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Agrokultura: SEK 150 million cost reduction program and strategic review of the Ukrainian operations

Press release published at The Swedish Wire
Agrokultura AB (the Company) is implementing an aggressive cost reduction program with the target to save SEK 150 million compared to the 2012 cost base. The Company also has engaged Dragon Capital, a leading Ukrainian investment bank, to explore strategic alternatives to enhance the value of the Ukrainian business.

In the light of several years of sustained losses, inadequate levels of control and an acquisition in Ukraine in 2012 which exposed the Company to a large dispute, the Company undertook a strategy review in early 2013. Based on this new strategy, the Board of Directors created and began executing a plan with the immediate focus to maximise shareholder value.
The Agrokultura share has lately been trading at a discount of around 60% compared to the Company's net asset value per share as at 30 June 2013 of SEK 8.20. The Board, in order to deliver on the expectations of the Company's shareholders, is committed on a strategy to proactively compare the value of the Company as a going concern versus the value an external buyer is willing to pay for the Company's shares, assets or a combination of the two.
The Board has therefore commissioned Dragon Capital, a Ukrainian investment bank, to explore strategic alternatives for the Company's Ukrainian business. The concrete results of this process are expected to be announced during the spring of 2014.
In parallel with the above, real value creation is being underpinned by an ongoing focus from the Board and management on far-reaching cost reductions, strengthening of internal processes and improvement of governance.
As communicated in the 2013 half year report further work is needed to adjust the Company's cost base. Consequently, the Board has established an aggressive cost reduction program across the Groups' businesses in Russia and Ukraine as well as the non-operational entities in Western Europe. The cost reduction action plan is being implemented with weekly follow up reporting at Board level.

As a first step, specific cost reductions expected to bring savings of SEK 150 million on an annual basis compared to the 2012 cost base have been identified and targeted. This corresponds to approximately 20% of the 2012 cost base (excluding depreciation, amortisation and interest) and includes the closing of offices, material headcount reductions, changes in senior management as well as the implementation of more efficient processes in the farming operations. The cost reduction plan assumes a roughly similar cropped area for 2014 as in 2012 and 2013, as well as select minor investments which are expected to have immediate cost reducing impact.

Mikael Nachemson, Chairman of the Board of Directors, commented:

"I assumed the role of chairman in May 2013, with a strong mandate from the shareholders to thoroughly transform a business that was not working. Since then we have worked tirelessly to implement a strategy with the aim to bringing Agrokultura to a position where it is cash generative irrespective of movements in the price of our commodities.

The current cost cutting programme is being felt across the organisation and will result in a much changed lean and profitable company. The strategic review will ensure that shareholders will gain the best possible return on their investment and is indicative of the Board's focus on shareholder value."

Stockholm 22 October 2013

The board of directors

For additional information, please contact:

Mikael Nachemson, Chairman, tel. +46 8 46 339 41



About Agrokultura  AB (publ)
Agrokultura invests in farmland and produces agricultural commodities in Russia and Ukraine. The Group aims to generate an attractive return on invested capital by optimally utilizing its agricultural land bank through crop production, livestock and related operations. Shares in Agrokultura are listed in Sweden on the Nasdaq OMX First North exchange under the ticker AGRA and the Group's Certified Adviser is Remium Nordic AB.
This information was distributed by Cision
 

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