Equatorial Palm Oil One2One Investor Presentation - Proactive ...

African sustainable palm oil
producer

Disclaimer
This document and its contents are confidential and should not be copied, reproduced,
distributed or passed on, directly or indirectly, to any other persons or published in
whole or in part for any purpose. The presentation and any further confidential
information made available to you is being supplied to you by Equatorial Palm Oil plc
(the “Company”) solely for your information and may not be reproduced, forwarded
to any other person or published, in whole or in part, for any other purpose. This
document and its contents have not been approved by an authorised person within the
meaning of the Financial Services and Markets Act 2000 and do not conform to the
rules and regulations of the U.S. Securities and Exchange Commission and other
regulatory bodies in the United States. The securities mentioned herein have not been
and will not be, registered under the Securities Act or under any U.S. State securities
laws, and may not be offered or sold in the United States unless they are registered
under the Securities Act or pursuant to an exemption from or in a transaction not
subject to the registration requirements of the Securities Act.
This presentation is being distributed on request in or from the United Kingdom and
the United States (as such term is defined in Regulation S under the U.S. Securities
Act of 1933, as amended (the “Securities Act”)) only to and are directed at (1) (a)
persons who have professional experience in matters relating to investments being
investment professionals as defined in Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the “FPO”), (b) high net worth
companies as defined in Article 49(2) of the FPO, (c) certified sophisticated investors
as defined in Article 50(1) of the FPO or (d) persons to whom it may otherwise lawfully be
communicated (together “Relevant Persons”) and (2) persons within the United States
who are “accredited investors” as defined in Rule 501(a) of Regulation D under the
Securities Act who are also “qualified institutional buyers” (“QIBs”) as defined in Rule
144A under the Securities Act. In order to qualify as a certified sophisticated investor
you must have a current certificate signed by a person authorised by the Financial
Services Authority to the effect that you are sufficiently knowledgeable to understand
the risks associated with this particular type of investment and you must have signed
within the last 12 months a statement in the terms set out in Article 50(1)(b) of the FPO.
The ordinary shares are available only to, and any invitation, offer or agreement to
subscribe, purchase or otherwise acquire the ordinary shares will be engaged in only
with, Relevant Persons or Accredited Investors. Any person who is not a Relevant
Person or an Accredited Investor should not rely on this document nor take any action
upon it, but should return it immediately to the Company.
We urge you to review the carefully before making any investment decision. This
presentation shall not constitute an offer to sell, or the solicitations of an offer to
buy, nor shall there be any sale of the securities mentioned herein in any State in
which such offer, solicitation, or sale would be unlawful under the securities laws
of any such State. Neither the Securities and Exchange Commission, nor any state
regulatory authority endorses this offering. This presentation must be read in
conjunction with the Admission Document and it contains only a synopsis of more
detailed information to be made available in relation to the matters described in this
document and accordingly no reliance may be placed for any purpose whatsoever on
the sufficiency or completeness of such information and to do so could potentially
expose you to a significant risk of losing all of the property invested by you. The
proposals in the presentation are preliminary and are subject to updating, completion,
revision, amendment and verification, which may result in material changes. No
reliance should be placed on any of the information and no representation or
warranty, express or implied, is given by the Company as to the accuracy of the
information or opinions contained in this document and, save in respect of fraud,
no liability is accepted by the Company or any of its directors, members, officers,
employees, agents or advisers for any such information or opinions.
This presentation contains certain forward-looking information about the Company
which are statements, beliefs, opinions or projections that are not historical facts.
By their nature, forward looking statements involve a number of risks, uncertainties
and assumptions that could cause actual results or events to differ materially from
those expressed or implied by the forward looking statements. Words such as
“expect(s)”, “believe(s)”, “may”, “anticipate(s)”, “project(s)”, “forecast” and
similar expressions are intended to identify forward-looking statements. Forward
looking statements contained in this document regarding past trends or activities
should not be taken as a representation that such trends or activities will continue
in the future. Accordingly, results could differ from those projected as a result of,
among other factors, changes in economic and market conditions, changes in the
regulatory environment and other business and operational risks.
By attending the presentation and/or retaining these presentation materials you
agree to be bound by the foregoing restrictions.
1

The Challenge of Food Security
‘It’s almost a perfect storm gathering here, the laws of
supply and demand are altering. Increasingly, the nations
in the East have the money to buy at prices that we in
the West will find increasingly difficult to afford.’
‘If you think you have seen change, you ain’t seen
nothing yet.’
Lord Paddy Ashdown, Oct 2012
2

Overview
Global food supply – One of this century’s major challenges
• Population growth and emerging middle class predicting major food deficit
• Palm oil most consumed vegetable oil in the world facing long term supply issues
Large scale development of sustainable crude palm oil (CPO) in Liberia
• Significant land position with planting target of over 100,000 hectares
• Fully commissioned oil palm mill with international sales of CPO
Liberia fast growing investment destination for multi-nationals
•Oil Palm – Golden Agri and Sime Darby
•Resources – Arcelor Mittal, BHP, Chevron, Aureus, Hummingbird
Highly experienced Board and Management team
• Proven track record in palm oil development to drive growth
Strategically located
• Excellent location near deepwater ports
Joint venture for capital funding
• Strong shareholder base and strategic partner with deep understanding of oil
palm industry
3

Palm Oil Uses
Sample of Top Selling UK Products
• Most consumed vegetable
oil in the world
• A healthy alternative to
hydrogenated oils such as
soya and sunflower oil
McDonalds
Warburtons
Premier Foods
Cadbury
ABF
• Used in foods – margarine,
instant noodles, chocolate
and processed foods
• 43 of top 100 food brands
in UK contain palm oil
Unilever
Unilever
Mars
Young’s
Nestlé
• Consumer goods including
soap, detergents, cosmetics
& pharmaceuticals
Premier Foods Wrigley Birds Eye
Mars
Mars
Kellogg’s
Ginsters United Biscuits Unilever Northern Foods
4

Market Outlook
• Palm oil demand increased 10% per annum since turn of century & forecast to continue
• Demand driven by increasing population, growing middle class and health issues
• Growth driven by China and India but also Africa and USA
•Largest producers, Malaysia and Indonesia, have little scope to increase acreage under
oil palm cultivation
• Significant increase in supply is not possible by mere technological improvements
Increasing demand for land to be cultivated
5

Why invest in West African palm oil?
Strong investment case for palm oil in Africa
•By 2040, African countries can increase collective value of their
agricultural output from $280 billion to $880 billion
(McKinsey and Company Report)
•Low cost, high quality land with ideal climatic conditions for
palm oil production
•Growing middle class in Africa - 60% growth in the past decade
with increasing domestic demand for palm oil (African
Development Bank Study)
•60% of the world’s uncultivated arable land lies in Africa
(McKinsey and Company Report)
6

Equatorial Palm Oil: AIM PAL
Key share data (as at 24.10.12)
11.00
Share price
Significant Shareholders
£14.11m
Market
Capitalisation
Bio Palm Energy
26.7%
Praetorian
Resources
8.85%
Directors 5.1%
JP Morgan 6.3%
Schweco Nominees 3.2%
Blackrock 2.4%
Henderson 2.0%
128.3m
Ordinary Shares
Other
45.45%
Other Investors:
Smith & Williamson;
CQS; Brewin
Dolphin; Killick
7

Project Location
Palm Bay Estate
• 50 year concession enacted by parliament
• Total area of 34,398 ha
• 25 km from deepwater port of Buchanan
• Mill commissioned with 3,500 ha reactivated
• Annual planting increasing to 3,000+ ha in 2013
Butaw Estate
• 50 year concession enacted by parliament
• Total area of 54,550 ha
• 42 km from deepwater port of Greenville
• Annual planting increasing to 3,000+ ha in 2013
• Location identified for processing mill
River Cess
• Working with small holders to develop concession
• Expansion potential of 80,000 ha
• Excellent position between two existing Estates
8

Large Scale Planting Programme
• Planting programme at Palm Bay & Butaw
• Oil palm seeds are specific for West African
conditions and sourced from Ghana, Cote D’Ivoire,
DRC and Thailand
• 1.7 million seedlings and young palms in nursery
• Existing stock in nursery will supply over 8,000 ha
new planting in 2012 and 2013
• 2014 target planting rate of 8,000 hectares
Nursery at Palm Bay
• Significant improvement in employee skills due to
on the job training
• Land preparation current focus
9

Plantation Team
Geoff Brown – Executive Director (EPO)
40 years of experience in large scale plantation management, with 10+ in Malaysia and 20+ in Indonesia as Managing Director of P.T.
London Sumatra Indonesia. Former Chairman of New Britain Palm Oil & Plantations Director of Harrisons & Crosfield plc.
------------------------------------------------------------------------------------------------------------------------------------------
Sashi Nambiar – Head of Operations (LPD)
Involved in the development and management of large scale palm oil estates for more than thirty years, primarily in Malaysia and
Indonesia.
Sasi Kumar – Group Manager Palm Bay Estate
30 year experience in managing new development and mature estates in Malaysia, Kalimantan and Sumatra.
Gilbert Netto – Group Manager Butaw Estate
As part of his 20 years oil palm experience he has worked in the West Africa oil palm industry for 8 years. Started as GM at Palm Bay
successfully planting 1,100 ha in 2011 with no other person with oil palm experience.
Muniandy Kanniah – Mill Manager Palm Bay Estate
25 years experience in working with oil palm mills – started career as a fitter and turner/mechanic so well qualified in all facets of the
mill. Will be invaluable in selection and commissioning of new 60MT mills.
Jasvinder Singh - RSPO & Concession Compliance
Previously with United Plantations in Malaysia where he helped them obtain RSPO certification in 2008 and lead the team through
surveillance and audit of RSPO process.
Other Indonesians have been brought in on 12 month contracts to train local workers – nurseries, planting, GIS, harvesting.
10

Palm Oil Processing Mill
Palm Bay Estate
• The only palm oil processing mill operational in
Liberia (5t of FFB* per hour)
Outside of mill
• Mill processing rehabilitated oil palms to be used
for training & development of staff
• Extraction rates over 18%
• Good quality palm oil produced with
low free fatty acid content
Fresh fruit bunches on way to the mill
• Future sized mills will be capable of processing up
to 60t of FFB per hour
• CPO sales to domestic market, Portugal &
Cameroon
* FFB = Fresh Fruit Bunches
Palm oil mill
11

Strategic Joint Venture
• EPO the JV manager and Liberian assets held on
50:50 basis
• Joint venture with BioPalm Energy (subsidiary of
the SIVA Group) for Liberian operations
• $30m in equity funds with $30m bank guarantee
• Development finance in process ($30m-$60m) to
fund major expansion
• Bank guarantee from SIVA to sit behind debt
funding
May 2011 at Palm Bay Estate: Madam Ellen Johnson Sirleaf
President of Liberia and Nobel Peace Prize co-winner
12

Responsible approach to business
• Social responsibility a key commitment
• Have built health clinics, schools, housing, drinking water, roads & infrastructure
• Ongoing social and environmental studies with Coastal & Environmental Services
• Member of Roundtable on Sustainable Palm Oil since 2007
• Development areas located on previously logged land so no degradation to primary
forested areas in Liberia
13

Investment Case Summary
• Extensive land position
• Planting programme established
• Experienced management team, injecting
expertise from more mature markets into
local economy
• Compelling demographic and macro
economic trends for West African palm oil
demand
• Funding strategy in place
• Strong share register
January 2011: Aerial Photo of Palm Bay Estate
14

Michael Frayne
Executive Chairman
94 Jermyn Street
London SW1Y 6JE
Tel: +44 (0)20 7766 7555
Fax: +44 (0)20 7766 7599
mjf@epoil.co.uk
Questions