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Bulgarian
Farm
Investment
Ltd.
2015
"To succeed in business, you need to make
others see things as you see them."
Aristotle Onasis
Real image Corn harvest 2013
Investment overview.
5 year investment with fixed return.7% yearly return, 22% in final year, giving a total
return on investment of 50%, averaging 10% per year.
€20,000 minimum investment.No risk to your capital.Funds secured against income producing assets.Loan registered with Bulgarian Central Bank.Shares in a limited liability company.
This document provides you with general
information about investment opportunity in
Agrotes Ltd. It is not a marketing document.
The information contained in this document is
directed only at persons or entities in any
jurisdiction or country where such access to
information contained herein and use thereof is
authorized and/or not contrary to any
applicable laws and regulations. This document
is accurate as at April 2015.
Section
1:
Investment strategy
Section
2:
Why Bulgaria
Section
3:Section
4:Section
4.1:Section
4.2:Machinery & EquipmentSection
4.2:Section
5:5.1:
Financials
Agriculture Land & Subsidies
Agrotes Ltd.
Current Business
Management Team
History and facts
Disclaimer Contents
5.2: Company Growth
5.4: Financials after first stage of investment
5.5: Financials after second stage of
investment5.6: Cash flow projections
Section
6:Investment Offer
5.3: Investment steps
Section
7:Contact Information
Investment Strategy
We seek to capitalize on the available potential to further expand the volume of the
agricultural production by renting more land, implementing the newest machinery and technology,
increasing the amount of irrigated land and availing of the various subsidies and EU grants.
In order to reduce the risk for investors we are offering up to a 50% investment in Agrotes Ltd. which is
an existing operational and profitable Bulgarian Company. Agrotes Ltd. has been in operation
since 2008 and its management team have been working in the agricultural sector for over 20 years.
Agrotes Ltd. will use the invested funds to further expand their current business activities and purchase
more machinery in order to ramp up the business. Agrotes Ltd. is currently one of the largest
companies in the Yambol region of Bulgaria and their aim is to become the largest.
The principle managers in Agrotes Ltd. are Mrs. Evelina Ivanova Tyufekchieva and Mr.
Stanislav Yordanov.
Evelina has a PhD in Agricultural Science and has extensive experience in the agricultural sector. She
is highly regarded in this sector and has made several publications in various scientific
magazines on agricultural topics. Mr. Yordanov grew up in Yambol and after his time in
university obtaining his Masters Degree in Finance he focused on helping his mother, Evelina, ramp
up the existing business.
Why
BulgariaPolitical and business stability
• Bulgaria is a member of the European Union, NATO and WTO.
• The stability of the currency is supported by the currency board, pegging the Bulgarian lev to the euro at the level of 1.96.
• Bulgaria has the second-lowest government debt in the European Union (17.0 % of GDP) and one of the lowest budget deficits
(2.1%) as of 2011.
Low cost of doing business
• Bulgaria has the most favourable tax regime in Europe. Corporate income tax rate is 10%, the lowest in the EU together with
Cyprus. Personal income tax is 10 %, flat rate. Industries in high-unemployment areas are granted 0% tax rate.
• Depreciation time for computers and new manufacturing equipment is 2 years.
• 5% withholding tax on dividends and liquidation quotas (0% for EU tax residents).
• Bulgaria has one of the most competitive costs of labor in Central and Eastern Europe.
• Favorable office rents and low cost of utilities. Bulgarian cost of electricity for industrial users is 70% of the European average.
Strategic location
• Located at the heart of the Balkans, Bulgaria is a strategic logistics hub. Ease of transportation of cargo is provided by.
• Five Pan-European corridors ( IV, VII, VII, XI, X), which pass through the country.
• Transport program TRACECA, which connects Europe with Caucasian and Central Asian region.
• Four major airports: Sofia, Plovdiv, Bourgas and Varna.
• Two main seaports: Varna and Bourgas.
• Numerous ports at the Danube River
Access to markets
• Due to its location Bulgaria provides direct access to the following key markets.
• European Union - zero tariff market with population of 500 million.
• CIS – still not well penetrated market with a high potential.
• Turkey - zero tariff market of near 80 million population.
• Middle East – a market with high purchasing power.
• North African market.
Human resources
• Work force is well educated, highly skilled and multilingual.
• 62.2 % of the total population is in working age (appr. 4.6 million)
• 60 000 students annually graduate from 51 universities.
• 98% of the high school students study a foreign language (usually English) and 73% study a second language (mainly German,
French, Spanish, Russian).
• 94% of the schools have Internet access.
Bulgaria provides an end-to-end solution to developing the Agri
sector
Unique natural conditions for the cultivation of a wide variety of
crops, fruits, and vegetables
50% of the country's territory is farming land
Ecologically clean and fertile soils
Very high quality of organic products (ban on GMOs)
Established local producers and a strong tradition in the sector
Long-standing distribution channels in the former Eastern Bloc
The EU acquis on food has been transposed into Bulgarian
legislation
Very high health and environmental protection standards make
Bulgarian food products fully prepared to meet even the highest and
most complex consumer requirements
The growing demand for new and local food and beverages in
Western Europe and beyond will boost the demand for traditional
Bulgarian products
A well-established infrastructure available
Direct access to the fastest-growing and largest market in Europe: over 122 million people
Strategically located to provide routes to Europe, Russia, CIS, the Middle East, and North Africa
5 Pan-European corridors cross the country, linking Northern Europe with the Middle East and North Africa
The logistics network is better developed than most Balkan countries
68 bilateral agreements on avoidance of double taxation
Highly qualified and affordable human resources
A well-developed educational network of colleges, universities, and high schools
A number of public and private research&analysis centres, more than 10 000 researchers
Workforce available throughout the country at some of the most competitive prices in Europe
Bulgarian research institutes and universities work together with companies in the sector to create a skilled workforce
Specialized government incentives and EU funding
The Rural Development Operational Programme has the largest budget in Bulgaria: €3.279 billion (EU: €2.642 billion.; national co-financing:
€637 million)
The Programme has the highest level of fund absorption in the country
At present there are 15 active financing schemes covering various industry sub-sectors which are at farmers' disposal
Bulgarian agriculture has one of the fastest
growing factor incomes in EU-27 (second only to
those of Estonia, Hungary and the Czech Republic)
for the 2005-2011 period, as is shown by Eurostat
data.
By the latest figures of the Bulgarian Association of
the Owners of Agricultural Land:
Some 170 000 transactions of agricultural land
have happened in Bulgaria in 2011.
The prices of agricultural land rose between 17%-
20% for 2011, but that rise is expected to level out
to 10% thereafter in the next few years.
Some 350 000 hectares of arable land are still not
cultivated, as they belong to the State or to
individual owners not interested in agriculture.
In 2011, wheat harvest for Bulgaria is some 4
million tones. The total area allocated for wheat
production is some 1 050 000 hectares.
Land under cultivation:
The total land under cultivation is 3 200 000 million
hectares, of which 1 800 000 million hectares, or
56.25%, are taken up by cereal production.
Agriculture Land & Subsidies
Agrotes Ltd. is a profitable company which has been
operational since 2008 and this twined with its very
experienced management team in Bulgaria reduces the
risk for the investors. Agrotes have a proven track record
in this industry and are benefitting from the various EU
grants and subsides available.
The Agriculture investment strategy presented is designed
to gain exposure to an asset class that is characterized by
low correlation to other asset classes, provides an
effective hedge to inflation and is expected to benefit from
attractive market fundamentals.
Our agricultural strategy uses a top down approach which
includes the purchase of modern machinery and
expansion of the plant and storage facilities in order to
avail of more grants and subsidies in this sector. Capital
will also be deployed to irrigate targeted land plots in order
to increase production. We will also focus on a bottom-up
approach that involves close communication with the
management team responsible for the expansion of the
business activities, including the support team who will
ensure that the grant applications are executed in a timely
manner. The strategy is diversified by geography and crop
type in order to create the optimal risk/ return profile.
Agricultural Land & Subsidies Agrotes Ltd.
• Agrotes Ltd was established in 2008
• Managers: Evelina Ivanova Tyufekchieva & Stanislav
Iordanov
• Business activities included: Manufacture and sale of
agricultural products
• In 2008 they began their operation with 50 hectars
• From 2008 to 2013 the company expanded their operation
and they currently cultivate over 800 ha.
• Area of business: Yambol
• Agrotes have invested in modern machinery including
tractors, cultivators, sprayers and combine harvesters with the
newest technology in order to keep up with the increasing
requirements of the EU
Picture Left: In 2008 Agrotes
started from the bottom with
limited capital and resources.
Picture right: Today the
equipment is much better and
easier to use and easier to use
and most importantly more
productive
History and Facts
Evelina Ivanova Tyufekchieva, has put
her strong commercial instincts and
innovative mind to all of her agricultural
ventures, resulting in the successful
business which Agrotes Ltd is today.
Over three decades of working on a
wide range of very challenging
agricultural projects she demonstrated
her ability to consistently deliver. Widely
acknowledged as an unassuming
reliable professional, her ability to adapt
analysis, drive, motivate, solve and
learn has permitted Evelina to grow her
business under the most challenging
economic and financial conditions.
Evelina has a PhD in Agricultural
Science and is the former head of
research division of the State Complex
Experimental Agricultural Institute in the
town of Yambol. She also has made a
number of publications in various
scientific magazines.
Management Team
Evelina Ivanova Tyufekchieva Stanislav Jordanov
Stanislav Jordanov has outstanding communication skills. He is a team builder
with a track record of effective staff management and motivation. Stanislav is
analytical and an excellent problem solver with the ability to anticipate and safe
guard against unforeseen events in a project and to deliver constructive
solutions.
Stanislav has a thorough understanding of cost and budgetary control,
monitoring and reporting on multiple projects. He spent much of his youth
working on his mother’s farm in Yambol. (Evelina Tyufekchieva is his mother).
Stanislav completed his masters degree in the Bulgarian Navy Academy and
graduated top of his class in Navigation. With a background in Engineering,
Stanislav has the ability to deal with complexity and solve problems with
creativity and in a timely manner. In 2001 he graduated with a second masters
degree in finance from the University of National and world economy.
• Hose Reel Irrigation systems -3 sets
• HDPE complete pipe system 250 mm+180 mm
• Galvanized quick coupling pipe system 150 mm
• Galvanized quick coupling pipe system 120 mm
• Set of fittings
• Pump station site
• With the following equipment
• 3 pumps 10 stage with 55 kW electric motors
• Galvanized manifold with all the fittings and water meter
• Automatic pump switch board with PLC control
• Electric transformer 250 kVA
• Areal electric line
• Cutting platform 6.1 m
• Rape seed cutting platform 6.1 m
• Sunflower seed cutting header - 8 row
• Disc roller HE-VA 6.3 m
• Subsoiler 3 m
• Site for base in the village of Djinot
• Trailed sprayer TECNOMA Galaxy
• Air planter Kverneland DT 6m
• Row crop planter MONOSEM
• Navigation and auto steer equipment Trimble
• Grain Loader
• Agricultural land - 20 ha
• Combine harvester John Deere W650
• Tractors:
• Fendt 312 Vario
• Deutz Agroplus 100
Machinery & Equipment
Bulgarian Agriculture Land &
Subsidies
Air planter Kverneland DT 6m
Disc roller HE-VA 6.3 m
Navigation and auto steer equipment Trimble
Row crop planter Monosem
Cultivator Vaderstad NZA 6000Marani Reel irrigationsystem
Agrotes ltd currently manages 800 hectars of land in a very fertile area in the vicinity of the town of Yambol
Agrotes Ltd also owns 20 ha of land and a Base Site
Agrotes Ltd currently owns 3 mobile irrigation systems
Agricultural Land Area in ha Rent Euro/ha Current expenses Euro/ha Income Euro/ha EU grants Euro/ha gross profit Euro/ha
Financials per ha Irrigated land 150 270.00 712.50 1,950.00 170.00 1,137.50
financials per ha NON irrigated 650 200.00 427.50 1,050.00 170.00 592.50
Total 800
Agricultural Land Area in ha Total rent Euro Current expenses Euro Income Euro EU grants Euro Gross profit Euro
Finacials for Irrigated land 150 40,500 106,875 292,500 25,500 170,625
Finacials for NON Irrigated land 650 130,000 277,875 682,500 110,500 385,125
Total 800 170,500 384,750 975,000 136,000 555,750
Financials
Direct payments – guaranteed by the EU budget for agriculture 2013-2020
Current
Business Operational expenses
Irrigated corn - 150 ha
Operations Number Operational expenses Euro/ha Consumables Euro/ha Total for the operation Euro/ha Total Euro/ha
Disc harrowing 1 30.00 30.00 30.00
Ploughing 1 40.00 40.00 40.00
Fertilizer spreading 1 7.50 180.00 187.50 187.50
Cultivation 2 30.00 30.00 60.00
Planting 1 20.00 60.00 80.00 80.00
Spraying 2 5.00 25.00 30.00 60.00
Row cultivation 2 15.00 15.00 30.00
Irrigation 1 35.00 140.00 175.00 175.00
Harvest 1 50.00 50.00 50.00
Total expenses per ha 712.50
cereals \no irrigation\ - 650 ha
Operations Number Operational expenses Euro/ha Consumables Euro/ha Total for the operation Euro/ha Total Euro/ha
Ploughing 1 40.00 40.00 40.00
Fertilizer spreading 1 7.50 150.00 157.50 157.50
Cultivation 2 30.00 30.00 60.00
Planting 1 20.00 40.00 60.00 60.00
Spraying 2 5.00 25.00 30.00 60.00
Harvest 1 50.00 50.00 50.00
Total expenses per ha 427.50
Farming is based on traditional crops – mainly cereals
Current agricultural operation650 ha conventional farming150 ha irrigated lands
Targeted agricultural operation1 300 ha conventional farming850 ha irrigated lands
• Investment in more irrigation facilities• Purchase of new agricultural
equipment and machinery• Purchase of more agricultural land
Intensification of the agricultural production
Economy of scale
Two stage expansion
Company Expansion
Plan
Investment steps – A high level Overview
1300 ha
conventional 850
ha irrigated lands
900 ha
conventional 500
ha irrigated lands 2nd Stage of Expansion
Receive 40 % of
capital expenditure
back from The
Rural
Development
Program (excludes
land purchase)
Current Operations: 650 ha conventional
150 ha irrigated lands
Investment Steps – A More Detailed Look
Due to the availability of quality agricultural land, well established business structure and operations company
growth is subject to:
• Good planning
• Cost effective investment• Availing of the Rural Development Program funds as part of EU CAP year 2014-2020 – already approved
Additional Financial Benefit: As we cannot confirm the timing of the receipt of the 40% return on capital expenditure from
The Rural Development Program we have not included this figure in the financials but we want to make our investors aware of this substantial additional financial benefit.
First stage of investment year 2015 Euro
4 pumps 60,000
pipes, couplings, fittings, etc. 70,000
Electricals 35,000
4 reel irrigation systems 80,000
Large tractor 185,000
Medium tractor 145,000
Small tractor 100,000
Other machines and equipment 150,000
Purchase of 100 ha to secure the 500 ha of irrigated land (4000 Euro/ha)
400,000
Total funds needed 1,225,000
Second stage of investment year 2016 Euro
4 pumps 60,000
pipes, couplings, fittings, etc. 70,000
Electricals 35,000
4 reel irrigation systems 80,000
Large tractor 185,000
Medium tractor 145,000
Small tractor 100,000
Other machines and equipment 150,000
Purchase of 70 ha to secure additional 350 ha of irrigated land (5000 Euro/ha)
350,000
Total funds needed 1,175,000
Financials after the first stage of investment
Agricultural Land Area in ha Rent Euro/ha Operational expenses Euro/ha
Total expenses Euro/ha Total expenses Euro
Irrigated 500 270.00 712.50 982.50 491,250.00
NON irrigated 900 200.00 427.50 627.50 564,750.00
Total in Euro 1,400 1,056,000.00
Agricultural Land Area in ha Grants Euro/ha Operatinal income Euro/ha
Total income Euro/ha Total income Euro
Irrigated 500 170.00 1,950.00 2,120.00 1,060,000.00
NON irrigated 900 170.00 1,050.00 1,220.00 1,098,000.00
1,400 2,158,000.00
Gross profit 1,102,000.00
Financials after the second stage of investment
Agricultural Land Area in ha Rent Euro/ha Operational expenses Euro/ha
Total expenses Euro/ha Total expenses Euro
Irrigated 850 270.00 712.50 982.50 835,125.00
NON irrigated 1,300 200.00 427.50 627.50 815,750.00
Total in Euro 2,150 1,650,875.00
Agricultural Land Area in ha Grants Euro/ha Operatinal income Euro/ha
Total income Euro/ha Total income Euro
Irrigated 850 170.00 1,950.00 2,120.00 1,802,000.00
NON irrigated 1,300 170.00 1,050.00 1,220.00 1,586,000.00
2,150 3,388,000.00
Gross profit 1,737,125.00
Cash flow - Year 2015
Operation Positive Negative Balance
Operational cash flow 1,600,000 1,600,000
Bank finance 775,000 2,375,000
Investment expenses 1,225,000 1,150,000
Current operational expenses 1,056,000 94,000
Yearly interest at 7% 54,250 39,750
Income 2,158,000 2,197,750
Corporation tax 10% 110,200 2,087,550
Dividend payment 400,000 1,687,550
Cash flow - Year 2016
Operation Positive Negative Balance
Operational cash flow 1,687,550
Bank finance 1,687,550
Investment expenses 1,687,550
Current operational expenses 1,056,000 631,550
Yearly interest at 7% 54,250 577,300
Income 2,158,000 2,735,300
Corporation tax 10% 110,200 2,625,100
Dividend payment 400,000 2,225,100
Cash flow - Year 2017
Operation Positive Negative Balance
Operational cash flow 2,225,100
Bank finance 825,000 3,050,100
Investment expenses 1,175,000 1,875,100
Current operational expenses 1,650,875 224,225
Yearly interest at 7% 112,000 112,225
Cash flow projections Cash flow - Year 2018
Operation Positive Negative Balance
Operational cash flow 2,926,513
Bank finance 2,926,513
Investment expenses - 2,926,513
Current operational expenses 1,650,875 1,275,638
Yearly interest at 7% 112,000 1,163,638
Income 3,388,000 - 4,551,638
Corporation tax 10% 173,713 4,377,925
Bank loan repayment 1,600,000 2,777,925
Dividend payment 400,000 2,377,925
Cash flow - Year 2019
Operation Positive Negative Balance
Operational cash flow 2,377,925
Bank finance 2,377,925
Investment expenses - 2,377,925
Current operational expenses 1,650,875 727,050
Yearly interest at 7% 727,050
Income 3,388,000 - 4,115,050
Corporation tax 10% 173,713 3,941,338
Dividend payment 400,000 3,541,338
Cash flow - Year 2020
Operation Positive Negative Balance
Operational cash flow 3,541,338
Bank finance 3,541,338
Investment expenses - 3,541,338
Current operational expenses 1,650,875 1,890,463
Yearly interest at 7% 1,890,463
Income 3,388,000 - 5,278,463
Corporation tax 10% 173,713 5,104,750
Dividend payment 4,000,000 1,104,750
Investment Offer
Sale of 50% of the company shares for €2,500,000
• Investors will receive the following :
• 7% return on investment, which will be distributed to the shareholders for 4 years.
• In year 5, the shares will be purchased back with a 22% uplift on your total investment and your loan will be fully repaid. So total ROI is 50%, averaging 10% per year.
• For the term of this invetment, you will own 50% of a company that includes:
190 ha of agricultural land
2 150 ha of agricultural production
Business generating over 1.2 million Euro in annual profit
Additional financial benefit (circa. 700 000 Euro grants)
For all capital expenditure excluding land purchases. Please see slide 17
Paul Flood or Joseph Sullivan Tel: 0878128791 or 0868192380email:[email protected]@sunsetresort.bg
