Last checked at 21 Nov 2016 07:00
21 November 2016
ROS AGRO financial results for 9M 2016 and Q3 2016
21 November 2016 - 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 nine months ended 30 September 2016.
9M 2016 Highlights
- Sales amounted to RR 55,588 million (US$ 815 million1), an increase of RR 5,230 million compared to 9M 2015;
- Adjusted EBITDA2 amounted to RR 11,488 million (US$ 168 million), a decreaseof RR 5,623 million compared to 9M 2015;
- Adjusted EBITDA margin decreased from 34% in 9M 2015 to 21% in 9M 2016;
- Net profit for the period amounted to RR 11,203 million (US$ 164 million);
- Net debt position3 as of 30 September 2016 was negative and amounted to RR -4,657 million (US$ -74 million);
- Net Debt/ Adjusted EBITDA as of 30 September 2016 was -0.25x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:
"In Q3 2016 three businesses decreased sales year-to-year and all businesses decreased margins. This is the result of lower prices and lack of raw material in oil and fat businesses. In meat and oil and fat businesses this was the last quarter of relatively weak 12 months. We expect margins of these businesses to improve starting Q4. Integration of newly acquired companies in sugar and agricultural businesses is on track: the harvest is well and the operations are now at full capacity. We expect sugar and agricultural segments to benefit from larger production in coming quarters. High net income margin reflects good harvest in agricultural business."
Key consolidated financial performance indicators
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales | 55,588 | 50,358 | 5,230 | 10 | 17,378 | 17,769 | (391) | (2) |
Gross profit | 19,014 | 23,102 | (4,088) | (18) | 10,895 | 10,490 | 405 | 4 |
Gross margin, % | 34% | 46% | -12% | 63% | 59% | 4% | ||
Adjusted EBITDA | 11,488 | 17,112 | (5,623) | (33) | 3,418 | 6,414 | (2,997) | (47) |
Adjusted EBITDA margin, % | 21% | 34% | -13% | 20% | 36% | -16% | ||
Net profit for the period | 11,203 | 18,088 | (6,884) | (38) | 9,170 | 10,868 | (1,698) | (16) |
Net profit margin % | 20% | 36% | -16% | 53% | 61% | -8% | ||
Key financial performance indicators by segments
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales, incl. | 55,588 | 50,358 | 5,230 | 10 | 17,378 | 17,769 | (391) | (2) |
Sugar | 23,605 | 22,922 | 683 | 3 | 8,386 | 8,664 | (278) | (3) |
Meat | 12,493 | 13,432 | (939) | (7) | 4,635 | 4,956 | (320) | (6) |
Agriculture | 8,179 | 5,199 | 2,979 | 57 | 3,632 | 2,969 | 664 | 22 |
Oil and Fat | 14,560 | 12,053 | 2,507 | 21 | 2,912 | 3,860 | (949) | (25) |
Other | 76 | 28 | 48 | 170 | 27 | 9 | 17 | 183 |
Eliminations | (3,325) | (3,277) | (48) | (1) | (2,213) | (2,689) | 476 | 18 |
Gross profit, incl. | 19,014 | 23,102 | (4,088) | (18) | 10,895 | 10,490 | 405 | 4 |
Sugar | 7,719 | 8,596 | (877) | (10) | 2,374 | 3,506 | (1,132) | (32) |
Meat | 1,845 | 5,440 | (3,595) | (66) | 1,615 | 1,325 | 290 | 22 |
Agriculture | 6,970 | 5,627 | 1,343 | 24 | 6,244 | 4,708 | 1,536 | 33 |
Oil and Fat | 2,430 | 3,441 | (1,011) | (29) | 675 | 1,075 | (399) | (37) |
Other | 76 | 28 | 48 | 170 | 27 | 9 | 17 | 183 |
Eliminations | (25) | (29) | 4 | 13 | (40) | (134) | 94 | 70 |
Adjusted EBITDA, incl. | 11,488 | 17,112 | (5,623) | (33) | 3,418 | 6,414 | (2,997) | (47) |
Sugar | 6,258 | 7,533 | (1,275) | (17) | 1,859 | 3,081 | (1,222) | (40) |
Meat | 2,600 | 6,441 | (3,841) | (60) | 1,234 | 2,479 | (1,245) | (50) |
Agriculture | 2,322 | 2,079 | 243 | 12 | 690 | 1,036 | (346) | (33) |
Oil and Fat | (149) | 1,435 | (1,584) | - | (79) | 378 | (457) | - |
Other | (1,423) | (1,133) | (289) | (26) | (400) | (350) | (49) | (14) |
Eliminations | 1,880 | 756 | 1,124 | 149 | 113 | (209) | 322 | - |
Adjusted EBITDA margin, % | 21% | 34% | -13% | 20% | 36% | -16% | ||
Sugar | 27% | 33% | -6% | 22% | 36% | -13% | ||
Meat | 21% | 48% | -27% | 27% | 50% | -23% | ||
Agriculture | 28% | 40% | -12% | 19% | 35% | -16% | ||
Oil and Fat | -1% | 12% | -13% | -3% | 10% | -13% | ||
Sugar Segment
The financial results of the sugar segment for 9M 2016 and Q3 2016 compared to 9M 2015and Q3 2015 respectively are presented in the table below:
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales | 23,605 | 22,922 | 683 | 3 | 8,386 | 8,664 | (278) | (3) |
Cost of sales | (16,219) | (14,551) | (1,668) | (11) | (6,008) | (5,158) | (851) | (16) |
Net gain/ (loss) from trading derivatives | 333 | 225 | 108 | 48 | (4) | 0 | (4) | - |
Gross profit | 7,719 | 8,596 | (877) | (10) | 2,374 | 3,506 | (1,132) | (32) |
Gross profit margin | 33% | 38% | -5% | 28% | 40% | -12% | ||
Distribution and selling expenses | (1,482) | (1,196) | (286) | (24) | (542) | (441) | (101) | (23) |
General and administrative expenses | (832) | (627) | (205) | (33) | (302) | (226) | (75) | (33) |
Other operating income/ (expenses), net | 142 | (97) | 238 | - | 34 | (363) | 397 | - |
Operating profit | 5,547 | 6,676 | (1,129) | (17) | 1,564 | 2,476 | (912) | (37) |
Adjusted EBITDA | 6,258 | 7,533 | (1,275) | (17) | 1,859 | 3,081 | (1,222) | (40) |
Adjusted EBITDA margin | 27% | 33% | -6% | 22% | 36% | -13% | ||
Trading operations with rice and the beginning of sales of buckwheat products contributed to the sales growth of the segment in 9M 2016 compared to 9M 2015. Sales of rice and buckwheat in 9M 2016 amounted to RR 473 million (9M 2015: nil). Sales of sugar slightly decreased because of 4% decrease in sales volume that was partly compensated by an increase in sales price.
A decrease in sales in Q3 2016 compared to Q3 2015 was a result of a decrease in both sugar sales volume and sugar sales prices. Sales of rice and buckwheat in Q3 2016 amounted to RR 250 million (Q3 2015: nil).
Sugar sales, production volumes and average sales prices per kilogram (excl. VAT) wereas follows:
Nine months ended | Variance | Three months ended | Variance | |||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sugar production volume(in thousand tons), incl. | 241 | 357 | (116) | (32) | 173 | 174 | (1) | (1) |
beet sugar | 179 | 174 | 4 | 3 | 173 | 174 | (1) | (1) |
cane sugar | 63 | 183 | (120) | (66) | - | - | - | - |
Sales volume(in thousand tons) | 532 | 556 | (24) | (4) | 189 | 203 | (14) | (7) |
Average sales price(roubles per kg, excl. VAT) | 42.0 | 40.4 | 1.5 | 4 | 41.7 | 41.9 | (0.2) | (1) |
Higher sugar beet prices for harvest of 2015 compared to harvest of 2014 lead to an increase in costs of sales.
An increase in general and administrative expenses in 9M 2016 include RR 64 million (Q3 2016: RR 47 million) attributed to newly acquired plants, whose financial results are included in the consolidated segment's results starting 1 June 2016.
Meat Segment
The financial results of the meat segment for 9M 2016 and Q3 2016 compared to 9M 2015and Q3 2015 respectively are presented in the table below:
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales | 12,493 | 13,432 | (939) | (7) | 4,635 | 4,956 | (320) | (6) |
Net gain/ (loss) on revaluation of biological assets and agricultural produce* | 126 | (31) | 157 | - | 598 | (631) | 1,229 | - |
Cost of sales* | (10,774) | (7,961) | (2,813) | (35) | (3,618) | (3,000) | (618) | (21) |
Gross profit | 1,845 | 5,440 | (3,595) | (66) | 1,615 | 1,325 | 290 | 22 |
Gross profit margin | 15% | 40% | -26% | 35% | 27% | 8% | ||
Gross profit excl. effect of biological assets revaluation | 1,719 | 5,471 | (3,752) | (69) | 1,018 | 1,956 | (938) | (48) |
Adjusted gross profit margin | 14% | 41% | -27% | 22% | 39% | -18% | ||
Distribution and selling expenses | (187) | (75) | (112) | (149) | (70) | (28) | (42) | (152) |
General and administrative expenses | (519) | (485) | (33) | (7) | (252) | (120) | (132) | (110) |
Other operating income/ (expenses), net | 272 | 667 | (395) | (59) | 42 | 369 | (327) | (89) |
incl. reimbursement of operating costs (government grants) | 108 | 594 | (486) | (82) | - | 347 | (347) | - |
Operating profit | 1,411 | 5,547 | (4,136) | (75) | 1,335 | 1,546 | (211) | (14) |
Adjusted EBITDA | 2,600 | 6,441 | (3,841) | (60) | 1,234 | 2,479 | (1,245) | (50) |
Adjusted EBITDA margin | 21% | 48% | -27% | 27% | 50% | -23% | ||
(*) See appendix 1 for the disclosure of reclassification adjustments made to 9M and Q3 2015 figures.
A decrease in Sales was mainly caused by a decrease in pork sales prices.
Pork sales volumes and the average pork sales prices per kilogram (excl. VAT) were as follows:
Nine months ended | Variance | Three months ended | Variance | |||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales volume (in thousand tonnes), incl. | 114 | 128 | (14) | (11) | 40 | 45 | (5) | (11) |
livestock pigs | 49 | 111 | (62) | (56) | 16 | 34 | (18) | (53) |
processed pork | 64 | 16 | 48 | 293 | 24 | 11 | 13 | 119 |
Average sale prices (roubles per kg, excl. VAT): | ||||||||
livestock pigs | 89.3 | 103.0 | (13.7) | (13) | 97.5 | 107.2 | (9.7) | (9) |
processed pork | 122.0 | 115.2 | 6.8 | 6 | 129.8 | 123.8 | 6.0 | 5 |
The decrease in sales volume is linked to change in product mix. In the middle of 2015 the Group launched the slaughter house, that led to movement from sales of livestock pigs to sales of processed pigs with related decrease in volumes due to wastage.
Higher grain prices for harvest 2015 compared to harvest 2014 led to an increase in feed costs. Increased feed costs and processing costs of slaughter house led to a significant increase in costs of sales in 2016 compared to 2015.
A drop in government grants for reimbursement of operating costs in 9M and Q3 2016, minus RR 486 million and RR 347 million respectively, also contributed to the negative dynamics in operating profit and Adjusted EBITDA figures.
Agricultural Segment
As at 30 September 2016 the segment's area of controlled land stands at 607 thousand hectares. The financial results of the agricultural segment for 9M 2016 and Q3 2016 compared to 9M 2015 and Q3 2015 respectively are presented below:
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales | 8,179 | 5,199 | 2,979 | 57 | 3,632 | 2,969 | 664 | 22 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce* | 4,118 | 3,104 | 1,014 | 33 | 5,396 | 3,470 | 1,926 | 56 |
Cost of sales* | (5,328) | (2,676) | (2,651) | (99) | (2,784) | (1,730) | (1,054) | (61) |
Net gain/ (loss) from trading derivatives | 1 | - | 1 | - | - | - | - | - |
Gross profit | 6,970 | 5,627 | 1,343 | 24 | 6,244 | 4,708 | 1,536 | 33 |
Gross profit margin | 85% | 108% | -23% | 172% | 159% | 13% | ||
Gross profit excl. effect of biological assets and agricultural produce revaluation | 2,852 | 2,523 | 329 | 13 | 848 | 1,239 | (390) | (32) |
Adjusted gross profit margin | 35% | 49% | -14% | 23% | 42% | -18% | ||
Distribution and selling expenses | (887) | (555) | (333) | (60) | (321) | (254) | (67) | (26) |
General and administrative expenses | (559) | (403) | (156) | (39) | (225) | (150) | (75) | (50) |
Other operating income/ (expenses), net | 278 | (56) | 334 | - | 175 | (64) | 239 | - |
incl. reimbursement of operating costs (government grants) | 297 | 177 | 120 | 68 | 105 | 10 | 94 | 902 |
Operating profit | 5,801 | 4,613 | 1,187 | 26 | 5,873 | 4,241 | 1,633 | 38 |
Adjusted EBITDA | 2,322 | 2,079 | 243 | 12 | 690 | 1,036 | (346) | (33) |
Adjusted EBITDA margin | 28% | 40% | -12% | 19% | 35% | -16% | ||
(*) See appendix 1 for the disclosure of reclassification adjustments made to 9M and Q3 2015 figures.
An increase in sales volumes was the main driver of an increase in sales in 9M 2016and Q3 2016 compared to 9M 2015 and Q3 2015.
Sales volumes by product were as follows:
Thousand tonnes | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
sugar beet | 909 | 796 | 113 | 14 | 909 | 796 | 113 | 14 |
grain | 465 | 287 | 178 | 62 | 187 | 60 | 127 | 210 |
incl. sold to other segments | 25 | 40 | (15) | (37) | 6 | 10 | (3) | (35) |
sunflower seeds | 33 | 1 | 32 | 2,629 | - | - | - | - |
incl. sold to other segments | 21 | - | 21 | - | - | - | - | - |
Sales volumes of grain include sales of wheat, barley, corn and peas.
The average sale prices per kilogram (excl. VAT) were as follows:
RR per kilogram, excl. VAT | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
sugar beet | 2.3 | 3.0 | (0.6) | (22) | 2.3 | 3.0 | (0.6) | (22) |
wheat | 8.4 | 8.3 | 0.1 | 1 | 5.9 | 7.9 | (2.0) | (26) |
barley | 8.0 | 9.4 | (1.4) | (15) | 7.6 | 9.4 | (1.8) | (19) |
sunflower seeds | 23.6 | 20.8 | 2.9 | 14 | 22.8 | 20.0 | 2.8 | 14 |
peas | 10.5 | 12.2 | (1.8) | (14) | 10.5 | - | n/a | n/a |
corn | 8.5 | 7.0 | 1.5 | 22 | - | 7.0 | n/a | n/a |
soy | 21.8 | 21.9 | (0.1) | (0.3) | 20.0 | 18.6 | 1.4 | 8 |
General and administrative expenses increased by RR 156 million in 9M 2016 (Q3 2016: RR 75 million) as number of new companies joined the agricultural segment and the Group duringthe current year. Additionally, the higher expenses are attributed to the implementation of SAP ERP and its integration with the existing financial reporting system, and related personnel expenses.
Other operating income, net includes income from reimbursement of operating expenses (government grants), which is higher by RR 120 million in 9M 2016 and is higher by RR 94 million in Q3 2016 compared to the prior year periods. Further, a gain from the partial releaseof lost-harvest provision was recognised in 9M 2016 in amount of RR 87 million comparedto RR 125 million of loss in 9M 2015 (RR 87 million of gain in Q3 2016 against RR 8 millionof loss in Q3 2015).
Oil and Fat segment
The financial results of the oil and fat segment for 9M 2016 and Q3 2016 compared to 9M 2015 and Q3 2015 respectively are presented below:
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales | 14,560 | 12,053 | 2,507 | 21 | 2,912 | 3,860 | (949) | (25) |
Cost of sales | (12,130) | (8,613) | (3,518) | (41) | (2,236) | (2,786) | 550 | 20 |
Gross profit | 2,430 | 3,441 | (1,011) | (29) | 675 | 1,075 | (399) | (37) |
Gross profit margin | 17% | 29% | -12% | 23% | 28% | -5% | ||
Distribution and selling expenses | (2,306) | (1,868) | (438) | (23) | (663) | (662) | (0) | (0) |
General and administrative expenses | (551) | (402) | (149) | (37) | (187) | (127) | (60) | (47) |
Other operating income/ (expenses), net | 141 | 81 | 59 | 73 | 18 | (9) | 27 | - |
Operating profit/ (loss) | (286) | 1,252 | (1,538) | - | (156) | 277 | (433) | - |
Adjusted EBITDA | (149) | 1,435 | (1,584) | - | (79) | 378 | (457) | - |
Adjusted EBITDA margin | -1% | 12% | -13% | -3% | 10% | -13% | ||
The breakdown of Sales, Gross profit and Adjusted EBITDA between the Samara oil plant, the Ekaterinburg fat plant and Far East operations is as follows:
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Sales, incl. | 14,560 | 12,053 | 2,507 | 21 | 2,912 | 3,860 | (949) | (25) |
Samara oil plant | 8,332 | 6,675 | 1,656 | 25 | 1,077 | 1,565 | (489) | (31) |
Ekat. fat plant | 6,771 | 6,074 | 697 | 11 | 2,408 | 2,505 | (98) | (4) |
Far East | 2,029 | 1,335 | 694 | 52 | 324 | 464 | (140) | (30) |
Eliminations(*) | (2,572) | (2,031) | (540) | (27) | (897) | (675) | (222) | (33) |
Gross profit, incl. | 2,430 | 3,441 | (1,011) | (29) | 675 | 1,075 | (399) | (37) |
Samara oil plant | 695 | 1,510 | (815) | (54) | (6) | 236 | (242) | - |
Ekat. fat plant | 1,632 | 1,815 | (183) | (10) | 660 | 764 | (104) | (14) |
Far East | 190 | 223 | (33) | (15) | (1) | 93 | (93) | - |
Eliminations(*) | (88) | (108) | 20 | 19 | 22 | (18) | 40 | - |
Adjusted EBITDA, incl. | (149) | 1,435 | (1,584) | - | (79) | 378 | (457) | - |
Samara oil plant | 141 | 931 | (789) | (85) | (60) | 128 | (189) | - |
Ekat. fat plant | (313) | 385 | (698) | - | (23) | 174 | (197) | - |
Far East | 7 | 125 | (118) | (94) | (52) | 60 | (112) | - |
Eliminations(*) | 15 | (5) | 20 | - | 56 | 15 | 41 | 276 |
Adjusted EBITDA margin, % | -1% | 12% | -13% | -3% | 10% | -13% | ||
Samara oil plant | 2% | 14% | -12% | -6% | 8% | -14% | ||
Ekat. fat plant | -5% | 6% | -11% | -1% | 7% | -8% | ||
Far East | 0.4% | 9% | -9% | -16% | 13% | -29% | ||
Intra-segment sales include sales of raw oil from Samara oil plant to Ekaterinburg fat plant.
Far East operations in 9M and Q3 2016 include results of operations of LLC Primorskaya soya, fat plant, acquired in Q4 2015 and engaged in soya bean oil extraction and processing. Far East operations in 9M 2015 included tolling operations with soya bean on the related party's production facilities.
Sales volumes by product were as follows:
thousand tons | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
mayonnaise | 52.5 | 44.8 | 7.7 | 17 | 19.5 | 17.5 | 1.9 | 11 |
margarine | 25.2 | 31.2 | (6) | (19) | 8.0 | 11.6 | (4) | (31) |
processed sunflower oil | 6.5 | 5.2 | 1 | 25 | 1.2 | 3.0 | (1.8) | (59) |
sunflower oil, 3rd parties sales | 88 | 70 | 17 | 25 | 2 | 12 | (10) | (84) |
sunflower oil, sales to Ekat. fat plant | 42 | 47 | (5) | (10) | 14 | 15 | (1) | (5) |
sunflower meal | 94 | 104 | (10) | (10) | 9 | 18 | (9) | (51) |
soybean raw oil | - | 2.7 | n/a | n/a | - | - | - | - |
soybean processed oil | 8.2 | 4.4 | 3.8 | 85 | 2.4 | 3.7 | (1.3) | (35) |
soybean meal | 45 | 36 | 9 | 25 | 5 | 9 | (4) | (43) |
The average sale prices per kilogram (excl. VAT) for sales to third parties were as follows:
RR per kilogram, excl. VAT | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
mayonnaise | 77.0 | 71.9 | 5.1 | 7 | 77.9 | 72.6 | 5.3 | 7 |
margarine | 73.9 | 69.1 | 4.8 | 7 | 80.0 | 74.0 | 6.0 | 8 |
processed sunflower oil | 77.1 | 59.4 | 17.7 | 30 | 84.4 | 64.2 | 20.2 | 31 |
sunflower raw oil, 3rd parties sales | 54.4 | 45.8 | 8.6 | 19 | 51.2 | 49.1 | 2.2 | 4 |
sunflower meal | 12.6 | 13.4 | (0.8) | (6) | 14.2 | 15.0 | (0.8) | (5) |
soybean raw oil | 57.3 | 24.4 | 32.9 | 135 | 57.3 | 49.0 | 8.3 | 17 |
soybean processed oil | 69.6 | 56.0 | 13.6 | 24 | 70.5 | 55.2 | 15.3 | 28 |
soybean meal | 30.2 | 28.3 | 2.0 | 7 | 33.1 | 27.4 | 5.7 | 21 |
Increase in prices for sunflower seeds and sunflower raw oil that exceeded the growth of finished goods sale prices together with a continuing growth of advertising expenses in Ekaterinburg fat plant led to the decrease of profitability of the segment.
Key consolidated cash flow indicators (not IFRS presentation*)
The key consolidated cash flow indicators presented according to management accounts methodology were as follows:
in million Roubles | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Net cash from operating activities, incl. | 11,635 | 13,714 | (2,079) | (15) | 3,148 | 3,952 | (804) | (20) |
Operating cash flow before working capital changes | 11,066 | 16,026 | (4,960) | (31) | 3,238 | 5,793 | (2,555) | (44) |
Working capital changes | 1,249 | (755) | 2,005 | - | (3) | (1,496) | 1,493 | 100 |
Net cash from investing activities, incl. | (12,823) | (10,823) | (2,000) | (18) | (499) | (6,998) | 6,498 | 93 |
Purchases of property, plant and equipment and inventories intended for construction | (6,428) | (9,698) | 3,270 | 34 | (2,797) | (5,991) | 3,194 | 53 |
Net cash from financing activities | 10,411 | (6,103) | 16,514 | - | 547 | 3,563 | (3,016) | (85) |
Net increase/ (decrease) in cash and cash equivalents | 9,168 | (4,174) | 13,342 | - | 3,104 | 824 | 2,279 | 276 |
(*) See Appendix 4
The main investments in property, plant and equipment and inventories intended for construction in 9M 2016 were made in the agriculture segment in the amount of RR 3,556 million (9M 2015:RR 2,073 million), related to purchases of machinery and equipment, and in the sugar segment in the amount of RR 1,731 million (9M 2015: RR 2,266 million), related to the modernization of sugar plants.
Debt position and liquidity management
in RR million | 30 September 2016 | 31 December 2015 | Variance | |
Units | % | |||
Gross debt | 45,097 | 49,898 | (4,801) | (10) |
Short-term borrowings | 18,826 | 25,860 | (7,035) | (27) |
Long-term borrowings | 26,271 | 24,038 | 2,234 | 9 |
Cash and cash equivalents, bank deposits and bonds | (49,753) | (34,751) | (15,002) | (43) |
Short-term cash, deposits and bonds | (32,596) | (20,037) | (12,559) | (63) |
Long-term cash, deposits and bonds | (17,157) | (14,714) | (2,443) | (17) |
Net debt | (4,657) | 15,147 | (19,803) | - |
Short-term borrowings, net | (13,770) | 5,823 | (19,594) | - |
Long-term borrowings, net | 9,114 | 9,323 | (209) | (2) |
Adjusted EBITDA | 18,800 | 24,423 | (5,623) | (23) |
Net debt/ Adjusted EBITDA | (0.25) | 0.62 | (0.9) | |
Net finance income/ (expense)
in RR million | Nine months ended | Variance | Three months ended | Variance | ||||
30 September 2016 | 30 September 2015 | Units | % | 30 September 2016 | 30 September 2015 | Units | % | |
Net interest expense | (2,821) | (1,501) | (1,320) | (88) | (919) | (467) | (452) | (97) |
Gross interest expense | (3,759) | (2,569) | (1,190) | (46) | (1,165) | (919) | (246) | (27) |
Reimbursement of interest expense | 938 | 1,068 | (130) | (12) | 246 | 452 | (206) | (45) |
Interest income | 3,354 | 901 | 2,453 | 272 | 1,321 | 435 | 886 | 204 |
Net gain/ (loss) from bonds held for trading | 0 | 637 | (637) | (100) | 13 | - | 13 | - |
Other financial income, net | (996) | 2,522 | (3,517) | - | 41 | 3,321 | (3,280) | (99) |
Net foreign exchange gain/ (loss) | (1,003) | 2,538 | (3,541) | - | 18 | 3,350 | (3,332) | (99) |
Other financial income / (expenses), net | 7 | (16) | 23 | - | 23 | (29) | 52 | - |
Total net finance income/ (expenses) | (463) | 2,559 | (3,021) | - | 456 | 3,289 | (2,833) | (86) |
In 2016 the Group continued to enjoy benefits from the state agriculture subsidies programme.In 9M 2016 RR 938 million of subsidies received covered 25% of gross interest expense.
Other financial income, net relates mainly to net financial foreign exchange losses.
__________________________________
(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 operating income/ (expenses), net (other than reimbursement of operating costs (government grants)), (iii) net gain/ (loss) on revaluation of biological assets and agricultural produce, (iv) provision/ (reversal of provision) for net realizable value of agricultural products in stock, (v) 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.
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:
We are a leading Russian sugar producer, producing sugar on six production sites from both sugar beet and raw cane sugar. We produce white cube sugar and white packaged sugar sold under the brands Chaikofsky, Russkii Sakhar and Brauni. Our sugar segment is vertically integrated with sugar beet cultivation in our agriculture segment, through which we striveto ensure a consistent supply of sugar beets.
Meat:
According to the National Union of Pig Breeders, we are the second largest pork producer in Russia on the ground of relative production volumes for 2015. We have implemented best practices in biosecurity at our pig farms.
Agricultural:
The Group currently controls what it believes to be one of the largest land banks among Russian agriculture producers, with 607 thousand hectares of land under our control located in the highly fertile Black Earth region of Russia (in the Belgorod, Tambov and Voronezh 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. We believe we are oneof the major sugar beet producers in Russia, and our agricultural segment also produces winter wheat and barley, sunflower products and soybeans. These products are partially consumedby the meat segment, supporting a synergistic effect and lowering price change risk.
Oil and Fat:
We are a leading producer of mayonnaise and consumer margarine in Russia, such as "Provansal EZhK" and "Schedroe Leto". In January 2013 the Company has begun production of mayonnaise under brand "Mechta Khozyayki". Our oil extraction plant located in Samara (Samara oil plant) enables us to control the source of 100% of the vegetable oil required by our oil and fats production plant in Ekaterinburg (Ekaterinburg fat plant).
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 9M and Q3 2016 financial results for investors and analysts.
Details of call:
Date | 21 November 2016 |
Time | 4:00 PM (Moscow) /1:00 PM (London) |
Subject | ROS AGRO PLC 9M and Q3 2016 financial results |
UK Toll Free UK Local Line | 0800 358 6377 +44 203 043 2002 |
USA Toll Free USA Local Line | 800 274 0251 +1 719 325 4746 |
Russia Toll Free | +7 495 213 1767 |
Conference ID | 8624726 |
Contacts:
Svetlana Kuznetsova Chief Investment Officer Phone: +7 495 363 1661 SKuznetsova@rusagrogroup.ru |
Appendix 1. Unaudited consolidated statement of comprehensive income for the Nine months ended 30 September 2016 (in RR thousand)
Nine months ended 30 September | Three months ended 30 September | |||
2016 | 2015 | 2016 | 2015 | |
Sales | 55,588,239 | 50,357,810 | 17,378,449 | 17,769,109 |
Net gain on revaluation of biological assets and agricultural produce* | 2,572,917 | 2,572,124 | 5,923,459 | 3,100,300 |
Cost of sales* | (39,480,874) | (30,052,760) | (12,402,777) | (10,379,661) |
Net gain from trading derivatives | 333,557 | 224,971 | (3,742) | 329 |
Gross profit | 19,013,839 | 23,102,146 | 10,895,390 | 10,490,077 |
Distribution and selling expenses | (4,686,815) | (3,496,400) | (1,485,847) | (1,225,615) |
General and administrative expenses | (3,916,423) | (3,043,826) | (1,424,960) | (969,844) |
Other operating income/ (expenses), net | 1,399,748 | 339,365 | 801,627 | (78,125) |
Operating profit | 11,810,349 | 16,901,285 | 8,786,210 | 8,216,493 |
Interest expense | (2,821,212) | (1,500,931) | (918,982) | (466,969) |
Interest income | 3,354,141 | 901,109 | 1,321,256 | 434,948 |
Net gain/ (loss) from bonds held for trading | 134 | 636,601 | 13,041 | - |
Other financial income/ (expenses), net | (995,777) | 2,521,341 | 40,703 | 3,320,864 |
Profit before income tax | 11,347,635 | 19,459,406 | 9,242,228 | 11,505,336 |
Income tax expense | (144,148) | (1,371,837) | (71,764) | (637,332) |
Profit for the year | 11,203,487 | 18,087,569 | 9,170,464 | 10,868,003 |
Other comprehensive income: | ||||
Items that may be subsequently reclassified to profit and loss: | ||||
Change in value of available-for-sale financial assets | (149,528) | - | 40,229 | - |
Income tax relating to other comprehensive income | 37,951 | - | - | - |
Total comprehensive income for the period | 11,091,910 | 18,087,569 | 9,210,693 | 10,868,003 |
Profit is attributable to: | ||||
Owners of ROS AGRO PLC | 11,204,003 | 18,035,687 | 9,169,941 | 10,814,667 |
Non-controlling interest | (516) | 51,881 | 523 | 53,336 |
Profit for the period | 11,203,487 | 18,087,569 | 9,170,464 | 10,868,003 |
Total comprehensive income is attributable to: | ||||
Owners of ROS AGRO PLC | 11,092,426 | 18,035,687 | 9,210,170 | 10,814,667 |
Non-controlling interest | (516) | 51,881 | 523 | 53,336 |
Total comprehensive income for the period | 11,091,910 | 18,087,569 | 9,210,693 | 10,868,003 |
Earnings per ordinary share for profit attributable to the owners of ROSAGRO PLC, basic and diluted(in RR per share) | 475.60 | 765.60 | 389.26 | 459.08 |
(*)In 2015 full-year financial statements the Group changed the way of presentation of gain/ loss on initial recognition of agricultural produce and gain/ loss on revaluation of biological assets in the consolidated statement of comprehensive income. In the interim financial statements for 2015 and in the financial statements for 2014 and earlier periods gain/ loss arising from initial recognition of biological assets and agricultural produce and from changes in fair-value-less-cost-to-sell of biological assets was included in statement of comprehensive income within a separate line "Gain/ (loss) on revaluation of biological assets and agricultural produce" above the gross profit line. In 9M 2015 and Q3 2015 "Gain/ (loss) on revaluation of biological assets and agricultural produce" amounted to RR 10,667,008 thousand and RR 6,488,156 thousand respectively. Gain recorded on initial recognition of agricultural produce attributable to the realized agricultural produce and the result of revaluation of biological assets attributable to the realized biological assets was included within the line "Cost of sales" and amounted to RR 8,094,884 in 9M 2015 and RR 3,387,856 million in Q3 2015. Starting the full-year financial statements for 2015 these gains/ losses are included within "Net gain/ (loss) on revaluation of biological assets and agricultural produce" line above the gross profit line.
For further details refer to note 2 "Summary of significant accounting policies" of the audited consolidated financial statements for the year ended 31 December 2015.
Appendix 2. Unaudited segment information for the Nine months ended 30 September 2016 (in RR thousand)
9M 2016 | Sugar | Meat | Agriculture | Oil and Fat | Other | Eliminations | Total |
Sales | 23,605,148 | 12,492,745 | 8,178,518 | 14,560,177 | 76,417 | (3,324,766) | 55,588,239 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | 125,843 | 4,117,869 | - | - | (1,670,794) | 2,572,918 |
Cost of sales | (16,219,259) | (10,773,996) | (5,327,552) | (12,130,311) | - | 4,970,245 | (39,480,873) |
incl. Depreciation | (770,257) | (1,439,929) | (542,154) | (180,888) | - | (5,614) | (2,938,842) |
Net gain/ (loss) from trading derivatives | 332,838 | - | 720 | - | - | - | 333,558 |
Gross profit | 7,718,727 | 1,844,592 | 6,969,555 | 2,429,866 | 76,417 | (25,315) | 19,013,842 |
Distribution and Selling, General and administrative expenses | (2,313,383) | (705,708) | (1,446,254) | (2,856,275) | (1,515,308) | 233,689 | (8,603,239) |
incl. Depreciation | (82,233) | (38,853) | (77,581) | (96,370) | (16,327) | 4,359 | (307,005) |
Other operating income/(expenses), net | 141,706 | 271,864 | 277,562 | 140,654 | 13,765,299 | (13,197,338) | 1,399,748 |
incl. Reimbursement of operating costs (government grants) | - | 107,853 | 297,050 | - | - | - | 404,903 |
Operating profit | 5,547,050 | 1,410,748 | 5,800,863 | (285,755) | 12,326,408 | (12,988,964) | 11,810,351 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 852,490 | 1,478,782 | 619,735 | 277,258 | 16,327 | 1,255 | 3,245,847 |
Other operating (income) /expenses, net | (141,706) | (271,864) | (277,562) | (140,654) | (13,765,299) | 13,197,338 | (1,399,747) |
Reimbursement of operating costs (government grants) | - | 107,853 | 297,050 | - | - | - | 404,903 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | (125,843) | (4,117,869) | - | - | 1,670,794 | (2,572,918) |
Adjusted EBITDA* | 6,257,834 | 2,599,676 | 2,322,217 | (149,151) | (1,422,564) | 1,880,423 | 11,488,436 |
* Non-IFRS measure
Appendix 2 (continued). Unaudited segment information for the Nine months ended 30 September 2015 (in RR thousand)
9M 2015 | Sugar | Meat | Agriculture | Oil and Fat | Other | Eliminations | Total |
Sales | 22,922,062 | 13,431,716 | 5,199,150 | 12,053,318 | 28,265 | (3,276,701) | 50,357,810 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | (31,434) | 3,103,997 | - | - | (500,438) | 2,572,124 |
Cost of sales | (14,551,246) | (7,960,568) | (2,676,136) | (8,612,730) | - | 3,747,921 | (30,052,760) |
incl. Depreciation | (677,062) | (918,379) | (286,679) | (172,147) | - | (36,999) | (2,091,266) |
Net gain/ (loss) from trading derivatives | 224,971 | - | - | - | - | - | 224,971 |
Gross profit | 8,595,788 | 5,439,714 | 5,627,010 | 3,440,588 | 28,265 | (29,218) | 23,102,146 |
Distribution and Selling, General and administrative expenses | (1,822,903) | (560,295) | (957,276) | (2,269,452) | (1,180,372) | 250,072 | (6,540,226) |
incl. Depreciation | (83,114) | (17,817) | (50,204) | (91,936) | (18,874) | 2,037 | (259,908) |
Other operating income/(expenses), net | (96,681) | 667,203 | (56,239) | 81,188 | 15,565,306 | (15,821,412) | 339,365 |
incl. Reimbursement of operating costs (government grants) | - | 593,906 | 176,680 | - | - | - | 770,585 |
Operating profit | 6,676,203 | 5,546,622 | 4,613,495 | 1,252,324 | 14,413,198 | (15,600,558) | 16,901,285 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 760,176 | 936,196 | 336,883 | 264,083 | 18,874 | 34,962 | 2,351,174 |
Other operating (income) /expenses, net | 96,681 | (667,203) | 56,239 | (81,188) | (15,565,306) | 15,821,412 | (339,365) |
Reimbursement of operating costs (government grants) | - | 593,906 | 176,680 | - | - | - | 770,585 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | 31,434 | (3,103,997) | - | - | 500,438 | (2,572,124) |
Adjusted EBITDA* | 7,533,061 | 6,440,955 | 2,079,301 | 1,435,219 | (1,133,234) | 756,253 | 17,111,556 |
* See appendix 1 for the disclosure of reclassification adjustments made to the 9M 2015 figures.
** Non-IFRS measure
Appendix 3. Unaudited consolidated statement of financial position as at 30 September 2016 (in RR thousand)
30 September 2016 | 31 December 2015 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 13,569,447 | 4,401,703 |
Restricted cash | 1,005 | - |
Short-term investments | 21,019,851 | 30,129,049 |
Trade and other receivables | 3,892,250 | 3,504,497 |
Prepayments | 1,079,602 | 1,186,836 |
Current income tax receivable | 148,932 | 41,816 |
Other taxes receivable | 2,458,305 | 1,613,361 |
Inventories | 19,828,441 | 22,569,821 |
Short-term biological assets | 14,175,322 | 3,616,397 |
Total current assets | 76,173,155 | 67,063,480 |
Non-current assets | ||
Property, plant and equipment | 39,613,326 | 34,607,999 |
Inventories intended for construction | 43,599 | 26,851 |
Goodwill | 5,620,975 | 2,403,562 |
Advances paid for property, plant and equipment | 6,164,358 | 5,392,600 |
Long-term biological assets | 1,689,932 | 1,913,224 |
Long-term investments | 17,933,547 | 15,378,412 |
Investments in associates | 125,723 | 431,404 |
Deferred income tax assets | 1,474,830 | 1,490,657 |
Other intangible assets | 775,123 | 709,965 |
Long-term restricted cash | 3,721 | 71,142 |
Total non-current assets | 73,445,134 | 62,425,816 |
Total assets | 149,618,289 | 129,489,296 |
Liabilities and EQUITY | ||
Current liabilities | ||
Short-term borrowings | 18,825,698 | 25,860,464 |
Trade and other payables | 8,768,543 | 3,736,755 |
Current income tax payable | 28,929 | 383,535 |
Other taxes payable | 2,318,320 | 2,359,135 |
Total current liabilities | 29,941,490 | 32,339,889 |
Non-current liabilities | ||
Long-term borrowings | 26,271,240 | 24,037,539 |
Government grants | 2,468,928 | 2,043,667 |
Deferred income tax liability | 218,718 | 496,235 |
Total non-current liabilities | 28,958,886 | 26,577,441 |
Total liabilities | 58,900,376 | 58,917,330 |
Equity | ||
Share capital | 12,269 | 9,734 |
Treasury shares | (505,880) | (505,880) |
Share premium | 26,964,480 | 10,557,573 |
Share-based payment reserve | 1,152,061 | 1,263,637 |
Retained earnings | 63,063,088 | 59,219,626 |
Equity attributable to owners of ROS AGRO PLC | 90,686,018 | 70,544,690 |
Non-controlling interest | 31,895 | 27,276 |
Total equity | 90,717,913 | 70,571,966 |
Total liabilities and equity | 149,618,289 | 129,489,296 |
Appendix 4. Unaudited consolidated statement of cash flows for the Nine months ended 30 September 2016 (in RR thousand) - NOT IFRS PRESENTATION (*)
Nine months ended | ||
30 September 2016 | 30 September 2015 | |
Cash flows from operating activities | ||
Profit before income tax | 11,347,635 | 19,459,406 |
Adjustments for: | ||
Depreciation and amortization | 3,245,852 | 2,351,174 |
Interest expense | 3,759,205 | 2,568,888 |
Government grants | (1,620,283) | (1,938,913) |
Interest income | (3,354,141) | (901,109) |
Loss/ (gain) on disposal of property, plant and equipment | 71,053 | 41,948 |
Net (gain) / loss on revaluation of biological assets and agricultural produce | (2,572,917) | (2,572,124) |
Change in provision for net realisable value of inventory | 108,245 | (162,830) |
Change in provision for impairment of receivables and prepayments | (34,357) | - |
Foreign exchange (gain) / loss, net | 979,452 | (2,391,755) |
Lost harvest write-off | (86,647) | 124,781 |
Net (gain) / loss from bonds held for trading | (134) | (636,601) |
Settlement of financial assets previously written-off | (511,732) | - |
Change in provision for impairment of other taxes receivables | (259,953) | - |
Other non-cash and non-operating expenses, net | (5,405) | 83,447 |
Operating cash flow before working capital changes | 11,065,871 | 16,026,312 |
Change in trade and other receivables and prepayments | 398,982 | (492,608) |
Change in other taxes receivable | (314,769) | (753,056) |
Change in inventories | 4,702,511 | 1,759,070 |
Change in biological assets | (6,736,492) | (3,914,583) |
Change in trade and other payables | 3,384,564 | 2,747,469 |
Change in other taxes payable | (185,411) | (101,555) |
Cash generated from operations | 12,315,256 | 15,271,049 |
Income tax paid | (680,292) | (1,556,844) |
Net cash from operating activities | 11,634,964 | 13,714,205 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (6,416,732) | (9,693,621) |
Purchases of other intangible assets | (187,419) | (102,571) |
Proceeds from sales of property, plant and equipment | 59,656 | 35,136 |
Purchases of inventories intended for construction | (11,519) | (4,839) |
Investments in subsidiaries, net of cash acquired | (6,345,592) | (979,136) |
Movement in restricted cash | 66,448 | (77,651) |
Dividends received | 12,199 | - |
Proceeds from sale of subsidiaries, net of cash disposed | - | (46) |
Net cash from investing activities | (12,822,959) | (10,822,728) |
Cash flows from financing activities | ||
Proceeds from borrowings | 18,250,274 | 22,695,967 |
Repayment of borrowings | (24,846,014) | (15,717,441) |
Interest paid | (2,949,093) | (2,329,433) |
Change in cash on bank deposits* | (4,199,733) | (17,690,052) |
Purchases of bonds* | (2,566,438) | - |
Proceeds from sales of bonds* | 3,318,378 | 7,567,628 |
Loans given* | (1,268,110) | (986,470) |
Loans repaid* | 10,883,585 | 641,130 |
Interest received* | 2,444,537 | 456,450 |
Proceeds from government grants | 2,045,543 | 2,041,531 |
Purchases of non-controlling interest | - | (4,105) |
Proceeds from issue of own shares, net of transaction cost | 16,409,442 | - |
Dividends paid to owners Ros Agro PLC | (7,124,250) | (2,760,324) |
Other financial activities | 13,356 | (17,498) |
Net cash from financing activities | 10,411,477 | (6,102,618) |
Net effect of exchange rate changes on cash and cash equivalents | (55,740) | (962,741) |
Net increase/ (decrease) in cash and cash equivalents | 9,167,742 | (4,173,882) |
Cash and cash equivalents at the beginning of the period | 4,401,703 | 10,316,313 |
Cash and cash equivalents at the end of the period | 13,569,447 | 6,142,429 |
(*) 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.