CSR BUSINESS CASE

Business Plan

Green Crop Farming Ghana Ltd. Moving to the next level in the value chain

CSR DRIVEN SOYA BEAN

MILK FACTORY IN GHANA

Investment of 2.400.000 GHS 600.000 USD

28 August 2017. Version 5. Made by: Lars Bollerup, Phone +45 23 26 08 02

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Invest in an existing CSR driven company, fight diabetes, and enjoy the increasing middleclass driven market in Africa

OVERVIEW

• You join an existing organic CSR company • 0.6 mill USD is the additional Investment budget • The Soya milk market is increasing rapidly

• Niche strategy with various taste varieties • Minimum investment 0.1 mill USD per investor • Exit within 5 years

• Closing end September 2017

• Company founded August 2012

• Driven as a CSR company for 5 years • Equity 2 mill USD

• Danish management • Existing technology from Denmark, China and Italy

TRACK RECORD

INVESTMENT STRATEGY

• To move from crops to processing

• Processing will add value to the existing activities

• Ghana Stock exchange as exit strategy

• Exit within 5 years

• Team Members own 5% of the shares

• Green Crop Farming Ghana A/S are the owner of the remaining 95%

• Green Crop Farming Ghana A/S is owned mainly by investors living in Denmark.

EXISTING INVESTORS

• Genyond Machinery Industrial Group, Shanghai, China

• New taste varieties with organic African flavors

• No sugar content • Diabetes friendly

BRIEF SUMMARY CSR DRIVEN SOYA

MILK FACTORY GHANA

SUPPLIER

PRODUCT

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Table of Contents

1.0 Summary – five years actual results 4

1.1 Summary – five years projection 5

2 The market for soya milk 6

3 Marketing plan for soya milk 6

4 Organization for the soya milk factory 7

5 Time schedule for the soya milk factory 8

6 Investment budget for the soya milk factory 8

7 Legal structure for the soya milk factory 8

8 Technical specification 8

9 SWOT for the soya milk factory 9

10 History of Green Crop Farming Ghana Ltd 10

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1.0 Summary – five years actual results

Green Crop Farming Ghana Ltd. was established in 2012, with the aim of being the leading cash crop producer in Ghana. Since the establishment, it has been the plan to develop the company and move up to the next level in the value chain when the organization was mature. The next level is processing to Soya Milk and a level where a significant value can be added. Green Crop Farming Ghana has now five years of experience, extensive local knowledge and networks of farming, technical expertise and market access to develop the company further. Looking back at Green Crop’s performance during the last five years, the yearly Profit and Loss Account can been seen below. This shows, that the results are good, although there have been challenges, which are reflected in the results. In 2014 there was a nearly total stop for production due to a turn-around to become a certified organic farm. In 2015 and 2016, Ghana experienced some extreme weather conditions resulting in destruction of crops. Despite these challenges, it has been possible to generate reasonable results the first five operations years.

Incl. soya Only farm

2017 2017 2016 2015 2014 2013 2012

Budget Budget ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL

GHS GHS GHS GHS GHS GHS GHS

Note 4 Note 1 Note 1 Note 2 Note 3

HA under plough 100 100 100 60 50 40 17

HA in use 80 80 75 40 10 40 17

Revenue (note 1) 9,680 720 1,609 580 197 540 252

Total variable costs -1,503 -255 -990 -198 -38 -183 -106

Gross margin 8,177 465 619 382 159 357 146

Gross margin in % 84 65 38 66 81 66 58

Total operating expenses -2,902 -202 -501 -254 -743 -230 -65

Result before depreciation and financial costs 5,275 263 118 128 -584 127 81

Result of operation (ROO) 4,955 103 -76 18 -210 127 81

ROO in percentage of Revenue 51 14 -5 3 -107 24 32

ROO in percentage of Equity 40 2 -2 1 -6 10 15

Equity end of year 12,363 4,302 4,199 3,327 3,308 1,319 546

Note 1: The year 2015 and 2016 was affected by too much rain / serious draught

Note 2: 2014 was used to install cleaning, drying and cooling facilities. Loss of GHS currency 226 t. GHS

Note 3:

Revenue and results 2012 derives from Green Crop Farming Ghana A/S (Danish Holding company)as follows

DKK Exch rate GHS

Gross profit/revenue 983,517 3.9 252184

2013 2012

Equity ltd 566 142

Current account A/S 753 404

Equity total ltd 1319 546

Note 4

The budget for 2017 will be showing the impact of the Soya milk business for an entire year in full operation.

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Green Crop has its own production of soya beans and this business plan is focusing on the establishment and construction of a milk processing factory, that will process soya beans into soya milk, adding nice tasting flavours and by that diversify from the competing products. Green Crop is looking for new investors to raise a total of USD 600,000, which will be used for constructing the soya milk factory.

1.1 Summary – five years projection The experiences from the last five years of operations indicate, that focusing on primary production alone is more sensitive, whereas processing will generate higher revenue consolidating the business. Now, the organization has now reached a mature stage, ready to move to the next level in the value chain. The business plan is describing how the company can process the exiting production of soya beans into high value soya milk. Below it will be seen that the yearly earning will be increased from about 100.000 GHS at current operations to a level of 5.000.000 GHS with an investment of 2.400.000 GHS/600.000 USD.

2017 2018 2019 2020 2021

Budget Budget Budget Budget Budget

GHS GHS GHS GHS GHS

HA in use 80 150 150 150 150

Litres of soya milk 1,600,000 1,750,000 2,550,000 3,750,000 5,750,000

Revenue soya 8,960 9,800 14,280 21,000 32,200

Revenue farm 720 1,350 1,418 1,488 1,563

Revenue Total 9,680 11,150 15,698 22,488 33,763

Total variable costs (note 1) -1,503 -1,784 -3,453 -4,947 -7,428

Gross margin 8,177 9,366 12,244 17,541 26,335

Gross margin in % 84 84 78 78 78

Total operating expenses -2,902 -3,483 -4,179 -5,015 -6,018

Result before depreciation and financial costs 5,275 5,883 8,065 12,526 20,317

Result of operation (ROO) 4,955 5,563 7,745 12,206 19,997

ROO in percentage of Revenue 55 57 54 58 62

ROO in percentage of Equity 40 31 30 32 35

Equity end of year 12,363 17,926 25,671 37,877 57,874

Note 1: Gross profit percentage is falling due to purchase of soya beans outside Ghana.

2 The Market for soya milk The market can be divided into Asia, USA, Europe, East Africa and West Africa. Official market sizes are available for USA, and is around 3.5 billion USD, expected to increase to 20 billion in a few years. Based upon the population in Europe, the European market might be on the same size. In Europe and in the USA, several producers are competing.

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The market in East and West Africa and in the Middle East seems not be described at the internet as a source. In Ghana Soya Milk will be seen in most of the “on the go” shops like filling stations. In these shops Soya Milk is placed beside the cow milk with milk as index 100 and soya as index 70, meaning that every time one on the go milk is sold, 0.7 soya milk is also sold. It is known that the import in the Tema Harbor of the brands Cerelac and Cowmilk with coco, vanilla and banana flavor is 4 containers per week, in all containing 160,000 bottles each 0.5 liter = 80,000 liter/week x 4 weeks in a month, giving 320,000 Liter per month. If it is assumed that the soya milk sales is ½ of the milk, the sales of soya milk will be 160,000 liter per month just for Ghana. Milk is sold at a price of 7 GHS for 0.5 liter and Soya Milk is sold at a price of 4 GHS for 0.3 liter, which gives the same liter price of 14 GHS. The on the go market is mainly activated by the figures of driving cars in Ghana, and the car market is representing the middle class, the upper middle class, and the top class in Ghana. There are 1.500.000 registered personal vehicles in Ghana. 3 years ago this amount was 1.100.000 registered cars. It is the assumption that similar calculations can be made for the other West African countries. Competition In Ghana and in West Africa there is mainly one supplier of Soya Milk. The supplier is called Vita Milk. Vita Milk is produced in Thailand, and the biggest market is the Philippines, Vita Milk is in Ghana imported by the company Gentle Giants Co. Ltd. The company has 25 employees and is using various local distributors to bring the Vita Milk around in Ghana. The CEO is Manuel Anane and the marketing manager is Samuel Dankyi. Vita Milk is delivered in 300 ML glass bottles and 250 ML/1liter cartons. Vita Milk has three variants: vanilla, choko and a variant that competes on the energy drink market. The energy drink variant is soya combined with malt, barley, brown rice and brown sesame.

3 Marketing plan for Soya Milk Segments A market analysis has been made with 21 local customers drinking soya milk, to find out, which purchase criteria they have, in order to define the segments in the market. It seems that there are two segments. Segment 1, that goes after health for the buyer and/or for buyers’ kids, and segment 2 that goes after getting more energy. The segments can be achieved through the distribution channels stated below. Markets In stage one it is the idea to focus on Ghana in order not to stress the soya production too much and to learn how the market is reacting to the introduction of the taste varieties. This focus is expected to last the first 3 - 5 months. The distribution will be done through Alpha Industries Ltd. in Ghana. Alpha Industries is a French company that is already distributing their own coco products through the same channels. As the soya milk production and sales pick up in Ghana, it is a vision, that production and sales can be extended to the wider regional markets of Western Africa, that is more than 370 million people. incl. Nigeria, Benin, Togo, Burkina Faso, Coté D’Ivoire and other countries. Alpha Industries Ltd. is already distributing in most of these countries. Certain countries in the Middle East might also be interesting upon further market studies. Distribution As mentioned above, the distribution will be done in a cooperation with Alpha Indiustries / Top Choko. The distribution will take place as follows:

- On the go market, meaning street sellers, shops near the road side like filling stations. 80% of the

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volume is expected to be in this segment. - Bigger and smaller supermarkets. 20% of the volume is expected to be in this segment.

Naming of the Soya milk As stated at the chapter “segments” above, one of the segments are kids and people focusing on the health. By using the brand name “Jungle Milk”, a story can be told about the clean environment in the jungle, providing the fresh milk. At the same time cartoon themes can easily be created for the kids (and their parents) using social medias to follow the wild growing soya vegetation, wild animals in the jungle, and by that creating the loyalty for Jungle Milk. For the energy segment, the word “energy” might be added to “Jungle Milk”. Final market research might show the interest for the name and the potential story telling. Market research commenced shows that the knowledge of soya milk is close to 76%. Among the target group 72% knows Vita Milk. Vita Milk is doing marketing mainly on bill boards at the road side. This marketing is expensive, but maintains the interest in Vita Milk, but also for Soya milk in general. The Vita Milk marketing profile is serious, and seems to follow the marketing concept that Vita Milk is using at all their markets. For the marketing of the Jungle Milk, the following is considered to be started:

- Trial taste of Jungle Milk in the super markets/filling stations - Involve local doctors for their health programs at the local radio stations. - Involve Ghalaway for making cartoon as part of their education programs (to create interest) - Let the local Ghana TV stations visit the factory (to create awareness)

Placing the nice designed bottles at strategic traffic points, e.g. Tema Motoway roundabout Taste varieties and no sugar added. In order not to compete directly, but rather to expand the market, soya products with several taste varieties and smoothies will be introduced. All products will be without any sugar. A cooperation agreement has been made with a major supplier of organic taste varieties.

4 Organization for the soya milk factory With reference to the board, Lars Bollerup will take the lead as the CEO for the Soya Milk Ghana Ltd. Lars Bollerup has been the founder behind Green Crop Farming Ghana, and has been living in Ghana the last four years. Lars Bollerup has a background as technical production supervisor for one year at the competitor Vita Milk in 1995. Lars Bollerup will be the only person that is also going to be involved in Green Crop Farming Ghanas soya field operation, whiles all other team members will be only focusing on the soya milk factory. Board By establishing the 100% owned subsidiary to Green Crop Farming Ghana Ltd. a professional board is supposed to be registered for Green Crop Faring Ghana Ltd. with the purpose of controlling the new Soya Milk Ghana, and with the purpose of a listing at the Ghana Stock Exchange within the next following 5 years. The board is supposed to be appointed as follows:

- Lars Bollerup, CEO, Green Crop Farming Ghana - John Dziwornu, Vice president for the Farmers Association - John Agyemfra, Director for BHJ Ghana, distributing meat in Ghana - Christopher Adjei, Consultant, Ghana Standard board, taking care of all approvals - A board member will receive 6,000 GHS per year (equivalent to 1,400 USD).

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Month 1 2 3 4 5 6

Transportation from China

Erecting of building

Pre launching of soya milks products

Launching of soya milk products

Pavement on roads

Training sales

Training production

Q system

Approvals

Sales The position is supposed to be taken by Mr. Kobby Sela, who at present is the Marketing Manager at the Ghana Food and Beverage Association. Mr. Kobby has more than 10 years’ experience in serving the segments for Jungle Milk. Technical matters On the technical side, an expat from Genyond Machinery Industrial Group in China will be part of the local team building up the plant and do the training of the 10 team members for the factory. The expat will stay in Ghana for three months. All team members will be certified in various operations. Each team members must be able to handle all operations, and the team members will change their position on weekly basis to maintain their broad competences. Production manager The production will be managed by Mr. Patric Nyamedi. Patric Nyamedi is at the moment the farm Manager at Green Crop Farming Ghana. The farm management will be taken over by the vice farm manager Mr. Timothy Noboly. Mr. Patric Nyamedi is a very experienced manager, trained by Lars Bollerup during the last 5 years.

5 Time Schedule for the soya milk factory The time from investment sum is paid, and until the soya factory is built and the first product is on the market is 6 months.

6. Investment Budget

Item USD

Processing plant incl. generators 240,000

Pavements at roads 8,000

Foundation factory floor 18,500

Factory building 88,000

Drillings 10,000

Approval 5,000

Initial marketing 200,000

Electricity 12,500

Training of 10 team members 18,000

Total investment budget 600,000

7 Legal structure for the soya milk factory

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The soya bean factory will be owned by a separate Ghana registered limited company. The new company is supposed to be called Soya Milk Ghana Ltd. The new legal identity will be owned 100% by Green Crop Farming Ghana Ltd. New shareholders will inject their investment in the existing Danish mother company Green Crop Farming Ghana A/S. As such they will also get an ownership to the existing farming activities as well.

8 Technical specification Capacity per hour 600 liter UHT Temperature 145 C Packing 250 ML – 1000 ML Storage Room Temperature Shelf Life 2 years Water Consumption 2.5 T/H Power consumption 90 KW Production area 300 m2 Team Members 10 persons

9 SWOT for the soya milk factory Strengths (internal) Green Crop Farming has proved the last five years that the business can be done with success. The new company (the soya factory) is built on an existing success case. The production and technical management and training will be done by Lars Bollerup that has experience from Vita Milk in Thailand. Weaknesses (internal) Management resources need to be trained properly and it takes time to find the right people. Technical maintenance staff needs to live at the factory or very close to the factory. Opportunities (market) The middle class is growing rapidly Everybody wants to fight diabetes. The CSR concept is well tested and adopted in the market Soya is the only product with omega 3, 6 and 9, together with all needed amino acids. Soya is the only products that gives energy and prevents Alzheimer and Parkinson Threats (market) Energy drinks with Amino acids and Omega 3, 6 and 9. Almond Milk, Rice Milk

10 History of Green Crop Farming Ghana Ltd. The supply of soya for the soya milk factory will come 80% from Green Crop Farming Ghana Ltd. and 20% from smaller out growers, hence Green Crop Farming Ghana Ltd. is an important player in the

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operation of the soya milk factory. That is the reason why an investor will be a shareholder in Green Crop Farming Ghana Ltd. and Green Crop Farming Ghana Ltd. will be the direct owner of the soya factory. In order for an investor to understand the history of Green Crop Farming Ghana Ltd. the following will describe how Green Crop Farming Ltd. has been build up the during the last 5 years, and how the organization is being managed. For the economic figures, please refer to chapter 1.

The operation of Green Crop Farming Ghana Ltd. was started on 24 August 2012. The operation started at a totally uncleared field in the jungle without any roads, any water and any electricity. Since 24 August 2012 Green Crop Farming Ghana has developed rapidly to a position as the leading certified organic cash crop farm in Ghana.

Green Crop Farming was founded by CEO Lars Bollerup from Denmark, Andre Raffnson from the USA and John Agyemfra from Ghana, and was later joined by several other investors mainly from Denmark. Green Crop Farming Ghana Ltd. is controlled by Green Crop Faring Ghana A/S Denmark, that is controlled 38% by Lars Bollerup. Until now more than 3.5 Mio GHS has been invested in Green Crop Farming Ghana Ltd.

Chia Seeds as the first product

Green Crop Farming Ghana was established on the idea to produce Chia Seeds with a high content of Omega 3.6 and 9. Chia Seeds were produced until the end of 2015. In 2015 the weather condition was so bad, that the Chia seeds were washed away from the fields. At the end of 2015 a small production of maize was done. Based on the experiences with maize, 60 HA with maize was planted in May 2016. The maize production ended up being very bad since the maize was attacked seriously by Caterpillar insects. Also soya beans were planted in 2016, and the yield ended up being 2000 kg per HA, which gives the farm a basis for a huge soya milk production. In 2017 soya was again planted, and the yield became 3000 kg per HA, which is even better than the best in the soya business.

150 HA of land

Green Crop Farming has 150 HA of land available on a 50 year land lease. 100 irrigated HA is at the time being used for production. Further 50 HA can be taken into operation when needed. The strategy is to use sub suppliers for producing more soya, and is a part of the social responsibility program for Green Crop Farming Ghana.

Farm organization

Green Crop Farming Ghana Ltd. has for the last three years been manages by CEO Lars Bollerup from Denmark. Lars has apart from his farming and technical background degrees in economy, sales and marketing and in law. Lars Bollerup is living in Ghana.

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For five years the farm manager has been Patric Nyamedi, that has a vice manager background from Vegpro Farm having 1000 acres of land. Patric Nyamedi can do all repairs and operations. Patric Nyamedi was awarded in 2017 for five years excellent leadership.

Irrigation system

Green Crop farming Ghana has in 2013 been building a pipeline with a length of 2.6 KM. The pipeline is supplying the farm with sufficient water through hydrants that are connected to eight high speed self-propelled water machines. The pipeline is connected to two 8 bar pressure pumps delivering 140.000 liters of water per hour.

Cleaning Plant At Green Crop Farming Ghana a fully automatic cleaning, roasting and packaging plant for the crops was delivered in 2013. The plant can effectively clean the crops.

CSR activities Green Crop Farming Ghana has a strong a very CSR program. The program is built on the top of the FAO recommendations for farms. The program has four elements

The

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CSR program is supporting disabled people without arms and legs, people with polio, support for orphans, eye clinics, an international local school programs, support for HIV sufferers, water and sanitation programs, medical clinics and nursing homes.

Internal training As a part of part the quality system at Green Crop Farming Ghana, training manuals have been developed. The training manual is taking the entire supply chain into consideration from receipt of raw seeds till delivery at the end user. Training is taking place in own training facilities Organic Certification

As one of a very few Ghana farms, Green Crop Farming Ghana is a fully certified organic farm, even with the certification from Control Union in Holland. The certification is EC as well as USDA approved.

Biggest mechanized organic farm in Ghana 30 production machines are available for Green Crop Farming Ghana. In order to keep the uptime as much as possible, an advanced maintenance system has been established for main machines as well for the production machines.