GLOBALGREENCHERRY PLC

INVESTING IN AGRICULTURE

GLOBALGREENCHERRY

INTRODUCTION

Making investment decisions has never been

an easy feat. This is true now more than

ever with the complex, fascinating, and often

confusing dynamic of the current global

economic environment.

Increased market volatility has led to reduced

investor interest in more traditional equities in

favour of alternative investment options. And

what could be more productive than farmland?

We all need food to survive, and virtually all

food originates from a farm.

THE PRACTICALITY OF AGRICULTURE INVESTMENTEmerging Markets and Overall Population Growth

Emerging markets are developing at an extraordinary pace. More and

more countries are offering their citizens the chance to live a middle-

class lifestyle. This is clearly a positive step in terms of well-being, but

does not come without consequences. There is suddenly an increase in

not only demand for quantity of food, but also for its higher quality. As

income increases more citizens are able to enjoy a more balanced diet,

and the demand for fruit and proteins will continue to grow.

Further complicating food supply is overall world population growth,

which estimates that the world population will rise from around 6.9 billion

people currently to between 9 and 10 billion people by the year 2050.

This becomes even more startling when we consider that this increase

amounts to approximately 200,000 more people on our planet everyday.

The Food Predicament – Prices and Production

In order to sustain this elevated population, it will become necessary to

produce nearly twice as much fruit and grain as is currently being grown,

clearly a difficult challenge to be faced in the near future. Even assuming

optimal agricultural production at or above average levels, it will clearly

be difficult to maintain a sufficient supply of fruit and grain for future

population levels. In fact, over the last 30 years, production has not been

able to keep up with population as the ratio of kg of fruit and grain per

year per person has begun to decrease.

Unfortunately, these are not the only factors that are complicating and

will continue to complicate the world food supply. Food prices have

been increasing at an exponential rate in recent years. By mid-2008,

international food prices had skyrocketed to their highest levels in 30

years. In December 2010, the FAO food price index rose above its 2008

peak. Not only commodity traders are affected by this trend, but also

each and every one of us when paying our daily shopping.

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Source: United Nations

10

8

6

4

2

0

World Population

1950 1970 1990 2010 2030 2050

Less developed regions

More developed regions

Source: Food and Agriculture Organisation

* The real price index is the nominal price index deflated by the World Bank Manufactures Unit Value Index (MUV)

250

210

170

130

90

50

FAO Food Price Index

1990 1995 2000 2005 2010

Nominal

Real*

Bill

ions

Urban Drift

In 1900, worldwide, there were 6.7 rural dwellers to each urban dweller;

now there is less than one and projections suggest there will be nearly

three urban dwellers to two rural dwellers by 2025. Cities of the world

have continued to grow until urbanisation has begun threatening the

very food supply that enabled their existence in the first place. This

has been underpinned by the rapid growth in the world economy and

in the proportion of gross world product and of the economically active

population working in industry and services. Currently, not only the

highly valuable resource that is land, but also water, is being irreversibly

destroyed by urbanisation and pollution.

Loss of Arable Land

Land that is especially suitable for growing crops, or arable land, with

its fragile top 15cm of fertile soil, determines the productivity of our

food system. Most land is either too dry, wet, steep, or cold for crop

production, and urbanisation is further complicating this situation. Not

only does population expansion reduce available cropland per capita, but

also on-going soil erosion and expanding urbanisation continually result

in the slow but continuous loss of cropland. Annually, millions of acres of

prime cropland are lost to erosion, salinisation, and waterlogging. Millions

more are lost as arable land as urbanisation, transportation networks and

industries take over croplands. The Food and Agriculture Organisation

of the United Nations (FAO) reports that already close to 200,000 km2 of

fertile soil have been destroyed by urbanisation. This will cause further

increases in food prices, and farmland will become more valuable.

Climate Change

Food commodity prices are extremely sensitive to even modest climate

change impacts on world agriculture. In a recent study, researchers

found that climate change is expected to dramatically alter global fruit

and nut production, as tree crops like pistachios and cherries struggle

in the rising temperatures. The study, published in the scientific journal

PLoS ONE, predicted that the fruit and nut industries in California,

the southeastern U.S., China’s Yunnan province and southern and

southwestern Australia would be highly affected by global climate

changes in the coming years. The study added that the areas that have

already been affected include Israel, Morocco, Tunisia and the Cape

region of South Africa. The results would of course cause commodity

prices to rise drastically.

ANNUALLY, MILLIONS OF ACRES OF PRIME CROPLAND ARE LOST TO EROSION, SALINISATION, AND WATERLOGGING.

The Urban and Rural Population of the World – 1950 to 2030

9876543210

Bill

ions

1950 1970 1990 2010 2030

World rural populationWorld urban populationWorld total population

Source: UN Population Division

Source: FAO

5

4

3

2

1

0

Arable Land per Capita

1960 2005 2030

Met

res

2

AGRICULTURE AS A LUCRATIVE INVESTMENTLand Appreciation and Cash Flow

When investing in agriculture, there is solid potential for healthy returns

from various sources. Increases in the price of farmland have been

steady over recent years. Europe has seen prices double, triple, and

even quadruple per acre of farmland since 2004. Productive agricultural

land, with water rights and everything else, wherever in the world you

look, has, over time, outperformed CPI inflation. Cash flow that stems

from leased farmland or from the commodities themselves can also

provide a substantial return. Investors can reduce risk by renting land to

local farmers who manage the land and make monthly lease payments

to owners/investors. Alternatively, cash flow can be augmented by

contracting land managers or investing in funds that manage farms

themselves. This latter option increases risk, but the benefit of higher

returns in cash flow makes this a lucrative option.

A Haven Against Inflation

It’s no secret that in recent years, lavish lending practices and over

leveraging has led the global economy into crisis. Part of the solution to

this crisis has been for governments around the world to increase the

supply of money. Additionally, interest rates have been brought near zero.

The near future will most likely, hence, bring higher inflation. Farmland

pricing has performed extraordinarily well during high inflationary

periods. In the 1970s, fruit prices reached astounding levels during high

inflation. Considering the fact that food inflation leads overall inflation in

many countries reflects the elevated demand for soft commodities. So

agricultural investment not only offers protection from inflation, but also

even pays you for it.

Diversification

Agricultural land also affords investors the chance to diversify away from

stocks and bonds, as farmland is not highly correlated with these more

volatile asset classes. This provides portfolio stability during volatile

markets while enhancing a portfolio’s risk adjusted return.

...AGRICULTURAL INVESTMENT NOT ONLY OFFERS PROTECTION FROM INFLATION, BUT ALSO EVEN PAYS YOU FOR IT.

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Inflation vs. Farmland Price

Rate of inflationFarmland prices

FACTORS FOR INVESTMENT ASSESSMENTPolitical Situation

In weighing out where and how to invest in agriculture, one must take into

consideration the political situation in any given country and how specific

property laws may restrict investment. Some countries may not permit

direct foreign ownership of farmland whatsoever.

Strength and stability of a country’s government should also be analysed

especially when considering investment in emerging markets. Factors

for evaluation include political risk, economic performance, structural

assessment, debt indicators, credit ratings, and access to bank finance

and capital markets.

Local Human Factors

Local public sentiment toward foreign investment, as well as cultural

differences and matters of language are all crucial issues that need

careful consideration.

To make sure foreign investments run smoothly, local residents must see

these ventures in a positive light. If there were any feeling of being taken

advantage of or of intrusion on their territory, the success of any foreign

investment would be fighting an uphill battle from the very beginning.

The consequences of not carefully managing local sentiment could

include the reduction or even the total abandonment of the investment. It

is crucial, therefore, that locals fully comprehend that the combination of

their region-specific understanding and expertise along with the influx of

foreign funds can clearly improve their livelihood.

From construction companies to hair salons, law firms to restaurants,

no matter how much ingenuity, funding, and ability provided by

owners, finding responsible and productive employees is always vital

for successful business operations. Finding, communicating with, and

comprehending the perspective and inclinations of workers in a foreign

country is a challenge that confronted with patience and sensibility, can

and must be overcome.

STRENGTH AND STABILITY OF A COUNTRY’S GOVERNMENT SHOULD ALSO BE ANALYSED...

Transport of Crops

Once crops have been successfully harvested, the quality of regional

infrastructure comes directly into play. Caring for the land and its crops

is a crucial part of any farm’s operations, but up to the point of reaping

the harvest from any season, on a financial level, only expenses have

been incurred. The potential for profit making begins when grains, fruits,

vegetables, or livestock leave a farm. Therefore, quality roads will be

necessary for transportation of goods. Larger farms use hefty equipment

that will also need to be brought to and from the farm.

Once it is clear that the local network of roads and highways is

sufficiently effective, the issue of who will be transporting the harvest

comes to the foreground. Sufficient options are necessary for a farm

to ensure adequate quality and correct prices at this stage of the profit

making process.

The Essential Element - Water

Around 97% of the Earth’s water is salt water from oceans and seas, and

unfortunately desalinisation is a very expensive process. Close to 2% of

the earth’s water is frozen in polar ice sheets and glaciers. This leaves

only a miniscule amount for drinking, irrigation, and industrial use. This

already small amount of freshwater is being dangerously depleted. All

over the globe, water is being pumped out of the ground faster than it

can be replenished. China’s Yellow River, which is siphoned off by farmers

and cities, has failed to reach the sea most years during the past decade.

The green revolution in India was only possible by the installation of 20

million irrigation wells. Additionally, India must now dig wells 150 meters

into the earth, compared to just 30 meters 4 decades ago.

THE POTENTIAL FOR PROFIT MAKING BEGINS WHEN GRAINS, FRUITS, VEGETABLES, OR LIVESTOCK LEAVE A FARM.

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...WATER IS BEING PUMPED OUT OF THE GROUND

FASTER THAN IT CAN BE REPLENISHED.

THE NEW BREADBASKET OF EUROPELocated in Southeastern Europe, Bulgaria is bordered by Romania to the

north, Serbia and the Republic of Macedonia to the west, Greece and Turkey

to the south and the Black Sea to the East. With a territory of 110,994

square kilometres, Bulgaria ranks as Europe’s 15th-largest country. It has

huge agricultural potential thanks to its fertile soil, temperate climate and its

key geographical position, with crucial access to the Black Sea and the key

markets in the European Union, Commonwealth of Independent States (former

Soviet Republics), the Middle East and Asia. The rural regions in Bulgaria

occupy 84% of the nation’s total land area while the 2.7 million people living in

rural areas account for 32.3% of its total population.

Bulgaria joined NATO in 2004 and the European Union in 2007, after the

country moved from central planning to a more market-driven system with free

movement of capital and the liberalisation of agricultural markets. Bulgaria

enjoys both political and economic stability, and the decentralised government

is very accommodating to overseas investors. In 2007, the Bulgarian

government launched a five-year, €3.2 billion modernisation and development

program, aimed at strengthening the agricultural sector.

The country is blessed with rich farming and forestry resources. The extremely

fertile soil (containing a moderate PH) and temperate climate, particularly

around the Black Sea, provide exceptional, high yielding, top quality crops,

and make Bulgaria an ideal producer of the most in-demand and lucrative

fruit: sweet cherries. The hot season arrives at just the right time for cherry

production and the humidity also makes for perfect growing conditions.

The season very rarely suffers from frost or other major weather hazards. If

properly handled, crops will suffer a very low production loss of 5 to 10%.

Cherries are a fruit that travels well, and once refrigerated, taste and flavour do

not deteriorate easily.

Although it is one of the newest sources of land for cherry production,

neighbouring Turkey is already one of the world’s leading producers. Bulgaria

is widely recognised as the country with the highest potential for growth as a

cherry producer.

The price for farmland and labour costs in Bulgaria are also considerably lower

than the rest of Europe, with farmers of the same skill set earning an average

of €200 in Bulgaria, compared with €1,000 in Western European countries.

The operating expenses are also considerably lower than orchards based in

other European countries. As a result, the return on investment is much higher

in a Bulgarian-run orchard.

Farmland average price per acre

€3.2BILLIONMODERNISATION AND DEVELOPMENT PROGRAM

BULGARIA

BULGARIA

RURAL REGIONS

OCCUPY 84% OF THE NATION’S TOTAL LAND AREA

BULGARIA

RICH FARMING AND FORESTRY RESOURCES, EXTREMELY FERTILE SOIL AND TEMPERATE CLIMATE

$23,6

84

$19,119

$14,8

66

$14,076

$6,9

23

$6,0

53

$5,0

61

$4,8

71

$2,6

96

$1,966

$1,263

Bul

garia

Fran

ce

Bel

gium

Pol

and

Engl

and

Irel

and

Rom

ania

Spa

in

Net

herlan

ds

Ger

man

y

Dem

ark

Nat

ional

ave

rage

20

04 t

o 20

07

Source: blackseaagriculture.com

Bulgaria also boasts an exceptional corporate environment. Historically,

Bulgarian farmland investment has achieved returns that outperform most

traditional investment assets.

Annual yield from Bulgarian cherry investments vs. traditional investments

THE ADVANTAGES OF PRODUCING CHERRIESCherries are one of the most succulent and sought after fruits on the

market. Due to the premium price they command – with revenues more than

doubling those of most other fruits – cherries have also quickly become one

of the most exciting and lucrative green investment opportunities available

today. From early May to late June, average retail prices for cherries are in

excess of €10 per kilo. Cherries also attract far higher prices at production

levels – more than double that of grapes and almost quadruple that of

apples. Unlike the volatility that is associated with commodities, which

is subject to a lot of futures trading, cherry prices are set locally by the

producers and supermarkets.

Although global cherry production has been rising in recent years, it has

failed to keep pace with the fruit’s ever-increasing demand. According to

Belrose, Inc., the world’s leading fruit producing analysts, sweet cherries

have become the most popular fruit within the U.S. and European markets.

Beyond their delicious flavour, cherries have become widely recognised for

their numerous health benefits. They have a high content of antioxidants,

making them excellent agents in helping to fight diseases such as cancer

and other cell degradation-related illnesses.

Cherries are also very low in calories and have become an important weight

loss and weight management tool. A serving of cherries only contains 50-70

calories making it an ideal mid-day snack. In addition, the red pigment in

cherries has a tremendous amount of anthocyanins, making the fruit an

outstanding natural anti-inflammatory. Cherries have been proven to offer

natural relief from headaches and joint pain caused from gout, arthritis and

joint inflammation. People suffering from these symptoms are encouraged

to drink cherry juice, eat fresh or dried cherries or consume cherry pills.

Cherries also contain melatonin, which helps against insomnia and slows

down the aging process. They are also a rich source of nutrients, vitamins

and minerals, such as potassium, iron, zinc, and copper.

CHERRIES ARE ONE OF THE MOST SUCCULENT AND SOUGHT AFTER FRUITS ON THE MARKET

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Source: blackseaagriculture.com* Estimate of the Directors

30%

25%

20%

15%

10%

5%

0%Farmland 10 year

TreasuryS&P 500

Index5 Year

CDMoney Market

GoldBulgarian Cherry*

6.50% 3.52% 2.82% 2.59% 1.23% 0.00%30.42%

CHERRY PRODUCTIONOver the last ten years there have been major breakthroughs in

cultivation techniques utilising a method known as high-density hydro

orchard production (also known as “high density root stock”). Orchards

using this groundbreaking technique increase plant density by growing

cherries directly on the base of the tree itself and not on the branches.

This results in higher volume crops with greater production efficiency and

larger cherries. Through the utilisation of the aforementioned production

technique coupled with sophisticated handling and transport systems

used to mitigate product perishability, a well-run cherry orchard is

capable of generating a return on investment of over 30% per year!

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A WELL-RUN CHERRY ORCHARD IS CAPABLE OF GENERATING A RETURN ON INVESTMENT OF

OVER 30% PER YEAR!

Shares in GlobalGreenCherry Plc are unquoted securities and may be considered to have more risk than quoted securities and shares. The value of investments can go down as well as up and you may not get back the money you originally invested.

The information contained in the document does NOT form a part of any offer for sale or subscription to or solicitation to buy or subscribe for any securities or investment product(s). The document is not a prospectus and/or Information Memorandum and contains no offer to the public for the purposes of the Prospectus Regulations 2005. The formal terms of this offer are set out in the Information Memorandum and applications for shares are made solely for that basis.

Any forward looking statements set out herein involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements implied by such statements.

LET’S TALK To find out more and download the Information Memorandum with Application Form, please visit:

www.globalgreencherry.com

If you have specific enquiries, please e-mail us at:

info@globalgreencherry.com

If you want to talk, call us on:

+44 (0)203 137 6920

GLOBALGREENCHERRY

May 2012

GLOBALGREENCHERRY PLC

Lloyd’s Building

12 Leadenhall Street

London EC3V 1LP

United Kingdom

T +44 (0)203 137 6920

F +44 (0)203 137 6921

E info@globalgreencherry.com

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