Good afternoon, dear listeners. Welcome to AUGA Group Investor Relations Conference. I'm Paulius from Nasdaq Vilnius, and I'll be moderating today's event. We will start with the presentation from the management, which will be followed by the Q&A session. Please be informed that this webinar is being recorded and will be available for a rewatch on Nasdaq Baltic YouTube channel. As always, I encourage every one of you to submit your questions in the Q&A section at the bottom of your screen, and you can enter them either anonymously or with your name. With that said, I'm pleased to introduce today's presenter, the Chair of AUGA Group Board, Kęstutis Juščius. Kęstutis, please, the floor is yours. Good evening, ladies and gentlemen. Although in November, my role in the organization changed from CEO to chair of the board, I'm still involved in the group's activities, working on key issues, so I take responsibility today to present financial results and performance of the company. Okay. Today, I will present financial results for nine months of 2023 and corresponding overview by segment, and outlook for year 2024, and key developments in the strategy, implementation, and technological projects. The revenue of nine months of 2023 has practically stayed on the same level with 2022, because mushroom and milk sales are stable, and crop production sales include not only this but also the sales from the previous season. So why we have the revenues on the stable position? The drop in organic food consumption had driven down the prices of organic commodities and had a major impact on our financial results. Group has also delivered... already taken strategical decisions to address the situation and to diversify part of this business. A third of our land will be cultivating using regenerative conventional farming practices. Let's go and look through the segments about performance. Two-third of land is dedicated to cash crops such as wheat and legumes. The drought of the spring in 2023 has negatively affected the yield of legumes mainly. Some crops are sensitive to the climate. Due to this, we decided this summer to cultivate some of the land using regenerative conventional farming methods and increase the areas planted with winter crops, which are much more resistant to weather conditions. In 2023-2024 season, winter crops will account for 62% compared to 52 in the previous season. If we had such a percentage of winter crops already this year, the crop growing segment would not have experienced such a losses. Conventional farmers, they don't have these issues in the farming because normally 85% of conventional farming here in Lithuania is related with winter crops. Regarding the cost generated by segment, the increase in salaries amounted to only 3% of all costs. The remaining part was attributed to the elevated prices of seeds and fertilizers, which peaked during the 2023 season. However, we observe that the situation is stabilizing, and trends indicate that prices for seeds mainly are decreasing. For example, the cost of wheat seeds for the 2023 season was EUR 115 per hectares, and while now it decreased to EUR 75 per crop for season 2024. The prices of organic commodities was another factor that led us to initiate cultivation on part of this land using regenerative conventional farming methods. As illustrated in the graph, the price of AUGA's organic commodities has significantly approached conventional commodity prices. The slow organic commodity market can be exemplified by the spot selling prices, which are significantly lower than statistical average you see on the graph. Additionally, the surplus of organic commodities has not created opportunities for better trading positions on the spot markets. In year 2022, it was really huge decrease of organic consumption in the retail market in Europe, and this created quite a large stocks for season 2023. Why even we see on the graph high prices here on wheat, this doesn't mean it reflects that you use the spot market prices are the same, because this statistics which you see on the graph is taken from all the agreements. It is long-term agreements, shorter agreements, and spot price agreements. Many farmers, not only Auga, have decided to exit organic farming this year. For example, Lithuania, one-third of larger, like 200 hectares farming farmers were left organic farming systems to the conventional ones. So the market dynamics are likely to change. Potential for more tangible price premiums for organic, it could be possible in nearest seasons. In 2023, the area planted with beans were 5,720 hectares, compared to 3,900 hectares in 2022. However, in terms of yield, the situation was opposite. While in 2022, we achieved 3 tons per hectare, so in 2023, our yield was only 1.3 tons per hectare, due to spring drought, which resulted in EUR 3.95 million loss of the biological value of beans. Meanwhile, beans are harvested mainly in September, so the negative impact was reflected also in Q3. Preliminary estimate is based on the 2023 Q4 harvest results, the valuing of 2024 harvest, but the current market prices, which will be adjusted at the end of the year. So this is the number. What you see here on the projection is it's not a real projection because a lot of changes in the main assumptions will happen. So this is just a view how we see the fourth quarter if the situation, market situation will not change. The decreases commodity prices yet have had a major negative impact on the crop growing segment. These are the numbers behind. On the Q3 2022 price level, the total gain of regulation of Q3 2023 would have been EUR 9.1 million. So the price impact for this year is minus EUR 9.1 million. Sales results dropped by EUR 2 million due to crops sold at lower than previously accounted prices. So, every year we sell partially new crop and partially crop which is were harvested from a previous season. So this is minus 2 million actually happened from the sales of last crop results. The group also received EUR 2.6 million less subsidies after conversion of one-third of our organic land to conventional as one of sanction for 2023. So, in summer of this year, we decided to stop growing on one-third of our soil, and actually, we made all the farming accordingly to organic standards, but because we quit a program, so we not received subsidies in the amount of EUR 2.6 million, which actually, in future, it will not happen because it will be another farming models already implemented on regenerative conventional ones. It also has been offset by the higher subsidies per hectare in the new agricultural scheme. So in general, the agricultural schemes for next previously next coming years also, we include also some greening subsidies, which our company, we can't replicate because it was different regulation. So from 2023 and forward looking, we will see the different numbers in organic subsidies. We will later we'll discuss about 2024. We'll explain how much we will subsidies we're planning to receive for season 2024. Dairy. It's important to note that milk yield per cow has grown by 4% this year in the 9 months of 2023 versus the same period of last year. But it's reflected in different places, but sometimes we don't see this milk increase because part of this milk yields are sold already in the form of FMCG, and that's why we don't see in the sales of milk this increase. But in total, our cows were more performant, performed better versus 2023. Also, it's important to mention that we also see a positive deployment of commodity milk price, organic commodity milk price, since the lowest point in summer 2023. We really had a really dip in the prices for organic milk, but we see really huge improvement and the price for next coming months we see approximately 48 euro cents or 480 EUR per ton of organic milk ex-farm. In general, the total volume of produced milk has grown by 2% year-on-year because we had a little bit less production producing cows for this year. However, the recorded sales volumes in the accounts has been 1% lower, like I said before, because part of this milk is used for production for our dairy products, which are reflected in the FMCG results. The decrease in the price levels for raw milk mainly resulted in a gross loss. It's important to mention that at the 2022 price level, the results for the first nine months of 2023 would have been EUR 1.7 million. So it is really huge differences related with commodity prices of this year. Mushroom growing. Mushroom growing business is marked a healthy and robust performance during the nine months of 2020. But we still have improvement here to improve our production and efficiencies. The prices for mushrooms was 17% higher year-on-year and remains stable. We don't. This is not anymore price increase. The price just was reflected by increase of costs and inflation, where we are increased to the consumers to the customers, and the existing price we expect for future coming months. We don't expect prices increase. In the third quarter is impacted by seasonal decline. As usual, we always have a little bit less production in the third quarter because it's related with wild or let's say, forest mushrooms, which are competing in kind of form, especially in Baltics market, with champignons. However, this year, the production volume in Q3 was higher compared to the previous years, so we don't have so huge drop in the third quarter of 2023. The profitability of mushroom growing is improving after the last challenging years. Higher production prices, control of production costs and lower energy prices, stabilized energy prices, have contributed to the improved results in the mushroom segment, and probably this is one of the segments which, in this not well performing year, improved the best. FMCG segment. In July 2023, our group sold the Grybai LT factory, which produced ready-to-eat soups and preserved products. We don't talk about why we sold this. This was previously already announced. That is not committed to our long-term strategy, and this is not, our products were processed. It's mainly where third parties raw materials processed in this facility. And in the third quarter, this production accounted for 41% of total segment sales, as shown in the graphs. We see also the increasing part of our new FMCG or sustainable product basket, how we call it, and no cost to nature basket. It is steady increase quarter by quarter. The remaining part, and now we introduce it on the market on the second quarter, but it was just introduction on the market, so it was the first steps on the market. In the third quarter, we already were placed in most of the retailer chains in Lithuania. The new coming products will be introduced in nearest future. Our new product line is exclusively produced now from only organic raw materials sourced from Auga farms. So this is not any more processing of third parties, like it's where in the soups and ready meals, and the farms which are committed to sustainable farming practices. Important to mention that this is this milk products and dairy products and also the and oats oat products, they are much larger food category than the group has operated so far in this ready meals category, because this is times more the category. At the beginning, this product line consisted of nine products. In the third quarter, regular UHT milk and lactose-free milk were introduced to the market, so we're adding more and more products to our portfolio. Additionally, Auga Group has started entering the HORECA segment, and our milk, especially with UHT treated milk, is a normal milk for coffee shops and houses. It was introduced on the market in Lithuania. So, let's go for the outlook for 2024. Good. So I just want to talk a little bit. This is important, important statement, probably the most important statement for today. Our company never presented any forecasts. It's mainly because our business is mainly related with a lot of fluctuations, with weather conditions, with commodity prices, drops and so on, the changes and so on. But today, we're facing different situation, where we change completely our business models, where we are change a part of our... very big part of our business to a completely different business model, to conventional regenerative farming. For investors, it is not possible to calculate and count what will be impact of this major company change. So we decided, for next coming season, to make a projections of our future, incomes, sales, gross margins, and, sorry, not sales, but gross margins and EBITDA. So we take it with showing you the most important assumptions. Out of these assumptions are generated gross profit, and from gross profit, after excluding of depreciation, after excluding the OpEx, we have result of EBITDA. So we take it all, our business segments, we forecast that future sales, future prices, future harvests, and yields, and we added extra new our operations, which are now the new operations, and it's transferred to EUR 23.3 million EBITDA for season 2024. So then the largest impact to increase it forecast is, of course, crop growing segment, where we take at the numbers, which are actually from a price level. So we have now very comfortable situation because conventional prices of the commodities, it's that there is this MATIF standard where you can fix the prices for next autumn today. We took the prices from organic farming prices, exactly the prices which we use for 2023 crop price calculation. And organic milk prices we took from today's price, which we receive on the market for €0.48 per liter of organically produced milk. So it's important to mention that we have two types of farming at the moment, so conventional farming and organic farming. So organic farming for 2024, we're planning for 22,700 hectares, and conventional farming, originated conventional private farming practices, it's planned for 15,500 hectares. We also estimate yields for the main cash crops. Conventional winter wheat is 6.7 tons per hectare, conventional rapeseed, 3.5 tons per hectare, organic winter wheat, 4.2 tons per hectare, and organic pulses, which is consists mainly of beans and peas, is 2.2 tons per hectare. Based on announcement from government announcement and the policies provided informations we have, estimated agricultural subsidies for the year 2024 we plan on an amount of EUR 13.4 million. Altogether, it's important to mention also that we have extra one activity, which we mentioned here in this plan. We plan biomethane activity, and this biomethane activity, we're planning EUR 2 million for next coming season. So mainly this is related to the little bit delay in the starting up operations related, we will discuss a little bit later, then we go on the segments of our strategic implementations. But, so we're a little bit reducing our forecast for coming season, what we announced before, because the delay, which will happen in the first quarter of next year. Also, we wanted to discuss about strategy implementation and tech projects we're developing at the moment. So biomethane infrastructure objects have become operational. We are running in the test mode. There was no regulatory framework allowing biomethane injection to the grid delivered from a remote biomethane facilities. So the company is currently working on the possibility of connecting to the national grid and set out a commercialization plan in Q1. This is expected to deliver EUR 2 million annual profit on the current price level. So importantly, we mentioned that, this activity, what is started here in Lithuania, is where for the first time, when the in the village, in, let's say, in countryside, biomethane operations need to be... The gas need to be compressed and delivered to the grid, into the pipe, and to get all these permissions and to get all the certification for the green certifications. So Lithuanian government need to change regulations and law, which actually took more time like we expected, and it was too slowly in our opinion. But at the moment, we see that all the regulation is finalized, and we can start the partners in where we have this injection point, we can start injecting the biomethane, and we can load our facilities on full mode. The AUGA M1 tractors from the first production batch have undergone 2023 seasonal field tests. The generated valuable findings will allow AUGA Tech company to improve the technology and ensure its reliability on the scale. Important message: half size of M1, electric multifunctional prototype tractor, which will be able to cover the remaining of the farming needs, will be presented in Q1 2024. Both tractors, big and small one, are complementary technologies that will cover the full scope of tractors' demand for farming operations, while addressing 100% of fossil fuel emissions. The combination of both tractors paves the way to the commercialization of the emission reduction technologies, and AUGA will take leadership here in the world. Specialized feed technology. AUGA Tech has been testing the technology for the last two years. One of the most remarkable achievements, AUGA Tech, actually, this is a specialized feed technology. In November, AUGA announced the results of technology testing, which were confirmed by independent scientists and universities. We achieved 13% increase in the milk yield and 32% reduction in emissions from cattle digestive processes per liter of raw milk. Now, we are sure that this technology works at the prototype level, and the next step is to prepare for production on large scale. We will continue preparing for the commercialization of this technology, and we expect and we believe that this technology can change the industry, dairy industry. A set of AUGA technologies, hybrid and electric tractors, alongside specialized feed technology, have been delivered to a degree that shows the functional viability and, above all, ability to address the pollution problems. These are ready to be scaled, but not at the expense of AUGA group itself, operational and capital expenditures. AUGA has invested enough to bring this technology to life, and as we deliver value to society at large, we will be looking for similar-minded partners to bring sustainable farming technologies to scale. These technologies will be further streamlined by blended financial instruments that may include attracting additional equity, securing sustainability grants, and applying for EU Green Deal Industrial Plan schemes in the between the first quarter and second quarter of 2024. It's important to mention that the public information which we have is on this Green Deal Industrial Plan here in Lithuania. It, the plan is up to EUR 1 billion funds, which will be available for companies developing sustainable technologies. The plan is already approved by European Commission and local authorities preparing the application forms, and Auga definitely will apply to this plan. And the numbers and the amount of resources we are planning to apply, we will publish later. This week, I just came back from the annual event, Business & Philanthropy Climate Forum, which is in COP28 private sector engagement platform to convene and engage business leaders and philanthropists from around. The forum convened 500 businesses and philanthropic leaders, alongside policymakers, to accelerate solutions and drive bolder results. We had one day dedicated for solving food crisis. The main issues that everybody understands is that we need to boost food supply and to reduce emissions. We also need to address the challenge of yields from the negative climate impacts. With climate change, which is, if you will, the climate will takes a speed, so actually the yields will reduce, and we need to increase. And if we not change this, so the practice stays like it is now, so in 2050, we will produce two times more emissions, what we agriculture produce at the moment. So or 50% of all the global emissions will be from agriculture. So it is possible, it is for sure it will be the situation, no one will allow to happen. In discussions, often emphasizes that there is no silver bullet that could solve these efficiency issues and ensure a more sustainable food production. A lot of speakers, they talk about this regenerative farming, and the farming which allows to sequestrate in the practices, some carbon to the soil. The problem is that emissions coming somewhere from the else. The emissions coming from ruminants, emissions coming from fossils on the farms, emissions coming from soil emissions, from nitrogen oxides because of wrong fertilization schedules farmers do now at the moment. It's only one silver bullet, and one silver bullet to solve this. This is actually, we are developing this, the silver bullet, technologies that address the main emissions from agriculture and will reduce the emissions from agriculture. Our development technologies is actually related to 90% of emissions happening in agriculture. Auga will be a front runner that supplies emissions-reducing technologies to the world. With the help of these technologies, the world will be fed with food produced in a climate-neutral way. So, and finally, we keep our strategy, which was published in 2020, and the final results will deliver that Auga will become synonym for sustainable food and lifestyle. There are some slides about our shares, prices, and turnovers. And of course, this is important notices and important disclaimers. We are very open to the questions. Thank you, Kęstutis, for the presentation. Now we'll proceed with the questions. Before that, I would like to remind you that you can submit them in the question box at the bottom of your screen. So we have quite a few questions that were submitted prior to the webinar. We'll start from those. Beginning with the first question: What are financing and refinancing needs for the next year, 2024? Great. So, our company use a lot of different instruments, financing instruments. We use a lot of credit lines which are renewed every time we finish it, because we are one year or two years longer periods and terms. This is like normal process that every year we review some credit lines, but if you take a look on our financial results, we're always publishing how many of the loans we have in the next coming year. Actually, these loans are renewed on a normal basis. So if you discuss about long-term repayments, so we have, at the end of 2024, we have, to repay long-term, loans, which is in the amount, sum of the amount is EUR 26 million, EUR 26 million. Thank you for the answer. Proceeding with the next one. Are there any bank loan covenants in danger? Yeah. So, this is we, we deliberately, how to say, poor financial results, and this is related with covenants, of course, which will be break to. We have covenants with banks on the group level, mainly. And, we have in the nearest time discussion with our financing banks. We had already this kind of situation two years before and three years before, we had the same financial institutions. And, definitely we'll find the agreement with the banks regarding not using any how to say, rules or penalties against Auga for the breaking the covenants. Thank you for the answer. The next question is: Why has the weight of milk sold as organic has declined? Good. This is amount of milk sold as organic, because decline is just a few percent, 5%, probably, or 10%. And part of this organic milk we're exporting also outside of Lithuania, like a raw material for processors, mainly in Poland. And this last year, 2022 and 2023, this first part of the year, the prices, energy prices, taxes, all the interest rates for the people being way increased, and this inflation shock provided to the shrinking down consumption for ready products, from partially decreasing from ready products. That's why part of this milk we sold for conventional market. But now we see the recovering of demand, and we mainly sell now our milk in the organic prices, and we don't need to use it, we don't need to use at all conventional market. Thank you for the answer. Proceeding with the next one. How is consumer goods segment developing? Okay, so we talk about this new consumer goods segment. So it's we just started second quarter, and the third quarter is it's we- like I said, we set on the main main retail chains in Lithuania. We test different different marketing the the messages to the consumers regarding sustainability sustainability values, and we test which will be works the best. At the moment, we're increasing our sales, and month by month, we're adding new customers. And not only the customers new customers like places where we sell, but also expanding our product portfolio on the existing retailers, expanding our market share. So it is, it is really very fluctuating and, how to say, changing business segment, and, and it's very fresh and very new. So it is not, to say this is, not as let's say it's skyrocketing, but we are step by step, we increasing and, our improvement, especially in the margins and the quality of delivery. Thank you. The next question is regarding targets. What are your targets for the next three years? I don't know which is, what's targets, which kind of targets, financial targets, business targets, strategy targets, whatever. So it's a but if it, if we talk about three years, so definitely, on AUGA group company level, AUGA Tech part will become a segment which will generate gross margins and will generate profits out of this, and will become one of the major drivers for AUGA's value and for AUGA shareholders. ... Thank you. At the same time, I just wanted to just a little bit to talk a bit that the improvement of existing operations together with new technology delivered specials. First of all, for our farms, where we are managing. So it improves not only that we can have extra incomes from the technology sharing or technology sales of our technology, but we also will improve our performance on the main company where we are generating now our main evidence of farming agriculture both conventional and organic. Thank you for the answer. How much did management pay increase in 2023? Okay, so it's the management pay, it's increased not really big numbers, so it's approximately 15%, year-on-year, if you discuss which kind of management, lower range or higher managements. But definitely, with this financials, what we have now delivered for this year, for next coming season, we see much less increase only on a special, only special performance management will receive a higher increase, but normally we don't have this increase, so huge increase for coming 2024. So that, like you've seen also in our presentation, our aim to reduce our OpEx for 2024, to decrease our OpEx by EUR 1 million. So it's included also our much better, not much. So, overall, the expenditures will be on the cost cutting and practices. Thank you. The next question is: For the operating expenses, marketing expense has the biggest portion and increased significantly year-over-year. Year-over-year. Could we expect similar trajectory going on for the next year? No. So this is, we see opposite projections. It's important to mention that the year of 2023, we had also a quite significant part of changing in operations. So we moved our companies farming operations. We separated our dairy business from farming operations on separate entities. We established cooperatives where there'll be first technology sharing hubs. And this causes for some of also administration, some of legal, some of also notarial expenditures, which is what's related with this transformation. But also we had quite intensive marketing expenditures for 2023, related with new launching a new product line here in Lithuania, and this is still will not happen. Another important thing that also excluding partially in Grybai LT, like a facility, so it will be part of our cost related with external visiting and external exhibitions, visiting traveling. A lot of costs will be not anymore used and needed because we're concentrating on FMCG for local markets and don't use anymore our resources for trying expand ready meal market in international wise. Thank you for the answer. What is the outlook on prices and yields for the quarter four of 2023? Prices. So the prices, prices, if you look on the graphs, so, the prices we already fixed, and this is, it is stabilized. They are not, not falling down anymore. So it is on the... So the prices will stay on the prices which we already fixed in our pocket, in the, in the third, end of the third quarter. It's only very, very small, part of, crops, a few thousand hectares, which are related with, fourth quarter, will be accounted, for fourth quarter. Related with the prices, so, and, the yields, the majority of our yields are already reflected in, an impact to, to result of, quarter. Fourth quarter is, it's, it's already presented in the third quarter results. So it's important to also mention that, for the pocket, we have this year, much more, much more, winter crops, already drilled and already in the, in the fields. So when we calculate in fourth quarter revaluation of, of the crops, so will be bigger portion of, crops will be, participate in the revaluation process. So we don't-- we can't tell which amount and what will be numbers, because we're always fixing these numbers at the end of the pro... At the end of the accounting period, so at the end of December, actually. Thank you for the answer. Regarding your debt structure, what is the portion of fixed to floating rate on your debt? So, okay, majority of our debt, fixed debt, this is our bonds, and this is approximately probably 40% of our total loan portfolio, is approximately 40%. And, all the banking products, which is very common practices here in Lithuania, as well, they have floating structure. So today, yes, we face quite a lot of cost for the financial costs, but we see from this Euribor that next year, probably the price for, especially for this fluctuation, it will decrease. Thank you for the answer. Regarding your cash position, and given you have to pay your interest expenses, are you planning to raise additional debt in fourth quarter of 2023? Or there might be a possibility for potential equity increase in early 2024. Is there any other possibility how to improve your cash position? Okay, great. So our company is, just really works with a lot of, a lot of big number of loans, from different banks, different financial institutions, so. And always is, always is a movement. Some loans are always repaying, some loans are new attracted. So this is like a living organism. If you discuss about, about the equity attraction and so on. So equity in this, you know, so equity is quite a tricky thing because, to publish, that we would like, we definitely will go to this equity raise, so we need to make, the, additional announcement, which need, need to be agreed on the board. And, at the moment, there are no any decisions yet, confirmed, confirmed regarding this, equity finance. But looking forward, that we need to finance future or developments of technology developments. We will look in the different forms of possible equity attractions. It could be looked in the forms of to attract to the case, special case, for example, for the technology part, that we don't need to use our resources for technology development, or it could be also one of the forms that we can raise the capital on the AUGA Group levels. We have both opportunities at the moment because we have separated business units, other technologies on the separate arm, and we are really flexible to both to work on the different options. But decision regarding equity raising is not yet made. When it will be made, so we will announce immediately. Thank you for the answer. The last current question that we have is regarding the new feeding technology. As it increases productivity by 13%, but what is the cost situation with this technology? Are costs rising less than productivity? The question is related with this, that, this technology need to finalize the exact cost, how will be cost, and so on. So, it's in general, we produce from the same materials which you do doing farming normally, so from the same materials. But we process grasses in the second form. And, this processing technology is most not yet on the big scale where you can exactly calculate all the, how to say, efficiencies, cost, energy, and all these kind of things. But, what's important to mention that this yield and productivity in the cows, it just really takes very big part of gross margin. So increasing yields, it's a, it's in, in general, it's decreasing, cost, all the rest of the cost because the liter of milk, because you don't need to have, any more, any other investments in the farmings and so on. So you have, you have, you can produce the same, the same amount, milk with 13% less of hard capital and assets, in the, in the dairy business. So, so the technology, we look, so important to mention, when we developing technology, so this is not that we're doing certain for futuristic or, like, like, for the purpose just to make something nice. So we always validate the technology through the efficiency agenda. This efficiency agenda is not worse, so we really is for us a big trigger always to continue on the processes, further processes. So where we had a lot of in the developing stages, we had a lot of situations when you are going to a certain point, and this you find that it costs really too much, and then you're skipping this any more projections, because to produce sustainable products in any price, it doesn't will never be technology will be commercialized. To commercialize technology, so usage, the farmers who will use technology, they will need. They need to earn more profit from the farming operations. If they can't produce more profit, they never buy the technology. So this is why technology, sustainability in our case, and efficiency, we always are linked together. Thank you for the answer, Kęstutis. As all questions are answered, on behalf of AUGA Group and Nasdaq Vilnius, thank you, everyone. It was a pleasure, being with you today. The recording of the presentation will be available on Nasdaq Baltic YouTube channel.