Financial result

The company has demonstrated solid performance and finished the year with strong financial results. Net assets grew by 76% (2010 = 352 639 2009 =231 414), revenues increased by 71%, (2010=219 330 000 2009=128 239 000) EBITDA by 106% (2010= 100 708 000 2009=48 870 000), net profit by 172% (2010 80 041 000 2009=29 449 000), and operating cash flow by 77.5%.

Development

In 2010, ASTARTA substantially extended its operational assets. Agricultural land under cultivation was scaled up to 210 thousand hectares; processing capacity of sugar plants grew to around 27 thousand tonnes of beets per day; and cattle herd increased to 24 thousand. The first phase of a modern cattle farm, with design capacity of up to 1,200 animals, was launched; and an agri-machinery park was boosted by more than two hundred harvesters, tractors, and other heavy agri-equipment. In line with growing production assets, the Company reinforced the supporting logistics and infrastructure network, commissioned and acquired new crop and sugar storages, forage production facilities, and a seeds pre-treatment plant.

Operations

The Company continued to improve its operational efficiency in main business segments through introduction of modern procedures like GPS precision farming in agriculture, advanced energy saving technologies in sugar processing, and automation of everyday enterprise activities at all levels of management. At the same time, the weather risk for agriculture has materialized, and due to abnormally hot summer months of July and August the major crops, including sugar beet were damaged providing lower than expected yields per hectare.

Environmental safety and social responsibility

Being an active member of the UN Global Compact initiative, and fully recognizing its environmental and social role, ASTARTA is assertive in introducing ISO and HAACP standards into production and management, as well as in supporting local communities and promoting cultural diversity and historical heritage. The environmental and health safety action plan has been set together with European bank for reconstruction and development (EBRD) and Dutch development bank (FMO), to follow a clear road map, and eventually to bring ASTARTA’s plants and farms up to the international and EU standards.

Business environment

During the year, there were some encouraging changes in the regulatory framework and competitive landscape. The Government extended the term of preferential taxation for agricultural producers till January 1, 2018, thus supporting development of agriculture as of a priority sector in a national economy. A number of other long-term incentives for the corporate sector (in particular, a gradual reduction of VAT and corporate tax) were introduced within a new Taxation Code which is active since January 2011. By the end of 2010 through the beginning of 2011, there were a couple of M&A’s in Ukrainian agriculture and food industries, including sugar production, as consolidation is in progress. The Company views this as evidence of a high long-term attractiveness of this sector in Ukraine and as positive moves towards predictable and sound inter-industry dialog.

Strategy and outlook

ASTARTA will continue its dynamic growth by taking advantage of available opportunities to expand its businesses. The primary targets for the Management in this regard would be a dynamic expansion in existing business segments, increasing efficiency of agri-operations and processing, and a further diversification and quality improvement of the Group’s key products.

UkrAgroConsult