INTEGRATED FRESH COCONUT PROCESSING: IS THIS THE PHILIPPINES SILVER BULLET TO ERADICATE POVERTY?

The GEA Group GEA Mechanical Equipment GEA Westfalia Separator

GEA Group Aktiengesellschaft

January 31, 2012

OUTLINE

WHAT IS FRESH COCONUT PROCESSING? GLOBAL TRENDS AFFECTING THE COCONUT INDUSTRY:
WHAT ARE THE FACTORS DRIVING LONG-TERM DEMAND FOR FRESH COCONUT PRODUCTS?

SOCIO-ECONOMIC BENEFITS OF FRESH COCONUT PROCESSING:

WHAT ARE THE BENEFITS TO THE FARMERS, COMMUNITY AND THE COUNTRY AND HOW WILL THE SHIFT TO INTEGRATED FRESH COCONUT PROCESSING REDUCE POVERTY IN THE COUNTRYSIDE?

VIABILITY OF GREENFIELD INTEGRATED FRESH COCONUT PROCESSING

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

WHAT IS FRESH COCONUT PROCESSING? IT IS NOT ABOUT YOUNG COCONUT AND DEFINITELY NOT ABOUT COPRA!!!

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

WHAT IS FRESH COCONUT PROCESSING?

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

OUTLINE

WHAT IS FRESH COCONUT PROCESSING? GLOBAL TRENDS AFFECTING THE COCONUT INDUSTRY:
WHAT ARE THE FACTORS DRIVING LONG-TERM DEMAND FOR FRESH COCONUT PRODUCTS?

SOCIO-ECONOMIC BENEFITS OF FRESH COCONUT PROCESSING:

WHAT ARE THE BENEFITS TO THE FARMERS, COMMUNITY AND THE COUNTRY AND HOW WILL THE SHIFT TO INTEGRATED FRESH COCONUT PROCESSING REDUCE POVERTY IN THE COUNTRYSIDE?

VIABILITY OF GREENFIELD INTEGRATED FRESH COCONUT PROCESSING

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

GLOBAL TRENDS
DEMAND FOR NATURAL AND HEALTHY DRINKS DRIVES GROWTH OF NATURAL DRINKS LIKE COCONUT WATER BEVERAGES

HEALTH BENEFITS FROM COCONUT WATER

Immediate rehydration Kidney cleansing Low in calories & fat Hangover fix

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

GLOBAL TRENDS

GLOBAL PLAYERS LIKE PEPSICO & COCA COLA BELIEVE THE HEALTHY TREND IS FOR LONG TERM

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

GLOBAL TRENDS

CELEBRITY INVESTMENTS AND ENDORSEMENTS FURTHER PROPEL THE POPULARITY OF COCONUT WATER DRINKS

MADONNA INVESTED US$ 1.5

MILLION IN VITACOCO

OTHER CELEBRITY ENDORSERS

ARE DEMI MOORE, KIRK DOUGLAS, MATHEW McCONAUGHEY

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

GLOBAL TRENDS

ENDORSEMENT BY OUR VERY OWN PRES. AQUINO MADE THE LOCAL MARKET AWARE OF PHIL.-MADE COCONUT WATER BEVERAGES

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

OUTLINE

WHAT IS FRESH COCONUT PROCESSING? GLOBAL TRENDS AFFECTING THE COCONUT INDUSTRY:
WHAT ARE THE FACTORS DRIVING LONG-TERM DEMAND FOR FRESH COCONUT PRODUCTS?

SOCIO-ECONOMIC BENEFITS OF FRESH COCONUT PROCESSING:

WHAT ARE THE BENEFITS TO THE FARMERS, COMMUNITY AND THE COUNTRY AND HOW WILL THE SHIFT TO INTEGRATED FRESH COCONUT PROCESSING REDUCE POVERTY IN THE COUNTRYSIDE?

VIABILITY OF GREENFIELD INTEGRATED FRESH COCONUT PROCESSING

10

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS
RESOURCE MAXIMIZATION THRU RECOVERY OF HIGH VALUE, HIGHLY NUTRITIOUS, HEALTHY & NATURAL FOOD PRODUCTS FROM FRESH COCONUT
COPRA

MEAT: 44%
MEAT PRODUCTS: COPRA: 22% COCONUT OIL: 14% COPRA MEAL: 8%

INTEGRATED FRESH COCONUT PROCESSING MEAT PRODUCTS: FROZEN COCONUT MEAT: 36% DESSICATED COCONUT: 16% PARING OIL: 2% COCONUT MILK: 17% SKIM MILK: 9% VIRGIN COCONUT OIL: 5% COCONUT FLOUR: 7%

WATER: 30%
COCONUT WATER: 0% TOTAL: 22%

WHITE OIL FROM FLOUR: 1.5% COCONUT WATER BEVERAGES: 26% TOTAL: 44%-62%

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS
PRODUCTION IN 2010: ABOUT 2.863 MILLION MT COPRA TERMS, OR ABOUT 12MILLION MT NUTS

NUT UTILIZATION, IN %
2 10 3 COPRA: 85% DCN: 10% FOODNUTS: 3% OTHERS: 2% SKIM MILK WASTED FROM COPRA

85 COCONUT WATER WASTED FROM COPRA

ESTIMATED VOL.: 2.65 MILLION MT ESTIMATED VOL.: 0.92 MILLION MT ESTIMATED VALUE: PhP 98.9 B ESTIMATED VALUE: PhP 39.6 B

COCONUT OIL EXPORTS IN 2010: PHP 54 B

EQUIV. EXPORTS IF VCO/PARING OIL WERE PRODUCED: PHP 30 B
12 GEA Group Aktiengesellschaft

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS

FARMER BENEFITS: COPRA LESS PROCESS STEPS MORE TIME FOR OTHER ACTIVITIES LESS TIME FROM HARVEST TO SELLING HIGHER PRICE FOR FRESH WHOLE NUTS

INTEGRATED VS. FRESH COCONUT PROCESSING

MATURED COCONUT DEHUSKING BREAKING DRYING DE-SHELLING PACKING

ALL THESE COULD TRANSLATE TO HIGHER INCOME FOR FARMERS

FARM-GATE PRODUCTS

COPRA

FRESH WHOLE NUTS

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS

COUNTRYSIDE DEVELOPMENT THRU INDUSTRIALIZATION AND HIGHER FARM PRODUCTIVITY

COPRA: LOW PRICE, LESS PERISHABLE & LESS SHIPPING VOLUME
COPRA & OIL PROCESSING FACILITIES ARE LOCATED AWAY FROM PLANTATIONS RESULT: COUNTRYSIDE REMAIN BACKWARD AND FARMERS ARE NOT MOTIVATED TO INCREASE FARM PRODUCTIVITY

FRESH COCONUT: HIGHER PRICE, MORE PERISHABLE & MORE SHIPPING VOLUME
VIRGIN COCONUT PROCESSING FACILITIES MUST BE LOCATED NEAR PLANTATIONS EXPECTED RESULT: INDUSTRIALIZATION OF COUNTRYSIDE AND FARMERS HAVE MORE REASONS TO INCREASE FARM PRODUCTIVITY

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GEA Group Aktiengesellschaft

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS FROM VIRGIN COCONUT PROCESSING: COUNTRYSIDE DEVELOPMENT THROUGH AGRO-INDUSTRIAL DEVELOPMENT

SOCIO-ECONOMIC BENEFITS

EVERY 30,000 HAS. OF COCONUT FARM CAN SUPPORT FRESH COCONUT FEEDSTOCK REQMT. OF A 400TPD INTEGRATED FRESH COCONUT PROCESSING PLANT

ESTIMATED FIGURES:
A. JOBS GENERATED BY THE PROCESSING PLANT: MANAGEMENT/SUPERVISORY : 12 PERSONNEL BLUE COLLAR JOBS : 36 PERSONNEL LABOR : 1,200 PERSONNEL B. FARMER-BENEFICIARY WITHIN 15 KM RADIUS OF PROCESSING PLANT: ABOUT 15, 000 FARMER BENEFICIARIES ASSUMING EACH FARMER HAS 2 HAS. OF FARM LOTS MULTIPLIER EFFECT OF ITEMS A AND B TO IMMEDATE FAMILY MEMBERS AND UPSTREAM AND DOWNSTREAM SUPPLIERS AND SERVICE PROVIDERS
efficiency in food and energy processes.

PUTTING UP PROCESSING PLANTS CLOSER TO AREAS WHERE COCONUT IS ABUNDANT MEANS:

IMPROVED INCOME IN DEPRESSED AREAS THRU EMPLOYMENT GENERATION AND BETTER PRICES FOR FARMERS WHO CAN SELL DIRECT TO PROCESSORS

SOCIO-ECONOMIC BENEFITS

HIGH IMPACT IN POVERTY ALLEVIATION SINCE PROJECTS BENEFIT THE MOST AFFECTED SECTOR AND AREAS:

THRU INCOME IMPROVEMENT OF ABOUT 3.5M FARMERS & 25M FILIPINOS THAT ARE DIRECTLY & INDIRECTLY DEPENDENT ON THE INDUSTRY THRU EMPLOYMENT OPPORTUNITIES IN TOP COCONUT PRODUCING REGIONS CURRENTLY RANKED AS THE POOREST REGIONS IN THE COUNTRY THRU TAXES ON EARNINGS FROM RESOURCE MAXIMIZATION W/C COULD FLOW BACK FOR SOCIAL SERVICES AND INFRA DEVELOPMENT IN COCONUT PRODUCING REGIONS
16 GEA Group Aktiengesellschaft

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS CURRENT DEVELOPMENTS:

EXTENSION/EXPANSION PROJECTS OF EXISTING DCN PROCESSING FACILITIES: FOUR EXTENSION/EXPANSION PROJECTS ARE OPERATIONAL TWO EXTENSION/EXPANSION PROJECTS ONGOING THREE EXTENSION PROJECTS IN NEGO STAGES

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GEA Group Aktiengesellschaft

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS CURRENT DEVELOPMENTS:

GREENFIELD INTEGRATED PROJECTS: TWO PROJECTS ARE ON-GOING, ONE EACH IN SORSOGON AND CAMARINES SUR ONE PROJECT IN CLOSING STAGE WITHIN 3 MONTHS IN ZAMBOANGA >10 INQUIRIES WITH BUDGETARY QUOTES ALL ARE LOOKING FOR AREAS WHERE COCONUT IS ABUNDANT LIKE LEYTE, SAMAR, SURIGAO, DAVAO, AURORA, PALAWAN, PANAY, CARAGA, ARMM, SARANGANI

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GEA Group Aktiengesellschaft

efficiency in food and energy processes.

SOCIO-ECONOMIC BENEFITS

CURRENT DEVELOPMENTS IN THE INDUSTRY:

TWO MULTINATIONAL COMPANIES ARE COMING OUT WITH THEIR OWN BRAND OF COCONUT WATER-BASED DRINKS FOR LOCAL AND FOREIGN MARKETS TWO MORE MULTINATIONAL COMPANIES ARE SERIOUSLY CONSIDERING COMING OUT WITH THEIR OWN BRANDS ALSO FOR LOCAL AND FOREIGN MARKETS RTD COCONUT WATER IN ASEPTIC PACKAGING IS SALEABLE IN THE LOCAL MARKET EVEN AT PRICE RANGE OF PHP 60180/LITER THE COCONUT FARMERS ARE BECOMING AWARE OF THEIR COLLECTIVE POWER AS FEEDSTOCK SUPPLIER

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GEA Group Aktiengesellschaft

efficiency in food and energy processes.

OUTLINE

WHAT IS FRESH COCONUT PROCESSING? GLOBAL TRENDS AFFECTING THE COCONUT INDUSTRY:
WHAT ARE THE FACTORS DRIVING LONG-TERM DEMAND FOR FRESH COCONUT PRODUCTS?

SOCIO-ECONOMIC BENEFITS OF FRESH COCONUT PROCESSING:

WHAT ARE THE BENEFITS TO THE FARMERS, COMMUNITY AND THE COUNTRY AND HOW WILL THE SHIFT TO INTEGRATED FRESH COCONUT PROCESSING REDUCE POVERTY IN THE COUNTRYSIDE?

VIABILITY OF GREENFIELD INTEGRATED FRESH COCONUT PROCESSING

20

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

efficiency in food and energy processes.

WHAT IS FRESH COCONUT PROCESSING?

efficiency in food and energy processes.

FRESH COCONUT PROCESSING ESTIMATED INVESTMENT COST

PROJECT:400TPDINTEGRATED FRESHCOCONUTPROCESSING INVESTMENT LAND,SQ.M. SITEDEVELOPMENT BUILDING&CIVILWORKS PROCESSINGPLANT INVESTMENTONINFRA WORKINGCAPITAL,DAYS CYCLE TOTALINVESTMENT

QTY 50,000 10,000 4,000 1

UNITPRICEOR TOTALPRICEOR COST COST 250 3,000 17,000 576,701,400 12,500,000.00 30,000,000.00 68,000,000.00 576,701,400.00 687,201,400.00

60 5,600,000 336,000,000.00 1,023,201,400.00

efficiency in food and energy processes.

FRESH COCONUT PROCESSING FINANCIAL FORECAST

PROJECT:400TPD INTEGRATEDFRESH COCONUT PROCESSING INVESTMENT SALES EXPENSES GROSSINCOME INCOMETAX,30% NETINCOME PAYBACKPERIOD, YEARS

YEAR0 687,201,400

YEAR1 60%CAP

YEAR2 75%CAP

YEAR3 90%CAP

YEAR4 100%CAP

YEAR5 100%CAP

1,684,500,000 2,105,625,000 2,526,750,000 2,807,500,000 1,403,400,000 1,754,250,000 2,105,100,000 2,339,000,000 281,100,000 84,330,000 196,770,000 351,375,000 105,412,500 245,962,500 421,650,000 126,495,000 295,155,000 468,500,000 140,550,000 327,950,000

2,807,500,000 2,339,000,000 468,500,000 140,550,000 327,950,000

2.8

efficiency in food and energy processes.

OUTLINE

WHAT IS FRESH COCONUT PROCESSING? GLOBAL TRENDS AFFECTING THE COCONUT INDUSTRY:
WHAT ARE THE FACTORS DRIVING LONG-TERM DEMAND FOR FRESH COCONUT PRODUCTS?

SOCIO-ECONOMIC BENEFITS OF FRESH COCONUT PROCESSING:

WHAT ARE THE BENEFITS TO THE FARMERS, COMMUNITY AND THE COUNTRY AND HOW WILL THE SHIFT TO INTEGRATED FRESH COCONUT PROCESSING REDUCE POVERTY IN THE COUNTRYSIDE?

VIABILITY OF GREENFIELD INTEGRATED FRESH COCONUT PROCESSING

25

GEA Group Aktiengesellschaft

efficiency in food and energy processes.

26

GEA Group Aktiengesellschaft

efficiency in food and energy processes.