FTN Cocoa Processors PLC:

A presentation of FACTS Behind Restructuring at the Nigerian

Stock Exchange

Our Agenda for today

• Introduction – Humble beginning to Plc Status

• Tracking Growth trajectory

• Expansion project

• Financial excerpts

• Current status

• Future outlook

• Questions and answers

History/Growth trajectory –Important milestones

• Started operations as 3rd party processors in 1994 with Stanmark Cocoa Ondo; Coop Cocoa, Akure; Cocoa Industries Limited, Lagos; and Cocoa Products, Ile Oluji, Ondo State.

• Own processing factory started operations in March 2007 with a 10000 ton capacity

• Over time developed quality indigenous clients like Nestle and Promasidor (producer of cowbell product)

• Capacity expanded to 20,000 tons in 2011 based on feedback from foreign buyers

• Entered into a strategic partnership with Transmar Commodity Group LLC in 2013. Details to come later

History/Growth trajectory – Important

milestones

Conceptualisation

1994

Private limited liability

2007

Public limited liability

2008

Strategic partnership with Transmar in 2013

Why Expand? 3 core reasonsA

Pro

mis

eM

ade • To

shareholders and debt holders that we will create value through:

• Expansion

Att

ain

ing

Cri

tica

l M

ass • Now 20000 metric

tons installed. Advantages includes

• Visibility

• Economies of scale

• Bigger and better clients with better terms of engagement

• Become industry leader

Fav

ou

rab

leA

gri

c P

oli

cies • EEG – 30% of

export proceeds refunded

• Tax incentive through Pioneer status

• Commercial Agric Credit Scheme (CACS)

The expansion faced new challenges

• Global recession

• Currency fluctuation

• Working capital needs

Coping with the challenges

• Off-take agreement with Transmar Commodities Group LLC – explained in a later slide

• Maintaining our work force. Despite the challenges we managed to retain our best hands

• We continued to engage all stakeholders including regulatory and statutory agencies on our activities; that is part of the reason we are here today

• We have been updating our exceptional shareholders with our progress at our AGMs

• We maintained a very lean cost structure

Financials

FTN COCOA PROCESSORS PLC

IMMEDIATE PAST FIVE YEAR FINANCIAL SUMMARY

2011 2012 2013 2014 2015 Q1, 2016

N’000 N’000 N’000 N’000 N’000 N’000

Revenue 836,936 278,170 460,634 247,418 1,368,462 341,441

(Loss) / Profit

before taxation (243,808) (404,580) (204,830) (577,204) (201,205) (62,568)

EPS (11.08k) (18.39k) (9.31k) (26.24k) (9.15k) (2.84k)

Non Current Assets

Property, plant and

equipment 3,270,125 3,453,012 3,293,739 3,181,432 3,046,948 2,980,055

Current assets 1,005,824 592,023 848,064 831,899 1,015,417 805,705

Current liabilities (849,035) (1,300,550) (1,972,287) (2,559,621) (2,149,377) (2,079,981)

3,726,898 3,088,864 2,549,725 1,861,802 2,589,123 2,436,799

Non-current

liabilities

Borrowings (1,280,436) (1,046,042) (713,134) (602,415) (1,530,942) (1,441,186)

Total net assets 2,385,679 1,982,039 1,775,809 1,198,604 1,058,181 995,613

Equity

Share capital 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000

Share premium 1,459,282 1,459,282 1,459,282 1,459,282 1,459,282 1,459,282

Revenue reserve (173,603) (578,183) (783,473) (1,360,678) (1,501,100) (1,563,669)

Putting it in perspectivesInstalled Vs Utilised Capacity

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2012 2013 2014 2015

Installed

Utilised

Only from 2015 did we achieve more than 8%of installed capacity

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

2012 2013 2014 2015 1st Qtr 2016

Installed

Utilised

Due to working capital challenges, processing has been limited to the old processing line of 10000 MTs per annum hence the relative low capacity

utilisation

Gross loss conundrum

• Analyst have been asking how can we justify our going concern basis seeing that we are unable to cover cost of production over the years.

• First, manufacturing accounts are usually not presented separately from the Trading accounts thereby disguising manufacturing profits

• Second, with virtually brand new factory with huge machine outlay, the depreciation figure is huge

• Third, the overhead cost especially energy cost continues to run whether at full or five percent capacity

Summary of current status• Firm order of approximately 31% of installed capacity from local

clients

• Transmar available to off-take up to installed capacity, note that the local client is subsumed under Transmar’s off-take agreement

• Factory is in peak shape with Improved available throughput and enhanced processes thanks to the strong technical support from our strategic partners

• We are perfectly hedged against currency fluctuations

• Existing market for up to installed capacity

• Strong backing – Transmar to own 40% of FTN

• We are in talks with AFREXIM to consolidate existing loans and provide working capital

• We are also discussing with a couple of development banks and local banks for working capital

Brief on Transmar and the off-take agreement

The off-take agreement

• Transmar Commodities Group LLC signed an off-take agreement with FTN Cocoa guaranteeing a market for all FTN products up to installed capacity for the next 5 years and renewable

• In addition, they will provide technical support especially in areas of machines, spare parts and quality control.

• FTN has been looped into the global maintenance and quality control scheme of Transmar

• The agreement allows Transmar to own 40% of FTN shares which is a big plus for the following reasons

– The Transmar brand is a big plus; they have depth and reach and re among the top cocoa traders in the world

– The surviving cocoa processors in Nigeria all have foreign affiliations which helps absorb currency shock as well provide technical support

Samples of our products

COCOA Powder – Usually sold to Indigenous Clients - Nestle, Promasidor

COCOA Butter – Exclusively sold to Transmar

Future outlook

• The next slide will help our understanding a little bit of cocoa economy and demonstrate the inherent transparency therein

• From there we can understand the import of having the needed working capital to operate

Schematics

Cocoa Butter

First line processing yields Liquor of btwn 76.5% to 81% with respect to Light or Main

crop season

Liquor is pressed, yields 100% in Cocoa Butter

and Cocoa Cake

Cake pulverisedinto Cocoa

Powder

Liquor mutually exclusive with (Cocoa Butter and Cake). They are all FX

earners and can be sold to Transmarbased on the Off-take agreement

Cake

Cocoa Liquor

Cocoa Beans

Follows Cash and priced at

Terminal

Mainly sold locally. Nestle is

the biggest consumer and our strategic partner

Cocoa Powder

• As represented on the next slide, we will require at least 6200 metric tons of Cocoa Beans to meet the local purchase orders for 2016

• A MT of cocoa beans goes between N920k to N950k, which translate to approximately N6b

But look at how improved our position will be with the 2016 firmed order of 31% of installed capacity

0%

20%

40%

60%

80%

100%

2016

Installed

Utilised

This excludes other sales to Transmar assuming we have the much needed working capital

Representing the 31% in numbers

Local Powder

Butter Sales

Total

Year N’000 N’000 N’000

2016 1,809,000 4,935,000 6,744,000

It goes without saying that with a Revenue of N6.7b less beans purchase of N6b we will have enough room to return

profit after accounting for other conversion costs and the assured off-take profits from Transmar

Opportunities

• Working capital financing through:

– Development banks – requires local Bank Guarantee

– Our capital structure can conveniently support equity injection and this will be considered at the right time

– Stock financing

• Banks

• High Net Worth Individuals

Questions