Kęstutis Juščius 2016 05 03
2015: start of major transformation AB Agrowill Group is one of the largest organic farming and investment groups in Europe developing unique sustainable farming model. Agrowill Group uses and creates new generation technologies to produce environmentally friendly production. Started transition to fully organic agriculture and dairy farming Completed company restructuring Renegotiated bank financing Dairy Farming Crop Growing Mushroom Growing Milk Wheat and other crops Vegetables Feeds for dairy Champignons Other exotic mushrooms Compost 2
Improving financial results In million EUR Earnings EBITDA 52% 13% 10.8 42.0 47.4 7.1 2014 2015 * 2014 2015 * * unaudited annual report 3
EBITDA growth drivers In million EUR 4.0-0.2 10.8 7.1-2.2 2.2-0.07 Y2014 EBITDA Dairy farming Crop growing Mushrooms growing Subsidies Other Y2015 EBITDA 2014 EBITDA 2015 * Negative dairy farming effect was compensated by improved crop growing results and subsidies. * unaudited annual report 4
Renegotiated bank financing 15.6 Previous schedule New schedule Excluding Land fund liabilities In million EUR 14.2 8.1 7.9 8.7 8.1 7.5 5.1 5.2 4.9 5.1 4.7 5.7 5.4 4.3 2016* 2017 2018 2019 Later * without renewable overdraft of 6.1 million EUR Company is now able to utilize financial resources for growth and innovations. 5
New vision and strategy TRANSITION From traditional farming to fully and only organic From commodity to final packaged product to more than organic producer Sustainable, socially responsible, aiming to become CO2 neutral through biogas extraction and utilization, new strong and meaningful brand. 6
Integrated organic food company Crop Growing Grain & grass for animal feed Manure for crops Dairy Farming Mushroom compost for crops Manure for compost Biogas for machinery Straws for mushroom compost Mushroom Growing Applying the latest scientific knowledge to improve all production processes in sustainable organic farming. 7
Route to market of final packaged products Supermarkets & retailers Own factories PRODUCTS Wholesalers OWN RAW MATERIALS Contract manufacturing 37,000 tons of milk 20,000 tons of grain Alternative channels Organic commodities 28,000 tons of vegetables 12,000 tons of mushrooms Estimated volume for 2018-2019 Wide range of organic food for end-user market using in-house and controlled contracted manufacturing. 8
Aiming to achieve C02 neutral farming Converting cow manure to biogas and using it for fuel is in line with sustainable farming principles, efficient and economically viable, provides climate benefit of 148% compared to fossil fuels. Livestock Biogas production Crops and vegetables Biogas upgrade Clean fuel for vehicles Organic digestate 18% increase in soil productivity* Agrowill Group would produce ~7,5 million m³ of biogas and reduce CO2 emissions around 35.000 t per annum. *Source: Ecofys Biofuels and food security Carlo Hamelinck, 2013, Report on analysis of sustainability performance for organic biogas plants : SUSTAINGAS 2014 9
Transformation milestones 2014 2015 2016 2017 2018 Merger of Agrowill Group and Baltic Champs Start of organic farming Launch of organic mushrooms 2nd transition year Launch of organic packaged vegetables Fully certified organic farming Launch of organic milk and grain products Integrated organic food company Sales growth of branded and PL end user products New technology for organic fertilization New technology for cultivation and weed control Loose cattle grazing New equipment for vegetable growing and processing EUR 7 MILLIONS INVESTED Prototyping and building new generation dairy farms Prototyping and building new poultry farms Combined feedstock production plant Organic seed preparation plant Biogas conversion, purification and liquefaction Biomethane fuel application for tractors Other R&D activities EUR 20 MILLIONS NEED FOR NEW CAPEX 10
Reason to believe Growth of organic markets WHY ORGANIC? Price gaps of organic vs. regular Consumer trends 11
Fast growth of organic product retail sales globally In billion EUR 31.7 26.2 CAGR: 11.2% CAGR: 8.2% 39% 11% 12% 11 9.8 12% 52%, 2014 2004 2006 2008 2010 2012 2014 Europe USA 2015 Source: http://www.fibl.org/en/media/media-archive/media-archive16/mm160210-european-organic-market.html, https://shop.fibl.org/fileadmin/documents/shop/1698-organic-world-2016.pdf 12
September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March Organic vs Conventional wheat price in Germany EUR/t 419 347 Organic products did not suffer price decline, contrary to conventional 147 142 2012 2013 2014 2015 2016 Source: www.ami-informiert.de, http://www.stat.gov.lt/ Organic milling wheat Conventional milling wheat Organic feed wheat Conventional feed wheat 13
January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March Organic vs Conventional raw milk price EUR/t 488 Organic milk price increased during the last 12 months while conventional product price continued to decline 316 268 204 Source: www.ami-informiert.de, http://www.stat.gov.lt/ 2013 2014 2015 2016 Germany organic milk Germany conventional milk Lithuania organic milk Lithuania coventional milk 14
Organic food is a mega consumer trend globally 80% believe they can improve their life by choosing healthier food 75% believe that today most of the food is not natural and not ecological Source: THE TRUTH ABOUT FOOD&WELLNESS. McCANN TRUTHS 2015. US, Canada, UK, Germany, France, Italy, Spain, Sweden, Holland, Croatia, Lithuania 62% would agree to ban the use of any pesticides and chemical fertilizers 75% agree that it is more important how the product was produced than who sells it Food quality is seen as major health factor (2 nd after physical activity). 15
Sweden is an example of future consumer today 80% Regularly buy eco certified products 39% growth of organic food market in 2015 30% forecasted annual growth of organic food market for the next 5 years 20% forecasted organic food market share of total food market by 2020 (6% currently) 38% of Swedish consumers are defined as LOHAS (Lifestyle Of Health And Sustainability) Source: KRAV market report 2016 16
Enjoy your healthy food every day 17