IMO HILL FARMS

Teaser DocumentJuly 2015

Contents

INTRODUCTION

THE COMPANY

EXPANSION STRATEGY

MARKET ASSESSMENT

3

5

13

18

THE OPPORTUNITY 20

Introduction 3

Introduction

Page 4

Imo Hill Farms Limited (“IHF” or “the Company”), is a private limited liabilitycompany engaged in animal husbandry (piggery & poultry), meat processing andfeed production

The Company has recently undertaken a strategy to expand its current operationsand has commenced its expansion plans

This document contains a brief background of IHF, its operations and its expansionplans; and highlights an opportunity to all interested investors to partner with theCompany

Detailed information will be made available to all parties that are interested inpursuing this opportunity further

Background Information

The Farm

Products

Current Facilities

Current Operational Strategy for Layers

Current Operational Strategy for Broilers

Current Operational Strategy for Pigs

The Company5

Background Information

Page 6

Imo Hill Farms Limited (“IHF” or “the Company”), located at 1 Joseph AwomoloStreet, Imo, Ilesa, Osun State was incorporated in June 1979 as a private limitedliability company

The Company is engaged in animal husbandry (piggery & poultry), meat processingand feed production

The Company is owned largely owned by the Awomolo Family through theircompany, Newco Investment, which has a 96.7% equity stake

In the late 80’s, the foundation stock of pigs raised in the farm were sourced fromGermany with the herd growing to about 3,000 pigs. By the mid-nineties, the farmwas fully stocked with over 7,000 pigs

In 2013, the piggery was reactivated with genetics from Topigs SA. From an initialstock of 173 pigs, the pig farm has grown to over 2,500 herd comprising bothcommercial and breeding pigs

Imo Hill Farms has been awarded SON NIS 517:2006 Certification of conformity forits Table Eggs while its other farm products are in the process of being certified

IHF has over 160 employees, including some expatriate staff

The Farm

Page 7

The farm is sited on 48 acres of land in the Imo hill area of Ilesa, Osun state,Nigeria

The farm has a broiler facility in Osu, a 30 minutes’ drive from Ilesa townshipcovering about 41 acres of land

The farm has undergone massive transformation in terms of infrastructuraldevelopment and system/process engineering and hence can be seen as anintegrated livestock farm offering superior quality products such as eggs, broiler,pork and processed meat to consumers

Products

Page 8

IHF’s pig herd consist of Topigs A Linegilts, Topigs Top40 gilts, B Line boarsand TEMPO boars. IHF uses artificialinsemination to breed its Top40 sowswhich its uses for commercialproduction

IHF rears broilers, layers and producesTable eggs

IHF processes two types of meat: Porkand Chicken. The pork is processedinto sausages, hams and bacon. Theprocessed chicken is available inwhole and portioned pieces

IHF has a Feed mill plant that produces all the feed utilized in the farm

Current FacilitiesPage 9

Pig

gery • 11 Pens

• Artificial Insemination Unit P

ou

ltry

• 2 Broiler Houses (25,000 capacity each)

• 5 LayerHouses

• 1 Rearing House (26,000 capacity)

• Central Feeding Station

Fee

dm

ill

• Two separate production lines with circa 3 tons per hour capacity

Me

atP

roce

ssin

g

• Broiler Processing Unit (1000 birds hrly)

• Pork Processing Unit (40 pigs daily)

• Cold Rooms

• Holding Freezer

• Cooling Rooms

• 45 pig carcass capacity hanging room

• Vacuum Sealing Machine

• Automatic Slicer

• Deridingmachine

• Ice making Machine

Some of these facilities were constructed and acquired under the Company’s Expansion Strategy

Current Operational Strategy for Layers

Page 10

Purchase of Day Old Chicks

In-house rearing of Day Old Chicks

Production of Table eggs

Distribution & Sale to market of Table eggs

and Spent Layers

Current Operational Strategy for Broilers

Page 11

Purchase of Day Old Chicks

In-house rearing of Day Old Chicks to

maturity

Processing of broilers to frozen processed

products

Distribution & Sales to market

Current Operational Strategy for Pigs

Page 12

Purchase of Boars

Artificial Insemination of

sows

Rearing of piglets to maturity

Processing of pigs to frozen

processed products

Distribution & Sales to market

Expansion Strategy

Funding Requirement

Expansion Strategy13

Expansion Strategy

Phase 1 Phase 2

Poultry Expansion Work to date Expansion Work to date

Rearing/LayerUnit

•Construction of26,000 capacityRearing House forDay Old Chicks(DOC)

•Rearing House hasbeen completedand is operational

•Construction of 42,000capacity Rearing House forDOC•Construction of 11 LayerSheds (17,000 capacity)

Nil

Broiler Unit •Construction of 2Broiler sheds(26,000 capacityeach)

•Broiler sheds havebeen constructedbut are 50%operational

•Construction of 19additional Broiler houseswith 26,000 capacity each

Nil

Breeder Farm &Hatchery Unit

Nil Nil •Construction of 2 rearingsheds of 5,900 DOCcapacity each•Construction of 6 Breederfarm sheds•Acquisition of HatcheryEquipment

Nil

IHF’s Board decided to expand its operations in line with its mission of developing a verticallyintegrated protein production unit. This expansion was agreed to be undertaken in twophases as follows :

Expansion Strategy (2)

Phase 1 Phase 2

Piggery Expansion Work to date Expansion Work to date

Pigs •Resuscitation ofBreeder unit•Construction ofArtificial Insemination(AI) Unit

•Breeder Unit has beenresuscitated and isoperational•The AI Unit building isalmost completed but theAI Program is operationalon a temporary site

Relocation ofBreeder Herd

Nil

ChickenProcessing Unit

•Installation of Chickenabattoir (1,000 bird/hr)•Installation of Coldstorage, Blast freezer (5tons) and Holdingfreezer (30 tons)

•Abattoir has beeninstalled and isoperational•Cold storage, Blast freezerand Holding freezer havebeen installed and areoperational

•Upgrade of Coldstorage by 600tons

Nil

Pork ProcessingUnit

• Set up of Abattoir and further processing Unit

• Installation of Cold rooms.

•Abattoir completed andoperational•Further processing Unitcompleted and partlyoperational•Cold storage installed andoperational

•EquipmentUpgrade

Nil

Expansion Strategy (3)

Phase 1 Phase 2

Feedmill Expansion Work to date Expansion Work to date

CroppingDivision

Nil Nil •Acquisition of 400-hectare farmland•Set up ofmaize/Soya farm

•50% downpaymenthas beenmade

Equipment •Capacity upgrade from5 tons per day to 25tons per day

•Upgrade has beencompleted and isoperational

•Construction ofnew Feedmill (150ton per daycapacity)

Nil

Funding Requirement

Page 17

IHF requires a sum of N108million to consolidate and achieve full optimisation ofthe facilities installed in Phase 1. N20million will be used to acquire equipmentrequired at Broiler House 2 and for other necessary construction works to be donein the house. The N10million will be used to buy an additional blast freezer to beused in the meat processing factory while the balance of the N78million will serveas working capital for the next three months

IHF estimates that these sums will be utilised till year end 2016 and that Phase 2will commence in 2017

0

20.000

40.000

60.000

80.000N

'00

0

Phase 1

Broiler Meat Processing Working Capital

Market Assessment18

Market Assessment

Page 19

Demand for livestock productsestimated at 2.4 million tonnesper annum whilst supply is only1.2 million tonnes

Therefore a supply gap of 1.2million tonnes per annum oflivestock products

Market size of supply gapestimated at N1.35 trillion

Hence, there is an opportunityfor IHF’s increased products tofill some of this gap

Demand Supply Supply Gap

Market size of Gap

‘000 tonnes N‘mm

Poultry 868.0 295.6 572.4 797,580

Pork 364.6 253.7 110.9 129,363

Eggs 1,173.5 652.4 550.1 419,020

2,406.1 1,201.7 1,233.4 1,345,953

Source: FAO Statistics

-

200

400

600

800

1.000

1.200

1.400

Poultry Pork Egg

'00

0 t

on

ne

s

Demand Vs Supply of Livestock Products

Demand Supply

The Opportunity20

The Opportunity

Page 21

Some of the opportunities available for IHF in Nigeria include:

Increased demand for poultry products from local farmers due to ban on the importationof frozen chicken and Government’s continuous efforts to prevent the smuggling offrozen poultry products

The Central Bank of Nigeria’s exclusion of importers of poultry/meat products fromaccessing foreign exchange loans in the Nigerian market

Increased demand for table eggs as it is the cheapest source of protein to Nigerians

Increase and popularity of Quick Service restaurants in urban centres

Rapid growth in the Nigerian population

Reduction in feed cost and improved nutrient quality of feed from in-house feedproduction

Strategic location of IHF with proximity to the Northern and South-South regions

ContactsPage 22

Frontier Capital Limited

UBA House (8th Floor)

57 Marina

Lagos

Contact Persons

Melody Fayomi (0815-929-0997)

Moji Jimoh (0705-500-6410)

Tayo Oduwole (0805-658-8296)