REG - Ros Agro PLC - 1st Half-year and 2nd Quarter Financial Results
08/08/2022 08:00
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RNS Number : 2281V Ros Agro PLC 08 August 2022
8 August 2022
ROS AGRO financial results for 1H 2022 and 2Q 2022
8 August 2022 - Today ROS AGRO PLC (the Company), the holding company of
Rusagro Group (Rusagro), a leading Russian diversified food producer with
vertically integrated operations, has announced the financial results for the
six months ended 30 June 2022.
1H 2022 HIGHLIGHTS
- Sales amounted to RUB 127,230 million (US$ 1,668 million(1)), an
increase of RUB 22,858 million (+22%) compared to 1H 2021;
- Adjusted EBITDA(2) amounted to RUB 30,158 million (US$ 395 million),
an increase of RUB 8,039 million (+36%) compared to 1H 2021;
- Adjusted EBITDA margin rose to 24% in 1H 2022 from 21% in 1H 2021;
- Net profit for the period amounted to RUB 166 million (US$ 2
million), a decrease of RUB 17,434 million;
- Net debt position(3) as of 30 June 2022 amounted to RUB 98,973
million (US$ 1,935 million);
- Net Debt/Adjusted EBITDA (LTM(4)) as of 30 June 2022 was 1.76.
Commenting on the results, Timur Lipatov, CEO of Rusagro, said:
"In 2Q 2022 sales and adjusted EBITDA of the Group improved, whereas net
profit decreased due to forex losses. Net revenue increased by 21% supported
by higher total sales volumes in Sugar and Meat segments. Adjusted EBITDA
margin increased by 1 pp to the level of 21% because sales grew in the same
proportion as costs of goods sold."
Key consolidated financial performance indicators
in RUB million Six months ended Variance Three months ended Variance
30 June 2022 30 June 2021 Units % 30 June 2022 30 June 2021 Units %
Sales 127,230 104,372 22,858 22 65,724 54,439 11,285 21
Gross profit 32,586 24,379 8,207 34 17,428 14,290 3,138 22
Gross margin, % 26% 23% 3 pp 27% 26% 1 pp
Adjusted EBITDA(1) 30,158 22,119 8,039 36 13,645 10,950 2,695 25
Adjusted EBITDA margin, % 24% 21% 3 pp 21% 20% 1 pp
Net profit for the period (1,2) 166 17,600 (17,434) (99) (1,775) 11,074 (12,849) -
Net profit margin % 0% 17% (17) pp (3%) 20% (23) pp
Sales volume of Rusagro products in 6М and 2Q 2022
in thousand tonnes Six months ended Variance Three months ended Variance
30 June 2022 30 June 2021 Units % 30 June 2022 30 June 2021 Units %
Sugar 437 362 76 21 260 160 100 62
Pork products 133 121 12 10 73 62 10 16
Agriculture crops, incl. 501 573 (72) (12) 145 300 (155) (52)
wheat 194 360 (166) (46) 115 218 (102) (47)
soybean 116 143 (26) (18) 15 71 (56) (80)
corn 111 58 53 91 10 8 2 31
sugar beet 59 - 59 100 - - - -
sunflower seeds 21 8 13 166 5 - 5 100
barley 0 4 (4) (96) 0 4 (4) (96)
Oil and fat products, incl. 792 835 (43) (5) 392 449 (57) (13)
meal 299 306 (7) (2) 149 188 (38) (20)
crude oil 200 198 2 1 108 95 12 13
industrial fats 141 156 (14) (9) 62 73 (11) (15)
dry whey mixes 8 7 1 19 4 4 0 11
consumer oil & fat products 136 162 (26) (16) 64 87 (22) (26)
consumer dairy products 7 7 1 12 4 3 1 23
KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)
The key consolidated cash flow indicators presented according to management
accounts methodology
in RUB million Six months ended Variance Three months ended Variance
30 June 2022 30 June 2021 Units % 30 June 2022 30 June 2021 Units %
Net cash from operating activities, incl. (706) 21,348 (22,054) - 4,424 12,931 (8,507) (66)
Operating cash flow before working capital changes 28,771 22,742 6,028 27 11,625 11,312 313 3
Working capital changes (28,252) (758) (27,494) (3,627) (6,305) 2,096 (8,401) -
Net cash from investing activities, incl. (3,962) (17,411) 13,448 77 (1,696) (15,412) 13,716 89
Purchases of property plant and equipment and inventories intended for (4,627) (6,222) 1,595 26 (1,538) (4,183) 2,644 63
construction
Acquisition of SolPro assets - (11,689) 11,689 - - (11,689) 11,689 -
Net cash from financing activities 39,140 36,373 2,767 8 30,214 33,406 (3,191) (10)
Net effect of exchange rate changes on cash and cash equivalents (18,995) (102) (18,893) (18,528) (11,035) (72) (10,963) (15,255)
Net increase / (decrease) in cash and cash equivalents 15,476 40,208 (24,732) (62) 21,908 30,852 (8,945) (29)
(*) See Appendix 3
The key investments in property, plant and equipment and inventories intended
for construction during 1H 2022 were made in the Meat segment in the amount of
RUB 2,233 million (1H 2021: RUB 2,846 million) mainly due to the purchases
related to the construction project in the Russian Far East. Investments in
the Agriculture segment in the amount of RUB 1,431 million (1H 2021 : RUB 911
million), Oil and Fat segment in the amount of RUB 770 million (1H 2021 : RUB
2,110 million excluding acquisition of SolPro assets), and Sugar segment in
the amount of RUB 193 million (1H 2021 : RUB 355 million) mainly relate to
purchases of machinery and equipment for production facilities renewal and
maintenance.
Debt position and liquidity management
in RUB million 31 June 2022 31 December 2021 Variance
Units %
Gross debt 196,641 172,724 23,917 14
Short-term borrowings 133,256 108,749 24,507 23
Long-term borrowings 63,385 63,975 (590) (1)
Cash and cash equivalents, bank deposits and bonds (97,668) (99,315) 1,647 2
Short-term cash, deposits and bonds (63,697) (65,344) 1,647 3
Long-term cash, deposits and bonds (33,971) (33,971) - -
Net debt 98,973 73,409 25,564 35
Short-term borrowings, net 69,559 43,405 26,154 60
Long-term borrowings, net 29,414 30,004 (590) (2)
Adjusted EBITDA (LTM(4)) 56,099 48,060 8,039 17
Net debt/ Adjusted EBITDA (LTM) 1.76 1.53 0.2 pp
Net finance income/ (expense)
in RUB million Three months ended Variance Six months ended Variance
30 June 2022 30 June 2021 Units % 30 June 2022 30 June 2021 Units %
Net interest expense (3,317) (2,507) (810) (32) (1,803) (1,213) (590) (49)
Gross interest expense (8,428) (3,774) (4,654) (123) (3,873) (1,989) (1,884) (95)
Reimbursement of interest expense 5,111 1,267 3,844 303 2,070 776 1,294 167
Interest income 4,348 3,723 625 17 2,040 1,903 136 7
Net gain/ (loss) from bonds held for trading - (1) 1 - - (1) 1 -
Other financial expenses, net (19,682) (163) (19,519) (11,945) (11,797) (143) (11,654) (8,139)
Net foreign exchange gain/ (loss) (19,551) 28 (19,579) - (11,723) 60 (11,783) -
Other financial income / (expenses), net (131) (192) 60 32 (74) (203) 129 63
Total net finance income/ (expenses) (18,651) 1,051 (19,702) - (11,560) 546 (12,106) -
Net debt increased at 30 June 2022 compared at 31 December 2021 as a result of
an increase in short-term borrowings.
In 1H 2022 Rusagro continued to enjoy benefits from the state agriculture
subsidies programme. Rusagro continued to receive bank loans with decreased
preferential interest rates under the programme of government support. Under
this programme, the government provides subsidies to the banks to compensate
the loss of income on borrowings with decreased interest rates, given by the
banks to agricultural producers. In 1H 2022 IFRS accounts these borrowings are
accounted according to its face value with no adjustments to prevailing market
rates. The differences between nominal and market interest rate is recognized
as either government grants in a statement of financial position for
borrowings received with the purpose to finance investment projects or
interest expenses in a statement of comprehensive income for general purpose
borrowings.
Net finance income of 1H 2021 in the sum of RUB 1,051 million changed to net
finance expense in the amount of RUB 18,651 million in 1H 2022 as the result
of negative dynamics in forex losses in 1H 2022 and increase in interest
income on bank deposits in 1H 2022, partially compensated by lower interest
income on SolPro loans.
________________________________
(1) The exchange rates used for translation of RUB amounts into USD represent
average Central Bank official exchange rate for the respective reporting
period for income, expenses and profits and the Central Bank official exchange
rate as at the reporting date for balance figures.
(2) Adjusted EBITDA is defined as operating profit before taking into account
(i) depreciation included in operating profit, (ii) net gain/ (loss) on
revaluation of biological assets and agricultural produce, (iii) non-recurring
components of other operating income/ (expenses), net, (iv) share-based
remuneration, (v) provision for impairment of loans issued (see Appendix 2 for
the detailed calculation of Adjusted EBITDA). Adjusted EBITDA is not a measure
of financial performance under IFRS. It should not be considered as an
alternative to profit for the period as a measure of operating performance or
to cash flows from operating activities as a measure of liquidity. Our
calculation of Adjusted EBITDA may be different from the calculation used by
other companies and therefore comparability may be limited. We believe that
Adjusted EBITDA provides useful information to investors because it is an
indicator of the strength and performance of our ongoing business operations,
including our ability to fund discretionary spending such as capital
expenditures, acquisitions of subsidiaries and other investments and our
ability to incur and service debt.
(3) The Rusagro determines the net debt as short-term borrowings and long-term
borrowings less cash and cash equivalents, bank deposits, bank promissory
notes and bonds held for trading.
(4) LTM - The abbreviation for the "Last twelve months".
NOTE
ROS AGRO PLC (LSE, MOEX: AGRO) - a holding company of Rusagro Group, a leading
Russian diversified food producer with vertically integrated operations in the
following branches:
Agricultural:
Rusagro currently controls one of the largest land banks among Russian
agriculture producers, with 642 thousand hectares of land under control
located in the highly fertile Black Earth region of Russia (in the Belgorod,
Tambov, Voronezh, Kursk, Orel regions) and in the Far East Primorye Region.
Land and production sites are strategically located within
the same regions to optimize efficiency and minimize logistical costs. Rusagro
is one
of the major sugar beet producers in Russia, but it also produces wheat and
corn, sunflower seeds and soybeans. These products are partially consumed by
the Sugar, Meat and Oil and Fat segments, supporting a synergistic effect and
lowering price change risk.
Oil and Fat:
Rusagro is the leading crude sunflower oil and consumer margarine producer,
second largest industrial fats and mayonnaise producer in Russia with products
sold under eleven key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki,
umbrella brand Ya Lublu Gotovit (includes Moskovskiy Provansal, Novosibirskiy
Provansal and Saratovskiy Provansal), Rossiyanka and Saratovskiy Slivochniy,
Benefitto, Maslava and Leto Krasno (红色夏日), which is sold on the
Chinese market. Rusagro also produces dry industrial mixes, cheeses, butter
and cream sold under three brands: Milie, Syrnaya Kultura and Ya Lublu
Gotovit. Rusagro owns four crushing and two oil & fats plants and leases
two milk processing plants. Owning its sunflower and soy oil production allows
Rusagro to control the source of the sunflower and soybean oil required to
produce oil and fats products.
Sugar:
Rusagro is one of the leading Russian sugar producers (№3 in Russia and №1
on cube white sugar market), producing sugar from sugar beet at nine
production sites in four regions. Group produces white and brown sugar sold
under the brands Russkii Sakhar, Chaikofsky, Mon Cafeand Brauni. The Sugar
segment is vertically integrated and sugar beets are supplied by Rusagro's
Agriculture segment, which ensures a consistent supply. The sugar segment also
operates a cereal plant and sells buckwheat and rice under the brand Tyoplye
Traditsii.
Meat:
Rusagro is №4 largest pork producer in Russia. It operates large commercial
pig breeding complexes adhering to best practices regarding biosecurity
standards, nucleus farms, compound feed plants, slaughterhouses and meat
processing plants in Tambov and Belgorod Regions and in the Russian Far East.
Since 2016, Rusagro sells retail products under its own brand Slovo Myasnika
(Butcher's word).
CONFERENCE CALL
Rusagro management is organizing a conference call on Company's 1H and 2Q 2022
financial results for investors and analysts.
Details of the call:
Date: 8 August 2022
Time: 16:00 PM (Moscow) / 14:00 PM (London)
Subject: ROS AGRO PLC 2Q and 6M 2022 Financial results
Password: 701541
Link: https://us06web.zoom.us/j/89970356497?pwd=WVBjdG5oSVQyTU8zYjJaUGlZeW1CUT09
(https://us06web.zoom.us/j/89970356497?pwd=WVBjdG5oSVQyTU8zYjJaUGlZeW1CUT09)
FORWARD-LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed to be,
forward-looking statements. These forward-looking statements do not relate to
historical or current events,
or to any future financial or operational activity of the Group.
By their nature, forward-looking statements involve risk and uncertainty
because they relate
to future events and circumstances, a number of which are beyond the Rusagro
Group's control. As a result, actual future results may differ materially from
the plans and expectations set out
in these forward-looking statements.
The Group undertakes no obligation to release the results of any revisions to
any forward-looking statements that may occur due to any change in its
expectations or to reflect events
or circumstances after the date of this document.
CONTACTS
Svetlana Shakaryan (Kuznetsova)
IR & ESG Director
Phone: +7 495 363 1661
E-mail: ir@rusagrogroup.ru
Appendix 1. Consolidated statement of comprehensive income for the Six and
Three months ended 30 June 2022 (in RUB thousand)
Six months ended Three months ended
30 June
30 June
2022 2021 2022 2021
Sales 127,230,280 104,371,769 65,724,120 54,438,801
Net gain / (loss) on revaluation of biological assets and agricultural produce (1,848,173) (434,812) 1,249,037 1,591,010
Cost of sales (92,796,000) (79,557,967) (49,545,210) (41,739,476)
Net gain / (loss) from trading derivatives - (5) - -
Gross profit 32,586,107 24,378,985 17,427,947 14,290,335
Distribution and selling expenses (7,360,741) (4,318,350) (3,731,561) (2,455,399)
General and administrative expenses (4,270,369) (4,640,837) (2,517,555) (2,576,813)
Other operating income/(expenses), net (3,504,772) 1,032,810 (2,887,479) 275,152
Reversal of provision/(provision) for impairment of loans issued - 1,852,295 - 1,852,295
Operating profit 17,450,225 18,304,903 8,291,352 11,385,570
Interest expense (3,317,386) (2,507,021) (1,802,674) (1,212,937)
Interest income 4,348,186 3,722,605 2,039,794 1,903,340
Net gain / (loss) from bonds held for trading 42 (1,362) - (1,123)
Other financial income/ (expenses), net (19,682,492) (163,409) (11,797,046) (143,191)
Profit / (loss) before taxation (1,201,425) 19,355,716 (3,268,574) 11,931,659
Income tax expense 1,367,826 (1,755,228) 1,493,461 (857,523)
Profit for the period 166,401 17,600,488 (1,775,113) 11,074,136
Other comprehensive income:
Total comprehensive income/ (loss) for the period 166,401 17,600,488 (1,775,113) 11,074,136
Profit / (loss) is attributable to:
Owners of ROS AGRO PLC 116,236 17,630,249 (1,825,996) 11,082,816
Non-controlling interest 50,165 (29,761) 50,883 (8,680)
Profit / (loss) for the period 166,401 17,600,488 (1,775,113) 11,074,136
Total comprehensive income/ (loss) is attributable to:
Owners of ROS AGRO PLC 116,236 17,630,249 (1,825,996) 11,082,816
Non-controlling interest 50,165 (29,761) 50,883 (8,680)
Total comprehensive income/ (loss) for the period 166,401 17,600,488 (1,775,113) 11,074,136
Earnings per ordinary share for profit attributable to the equity holders of 4.32 655.25 (67.87) 411.90
ROS AGRO PLC, basic and diluted (in RR per share)
Appendix 2. Consolidated statement of financial position as at 30 June 2022
(in RUB thousand)
30 June 2022 31 December 2021
ASSETS
Current assets
Cash and cash equivalents 61,938,206 46,462,179
Restricted cash 31 47
Short-term investments 5,751,719 21,001,760
Trade and other receivables 13,557,992 12,558,401
Prepayments 13,096,683 5,414,032
Current income tax receivable 1,166,166 1,532,726
Other taxes receivable 6,845,975 8,321,193
Inventories and short-term biological assets 84,923,576 77,509,033
Total current assets 187,280,348 172,799,371
Non-current assets
Property, plant and equipment 120,567,115 119,159,412
Inventories intended for construction 1,247,643 1,604,570
Right-of-use assets 7,100,092 7,346,538
Goodwill 2,364,942 2,364,942
Advances paid for non-current assets 5,718,584 7,355,467
Long-term biological assets 4,404,675 2,744,863
Long-term investments and receivables 42,519,911 42,527,657
Investments in associates 430,782 359,782
Deferred income tax assets 8,583,101 4,835,268
Other intangible assets 1,426,923 1,144,057
Other non-current assets 78,712 79,125
Total non-current assets 194,442,480 189,521,681
Total assets 381,722,828 362,321,052
LIABILITIES and EQUITY
Current liabilities
Short-term borrowings 133,255,929 108,748,840
Lease liabilities 1,113,914 1,130,831
Trade and other payables 11,988,286 15,440,635
Provisions 345,649 494,709
Current income tax payable 512,728 464,471
Other taxes payable 4,897,025 7,454,558
Total current liabilities 152,113,531 133,734,044
Non-current liabilities
Long-term borrowings 63,384,819 63,975,025
Government grants 10,388,375 9,325,530
Lease liabilities 5,178,688 5,535,014
Deferred income tax liability 2,615,641 1,876,244
Total non-current liabilities 81,567,523 80,711,813
Total liabilities 233,681,054 214,445,857
Equity
Share capital 12,269 12,269
Treasury shares (490,607) (490,607)
Additional paid-in capital 26,964,479 26,964,479
Other reserves 1,363,177 1,363,177
Retained earnings 120,196,722 120,080,307
Equity attributable to owners of ROS AGRO PLC 148,046,040 147,929,625
Non-controlling interest (4,266) (54,430)
Total equity 148,041,774 147,875,195
Total liabilities and equity 381,722,828 362,321,052
Appendix 3. Consolidated statement of cash flows the Six months ended 30 June
2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Six months ended
30 June 2022 30 June 2021
Cash flows from operating activities
Profit/(loss) before income tax (1,201,425) 19,355,716
Adjustments for:
Depreciation and amortization 7,417,511 5,924,098
Interest expense 8,427,977 3,774,168
Government grants (5,863,671) (2,167,458)
Interest income (4,348,184) (3,722,605)
Loss/ (gain) on disposal of property, plant and equipment (473,166) (17,033)
Net (gain) / loss on revaluation of biological assets and agricultural produce 1,848,173 434,812
Change in provision for impairment of loans issued 3,028 (1,852,295)
Interest expense on leases 122,595 122,168
Realised deferred day-one gain - (395,146)
Change in provision for net realisable value of inventory 508,561 999,799
Change in provision for impairment of receivables and prepayments 35,050 72,545
Foreign exchange (gain) / loss, net 22,932,796 (96,100)
Lost / (reversal of) harvest write-off 5,945 210,464
Net (gain) / loss from bonds held for trading (42) 1,362
Change in provision for impairment of advances paid for property, plant and (31,224) (34,322)
equipment
Change in other provisions (149,060) 571,009
Dividend income - (377,269)
Loss on disposal of other assets 5,162 -
Gain on SolPro loans redemption (400,307) -
Other non-cash and non-operating expenses, net (69,181) (61,794)
Operating cash flow before working capital changes 28,770,538 22,742,119
Change in trade and other receivables and prepayments (12,932,703) (1,908,398)
Change in other taxes receivable 1,475,217 (5,552,282)
Change in inventories and short-term biological assets (11,514,566) (1,607,811)
Change in trade and other payables (2,991,723) 2,213,800
Change in other taxes payable (2,287,788) 6,096,652
Cash generated from operations 518,975 21,984,080
Income tax paid (1,225,243) (636,256)
Net cash from operating activities (706,268) 21,347,824
Appendix 3 (continued). Consolidated statement of cash flows the Six months
ended 30 June 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Six months ended
30 June 2022 30 June 2021
Cash flows from investing activities
Purchases of property, plant and equipment including SolPro assets acquisition (4,445,855) (17,682,805)
Purchases of other intangible assets (523,970) (201,571)
Purchases of land lease rights (16,906) (25,828)
Proceeds from sales of property, plant and equipment 451,961 175,297
Purchases of inventories intended for construction (180,927) (228,460)
Purchases of associates (71,000) (56,600)
Movement in restricted cash - 104,163
Dividends received 377,269 377,331
Other investing activities 447,203 127,849
Net cash from investing activities (3,962,225) (17,410,624)
Cash flows from financing activities
Proceeds from borrowings 43,447,215 75,517,913
Repayment of borrowings (20,618,379) (10,206,491)
Interest paid (3,011,301) (2,042,736)
Change in cash on bank deposits 16,108,072 (28,000,000)
Proceeds from sales of bonds with maturity over three months* 140,783 220,282
Loans given* (1,250,617) (281,445)
Loans repaid* (431,958) 7,807,779
Interest received* 4,686,213 3,255,728
Proceeds from government grants 581,096 869,393
Purchases of non-controlling interest (518) -
Dividends paid to owners Ros Agro PLC (120) (10,666,996)
Repayment of lease libilities - principal (511,339) (55,068)
Other financial activities 711 (45,633)
Net cash from financing activities 39,139,858 36,372,726
Net effect of exchange rate changes on cash and cash equivalents (18,995,338) (101,974)
Net increase/ (decrease) in cash and cash equivalents 15,476,027 40,207,952
Cash and cash equivalents at the beginning of the period 46,462,179 11,866,798
Cash and cash equivalents at the end of the period 61,938,206 52,074,750
(*) For the purpose of conformity with the methodology of the Group's net
debt calculation investments in financial assets related to financial
activities are presented in Cash flows from financing activities in the
Group's management accounts.
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