Agromino: Update on ongoing divestments
Elevator sale is completed
Agromino A/S (also the “Company”) is pleased to announce that following the press release of 29 January 2018 concerning the signing of the share purchase agreement for the sale of its Ukrainian subsidiary – PrJSC “Novomirgorodskiy Elevator” (also the “Elevator”) the Company has successfully completed the transaction, having received the purchase price of USD 2.6 million.
As a post-transaction arrangement the parties have agreed that following settlement of accrued outstanding account receivables and payables related to the business operations of the Elevator prior to the completion of the transaction, the purchaser of the Elevator will remit to the Company the corresponding funds in the amount of approximately USD 101 thousand not later than 1 April 2018.
Disposal of non-core land plots in Dno and Dedovichi area
The Company also informs that it divested eleven Russian legal entities holding 10,261 hectares of agricultural land, located in Dno and Dedovichi regions of Pskov oblast of the Russian Federation (also the “Land Companies”) for a net consideration of EUR 171,000.
Due to a lack of available financing and a revisited strategic decision of the Company, the land has not been put into production. As a result of this, the quality of the land has been deteriorating due to an increasing infestation of the land with bushes and trees. Clearing of the land plots, repair of their drainage system and general infrastructure would require a minimum capital investment of EUR 200 per hectare to restore the productive qualities of the land totaling circa EUR 2 million. The capital investment at such a level is not justified given the low returns from arable farming in the Pskov region.
The Company continues to operate in the Gdov region, adjacent to Dno and Dedovichi regions, where it has a dairy farm Dobruchi (the “Dobruchi farm”) with a herd of 1,100 milking cows and 2,873 hectares of agricultural land. Due to the changes in the management of the Dobruchi farm as of spring 2017, the efficiency and production results of the Dobruchi farm have substantially improved; much stronger financial results will be presented in 4Q 2017 interim report.
The Company reclassified the land plots as the land held for sale, a respective write-off of EUR 5.5 million had already been recorded in the 3Q 2016 interim report and a further additional loss of EUR 1.4 million will be recorded in 4Q 2017 interim report.
In conjunction with the disposal of the Land Companies, the currency translation difference of EUR -1.7 million (subject to future exchange rate differences) has to be recycled from the Other Reserves to the Income Statement in 1Q 2018 interim report. It has to be noted, that the accumulated currency translation difference is, as such, a non-cash item and has no effect either on the total equity or liquidity of the Company.
Simon Boughton, the CEO of Agromino A/S, commented on the transactions as follows:
“For two years now the strategic plan has been to focus on core assets and strengths, the sale of the Elevator is consistent with this plan in that not only does it remove a potential reconstruction liability from our asset portfolio but also releases capital that can be put to work more effectively in our core farming business.
The divestment of the Land Companies will allow the management to narrow its focus in the region to continue to improve the efficiency and financial performance of the Dobruchi farm.”
Mr. Simon Boughton, CEO of Agromino A/S
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We are farmers and agribusiness managers, with operations in Ukraine, Russia and Estonia. Agromino A/S shares are traded on the main market of Nasdaq Stockholm.
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This information is information that Agromino A/S is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 19:00 CET on 22 February 2018.