Astarta Holding PLC

Hello everyone, thank you for your interest in the call. We still see some people joining, so I'll do probably a slow start because we can see more people joining us online. Today we will be reporting our nine months results which were published last night. Given the overall situation in Ukraine and the wartime conditions, we are pleased to report very good results. You can see that our revenues are up by 13%, with the biggest contribution coming from sugar production. We also have very positive dynamics in soybean processing, stable sales and revenues in cattle farming and in agriculture. Our profitability is lower on the headlines, but if we look at our gross margin and EBITDA margin without the impact of IS41, it was actually widening margin thanks to the higher contribution of the soybean segment and due to the time and lack in the agricultural segment, as we were still selling the previous year's harvest. Overall, the company reported 130 million euro EBITDA and a net income of 62 million. Looking at our cash flows and the balance sheet, we still focus on our operating cash flows. We also maintain our capital expenditure program at the maintenance level, understandably. But we also had to increase our finance debt, which is partially seasonal. and partially because of the situation in Ukraine. But even with this change, our leverage ratios are at very reasonable levels, just above one. If we look at our results on a segment basis on agriculture, we reported already our final, yields for wheat and rapeseeds, our key winter crops. We are in the process of harvesting sunflower seeds and soybeans which are near to completion. These numbers are not going to change much and also yesterday you might have noticed in our press release we also disclosed our interim yields in corn and sugar beets which we are expecting above last year's level. Obviously, everyone is aware that there are logistical difficulties on exports of soft commodities out of Ukraine. The situation was visibly improved since August, the launch of the seaborne grain corridor from the greater Odessa ports. but the cost of logistics remain quite high, which can be seen in the increase in our selling and distribution expenses. If we are looking at the global situation, there is a favorable global environment for soft commodities. But Ukrainian X-Works prices inched upwards only after the Seabourn route was reopened. On the basis of the last several months, we can see a $30 uptick in the local prices. And if the grain corridor stays intact, we can see a further improvement in pricing for the Ukrainian agricultural producers. Sugar was another stable segment for us. We are focusing on ensuring food security in the domestic market. But this year, Ukraine is turning from an importer to exporter of sugar. We also exported 11,000 tons in the first nine months since the EU opened a free trade with Ukraine. Our margins remain at a reasonable level, at 28% on the gross level, and 24% at the EBITDA level. We are processing sugar beet as we speak, and as of today, we already produced around 150,000 tons of white sugar. If we look at the bigger picture in Ukraine, There was an acreage reduction on the sugar beet of 20% due to the military invasion by Russia. Only 23 sugar mills are operating this season. We operate all of our facilities. Ukraine is expected to produce about 1.2 million tons of sugar, which roughly is equal to the estimated domestic consumption. but also we see good opportunities for exports into the EU, given the lower consumption levels in Ukraine. Soybean processing had a stellar performance this year. we see an ample availability of raw materials for processing. We as a company also increased acreage under soybeans, and that allowed us to increase our volumes of soybean processed by almost 50% and double our margins or even triple our margins from 5 to 20%. Kettle farming also stable, but also on increase, both in terms of the volume of milk produced, stable pricing, although somewhat volatile this year because of the macroeconomic situation in Ukraine and also because of the Forex volatility. 95% of our product is graded extra and we continue to receive premium on our production. Gross margin improved to 28% and EBITDA margin was respectable 24%. As with six months results, we are not able to provide the guidance for this year because of the very fast moving situation in Ukraine, but we always promise investors that we will still keep an eye on sustainability development of our business and of our country. We have updated the slide on the efforts that we continue during the war times. There will be enhanced disclosure on decarbonization. We are looking for cooperation with the global soft commodity of takers who seek sourcing the ingredients from regenerative farming, and we're working on the green recovery for Ukraine, including our business. Also, we cannot rest until we provide all the necessary support to the people who were displaced by the military hostilities, and that is 7 million people who unfortunately had to leave the country, 10 million internally displaced people, and we concentrate our efforts together with our business partners here on the ground in Ukraine to provide humanitarian support. If you have any contacts for potential partners in these projects, please do contact us. With this, I would like to finish the introductory presentation and we would be very happy to take your questions.

You can put your questions into the chat box.

Marcin, I've seen you send me question, but it's not in the chat box, sorry. Ah, okay. Now I can see it. Jakob, what is the situation with gas stocks in Ukraine? Is there enough storage until the end of the sugar campaign? I'll start answering the first question before moving to the next one. Publicly, we've seen that Naftogaz Ukraine, which is a state-owned monopoly, reported that there are enough gas in the storage in Ukraine, but Ukraine still does need financing for a couple billion cubic meters. Also, we are at the beginning of the winter soon. However, autumn was quite warm. I think it was a warm autumn across the whole Europe, and that allowed Ukraine and other countries to save more gas. Also, our sugar processing activities take place now and in the next month. which is well in advance of the peak in demand for gas. So we are pretty much confident that today and in the next month, we are off peak on gas consumption and the sugar processing season will be done without major hurdles. Also, it should be noted that one of our five sugar mills is operating on coal. Do you have any information that your competitors have problems with sugar production due to temporary power cuts? I think the summary from UkrZukr, which says that 23 out of 33 sugar mills will be operating in Ukraine, is the answer to your question. But also it should be noted that some sugar mills are coal fired in Ukraine, and that provides some caution against gas shortages. A question about the recent discounting of gas in Europe. In the short term, it was possible to buy gas even at negative prices. At that time, was Astarte active in the market and trying to buy cheaper gas on the market for the sugar campaign? Yes, obviously, the situation with the gas in the European market is different from what it was in Ukraine, but this is true. We did buy into the deep. in gas prices for sugar making season. There was also decline in sugar beet prices this year, so we expect our costs per tonne of sugar beet process to be lower this year. Question about revaluation of biological assets. When estimating current production, do you take prices in Ukraine or would market prices as a benchmark for grain prices? Question whether revaluations of biological assets are not inflated by foreign high prices while prices at ports are much lower. The revaluation the revaluation is booked at expected prices minus delivery costs and the cost of productions. So what you see in the revaluation as gain from re-measurement, this is a proxy for the gross margin. So we book our We book our revaluation on the basis of prices which are close to farm gate prices.