14 22 25 35 41 30 47 47 55 61 50 67 67 Wheat ths ha 6 12 21 15 36 42 47 60 49 69 72 75 88 Barley ths ha 5 4 9 10 14 17 12 19 19 22 25 20 27 Oat ths ha 3 7 5 5 7 8 6 9 9 11 12 10 13 Flax ths ha 2 6 7 22 25 35 41 30 47 47 55 61 50 Yield Rapeseed hund kg/ha 17,0 19,0 22,5 22,5 24,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 Wheat hund kg/ha 18,0 18,0 18,0 18,0 18,0 18,0 18,0 18,0 18,0 18,0 18,0 18,0 18,0 Barley hund kg/ha 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 Oat hund kg/ha 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 17,0 Flax hund kg/ha 16,0 16,0 16,0 16,0 16,0 16,0 16,0 16,0 16,0 16,0 16,0 16,0 16,0 Gross output 51 91 129 166 239 247 298 322 348 408 404 451 475 3 628 Rapeseed ths t 23,2 41,8 56,7 77,8 99,1 74,8 117,5 118,0 136,4 153,3 124,8 167,5 168,0 1 359 Wheat ths t 10,3 21,7 37,4 27,0 64,5 75,1 83,8 108,2 87,8 123,9 129,1 134,2 158,6 1 061 Barley ths t 8,8 6,6 15,0 17,1 23,5 28,1 20,3 32,0 32,1 37,1 41,7 33,9 45,6 342 Овес ths t 4,4 12,2 9,1 8,6 11,8 14,0 10,2 16,0 16,0 18,6 20,8 17,0 22,8 181 Flax ths t 3,7 9,0 11,1 35,2 40,3 55,3 66,1 47,8 75,2 75,5 87,3 98,1 79,8 685 Output in standard weight 45 82 116 148 215 218 265 289 309 365 357 401 424 3 234 Rapeseed ths t 21,3 38,9 53,3 73,9 95,2 71,8 112,8 113,3 131,0 147,1 119,8 160,8 161,3 1 300 Wheat ths t 9,2 19,3 33,3 24,0 57,4 66,8 74,5 96,3 78,2 110,3 114,9 119,4 141,2 945 Barley ths t 7,8 5,8 13,2 15,1 20,7 24,8 17,9 28,2 28,3 32,7 36,8 29,9 40,2 301 Oat ths t 3,9 10,7 8,0 7,6 10,4 12,4 9,0 14,1 14,2 16,4 18,4 15,0 20,1 160 Flax ths t 2,8 6,9 8,6 27,1 31,0 42,6 50,9 36,8 57,9 58,2 67,2 75,5 61,5 527 Sales 36 74 110 141 201 218 256 284 305 354 359 392 419 3 149 Rapeseed ths t 17,1 35,4 50,4 69,8 90,9 76,5 104,6 113,2 127,4 143,9 125,2 152,6 161,2 1 268 Wheat ths t 7,3 17,3 30,5 25,9 50,7 65,0 73,0 91,9 81,8 103,8 114,0 118,5 136,8 916 Barley ths t 6,2 6,2 11,7 14,7 19,6 24,0 19,3 26,1 28,3 31,8 36,0 31,3 38,1 293 Oat ths t 3,1 9,4 8,6 7,7 9,8 12,0 9,7 13,1 14,1 15,9 18,0 15,6 19,1 156 Flax ths t 2,3 6,1 8,2 23,4 30,3 40,3 49,2 39,7 53,7 58,1 65,4 73,9 64,3 515
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 45 Forecast financial and operating data (2/2)
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Total
Sale prices (1st grade) Rapeseed ths rub/t 30,0 31,4 32,6 33,9 35,4 36,9 38,4 39,9 41,5 43,0 44,5 46,1 47,7 Wheat ths rub/t 11,1 11,6 12,1 12,6 13,1 13,7 14,2 14,8 15,4 15,9 16,5 17,1 17,7 Barley ths rub/t 11,0 11,5 11,9 12,4 13,0 13,5 14,1 14,6 15,2 15,7 16,3 16,9 17,5 Oat ths rub/t 8,3 8,7 9,1 9,4 9,8 10,2 10,7 11,1 11,5 11,9 12,4 12,8 13,2 Flax ths rub/t 28,0 29,3 30,4 31,7 33,0 34,4 35,8 37,3 38,7 40,1 41,6 43,0 44,5
Unit production cost Rapeseed ths rub/t (9,0) (8,2) (7,3) (7,3) (7,1) (7,1) (7,3) (7,6) (7,9) (8,2) (8,5) (8,8) (9,1) Wheat ths rub/t (4,1) (4,2) (4,3) (4,5) (4,7) (4,9) (5,1) (5,3) (5,5) (5,7) (5,9) (6,1) (6,4) Barley ths rub/t (4,2) (4,2) (4,4) (4,6) (4,8) (5,0) (5,2) (5,4) (5,6) (5,8) (6,1) (6,3) (6,5) Oat ths rub/t (3,1) (3,2) (3,3) (3,4) (3,6) (3,7) (3,8) (4,0) (4,2) (4,3) (4,5) (4,6) (4,8) Flax ths rub/t (4,0) (4,1) (4,3) (4,5) (4,7) (4,9) (5,2) (5,3) (5,6) (5,9) (6,1) (6,4) (6,5) Staff numbers 401 554 707 860 1 014 1 167 1 302 1 425 1 547 1 670 1 793 1 915 1 915 Managerial staff persons 84 88 92 96 100 104 107 110 114 117 120 123 123 Operational staff persons 205 301 397 494 590 687 772 849 926 1 003 1 081 1 158 1 158 Field personnel with piecework 112 165 218 271 323 376 423 465 507 550 592 634 634 wages persons General production and general administrative expenses
Finished product transportation ths rub/t (1,8) (2,1) (2,3) (2,4) (2,5) (2,7) (2,7) (2,9) (3,0) (3,1) (3,2) (3,3) (3,4) Land lease rub/ha (23,0) (24,0) (25,0) (26,0) (27,1) (28,3) (29,4) (30,6) (31,8) (33,0) (34,1) (35,3) (36,5) Other expenses ths rub/ha (0,9) (0,7) (0,7) (0,6) (0,6) (0,6) (0,6) (0,5) (0,5) (0,5) (0,5) (0,5) (0,5)
Profit and loss statement mln rub Revenue 1 065 1 585 2 411 3 643 5 178 5 476 7 122 7 795 9 112 10 750 10 869 12 840 13 733 91 579 Cost (342) (452) (619) (824) (1 156) (1 221) (1 529) (1 754) (1 977) (2 369) (2 435) (2 810) (3 096) (20 584) Payroll (14) (28) (39) (52) (75) (86) (104) (120) (133) (160) (172) (192) (213) (1 387) Diesel fuel (41) (80) (113) (143) (209) (234) (280) (330) (363) (439) (466) (520) (583) (3 800) Petrol (2) (3) (5) (6) (9) (10) (12) (14) (15) (19) (20) (22) (25) (162) Pretreatment (5) (10) (17) (18) (32) (42) (52) (62) (65) (83) (96) (109) (120) (712) Seeds (36) (70) (103) (123) (187) (220) (255) (310) (331) (405) (441) (481) (549) (3 511) Fertilizers (87) (168) (218) (302) (399) (378) (503) (564) (654) (772) (747) (901) (981) (6 675) Herbicides (48) (93) (124) (180) (244) (250) (324) (354) (415) (490) (494) (585) (626) (4 229) Yield 2018 (109) ------(109) Gross profit 724 1 133 1 792 2 819 4 023 4 255 5 592 6 041 7 135 8 382 8 433 10 030 10 637 70 994 General production expenses (378) (438) (608) (795) (1 067) (1 218) (1 487) (1 706) (1 906) (2 200) (2 358) (2 676) (2 875) (19 712) EBITDA 346 695 1 184 2 024 2 956 3 036 4 105 4 335 5 229 6 182 6 075 7 354 7 762 51 282 profitability 32% 44% 49% 56% 57% 55% 58% 56% 57% 58% 56% 57% 57% 56% Subsidies 346 716 765 674 985 676 386 362 372 382 393 403 322 6 782 Depreciation (47) (110) (213) (328) (458) (614) (731) (824) (918) (1 015) (1 102) (1 156) (1 194) (8 711) Interest (60) (59) (114) (160) (211) (260) (278) (266) (249) (241) (230) (236) (250) (2 613) Leasing payments (90) (75) (65) (45) (19) ------(294) Profit tax ------Net profit 494 1 168 1 558 2 164 3 252 2 838 3 483 3 607 4 434 5 308 5 135 6 365 6 639 46 446 profitability 46% 74% 65% 59% 63% 52% 49% 46% 49% 49% 47% 50% 48% 51%
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 46 Pro forma income statement
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 TOTAL
Sales mln rub 1 065 1 585 2 411 3 643 5 178 5 476 7 122 7 795 9 112 10 750 10 869 12 840 13 733 91 579 First grade 718 1 561 2 383 3 630 5 167 5 466 7 108 7 779 9 094 10 729 10 849 12 816 13 706 91 008 Rapeseed 479 1 032 1 552 2 316 3 164 2 763 3 953 4 439 5 193 6 082 5 475 6 923 7 552 50 921 Wheat 82 200 367 322 663 882 1 032 1 353 1 246 1 646 1 869 2 011 2 403 14 073 Barley 69 70 139 182 253 322 269 380 426 498 583 524 662 4 378 Annual grass ------Oat 26 81 77 72 96 122 102 144 162 189 221 199 251 1 741 Flax 63 178 249 739 992 1 378 1 752 1 463 2 067 2 314 2 702 3 158 2 838 19 895
Second grade 11 24 27 13 11 10 14 16 18 21 19 24 26 235 Rapeseed 11 24 27 13 11 10 14 16 18 21 19 24 26 235
Yield sale 2018 336 ------336
COGS mln rub (342) (452) (619) (824) (1 156) (1 221) (1 529) (1 754) (1 977) (2 369) (2 435) (2 810) (3 096) (20 584) Rapeseed (153) (291) (366) (507) (645) (540) (765) (859) (1 006) (1 179) (1 062) (1 343) (1 466) (10 182) Wheat (30) (72) (132) (116) (239) (318) (372) (489) (450) (595) (676) (728) (870) (5 089) Barley (26) (26) (52) (68) (94) (120) (100) (142) (159) (186) (218) (196) (248) (1 634) Annual grass (5) (8) (6) (1) ------(19) Oat (10) (30) (28) (26) (35) (44) (37) (52) (59) (69) (81) (72) (92) (634) Flax (9) (25) (35) (106) (142) (199) (255) (212) (303) (340) (399) (470) (421) (2 917) Yield 2018 (109) ------(109)
Gross profit mln rub 724 1 133 1 792 2 819 4 023 4 255 5 592 6 041 7 135 8 382 8 433 10 030 10 637 70 994 Gross profit % 68% 71,5% 74,3% 77,4% 77,7% 77,7% 78,5% 77,5% 78,3% 78,0% 77,6% 78,1% 77,5% 78%
General production and administrative mln rub (378) (438) (608) (795) (1 067) (1 218) (1 487) (1 706) (1 906) (2 200) (2 358) (2 676) (2 875) (19 712) expenses
Finished product transportation (81) (174) (265) (359) (529) (582) (722) (831) (932) (1 116) (1 158) (1 322) (1 461) (9 532) Land lease (3) (5) (7) (8) (8) (8) (9) (9) (9) (10) (10) (10) (11) (106) Land tax ------(0,3) (0,3) (0,3) (1) Rapeseed export duty (29) (62) (93) (139) (191) (167) (240) (270) (317) (372) (336) (425) (465) (3 107) Property tax - - - - - (69) (74) (103) (105) (105) (140) (139) (137) (872) Payroll (95) (120) (150) (181) (214) (250) (286) (321) (358) (396) (437) (480) (496) (3 783) Social charges on wages (15) (19) (23) (28) (33) (39) (45) (50) (56) (62) (131) (144) (149) (793) Other expenses (47) (58) (69) (80) (91) (102) (112) (121) (130) (139) (148) (156) (156) (1 409) Yield costs 2018 (109) ------(109)
Subsidies mln rub 346 716 765 674 985 676 386 362 372 382 393 403 322 6 782 EBITDA mln rub 692 1 411 1 949 2 698 3 941 3 712 4 492 4 697 5 601 6 564 6 467 7 757 8 083 58 064 EBITDA % 65% 89% 81% 74% 76% 68% 63% 60% 61% 61% 60% 60% 59% 63%
Depreciation (47) (110) (213) (328) (458) (614) (731) (824) (918) (1 015) (1 102) (1 156) (1 194) (8 711) Interest costs (60) (59) (114) (160) (211) (260) (278) (266) (249) (241) (230) (236) (250) (2 613) Leasing payments (90) (75) (65) (45) (19) ------(294)
Profit before tax mln rub 494 1 168 1 558 2 164 3 252 2 838 3 483 3 607 4 434 5 308 5 135 6 365 6 639 46 446
Profit tax ------
Net profit mln rub 494 1 168 1 558 2 164 3 252 2 838 3 483 3 607 4 434 5 308 5 135 6 365 6 639 46 446 Net profit % 46% 74% 65% 59% 63% 52% 49% 46% 49% 49% 47% 50% 48% 51%
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 47 Pro forma balance sheet
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 TOTAL
Total assets mln rub 2 393 5 369 7 635 9 149 11 943 11 771 12 940 13 088 14 424 15 566 15 398 17 431 17 618 17 618 Current assets 1 183 3 047 4 150 4 728 6 076 5 101 6 097 6 137 7 401 8 579 8 435 10 513 10 808 10 808 Raw materials (0) - - (0) 0 0 0 0 0 0 - (0) (0) (0) Finished products 58 99 130 173 246 244 321 358 405 491 486 581 629 629 VAT receivable on capex 60 152 169 150 231 160 89 87 93 93 102 106 104 104 Accounts receivable 193 372 546 829 1 165 1 160 1 597 1 666 1 998 2 349 2 292 2 829 2 931 2 931 Cash 666 2 219 3 100 3 371 4 230 3 333 3 885 3 821 4 700 5 441 5 349 6 792 6 938 6 938 Operating balance (constant items) 205 205 205 205 205 205 205 205 205 205 205 205 205 205
Non-current assets 1 210 2 323 3 484 4 421 5 867 6 670 6 843 6 951 7 024 6 987 6 964 6 918 6 811 6 811 Fixed assets 1 210 2 323 3 484 4 421 5 867 6 670 6 843 6 951 7 024 6 987 6 964 6 918 6 811 6 811
Total liabilities and equity mln rub 2 393 5 369 7 635 9 149 11 943 11 771 12 940 13 088 14 424 15 566 15 398 17 431 17 618 17 618 Short-term liabilities 309 710 1 080 1 421 1 899 1 995 2 563 2 878 3 254 3 818 3 892 4 587 4 866 4 866 Working capital loans 221 577 903 1 193 1 588 1 651 2 124 2 385 2 703 3 179 3 240 3 822 4 054 4 054 Accounts payable 64 109 155 206 289 321 417 471 528 617 630 743 790 790 Other short-term liabilities 22 22 22 22 22 22 22 22 22 22 22 22 22 22
Financial liabilities 462 1 383 2 234 2 905 3 960 4 325 3 926 3 380 2 890 2 498 2 249 2 232 2 292 2 292 Investment loan 2 144 568 1 560 2 280 3 360 3 725 3 416 2 990 2 620 2 348 2 219 2 232 2 292 2 292 Loan by the Far East Development Fund - 600 600 600 600 600 510 390 270 150 30 - - - Existing investment loans 197 140 39 13 (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Other long-term liabilities 121 75 35 12 (0) (0) (0) (0) (0) (0) (0) (0) (0) (0)
Equity capital and reserves 1 621 3 277 4 321 4 822 6 084 5 451 6 451 6 830 8 281 9 250 9 257 10 612 10 460 10 460 Equity 948 1 389 1 389 1 389 1 389 1 389 1 389 1 389 1 389 1 389 1 389 1 389 1 389 1 389 Retained earnings 602 1 817 2 861 3 362 4 624 3 991 4 991 5 370 6 821 7 790 7 797 9 152 9 000 9 000 Revaluation of non-current assets 71 71 71 71 71 71 71 71 71 71 71 71 71 71
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 48 Pro forma cash flow
Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 TOTAL
Operating cash flow mln rub 932 1 388 2 044 2 693 3 913 4 103 4 321 4 829 5 468 6 408 6 743 7 453 8 194 58 490 EBITDA 692 1 411 1 949 2 698 3 941 3 712 4 492 4 697 5 601 6 564 6 467 7 757 8 083 58 064 Adjustments: 241 (23) 95 (5) (28) 391 (170) 132 (133) (155) 275 (305) 110 426 ∆ Finished products (58) (40) (32) (43) (72) 2 (77) (37) (47) (86) 5 (95) (48) (629) ∆ Accounts receivable (193) (178) (174) (283) (336) 5 (437) (69) (332) (351) 56 (537) (102) (2 931) ∆ Opening balance (operating items) 391 ------391 VAT recovery on capex 35 151 256 270 298 352 249 184 188 193 201 213 214 2 805 ∆ Accounts payable 65 45 44 52 82 33 95 54 57 89 12 114 46 790
Investment expenditures (with VAT) mln rub (578) (1 466) (1 648) (1 515) (2 284) (1 697) (1 082) (1 114) (1 185) (1 171) (1 289) (1 328) (1 299) (17 656) Involvement of idle lands (73) (85) (88) (92) (96) (100) (91) (86) (90) (93) (97) (100) - (1 090) Fallows - (1) (34) (60) (19) (88) (105) (149) (186) (139) (227) (236) (282) (1 525) Machinery (506) (750) (879) (680) (1 453) (747) (684) (647) (672) (696) (722) (747) (772) (9 955) Elevator (1 stage – the Far East Development Fund) - (600) ------(600) Elevator (2-5 stages) - - (600) (600) (600) (600) ------(2 400) Maintenance capex - (31) (47) (83) (117) (163) (202) (231) (238) (242) (244) (245) (245) (2 087)
CFF mln rub 252 1 630 485 (907) (771) (3 303) (2 687) (3 778) (3 404) (4 496) (5 546) (4 682) (6 748) (33 955) Cash flow from financial activities 967 2 057 1 971 2 147 3 106 2 708 2 745 2 999 3 340 3 835 3 916 4 516 4 766 39 075 Contribution to equity capital for investment program financing 362 342 ------703 Contribution to equity capital fort working capital financing 200 100 ------300 Investment loan 2 144 439 1 068 954 1 519 1 057 620 615 636 657 676 694 712 9 792 Loan by the Far East Development Fund - 600 ------600 Working capital loans 261 577 903 1 193 1 588 1 651 2 124 2 385 2 703 3 179 3 240 3 822 4 054 27 680 Cash outflows from financial activities (715) (427) (1 486) (3 054) (3 877) (6 011) (5 432) (6 778) (6 744) (8 332) (9 462) (9 198) (11 515) (73 030) Existing investment loans - principal (48) (56) (101) (26) (13) ------(245) Existing working capital loans - principal (393) ------(393) Existing shareholder loans- principal (84) ------(84) Investment loan 2 - principal - (16) (76) (235) (438) (692) (930) (1 040) (1 007) (929) (805) (681) (652) (7 499) Loan by the Far East Development Fund ------(90) (120) (120) (120) (120) (30) - (600) Working capital loans - principal (40) (221) (577) (903) (1 193) (1 588) (1 651) (2 124) (2 385) (2 703) (3 179) (3 240) (3 822) (23 625) Existing investment loans - % (28) (22) (13) (3) (1) (0) (0) (0) (0) (0) (0) (0) - (67) Existing working capital loans - % (16) ------(16) Existing shareholder loans - % (9) ------(9) Investment loan 2 - % (3) (13) (44) (90) (130) (174) (182) (164) (143) (127) (115) (112) (114) (1 410) Loan by the Far East Development Fund - (9) (30) (30) (30) (30) (29) (23) (17) (11) (5) (0) - (215) Working capital loans - % (4) (15) (27) (37) (50) (56) (67) (79) (89) (103) (110) (124) (136) (896) Leasing payments (90) (75) (65) (45) (19) ------(294) Dividends - - (553) (1 685) (2 002) (3 471) (2 484) (3 228) (2 983) (4 339) (5 128) (5 011) (6 792) (37 676)
Net cash flow mln rub 606 1 553 881 271 859 (897) 552 (64) 879 741 (92) 1 443 146 6 878
Opening cash balance mln rub 60 666 2 219 3 100 3 371 4 230 3 333 3 885 3 821 4 700 5 441 5 349 6 792 - Closing cash balance mln rub 666 2 219 3 100 3 371 4 230 3 333 3 885 3 821 4 700 5 441 5 349 6 792 6 938 6 938
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 49 Debt burden
Company debt burden is below peers. From 2021 г. Net debt / EBITDA becomes below 4.0x and will keep decreasing. Steady financial position will allow accelerating land-bank development and implement capital-intensive projects on deep processing of agricultural products1
Debt / EBITDA dynamics
6,0х
5,0х
4,0х
3,0х
2,0х
1,0х
0,0х
01.12.2018 01.03.2019 01.06.2019 01.09.2019 01.12.2019 01.03.2020 01.06.2020 01.09.2020 01.12.2020 01.03.2021 01.06.2021 01.09.2021 01.12.2021 01.03.2022 01.06.2022 01.09.2022 01.12.2022 01.03.2023 01.06.2023 01.09.2023 01.12.2023 01.03.2024 01.06.2024 01.09.2024 01.12.2024 01.03.2025 01.06.2025 01.09.2025 01.12.2025 01.03.2026 01.06.2026 01.09.2026 01.12.2026 01.03.2027 01.06.2027 01.09.2027 01.12.2027 01.03.2028 01.06.2028 01.09.2028 01.12.2028 01.03.2029 01.06.2029 01.09.2029 01.12.2029 01.03.2030 01.06.2030 01.09.2030 01.12.2030 01.03.2031 01.06.2031 01.09.2031 01.12.2031
1 Projects on deep processing of Rapeseed and other cultures are not overviewed in the present business-plan and will be worked out additionally
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 50 Appendix: financial status
STRICTLY CONFIDENTIAL VINCERE CAPITAL 51 Balance sheet overview (1/4)
ths rub 31.12.2016 31.12.2017 30.09.2018 . KEY DATA The Company assets as of the last accounting date have been Total assets 532 043 1 093 126 1 483 770 increased by a factor of 2.8 compared with 31.12.2016 or up to Current assets 259 973 496 911 818 169 1483 mln rub from 532 mln rub Inventory 137 214 384 073 666 326 90% of assets are comprised of fixed assets and inventory Fixed assets are represented by agricultural machinery (sowing VAT on acquired values - 16 - complexes, spraying machines, grain-harvesting combines), Financial investment 10 63 63 equipment, infrastructural objects (storages, grain flows, garages, fuel stations etc.), land plots, production conveyers. During last 2 Accounts receivable 75 860 63 326 115 741 years the Company investment in infrastructure, acquisition of Cash 45 608 31 716 5 326 machinery and other fixed assets amounted over 400 mln rub Other assets 1 281 17 717 30 713 Inventory includes finished products in the amount of 167 mln rub, stocks of materials (fertilizers, plant protection agents, fuel & PPE 272 070 596 215 665 601 lubricants) in the amount of 140 mln rub, work in progress in the amount of 336 mln rub (according to cost of incurred expenses: Fixed assets 272 070 596 215 665 571 direct, general production and administrative) Financial investment - - 30 As of the last accounting date the advances (issued for acquisition of materials, plant protection agents, fertilizers, etc.) came to 63 mln rub. Other accounts receivable are lease payments paid, on Total liabilities and equity 532 043 1 093 126 1 483 770 which the closing documents were not signed as of the accounting Current liabilities 130 693 285 006 494 615 date, as well as VAT receivable in the amount of 16 mln rub Founders’ investment for 2015-2018 exceeded 400 mln rub. As of Loans 64 856 66 771 329 083 the accounting date equity investment came up to 190 mln rub, Accounts payable 37 810 196 278 143 357 unredeemed shareholder loans – 84 mln rub Deferred profits 28 027 21 957 21 516 The Company total debt burden by the end of 2018 is 1 bln rub, including bank loans in the amount of 638 mln rub, lease liabilities Estimated liabilities - - 659 - 294 mln rub, shareholder loans - 84 mln rub. In 2019 the Long-term liabilities 199 755 512 981 689 722 Company is to repay the debt in the amount of 500 mln rub, including 393 mln rub on short-term loans borrowed from Loans 199 755 512 981 491 518 Rosselhozbank and Sberbank Other long-term liabilities 198 204 Deferred income reflects the amount of received subsidies that are written-off quarterly as far as depreciation is charged Capital and reserves 201 595 295 139 299 433
Common stock 81 500 190 000 190 000 Retained earnings 49 218 34 262 38 556 Revaluation of fixed assets 70 877 70 877 70 877
STRICTLY CONFIDENTIAL VINCERE CAPITAL 52 Balance sheet overview (2/4) ths rub 31.12.2016 31.12.2017 30.09.2018 Finished products Total assets 532 043 1 093 126 1 483 770 23 42 Current assets 259 973 496 911 818 169 Materials 166,7 Inventory 137 214 384 073 666 326 VAT on acquired values - 16 - Main production 111,6 Financial investment 10 63 63 665 General production mln rub Accounts receivable 75 860 63 326 115 741 expenses
Cash 45 608 31 716 5 326 General administrative expenses 140,1 Other assets 1 281 17 717 30 713 182,3 PPE 272 070 596 215 665 601 Other materials Fixed assets 272 070 596 215 665 571 Financial investment - - 30
Total liabilities and equity 532 043 1 093 126 1 483 770 Current liabilities 130 693 285 006 494 615 Loans 64 856 66 771 329 083 Advances paid 5,1 Accounts payable 37 810 196 278 143 357 16,4 Deferred profits 28 027 21 957 21 516 Leasing payments non- Estimated liabilities - - 659 invoiced Long-term liabilities 199 755 512 981 689 722 116 mln rub VAT recoverable 62,5 Loans 199 755 512 981 491 518 Other long-term liabilities 198 204 31,4 Capital and reserves 201 595 295 139 299 433 Accounts receivable (customers) Common stock 81 500 190 000 190 000 Retained earnings 49 218 34 262 38 556 Revaluation of fixed assets 70 877 70 877 70 877
STRICTLY CONFIDENTIAL VINCERE CAPITAL 53 Balance sheet overview (3/4)
Combines, self-driven ths rub 31.12.2016 31.12.2017 30.09.2018 mowers Total assets 532 043 1 093 126 1 483 770 Infrastructure objects Current assets 259 973 496 911 818 169 Tractors Storage facilities 41 55 5 Inventory 137 214 384 073 666 326 25 Spraying machines 156 VAT on acquired values - 16 - 28 Cultivators, sowers, 30 Financial investment 10 63 63 ploughs, harrows, etc. Sowing machines 665 Accounts receivable 75 860 63 326 115 741 46 Equipment mln rub Cash 45 608 31 716 5 326 Land plots Other assets 1 281 17 717 30 713 63 111 Packing line PPE 272 070 596 215 665 601 Automobiles 69 Fixed assets 272 070 596 215 665 571 81 Other machinery Financial investment - - 30 Others
Total liabilities and equity 532 043 1 093 126 1 483 770 Current liabilities 130 693 285 006 494 615 Loans 64 856 66 771 329 083 Accounts payable 37 810 196 278 143 357 Deferred profits 28 027 21 957 21 516 Estimated liabilities - - 659 Long-term liabilities 199 755 512 981 689 722 Loans 199 755 512 981 491 518 Other long-term liabilities 198 204 Capital and reserves 201 595 295 139 299 433 Common stock 81 500 190 000 190 000 Retained earnings 49 218 34 262 38 556 Revaluation of fixed assets 70 877 70 877 70 877
STRICTLY CONFIDENTIAL VINCERE CAPITAL 54 Balance sheet overview (4/4) ths rub 31.12.2016 31.12.2017 30.09.2018
Total assets 532 043 1 093 126 1 483 770 Bills payable 7 0 Current assets 259 973 496 911 818 169 12 Inventory 137 214 384 073 666 326 Advances received VAT on acquired values - 16 - Payroll 143 Financial investment 10 63 63 mln rub 41 Accounts receivable 75 860 63 326 115 741 Settlment with budget and 82 Cash 45 608 31 716 5 326 non-budget funds Other assets 1 281 17 717 30 713 Other PPE 272 070 596 215 665 601 Fixed assets 272 070 596 215 665 571 Financial investment - - 30
Total liabilities and equity 532 043 1 093 126 1 483 770 Current liabilities 130 693 285 006 494 615 Loans 64 856 66 771 329 083 Accounts payable 37 810 196 278 143 357 Deferred profits 28 027 21 957 21 516 Estimated liabilities - - 659 Long-term liabilities 199 755 512 981 689 722 Loans 199 755 512 981 491 518 Other long-term liabilities - - 198 204 Capital and reserves 201 595 295 139 299 433 Common stock 81 500 190 000 190 000 Retained earnings 49 218 34 262 38 556 Revaluation of fixed assets 70 877 70 877 70 877
STRICTLY CONFIDENTIAL VINCERE CAPITAL 55 Debt burden as of 31.12.2018
Debt burden Debt Structure
mln rub Invest. Circulat. Total Investment Development Fund of Zabaikalsky 9 9 Region Short-term loans 84 Rosselkhozbank 191 277 467 Sberbank 116 116 Agri Support and Development Fund 5 5 Investment loans 393 Best Efforts Bank (bonds) 40 40 294 1 016 Total loans 245 393 638 mln rub Leasing Loans from affiliated companies (Chitinskiye 84 84 Klyuchi) Leasing 294 294 Shareholder loans Total Debt 539 477 1 016 245 EBITDA 2018 (with account of subsidies) 220 Cash balance as of 31.12.2018 60 Net Debt / EBITDA 4.3 Principal debt service schedule
mln rub 350
297 300
250 84,0 200 178 24,8 150 21,6 100 84 65 176,6 56 50 144,0 38 42 21,9 34 29 30 26 33 29 15,5 13 11 17 17 21,6 7 4 4 - 49,4 18,0 22,7 20,2 17,6 18,0 19,0 50 15,5 14,8 11 19 24 15,6 9,3 9,0 12 12 12 13 11 12 10 18 14 10,92 10,41 8 8 6,61 3,90 4 ( 50) Q1. 2019 Q2. 2019 Q3. 2019 Q4. 2019 Q1. 2020 Q2. 2020 Q3. 2020 Q4. 2020 Q1. 2021 Q2. 2021 Q3. 2021 Q4. 2021 Q1. 2022 Q2. 2022 Q3. 2022 Q4. 2022 Q1. 2023 Q2. 2023 Q3. 2023 Q4. 2023
Investment loans Short-term loans Leasing Shareholder loans Total
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 56 P&L overview (1/3)
2018 vs . KEY DATA ths rub 2015 2016 2017 9м 2017 9м 2018 2017 The Company revenue for 9 months of 2018 is formed due to plant cultivation as the main activity (214 mln Revenue 31 998 101 647 121 289 47 465 228 042 180 577 rub), animal livestock (12.6 mln rub). Other revenue came to 1.4 mln rub COGS (39 970) (39 353) (102 552) (21 594) (168 034) (146 440) COGS is mainly comprised of payroll with taxes, material expenditures and depreciation: 42 mln rub, 40 mln rub and 37 mln rub, respectively (7 972) 62 294 18 737 25 871 60 008 34 137 Gross Profit Commercial expenditures are related to transportation of finished products from the fields to storage places Commercial expenditures (2 341) (12 203) (17 290) (6 448) (35 133) (28 685) and further to an end-user’s transfer. In addition, commercial expenditures include payments connected Administrative with rapeseed export duty (6.5% of the price the of (12 423) (16 597) - - - - expenditures exported lot) In compliance with the Company accounting policy Profit (loss) from sales (22 736) 33 494 1 447 19 423 24 875 5 452 leasing payments (23 mln rub for 9 months of 2017) are shown in cost of sales. Without taking into account leasing payments and depreciation COGS for 9 Interest receivable - 36 130 130 - (130) months of 2018 comes to 98 mln rub. Considering cost adjustment on leasing payments and depreciation the Interest payable (3 117) (15 222) (52 505) (38 240) (33 763) 4 477 Company EBITDA for 9 months of 2018 is 95 mln rub The Company other income is formed of the subsidies on plant cultivation and livestock breeding in the 46 099 31 275 50 183 29 058 34 089 5 031 Other income amount of 30 mln rub. Adjusted EBITDA considering the received subsidies for 9 months of 2018 is 125 mln Other expenses (4 543) (15 423) (14 211) (10 732) (20 096) (9 364) rub
Profit before tax 15 703 34 160 (14 956) (361) 5 105 5 466
Profit tax - - - - (811) -
Others (31) - - - -
Net profit (loss) 15 672 34 160 (14 956) (361) 4 294 5 466
STRICTLY CONFIDENTIAL VINCERE CAPITAL 57 P&L overview (2/3) ths rub 2015 2016 2017 9м 2017 9м 2018 2018 vs 2017 Revenue 31 998 101 647 121 289 47 465 1 228 042 180 577 COGS (39 970) (39 353) (102 552) (21 594) 2 (168 034) (146 440) Gross Profit (7 972) 62 294 18 737 25 871 60 008 34 137 Commercial expenditures (2 341) (12 203) (17 290) (6 448) (35 133) (28 685) Administrative expenditures (12 423) (16 597) - - - - Profit (loss) from sales (22 736) 33 494 1 447 19 423 24 875 5 452 Interest recievable - 36 130 130 - (130) Interest payable (3 117) (15 222) (52 505) (38 240) (33 763) 4 477 Other income 46 099 31 275 50 183 29 058 34 089 5 031 Other expenses (4 543) (15 423) (14 211) (10 732) (20 096) (9 364) Profit before tax 15 703 34 160 (14 956) (361) 5 105 5 466 Profit tax - - - - (811) - Others (31) - - - - Net profit (loss) 15 672 34 160 (14 956) (361) 4 294 5 466
1 Revenue structure 2 COGS structure
2,1 1,2 0,3 0,2 Rapeseed 3,8 0,1 Material cost 3,9 Oat 9,7 4,9 Payroll Sheep wool 5,4 9,1 16,8 39,8 Sheep meat D & A Barley 17,6
Wheat 228 Lease payments included in cost 168 mln rub of sales mln rub Bovine cattle
Transportation services Depreciation deductions on property being on lessee's 23,3 31,9 balance Horse meet Other expenses Packaging services 197,2 29,0 Water pumping services Social charges
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 58 P&L overview (3/3) ths rub 2015 2016 2017 9м 2017 9м 2018 2018 vs 2017 Revenue 31 998 101 647 121 289 47 465 228 042 180 577 COGS (39 970) (39 353) (102 552) (21 594) (168 034) (146 440) Gross Profit (7 972) 62 294 18 737 25 871 60 008 34 137 Commercial expenditures (2 341) (12 203) (17 290) (6 448) 1 (35 133) (28 685) Administrative expenditures (12 423) (16 597) - - - - Profit (loss) from sales (22 736) 33 494 1 447 19 423 24 875 5 452 Interest receivable - 36 130 130 - (130) Interest payable (3 117) (15 222) (52 505) (38 240) (33 763) 4 477 Other income 46 099 31 275 50 183 29 058 2 34 089 5 031 Other expenses (4 543) (15 423) (14 211) (10 732) 3 (20 096) (9 364) Profit before tax 15 703 34 160 (14 956) (361) 5 105 5 466 Profit tax - - - - (811) - Others (31) - - - - Net profit (loss) 15 672 34 160 (14 956) (361) 4 294 5 466
1 Commercial expenditures structure 2 Other income structure 3 Other expenses structure
0,0 2,6 1,6 1,4 1,7 9,8 3,3 12,9 1,4 35 34 20 mln rub mln rub mln rub 10,2 5,3 2,3
25,3 2,8 8,6
Subsidy for fallows Susidy for plant cultivation Other non-operating expenses Bank services
Product transportation Export duty on rapeseed Other services Subsidy for machinery Subsidy for livestock breeding Debtor write-offs Penalties
Exchange differeces Others Exchange differences Others
СТРОГОSTRICTLY КОНФИДЕНЦИАЛЬНО CONFIDENTIAL 59