Astarta Holding PLC

Thank you very much for your interest in the call regarding first quarter results of a starter. This is one minute past two. We will start the call. If you have any question, please put it into the Q&A box so that we don't have background noise. Everyone is on mute except me at the moment and I would like to go through our presentation. First quarter results were affected by our results in the agricultural segment. we had majority of our produce sold by year-end. So compared to the first quarter this year, we had lower revenue volumes compared to the previous one. We'll go through this in more detail in the agricultural segment overview. Other segments such as sugar production and soybean processing were flat on the top line and we have a good increase in cattle farming as we continue to grow our operations in this business segment. Profitability-wise, EBITDA was lower, but the margin was higher on the account of lower selling and distribution costs. If we stripped the impact of IAS 41 from our results, gross margin was lower, but the EBITDA at 29%. Now, if we are going into our cash flow and balance sheet, we have very healthy operating cash flows, although reduced from 42 million to 35 million before the working capital. We have significant increase in investment cash flows compared to last year. This is around 20 million euro as we replace our agricultural fleet and we also implement one of our largest investment projects which is soy protein concentrate in the Poltava region. Still, our net financial debt is currently at a positive cash position and the overall leverage ratios remain low. If we are looking at agriculture results, they were impacted by lower corn sales volume, which was over 110,000 tons compared to 200 last year. We also sold off majority of our produce of wheat and sunflower seeds compared to last year. There is a positive pricing environment for corn. while wheat was flat and it was a very good increase for the price of sunflower seeds which also positively impacted our margin. One can also see CAPEX increasing and this is the replacement of agricultural machinery as we are increasing our scale of regenerative agriculture. As of date of this report, we are in the middle of spring planting the acreage. remains largely the same as last year. However, we see a lower acreage under soybeans, but we have higher acreage under sunflower seeds due to the more positive pricing environment. We also slightly increased our acreage on the corn and sugar beet is at 34. If we are looking at the general market, we can see a nice convergence between international prices and domestic ex-works prices in Ukraine. And this is thanks to the good operations of Odessa-based deepwater seaports, allowing all agricultural products, which are grown by Ukrainian farmers to be exported in the most efficient manner.

Sugar production.

Compared to the previous year, first quarter, we have higher volumes of sales. And that somewhat offset lower prices for sugar, which averaged 525 euros for the first quarter of this year. That combined with lower SDNA expenses allowed us to increase EBITDA margin to 15%. Half of the volumes that we sold in the first quarter were exported. The main export destinations were in the Middle East, as the European market is currently difficult for Ukraine because of the uncertainty for the future trade regime. What we heard today is that Ukraine and EU are still working on the long-term solution. Therefore, the ATM, autonomous trade regime, which was introduced as an assistance to the Ukrainian economy, last year will not be renewed. There is an interim measure for the remaining seven months of this year, which will provide the parties more time to agree on their multi-year trade regime, which will give more gradual reopening of the market for Ukrainian producers. So for the second half of this year, we haven't seen the figures published yet, but we largely expect seven twelfths of the volumes which were agreed under the DF-CTA before the war between Ukraine and the EU. And these expectations led to Ukrainian farmers reducing acreage under sugar beet, so it is down by 16%. Ukraine remains a major exporter of sugar, but the volumes which are going to the EU are much smaller because of the current restrictions. So the key markets are in the Middle East, the most important ones being Turkey and Libya. Soybean processing, we have steady operations and lower price for soybean meal was well compensated by higher prices for soybean oil. So, we have revenues remain largely flat. However, profitability is lower this year with crash margins going down, which is reflected at the gross margin level of 19%. As Ukraine experienced shortages of sunflower seeds last year, we can see moves by the farmers to increase acreage in that crop at expense of soybeans. So, the Ministry of Agriculture officially forecast soybean area to be down by 9% this year. The final figures will be known later after the planting is done. Cattle farming, we continue to increase our herd and the milk production. The quality of our product remains high and we see the premium paid for this high quality milk. price-wise remains high. However, there is an upward pressure on our costs, and that led us to negative biological asset evaluation booked in this business segment of 8 million euros, and negative EBITDA for the first quarter of this year. This is in a nutshell regarding our first quarter results. I'm going to switch to Q&A. Just one second, I'll stop sharing for a moment and then we'll come back so I can see the Q&A box.