Company Overview
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COMPANY OVERVIEW JANUARY 2016 Strictly Confidential Plaza Independencia 737, Montevideo 11000, Uruguay IMPORTANT NOTICE This presentation does not provide full disclosure of all material facts relating to Union Agriculture Group (“UAG”), the securities or the offering and is not subject to liability for misrepresentations under applicable Canadian provincial securities legislation. This presentation contains forward looking statements which reflect the current expectations of management regarding future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate” and similar expressions have been used to identify these forward looking statements. These statements reflect management’s current beliefs with respect to future events and are based on information currently available to UAG. Forward looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements including, without limitation, those risk factors to be listed in the prospectus to be filed by UAG. Should one or more of these or any other risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward looking statements contained in this presentation. These factors should be considered carefully and prospective investors should not place undue reliance on these forward looking statements. Although the forward looking statements contained in this presentation are based upon what management currently believes to be reasonable assumptions, prospective investors cannot be assured that actual results, performance or achievements will be consistent with these forward looking statements. These forward looking statements are made as of the date of this presentation and UAG does not assume any obligation to update or revise, except as required under applicable securities laws. All currency figures are in US dollars unless indicated otherwise. Non-IFRS Measures In addition to using financial measures prescribed by IFRS, references are made in this overview to “EBITDA”, “Net Asset Value” and “NAV”, which are measures that do not have any standardized meaning as prescribed by IFRS. Accordingly, the Company’s use of such terms may not be comparable to similarly defined measures presented by other entities. Company Overview - Strictly Confidential 2 HIGHLIGHTS UNION AGRICULTURE GROUP IS THE LARGEST CORPORATE AGRICULTURAL LANDHOLDER AND OPERATOR IN URUGUAY MANAGED LAND TOTAL NUMBER OF FARMS 171,000(APPROX.) OVER 100 HECTARES SOY PRODUCTION RICE PRODUCTION 120,000(APPROX.) 37,000(APPROX.) TONNES TONNES BEEF CATTLE WHEAT PRODUCTION 67,530 20,000(APPROX.) TOTAL HEADS TONNES SHEEP NET ASSET VALUE* 13,494 US$ 503 TOTAL HEADS MILLION REVENUE US$ 183.8 MILLION 3 Notes: All information on this page as at June 30, 2015 or for the twelve months ended June 30, 2015 * NAV and EBITDA are non-IFRS financial measures. See “Non-IFRS Measures”. COMPANY OVERVIEW WE HAVE INCREASED OUR PARTICIPATION IN THE AGRIBUSINESS VALUE - CHAIN TO BECOME A SIGNIFICANT, FULLY - INTEGRATED EXPORTER OF HIGH QUALITY AGRICULTURAL GOODS TO THE WORLD STRATEGIC RATIONALE + Benefit from historical trends in rising: 127,000 HA* OF OWNED FARMLAND (APPROX.) • Land prices in Uruguay driven by international demand, demographics; and • Commodity prices over the long term 44,000 HA OF LEASED FARMLAND + Increase volume and economies of scale in operations and (APPROX.) production + Extend operations from the farm gate across the whole GRAINS RICE MEAT value chain to a finished, loaded and commercialized product SLAUGHTER HOUSE + Ongoing integration through various sectors covering the 100% 36% entire agriculture value chain Fully integrated Industrial rice Uruguayan processor and the Currently under trading & logistics second largest rice consideration company exporter in Uruguay * Land owned directly or indirectly by UAG Company Overview - Strictly Confidential 4 URUGUAY HIGHLIGHTS URUGUAY IS A COUNTRY WITH UNIQUE COMPETITIVE ADVANTAGES FOR AGRICULTURAL INVESTMENTS LARGER FARM SIZES LEADS TO ECONOMIES OF SCALE PRODUCTION HIGHLIGHTS(2) + Large farms account for 60% of Uruguay farmland SOYBEANS SHORTER DISTANCES TO PORT + 2.8 million tonnes of production + Strategically located and robust infrastructure + US$ 1.9 billion in exports STRONG BIOLOGICAL GROWTH + Fertile soils, regular rainfall and maritime climate WHEAT POLITICAL STABILITY + 1.0 million tonnes of production + Three consecutive presidential terms with Frente + US$ 0.3 billion in exports Amplio majority government LOW CORRUPTION RISK + Uruguay’s perceived level of corruption ranks on RICE par with Chile – just one rank below the U.S.(1) + 1.4 million tonnes of production ECONOMIC STABILITY + US$ 0.5 billion in exports + S&P’s credit rating on Uruguay upgraded to BBB with a Stable outlook in June 2015 SUSTAINABLE POWER GENERATION + 95% of electricity generation from renewable MEAT sources + Over 1,217,000 MT CWE(3) produced + US$ 1.5 billion in exports (1) Source: Transparency International (2014) (2) Source: Uruguayan Ministry of Agriculture (MGAP), DIEA Report (2014) (3) Carcass-Weight Equivalent 5 GOVERNANCE AND MANAGEMENT OPERATIONAL TEAM COMPRISED OF TOP TIER INDUSTRY EXPERTS Juan Sartori Julio de Brun BOARD OF DIRECTORS Roberto Vazquez Jerome Tordo Ned Goodman Oscar Leon Edgardo Cardozo Shoulin Zhang Oscar Costa Jean Bragard Oscar Costa CEO MANAGEMENT Jose Pedro Sanchez Oscar Leon Vice CEO CFO Santiago Berreta Lucas Falabella Valentina Carro IT Director Purchasing HR Manager Manager OPERATIONAL MANAGERS Juan J. Mastropierro Edwin Borghi Pablo Dominguez Mariano Duran Juan Ignacio Buffa Regional Manager Regional Manager Regional Manager Regional Manager Regional Manager A B C D E PROFESSIONAL SERVICES (Auditing) (Land Appraisal) (Legal) AND CONTRACTORS (Financing) (Financing) (Tax) (Transfer Agent) Company Overview - Strictly Confidential 6 GOVERNANCE AND MANAGEMENT UNION AGRICULTURE GROUP IS LED BY A H I G H L Y EXPERIENCED MANAGEMENT TEAM JUAN SARTORI OSCAR COSTA OSCAR LEON EDGARDO CARDOZO FOUNDER AND EXECUTIVE CHAIRMAN CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER TECHNICAL ADVISOR - - - - Education Education Education Education Bachelor of Business & Bachelor’s degree in Computer Certified Public Accountant, B.Eng. in Agronomy from Economics, École des Hautes Science, EST and MBA from ORT Universidad de la República Universidad de la República and Études Commerciales de University Oriental del Uruguay (UDELAR) Ph.D. in Animal Science from Lausanne Michigan State University Previous experience Previous experience Previous experience Previous experience Former Vice President of the Former Director and CFO for Founder and Executive Uruguayan Forestry Association several mining companies in Former Uruguayan Vice Chairman of Union Group and Colonel in the Uruguayan LATAM such as Compañía Minera Minister of Agriculture Army San Gregorio; Everton Professor at Universidad de la Resources; DelcoSur; Yamiri Gold República Company Overview - Strictly Confidential 7 GOVERNANCE AND MANAGEMENT UNION AGRICULTURE GROUP IS REPRESENTED BY AN EXPERIENCED BOARD OF DIRECTORS JUAN SARTORI OSCAR COSTA EDGARDO CARDOZO OSCAR LEON EXECUTIVE CHAIRMAN CHIEF EXECUTIVE OFFICER DIRECTOR AND CHIEF FINANCIAL OFFICER AND DIRECTOR AND DIRECTOR TECHNICAL ADVISOR AND DIRECTOR [To Be Provided] JÉRÔME TORDO JEAN BRAGARD ROBERTO VAZQUEZ JULIO DE BRUN SHOULIN ZHANG NED GOODMAN DIRECTOR LEGAL COUNSEL DIRECTOR DIRECTOR DIRECTOR DIRECTOR AND DIRECTOR Previous experience Previous experience Previous experience Previous experience Previous experience Previous experience President, Cypanga SAS; Partner, Bragard & Duran Chairman of the Board and Executive Director, Managing Director, China Founder, director and Co-founder, Sycomore Abogados; Former Chief Executive Officer, Uruguayan Private Banks Investment Corporation; former President and Asset Management Partner, Sanguinetti, Uruguay’s National Meat Association; Former Former Managing Chief Executive Officer of Fodere & Bragard Institute Governor, Central Bank of Director, Barclays Capital Dundee Corporation; Abogados Uruguay Over four decades of experience as a securities analyst, asset manager, senior executive, geologist and as an investor. Company Overview - Strictly Confidential 8 COMPANY OVERVIEW UNION AGRICULTURE GROUP IS THE LARGEST CORPORATE AGRICULTURAL LANDHOLDER AND OPERATOR IN URUGUAY INTERCONNECTED PRODUCTION NETWORK 171,000 HECTARES CONSOLIDATED SINCE 2008 200 OWNED LAND 175 LEASED LAND 51 150 44 125 100 11 13 75 130 127 HECTARES HECTARES (‘000S) 50 98 85 89 94 25 34 0 8 2008 2009 2010 2011 2012 2013 2014 2015 URUGUAY’S LEADING CORPORATE FARMLAND OWNER UAG 127 NZ FARMING SYSTEMS 28 FRIGORIFICO MODELO 25 CAMPOS ORIENTALES 23 0 25 50 75 100 125 HECTARES (‘000S) Source: Company data Company Overview - Strictly Confidential 9 GRAIN OPERATIONS STORAGE CAPACITY + Granosur sells all of UAG’s soybean, wheat, and sorghum and also originates grain, beef, lamb, rice, and barley from third parties 81,000 + Client list includes four renowned global grain traders and a number of large domestic