AUGA group

Investor Presentation • Mar 14, 2018

EUROPE'S BIGGEST ORGANIC FOOD PRODUCER FROM FIELD TO SHELF

AUGA GROUP AB MARCH 2018

DISCLAIMER

This document has been prepared jointly by AUGA Group AB ("Company") and AS LHV Pank ("LHV"), together called the "Parties", for informational purposes only. This document does not by any means constitute an offer or a solicitation, nor a recommendation to purchase or sell securities, commodities, currencies or other investments referred to herein. This document does not constitute independent investment advice. The document belongs to the Parties. The information contained in this document has been compiled from published sources which the Parties believe to be reliable and accurate and in good faith. The Parties are not responsible for any decisions taken by third parties on the information provided in this presentation. The information provided herein cannot be the basis for any subsequently concluded agreement.

Although carefully verified, the Parties make no representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability or suitability with respect to the information contained herein. Any reliance placed on such information is therefore strictly at the risk of the reader. In no event shall the Parties be liable for any loss or damage including direct, indirect, consequential loss or damage arising in connection with the use of the information contained herein. The Parties shall also assume no other obligations or liability of whatever nature in connection with this preliminary material, such as for example an obligation to ensure the offering and issue of any securities or an obligation to update this information should the underlying circumstances change, etc. No respective claims can be brought against any of the Parties in connection with the information contained herein.

This document contains forward-looking statements that are based on the Parties' expectations, estimates, projections and assumptions. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. Forward-looking statements are made and based on information available to the Parties on the date of this document. The Parties do not assume, and expressly disclaim, any obligation to update this information, nor do the Parties take any responsibility to guarantee any result predicted in this document to become actual.

The information of this presentation does not encompass all the information, disclosed by the Company and should be read together with the Company's publicly announced financial information. The financial data provided should be evaluated together with the financial statements. The data presented reflect the situation for a past periods of time and results for a past period are not reliable indicator of future performance. No investment decision shall be based on this preliminary material. In connection with a potential capital raising, should it take place, the Company will publish a prospectus according to applicable laws and regulations. In any case, investments into shares of the Company are associated with investment risk. The value of the Company's shares can both rise and fall, and the investor may recover less than invested or even lose the entire invested amount. Past financial results of the Company do not guarantee future performance.

AGENDA

• 1. Executive summary
• 1. Company highlights
• 1. Transformation to organic farming
• 1. Organic world
• 1. Corporate governance and share details
• 1. Company financials
• 1. Peers
• 1. Management notes
• 1. Relative pricing to peers (2017)
• 10.Appendices

Presented by

Kęstutis Juščius The chairman of the board

Linas Bulzgys Board member, CEO

EXECUTIVE SUMMARY

Investment opportunity	• • • •	Booming global organic market Healthy and sustainable food trends, driven by new consumer generation Unique company know-how and operational set-up Vertical integration backed by economies of scale
Strategy	• • •	Focus only on organic and sustainable food production Achieve efficiency by utilizing scale of operations, synergies among different agricultural sectors and applying latest scientific knowledge to improve all production processes Grow share of value-added end-consumer products using proprietary and contracted manufacturing, with full process control from field to shelf
Key strengths	• • • • •	Large scale organic supply from one source with full traceability Wide range of organic commodities and end-consumer products Certified with the EU Organic, USDA, BRC, Kosher, Global GAP Experienced and skilled management Strong R&D
Overview	• • •	With 38,000 ha under management, AUGA is the largest vertically integrated organic agriculture company in the EU AUGA controls all processes from seed to final product Considering equity capital injection for development of recent acquisitions and new investment projects: poultry, diary, biogas, other technologies.

COMPANY HIGHLIGHTS

• Main revenue stream is generated by 3 segments: mushrooms, agriculture (crops) and milk
• Gross profit mainly comes from agricultural business segment (around 90%)
• Company is export oriented; ca. 80% of sales are export
• End-consumer products comprise significant part of sales

Financial Overview

EURm	2015	2016	Unaudited 2017
Revenue	47.4	39.6	48.8
Revenue growth, % y-o-y	13.1	(16.4)	23.1
Gross profit	10.4	10.8	15.2
EBITDA	10.7	9.6	13.1
Net profit	5.6	2.1	4.7
Net debt	42.6	30.3	42.9

TRANSFORMATION MILESTONES

2014	2015	2016	2017	2018
Merger of Agrowill Group and Baltic Champs	Start of organic farming	2nd transition year	Fully certified organic farming Acquisition of KTG Agrar	Integrated organic food company Acquisition of Raseiniu Agra
New era begins for the company	Launch of organic mushrooms	Launch of organic packaged vegetables	Launch of organic milk and grain products	Sales growth of branded and PL end user products
Arrival of new controlling shareholder via Baltic Champs denotes strategic change in operational influence and direction	Already EUR 15m invested: New technology for organic ▪ ▪ fertilization ▪ New technology for ▪ ▪ cultivation and weed control ▪ Loose cattle grazing ▪ ▪ New equipment for vegetable ▪ ▪ growing and processing ▪ ▪ Prototyping poultry farms		New development projects: Expanding poultry farms Prototyping and building new generation dairy farms Combined feedstock production plant Organic seed preparation plant Biogas conversion and purification Biomethane fuel application for tractors Other R&D activities

INTEGRATED SUSTAINABLE FARMING MODEL

Synergy among different branches of agriculture with focus on sustainability.

SUSTAINABILITY AGENDA

• Planned projects to convert cow manure to biogas and use it for fuel
• Organic digestate from biogas production used as fertilizer can improve crop yield by 18%*
• In line with sustainable farming principles, efficient and economically viable, it can provide climate benefit of 148% compared to fossil fuels
• Already applying min till technology to improve land quality and preserve biodiversity
• Already purchasing only green electricity and utilizing in-house renewable energy plants (solar and wind)

Crops and vegetables

*Source: Ecofys "Biofuels and food security" Carlo Hamelinck, 2013, "Report on analysis of sustainability performance for organic biogas plants": SUSTAINGAS 2014

OPERATIONAL ASSETS

• Operating in the most fertile areas of Lithuania
• After acquisitions of KTG Agrar and Raseiniu Agra, the harvested land area expanded from 27k ha in 2017 to 38k ha in 2018
• 8.4% of land is owned, rest is managed on the basis of long term lease agreements
• In 2016, average cost of asset (land) in Lithuania was 3,340 EUR/ha, vs. 19,614 EUR/ha in Germany, 9,100 EUR/ha in Poland
• In 2016, land rent cost per year was on avg. 124 EUR/ha for AUGA group (125 EUR/ha in 2017), vs. Germany average 288 EUR/ha, Poland average 209.9 EUR/ha
• All AUGA land is certified organic. Due to recent acquisitions 18% of AUGA land is in P2 transition period, to be completed in 2019

PROVEN ACHIEVEMENTS: ABOVE AVERAGE YIELDS

3,50

Wheat yield, t/ha in Lithuania

3,30 Leguminous plants yield, t/ha in Lithuania

Source: Lithuanian institute of agrarian economics, AUGA group data

PROVEN ACHIEVEMENTS: AUGA ORGANIC POULTRY FARMS

AUGA PRODUCT PORTFOLIO

NEW PRODUCTS IN 2018

ROUTE TO MARKET

ORGANIC WORLD

• In 10 years, consumers have more than tripled their consumption of organic products, and demand continues to grow
• CAGR of organic market in EU 9% and US 11% from 2004 to 2016
• In 2016, global organic sales reached 90 billion US dollars (USD 43.3 bn US, EUR 33.5 bn Europe)
• Highest organic products consumption per capita is in Europe: Switzerland (EUR 262), Denmark (EUR 191), Sweden (EUR 177)
• Most European markets continued double-digit growth in 2016: France (22%), Denmark (14%), Norway (20%), Ireland (22%)

Source: http://www.ifoam-eu.org/en/organic-europe ; http://www.organic-europe.net ; http://www.organic-world.net/yearbook/yearbook-2018.html

15

ORGANIC RETAIL SALES VS. FARMLAND IN EUROPE

• Retail sales of organic products grow faster than their supply capacity (farmland)
• In 2016, European organic farmland area increased by 6.7%, while sales grew by 12%

Source:http://www.ifoam-eu.org/en/organic-europe ; http://www.organic-europe.net

ORGANIC VS. CONVENTIONAL PRICES

• Organic products prices are higher than conventional products and did not suffer price decline, contrary to conventional
• Germany, as largest EU market, is a benchmark for major organic products prices

ORGANIC FOOD IS A MEGA CONSUMER TREND

GAP BETWEEN THOSE THAT THINK HEALTHY ATTRIBUTES ARE IMPORTANT CONSUMER ATTITUDES TOWARDS FOOD** AND THEIR WILLINGNESS TO PAY PREMIUM FOR IT*

80%

believe they can improve their life by choosing healthier food

believe that today most of the food is not natural and not ecological

75%

would agree to ban the use of any pesticides and chemical fertilizers agree that it is more

62%

important how the product was produced than who sells it Source:

75%

* Nielsen Global Health and Wellness Survey 2014.

** The truth about health & wellness. McCann Truths 2015. US, Canada, UK, Germany, France, Italy, Spain, Sweden, Holland, Croatia, Lithuania

18

CORPORATE GOVERNANCE

Management board

Kęstutis Juščius The chairman of the board

The founder and the chairman of the board of UAB Baltic Champs Group

Linas Bulzgys Board member, CEO

CEO of AB AUGA group since 2015.

Marijus Bakas Board member

Head of Širvintai unit of UAB Baltic Champs

Linas Strėlis Independant board member

Board member of AB Vilkyškių Pieninė and AB Umega group.

Agnė Jonaitytė Board member

Attorney at law

Supervisory board

Vladas Lašas Chairman of the Supervisory Board

Doctor of technical sciences and the chairman of the supervisory board of AB AUGA group

Rimantas Rudzkis Member of the Supervisory Board

Liudas Navickas Member of the Supervisory Board

The investment advisor, consulting Domeina company.

SHAREHOLDER STRUCTURE AND LISTING DETAILS

• AUGA Group is currently dual-listed
• Admission to trading on the Baltic Secondary List of Nasdaq Vilnius Stock Exchange (AUG1L) from 2 April 2008
• Admission to trading on the Warsaw Stock Exchange (AUG) from 8 July 2011
• The company has intentions to move from the Baltic Secondary List to the Baltic Main List
• An increase in equity would allow for an increase in free float

INCOME STATEMENT

EUR'000	2015	2016	2017
Revenues	47,425	39,630	48,784
Cost of sales	-36,735	-27,985	-38,012
Gain (loss) on changes in fair value of biological assets	-289	-868	4,477
Gross profit	10,401	10,777	15,249
Operating expenses	-6,069	-7,014	-8,989
Revaluation of investment property	3,339	0	0
Other income	458	127	306
Operating profit	8,129	3,890	6,566
EBITDA	10,748	9,623	13,104
Finance cost	-2,001	-2,098	-1,908
Profit (loss) before income tax	6,128	1,792	4,658
Income tax expense	-569	353	83
Net profit (loss) for the year	5,559	2,145	4,741

2017 =unaudited

BALANCE SHEET

EUR'000	2015	2016	2017
Assets
Non -current assets
Property, plant and equipment	89,634	76,262	87,345
Biological assets	6,637	6,858	8,029
Other non -current assets	10,590	3,573	5,737
Total non -current assets	106,861	86,693	101,111
Current assets
Biological assets – crops	4,067	5,223	11,447
Inventory	8,856	15,157	26,369
Trade receivables, advance payments & other receivables	11,414	13,367	11,560
Cash and cash equivalents	4,068	1,650	623
Total current assets	28,405	35,397	49,999
Total assets	135,266	122,090	151,110
Equity and liabilities
Capital and reserves
Share capital and premium	62,241	62,241	55,089
Reserves	8,002	4,541	9,253
Retained earnings (accumulated deficit)	-1,434	5,163	16,967
Equity attributable to equity holders of the Company	68,809	71,945	81,309
Non -controlling interest	321	293	382
Shareholders equity, total	69,130	72,238	81,691
Non -current liabilities
Non -current financial debt	21,319	20,365	22,974
Grants	3,852	3,286	2,708
Deferred tax liability	2,820	433	811
Total non -current liabilities	27,991	24,084	26,493
Current liabilities
Current financial debt	25,359	11,625	20,581
Trade payables	8,473	8,796	15,494
Other payables and current liabilities	4,313	5,347	6,851
Total current liabilities	38,145	25,768	42,926
Total liabilities	66,136	49,852	69,419
Total equity and liabilities	135,266	122,090	151,110
			2017 =unaudited

CASHFLOW STATEMENT

EUR'000	2015	2016	2017
Cash flows from / (to) operating activities
Net profit (loss) before income tax	6,128	1,792	4,741
Adjustments for non -cash expense (income) items and other adjustments
Depreciation expense	6,177	6,058	6,804
Amortisation expense	151	50	0
Other adjustments	773	4,181	-1,940
Changes in working capital
(Increase) decrease in biological assets	1,419	-2,245	-2,004
(Increase) decrease in trade receivables and prepayments	-2,690	-1,289	6,013
(Increase) decrease in inventory	-65	-7,567	-11,273
(Decrease) increase in trade and other payables	-1,473	1,723	3,649
	10,420	2,703	5,990
Income tax paid	-735	0	0
Interest received, gross	50	48	0
Interest paid, gross	-1,676	-1,945	-1,908
Net cash flows from / (to) operating activities	8,059	806	4,082
Cash flows from / (to) investing activities
Purchase of property, plant and equipment	-4,198	-4,329	-9,027
Purchase of non -current intangible assets	- 2	-14	-198
Other investing activities	2,656	5,773	-1,973
Net cash flows from / (to) investing activities	-1,544	1,430	-11,199
Cash flows from / (to) financing activities
Loans repaid to banks	-12,768	-19,101	-7,381
Borrowings received	14,795	17,352	12,130
Other borrowings obtained (paid)	-4,521	-851	-1,399
Finance lease repayments	-851	-2,054	2,740
Other	-156	0	0
Net cash flows from / (to) financing activities	-3,501	-4,654	6,090
Net (decrease) / increase in cash and cash equivalents	3,014	-2,418	-1,027
Cash and cash equivalents at the beginning of the period	1,054	4,068	1,650
Cash and cash equivalents at the end of the period	4,068	1,650	623
			2017 =unaudited

Thank you!

Find out more at www.auga.lt More videos about AUGA at Youtube

APPENDIX 1: ANNOUNCEMENT AND PROCEEDS

AUGA group, AB seeks to raise up to EUR 20 million of additional share capital through a public offering by the middle of 2018

On January 22, 2018, AUGA group's, AB (the Company) Management Board decided to initiate the process of raising additional capital to finance business development of the Company through a public offering of the new issue of the Company's shares. The General Meeting is scheduled for March 28, 2018 for the purpose of adopting the respective decisions.

It is expected to raise up to EUR 20 million of additional share capital, which would be used to finance ongoing acquisitions and to invest in further business development.

In any case the public offering of shares of the company will be done solely on the basis of the issue prospectus, to be approved by the Bank of Lithuania and announced by the company.

https://cns.omxgroup.com/cdsPublic/viewDisclosure.action?disclosureId=819850& messageId=1030398

APPENDIX 2: LITHUANIAN MACRO SETTING

• Of the three Baltics, Lithuania's efforts to diversify its trade away from Russia has done the most to mute the impact of the Russian embargo in long run
• Growth for 2017 is estimated at 3.6%, up from 2.3% in 2016 (2018E: 2.8%; 2019E: 2.6%) – which is consistently faster than the EU average
• As with its Baltic neighbours, wages are rising as well as employment levels, supporting private consumption and forming the basis of the sustained improvement in GDP
• Agriculture remains a key segment contributing consistently to over 3.0% of gross GDP (2016 EU28 average = 1.3%)

(current prices)	2013	2014	2015	2016
Lithuania
- Total gross value added, EURm	31,690	33,068	33,709	34,789
- Agriculture, forestry and fishing gross value added, EURm	1,251	1,252	1,288	1,155
- % gross value added	3.9	3.8	3.8	3.3
- % gross GDP	3.6	3.4	3.4	3.0
EU28
- Total gross value added, EURm	12,158,356	12,571,778	13,241,913	13,331,932
- Agriculture, forestry and fishing gross value added, EURm	208,695	204,796	204,311	200,551
- % gross value added	1.7	1.6	1.5	1.5
- % gross GDP	1.5	1.5	1.4	1.3

Source: Eurostat

APPENDIX 3: AUGA GROUP VIDEOS

https://www.youtube.com/watch?v=ixak1ANw7EY https://www.youtube.com/watch?v=evS46h_tqAE https://www.youtube.com/watch?v=1n8woCaa778

https://www.youtube.com/watch?v=p_U--qXMNBw

https://www.youtube.com/watch?v=EFTIFwlGHpo https://www.youtube.com/watch?v=4eCz93zn0HY