Trail PY2 GmbH & Co. KG

A large scale cattle farm project in Paraguay

Investment overview

Acquired 38.818 hectares in West Paraguay (Chaco) for US$ 172/hectare

Goal: Develop a large scale cattle farm with about 14.000 cattle units

Total capital investment: about US$ 30 million

Secured private equity: US$ 14 million

Capital needs: about US$ 16 million

Issuer (Andres Cramer) participation 30% at all times

• current participation US$ 6 million

Undisclosed reserves:

• The current market situations suggests an increase of our land value of 35% since the acquisition of the land in November 2010

• The investor participates with 100% in these undisclosed reserves

Total Return: 276% after PY Tax (excl. agio)

Minimum participation: US$ 1 million plus agio

Planned Exit: December 31st 2021

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Content

Investments

• in Agriculture • in Livestock • in Latin America • in Paraguay • in the Chaco

Location of the farm & project description

Risks & Opportunities

Risk assessment

Management team in Germany & Paraguay

Principles & success factors of our farm management

Our service

Current projects

Investment structure in Germany

Sensitivities

Tax structure

Frequently Asked Questions

In the press

Short film about the project

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Why invest in agriculture?

Agriculture Investments

Food Hunger of a growing world population Feed Commodities such as wheat, soy and corn are also used for feed production Fuel Increasing demand for biofuels

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The growing demand for agricultural products is accompanied by limited supply as arable land cannot be reproduced. The fact that arable land is being destroyed by urbanization, erosion and salinization further increases scarcity

Agriculture Investments

Scarcity is predictable and forecasted

„The UN has predicted global population to be 7.7 billion (today 6.9 billion) by 2020, while arable land is expected to decrease by 100 million hectares in the same time.” – New Energy World Network September 2010

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Livestock investments hold a great opportunity, since:

Livestock Investments

With the increase in the standard of living, the demand for meat increases

• Disproportionate increase in the standard of living in emerging markets such as China or Brazil

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Scarcity through the conversion of pasture to agricultural land

• Example Argentina: Beef exports 2005: about 770.000 metric tons

Beef exports 2010: about 320.000 metric tons

The UN organization FAO (Food and Agriculture Organization) forecasts an further increase in beef prices of 50% until 2017

Commodity price increases e.g. wheat • Lead to increase of feed prices since 1kg

beef requires 10kg feed • Which in turn leads to higher beef prices

Latin America‘s success factors:

Investing in Latin America

Immense land reserves Untapped arable farmland Fertile soil Favorable climate conditions Low labor costs Subsidiary free Large share of western European population Facts: Over the past years the livestock market in these countries has grown 4% per year compared to the world market‘s 2%

Exports to China have increased sevenfold between 2000-2008

The agricultural production in Latin American countries grew 71% during the 2009 crisis Sources: FAO & CEPAL

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Market environment*

Investing in Paraguay

Population: 6.5 Mio • 98% live in East Paraguay • West Paraguay (Chaco) is dominated by German speaking Paraguayans

Capital: Asunción

Languages: Guaraní & Spanish (German in the Chaco)

Landlocked (no natural disasters)

GDP per capita 2.000 US$, Chaco: 12.000 US$

Part of the Latin American free trade market Mercosur:

Brazil, Argentina, Uruguay and Paraguay

Main export markets for beef: Chile, Russia and Europe

Free market economy & stable democracy * March 2010 8

Paraguay´s international reputation

Paraguay´s international reputation certainly has room for improvement

The main reason for its negative perception is the impression General Stroessner left after a 35 year dictatorship

The democratic change, however, has already been triggered since 1992 after Stroessner´s downfall

Since then, the political and economic environment has recovered and notably improved

Positive developments in Paraguay

Since 2003 the GDP has increased by 3% per year on average

Paraguay has been able to achieve a budget surplus since 2004

The unemployment rate has decreased by nearly 70% over the past 10 years

Today, Paraguay is the 4th largest soybean and 8th largest beef exporter in the world

Next to forecasts that expect Paraguay to become the 4th largest beef exporter in the world over the next 5 years, the country is expected to grow at record rates of over 9% over the next years

In the year 2010 the expectations were surpassed with a growth rate of 15,3%

While the focus is on economic growth, high importance is given to the ecological use of its untapped land reserves

Only 50% of the land reserves can be used for production, the rest remains untouched as ecological reserve

Strict controls and ongoing monitoring via satelite pictures, assure the compliance with the ecological reserve

Violations of the environmental laws are sanctioned fiercly

Investing in Paraguay

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Investing in Paraguay

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Average price 2011 (until October 2011): US$ 1.67/kg This implies an total increase since 2001 of 215% or 22% per year

Live cattle price development in Paraguay

Current advantages over other Latin American countries

Investing in Paraguay

Pasture land prices (for one cattle unit):

• Uruguay & Brazil currently at US$ 3.000

• Argentina currently at US$ 2.500

• Paraguay currently at US$ 1.500

No foreign investment restrictions (BR, AR)

No additional taxation for large land holdings (UY)

Lower tax rates

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Investing in Paraguay

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Paraguay and especially the Chaco are just being discovered by foreign investors: “Worldwide food shortages and rock-bottom land prices in Paraguay have made the Chaco the last agricultural frontier. “ – The Guardian UK October 2010 “Latin America’s impressive little guys: Uruguay and Paraguay” – Financial Times Europe September 2010

Current advantages over other Latin American countries

The soils in the Chaco are extremely fertile

Tropical pastures are used, that are suited perfectly for the conditions in the Chaco

Heat resistant cattle breeds (Indian Zebu) are crossed with British breeds (Angus & Hereford) – Genetic and beef quality are excellent (exported to the EU)

Large water retention basins assure sufficient water reserves throughout the year

Economies of scale through large-scale production

Low labor costs

Extraordinarily well educated, young and motivated local management

The abattoir in the Chaco is among the most modern and advanced abattoirs of South America

Investing in the Chaco

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Conditions in the Chaco

During summer, temperatures can reach up to 50 degrees Celcius, therefore 40% of the Chaco are semi-arid lands

Precipitation is seasonal: 70% of the rain fall occurs between December and March

Therefore, there are strong seasonal contrasts between droughts and floodings

Why cattle farming has been successful in the Chaco nonetheless

The potential of the Chaco

The productive areas in the Chaco are growing each year by thousands of

hectares; In 2010 alone, over 200.000 hectares were sold to foreign

investors

Beef production in the Chaco has increased by 36,1% since 2005

Additional investments into the livestock sector of the Chaco are

forecasted to be U$ 3 billion until the year 2020.

Due to the increasing production and growing number of abattoirs, not

only does the export rate increase, but so does the efficiency and

profitability of the farms in the Chaco

While a working infrastructure exists, the growing number of investments

will lead to an increase in productivity e.g. through more asphalt roads

The groundwater reserves of the Chaco are widely unexplored. For some

farms this could allow crop cultivation, which would lead to an immense

increase in land prices

The increasing demand for organic beef is being satisfied by natural and

extensive cattle grazing without the use of feedlots in the Chaco

Investing in the Chaco

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Location of our farm „La Huella“

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Project description „La Huella“

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Acquired 34.318 ha

Buy and breed cattle

Developed 5.700 hectares

Development of another 15.240 hectares & building Infrastructure including water reserves

Break Even

Exit

Acquired another 4.500 ha

Risks & Opportunities

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Risks

Development of beef price

Development of farmland price

Currencies (US$/€ as well as US$/PYG)

Opportunities

Increase of farmland prices due to scarcity

Increase of beef prices due to scarcity

Liberalization of international markets (tariffs)

Increase of bio energy demand

German speaking environment in the Chaco

Disproportionate beef export balance (low meat consumption in Paraguay)

Arable land in the Chaco is still highly undervalued

Risks Assessment

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Land prices There are not many fertile soils left at this price level in the world There is no rational reason why land prices should not further increase in the Chaco

Beef prices

Conclusion

We are convinced, that with this project, we have seized a rare opportunity to participate in a significant increase of land value in todays difficult market environment

Team in Germany

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Andrés Cramer CEO Born in 1953 in Buenos Aires, Argentina Married, 4 children Management • 17 years for an international conglomerate, 12 years of which in non-European countries • 8 years CEO of a medium sized company in Hamburg/Germany • 9 years CEO of a family office Competences • Innovative farm management (technological, economical and social) • Business expertise • Excellent network in Latin America Languages German, English, Spanish, Portuguese

Team in Germany

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Hans Ruwe Managing Director Trail PY2 Verwaltungs GmbH Born in 1959 in Bielefeld/Germany Education & Career • Silvicultural science studies at Göttingen

University in Germany • 6 years forestry management at international companies • Since 1989 free-lance consultant in the agriculture

and forestry sector for clients around the world Special Skills • Innovative farm management • Special expertise in agriculture and cattle

farming for: USA, Africa and South America Languages German, English, Spanish & Swedish

Oliver Herrmann Managing Director Trail PY2 Verwaltungs GmbH Born 1981 in Hamburg/Germany Education & Career • Graduated high school in Hamburg/Germany • Business studies at Boston University/USA • 3 years management for an international company • Before joining AgrInvest: Managing Director Spain Languages German, English, Spanish, Portuguese

Team in Paraguay

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Fabian Farr Coordinator Born 1983 in Halle (Saale), Germany Education & Career • Graduated high school in

Hamburg/Germany • Agricultural Science studies at the

University of Hohenheim/Germany • Agricultural project development in

Tanzania/Africa (coffee plantation) • Agricultural project development and

Management in Uruguay and Paraguay (Logistics, livestock, water infrastructure)

Languages German, English, Spanish

Ferdinand Neufeld Farm Manager Born 1980 in Loma Plata (Chaco), Paraguay Education & Career • Engineering studies at the University

Nacional de Asuncion • Expertise in satellite- and land

surveying technology • 4 years consultant for the

„Cooperativa Choritzer“ (responsible for 1 Million Hectares)

Languages German, English, Spanish

Egon Reimer Assistant Farm Manager Born 1985 in Loma Plata (Chaco), Paraguay Education & Career • Farmer • 2 years agriculture in Eastern Paraguay • 4 years cattle farming in Western

Paraguay (Chaco) Languages German & Spanish

Principles & Success Factors

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Law compliance The strict compliance with Paraguayan law is a fundamental requirement for a sustainable and successful farm Rights of indigenous tribes All rights of indigenous tribes are treated with the utmost respect and supported by the company Employee rights The company has the goal to be among the best employers in the region and supports employee needs beyond the required framework of law Control of environmental impact The farm shall serve as example for an ecological and innovative operation. Regular controls are carried out in order to measure the impact on the environment. Furthermore, relevant environmental studies shall be performed by scientific institutes Regular controls and evaluation of operative goals The managment commits itself to regularly evaluate and improve the operation as well as to set operative goals above the standard. Maintainig a high standard in all aspects The farm will be managed according to West European standards

Our Service

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Operations

Build entire farm & fields

Farm management

Project management

Due diligence

Business plan

Controlling, auditing, tax & law

Follow-up and control of goals

Investor relations

Preparation /execution of sales process

Current Projects

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Investment structure in Germany

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Andres Cramer (30%)

Investors (70%)

39.000 ha Land in Paraguay (about 20.000 ha for livestock; 19.000 ha ecological reserve)

La Huella S.A.

Trail PY2 GmbH & Co. KG (99.9%)

Germany

Paraguay

Trail PY2 Verwaltungs

GmbH

General Partner

Return & Sensitivities for Investors

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Increase in live cattle price/year Sa

le o

f La

nd

/Hec

tare

* Forecasted Scenario ** For an investor with a capital contribution of US$ 1.000.000 paid in full on 30.06.2012.

Return** 0% 5% 10%

$1.600 (Market Price Today )

186%

244%

326%

$2.080 (Market Price Today

+ 30%)

218%

276%*

358%

$1.100/$2.430/$4.214 (CF Factor 15)

153%

299%

497%

$3.200 (Market Price Today

+ 100%)

292%

349% 431%

Tax structure

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No double taxation agreement exists between Germany and Paraguay. In general, the tax burden is determined as follows: Taxes PY Profit before taxes 100 IMAGRO (10%) -10 Gross profit 90 Withholding tax (5%) -4,5 Transfer tax (15%) -13,5 Net profit 72 Tax burden PY: 28% Taxes GER Gross profit 90 Net profit 72 Final withholding tax incl. solidarity surcharge (26,4%) 23,8 Creditable amount -18 Tax burden GER: 5,8% Total tax burden: 33,8% Profit after taxes: 66,2

Today, we plan to exit in the year 2021 by selling the shares of the La Huella (share deal). While the tax burden in Paraguay is 20% when selling the land including cattle and infrastructure (asset deal), there is no tax burden when selling the shares to e.g. another foreign company. In our business plan, we have planned with a 10% latent tax burden in the year of exit. The auditor Deloitte & Touche has confirmed us, that losses in Paraguay can be carried forward up to 5 years. Our business plan, therefore does not include any tax burden of the Paraguayan corporation tax IMAGRO (10%). Furthermore, Deloitte & Touche has confirmed, that according to Paraguayan law , capital returns from the capital reserve can be performed at any time and do not underlay any tax burden in Paraguay. These distributions can be made prior to profit distributions of the La Huella according to Deloitte & Touche. All capital flows from Germany to Paraguay are therefore planned to be paid into the capital reserve of the La Huella, allowing all distributions until the year 2021 to be taken tax free from the capital reserve of the La Huella.

FAQ

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What experiences exist with cattle farming in the Chaco? Cattle farming is being done successfully in the Chaco for many years now. Our advisory board in Paraguay consists of people, who have directly participated in this success and will help us implement the positive experiences in our operation What happens during long periods of drought? During long periods of drought there is the danger of lack of feed, since the grass cannot re-grow. We have therefore planned for an own hay production, in order to have enough feed reserves for this case. Artificial irrigation is not profitable due to the large size of the operation Is the land register in Paraguay cleared? Since there are still cases of double registration, a notarized due dilligence is essential before acquiring land in Paraguay. We have gone through this due dilligence process and our land has been secured through notarized land registrations and notarized land sales contracts Who are the German speaking Paraguayans in the Chaco? They are Mennonites, an evangelic community. The Mennonites living in Paraguay have emigrated from Russia and Canada into the Chaco. Due to their German roots, school classes are in tought in German. They therefore grow up speaking three different languages – Spanish, German and a Mennonite dialect. The essential characteristic of this community is the freedom of faith, non-violence and dedication to peace. The Mennonites in Paraguay are cosmopolitan, hard-working and live according to modern standards

FAQ

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Where is the catch? Why is the land in the Chaco so cheap?

There are different reasons:

The increasing conversion from pasture to land for crop production has lead to a scarcity of pastures. Therefore, land that prior seemed unattractive for production is now getting attention for use as pasture.

The Chaco seemed unattrative for many years, due to its high temperatures, seasonal precipitation and missing infrastructure

Only the Mennonites have worked on the development of the region and succeeded in converting the land to productive and profitable surfaces for cattle farming

Nonetheless, cattle farming is capital intensive in the Chaco due to the cost of building large water and feed reserves. Capital, which most Paraguayans lack. Therefore, the region relies on foreign direct investments

Foreign investors are only now discovering the Chaco, since a working infrastructrure exists and a successful concept for livestock operations has been implemented

In comparision to international price levels, the land is still cheap. It has, however, already increased in value by about 500% over the past years.

Please refer to page 13 „The potential of the Chaco“ for why we believe, that land prices will continue to rise in the Chaco and have yet to make their biggest leap in terms of value

In the Press

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Reuters: „South America tops farmland investors' wish-list” Private equity and fund managers at a farm investing conference in Geneva named South America a top place to buy, lease and manage agricultural lands for profit…Brazil, Paraguay and Uruguay are all attractive destinations and Argentina is under review following the death of former President Nestor Kirchner… World Bank Online: “Latin America’s growth expected to reach 5-6% in 2010” Latin America’s semiannual economic report also reveals that the region’s recovery is ahead of the rich nation’s and compares well with the Asian Tigers’ expected growth of over 7 percent. All in all, the crisis in Latin America & Caribbean (LAC) was short lived, as compared to other parts of the globe, thanks in part to solid macroeconomic and fiscal frameworks set in place well before the crisis struck. Individually, Brazil, Peru and Argentina lead the pack with 7.5 percent projected growth while Uruguay and Paraguay are expected to largely surpass the regional average… Financial Times Europe: “Latin America’s impressive little guys: Uruguay and Paraguay” Paraguay’s economy is on fire - set to grow at around 9 per cent this year, a 30-year-high… The Banker (Financial Times Group): „Paraguay ups its game” Paraguay's vast amounts of fertile and inexpensive land have been exploited in a very low-intensive way, and therefore hold great potential for the agriculture sector…

Short movie: Project „La Huella“

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