KTG Agrar AG acquires stake in Russian agricultural group in the Chernozem region

KTG Agrar AG acquires stake in Russian agricultural group in the Chernozem region

- Four years' experience in local farm management
- Business model integrates crop farming, fodder production and pig breeding
- Strong partners to exploit opportunities in a key market for the global agricultural sector

Hamburg, 1 October 2013 - KTG Agrar AG (ISIN: DE000A0DN1J4) has been active as a farm manager in Russia since the 2009/2010 farming season. Following on from the good experience gained in recent years, KTG Agrar has decided to make an investment in the Sojuz Group, which includes the companies Agro-Sojuz based in the Belgorod Oblast and Mjaso-Sojuz based in the Voronezh Oblast. The Sojuz Group has been active in the fertile Chernozem region some 600 km to the south of Moscow since the year 2008. Its business model integrates crop production with pig breeding and fattening. 'This expansion is being undertaken following a thorough examination. We have gotten to know the region and its people in recent years and we are convinced of the opportunities,' says Siegfried Hofreiter, CEO of KTG Agrar AG. 'Russia is one of the world's key markets for the agricultural sector and offers outstanding long-term potential. As crop farming specialists, we want to exploit this potential jointly with our strong partners whose experience lies in livestock management.' KTG Agrar holds a 17.5 percent stake in the entire Sojuz Group with immediate effect and will continue to manage the Group's crop farming activities. Another 17.5 percent stake is held by RKS Agrarbeteiligungs GmbH. KTG Agrar and RKS Agrarbeteiligungs GmbH have pooled their combined 35 percent in the Sojuz Group stake in Hamburg-based TKS Union AG. The majority shareholder is Tönnies Russland Agrar GmbH.

'I look forward to continuing our close cooperation with KTG Agrar. Together we have built a highly modern agricultural company in recent years,' says Clemens Tönnies, one of the shareholders in Tönnies Russland Agrar GmbH.

The Sojuz Group's core business consists of agricultural production in the Chernozem region as well as pig breeding and fattening as parts of an integrated business model. The required fodder is sourced from the Group's own fields. This set-up makes the Group independent from fluctuating fodder prices and availabilities, maximises production efficiency in all processes and ensures the best, carefully controlled quality of the fodder. The Group's own crop farming activities, the use of the most advanced agricultural equipment and plants as well as highly qualified employees mean that the pig breeding and fattening activities meet the highest standards and produce high-quality meat.

The Sojuz Group is currently active in two regions. Since 2007, Agro-Sojuz is investing in the Belgorod Oblast and today farms some 30,000 hectares and operates pig fattening farms with an annual output of 650,000 pigs. The construction of a mixed fodder factory with an annual capacity of 240,000 tons is currently being completed. Says Siegfried Hofreiter: 'Having our own mixed fodder factory means that we will be able to process our harvest into fodder ourselves. This way we complete our integrated business model and can increase our margin significantly. The Mjaso-Sojuz Group was founded in 2011 and today farms some 15,000 hectares in Voronezh. A pig fattening farm with a capacity of 65,000 animals per year is currently under construction and is due to start operation in early 2014. The combined 45,000 hectares include 15,000 hectares of company-owned farmland. The rest is used under long-term leases, some of which run for up to 50 years.

Having reported sales of approximately EUR 90 million as well as earnings before interest and taxes (EBIT) of some EUR 20 million in 2012, the Group intends to push ahead its growth strategy in the coming years. The medium term plan provides for up to ten additional pig breeding and fattening farms including boar sheds with an annual production capacity of 650,000 pigs for slaughter, with the crop fields being extended to 60,000 hectares at the same time.

About KTG Agrar
With cultivable land of more than 40,000 hectares, KTG Agrar AG (ISIN: DE000A0DN1J4) is one of the leading producers of agricultural commodities in Europe. As an integrated supplier, the company produces agricultural commodities and renewable energy and food. The Hamburg-based company's core area of expertise is the organic and traditional cultivation of market products such as cereals, maize and rapeseed. For organic market products KTG Agrar is the European market leader. The company mainly produces in Germany but has also operated production in the EU member state of Lithuania since 2005. As a result of the takeover of Frenzel Tiefkühlkost and Biozentrale Naturprodukte, KTG has expanded the value chain by the production of food. In the year 2012, KTG achieved a total output of EUR 168 million and EBIT of EUR 29.5 million. Since November 2007 the company is listed on the Frankfurt Stock Exchange and had 591 employees at year end 2012. Further information can be found at www.ktg-agrar.de.

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