Auga Group AB (VSE:AUG1L)
Lithuania flag Lithuania · Delayed Price · Currency is EUR
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+0.0010 (1.47%)
At close: Apr 24, 2026
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Status Update

May 25, 2023

Speaker 1

Good morning, everyone, today in this room. What do we see here? What do we see here? We all agree that the climate situation is getting worse. It is because of our human activity. What can we do? AUGA has an answer. That's why I'm today here on this stage. It all starts with agriculture. Agriculture accounts for nearly a quarter of all emissions we create like human race.

Technology is one of the best ways to address this emissions problem. Other sectors have already realized this. Energy sector, industry, and transport, they have solutions. What about agriculture? That's why 3 years ago, we began developing agriculture technology because it just not exist. That's why today we have established the Auga Tech business unit.

Business strategy for this business unit is simple: to identify emissions problems in farming, to create solutions for solving these problems, to develop and scale solutions worldwide. We already have some results. AUGA M1 tractor, first production models are at the field testing stage right now.

Our unique biomethane processing and delivery cycle is already in operation, and cow manure is already powering that massive tractor. Our specialized feed technology, we talk a lot about this, will reduce emissions from cattle. It is at the prototype stage at the moment, but it's already showing promising results in production. We have much more technologies, projects in pipeline. Just to understand, in one busy month, AUGA M1 tractor can save the amount of diesel equivalent to that your private cars will use in lifetime. That's really huge. AUGA can't change the world on its own.

Even we are committed to net zero by 2030, even will not emit zero, but will not stop climate change, because we are just a drop in the ocean. We need to include the whole ocean to involve the entire agriculture community. We need to involve farmers, all farmers in the world, and include them on to our journey towards net zero emissions. Before we can involve farmers, we need to consider their point of view. Many farmers, they don't think they are part of the problem.

They don't feel responsible. Yeah, they are small farms, they are aging, they have limited access to technology, whatever technologies also not exist, but anyway, they don't have access to the technology, and they don't want to be pushed around by politicians and Green Deal targets. That's why they protect from everything we'll offering for them.

For them, Green Deal is really a threat. To reduce global emissions, we still need these farmers. In my opinion, and AUGA's opinion, we need to encourage farmers to change. We need to give them motivation to change. Our proposition is quite simple.

Farmers can join the AUGA Community, they use our sustainable practices, and become wealthier and enjoy a better life. To achieve this, we have established our second separate business unit. It's called AUGA SOFA. So far, so good, yeah? SOFA means not a sofa, what you understand, like a sofa. SOFA means Sustainable Organic Farming Architecture. It will work also for conventional farm, too. It's not only for organic farms. What will AUGA SOFA do?

First of all, develop and monitor sustainable farming standards, to provide certification for farmers who will be confirmed that we work with the standards. Provide organizational tools for sustainable technology sharing. Technology, it can't be used by every one farm alone. Technology produced must be shared between the farmers, for this sharing, you also need the tools to organize the sharing.

The third, we will support farmers with know-how, how to make more sustainably, we supply with digital farm management tools. This structure is very similar to a franchise. Franchises provide standards and processes that all members must follow, all the shared benefits. The consumers, it gives a standard they can trust. How it will work? We will start here in Lithuania, in my country.

Currently, AUGA farms work 38,000 hectares of farmland, and we have also 3,500 dairy cows. We already finalizing, and we start in production very soon, 3 biomethane plants, which will provide sustainable fuel for future AUGA Community. 150 tractors and other agriculture machine we use already at the moment. Unfortunately, we run now on the fossils because technology is not yet scaled.

What we've done so far? We have recently, just few days before, established 11 regional cooperatives who will be the franchisees that will offer services to all our current AUGA farms, as well as farmers who want to join the community. Not only that, we have 21 technology hubs that can provide services to farmers in the 25 territory of Lithuania. That is 20 times more land that AUGA can currently operates.

The farmers which will join AUGA, so it can save much more emissions, what we can save by our own. Why should farmers join? What will they get? First of all, access to AUGA's cost-reducing farming technologies. Combined purchasing power for supplies and farming inputs, therefore reducing costs. We will be, in future, the largest organization, farmers' organization in the world, and we don't pay to any dealers, any margins.

It will stay in community. Simplified and wide access to capital with better conditions. The farmers, they are not so well informed where the green lenders are. The break between the small farmer in the village and the big institutional lender who wanted to support sustainable initiatives is so huge. It's a massive break. AUGA will fill this gap. Streamlined operations and reduced administrative costs through farming.

What I just mentioned you before, the farmer can do from his phone. If he will retire, he don't have any more thoughts and power to run, he can choose farming model sitting on the sofa and will be carbon-neutral food producer out of this model. This farming model and the technology is here, is already here in my phone, we start testing soon. Is there a market for such products?

Are consumers willing to pay more? This is most important question. Let's look on the research. 69% in Europe, consumers say, "Yes, we wanted to buy," a very similar amount of consumers in world be saying also, "Yes." We need to build the value to consumers and how we can build this value to consumers, that we made decisions to buy.

First, we'll do by helping them to clearly understand the impact of their decisions. Everyone consumer in future will understand why you made this choice, and this will be because he will be the largest impactor in the world. He impacted by his choices, the farmers will change. If he will not buy, farmers will not change, so we'll destroy our planet.

Everyone consumer in the world could be an impactor, and every wealth person, every educated person, probably wanted to be like this. Second, making it easy for them to switch to sustainable food without changing their habits. We know now a lot of startups which trying to develop different kind of food, try to build this vegan meat and all these things, but people, they just don't want to change these habits. We wanted to eat what we eat every day.

What is AUGA solution? We provide the same food you eat every day, but it's better. It will be carbon-neutral food. You don't need to change your habits. Of course, we will give them sustainable versions of the brands they love now. You know you have a lot of brands you love, and they are not sourced now at the moment from sustainable materials.

In future, you will have access to these brands, to AUGA's products in these brands. That's why we established the third business unit, Auga Trade, which we organize everything, what I just said before. What does it do? First of all, brand marketing. Building the AUGA brand with its no cost to nature promise.

Unfortunately, we have now mission, no cost to nature at the moment, very soon we can claim no cost to nature because it will be just a carbon-neutral food. Second, AUGA led contract manufacturing. We proactively work as a front runner, introducing sustainable examples of everyday basics products.

We also provide co-branding and AUGA labeling to enable another companies to produce their brands and products more sustainably. This is what we achieved so far. We launched new AUGA consumer product line in May, this May, in 2023, here in Lithuania. They are produced exclusively from our organic raw materials, from AUGA farms, which are committed to sustainable farming practices. We started with essential daily products, and are learning about consumers' attitudes towards sustainability.

We will bring the idea to consumers. They'll take that feedback, the reaction of consumers, and we try to share this reaction later worldwide. We know that other brands are also looking for sustainable options, brands who could co-brand with us. Companies like Nestlé reports, that you see on behind, on my wall, that ingredients account for 71% of their emissions. All of them be looking for how to solve this, and AUGA's products, produced with farmers' organization, can fill that gap.

How does it whole picture fit together? As a part of AUGA Group, we have established a holding company, AUGA Community, which unites three new business models and units under one roof. Now, the big question: How will we generate revenue?

Company, you can't generate revenue from when you started with idea. One day, the business unit can show that it could be self-sustainable. It can generate revenues will fill the costs and generate revenues to the shareholders. I want to talk about every one business unit. Auga Tech will provide sales and lease to both the cooperatives and the general market.

AUGA SOFA will provide benefits to these farmers and these cooperatives, including increased revenues. Part of its results will be charged by a franchise fees. Auga Trade will generate revenue through the sales of end-user products and the co-branding fees. The next obvious question is, how big are the margins in our target business segments? As you can see, it ranges from 20 till 50%, we can access this either directly or through franchise or co-branding fees.

Where can we make the most impact? In which regions in the world? The obvious choice is the two largest developed markets, Europe and North America. Why these developed markets? Why not undeveloped markets? Impact consumers can be when they already could be the person who already fulfilled his requirements or his primary requirements to live, to give education to the kids, and looking for something else more.

Most wealth countries will be primarily our regions where AUGA will act. If we look a bit deeper, we can see that the food market is 30 times bigger than the agriculture machinery market. That's why our new business model is pivoted towards providing consumers with sustainable food, not only tractors. After my first presentation, everyone asked me: "How much tractors you sell? How much revenue you get out of this?" I said, "Concentrate.

The end goal is different food, different new category in the food, not organic, not healthy food for your family. It's healthy food for your family and good for planet. That your grandchildren will live in the same planet that you born. They will find the same. That's why they will make choices. Even if only 10% of consumers, this is amazing, will vote with their wallets, that is a potential market of EUR 290 billion only on these two regions.

That's not small change at all. What's the timeline for everything we are looking to implement? This is just a projection, but as you can see, there is a lot of activity ongoing and plans. What you think? To make it possible, we will look for financing and raising capital on AUGA Community.

We plan to raise capital already in Fourth quarter, sorry, for 2023. How we'll finance it? Through a mixture of following. It could be financed through new equity for of our initial transformation technologies and brand building. Last year, EUR 10 billion of venture capital was invested into FarmTech. EU green financing for scaling is one other source. Just to give you an idea of the money in the pot are here.

Only in Lithuania, the plan is to provide EUR 1 billion in subordinated loans to green technology providers who wanted to scale green technology here in Europe, on Lithuania. Third financing source to change the farming industry is ready-to-use machinery will most likely be co-financed by banks, regular commercial banks, as they are interested in expanding the green portfolios. I can't tell you the exact amount and form of funds now.

I can't tell you exact amount. We see a need for up to EUR 200 million in next 2 years to achieve full speed, to make it happens. Not later, to make it happens as soon as possible. What I presented today is not totally new. It is just part of our implementation of our 2025 AUGA strategy, which is a slide from our strategy, actually, which was published in 2020. This business model, what I just presented today, will allow us to achieve our vision, which is becoming a synonym for sustainable food and lifestyle in all the world. Thank you very much for attention.

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