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's activity report 2022

Summary of economic results:

The year 2022 surprised us in many different ways. Although many important cost items for us increased against the background of what is happening in the world, the milk price also exceeded expectations and the income from milk sales covered the expenses made. In 2023, we expect the milk price to start moving downwards. However, we also hope that energy and other cost items will gradually start to decrease.

The profit for 2022 exceeded the previous year's profit by nearly 1.5 million € (2022: 1 712 075 €; 2021: 254 686 €).

Sales revenue increased by 59.2% in 2022 to 4 774 923 € (2021: 2 997 750 €) mainly due to a strong milk price, animal sales and an increase in crop production sales prices.

While usually good weather conditions support crop production, this year animal production also achieved a strong result.

Revenues from milk sales increased by 59% to 2 876 686 € (2021: 1 808 136 €). The average milk price exceeded the 2021 level by 49% (2022: 0.4903 €/kg; 2021: 0.3293 €/kg). The 7% increase in milk volume, mainly due to the transition to triple milking (2022: 5 867 t; 2021: 5 491 t), cannot be overlooked. The number of animals in the herd remained stable at 1 454 (2021: 1 471), with 834 young animals (2021: 839). A slight decrease occurred through the deliberate removal of lower value animals and the sale of 46 pregnant heifers.

In 2023, we hope to keep the number of animals stable and further increase the health level of the herd. As the strategic size of the herd has been achieved, we will continue to sell pregnant heifers.

Due to the significant increase in crop input and market prices, the cost price of agricultural production also increased significantly.

During the 2022 vegetation period (April – August), the weather remained quite dry. On the one hand, this kept grain drying costs low, but the silage yield was small. However, we try to hold out until the new harvest by adjusting the feed ration.

Investments: In 2022, a total of 1 172 607 € (2021: 261 181 €) was invested. The land purchase-sale balance was 318 485 €. Mainly during the year, unsuitable land for agricultural activities was sold and less suitable agricultural land was exchanged for logistically more suitable land. New agricultural machinery was acquired by leasing for 184 900 €, older machinery was replaced with newer ones and other smaller investments were made in equipment and improvements to existing buildings and machinery. The renovation of the workshop buildings was started.

In 2023, we are open to offers for the sale of leased land and usufructs and the exchange of remote lands for closer ones. We are also ready to acquire new plots of land that we need.

We plan to purchase a new feed mixer, feeding tractor and loader. We plan to continue improvements in workshop buildings and modernize barn technology, we keep existing machines in working order and repair road surfaces.

Significant environmental and social impacts:

OÜ Vao Agro continues to be one of the largest employers in its operating area. The average number of employees in 2022, including leased workers, was 28, which is the same as the average for the last three years. In 2023, we plan to continue with the same number of employees. In recent years, we have used a significant amount of foreign labor.

After Russia's attack on Ukraine, we made a significant contribution to the reception of Ukrainian refugees and their adaptation to local conditions, supporting them in accommodation, the acquisition of various supplies and in dealing with residence permits, kindergarten and school.

We consider the promotion of local life important and for this we cooperate with the local government and other entrepreneurs. We continue to pay serious attention to environmental protection. We have so far cultivated and will continue to cultivate environmentally friendly agriculture.

Company financial indicators: 2022 2021 2020 2019 2018

Sales revenue € 4 774 923 2 997 750 3 254 584 2 993 419 2 571 520

Net profit/ loss (-) € 1 712 075 254 686 610 516 414 664 44 963

Net profitability % 35.9 8.5 18.8 13.9 1.7

Operating profit € 1 745 189 289 473 653 058 465 453 105 628

Operating profit before depreciation (EBITDA) € 2 173 891 735 114 1 097 059 897 168 514 469

Short-term liabilities coverage ratio x 2.65 2.49 1.4 0.9 0.9

Return on assets (ROA) % 11.8 2.0 4.7 3.3 0.4

Solvency ratio % 88.7 87.2 84.3 81.3 77.4

Debt ratio x 0.11 0.13 0.2 0.2 0.2

Net profitability (%) = net profit / sales revenue x 100

Short-term liabilities coverage ratio (times) = current assets / short-term liabilities

Return on assets (ROA %) = net profit / total assets x 100

Solvency ratio = equity / cost of assets x 100

Debt ratio (times) = total liabilities / total assets

Kalle Margus

Board member