VELPA PRESENTATION 2020 eng v2

Bulgarian corrugated paper and packaging manufacturer Velpa Group of companies Corrugated paper producer and packaging manufacturer Presentation 2020 Produced by VHM Capital – Financial advisor of Velpa

Section 1 Executive Summary

Brief Overview The largest manufacturing capacity in North East Bulgaria Velpa Pack Ltd. is a paper packaging manufacturer with 20 years history. Since 2017 the company entered corrugated paper manufacturing with its company Velpa Ltd. producing double layer and triple layer corrugated paper with printing. The current product portfolio comprises: ■ Production of double and triple layer corrugated paper, transportation and paper boxes, seven colour print. ■ Carton products: E+B+F flute crafted and recycled papers for transportation and containing various foods, washing and cleaning materials, glass products, metal products, shoes, textile, etc. with colour print or plain. ■ Paper boxes products. The company produces packages of corrugated box made of crafted and recycled papers with white and brown cover for the food industry, glass industry, shoe making industry, textile industry, etc. The corrugated boxes are for retail clients and transportation, which are produced with different colour prints and structures, according to clients’ specifications. Actual & Projected RevenuesS(€amleillsio,n)€&mEBITDA* (%), 2015 – 2021F Revenue by Revenue by stream 6.0 € 5% 5.0 € 16% 4.0 € 3.0 € Products Goods Services 2.0 € 4.0 18.1 79% 1.0 € -€ 2019 2020 2021 2018 5

Key Highlights stablished packaging company in in SEE region ❑ Packaging manufacturer based in Bulgaria • Newly built production facilities (2017) • New machinery and equipment from top industry European equipment suppliers • Production capacity 15 million m² corrugated paper per shift per annum • Velpa production site covers 4,200 m2, office area 1,150 m², and TBA 5,630 m², on a plot of 7,000 m², ❑ Production site well-positioned for rapid growth • Production capacity utilization is 21%. • Without additional investment in CAPEX production output can be extended 4 – 5 folds. • Factory expansion secured by additional plot of 2,200 m² adjacent to the factory. ❑ Strategic location • Strategically located 70 km west from Varna, Bulgaria. • Strategically located in food production area of North Bulgaria, close to various sectors producers and close to multi million retail market with catchment area of 22+ million people • Well connected with transportation infrastructure with 4 international see ports (Varna, Burgas, Balchik, Constanta), and 1 river international port (Rouse). ❑ Growing company with an in-depth industry know-how • The Company has implemented a state-of-the-art manufacturing process according international standards. • In-house design departments with dedicated teams of specialists. • Experienced and dedicated management team with a demonstrated ability to successfully manage packaging businesses. 6

Section 2 Velpa | The Group

Two sister companies – vertical integration Key points Velpa Velpa Pack Corrugated paper Paper packaging producer producer The biggest corrugated paper manufacturer in North-East Current product portfolio Bulgaria • Carton box products • Transportation packaging boxes  15m m² annual capacity of corrugated paper when 1 shift is Clients base by geographic employed (2019) • Bulgaria • Romania (Bucharest) 2017 double layer corrugated paper is introduced • Turkey (Istanbul) 2018 triple layer corrugated paper is introduced 2018 printing facility with 7 colours and pre-print technology, was introduced on the Bulgarian market.  59.9% paper output growth (2019, YoY) 6

Biggest capacity in North-East Bulgaria €2.3m Key points Revenue 2019 59.9% Paper output growth, 2019 30 clients 3 Countries The biggest corrugated paper manufacturer in North- Current product portfolio East Bulgaria • Carton box products • Corrugated paper  15m m² annual capacity of corrugated paper when 1 shift is • Transportation packaging boxes employed (2019) Potential fast growth: • Current utilization is 21% | no CapEX is necessary for a 2017 new production facilities were built  €2.3m in revenues from sales (2019) quick sales growth  59.9% paper output growth (2019) • Additional plot of land is purchased adjacent to the factory • GDP is growing faster then EU average Domestic ownership  Velpa Ltd. is 100% owned by Velpa Pack Ltd. 7

Production Facilities (1) Modern technological production site Strategic Location in Bulgaria Manufacturing facilities  Velpa manufacturing facilities are situated in the town of Kaspichan, 22 km east from city of Shumen and 70 km. from city of Varna.  The factory covers 5,058 m2 production facilities: ■ Manufacturing facilities: 4,192 m². ■ Office space: 1,152 m². ■ Service facilities: 288 m². ■ Total built-up area (TBA): 5,634 m² . ■ Plot area: 7,000 m².  A new factory was built in 2017-2018.  New production equipment has been installed.  Production capacity has been increased substantially 8

Production Facilities (2) Factory Layout Strategic Location in Bulgaria 9

Production Facilities (3) Factory Strategic Location in Bulgaria Velpa production operations include: • Production of double layer corrugated paper • Production of triple layer corrugated paper • Printing facility with “pre-print” technology • Carton and paper box and packages facility 10

Section 3 Velpa | Equipment

Production Equipment (1) Equipment Strategic Location in Bulgaria Modern machinery and equipment from prominent European industry suppliers have been purchased which allows the company to produce a high-quality products, enlarge production capacity, and satisfy clients needs. 12

Production Equipment (2) Equipment Carton box mSactrhainteeg–icSLtooccka, tGioenrminanByulgaria Die-cutting machine BOBST SPERIA 106 E Specifications Processed materials Productivity: up to 8 000 units/hour Paper 80 g/m2 Carton board 2000 g/m2 Corrugated board 4 mm max max Capability min Sheet size 350 x 400 mm max Speed 740 x 1060 mm 8000 s/h 13

Production Equipment (3) Equipment Strategic Location in Bulgaria Modern machinery and equipment from prominent European industry suppliers have been purchased which allows the company to produce a high-quality products, enlarge production capacity, and satisfy clients needs. 14

Production Equipment (4) SFolding-gluing machine ocation in Bulgaria Equipment Die-cutting machine BOBST EXPERTCUT 1.6 AUTOPLATEN tegic Location in Bulgaria Specifications 80 g/m2 max Specifications 800 g/m2 min Processed materials 2000 g/m2 max Folded materials 12 mm max Paper 4 mm Carton board Carton board min Folded box thickness N; F; E; B min Corrugated board 350 x 400 max Corrugated board max Capability mm box 126 mm min 740 x 1060 Sheet size 1100 mm max Sheet size mm 8000 s/h Open box width 60 mm Speed 800 mm Open box length 15

Production Equipment (5) Equipment Strategic Location in Bulgaria Modern machinery and equipment from prominent European industry suppliers have been purchased which allows the company to produce a high-quality products, enlarge production capacity, and satisfy clients needs. 16

Production Equipment (6) Equipment Double layer corrugated board machine Specifications B, E Processed materials 80-250 gr/m² Corrugated flute type Paper weight N; F; E; B Corrugated flute type 1650 mm Sheet size 125 m/min. Speed 36 000 s/h Capacity Produced 2015 Triple layer corrugated board machine Specifications B, E, F Processed materials Corrugated flute type 2500 mm Paper weight 300 m/min. Sheet size 36 000 s/h Speed Capacity 2015 Produced 17

Production Equipment (7) Equipment Strategic Location in Bulgaria Modern machinery and equipment from prominent European industry suppliers have been purchased which allows the company to produce a high-quality products, enlarge production capacity, and satisfy clients needs. 18

Production Equipment (8) Equipment Flexo-post priSnttrinagtemgiaccLhionceation in Bulgaria Specifications 1400 mm Processed materials 200 m/min. Corrugated board Paper weight 2017 Corrugated board box Width (max) Speed Produced 19

Production Equipment (9) Production capacity Two layer cSotrrrauteggaitceLdopcaatpioenr in Bulgaria m m² Annual capacity after maintenance 7,200,000 5,760,000 Annual production capacity @ 1 shift 14,400,000 11,520,000 Annual production capacity @ 2 shift 28,800,000 17,280,000 Annual production capacity @ 3 shift m m² Three layer corrugated paper 9,000,000 9,000,000 Annual capacity after maintenance 18,000,000 18,000,000 Annual production capacity @ 1 shift 27,000,000 27,000,000 Annual production capacity @ 2 shift Annual production capacity @ 3 shift m m² 16,200,000 14,760,000 Total 32,400,000 29,520,000 Annual capacity after maintenance 55,800,000 44,280,000 Annual production capacity @ 1 shift Annual production capacity @ 2 shift 20 Annual production capacity @ 3 shift

Section 4 Velpa | Operations

Product Portfolio Carton boxes products Corrugated paper Transportation packaging boxes LED Packages Bulbs 22

Revenue Customer Portfolio by end-use sector, 2019 14,760,000 Annual capacity (m²) Customers by end-use sector, 2019 68% 19% 8% 30 clients 0.75 Average corrugated (2019) paper sale price (€/m²) of revenues of revenues of revenues 59.9 Pape output #1 #2 #3 growth, YoY (%) Glassware Paper Food SRteravteenguice Lboyceantdio-unsien sBeucltgoarr,ia2019 Paper output (m) 5.0% 7,000,000 6,079,184 8.3% 6,000,000 5,000,000 2019 19.0% Glassware Paper output, m 4,000,000 3,801,020 23 Paper 3,000,000 Food 2,000,000 3,418,383 Others 1,000,000 67.6% - 2017 2018

Geographic Footprint Catchment area Strategic Location in Bulgaria Velpa Ltd Strategically located in well developed food production region within reach of 2 capital cities and European part of Turkey  Velpa manufacturing facilities are situated: • 69 km northwest from Varna • 125 km from Ruse • 213 km from Bucharest (Romania) • 190 km from Constantsa (Romania) • 376 km from Sofia • 305 km from Plovdiv • 140 from Burgas • 258 km from Edirne (Turkey) • 470 km from Istanbul (Turkey)  Catchment area of 22+ million people in the big cities  Catchment area within 100 km is 1+ million people.  Well connected with transportation infrastructure with 4 international see ports (Varna, Burgas, Balchik, Constanta), and 1 river international port (Rouse). 24

Selected Partners (1) 25

Selected Partners (2) 26

Certificates Certified by TUV NORD GmbH Certificates  Quality management system – ISO 9001:2015  Forest Stewardship Counsel (FSC) – Responsible management system  Environmental management system – ISO 14001:2015  Energy management system – ISO 50001:2011 27

Customers | Suppliers Top 10 Customers by Revenue (%) Top 10 Customers & Suppliers 2%2%2%2%2% 6% % Customer 1 4% 6% Customer 2 Top 10 customers 5% Customer 3  Dependency on key customers in terms of revenue is shown on the right pie 62% Customer 4 50% Customer 5 chart. Customer 6  The top 10 customers contribute to 94% of the total revenues of Velpa for 6% Customer 7 2018. Customer 8  Top 1 customer generates 62% of the total revenues for the period. 8% Customer 9  Top 5 customers account jointly for 86% of total revenues for the period. Customer 10 Others Top 10 suppliers  Dependency on key suppliers in terms of material cost is shown on the right Top 10 Suppliers by Material Costs (%) pie chart. 11% Supplier 1  The top 10 suppliers contribute to 52.5% of the total material costs of Supplier 2 Velpa for the period.  Top 1 supplier generates 11.1% of the total material costs for the period. 8% Supplier 3  Top 5 suppliers account jointly for 35.8% of total material costs for the period. Supplier 4 Payment & Delivery Terms 48% 6% Supplier 5 Payment & delivery terms Supplier 6  Payment terms for customers are standard: 30 days  Payment terms increase option* 6% Supplier 7  Delivery terms for customers vary: 15 – 30 days *Under certain scenarios payment terms can be increased: approval by factor, 5% Supplier 8 substantial monthly requiring revenues on long term basis Supplier 9 4% Supplier 10 4% Ot he rs 2%3% 3% 28

Human Resources Headcount Breakdown by Departments, 2018 Headcount Breakdown Production 2018 Labor force by department 72% Production department 31 36% 7% 1 10 14 53 59% employees 24 35 Headcount Rebalancing, 2011 – 2016 General labour Operators Forklift operator Headcount Development, 2011 – 2016 Production Administration Security Cleaning 29

Management CEO Procurator Operations Manager Financial Marketing Production Manager Manager Manager Chief Business Accountant Development Manager

Contact details For further questions please contact us at: CEO CEO Mr. Yavor Kovachev Mr. Ercan Iliyazov Market Manager Business Development Manager Velpa Chief Technology Business Velpa Email: [email protected] Officer Tel: +359 889 922 197 Development Email: [email protected] Director Tel: +359 889 393 150 With support of VHM Capital Investment banking boutique M&A | Fundraising | Asset Management | Investment Advisory Bulgaria | Finland | Spain 31