PIK-BEČEJ in Bankruptcy

Transcription

1 RELINK Ltd Agro Investment, Business Development, EU Funding Contact: Kim Bretting Phone: PIK-BEČEJ in Bankruptcy December

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3 CURRENT STATUS AND INVESTMENT CONSIDERATIONS Current Status o PIK BECEJ is in bankruptcy since April 2011th - acceptance of the Restructuring plan still pending o Key challenge refers to the upcoming public tender, regarding leasing of land from the Becej municipality The tender assumes bidding for a 3 years contract Many competitors expected numerous individual producers o Finding a long term solution is a wide spread idea Key Investment Considerations! Leading position in Serbia, market of 8 million consumers with potential to become the leader in the region market! Production resources concentration PIK BECEJ operates one of the largest parcels of irrigated land in Europe, with sound economy of scale and high crop yields! Minimal risk regarding crop farming operations (irrigated 40% of land). In drought years profitability actually increases due to a growing demand and higher price! Seed production is a knowledge intensive activity with high barriers to entry, at the same time serving as a key strategic advantage of the Company within the regional market, resulting in high profitability and high growth potential! Significant improvement in financial performance following the restructuring program healthy operations despite a high net debt level! Highly skilled technical management and workforce at attractive salary levels 3

4 INTRODUCTION 5 KEY RESOURCES 10 OPERATIONAL PERFORMANCES 18 FINANCIALS 25 4

5 PIK BECEJ at a Glance PIK BECEJ, founded in 1959, is a former market leader in production of primary agricultural products. Located at the heart of Vojvodina between Tisa river and Danube-Tisa-Danube channel Cultivates about ha ha long term leased from the Becej municipality and the Serbian Orthodox Church ha owned - over ha under irrigation systems - Additional (not included in ha) 54 ha of land used for orchard cultivation, 663 ha for fish farming and 10 ha of non-cultivated land (forests, fields, etc). PIK BECEJ is a market leader in seeds production With annual production of fatling pig and 11 mn liters of milk, it is one of the milestones of Serbian agriculture Operates as a vertically integrated system - 50% of primary production (by value) is directly used in cattle feeding and vegetable processing. In addition to 12,000 t capacity of warm vegetables processing and 3,500 t of frozen food. PIK BECEJ produces over 35,000 t of cattle food. It has a silo with capacity stretching to t Before mentioned obstacles, PIK BECEJ generated annual income of around EUR 60 million, out of which generating 4 million from exports. In 2011, recorded operating revenues of EUR 40 mn. The Company has approximately employees Strategically Location the Heart of Vojvodina 5

6 CONCENTRATED PLOT AREA All operations are concentrated in one are, allowing optimization of resources 6

7 ORGANIZATIONAL STRUCTURE PIK BECEJ is a group of production units with the clear separation from the external market. " Crop farming is the major supplier of food for both pig and cattle farming operations (through food mixing plants). Surplus of crop production is sold on the external market. Seed production (both wheat and corn) is recognized as a major comparative advantage od PIK BECEJ due to premier track record and huge plots covered with an irrigation system " Dairy division is a primary producer of milk, while minor production is focused on fresh meat. " Pig farming division is primarily the fresh meat producer. " Vegetable production unit (FLORA) is exclusively focused on the production of a limited range of vegetables (green beans, peas, sweet corn, cucumber and pepper) marketed both in domestic market and for export. " Fish production unit is focused on the production of fresh fish for domestic market exclusively, with limited supply to its own restaurant and hotels. " Non-core activities Trading & Services relate to management of two hotels and a restaurant located on PIK BECEJ s land. " Construction is specialized in construction works for own purposes. 7

8 CAUSES FOR A DISTRESSED SITUATION Reduced Arable Land In PIK BECEJ cultivated ha of land In according to the Law of transformation of socially owned property to other forms of ownership, Pik Becej became the owner of 2.902,5 ha In the process of denationalization ( ) Pik Becej returned ha (out of ha) to the previous owners, cultivating approx ha ( ) Due to the privatization, Pik Becej lost the right to apriori use of state owned kand new procedure refers to bidding rents in a public tender. Rented state owned land was reduced to ha in 2006/2007, and further to ha in Currently, Pik Becej rents round ha of land from the state and the Serbian Orthodox Church Poor financial condition After 2000, interest on loans amounted to more than 20%, with foreign currency clause which is burdened production Sound Foundation Still Allow PIK BECEJ to Resist Land at the outskirts of Becej municipality, and especially those cultivated by Pik Becej is rated as highest quality, while it also includes irrigation systems! Yields are significantly higher compared to Serbian average! Quality, plot area, and irrigation system allow production of seeds (products of added value) Highly specialized employees, especially in the tehnical field (strong cooperation with the Institute of agriculture in Novi Sad)! Pik Becej was a market leader in former Yugoslavia (pioneer in introducing Holstein- Friesian cows, etc.) Economy of scale still allows reduction of fixed costs and a strong negotiation power in respect to buyers, suppliers, and creditors 8

9 INTRODUCTION 5 KEY RESOURCES 10 OPERATIONAL PERFORMANCES 18 FINANCIALS 25 9

10 LAND AND CROP FARMING Crop farming PIK BECEJ is using ha of arable land, with the following structure: - Owned land amounts to ha, out of which ha under irrigation. Not cultivated land area reaches 14 ha - Rented land counts ha, out of which ha under irrigation. In addition, 56 ha (under irrigation) is used for orchards, 663 ha for fish farming Rents accounts to approximately EUR 120 per hectare Large plots and irrigation system gave the Company a strong competitive advantage for seeds production uniquely positioned on the market, targeting products with higher margins - Owns one of the most up-to-date seeds centers in Serbia with total capacity of t - Producing seeds for the Institute of Agriculture from Novi Sad, Pionir, KWS i dr. - Pik Becej does not have a real competition in Serbia other leading agricultural companies operate on small sized plot, despite large land area in total. In order to supply own cattle feeding needs, Pik Becej is strongly focused on production of lower margin products, like mercantile corn (20% of arable land) - Operates a silo of t capacity, along with a cattle feed processing unit (capacity t of fodder mix and 400 t premixes) Mechanization includes approximately 210 propulsion and 453 auxillary machines. 10

11 Cultivated Land in Ha*incl. Second seeding Land structure** *excluding orchards, fish farming and non-cultivated land ** including orchards, fish farming and non-cultivated land 11

12 PIG FARMING Strongest cash generator in PIK BECEJ Pig farming is organized on seven farms, out of which two refer to nucleus and five commercial farms PIK BECEJ has approx sows, structured as Large White, German and Dutch Landrace, Hampshire and Duroc - Farms are arable to operate without supply in new genetics from other farms (large genetic base) Farrowing Index accounts to 2.2x Total production of fatling pigs accounts to heads, with average weight of 98 kg, and over 50% of meat share - Average sow produces 18 piglets, while average yield reaches 620 g in fattening and ratio of 3,2 kg cattle feed for 1 kg of yields - Average meat production per sow accounts to kg annually Pik Becej buy cattle feed from suppliers Born pigs Fatling pigs turnover 12

13 CATTLE FARMING - milk production Largest raw milk producer in Serbia Pik Becej has approx cows (high quality Holstein-Friesian race) with average milk production per cow standing to l - The most productive cows produce over l of milk annually (over 50 l per day) - Needed HACCP in herd in order to improve milk production per cow Total annual production of milk reaches approx l of milk one part is used for cattle feed, while the rest are being marketed - As a leading milk producer in Serbia, Pik Becej has a strong negotiation power among diaries In addition to milk production, Pik Becej produces approx. 350 fatling bullocks and of manures annually. Cows and average milk production 13

14 Total milk sales 14

15 FLORA Vegetable Processor 15

16 Market repositioning and rebranding needed Production of frozen and canned (warm) vegetables products - Production capacity of frozen vegetables products amounts to t, while cold storage capacity is estimated to 8.000t - Production capacity of warm vegetables products amounts to around t annual - In estimated total production should reach approx t Approx. 90% of vegetables processing production and revenues refer to peas, green beans and sweet corn. A few years ago, Pik Becej targeted the Russian market. Positioning requires a strong focus on frozen products, instead of canned - Expansion of frozen products requires HACCP in refrigerators Vegetable Processing in in t Flora s Brands OTHER OPERATIONS 16

17 Fish farming Realization of fish farming, in tones Fish farming is an opportunistically developed operation marsh soil land is used for farming on area of 663 ha Main product refers to common carp (approx. 80% of total production) Average production over 400 t common carp and 36 t silver carp Fantast Castle and stable In parallel with core operations, pik becej runs hotels Fantast and Bela Ladja (main hotel in Becej municipality), and a restaurante Fantast (also known as Dundjerski castle) has a restaurant with capacity of over 100 customers, while its hotel has 22 rooms and two apartments (total capacity of 55 beds) Before the World War II, the caste belonged to Dundjerski family, one of the richest families in Vojvodina Mutual Operations Mutual operations include construction services, security, sales, etc. Mutual services help PIK BECEJ operate as a vertically integrated company 17

18 INTRODUCTION 4 KEY RESOURCES 10 OPERATIONAL PERFORMANCES 18 FINANCIALS 25 PRODUCTION 18

19 Crop farming since 3,872 ha is under irrigation systems, Pik Becej is able to perform the second seeding on the area (in planned only 305 ha for the second seeding). With the second seeding, the total seed area grows to 8,080 ha (potencial). In 2014, mercantile cultures are cultivated on 4,625 ha (mercantile corn on 1,5 thousand hectares), while the remaining area is used for seeds and others products (such as peas, green beans) that need intensive irrigation. Wheat seeds occupy approximately 1,200 ha, soya seeds over 1,000 ha, while corn seeds over 700 ha of land. Peas and green beans are grown exclusively for the use of Flore (vegetables processor) Pig farming with 5,100 sows and 120,000 nurtured pigs annually, Pik Becej is the leading pig farm in Serbia. Average number of fatling pigs is between 27,500-30,000 Milk production Pik Becej was the first farm in Serbia importing Holstein-Friesian cows. Currently, average milk production per cow exceeds 7,200 liters Flora (vegetables production) approx. 43% of production refers to peas and 42% to sweet corn Fish farming around 663 ha of Pik Becej s land is used for fish farming with annual production of 440 t in Key production for in % Key production trend in 000t CROP FARMING ACHIEVEMENTS 19

20 Crop farming generates sound value Almost 1/3 of production refers to wheat and corn (mostly mercantile) while over 1/3 to sugar beat Although important for cattle feed, mercantile soya is not very widespread (1,3% of total production), while soya seeds accounts to over 4% of total production (measured in tons) 4,5 % odnosi se na grašak PIK BECEJ outperformed yields for most cultures, either compared to the Serbian average, or averages recorded in Poland, Hungary, Romania and Bulgaria. Operating Revenues (u 000 din) Operating Revenues (u 000 eur) Wheat yields (u kg/ha) 20

21 Corn yields (u kg/ha) Soya yields (u kg/ha) 21

22 PIG FARMING & MILK PRODUCTION Milk production revenues (u 000 din) Milk production revenues (u 000 eur) 22

23 Pig farming revenues (u 000 din) Pig farming revenues (u 000 eur) Total Weight of sold fatling pigs (u tons) Milk per Cow 23

24 OTHER PRODUCTION Vegetables processing (u 000 din) Vegetables processing (u 000 eur) Vegetables processing (in tons) Fish farming (in tones) 24

25 INTRODUCTION 4 KEY RESOURCES 10 OPERATIONAL PERFORMANCES 18 FINANCIALS 25 25

26 CONSOLIDATED FINANCIALS INCOME STATEMENT u 000 din A. INCOME AND EXPENSES FROM OPERATIONS I OPERATING REVENUES Revenues from sales Revenue from activating output and goods Increase in inventories Decrease in inventories Other operating revenues II OPERATING EXPENSES Cost of merchandise sold Cost of materials Wages, salaries and other personnel expenses Amortization Other operating expenses III OPERATING PROFIT IV OPERATING LOSS V FINANCIAL REVENUES VI FINANCIAL EXPENSES VII OTHER REVENUES VIII OTHER EXPENSES IX PROFIT FROM CONTINUING OPERATIONS BEFORE TAXES X LOSS FROM CONTINUING OPERATIONS BEFORE TAXES XI NET INCOME FROM DISCONTINUED OPERATIONS XII NET LOSS FROM DISCONTINUED OPERATIONS B. PROFIT BEFORE TAX V. LOSS BEFORE TAX G. INCOME TAX Deferred income tax benefit D. Rewards paid to employer DJ. NET PROFIT E. NET LOSS

27 INCOME STATEMENT u 000 EUR A. Income and expenses from operations I OPERATING REVENUES Revenues from sales Revenue from activating output and goods Increase in inventories Decrease in inventories Other operating revenues II OPERATING EXPENSES Cost of merchandise sold Cost of materials Wages, salaries and other personnel expenses Amortization Other operating expenses III OPERATING PROFIT IV OPERATING LOSS V FINANCIAL REVENUES VI FINANCIAL EXPENSES VII OTHER REVENUES VIII OTHER EXPENSES IX PROFIT FROM CONTINUING OPERATIONS BEFORE TAXES X LOSS FROM CONTINUING OPERATIONS BEFORE TAXES XI NET INCOME FROM DISCONTINUED OPERATIONS 0 XII NET LOSS FROM DISCONTINUED OPERATIONS B. PROFIT BEFORE TAX V. LOSS BEFORE TAX G. INCOME TAX Deferred income tax benefit D. Rewards paid to employer DJ. NET PROFIT E. NET LOSS