1. No category

Management Presentation
August 2015
Disclaimer
Any estimates, projections, targets or forecasts contained herein have been prepared by the
management of Axzon and involve significant elements of subjective judgments and analysis,
which may or may not be correct.
No representation or warranty, either expressed or implied, is or will be made by Axzon, or
its respective directors, officers, partners, employees, agents, representatives or advisers as
to the accuracy or completeness of the information contained in this document, or which
this document is based on or of any other written or oral communications with the recipient
in connection with an evaluation of a specific transaction with or relating to the business of
the Group, and all liability therefore (including direct, indirect or consequential loss or
damage) is expressly disclaimed. Neither part of this document should form the basis of, or
be relied on in connection with, any contract or commitment or investment decision
whatsoever, and the recipient thereof should conduct its own independent investigation and
analysis of the information contained or referred to herein.
This document may not be passed on, copied, reproduced, in whole or in part, or otherwise
disseminated, directly or indirectly, to any other person. Failure to comply with this
restriction may constitute a violation of applicable laws.
2
Baggrunden for for Axzon
• En idé I hovedet på en dansk landmand
▫ Lad os placere landbrugs-og fødevareproduktionen så tæt
på markedet og forbrugeren som muligt!
▫ Hvorfor flytte korn og råvarer den halve verden rundt?
▫ Hvorfor betale overpriser for landbrugsjord for at
understøtte en meget høj koncentration af husdyr ?
▫ Hvorfor flytte arbejdskraft i stedet for produktion?
▫ Lad os etablere os med produktion rundt om i verden, og
dermed medvirke til integration !
▫ Lad os medvirke til en mere bæredygtig
landbrugsproduktion, også i Østeuropa!
▫ Lad so bidrage til en mere stabil og fredelig verdensorden!
Establishment and early years
1992
Danosha started
operations
Prime Food
acquired
Tom Axelgaard’s first visit
to Ukraine
1994
Poldanor started
operations
2000
2002
Axzon A/S
incorporated
2004
4
Sustainable development
The first biogas plant
launched in Poland
2005
“Welfare Pigs” concept
introduced at Poldanor
2008
Sevel Slagteri
acquired
2009
Construction of the 1st biogas
Merger with Dan Invest and
plant in Ukraine started
Initializing production in Russia
2010
Restructuring of the Group
under Axzon A/S
2011
2013
Verification of Carbon neutral
meat production in Poland
2013
5
Stabil udvikling !
1.416
EBITDA
1.085
602
375
154
43
97
433
593
623
620
730
801
1.207 1.252
900
406
66
Source: Audited financial reports, the Group
64
133
88
94
107
62
144
178
261
354
Mio. DKK
Revenue
268
365
6
Polen Invest A/S
90 Danske investorer
84,67 %
IFC
Axelgaard Holding
6,97 %
3,91 %
Tom Axelgaard
Verdensbanken
76 Danske investorer
4,45 %
Holding company
40 %
#2 I polsk
svineproduktion
#1 biogas producent
på farmbasis
Top 10 producent
I Polen og kendt
for høj kvalitet
#2 største
svineproducent I
Ukraine og nu med
biogasanlæg
Økonomiske indikatorer 2014
Solid platform for
udvidelser i
Rusland
Med-ejer af
mindre Slagteri i
Danmark
Produktions indikatorer, 2014
Omsætning
1,5 mia DKK
Antal solgte slagtesvin
930k stk.
EBITDA
365mio. DKK
Solgt svinekød I ton
87k tons
Kødprodukter solgt i ton
49k tons
EBITDA margin
26%
Netto resultat
46mio DKK
* In live-weight
** Excluding slaughtering services of Sevel Slagteri
Besætning (total/søer)
470/40.1k stk.
7
Axzon producerer i dag ca. 10 tons svinekød i timen.
Poldanor er 2 største svineproducent I Polen, med 22.300 søer og 620.000 slagtesvin produceret om året
Danosha er 2 største svineproducent I Ukraine med 11.600 søer og 330.000 slagtesvin produceret om året
Dan Invest har en produktionskapacitet på ca. 8.000 søer og kan producere 240.000 slagtesvin om året
Prime Food er mellem de 10 største slagterier i Polen med 2 % og kendt for høj kvalitet og sporbarhed
Poldanor er Polens største biogasproducent med en årlig produktion på ca. 60 mio KWH strøm
Samlet har Axzon rådighed over 35.000 ha. Landbrugsjord i Polen, Ukraine og Rusland
8
Eastern Europe in focus
We target markets where pork prices are high and recourses are relatively cheap…
EUR ‘000 per ha
40
Land price (LhS)
Pig carcase price (RhS)
EUR per 1 kg
3,0
2,5
30
2,0
1,5
20
1,0
10
0,5
0
0,0
Netherlands Denmark
Germany
Spain
Poland
Hungary
Romania
Ukraine*
Russia
… where growth opportunities are significant and constrains are limited
heads per ha
Pig density (LhS)
7
40,2 EU-27 average
6
5
4
3
2
1
0
Netherlands Denmark
Germany
Spain
kg p.a.
Pork per capita consumtion (RhS)
50
40
17,3
21,2
30
20
10
0
Poland
Hungary
Romania
*Value of 10 year lease rights
Note: Value of farmland - latest available (2008-09); pork price - average for 2011 in live weight, density - pigs herd (Dec’ 11) per agricultural land area
Source: Eurostat, FAS USDA, Savills (International Farmland Market Bulletin, 2011)
Ukraine
Russia
9
Potential for further growth in grain production
UA 40 mio ha. *5 t = 200 mio t.
RU 222 mio ha. * 3 t.= 666 mio t.
(RU an UA could double the worlds wheat production.)
10
Extreemely low profitability in Danish pigproduction
In spite of the fact that Danish production efficiency is the highest in the world
Avg net result pr. pig... - 52 DKK
100
42
50
0
-11
-50
-12
-20
-28
-64
-13
-35
-79
-100
-108
-127
-150
-200
-168
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Avg net result pr. pig
Source: Foedevarewatch Denmark
Note. Net result after depreciation, financial and all other costs.
11
Geography of operations
Each of the markets where Axzon is present or plans to be contains substantial growth potential
Axzon’s geography of operations
Poland
 Price is expected to surge upward
 Less efficient pig producers quit the business
 The change in EU regulation will have price upside effect
in 2014-2016
Regions of operations
Markets of presence
Ukraine
 Favorable price environment
 Growth potential implied by low internal supply, and
a low level of current per capita consumption
 Pig price growth trend
Russia





Demand – an internal production gap of 475k tons
Outstanding margins implied by high pork prices
Huge population and vast land resources
Growing disposable income and pork consumption
Substantial internal economical and political support
for investments in pork production
Russia
143 m
Denmark
22 kg
6m
2,935k t
81 kg
1,589 k t
Poland
38 m
38 kg
1,625k t
Ukraine
46 m
17 kg
820k t
Population
Pork per capita annual consumption (2014)
Total pork production (2014, carcass weight)
Source: FAS USDA, Statistics Denmark, FAPRI, World Bank
12
Russia: Still a major global importer of pigmeat…but
Pig average price dynamics
 Major global pork importer with annual shortage
exceeding 450kt (2014)
 143m population with growing disposable income and
pork consumption
 Significant pig price premium and abundant grains1
production (average output during the last 5 years –
83mt)
 Outstanding margins in pork production (EBITDA margin
> 40%) despite poor operating efficiency
 Substantial government support
2,2
2,08
2,0
1,8
1,6
1,67
1,57
1,81 1,82
1,4
1,73
1,17
0,8
1,33 1,32
1,06
0,99
32% 32%
33%
32% 24% 17% 8%
2.000
20%
-1,0
2008 2009 2010 2011 2012 2013 2014 2015F
0%
Production (LhS)
Consumption (LhS)
Share of net import in consumption, % (RhS)
1 incl.
40%
1,0
wheat, corn, barley, oats, rye, millet
coefficient
2 Correlation
Source: FAPRI, Euromonitor, ZSRIR, Rosstat, Ukrstat, the Group data
1,06
1,04
EUR/kg (lw)
Ukraine
Russia
Personal disposable income
and pork per capita
corr2= 0.99
consumption
60%
3,10
3,20
3,15
3,02
2,97
2,84
2,84
2,72
2,40
2,08
2,00
1,92
2,60 2,90
1,84
1,74
1,19
1.500
19,2
20,1
20,9
21,5
21,7
22,0
22,0
20,0
1.000
500
25,0
kg
39%
1,13
1,48
2008 2009 2010 2011 2012 2013 2014 2015f
$ bn
M tons (cw)
3,0
Pork consumption balance in Russia
1,32
1,61
1,2
1,0
1,80 1,83
1,95 1,90
1,53
Poland
5,0
1,87
768
923
1.076 1.151 1.247 1.123 1.048
-
15,0
10,0
2009 2010 2011 2012 2013 2014 2015E
Personal disposable income, US$ bn (LhS)
13
3.5 Sustainable intensification of
agriculture
Formål/grundlag: Er det tomme ord ??????
”Bæredygtig intensivering af landbrugs og fødevareproduktion”.
Vision
”At blive verdensførende i landbrugs- og fødevareproduktion, baseret på
intensive, bæredygtige produktionsmetoder og standarder og høj kvalitet i
både produkter og organisation”
Mission:
Key Value Drivers
“At producere sunde høj-kvalitets fødevarer
Ved brug af mindst mulige ressourcer
Og have mindst mulig indvirkning på det naturlige miljø”
Landbrug
Kontrol over hele værdikæden
Føde
Svine
varer
produktion
Energi
Fra jord til bord
15
Danish know-how and sustainable agriculture
Danish pig producers are leading the way and develop production based on the most advanced
know-how in the world and sustainable farming principles
 For more than 100 years, production of pigs and pig
meat has been a major source of income for Denmark
The milestones of sustainable agriculture
 Nowadays the country is among the world’s leaders in
breeding, animal welfare standards, food traceability,
safety and quality
 Danish farmers undertook a long and hard way
learning how to make intensive agriculture sustainable
 Led by Danish management, Axzon adheres to the
strictest environmental and social standards and
brings the principals of sustainable agriculture to the
countries where it operates
Source: the Group
Environment
Waste utilization
Animals welfare
Bioenergy
Society
Food safety
Rural development
Economy
Food supply
Farm profitability
16
Sporbarhed fra bord til jord
Fuld control over hele produktionsprocessen til sikring af den optimale kvalitet for forbrugeren.
Fra jord til bord strategien
Produktion af
foderagrøder
Majs
ensilage
Organisk
gødning
Svineavl og
produktion
Produktion af
foder
Elektricitet
og varme
Husdyr
gødning
Elektricitet
og varme
Slagtning og
udbening
Slaughter
waste
Elektricitet
og varme
Kødforarbejdning
og salg
Elektricitet
og varme
Produktion af biogas
Interne aktiviteter og kontrol til sikring af effektivitet og optimal miljøpåvirkning
Intern
opformering
Af produktionsdyr
Optimal udnyttelse
af husdyrgødning
Egen
transportafdeling
Egen
byggeafdeling
Uddannelses
Center
17
„From Field to Table”
Top focus: animal welfare
Group
housing of
sows
Castration
with
anaesthetic
(all male
piglets)
Transport by own transport
trucks
Slaughterhouse animal welfare
managment
18
Dyrevelfærd er et relativt begreb
19
Koncentration af produktionssøer og vildsvin i Europa.
20
Udbrud 2014 -15 i EU
21
Hvis dyrene har det godt, producerer de godt.
22
Constant focus and development.
23
Operating excellence in pig production
Axzon is ahead of its Russian peers by operating efficiency
22
Pigs sold per sow
Meat yield per sow, kg
30,3
3.439
25
22,2
21
2.717
2.520
Feed conversion ratio, kg
2,94
2.308
2.129
2,76
USA avg
Smithfield
Miratorg
Axzon
Chercizovo
Rus Agro
USA avg
Smithfield
Miratorg
Axzon
Chercizovo
Rus Agro
[VÆRDI]
*
[VÆRDI]
Chercizovo
Rus Agro
2,68
USA
avg
Smithfield
Miratorg
Axzon
average for benchmarked companies
Additional information
Sow herd
Average marketable pig
weight, kg
EBITDA margin of Russian
peers in pig segment, 2014
USA avg
15 mio.
135.0K
41,6K
80K
81K
120
110
109
117
109
Daily gain on finishers
n/a
800
935
n/a
n/a
40%
Weaned pigs/sow/year
24,8
26
31,4
21,7
24**
30%
27,2 **
n/a
35,3
24.4
26,4**
20%
Born alive pr. sow/year
60%
50%
57%
***
49%
Note: (*) figures for 2010, other figures for Russian peers are for 2014.(**) Calculated 2014 figures. Figures for Axzon is for 2 quarter 2015 *** 1H 2015 incl. Dankub costs with no production.
.Source: the Group, companies’ data from public sources
50%
„From Field to Table”
ENVIRONMENT
Today:
8 biogas plants
58 000 MWh yearly
200 000 tons yearly
reduction of CO2
emission
Plan by 2015:
13 biogas plants
120 000 MWh/year
(30 000 households)
Biogas
Modern and environment
friendly technologies – use
least possible resources
IPPC permits valid until
30.06.2016
Wastes and waste water
management
25
Efficient crop production
Reduced farming solutions
save the environment (no
ploughing => reduction of
fuel consumption)
GPS makes growing more efficient, saves resources
and saves the environment for unnescessary pollution
Reduceret jordbehandling og minimering af kemi!
28
Rettidig omhu !!
Corn for cows, pig feed and biogas
30
3.5 Biogas operations and environment
protection
Value of covering lagoons for storing animal manure
Economics
• Price of Nitrogen is today 3 PLN/kg N in agricultural fertilizer in Poland
• Loss by open lagoon pr year = 10.000 t * 1kg loss/ton = 30.000 PLN = pay back 1,5 years
Side effects
• No evaporation of Ammonium and Methane to the atmosphere (pollution)
• No odor from the lagoons
• Secondary utilization of both
32
Det kommer jo næsten af sig selv!
33
Biogas operations and environment protection (1/3)
With sustainability as underling principle, Axzon strives to utilize the best available technologies
to protect environment and boast efficiency
China
6-floor farm for 18,000 sows
Slurry goes directly into the river!
Axzon approach
1
Slurry accumulated in
sealed lagoons
2
Biogas plants produce
electric and heat energy
3
Degased biomass used
as organic fertilizer
4
Ecologic situation
meticulously monitored
34
Koczała biogas plant (2009) – 2 x 1063 kW
36
Christmas meeting presentation
Відкриття біогазового заводу
Biogas plant opening Ukraine
9/21/2015
Essential functions of biogas plants:
 Electricity and heat – cogeneration
(app. 52,000 MWh in 2012)
 Utilization of plant and animal waste (1000 t/year)
 Better natural fertilizer (fermented pig manure)
 Reduction of GHG (greenhouse gas) emission (app. 200,000 tons of CO2
eq/year)
 Reduction of manure odour – app. 80%
 Reduced spreading of pathogens and weed seeds.
 Development of local infrastructure and new jobs
37
Utilization of the fermented biomass as natural
fertilizer, using the soil injection method
Capacity: 150 t/h
38
Ammongas and steam Explosion
39
Hvad er det ?????
Steam explosion
The uniqe production cycle
CORN
PRODUCTION
The biomass is distributed in the spring,
when the corn can utilize it optimally.
SINGLE-PASS
CORN HARVEST
SINGLE-PASS
CORN HARVEST
Wet
corn
cernels
BIOMASS DISTRIBUTION
CORN SILAGE
The digested slurry is homogeneous,
smells less, and the nutrients accessibility
is optimal for the new generation of corn.
.
Electricity and heat
BIOGAS
PRODUCTION
SEALED WET CORN
STORAGE NEAR
BY FARM.
•
•
Minimal transport
No drying needed
 no energy used for that,
 as well as no loss of nutrients
Electricity and heat
LIQUID FEEDING
PIG
PRODUCTION
STEAM EXPLOSION
The lignin in the corn
stover is destroyed,
so the dry matter is
more accessible for
the methane bacteria
in the biogas plants
(optimum utilization)
WET MILLING
SYSTEM AT THE
FARM
SLURRY STORAGE
El.
The steam exploded mass is mixed
with the pig manure in exact and
stable doses, to keep a constant
digestion and methane production.
.
The biomass from the pigs (slurry) is
contained in sealed systems
 No loss of nutrients and gasses
Pigs eating and growing from the
good food composition
Minimering af resurseforbrug pr. produceret enhed.
•
•
•
•
•
•
•
•
•
Foderforbrug pr. kg. tilvækst
Medicinforbrug pr. kg. kød
Energiforbrug( el, brændstof etc.) pr. kg. kød.
Vandforbrug pr. kg. kød.
Arbejdskraftsforbrug pr. kg kød.
Pesticidforbrug pr. kg. kød.
Udledning af metan, c02, NH3 etc. pr kg. kød.
Nedsivning, udvaskning, spor i miljøet pr. kg. kød.
Affaldshåndtering, udnyttelse, helhedsindvirkning pr. kg. kød.
42
+
Carbon neutral meat
Carbon neutral companies
(average benchmark: 5,35 kg CO2)
(from 2,5 to 8,2 )
43
Recognized and awarded by Financial Times and IFC
At the Transformational Business Conference & Awards, arranged by Financial
Times (FT) and the International Finance Corporation (IFC) in London, Axzon won
the 1. prize in the category : "Achievement in project finance Food and Water”.
Z nami wiesz co jesz





Traceability
High Quality
Healthy pigs
Low CO2 outlet
Good retail net