REG - Ros Agro PLC - 1st Quarter Results
RNS Number : 1823NRos Agro PLC18 May 2020
18 May 2020
ROS AGRO financial results for Q1 2020
18 May 2020 - Today ROS AGRO PLC (the "Company"), the holding company
of Rusagro Group (the "Group"), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the three months ended 31 March 2020.
Q1 2020 Highlights
- Sales amounted to RR 32,933 million (US$ 494 million1), an increase of RR 4,962 million (+18%) compared to Q1 2019;
- Adjusted EBITDA2 amounted to RR 5,163 million (US$ 77 million), an increase of
RR 1,892 million (+56%) compared to Q1 2019;
- Adjusted EBITDA margin rose from 12% in Q1 2019 to 16% in Q1 2020;
- Net profit for the period amounted to RR 3,198 million (US$ 48 million), an increase of RR 2,231 million (+231%);
- Net debt position3 as of 31 March 2020 amounted to RR 59,965 million (US$ 771 million);
- Net Debt/ Adjusted EBITDA (LTM4) as of 31 March 2020 was 2.73x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:
"Q1 2020 showed strong performance in terms of sales and adjusted EBITDA. All business divisions except Agriculture Segment demonstrated sales growth. Key growth drivers were higher sales volumes of oil-and-fat products due to the lease of SolPro assets, increased sales volumes of processed pork due to production expansion in Tambov Region and higher sugar sales volumes attributable to demand growth triggered by the implications of COVID-19 pandemic. Agriculture Segment's sales went down in comparison to Q1 2019 due to the decision to postpone sales of grains from 2018 to the beginning of 2019 when prices increase was expected.
However, margin of Agriculture Segment improved significantly as a result of higher income generated by soybeans export in March 2020 taking advantage of currency fluctuation and due to decrease of transportation costs because of lower grain export. Oil and Fat and Meat Segments also showed sound EBITDA margin improvement. Additional margin was drawn from SolPro product sales, that remained at SolPro entities in Q1 2019 under the tolling scheme. Meat Segment's margin improved due to the decrease of purchased animals costs after Tambov production expansion together with the increase of other income as a result of the launch of the grain elevator in Primorie and storage services provided. Sugar Segment's EBITDA margin decrease was mainly attributable to the price drop and slight increase of production support expenditures due to sugar production season extension.
In 1Q 2020 Company operated in the world pandemic environment, which had two key effects. The first one was the growth of demand for consumer products, and the second one was ruble devaluation as a result of oil price drop.
Despite several identified cases among employees, travel and logistical disruptions, government restrictions Ros Agro managed to operate all plants and construction plants at high capacity and prepare for planting well. The company implemented new production protocols, improved liquidity position and supported the medical infrastructure of the main regions of operation."
Key consolidated financial performance indicators
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales 1
32,933
27,9712
4,962
18
Gross profit
7,165
3,780
3,385
90
Gross margin, %
22%
14%
8 pp
Adjusted EBITDA 3
5,163
3,2714
1,892
58
Adjusted EBITDA margin, %
16%
12%
4 pp
Net profit for the period 5
3,198
967
2,231
231
Net profit margin %
10%
3%
6 pp
1 Sales for Agriculture segment were reallocated between 1Q19 and 2Q19, effect RR -503 million for 1Q19 and RR +503 million for 2Q19
2 Sales and COS for 1Q19 related to Oil & Fats (RR 3,507 million) and Other (RR 387 million) have been netted versus each other with no effect on Gross profit in accordance with p. 17(a) and 17(b) of IFRS15
3 Adjusted EBITDA calculation now also includes other operating income/(expenses), while other non-operating expenses are excluded, effect for 1Q19 RR -67 million
4 COS for 1Q19 related to Meat was increased to RR 360 million in part of revaluation procedure, performed at the year end
5 Net profit for the period is affected by non-cash gain/(loss) on revaluation of biological assets and agricultural produce. See details in business-sections below
Key financial performance indicators by segments
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales, incl.
32,933
27,971
4,962
18
Sugar
5,241
4,525
716
16
Meat
6,809
5,186
1,623
31
Agriculture
4,424
4,875
(451)
(9)
Oil and Fat
16,147
13,422
2,725
20
Milk Products
990
862
128
15
Other
118
46
72
157
Eliminations
(796)
(945)
149
16
Gross profit, incl.
7,165
3,780
3,385
90
Sugar
1,216
1,248
(32)
(3)
Meat
1,316
154
1,162
766
Agriculture
1,130
271
859
317
Oil and Fat
3,375
1,438
1,937
135
Milk Products
119
63
56
89
Other
5
6
(1)
(17)
Eliminations
4
600
(596)
(99)
Adjusted EBITDA, incl.
5,163
3,271
1,892
58
Sugar
1,021
1,018
3
0
Meat
1,167
686
481
71
Agriculture
1,319
888
431
49
Oil and Fat
2,012
303
1,709
564
Milk Products
(4)
(6)
2
33
Other
(399)
(648)
249
38
Eliminations
47
1,030
(983)
(95)
Adjusted EBITDA margin, %
16%
12%
4 pp
Sugar
19%
22%
(3) pp
Meat
17%
13%
4 pp
Agriculture
30%
18%
12 pp
Oil and Fat
12%
2%
10 pp
Milk Products
0%
-1%
(1) pp
Sugar Segment
The financial results of the Sugar Segment of 1Q20 compared to 1Q19 respectively are presented in the table below:
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales
5,241
4,525
716
16
Cost of sales
(4,025)
(3,274)
(751)
(23)
Net gain/ (loss) from trading derivatives
-
(3)
3
-
Gross profit
1,216
1,248
(32)
(3)
Gross profit margin
23%
28%
(5) pp
Distribution and selling expenses
(511)
(376)
(135)
(36)
General and administrative expenses
(349)
(365)
16
4
Other operating income/ (expenses), net
20
2
18
890
Other non-operating income/ (expenses), net
53
59
(6)
(10)
Operating profit
429
568
(139)
(24)
Adjusted EBITDA
1,021
1,018
3
0
Adjusted EBITDA margin
19%
22%
(3) pp
Sales increased in 1Q20 compared to 1Q19 due to sugar sales volume growth by 63%, which was partially offset by 32% price drop. Sales volumes increased as a result of demand growth attributable to the COVID-19 pandemic. In 1Q19, on the other hand, sales were postponed from the beginning of the year until February-March due to management expectation of prices upturn. Selling prices drop was caused by sugar overproduction in Russia. However, in comparison to 4Q19 sale price showed increase of 14% in 1Q20 as a result of demand growth triggered by the implications of the COVID-19 pandemic.
Sugar sales, production volumes and average sales prices per kilogram (excl. VAT) were
as follows:
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sugar production volume (in thousand tonnes)
58
18
40
228
Sales volume (in thousand tonnes)
169
104
65
63
Average sales price (rubles per kg, excl. VAT)
24.9
36.5
(11.6)
(32)
Cost of sales in 1Q20 showed in comparison to 1Q19 a slightly higher increase than Sales due to the rise in production support costs attributable to sugar production season extension together with the growth of inventory provision expenses contributing RR 84 million.
Meat Segment
The financial results of the Meat Segment of 1Q20 compared to 1Q19 respectively are presented in the table below:
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales
6,809
5,186
1,623
31
Net gain/ (loss) on revaluation of biological assets and agricultural produce
428
(359)
787
-
Cost of sales
(5,921)
(4,673)
(1,246)
(27)
Gross profit
1,316
154
1,164
766
Gross profit margin
19%
3%
16 pp
Gross profit excl. effect of biological assets revaluation
888
511
377
74
Adjusted gross profit margin
13%
10%
3 pp
Distribution and selling expenses
(204)
(157)
(47)
(30)
General and administrative expenses
(459)
(386)
(73)
(19)
Other operating income/ (expenses), net
74
(6)
80
-
incl. reimbursement of operating costs (government grants)
-
-
-
-
Other non-operating income/ (expenses), net
69
60
9
15
incl. reimbursement of non-operating costs (government grants)
-
-
-
-
Operating profit
796
(335)
1,133
-
Adjusted EBITDA
1,167
686
483
71
Adjusted EBITDA margin
17%
13%
4 pp
Sales of the Meat Segment increased by 31% in 1Q20 compared to the respective period of the prior year because of increase in production volumes of pork mainly due to launch of 3rd stage of Tambov Bacon. Sales volumes increase was partly compensated by decrease in sales price of processed pork by 7%, caused by livestock market price drop by 11% due to continuous domestic production growth and, thus, increased competition.
Pork sales volumes and the average pork sales prices per kilogram (excl. VAT) were as follows:
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales volume (in thousand tonnes), incl.
57
41
16
40
livestock pigs
5
4
1
25
processed pork
52
36
16
43
Average sale prices (rubles per kg, excl. VAT):
livestock pigs
66.7
70.7
(4.0)
(6)
processed pork
124.1
133.0
(8.9)
(7)
Cost of sales increased by 27% due to higher volumes of livestock pigs transferred to meat processing and accrual for reproductive herd revaluation, which is performed at the year-end, with effects allocated between quarters retrospectively, effect for 1Q'19 was RR -360 million
Net gain on revaluation of biological assets and agricultural produce in 1Q20 resulted mainly from an increase in market prices for livestock pigs during 1Q20 compared to market prices at the end 2019 and respective increase in fair value of livestock in the closing balance.
An increase in Distribution and selling expenses in 1Q20 compared to the same prior year period included an increase in transportation costs as a result of higher sales volume of processed pork and an increase in payroll costs related to launch of 3rd stage of Tambov Bacon, and also as a result of the rise in the costs of marketing activities.
An increase in General and administrative expenses in 1Q20 compared to prior year period related to expenses of farms in construction.
An increase in Other operating income in 1Q20 compared to the same prior year period is due to the launch of the grain elevator in Primorie.
Agricultural Segment
As at 31 March 2020 Group's area of controlled land stands at 643 thousand hectares (31 March 2019: 649 thousand hectares). The financial results of the Agricultural Segment of 1Q20 compared to 1Q19 respectively are presented below:
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales
4,424
4,875
(451)
(9)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
(447)
(1,403)
956
68
Cost of sales
(2,847)
(3,201)
354
11
Net gain/ (loss) from trading derivatives
-
-
-
-
Gross profit
1,130
271
859
317
Gross profit margin
26%
6%
20 pp
Gross profit excl. effect of biological assets and agricultural produce revaluation
1,577
1,674
(97)
(6)
Adjusted gross profit margin
36%
34%
2 pp
Distribution and selling expenses
(480)
(892)
412
46
General and administrative expenses
(315)
(272)
(43)
(16)
Other operating income/ (expenses), net
(32)
13
(45)
-
incl. reimbursement of operating costs (government grants)
-
36
(36)
-
Other non-operating income/ (expenses), net
57
(51)
108
-
incl. reimbursement of non-operating costs (government grants)
-
-
-
-
Operating profit
360
(931)
1,291
-
Adjusted EBITDA
1,319
888
395
43
Adjusted EBITDA margin
30%
18%
12 pp
Lower Sales in 1Q20 compared to 1Q19 was attributable to the management decision in 2018 to postpone sales from the end of 2018 to 1Q19 mainly due to expected increase in sales prices. In March 2020, following ruble devaluation soybean export sales volumes increased significantly improving the total segment sales for the quarter.
Sales volumes by product were as follows:
thousand tonnes
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
wheat
46
179
(134)
(75)
barley
23
49
(26)
(53)
corn
8
85
(77)
(91)
sunflower seeds
17
0
16
-
soybean
121
38
83
217
The average sale prices per kilogram (excl. VAT) were as follows:
RR per kilogram, excl. VAT
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
wheat
10.9
12.8
(1.9)
(15)
barley
10.1
11.5
(1.4)
(13)
corn
13.0
12.7
0.3
3
sunflower seeds
19.9
18.7
1.1
6
soybean
24.9
22.8
2.1
9
Net loss on revaluation of biological assets and agricultural produce in 1Q20 and 1Q19 represents the realisation of gain from crops revaluation, recognised in the previous year financial statements and remained unrealised as at the year-end.
Net gain/ (loss) on revaluation of crops and its subsequent realisation do not affect the Adjusted EBITDA figure.
Distribution and selling expenses decreased by RR 412 million as significantly lower volumes of wheat, barley and corn were exported in 1Q20 in comparison to 1Q19.
Other non-operating income/(expenses),net include result from PPE disposal and foreign exchange. Expenses of RR 51 million in 1Q19 turned into income of RR 57 million in 1Q20 as a result of foreign exchange gain of RR 52 million in 1Q20 (against nil in 1Q19) and RR 21 million gain from PPE disposal (against RR 51 million of loss in 1Q19).
Oil and Fat Segment
The financial results of the Oil and Fat Segment of 1Q20 compared to 1Q19 respectively are presented below:
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales
16,147
13,422
2,725
20
Cost of sales
(12,772)
(11,984)
(788)
(7)
Gross profit
3,375
1,438
1,937
135
Gross profit margin
21%
11%
10 pp
Distribution and selling expenses
(965)
(947)
(18)
(2)
General and administrative expenses
(530)
(320)
(210)
(66)
Other operating income/ (expenses). net
(24)
(11)
(13)
(115)
Other non-operating income/ (expenses). net
62
(7)
69
-
Operating profit/ (loss)
1,919
153
1 766
1 154
Adjusted EBITDA
2,012
303
1,709
564
Adjusted EBITDA margin
12%
2%
10 pp
The breakdown of Sales, Gross profit and Adjusted EBITDA between the Samara oil plant the Ekaterinburg fat plant and Far East plant is as follows:
In RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales, incl.
16,147
13,422
2,725
20
Samara oil plant
12,872
9,735
3,137
32
Ekat. fat plant
9,550
6,610
2,940
44
Far East
122
852
(730)
(86)
Eliminations(*)
(6,397)
(3,775)
(2,622)
(69)
Gross profit, incl.
3,375
1,438
1,937
135
Samara oil plant
2,301
836
1,465
175
Ekat. fat plant
1,309
766
543
71
Far East
(14)
43
(57)
-
Eliminations(*)
(221)
(207)
(14)
(7)
Adjusted EBITDA, incl.
2,012
303
1,709
564
Samara oil plant
1,700
196
1,504
767
Ekat. fat plant
378
105
273
260
Far East
(65)
(6)
(59)
(983)
Eliminations(*)
(1)
8
(9)
-
Adjusted EBITDA margin %
12%
2%
10 pp
Samara oil plant
13%
2%
11 pp
Ekat. fat plant
4%
2%
2 pp
Far East
(53)%
(1)%
(52) pp
(*) Intra-segment sales include sales of bulk oil from Samara oil plant and bulk and bottled oil from Far East to Ekaterinburg fat plant.
Sales volumes to third parties by product were as follows:
thousand tonnes
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
mayonnaise
31
20
11
57
margarine
10
9
1
12
bottled oil
36
31
5
17
industrial fats
77
30
47
156
bulk oil
100
111
(11)
(10)
meal
162
165
(3)
(2)
The average sale prices per kilogram (excl. VAT) for sales to third parties were as follows:
RR per kilogram. excl. VAT
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
mayonnaise
80.6
79.4
1.2
1
margarine
80.4
81.3
(0.9)
(1)
bottled oil
54.9
54.7
0.2
0
industrial fats
53.1
51.3
1.8
4
bulk oil
45.9
43.3
2.6
6
meal
12.4
15.8
(3.4)
(21)
Sales increased as a result of augmented capacity rented from SolPro (since 3Q19), and, as a result, higher sales volumes of industrial fats (RR +2.5 billion), supported by regained market share in 2H 2019, and higher sales volumes mayonnaise (RR +0.9 billion), while SolPro continued to sell own products in 1Q19. At the same time, EBITDA margin increased to 12% in 1Q20 as in 1Q19 all sales have been transferred to Rusagro, while profit remained on SolPro entities and has been further withdrawn through interest income reflected in Other segment below EBITDA. Starting from July 2019 all the SolPro plants are rented by Rusagro and margin is reflected in Rusagro EBITDA. EBITDA margin has increased by 10 pp in 1Q20 compared to 1Q19.
Increase in General and administrative expenses by RR 210 million in 1Q20 compared to the same period of the previous year is attributed to growth in employees number due to the rent of SolPro assets.
Milk Products Segment
The financial results of the Milk Products Segment of 1Q20 as compared to 1Q19 respectively are presented in the table below:
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Sales
990
862
128
15
Cost of sales
(871)
(799)
(72)
(9)
Gross profit
119
63
56
89
Gross profit margin
12%
7%
5 pp
Distribution and selling expenses
(59)
(42)
(16)
(39)
General and administrative expenses
(36)
(27)
(9)
(35)
Other operating income/ (expenses). net
(29)
-
(29)
-
Other non-operating income/ (expenses). net
(2)
(2)
-
-
Operating profit
(7)
(8)
1
12
Adjusted EBITDA
(4)
(6)
2
32
Adjusted EBITDA margin
0%
(1)%
1 pp
Group is now focusing on entering the retail chains with a consumer product, developing brands and increasing sales profitability.
Sales volumes by product were as follows:
Thousand tonnes
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
cheese and cheese product
2
2
-
15
butter and spread
0
1
(1)
-74
dry mixes
4
3
1
15
cream
1
0
1
-
The average sale prices per kilogram (excl. VAT) were as follows:
RR per kilogram. excl. VAT
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
cheese and cheese product
203.5
210.3
(6.8)
(3)
butter and spread
234.6
277.1
(42.5)
(15)
dry mixes
75.1
76.4
(1.4)
(2)
cream
192.5
0.0
192.5
-
Key consolidated cash flow indicators (not IFRS presentation*)
The key consolidated cash flow indicators presented according to management accounts methodology were as follows:
in mln Roubles
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Net cash from operating activities, incl.
6,479
3,763
2,716
72
Operating cash flow before working capital changes
5,242
2,812
2,430
86
Working capital changes
1,444
988
456
46
Net cash from investing activities, incl.
(2,020)
(2,965)
945
32
Purchases of property plant and equipment and inventories intended for construction
(2,150)
(2,968)
817
28
Net cash from financing activities
(3,923)
(1,655)
(2,267)
(137)
Net effect of exchange rate changes on cash and cash equivalents
319
(25)
344
-
Net increase / (decrease) in cash and cash equivalents
856
(883)
1,739
-
(*) See Appendix 4
The main investments in property, plant and equipment and inventories intended for construction in 1Q20 were made in the Meat Segment in the amount of RR 1,039 million (1Q19: RR 1,531 million) related to the construction project in Far East region. Investments in Sugar Segment in the amount of RR 495 million (1Q19: RR 867 million), Agriculture Segment in the amount of RR 404 million (1Q19: RR 514 million) and Oil and Fat Segment in the amount of RR 212 million (1Q19: RR 56 million) mainly relate to purchases of machinery and equipment for production facilities renewal and maintenance.
Debt position and liquidity management
in RR million
31 March 2020
31 December 2019
Variance
Units
%
Gross debt
96,956
97,876
(920)
(1)
Short-term borrowings
31,068
31,835
(767)
(2)
Long-term borrowings
65,888
66,041
(153)
(0)
Cash and cash equivalents, bank deposits and bonds
(36,991)
(36,136)
(855)
(2)
Short-term cash, deposits and bonds
(3,027)
(2,171)
(856)
(39)
Long-term cash, deposits and bonds
(33,964)
(33,965)
1
0
Net debt
59,965
61,740
(1,775)
(3)
Short-term borrowings, net
28,041
29,664
(1,623)
(5)
Long-term borrowings, net
31,924
32,076
(152)
(0)
Adjusted EBITDA (LTM4)
21,340
19,448
1,892
10
Net debt/ Adjusted EBITDA (LTM)
2.81
3.17
(0.4)
Adjusted EBITDA (LTM)* without other operating income/expenses
21,994
20,045
1,913
10
Net debt/ Adjusted EBITDA (LTM)* without other operating income/expenses
2.73
3.08
(0.35)
Net finance income/ (expense)
in RR million
Three months ended
Variance
31 March 2020
31 March 2019
Units
%
Net interest expense
(1,347)
(1,567)
220
14
Gross interest expense
(1,702)
(1,811)
109
6
Reimbursement of interest expense
355
243
111
46
Interest income
1,770
3,003
(1,233)
(41)
Net gain/ (loss) from bonds held for trading
(1)
(4)
3
75
Other financial income for business purposes, net
(1,140)
(195)
(945)
(484)
Net foreign exchange gain/ (loss)
(1,076)
(58)
(1,018)
(1,761)
Other financial income / (expenses), net
(64)
(137)
74
54
Total net finance income/ (expenses)
(718)
1,238
(1,956)
-
In 1Q20 the Group continued to enjoy benefits from the state agriculture subsidies programme. The Group continued to receive bank loans with decreased preferential interest rates under the programme of government support. Under this programme, the government provides subsidies to the banks to compensate the loss of income on credits with decreased interest rates, given by the banks to agricultural producers. In 1Q20 IFRS accounts these credits are accounted for according to its face value with no adjustments to prevailing market rates. The differences between nominal and market interest rate is presented in interest expenses in a statement of comprehensive income.
Net finance income of 1Q19 in the sum of RR 1,238 million changed to net finance expense in the amount of RR 718 million in 1Q20 as the result of negative dynamics in forex losses and change in approach for interest accrual related to SolPro rights of claim starting from 2Q19.
________________________________
(1) The exchange rates used for translation of RR amounts into USD represent average Central Bank official exchange rate for the respective reporting period for income, expenses and profits and the Central Bank official exchange rate as at the reporting date for balance figures.
(2) Adjusted EBITDA is defined as operating profit before taking into account (i) depreciation included in operating profit, (ii) other non-operating income/ (expenses), net, (iii) net gain/ (loss) on revaluation of biological assets and agricultural produce, (iv) share-based remuneration (see Appendix 2 for the detailed calculation of Adjusted EBITDA). Adjusted EBITDA is not a measure of financial performance under IFRS. It should not be considered as an alternative to profit for the period as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. We believe that Adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of subsidiaries and other investments and our ability to incur and service debt.
(3) The Group determines the net debt as short-term borrowings and long-term borrowings less cash and cash equivalents, bank deposits, bank promissory notes and bonds held for trading.
(4) LTM - The abbreviation for the "Last twelve months".
Note:
ROS AGRO PLC (LSE: AGRO) - a holding company of Rusagro Group, a leading Russian diversified food producer with vertically integrated operations in the following branches:
Sugar:
Rusagro is one of the leading Russian sugar producers (№3 with 12% share in sugar production in Russia and №1 with 50% share of cube white sugar market), producing sugar from sugar beet at nine production sites in four regions. Group produces white and brown cube sugar and packaged sugar sold under the brands Russkii Sakhar, Chaikofsky, Mon Cafe and Brauni. Sugar Segment is vertically integrated and sugar beet is supplied by Rusagro's Agriculture Segment, which ensures a consistent supply of raw material. Sugar Segment also operates a cereal plant and sell buckwheat and rice under the brand Tyoplye Traditsii.
Meat:
Rusagro is the fourth largest pork producer in Russia with 5% share of pork produced in Russia. It operates 18 commercial pork complexes with correspondence to high biosecurity standards, has own compound feed production, slaughterhouses and meat processing plants in Tambov and Belgorod Regions. Since 2016 Rusagro sells retail products under its own brand Slovo Myasnika (Butcher's word).
Agricultural:
The Group currently controls one of the largest land banks among Russian agriculture producers, with 643 thousand hectares of land under control located in the highly fertile Black Earth region of Russia (in the Belgorod, Tambov, Voronezh, Kursk and Orel regions)
and in the Far East Primorie Region. Land and production sites are strategically located within
the same regions to optimize efficiency and minimize logistical costs. Rusagro is one
of the major sugar beet producers in Russia, but it also produces wheat and barley, sunflower seeds and soybeans. These products are partially consumed by the Meat Segment, supporting a synergistic effect and lowering price change risk.Oil and Fat:
Rusagro is the leading crude sunflower oil and consumer margarine producer, second largest industrial fats and mayonnaise producerin Russia with products sold under eight key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki, Moskovskiy Provansal, Novosibirskiy Provansal, Saratovskiy Provansal, Rossiyanka and Saratovskiy Slivochniy. The Group operates (including through ownership and the lease) five crushing and three oil and fats plants. Own sunflower and soy oil production allows to control the source of the vegetable oil required to produce oil and fats products.
Milk Products:
Launched at the end of 2018 Milk Products Segment operates two plants in Samara and Ulyanovsk Regions. It produces dry industrial mixes, cheeses, butter and cream. Consumer products are sold under three brands, which are Milie, Buterbrodnoe utro and Syrnaya Kultura.
Forward-looking statements
This announcement includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements do not relate to historical or current events,
or to any future financial or operational activity of the Group.
By their nature, forward-looking statements involve risk and uncertainty because they relate
to future events and circumstances, a number of which are beyond the Rusagro Group's control. As a result, actual future results may differ materially from the plans and expectations set out
in these forward-looking statements.
The Group undertakes no obligation to release the results of any revisions to any forward-looking statements that may occur due to any change in its expectations or to reflect events
or circumstances after the date of this document.
Rusagro management is organizing a conference call about its Q1 2020 financial results for investors and analysts.
Details of the call:
Date
18 May 2020
Time
4:00 PM (Moscow) / 2:00 PM (London)
Subject
ROS AGRO PLC 1Q 2020 Financial results
UK Toll Free
UK Local Line
0 800 376 61 83
+44 207 194 37 59
USA Toll Free
USA Local Line
1 844 286 06 43
+1 646 722 49 16
Russia Toll Free
8 800 500 98 63
Russian Local Line
+7 495 646 93 15
Conference ID
14785811#
Contacts:
Svetlana Kuznetsova
Chief Investment Officer
Phone: +7 495 363 1661
E-mail: ir@rusagrogroup.ru
,
Appendix 1. Consolidated statement of comprehensive income for the Three month ended 31 March 2020 (in RR thousand)
Three months ended
31 March
2020
2019
Sales
32,933,364
27,970,942
Net gain/(loss) on revaluation of biological assets and agricultural produce
85,979
(1,959,103)
Cost of sales
(25,854,004)
(22,228,529)
Net gain/(loss) from trading derivatives
(83)
(3,281)
Gross profit
7,165,256
3,780,029
Distribution and selling expenses
(2,102,982)
(2,319,096)
General and administrative expenses
(2,009,476)
(1,878,970)
Other operating income/ (expenses), net
(89,440)
(31,576)
Other non-operating income/ (expenses), net
790,015
67,586
Operating profit / (loss)
3,753,373
(382,027)
Interest expense
(1,347,445)
(1,567,340)
Interest income
1,770,499
3,003,394
Net (loss)/gain from bonds
(859)
(3,501)
Other financial income/ (expenses), net
(1,139,998)
(195,103)
Profit before income tax
3,035,570
855,423
Income tax expense
162,198
111,722
Profit for the period
3,197,768
967,145
Other comprehensive income
Total comprehensive income for the period
3,197,768
967,145
Profit is attributable to:
Owners of ROS AGRO PLC
3,224,918
976,154
Non-controlling interest
(27,150)
(9,008)
Profit for the period
3,197,768
967,145
Total comprehensive income is attributable to:
Owners of ROS AGRO PLC
3,224,918
976,154
Non-controlling interest
(27,150)
(9,008)
Total comprehensive income for the period
3,197,768
967,145
Earnings per ordinary share for profit attributable to the owners of ROS AGRO PLC, basic and diluted
(in RR per share)119.88
36.29
Appendix 2. Segment information for the Three months ended 31 March 2020 (in RR thousand)
3M 2020
Sugar
Meat
Agriculture
Oil and Fat
Other
Eliminations
Total
Sales
5,241,009
6,808,987
4,423,982
16,146,763
1,108,524
(795,901)
32,933,364
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
427,968
(446,611)
-
-
104,622
85,979
Cost of sales
(4,025,357)
(5,920,933)
(2,847,448)
(12,771,826)
(984,859)
696,419
(25,854,004)
incl. Depreciation
(625,132)
(815,947)
(530,829)
(114,180)
(3,060)
(6,490)
(2,095,638)
Net loss from trading derivatives
(83)
-
-
-
-
-
(83)
Gross profit / (loss)
1,215,569
1,316,022
1,129,923
3,374,937
123,665
5,140
7,165,256
Distribution and Selling, General and administrative expenses
(859,774)
(662,750)
(794,994)
(1,494,368)
(521,050)
220,478
(4,112,458)
incl. Depreciation
(20,339)
(51,998)
(38,165)
(40,841)
(44,716)
6,490
(189,568)
Other operating income/(expenses), net
19,802
73,928
(31,868)
(23,683)
(54,121)
(73,498)
(89,440)
incl. Reimbursement of operating costs (government grants)
-
(314)
-
-
-
-
(314)
Other non-operating income/(expenses), net
52,569
69,183
57,150
61,716
594,335
(44,938)
790,015
incl. Reimbursement of non-operating costs (government grants)
-
-
-
-
-
-
-
Operating profit / (loss)
428,166
796,383
360,211
1,918,602
142,829
107,182
3,753,373
Adjustments:
-
Depreciation included in Operating Profit
645,471
867,945
568,994
155,021
47,775
-
2,285,206
Other non-operating (income) /expenses, net
(52,569)
(69,183)
(57,150)
(61,716)
(594,335)
44,938
(790,015)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
(427,968)
446,611
-
-
(104,622)
(85,979)
Adjusted EBITDA*
1,021,068
1,167,177
1,318,666
2,011,907
(403,731)
47,498
5,162,585
* Non-IFRS measure
Appendix 2 (continued). Segment information for the Three months ended 31 March 2019 (in RR thousand)
3M 2019
Sugar
Meat
Agriculture
Oil and Fat
Other
Eliminations
Total
Sales
4,524,875
5,186,281
4,875,000
13,421,858
908,447
(945,519)
27,970,942
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
(358,887)
(1,402,881)
-
-
(197,335)
(1,959,103)
Cost of sales
(3,273,264)
(4,673,820)
(3,200,698)
(11,984,420)
(839,501)
1,743,174
(22,228,529)
incl. Depreciation
(490,373)
(691,243)
(310,748)
(117,133)
(3,214)
(3,599)
(1,616,310)
Net gain/ (loss) from trading derivatives
(3,278)
-
-
-
(3)
0
(3,281)
Gross profit
1,248,333
153,574
271,421
1,437,438
68,943
600,320
3,780,029
Distribution and Selling, General and administrative expenses
(741,485)
(543,062)
(1,164,133)
(1,266,496)
(716,872)
233,982
(4,198,066)
incl. Depreciation
(19,418)
(32,078)
(54,040)
(25,954)
(17,349)
3,599
(145,240)
Other operating income/(expenses), net
1,619
(6,479)
13,049
(11,167)
(28,599)
-
(31,576)
incl. Reimbursement of operating costs (government grants)
-
-
35,591
-
-
-
35,591
Other non-operating income/(expenses), net
59,226
59,917
(51,316)
(7,125)
271,844
(264,960)
67,586
incl. Reimbursement of non-operating costs (government grants)
-
-
-
-
-
-
-
Operating profit / (loss)
567,694
(336,050)
(930,979)
152,650
(404,684)
569,342
(382,027)
Adjustments:
Depreciation included in Operating Profit
509,791
723,321
364,788
143,087
20,563
0
1,761,550
Other non-operating (income) /expenses, net
(59,226)
(59,917)
51,316
7,125
(271,844)
264,960
(67,586)
Net gain/ (loss) on revaluation of biological assets and agricultural produce
-
358,887
1,402,881
-
-
197,335
1,959,103
Adjusted EBITDA*
1,018,259
686,241
888,006
302,862
(655,965)
1,031,637
3,271,040
* Non-IFRS measure
Appendix 3. Consolidated statement of financial position as at 31 March 2020
(in RR thousand)
31 March 2020
31 December 2019
ASSETS
Current assets
Cash and cash equivalents
3,026,528
2,170,779
Restricted cash
48
39
Short-term investments
24,694,502
23,456,552
Trade and other receivables
7,960,500
8,068,349
Prepayments
2,936,161
3,018,658
Current income tax receivable
320,550
225,315
Other taxes receivable
3,012,720
4,349,400
Inventories and short-term biological assets
48,108,901
49,386,797
Total current assets
90,059,910
90,675,889
Non-current assets
Property, plant and equipment
81,191,003
80,629,483
Inventories intended for construction
3,355,787
3,157,369
Right-of-use assets
6,862,532
6,230,707
Goodwill
2,364,942
2,364,942
Advances paid for non-current assets
8,439,670
8,721,155
Long-term biological assets
2,457,893
2,279,335
Long-term investments and receivables
43,075,293
42,636,323
Investments in associates
200,070
165,070
Deferred income tax assets
2,480,018
1,852,983
Other intangible assets
589,690
608,635
Other non-current assets
-
173,002
Total non-current assets
151,016,898
148,819,004
Total assets
241,076,808
239,494,893
LIABILITIES and EQUITY
Current liabilities
Short-term borrowings
31,067,820
31,834,699
Lease liabilities
980,193
916,791
Trade and other payables
16,537,602
17,492,614
Current income tax payable
116,108
123,846
Other taxes payable
2,973,724
3,468,034
Total current liabilities
51,675,447
53,835,984
Non-current liabilities
Long-term borrowings
65,887,960
66,040,784
Government grants
8,281,469
8,306,779
Lease liabilities
4,343,976
3,989,801
Deferred income tax liability
863,620
494,977
Total non-current liabilities
79,377,025
78,832,341
Total liabilities
131,052,472
132,668,325
Equity
Share capital
12,269
12,269
Treasury shares
(490,607)
(490,607)
Additional paid-in capital
26,964,479
26,964,479
Other reserves
1,313,691
1,313,691
Retained earnings
82,188,553
78,960,843
Equity attributable to owners of ROS AGRO PLC
109,988,385
106,760,675
Non-controlling interest
35,951
65,893
Total equity
110,024,336
106,826,568
Total liabilities and equity
241,076,808
239,494,893
Appendix 4. Consolidated statement of cash flows for the Three months ended 31 March 2020 (in RR thousand) - NOT IFRS PRESENTATION (*)
Three months ended
31 March 2020
31 March 2019
Cash flows from operating activities
Profit before income tax
3,035,570
855,423
Adjustments for:
Depreciation and amortization
2,285,206
1,761,550
Interest expense
1,702,144
1,810,563
Government grants
(517,206)
(389,014)
Interest income
(1,770,499)
(3,003,394)
Loss / (gain) on disposal of property, plant and equipment
(21,317)
105,074
Net (gain) / loss on revaluation of biological assets and agricultural produce
(85,979)
1,959,103
Lease finance expense
61,934
47,295
Realised deferred day-one gain
(387,341)
(179,601)
Change in provision for net realisable value of inventory
58,393
(18,844)
Change in provision for impairment of receivables and prepayments
(12,203)
39,375
Foreign exchange (gain) / loss, net
998,839
51,379
Net (gain) / loss from bonds held for trading
859
3,505
Settlement of loans and accounts receivable previously written-off
(1)
(11)
Change in provision for impairment of advances paid for property, plant and equipment
82,862
12,492
Dividend income
(186,506)
-
Loss / (gain) on other investments
(149,920)
Other non-cash and non-operating expenses, net
(2,738)
(93,047)
Operating cash flow before working capital changes
5,242,017
2,811,928
Change in trade and other receivables and prepayments
433,296
1,020,443
Change in other taxes receivable
1,336,681
1,152,457
Change in inventories and short-term biological assets
1,119,080
(2,105,885)
Change in trade and other payables
(983,924)
1,820,311
Change in other taxes payable
(460,807)
(898,863)
Cash generated from operations
6,686,343
3,800,391
Income tax paid
(207,421)
(37,818)
Net cash from operating activities
6,478,922
3,762,573
Appendix 4 (continued). Consolidated statement of cash flows the Three months ended 31 March 2020 (in RR thousand) - NOT IFRS PRESENTATION (*)
Three months
Cash flows from investing activities
31 March 2020
31 March 2019
Purchases of property, plant and equipment
(1,687,268)
(2,921,781)
Purchases of other intangible assets
(70,563)
(10,656)
Proceeds from sales of property, plant and equipment
46,264
36,763
Purchases of inventories intended for construction
(462,996)
(45,962)
Purchases of associates
(28,000)
-
Dividends received
186,506
-
Movement in restricted cash
-
(147,787)
Proceeds from sale of subsidiaries, net of cash disposed
-
18,490
Proceeds from sales of other investments
-
105,872
Other investing activities
(3,744)
-
Net cash from investing activities
(2,019,801)
(2,965,061)
Cash flows from financing activities
Proceeds from borrowings
11,518,942
6,115,669
Repayment of borrowings
(14,839,577)
(11,735,057)
Interest and other finance cost paid
(732,829)
(1,024,734)
Change in cash on bank deposits*
-
2,571,104
Purchases of loan issued*
(240)
-
Loans repaid*
10,989
1,607,946
Interest received*
87,189
705,313
Proceeds from government grants
87,721
157,795
Purchases of non-controlling interest
-
(6,636)
Dividends paid to owners Ros Agro PLC
-
-
(Repayment)/proceeds of lease liabilities-principal
(54,904)
(46,780)
Other financial activities
-
33
Net cash from financing activities
(3,922,709)
(1,655,347)
Net effect of exchange rate changes on cash and cash equivalents
319,337
(25,054)
Net increase/ (decrease) in cash and cash equivalents
855,749
(882,889)
Cash and cash equivalents at the beginning of the period
2,170,779
1,728,396
Cash and cash equivalents at the end of the period
3,026,528
845,507
(*) For the purpose of conformity with the methodology of the Group's net debt calculation investments in financial assets related to financial activities are presented in Cash flows from financing activities in the Group's management accounts.
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