AUGA group

Quarterly Report • Mar 4, 2020

FINANCIAL RESULTS FOR THE 12 MONTHS PERIOD ENDED 31 DECEMBER 2019

PRESENTING

2

Kęstutis Juščius CEO

Eimantas Gudonis Head of Finance Department

FINANCIAL RESULTS

FINANCIAL RESULTS
EUR'million	2018	2019	Variance
Revenue	54.7	71.1	16.4	Revenue increased by 30%;
Gross profit	3.7	11.9	8.2
EBITDA* (before IFRS16)	3.5	11.0	7.5
EBITDA** (after IFRS16)	n/a	17.1	-	EBITDA increased by 214%;
Net profit (before IFRS16)	(5.9)	(2.0)	3.9	Net loss reduced by 66%;
Net profit (after IFRS16)	n/a	(3.0)	-
Net debt (before IFRS16)	53.6	55.2	1.6	Net debt increased by 3%;
Net debt (after IFRS16)	n/a	90.1	-	Implementation of IFRS16
Net financial debt (before IFRS16) - adjusted working capital***	15.9	14.4	(1.5)	affected the net debt by EUR 35.0 million;
EBITDA (before IFRS16) = net cash flow from paid, as it is disclosed in the cash flow statement, excluding the impact of IFRS 16 implemented since * EBITDA = net cash flow from operating activities disclosed in cash flow statement, including gain of IFRS 16 implemented since January 1, 2019.	operating activities before including gain (loss) January 1, 2019. before changes in (loss) on changes in fair	changes in working on changes in fair value working capital and net value of biological assets	capital and net interest of biological assets interest paid, as it is excluding the impact	capital decreased by 9%.
*** Adjusted working capital = Current biological Inventory – Trade payables – Other payables and and financing elements, allowing the reader to see of the Group are being utilized.	assets + Trade receivables, current liabilities. The how the short-term assets	advance payments adjusted working capital and liabilities directly	and other receivables + formula eliminates cash related to operations

• Revenue increased by 30%;
• Gross profit increased by 221%;
• EBITDA increased by 214%;
• Net loss reduced by 66%;
• Net debt increased by 3%;
• Implementation of IFRS16 affected the net debt by EUR 35.0 million; Net debt – adjusted working
• capital decreased by 9%.

COMPANY MOVES TO LONG-TERM FINANCING

• In Q4 2019, the Company issued 20.000 6% 5Y green bonds with nominal value of EUR 1.000. Total financing received (after discounts and issuerelated expenses) was EUR 18.523 thousand;
• Part of the financing was used to refinance existing long-term and short-term borrowings;
• The company's expansion since 2016 required an additional working capital financing which was done tapping into credit-line facilities;
• Long-term goal of the company is to refinance part of credit-line facilities with long-term financing.

LEASE LIABILITIES INCREASED DUE TO IFRS16

The Group's leases consisted of the following:

LEASE LIABILITIES INCREASED DUE TO IFRS16
The Group's leases consisted of the following:	As at 31 December 2018	As at 31 December 2019
Long-term lease liabilities
Lease liabilities related to right-of-use	-	30,847	standard;
assets Lease liabilities related to other assets*	7,889	5,303
Total long-term lease liabilities	7,889	36,150
Short-term Lease liabilities
Lease liabilities related to right-of-use	-	4,113	3.26 million.
assets Lease liabilities related to other assets*	3,618	2,942
Total short-term lease liabilities	3,618	7,054
Total lease liabilities	11,507	43,205

• 30,847 In 2019, total lease liabilities increased due to the introduction of a new IFRS16 standard;
  • The Company reduced the lease liabilities to financial institutions by EUR 3.26 million.

HARVEST IN THE SEASON OF 2018/2019

NOTE: The data on LT organic

farms in 2019 has not yet been published. Reference: Lithuanian Statistics Department, data of the survey of the activities of Lithuanian agricultural producers included in the Farm Accountancy Data Network (FADN), the Group's data. 2,0 2,1 1,4 1,7

-

- Average wheat yield was 4.2 t/ha in 2018/2019 season compared to 2.8 t/ha in 2017/2018 and 4.1 t/ha in 2016/2017. The Group believes that the wheat yield potential this season was around 15% higher were weather Average legumes yield was only 1.7 t/ha in 2018/2019 season. It was slightly better than in 2018, but significantly lower than in 2017. Although, results from legumes were disappointing for two years in a row the Group constantly improves the technologies used in growing these crops and believes that upside yield potential is very significant were weather conditions closer to the seasonal averages; As can be drawn from the data presented, the Group average wheat and legumes yields are approximating the average yields achieved on non-organic farms in Lithuania. These are related to the annual technology improvements, the experience gained in organic farming, and refined land cultivation and land quality.

SUMMARY ON CROP PRICES, COSTS AND PROFIT (LOSS)

				SUMMARY ON CROP PRICES, COSTS AND PROFIT (LOSS)
Average price of 1 tonne of crop, eliminating sales costs, EUR	2018/2019	2017/2018	Comparison, %	prices;
Wheat	243	256	-5%
Legumes	357	371	-4%
Other cash-crops	181	221	-18%
Cost per 1 ha cultivated land, EUR	2018/2019	2017/2018	Comparison, %	by around 4%;

				SUMMARY ON CROP PRICES, COSTS AND PROFIT (LOSS)
Average price of 1 tonne of crop,				prices;
Legumes	357	371	-4%
Other cash-crops	181	221	-18%
Cost per 1 ha cultivated land, EUR	2018/2019	2017/2018	Comparison, %	by around 4%;
Wheat	884	881	0%
Legumes	792	790	0%	higher yield compared to 2018;
Other cash-crops	1,176	1,038	13%
				draught and a hot summer;
Gain (loss) on revaluation of agricultural produce at point of harvest, EUR/ha	2018/2019	2017/2018	Comparison, %

Average price of 1 tonne of crop,				prices;
Cost per 1 ha cultivated land,				by around 4%;
				higher yield compared to 2018;
Other cash-crops	1,176	1,038	13%	draught and a hot summer;
Gain (loss) on revaluation of agricultural produce at point of harvest, EUR/ha	2018/2019	2017/2018	Comparison, %
Wheat	217	-157	238%
Legumes	-195	-268	73%	conditions be more favorable.
Other cash-crops	324	90	360%	yield and different crop-mix.
				Gross profit of crop growing segment, including the result of sales of agricultural produce, gain (loss) on changes in fair value of biological assets and agricultural subsidies, amounted to EUR 11.32 million in 2019 compared to EUR 4.29 million the year earlier.

• Average sales price of wheat and legumes decreased in line with the decline in the market prices;
• Average sales price of other cash-crops was mainly impacted by the different crop-mix (proportion of lower price crops increased);
• The adoption of IFRS16 in 2019 had a positive impact on the costs, by around 28 eur/ha. By eliminating this effect, the costs would increase by around 4%;
• Gain on wheat mostly increased due to the 48% higher yield compared to 2018;
• Legumes remain in loss due to the unusual draught and a hot summer;
• The Group put a continuous effort in improving the technology used for growing legumes; in the belief, that the upside yield potential is very significant for these crops should weather conditions be more favorable.
• Gain on other cash-crops increased due to better yield and different crop-mix.

Gross profit of crop growing segment, including the result of sales of agricultural produce, gain (loss) on changes in fair value of biological assets and agricultural subsidies, amounted to EUR 11.32 million in 2019 compared to EUR 4.29 million the year earlier.

MILD WINTER SETS A POSITIVE OUTLOOK ON THE 2019/2020 SEASON

• Weather conditions in the autumn of 2019 were favorable for sowing and other preparatory land works for the season of 2019/2020. As a result, the seeding of winter crops and land preparation works were completed on time.
• During the autumn of 2019, the Group had sown around 14.5 thousand ha of winter crops, which represent around a half of the total cash crops area to be planted in the season of 2019/2020. In comparison, the season of 2018/2019 saw around 15.6 thousand of winter cash crops sown.
• Favorable 2019 autumn weather also allowed for proper cultivation of the land and preparation for summer crop sowing in the spring of 2020.
• Mild winter positively impacted winter crops, their condition before spring is better compared with the average of our climate zone.
• As a result, the Group is well prepared for the season of 2019/2020 and remains positive about next year harvest potential.

Winter cash crops area share in total cash crops area

STABLE BUSINESS AND INCREASING SHARE OF ORGANIC MUSHROOMS 12 months The total volume of mushrooms sold remain

MUSHROOMS		12 months	12 months
		2019	2018
Total mushrooms sold, tons		12,256 11,335	12,147
Non-organic mushrooms, tons			11,271	stable;
	Organic mushrooms, tons	921	876
Total revenues from mushroom sales, EUR'000		26,319	23,875
Non-organic mushrooms, EUR'000			21,296
	Organic mushrooms, EUR'000	2,710	2,579
Total cost of mushrooms sold, EUR'000		(23,733)	(22,331)
Non-organic mushrooms, EUR'000 (21,808)			(20,720)
Total revenues from sales of mushroom seedbed, EUR'000	Organic mushrooms, EUR'000	(1,925) 2,388	(1,611) 2,581
Total cost of sales of mushroom seedbed, EUR'000		(2,488)	(2,400)
Gross profit of mushroom growing segment, EUR'000	2,486	1,725
	12 months 12 2019	months 2018	Change, 2019/2018
Average price of sold mushrooms, EUR/ton	2,147	1,966	9%
Non-organic mushrooms, EUR/ton	2,083	1,889	10%
Organic mushrooms, EUR/ton	2,943	2,944	0%
Average cost of sold mushrooms, EUR/ton	1,936	1,838	5%
Non-organic mushrooms, EUR/ton	1,924	1,838	5%
Organic mushrooms, EUR/ton	2,091	1,839	14%

• 2018 stable;
  -
• The sales volume of organic mushrooms increased by 5%; Price of non-organic mushrooms increased by 10% since the share of fresh mushrooms (which has a higher price) increased compared

2019/2018 Organic mushrooms, EUR/ton 2,943 2,944 0% Average cost of sold mushrooms, EUR/ton 1,936 1,838 5% to mushrooms sold to processors. The gain in the average cost of sales for mushrooms is mostly related to the increase of the proportion of sales of fresh mushrooms with packaging (the cost and sales price of packaged mushrooms is higher than the ones sold in the reusable containers).

12 months 12 months DAIRY MARKS BETTER YIELDS AND HIGHER SHARE OF ORGANIC IN SALES Sales volume increased due to better milk yields per cow, which stand for 19.7 kg per cow a day in 2019 vs 18.4 kg in 2018 (marking an 8% increase); Share of milk sold with organic price premium increased from 46% in 2018 to 74% in 2019;

DAIRY MARKS BETTER YIELDS AND HIGHER SHARE OF
ORGANIC IN SALES
		12 months	12 months
		2019	2018
Total sales volume, tons		25,224	23,397
Non-organic	milk, tons	6,425	12,245
	Organic milk, tons	18,067	10,389
	Cattle, tons	732	763
Total revenues of diary segment, EUR'000		10,138	8,954
Non-organic	milk, EUR'000	2,051	3,882
	Organic milk, EUR'000 Cattle, EUR'000	7,371 716	4,246 827
Total cost of of diary segment, EUR'000		10,641	10,261
	Milk, EUR'000	9,925	9,434
	Cattle, EUR'000	716	827
Revaluation of biological assets, EUR'000		(2,199)	(1,813)
Total subsidies, EUR'000		774	698
Gross profit of diary segment, EUR'000		(1,928)	(2,422)
12	months	12 months	Change,
	2019	2018	2019/2018
Average price of milk sold, EUR/ton	385	359	7%
Average price of non-organic milk, EUR/ton	319	317	1%
Average price of organic milk, EUR/ton	408	409	(0%)
Average price of cattle, EUR/ton	978	1,084	(10%)
Average cost of milk sold, EUR/ton	405	417	(3%)
Average cost of cattle, EUR/ton	978	1,084	(10%)

		Change,
2019	2018

2019/2018 In line with the earlier periods, the Group is aiming to have a more diversified client portfolio to be able to deliver more stable organic milk sales and to further increase the share of the category in total milk sales. The Group is still in the process of certifying its organic milk production to meet the Chinese organic farming requirements. These certificates will expand the potential to sell all produced milk with organic price premium. The certification project is getting behind the schedule, but the Group plans to complete the certification during the second quarter of 2020.

END-CONSUMER PACKAGED GOODS

WITH NEW MARKETS THE SALES ARE FURTHER EXPANDING 12 months 2018 12 months 2019

			WITH NEW MARKETS THE SALES ARE FURTHER EXPANDING
	12 months 2018 12	months 2019
Total revenue from end-consumer products, EUR'000	1,864	2,798
Total cost of end-consumer products, EUR'000	(1,793)	(2,752)
Gross profit of other segments, EUR'000	71	45
Revenues structure from end consumer goods 2019 12M,%	Revenue changes, y-o-y
8% 5%	+50%	2798

• 2798 Total revenues of end-consumer packaged goods segment increased by 50%; The USA market was opened at the end of third quarter in 2019 and the first orders had already been delivered. The Group is also in the process of negotiations with several major retailers in the USA and other major countries. Preserved products, especially ready-to-eat organic soups, remain the main export product in the segment.
• 1831

STRUCTURE OF OPERATING EXPENSES

14 000

reasons:

Operating expenses increased due the 3 main thousand);

1) Fines and late payments (EUR 1.319 thousand higher than previous period); 2) Payroll and social security expenses (EUR 499

Impairment of adcounts receivable Depreciation of property, plant and 3) Amortization of share-based payments (EUR 247 thousand). By eliminating one-off effects (fines and sanctions) and non-cash expenses (depreciation, impairments etc.) from the both periods, the Group managed to stay on the similar OPEX level (EUR 8.209 thousand in 2019 vs. EUR 8.359 thousand in 2018).

Thank you!

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