Astarta Holding PLC

we will be presenting our first quarter results. We can see that the company was able to slightly increase its revenues. And this is on account of the sugar segment, which performed really well compared to the first quarter last year. We have reduced profitability on the gross margin side and EBITDA. However, this is explained by the higher share of exports that we achieved this year compared to the previous year and logistical costs getting crops and sugar out of Ukraine are quite significant. We continue to disclose our gross profit and EBITDA on a net of IAS 41 basis. So here we can see a margin squeeze from 37 to 27%. Nonetheless, the cash flows remain strong. Our operating cash flows total 70 million euro compared to 45 last year. And cash flows before working capital were also significant at 42 million euros. Investment program. For the first quarter is only 6 million euros, but this is double from last year because we announced investments into further soybean processing and also we have extra investments going into the sugar segment this did not affect our leverage position in fact as of first of quarter the company is in a net positive cash situation but including land lease liabilities leverage remains below one times net debt to EBITDA. Sorry. If we are going to segment performance, we start with agriculture. There was lowering of prices for corn, sunflower seeds and rapeseeds, but wheat held up compared to last year and continues to increase currently. There are some trading volumes in these results, especially for corn. We disclosed this number for the annual results at 56 million euros. For the first quarter, we don't have the precise number, but it is over 100,000 tons. Now the company already finished spring sowing. The crop mix is changing in line with the last two years. we keep reducing acreage for corn and we increase acreage under soybeans because we would like to increase our self-sufficiency on crushing and we see better margins in soybeans compared to corn and wheat. Our acreage under sugar beet remains at last year's level And there is a minor change in rapeseeds, sunflower seeds also at 18,000 hectares. Our commercial director is online to answer questions, but generally one can see that the pricing differential between global prices and domestic prices for key commodities such as wheat and corn remains but it is much more narrow compared to last year since Ukraine is able to export via idea supports in fact since reopening of this route, the exports for agricultural commodities reached pre-war levels in the recent months. But generally there is a global price decline at the same scale as in Ukraine. if corn was down by 34% globally, Ukrainian corn was down by 28%. And same goes for wheat, if we are talking about first quarter, but there is a small uptick recently in the wheat price. Sugar production. We've just finished planting sugar beet for this season. The acreage remains the same at 38,000 hectares. And last year's sugar volumes are sold well. There is a slight price decline compared to the first quarter of last year. but we still have quite strong results at gross margin of 23%. EBITDA margin was squeezed much more intensively on the account of selling distribution expenses because we exported about half of our produce, and exporting is associated with high logistical costs. Europe was a main destination for sugar exports for Ukraine and for us, but we also diversified our supplies to other markets, including Middle East and North Africa. If we are looking at the general situation in the sugar industry in Ukraine this year, the farmers would like to keep the acreage on the sugar beet same as last year at 250,000 hectares. Ukraine actively exported sugar this year. And the first quarter volumes at over 200,000 tons are actually close to the quarter which was negotiated with the EU. The annual 2024 quarter is 263,000 tons. So we are hitting the ceiling. And it is going to be restarted from January 25. So the domestic price is dipped by 21%. However, global prices remain quite robust. So this is why we are focusing on exports and especially exports outside the EU, since we are hitting the overall ceiling with the EU. Soybean processing largely stable except for the soybean oil, which was down by more than 42% compared to last year. However, we manage our margin well and the gross margin is still 30%. EBITDA margin 24% is quite a good result. Since there is a general trade in Ukraine of decreasing acreage under grains and increasing acreage under oilseeds, We see other farmers also increasing production of soybeans and rapeseeds. For soybeans this year, the harvest is expected to hit 6 million tons, which is all time high for Ukraine. Generally, in the environment where raw materials are abundant, which we expect this year, we expect to enjoy a pretty good crushing margin. Kettle farming increase in production. We increase in our herd, so the increase is not just on the milk side, but on byproduct meat which we sell. The prices for premium quality milk, which Astarte is specializing in, is also holding up quite nicely at above 400 euros per tonne. And that allowed us to hold gross and EBITDA margin at above 40% this year. There is a general trend that small households which keep livestock reducing their output and industrial agricultural producers such as a starter increase production of raw milk and this trend remains intact. So we believe that dairy product processes in Ukraine are very much focusing on consistent premium quality milk which we supply to them. This is it for the main part of the presentation. So we welcome your questions, please. Let me just go into the chat box to check.

One second. OK.

So first question from Carol. You haven't plans to increase land area used for crops production, including sugar beet. And yes, so let us reply. Let us do the first question. Because the second one is actually different. At the moment, we are happy with the acreage we have. As coming back from the history of Astarta, it was primarily an agricultural and sugar producing company. And our acreage is very much affected by the crop rotation process related specifically to sugar beet. According to agronomic science, sugar beet should be sown once in five years. So at 40,000 hectares of land under sugar beet for the crop rotation, we need over 200,000 hectares overall. And this is exactly what we have at the moment. But we will continue to monitor the situation in the market, and see how the land market develops in Ukraine, if there is any opportunity to expand in the medium term. Current outlook for buying land that are leasing in area where company is operating, Unfortunately, under the current law on the land market, companies which have foreign beneficial owners are not allowed to purchase land. And this has been our business model from the start. We are a large scale operator of land. We operate land on the basis of leases we focus on having long-term leases in place and since we have foreign shareholders we are not allowed to purchase land the land market in general was opened up to foreign ownership or sorry, to corporate ownership from this year. But we did not observe significant turnover in this respect. So for the moment, the Ukrainian agriculture continues to operate on the basis of long-term leases. Marcin, why farmers have seen similar acreage with BEAT in 24? if the export to destinations outside EU squeezes margin by that much. Vyacheslav, maybe you have more idea about other farmers. I will start replying regarding Astarta since we are... one of the largest sugar producers in Ukraine. We would continue to produce the amount of sugar that we produced last year. We see opportunities in the other markets. And the question about other farmers, I will pass on to Vyacheslav.