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Edited Transcript of KER.WA earnings conference call or presentation 27-Nov-19 2:00pm GMT

Q1 2020 Kernel Holding SA Earnings Call

Kiev Nov 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Kernel Holding SA earnings conference call or presentation Wednesday, November 27, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Anastasiia Usachova Ivanovna

Kernel Holding S.A. - CFO & Executive Director

* Andrii Verevskyi

Kernel Holding S.A. - Founder & Chairman of the Board

* Yuriy Kovalchuk

Kernel Holding S.A. - Corporate Investment Director, IR Director & Director

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Conference Call Participants

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* Jakub Szkopek

Dom Maklerski mBanku S.A., Research Division - Analyst

* Konstantin Fastovets

* Marcin Gatarz

UniCredit Research - Analyst

* Nikolay Menteshashvili

Insight Investment Management Limited - Credit Analyst

* Pawel Wieprzowski

Wood & Company Financial Services, a.s., Research Division - Research Associate

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Kernel Holding First Quarter 2019 -- 2020 Results call. My name is Keiran, and I'll be coordinating your call today. (Operator Instructions) I will now hand over to your host, Marcin Gatarz, to begin. Marcin, please go ahead.

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Marcin Gatarz, UniCredit Research - Analyst [2]

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Good afternoon. I'm glad to welcome you to the conference call of Kernel. Today, we will discuss Q1 2020 results. The presentation for the call is available at the company's website. And the company today is represented by Andrii Verevskyi, Chairman of the Board; Anastasiia Ivanovna, CFO; and Yuriy Kovalchuk, Corporate Investment Director. So we will start with the presentation, and then there will be time for your questions.

So now let me hand over to the company.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [3]

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Thank you very much. Good afternoon, dear -- ladies and gentlemen. Today, we are presenting Kernel's financial results for the 3 months ended 30th September 2019, and this is our first quarter of our financial year 2020. Group revenue in reporting period totaled $846 million. EBITDA stood at $107 million, and net profit is $59 million. Financial leverage increased to 3.3x net debt-to-EBITDA as of 30th September 2019. I take you, as usual, through the segments. I will start from Oilseeds Processing business, which generated $22 million of EBITDA, is up 38% year-to-year, while the vegetable oil sales volume in reporting period normalized to 300,000 from unusual high 400,000 tons in the first quarter of financial year '19. EBITDA margin increased to $74 per ton of oil, which is 85% up year-to-year mainly driven by a higher year-to-year global sunflower oil prices and sufficient supply of sun seeds due to stronger last year harvest in Ukraine.

Outlook for crushing business in the current season is positive. We estimate sunflower seeds harvest in Ukraine this season to set a new record around 16 million tons, which is compared to 15.2 million last year. As a result, we expect to process 3.3 million tons of oilseeds in the financial year '20, out of which, we already crushed 0.6 ton -- million tons in the first quarter. Driven by strong supply of sun seeds in Ukraine and recovering global sunflower oil prices, we improved our full year outlook for the business, expecting crushing margins to average near $85 per ton of oil in full financial year 2020.

Infrastructure and Trading segment EBITDA in first quarter totaled $35 million, which is down 8% year-to-year. With that 1.6 million tons of grain exported from Ukraine, we generated $22 per ton of EBITDA margin, which is 21% decline year-to-year. We have strong contribution from infrastructure business. Silos, export terminals and grain railcars performed pretty strongly and also marginally positive Avere results. But at the same time, year-to-year trading margins declined. First of all, because the wheat and barley prices was at pretty low and soft and -- which was actually our major grain export in financial -- in the first quarter financial year 2020. So generally speaking, the compressed profitability of the trading business putting pressure for the whole value chain of the Infrastructure and Trading.

So we estimate crop size of the 3 major grains; corn, wheat and barley in Ukraine of 73 million tons in the current season, which is up 8% driven mainly by wheat and barley production growth. Corn harvest will remain unchanged. This new record will secure strong domestic supply of grain and good utilization of the grain export infrastructure. We maintain our target to export over 8 million tons of grain from Ukraine, which is 33% up year-to-year and 7 million tons for our -- 7 million tons of volume throughput for our terminal, which is 50% growth, including TransGrainTerminal, which will be the final stage commissioning scheduled for January 2020.

Outlook for infrastructure margins are expected to be flat as compare -- in 2020 compared to financial year '19. But trading margin may weakening driven by weak global grain prices. At the same time, the surging grain volumes and substantial contribution coming from grain railcars shall drive Infrastructure and Trading division EBITDA generation 60%, 70% up year-to-year in full financial year 2020. EBITDA contribution for our Farming segment amounted $58 million in the first quarter. As of today, we completed our 2019 Harvest campaign with 513,000 hectares. Wheat was 5.9 tons per hectare, which is up 16%; sun seeds 3.5 tons per hectare, up 11%; while corn normalized to 8.6 ton per hectare, which is down 13% year-to-year. Owing the softer corn yield, and corn is our major products in terms of volume, lower grain prices and growing production costs, future inflated by local currency appreciation, we expect full year Farming segment over $100 million EBITDA in full financial year 2020. This result will be net of IFRS 6 (sic) [IFRS 16] effect.

Yes, that's about Farming. The weaker farming contribution in financial year 2020, which we forecast is supposed to be offset by better performance in Oilseeds Processing and Infrastructure and Trading segments, which should translate into the full year EBITDA consolidated potentially comparable flat to the last year results, net of IFRS 16 effect.

On the credit side, in October '19, we issued $300 million bond, 5 years, 6.5% coupon to finance our working capital needs and general corporate needs.

Execution of our Strategy 2021 is in -- is progressing as expected. TransGrainTerminal and the free energy, heat and power plants are planned to be commissioned during the financial year 2020. We reconfirm the original guidance of the CapEx deployment having around $300 million investment scheduled for the financial year 2020, both expansion and maintenance. And as well, we're confirming that the rest of the $150 million investment for the financial year 2021.

This is pretty much it from my side. Please go ahead with your questions.

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Marcin Gatarz, UniCredit Research - Analyst [4]

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Operator, we are ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Pawel from Wood & Company.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [2]

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My first question would refer to the 2020 EBITDA guidance. Could you just confirm that you said that it should be flat year-on-year net of IFRS 16 impact?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [3]

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Yes.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [4]

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Okay. My second question refers to the railcars contribution to your EBITDA in 2020, 2021 and what was last year? Could you please provide the nominal EBITDA figures for these 3 years; for last year, this year and next year?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [5]

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So 1 second, let me take a look. So the last year EBITDA from the railway wagons was around $19 million I guess, 1 second. Anastasiia, can you comment on that?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [6]

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Last year, total contribution was in the range of $9 million...

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [7]

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Sorry, yes $9 million.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [8]

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This year?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [9]

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This year; we're supposed to be around $48 million. And in 2021, it's going down to $35 million.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [10]

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$35 million. Okay, great. My next question refers to your EBITDA target presented in your strategy 3 years ago. Do you still confirm it's $500 million for 2021 and is this including IFRS 16 impact -- effect or excluding it?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [11]

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First of all, for 2021, we would probably not be able to deliver that and it's going to be substitute -- postponed for the 2022 during the CapEx expansion. And yes, we are working around this number, but obviously, precise $500 million, it would be very aggressive. I can give you this guidance, it's going to be like within this maybe 5% plus/minus to this amount. But it's obviously net of IFRS 16.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [12]

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Okay. Great. What kind of margin evolution do you expect in your trading business? Flat year-on-year? Because you guided that...

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [13]

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Which trading business you mean? In grain or...

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [14]

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In grain and export terminals.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [15]

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We believe that for the export terminals -- that obviously, the export terminals margins will depend on the crop size in Ukraine. If we maintain more or less the same amount of the harvest -- size of the harvest which we're having this year, we expect the terminal margin should stay more or less flat. For the grain margin, grain trading margins, it will depend on 2 inputs. First of all, size of the crop and also the prices. If prices will be weak and low, the farmers are really reluctant to sell, and it's not easy to manage the good margins. For example, if you compare last year with this year, even we have a good crop and good crop pressure. For the wheat and barley, it was so difficult to make the strong margins. So that's why the margin was under pressure. So depends on prices and crop size, then these margins will be -- will fluctuate.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [16]

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Okay. Clear. Could you please provide your forecast or expectations for EBITDA from green energy projects? For this year, you said it was $6 million as far as I remember. And for the next 2 years?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [17]

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So for green energy, EBITDA for that -- for this year will be $5 million. Next year, we're expecting $50 million, and the 70 -- sorry, '21, it will be $50 million, and '22 should be $75 million.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [18]

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$75 million. Okay, perfect. And revenues?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [19]

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I don't look at revenues, sorry.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [20]

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Okay. No problem at all. Could you please remind us the debt covenants that you have for this year and next year?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [21]

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Anastasiia, can you comment on this, please?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [22]

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Yes. Maturity of our debt today is actually, we have the bond, both have the same covenants. Interest cover ratio 3x. That's for $800 million in total. The rest related to bank securities. I wouldn't disclose the level of the covenant. I can confirm that the adjusted covenant taking into consideration IFRS 16 and we have sufficient [loan] there.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [23]

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Okay. Maybe 2 more questions from my side. What do you think about the crop prices for the full year this year? Should they stay at this low level or should they start recovering significantly? And what is your position in the Farming segment? Are you long still or you have hedged your position?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [24]

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Yes. Obviously, I don't know where the prices will go. And I doubt it if everyone does, but we believe that, generally speaking, the downside for corn and soybeans and oil is pretty limited just given because of the cost of production in Ukraine and the United States and Brazil and Argentina, we believe that the farmers on that current prices are pretty much breakeven. So obviously, we can see more downside, but I think it's rather limited. Upside, difficult to say. I mean we hope so, but that's -- so many things can influence on price. So I would probably not comment on that. In terms of Farming, yes, we're still long, but we sold already a big chunk of that. I mean probably around 65%, 70% we already sold, but will still remain long for some part.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [25]

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And my last question refers to the land reform. Do you have any new considerations of the land price? You mentioned recently during the last call that the land price may be between $1,700 to $2000 dollars per hectare. Do you think there has been any material change in your view within this regard? And do you think that there might be some large foreign player entering Ukrainian market following the liberalization of land trades?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [26]

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Well, there's no news nor any consideration for -- over the land price. I think we'll still stick with our forecast and the rest of our market will show what the price -- how the land will trade. We don't see any big internationals coming. We need to see, first of all, the law. It's at the moment, the government and the President wants to overall exclude the foreign players from the land reform at the first stage. So we -- I mean Parliament voted for the first reading of the law of the land reform. And I guess, towards the end of the calendar year, they should potentially vote for the whole and final law, and let's see what's going to be in this -- in it, and then we will take it from there.

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [27]

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And what's the number of farmers you are leasing the land from roughly?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [28]

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Say again?

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [29]

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What's the number of farmers that you are leasing your land bank from, roughly?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [30]

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We're not leasing from farmers. We are leasing from the physical persons and I'm not...

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Pawel Wieprzowski, Wood & Company Financial Services, a.s., Research Division - Research Associate [31]

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Yes, from physical persons...

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [32]

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Yes. I'm not -- if I'm not mistaken, maybe around 150,000 or maybe 200,000 because average contract is, I guess, 2.5 hectares. I don't know. Anastasiia, can you -- or Yuriy, do you have a statistic on that? Because I'm not sure I'm precise on the numbers.

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Yuriy Kovalchuk, Kernel Holding S.A. - Corporate Investment Director, IR Director & Director [33]

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Yes, so basically the...

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [34]

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But roughly, roughly like this

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Yuriy Kovalchuk, Kernel Holding S.A. - Corporate Investment Director, IR Director & Director [35]

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Roughly, average ownership around 3 hectares.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [36]

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3 hectares, okay.

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Yuriy Kovalchuk, Kernel Holding S.A. - Corporate Investment Director, IR Director & Director [37]

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And this is 80,000 hectares owned by private individuals divided by (inaudible) like 150,000 (inaudible)

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [38]

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And plus, we have a government land around 10%, so 55,000 (inaudible)

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Yuriy Kovalchuk, Kernel Holding S.A. - Corporate Investment Director, IR Director & Director [39]

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Around [51,116].

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Operator [40]

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Our next question comes from Jakub from mBanku.

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Jakub Szkopek, Dom Maklerski mBanku S.A., Research Division - Analyst [41]

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I just want -- I would like to ask about the -- your target debt net-to-EBITDA ratio at the end of the year. I remember that it was 2.5 on the last call. And regarding this IFRS 16, how would it change?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [42]

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Honestly, like I would stay, at the moment, out of IFRS 16, because we need to adjust it. Anastasiia, maybe you can comment after my answer regarding this IFRS 16 effect. Generally speaking, we would like to keep the 2.5 covenant. We might be slightly higher, depends, obviously, what the EBITDA we will produce at the end of the year. And we might be slightly higher because of this year financial year 2020 is top of the year in terms of our capital deployed. So we might be, at some point, higher than 2.5, but not too much. But regarding the IFRS 16, Anastasiia?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [43]

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Taking into consideration IFRS 16, we will be higher than 2.5 this year, we'll be around 3x. And then leverage will go down and we will be below 2.5.

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Jakub Szkopek, Dom Maklerski mBanku S.A., Research Division - Analyst [44]

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Okay. And the last question regarding the dividend policy. I know this is like constant for the last year, but there were some intentions to change it in the near future, like, in the next 2 years. And regarding this IFRS 16, how do you find this? Because right now, you're pursuing the biggest CapEx ever and this IFRS, I mean, you have another debt. And what -- would it be for a long time that you will pay this, like very, very, very low dividend?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [45]

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IFRS 16, for us, is a noncash item. So I don't think it's really influencing our dividend policy at all. But the dividend increase, our plan is, as we already said on the previous call, we would like to finish our CapEx program and towards the end of the 2021, we will, obviously, take into consideration how fast will go the land reform as well. So we will be communicating to shareholders and investors our new policy.

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Operator [46]

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Our next question comes from Nikolay from Insight Investment.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [47]

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Just a couple of questions from my side. First of all, I think compared to the full year presentation, you seem to have raised the forecast for the, kind of, sunflower oil harvest in Ukraine for the full next year. Are there any risks to that estimate for the overall sunflower harvest?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [48]

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No, no. We -- I think sun seeds is -- yes, definitely, our view was lower than finally what we've seen after the harvest completed. We believe that 16 million tons is a reasonable number, and we don't see the way to, I mean, to review it down.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [49]

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Got it. And in terms of the working capital flow, I think, usually, you had most of the working capital outflow in the second quarter and now, it's kind of a large outflow in the first quarter. Is it because you see, kind of, more seeds available so you're buying more earlier or what's the plan?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [50]

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Yes, exactly. We -- I mean, the margin is good, better than last year, so we try to secure as much as possible sun seeds and locked in the margin, and that's why you see the working capital spike.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [51]

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Do you expect further working capital increase in the second quarter as well?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [52]

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Compared to the second quarter last year, maybe a little bit, but then it's going to go down after February.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [53]

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Okay. And also, I wanted to ask on the bank covenants. Just wanted to check, is -- you used to disclose it before, I think, is it still, kind of -- is it net leverage point? And is it tested annually as you used to or are there any changes to them?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [54]

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Anastasiia?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [55]

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No, there is no change in the structure of the covenant. It's still tested annually. And we never actually disclose the covenants.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [56]

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Okay. All right. And the last one, maybe on a small topic on the litigation that you have with Stiomi Holding, right? I think the report says that there is a tribunal award awaited in December. What's the expectation for that? And what's the potential cash outflow for Kernel regarding the litigation?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [57]

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Anastasiia, correct me if I'm wrong, we already have the -- we've reserved the amount, right, of the decision, correct or not?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [58]

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Yes. Yes, that's correct.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [59]

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I mean it's tough to say in December. Once we get the award, we'll definitely make the announcements.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [60]

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But in terms of cash outflow, you still need to pay it? And is it large or it's like single digit...

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [61]

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I don't think we would -- we're going to pay it in December because there's still a long process of appeal and stuff. It's not final, final.

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Nikolay Menteshashvili, Insight Investment Management Limited - Credit Analyst [62]

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Okay. And in terms of scale, is it single digit million, double-digit, triple? Just to understand.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [63]

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Anastasiia, remind me the number.

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [64]

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No, the amount is -- yes, the amount in the provision is close to $78 million to [$80 million], that's included for the interest factor. But it's, I mean, we need to see the decision. It's not a reflection of -- it's not reflection of our estimation. This is based on the first decision of the court -- of the court.

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Operator [65]

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(Operator Instructions) Our next question comes from Konstantin from Adamant Capital.

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Konstantin Fastovets, [66]

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I just had a question about the infrastructure segment. Could you give us a bit more detail on the profit that Avere made? Because I see in the financial statements that you have, I think it's $15.4 million of net gains arising from financial assets classified at fair value. Is that -- I'm guessing that's related to Avere. It's about -- yes, so $15 million. Could you comment on that? And then also, are you still receiving proceeds at the Taman terminal? Because I think you were leasing that out. That should -- probably still is in your financial results? Yes. So just a bit more color and clarity on that segment would be nice.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [67]

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Taman, yes. According to the budget and according to the contract with Glencore, we should get the $9 million over the year. From Avere, it's definitely not $15 million because the Avere result in the first quarter is marginally positive. But $15 million, Anastasiia, can you comment from that point of view?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [68]

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Konstantin, if you could -- could you please repeat your question just to be sure that we're answering...

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Konstantin Fastovets, [69]

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Yes. So if you look at the cash flow statements, there is a net gain on financial assets classified at fair value through profit and loss and it's $15.45 million. And so the question was, is this related to Avere? Is this a gain that was booked by Avere?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [70]

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Yes, the -- a big chunk is related to Avere.

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Konstantin Fastovets, [71]

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Okay. So how does that, sort of, match with Avere profit being marginal? Like, because -- okay, can you explain, like, how that figure has -- or how you got to that figure? I mean, so imagine the 2 realities of Avere, sort of, making small profits -- relatively small profits, right, and then the $15.4 million.

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [72]

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Yes, that's because that's only 1 item of Avere operation, and they might have gained in 1 type of operation and loss on the other side, so you cannot say it's really P&L of Avere from cash flow statements, unfortunately.

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Konstantin Fastovets, [73]

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Okay. So basically, the other losses are cash based, I'm guessing, right? So this is a revaluation gain and that must be that the -- you were losing money on a cash basis. Is that true then?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [74]

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I -- honestly speaking, I am not ready to answer this question because I thought you go then to (inaudible) P&L. But yes, P&L is always a combination of cash and noncash items.

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Konstantin Fastovets, [75]

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Okay. All right. But -- so could you then...

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [76]

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It's minus. Yes, it's minus.

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Konstantin Fastovets, [77]

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Okay. So last, I believe that in the first quarter of 2019, I think that during the call, I think the guidance that was given for Avere, that the profit roughly, the EBITDA contribution was roughly $10 million. Are you willing to disclose what it is this time or are you not giving this information?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [78]

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Anastasiia?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [79]

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Yes, just a second. Yes, the current demand is around $2 million.

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Konstantin Fastovets, [80]

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$2 million. Okay. Okay. Okay. All right. And then I had 1 more question on the Farming segment. So if I look at the EBITDA contribution, excluding biological revaluation, what I see there is that it's an actually -- it's an increase from last year. And I'm guessing that this means that you're selling your crops at a quicker pace than the last year. Would that -- is that a correct assertion?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [81]

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Anastasiia, will you comment on the quarterly sales, please?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [82]

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On the quarterly sales of Farming?

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Konstantin Fastovets, [83]

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Yes, the Farming segment, yes. So just -- I can just repeat that. So when I look at the EBITDA contribution, it's $24 million, excluding biological revaluation. And then last year, it was $11 million. So I'm guessing, right, that this is -- this means higher volumes?

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Anastasiia Usachova Ivanovna, Kernel Holding S.A. - CFO & Executive Director [84]

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Yes. Sorry, (inaudible) phone line a little bit. Would you expand your question and we will answer your question to be sure that we know the answer is correct?

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Konstantin Fastovets, [85]

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Okay. Got it, got it. Okay. And then just one last thing. So you mentioned that you're expecting to have -- the green energy contribution will be growing, right? So from this year to next year, it's going to -- I think you said $50 million you expect next year and $5 million for this year. And will that go towards the oil segment? So we're going to see essential delinquencies in margins -- in calculated margins?

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [86]

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That's a good question. I don't think we haven't -- yes, it probably will go for the Oilseeds Processing segment. But yes, but if you want to any way to ask us in a separate way, we can always comment to you how much exactly we make from green energy. Because internally, we definitely count it as a separate profit and loss. But in accounting, it will go in Oil and Processing segment.

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Konstantin Fastovets, [87]

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Okay. Right. Yes, because if we're talking about the EBITDA contribution from Oilseeds Processing, it's around $100 million, right, it's $50 million...

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [88]

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Yes. Substantially...

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Operator [89]

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(Operator Instructions) We currently have no further questions on the phone line.

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Andrii Verevskyi, Kernel Holding S.A. - Founder & Chairman of the Board [90]

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Ladies and gentlemen, thank you very much for the call. As usual, if you have any more questions, please refer to us, and we're going to try to answer all your questions. Thank you very much. Bye.

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Operator [91]

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Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.