Ros Agro S Regulatory News (AGRO)

4 March 2024

ROS AGRO PLC financial results for 12M 2023 and 4Q 2023

4 March 2024 - Today ROS AGRO PLC (the "Company"), the holding company of Rusagro Group (the "Rusagro"), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the third quarter and the nine months ended 31 December 2023.

12M 2023 HIGHLIGHTS:

- Sales amounted to RUB 277,328 million (US$ 3,252 million1), an increase of RUB 37,098 million (+15%) compared to 2022;

- Adjusted EBITDA2 amounted to RUB 56,560 million (US$ 663 million), an increase of RUB 11,545 million (+26%) compared to 2022;

- Adjusted EBITDA margin increased to 20% in 2023 from 19% in 2022;

- Net profit for the period amounted to RUB 48,706 million (US$ 571 million), an increase of RUB 41,920 million (+618%);

- Net debt position3 as of 31 December 2023 amounted to RUB 66,476 million (US$ 741 million);

- Net Debt/Adjusted EBITDA (LTM4) as of 31 December 2023 was 1.18x.

Commenting on the results, Timur Lipatov, CEO of Rusagro, said:

"In 2023 Rusagro has demonstrated record financial results in terms of revenue, adjusted EBITDA and net profit. Revenue increased by 15%, adjusted EBITDA has grown by 126%, net profit amounted to RUB 48.7 billion and net debt decreased by 33%.

Revenue of all business segments, except Oil and Fat, increased in 2023 with the most significant contribution of Agricultural segment, where higher volumes were sold, and Sugar segment, where both sales volumes and prices increased. Oil and Fat segment's revenue decreased due to the fall of world prices for oil and fat products as well as lower production volumes caused by the suspension of the oil extraction plant in Balakovo for modernization, which was completed in August 2023 and led to the increase in the production capacity by 30%.

The acquisition of NMGK business brings Rusagro significant synergies, which also are reflected in the Group's financial results.

Rusagro Group's adjusted EBITDA in 2023 improved across all business segments, except Oil and Fat, mostly attributable to increased sales volumes supported by higher prices following the USD to RUB exchange rate while costs growth was contained on the Group level.

Net profit of the Group increased due to higher Adjusted EBITDA, positive exchange rate dynamics and the consolidation of the financial results of NMGK."

1 Several adjustments were made to the published 9M and 3Q 2022 key financial indicators:

? Gross profit and Net profit for 4Q 2022 was decreased by RUB 1,057 million and RUB 845 million correspondingly to reflect the distribution of depreciation expenses in Oil and Fat segment between the quarters of 2022;

? Gross profit for 4Q 2022 was increased by RUB 572 million to reflect the distribution of depreciation expenses in Meat segment between the quarters of 2022;

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

Note: since some indicators and percentages in the press release were rounded to the nearest whole number, the sum of the rounded values may not fully match the totals.

SUGAR SEGMENT

In 12M 2023 Sugar segment earned RUB 19,171 million of adjusted EBITDA (+22% y-o-y) with 30% margin (-2 pp y-o-y).

The financial results of the Sugar Segment of 12M 2023 and 4Q 2023 compared to 12M 2022 and 4Q 2022 are presented in the table below:

In 4Q 2023 and 12M 2023 compared to the respective periods of 2022 Sales of Sugar segment increased by 131% and 31%, correspondingly, mainly due to the growth of sugar sales volumes supported by the growth of market prices. Sales volume growth is attributable to the increase in production volumes and higher export.

Cost of sales in 4Q 2023 increased following the growth of production volumes and sugar beet prices of new season 2023-2024. Cost of sales increased in 2023 compared to 2022 following the growth of volumes as well as higher sugar beet and its processing costs per unit of sugar because of lower quality and sugar content of beet in season 2022-2023 compared to the previous season.

Other operating income/ (expenses), net in 4Q and 12M 2023 increased mainly due to the positive dynamics of the operating forex differences and the gain from forward contracts for the purchase of foreign currency.

MEAT SEGMENT

In 12M 2023 Meat segment earned RUB 5,010 million of adjusted EBITDA (+209% y-oy) with 10% margin (+7 pp y-o-y).

The financial results of the Meat segment of 12M 2023 and 4Q 2023 compared to 12M 2022 and 4Q 2022 respectively are presented in the table below.

Sales of the Meat segment increased by 8% in 4Q 2023 compared to the respective period of 2022 mainly due to increase of sales prices for both meat products and livestock.

In 12M 2023 compared to the same period in 2022 Sales of Meat segment increased by 11% supported by the higher sales prices for meat products.

Cost of sales decreased by 17% in 4Q 2023 compared to the respective period of 2022 due to lower sales volumes. In 12M 2023 compared to the respective period of 2022 Cost of sales decreased by 3% following the lower sales volumes.

Net loss on revaluation of biological assets and agricultural produce in 4Q 2023 resulted from the decrease in fair value of consumable livestock pigs while costs for consumable livestock pigs remained stable. Net gain on revaluation of biological assets and agricultural produce in 12M 2023 resulted from the increase in fair value and at the same time the decrease in costs for consumable livestock pigs during the reporting period compared to the respective figures at the beginning of 2023.

Other operating expenses in 4Q 2023 and 12M 2023 showed negative dynamics mainly due to additional costs caused by the outbreak of African swine fever and one-off gain for the reversal of provision for legal claims and government grants for part of the cost of livestock feed in 2022.

AGRICULTURAL SEGMENT

As at 31 December 2023 Rusagro's area of controlled land stands at 685 thousand hectares(31 December 2022: 660 thousand hectares).

The financial results of the Agricultural Segment of 12M 2023 and 4Q 2023 compared to 12M 2022 and 4Q 2022 respectively are presented below.

In 12M 2023 Agriculture segment earned RUB 16,961 million of adjusted EBITDA (+74%y-o-y) with 30% margin (-1 pp y-o-y).

In 4Q 2023 in comparison to 4Q 2022 Sales of the Agriculture segment increased by 123% to RUB 33,130 million mainly due to higher sales volumes of sugar beet and soybean.

In 2023 compared to 2022 Sales of Agriculture segment increased by 78% to RUB 56,919 million mainly due to higher sales volumes of all crops and the increase in sugar beet price, compensated by the decrease in soybean, wheat and sunflower prices.

Increase in sales volumes of sugar beet in 4Q 2023 and 12M 2023 is attributable to higher yields and larger area of cultivation as well as the shift of harvesting in 2022 to 2023. Sugar beet sales prices increased following the sugar prices dynamics.

Increase in sales volumes of soybean in 4Q 2023 and 12M 2023 is mainly caused by the shift in harvesting from 2022 to 2023 due to bad weather conditions, as well as increased yields in 2023. The growth of sunflower sales volumes is also attributable to the shift of harvesting in 2022.

Increase in sales of wheat in 12M 2023 was caused by sales of carryover stocks from previous year.

Sales prices for wheat decreased due to the fall in global wheat prices because of high grain stocks. Prices decrease for oil crops is attributed to the quality of harvest following adverse weather conditions during the prolonged harvesting period.

The main reason for the increase in Cost of sales and Distribution and selling expenses is the growth of volumes of goods sold.

Reimbursement of operating costs (government grants) was received in higher amount in 12M 2023 as the Company received subsidies for grain crops sales, support of elite seed and ameliorants usage.

Change in Other operating income except government grants in 12M 2023 in comparison to the same period of 2022 is mainly due to the one-off gain from sale of fixed assets in 1Q 2022.

Net gain/(loss) on revaluation of biological assets and agricultural produce depends on revaluation amounts in opening and closing inventory balances. As agricultural produce matures and at the point of harvest, a gain on revaluation of agricultural produce to fair value less costs to sell is recognized. During subsequent sale, a loss from the revaluation of agricultural products sold in the reporting period is recognized in the amount of the previously recognized gain.

Net loss in 4Q 2023 and 4Q 2022 resulted from the realization of gain on revaluation of agricultural produce to fair value less costs to sell recognized in 3Q 2023 and 3Q 2022, correspondingly. In 4Q 2023 the loss from gain realization is higher compared to 4Q 2022 following the increase in sales volumes. Net loss in 12M 2023 is lower than net loss in 12M 2022 because opening balance of revaluation was higher at the beginning of 2022 than at the beginning of 2023.

Net gain/ (loss) on revaluation of biological assets and agricultural produce and its subsequent realisation do not affect the Adjusted EBITDA figure.

OIL AND FAT SEGMENT

In 12M 2023 Oil and Fat segment earned RUB 13,492 million of adjusted EBITDA (-15 %y-o-y) with 12% margin (without changes compared to the previous year).

The financial results of the Oil and Fat Segment for 12M 2023 and 4Q 2023 compared to 12M 2022 and 4Q 2022 respectively are presented below.

In 4Q 2023 Sales of Oil and Fat segment increased in comparison to 4Q 2022 mainly because of the increase in sales volumes of bulk oil after the completion of modernization of oil extraction plant in Balakovo, which led to growth in production capacity and production volumes. Also Sales increased following higher oil prices supported by the growth USD to RUB exchange rate.

In 2023 Sales of the Oil and Fat segment decreased compared to 2022 (by 18% to RUB 108 746 million) mainly because of the decrease of world prices for oil and fat products and of bulk oil and meal sales volumes, which was partially compensated by the increase in sales volumes of industrial fats.

Decrease in sales volumes of bulk oil and meal was caused by difficulties with the vessels shipment caused by ice situation in Astrakhan in January and February 2023 and the suspension of Balakovo oil extraction plant for modernization from 23 May 2023 till 28 August 2023.

The growth of Cost of sales in 4Q 2023 compared to the same period of the previous year is due to the increase in sales volumes as well as the growth of palm oil prices following the dynamics of USD to RUB exchange rate.

The decrease of Cost of sales in 2023 is caused by the decline in sales volumes of oil and fat products. Cost of sales decreased more than Sales mainly due to reduction of prices for sunflower seeds.

The growth of General and administrative expenses in 2023 compared to the same period of the previous year is mainly attributable to higher costs of information and consulting services.

The decrease of Other operating expenses is due to lower charity expenses and positive exchange dynamics in 12M 2023 compared to the same period in 2022, which was partially compensated by accrual of provision for bad debts.

NMGK

At the end of 2Q 2023 the Company acquired 50% of the shares and control over the NMGK group of companies. The Company's financial results for 12M 2023 include the financial results of the NMGK Group starting from the acquisition for 3Q 2023 and 4Q 2023.

For 12M 2023* the revenue of the NMGK Group of companies amounted to RUB 31,202 million, adjusted EBITDA amounted to RUB 5,191 million with a margin of 17%.

The financial results of NMGK as a part of Rusagro for 4Q 2023 and 12M 2023* are presented in the table below.

(*) NMGK results have been presented since the acquisition of control - for Q3 2023 and Q4 2023

KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)

The key consolidated cash flow indicators presented according to management accounts methodology

(*) See Appendix 4

Net debt decreased at 31 December 2023 compared at 31 December 2022 by 33%.

In 12M 2023 Rusagro continued to enjoy benefits from the state agriculture subsidies programme. Rusagro 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 borrowings with decreased interest rates, given by the banks to agricultural producers. In 12M 2023 IFRS accounts these borrowings are accounted according to its face value with no adjustments to prevailing market rates. The differences between nominal and market interest rate is recognized as either government grants in a statement of financial position for borrowings received with the purpose to finance investment projects or interest expenses in a statement of comprehensive income for general purpose borrowings.

Net finance expense of 12M 2022 in the sum of RUB 10,654 million changed to net finance income in the amount of RUB 8,940 million as the result of positive dynamics in forex differences.

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(1) The exchange rates used for translation of RUB 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) net gain/ (loss) on revaluation of biological assets and agricultural produce, (iii) non-recurring components of other operating income/ (expenses), net, (iv) share-based remuneration, (v) provision for impairment of loans issued (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) Rusagro 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, MOEX: AGRO) - a holding company of Rusagro Group, a leading Russian diversified food producer with vertically integrated operations in the following branches:

Agricultural:

Rusagro currently controls one of the largest land banks among Russian agriculture producers, with 685 thousand hectares of land under control located in the highly fertile Black Earth regions of Russia (in the Belgorod, Tambov, Voronezh, Kursk, Saratov, Tula and Orel regions) and in the Far East Primorye 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, barley and corn, sunflower seeds and soybeans. These products are partially consumed by the Sugar, Meat and Oil and Fat segments, supporting a synergistic effect and lowering price change risk.

Oil and Fat:

Rusagro together with NMGK is the leading crude sunflower oil and consumer margarine and mayonnaise producer, second largest industrial fats and mayonnaise producer in Russia with products sold under eleven key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki, umbrella brand Ya Lublu Gotovit (includes Moskovskiy Provansal, Novosibirskiy Provansal and Saratovskiy Provansal), Rossiyanka and Saratovskiy Slivochniy, Benefitto, Maslava and Leto Krasno (££), which is sold on the Chinese market. Rusagro also produces dry industrial mixes, cheeses, butter and cream sold under three brands: Milie, Syrnaya Kultura and Ya Lublu Gotovit. Rusagro owns four crushing and two oil & fats plants and leases two milk processing plants. Owning its sunflower and soy oil production allows Rusagro to control the source of the sunflower and soybean oil required to produce oil and fats products.

Rusagro finalized the acquisition of 50% of NMGK Group in 2023. NMGK Group owns an oil and fat plant in Nizhny Novgorod, a fat plant in Samara, oil extraction factories in Uryupinsk and Sorochinsk, as well as elevators in the Volgograd, Orenburg, Samara, Saratov regions and the Republic of Bashkortostan. The company produces mayonnaise and sauces "Ryaba", "Sdobri", sauces and ketchups "Astoria", margarine "Khozyayushka", Slivochnik, spread "Kremlevskoe", coconut oil "Delicato", soap "Moy malysh" and "Retsepty chistoty".

Sugar:

Rusagro is one of the leading Russian sugar producers (?2 in Russia and ?1 on cube white sugar market), producing sugar from sugar beet at nine production sites in four regions. Group produces white and brown sugar sold under the brands Russkii Sakhar, Chaikofsky, Mon Café and Brauni. The Sugar segment is vertically integrated and sugar beets are supplied by Rusagro's Agriculture segment, which ensures a consistent supply. The sugar segment also operates a cereal plant and sells buckwheat and rice under the brand Tyoplye Traditsii.

Meat:

Rusagro is ?2 largest pork producer in Russia. It operates large commercial pig breeding complexes adhering to best practices regarding biosecurity standards, nucleus farms, compound feed plants, slaughterhouses and meat processing plants in Tambov and Belgorod Regions and in the Russian Far East. Since 2016, Rusagro sells retail products under its own brand Slovo Myasnika (Butcher's word).

CONFERENCE CALL

Rusagro management is organizing a conference call on Company's 12M and 4Q 2023 financial results for investors and analysts.

Details of the call:

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.

CONTACTS

Appendix 1. Consolidated statement of comprehensive income for the Year and Three months ended 31 December 2023 (in RUB thousand)

Appendix 2. Segment information for the Year ended 31 December 2023 (in RUB thousand)

Appendix 2 (continued). Segment information for the Year ended 31 December 2023 (in RUB thousand)