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 |
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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