Overview of Sundrop Farms - SEGRA · Strictly Confidential Slide 3 Executive Summary • Overview:...

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Overview of Sundrop Farms Redefining sustainable greenhouse production of fresh fruits and vegetables

October 2017

Strictly Confidential

Strictly Confidential Slide 2

Disclaimer

This presentation has been prepared by Sundrop Farms Advisors Limited and its subsidiaries and affiliates (“Sundrop”) for the exclusive use of the recipient. Sundrop has not independently verified the information contained herein, nor does Sundrop make any representation or warranty, either express or implied, as to the accuracy, completeness, or reliability of the information contained in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expenses, net income, returns and stock/asset performance) are the best judgments of Sundrop, based on information from a range of sources (public, internal analysis, etc.) as of the date of this presentation. There is no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the projections and such variations may be material. Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. Sundrop expressly disclaims any and all liability relating or resulting from the use of this presentation.

This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The contents of this presentation should not be construed as legal, tax, accounting, or investment advice or a recommendation. The recipient should consult its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein. This presentation does not purport to be all-inclusive or to contain all of the information which the company may require. No investment, divestment, or other financial decisions or actions should be based solely on the information in this presentation.

This presentation has been prepared on a confidential basis solely for the use and benefit of the recipient. Distribution of this presentation to any person other than the recipient and any person/companies retained to advise the recipient is unauthorized. This material must not be copied, reproduced, distributed, or passed to others at any time without the prior written consent of Sundrop.

DISCLAIMER EXECUTIVE SUMMARY COMPANY MILESTONES & KEY INITIATIVES TECHNOLOGY OVERVIEW KEY BENEFITS PORT AUGUSTA PROJECT BUSINESS DEVELOPMENT STRATEGY TRIPLE BOTTOM LINE OPERATIONAL EFFICIENCY KEY PARTNERS SENIOR LEADERSHIP TEAM GLOBAL PRESENCE


Executive Summary

• Overview: Sundrop Farms is a pioneer in sustainable agriculture, growing high-value fruits and vegetables using renewable inputs. The Company develops, owns, and operates infrastructure-like agriculture assets globally. By taking a sustainable approach to greenhouse growing, Sundrop uses advanced technology to increase produce quality and consistency, reduce environmental impact, and create a superior business model

• Sundrop Approach: Sundrop integrates solar power, electricity generation, fresh water conservation, and production, climate control, and hydroponics to enable the year-round production of premium produce at high yields with consistent quality and deliver a meaningful reduction in fossil fuel and water use through innovative use of renewable energy / low carbon technologies. For each new project developed, Sundrop forms long term partnerships with its customers. This allows the design of customized facilities to precisely meet the customers’ needs

• History: Sundrop was set-up in 2009 by Saumweber Holdings, a family office (Series A: US$ 10.2m), to directly address industry supply constraints (water, energy, land, capital) on a triple bottom line basis, taking into account profits, planet, and people. In 2014, Sundrop signed a landmark deal to supply the Australian food retailer Coles with tomatoes under an exclusive long term contract, setting the scene for more customer-led projects. Sundrop completed its Series B round with private equity firm KKR (exact investment amount undisclosed, but US$ 100m+)

• Business Development Strategy: Sundrop is expanding in Australia, the USA, and Portugal and is developing greenhouses to produce cucumbers, peppers, berries, and other supply constrained fruits and vegetables. The Company’s deal pipeline is well developed and de-risked through partnerships, produce offtake agreements, and turn-key, fixed price construction agreements. The projects under development will produce stable infrastructure-like returns in the agriculture sector

• Partners: The Company works very closely with its investors, lenders, construction and technology providers, operating partners, governments and communities, research institutions, and other advisors, to achieve superior long-term, sustainable returns

• Sundrop Expertise: Sundrop has assembled a world-class team of agronomy, technology, project development, operations, and finance professionals using an analytical and professional approach to develop projects and to deliver complex developments on time, on budget, and to the need of its offtake partners



Company Milestones & Key Initiatives

Sundrop was founded on the principle that resource constraints and volatility in agriculture can be mitigated

2008 2009 2010 - 2013

Saumweber Holdings, a family office with significant agriculture investments, evaluates technologies for overcoming water and energy scarcity issues in the agriculture sector

Saumweber Holdings acquires a minority stake in Seawater Greenhouse The investment is used to build a 0.2 hectare pilot facility in Port Augusta, Australia

Saumweber Holdings purchases Seawater Greenhouse’s interest in the Port Augusta pilot project and Sundrop Farms Holdings is formed (Series A: US$ 10.2m) Between 2010 and 2013 (i) key technical challenges are overcome, (ii) solar, desalination, control software and other systems are refined and tested and (iii) different produce and varieties are successfully trialled



Company Milestones & Key Initiatives

From its beginnings in Port Augusta, Sundrop Farms is expanding globally

2014 2015 2016 Onward

Coles signs a long term supply agreement to purchase Sundrop’s tomatoes and private equity firm KKR invests more than US$ 100m in the business (Series B)

Construction begins on the 20 hectare, ~US$ 150m Port Augusta greenhouse expansion project

On-going construction of the Port Augusta facility Strategy and business development to build the deal pipeline in attractive markets globally Financial close achieved to expand in selected new markets

Completion and full opening of the Port Augusta facility Development and construction of projects in the USA, Portugal, and Australia Diversification into new fresh products Continued opportunistic approach to project development and investment in new markets



Technology Overview

Compared to typical greenhouses, Sundrop primarily uses renewable inputs


Groundwater Fossil fuels

Nutrients Sunlight

Fruits and Vegetables

Seawater

Nutrients Sunlight

Salt and minerals Freshwater

Fruits and Vegetables

Rain water

Non-renewable input Renewable input Output


Key Benefits of the Sundrop Approach Sundrop presents an environmentally friendly and commercially attractive alternative to traditional agriculture

Fresh water conservation: By producing, capturing (from rain), and/or recycling water there is limited if any need for mains or ground water. In Port Augusta, solar-powered desalination technology produces fresh water from the ocean that is used to grow fresh tomatoes

Reduction in fossil-fuel use: Unlike traditional greenhouses, which rely on mains electricity, natural gas, or other fossil fuels for temperature control, Sundrop’s greenhouses use sunlight as their main power source

Production of premium produce: Delicious fruits and vegetables can be grown year-round in high yields. Sundrop greenhouses can grow a range of products, including tomatoes, cucumbers, peppers/ capsicums, herbs, leafy greens, berries, and other fruits and vegetables

Transformation of arid land: The Sundrop System enables the transformation of land normally not deemed suitable for agriculture. The Company is particularly interested in sites with significant sunlight that are climatically dry and have relatively low humidity

Job creation: Each hectare of a Sundrop greenhouse typically employs 10 people. This creates long-term green employment in new markets. For example, the Port Augusta facility created ~200 new ‘green’ jobs in South Australia

Superior returns and profitability: The Sundrop System more than doubles grower profitability (as compared to conventional greenhouses) by increasing yield/quality and lowering operating costs. Furthermore, the business is not dependent on government subsidies

Reduced volatility: Traditional greenhouse and field agriculture operations have volatile operating expenses due to fluctuating input costs (such as energy and water). Sundrop accurately forecasts yield and operating expenses to significantly smooth revenue and earnings volatility



Port Augusta Project

A world-class 20 hectare greenhouse in Port Augusta, South Australia is now operational

• Operations in Australia began with the construction of a 0.2 hectare pilot facility opened in 2009. The pilot paved the way for the development and refinement of the technology that underpins the Sundrop approach

• Port Augusta, Australia is not suitable for conventional agriculture but works well for the Company’s technology. Specifically, the location has significant sunlight, mild temperatures, and low relative humidity. Additionally, the site is close to an unlimited source of seawater

• In 2014, Sundrop broke ground on a world class greenhouse in Port Augusta on the same site as the pilot facility. At a cost of ~US$ 150m, the operation comprises 20 hectares and produces premium truss tomatoes for Coles. The facility opened in early 2016. John Holland Group was the EPC contractor for the project

• The 20 hectare Port Augusta greenhouse and solar field are shown below:

View of the greenhouses View of the solar collection equipment adjacent to the greenhouses



Business Development Strategy

Becoming the leading global developer, owner, operator of sustainable greenhouses

• Core Strategy: To develop, own, and operate a global portfolio of sustainable protected growing facilities which

capitalise on increasing resource scarcity and a fragmented marketplace. Sundrop will focus on non-commoditised fresh produce segments, in supply constrained markets, to maximise competitive advantage. The Company will de-risk projects through long term off-take partnerships and contracts. The end result is a business model that works for local communities, the planet, employees, and investors

• Produce segment focus areas:

Herbs and leafy greens – Expanding market (from a small base) with limited competition and higher prices (primarily in developed markets)

Berries – Large/growing market with supply gaps, inconsistent quality/taste, and notable barriers to entry Tomatoes, peppers and cucumbers – A stable category with interesting opportunities for high-quality, mass

market products in select countries and regions. Greenhouse production still a small portion of the overall market

• Geographic focus:

Australia – A core Sundrop market with potential to expand across a range of fresh categories working with

the Company’s key Australian retail partner, Coles

Europe – Supply and quality gaps in a number of markets that could be addressed by the introduction of Sundrop technology and a professional approach to agriculture

USA – A large and deep market with interesting opportunities in specific sectors often driven by an induvial buyers’ needs and logistics issues; well suited to Sundrop’s customisable development approach

Other markets are explored on an opportunistic basis



Triple Bottom Line

Growing in harmony with people and planet are core to Sundrop’s ethos and provides for enhanced long-term returns

Industry leadership with regards to restorative agriculture, going beyond sustainability, always employing innovation and farming best practices to significantly reduce or obviate reliance on fossil water or fuel

Further environmental stewardship principles: Pesticide free production No GMOs No irradiation No biosolids

Sundrop is an employer of choice, fostering long-term careers and training, ensuring farmworker health and safety, and offering a unique culture of shared values and success

Promoting high-value jobs and industry in regions that would otherwise not sustain agricultural production

Promoting human health through safe food of the highest ethical and environmental standards

Sundrop’s success in true sustainability is predicated on making an economic return; profits fund innovation, R&D and future contributions to the planet and employees

Looking out for revenues and costs allows us to grow delicious and natural food that is affordable

People

Profits

Planet



Operational Efficiency Large-scale, sustainable farming captures a greater share of the value chain and creates a superior business model

Market fragmentation: There are few large scale growers and production is highly fragmented

Bargaining power: Producers have limited control over inputs (especially energy and water) and little pricing power over output prices because of an inherently volatile business model

Capital constraints: Smaller farmers lack capital and resources for consolidation and meaningful expansion

Lack of technology: Limited R&D and best-in-class agricultural practices are not applied

Conventional Fresh Fruit and

Vegetable Supply Chain

Consistent supply: Differentiation through consistent production of sustainably grown, premium quality fruits and vegetables

Cost profile: Operational leverage in production due to unique technology and R&D, scale of projects, high density growing systems, global supplier relationships, and knowledge sharing across markets

Horticulture expertise: Best-in-class horticultural talent and track record, allowing for greater training and development of scarce grower talent. Staff is highly focused on quality, consistency, and yield

Disintermediation: By working directly with leading off-take partners, Sundrop reduces sales and marketing expenses and builds strong relationships with the end customer

Global brand: Sundrop aims to build customer relationships and trust through a track record for environmental stewardship and consistently delivering a high quality product

Inputs Production Wholesaler/

Marketer Consumer

Inputs R & D Propagation Production Marketing Supermarket, Food-Service, Wholesale



Key Partners

Successes is achieved with key retail, financial, construction and technical, government and other partners

Retail

Equity

Construction & Technology

Operating

Government & Community

Research

Advisors

Project Finance



Senior Leadership Team

A world class, multi-disciplinary team to develop and manage the business globally

Philipp Saumweber – Chairm

Philipp began his career as an investment banker at Goldman Sachs where he focused on corporate finance for real estate and lodging companies. He later became project manager for an eco-friendly property development project in Costa Rica, anchored by the Four Seasons hotel group.

More recently, Philipp was an investment professional at King Street Capital, a hedge fund, where he covered real asset investments in Europe. Philipp is also a Director of Saumweber Holdings, a family office, where he led investments and operations across the agricultural value chain globally, including the initial investment in Sundrop Farms in 2010.

Philipp received a BA degree in Economics from Dartmouth College and a MBA from Harvard University.

Steve Marafiote – Chief Executive Officer

Steve was previously a CEO of the South Australian Potato Company, and has joined the team on 7 March 2016. Steve has held roles of Managing Director and CEO for more than 12 years in multinational businesses within the produce and food industries, including Australian Quality Plus, National Food Industry Strategy and Chiquita.

He is a former Chair of the South Australian Premiers Food Council, has exported to more than 35 countries, and has won multiple business awards for his commercial acumen and ability to develop multi-faceted and vertically integrated businesses. Both of Steve’s grandfathers were tomato growers since the 1950’s in Australia and he comes from three generations of farming and retail operations within the horticulture industry.



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Overview of Sundrop Farms - SEGRA · Strictly Confidential Slide 3 Executive Summary • Overview:...

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