Company Announcements

Half-year Report

Source: RNS
RNS Number : 2144W
Ros Agro PLC
14 August 2020
 

 

 

14 August 2020

 

ROS AGRO financial results for 1H 2020 and 2Q 2020

 

14 August 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 six months ended 30 June 2020.

 

1H 2020 Highlights

 

-     Sales amounted to RR 71,236 million (US$ 1,027 million1), an increase of RR 5,916 million (+9%) compared to 1H 2019;

-     Adjusted EBITDA2 amounted to RR 12,125 million (US$ 175 million), an increase of

RR 4,344 million (+56%) compared to 1H 2019;

-     Adjusted EBITDA margin rose from 12% in 1H 2019 to 17% in 1H 2020;

-     Net profit for the period amounted to RR 8,000 million (US$ 115 million), an increase of RR 5,432 million (+212%);

-     Net debt position3 as of 30 June 2020 amounted to RR 51,620 million (US$ 738 million);

-     Net Debt/ Adjusted EBITDA (LTM4) as of 30 June 2020 was 2.17x.

 

Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:

 

"Q2 2020 showed good results as sales and adjusted EBITDA of the Group continued to improve. Sales of Oil and Fat and Meat Segments increased significantly as the result of higher sales volumes of oil-and-fat products due to the lease of SolPro assets and increased sales volumes of processed pork due to production expansion in Tambov Region. Sugar and Agricultural Segments experienced decrease in sales mainly due to sugar sales price drop and management decision to postpone sales of sugar, wheat, barley and soybean from the beginning of 2019 towards 2Q 2019.

 

Margins of Oil and Fat and Sugar Segments contributed the most to Group's adjusted EBITDA margin improvement. High margin was drawn from SolPro product sales, while it remained at SolPro entities in 1H 2019 under the tolling scheme. Sugar Segment benefited from the significant decrease of sugar beet purchase prices as well as the launch of second line of desugarisation, which increased volumes of higher margin sugar produced out of molasses. Meat and Agricultural Segments' margins remained rather flat.

 

In 1H 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

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sales 1

71,236

65,3202

5,916

9

38,302

37,350

952

3

Gross profit

15,416

9,143

6,273

69

8,251

4,677

3,574

76

Gross margin, %

22%

14%

8 pp

 

22%

13%

9 pp

 

Adjusted EBITDA 3

12,125

7,7814

4,344

56

6,963

3,825

3,138

82

Adjusted EBITDA margin, %

17%

12%

5 pp

 

18%

10%

8 pp

 

Net profit for the period 5

8,000

2,568

5,432

212

4 802

915

3,887

425

Net profit margin %

11%

4%

7 pp

 

13%

2%

11 pp

 

1 Sales for Agriculture segment were allocated between 1Q19 and 2Q19, effect RR -503 million for 1Q19 and RR +503 million for 2Q19

2 Sales and COS for 1H19 related to Oil & Fats (RR 7,396 million) and Other (RR 457 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 1Н19 RR -449 million; Cost of Sales for Agriculture segment were allocated between 1Q19 and 2Q19, effect RR +685 million for 1Q19 and RR -685 million for 2Q19 in terms of EBITDA

4 Adjusted EBITDA for 2Q19 was decreased by RR 311 million due to revaluation procedure, performed at the year end

5 Net profit for the period is affected by non-cash loss on revaluation of biological assets and agricultural produce. See details in business-sections below

 

Key financial performance indicators by segments

in RR million

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

 

 

 

 

 

 

 

 

 

Sales, incl.

71,236

65,320

5,916

9

38,302

37,350

952

3

Sugar

14,269

15,674

(1,405)

(9)

9,028

11,149

(2,121)

(19)

Meat

14,079

11,169

2,910

26

7,270

5,983

1,287

22

Agriculture

7,670

9,157

(1,487)

(16)

3,246

4,282

(1,036)

(24)

Oil and Fat

34,444

28,941

5,503

19

18,297

15,519

2,778

18

Dairy Products

1,819

1,832

(13)

(1)

829

969

(140)

(14)

Other

289

156

133

85

170

110

60

55

Eliminations

(1,334)

(1,609)

275

17

(538)

(662)

124

19

 

 

 

 

 

 

 

 

 

Gross profit, incl.

15,415

9,142

6,273

69

8,250

4,678

3,572

76

Sugar

3,882

2,837

1,045

37

2,666

1,589

1,077

68

Meat

2,517

1,432

1,085

76

1,201

1,279

(78)

(6)

Agriculture

1,813

1,271

542

43

683

315

368

117

Oil and Fat

6,865

3,044

3,821

126

3,490

1,607

1,883

117

Dairy Products

213

150

63

42

94

86

8

9

Other

43

114

(71)

(62)

38

108

(70)

(65)

Eliminations

82

294

(212)

(72)

78

(306)

384

-

 

 

 

 

 

 

 

 

 

Adjusted EBITDA, incl.

12,125

7,781

4,344

56

6,963

3,825

3,138

82

Sugar

3,554

2,302

1,252

54

2,533

1,283

1,250

97

Meat

2,690

1,973

717

36

1,523

1,287

236

18

Agriculture

2,104

2,597

(493)

(19)

786

1,024

(238)

(23)

Oil and Fat

4,350

406

3,944

971

2,338

103

2,235

2,170

Dairy Products

(18)

1

(19)

-

(14)

9

(23)

-

Other

(615)

(813)

198

24

(216)

(164)

(52)

(32)

Eliminations

60

1,315

(1,255)

(95)

13

283

(270)

(95)

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin, %

17%

12%

5 pp

 

18%

10%

6%

 

Sugar

25%

15%

10 pp

 

28%

12%

16 pp

 

Meat

19%

18%

1 pp

 

21%

22%

   (1) pp

 

Agriculture

27%

28%

(1) pp

 

24%

24%

0 pp

 

Oil and Fat

13%

1%

12 pp

 

13%

1%

12 pp

 

Dairy Products

(1)%

0%

(1) pp pp

 

(2)%

1%

(3) pp

 

 

 

Sugar Segment

The financial results of the Sugar Segment of 1H20 and 2Q20 compared to 1H19 and 2Q19 respectively are presented in the table below:

in RR million

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sales

14,269

15,674

(1,405)

(9)

9,028

11,149

(2,121)

(19)

Cost of sales

(10,398)

(12,831)

2,433

19

(6,373)

(9,557)

3,184

33

Net gain/ (loss) from trading derivatives

11

(6)

17

-

11

(3)

14

-

Gross profit

3,882

2,837

1,045

37

2,666

1,589

1,077

68

Gross profit margin

27%

18%

9 pp

 

30%

14%

16 pp

 

Distribution and selling expenses

(1,091)

(841)

(250)

(30)

(580)

(466)

(114)

(24)

General and administrative expenses

(686)

(723)

37

5

(337)

(358)

21

6

Other operating income/ (expenses), net

95

17

78

459

75

16

59

367

Other non-operating income/ (expenses), net

468

406

62

15

415

347

68

20

Operating profit

2,668

1,696

972

57

2,239

1,128

1,111

98

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

3,554

2,302

1,252

54

2,533

1,283

1,250

97

Adjusted EBITDA margin

25%

15%

10 pp

 

28%

12%

16 pp

 

 

Sales decreased in 1H20 compared to 1H19 mainly due to sale price drop of 18% compensated by sales volumes increase of 3%. The decrease of selling prices was caused by sugar overproduction in Russia. However, in comparison to 4Q19 the sale price showed increase of 20% in 1H20 as a result of demand growth triggered by the implications of the COVID-19 pandemic, which also led to sales volumes increase. Quarterly sales volumes decreased in 2Q20 compared to 2Q19 due to management decision to postpone sales from 1Q19 to 2Q19 with expectation of prices growth. Sugar sales decrease was partially compensated by the sugar pulp sales growth of RR 635 million in 1H20 compared to 1H19 and of RR 388 million in 2Q20 compared to 2Q19.

Sugar sales, production volumes and average sales prices per kilogram (excl. VAT) were
as follows:

 

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sugar production volume

(thousand tonnes)

109

27

82

304

52

9

43

464

Sales volume

(thousand tonnes)

466

453

13

3

297

348

(51)

(15)

Average sales price

(rubles per kg, excl. VAT)

26.2

31.8

(5.6)

(18)

26.9

30.3

(3.4)

(11)

 

Cost of sales in 1H20 showed in comparison to 1H19 a higher decrease than Sales mainly due to the significant drop of sugar beet purchase prices by 36% when seasons 2019/2020 and 2018/2019 are compared. The launch of second line of desugarization at the end of 2019 led to increase of high-margin sugar produced out of molasses and therefore additional Cost of sales decrease.

 

 

Meat Segment

 

The financial results of the Meat Segment of 1H20 and 2Q20 compared to 1H19 and 2Q19 respectively are presented in the table below:

in RR million

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sales

14,079

11,169

2,910

26

7,270

5,983

1,287

22

Net gain/ (loss) on revaluation of biological assets and agricultural produce

320

(256)

576

-

(108)

103

(211)

-

Cost of sales

(11,882)

(9,481)

(2,401)

(25)

(5,961)

(4,807)

(1,154)))

(24)

Gross profit

2,517

1,432

1,085

76

1,201

1,279

(78)

(6)

Gross profit margin

18%

13%

5 pp

 

17%

21%

(4) pp

 

Gross profit excl. effect of biological assets revaluation

2,197

1,688

509

30

1,309

1,176

133

11

Adjusted gross profit margin

16%

15%

1 pp

 

18%

20%

(2) pp

 

 

 

 

 

 

 

 

 

 

Distribution and selling expenses

(559)

(368)

(191)

(52)

(354)

(211)

(143)

(68)

General and administrative expenses

(781)

(598)

(183)

(31)

(322)

(212)

(110)

(52)

Other operating income/ (expenses), net

51

(83)

134

-

(23)

(76)

53

70

incl. reimbursement of operating costs (government grants)

-

2

(2)

-

(0)

2

(2)

-

Other non-operating income/ (expenses), net

204

125

79

63

135

66

69

104

incl. reimbursement of non-operating costs (government grants)

-

-

-

-

-

-

-

-

Operating profit income/ (expenses), net

1,432

510

922

181

637

848

(211)

(25)

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

2,690

1,973

717

36

1,523

1,287

236

18

Adjusted EBITDA margin

19%

18%

1 pp

 

21%

22%

(1) pp

 

                   

Sales of the Meat Segment increased by 26% in 1H20 and by 22% in 2Q20 compared to the respective periods of the prior year because of increase in production volumes of pork mainly due to launch of 3rd stage of Tambov Bacon in 3Q19. Sales volumes increase was partly compensated by decrease in sales price of livestock pigs and processed pork by 5% and 6% respectively, due to continuous domestic production growth and, thus, increased competition.

Cost of sales increased by 25% due to higher volumes of livestock pigs transferred to meat processing.

Net gain on revaluation of biological assets and agricultural produce in 1H20 resulted mainly from an increase in market prices for livestock pigs during the period compared to market prices at the end 2019 and respective increase in fair value of livestock in the closing balance. There was a decrease of net gain on revaluation of biological assets and agricultural produce in 2Q20 as a result of culling pigs from the reproductive herd for fattening and respective reflecting the effect of their revaluation.

An increase in Distribution and selling expenses in 1H20 and 2Q20 compared to the same prior year periods due to the rise in the costs of marketing activities.
 

Pork sales volumes and the average pork sales prices per kilogram (excl. VAT) were as follows:

 

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sales volume

(thousand tonnes), incl.

116

86

30

35

59

45

14

31

livestock pigs

11

8

3

38

6

4

2

46

processed pork

105

78

27

35

53

41

12

28

Average sale prices

(rubles per kg, excl. VAT):

 

 

 

 

 

 

 

livestock pigs

69.2

73.2

(4)

(5)

71.4

76.1

(5)

(8)

processed pork

126.6

134.8

(8.2)

(6)

129.0

136.4

(7.4)

(5)

An increase in General and administrative expenses in 1H20 compared to prior year period related to expenses of farms in construction.

An increase in Other operating income in 1H20 compared to the same prior year period is due to the launch of the grain elevator in Primorie.

 

 

 

Agricultural Segment

 

As at 30 June 2020 Group's area of controlled land stands at 642 thousand hectares (30 June 2019: 648 thousand hectares). The financial results of the Agricultural Segment of 1H20 and 2Q20 compared to 1H19 and 2Q19 respectively are presented below:

in RR million

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sales

7,670

9,157

(1,487)

(16)

3,246

4,282

(1,036)

(24)

Net gain/ (loss) on revaluation of biological assets and agricultural produce

(1,006)

(2,795)

1,789

64

(560)

(1,392)

832

60

Cost of sales

(4,850)

(5,090)

240

5

(2,003)

(2,575)

572

22

Net gain/ (loss) from trading derivatives

-

-

-

-

-

-

-

-

Gross profit

1,814

1,272

542

43

683

315

368

117

Gross profit margin

24%

14%

10 pp

 

21%

7%

14 pp

 

Gross profit excl. effect of biological assets and agricultural produce revaluation

2,820

4,067

(1,247)

(31)

1,243

1,707

(464)

(27)

Adjusted gross profit margin

37%

44%

(7) pp

 

38%

40%

(2) pp

 

 

 

 

 

 

 

 

 

 

Distribution and selling expenses

(978)

(1,592)

614

39

(498)

(700)

202

29

General and administrative expenses

(619)

(591)

(28)

(5)

(304)

(319)

15

5

Other operating income/ (expenses), net

(76)

(65)

(11)

(17)

(44)

(78)

34

44

  incl. reimbursement of    

  operating costs (government   

  grants)

61

72

(11)

(15)

61

36

25

69

Other non-operating income/ (expenses), net

115

(43)

158

-

57

8

49

618

incl. reimbursement of non-operating costs (government grants)

-

-

-

-

-

-

-

-

Operating profit

256

(1,019)

1,275

-

(105)

(774)

669

86

 

-

-

 

 

-

-

 

 

Adjusted EBITDA

2,105

2,597

(492)

(19)

787

1,024

(237)

(23)

Adjusted EBITDA margin

27%

28%

(1) pp

 

24%

24%

- pp

 

Sales in 1H20 vs 1H19 decreased due to lower sales volumes of wheat, barley and corn and lower sales prices of wheat and barley. Higher soybean volumes were sold in 1H20 mainly during 1Q20. Increased volumes of export sales were supported by higher export prices due to the devaluation of the ruble in March.

Lower Sales in 2Q20 compared to 2Q19 were affected by management decision in 2018 to push sales timing towards 2Q19.

 

 

 

 

 

Sales volumes by product were as follows:

Thousand tonnes

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

wheat

82

262

(180)

(69)

36

83

(47)

(57)

barley

51

121

(70)

(58)

28

72

(44)

(61)

corn

67

125

(58)

(46)

59

40

19

47

sunflower seeds

18

8

10

125

1

8

(7)

(84)

soybean

179

130

49

38

57

91

(34)

The average sale prices per kilogram (excl. VAT) were as follows:

RR per kilogram, excl. VAT

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

wheat

 11.2  

 12.8  

(1.6)

(13)

 11.6  

 12.9  

(1.3)

(10)

barley

 9.7  

 11.2  

(1.5)

(13)

 9.5  

 11.0  

(1.5)

(14)

corn

 14.8  

 12.6  

2.2

17

 15.0  

 12.6  

2.4

20

sunflower seeds

 20.1  

 18.8  

1.3

7

 22.8  

 18.8  

4.0

21

soybean

 25.5  

 20.3  

5.2

26

 26.9  

 19.2  

7.7

40

Net loss on revaluation of biological assets and agricultural produce in 1H20 and 2Q20 vs 2019 figures 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 in 1H20 and 2Q20 vs 2019 figures as significantly lower volumes of crops were sold in the current year.

Other non-operating income/(expenses),net include result from PPE disposal and foreign exchange.

In 2Q20 Other non-operating income increased by RR 49 million compared to 2Q19 mainly as a result of higher foreign exchange gain.

 

 

Oil and Fat Segment

The financial results of the Oil and Fat Segment for 1H20 and 2Q20 compared to 1H19 and 2Q19 respectively are presented below:

in RR million

Six months ended

Variance

Three months ended

Variance

 

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

 

Sales

34,444

28,941

5,503

19

18,297

15,519

2,778

18

 

Cost of sales

(27,579)

(25,897)

(1,682)

(6)

(14,807)

(13,912)

(895)

(6)

Gross profit

6,865

3,044

3,821

126

3,490

1,607

1,883

117

 

Gross profit margin

20%

11%

9 pp

 

19%

10%

9 pp

 

 

 

 

 

 

 

 

 

 

 

 

Distribution and selling expenses

(1,808)

(2,017)

209

10

(844)

(1,070)

226

21

 

General and administrative expenses

(985)

(742)

(243)

(33)

(456)

(422)

(34)

(8)

 

Other operating income/ (expenses). net

(34)

(190)

156

82

(10)

(179)

169

94

 

Other non-operating income/ (expenses). net

(176)

(19)

(157)

(826)

(238)

(12)

(226)

(1,883)

 

Operating profit/ (loss)

3,862

76

3,786

4,982

1,943

(76)

2,019

-

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

4,350

406

3,944

971

2,338

103

2,234

2,148

 

Adjusted EBITDA margin

13%

1%

12 pp

 

13%

1%

12 pp

 

 

                     

 

Sales volumes to third parties by product were as follows:

thousand tonnes

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

mayonnaise

64

57

7

12

33

37

(4)

(10)

margarine

20

19

1

5

10

10

0

1

bottled oil

83

67

16

24

47

36

11

32

industrial fats

134

91

43

47

57

62

(5)

(7)

bulk oil

216

207

9

4

115

96

19

20

meal

317

333

(16)

(5)

155

168

(13)

(8)

 

The average sale prices per kilogram (excl. VAT) for sales to third parties were as follows:

RR per kilogram, excl. VAT

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

mayonnaise

83.1

79.9

3.2

4

85.4

80.2

5.2

7

margarine

83.3

81.0

2.3

3

86.2

80.7

5.5

7

bottled oil

58.7

53.6

5.1

10

61.6

52.7

8.9

17

industrial fats

54.9

49.7

5.2

10

57.2

48.9

8.3

17

bulk oil

47.4

43.8

3.6

8

48.7

44.4

4.3

10

meal

13.4

14.9

(1.5)

(10)

14.5

14.1

0.4

3

 

Sales increased as a result of increased capacity rented from SolPro (since 3Q19), and, as a result, higher sales volumes of industrial fats, supported by regained market share in 2H19, and higher sales volumes mayonnaise, while SolPro continued to sell own products in 1H19. At the same time, EBITDA margin increased to 13% in 1H20 as in 1H19 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 12 pp in 1H20 compared to 1H19.

Increase in General and administrative expenses by RR 243 million in 1H20 and by RR 34 million in 2Q20 compared to the prior period is attributed to higher number of employees in administrative function in Oil and Fat segment.

Decrease in Other operating expenses by RR 156 million in 1H20 and by RR 169 million in 2Q20 was mainly write-off of RR 175 million as result of sunflower technological losses in 2Q19.

Increase in Other non-operating expenses by RR 182 million in 1H20 was caused by a change in the exchange rate.
 

Dairy Products Segment

 

The financial results of the Dairy Products Segment for 1H20 and 2Q20 compared to 1H19 and 2Q19 respectively are presented in the table below:

in RR million

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Sales

1,819

1,832

(13)

(1)

829

969

(140)

(15)

Cost of sales

(1,606)

(1,682)

76

5

(735)

(883)

148

17

Gross profit

213

150

63

42

94

86

8

9

Gross profit margin

12%

8%

4 pp

 

11%

9%

2 pp

 

 

 

 

 

 

 

 

 

 

Distribution and selling expenses

(126)

(74)

(52)

(70)

(68)

(32)

(36)

(113)

General and administrative expenses

(77)

(73)

(4)

(5)

(41)

(46)

6

12

Other operating income/ (expenses). net

(30)

-

(30)

-

(1)

-

(1)

-

Other non-operating income/ (expenses). net

(1)

(2)

1

50

1

(1)

2

-

Operating profit

(21)

1

(22)

-

(14)

7

(21)

-

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

(18)

1

(19)

-

(14)

9

(23)

-

Adjusted EBITDA margin

(1)%

0%

(1) pp

 

(2)%

1%

(3) 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

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

cheese and cheese product

4

4

-

-

2

2

-

(3)

butter and spread

0

1

(1)

-

0

1

(1)

(69)

dry mixes

7

7

-

-

3

4

(1)

(19)

cream

2

0

2

-

1

0

1

-

 

The average sale prices per kilogram (excl. VAT) were as follows:

RR per kilogram, excl. VAT

Six months ended

Variance

Three months ended

Variance

 

30 June 2019

30 June 2018

Units

%

30 June 2019

30 June 2018

Units

%

 

cheese and cheese product

210.7

224.7

(14.0)

(6)

218.4

237.7

(19.3)

(8)

butter and spread

242.1

290.3

(48.2)

(17)

250.9

309.3

(58.4)

(19)

dry mixes

74.4

79.0

(4.6)

(6)

73.5

81.2

(7.7)

(9)

cream

185.9

0.0

185.9

-

175.5

0.0

175.5

-

                     

Sales of dairy products decreased in 1H20 (RR -13 million, -1%) as a result of decrease of sales volume and shift of sales volume from cheese (more expensive product) to cheese products.

Growth of Distribution and selling expenses due to brand development and promotion. Growth of General and administrative expenses due to newly hired during 2019 staff, including key personnel
 

Key consolidated cash flow indicators (not IFRS presentation*)

The key consolidated cash flow indicators presented according to management accounts methodology were as follows:

in mln Roubles

Six months ended

Variance

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Net cash from operating activities, incl.

19,053

18,823

230

1

12,574

15,060

(2,486)

(17)

Operating cash flow before working capital changes

12,864

8,665

4,200

48

7,622

5,853

1,770

30

Working capital changes

6,449

10,248

(3,800)

(37)

5,005

9,260

(4,256)

(46)

Net cash from investing activities, incl.

(4,765)

(6,108)

1,343

22

(2,745)

(3,143)

398

13

Purchases of property plant and equipment and inventories intended for construction

(4,825)

(6,405)

1,580

25

(2,675)

(3,437)

762

22

Net cash from financing activities

(13,407)

(11,651)

(1,756)

(15)

(9,484)

(9,996)

512

5

Net effect of exchange rate changes on cash and cash equivalents

173

(114)

287

-

(147)

(88)

(59)

(67)

Net increase / (decrease) in cash and cash equivalents

1,054

949

104

11

198

1,832

(1,635)

(89)

(*) See Appendix 4

The main investments in property, plant and equipment and inventories intended for construction in 1H20 were made in the Meat Segment in the amount of RR 2,083 million (1H19: RR 3,795 million) related to the construction project in Far East region. Investments in Sugar Segment in the amount of RR 913 million (1H19: RR 1,672 million), Agriculture Segment in the amount of RR 1,181 million (1H19: RR 838 million) and Oil and Fat Segment in the amount of RR 648 million (1H19: RR 100 million) mainly relate to purchases of machinery and equipment for production facilities renewal and maintenance.

 

 

Debt position and liquidity management

in RR million

30 June 2020

31 December 2019

Variance

Units

%

Gross debt

88,809

97,876

(9,067)

(9)

Short-term borrowings

25,102

31,835

(6,733)

(21)

Long-term borrowings

63,707

66,041

(2,334)

(4)

Cash and cash equivalents, bank deposits and bonds

(37,189)

(36,136)

(1,053)

(3)

Short-term cash, deposits and bonds

(3,225)

(2,171)

(1,054)

(49)

Long-term cash, deposits and bonds

(33,964)

(33,965)

1

0

Net debt

51,620

61,740

(10,120)

(16)

Short-term borrowings, net

21,877

29,664

(7,787)

(26)

Long-term borrowings, net

29,743

32,076

(2,333)

(7)

Adjusted EBITDA (LTM4)

23,793

19,448

4,345

22

Net debt/ Adjusted EBITDA (LTM)

2.17

3.17

(1.0) pp

 

Adjusted EBITDA (LTM) without other operating income/expenses

24,186

20,045

4,141

21

Net debt/ Adjusted EBITDA (LTM) without other operating income/expenses

2.13

3.08

(0.9) pp

 

Net finance income/ (expense)

in RR million

Six months ended

Three months ended

Variance

30 June 2020

30 June 2019

Units

%

30 June 2020

30 June 2019

Units

%

Net interest expense

(2,582)

(2,701)

119

4

(1,235)

(1,134)

(101)

(9)

Gross interest expense

(3,357)

(3,341)

(15)

(0)

(1,655)

(1,531)

(124)

(8)

Reimbursement of interest expense

775

640

134

21

420

397

23

6

Interest income

3,572

3,996

(424)

(11)

1,801

993

809

81

Net gain/ (loss) from bonds held for trading

(17)

(23)

6

24

(16)

(19)

3

15

Other financial income, net

(1,351)

(82)

(1,269)

(1,546)

(211)

113

(324)

-

Net foreign exchange gain/ (loss)

(1,215)

11

(1,226)

-

(138)

69

(207)

-

Other financial income / (expenses), net

(137)

(93)

(43)

(47)

(73)

44

(117)

-

Total net finance income/ (expenses)

(379)

1,190

(1,569)

-

339

(47)

386

-

 

Net debt decreased at 30 June 2020 compared at 31 December 2019 as a result of repayment of loans and borrowings received and as a result of increase in cash balances and short-term bank deposits.

In 1H20 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 1H20 IFRS accounts these credits are accounted according to its face value with no adjustments to prevailing market rates. The differences between nominal and market interest rate is presented in interest expenses in a statement of comprehensive income.

Net finance income of 1H19 in the sum of RR 1,190 million changed to net finance expense in the amount of RR 379 million in 1H20 as the result of negative dynamics in forex losses and decrease in interest income as a result of accrual of interest on rights to claims SolPro entities and interest receivable on bonds.

________________________________

(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 642 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 producer in Russia with products sold under eight key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki, Moskovskiy Provansal, Novosibirskiy Provansal, Saratovskiy Provansal, Rossiyanka and Saratovskiy Slivochniy. The Group operates (including through ownership and the lease) five crushing and three oil and fats plants. Own sunflower and soy oil production allows to control the source of the vegetable oil required to produce oil and fats products.

 

Dairy Products:

Launched at the end of 2018 Dairy 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 1H and 2Q 2020 financial results for investors and analysts.

Details of the call:

 

Date

14 August 2020

Time

4:00 PM (Moscow) / 2:00 PM (London)

Subject

ROS AGRO PLC 2Q 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

12614968#

 

 

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 Six and Three months ended 30 June 2020 (in RR thousand)

 

 

Six months ended

30 June

Three months ended

30 June

 

2020

2019

2020

2019

Sales

71,235,810

65,320,244

38,302,446

37,349,303

Net gain/(loss) on revaluation of biological assets and agricultural produce

(381,327)

(3,911,093)

(467,306)

(1,951,989)

Cost of sales

(55,449,155)

(52,260,687)

(29,595,151)

(30,717,410)

Net gain/(loss) from trading derivatives

10,556

(5,823)

10,639

(2,542)

Gross profit

15,415,884

9,142,641

8,250,628

4,677,362

 

 

 

 

 

Distribution and selling expenses

(4,315,568)

(4,918,258)

(2,212,587)

(2,599,163)

General and administrative expenses

(3,682,032)

(3,455,599)

(1,672,556)

(1,576,627)

Other operating income/ (expenses), net

(173,149)

(375,776)

(83,708)

(344,200)

Other non-operating income/ (expenses), net

1,616,650

1,059,262

826,635

991,675

Operating profit / (loss)

8,861,785

1,452,270

5,108,412

1,149,047

 

 

 

 

 

Interest expense

(2,582,278)

(2,701,155)

(1,234,833)

(1,133,815)

Interest income

3,571,808

3,996,008

1,801,308

992,612

Net (loss)/gain from bonds

(17,002)

(22,515)

(16,143)

(19,013)

Other financial income/ (expenses), net

(1,351,245)

(82,101)

(211,247)

113,001

Profit before income tax

8,483,068

2,642,507

5,447,497

1,101,832

 

 

 

 

 

Income tax expense

(483,072)

(74,746)

(645,269)

(186,465)

Profit for the period

7,999,996

2,567,761

4,802,228

915,367

 

 

 

 

 

Other comprehensive income

 

 

 

 

Total comprehensive income for the period

7,999,996

2,567,761

4,802,228

915,367

 

 

 

 

 

Profit is attributable to:

 

 

 

 

Owners of ROS AGRO PLC

8,034,829

2,590,348

4,809,911

928,945

Non-controlling interest

(34,833)

(22,586)

(7,683)

(13,578)

Profit for the period

7,999,996

2,567,761

4,802,228

915,367

 

 

 

 

 

Total comprehensive income is attributable to:

 

 

 

 

Owners of ROS AGRO PLC

8,034,829

2,590,348

4,809,911

928,945

Non-controlling interest

(34,833)

(22,586)

(7,683)

(13,578)

Total comprehensive income for the period

7,999,996

2,567,761

4,802,228

915,367

 

 

 

 

 

Earnings per ordinary share for profit attributable to the owners of ROS AGRO PLC, basic and diluted
(in RR per share)

298.65

96.30

178.77

34.53

 

Appendix 2. Segment information for the Six months ended 30 June 2020 (in RR thousand)

 

 

1H 2020

Sugar

Meat

Agriculture

Oil and Fat

Other

Eliminations

Total

Sales

14,268,955

14,079,193

7,669,632

34,444,160

2,107,471

(1,333,601)

71,235,810

Net gain/ (loss) on revaluation of biological assets and agricultural produce

-

320,426

(1,006,369)

-

-

304,616

(381,327)

Cost of sales

(10,397,787)

(11,881,721)

(4,850,232)

(27,579,255)

(1,851,412)

1,111,252

(55,449,155)

incl. Depreciation

(1,316,686)

(1,670,932)

(823,449)

(234,117)

(5,809)

(8,858)

(4,059,851)

Net loss from trading derivatives

10,556

-

-

-

-

-

10,556

Gross profit / (loss)

3,881,724

2,517,898

1,813,031

6,864,905

256,059

82,267

15,415,884

Distribution and Selling, General and administrative expenses

(1,776,525)

(1,339,052)

(1,596,788)

(2,793,445)

(932,687)

440,897

(7,997,600)

incl. Depreciation

(37,737)

(109,775)

(134,094)

(77,863)

(88,504)

8,858

(439,116)

Other operating income/(expenses), net

94,547

50,585

(75,780)

(33,884)

(51,181)

(157,435)

(173,149)

incl. Reimbursement of operating costs (government grants)

72,144

(439)

60,951

86,569

-

-

219,225

Other non-operating income/(expenses), net

467,585

203,824

114,620

(176,136)

5,635,172

(4,628,415)

1,616,650

incl. Reimbursement of non-operating costs (government grants)

-

-

-

-

-

-

-

Operating profit / (loss)

2,667,331

1,433,255

255,083

3,861,440

4,907,363

(4,262,687)

8,861,785

Adjustments:

 

 

 

 

 

 

 

Depreciation included in Operating Profit

1,354,423

1,780,707

957,543

311,980

94,313

-

4,498,966

Other non-operating (income) /expenses, net

(467,585)

(203,824)

(114,620)

176,136

(5,635,172)

4,628,415

(1,616,650)

Net gain/ (loss) on revaluation of biological assets and agricultural produce

-

(320,426)

1,006,369

-

-

(304,616)

381,327

Adjusted EBITDA*

3,554,169

2,689,712

2,104,375

4,349,556

(633,496)

61,112

12,125,428

 

* Non-IFRS measure

 

 

Appendix 2 (continued). Segment information for the Six months ended 30 June 2019 (in RR thousand)

 

 

1H 2019

Sugar

Meat

Agriculture

Oil and Fat

Other

Eliminations

Total

Sales

   15,674,283   

11,169,171

9,156,605

28,940,747

1,987,194

(1,607,756)

65,320,244

Net gain/ (loss) on revaluation of biological assets and agricultural produce

-

(255,627)

(2,794,959)

-

-

(860,507)

(3,911,093)

Cost of sales

(12,831,202)

(9,480,699)

(5,090,364)

(25,896,557)

(1,724,163)

2,762,298

(52,260,687)

incl. Depreciation

(971,860)

(1,271,581)

(658,246)

(236,525)

(6,381)

(5,853)

(3,150,446)

Net gain/ (loss) from trading derivatives

(5,817)

-

-

-

(6)

-

(5,823)

Gross profit

2,837,264

1,432,845

1,271,282

    3,044,190

263,025

294,035

        9,142,641

Distribution and Selling, General and administrative expenses

(1,565,172)

(965,518)

(2,182,756)

(2,759,082)

(1,061,815)

160,486

(8,373,857)

incl. Depreciation

(40,251)

(61,621)

(120,082)

(74,453)

(35,909)

5,853

(326,463)

Other operating income/(expenses), net

17,360

(82,930)

(64,679)

(190,234)

(55,293)

-

(375,776)

incl. Reimbursement of operating costs (government grants)

-

1,575

71,783

-

-

-

73,358

Other non-operating income/(expenses), net

406,349

125,498

(43,305)

(19,260)

10,944,321

(10,354,341)

1,059,262

incl. Reimbursement of non-operating costs (government grants)

-

-

-

-

-

-

-

Operating profit / (loss)

1,695,801

509,895

(1,019,458)

75,614

10,090,238

(9,899,820)

1,452,270

Adjustments:

 

 

 

 

 

 

 

Depreciation included in Operating Profit

1,012,111

1,333,202

778,328

310,978

42,290

-

3,476,909

Other non-operating (income) /expenses, net

(406,349)

(125,498)

43,305

19,260

(10,944,321)

10,354,341

(1,059,262)

Net gain/ (loss) on revaluation of biological assets and agricultural produce

-

255,627

2,794,959

-

-

860,507

3,911,093

Adjusted EBITDA*

2,301,563

1,973,226

2,597,134

405,852

(811,793)

1,315,028

7,781,010

 

* Non-IFRS measure

 

 

 

 

Appendix 3. Consolidated statement of financial position as at 30 June 2020
(in RR thousand)

 

 

 

30 June 2020

31 December 2019

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

3,224,443

2,170,779

Restricted cash

44

39

Short-term investments

23,498,905

23,456,552

Trade and other receivables

7,106,118

8,068,349

Prepayments

2,486,015

3,018,658

Current income tax receivable

390,054

225,315

Other taxes receivable

3,365,188

4,349,400

Inventories and short-term biological assets

45,023,884

49,386,797

Total current assets

85,094,651

90,675,889

 

 

 

Non-current assets

 

 

Property, plant and equipment

83,029,805

80,629,483

Inventories intended for construction

3,566,226

3,157,369

Right-of-use assets

6,209,375

6,230,707

Goodwill

2,364,942

2,364,942

Advances paid for non-current assets

6,646,467

8,721,155

Long-term biological assets

2,306,739

2,279,335

Long-term investments and receivables

42,633,422

42,636,323

Investments in associates

200,070

165,070

Deferred income tax assets

2,611,150

1,852,983

Other intangible assets

592,790

608,635

Other non-current assets

47,477

173,002

Total non-current assets

150,208,463

148,819,004

Total assets

235,303,114

239,494,893

 

 

 

LIABILITIES and EQUITY

 

 

Current liabilities

 

 

Short-term borrowings

25,101,545

31,834,699

Lease liabilities

841,340

916,791

Trade and other payables

17,379,947

17,492,614

Current income tax payable

288,547

123,846

Other taxes payable

2,807,425

3,468,034

Total current liabilities

46,418,804

53,835,984

 

 

 

Non-current liabilities

 

 

Long-term borrowings

63,707,011

66,040,784

Government grants

8,340,857

8,306,779

Lease liabilities

3,954,209

3,989,801

Deferred income tax liability

1,272,019

494,977

Total non-current liabilities

77,274,096

78,832,341

Total liabilities

123,692,900

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

83,782,115

78,960,843

Equity attributable to owners of ROS AGRO PLC

111,581,947

106,760,675

Non-controlling interest

28,267

65,893

Total equity

111,610,214

106,826,568

Total liabilities and equity

235,303,114

239,494,893

 

 

 

Appendix 4. Consolidated statement of cash flows for the Six months ended 30 June 2020 (in RR thousand) - NOT IFRS PRESENTATION (*)

 

Six months ended

 

30 June 2020

30 June 2019

Cash flows from operating activities

 

 

Profit before income tax

8,483,068

2,642,507

Adjustments for:

 

 

Depreciation and amortization

4,498,966

3,476,909

Interest expense

3,356,941

3,319,155

Government grants

(1,306,625)

(950,006)

Interest income

(3,571,808)

(3,996,008)

Loss / (gain) on disposal of property, plant and equipment

(50,577)

93,300

Net (gain) / loss on revaluation of biological assets and agricultural produce

381,327

3,911,093

Lease finance expense

129,700

107,863

Realised deferred day-one gain

(823,967)

(359,202)

Change in provision for net realisable value of inventory

366,003

273,376

Change in provision for impairment of receivables and prepayments

(4,045)

71,869

Foreign exchange (gain) / loss, net

1,361,408

19,874

Lost harvest write-off

179,563

82,785

Net (gain) / loss from bonds held for trading

17,002

22,515

Settlement of loans and accounts receivable previously written-off

(2)

(11)

Change in provision for impairment of advances paid for property, plant and equipment

113,203

29,235

Dividend income

(186,506)

-

Gain on sale of subsidiaries, net

-

(364,880)

Loss / (gain) on other investments

-

575

Other non-cash and non-operating expenses, net

(79,171)

283,800

Operating cash flow before working capital changes

12,864,480

8,664,749

Change in trade and other receivables and prepayments

1,307,967

(2,152,188)

Change in other taxes receivable

984,212

631,855

Change in inventories and short-term biological assets

3,978,409

4,609,438

Change in trade and other payables

618,965

7,127,098

Change in other taxes payable

(441,051)

32,176

Cash generated from operations

19,312,982

18,913,128

Income tax paid

(259,734)

(90,134)

Net cash from operating activities

19,053,248

18,822,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix 4 (continued). Consolidated statement of cash flows the Six months ended 30 June 2020 (in RR thousand) - NOT IFRS PRESENTATION (*)

 

 

 

Six months

Cash flows from investing activities

30 June 2020

30 June 2019

Purchases of property, plant and equipment

(4,016,179)

(5,643,964)

Purchases of other intangible assets

(237,792)

(47,092)

Proceeds from sales of property, plant and equipment

79,507

142,458

Purchases of inventories intended for construction

(808,586)

(761,049)

Purchases of associates

(35,000)

-

Dividends received

186,506

-

Movement in restricted cash

-

(277,327)

Proceeds from sale of subsidiaries, net of cash disposed

-

478,710

Other investing activities

66,487

-

Net cash from investing activities

(4,765,057)

(6,108,264)

Cash flows from financing activities

 

 

Proceeds from borrowings

31,110,339

19,753,266

Repayment of borrowings

(42,937,117)

(34,813,882)

Interest and other finance cost paid

(2,161,798)

(3,040,947)

Change in cash on bank deposits*

-

2,594,903

Proceeds from sales of bonds with maturity over three months*

-

2,323,560

Purchases of loan issued*

(1,840)

(87,189)

Loans repaid*

696,560

1,629,718

Interest received*

2,628,790

2,741,880

Proceeds from government grants

544,868

770,390

Dividends paid to owners Ros Agro PLC

(3,216,539)

(3,401,828)

(Repayment)/proceeds of lease liabilities-principal

(70,432)

(121,227)

Net cash from  financing activities

(13,407,169)

(11,651,356)

Net effect of exchange rate changes on cash and cash equivalents

172,642

(114,008)

Net increase/ (decrease) in cash and cash equivalents

1,053,664

949,366

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

3,224,443

2,677,762

 

 

(*) 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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