Astarta Holding PLC

Good afternoon, ladies and gentlemen. My name is Paweł Wieczorski, and on behalf of Wooden Company, I'm delighted to welcome you to the second quarter 2021 results conference call with Astartes Management. The company is represented today by Wiktor Iwańczyk, CEO, Wiktor Glacki, CFO, as well as Yulia Bershenko, Business Development and Investor Relations Director. Gentlemen, congrats on the results. Please go ahead.

Thank you, Pavel. I would like to go straight into our T&A. The way we look at our business is on six-month, 12-month results because we are a highly seasonal business. So if you look at our first half, Revenue line, you can see that we have significant growth in the sugar production, soybean processing segments. Our revenues were flat in cattle farming, but much reduced in the agricultural side. The lower result in the agricultural side is explained by the fact that we are still selling last year's harvest. and the lower volume of output last year is feeding through our revenue on the corn side in the first six months, but we'll look at it in more detail when we go to the segmental information. If we look at our profitability, You can see that we are able to book a large change in the biological assets. Our winter crop harvest is very close to completion in terms of action. Spring harvest is in full swing. and we were able to book about 92 million Euro biological assets revaluation surplus, which goes above our gross profit. If we look at our profitability at the growth and EBITDA margin without the impact of IAS standard treatment, Our margin still expanded from 26% to 27% on the growth level and to 28% at the EBITDA level. Due to low leverage, you can see that we also have low finance costs and the currency movements for Ukrainian hryvnia was also favorable to us compared to the previous period of last year. And that's about around 90 million online profits in the first six months this year. Going into the tax laws and the balance sheets. Due to the seasonality of our business, and now we are in the harvesting part of the winter crops, we have negative operating cash flows. Also, what has impacted our cash flows in the first six months is our activities to process raw sugar came into white sugar for the Ukrainian market. However, our investments are still tightly controlled at maintenance level, and net debt increased due to working capital needs was not significant. Our net debt totals in BDA ratio still remains at a healthy level of 1. If we drill into our segment results, you can see that the majority of readiness were done on selling off the remaining volumes of corn from last year's harvest. And we have IS-41 item booked for the crop growing currently in the ground. Our costs remain well controlled, and this can be seen not just on the cost of sales basis, but also on the cash flows related to our land use liabilities. Overall, the market environment for soft commodities remains highly favorable. There was a small dip on the wheat side, but we can see that the situation has reversed recently and we remain optimistic on the pricing environment for us going forward in the second half of this year. On the sugar production side, we are still selling off stocks from our sugar deprocessing last year. This pricing environment domestically remains more favorable than international one, although we can see that there is a large sugar price uptick in global markets as well. And this allows us to earn a gross profit margin of 37%, and the EBITDA margin also doubles from 14% to 31%. If we are looking at the situation in the global market, we can see that white sugar foods were up by one fifth in the first half of this year, but the Ukrainian market experienced a higher price increase because there was an under production of sugar beet last year due to lower harvest. And Ukraine had to import additional volumes of sugar Astarte is one of the biggest players in the market, obviously at the front running of this trend. We imported around 75,000 tons of raw cane sugar and we already produced nearly 50,000 tons of white sugar for our domestic customers. The local farmers responded to higher pricing environment by expanding sugar de-planting area but it is not significant increase around five percent. Soybean processing, huge value for soybeans and quite significant price increases for the key products such as soybean meal and soybean oil. However, our profitability, of course, was squeezed on higher costs for the input sold-ins, and we have a slight margin increase at the data level from 9% to 8%. Likewise, the rally on the sold-ins product pricing led to Ukrainian farmers expanding the planting area, which is expected, plus 6% this year. Cattle farming is largely stable. We have a stable life of herds. However, our production volumes are up as we increase productivity of our herd. Our daily milk yields were 23 liters, which is higher than in the previous six months. If we are looking at the average pricing In this sector, it was largely flat on six months to six months last year, and that has allowed us to keep our growth, profit and margin at the same level, although at the EPA level it was lower. This is probably The end of our six month results, the strategy outlook hasn't been changed. Last year was a COVID year and it was not, the focus of our business was maintaining our profitability and keeping the cash flows rather than expansion. But we are looking at the same target in terms of this year. One of the slides which I wanted to highlight at the end of our presentation is our current capital structure. We finally see a big rebound in our enterprise value due to reduced leverage and higher operating results. And we believe that the capital markets now can value our business on a more full picture. So, Pavel, we are ready to take questions from the audience or anything you would like to ask as well.

Thank you so much for delivering the presentation. So if I may ask a few quick questions. First of all, what is your outlook for the 2021 harvest? What kind of year-on-year growth do you expect? Is it double-digit?