AgroGeneration Corporate Presentation AgroGeneration SA 3 de la - - PowerPoint PPT Presentation

October 2018

AgroGeneration

Corporate Presentation

AgroGeneration SA – 3 de la Pompe Str., 75116 Paris, FRANCE – Tel.: +33 1 56 43 68 60

Ukraine

Agricultural Market Today

• Ukraine. Agricultural Market Today

Ukraine – Another Record Year for a Leading Global Producer

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Ukrainian agriculture – one of the most powerful sectors in the country today

38.0 34.3 29.3 53.3 46.0 39.3 56.7 46.2 63.1 63.9 60.1 66.0 61.9 12.9 9.5 4.4 24.5 21.2 12.4 21.7 22.7 32.3 34.8 39.5 43.8 39.4 10 20 30 40 50 60 70 05 06 07 08 09 10 11 12 13 14 15 16 17

• Ukraine. Grain Production & Export Dynamics

Grain Production, M tons Grain Export, M tons

For five consecutive years now (2013-2017) Ukraine has been harvesting over 60M tons of grains and 17M tons of oilseeds on average annually

Ukraine is the largest sunflower oilseeds producer in the world

Over 65% of produced grains and 22% of

• ilseeds are exported annually

12.5 12.1 16.1 16.3 17.0 19.1 18.4 2.8 2.7 3.6 4.4 3.9 4.1 4.8 5 10 15 20 2011 2012 2013 2014 2015 2016 2017

• Ukraine. Oilseeds Production & Export

Dynamics

Oilseeds Production, M tons Oilseeds Export, M tons

Sources: State Statistics Committee of Ukraine, USDA

• Ukraine. Main Crops Production & Export Breakdown, M tons

Crop 2017 Production Share in Total, % 2017/18 MY Export Share in Total, % Total Grains 61.9 100% 39.4 100% Wheat 26.2 42.3% 17.1 43.4% Barley 8.3 13.4% 4.2 10.7% Corn 24.7 39.9% 17.7 44.9% Other grains 2.7 4.4% 0.4 1.0% Total Oilseeds 18.4 100% 4.8 100% Soy 3.9 21.6% 2.7 56.3% Rapeseed 2.2 12.5% 2.1 43.7% Sunflower 12.2 65.9% 0.1 0.0%

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• World. Grain1 Export Breakdown in

2017/18MY, %

1 Excl. rice

Sources: State Statistics Committee, USDA

Over 6% share in total grain export from Ukraine Over 4% to 6% share Over 2% to 4% share

• Ukraine. Grain1 Export Breakdown in 2017FY,

by Country-Importer, M tons/%

In 2017/18MY, Ukraine became the 3rd largest grain exporter after USA and Russia with 11% share in the world’s total grains export volume, in particular:

4th largest corn exporter 6th largest wheat exporter

• Ukraine. Agricultural Market Today

High Export Potential

Ukraine is already a key player in the export markets, with over 50% of grain exports going to the Middle East and Africa

24% 14% 11% 11% 9% 7% 7% 6% 11% USA Russia Ukraine Argentina EU Canada Brazil Australia Others

Netherlands Ukraine China Iran Israel Turkey Libya Tunisia Spain Italy Egypt Saudi Arabia India Bangladesh Indonesia South Korea Philippines 2017 Grain Export 41.8M EU 11.0M 26% Asia 19.8M 47% Africa 10.8M 26% Other Countries 0.2M 1%

Commodity crop farming currently dominates local agriculture, accounting for up to 60% of total crop output Grains and oilseeds account for approximately 54% and 31% of cultivated land use, respectively

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• Ukraine. Agricultural Market Today

Produced Crops Variety & Yields Potential

Despite favorable climate and soil conditions, average crop yields in Ukraine are still lower than in Western Europe and far below its genetic potential Ukraine still has significant upside to improve yields and increase margins:

Crop yields could rise by 50% on average just through the use of new technologies Many farming companies (incl. AgroGeneration) are consistently achieving (and exceeding) US and EU yields at lower costs

3-year Average Yield Comparison (2015-2017), tons/ha

Crop Ukraine EU US Canada World Ukraine’s Genetic Potential Wheat 4.02 5.69 3.20 3.26 3.37 10-11 Corn 5.85 6.88 10.85 10.11 5.61 12-13 Barley 3.21 4.90 3.94 3.74 3.00 10 Soy 2.02 2.82 3.35 2.88 2.76 6 Rapeseed 2.66 3.26 1.83 2.31 2.06 4.3 Sunflower 2.10 2.02 1.75 1.99 1.81 3.5-5 22% 7% 3% 1% 7% 7% 0% 23% 9% 17% 4% Grain and Legumes 54%

Ukraine's Cultivated Lands Structure in 2017, %

Sunflower Soy Rapeseed Sugar Beet Vegetables Feed Crops Other Wheat Barley Corn Other Grains

Yields and low costs are drivers of growth

Sources: USDA, FAOSTAT, Ukrstat Source: State Statistics Committee of Ukraine

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• Ukraine. Agricultural Market Today

Transport Infrastructure

The total transport network includes around 22k km of railroads, 164k km of auto roads, 2k km of

• perational river shipping routes with access to the

Azov and Black seas

Logistics Performance Index (LPI)1 in Ukraine according to World Bank 2016 report equals to 2.7 compared to the highest of over 4 in selected European countries, the US, and Japan

Ukraine has well-developed infrastructure to support agricultural exports, which still requires quality and efficiency improvements

4.2 4.0 4.0 3.8 3.7 3.7 3.4 2.7 2.6 2.6 2.4 1.6 0.0 2.0 4.0 6.0

Logistics Performance Index*

Source: World Bank

• Ukraine. Map of Rail Roads
• Ukraine. Map of Auto Routes

1 benchmarking tool developed by the World Bank that measures performance

along the logistics supply chain within a country (compares 160 countries)

Ukraine can ship over 40M tons of grains and oilseeds annually through its 11 sea ports (terminals)

Over 60% of shipping volumes are concentrated in the Odesa region (Odesa, Illichivsk, and Yuzhny ports)

Existing storage infrastructure of 47M tons allows immediate storage of 70-80% of annual harvest

An additional 15M tons will be needed to ensure that 100% of the currently harvested grains can be safely stored Poltava, Odesa, Vinnitsa, Kharkiv, and Dnipro regions possess the largest storage volumes in Ukraine, jointly accounting for 38% of total storage capacity in volume terms

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Grain storage infrastructure growth is needed to support crops

• Ukraine. Agricultural Market Today

Grain Storage and Port Infrastructure

2,275 765 489 2,177 1,472 3,595 2,017 1,800 1,798 1,814 2,100 2,100 1,427 547 480 2,714 1,617 433 212 1,600 94 231 1,320 3,179

Storage Capacity in a Region Grain transshipment terminals Source: elevatorist.com

Under 1,000 k tons Over 1,000 k tons Over 2,000 k tons Over 3,000 k tons

Currently, about 832 certified elevator complexes

• perate in Ukraine (36M tons capacity)

Silo elevators are 46% of total storage capacities, floor-type granaries constitute 54%

• Approx. 20% of total storage capacities are managed

by state-owned operators

AgroGeneration

Company Background

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PRODUCTION PUBLIC COMPANY FARMLANDS TEAM STORAGE

Kharkiv 60,000 ha Sumy 10,000 ha Zhitomyr 12,000 ha Lviv, Ternopil 29,000 ha Kyiv

Listing on NYSE Euronext in Paris with 35% free float 110k ha in 5 regions of Ukraine 1,400 employees run by strong management team Over 210k tons Oilseeds 23% Grains 77% Up to 400k tons

AgroGeneration

At a Glance

MACHINERY FLEET

Fleet of modern ag machinery, incl. 72 combines, 270 tractors, 57 sprayers, 255 seeders and headers

Excellent assets base for further development and growth

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(1) SigmaBleyzer – one of the largest and most experienced private equity investors in Eastern Europe, founded in 1993; the majority owner of new AgroGeneration after the merger

AgroGeneration

Milestones of Development – Historical Background

AgroGeneration: two stories, one future 2014 2013 Recovery of the balance sheet from the debt burden through successful completion of the restructuring process Successful turnaround of the Group. Significant improvement in results despite the challenging economic and political situation in Ukraine Merger between ex-AgroGeneration and Harmelia, finalized in late 2013, became a starting point for the agricultural market player’s future development 2015 2016 2017- 2018 Improvement of business processes, continuing to consolidate operational and financial fundamentals of the business Severe weather conditions impacted Group results two years in a row, thus pushing strongly towards further cost and operations optimization

Harmelia (c. 70,000 ha) Ex-AgroGeneration (c. 50,000 ha)

2010 2010 2007

Founded by SigmaBleyzer Fund IV (SBF IV) under management of SigmaBleyzer1 Listed on NYSE Euronext in Paris Founded by a pool of French investors

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Konkur:

Majority shareholder of AgroGeneration Investment holding company Controlled by SBF IV (run by SigmaBleyzer)

AgroGeneration

Current Shareholders and Investors

Major experience in the field and a unique approach based on the creation of value SigmaBleyzer:

Over 25 years SigmaBleyzer (SB) and SB’s managed funds have invested over $1 billion in Ukrainian economy in many sectors, including: agriculture, telecom, high-tech, media, food, retail, consumer products, infrastructure SB has been a successful private equity investor in Ukraine in spite of the challenges

Strong record of creating value, investments in over 100 companies, active hands-on management style, value creation at the operational level, not through financial engineering

56.6% 7.1% 1.2% 35.1% Konkur Inv. Ltd Green Alliance/Gravitation Cordial Inv. and Consulting Ltd Floating

AgroGeneration Shareholder’s Structure as of December 31, 2017*

* excl. OSRANE bonds to be fully converted to equity in early 2019

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AgroGeneration

Chaired by an Experienced Operations and Management Team

John Shmorhun CEO, member Board of Directors

Executive in SigmaBleyzer companies since 2009 Former DuPont executive Former US navy pilot Over 20 years of experience in the agricultural business in Ukraine and Russia

Michael Bleyzer Chairman of the Board of Directors

Chairman & CEO of SigmaBleyzer, one of the largest and most experienced private equity investor in Eastern Europe Worked for over 15 years for Exxon and Ernst & Young before creating SigmaBleyzer in 1994

Pierre Danon Vice-Chairman of the Board of Directors

Chairman of several companies in Europe Vice-Chairman of TDC (Denmark) Non-executive Director of Standard Life (Edinburgh, UK) Former Chairman and CEO for Numericable-Completel

Decision making in France and US with strong experienced management based in Ukraine

Sergey Bulavin Senior Vice-President

Joined SigmaBleyzer in 1994, and held managerial positions since

• 1995. Has been in charge of the agricultural business since 2011

Vladyslava Rutytska Vice-President for Strategic Development

Ex Deputy Minister of the Ministry of Agrarian Policy and Food of Ukraine. Member of National Council of Reforms of

• Ukraine. The Senior Advisor to Michael Bleyzer

Kateryna Konashchuk Vice-President of Commerce

10-year experience in agribusiness and international commodity trade. Before joining SigmaBleyzer in 2011, held managerial positions at grain trading companies in Ukraine

Olena Levchenko CFO

Twice-named one of the TOP 10 Chief Financial Officers in

• Ukraine. Joined SigmaBleyzer in 1995. Started her work for

AgroGeneration in 2014

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The Company owns up to 210,000 tons of storage facilities, including both elevators and horizontal storage capacities

Sites of existing elevators (c.a. 124,000 tons) have spare land for new construction to further expand capacities Up to 90,000 tons of horizontal storage sites located at the farms today

Today, AgroGeneration’s farms are self- sufficient in terms of securing crop annually, though storage capacities are constrained in the West

Asset base is sufficient to cover the needs of Group’s operations

AgroGeneration

Machinery Fleet and Storage Capacities

• AgroGeneration. Existing Elevators

Region Current Working Capacity, tons Kharkiv 69,100 Lviv 36,870 Sumy 18,000 Total Elevators Capacities 123,970

The business is well equipped with agricultural machinery

Key machinery is chiefly foreign-made Locally produced equipment are used to perform supporting operations

Fleet is equipped with GPS and fuel sensors to record and follow-up working parameters in real time through the dispatcher services team

AGG List of Main Agricultural Machinery

Type of Machinery Number of Items Tractors 273 Combines 72 Sprayers 57 Trucks 224 Autos 139 Seeders 107 Headers 148 Tilling equipment (harrows, cultivators, dip tillers, others) 331 Other towing equipment 251

Lean 6 Sigma cost optimization system already implemented to provide more transparency to the Group and help to strictly manage costs and improve efficiencies Purchasing of inputs and sale activities are partially conducted using electronic tender platform APS system KPI’s introduced to all middle and upper management in alignment with expected individual

• bjectives. Merit system in place

R&D Department

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Agro GIS GPS Control Rental contract Control (1C 8.x) ERP + Accounting (1C 8.x)

Information about Land Plots Info Base

• f Lease

Holders Fuel Consumption, Operational Kilometers, Daily Output

Machinery Tracking, Info from Sensors

Information for the Reports Information about Crop Pattern

Machinery Location Limits, Cartographic Basis

• AgroGeneration. Information System Interworking

Sound management of operations and personnel with constant improvement of operational efficiency

AgroGeneration

Operational Management

“Clustering” concept in running the business State-of-the-art soil treatment and testing technologies are applied to obtain optimal soil fertility Centralized accounting and monitoring system was implemented within Group’s farms:

Field activities day-to-day management GPS mapping of all cultivated lands (GIS system)

37% 28% 7% 3% 6% 12% 6% 1% Wheat Sunflower Barley Corn Rapeseed Pulses Soy Other

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AgroGeneration is constantly looking for the right balance between improving yields

• f individual crops and overall profitability

AgroGeneration

Production Performance

4.7 4.4 2.8 2.5 4.0 3.2 2.7 2.2 5.7 4.9 3.3 2.1 3.4 3.0 2.1 1.8 Wheat Barley Rapeseed Sunflower AGG Ukraine Europe World

3-Year Avg. Historical Gross Yields Comparison, tons/ha

• AgroGeneration. 2018 Crop Mix, by ha

Obtained crop yields constantly exceed Ukrainian averages 395k tons of crops (in gross weight) were produced in 2017 Wide crop pattern and geographical diversification of farmlands allows to partially mitigate climatic changes impact

–

Still, last two season weather fluctuations significantly affected production

–

2018 crop season is underway

2018 Harvesting Campaign Progress. Obtained Gross Yields, tons/ha (as of early September, 2018)

Crop AgroGeneration Actual Ukraine Avg Change vs Ukraine, % Peas 2.15 1.86 +15.6% W Barley 4.18 3.53 +18.4% W Rapeseed 2.87 2.61 +10.0% W Wheat 3.83 3.80 +0.8% S Barley 3.65 2.75 +32.7%

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Sale of harvest to top-tier purchasers under well-developed logistics and infrastructure

AgroGeneration

Trade

Individual sales strategy for each crop Top-tier buyers: Bunge, Cargill, COFCO, Louis Dreyfus, Glencore, Kernel, ADM Risk hedging through forward contracts (account for around 40% of yearly sales)

GAFTA member

2014 2015 2016

2017

66,309 125,001 163,463 189,652 279,495 206,939 187,323 132,903

50,000 100,000 150,000 200,000 250,000 300,000

Export Export Local 19%

38% 47%

59%

AgroGeneration

Today’s Position

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Produces up to 400,000 tons of a portfolio of high value crops per annum, with yields consistently outperforming Ukrainian averages, and

• perating with modern farming practices

Expanding export sales and retaining positive EBITDA level, under difficult political, economic, and climatic conditions

Operating in the Ukrainian ag market for more than 10 years, the Company is a western-run, market player with experience both in the ag sector and in Ukraine

Operates over 110,000 ha in 5 regions of Ukraine Grain storage capacities of ≈ 210,000 tons

• Among the 5 largest pure crop producers and

among 10 major ag players in Ukraine

• French public company, listed on NYSE

Euronext in Paris, with 35% free-float

• Strong management team with a proven track

record and best Western corporate governance and managing practices

• Audited by E&Y annually
• Official corporate website

http://agrogeneration.com/ AgroGeneration Today AgroGeneration – one of the TOP 5 Ukrainian pure crop producers

• AgroGeneration. Map of Land Assets

AgroGeneration

Opportunities Overview

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Crops Processing Animal Breeding Grain Trading Vegetable Growing

Crop Production Areas of Potential Integration

Our goal is to become

One of the largest and most efficient crop producers in Ukraine with yields at or above EU and USA levels A company with strong storage and infrastructure base A diversified, stable and profitable company AgroGeneration offers an excellent platform for further development and growth

AGG is looking at expansion opportunities in Ukraine Investment opportunities consist of:

Expansion of the current operational land base Storage infrastructure modernization/development to support business operations Other agriculture related activities such as processing, trading, logistics and other businesses

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AgroGeneration

Please Contact Us Sergey Bulavin

Senior Vice-President Head of M&A E-mail: sbulavin@agrogeneration.com Mob: +3 8 050 331 34 50

Kateryna Konashchuk

Vice-President of Commerce E-mail: ekonashchuk@agrogeneration.com Mob: +3 8 050 394 46 03

AgroGeneration

Corporate e-mail: contact@agrogeneration.com Website: www.agrogeneration.com Ticker: ALAGR ISIN: FR0010641449