REG - Ros Agro PLC - Half-year Report
16 August 2021
ROS AGRO financial results for 1H 2021 and 2Q 2021
16 August 2021 - Today ROS AGRO PLC (the "Company"), the holding company of Rusagro Group (the "Rusagro"), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the six months ended 30 June 2021.
1H 2021 HIGHLIGHTS
- Sales amounted to RUB 104,372 million (US$ 1,404 million1), an increase of RUB 32,210 million (US$ 433 million, +45%) compared to 1H 2020;
- Adjusted EBITDA2 amounted to RUB 22,119 million (US$ 298 million), an increase of RUB 10,217 million (US$ 137 million, +86%) compared to 1H 2020;
- Adjusted EBITDA margin rose from 16% in 1H 2020 to 21% in 1H 2021;
- Net profit for the period amounted to RUB 17,600 million (US$ 237 million), an increase of RUB 7,870 million (US$ 106 million, +81%);
- Net debt position3 as of 30 June 2021 amounted to RUB 66,844 million (US$ 924 million);
- Net Debt/Adjusted EBITDA (LTM4) as of 30 June 2021 was 1.57x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Rusagro, said:
"In 2Q 2021 Rusagro showed growth of adjusted EBITDA backed by revenue increase across Agriculture, Oil & Fats, Meat business segments. Revenue growth was triggered by positive trends both in sales volume and sales prices. Sugar sales decreased due to sales volume reduction partially compensated by sales price growth. Adhering to its mission of making people's lives longer and better, Rusagro continued to participate in the market initiative to provide Russians with affordable food supplies and limited its sales price of sugar and bottled sunflower oil to retail. Thus, sales price of sugar to retail chains in Russia in bags of 50 kg on the basis of the plant didn't exceed 36 roubles/kg inclusive of VAT and sales price of bottled sunflower oil at the plant didn't exceed 95 roubles/litre inclusive of VAT.
In 2Q 2021 Rusagro improved adjusted EBITDA margin of Agriculture and Oil & Fats segments as Revenue grew higher than corresponding increase in costs. EBITDA margin of Sugar and Meat segments followed negative influence of higher sugar beet price for Sugar segment (-2 p.p.) and higher costs of feed and animal health protection as well as additional expenses relating to the start of operations in Primorie for Meat segment (-4 p.p.)."
Key consolidated financial performance indicators
in RR million
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sales 1
104,372
72,1611
32,210
45
54,439
39,2281
15,211
39
Gross profit1
24,379
20,2561
4,123
20
14,290
13,2481
1,042
8
Gross margin, %
23%
28%
(5) pp
26%
34%
(8) pp
Adjusted EBITDA 1
22,119
11,9021
10,218
86
10,950
6,8961
4,054
59
Adjusted EBITDA margin, %
21%
16%
5 pp
20%
18%
2 pp
Net profit for the period 1,2
17,600
9,7301
7,870
81
11,074
9,3921
1,682
18
Net profit margin %
17%
13%
4 pp
20%
24%
(4) pp
1 Several adjustments were made to the published 1H and 2Q 2020 indicators:
• Due to Revenue cut-off adjustment Sales for 1H20 and 2Q20 increased by RUB 926 million; Gross profit increased by RUB 391 million; Adjusted EBITDA and Net profit increased by RUB 119 million;
• Adjusted EBITDA, Gross profit and Net profit for 1H20 was decreased by RUB 343 million due to revaluation procedure, performed at the year end, the same indicators for 2Q20 decreased by RUB 186 million;
• Revaluation of biological assets led to increase of Gross profit and Net profit in amount of RUB 4,792 million;
• Net profit decreased by RUB 63 million because of other reserves;
• Valuation difference for SolPro operations caused Net profit to decrease by RUB 3,436 million for 1H20, and by RUB 72 million for 2Q20;
• Effect on income tax expense of adjustments above RUB 662 million.
2 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
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sales, incl.
104,372
72,161
32,210
45
54,439
39,228
15,211
39
Sugar
16,386
14,269
2,117
15
7,745
9,028
(1,283)
(14)
Meat
18,182
14,079
4,103
29
9,621
7,270
2,351
32
Agriculture
11,887
8,001
3,885
49
5,926
3,577
2,349
66
Oil and Fat
61,569
36,732
24,837
68
33,962
19,671
14,291
73
Other
396
289
107
37
224
170
54
32
Eliminations
(4,047)
(1,208)
(2,839)
(235)
(3,040)
(489)
(2,551)
(522)
Gross profit, incl.
24,379
20,256
4,123
20
14,290
13,248
1,042
8
Sugar
4,400
3,882
519
13
2,096
2,666
(570)
(21)
Meat
3,970
2,449
1,522
62
2,009
1,290
720
56
Agriculture
6,595
6,360
235
4
5,063
5,231
(168)
(3)
Oil and Fat
9,705
7,440
2,265
30
5,404
3,946
1,458
37
Other
108
43
65
151
54
38
16
41
Eliminations
(400)
82
(483)
-
(336)
77
(413)
-
Adjusted EBITDA, incl.
22,119
11,902
10,218
86
10,950
6,896
4,054
59
Sugar
4,240
3,554
686
19
1,995
2,533
(538)
(21)
Meat
3,094
2,347
747
32
1,349
1,337
12
1
Agriculture
5,863
2,134
3,729
175
2,837
815
2,022
248
Oil and Fat
7,482
4,421
3,061
69
4,368
2,413
1,955
81
Other
(652)
(615)
(37)
(6)
(335)
(216)
(119)
(55)
Eliminations
2,092
61
2,031
3,323
735
14
722
5,301
Adjusted EBITDA margin, %
21%
16%
5 pp
20%
18%
2 pp
Sugar
26%
25%
1 pp
26%
28%
(2) pp
Meat
17%
17%
0 pp
14%
18%
(4) pp
Agriculture
49%
27%
22 pp
48%
23%
25 pp
Oil and Fat
12%
12%
0 pp
13%
12%
1 pp
SUGAR SEGMENT
In 1H21 Sugar segment earned RUB 4,240 million of adjusted EBITDA (+19% y-o-y) with 26% margin (+1 pp y-o-y). The financial results of the Sugar Segment of 1H21 and 2Q21 compared to 1H20 and 2Q20 respectively are presented in the table below.
Sugar segment 1H and 2Q 2021 Financial Results
in RR million
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sales
16,386
14,269
2,117
15
7,745
9,028
(1,283)
(14)
Cost of sales
(11,985)
(10,398)
(1,588)
(15)
(5,649)
(6,372)
724
11
Net gain/ (loss) from trading derivatives
-
11
(11)
-
-
11
(11)
-
Gross profit
4,400
3,882
519
13
2,096
2,666
(570)
(21)
Gross profit margin
27%
27%
0 pp
27%
30%
(3) pp
Distribution and selling expenses
(965)
(1,090)
126
12
(490)
(579)
89
15
General and administrative expenses
(759)
(686)
(73)
(11)
(398)
(337)
(61)
(18)
Other operating income/ (expenses), net
49
548
(498)
(91)
(8)
475
(483)
-
incl. other adjustments to
EBITDA (non-recurring items)
(38)
453
(491)
-
(78)
401
(478)
-
Operating profit
2,726
2,653
74
3
1,200
2,225
(1,025)
(46)
Adjusted EBITDA
4,240
3,554
686
19
1,995
2,533
(538)
(21)
Adjusted EBITDA margin
26%
25%
1 pp
26%
28%
(2) pp
In 1H21 in comparison to 1H20 Sales of Sugar segment improved by 15% - to RUB 16,386 million. Average sugar sales price showed positive trend in comparison to 1H20, when market sugar prices in Russia reached minimum level for 2014-2021. Meanwhile, Rusagro's sugar sales price to retail chains in Russia did not exceed 36 RUB/kg incl. of VAT for white sugar in 50 kg bags at the plant. Rusagro decreased sugar sales volume by 22% y-o-y to 362 thousand tonnes due to reduction of brought forward sugar balance driven by production volumes decrease as the result of lower sugar beet harvest in Russia in season 2020/2021 in comparison to the season 2019/2020. Sales of Sugar segment in 2Q21 compared to 2Q20 decreased as the result of sales volume decrease partially compensated by sugar sales prices growth.
Sugar revenue growth for 1H21 was partially offset by the decrease in sales of beet pulp of RUB 284 million.
Production, sales volume and sales price of sugar in 1H and 2Q 2021
Six months ended
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Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sugar production volume, thousand tonnes
39
109
(70)
(64)
29
52
(23)
(44)
Sales volume,
thousand tonnes
362
466
(104)
(22)
160
297
(137)
(46)
Average sales price,
RUB/kg, excl. of VAT
40.7
26.2
14.5
55
42.4
26.9
15.5
57
Cost of sales in 1H21 showed a lower increase than Sales y-o-y mainly because sugar beet purchase price in season 2020/2021 in comparison to season 2019/2020 grew less than sugar sales price y-o-y.
MEAT SEGMENT
In 1H21 Meat segment earned RUB 3,094 million of adjusted EBITDA (+32% y-o-y) with 17% margin (+0 pp y-o-y). The financial results of the Meat Segment of 1H21 and 2Q21 compared to 1H20 and 2Q20 respectively are presented in the table below.
Meat segment 1H and 2Q 2021 Financial Results
in RR million
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sales
18,182
14,079
4,103
29
9,621
7,270
2,351
32
Net gain/ (loss) on revaluation of biological assets and agricultural produce
1,267
594
673
113
447
166
281
169
Cost of sales
(15,479)
(12,225)
(3,254)
(27)
(8,059)
(6,147)
(1,912)
(31)
Gross profit
3,970
2,449
1,522
62
2,009
1,290
720
56
Gross profit margin
22%
17%
5 pp
21%
18%
3 pp
Gross profit excl. effect of biological assets revaluation
2,703
1,855
848
46
1,562
1,124
439
39
Adjusted gross profit margin
15%
13%
2 pp
16%
15%
1 pp
Distribution and selling expenses
(751)
(559)
(192)
(34)
(420)
(354)
(66)
(19)
General and administrative expenses
(1,670)
(781)
(889)
(114)
(1,000)
(322)
(678)
(210)
Other operating income/ (expenses), net
720
254
465
183
223
111
112
101
incl. reimbursement of operating costs (government grants)
256
(0)
256
-
56
(0)
56
-
incl. other adjustments to EBITDA (non-recurring items)
337
204
133
65
201
135
66
49
Operating profit income/ (expenses), net
2,269
1,364
905
66
813
725
88
12
Adjusted EBITDA
3,094
2,347
747
32
1,349
1,337
12
1
Adjusted EBITDA margin
17%
17%
0 pp
14%
18%
(4) pp
Sales of the Meat segment increased by 29% in 1H21 and by 32% in 2Q21 compared to the respective periods of the prior year due to the growth of average sales price of meat products by 24% and 26% respectively. The growth of total sales volume by 4% in 1H21 compared to 1H20 triggered by 3% pigs production increase achieved as new pig farms in Tambov Region reached full capacity.
Production, sales volume and sales price of pork products in 1H and 2Q 2021
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Pigs production,
thousand tonnes
151
146
5
3
76
74
2
3
Sales volume,
thousand tonnes
121
116
5
4
62
59
3
6
Average sales prices,
RUB/kg, excl. of VAT
149.9
121.1
28.8
24
154.8
123.2
31.5
26
Cost of sales increased by 27% in 1H21 and by 31% in 2Q21 compared to the respective periods of the prior year mainly due to higher costs of feed and animals health protection.
Net gain on revaluation of biological assets and agricultural produce in 1H21 resulted mainly from an increase in market prices for both bearer and consumable livestock pigs during the reporting period compared to market prices at the end 2020 and respective increase in fair value of livestock in the closing balance.
An increase in Distribution and selling expenses in 1H21 in comparison to 1H20 is mainly due to the rise in the costs of marketing activities.
General and administrative expenses in 1H21 compared to prior year period increased mainly due realization of pork production cluster project in the Primorie Territory.
An increase in Other operating income in 1H21 in comparison to 1H20 is mainly due to partial reimbursement of feed purchase costs and investment loans interest.
AGRICULTURAL SEGMENT
As at 30 June 2021 Rusagro's area of controlled land stands at 688 thousand hectares (30 June 2020: 642 thousand hectares). In 1H21 Agriculture segment earned RUB 5,863 million of adjusted EBITDA (+175 % y-o-y) with 49% margin (+22 pp y-o-y). The financial results of the Agricultural Segment of 1H21 and 2Q21 compared to 1H20 and 2Q20 respectively are presented below.
Agriculture segment 1H and 2Q 2021 Financial Results
in RR million
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sales
11,887
8,001
3,885
49
5,926
3,577
2,349
66
Net gain/ (loss) on revaluation of biological assets and agricultural produce
248
3,512
(3,263)
(93)
1,900
3,958
(2,058)
(52)
Cost of sales
(5,540)
(5,152)
(387)
(8)
(2,764)
(2,305)
(459)
(20)
Gross profit
6,595
6,360
235
4
5,063
5,231
(168)
(3)
Gross profit margin
55%
79%
(24) pp
85%
146%
(61) pp
Gross profit excl. effect of biological assets and agricultural produce revaluation
6,347
2,849
3,498
123
3,162
1,272
1,890
149
Adjusted gross profit margin
53%
36%
17 pp
53%
36%
17 pp
Distribution and selling expenses
(960)
(978)
18
2
(525)
(498)
(28)
(6)
General and administrative expenses
(634)
(619)
(16)
(3)
(339)
(304)
(34)
(11)
Other operating income/ (expenses), net
87
(80)
168
-
40
1
38
2,760
incl. reimbursement of
operating costs (government
grants)
133
61
72
118
133
61
72
118
incl. other adjustments to EBITDA (non-recurring items)
86
(5)
91
-
63
45
18
40
Operating profit
5,087
4,683
404
9
4,238
4,430
(192)
(4)
Adjusted EBITDA
5,863
2,134
3,729
175
2,837
815
2,022
248
Adjusted EBITDA margin
49%
27%
22 pp
48%
23%
25 pp
In 1H21 in comparison to 1H20 Sales of the Agriculture segment increased by 49% to RUB 11,887 million thanks to significantly higher sales volume of wheat and higher sales price of all crops, except corn, following global price increase. This was partially offset by sales volume decrease of all other crops, except wheat, especially soybean. Meanwhile, Cost of sales and General and administrative expenses remained relatively stable.
Higher sales volume of wheat in 1H21 compared to 1H20 were affected by management decision in 2020 to push sales timing towards 1H21 in expectation of peak prices, whereas 2019 wheat harvest was mainly sold in 2019.
Opposite situation with soybean, as lower sales volume in 1H21 compared to 1H20 were affected by management decision in 2019 to push sales timing towards 1H20 in expectation of peak prices, whereas 2020 soybean harvest was partially realized in 2020 due to sharp domestic price rise and introduction of export duties.
In 2Q21 in comparison to 2Q20 Sales of the Agriculture segment increased by 66% to RUB 5,926 million because of the same reasons listed above, except that soybean sales volume remains in line between 2Q21 and 2Q20.
Sales volume of crops in 1H and 2Q 2021
Thousand tonnes
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
wheat
360
82
278
341
218
36
182
505
soybean
143
188
(45)
(24)
71
67
4
6
corn
58
73
(15)
(21)
8
65
(57)
(88)
sunflower seeds
8
18
(10)
(55)
-
1
(1)
(100)
barley
5
51
(46)
(90)
4
28
(24)
(84)
Sales price of crops in 1H and 2Q 2021
RR per kilogram,
excl. of VAT
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
wheat
12.7
11.2
1.5
13
12.5
11.6
0.9
8
soybean
40.6
25.6
15.0
59
39.8
26.9
12.9
48
corn
13.2
14.8
(1.6)
(11)
14.9
15.0
(0.1)
(1)
sunflower seeds
39.2
20.1
19.1
95
-
22.8
n/a
n/a
barley
12.0
9.8
2.2
23
11.9
9.5
2.4
26
Net gain on revaluation of biological assets and agricultural produce in 1H21 and 1H20 respectively represents a combination of the two factors. Gain from current year unharvested crops revaluation to fair value less estimated point-of-sale costs equals to RUB 4,720 million in 1H21 against RUB 4,518 million in 1H20. The second factor is the realisation of gain from crops revaluation, recognised in the previous year financial statements and remained unrealised as at the year-end, equals to RUB 4,472 million loss recognised in 1H21 against RUB 1,006 million loss in 1H20, significant loss increase caused by higher revaluation amounts in 2020 due to crops price growth.
Net gain/(loss) on revaluation of crops and its subsequent realisation do not affect the Adjusted EBITDA figure.
Distribution and selling expenses remains at the same levels despite growth in sales volumes, which is caused by changes in sales channels of soybean, export in 1H2020 vs. domestic in 1H2021.
Other net operating income/(expenses) increased as a result of received government grants in higher amount by RUB 72 million, gain of RUB 51 million from release of provision for legal claims in 1H21.
OIL AND FAT SEGMENT
In 1H21 Oil and Fat segment earned RUB 7,482 million of adjusted EBITDA (+69 % y-o-y) with 12% margin (+0 pp y-o-y). The financial results of the Oil and Fat Segment for 1H21 and 2Q21 compared to 1H20 and 2Q20 respectively are presented below.
Oil and Fat segment 1H and 2Q 2021 Financial Results
in RR million
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Sales
61,569
36,732
24,837
68
33,962
19,671
14,291
73
Cost of sales
(51,864)
(29,292)
(22,572)
(77)
(28,557)
(15,725)
(12,832)
(82)
Gross profit
9,705
7,440
2,265
30
5,404
3,946
1,458
37
Gross profit margin
16%
20%
(4) pp
16%
19%
(3) pp
Distribution and selling expenses
(2,169)
(2,207)
38
2
(1,264)
(1,184)
(80)
(7)
General and administrative expenses
(1,014)
(1,062)
48
5
(570)
(496)
(74)
(15)
Other operating income/ (expenses), net
136
(171)
307
-
73
(284)
358
-
incl. Other adjustments to EBITDA (non-recurring items)
18
(107)
125
-
(95)
(273)
178
65
Operating profit/ (loss)
6,658
4,000
2,658
66
3,644
1,982
1,662
84
Adjusted EBITDA
7,482
4,421
3,061
69
4,368
2,413
1,955
81
Adjusted EBITDA margin
12%
12%
0 pp
13%
12%
1 pp
In 2021 results of Dairy Products segment are included in Oil and Fat segment due to consolidation of these two businesses. For comparison purpose financial results of the previous years were corrected accordingly.
Sales volumes to third parties in 1H and 2Q 2021
thousand tons
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
meal
306
317
(11)
(3)
188
155
33
21
crude oil
198
227
(29)
(13)
95
127
(31)
(25)
industrial fats
158
134
24
18
74
57
18
31
dry whey mixes
7
7
0
0
4
3
1
16
consumer oil&fat products
160
165
(5)
(3)
85
89
(4)
(5)
consumer dairy products
7
6
1
16
3
3
0
14
Sales price to third parties in 1H and 2Q 2021
RR per kilogram, excl. VAT
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
meal
24.6
13
11.2
83
25.9
14.5
11.4
79
crude oil
100.7
47.5
53.2
112
112.4
48.7
63.7
131
industrial fats
88.5
54.9
33.6
61
96.6
57.2
39.4
69
dry whey mixes
81.8
74.4
7.4
10
83.8
73.5
10.3
14
consumer oil&fat products
105.5
70.9
34.6
49
108.5
72.9
35.6
49
consumer dairy products
216.4
205.6
10.8
5
219.5
210.0
9.5
5
In 1H21 in comparison to 1H20 Sales of the Oil and Fat segment grew thanks to higher sales prices for all product categories. Sales price of bottled sunflower oil to retail in Russia did not exceed 95 RUB/l incl. of VAT at the plant.
Cost of sales in 1H21 in comparison to 1H20 increased due to higher prices of raw materials, including sunflower seeds, bulk and tropical oil.
Other net operating income/(expenses) decreased by RUB 307 million as a result of foreign exchange gain of RUB 46 million in 1H21 against RUB 84 million loss in 1H20 and loss of RUB 9 million from release of provision for legal claims in 1H21 against RUB 36 million loss in 1H20.
KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)
The key consolidated cash flow indicators presented according to management accounts methodology
in mln Roubles
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Net cash from operating activities, incl.
21,348
19,053
2,295
12
12,931
12,574
356
3
Operating cash flow before working capital changes
22,742
12,641
10,101
80
11,312
7,556
3,756
50
Working capital changes
(758)
6,672
(7,430)
-
2,096
5,071
(2,975)
(59)
Net cash from investing activities, incl.
(17,411)
(4,765)
(12,646)
(265)
(15,412)
(2,745)
(12,667)
(461)
Purchases of property plant and equipment and inventories intended for construction
(6,222)
(4,825)
(1,398)
(29)
(4,183)
(2,675)
(1,508)
(56)
Acquisition of SolPro assets
(11,689)
-
(11,689)
-
(11,689)
-
(11,689)
-
Net cash from financing activities
36,373
(13,407)
49,780
-
33,406
(9,484)
42,890
-
Net effect of exchange rate changes on cash and cash equivalents
(102)
173
(275)
-
(72)
(147)
75
51
Net increase / (decrease) in cash and cash equivalents
40,208
1,054
39,154
3,716
30,852
198
30,655
15,489
(*) See Appendix 4
During 1H21 the Company started to acquire SolPro assets (Atkarskiy oil extraction plant), cash inflow corresponding to loans and interest repaid as the result of SolPro assets acquisition is included in line Net cash from financing activities.
The key investments in property, plant and equipment and inventories intended for construction during 1H21 were made in the Meat segment in the amount of RUB 2,846 million (1H20: RUB 2,083 million) due to the purchases related to the construction project in the Russian Far East. Investments in the Oil and Fat segment in the amount of RUB 2,110 million (1H20: RUB 648 million), Agriculture segment in the amount of RUB 911 million (1H20: RUB 1,181 million) and Sugar segment in the amount of RUB 355 million (1H20: RUB 913 million) mainly relate to purchases of machinery and equipment for production facilities renewal and maintenance.
Debt position and liquidity management
in RUB million
30 June 2021
31 December 2020
Variance
Units
%
Gross debt
181,555
114,929
66,626
58
Short-term borrowings
116,206
51,753
64,453
125
Long-term borrowings
65,349
63,176
2,173
3
Cash and cash equivalents, bank deposits and bonds
(114,711)
(46,029)
(68,682)
(149)
Short-term cash, deposits and bonds
(80,740)
(12,064)
(68,676)
(569)
Long-term cash, deposits and bonds
(33,971)
(33,965)
(6)
(0)
Net debt
66,844
68,900
(2,056)
(3)
Short-term borrowings, net
35,466
39,689
(4,223)
(11)
Long-term borrowings, net
31,378
29,211
2,167
7
Adjusted EBITDA (LTM4)
42,202
31,984
10,218
32
Net debt/ Adjusted EBITDA (LTM)
1.58
2.15
(0.6) pp
Adjusted EBITDA (LTM)5 without other operating income/expenses
42,496
32,435
10,061
31
Net debt/ Adjusted EBITDA (LTM)5 without other operating income/expenses
1.57
2.12
(0.5) pp
Net finance income/ (expense)
in RR million
Six months ended
Variance
Three months ended
Variance
30 June 2021
30 June 2020
Units
%
30 June 2021
30 June 2020
Units
%
Net interest expense
(2,507)
(2,582)
75
3
(1,213)
(1,235)
22
2
Gross interest expense
(3,774)
(3,357)
(417)
(12)
(1,989)
(1,655)
(335)
(20)
Reimbursement of interest expense
1,267
775
492
64
776
420
357
85
Interest income
3,723
3,572
151
4
1,903
1,801
102
6
Net gain/ (loss) from bonds held for trading
(1)
(17)
16
92
(1)
(16)
15
93
Other financial income, net
(163)
(1,351)
1,188
88
(143)
(211)
68
32
Net foreign exchange gain/ (loss)
28
(1,215)
1,243
-
60
(138)
198
-
Other financial income / (expenses), net
(192)
(137)
(55)
(40)
(203)
(73)
(130)
(179)
Total net finance income/ (expenses)
1,051
(379)
1,430
-
546
339
207
61
Net debt decreased at 30 June 2021 compared at 31 December 2020 as a result of an increase in cash and cash equivalents, bank deposits and bonds.
In 1H21 Rusagro continued to enjoy state agriculture subsidies programme. The Rusagro continued to receive bank loans with decreased 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 1H21 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 expenses of 1H20 in the sum of RUB 379 million changed to net finance income in the amount of RUB 1,051 million in 1H21 as the result of negative dynamics in forex losses in 1H20.
________________________________
(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".
(5) Starting from the beginning of 2020 part of other operating income and expensed (recurring items) was included in Adjusted EBITDA calculation. Figures of 2021 and 2020 calculated using prior periods' logic (excluding other operating income/expenses) are shown in table Debt position and liquidity management above and in the diagram with Net debt/ LTM EBITDA trend analysis for comparative purposes
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:
Sugar:
Rusagro is one of the leading Russian sugar producers (№2 in sugar production in Russia and №1 on cube white sugar market in 2020), 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, Horoshiy 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:
Rusagro is the third largest pork producer in Russia in 2020. 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:
Rusagro currently controls one of the largest land banks among Russian agriculture producers, with 688 thousand hectares of land under control located in the highly fertile Black Earth region of Russia (in the Belgorod, Tambov, Voronezh, Kursk, Orel and Saratov 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:
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, umbrella brend Ya lublu gotovit (includes Moskovskiy Provansal, Novosibirskiy Provansal, Saratovskiy Provansal), Rossiyanka and Saratovskiy Slivochniy. Rusagro 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. Since 1Q 2021 Oil and Fats segment also operates two milk processing plants in Samara and Ulyanovsk Regions, which produce dry industrial mixes, cheeses, butter and cream sold under three brands: 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.
CONFERENCE CALL
Rusagro management is organizing a conference call on Company's 1H and 2Q 2021 financial results for investors and analysts.
Details of the call:
Date
16 August 2021
Time
4:00 PM (Moscow) / 2:00 PM (London)
Subject
ROS AGRO PLC 1H and 2Q and 6M 2021 Financial results
Zoom link
https://ib-translations.zoom.us/j/81995329724?pwd=cWFRQlRyWk9ibWNqb1lUK3puOTdDdz09
Password
235894
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 Six and Three months ended 30 June 2021 (in RUB thousand)
Six months ended
30 June
Three months ended
30 June
2021
2020
2021
2020
Sales
104,371,769
72,161,446
54,438,801
39,228,082
Net gain/(loss) on revaluation of biological assets and agricultural produce
(434,812)
4,410,327
1,591,010
4,324,348
Cost of sales
(79,557,967)
(56,326,166)
(41,739,476)
(30,315,191)
Net gain/(loss) from trading derivatives
(5)
10,556
-
10,638
Gross profit
24,378,985
20,256,162
14,290,335
13,247,877
Distribution and selling expenses
(4,318,350)
(4,588,049)
(2,455,399)
(2,485,068)
General and administrative expenses
(4,640,837)
(3,682,032)
(2,576,813)
(1,672,556)
Reversal of provision/(provision) for impairment of loans issued
1,852,295
(3,256,721)
1,852,295
-
Other operating income/(expenses), net
1,032,810
1,243,618
275,152
679,753
Operating profit / (loss)
18,304,903
9,972,978
11,385,570
9,770,006
Interest expense
(2,507,021)
(2,582,278)
(1,212,937)
(1,234,833)
Interest income
3,722,605
3,520,931
1,903,340
1,721,326
Net (loss)/gain from bonds
(1,362)
(17,002)
(1,123)
(16,143)
Other financial income/ (expenses), net
(163,409)
(1,351,245)
(143,191)
(211,247)
Profit before income tax
19,355,716
9,543,384
11,931,659
10,029,109
Income tax expense
(1,755,228)
186,653
(857,523)
(637,064)
Profit for the period
17,600,488
9,730,037
11,074,136
9,392,045
Other comprehensive income
Total comprehensive income for the period
17,600,488
9,730,037
11,074,136
9,392,045
Profit is attributable to:
Owners of ROS AGRO PLC
17,630,249
9,764,870
11,082,816
9,399,728
Non-controlling interest
(29,761)
(34,833)
(8,680)
(7,683)
Profit for the period
17,600,488
9,730,037
11,074,136
9,392,045
Total comprehensive income is attributable to:
Owners of ROS AGRO PLC
17,630,249
9,764,870
11,082,816
9,399,728
Non-controlling interest
(29,761)
(34,833)
(8,680)
(7,683)
Total comprehensive income for the period
17,600,488
9,730,037
11,074,136
9,392,045
Earnings per ordinary share for profit attributable to the owners of ROS AGRO PLC, basic and diluted
(in RR per share)655.25
362.95
411.90
349.35
Appendix 2. Segment information for the Six months ended 30 June 2021 (in RUB thousand)
1H 2021
Sugar
Meat
Agriculture
Oil and Fat
Other
Eliminations
Total
Sales
16,385,736
18,181,889
11,886,604
61,568,998
396,005
(4,047,463)
104,371,769
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
1,267,394
248,454
-
-
(1,950,660)
(434,812)
Cost of sales
(11,985,423)
(15,478,892)
(5,539,832)
(51,863,898)
(287,802)
5,597,880
(79,557,967)
incl. Depreciation
(1,440,624)
(2,111,871)
(998,251)
(709,188)
(4,696)
(9,297)
(5,273,927)
Net gain/ (loss) from trading derivatives
-
(5)
-
-
-
-
(5)
Gross profit
4,400,313
3,970,386
6,595,226
9,705,100
108,203
(400,243)
24,378,985
Distribution and Selling, General and administrative expenses
(1,723,373)
(2,420,500)
(1,594,914)
(3,183,122)
(866,823)
829,545
(8,959,187)
incl. Depreciation
(35,379)
(316,798)
(111,439)
(132,357)
(63,495)
9,297
(650,171)
Other operating income/(expenses), net
49,437
719,501
87,182
136,182
15,548,273
(15,507,765)
1,032,810
incl. Reimbursement of operating costs (government grants)
84,440
255,545
132,901
102,725
-
-
575,611
incl. Other adjustments to EBITDA (non-recurring items)
(37,563)
336,546
85,918
17,880
15,509,348
(15,219,857)
692,272
Reversal of provision/(provision) for impairment of loans issued
-
-
-
-
1,852,295
-
1,852,295
Operating profit / (loss)
2,726,377
2,269,387
5,087,494
6,658,160
16,641,948
(15,078,463)
18,304,903
Adjustments:
Depreciation included in Operating Profit
1,476,003
2,428,669
1,109,690
841,545
68,191
-
5,924,098
Other adjustments to EBITDA (non-recurring items)
37,563
(336,546)
(85,918)
(17,880)
(15,509,348)
15,219,857
(692,272)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
(1,267,394)
(248,454)
-
-
1,950,660
434,812
Reversal of provision/(provision) for impairment of loans issued
-
-
-
-
(1,852,295)
-
(1,852,295)
Adjusted EBITDA*
4,239,943
3,094,116
5,862,812
7,481,825
(651,504)
2,092,054
22,119,246
* Non-IFRS measure
Appendix 2 (continued). Segment information for the Six months ended 30 June 2020 (in RUB thousand)
1H 2020
Sugar
Meat
Agriculture
Oil and Fat
Other
Eliminations
Total
Sales
14,268,955
14,079,193
8,001,245
36,731,663
288,691
(1,208,301)
72,161,446
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
594,091
3,511,620
-
-
304,616
4,410,327
Cost of sales
(10,397,786)
(12,224,512)
(5,152,408)
(29,291,877)
(245,536)
985,953
(56,326,166)
incl. Depreciation
(1,316,686)
(1,670,932)
(823,449)
(234,910)
(5,017)
(8,857)
(4,059,851)
Net gain/ (loss) from trading derivatives
10,555
-
-
-
-
-
10,555
Gross profit
3,881,724
2,448,772
6,360,457
7,439,786
43,155
82,268
20,256,162
Distribution and Selling, General and administrative expenses
(1,776,525)
(1,339,052)
(1,596,788)
(3,269,323)
(729,289)
440,896
(8,270,081)
incl. Depreciation
(37,737)
(109,775)
(134,094)
(79,276)
(87,092)
8,857
(439,117)
Other operating income/(expenses), net
547,653
254,410
(80,487)
(170,626)
5,478,518
(4,785,850)
1,243,618
incl. Reimbursement of operating costs (government grants)
72,144
(439)
60,950
86,569
-
-
219,224
incl. Other adjustments to EBITDA (non-recurring items)
453,105
203,825
(4,706)
(106,639)
5,499,598
(4,628,415)
1,416,768
Reversal of provision/(provision) for impairment of loans issued
-
-
-
-
(3,256,721)
-
(3,256,721)
Operating profit / (loss)
2,652,852
1,364,130
4,683,182
3,999,837
1,535,663
(4,262,686)
9,972,978
Adjustments:
Depreciation included in Operating Profit
1,354,423
1,780,707
957,543
314,186
92,109
-
4,498,968
Other adjustments to EBITDA (non-recurring items)
(453,105)
(203,825)
4,706
106,639
(5,499,598)
4,628,415
(1,416,768)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
(594,091)
(3,511,619)
-
-
(304,617)
(4,410,327)
Reversal of provision/(provision) for impairment of loans issued
-
-
-
-
3,256,721
-
3,256,721
Adjusted EBITDA*
3,554,170
2,346,921
2,133,812
4,420,662
(615,105)
61,112
11,901,572
* Non-IFRS measure
Appendix 3. Consolidated statement of financial position as at 30 June 2021
(in RUB thousand)
30 June 2021
31 December 2020
ASSETS
Current assets
Cash and cash equivalents
52,074,750
11,866,798
Restricted cash
36,534
143,637
Short-term investments
42,300,594
19,583,523
Trade and other receivables
11,256,011
9,512,286
Prepayments
2,868,302
2,941,224
Current income tax receivable
511,892
646,162
Other taxes receivable
11,058,957
5,506,675
Inventories and short-term biological assets
68,476,829
69,001,368
Total current assets
188,583,869
119,201,673
Non-current assets
Property, plant and equipment
100,194,636
87,519,088
Inventories intended for construction
2,413,153
3,353,330
Right-of-use assets
6,875,198
6,934,567
Goodwill
2,364,942
2,364,942
Advances paid for non-current assets
8,043,093
6,905,003
Long-term biological assets
3,303,267
2,528,128
Long-term investments and receivables
42,527,657
42,692,320
Investments in associates
314,382
257,782
Deferred income tax assets
4,350,562
3,566,168
Other intangible assets
637,434
619,793
Other non-current assets
442,569
205,793
Total non-current assets
171,466,893
156,946,914
Total assets
360,050,762
276,148,587
LIABILITIES and EQUITY
Current liabilities
Short-term borrowings
116,206,334
51,753,475
Lease liabilities
926,058
943,859
Trade and other payables
17,846,303
16,016,138
Provisions
750,804
69,546
Current income tax payable
254,661
4,096,199
Other taxes payable
10,376,892
179,796
Total current liabilities
146,361,052
73,059,013
Non-current liabilities
Long-term borrowings
65,349,000
63,175,720
Government grants
8,651,762
8,536,899
Lease liabilities
4,755,454
4,855,508
Deferred income tax liability
2,070,543
487,049
Total non-current liabilities
80,826,759
77,055,176
Total liabilities
227,187,811
150,114,189
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
105,043,352
98,185,038
Equity attributable to owners of ROS AGRO PLC
132,892,670
126,034,356
Non-controlling interest
(29,719)
42
Total equity
132,862,951
126,034,398
Total liabilities and equity
360,050,762
276,148,587
Appendix 4. Consolidated statement of cash flows for the Six months ended 30 June 2021 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Six months ended
30 June 2021
30 June 2020
Cash flows from operating activities
Profit before income tax
19,355,716
9,543,384
Adjustments for:
Depreciation and amortization
5,924,098
4,498,967
Interest expense
3,774,168
3,356,941
Government grants
(2,167,458)
(1,306,625)
Interest income
(3,722,605)
(3,520,931)
Loss/ (gain) on disposal of property, plant and equipment
(17,033)
(45,948)
Net (gain) / loss on revaluation of biological assets and agricultural produce
434,812
(4,410,327)
Change in provision for impairment of loans issued
(1,852,295)
3,256,721
Lease financial expense
122,168
129,700
Realised deferred day-one gain
(395,146)
(687,258)
Change in provision for net realisable value of inventory
999,799
366,003
Change in provision for impairment of receivables and prepayments
72,545
(4,045)
Foreign exchange (gain) / loss, net
(96,100)
1,361,408
Lost / (reversal of) harvest write-off
210,464
179,563
Net (gain) / loss from bonds held for trading
1,362
17,002
Settlement of loans and accounts receivable previously written-off
-
(2)
Change in provision for impairment of advances paid for property, plant and equipment
(34,322)
113,203
Change in other provisions
571,009
63,174
Dividend income
(377,269)
(186,506)
Other non-cash and non-operating expenses, net
(61,794)
(83,801)
Operating cash flow before working capital changes
22,742,119
12,640,623
Change in trade and other receivables and prepayments
(1,908,398)
382,332
Change in other taxes receivable
(5,552,282)
984,212
Change in inventories and biological assets
(1,607,811)
5,127,762
Change in trade and other payables
2,213,800
618,965
Change in other taxes payable
6,096,652
(441,051)
Cash generated from operations
21,984,080
19,312,843
Income tax paid
(636,256)
(259,595)
Net cash from operating activities
21,347,824
19,053,248
Appendix 4 (continued). Consolidated statement of cash flows the Six months ended 30 June 2021 (in RUB thousand) - NOT IFRS PRESENTATION (*)
Six months ended
30 June 2021
30 June 2020
Cash flows from investing activities
Purchases of property, plant and equipment including SolPro assets acquisition
(17,682,805)
(4,016,179)
Purchases of other intangible assets
(201,571)
(237,793)
Purchases of land lease rights
(25,828)
-
Proceeds from sales of property, plant and equipment
175,297
79,507
Purchases of inventories intended for construction
(228,460)
(808,586)
Purchases of associates
(56,600)
(35,000)
Movement in restricted cash
104,163
-
Dividends received
377,331
186,506
Other investing activities
127,849
66,488
Net cash from investing activities
(17,410,624)
(4,765,057)
Cash flows from financing activities
Proceeds from borrowings
75,517,913
31,110,339
Repayment of borrowings
(10,206,491)
(42,937,117)
Interest paid
(2,042,736)
(2,161,798)
Change in cash on bank deposits
(28,000,000)
-
Proceeds from sales of bonds with maturity over three months*
220,282
-
Purchases of loans issued*
(281,445)
(1,840)
Loans repaid*
7,807,779
696,560
Interest received*
3,255,728
2,628,790
Proceeds from government grants
869,393
544,868
Dividends paid to owners Ros Agro PLC
(10,666,996)
(3,216,539)
Repayment of lease liabilities
(55,068)
(70,432)
Other financial activities
(45,633)
-
Net cash from financing activities
36,372,726
(13,407,169)
Net effect of exchange rate changes on cash and cash equivalents
(101,974)
172,642
Net increase/ (decrease) in cash and cash equivalents
40,207,952
1,053,664
Cash and cash equivalents at the beginning of the period
11,866,798
2,170,779
Cash and cash equivalents at the end of the period
52,074,750
3,224,443
(*) 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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