REG - Ros Agro PLC - IFRS Parent company FS and Auditors’ Report
28/02/2022 08:45
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RNS Number : 0049D Ros Agro PLC 28 February 2022
ROS AGRO PLC
Parent company financial statements and Independent Auditor's Report
31 December 2021
http://www.rns-pdf.londonstockexchange.com/rns/0049D_1-2022-2-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/0049D_1-2022-2-28.pdf)
Contents
Board of Directors and other
officers............................................................................................
1
Management
report......................................................................................................................
2
Directors' Responsibility
Statement.............................................................................................
7
Independent Auditor's
Report......................................................................................................
8
Statement of comprehensive income for the year ended 31 December
2021................................ 12
Balance sheet as at 31 December
2021........................................................................................
13
Statement of changes in equity for the year ended 31 December
2021........................................ 14
Statement of cash flows for the year ended 31 December
2021................................................... 15
Notes to the financial statements
1 (#_Toc65577765) (#_Toc65577765) General information
(#_Toc65577765)
2 (#_Toc65577766) (#_Toc65577766) Summary of significant
accounting policies (#_Toc65577766)
3 (#_Toc65577767) (#_Toc65577767) Financial risk management
(#_Toc65577767)
4 (#_Toc65577770) (#_Toc65577770) Critical Accounting Estimates
and Judgements (#_Toc65577770)
5 (#_Toc65577771) (#_Toc65577771) Interest Income
(#_Toc65577771)
6 (#_Toc65577772) (#_Toc65577772) Other operating
gains/(losses) - net (#_Toc65577772)
7 (#_Toc65577773) (#_Toc65577773) Expenses by nature
(#_Toc65577773)
8 (#_Toc65577774) (#_Toc65577774) Income tax expense
(#_Toc65577774)
9 (#_Toc65577776) (#_Toc65577776) Financial assets at amortised
cost (#_Toc65577776)
10 (#_Toc65577778) (#_Toc65577778) Cash and cash equivalents
(#_Toc65577778) 32
11 (#_Toc65577779) (#_Toc65577779) Investments in subsidiaries
(#_Toc65577779)
12 (#_Toc65577781) (#_Toc65577781) Financial assets at fair value
through other comprehensive (#_Toc65577781)
13 (#_Toc65577783) (#_Toc65577783) Share capital and share premium
(#_Toc65577783)
14 (#_Toc65577784) (#_Toc65577784) Other reserves (#_Toc65577784)
15 (#_Toc65577785) (#_Toc65577785) Trade and other payables
(#_Toc65577785)
16 (#_Toc65577786) (#_Toc65577786) Contingencies (#_Toc65577786)
17 (#_Toc65577787) (#_Toc65577787) Related party transactions
(#_Toc65577787)
18 (#_Toc65577790) (#_Toc65577790) Events after the balance sheet
date (#_Toc65577790)
Board of Directors and other officers
Mr. Vadim Moshkovich
Chairman of the Board of Directors
President of LLC Group of Companies Rusagro
Mr. Anastassios Televantides
Chairman of the Audit Committee
Non-executive Director
Mr. Richard Andrew Smyth
Member of the Audit Committee
Non-executive Director
Mrs. Ganna Khomenko
Member of the Audit Committee
Non-executive Director
Mr. Maxim Basov
Executive Director
Board support
The Company Secretary is available to advise all Directors to ensure
compliance with the Board procedures.
Company Secretary
Fiduciana Secretaries Limited
8 Mykinon Street
CY-1065, Nicosia
Cyprus
Registered office
25 Aphrodite Street,
3rd floor, Office 300,
CY-1060 Nicosia,
Cyprus
The Board of Directors presents its report together with the audited parent
company financial statements of ROS AGRO PLC (hereafter also referred as the
"Company") for the year ended 31 December 2021. The parent company financial
statements have been prepared in accordance with International Financial
Reporting Standards (hereafter also referred as "IFRS") as adopted by the
European Union ("EU") and the requirements of the Cyprus Companies Law, Cap.
113.
Principal activities and nature of operations of the Company
The Company's principal activity, which is unchanged from last year, is the
holding of investments, including any interest earning activities.
Changes in Group structure
The Company has interests in direct and indirect subsidiaries as disclosed in
Note 11 to the financial statements (together with the Company, the "Group").
The Company's changes in direct subsidiaries are disclosed in Note 11 to the
financial statements.
Review of developments, position and performance of the Company's business
The profit of the Company for the year ended 31 December 2021 was RR
18,978,117 thousand (2020: RR 14,852,249 thousand), arising primarily from
dividend income (Note 17). On 31 December 2021 the total assets of the Company
were RR 42,615,507 thousand (2020: RR 41,525,749 thousand) and the net
assets were RR 39,854,751 thousand (2020: RR 40,403,166 thousand). The
increase in total assets is mainly attributable to dividends receivable that
was higher from the settlement of short-term financial asset at amortized cost
(Note 9). The financial position, development and performance of the Company
as presented in these parent company financial statements are considered
satisfactory.
Future developments of the Company
The Board of Directors does not expect any significant changes or developments
in the operations, financial position and performance of the Company in the
foreseeable future.
Results
The Company's results for the year are set out on page 12.
Human resources management and environmental protection
The Group offers its employees opportunities to realize their professional
potential, improve their knowledge and skills, work on interesting innovative
projects and be part of a cohesive team. Group management believes that one of
the keys to a successful business is maintaining a balance between the high
quality and efficient work of all employees who share common values and
principles on one hand, and the Company's commitment to providing
opportunities for career growth on the other. Group business divisions
annually prepare and implement employee training and development plans based
on the business's strategic and current objectives, as well as needs
identified by comprehensive assessment. Based on the results of a
comprehensive assessment, every employee draws up an individual development
plan for a period of one to two years that lists all training and development
activities that are intended to advance the employee's skills or pass on the
knowledge they have gained.
The Group is committed to protecting the environment and minimizing the
environmental impact of its operations in regions where it has a presence. All
of the Group's divisions constantly monitor wastewater runoff and air
quality,and are equipped with treatment facilities that meet all the standards
of applicable environmental legislation. The Group has implemented guidelines
for maximum allowable emissions and guidelines for waste generation and
established sanitary buffer zones for warehouses storing crop protection
agents. The Group also returns packaging from crop protection agents and
fertilizer to counterparties and performs soil deacidification efforts on
farmland.
Principal risks and uncertainties
The Company`s financial risks are disclosed in Note 3 to the parent company
financial statements. The Company`s contingencies are disclosed in Note 16 to
the parent company financial statements.
Dividends
Pursuant to its Articles of Association the Company may pay dividends out of
its profits. In August 2013 the Board of Directors has approved a new dividend
policy with payout ratio of at least 25% of the Group's profit for the year
applicable starting from the year ended 31 December 2013. To the extent that
the Company declares and pays dividends, owners of Global Depositary Receipts
(hereafter also referred as "GDRs") on the relevant record date will be
entitled to receive dividends payable in respect of Ordinary Shares underlying
the GDRs, subject to the terms of the Deposit Agreement.
The Company is a holding company and thus its ability to pay dividends depends
on the ability of its subsidiaries to pay dividends to the Company in
accordance with the relevant legislation and contractual restrictions. The
payment of such dividends by its subsidiaries is contingent upon the
sufficiency of their earnings, cash flows and distributable reserves. The
maximum dividend payable by the Company`s subsidiaries is restricted to the
total accumulated retained earnings of the relevant subsidiary, determined
according to the Russian law.
In 2021 the Company distributed RR 10,770,584 thousand of remaining dividends
for 2020 and RR 8,755,947 thousand of interim dividends for 2021. The
remaining dividends for 2020 amounted to RR 400.30 (gross) per share and
interim dividends for 2021 amounted to RR 325.42 (gross) per share.
Subsequent to the year ended 31 December 2021, the Board of Directors
recommends the payment of additional dividends out of the profits for 2021 in
the amount of RR 11,928,542 thousand. Given that the Company has already paid
interim dividends for the 2021 in the amount of RR 8,755,947 thousand, the
total dividend out of the profits for 2021 and prior years' undistributed
reserves amounts to RR 20,684,489 thousand.
The proposed dividend is subject to approval by the shareholders at the Annual
General Meeting. These consolidated financial statements do not reflect the
dividends that have not been approved on the reporting date.
Share capital
There were no changes in the share capital of the Company.
Significant direct/indirect holdings
For the significant direct and indirect shareholdings held by the Company,
please refer to Note 11 of the parent company financial statements.
The role of the Board of Directors
The Company is governed by its Board of Directors (hereafter also referred as
"the Board") which is collectively responsible to the shareholders for the
successful performance of the Company and the Group.
The Board sets corporate strategic objectives, ensuring that the necessary
financial and human resources are in place for the Company and the Group to
meet its objectives and reviewing management performance.
The Board of Directors sets the Company's and Group's values and standards and
ensures all obligations to shareholders are understood and met. The Board
believes it maintains a sound system of internal control to safeguard the
Company's assets and shareholders' investments in the Company.
Members of the Board of Directors
The members of the Board of Directors at 31 December 2021 and at the date of
this report are shown in the beginning of these parent company financial
statements. All of them were members of the Board throughout the year ended 31
December 2021.
In accordance with the Company's Articles of Association, one third of the
Directors shall retire by rotation and seek re-election at each Annual General
Meeting.
The Company's Directors' remuneration is disclosed in Note 17. No significant
changes to Directors' remuneration occurred during the year ended 31 December
2021.
Directors' Interests
The Directors Mr. Vadim Moshkovich, Mr. Maxim Basov, Mr. Richard Andrew Smyth
and Mr. Anastassios Televantides held interest in the Company as at 31
December 2021 and 31 December 2020.
Mr. Vadim Moshkovich has no direct interest in the Company as at 31 December
2021 and 2020. The number of shares held indirectly through a company
controlled by him as at 31 December 2021 is 15,367,829 (31 December 2020:
19,327,829).
The number of shares held indirectly by Mr. Maxim Basov through a company
controlled by him and GDRs held directly by him as at 31 December 2021 is
1,000,000 and 5,392,809 (equivalent to 1,078,562 shares) respectively (31
December 2020: 1,000,000 and 5 084 809 (equivalent to 1,016,962 shares)).
The number of GDRs held directly by Mr. Richard Andrew Smyth as at 31 December
2021 and 2020 is 31,125 (equivalent to 6,225 shares).
The number of GDRs held directly by Mr. Anastassios Televantides as at 31
December 2021 and 2020 is 10,000 (equivalent to 2,000 shares).
Audit Committee
The Board of Directors has established an Audit Committee. The Audit Committee
is primarily responsible for (i) ensuring the integrity of our financial
statements, (ii) ensuring our compliance with legal and regulatory
requirements, (iii) evaluating our internal control and risk management
procedures, (iv) assuring the qualification and independence of our
independent auditors and overseeing the audit process and (v) resolving
matters arising during the course of audits and coordinating internal audit
functions. The Audit Committee consists of three members appointed by the
Board of Directors.
The current members are Mr. Anastassios Televantides (Chairman), Mr. Richard
Andrew Smyth and Mrs. Ganna Khomenko.
Corporate Governance
Since 2011, the Company adopted the following codes: Code of Conduct on
insider information and Code of Business Conduct and Ethics (the "Codes"). In
addition, since May 2014 the Company together with its subsidiaries and
affiliates adopted a new edition of the Codes for mandatory compliance by all
employees. In 2017 the Company adopted a new Code of Conduct and Business
Ethics.
Internal control and risk management systems in relation to the financial
reporting process
The internal control and risk management systems relating to financial
reporting are designed to provide reasonable assurance regarding the
reliability of financial reporting and to ensure compliance with applicable
laws and regulations. The Audit Committee of the Board of directors of the
Company reviews high-risk areas at least once a quarter. Reporting from
various Group entities to the central office is supervised on an ongoing basis
and procedures have been established for control and checking of such
reporting. With each acquisition the Group seeks to adapt and incorporate the
financial reporting system of the acquired operations quickly and efficiently.
Non-financial and diversity information
The Company will be publishing its non-financial information and Diversity
Statement together with the Annual Report on the Company's website
www.rusagrogroup.ru, within 6 months after balance sheet date.
The composition and diversity information of the Board of Directors of the
Company
The authorities and responsibilities of the Board of Directors are described
in the internal rules of the Board of Directors.
On Behalf of all shareholders and on the proposal of advice of the Management
Board, the Board of Directors lays down the strategy and general policy of the
Company and Group. It also sets the Company's and the Group's standards and
monitors the implementation of that strategy.
It controls and gives direction to the management of the Company and the Group
and provides monitoring of risks. It also ensures that the principles of good
governance are respected.
The Board's acts are guided solely by a concern for the interests of the
Company in relation to its shareholders, its customers and staff.
The Board of Directors is the decision-making body of our Group. Its role is
to define the Group strategic vision, assisted by a specialized committee (the
Audit Committee). It is composed of 5 Directors, including 2 independent
Directors and 1 managing Director. The Board offers a diverse and synergistic
range of experience, nationalities and cultures and enables us to consider the
interests of all our shareholders.
The Board has determined that as a whole, it has the appropriate skills and
experience necessary to discharge its functions. Executive and independent
Directors have the experience required to contribute meaningfully to the
Board's deliberations and resolutions. Independent Directors assist the Board
by constructively challenging and helping develop strategy proposals.
Treasury shares
On 25 August 2011 the Board unanimously resolved that it is in the best
interest of the Company to buy back GDRs from the market for the total amount
of up to USD 10 million increased to up to USD 30 million via subsequent
Board's decision on 17 July 2012.
At 31 December 2021 and 2020, the Company held 2,135,113 (31 December 2020:
2,135,113) of its own GDRs (approximately 427,063 shares (31 December 2020:
427,063 shares)) that is equivalent to RR 490,607 thousand, representing 1.6%
of its issued share capital. The GDRs are held as 'treasury shares'.
In 2020, the Company transferred 31,000 of its own GDRs (approximately 6,200
shares) from those held as treasury shares to employees of the Group
representing 0.02% of the issued share capital. No GDRs were transferred to
the employees under the share option incentive scheme during 2020 or during
2021.
During 2021 and 2020 the Company did not buy back any of its own GDRs from the
market.
Events after the balance sheet date
The material events after the balance sheet date are disclosed in Note 16 and
in Note 18 to the financial statements. The Board considered the effects of
the circumstances disclosed in Note 16 and concluded that no significant
impact is expected to affect the Company's operations.
Branches
The Company operated through its branches in the United Arab Emirates and Hong
Kong during the year.
Research and development activities
The Company is not engaged in research and development activities
Going Concern
Directors have access to all information necessary to exercise their duties.
The Directors continue to adopt the going concern basis in preparing the
financial statements based on the fact that, after making enquiries and
following a review of the Group's budget for 2022, including cash flows and
borrowing facilities, the Directors consider that the Company has adequate
resources to continue in operation for the foreseeable future.
Independent Auditors
On 13 August 2021 it was agreed by the board that rotation of the auditors
would take place every 5 years for the purpose of getting objective and fresh
view over Company's performance and business processes, especially in terms of
rapid growth. On 26 November 2021 EGM approved replacement of the independent
auditor from PricewaterhouseCoopers Limited to KPMG Limited Chartered
Accountants.
By Order of the Board
Vadim Moshkovich
Chairman of the Board of Directors
Larnaca
25 February 2022
The Company's Board of Directors is responsible for the preparation of the
parent company financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the
European Union and the requirements of the Cyprus Companies Law, Cap.113, and
for such internal control as the Board of Directors determines is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. This responsibility includes
selecting appropriate accounting policies and applying them consistently; and
making accounting estimates and judgements that are reasonable in the
circumstances.
In preparing the parent's company financial statements, the Board of Directors
is also responsible for assessing the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Board of Directors either
intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Company's
financial reporting process.
Each of the Directors confirms to the best of his or her knowledge that the
parent company financial statements, which are presented on pages 12 to 41,
have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union and the requirements of the Cyprus
Companies Law, Cap.113, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company.
Further, the Board of Directors confirms that, to the best of its knowledge:
(i) adequate accounting records have been maintained which
disclose with reasonable accuracy the financial position of the Company and
explain its transactions;
(ii) all information of which it is aware that is
relevant to the preparation of the parent company financial statements, such
as accounting records and all other relevant records and documentation, has
been made available to the Company's auditors;
(iii) the parent company financial statements disclose the
information required by the Cyprus Companies Law, Cap.113 in the manner so
required;
(iv) the Management Report has been prepared in accordance
with the requirements of the Cyprus Companies Law, Cap.113, and the
information given therein is consistent with the parent company financial
statements;
(v) the information included in the corporate governance
statement in accordance with the requirements of subparagraphs (iv) and (v) of
paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which
is included as a specific section of the Management Report, have been prepared
in accordance with the requirements of the Cyprus Companies Law, Cap, 113, and
is consistent with the parent company financial statements; and
(vi) the corporate governance statement includes all
information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of
paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.
By Order of the Board
Vadim
Moshkovich
Chairman of the Board of
Directors
Larnaca, 25 February 2022
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS
OF
ROS AGRO PLC
Report on the audit of the parent company financial statements
Opinion
We have audited the accompanying financial statements of the parent company
ROS AGRO PLC (the ''Company''), which are presented on pages 12 to 41 and
comprise the balance sheet as at 31 December 2021, and the statements of
comprehensive income, changes in equity and cash flows for the year then
ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair
view of the financial position of the Company as at 31 December 2021, and of
its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the
European Union (''IFRS-EU'') and the requirements of the Cyprus Companies Law,
Cap. 113, as amended from time to time (the ''Companies Law, Cap.113'').
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(''ISAs''). Our responsibilities under those standards are further described
in the ''Auditors' responsibilities for the audit of the financial
statements''' section of our report. We are independent of the Company in
accordance with the International Code of Ethics (Including International
Independence Standards) for Professional Accountants of the International
Ethics Standards Board for Accountants (''IESBA Code'') together with the
ethical requirements in Cyprus that are relevant to our audit of the financial
statements, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Assessment of fair value of investment in LLC GK Agro - Belogorie
Refer to note 12 to the financial statements
The key audit matter How the matter was addressed in our audit
This issue has become a key focus area for our audit due to the significance
We involved our own valuation specialists to assist us in evaluating the
of the amounts and the subjective nature of the valuation of investment in LLC assumptions and methodologies used by the Company.
GK Agro-Belogorie.
At 31 December 2021, the carrying amount of investment in LLC GK
Agro-Belogorie at fair value through other comprehensive income amounted to RR Among others, our audit procedures included:
8 556 556 thousand.
The fair value of this investment was measured using a discounted cash flow
model based primarily on unobservable inputs and involving significant - evaluating the principles and the integrity of the Company's
management judgment. discounted cash flow model
- assessing the reasonableness of the Company's assumptions including
projected EBITDA margins and discount rates
- assessing the accuracy of the Company's historic financial
information to support evaluation of forecasts incorporated in the discounted
cash flow model
We also considered the adequacy of the Company's disclosures with regard to
fair value measurement of this investment.
Other information
The Board of Directors is responsible for the other information. The other
information comprises the Management Report, which we obtained prior to the
date of this report, and the Company's Annual Report, other than the financial
statements and our auditors' report thereon, which is expected to be made
available to us after that date.
Our opinion on the financial statements does not cover the other information
and we do not express any form of assurance conclusion thereon, except as
required by the Companies Law, Cap.113.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact.
With regards to the management report, our report in this regard is presented
in the ''Report on other legal requirements'' section.
When we read the Company's Annual Report, if we conclude that there is a
material misstatement therein, we are required to communicate the matter to
those charged with governance and if not corrected, we will bring the matter
to the attention of the members of the Company at the Company's Annual General
Meeting and we will take such other action as may be required.
Responsibilities of the Board of Directors and those charged with governance
for the financial statements
The Board of Directors is responsible for the preparation of financial
statements that give a true and fair view in accordance with IFRS-EU and the
requirements of the Companies Law, Cap. 113, and for such internal control as
the Board of Directors determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Board of Directors is responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless there is an intention to either
liquidate the Company or to cease operations, or there is no realistic
alternative but to do so.
The Board of Directors and those charged with governance are responsible for
overseeing the Company's financial reporting process.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditors' report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Board of Directors.
· Conclude on the appropriateness of the Board of Directors' use of
the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to
continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditors' report to the
related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors' report. However, future
events or conditions may cause the Company to cease to continue as a
going concern.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves a true and fair view.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditors' report.
Report on other legal requirements
Pursuant to the additional requirements of the Auditors Law 2017,
L.53(Ι)/2017, as amended from time to time (''Law L.53(I)/2017''), and based
on the work undertaken in the course of our audit, we report the following:
· In our opinion, the management report, the preparation of
which is the responsibility of the Board of Directors, has been prepared in
accordance with the requirements of the Companies Law, Cap 113, and the
information given is consistent with the financial statements.
· In the light of the knowledge and understanding of the
business and the Company's environment obtained in the course of the audit, we
have not identified material misstatements in the management report.
Other Matters
Reporting responsibilities
This report, including the opinion, has been prepared for and only for the
Company's members as a body in accordance with Section 69 of Law L.53(Ι)/2017
and for no other purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to whose knowledge
this report may come to.
Comparative figures
The financial statements of the Company for the year ended 31 December 2020
were audited by another auditor who expressed an unmodified opinion on those
financial statements on 14 March 2021.
Consolidated financial statements
We have reported separately on the consolidated financial statements of the
Company and its subsidiaries for the year ended 31 December 2021.
The engagement partner on the audit resulting in this independent auditors'
report is Antonis I. Shiammoutis.
Antonis I. Shiammoutis
Certified Public Accountant and Registered Auditor
for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087 Nicosia Cyprus
25 February 2022
Year ended 31 December Year ended 31 December
Notes 2021 2020
Interest income 5 96,850 109,143
Interest 17 (70,470) (43,069)
expense
Net interest income 26,380 66,074
Dividend income 12,17 19,195,385 14,479,230
Total Revenue 19,221,765 14,545,304
Administrative expenses 7 (119,250) (75,450)
Other operating gains - net 6 249,844 1,024,719
Operating profit / Profit before tax 19,352,359 15,494,573
Income tax 8 (374,242) (642,324)
expense
Profit for the year 18,978,117 14,852,249
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Change in fair value of equity instruments designated at fair value through 12 - 48,056
other comprehensive income (net of tax)
- 48,056
Total comprehensive income for the year 18,978,117 14,900,305
The notes on pages 16 to 41 are an integral part of these parent company
financial statements.
Notes 31 December 31 December
2021 2020
Assets
Non-current assets
Property, plant and equipment 85 117
Investments in subsidiaries 11 24,234,900 23,920,347
Financial assets at fair value through other comprehensive income 12 8,556,556 8,556,556
Total non-current assets 32,791,541 32,477,020
Current assets 9 9,801,993 -
Dividends Receivables
Financial assets at amortised cost 9 - 9,046,364
Prepayments 2,608 135
Cash and cash equivalents 10 19,365 2,230
Total current assets 9,823,966 9,048,729
Total assets 42,615,507 41,525,749
Equity and liabilities
Capital and reserves
Share capital 13 12,269 12,269
Share premium 13 26,972,879 26,972,879
Treasury share reserve 13 (490,607) (490,607)
Other reserves 14 1,297,419 1,297,419
Fair value reserve 12 48,056 48,056
Retained earnings 12,014,735 12,563,150
Total equity 39,854,751 40,403,166
Current liabilities
Current income tax and other tax payables 7,156 8,735
Borrowings 17 2,745,836 1,104,666
Trade and other payables 15 7,764 9,182
Total current liabilities 2,760,756 1,122,583
Total equity and liabilities 42,615,507 41,525,749
On 25 February 2022, the Board of Directors of ROS AGRO PLC authorized these
parent company financial statements for issue.
Vadim Moshkovich
Ganna Khomenko
Director
Director
The notes on pages 16 to 41 are an integral part of these parent company
financial statements.
Share capital Share premium Other reserves Fair value reserve Retained earnings ((1)) Treasury share reserve Total
Notes
1 January 2020 12,269 26,972,879 1,297,419 - 2,849,284 (490,607) 30,641,244
Comprehensive income
Profit for the year - - - - 14,852,249 - 14,852,249
Total comprehensive income - - - - 14,852,249 - 14,852,249
Other comprehensive income 12 48,056 48,056
Fair value gains on financial assets at fair value
through other comprehensive income
Total other comprehensive income 48,056 48,056
Total comprehensive income 48,056 14,852,249 14,900,305
Transactions with owners
Dividends ((2)) - - - - (5,138,383) - (5,138,383)
Total transactions with owners - - - - (5,138,383) - (5,138,383)
Balance at 31 December 2020/1 January 2021 12,269 26,972,879 1,297,419 48,056 12,563,150 (490,607) 40,403,166
Comprehensive income
Profit for the year - - - - 18,978,117 - 18,978,117
Total comprehensive income - - - - 18,978,117 - 18,978,117
Other comprehensive income
Fair value gains on financial assets at fair value through other comprehensive 12 - - - - - - -
income
Total other comprehensive income - - - - - - -
Total comprehensive income 18,978,117 18,978,117
Transactions with owners
Dividends ((3)) - - - - (19,526,532) - (19,526,532)
Total transactions with owners - - - - (19,526,532) - (19,526,532)
Balance at 31 December 2021 12,269 26,972,879 1,297,419 48,056 12,014,735 (490,607) 39,854,751
(1. )The only reserve which is available for distribution in
the form of dividends to the Company's shareholders is retained earnings.
(2. )In 2020 the Company distributed RR 3,216,350 of remaining
dividends for 2019 and RR 1,922,033 of interim dividends for 2020. The
remaining dividends for 2019 amounted to RR 119.54 per share and interim
dividends for 2020 amounted to RR 71.43 per share.
(3. )In 2021 the Company distributed RR 10,770,584 thousand of
remaining dividends for 2020 and RR 8,755,947 thousand of interim dividends
for 2021. The remaining dividends for 2020 amounted to RR 400.30 (gross) per
share and interim dividends for 2021 amounted to RR 325.42 (gross) per share.
Companies which do not distribute 70% of their profits after tax, as defined
by the Special Contribution for the Defence of the Republic Law, during the
two years after the end of the year of assessment to which the profits refer,
will be deemed to have distributed this amount as dividend. Special
contribution for defence at 17% will be payable on such deemed dividend to the
extent that the ultimate owners at the end of the period of two years from the
end of the year of assessment to which the profits refer are both Cyprus tax
resident and Cyprus domiciled. The amount of this deemed dividend distribution
is reduced by any actual dividend paid out of the profits of the relevant year
at any time. This special contribution for defence is paid by the company for
the account of the owners.
The notes on pages 16 to 41 are an integral part of these parent company
financial statements.
Notes Year ended 31 December Year ended 31 December
2021 2020
Cash flows from operating activities
Profit before tax 19,352,359 15,494,573
Adjustments for:
Dividend income not received in cash 9 (9,801,993) -
Dividend income received relating to prior years - 1,542,624
Net foreign exchange gains 6 (249,423) (1,023,988)
Interest expense not paid in cash 17 70,470 43,069
Interest income not received in cash 5 (96,850) (107,575)
Depreciation of property, plant and equipment 7 32 32
9,274,595 15,948,735
Changes in working capital:
Prepayments - (78)
Trade and other receivables (2,473) -
Trade and other payables 15 2,997 (3,280,288)
VAT receivable - 2,090
Borrowings 17 1,689,581 3,008,738
Loans receivable including interest received 17 9,143,214 (1,503,243)
Cash from operations 20,107,914 14,175,954
Tax paid (11,937) (751,847)
Net cash from operating activities 20,095,977 13,424,107
Cash flows from investing activities
Repayment of original cost of subsidiary 11 - 2,415,000
Capital contribution to subsidiary 11 (314,553) -
Payment of financial assets at fair value through other comprehensive income 12 -
(8,512,440)
Payment for acquisition of subsidiary and other investments 11
- (2,099,234)
Net cash used in investing activities (314,553) (8,196,674)
Cash flows from financing activities
Dividends paid 17 (19,526,532) (5,134,426)
Net cash used in financing activities (19,526,532) (5,134,426)
Net increase/ (decrease) in cash and cash equivalents 254,892 93,007
Cash and cash equivalents at the beginning of the year 2,230 3,741
Net effect of exchange rate changes on cash and cash equivalents (237,757) (94,518)
Cash and cash equivalents at the end of the year 10 19,365 2,230
The notes on pages 16 to 41 are an integral part of these parent company
financial statements.
1 General information
Country of incorporation
ROS AGRO PLC (hereinafter the "Company") was incorporated and domiciled in
Cyprus on 1 December 2009 as a private limited liability company in accordance
with the provisions of the Companies Law, Cap. 113. Its registered office is
at 25 Aphrodite Street, 3rd floor, Office 300, CY-1060 Nicosia, Cyprus. It
was converted into a public company in February 2011.
During the first half of 2011 the Company has successfully completed an
initial public offering ("IPO") of its shares in the form of global depositary
receipts ("GDRs"). The Company's GDRs (one ordinary share representing 5 GDRs)
are listed on the Main Market of the London Stock Exchange under the symbol
"AGRO". The IPO included an offering by the Company of 20,000,000 GDRs. During
2014, GDRs of the Company have been admitted to trading on the Moscow Stock
Exchange. In 2016, the Company has successfully completed a secondary public
offering ("SPO").
Principal activities
The Company's principal activity, which is unchanged from last year, is the
holding of investments, including any interest earning activities.
2 Summary of significant accounting policies
Basis of preparation
The separate financial statements of the Company have been prepared in
accordance with International Financial Reporting Standards ("IFRS"), as
adopted by the European Union ("EU"), and the requirements of the Cyprus
Companies Law, Cap. 113.
The separate financial statements have been prepared under the historical cost
convention as modified by the revaluation of financial assets at fair value
through other comprehensive income.
As of the date of the authorization of the financial statements, all
International Financial Reporting Standards issued by the International
Accounting Standards Board (IASB) that are effective as of 1 January 2021 and
are relevant to the Company's operations have been adopted by the EU through
the endorsement procedure established by the European Commission.
The preparation of financial statements in conformity with IFRSs requires the
use of certain critical accounting estimates and requires management to
exercise its judgment in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 4.
2 Summary of significant accounting policies (continued)
Going concern
In assessing the Company's status as a going concern the Directors considered
the current intentions and financial position of the Company. The Company had
net current assets as at 31 December 2021 of RR7,063,210 (2020:RR 7,926,146)
and net asset position of RR 39,854,751 (2020: RR 40,403,166). Also, the
Directors, after reviewing the Group's budget for 2022, including cash flows
and borrowing facilities, considered that the Company has adequate resources
to continue in operation for the foreseeable future.
Consolidated financial statements
The Company has also prepared consolidated financial statements in accordance
with International Financial Reporting Standards as adopted by the EU and the
requirements of the Cyprus Companies Law, Cap. 113 for the Company and its
subsidiaries (collectively the "Group"). A copy of the consolidated financial
statements is available to the members, at the Company's registered office and
at the Company's website at www.rusagrogroup.ru (http://www.rusagrogroup.ru) .
Users of these separate financial statements of the parent company should read
them together with the Group's consolidated financial statements as at and for
the year ended
31 December 2021 in order to obtain a proper understanding of the financial
position, the financial performance and the cash flows of the Company and the
Group.
New Standards, interpretations and amendments adopted by the Company
During the current year the Company adopted all the new and revised
International Financial Reporting Standards (IFRS) that are relevant to its
operations and are effective for accounting periods beginning on 1 January
2021. This adoption did not have a material effect on the accounting policies
of the Company.
New Standards, interpretations and amendments, not yet adopted by the Company
At the date of approval of these financial statements a number of new
standards and amendments to standards and interpretations are effective for
annual periods beginning after 1 January 2021 and have not been applied in
preparing these financial statements. None of these is expected to have a
significant effect on the financial statements of the Company.
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the years presented.
Revenue recognition
Revenues earned by the Company are recognised on the following bases:
(i) Interest income
Interest income on financial assets at amortised cost is calculated using the
effective interest method and is recognised separately on the face of
statement of comprehensive income. Interest income is calculated by applying
the effective interest rate to the gross carrying amount of a financial asset
except for financial assets that subsequently become credit impaired. For
credit - impaired financial assets - Stage 3 the effective interest rate is
applied to the net carrying amount of the financial asset (after deduction of
the loss allowance), for Stage 1 and Stage 2 - gross amount of financial
assets.
(ii) Dividend income
Dividend income is recognised when the right to receive payment is
established.
2 Summary of significant accounting policies (continued)
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using
the currency of the primary economic environment in which the entity operates
('the functional currency'). The financial statements are presented in Russian
Rouble (RR) which is the Company's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at period end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement.Foreign exchange gains and losses are presented in profit or loss
within "Other operating gains/ (losses) - net".
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is
recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case,
the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The current income tax is calculated in the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the country in which the
Company operates and generates taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. If applicable tax
regulation is subject to interpretation, it establishes provision where
appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is recognised using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. The measurement of deferred tax
reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount
of its assets and liabilities. Deferred tax is not recognised for: - temporary
differences on the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss; - temporary differences related to
investments in subsidiaries, associates and joint arrangements to the extent
that the Group is able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the foreseeable
future. Deferred income tax is determined using tax rates and laws that have
been enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is realized or
the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profits will be available against which the temporary
differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on the Company where there is an
intention to settle the balances on a net basis.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the
balance sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis or
realize the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the Company or the counterparty.
2 Summary of significant accounting policies (continued)
Investment in subsidiaries
Subsidiaries are all entities (including special purpose entities) over which
the Company has control. The Company controls an entity whom the Company is
exposed to or has the rights to variable returns through its involvement with
the investee, power over the investee and the ability to use its power over
the investee to affect the amount of the investor's return. In its parent
company financial statements, the Company carries the investments in
subsidiaries at cost less any impairment. Investments in subsidiaries are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is
recognised through income statement for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in use. An
impairment loss recognised in prior years is reversed where appropriate if
there has been a change in the estimates used to determine the recoverable
amount.
The Company recognizes dividend income from investments in subsidiaries to the
extent that the Company receives distributions from subsidiaries which
constitute return on the cost of investment. Capital reductions and dividend
distributions by subsidiaries which constitute return of cost of investment as
opposed to return on cost of investment are recognised as a reduction in the
cost of investment in subsidiary.
The difference between investment cost and the legally issued share capital
and share premium of the Company is recorded in other reserves for
subsidiaries which are acquired as a result of reorganization of the group
structure in a manner that satisfies the following criteria:
(a) the new parent obtains control of the original parent by issuing equity
instruments in exchange for existing equity instruments of the original
parent;
(b) the assets and liabilities of the new group and the original group are
the same immediately before and after the reorganisation;
(c) the owners of the original parent before the reorganisation have the
same absolute and relative interests in the net assets of the original group
and the new group immediately before and after the reorganisation; and
(d) the Company measures cost at the carrying amount of its share of the
equity items shown in the separate financial statements of the original parent
at the date of the reorganization.
Share-based payment transactions in subsidiary undertakings
The grant by the Company of options over its equity instruments to the
employees of subsidiary undertakings in the Group is treated as a capital
contribution. The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the vesting period
as an increase/(decrease) to investment in subsidiary undertakings, with a
corresponding credit/(debit) to equity in the parent entity financial
statements.
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment. Assets that are subject to depreciation or
amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash generating units).
Non‑financial assets, other than goodwill, that have suffered an impairment
are reviewed for possible reversal of the impairment at each reporting date.
2 Summary of significant accounting policies (continued)
Share capital and share premium
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax, from the proceeds.
Any excess of the fair value of consideration received over the par value of
shares issued is recognised as share premium. Share premium account can only
be resorted to for limited purposes, which do not include the distribution of
dividends, and is otherwise subject to the provisions of the Cyprus Companies
Law on reduction of share capital.
Treasury share reserve
Repurchased shares are classified as treasury shares and are presented in the
treasury share reserve. Where the Company purchases the Company's equity
instruments, the consideration paid, including any directly attributable
incremental costs, net of income taxes, is deducted from equity attributable
to the Company's owners until the equity instruments are cancelled, reissued
or disposed of. Where such equity instruments are subsequently sold or
reissued, any consideration received, net of any directly attributable
incremental transaction costs and the related income tax effects, is included
in equity attributable to the Company's owners.
Financial assets - Classification
The Company classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at fair value (either
through OCI or through profit or loss); and
· those to be measured at amortised cost.
The classification and subsequent measurement of debt financial assets depends
on: (i) the Company's business model for managing the related assets portfolio
and (ii) the cash flow characteristics of the asset. On initial recognition,
the Company may irrevocably designate a debt financial asset that otherwise
meets the requirements to be measured at amortised cost or at FVOCI, at FVTPL
if doing so eliminates or significantly reduces an accounting mismatch that
would otherwise arise.
For investments in equity instruments that are not held for trading,
classification will depend on whether the Company has made an irrevocable
election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income (FVOCI). This
election is made on an investment‐by‐investment basis.
All other financial assets are classified as measured at FVTPL.
For assets measured at fair value, gains and losses will either be recorded in
profit or loss or OCI. For investments in equity instruments that are not held
for trading, this will depend on whether the Company has made an irrevocable
election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income (FVOCI).
Financial assets - Recognition and derecognition
All purchases and sales of financial assets that require delivery within the
time frame established by regulation or market convention ("regular way"
purchases and sales) are recorded at trade date, which is the date when the
Company commits to deliver a financial instrument. All other purchases and
sales are recognised when the entity becomes a party to the contractual
provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Company has
transferred substantially all the risks and rewards of ownership.
2 Summary of significant accounting policies (continued)
Financial assets - Measurement
At initial recognition, the Company measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit
or loss (FVTPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVTPL are expensed in profit or loss. Fair value at initial
recognition is best evidenced by the transaction price. A gain or loss on
initial recognition is only recorded if there is a difference between fair
value and transaction price which can be evidenced by other observable current
market transactions in the same instrument or by a valuation technique whose
inputs include only data from observable markets.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised
as income in profit or loss unless the dividend clearly represents a recovery
of part of the cost of the investment. Other net gains and losses are
recognised in OCI in fair value reserve and are never reclassified to profit
or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the company's business
model for managing the asset and the cash flow characteristics of the asset.
There are three measurement categories into which the Company classifies its
debt instruments:
· Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent solely payments of
principal and interest are measured at amortised cost. Interest income from
these financial assets is shown separately on the face of statement of
comprehensive income. Any gain or loss arising on derecognition is recognised
directly in profit or loss and presented in other gains/(losses) together with
foreign exchange gains and losses. Impairment losses are presented as separate
line item in the income statement. Financial assets measured at amortised cost
(AC) comprise: cash and cash equivalents, bank deposits with original maturity
over 3 months, loans receivables and other receivables.
· FVOCI: Assets that are held for collection of contractual cash
flows and for selling the financial assets, where the assets' cash flows
represent solely payments of principal and interest, are measured at FVOCI.
Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign
exchange gains and losses which are recognised in profit or loss.
· FVTPL: Assets that do not meet the criteria for amortised cost or
FVOCI are measured at FVTPL. A gain or loss on a debt investment that is
subsequently measured at FVTPL is recognised in profit or loss and presented
net within "other operating gains/(losses)-net" in the period in which it
arises.
Financial assets - Impairment - credit loss allowance for ECL
The Company assesses on a forward-looking basis the ECL for debt instruments
(including loans) measured at AC and with the exposure arising from loan
commitments and financial guarantee contracts. The Company measures ECL and
recognises credit loss allowance at each reporting date. The measurement of
ECL reflects: (i) an unbiased and probability weighted amount that is
determined by evaluating a range of possible outcomes, (ii) time value of
money and (iii) all reasonable and supportable information that is available
without undue cost and effort at the end of each reporting period about past
events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an
allowance account, and the amount of the loss is recognised in the income
statement within "net impairment losses on financial assets".
Debt instruments measured at AC are presented in the balance sheet net of the
allowance for ECL. For loan commitments and financial guarantee contracts, a
separate provision for ECL is recognised as a liability in the balance sheet.
Expected losses are recognised and measured according to one of two
approaches: general approach or simplified approach.
2 Summary of significant accounting policies (continued)
Financial assets - Impairment - credit loss allowance for ECL (continued)
For all financial assets that are subject to impairment under IFRS 9, the
Company applies general approach - three stage model for impairment. The
Company applies a three stage model for impairment, based on changes in credit
quality since initial recognition. A financial instrument that is not
credit-impaired on initial recognition is classified in Stage 1. Financial
assets in Stage 1 have their ECL measured at an amount equal to the portion of
lifetime ECL that results from default events possible within the next 12
months or until contractual maturity, if shorter ("12 Months ECL"). If the
Company identifies a significant increase in credit risk ("SICR") since
initial recognition, the asset is transferred to Stage 2 and its ECL is
measured based on ECL on a lifetime basis, that is, up until contractual
maturity but considering expected prepayments, if any ("Lifetime ECL"). If the
Company determines that a financial asset is credit-impaired, the asset is
transferred to Stage 3 and its ECL is measured as a Lifetime ECL.
Financial assets - Reclassification
Financial instruments are reclassified only when the business model for
managing those assets changes. The reclassification has a prospective effect
and takes place from the start of the first reporting period following the
change.
Financial assets - write-off
Financial assets are written-off, in whole or in part, when the Company
exhausted all practical recovery efforts and has concluded that there is no
reasonable expectation of recovery. The write-off represents a derecognition
event. The Company may write-off financial assets that are still subject to
enforcement activity when the Company seeks to recover amounts that are
contractually due, however, there is no reasonable expectation of recovery.
Financial assets - modification
The Company sometimes renegotiates or otherwise modifies the contractual terms
of the financial assets. The Company assesses whether the modification of
contractual cash flows is substantial considering, among other, the following
factors: any new contractual terms that substantially affect the risk profile
of the asset, significant change in interest rate, change in the currency
denomination, new collateral or credit enhancement that significantly affects
the credit risk associated with the asset or a significant extension of a loan
when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows
from the original asset expire and the Company derecognises the original
financial asset and recognises a new asset at its fair value. The date of
renegotiation is considered to be the date of initial recognition for
subsequent impairment calculation purposes, including determining whether a
SICR has occurred. The Company also assesses whether the new loan or debt
instrument meets the SPPI criterion. Any difference between the carrying
amount of the original asset derecognised and fair value of the new
substantially modified asset is recognised in profit or loss, unless the
substance of the difference is attributed to a capital transaction with
owners.
2 Summary of significant accounting policies (continued)
Financial assets - modification (continued)
In a situation where the renegotiation was driven by financial difficulties of
the counterparty and inability to make the originally agreed payments, the
Company compares the original and revised expected cash flows to assets
whether the risks and rewards of the asset are substantially different as a
result of the contractual modification. If the risks and rewards do not
change, the modified asset is not substantially different from the original
asset and the modification does not result in derecognition. The Company
recalculates the gross carrying amount by discounting the modified contractual
cash flows by the original effective interest rate, and recognises a
modification gain or loss in profit or loss.
Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents includes cash in
hand, deposits held at call with banks with original maturities of three
months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value, and bank overdrafts.
In the balance sheet bank overdrafts are shown within borrowings in current
liabilities. Cash and cash equivalents are carried at AC because: (i) they are
held for collection of contractual cash flows and those cash flows represent
SPPI, and (ii) they are not designated at FVTPL.
Financial assets at amortised cost
These amounts generally arise from transactions outside the usual operating
activities of the Company. These are held with the objective to collect their
contractual cash flows and their cash flows represent solely payments of
principal and interest. Accordingly, these are measured at amortised cost
using the effective interest method, less provision for impairment. Financial
assets at amortised cost are classified as current assets if the entity
expects to realise the asset within twelve months after the reporting period.
If not, they are presented as non-current assets.
Credit related commitments
The Company issues commitments to provide loans. Commitments to provide loans
are initially recognised at their fair value, which is normally evidenced by
the amount of fees received. Such loan commitment fees are deferred and
included in the carrying value of the loan on initial recognition. Loan
commitments provided by the Company are measured as the amount of the loss
allowance calculated under IFRS 9.
At the end of each reporting period, the commitments are measured at
(i) the remaining unamortised balance of the amount at initial
recognition, plus
(ii) the amount of the loss allowance determined based on the
expected credit loss model.
If the loan commitments are provided at a below-market interest rate, they are
measured at the higher of:
(i) the amount of the loss allowance determined based on the
expected loss model and
(ii) the amount initially recognised less, where appropriate, the
cumulative amount of income recognised in accordance with the principles of
IFRS 15 Revenue from Contracts with Customers.
For loan commitments (where those components can be separated from the loan),
a separate provision for ECL is recognised as a liability in the balance
sheet. However, for contracts that include both a loan and an undrawn
commitment and the Company cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component,
the expected credit losses on the undrawn commitment are recognised together
with the loss allowance for the loan. To the extent that the combined expected
credit losses exceed the gross carrying amount of the loan, the expected
credit losses are recognised as a provision.
2 Summary of significant accounting policies (continued)
Financial guarantee contracts
Financial guarantee contracts are contracts that require the Company to make
specified payments to reimburse the holder of the guarantee for a loss it
incurs because a specified debtor fails to make payment when due in accordance
with the terms of debt instrument. Such financial guarantees are given to
banks, financial institutions and others on behalf of third parties to secure
loans, overdrafts and other banking facilities.
Financial guarantees are recognised as a financial liability at the time the
guarantee is issued. Financial guarantees are initially recognised at their
fair value, which is normally evidenced by the amount of fees received. This
amount is amortised on a straight line basis over the life of the guarantee in
other income in profit or loss.
At the end of each reporting period, the guarantee is subsequently at the
higher of:
· the amount of the loss allowance determined in accordance with
the expected credit loss model under IFRS 9 Financial Instruments; and
· the amount initially recognised less, where appropriate, the
cumulative amount of income recognised in accordance with the principles of
IFRS 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present
value of the difference in cash flows between the contractual payments
required under the debt instrument and the payments that would be required
without the guarantee, or the estimated amount that would be payable to a
third party for assuming the obligations. Where guarantees in relation to
loans or other payables of subsidiaries are provided for no compensation, the
fair values are accounted for as contributions and recognised as part of the
cost of the investment.
Financial liabilities - measurement categories
Financial liabilities are initially recognised at fair value and classified as
subsequently measured at amortised cost, except for (i) financial liabilities
at FVTPL: this classification is applied to derivatives, financial liabilities
held for trading (e.g. short positions in securities), and other financial
liabilities designated as such at initial recognition and (ii) financial
guarantee contracts and loan commitments.
Transactions with equity owners/subsidiaries
The Company enters into transactions with shareholders and subsidiaries. When
consistent with the nature of the transaction, the Company's accounting policy
is to recognise (a) any gains or losses with equity holders and other entities
which are under the control of the ultimate shareholder, directly through
equity and consider these transactions as the receipt of additional capital
contributions or the payment of dividends; and (b) any losses with
subsidiaries as cost of investment in subsidiaries. Similar transactions with
non‑equity holders or subsidiaries, are recognised through the profit or
loss in accordance with IFRS 9 'Financial Instruments'.
2 Summary of significant accounting policies (continued)
Borrowings
Measurement
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in profit or loss over the period of the borrowings, using
the effective interest method, unless they are directly attributable to the
acquisition, construction or production of a qualifying asset, in which case
they are capitalised as part of the cost of that asset. Borrowings are
classified as current liabilities, unless the Company has an unconditional
right to defer settlement of the liability for at least twelve months after
the balance sheet date.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. In this case, the fee is deferred
until the draw‑down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the fee is
capitalised as a prepayment (for liquidity services) and amortised over the
period of the facility to which it relates.
Modification
An exchange between the Company and its original lenders of debt instruments
with substantially different terms, as well as substantial modifications of
the terms and conditions of existing financial liabilities, are accounted for
as an extinguishment of the original financial liability and the recognition
of a new financial liability. The terms are substantially different if the
discounted present value of the cash flows under the new terms, including any
fees paid net of any fees received and discounted using the original effective
interest rate, is at least 10% different from the discounted present value of
the remaining cash flows of the original financial liability.
Modifications of liabilities that do not result in extinguishment are
accounted for as a change in estimate using a cumulative catch up method, with
any gain or loss recognised in profit or loss, unless the economic substance
of the difference in carrying values is attributed to a capital transaction
with owners and is recognised directly to equity.
Derecognition
Borrowings are removed from the balance sheet when the obligation specified in
the contract is discharged, cancelled or expired. The difference between the
carrying amount of a financial liability that has been extinguished or
transferred to another party and the consideration paid, including any
non-cash assets transferred or liabilities assumed, is recognised in profit or
loss as other income or finance costs.
Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a
liability in the Company's financial statements in the period in which the
dividends are approved, appropriately authorized and are no longer at the
discretion of the Company.
More specifically, interim dividend distributions to the Company's
shareholders are recognised as a liability when it is both appropriately
authorised and no longer at the Company's discretion (i.e. when the Company
has an obligation to pay). Final dividend distributions to the Company's
shareholders are recognised in the Company's financial statements in the year
in which they are approved by the Company's shareholders.
3 Financial risk management
(i) Financial risk factors
The Company's activities expose it to a variety of financial risks: market
risk (including foreign exchange risk, price risk, cash flow and fair value
interest rate risk), credit risk and liquidity risk.
The risk management policies employed by the Company to manage these risks are
discussed below.
3 Financial risk management (continued)
· Market risk
Foreign exchange risk
The Company attracts and provides financing and receives services denominated
in foreign currencies and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to US dollar and Euro.
Foreign exchange risk arises when future commercial transactions or recognised
assets or liabilities are denominated in a currency that is not the Company's
functional currency.
At 31 December 2021, if the Russian Rouble had weakened/strengthened by 10%
(2020: 10%) against the US dollar and/or against the Euro with all other
variables held constant, no significant foreign exchange risks arise.
Management monitors the exchange rate fluctuations on a continuous basis and
acts accordingly.
Cash flow and fair value interest rate risk
The Company's interest rate risk arises from interest-bearing assets and
borrowings. Interest-bearing assets and borrowings at variable rates expose
the Company to cash flow interest rate risk. Interest bearing assets and
borrowings issued at fixed rates expose the Company to fair value interest
rate risk due to fluctuations in the market value of balances.
At 31 December 2020, any potential change in market interest rates would not
impact the carrying rate of financial instruments with fixed interest rate,
and so neither the profit or loss for the year and equity, as these are
carried at amortised cost.
As at 31 December 2020 there were no loans issued at variable rates. As at 31
December 2021 there were no loans issued.
Price risk
The Company is exposed to equity securities price risk because of investments
held by the Company and classified on the balance sheet as at fair value
through other comprehensive income.
For price risk on investments held by the Company and classified on the
balance sheet as at fair value through other comprehensive income refer to
Note 12.
The Company does not have formal policies to manage its price risk.
3 Financial risk management (continued)
(i) Financial risk factors (continued)
· Credit risk
The credit risk represents the risk of losses for the Company owing to default
of counterparties on obligations to transfer to the Company cash and cash
equivalents and other financial assets.
For minimization of credit risk related to cash and cash equivalents the
Company places cash in financial institutions which at the moment of
transaction have the minimum risk of a default.
The Company's financial assets that are subject to the expected credit loss
model are as follows:
Year ended Year ended
31 December 31 December
2021 2020
Short-term financial assets
Loans issued to related parties (Note 9) - 9,031,494
Loans issued to third party (Note 9) - 14,870
Cash and cash equivalents (Note 10) 19,365 2,230
Dividends receivable from subsidiaries (Note 9) 9,801,993 -
Total short-term financial assets 9,821,358 9,048,594
The Company's maximum exposure to credit risk at the reporting date without
taking account of any collateral held is the carrying value of the financial
assets carried at amortised cost.
Credit risk grading system. For measuring credit risk and grading financial
instruments by the amount of credit risk, the Company applies two approaches -
an Internal Risk-Based (IRB) rating system or risk grades estimated by
external international rating agencies (Standard & Poor's - "S&P",
Fitch, Moody's). Internal and external credit ratings are mapped on an
internally defined master scale with a specified range of probabilities of
default as disclosed in the table below:
Master scale credit risk grade Corresponding internal ratings Corresponding ratings of external international rating agencies Corresponding PD interval
Excellent [1 - 6] AAA to BB+ 0.01% - 0.05%
Good [7 - 14] BB to B+ 0.06% - 1%
Satisfactory [15 - 21] B, B- 1% - 5%
Special monitoring [22 - 25] CCC+ to CC- 6% - 99.9%
Default [26 - 30] C, D-I, D-II 100%
Each master scale credit risk grade is assigned a specific degree of
creditworthiness:
· Excellent - strong credit quality with low expected credit risk;
· Good - adequate credit quality with a moderate credit risk;
· Satisfactory - moderate credit quality with a satisfactory credit
risk;
· Special monitoring - facilities that require closer monitoring
and remedial management; and
· Default - facilities in which a default has occurred.
3 Financial risk management (continued)
(i) Financial risk factors (continued)
· Credit risk (continued)
The IRB system is designed internally and ratings are estimated by management.
Various credit-risk estimation techniques are used by the Company depending on
the class of the asset. There are three commonly used types of such systems:
· Model-based - In this system, credit risk ratings are assigned by
internally developed statistical models with the limited involvement of credit
officers. Statistical models include qualitative and quantitative information
that shows the best predictive power based on historical data on defaults.
· Expert judgement-based - In this system, credit risk ratings are
assigned subjectively by experienced credit officers based on internally
developed methodology and different qualitative and quantitative factors. This
approach is based on expert methodology and judgements rather than on
sophisticated statistical models.
· Hybrid - This rating system is a combination of the two systems
above. It is developed by using historical data combined with expert input.
The Company applies IRB systems for measuring credit risk for the following
financial assets: cash and cash equivalents and bank deposits.
The table below discloses the credit quality of cash and cash equivalents
balances based on credit risk grades at 31 December 2021:
Cash and cash equivalents Total
- Excellent 16,704 16,704
- Good 1,092 1,092
- Satisfactory 1,569 1,569
- Special monitoring - -
Total 19,365 19,365
The table below discloses the credit quality of cash and cash equivalents
balances based on credit risk grades at 31 December 2020:
Cash and cash equivalents Total
- Excellent 2,061 2,061
- Good - -
- Satisfactory 169 169
- Special monitoring - -
Total 2,230 2,230
Expected credit loss measurement. Expected credit loss is a
probability-weighted estimate of the present value of future cash shortfalls.
An expected credit loss measurement is unbiased and is determined by
evaluating a range of possible outcomes. Expected credit loss measurement is
based on four components used by the Company: Probability of Default, Exposure
at Default, Loss Given Default and Discount Rate.
Exposure at Default is an estimate of exposure at a future default date,
taking into account expected changes in the exposure after the reporting
period, including repayments of principal and interest, and expected drawdowns
on committed facilities.
3 Financial risk management (continued)
(i) Financial risk factors (continued)
· Credit risk (continued)
For purposes of measuring Probability of Default, the Company defines default
as a situation when the exposure meets one or more of the following criteria:
· the borrower is more than 90 days past due on its contractual
payments;
· international rating agencies have classified the borrower in the
default rating class;
· the borrower meets the unlikeliness-to-pay criteria listed below:
- the borrower is deceased;
- the borrower is insolvent; and
- it is becoming likely that the borrower will enter bankruptcy.
· Liquidity risk
The table below analyses the Company's financial liabilities into relevant
maturity groupings based on the remaining period at the balance sheet to the
contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Less than 1 year
At 31 December 2021
Trade and other payables 3,215
Commitments to provide funds to subsidiaries (Note 17) -
Payables to related parties (Note 17) 4,549
Financial Guarantees (Note 17) 2,780,000
Borrowings 2,745,836
Total 5,533,600
Less than 1 year
At 31 December 2020
Trade and other payables 9,182
Commitments to provide funds to subsidiaries (Note 17) 968,507
Financial Guarantees (Note 17) 5,439,525
Borrowings 1,104,666
Total 7,521,880
(ii) Capital risk management
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. The Company does not have a
quantified target level of shareholders' return or capital ratios.
(iii) Fair value estimation
The estimated fair values of financial instruments have been determined by the
Company using available market information, where it exists, and appropriate
valuation methodologies. However, judgement is necessarily required to
interpret market data to determine the estimated fair value. The Russian
Federation continues to display some characteristics of an emerging market and
economic conditions continue to limit the volume of activity in the financial
markets. Market quotations may be outdated or reflect distress sale
transactions and therefore not represent fair values of financial instruments.
Management has used all available market information in estimating the fair
value of financial instruments.
3 Financial risk management (continued)
(iii) Fair value estimation (continued)
The disclosure of the fair value of financial instruments carried at amortised
cost and the fair value of financial instruments carried at fair value is
determined using the following valuation methods:
· Quoted prices (unadjusted) in active markets for identical assets
or liabilities (Level 1).
· Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2).
· Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level 3).
Refer to Note 12 for the Company's financial asests carried at fair value as
at 31 December 2021 and 2020.
4 Critical Accounting Estimates and Judgements
The Company makes estimates and assumptions that affect the amounts recognised
in the parent company financial statements and the carrying amounts of assets
and liabilities within the next financial year. Estimates and judgements are
continually evaluated and are based on management's experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. Management also makes certain judgements,
apart from those involving estimations, in the process of applying the
accounting policies. Judgements that have the most significant effect on the
amounts recognised in the parent company financial statements and estimates
that can cause a significant adjustment to the carrying amount of assets and
liabilities within the next financial year include:
Fair value of investment in LLC GK Agro-Belogorie
Key inputs and assumptions used in the fair value measurement of investment in
LLC GK Agro-Belogorie are disclosed in Note 12. Change in fair value of
investment in LLC GK Agro-Belogorie is accounted within fair value reserve
line of the Balance Sheet.
Assessment of existence of significance influence over LLC GK Agro-Belogorie
For management assessment refer to Note 12.
5 Interest Income
Year ended 31 December Year ended 31 December
2021 2020
Interest income on bank deposits 264 1,202
Interest income on loans issued third parties 948 365
Interest income on loans issued - related parties (Note 17) 95,638 107,575
Total interest income calculated using effective interest rate method 96,850 109,143
6 Other operating gains - net
Year ended 31 December Year ended 31 December
2021 2020
Net foreign exchange gains 249,423 1,023,988
Other operating income (Note 17) 421 731
Total other operating gains - net 249,844 1,024,719
7 Expenses by nature
Year ended 31 December Year ended 31 December
2021 2020
Key management personnel compensation (Note 17) 27,328 26,896
Other personnel remuneration (including social insurance costs) 14,824 10,250
Depreciation of property, plant and equipment 32 32
Auditor's remuneration - statutory auditor 3.590 3,545
Legal, consulting and other professional fees 61,990 20,680
Bank charges 4,797 5,554
Other tax expenses 5,542 6,556
Travelling expenses - 977
Rent and Other expenses 1,147 960
Total administrative expenses 119,250 75,450
The average number of employees employed by the Company during the year ended
31 December 2021 was 4 (4 for the year ended 31 December 2020).
The total fees charged by the Company's statutory auditor for the statutory
audit of the annual financial statements of the Company for the year ended 31
December 2021 amounted to RR 3,590 (2020: RR 3,545). Fees charged by the
Company's statutory auditor for the year ended 31 December 2021 for tax
advisory services amounted to RR nil (2020: RR 607).
8 Income tax expense
Year ended 31 December Year ended 31 December
2021 2020
Current tax:
Withholding tax 362,305 629,864
Corporation tax 11,937 12,460
Total income tax 374,242 642,324
374,242 642,324
The tax on Company's profit before tax differs from the theoretical amount
that would arise using the applicable tax rate as follows:
Year ended 31 December Year ended 31 December
2021 2020
Profit before tax 19,352,358 15,494,573
Tax calculated at the applicable corporation tax rate of 12.5% 2,419,044 12,5% 1,936,822 12,5%
Tax effect of expenses not deductible for tax purposes 23,531 0,1% 12,935 0,1%
Tax effect of allowances and income not subject to tax (2,430,638) (12,5%) (1,937,297) (12,5%)
Withholding tax 362,305 1,7% 629,864 4,1%
374,242 1,8% 624,324 4,2%
8 Income tax expense (continued)
The Company is subject to income tax on taxable profits at the rate of 12.5%.
Dividend income received by the Company's investments in OJSC Rusagro Group
and LLC GK Agro-Belogorie, is subject to a 5% withholding tax deducted at
source. Interest income received from bank in Switzerland, is subject to a 35%
withholding tax deducted at source. Brought forward losses of only five
years may be utilised.
Under certain conditions, interest may be exempt from income tax and only
subject to special defence contribution at the rate of 30%. In certain cases
dividends received from abroad may be subject to special contribution for
defence at the rate of 17%. Gains on disposal of qualifying titles (including
shares, bonds, debentures etc.) are exempt from Cyprus income tax.
9 Financial assets at amortised cost
Financial assets at amortised cost include the following:
Year ended Year ended
31 December 31 December
2021 2020
Current
Loans issued to related parties (Note 17) - 9,031,494
Loans issued to third party - 14,870
Dividends receivable from subsidiaries (Note 17) 9,801,993 -
Total current 9,801,993 9,046,364
Due to the short-term nature of the current financial assets at amortised
cost, their carrying amount is considered to approximates their fair value.
The carrying amounts of the Company's financial assets at amortised cost are
denominated in the following currencies:
Currency Year ended Year ended
31 December 31 December
2021 2020
RUB 9,801,993 9,046,364
Total 9,801,993 9,046,364
The maximum exposure to credit risk at the balance sheet date is the carrying
value of each class of financial asset at amortised cost mentioned above. The
Company does not hold any collateral as security.
10 Cash and cash equivalents
31 December 31 December
2021 2020
Cash at bank 19,365 2,230
Total cash and cash equivalents 19,365 2,230
Cash and cash equivalents are denominated in the following currencies:
31 December 31 December
2021 2020
USD 8,597 527
Euro 10,127 1,583
Russian Rouble 641 120
Total cash and cash equivalents 19,365 2,230
10 Cash and cash equivalents (continued)
Non-cash transactions
No non-cash transactions were made during 2021.
The principal non-cash transactions during 2020 are as follows:
§ Receivable amount of RR 2,100,000 due to the Company in relation to the
capital reduction of Limeniko Invest. & Trade Ltd (Note 11) was assigned
to Ros Agro Trading Limited and subsequently set off against its borrowings
owed by the Company to Ros Agro Trading Limited (Note 17).
§ Receivable amount of RR 1,874,534 due to the Company in relation to the
capital reduction of Limeniko Invest. & Trade Ltd (Note 11) was set off
with the payable owed to Limeniko Invest & Trade Limited of the same
amount.
Cash and cash equivalents mainly relate to current accounts and their carrying
amount is considered to approximate their fair value.
11 Investments in subsidiaries
OJSC Rusagro Group Total
Limeniko Trade
& Invest. Limited * Ros Agro Trading Limited
Ros Agro China Limited
1 January 2020 6,389,534 3,710,257 20,206,224 3,866 30,309,881
Share-Based Remuneration (Note 17) - - - - -
Additions - - - - -
Liquidation/impairment of subsidiaries (6,389,534) - - - (6,389,534)
At 31 December 2020/ 1 January 2021 - 3,710,257 20,206,224 3,866 23,920,347
Additions 314,553 - 314,553
At 31 December 2021 - 3,710,257 20,520,777 3,866 24,234,900
* Subsidiaries liquidated during the current or prior year
During 2021, RR 314,553 were injected as share capital of Ros Agro China
Limited without alloting and issuing new shares.
During 2020, Limeniko Trade & Invest. Limited has been liquidated.
Liquidation proceeds amounting to RR 2,415,000 have been received in cash and
the remaining have been set off with borrowings and payable with related
parties (Note 10).
11 Investments in subsidiaries (continued)
The Company's interests in direct and indirect principal subsidiaries, all of
which are unlisted, were as follows:
Entity Principal activity Country of incorporation 2021 % 2020 %
holding holding
OJSC Rusagro Group* Investment holding, financing Russia 100 100
LLC Group of Companies Rusagro Investment holding, financing Russia 100 100
LLC Rusagro-Sakhar Sugar division trading company, sales operations Russia 100 100
LLC Rusagro-Belgorod Beet and raw sugar processing Russia 100 100
LLC Rusagro-Tambov Beet and raw sugar processing Russia 100 100
OJSC Krivets-Sakhar Beet and raw sugar processing Russia 100 100
OJSC Kshenskiy Sugar Plant Beet and raw sugar processing Russia 100 100
OJSC Otradinskiy Sugar Plant Beet and raw sugar processing Russia 100 100
OJSC Hercules Buckwheat processing plant Russia 100 100
Ros Agro Trading Limited* Trading operations with goods and derivatives Hong Kong 100 100
Ros Agro China Limited* Investment holding, financing China 100 100
LLC RusagroTechnologii IT services Russia 100 -
OJSC Fats and Oil Integrated Works Oil processing Russia 100 100
CJSC Samaraagroprompererabotka Oil extraction Russia 100 100
LLC Primorskaya Soya Oil extraction and processing Russia 100 75
LLC Rusagro-Saratov Oil processing Russia 100 100
LLC Rusagro-Atkarsk Oil extraction Russia 100 100
LLC Rusagro-Balakovo Oil extraction Russia 100 100
LLC Rusagro-Zakupki Oil and Fat raw materials procurement Russia 100 -
LLC Tambovsky Bacon Cultivation of pigs Russia 100 100
LLC Rusagro-Primorie Cultivation of pigs Russia 100 100
LLC Regionstroy Construction for cultivation of pigs Russia 100 100
LLC Rusagro-Invest Agriculture Russia 100 100
LLC Agrotehnology Agriculture Russia 100 100
CJSC Primagro Agriculture Russia 100 100
LLC Kshenagro Agriculture Russia 100 100
LLC Otradaagroinvest Agriculture Russia 100 100
LLC Vozrozhdenie Agriculture Russia 100 100
LLC Agromeliorant Production of fertilizers Russia 100 -
* Subsidiaries held directly from the Company.
12 Financial assets at fair value through other comprehensive
income
LLC GK Agro-Belogorie
1 January 2020 8,508,500
Fair value 48,056
At 31 December 2020/1 January 2021 8,556,556
Fair value -
At 31 December 2021 8,556,556
Entity Principal activity Country of incorporation 2021 % holding 2020 % holding
LLC GK Agro-Belogorie Cultivation of pigs Russia 22.5 22.5
On 3 December 2019 the Company acquired 22.5% of ownership interest in LLC GK
Agro-Belogorie, one of the largest pork producers in Russia and a large
landholder in Belgorod region, for a total consideration of RR 8,508,500, paid
in cash during 2020. Key business areas of investee include industrial pig
farming and meat processing, milk livestock, crop and feed production.
Investment in LLC GK Agro-Belogorie is classified as investment at fair value
through other comprehensive income. The management considers that the Company
does not have significant influence over LLC GK Agro-Belogorie due the
following:
· The management has no power to appoint the members of
the board of directors or equivalent governing body of LLC GK Agro-Belogorie;
· Group management does not participate in policy-making
processes, including decisions about dividends or other distributions;
· There were no material transactions or interchange of
managerial personnel between the Group and LLC GK Agro-Belogorie since the
share acquisition date;
· No essential technical information was interchanged
between the Group and LLC GK Agro-Belogorie.
The fair value of the investment determined applying the level 3 valuation
model amounted to RR 8,508,500 at acquisition date.
Subsequent to the initial recognition this investment is measured at fair
value through other comprehensive income. Changes in the fair value are
recognised in the fair value reserve in other comprehensive income. As at 31
December 2021 the fair value of the acquired investment amounted to RR
8,556,556 (31 December 2020: RR 8,556,556) .
The fair value of the investment has been determined based on a value-in-use
calculation using discounted cash flow projections based on the actual
financial data and budgets of LLC GK AgroBelogorie covering a five-year period
and the expected market prices for the key products for the same period
according to leading industry publications. Cash flows beyond the five-year
period were projected with a long-term growth rate of 1.8% per annum (2020:
1.8% per annum).
During the year, there was a total dividend income of RR 794,250 (2020: RR
590,072) from the investment in LLC GK Agro-Belogorie.
12 Financial assets at fair value through other comprehensive
income (continued)
The valuation technique, significant unobservable inputs used in the fair
value measurement for level 3 measurement and related sensitivity to
reasonably possible changes in those inputs (holding other inputs constant)
are as follows at 31 December 2021:
In thousands of Russian Roubles Significant unobservable inputs used Range of inputs (weighted average) Reasonable change Sensitivity of fair value measurement
Investment at FV through OCI
EBITDA Margin 17 - 24% ± 1% ± 462,808
Terminal growth rate 1.8% ± 0.5% ± 120,515
WACC 15.6% ± 0.5% ± 225,302
The valuation technique, significant unobservable inputs used in the fair
value measurement for level 3 measurement and related sensitivity to
reasonably possible changes in those inputs (holding other inputs constant)
are as follows at 31 December 2020:
In thousands of Russian Roubles Significant unobservable inputs used Range of inputs (weighted average) Reasonable change Sensitivity of fair value measurement
Investment at FV through OCI
EBITDA Margin 16 - 22% ± 1% ± 523,765
Terminal growth rate 1.8% ± 0.5% ± 161,302
WACC 12.0% ± 0.5% ± 274,518
Sensitivity of fair value to valuation inputs for financial assets and
financial liabilities, if changing one or more of the unobservable inputs to
reflect reasonably possible alternative assumptions would not be significant.
For this purpose, significance was judged with respect to profit or loss, and
total assets or total liabilities, or, when changes in fair value are
recognised in other comprehensive income, total equity.
There were no changes in the valuation technique for level 3 recurring fair
value measurements during the year ended 31 December 2021 (2020: none).
13 Share capital and share premium
Number of issued and fully paid shares Share capital Share premium Total
1 January 2020/ At 31 December 2020/31 December 2021 27,333,333 12,269 26,972,879 26,985,148
All ordinary shares rank equally with regard to the Company's residual assets.
At 31 December 2021 and 2020, the authorised share capital consisted of
60,000,000 ordinary shares with par value of Euro 0.01 each.
Treasury reserve
On 25 August 2011 the Board unanimously resolved that it is in the best
interest of the Company to buy back GDRs from the market for the total amount
of up to USD 10 million increased to up to USD 30 million via subsequent
Board's decision on 17 July 2012.
At 31 December 2021 and 2020, the Company held 2,135,113 of its own GDRs
(approximately 427,063 shares) that is equivalent to RR 490,607 thousand,
representing 1.6% of its issued share capital. The GDRs are held as 'treasury
shares'.
In 2020, the Company transferred 31,000 of its own GDRs (approximately 6,200
shares) from those held as treasury shares to employees of the Group
representing 0.02% of the issued share capital. No GDRs were transferred to
the employees under the share option incentive scheme during 2020 and 2021.
During 2021 and 2020 the Company did not buy back any of its own GDRs from the
market.
14 Other reserves
Share based payment reserve Other reserves Total
As at 1 January 2020/ 31 December 2020/1 January 2021/31 December 2021 1,313,691 (16,272) 1,297,419
Under share option incentive schemes for top-management of the Group, certain
employees of the Group were granted GDRs of the Company provided they remained
in their position upto a specific date in the past. The increase in equity to
reflect this transaction was recognised in the share based payment reserve.
15 Trade and other payables
31 December 31 December
2021 2020
Other payables 3,215 4,659
Payables to related parties (Note 17) 4,549 4,523
Total financial payables within trade and other payables at amortised cost 7,764 9,182
The fair value of trade and other payables which are due within one year
approximates their carrying amount at the balance sheet date.
16 Contingencies
Operating environment
Russian Federation. The Russian Federation displays certain characteristics of
an emerging market. Its economy is particularly sensitive to oil and gas
prices. The legal, tax and regulatory frameworks continue to develop and are
subject to frequent changes and varying interpretations which contribute
together with other legal and fiscal impediments to the challenges faced by
entities operating in the Russian Federation. The Russian economy continues to
be negatively impacted by ongoing political tension in the region and
international sanctions against certain Russian companies and individuals.
Starting in 2014, the United States of America, the European Union and some
other countries have imposed and gradually expanded economic sanctions against
a number of Russian individuals and legal entities. The imposition of the
sanctions has led to increased economic uncertainty, including more volatile
equity markets, a depreciation of the Russian rouble, a reduction in both
local and foreign direct investment inflows and a significant tightening in
the availability of credit. As a result, some Russian entities may experience
difficulties accessing the international equity and debt markets and may
become increasingly dependent on state support for their operations. The
longer-term effects of the imposed and possible additional sanctions are
difficult to determine. In February 2022, following the recognition of
self-proclaimed republics of Donetsk and Lugansk and the commencement of
military operations in Ukraine by the Russian Federation, additional sanctions
were introduced by the United States of America, the European Union and some
other countries against Russia. Moreover, there is an increased risk that even
further sanctions may be introduced. This may have significant adverse impact
on Russia's economy. These events have led to depreciation of the Russian
rouble, increased volatility of financial markets and significantly increased
the level of economic uncertainty in the Russian business environment. Also,
the COVID-19 coronavirus pandemic has continued to create additional
uncertainty in the business environment. Management is taking necessary
measures to ensure sustainability of the Group's operations and support its
customers and employees. However, the future effects of the current economic
situation and the above measures are difficult to predict, and management's
current expectations and estimates could differ from actual results.
Although the COVID-19 pandemic had no significant impact on business activity,
the Company and the Group is taking actions to reduce COVID-19 exposure and
support its personnel. The specifics of the Company's and the Group's business
does not allow transferring all personnel to distance work. However, the Group
did utmost to increase the share of employees handling their duties remotely.
All employees were provided with personal protective equipment and
antiseptics, and all surfaces and common areas at offices and enterprises were
given additional disinfection. Maintaining business processes and additional
focusing on occupational safety helped the Group to demonstrate strong
operating and financial results in 2021.
16 Contingencies (continued)
The financial statements reflect management's assessment of the impact of the
Russian business environment on the operations and the financial position of
the Company. The future business environment may differ from management's
assessment.
Guarantees granted to subsidiaries
Refer to Note 17 for details of guarantees granted to subsidiaries.
17 Related party transactions
Parties are generally considered to be related if the parties are under common
control or if one party has the ability to control the other party, or can
exercise significant influence or joint control over the other party in making
financial and operational decisions. In considering each possible related
party relationship, attention is directed to the substance of the relationship
and not merely the legal form. Related parties may enter into transactions,
which unrelated parties might not, and transactions between related parties
may not be effected on the same terms, conditions and amounts as transactions
between unrelated parties.
The Company is controlled by GRANADA CAPITAL CY LIMITED, incorporated in
Cyprus, which owns 56,2% of the Company's shares. The parent entity which
prepares consolidated financial statements is GRANADA CAPITAL CY LIMITED,
which is incorporated in Cyprus with registered office at 205 Archiepiskopou
Makariou, Victory House, Flat/Office 211 A, CY-3030, Limassol, Cyprus.
As at 31 December 2021 the ultimate controlling party of the Company is Mr.
Vadim Moshkovich (the "Owner"), who ultimately controls 56,2% of the total
issued shares (2020:70,7%).
As at 1 October 2021, Granada Capital CY Limited transferred to BNY Nominees
Limited 2.632.167 shares amounting to 0,01 EUR each, which represents 14,5% of
the total shares held by Granada Capital CY Limited.
Related parties of the Company fall into the following categories:
1. Entities controlled by the Owner and subsidiaries; and
2. Members of the Board of Directors and Key Management
Personnel.
1. Entities controlled by the Owner and subsidiaries
Dividend income 31 December 31 December
2021 2020
Subsidiaries 18,401,135 13,889,158
Other operating income 31 December 31 December
2021 2020
Subsidiaries 421 731
Other payables - subsidiaries 31 December 31 December
2021 2020
Total at the year ended (Note 9) 4,549 4,523
Dividends receivable - subsidiaries
Total at the year ended 9,801,993 -
Other transactions with related parties
During 2021, the Company injected RR 314,553 as share capital of Ros Agro
China Limited, without alloting and issuing new shares (Note 11).
17 Related party transactions (continued)
1. Entities controlled by the Owner and subsidiaries
(continued)
31 December 31 December
2021 2020
Borrowings - subsidiaries
At 1 January 1,104,666 -
Loans received during the year * 4,215,145 6,014,110
Loans offset ** (Note 10) - (2,100,000)
Loans repaid * (2,525,565) (3,005,372)
Foreing exchange differences ** (118,880) 152,859
Interest expense 70,470 43,069
At 31 December 2,745,836 1,104,666
* cash - flows
** non-cash flows
The loan is provided at an interest rate of 5% (2020: 1,3%) per annum, is
repayable on demand but not later than 31 December 2022 and is unsecured. As
at 31 December 2021, the loan is denominated in RR (2020: EUR).
On 1 September 2021, the Company entered in an amendment agreement with the
subsidiary and agreed to change the currency of the Loan from EUR to RR, and
the Interest rate from 1.3% to 5%. Even though the amendments to the
contractual terms are considered as substantially modified, the above changes
did not have any material effect to the balance of the loan.
Due to the short-term nature of the current financial assets and liabilities
at amortised cost, their carrying amount is considered to approximate their
fair value.
31 December 31 December
Loans issued - subsidiaries 2021 2020
At 1 January 9,031,494 6,153,491
Loans issued during the year - 12,743,197
Loans assigned from a subsidiary (Note 10) - -
Loans repaid (9,024,097) (11,039,508)
Interest income 95,638 107,575
Interest repaid (103,035) (212,694)
Foreing exchange differences - 1,279,433
At 31 December - 9,031,494
During 2020, a loan to Ros Agro Trading Limited was provided at an interest
rate of 3,75%. The loan was unsecured and repayable on demand but not later
than 18 December 2021. As at 31 December 2021 the loan was settled.
Dividends paid to entities controlled by the Owner
During the year ended 31 December 2021 the dividends paid to entities
controlled by the Owner amounted RR 14,026,673 (2020: RR 3,691,102).
17 Related party transactions (continued)
1. Entities controlled by the Owner and subsidiaries
(continued)
Guarantees granted to subsidiaries
During 2015 the Company granted a corporate guarantee covering the non -
performance by an indirect subsidiary of the Company in respect of a bank loan
for the total amount of RR 2,780.000. The guarantee was provided free of
charge and is valid until 26 November 2031.
During 2019 the Company guaranteed the punctual performance by the debtor of
all the guaranteed liabilities amounting to total EUR 14 million (equivalent
to RR 1,269,554 as at 31 December 2020 and RR 970,768 as at 31 December 2019).
During 2020 the guarantee was released following the liquidation of the
subsidiary.
During 2020 the Company guaranteed the punctual performance by the debtor of
all the guaranteed liabilities amounting to total USD 36 million (equivalent
to RR 2,659,525 as at 31 December 2020) until 28 February 2021. During 2021
the guarantee was released given the termination agreement.
During 2021 the Company has not granted any guarantees to its subsidiaries.
The fair value on initial recognition of the guarantees was not recognised as
the Board of Directors estimates that the effect on the Company's financial
statements is not significant.
2. Members of the Board of Directors and Key Management
Personnel
Share-Based Remuneration
In 2017 the Group initiated a share option incentive scheme for its
top-management. Under this scheme the employees were granted GDRs of the
Company provided they remained in their position up to a specific date in the
future. The amount of GDRs granted were dependent on the average market prices
of GDRs for the period preceding this date. Vesting period of the scheme ended
by 31 December 2019. No expenses or gains were recognized under the scheme for
the years ended 31 December 2021 and 2020, no GDRs of the Company were
transferred to the employees under the scheme in 2021 (2020: 31,000 GDRs
amounting to RR 0).
As at 31 December 2021, the share-based payment reserve accumulated in equity
as a result of the share-based payment transactions amounted to RR 1,313,691
(2020: RR 1,313,691).
Key management personnel compensation
In respect of the year ended 31 December 2021, key management personnel
compensation included in administrative expenses comprised of Directors' fees
totalling RR 27,065 and emoluments in their executive capacity totalling RR
263 (2020: Directors' fees totalling RR 26,646 and emoluments in their
executive capacity totalling RR 250).
17 Related party transactions (continued)
2. Members of the Board of Directors and Key Management
Personnel (continued)
Dividends paid to the Company Directors
During the year ended 31 December 2021 the dividends paid to the Company
Directors amounted to RR 1,478,145 (2020: RR 383,216).
Payables to Directors
As at 31 December 2021 the total payables to Directors were nil (2020: nill).
These are unsecured, bear no interest and are repayable on demand.
18 Events after the balance sheet date
Subsequent to the year ended 31 December 2021, the Board of Directors
recommends the payment of additional dividends out of the profits for the year
2021 to the amount of RR 11,928,542. Given that the Company has already paid
interim dividends for 2021 to the amount of RR 8,755,947, the total dividend
out of the profits for 2021 would amount to RR 20,684,489. The dividend per
share will be fixed at the dividend record date set on 1 April 2022. The
proposed dividend is subject to approval by the shareholders at the Annual
General Meeting. These financial statements do not reflect the dividends that
have not been approved on the reporting date.
From 1 January 2022, Timur Lipatov became Rusagro's Chief Executive Director.
Contract of Maxim Basov, previous CEO, expired on 31 December 2021.
There were no other material post balance sheet events occurring after the end
of the reporting period requiring disclosure in these parent company financial
statements.
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