Streaming Canola across Western Canada TSX.V: INP Corporate Presentation January 2, 2019 1
Important notice concerning this document including forward looking statements This Presentation discloses management policies, investment strategies and courses of conduct that may constitute “forward -looki ng information” within the Corporate Presentation meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein may be forward-looking information. Generally, forward-looking information may be identified by the use of forward- looking terminology such as “plans”, “expects” or “does not expect”, “proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. This April 2017 TSX.V: INP forward- looking information reflects the Company’s current beliefs and is based on information currently available to the Compan y and on assumptions the Company believes are reasonable at the time of preparation. These assumptions include, but are not limited to, the actual result s of investee’s being equivalent to or better than estimated results by the Company. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; commodity prices; cyclical nature of the agricultural industry; weather; the early stage development of the farming operations or dishonesty of the streaming partners; reliance on management, uncertainty in identifying and structuring streaming agreements, liquidity of investments, potential conflicts of interest, failure of the Company to meet targeted returns, limited transferability of Shares, defaulting streaming partners, competition; changes in project parameters as plans continue to be refined; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation affecting the Company and its streaming partners; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there maybe other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. As a result of these risks and uncertainties, actual events or results and the actual performance of the Company or its business may be materially different from those reflected or contemplated in the forward looking statements or information. Likewise, in considering the prior performance information contained herein, prospective investors should bear in mind that past performance and experience is not necessarily indicative of future results, and there can be no assurance that the Company will achieve comparable results. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as am ended (the “1933 Act”), or any state securities laws. Accordingly, these securities may not be offered or sold within the United States of America or to a U.S. Person (as such term is defined in Regulation S under the 1933 Act) unless registered under the 1933 Act and applicable state securities laws or an exemption from such registration is available. 2
Summary Direct exposure to the growing global canola market • CTTPP trade agreement set to open new markets to Canadian canola – see https://www.canolacouncil.org/cptpp/ • Global population expected to rise 30% by 2050 primarily in developing nations • Global food output, including consistent growing demand for canola, will need to outpace population growth due to emerging middle classes in countries such as China, India and Brazil • 90% of Canadian canola production is destined for export markets accounting for 70% of global exports + agronomic limits to greater Canadian production = strong canola price dynamics Current market share of ~85,000 MT 1 in 20 million MT market (388 farmers in 50,000 farmer market) • Investments into streaming contracts provide attractive returns • Capital Stream product solves working capital issues; generates gross IRRs in the mid-teens; capital is fully secured against farm assets (land, equipment, buildings) • Marketing Streams added in January 2017; higher cash returns at lower risk, and significantly larger addressable market; signed up over 270 farmers in first nine months • Mortgage Streams added in January 2018; highly suitable for land financing; lends itself to third party funding to significantly increase ROE; rock solid security; already accounts for >50% of invested assets. A dividend-paying growth story led by experienced owner-management team • Management estimates it could grow a very significant mortgage book within 5 years, generating significant growth in earnings per share and distributable cash; any debt to be secured against mortgages – no operating debt • Currently paying quarterly dividend yielding ~5.0% annually • Over the last 20 months, insiders have increased share ownership by 6.85 million shares (from 14.9% to 22.3% basic and from 22.3% to 26.7% FD) • Renewed share buyback launched in December 2018 to buy back up to ~10% of the public float 1. 85,672 MT of canola equivalent sold from streaming for the fiscal year ended September 30, 2018. 3
Historical Multi-Year Results Active Streaming Clients Adjusted Crop Revenue (CAD Millions) 388 $42.052 $41.336 301 $36.385 94 SEP 16 SEP 17 SEP 18 SEP 16 SEP 17 SEP 18 Adjusted Crop Volume Adjusted Net Income Per Share (canola equivalent MT) $0.08 88,535 85,672 $0.05 $0.05 53,949 SEP 16 SEP 17 SEP 18 SEP 16 SEP 17 SEP 18 Total Capital Deployed Adjusted EBITDA Per Share (CAD Millions) $0.28 $36.794 $0.23 $33.025 $25.825 $0.17 SEP 16 SEP 17 SEP 18 SEP 16 SEP 17 SEP 18 A significant volume of deliveries expected in September 2018 were delayed into Q1 of FY2019 due to heavy unseasonal snow across Alberta and Saskatchewan. As a result, adj. crop revenue, volume, EBITDA and net income were reduced for FY2018. This revenue, cash flow & earnings will be recorded in Q1 of FY2019. Previous periods restated for the twelve month periods ended September 30 to reflect trailing twelve month comparisons. 4
Growing Global Demand for Canadian Canola 5
$26.7B Growth Industry in Canada • 90% of Canadian canola production is destined for export markets, accounting for 70% of annual global exports. • Annual canola production accounts for $26.7 billion of economic activity in Canada per year and 250,000 Canadian jobs and $11.2 billion in wages. • Canola is the largest, most profitable crop in Canadian agriculture, generating more than one quarter of all farm receipts across 43,000 farms. • Domestic production and export markets have shown consistent growth. Canadian Canola Production and Exports 30,000 50 bpa yield = 26.0M MT total production 1 25,000 40 bpa yield = 20.9M MT total production 1 20,000 Thousands MT 30 bpa yield = 15.6M MT total production 1 15,000 10,000 5,000 - 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Ontario Manitoba Saskatchewan Alberta British Columbia Exports 1. Assumes 23.1M acres planted to canola representing the upper limit of rotational capacity 6 Sources: Canola Council of Canada, Statistics Canada
Cash Prices Supported by Growing Export Market • Cash prices are supported by strong export market. • Export markets show continued strength; a bullish indicator for future prices. • As exports continue to grow, Canadian canola production is reaching its physical and agronomic limits using existing farming practices. $800 Exports: 19.2 Max: $669.80 million MT 20,000 No. 1 Canada Canola Par Region Best Bid (CAD) $700 $600 15,000 Exports (thousands MT) $500 $400 10,000 $300 Min: $359.00 $200 5,000 $100 $0 0 Jan 2010 Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2018 Source: Intercontinental Exchange and the Canola Council of Canada 7
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