REG - Ros Agro PLC - 3Q and 9M 2022 IFRS Financial Results
14/11/2022 07:00
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RNS Number : 2763G Ros Agro PLC 14 November 2022
14 November 2022
ROS AGRO financial results for 9M 2022 and 3Q 2022
14 November 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
nine months ended 30 September 2022.
9M 2022 HIGHLIGHTS
- Sales amounted to RUB 182,027 million (US$ 2,535 million(1)), an
increase of RUB 24,451 million (+16%) compared to 9M 2021;
- Adjusted EBITDA(2) amounted to RUB 35,371 million (US$ 493 million),
an increase of RUB 4,649 million (+15%) compared to 9M 2021;
- Adjusted EBITDA margin remained on the same level of 19% in 9M 2022
and 9M 2021;
- Net profit for the period amounted to RUB 1,337 million (US$ 19
million), a decrease of RUB 34,085 million;
- Net debt position(3) as of 30 September 2022 amounted to RUB 104,501
million (US$ 1,820 million);
- Net Debt/Adjusted EBITDA (LTM(4)) as of 30 September 2022 was 1.98.
Commenting on the results, Timur Lipatov, CEO of Rusagro, said:
"During the time of unstable economic environment Rusagro demonstrated its
resilience. Its net revenue and adjusted EBITDA for 9M 2022 increased by 16%
(+RUB 24,451 million) and 15% (+RUB 4,649 million) respectively with adjusted
EBITDA margin remaining flat in time of increasing pressure from cost of sales
growth. These results were driven by higher sales volumes of sugar, pork
products, as well as sugar beet, corn, sunflower seeds and meal. Sales growth
was possible due to the launch of vertically integrated pork production
cluster in Primorsky Krai, start of the wheat export trading operations and
positive market dynamics on the Russian sugar market. In comparison to 9M 2021
net profit decreased, as it was negatively influenced by forex losses and
revaluation of biological assets on the back of dropping market prices and
rising costs of sales.''
Key consolidated financial performance indicators
in RUB million Nine months ended Variance Three months ended Variance
30 September 2022 30 September 2021 Units % 30 September 2022 30 September 2021 Units %
Sales 182,027 157,576 24,451 16 54,796 53,204 1,592 3
Gross profit 40,103 44,885 (4,782) (11) 7,517 20,506 (12,989) (63)
Gross margin, % 22% 28% (6) pp 14% 39% (25) pp
Adjusted EBITDA 35,371 30,722 4,649 15 5,211 8,603 (3,392) (39)
Adjusted EBITDA margin, % 19% 19% 0 pp 10% 16% (6) pp
Net profit for the period (1) 1,337 35,422 (34,085) (96) 1,170 17,822 (16,652) (93)
Net profit margin % 0% 22% (21) pp 2% 33% (31) pp
Sales volume of Rusagro products in 9М and 3Q 2022
in thousand tonnes Nine months ended Variance Three months ended Variance
30 September 2022 30 September 2021 Units % 30 September 2022 30 September 2021 Units %
Sugar 636 541 95 18 199 179 19 11
Pork products 205 182 22 12 72 61 10 17
Agriculture crops, incl. 1,382 1,537 (155) (10) 881 964 (83) (9)
Sugar beet 788 720 68 9 730 720 10 1
wheat 292 583 (291) (50) 98 223 (125) (56)
soybean 145 161 (17) (10) 28 19 9 50
corn 135 58 77 134 25 - 25 0
sunflower seeds 21 8 13 169 1 0 0 0
barley 0 7 (6) (95) 0 2 (2) (92)
Oil and fat products, incl. 1,199 1,257 (58) (5) 407 423 (15) (4)
meal 470 443 27 6 171 138 33 24
crude oil 284 319 (35) (11) 84 121 (37) (30)
industrial fats 213 239 (26) (11) 72 83 (11) (14)
dry whey mixes 13 11 2 14 4 4 0 7
consumer oil & fat products 207 234 (27) (11) 71 72 (1) (1)
consumer dairy products 11 10 1 10 4 4 0 6
KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)
The key consolidated cash flow indicators presented according to management
accounts methodology
in RUB million Nine months ended Variance Three months ended Variance
30 September 2022 30 September 2021 Units % 30 September 2022 30 September 2021 Units %
Net cash from operating activities, incl. 7,918 32,255 (24,337) (75) 8,625 10,907 (2,282) (21)
Operating cash flow before working capital changes 32,427 30,312 2,115 7 3,656 7,570 (3,914) (52)
Working capital changes (22,995) 3,467 (26,463) - 5,256 4,225 1,031 24
Net cash from investing activities, incl. (6,752) (37,078) 30,326 82 (2,790) (19,667) 16,877 86
Purchases of property plant and equipment and inventories intended for (7,642) (8,816) 1,174 13 (3,015) (2,594) (422) (16)
construction
Acquisition of SolPro assets - (28,735) 28,735 - - (17,046) 17,046 -
Net cash from financing activities 28,748 50,108 (21,359) (43) (10,392) 13,735 (24,127) -
Net effect of exchange rate changes on cash and cash equivalents (17,177) (187) (16,990) (9,103) 1,819 (85) 1,903 -
Net increase / (decrease) in cash and cash equivalents 12,738 45,098 (32,360) (72) (2,738) 4,890 (7,628) -
(*) See Appendix 3
The key investments in property, plant and equipment and inventories intended
for construction during 9M 2022 were made in the Meat segment in the amount of
RUB 2,802 million (9M 2021: RUB 4,916 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 2,255 million (9M 2021 : RUB
1,885 million), Oil and Fat segment in the amount of RUB 1,934 million (9M
2021 : RUB 1,266 million excluding acquisition of SolPro assets), and Sugar
segment in the amount of RUB 651 million (9M 2021 : RUB 749 million) mainly
relate to purchases of machinery and equipment for production facilities
renewal and maintenance.
Debt position and liquidity management
in RUB million 30 September 2022 31 December 2021 Variance
Units %
Gross debt 246,256 172,724 73,532 43
Short-term borrowings 183,260 108,749 74,511 69
Long-term borrowings 62,996 63,975 (979) (2)
Cash and cash equivalents, bank deposits and bonds (141,755) (99,315) (42,440) (43)
Short-term cash, deposits and bonds (107,334) (65,344) (41,990) (64)
Long-term cash, deposits and bonds (34,421) (33,971) (450) (1)
Net debt 104,501 73,409 31,092 42
Short-term borrowings, net 75,926 43,405 32,521 75
Long-term borrowings, net 28,575 30,004 (1,429) (5)
Adjusted EBITDA (LTM(4)) 52,709 48,060 4,649 10
Net debt/ Adjusted EBITDA (LTM) 1.98 1.53 0.5 pp
Net finance income/ (expense)
in RUB million Nine months ended Variance Three months ended Variance
30 September 2022 30 September 2021 Units % 30 September 2022 30 September 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 September 2022 compared at 31 December 2021 as a
result of an increase in short-term borrowings.
In 9M 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 9M 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 9M 2021 in the sum of RUB 1,813 million changed to net
finance expense in the amount of RUB 17,379 million in 9M 2022 mainly as the
result of negative dynamics in forex losses in 9M 2022.
________________________________
(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 659 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 9M and 3Q 2022
financial results for investors and analysts.
Details of the call:
Date: 14 November 2022
Time: 4:00 PM (Moscow) / 1:00 PM (London)
Subject: ROS AGRO PLC 3Q and 9M 2022 Financial results
Registration (available up to 3:00 PM Moscow time / 12:00 AM London time on 14 November):
https://us06web.zoom.us/webinar/register/WN_zoIP53dySEWNfkBZS2golw
(https://us06web.zoom.us/webinar/register/WN_zoIP53dySEWNfkBZS2golw)
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 Nine and
Three months ended 30 September 2022 (in RUB thousand)
Nine months ended Three months ended
30 September
30 September
2022 2021 2022 2021
Sales 182,026,606 157,576,090 54,796,326 53,204,321
Net gain / (loss) on revaluation of biological assets and agricultural produce (2,087,230) 10,570,007 (239,057) 11,004,819
Cost of sales (139,836,326) (123,260,634) (47,040,326) (43,702,667)
Net gain / (loss) from trading derivatives - (5) - -
Gross profit 40,103,050 44,885,458 7,516,943 20,506,473
Distribution and selling expenses (10,968,875) (5,704,363) (3,608,134) (1,386,012)
General and administrative expenses (6,735,396) (8,322,598) (2,465,036) (3,681,761)
Other operating income/(expenses), net (4,098,301) 1,201,562 (594,972) 168,752
Reversal of provision/(provision) for impairment of loans issued - 3,649,567 - 1,797,273
Operating profit 18,300,478 35,709,626 848,801 17,404,725
Interest expense (5,775,676) (4,002,929) (2,458,290) (1,495,908)
Interest income 6,549,397 6,307,773 2,201,212 2,585,169
Net gain / (loss) from bonds held for trading 42 (2,362) - (1,000)
Other financial income/ (expenses), net (18,151,908) (489,739) 1,530,584 (326,330)
Profit / (loss) before taxation 922,333 37,522,369 2,122,307 18,166,656
Income tax expense 414,389 (2,100,271) (951,986) (345,043)
Profit for the period 1,336,722 35,422,098 1,170,321 17,821,613
Other comprehensive income:
Total comprehensive income/ (loss) for the period 1,336,722 35,422,098 1,170,321 17,821,613
Profit / (loss) is attributable to:
Owners of ROS AGRO PLC 1,296,521 35,441,460 1,129,402 17,819,894
Non-controlling interest 40,201 (19,362) 40,919 1,719
Profit / (loss) for the period 1,336,722 35,422,098 1,170,321 17,821,613
Total comprehensive income/ (loss) is attributable to:
Owners of ROS AGRO PLC 1,296,521 35,441,460 1,129,402 17,819,894
Non-controlling interest 40,201 (19,362) 40,919 1,719
Total comprehensive income/ (loss) for the period 1,336,722 35,422,098 1,170,321 17,821,613
Earnings per ordinary share for profit attributable to the equity holders of 48.19 1,317.22 41.98 662.30
ROS AGRO PLC, basic and diluted (in RR per share)
Appendix 2. Consolidated statement of financial position as at 30 September
2022
(in RUB thousand)
30 September 2022 31 December 2021
ASSETS
Current assets
Cash and cash equivalents 59,199,907 46,462,179
Restricted cash 32 47
Short-term investments 64,890,345 21,001,760
Trade and other receivables 22,053,359 12,558,401
Prepayments 11,141,171 5,414,032
Current income tax receivable 995,192 1,532,726
Other taxes receivable 12,916,554 8,321,193
Inventories and short-term biological assets 79,028,575 77,509,033
Total current assets 250,225,135 172,799,371
Non-current assets
Property, plant and equipment 120,828,896 119,159,412
Inventories intended for construction 956,361 1,604,570
Right-of-use assets 6,981,451 7,346,538
Goodwill 2,364,942 2,364,942
Advances paid for non-current assets 5,474,064 7,355,467
Long-term biological assets 4,389,147 2,744,863
Long-term investments and receivables 42,970,649 42,527,657
Investments in associates 455,916 359,782
Deferred income tax assets 7,545,290 4,835,268
Other intangible assets 1,526,228 1,144,057
Other non-current assets 75,451 79,125
Total non-current assets 193,568,395 189,521,681
Total assets 443,793,530 362,321,052
LIABILITIES and EQUITY
Current liabilities
Short-term borrowings 183,260,279 108,748,840
Lease liabilities 1,162,772 1,130,831
Trade and other payables 15,836,612 15,440,635
Provisions 245,462 494,709
Current income tax payable 197,104 464,471
Other taxes payable 12,644,731 7,454,558
Total current liabilities 213,346,960 133,734,044
Non-current liabilities
Long-term borrowings 62,995,825 63,975,025
Government grants 10,627,190 9,325,530
Lease liabilities 5,222,242 5,535,014
Deferred income tax liability 2,388,371 1,876,244
Total non-current liabilities 81,233,628 80,711,813
Total liabilities 294,580,588 214,445,857
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 121,377,853 120,080,307
Equity attributable to owners of ROS AGRO PLC 149,227,171 147,929,625
Non-controlling interest (14,229) (54,430)
Total equity 149,212,942 147,875,195
Total liabilities and equity 443,793,530 362,321,052
Appendix 3. Consolidated statement of cash flows the Nine months ended 30
September 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Nine months ended
30 September 2022 30 September 2021
Cash flows from operating activities
Profit/(loss) before income tax 922,333 37,522,370
Adjustments for:
Depreciation and amortization 10,844,824 9,434,299
Interest expense 14,932,317 7,324,543
Government grants (10,131,758) (5,238,990)
Interest income (6,549,396) (6,307,773)
Loss/ (gain) on disposal of property, plant and equipment (467,203) (66,677)
Net (gain) / loss on revaluation of biological assets and agricultural produce 2,087,230 (10,570,007)
Change in provision for impairment of loans issued (3,385) (3,649,739)
Interest expense on leases 420,998 370,436
Realised deferred day-one gain - (529,893)
Change in provision for net realisable value of inventory 646,480 1,017,409
Change in provision for impairment of receivables and prepayments 52,771 577,580
Foreign exchange (gain) / loss, net 20,856,051 (36,965)
Lost / (reversal of) harvest write-off 24,797 237,476
Net (gain) / loss from bonds held for trading (42) 2,362
Change in provision for impairment of advances paid for property, plant and (14,205) (38,260)
equipment
Change in other provisions (249,247) 622,072
Dividend income (397,125) (377,269)
Loss on disposal of other assets (21,698) -
Gain on SolPro loans redemption (466,330) -
Other non-cash and non-operating expenses, net (60,661) 19,269
Operating cash flow before working capital changes 32,426,754 30,312,242
Change in trade and other receivables and prepayments (19,210,644) (7,824,401)
Change in other taxes receivable (4,595,361) (4,048,993)
Change in inventories and short-term biological assets (5,424,747) 7,983,147
Change in trade and other payables 737,498 2,264,641
Change in other taxes payable 5,497,786 5,092,643
Cash generated from operations 9,431,285 33,779,279
Income tax paid (1,512,818) (1,524,306)
Net cash from operating activities 7,918,467 32,254,973
Appendix 3 (continued). Consolidated statement of cash flows the Nine months
ended 30 September 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Nine months ended
30 September 2022 30 September 2021
Cash flows from investing activities
Purchases of property, plant and equipment including SolPro assets acquisition (7,433,806) (37,151,209)
Purchases of other intangible assets (690,318) (448,233)
Purchases of land lease rights (24,968) (36,933)
Proceeds from sales of property, plant and equipment 479,519 260,298
Purchases of inventories intended for construction (208,440) (399,645)
Purchases of associates (96,134) (102,000)
Movement in restricted cash - 140,895
Dividends received 722,768 377,331
Other investing activities 499,129 281,501
Net cash from investing activities (6,752,250) (37,077,995)
Cash flows from financing activities
Proceeds from borrowings 99,630,403 96,623,976
Repayment of borrowings (28,134,987) (23,593,441)
Interest paid (4,842,909) (3,098,985)
Change in cash on bank deposits (29,691,928) (28,000,000)
Proceeds from sales of bonds with maturity over three months* 140,783 220,282
Loans given* (15,445,102) (728,269)
Loans repaid* 1,377,321 20,698,888
Interest received* 5,512,854 5,570,976
Proceeds from government grants 636,607 1,935,018
Dividends paid to owners Ros Agro PLC (410) (19,417,565)
Repayment of lease libilities - principal (435,240) (58,706)
Other financial activities 722 (44,645)
Net cash from financing activities 28,748,114 50,107,529
Net effect of exchange rate changes on cash and cash equivalents (17,176,603) (186,644)
Net increase/ (decrease) in cash and cash equivalents 12,737,728 45,097,863
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 59,199,907 56,964,661
(*) 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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