AUGA group, AB December, 2019 Europe’s la larg rgest st org rganic nic fo food pro roducer cer fr from m fi field ld to shelf lf 1
EXECUTI ECUTIVE VE SUMMARY ARY The largest vertically-integrated organic agriculture company in Europe. • EUR 55 m revenue, 38 thousand ha of land under management. • All processes controlled from seed to final product, developing and applying • Overview sustainable technologies in farming and food production. Shares are listed on Nasdaq Vilnius (ticker: AUG1L) and Warsaw Stock Exchange. • Large scale organic supply from one source with full traceability. • Wide range of organic commodities and end-consumer products. • Key Management of the whole value chain. strengths • Certified: EU Organic, USDA, BRC, Kosher, Global GAP. • Focus on only organic and sustainable food production. • Achieving efficiency by utilising scale of operations, synergies among different • agricultural sectors and applying the latest scientific knowledge to improve all Strategy production processes. Growing share of high value-added end-consumer products using in-house and • contracted manufacturing, with full process control from field to shelf. Bonds will be secured with real estate (land). • Investment Yield reflects a new instrument / maiden bond programme. • Opportunity Company has applied for formal green bond status (second opinion). • 2
COMPANY HIGHLIGHTS AUGA group, AB, headquartered in Vilnius, Lithuania, unites 136 companies which undertake agricultural, food production and processing, supply chain and administrative activities in the following segments: Crop growing Dairy farming Mushroom growing End-consumer products 3
TRANSFORMATION MILESTONES 2015 2015 2014 2014 2016 2016 2017 2017 2018 2018 2019 2019 Merger r of Agrowill ill Start rt of organic ic 2nd transit sitio ion n year Fully y certif ified Successful ssful SPO on New management nt model Group up and Balt ltic ic farm rmin ing New compan pany y name organic nic farm rming ing NASDAQ DAQ Champs ps AUGA A group Acquisition of KTG Acquisition of Raseiniu Agra Agrar Expansion of product New era begins for the Launch of organic Launch of organic Launch of organic Sales growth of range and company, mushrooms packaged vegetables soups, milk and grain branded end- export markets new main shareholder products consumer products 4
OPERATIONAL ASSETS AUGA group gains efficiency of returns through leasing of land rather than low returns as an owner, operating in the most fertile areas of Lithuania. Location of main AUGA farms and land quality in L Lithuania Currently, 9.1% of land is owned, the rest is managed on the basis of long-term lease agreements. Managed land, thousand ha Organic Transitional Conventional Land quality points 60 - 100 50 - 60 1 7,5 45 - 50 4 40 - 45 35 - 40 1,6 30 - 35 37,6 25 - 30 30,7 29 15 - 25 25 23,4 1 - 15 2015 2016 2017 2018 2019 Source: https://www.vzf.lt/?naujienos=atnaujinti-zemes-nasumo-vertinimo-erdviniai-duomenys 5
REVENUE VENUE TRANS NSFORMAT FORMATIO ION Main revenue stream is currently generated by three segments: mushrooms, crop growing and dairy. The new (since 2016) end-user product segment is strategically important and the fastest growing. Year 2018 2018 Year 2013 2013 4% 16% Dairy Dairy 36% s Mu Mush shro room * 32% EUR 23.9 m EUR 54.7 m Crops Cro ps 64% End-c End-consum nsumer 48% * Mushroom growing segment is reported separately due to its size and importance. Although majority of mushrooms are sold as end-consumer packaged goods it is not included in the End-Consumer segment financial reports. 6
SHORT SUPPLY CHAIN The Group’s ability to accumulate large volume s of organic commodities allows to employ in-house and contract manufacturing model for various products to ensure traceability and to control the whole value chain from field to shelf. CONTRO NTROLLE LED AN AND ENSURE SURED TRACEA ACEABILITY LITY OF PRODUCTI UCTION ON CHAI AIN N Retaile lers rs Wholesalers esalers ORGANIC IC END END- CONSUME SUMER R PROD ODUC UCTS TS Consum umers rs OWN/CO CONTRA TRACTED CTED OWN RAW PROCE CESS SSING ING MATE TERI RIALS Farmers rs ORGANIC NIC CO COMMO MODITI TIES Trade ders rs Processo ssors rs 7
AUGA GROUP’S EXPORT MARKETS 2018 sales s geogr graphy 22% 78% Lithuania Export (incl. traders) Contracts with major retail chains: 8
ORGANIC WORLD In 10 years consumers have more than tripled their consumption of organic products and demand continues to grow. CAGR of organic food market in the EU was 9.8% from 2004 to 2017, in USA 11.2% from 2004 to 2018. In 2017, global organic sales reached EUR 92 bn (EUR 37.3 bn in Europe, EUR 43.3 bn in USA). Most European markets continued double-digit growth in 2017: France (18.0%), Denmark (15.0%), Spain (16.4%), Austria (11.7%). Organic c food d produ ducts cts retail sales, s, EUR bn By country try in 2017, EUR bn bn Europe USA DE (2018) 10,9 43,8 FR 7,9 34,3 IT 3,1 CH 10,2 2,4 8,9 SE 2,3 2004 2006 2008 2010 2012 2014 2016 2018 Sources: https://www.organic-world.net/yearbook/yearbook-2019.html ; https://statistics.fibl.org/world/retail-sales-world.html?tx_statisticdata_pi1%5Bcontroller%5D=Element2Item&cHash=35a0fcd89ae099d2ff14fe1ddb38a1aa ; 9 https://ota.com/news/press-releases/20699
ORGANIC RETAIL SALES VS. FARMLAND IN EUROPE Retail sales of organic products grow faster than their supply capacity (farmland). In 2017, European organic farmland area increased by 7.6%, while sales grew by 10.5%. Organic certifi fied ed land area and retail sales s in E Europe pe Sales Area Source: http://www.ifoam-eu.org/en/organic-europe ; http://www.organic-europe.net ; https://www.organic-world.net/yearbook/yearbook-2019.html 10
ORGANIC VS. CONVENTIONAL PRICES Prices of organic products are twice as high and less volatile compared to conventional. Germany, the largest EU market, is a benchmark for major organic products prices. Organic c vs Conven venti tional onal raw milk price in Organic c vs Conven venti tional onal wheat price in Lithuania and Germany, EUR/100 00 kg Germany, , EUR/t 60 500 50 400 40 300 30 200 20 100 10 0 0 January April July October January April July October January April July October January April July October January April July October January April July October January April July Janurary April July October Janurary April July October Janurary April July October Janurary April July October January April July October January April 2013 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Organic milling wheat Organic feed wheat Germany organic milk Germany conventional milk Conventional milling wheat Conventional feed wheat Lithuania organic milk Lithuania conventional milk 11 Source: www.ami-informiert.de , http://www.stat.gov.lt/; https://www.bmel-statistik.de/
CONSUME ONSUMER BEHAVIO HAVIOR R AR ARE CHANGIN HANGING Extrem emel ely or ve very impo porta tant that at com ompan panies ies Wou ould ld chan hange ge consum onsumption ption habit bits to reduc duce implem plemen ent t progr gram ams to improve prove the envir ironm onmen ent t impac pact envir ironm onmen ent 75% 75% 83% 83% 66% 66% 62% 62% 46% 46% 34% 34% Gen Y, en Y, 21-3 1-34 Gen X, 35- en X, 35-49 49 50-64 50- 64 Gen Y, en Y, 21-3 1-34 Gen en X, 35 X, 35-49 49 50- 50-64 64 12 Source: https://www.nielsen.com/us/en/insights/article/2018/was-2018-the-year-of-the-influential-sustainable-consumer/
FO FOCU CUS S ON ON SUSTAI TAINABILITY ABILITY AUGA group is committed to the development of sustainable agriculture and does more than required by EU organic regulations. The following practices are employed: Min-till till tec echn hnolog ogy Closed ed-loo oop p organic c farming g model Certifi fied ed green en energy gy developed by the group aims to achieve is used in all of production applied on 85% of cultivated agricultural land preserves soil synergies among different branches of and administrative facilities, from erosion, saves agriculture and the re-use of organic in part produced by the waste. Farming activities, such as crop group’s companies biodiversity and reduces fuel consumption, resulting in lower growing, dairy farming and mushroom themselves from renewable GHG emissions. growing supplement each other. energy sources. MIN-TILL GRE REEN EN EN ENER ERGY For more information, click here to view annual Sustainability Reports of AUGA group. 13
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