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's activity report 2022

Sadala Agro OÜ is an agricultural company based on Estonian capital, whose main activity is crop farming. Additional services are offered with agricultural machinery. It does not have branches abroad.

As in previous years, the main sales revenue in 2022 came from the cultivation and sale of winter wheat (total yield 10500 tons) and winter rapeseed (total yield 4580 tons), which together made up about half of the company's turnover. Barley, peas, and silage sold for animal feed also had a significant share. The production of sowing seeds and the provision of services to other agricultural enterprises (mainly machine work) also play an important role.

The most significant investment in 2022 was made in slurry spreading technology, totaling ~ 750 thousand euros (self-propelled slurry spreader with associated aggregates and equipment for transporting slurry), as well as continued purchase of agricultural land and upgrading/improving the existing machinery. Investments were also continued in technology to better adapt to changing weather conditions and to reduce negative environmental impacts. Investments in the ongoing renewal of the existing machinery and, if possible, the acquisition of additional agricultural land are planned for 2023.

The company has not made direct expenditures on research and development, but every year it tests innovative technical and agronomic solutions with the aim of increasing efficiency and achieving better protection against changing weather conditions.

2022 was a year of great changes for agriculture as a whole, significantly influenced by the war that started in Europe and largely as a result of which the selling prices of crop production rose by almost twice as high by the end of May as they were at the beginning of the year and then fell back to the same level by the end of the year. The price of one of the most important inputs - fertilizer - fluctuated even more, and several other production inputs, which experienced a significant price increase during the year - fuels, plant protection products, electricity, etc. - also had high volatility.

Overall, the 2022 financial year can be considered favorable for the agricultural sector as a whole in Estonia, but the timing of when and whether input prices and finished product prices were fixed had a very significant impact on the results.

For Sadala Agro OÜ, 2022 can be considered one of the most successful years ever. The yields of crop production were higher than average, selling prices were also higher than average, and at the same time, the prices of some inputs were fixed at a low price level in the previous year.

In 2023, it is planned to continue at existing volumes and directions of activity. The share of winter cereals has remained at about the same level as in the previous year and the spring outlook is rather positive. However, selling prices have fallen significantly and with rising input prices, we certainly expect a worse year than 2022 and predict average results similar to 2021. The most important planned investments are related to the renewal of existing equipment (combine, plant protection sprayer, some tractors) and the ongoing updating of technological solutions in connection with the increase in the share of direct sowing and strip sowing and precision farming. The aim of all these investments and changes is to increase efficiency on the one hand and to be more environmentally friendly in our economic activities on the other hand.

Land use in 2022 remained similar to previous years at ~ 4800 ha.

Key financial ratios

Ratio 2022 2021

Liquidity ratio 0.71 0.63

Debt ratio (%) 56.9 62.9

Return on assets ROA (%) 15.9 4.9

Return on equity ROE (%) 32.4 8.6

Return on sales (%) 28.3 9.6

Formulas used in calculating ratios:

Liquidity ratio = (current assets - inventories) / short-term liabilities

Debt ratio (%) = (liabilities / assets) * 100

Return on assets ROA (%) = (operating profit / total assets) * 100

Return on equity ROE (%) = (profit / equity) * 100

Return on sales (%) = (operating profit / net sales) * 100