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Company Overview. A leading grower & marketer of branded, high-quality hydroponic greenhouse grown produce in North America Fresh vine ripened tomatoes, bell peppers & cucumber varieties Approaching 25 th Year of Operations Annual sales of over $135m

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Company Overview

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Company overview

Company Overview

  • A leading grower & marketer of branded, high-quality hydroponic greenhouse grown produce in North America

    • Fresh vine ripened tomatoes, bell peppers & cucumber varieties

    • Approaching 25th Year of Operations

    • Annual sales of over $135m

    • Listed on TMX (Toronto Stock Exchange) – VFF

    • Member of TMX Clean Technology Market Index

    • Vertically integrated year-round direct supplier to leading retail grocers

    • Largest hydroponic producer in Canada and 2nd largest in North America

    • Strong reputation as industry leader in quality and service

  • Highly Sustainable

    • “Local” source produce supplier

    • Small carbon and physical footprint

    • Highly productive compared to field farming

  • Operating and marketing in Canada, US, Mexico and DR

    • Greenhouse facilities owned – BC (110 acres), TX(110 acres)

    • New 30-acre GATES® greenhouse completed – end of 2011

    • Four distribution centers

    • Exclusive marketing arrangements with US, Mexican, Canadian & DR growers


Experienced management team

Experienced Management Team

Mike DeGiglio – Chief Executive Officer and Director

  • Co-Founder; Served as Chief Executive Officer since inception

  • 27 years intensive agricultural experience in controlled environmental growing – former CEO of two other industry related companies in greenhouse and agriculture biotechnology

  • Served on active duty in the United States Navy as an officer and jet aviator (1976 – 1983), and the Naval Air Reserves (1983 – 2001), retiring at the rank of Captain

Stephen Ruffini – Chief Financial Officer

  • Joined Village Farms in January 2009

  • Previously at HIT Entertainment PLC where he served as Chief Financial Officer

  • 25 years of extensive financial, operations, investor relations and mergers and acquisitions experience with leading international companies


Greenhouse produce a premium product

Greenhouse Produce – A Premium Product

  • Retail consumers pay a premium for Greenhouse produce

    • Offers more consistent quality, taste, appearance and food safety than field grown produce

    • Vine-Ripened Tomatoes

      • Consistent quality

      • Longer growing season

      • Multiple varieties

      • Flavor fully develops/better taste

    • English Cucumbers

      • Thin dark green skin

      • Unwaxed/not coated

      • Seedless

    • Peppers

      • Vibrant colors, firm skin

      • Free of spots & blemishes

      • Stems; green and fresh

      • Sweet taste


Key customer relationships

Key Customer Relationships

Relationships with Marquee Customers

Winco Foods


Size of produce markets

Size of Produce Markets


Retail tomato market

Retail Tomato Market

Retail Tomato Dollars

Retail Tomato Volume (lbs)


Greenhouse capacity u s canada

Greenhouse Capacity (U.S. & Canada)

318

220

208

155

110

  • Greenhouse tomato capacity in Canada and the U.S. is approximately 2,343 acres1

    • 1,334 acres in Canada

    • 1,008 acres in United States

Significant Canadian & U.S. Producers (in Acres)

  • 2

3

3

2012 Village Farms AIF

Purchased by NatureSweet through bankruptcy in early 2013

VFF management estimates of assets owned

Note: North American capacity excludes Mexico


Strategically located operations

Strategically Located Operations

Greenhouses

Partners

Distribution Centers

Corporate Offices

4

  • VFF has the logistics and distribution capabilities to ensure fresh high quality produce that meets consumer demands. Over 60% delivered direct to retailer from greenhouses.

Partnerships

Greenhouses


Recent initiatives

Recent Initiatives

New US/Mexico Suspension Agreement

  • Place season minimum pricing on imports of Mexican Tomatoes

  • Distinction between field and non-field product – mislabeling no longer allowed

  • Stronger enforcement on both sides of the border

Implementation of Certified Greenhouse Association Technology

  • Founding member of Certified Greenhouse Vegetable Producers Association

  • Qualified facilities may designate product with CGA logo

  • Next step enhanced definition and enforcement of greenhouse definition – federal and consumers

  • Hail storm took out 82 acres of production on 5/31/12 – Marfa, Texas

  • Received net Insurance proceeds through June 2013 of $36.5m

  • Final settlement of $11.25m – September 2013

Settlement of Insurance Claim

  • Due to hail storm impact – One lender tried to force an early exit

  • Restructured Long Term Debt – March 2013

    • $58m , LIBOR+, 5 years, 14- year amort.

  • New Operating Line – September 2013

    • $10m, LIBOR+, 3 years

Restructure of Company Debt


Financial performance

Financial Performance

  • VFF revenue negatively impacted by Loss of Acreage

    • Hail Storm in May 2012 – took out 82 acres – reducing production thus revenues

    • 40 Acres up and operational late 2012

    • Another 20 acres up and operational in Spring/Summer 2012

  • VFF EBITDA impacted by

    • Poor Pricing in late 2011 through September 2012

    • Hail Storm Proceeds in 2012

Revenue (US$ millions)

EBITDA (US$ millions)1

  • See EBITDA Support Schedule


Capitalization

Capitalization

High

Low

Current

(1)

$1.08

$1.08

$1.08

Price

(2)

38.9

F/D Shares Outstanding

F/D Market Capitalization

$ 42.0

(3)

$ 55.4

Net Debt

$ 97.4

Enterprise Value

(3)

LTM

TEV / EBITDA

4.2x

(4)

8.3x

Price / EPS

Net Debt / EBITDA

2.4x

(1) Close price as of 09/17/2013

(2) Calculated using the treasury stock method; includes exchangeable shares

(3) As of 6/30/2013; rolling LTM EBITDA (incl. Ins. Proceeds)

(4) Diluted earnings per share

Capitalization

  • Improved financial performance has driven share price appreciation

    • VFF currently trades at 4.2x EV / LTM EBITDA

  • Repair of 20 acres in Marfa, Texas in 2014

  • Proving out GATES®technology a potential catalyst for improved valuation / share price performance

Two Year Price and Volume


Significant insider ownership

Significant Insider Ownership

  • Insiders hold an economic interest in Village Farms of approximately 29.8%

Shareholder Overview

  • Includes outstanding options

  • 2Management estimate


Company overview

Key Trends Driving Greenhouse Development

Forecasted Water Scarcity, 2050

Population Density, 2025

Carbon Dioxide Emissions, Today

  • Water and Land Scarcity

  • Greenhouses have higher production volumes per acre of land

  • Water can be precisely measured and applied to plants

  • Safer, Locally Grown Food

  • Greenhouses can be located anywhere, esp. to serve densely populated regions

  • Controlled environment reduces chance of disease

  • Reduced GHG’s

  • Combined heat and power systems on greenhouses are over 40% more efficient

  • 47% reduction in CO2

  • 99% reduction in SO2

  • 93% reduction in NOx


Gates extreme growing

GATES® – Extreme Growing

  • Greenhouse Advanced Technology Expert System (“GATES®”)

    • Millions of dollars invested to develop the next generation, closed system greenhouse

    • Employs new concepts in greenhouse design technology, climate control and crop management

    • Successful pilot plant in Marfa, Texas sets the stage for growth

Consumer Demand Drivers

GATES®1Facility

  • Focus on “food miles”

  • Reduced carbon footprint

  • Reduced spoilage

  • Supply in close proximity to local markets

  • Food safety

  • Ability to locate in non-traditional locations: closer proximity to key markets

  • Advanced climate control with improved monitoring capabilities

  • CoGen partnerships further improve economics and provide environmental benefits


Growth initiatives

Growth Initiatives

  • Repair Damaged acreage in Marfa, Texas

    • Repair 20 acres of hail storm damage – Spring 2014

    • Rebuild of another 20 acres – 2015/16

  • Expand Production Capacity

    • Higher yields – year round (lowering costs per pound)

    • Enhance existing acreage with lights

    • More flexibility on crop selection

    • Lower labor costs due to technology

  • Expand US/CA regional markets

    • Buy ‘local’ trend – retailers and consumers

    • Improve retailer ‘shrink’ due to fresher product

    • Freight advantages - cost savings


Investment highlights

Investment Highlights

Greenhouse Produce Industry Leader

  • Vertically integrated year-round direct supplier to leading retail grocers

  • Largest hydroponic producer in Canada and 2nd largest in North America

  • Strong reputation as industry innovator in quality and safety

Advanced Greenhouse Technology

  • Track record of improvements in greenhouse production technology

  • GATES®technology / Extreme Growing

  • Repairs at Marfa facility will utilize some enhancements learned from GATES®

  • “Local source” produce supplier – market is short of US supply

  • Small carbon and physical footprint

  • Highly productive compared to field farming

Value-Add and Sustainability Story

  • Increased EBITDA since the acquisition of Hot House in 2006

  • Reduced financial leverage

  • Increased operating capacity and crop yield

  • Significant alignment of interest – Management holds 30% ownership

Successful Track Record of Value Creation


Ebitda support schedule

EBITDA Support Schedule


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