AUGA group, AB and its subsidiaries presented to the public and investors the principles of a new business model that will enable scaling of technology and sustainable food supply

AUGA group, AB (hereinafter – the Company) presented the key principles of the new business model of the Company and its subsidiaries (hereinafter – the Group) along with the steps for its implementation, as approved by the Company’s Board. The Company believes that this will help to achieve the goals set out in the Group's strategy more effectively.

"We are consistently implementing our 2020 business strategy to make the AUGA brand synonym for sustainable food and lifestyle. The new business model will create opportunities for farmers to use the more sustainable technologies, that are being developed by the Group, through sharing economy principles. It will help them work more efficiently and earn more by joining a new community that enables economies of scale. For consumers, it is an opportunity to choose food with no cost to nature, and for investors, it is an opportunity to get a financial return while making a positive impact," says Kestutis Jušcius, the Company's CEO.

The Group's new business model is based on three main pillars:

(i) the development and production of sustainable agricultural technologies;
(ii) the organisation of agricultural activities through cooperatives, applying AUGA
sustainable farming standard; and

(iii) delivering more sustainable food to consumers.

A new organisational structure has been put in place to implement the new business model. AUGA Tech, UAB develops and produces innovative agricultural technologies which will be commercialised. AUGA SOFA, UAB will develop AUGA sustainable farming standards and provide services to agricultural cooperatives and farmers under franchise agreements. AUGA Trade, UAB will organise the production, trade and marketing of sustainable consumer products. All activities of the new business model are consolidated by the Group company AUGA Community, UAB.

AUGA Tech, UAB

AUGA Tech, UAB will continue developing sustainable agricultural technologies that enable to reduce greenhouse gas emissions. The Group has already developed the AUGA M1, a biomethane- and electricity-powered tractor for professional use. The tractors from the first production batch are currently being tested on farms and will be prepared for mass production at the end of 2023. The Group continues to steadily develop specialised feed technology to reduce methane emissions from cattle. It is also developing and intends to manufacture other agricultural machinery that uses sustainable energy sources. Revenue from this business will be generated through the lease and sale of the technologies to the cooperatives served and other market players.

AUGA SOFA, UAB                                                                                         

Through AUGA SOFA, UAB the Group will develop AUGA sustainable farming standards, introduce a cooperative and franchised model of agricultural organisation and provide farmers with know-how and digital farm organisation solutions. This will enable technology sharing and the implementation and scaling of the AUGA sustainable farming standards. Farms (initially Group farms, later enabling other farms to join as well) will form cooperatives which will work the land of the member farms and provide other agricultural services to their members (and other farms when capacity suffices) adhering to the AUGA standards and methodologies for sustainable agriculture and using the sustainable technical solutions developed by the Group.

The new operating model will first be tested and refined among the Group's farms. Implementation of the new model has already begun. Eleven cooperative companies have been established with Group farms as the founders and members. Assuming the new model proves effective, there are plans to allow other farms to join in the second half of 2023. The Group will offer members of the cooperatives the use of a centralised system for purchasing the raw materials needed for agricultural activities and for selling what they produce.

AUGA Trade, UAB

AUGA Trade, UAB organises the production and marketing of more sustainable organic products and AUGA brand building. The end-consumer products are produced from raw materials grown on farms that apply AUGA sustainable farming standards and implement new technologies that reduce emissions. Such products have already been introduced on the Lithuanian market and are available in the country's major supermarket chains. The new product line currently includes milk, kefir, cottage cheese, sour cream, eggs and oat flakes. Expansion of this product line in the dairy and other categories is foreseen in the future. The aim is to achieve a 10% market share in the relevant categories by providing consumers with products that are familiar, affordable, and enable more sustainable choices.

The Group sees global expansion opportunities not only for AUGA-branded consumer products, but also in co-branding and suppling food processors with raw materials that bear the AUGA sustainability mark. The Group’s and other companies’ data show that, for final food products, it is raw materials that account for the largest share of emissions, so addressing that issue is of particular relevance in the market.

AUGA Community, UAB

The Group's new organisational structure will enable the implementation of the new business model and help attract investments, which is planned in the last quarter of 2023.

"The Group will consider a variety of funding possibilities – to raise venture capital and private equity funding within the AUGA Community structure for early-stage technology development. There are plans to make use of EU green financing opportunities for the development and scaling of technologies, and in later stages commercial bank financing will also be used," says Kestutis Jušcius, the Company's CEO.

Outlook for the future

The new business model will first be introduced and tested in Lithuania. It will then be expanded abroad through the technology branch and through the supply of climate-neutral raw materials and branding.

View the full presentation here: bit.ly/3MWafEb

The presentation slides attached below.

Chief Executive Officer
Kestutis Jušcius
+370 5 233 5340

Attachment

• Presentation