OREANDA-NEWS. August 26, 2010. ASTARTA Holding N.V., vertically integrated agri-industrial holding, leader of the sugar and agricultural sector of Ukraine has published its semi-annual report for the six months ended June 30, 2010.

Key Financial Highlights

Consolidated revenues increased by 85% y-o-y to EUR 86 mln.

EBIT up 107% y-o-y to EUR 43.3 mln. EBIT margin grew to 50% from 45%.

EBITDA increased by 104% y-o-y to EUR 51.7 mln. EBITDA margin increased from 54% to 59%.

Net income up 119% to EUR 41 mln. Net profit margin for 6 months 2010 constituted 48% vs.40% a year before.

Cash flows provided by operating activities grew to EUR 31.1 mln from EUR 8.2 mln a year before.

Key Operational Highlights

Total operated land bank increased to 185,000 hectares.

Sugar plants are fully prepared for the start of the sugar campaign. Increase in the processing capacity to 27,000 tons of beet per day is due to thorough modernization campaign provided by the Company.

Yields of early crops down due to unfavorable weather conditions but still 20-25% above Ukrainian averages. The decrease in harvest should be compensated by growing international and domestic prices for grains. Later crops like corn, soy, sunflower and sugar beet were not such strongly affected by hot weather.

In order to increase diversification, further development of business, and raise revenues and profitability, in 2010 the Company initiated trading by crops and sugar.

Financial Highlights

Revenues, Gross profit and cost of revenues

In the first half of 2010, revenue grew 85% y-o-y to EUR 86 million owing mainly to higher sales of sugar and cattle farming produce supported by better pricing environment. At the same time, the cost of goods sold grew only to EUR 45.2 million by 39%. Gross profit raised from EUR 8.2 million in H1 2009 to EUR 37.1 million in H1 2010 respectively.

Profit from operations (EBIT) and EBITDA

Profit from operations more than doubled y-o-y due to a significant increase in the gross profit and rigid cost control procedures. General and administrative expense was almost stable, thus constituting 5.3% of the revenues vs. 9.0% in H1 2009 as a result of strong management efforts. Selling and distribution expense was growing in line with growing sales, representing 5.1% of the revenues vs. 5.8% in H1 2009. The Group's profit from operations (EBIT) grew 107% to EUR 43.3 million, while the EBIT margin improved from 45% to 50%. EBITDA grew 104%to EUR 51.1 million, EBITDA margin to 59% from 54% a year before.

Profit before tax and net profit

Profit before tax was up 129% to EUR 42.8 million in H1 2010 vs. EUR 18.4 million in H1 2009, and the net profit up 119% to EUR 41 million vs. EUR 18.7 million respectively.

Financial position and debt profile

The Group's total assets grew y-o-y by 60% to EUR 314.3 million. Equity increased by 126% to EUR 181.6 million. Net debt/equity ratio improved significantly from 103% in 2009 to 46% in 2010.

During the first six month of 2010 the Group repaid number of short-term debts and secured the long term financing from Landesbank Baden-Wurttemberg, Wells Fargo HSBC Trade Bank, and EBRD. The total debt in the Ukrainian hryvnia equivalent decreased 11%

y-o-y. As a result of the successful loan portfolio optimization, interest expense on bank loans decreased 22% to EUR 3,479 million from EUR 4,472 million a year before.

Key Products, Production and Sales

Revenues breakdown

Sugar sales represented 72% of the total revenues vs. 60% in the first half of 2009. Owing to a more aggressive growth in revenue from sugar sales, the share of revenues from crop sales dropped from 22% to 16%. Share of revenue from cattle farming slightly decreased (8% vs. 9% in H1 2009) despite of higher volumes on 13% and dynamic increase in prices.

Sugar production and sales

During preparation to the next production season, ASTARTA modernized its sugar plants in order to increase energy efficiency and to raise processing capacity. This reconstruction will lead to a cut in the sugar prime cost already in the 2010 season.

Revenue from sugar sales more than doubled compared to the first half of 2009 to EUR 61.5 million (UAH 650 million) on a back of favorable pricing. In terms of volume, sugar sales grew from about 90 thousand tons in the first half of 2009 to around 101 thousand tons.

Crop production and sales

In the first half of 2010, ASTARTA actively invested into agricultural production. It increased the operated land bank by about 10% y-o-y to 185 thousand hectares, substantially upgraded the agricultural machinery fleet, and expanded the logistics and grain storage capacities.

Revenue from crop sales grew 37% to EUR 13.5 million (UAH 142.7 million). Exports amounted to about 62% of the total revenues from crop sales. In terms of volume, sales of the key five crops were just marginally lower than in H1 2009.

To the date, ASTARTA's agricultural companies have harvested 160 thousand tons of early grains on the area of 53 thousand hectares. The average yield of winter wheat is about 3.4 tons per hectare, and 2.6 tons per hectare for spring barley. The decline in yields of wheat and barley was caused by adverse weather conditions. On a positive side, because of hot summer, the most part of wheat produced this year is of high milling quality, and will have much better pricing than the lower grade grain, especially in bullish crop markets.

Production and sales of cattle farming produce

In the first half of 2010, ASTARTA's farms produced 24.7 thousand tons of milk, of which 23.3 thousand tons (+13% y-o-y) were sold to dairy processors. Due to growth of prices and effective marketing campaign, the Group's revenue from sales of cattle farming produce grew 74% y-o-y to EUR 7 million (UAH 73.4 million) to secure 8% of the total revenues.

Export sales

Revenue from export sales reached USD 11.6 mln increasing 57% from USD 7.4 mln in H1 2009 and constituting over 10% of the total revenues. Thus, ASTARTA stayed fully hedged on cash flow level as export revenues amply covered interest payments and amortizing part of principal repayments of banking debts received in foreign currencies.

MANAGEMENT COMMENT ON SEMI-ANNUAL RESULTS FOR 2010

Viktor Ivanchyk, CEO of ASTARTA Holding N. V. said:

The first half of 2010 was positive for strengthening ASTARTA's market and financial position, as well as securing a good ground for the Group's further strategic development. During the first six months of 2010 we have invested about EUR 23 mln in acquisition of long-term land lease rights, agricultural machinery, storage capacities, and modern equipment for sugar plants and farms.

Now we are at the final stage of preparation for the new sugar campaign, have started harvesting of technical crops and land cultivation for the 2011 harvest. All works are going in accordance with the plan.

We also continue looking at some acquisition opportunities in Ukraine that might result in a faster growth of the Group.