DGAP-News

KTG Agrar SE releases hidden reserves

DGAP-News: KTG Agrar SE / Key word(s): Disposal/Bond
KTG Agrar SE releases hidden reserves

13.08.2014 / 07:30

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CORPORATE NEWS

KTG Agrar SE releases hidden reserves

- Some 4,000 hectares of farmland in Lithuania sold and leased back for 18
years
- Realignment of land boundaries is part of the business model
- Farmland to be expanded further

Hamburg, 13 August 2014 - For over ten years, KTG Agrar SE (ISIN:
DE000A0DN1J4) has successfully invested in assets such as farmland, biogas
plants and agricultural real estate. As these assets are recognised at the
cost of acquisition (in accordance with the German Commercial Code (HGB)),
the company has built up hidden reserves in excess of EUR 150 million over
the past years. Among other things, KTG Agrar has purchased and leased
farmland in Lithuania since 2005. "As a farmer, we focus on the cultivation
of farmland. Leasing this land generally makes more sense from an economic
point of view," says Siegfried Hofreiter, CEO of KTG Agrar SE. "However, it
is often difficult to find large, contiguous areas of land. It is therefore
part of our business model to buy smaller areas, to realign their
boundaries and to resell them in order to lease them back and cultivate
them under long-term contracts. While we have done this rather occasionally
in the past, we have now been able to sign an attractive package deal in
Lithuania."

KTG Agrar thus sold some 4,000 hectares to a German institutional investor
with retroactive effect from 30 June 2014. This also allowed the company to
benefit from the positive tax regulations that were effective in Lithuania
until 30 June 2014. At the same time, KTG Agrar leased the land for the
next 18 years (additional renewal option). The transaction volume amounted
(including repaid liabilities) to approx. EUR 20 million, with a book value
of EUR 10 million. Says Siegfried Hofreiter: "The transaction shows that we
were successful in creating value in the past years. And this is only a
small portion of our hidden reserves. The proceeds will increase our equity
ratio and will be reinvested in farmland." KTG Agrar already cultivates
3,300 hectares of leased farmland in Lithuania, for which the company has
secured itself the pre-emptive rights at attractive conditions.

As of 30 June 2014, KTG Agrar thus cultivated a total of 43,700 hectares in
East Germany and Lithuania. More than 5,000 hectares of farmland in East
Germany are still owned by the company - whose hidden reserves amount to