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1st Quarter Results

18 May 2020 08:00

RNS Number : 1823N
Ros Agro PLC
18 May 2020
 

 

 

18 May 2020

 

ROS AGRO financial results for Q1 2020

 

18 May 2020 - Today ROS AGRO PLC (the "Company"), the holding companyof 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) wereas 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 withinthe same regions to optimize efficiency and minimize logistical costs. Rusagro is oneof 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 relateto 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 outin 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 eventsor 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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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