RELIABLE INVESTMENTS KAZAKHSTAN

www.eximar.kz

www.eximar.pro, aiman@eximar.kz Office 306, Economical Zone “Innovative Technologies Park” Alatau valley, Almaty, 050032, Kazakhstan

STATE SUPPORT, PROJECTS, ANALYTICSFull Member

of Global Professional Research Association

Group Member

Introduction to KazakhstanThe republic of Kazakhstan is situated in the center of Eurasia. It is ninth largest are in the world with the area of 2 724.9 thousand km2. The territory of Kazakhstan is divided to 14 regions or oblasts, which are further divided to 162 districts or raions. The population of the republic as of the end of 2013 is 16.9 million people. The geographical position renders Kazakhstan to have limited access to international waterways for trade; the only maritime connection is in the west of the country through the ports of Aktau and Atyrau in the Caspian Sea. Kazakhstan shares most parts of the border with Uzbekistan and Turkmenistan on the south, with China on the west, and with Russia on the north and northwest.

Kazakhstan is a promising and actively developing country in terms of development of multiple business initiatives. The Government of Kazakhstan actively supports entrepreneurs. Nowadays the government has established the framework of simplified business registration, and licensing, options of preferential taxation are offered and other conditions are offered as well.

Kazakhstan holds 18th position in ownership registration and taxation. The rise in ownership registration is caused by implementing the possibility of registering business online through government website. Kazakhstan’s position in taxation has not changed since 2013. The taxation rules and schemes have not changed; they already provide businesses with convenient taxation systems. In receiving a building license Kazakhstan has risen to 145 positions, and in insolvency solution it has risen by 1 point.

According to the Law “On investment” the investor investing into priority areas is subject to the following exemptions – zero customs rate on imports of equipment, raw materials necessary for the project, government land grants. For strategic investment projects (production of high value added products in the priority sectors in high-tech industries and with total investments no less than 50 mln USD) the investors subject to tax exemptions (land tax and property tax at zero rate), manufacturing preferences in regions with low level of social and economic development (partial compensation of costs of gas, electricity, land acquisition, purchase and construction of buildings).

The World Bank report on «Ease of Doing Business» in 2014 ranked Kazakhstan 50th out of 189 economies. The continual instability of the global economy has led investors to look at countries such as Kazakhstan as a safer place to grow. While global FDI inflows declined by 18% between 2011 and 2012, Kazakhstan remained a stable destination for investors, receiving US$22.5b in FDI inflows in 2012, which is 15% higher than pre - crises level and 7% in 2011.

The country's competitive geographical location at the junction of Asia, Europe and the Middle East enables access to the rapidly growing markets of Russia, India and China, and the Customs Union with Russia and Belarus with population of about 170 mln. people creates unique opportunities for investors and local companies. Kazakhstan farming capacities consist 215,5 million hectares including arable lands – 24,6 (11.2%) million hectares, hayfields – 5,0 million hectares (2.2%) and pastures (84.4%) - 185,9 million hectares.

Area 2,724,900 km2Population 17,563,300 Density 5.94/km2GDP (PPP) Total $420.629 billionGDP Per capita $24,143

Foreign Direct Investment Support Measures for Food & Agro Business

Access to credits: The program “Agribusiness-2020” has introduced new form of government support in order to improve access to credits, which is subsiding the interest rate for the credits. Nowadays second tier banks offer the credits to agricultural producers at the interest rate of 15% on average. The government can cover up to 8% of the interest rate; the farmer pays the rest 7%. Since 2003 the volume of credits provided in Kazakhstan has grown by 11 times. Agricultural credits provided by second tier banks have also grown, but by lesser extent – only by 3 times in the period of 2003-2013. In 2013 the amount of credits for agriculture reached 2.5 billion dollars that is 3.3% of total credits for the economy of Kazakhstan. Most of the credits for agricultural purposes are provided by second tier banks and financial institutions of MoA’s daughter company «National holding «KazAgro» JSC».

Agricultural land ownership issues: Land relations in Kazakhstan are regulated by Land Code and regulatory acts developed on national or local levels. According to these documents, the procedures of selling or long-term lending for 49 years of the land to the farmers are set.

Veterinary and Food Safety:Government policy in veterinary safety is developed by the Department of Veterinary and Food Safety of MoA, and control and supervision is carried out by the Committee of Veterinary Control and Supervision of the MoA that has a network of subsidiary organizations in all regions of Kazakhstan.

Transport & Logistics:According to the “Global competitiveness report 2012-2013” Kazakhstan holds 29th and 117th positions (out of 144) on the quality of railways and roadways respectively. The average density of railways is 5.36 km / 1000 km2.

KazAgro JSC, million KZT 2015 year (6 months) 2014 year 2013 year 2012 year

KazAgro Loans in total 734 984 701 324

438 969

260 171

Loans for agro sector distributed to commercial private banks 320 040

329 054

115 853

15 255

Direct loans to clients 240 858 207 178

199 326

151 700

Direct leasing contracts to clients 174 086 165 092

123 790

93 216

2012 year 2013 year 2014 year 2015 year (6 months)

260,171

438,969

701,324 734,984

KazAgro Loans to Agriculture dynamics, mln. KZT

INVESTORS’ SUPPORT FOOD & AGRICULTURE SECTORS: Tax exemption for

local companies 70% discount for VAT, labor tax, transport tax, land royalty, profit tax;

Free of profit tax for foreign direct investors for 10 years (normal rate 15%);

Free of custom taxes and VAT for import equipment, cattle, breeding birds, growing materials and etc.;

Return as a debt payment from 20 up to 50% of all capital expenses for priority sectors in agriculture.

Dairy Farming and Cheese Processing – ASU LTD

STATE SUPPORT MEASURES FOR DAIRY FARMING & MILK PROCESSING:1. Milk production subsidies –

0,16 USD per 1 kg of the selling price;

2. Milk processing for cheese production 0,16 USD per 1 kg of processing raw milk purchases;

3. Feed purchase price reimbursement – up to 45% of the feed cost;

4. Breeding cattle purchase price reimbursement – up to 50% of the total value. Depending on the country of cattle origin reimbursement amount differs;

5. Investment subsidy – return as a debt payment for 50% of all capital expenses during 2 years after project launch.

PROJECT PROFILEASU LTD established in 2003 in Almaty region, Kazakhstan. Currently, the plant is fully equipped with machinery, needed for production of traditional pasteurized dairy products. Company owns 2064 ha of agricultural as well as 500 ha of arable, and 17 ha site map for Dairy Farm construction. In March 2014 the ASU LTD project “Dairy Cluster Development” was included in Industrialization Map of Almaty region. Current value of LLP «ASU LTD» is 6 mln. USD, including facilities, farming lands, technological equipment and transports.Project cost $6 933 196 (working capital included)Equity Funding $ 1 040 124, Stock share for Investor 49-60%Loans by KazAgro $5 893 072, Investment subsidy $2 978 096

ASU LTD Project CapEx $6 710 973WACC 12,22%IRR, % 31,27%NPV, USD $10 017 653PB (discounted) 4,45 KAZAKHSTAN CHEESE COMMODITY KEY FEATURES 2013-2015 years

year 1

year 2

year 3

year 4

year 5

year 6

year 7

year 8

year 9

year 10

0% 7%

36% 36%61%

74% 74%87%

104%121%ASU Dairy Project ROI dynamics, %

Cheese, Cottage Cheese & Butter 2013 year 2014 year 2015 yearCountry Production, thousand tonnes

36,20 41,01 47,57

Import, thousand tonnes 31,43 32,71 29,44 Export, thousand tonnes 0,80 0,81 4,62 Consumption, thousand tonnes 65 73 72 Consumption per capita, kg/year 3,8 4,2 4,1 Average import price, USD/kg $ 4,76 $ 4,07 $ 2,99 Average export price, USD/kg $ 3,62 $ 3,61 $ 4,87 Average retail price for Gauda cheese, USD/kg

$ 7,33 $ 7,53 $ 7,86

Domestic Market Dependency from Imports, % from consumption

48,5% 44,9% 40,7%

Red Meat Breeding and Processing (Angus beef)

Investment analysis USDWACC 14,00%IRR, % 23,87%NPV $ 11 550 848

PB, years 5,86 DPB, years 7,01

STATE SUPPORT MEASURES FOR MEAT BREEDING & PROCESSING:1. Production subsidies

amounts 1,5 USD per kg of the selling price;

2. Feed purchase price reimbursement – up to 50% of the concentrated feed;

3. Feed purchasing price reduction for breeding cattle – up to 30 USD per head;

4. Breeding cattle purchase price reimbursement – up to 50% of the total value. Depending on the country of cattle origin reimbursement amount differs;

5. Investment subsidy – return as a debt payment for 50% of all capital expenses during 2 years after project launch.

KAZAKHSTAN MEAT COMMODITY KEY FEATURES 2013-2015 yearsMeat 2013 year 2014 year 2015 year

Country Production, thousand tonnes

871 900 930

Import, thousand tonnes 222 198 186 Export, thousand tonnes 3 9 12 Consumption, thousand tonnes 1 090 1 089 1 105 Consumption per capita, kg/year 64,5 63,5 62,9 Average import price, USD/kg $ 1,39 $ 1,27 $ 1,06 Average export price, USD/kg $ 2,70 $ 2,78 $ 1,88 Average retail price for fresh meat, USD/kg

$ 6,67 $ 6,45 $ 6,43

Domestic Market Dependency from Imports, % from consumption

20% 18% 17%

USD USD USDLeasing (cattle) 2 751 777$ 2 339 011$ 412 767$ Leasing (equipment and machinery) 447 300$ 352 549$ 94 752$ Construction costs 920 538$ 774 194$ 146 345$ Working capital 1 556 598$ 967 742$ 588 856$ Total project 5 676 214$ 4 433 495$ 1 242 719$

Total Expenditures KazAgro loans

Investor's Co FinancingProject summary

year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10

33% 31%45% 50%

67% 76%

120% 125%Meat Breeding Project ROI dynamicsThe project is implemented in Almaty region, Raiymbek District. Fodder

base is 10 000 hectares of pastures, hayfields 3000 hectares, 5000 hectares of arable land. On a ranch in the village Saty contains maternal herd of 400 head of Angus with winter 2015 offspring calves. Currently company conducting the reconstruction of the livestock farm in 5000 in the village heads Aktasty and prepares to farming land works.

Intensive Growing and Storage Fruit & Vegetables – Ismida Gardens

STATE SUPPORT MEASURES FOR MEAT BREEDING & PROCESSING:1. Fertilizer cost

reimbursement - up to 50% for local fertilizers and up to 30% for imported fertilizers;

2. Grapes and fruits growing cost reimbursement – up to 40%, if the growing area exceeds 5 ha;

3. State loans 6% interest in KZT;

4. Fertilizer cost reimbursement - up to 50% for local fertilizers and up to 30% for imported fertilizers;

5. Investment subsidy – return as a debt payment for 40% of all capital expenses during 2 years after project launch.

Currently, intensive garden is built on 50 hectares. In 2016, it plans to build a garden on 900 hectares in Al,aty region, Malovodnoye village. Existing apple trees garden 36,6 hectares crop yield in 2015 achieved 500 tones. During 2016-2017 the garden would be reconstructed using drip irrigation system and old trees would be replaced with minimal crop 50 tones per hectare.

KAZAKHSTAN FRUITS COMMODITY KEY FEATURES 2013-2015 years

Fresh Fruits, Grape & Berries 2013 year 2014 year 2015 yearCountry Production, thousand tonnes 283 375 247 Import, thousand tonnes 600 647 586 Export, thousand tonnes 12 18 10 Consumption, thousand tonnes 871 1 004 823 Consumption per capita, kg/year 51 58 47 Average import price (apples), USD/kg $ 0,74 $ 0,79 $ 0,65 Average export price (apples), USD/kg $ 0,40 $ 0,23 $ 0,26 Average retail price for fresh apples, USD/kg

$ 0,80 $ 0,81 $ 0,89

Domestic Market Dependency from Imports, % from consumption

69% 65% 71%

Apples & Pears 2013 year 2014 year 2015 yearGardens growing area, thousands hectares (apples, pears, apricots, peachs)

38,90 39,50 40,02

Country Production (apples & pears only), thousands tonnes

192,3 210,7 161,8

Import, thousands tonnes 146,6 170,5 193,0 Export, thousands tonnes 0,1 0,9 1,1 Consumption, thousands tonnes 338,8 380,3 353,7 Consumption per capita, kg/year 0,0 0,0 0,0 Average import price, USD/kg $ 0,51 $ 0,47 $ 0,45 Average export price, USD/kg $ 0,74 $ 0,24 $ 0,11 Average retail price for fresh apples, USD/kg $ 0,80 $ 0,81 $ 0,89 Domestic Market Dependency from Imports, % from consumption

43% 45% 55%

Project cost, 50 hectares $ 2 175 291 WACC 14,00%IRR, % 38,55%

NPV $ 6 070 715

Payback period, years 4

Discounted Payback period 5

year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8

0%19%

44%68%

96%

127% 134% 141%

ROI dynamics for 50 hectares apple garden project

Horticultural growing – 7,6 hectares greenhouse in Almaty

Project Cost $ 14 465 832 WACC 14,00%

IRR 19,34%

NPV $ 9 544 001PB, years 3,52

DPB, years 4,31

STATE SUPPORT MEASURES FOR GREENHOUSES VEGETABLES GROWING:1. Basic seeds purchase

price reimbursement – up to 40%;

2. Fertilizers purchase price reimbursement– up to 50% from local producer and up to 30% for imported fertilizers;

3. Fuel cost reimbursement – up to 40%;

4. Investment subsidy – return as a debt payment for 30% of all capital expenses during 2 years after project launch.

KAZAKHSTAN VEGETABLES COMMODITY KEY FEATURES 2013-2015 years

Key Features in 2015 in Kazakhstan

Country Production, thousand tonnes

Country Import, thousand tonnes

Country Export, thousand tonnes

Domestic Cunsumption, thousand tonnes

Consumption per capita, kg/year

Country Dependency from Import, %

Cucumbers 45,6 10,8 5,3 51,1 2,91 21,10%Tomatoes 77,1 67,5 1,1 143,6 8,18 47,03%Salads 29,5 2,8 14,8 17,5 1,00 15,98%

Fresh Vegetables 2013 year 2014 year 2015 yearCountry Production, thousand tonnes 3 242 3 470 3 565 Import, thousand tonnes 628 499 641 Export, thousand tonnes 43 52 55 Consumption, thousand tonnes 3 827 3 917 4 151 Consumption per capita, kg/year 226 228 236 Average import price (tomatoes), USD/kg

$ 0,39 $ 0,44 $ 0,34

Average export price (tomatoes), USD/kg

$ 0,16 $ 0,18 $ 0,14

Average retail price for fresh tomatoes, USD/kg

$ 3,00 $ 3,23 $ 3,57

Domestic Market Dependency from Imports, % from consumption

16% 13% 15%

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

-1%

27%

17% 19% 21% 20%24% 25% 27% 28%

ROI dynamics Greenhouse project 7,6 hectares

The project is implemented on an area of 15 hectares of land in the industrial zone of Alatau district of Almaty with a number of special investment preferences that affect the flexible pricing policy for the take off of the partners. The first products (salads) to be supplied to the market of Kazakhstan and Russia in late December 2016, cucumbers and tomatoes in February, in March 2017.

Tomato Paste Processing Plant – Tatu AgroThe tomato paste plant is located in the Kyzylorda region, Kenes village. The equipment of tomato processing produced by «Rossi & Catelli» (Italy). Plant operates since 2011 with processing capacity of 660 tons / day. Warehouses totaling capacity of 35 thousand tons, an area of 13 840 m2. The complex is provided with electricity, water, move the road, there is a railway deadlock.The total land area for tomatoes growing 2403 hectares irrigated arable land. Growing SH crops 640 hectares of winter wheat (yield 8 kg / ha, maize - 100 ha (yield 35 t / ha), potatoes - 23 ha (yield - 80 t / ha), tomatoes - 200 ha (yield - 620 kg / ha) 120 ha - apple trees, 120 hectares - grapes, 30 hectares – cucumbers. There are 2 hectares greenhouse purchased for seeds propagation . The greenhouse located in Derbiseksky village, South Kazakhstan region. Storage area - 0.68 ha.

STATE SUPPORT MEASURES FOR GREENHOUSES VEGETABLES GROWING:1. Basic seeds purchase

price reimbursement – up to 40%;

2. Fertilizers purchase price reimbursement– up to 50% from local producer and up to 30% for imported fertilizers;

3. Fuel cost reimbursement – up to 40%;

4. Investment subsidy – return as a debt payment for 30% of all capital expenses during 2 years after project launch.

5. Export grants for final goods up to 15% of export price.

Tomato paste 2013 year 2014 year 2015 yearOpen field tomatoes growing area, thousands hectares

133,10 137,70 139,05

Country Tomatoes Production (open field only), thousands tonnes

65,8 68,1 68,8

Number of fruits & vegetables processing plants in Kazakhstan

46,0 43,0 38,0

Tomato Paste Country Production, thousands tonnes

10,3 12,0 13,8

Tomato Paste Import, thousands tonnes 27,2 22,0 24,4 Tomato Paste Export, thousands tonnes 0,02 0,5 0,5 Tomato Paste Consumption, thousands tonnes 37,5 33,5 37,7 Consumption per capita, kg/year 2,2 2,0 2,1 Average import price, USD/kg $ 0,77 $ 0,95 $ 0,96 Average export price, USD/kg $ 1,78 $ 0,71 $ 0,79 Average wholesale price for tomato paste 36-38% BRIX big bag, USD/kg

$ 1,00 $ 1,12 $ 1,15

Domestic Market Dependency from Imports, % from consumption

73% 66% 65%

Project cost $5 000 000WACC 14,00%IRR 52,06%NPV $ 3 561 352 PB, years 3,5DPB, years 4

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

0%

35%55%

74%99%

112% 115% 118% 121% 124%

ROI dynamics Tomato paste processing plant 600 tonnes/day

EXIMAR Company ProfileEXIMAR a member of Kazakhstan Association of Professional Market and Social Researchers (www.kapior.kz) and member of International Association of Professional Market and Social Researchers ESOMAR (www.Esomar.org) since April 2015. EXIMAR is a resident of the National Innovative Cluster “Innovation Technologies Park” since 2010.Consulting agency EXIMAR was established in 2003 and specialized in retail audit and comprehensive market studies. EXIMAR have been providing services on market researches to FMCG producers, financial institutions, real estate and construction companies, industrial and agricultural facilities. Geography of surveys covered a huge range of commodity markets in Kazakhstan, Russia, China, CIS, Gulf, Middle Asia and Europe countries.Since 2008, our company began to provide turnkey services for start-up investment projects in Kazakhstan, including financial consultancy services under the state investment programs. The company completed projects portfolio includes major regional growth point - large-scale national projects under the contracts with government customers. Since 2010, our company has become a constant participant of the special economic zone "Park of innovative technologies“. Our company specializing on feasibility studies, innovative technological solutions implementation, researches, IT infrastructure management and social scoring systems deployment.Our own software Retailer (retail audit data collection and analysis) and Netscore (social behavioral scoring) significantly accelerate the collection, processing and analysis of marketing data. For large-scale studies also we are using the latest versions of licensed software from global vendor - IBM SPSS Data Collection and SPSS Statistics.Today EXIMAR - an experienced consultant in marketing, investment evaluation, technological solutions with an 360º overview of the client's business needs. We are trusted by government bodies, foreign and domestic investment groups, national development institutions, international non profit funds and Kazakh businessmen.In the Autumn of 2015 EXIMAR joined to the group of companies “Alatau Fruits”, managing by Temirzhan Zhalgasbayev.

OUR KEY SERVICES Feasibility Study PEST analysis, Risk Assessment Processing Industries Localization

matrix Studies & Design of sectorial,

governmental, regional development programs for food & agriculture, machinery, ICT, chemistry, logistics commodities.

Domestic & international markets surveys

Retail Audit, DPSM, TDI, BDI researches

State Budget Project Business planning (completed feasibility studies) according Kazakhstan State Budget Legislation

Industrial Objects Concept and Engineering Design Support

International marketing and technology expertise

Project support on state budget procedures & approvals

Financial analysis and financing schemes modelling

Budget financing submissions support

Assistance to clients with investors attraction

Clients’ loan financing submissions support to Kazakhstan development financial institutions

EXIMAR Largest Clients

EXIMAR Research & Development Team

Temirzhan Zhalgasbayev

EXIMAR Co FounderAlatau Fruits Group CEO

Tim Invest Group FounderSkolkovo Business High School

Graduate.Well-oriented in banking,

investment and law, in horizontal and vertical structures of

governance. More than 15 years experience in

banking, investment and managing state development

institutions.

AimanTursynkan

EXIMAR Establisher, Co Founder & CEO

Kazakh State University named Al Farabi graduate, ESOMAR

full professional member.More than 20 years experience

in market global researches, feasibility studies for large private public partnership

projects, financial analysis and business trainings design.13 years in state strategic

consulting & foresight.

SerjanStybaev

EXIMAR Co Founder KazMeat feedlot CEO

ASU Dairy CEO, FounderKazakh State National

Academy of Management graduate

More than 30 years experience in managing, development and investing to Food & Agriculture

spheres. Key sectors – greenhouses, meat breeding and feedlot, dairy farming &

milk processing, farming.

LudmilaFukalova

EXIMAR Financial Director

Kazakh State National Academy of

Management graduate.More than 15 years

experience in financial management, accounting

and audit of industrial companies and

investment groups.Responsible for

investment analytics.

GulmiraNurbaevaEXIMAR Regional Director (Astana)

Russian Omsk State University graduate.More than 15 years

experience on market researches and audit of industries for Federal

Antimonopoly Service of Russia and Kazakh Agency for Natural

Monopolies Control Committee.