REG - Ros Agro PLC - Financial Results 4Q and 12M 2020
15 March 2021
ROS AGRO financial results for 12M 2020 and 4Q 2020
15 March 2021 - Today ROS AGRO PLC (the "Company"), the holding company
of Rusagro Group (the "Group"), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the year ended 31 December 2020.
12M 2020 Highlights
- Sales amounted to RR 158,971 million (US$ 2,198 million1), an increase of RR 20,799 million (+15%) compared to 12M 2019;
- Adjusted EBITDA2 amounted to RR 31,984 million (US$ 442 million), an increase of
RR 12,613 million (+65%) compared to 12M 2019;
- Adjusted EBITDA margin rose from 14% in 12M 2019 to 20% in 12M 2020;
- Net profit for the period amounted to RR 24,297 million (US$ 336 million), an increase of RR 14,588 million (+150%);
- Net debt position3 as of 31 December 2020 amounted to RR 68,900 million (US$ 933 million);
- Net Debt/Adjusted EBITDA (LTM4) as of 31 December 2020 was 2.15x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:
"In 2020 Rusagro achieved impressive results and managed to earn the highest adjusted EBITDA in the Company's history. 4Q followed the positive trend set during 9M 2020, sales and adjusted EBITDA of the Group improved significantly. Sales of all segments except Sugar have increased mainly due to sales prices growth of Oil and Fat products, pork and all crops despite the decrease of sales volumes in Oil and Fat and Agricultural Segments. Sales volumes in Meat Segments increased substantially as a result of higher volumes of processed pork due to production expansion in Tambov Region. Sugar price has also improved as a result of lower sugar beet harvest.
Adjusted EBITDA margins of Oil and Fat, Meat and Agricultural Segments improved mostly as the result of sales prices growth in all product lines while costs were quite stable. Sugar Segment quarterly margin remained flat.
In 2020 the Company operated in the world pandemic environment, which had two key effects. The first one was the growth of demand for consumer products, and the second one was rouble devaluation, as a result, of oil price drop.
Despite several identified cases among employees, travel and logistical disruptions, government restrictions Ros Agro managed to operate all plants at high capacity, continue construction and harvest crops well. The company implemented new production protocols, improved liquidity position and supported the medical infrastructure of the main regions of operation."
Key consolidated financial performance indicators
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales 1
158,971
138,172
20,799
15
50,209
39,096
11,112
28
Gross profit
43,739
23,582
20,157
85
13,296
8,137
5,159
63
Gross margin, %
28%
17%
11 pp
26%
21%
5 pp
Adjusted EBITDA 2
31,984
19,371
12,613
65
11,789
7,379
4,410
60
Adjusted EBITDA margin, %
20%
14%
6 pp
23%
19%
4 pp
Net profit for the period 3
24,297
9,709
14,588
150
5,772
4,096
1,676
41
Net profit margin %
15%
7%
8 pp
11%
10%
1 pp
1 Sales and COS for 12M19 related to Oil & Fats (RR 7,396 million) and Other (RR 1,120 million) have been netted versus each other with no effect on Gross profit in accordance with p. 17(a) and 17(b) of IFRS15
2 Adjusted EBITDA for 9M20 was decreased by RR 544 million due to revaluation procedure, performed at the year end
Adjusted EBITDA calculation now also includes components of other operating income/(expenses), except for the non-recurring items, effect for 12M19 RR -673 million
3 Net profit for the period is affected by non-cash income/ (loss) on revaluation of biological assets and agricultural produce. See details in business-sections below
Key financial performance indicators by segments
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales, incl.
158,971
138,172
20,799
15
50,209
39,096
11,112
28
Sugar
28,113
31,195
(3,082)
(10)
7,034
7,953
(919)
(12)
Meat
32,434
25,834
6,601
26
9,588
7,538
2,049
27
Agriculture
34,348
25,845
8,503
33
19,596
10,804
8,793
81
Oil and Fat
76,160
62,375
13,785
22
24,208
17,796
6,411
36
Milk Products
3,786
3,870
(83)
(2)
1,022
1,041
(19)
(2)
Other
631
300
331
111
234
76
158
207
Eliminations
(16,501)
(11,245)
(5,256)
(47)
(11,473)
(6,112)
(5,361)
(88)
Gross profit, incl.
43,739
23,582
20,157
85
13,296
8,137
5,159
63
Sugar
6,885
5,429
1,456
27
1,512
2,128
(616)
(29)
Meat
4,377
3,264
1,114
34
(372)
541
(913)
-
Agriculture
18,870
5,702
13,169
231
9,614
2,757
6,856
249
Oil and Fat
14,778
8,914
5,864
66
3,715
3,363
353
10
Milk Products
401
369
33
9
94
118
(24)
(21)
Other
153
155
(1)
(1)
77
30
48
161
Eliminations
(1,725)
(249)
(1,476)
(592)
(1,345)
(802)
(543)
(68)
Adjusted EBITDA, incl.
31,984
19,371
12,613
65
11,789
7,379
4,410
60
Sugar
6,352
3,988
2,364
59
1,347
1,517
(170)
(11)
Meat
6,473
4,820
1,653
34
1,539
1,262
276
22
Agriculture
15,191
5,913
9,278
157
10,176
1,916
8,259
431
Oil and Fat
9,388
3,385
6,003
177
1,995
1,888
107
6
Milk Products
(13)
53
(67)
-
13
16
(4)
(22)
Other
(1,300)
(1,149)
(151)
(13)
(206)
(93)
(113)
(121)
Eliminations
(4,108)
2,360
(6,468)
-
(3,073)
872
(3,945)
-
Adjusted EBITDA margin, %
20%
14%
6 pp
23%
19%
4 pp
Sugar
23%
13%
10 pp
19%
19%
0 pp
Meat
20%
19%
1 pp
16%
17%
(1) pp
Agriculture
44%
23%
21 pp
52%
18%
34 pp
Oil and Fat
12%
5%
7 pp
8%
11%
(3) pp
Milk Products
0%
1%
(1) pp
1%
2%
(1) pp
Sugar Segment
The financial results of the Sugar Segment of 12M20 and 4Q20 compared to 12M19 and 4Q19 respectively are presented in the table below:
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales
28,113
31,195
(3,082)
(10)
7,034
7,953
(919)
(12)
Cost of sales
(21,238)
(25,758)
4,520
18
(5,522)
(5,822)
300
5
Net gain/ (loss) from trading derivatives
11
(7)
18
-
-
(2)
2
-
Gross profit
6,885
5,429
1,456
27
1,512
2,128
(616)
(29)
Gross profit margin
24%
17%
7 pp
21%
27%
(6) pp
Distribution and selling expenses
(1,964)
(2,077)
113
5
(478)
(803)
325
40
General and administrative expenses
(1,436)
(1,440)
4
0
(389)
(322)
(67)
(21)
Other operating income/ (expenses), net
602
544
58
11
(31)
32
(63)
-
incl. Other adjustments to EBITDA (non-recurring items)
425
468
(43)
(9)
(65)
15
(80)
-
Operating profit
4,088
2,457
1,631
66
614
1,036
(422)
(41)
Adjusted EBITDA
6,352
3,988
2,364
59
1,347
1,517
(170)
(11)
Adjusted EBITDA margin
23%
13%
10 pp
19%
19%
0 pp
Sales decreased in 12M20 compared to 12M19 due to sales volume reduction of 21% partially compensated by sale price increase of 7%. Sale price showed increase as a result of demand growth triggered by lower harvest of sugar beet in 2020 and the implications of the COVID-19 pandemic. Sales volumes decreased due to management expectation of lower production volumes in 2020 to ensure consistent sales volume. Sugar sales decrease in 12M20 compared to 12M19 was partially compensated by sugar pulp sales growth of RR 810 million and buckwheat sales growth of RR 281 million.
Sales decrease in 4Q20 vs 4Q19 was attributable to sugar sales volume reduction of 52% significantly compensated by sale price growth of 78%. Quarterly sales volumes decreased in 4Q20 compared to 4Q19 due to lower production volumes of 2020/2021 season together with the limitation of storage facilities: excess of production volume over storage limit sold during 4Q was higher in 2019.
Sugar sales, production volumes and average sales prices per kilogram (excl. VAT) were
as follows:
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sugar production volume, thousand tonnes
764
880
(116)
(12)
484
642
(158)
(24)
Sales volume, thousand tonnes
812
1,022
(210)
(21)
142
295
(154)
(52)
Average sales price, rubles/kg, excl. VAT
29.5
27.5
2.0
7
39.2
21.9
17.2
78
Cost of sales in 12M20 showed in comparison to 12M19 a higher decrease than Sales mainly due to the significant drop of sugar beet purchase prices by 36% when seasons 2019/2020 and 2018/2019 are compared. The launch of second line of desugarization at the end of 2019 led to increase of high-margin sugar produced out of molasses and therefore additional Cost of sales decrease.
Meat Segment
The financial results of the Meat Segment of 12M20 and 4Q20 compared to 12M19 and 4Q19 respectively are presented in the table below:
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales
32,434
25,834
6,601
26
9,588
7,538
2,049
27
Net gain/ (loss) on revaluation of biological assets and agricultural produce
(681)
(852)
171
20
(1,504)
(396)
(1,108)
(279)
Cost of sales
(27,376)
(21,717)
(5,658)
(26)
(8,455)
(6,600)
(1,855)
(28)
Gross profit
4,377
3,264
1,114
34
(372)
541
(913)
-
Gross profit margin
13%
13%
0 pp
(4) %
7%
(11) pp
Gross profit excl. effect of biological assets revaluation
5,059
4,116
942
23
1,132
938
194
21
Adjusted gross profit margin
16%
16%
0 pp
12%
12%
0 pp
Distribution and selling expenses
(1,204)
(847)
(357)
(42)
(342)
(296)
(46)
(16)
General and administrative expenses
(1,509)
(1,288)
(221)
(17)
(549)
(407)
(142)
(35)
Other operating income/ (expenses), net
654
326
328
100
258
198
60
30
incl. reimbursement of operating costs (government grants)
105
57
48
85
42
7
35
502
incl. Other adjustments to EBITDA (non-recurring items)
460
366
94
26
181
195
(14)
(7)
Operating profit income/ (expenses), net
2,318
1,454
864
59
(1,005)
37
(1,042)
-
Adjusted EBITDA
6,473
4,820
1,653
34
1,539
1,262
276
22
Adjusted EBITDA margin
20%
19%
1 pp
16%
17%
(1) pp
Sales of the Meat Segment increased by 26% in 12М20 and by 27% in 4Q20 compared to the respective periods of the prior year because of increase in production volumes of pork mainly due to launch of 3rd stage of Tambov Bacon in 3Q19 and increase in productivity. In addition, Sales increased as the result of sales price growth in 4Q20 of all meat product categories and livestock pigs by 8% and 13%, respectively, and increased export sales with a premium price relative to the domestic price.
Cost of sales increased by 25% in 12M20 due to higher volumes of livestock pigs transferred to meat processing.
Net loss on revaluation of biological assets and agricultural produce in 12M20 resulted mainly from loss in revaluation on bearer livestock as at 31 December 2020 and compensated by gain on revaluation of consumable livestock pigs (caused by increase in market prices during the period compared to market prices at the end 2019).
An increase in Distribution and selling expenses in 12М20 and 4Q20 compared to the same prior year periods included an increase in transportation costs as a result of higher sales volume of processed pork and an increase in payroll costs related to launch of 3rd stage of Tambov Bacon, and also as a result of the rise in the costs of marketing activities.
Pork sales volumes and the average pork sales prices per kilogram (excl. VAT) were as follows:
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales volume (in thousand tonnes), incl.
249
202
47
23
71
61
10
17
livestock pigs
34
33
1
3
14
14
0
1
processed pork
215
169
46
27
57
47
10
21
Average sale prices (rubles per kg, excl. VAT):
livestock pigs
80.0
75.3
4.6
6
81.9
72.5
9.4
13
processed pork
137.9
137.6
0.3
0
146.6
135.2
11.4
8
An increase in Other operating income in 12M20 compared to the same prior year period is due to the launch of the grain elevator in Primorie and the reimbursement for part of the costs under the animal insurance program with state support.
Agricultural Segment
As at 31 December 2020 Group's area of controlled land stands at 638 thousand hectares
(31 December 2019: 641 thousand hectares). The financial results of the Agricultural Segment
of 12M20 and 4Q20 compared to 12M19 and 4Q19 respectively are presented below:
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales
34,348
25,845
8,503
33
19,596
10,804
8,793
81
Net gain/ (loss) on revaluation of biological assets and agricultural produce
3,583
(1,560)
5,142
-
(56)
685
(741)
-
Cost of sales
(19,060)
(18,584)
(476)
(3)
(9,926)
(8,731)
(1,195)
(14)
Gross profit
18,870
5,702
13,169
231
9,614
2,757
6,856
249
Gross profit margin
55%
22%
33 pp
49%
26%
23 pp
Gross profit excl. effect of biological assets and agricultural produce revaluation
15,288
7,261
8,027
111
9,670
2,072
7,597
367
Adjusted gross profit margin
45%
28%
17 pp
49%
19%
30 pp
Distribution and selling expenses
(2,370)
(2,826)
457
16
(918)
(819)
(99)
(12)
General and administrative expenses
(1,363)
(1,342)
(20)
(2)
(414)
(400)
(14)
(4)
Other operating income/ (expenses), net
460
(95)
555
-
446
8
438
5,629
incl. reimbursement of
operating costs (government grants)
299
131
168
129
188
31
158
514
incl. Other adjustments to EBITDA (non-recurring items)
71
(17)
89
-
97
(1)
98
-
Operating profit
15,597
1,437
14,160
985
8,728
1,546
7,181
464
Adjusted EBITDA
15,191
5,913
9,278
157
10,176
1,916
8,259
431
Adjusted EBITDA margin
44%
23%
21 pp
52%
18%
34 pp
Sales in 12M20 and 4Q20 compared to the prior year increased thanks to higher sales price of all crops.
Sales volumes by product were as follows:
Thousand tonnes
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
sugar beet
2,952
3,875
(924)
(24)
2,120
2,931
(811)
(28)
wheat
653
831
(177)
(21)
386
357
29
8
barley
122
278
(156)
(56)
30
30
0
1
corn
149
156
(7)
(4)
57
19
38
197
sunflower seeds
78
80
(2)
(3)
59
70
(11)
(15)
soybean
331
225
106
47
97
51
47
92
The average sale prices per kilogram (excl. VAT) were as follows:
RR per kilogram, excl. VAT
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
sugar beet
3.4
1.6
1.9
119
3.6
1.5
2.1
140
wheat
12.9
10.4
2.5
24
13.8
9.5
4.2
44
barley
10.2
10.2
0.1
1
11.5
8.6
2.9
34
corn
14.0
12.6
1.4
11
13.1
12.9
0.3
2
sunflower seeds
30.0
17.3
12.6
73
33.0
17.2
15.8
92
soybean
28.6
20.5
8.2
40
34.3
22.0
12.3
56
Net gain on revaluation of biological assets and agricultural produce in 12M20 represents the gain recognised from revaluation of crops for 2020 harvest and the realisation of loss from revaluation of 2019 crops harvest remained in stock as at 31 December 2019 and being sold to customers during 2020.
The gain on revaluation of crops and its subsequent realisation do not affect the Adjusted EBITDA figure.
Dynamics in distribution and selling expenses correlate with crops sales volume in 12M20
and in 4Q20 vs 2019.Other operating income/(expenses), net increased as a result of the higher reimbursement of operating costs through government grants by RR 168 million in 12M20 vs 12M19 (by RR 158 million in 4Q20 vs 4Q19) and other operating income from the rental of land to the Meat Segment by RR 243 million in 12M20 vs 12M19 (by RR 104 million in 4Q20 vs 4Q19). Gain from PPE disposal was by RR 230 million higher in 12M20 compared to 12M19 (in 4Q20 gain from PPE disposal was higher by RR 174 million vs 4Q19). Foreign exchange gain is lower by RR 61 million in 12M20 vs 12M19.
Oil and Fat Segment
The financial results of the Oil and Fat Segment for 12M20 and 4Q20 compared to 12M19 and 4Q19 respectively are presented below:
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales
76,160
62,375
13,785
22
24,208
17,796
6,411
36
Cost of sales
(61,383)
(53,461)
(7,922)
(15)
(20,492)
(14,434)
(6,059)
(42)
Gross profit
14,778
8,914
5,864
66
3,715
3,363
353
10
Gross profit margin
19%
14%
5 pp
15%
19%
(4) pp
Distribution and selling expenses
(4,639)
(4,408)
(231)
(5)
(1,759)
(1,298)
(461)
(35)
General and administrative expenses
(1,675)
(1,604)
(71)
(4)
(288)
(419)
130
31
Other operating income/ (expenses). net
(257)
(453)
196
43
(127)
(243)
116
48
incl. Other adjustments to EBITDA (non-recurring items)
(463)
(321)
(142)
(44)
(215)
(327)
112
34
Operating profit/ (loss)
8,207
2,449
5,758
235
1,541
1,403
138
10
Adjusted EBITDA
9,388
3,385
6,003
177
1,995
1,888
107
6
Adjusted EBITDA margin
12%
5%
7 pp
8%
11%
(3) pp
Sales volumes to third parties by product were as follows:
thousand tons
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
mayonnaise
138
136
2
2
37
43
(6)
(15)
margarine
43
45
(2)
(5)
12
14
(2)
(15)
bottled oil
160
147
13
9
45
43
2
4
industrial fats
313
243
70
29
92
81
11
13
bulk oil
384
406
(21)
(5)
98
107
(9)
(8)
meal
589
647
(58)
(9)
146
178
(31)
(18)
The average sale prices per kilogram (excl. VAT) for sales to third parties were as follows:
RR per kilogram, excl. VAT
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
mayonnaise
87.3
80.1
7.2
9
96.4
80.7
15.7
19
margarine
89.3
80.3
9.0
11
97.9
79.1
18.8
24
bottled oil
68.0
53.7
14.3
27
87.1
53.3
33.8
64
industrial fats
59.7
48.4
11.3
23
69.3
49.0
20.4
42
bulk oil
53.6
44.4
9.2
21
66.9
44.5
22.3
50
meal
15.2
14.2
0.9
7
17.9
12.2
5.7
47
Sales increased as a result of new production capacities rented since 3Q19 in Saratov region, and, as a result, higher sales volumes of industrial fats, supported by regained market share in 2H19, and higher sales volumes mayonnaise. Also increase in sales in 12M20 is due to higher sales prices for all products. At the same time, EBITDA increased by RR 6,003 million in 12M20 due to increased production capacities. EBITDA margin has increased by 7 pp in 12M20 compared to 12M19 due to higher sales prices for all products while cost of sales have changed less significantly because during 2020 sunflower, including purchased at lower prices in 2019, was used.
An increase in Distribution and selling expenses in 12М20 and 4Q20 compared to the same prior year periods included an increase in advertising expenses.
Increase in General and administrative expenses in comparison to the prior period is attributed to higher number of employees in administrative function in Oil and Fat segment.
Increase in Other operating expenses by RR 196 million in 12M20 was mainly due to the write-off of RR 175 million as result of sunflower technological losses in 2Q19.
Increase in Other adjustments to EBITDA (non-recurring items) by RR 142 million in 12M20 was caused by a change in the exchange rate and charity expenses.
Milk Products Segment
The financial results of the Milk Products Segment for 12M20 and 4Q20 compared to 12M19 and 4Q19 respectively are presented in the table below:
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Sales
3,786
3,870
(83)
(2)
1,022
1,041
(19)
(2)
Cost of sales
(3,385)
(3,501)
116
3
(928)
(923)
(6)
(1)
Gross profit
401
369
33
9
94
118
(24)
(21)
Gross profit margin
11%
10%
1 pp
9%
11%
(2) pp
Distribution and selling expenses
(276)
(175)
(101)
(57)
(78)
(75)
(2)
(3)
General and administrative expenses
(141)
(132)
(9)
(7)
(33)
(28)
(4)
(16)
Other operating income/ (expenses). net
(276)
(11)
(266)
(2,473)
(244)
1
(244)
-
incl. Other adjustments to EBITDA (non-recurring items)
(269)
(1)
(268)
(39,749)
(266)
(1)
(265)
(42,721)
Operating profit
(292)
50
(342)
-
(260)
15
(275)
-
Adjusted EBITDA
(13)
53
(67)
-
13
16
(4)
(22)
Adjusted EBITDA margin
0%
1%
(1) pp
1%
2%
(1) pp
Group is now focusing on entering the retail chains with a consumer product, developing brands and increasing sales profitability. Sales volumes by product were as follows:
Thousand tonnes
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
cheese and cheese product
8.1
8.4
(0.3)
(3)
1.9
2.4
(0.5)
(22)
butter and spread
0.8
1.9
(1.1)
(57)
0.3
0.2
0.1
25
dry mixes
14.6
15.4
(0.9)
(6)
3.9
4.2
(0.3)
(7)
cream
4.2
1.4
2.7
190
1.3
0.7
0.7
101
The average sale prices per kilogram (excl. VAT) were as follows:
RR per kilogram, excl. VAT
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
cheese and cheese product
212.9
217.9
(5.0)
(2)
224.2
219.9
4.3
2
butter and spread
242.4
273.5
(31.2)
(11)
247.0
227.3
19.6
9
dry mixes
74.0
79.4
(5.4)
(7)
76.1
77.7
(1.6)
(2)
cream
181.7
200.6
(18.9)
(9)
183.3
204.3
(21.1)
(10)
Sales of milk products decreased in 12M20 (RR -83 million, -2%) as a result of decrease of sales volume and shift of sales volume from cheese (more expensive product) to cheese products and significant decrease of milk fat prices due to oversupply in the market.
Growth of Selling, General and Administrative expenses due to newly hired during 2019 staff, including key personnel.
Key consolidated cash flow indicators (not IFRS presentation*)
The key consolidated cash flow indicators presented according to management accounts methodology were as follows:
in mln Roubles
Year ended
Variance
Year ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Net cash from operating activities, incl.
12,117
21,165
(9,048)
(43)
(12,560)
(7,466)
(5,094)
(68)
Operating cash flow before working capital changes
31,899
19,423
12,476
64
10,984
6,962
4,021
58
Working capital changes
(17,748)
1,948
(19,697)
-
(22,496)
(14,179)
(8,317)
(59)
Net cash from investing activities, incl.
(13,494)
(24,324)
10,830
45
(3,627)
(3,653)
26
1
Purchases of property plant and equipment and inventories intended for construction
(14,066)
(16,799)
2,732
16
(3,976)
(4,409)
433
10
Net cash from financing activities
10,892
3,673
7,219
197
18,512
8,280
10,232
124
Net effect of exchange rate changes on cash and cash equivalents
180
(72)
253
-
(111)
42
(153)
-
Net increase / (decrease) in cash and cash equivalents
9,696
442
9,254
2,092
2,214
(2,797)
5,011
-
(*) See Appendix 4
The key investments in property, plant and equipment and inventories intended for construction during 12M20 were made in Meat Segment in the amount of RR 8,750 million (12M19: RR 10,851 million), purchases related to the construction project in Far East region. Investments in Sugar Segment in the amount of RR 1,494 million (12M19: RR 3,408 million), Agriculture Segment in the amount of RR 2,038 million (12M19: RR 2,021 million), Oil and Fat Segment in the amount of RR 1,625 million (12M19: RR 519 million) and in Milk Products Segment in the amount of RR 159 million (no investments in 12M19) mainly relate to purchases of machinery and equipment for production facilities renewal and maintenance.
Debt position and liquidity management
in RR million
31 December 2020
31 December 2019
Variance
Units
%
Gross debt
114,929
97,876
17,053
17
Short-term borrowings
51,753
31,835
19,918
63
Long-term borrowings
63,176
66,041
(2,865)
(4)
Cash and cash equivalents, bank deposits and bonds
(46,029)
(36,136)
(9,893)
(27)
Short-term cash, deposits and bonds
(12,064)
(2,171)
(9,893)
(456)
Long-term cash, deposits and bonds
(33,965)
(33,965)
(0)
(0)
Net debt
68,900
61,740
7,160
12
Short-term borrowings, net
39,689
29,664
10,025
34
Long-term borrowings, net
29,211
32,076
(2,865)
(9)
Adjusted EBITDA (LTM4)
31,984
19,371
12,613
65
Net debt/ Adjusted EBITDA (LTM)
2.15
3.19
(1.0) pp
Adjusted EBITDA (LTM)* without other operating income/expenses
32,435
20,045
12,390
62
Net debt/ Adjusted EBITDA (LTM)* without other operating income/expenses
2.12
3.08
(1.0) pp
Net finance income/ (expense)
in RR million
Year ended
Variance
Three months ended
Variance
31 December 2020
31 December 2019
Units
%
31 December 2020
31 December 2019
Units
%
Net interest expense
(4,805)
(5,481)
676
12
(1,085)
(1,564)
479
31
Gross interest expense
(6,448)
(6,830)
381
6
(1,558)
(1,984)
426
21
Reimbursement of interest expense
1,643
1,348
295
22
473
420
52
12
Interest income
7,165
7,305
(140)
(2)
2,535
1,293
1,242
96
Net gain/ (loss) from bonds held for trading
(16)
(28)
12
43
0
(7)
7
-
Other financial income, net
(1,844)
(331)
(1,513)
(458)
(353)
88
(441)
-
Net foreign exchange gain/ (loss)
(1,234)
211
(1,444)
-
(116)
243
(358)
-
Other financial income / (expenses), net
(610)
(541)
(69)
(13)
(237)
(155)
(82)
(53)
Total net finance income/ (expenses)
500
1,465
(965)
(66)
1,098
(190)
1,288
-
Net debt increased at 31 December 2020 compared at 31 December 2019 as a result of an increase in short-term borrowings.
In 12M20 the Group continued to enjoy benefits from the state agriculture subsidies programme. The Group 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 credits with decreased interest rates, given by the banks to agricultural producers. In 12M20 IFRS accounts these credits 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 12M19 in the sum of RR 1,465 million changed to net finance income in the amount of RR 500 million in 12M20 as the result of negative dynamics in forex losses and decrease in interest expense as a result of savings in net interest expense due to higher volume of government grants.
________________________________
(1) The exchange rates used for translation of RR 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 Group 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: AGRO) - a holding company of Rusagro Group, a leading Russian diversified food producer with vertically integrated operations in the following branches:
Sugar segment
Rusagro is one of the leading Russian sugar producers (№3 with 13% share in sugar production in Russia and №1 with 46% share of cube white sugar market), producing sugar from sugar beet at nine production sites in four regions. Group produces white and brown cube sugar and packaged sugar sold under the brands Russkii Sakhar, Chaikofsky, Mon Cafe and Brauni. Sugar Segment is vertically integrated and sugar beet is supplied by Rusagro's Agriculture Segment, which ensures a consistent supply of raw material. Sugar Segment also operates a cereal plant and sell buckwheat and rice under the brand Tyoplye Traditsii.
Meat segment
Rusagro is the fourth largest pork producer in Russia with 5.6% share of pork produced in Russia. It operates 18 commercial pork complexes with correspondence to high biosecurity standards, has own compound feed production, slaughterhouses and meat processing plants in Tambov and Belgorod Regions. Since 2016 Rusagro sells retail products under its own brand Slovo Myasnika (Butcher's word).
Agricultural segment
The Group currently controls one of the largest land banks among Russian agriculture producers, with 638 thousand hectares of land under control located in the highly fertile Black Earth region of Russia (in the Belgorod, Tambov, Voronezh, Kursk and Orel regions)
and in the Far East Primorie 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 barley, sunflower seeds and soybeans. These products are partially consumed by the Meat Segment, supporting a synergistic effect and lowering price change risk.Oil and Fat segment
Rusagro is the leading crude sunflower oil and consumer margarine producer, second largest industrial fats and mayonnaise producer in Russia with products sold under eight key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki, Moskovskiy Provansal, Novosibirskiy Provansal, Saratovskiy Provansal, Rossiyanka and Saratovskiy Slivochniy. The Group operates (including through ownership and the lease) five crushing and three oil and fats plants. Own sunflower and soy oil production allows to control the source of the vegetable oil required to produce oil and fats products.
Milk Products segment
Launched at the end of 2018 Milk Products Segment operates two plants in Samara and Ulyanovsk Regions. It produces dry industrial mixes, cheeses, butter and cream. Consumer products are sold under three brands, which are Milie, Buterbrodnoe utro and Syrnaya Kultura.
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.
Rusagro management is organizing a conference call about its 12M and 4Q 2020 financial results for investors and analysts.
Details of the call:
Date
15 March 2020
Time
4:00 PM (Moscow) / 1:00 PM (London)
Subject
ROS AGRO PLC 3Q 2020 Financial results
Zoom
https://ib-translations.zoom.us/j/95649463469?pwd=clhHTmg1UFBydmZ1Q0JlL1R3NW5MQT09
Password
989307
Contacts:
Svetlana Kuznetsova
IR & ESG Director
Phone: +7 495 363 1661
E-mail: ir@rusagrogroup.ru
Appendix 1. Consolidated statement of comprehensive income for the Year and Three months ended 31 December 2020 (in RR thousand)
Year ended
31 December
Three months ended
31 December
2020
2019
2020
2019
Sales
158,971,035
138,172,424
50,208,835
39,096,396
Net gain/(loss) on revaluation of biological assets and agricultural produce
5,890,447
(4,111,947)
461,484
(827,618)
Cost of sales
(121,132,658)
(110,470,963)
(37,374,419)
(30,130,074)
Net gain/(loss) from trading derivatives
10,552
(7,348)
-
(2,203)
Gross profit
43,739,376
23,582,166
13,295,900
8,136,501
Distribution and selling expenses
(9,760,841)
(9,818,779)
(3,252,990)
(2,859,744)
General and administrative expenses
(7,377,449)
(6,711,005)
(1,891,956)
(1,582,737)
Other operating income/ (expenses), net
2,293,017
1,926,686
910,573
1,179,383
Provision for impairment of loans issued
(5,070,598)
-
(5,070,598)
-
Operating profit / (loss)
23,823,505
8,979,068
3,990,929
4,873,403
Interest expense
(4,804,995)
(5,481,240)
(1,084,823)
(1,563,510)
Interest income
7,164,816
7,304,845
2,534,967
1,292,723
Net (loss)/gain from bonds
(15,698)
(27,711)
279
(7,062)
Other financial income/ (expenses), net
(1,844,130)
(330,699)
(352,567)
88,004
Profit before income tax
24,323,498
10,444,263
5,088,785
4,683,558
Income tax expense
(26,771)
(735,754)
683,661
(587,236)
Profit for the period
24,296,727
9,708,509
5,772,446
4,096,322
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains less losses on investments in equity securities at fair value through other comprehensive income
56,556
-
56,556
-
Income tax relating to other comprehensive income
(7,070)
-
(7,070)
-
Total comprehensive income for the period
24,346,213
9,708,509
5,821,932
4,096,322
Profit is attributable to:
Owners of ROS AGRO PLC
24,359,786
9,808,204
5,795,529
4,112,237
Non-controlling interest
(63,059)
(99,695)
(23,083)
(15,915)
Profit for the period
24,296,727
9,708,509
5,772,446
4,096,322
Total comprehensive income is attributable to:
Owners of ROS AGRO PLC
24,409,272
9,808,204
5,845,015
4,112,237
Non-controlling interest
(63,059)
(99,695)
(23,083)
(15,915)
Total comprehensive income for the period
24,346,213
9,708,509
5,821,932
4,096,322
Earnings per ordinary share for profit attributable to the owners of ROS AGRO PLC, basic and diluted
(in RR per share)905.39
364.62
215.40
152.87
Appendix 2. Segment information for the Year ended 31 December 2020 (in RR thousand)
12M 2020
Sugar
Meat
Agriculture
Oil and Fat
Other
Eliminations
Total
Sales
28,112,519
32,434,214
34,347,506
76,160,418
4,406,702
(16,490,324)
158,971,035
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
(681,302)
3,582,520
-
-
2,989,229
5,890,447
Cost of sales
(21,238,160)
(27,375,635)
(19,059,850)
(61,382,829)
(3,854,140)
11,777,956
(121,132,658)
incl. Depreciation
(2,605,853)
(3,716,132)
(2,861,216)
(536,301)
(17,164)
(75,387)
(9,812,053)
Net gain/ (loss) from trading derivatives
10,552
-
-
-
-
-
10,552
Gross profit
6,884,911
4,377,277
18,870,176
14,777,589
552,562
(1,723,139)
43,739,376
Distribution and Selling, General and administrative expenses
(3,399,788)
(2,713,324)
(3,732,770)
(6,313,621)
(2,121,408)
1,142,621
(17,138,290)
incl. Depreciation
(83,738)
(218,146)
(386,864)
(181,013)
(187,619)
75,387
(981,993)
Other operating income/(expenses), net
602,466
653,934
459,868
(256,767)
15,305,841
(14,472,325)
2,293,017
incl. Reimbursement of operating costs (government grants)
179,564
104,836
299,020
347,210
-
-
930,630
incl. Other adjustments to EBITDA (non-recurring items)
425,102
459,983
71,372
(463,483)
15,257,311
(13,936,656)
1,813,629
Provision for impairment of loans issued
-
-
-
-
(5,070,598)
-
(5,070,598)
Operating profit / (loss)
4,087,589
2,317,887
15,597,274
8,207,201
8,666,397
(15,052,843)
23,823,505
Adjustments:
Depreciation included in Operating Profit
2,689,591
3,934,278
3,248,080
717,314
204,783
-
10,794,046
Other adjustments to EBITDA (non-recurring items)
(425,102)
(459,983)
(71,372)
463,483
(15,257,311)
13,936,656
(1,813,629)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
681,302
(3,582,520)
-
-
(2,989,229)
(5,890,447)
Provision for impairment of loans issued
-
-
-
-
5,070,598
-
5,070,598
Adjusted EBITDA*
6,352,078
6,473,484
15,191,462
9,387,998
(1,315,533)
(4,105,416)
31,984,073
* Non-IFRS measure
Appendix 2 (continued). Segment information for the Year ended 31 December 2019 (in RR thousand)
12M 2019
Sugar
Meat
Agriculture
Oil and Fat
Other
Eliminations
Total
Sales
31,194,715
25,833,637
25,844,693
62,375,087
4,164,293
(11,240,001)
138,172,424
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
(852,455)
(1,559,526)
-
-
(1,699,966)
(4,111,947)
Cost of sales
(25,758,275)
(21,717,486)
(18,583,596)
(53,461,301)
(3,640,734)
12,690,429
(110,470,963)
incl. Depreciation
(1,925,029)
(2,696,297)
(2,462,063)
(472,629)
(12,507)
(70,938)
(7,639,463)
Net gain/ (loss) from trading derivatives
(7,342)
-
-
-
(6)
-
(7,348)
Gross profit
5,429,098
3,263,696
5,701,571
8,913,786
523,553
(249,538)
23,582,166
Distribution and Selling, General and administrative expenses
(3,516,890)
(2,135,635)
(4,168,971)
(6,011,841)
(1,606,311)
909,864
(16,529,784)
incl. Depreciation
(74,134)
(183,169)
(437,344)
(141,980)
(74,800)
70,938
(840,489)
Other operating income/(expenses), net
544,406
326,251
(95,492)
(452,519)
14,973,889
(13,369,849)
1,926,686
incl. Reimbursement of operating costs (government grants)
71,290
56,562
130,623
141,791
-
-
400,266
incl. Other adjustments to EBITDA (non-recurring items)
467,932
366,207
(17,158)
(321,376)
15,073,830
(13,369,849)
2,199,586
Provision for impairment of loans issued
-
-
-
-
-
-
-
Operating profit / (loss)
2,456,614
1,454,312
1,437,108
2,449,426
13,891,131
(12,709,523)
8,979,068
Adjustments:
Depreciation included in Operating Profit
1,999,163
2,879,466
2,899,407
614,609
87,307
-
8,479,952
Other adjustments to EBITDA (non-recurring items)
(467,932)
(366,207)
17,158
321,376
(15,073,830)
13,369,849
(2,199,586)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
852,455
1,559,526
-
-
1,699,966
4,111,947
Provision for impairment of loans issued
-
-
-
-
-
-
-
Adjusted EBITDA*
3,987,845
4,820,026
5,913,199
3,385,411
(1,095,392)
2,360,292
19,371,381
* Non-IFRS measure
Appendix 3. Consolidated statement of financial position as at 31 December 2020
(in RR thousand)
31 December 2020
31 December 2019
ASSETS
Current assets
Cash and cash equivalents
11,866,798
2,170,779
Restricted cash
143,637
39
Short-term investments
19,583,523
23,456,552
Trade and other receivables
9,512,286
8,068,349
Prepayments
2,941,224
3,018,658
Current income tax receivable
646,162
225,315
Other taxes receivable
5,506,675
4,349,400
Inventories and short-term biological assets
69,001,368
49,386,797
Total current assets
119,201,673
90,675,889
Non-current assets
Property, plant and equipment
87,519,088
80,629,483
Inventories intended for construction
3,353,330
3,157,369
Right-of-use assets
6,934,567
6,230,707
Goodwill
2,364,942
2,364,942
Advances paid for non-current assets
6,905,003
8,721,155
Long-term biological assets
2,528,128
2,279,335
Long-term investments and receivables
42,692,320
42,636,323
Investments in associates
257,782
165,070
Deferred income tax assets
3,566,168
1,852,983
Other intangible assets
619,793
608,635
Other non-current assets
205,793
173,002
Total non-current assets
156,946,914
148,819,004
Total assets
276,148,587
239,494,893
LIABILITIES and EQUITY
Current liabilities
Short-term borrowings
51,753,475
31,834,699
Lease liabilities
943,859
916,791
Trade and other payables
16,016,138
17,492,614
Provisions
179,796
-
Current income tax payable
69,546
123,846
Other taxes payable
4,096,199
3,468,034
Total current liabilities
73,059,013
53,835,984
Non-current liabilities
Long-term borrowings
63,175,720
66,040,784
Government grants
8,536,899
8,306,779
Lease liabilities
4,855,508
3,989,801
Deferred income tax liability
487,049
494,977
Total non-current liabilities
77,055,176
78,832,341
Total liabilities
150,114,189
132,668,325
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
1,313,691
Retained earnings
98,185,038
78,960,843
Equity attributable to owners of ROS AGRO PLC
126,034,356
106,760,675
Non-controlling interest
42
65,893
Total equity
126,034,398
106,826,568
Total liabilities and equity
276,148,587
239,494,893
Appendix 4. Consolidated statement of cash flows for the Year ended 31 December 2020 (in RR thousand) - NOT IFRS PRESENTATION (*)
Year ended
31 December 2020
31 December 2019
Cash flows from operating activities
Profit before income tax
24,323,498
10,444,263
Adjustments for:
Depreciation and amortization
10,794,046
8,479,952
Interest expense
6,448,154
6,829,598
Government grants
(3,216,290)
(2,363,233)
Interest income
(7,164,816)
(7,304,845)
Loss / (gain) on disposal of property, plant and equipment
(335,640)
110,601
Net (gain) / loss on revaluation of biological assets and agricultural produce
(5,890,447)
4,111,947
Change in provision for impairment of loans issued
5,070,598
-
Lease finance expense
580,276
590,777
The result from early repayment of the loan
131,363
-
Realised deferred day-one gain
(993,558)
(1,592,001)
Change in provision for net realisable value of inventory
732,237
(29,168)
Change in provision for impairment of receivables and prepayments
13,592
75,855
Foreign exchange (gain) / loss, net
1,698,846
(177,728)
Lost harvest write-off
188,536
122,468
Share based remuneration
-
(12,888)
Net (gain) / loss from bonds held for trading
15,698
27,711
Settlement of loans and accounts receivable previously written-off
(2)
(147)
Change in provision for impairment of advances paid for property, plant and equipment
(29,620)
29,066
Change in other provisions
179,796
-
Dividend income
(560,568)
-
Gain on sale of subsidiaries, net
-
(364,880)
Loss / (gain) on sale of assets held for sale
-
412,111
Other non-cash and non-operating expenses, net
(87,028)
33,552
Operating cash flow before working capital changes
31,898,671
19,423,011
Change in trade and other receivables and prepayments
(1,920,133)
(2,509,233)
Change in other taxes receivable
(1,157,274)
70,610
Change in inventories and short-term biological assets
(15,169,512)
(87,367)
Change in trade and other payables
(209,572)
4,902,852
Change in other taxes payable
708,163
(428,669)
Cash generated from operations
14,150,343
21,371,204
Income tax paid
(2,033,327)
(206,139)
Net cash from operating activities
12,117,016
21,165,065
Appendix 4 (continued). Consolidated statement of cash flows the Year ended 31 December 2020 (in RR thousand) - NOT IFRS PRESENTATION (*)
Year ended
Cash flows from investing activities
31 December 2020
31 December 2019
Purchases of property, plant and equipment
(12,405,295)
(15,056,765)
Purchases of other intangible assets
(418,808)
(261,046)
Purchases of land lease rights
(86,729)
-
Proceeds from sales of property, plant and equipment
687,757
288,096
Purchases of inventories intended for construction
(1,660,923)
(1,741,948)
Purchases of investments in third parties
-
(8,500,000)
Purchases of associates
(92,712)
(78,150)
Dividends received
560,568
-
Movement in restricted cash
(143,454)
(6,241)
Proceeds from sale of subsidiaries, net of cash disposed
-
478,710
Proceeds from sale of assets held for sale
-
408,839
Proceeds from sales of other investments
-
145,000
Other investing activities
65,938
-
Net cash from investing activities
(13,493,658)
(24,323,505)
Cash flows from financing activities
Proceeds from borrowings
77,932,773
91,687,403
Repayment of borrowings
(65,389,365)
(91,118,861)
Interest and other finance cost paid
(4,196,451)
(5,024,201)
Purchases of bonds with maturity over three months*
(197,523)
-
Proceeds from cash withdrawals from deposits*
-
4,623,323
Deposits placed with banks*
-
(2,012,991)
Proceeds from sales of bonds with maturity over three months*
-
2,314,831
Proceeds from sales of promissory notes*
-
100,000
Purchases of loan issued*
(13,829)
(372,899)
Loans repaid*
1,012,854
1,864,061
Interest received*
4,808,803
4,820,116
Proceeds from government grants
2,192,483
2,086,446
Purchases of non-controlling interest
-
(600)
Dividends paid to owners Ros Agro PLC
(5,134,426)
(5,046,515)
(Repayment)/proceeds of lease liabilities-principal
(123,044)
(235,859)
Other financial activities
-
(10,998)
Net cash from financing activities
10,892,275
3,673,256
Net effect of exchange rate changes on cash and cash equivalents
180,386
(72,433)
Net increase/ (decrease) in cash and cash equivalents
9,696,019
442,383
Cash and cash equivalents at the beginning of the period
2,170,779
1,728,396
Cash and cash equivalents at the end of the period
11,866,798
2,170,779
(*) 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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