Last checked at 9 Apr 2015 07:24
09 April 2015
ROS AGRO financial results for 12M 2014 and Q4 2014
Moscow, 09 April 2015 - Today ROS AGRO PLC (the "Company"), the holding company of Rusagro Group (the "Group"), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the year ended 31 December 2014.
12M 2014 Highlights
- Sales amounted to RR 59,112 million (US$ 1,532 million (*)), an increase of RR 22,622 million compared to 12M 2013;
- Adjusted EBITDA (**) amounted to RR 18,069 million (US$ 468 million), an increase of RR 11,285 million compared to 12M 2013;
- Adjusted EBITDA margin increased from 19% to 31%;
- Net profit for the period amounted to RR 20,177 million (US$ 523 million);
- Net debt position (***) as of 31 December 2014 was RR 3,617 million (US$ 64 million);
- Net Debt/ Adjusted EBITDA (LTM) (****) as of 31 December 2014 was 0.2x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:
"2014 was the best year for Ros Agro in many ways. We managed to gain overall from extreme turbulence of changing currency exchange rates and interest rates and archived the highest financial results in our history despite decreasing government support, changes in retail industry and falling consumer income. We are pleased with sales of 59 bln roubles, EBITDA of 18 bln roubles and net income of 20 bln roubles."
Key consolidated financial performance indicators
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales | 59,112 | 36,490 | 22,622 | 62 | 17,726 | 13,370 | 4,356 | 33 |
Gross profit | 24,082 | 8,858 | 15,224 | 172 | 7,650 | 3,053 | 4,597 | 151 |
Gross margin, % | 41% | 24% | 16% | 43% | 23% | 20% | ||
Adjusted EBITDA | 18,069 | 6,784 | 11,285 | 166 | 6,825 | 3,817 | 3,008 | 79 |
Adjusted EBITDA margin, % | 31% | 19% | 12% | 39% | 29% | 10% | ||
Net profit for the period | 20,177 | 3,202 | 16,975 | 530 | 7,683* | 1,325 | 6,358 | 480 |
Net profit margin % | 34% | 9% | 25% | 43% | 10% | 33% | ||
*See appendix 1 for the disclosure of reclassification adjustments made to the 9M 2014 figures
Key financial performance indicators by segments
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales, incl. | 59,112 | 36,490 | 22,622 | 62 | 17,726 | 13,370 | 4,356 | 33 |
Sugar | 22,464 | 16,963 | 5,501 | 32 | 5,886 | 5,067 | 819 | 16 |
Meat | 17,751 | 7,421 | 10,329 | 139 | 4,998 | 2,903 | 2,094 | 72 |
Agriculture | 10,710 | 8,529 | 2,181 | 26 | 7,107 | 5,566 | 1,541 | 28 |
Oil | 14,920 | 8,920 | 6,001 | 67 | 3,583 | 3,768 | (185) | (5) |
Other | 46 | 117 | (72) | (61) | 9 | 19 | (10) | (53) |
Eliminations | (6,778) | (5,460) | (1,317) | (24) | (3,857) | (3,953) | 97 | 2 |
Gross profit, incl. | 24,082 | 8,858 | 15,224 | 172 | 7,650 | 3,053 | 4,597 | 151 |
Sugar | 6,190 | 3,051 | 3,139 | 103 | 2,316 | 1,572 | 743 | 47 |
Meat | 9,413 | 1,167 | 8,245 | 706 | 1,871 | 704 | 1,166 | 166 |
Agriculture | 4,994 | 3,034 | 1,960 | 65 | 2,762 | 416 | 2,346 | 564 |
Oil | 4,368 | 2,352 | 2,016 | 86 | 1,330 | 1,123 | 207 | 18 |
Other | 46 | 117 | (72) | (61) | 9 | 19 | (10) | (53) |
Eliminations | (928) | (864) | (64) | (7) | (637) | (782) | 145 | 19 |
Adjusted EBITDA, incl. | 18,069 | 6,784 | 11,285 | 166 | 6,825 | 3,817 | 3,008 | 79 |
Sugar | 4,809 | 1,720 | 3,089 | 180 | 1,974 | 1,184 | 790 | 67 |
Meat | 8,829 | 1,726 | 7,103 | 412 | 2,616 | 829 | 1,787 | 215 |
Agriculture | 4,375 | 2,361 | 2,014 | 85 | 3,240 | 1,454 | 1,786 | 123 |
Oil | 1,882 | 1,025 | 857 | 84 | 597 | 659 | (62) | (9) |
Other | (1,000) | (398) | (603) | (152) | (590) | (136) | (455) | (336) |
Eliminations | (825) | 350 | (1,175) | - | (1,012) | (174) | (838) | (482) |
Adjusted EBITDA margin, % | 31% | 19% | 12% | 39% | 29% | 10% | ||
Sugar | 21% | 10% | 11% | 34% | 23% | 10% | ||
Meat | 50% | 23% | 26% | 52% | 29% | 24% | ||
Agriculture | 41% | 28% | 13% | 46% | 26% | 19% | ||
Oil | 13% | 11% | 1% | 17% | 17% | -1% | ||
Sugar Segment
The financial results of the sugar segment for 12M 2014 and Q4 2014 compared to 12M 2013 and Q4 2013 respectively are presented in the table below:
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales | 22,464 | 16,963 | 5,501 | 32 | 5,886 | 5,067 | 819 | 16 |
Cost of sales | (16,649) | (14,087) | (2,562) | (18) | (3,652) | (3,546) | (106) | (3) |
Gains less losses from trading sugar derivatives | 375 | 175 | 200 | 114 | 81 | 51 | 30 | 59 |
Gross profit | 6,190 | 3,051 | 3,139 | 103 | 2,316 | 1,572 | 743 | 47 |
Gross profit margin | 28% | 18% | 10% | 39% | 31% | 8% | ||
Distribution and selling expenses | (1,587) | (1,443) | (144) | (10) | (461) | (455) | (6) | (1) |
General and administrative expenses | (723) | (765) | 43 | 6 | (171) | (211) | 40 | 19 |
Other operating (expenses)/ income, net | 82 | (235) | 317 | - | 102 | (176) | 278 | - |
Operating profit | 3,962 | 607 | 3,355 | 553 | 1,786 | 731 | 1,055 | 144 |
Adjusted EBITDA | 4,809 | 1,720 | 3,089 | 180 | 1,974 | 1,184 | 790 | 67 |
Adjusted EBITDA margin | 21% | 10% | 11% | 34% | 23% | 10% | ||
Sales in the sugar segment increased as a result of sales volume increase and an increase in sale prices.
Sugar sales and production volumes and the average sales prices per kilogram (excl. VAT) were as follows:
Year ended | Variance | Three months ended | Variance | |||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sugar production volume (in thousand tonnes) , incl. | 717 | 611 | 106 | 17 | 327 | 352 | (25) | (7) |
beet sugar | 498 | 502 | (4) | (1) | 327 | 352 | (25) | (7) |
cane sugar | 219 | 109 | 110 | 101 | - | - | - | - |
Sales volume (in thousand tonnes) | 752 | 653 | 99 | 15 | 166 | 186 | (20) | (11) |
Sale price (roubles per kg, excl. VAT) | 28.4 | 24.6 | 3.8 | 15 | 31.8 | 25.1 | 6.7 | 27 |
The closure of Rzhevsky Sakharnik in 2013, one of the Group's sugar plants in the Belgorod region, and the resulting disposal of the related production assets and write-off of work in progress led to the loss in the amount of RR 236 million, which is included in Other operating expenses, net in 12M 2013, which was not the case in 2014.
An increase in the sale prices in 12M 2014 compared to 12M 2013 together with an increase in sales volume led to an increased profitability of the segment.
Meat Segment
The financial results of the meat segment for 12M 2014 and Q4 2014 compared to 12M 2013 and Q4 2013 respectively are presented in the table below:
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales | 17,751 | 7,421 | 10,329 | 139 | 4,998 | 2,903 | 2,094 | 72 |
Gain on revaluation of biological assets and agricultural produce | 9,346 | 1,821 | 7,526 | 413 | 1,676 | 1,548 | 128 | 8 |
Cost of sales | (17,684) | (8,075) | (9,609) | (119) | (4,803) | (3,747) | (1,055) | (28) |
Gross profit | 9,413 | 1,167 | 8,245 | 706 | 1,871 | 704 | 1,166 | 166 |
Gross profit margin | 53% | 16% | 37% | 37% | 24% | 13% | ||
Gross profit excl. effect of biological assets revaluation | 7,636 | 601 | 7,036 | 1,172 | 2,349 | 355 | 1,994 | 562 |
Adjusted gross profit margin | 43% | 8% | 35% | 47% | 12% | 35% | ||
Distribution and selling expenses | (55) | (32) | (23) | (72) | (23) | (5) | (19) | (385) |
General and administrative expenses | (439) | (357) | (82) | (23) | (143) | (91) | (53) | (58) |
Other operating income, net | 376 | 186 | 190 | 102 | 153 | 2 | 151 | 7,550 |
Operating profit | 9,294 | 964 | 8,330 | 864 | 1,857 | 611 | 1,246 | 204 |
Adjusted EBITDA | 8,829 | 1,726 | 7,103 | 412 | 2,616 | 829 | 1,787 | 215 |
Adjusted EBITDA margin | 50% | 23% | 26% | 52% | 29% | 24% | ||
An increase in Sales by 139% was driven by a significant increase both in pork sales volume and pork sales prices. The sales volume of pork increased by 58% as a result of the launch in 2013 of new pig breeding facilities.
Pork sales volumes and the average pork sales prices per kilogram (excl. VAT) were as follows:
Year ended | Variance | Three months ended | Variance | |||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales volume (in thousand tonnes) | 182 | 115 | 67 | 58 | 52 | 43 | 9 | 22 |
Sale prices (roubles per kg, excl. VAT) | 95.9 | 63.6 | 32.3 | 51 | 95.8 | 66.7 | 29.1 | 44 |
The increase in sales prices and volumes also led to a significant amount of Gain on revaluation of biological assets (pigs) in 12M 2014 compared to 12M 2013.
The breakdown of adjusted EBITDA between Belgorod Meat and Tambov Meat is as follows:
in RR million | Year ended 31 December 2014 | Year ended 31 December 2013 | Three months ended 31 December 2014 | Three months ended 31 December 2013 | ||||
Belgorod Meat | Tambov Meat | Belgorod Meat | Tambov Meat | Belgorod Meat | Tambov Meat | Belgorod Meat | Tambov Meat | |
Sales to third parties and other segments | 7,768 | 9,982 | 4,887 | 2,535 | 2,149 | 2,849 | 1,553 | 1,350 |
Adjusted EBITDA | 3,865 | 4,964 | 1,727 | (1) | 1,090 | 1,526 | 722 | 107 |
Adjusted EBITDA margin | 50% | 50% | 35% | - | 51% | 54% | 46% | 8% |
An increase of income from government grants accompanied by a decline in charitable donations and other social costs resulted in double increase of Other operating income, net in 12M 2014 compared to 12M 2013.
An increase in pork sales prices together with a decrease in feed costs led to increased profitability of the meat segment.
Agricultural Segment
The segment's area of controlled land now stands at 495 thousand hectares, including 27 thousand hectares in the Far Eastern region. The financial results of the agricultural segment for 12M 2014 and Q4 2014 compared to 12M 2013 and Q4 2013 respectively are presented below:
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales | 10,710 | 8,529 | 2,181 | 26 | 7,107 | 5,566 | 1,541 | 28 |
Gain on revaluation of biological assets and agriculture produce | 2,897 | 1,669 | 1,229 | 74 | 1,175 | (437) | 1,612 | - |
Cost of sales | (8,614) | (7,164) | (1,450) | (20) | (5,520) | (4,713) | (808) | (17) |
Gross profit | 4,994 | 3,034 | 1,960 | 65 | 2,762 | 416 | 2,346 | 564 |
Gross profit margin | 47% | 36% | 11% | 39% | 7% | 31% | ||
Gross profit excl. effect of biological assets and agricultural produce revaluation | 4,883 | 3,160 | 1,723 | 55 | 3,659 | 1,912 | 1,747 | 91 |
Adjusted gross profit margin | 46% | 37% | 9% | 51% | 34% | 17% | ||
Distribution and selling expenses | (1,161) | (1,193) | 31 | 3 | (884) | (866) | (17) | (2) |
General and administrative expenses | (383) | (659) | 277 | 42 | (86) | (180) | 94 | 52 |
Other operating income/ (expenses), net | (150) | 11 | (161) | - | (237) | 38 | (275) | - |
Operating profit/ (loss) | 3,300 | 1,193 | 2,107 | 177 | 1,555 | (593) | 2,148 | - |
Adjusted EBITDA | 4,375 | 2,361 | 2,014 | 85 | 3,240 | 1,454 | 1,786 | 123 |
Adjusted EBITDA margin | 41% | 28% | 13% | 46% | 26% | 19% | ||
An increase in Sales by 26% in 12M 2014 compared to 12M 2013 resulted from an increase in barley, peas and sunflower seeds sales volume and sugar beet and grain, except for barley, sales prices that was partly offset by a decrease in sugar beet, wheat and soya beans sales volume and a decrease in barley sales prices.
Sales volumes by product were as follows:
Thousand tonnes | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
sugar beet | 2,330 | 2,935 | (605) | (21) | 1,435 | 2,164 | (729) | (34) |
grain | 635 | 617 | 17 | 3 | 409 | 387 | 22 | 6 |
incl. sold to other segments | 224 | 208 | 16 | 8 | 92 | 200 | (108) | (54) |
sunflower seeds | 99 | 35 | 64 | 182 | 66 | 34 | 32 | 94 |
incl. sold to other segments | 32 | 33 | (1) | (2) | - | 33 | (33) | (100) |
Sales volumes of grain include sales of wheat, barley, corn, peas and soya beans. All sugar beet is sold to the sugar segment.
The average sale prices per kilogram (excl. VAT) were as follows:
RR per kilogram, excl. VAT | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
wheat | 6.4 | 5.9 | 0.5 | 8 | 6.7 | 6.0 | 0.7 | 12 |
barley | 4.9 | 6.2 | (1.3) | (20) | 4.6 | 5.1 | (0.5) | (10) |
sunflower seeds | 15.8 | 9.8 | 6.0 | 61 | 17.3 | 9.8 | 7.5 | 76 |
peas | 9.0 | 8.2 | 0.8 | 10 | 9.2 | 8.1 | 1.1 | 14 |
corn | 4.9 | 4.0 | 0.9 | 23 | 4.9 | 4.0 | 0.9 | 21 |
A decrease in General and administrative expenses came from a decrease in payroll costs by RR 199 million from RR 392 million in 12M 2013 to RR 193 million in 12M 2014. As a result of changes in the organization structure of the Belgorod division of the agricultural segment payroll costs of some departments were reclassified from administrative expenses into production costs.
In 12M 2014 the Group disposed one of non-core subsidiary engaged in cultivation of dairy cattle livestock. Loss on the disposal in the amount of RR 179 million was included in Other operating expenses, net in the agricultural segment.
Oil segment
The financial results of the oil segment for 12M 2014 and Q4 2014 compared to 12M 2013 and Q4 2013 respectively are presented below:
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Sales | 14,920 | 8,920 | 6,001 | 67 | 3,583 | 3,768 | (185) | (5) |
Cost of sales | (10,552) | (6,567) | (3,985) | (61) | (2,254) | (2,645) | 392 | 15 |
Gross profit | 4,368 | 2,352 | 2,016 | 86 | 1,330 | 1,123 | 207 | 18 |
Gross profit margin | 29% | 26% | 3% | 37% | 30% | 7% | ||
Distribution and selling expenses | (2,390) | (1,266) | (1,123) | (89) | (656) | (454) | (202) | (45) |
General and administrative expenses | (463) | (375) | (88) | (23) | (162) | (101) | (60) | (60) |
Other operating income/ (expenses), net | 86 | (21) | 107 | - | 82 | (1) | 83 | - |
Operating profit | 1,601 | 689 | 912 | 132 | 594 | 567 | 27 | 5 |
Adjusted EBITDA | 1,882 | 1,025 | 857 | 84 | 597 | 659 | (62) | (9) |
Adjusted EBITDA margin | 13% | 11% | 1% | 17% | 17% | -1% | ||
The breakdown of Sales, Gross profit and Adjusted EBITDA between the Samara oil plant and Ekaterinburg fat plant is as follows:
in RR million | Year ended 31 December 2014 | Year ended 31 December 2013 | Three months ended 31 December 2014 | Three months ended 31 December 2013 | ||||
Samara oil plant | Ekat. fat plant | Samara oil plant | Ekat. fat plant | Samara oil plant | Ekat. fat plant | Samara oil plant | Ekat. fat plant | |
Sales to third parties and other segments | 8,098 | 6,822 | 3,341 | 5,578 | 1,527 | 2,056 | 2,010 | 1,758 |
Internal sales | 1,285 | - | 1,266 | - | 311 | - | 536 | - |
Gross profit | 2,149 | 2,219 | 860 | 1,493 | 514 | 816 | 620 | 503 |
Gross profit margin | 23% | 33% | 19% | 27% | 28% | 40% | 24% | 29% |
Adjusted EBITDA | 1,380 | 502 | 623 | 402 | 332 | 265 | 573 | 86 |
Adjusted EBITDA margin | 15% | 7% | 14% | 7% | 18% | 13% | 23% | 5% |
Sales increased as a result of sales volume increase and an increase in sale prices of mayonnaise, margarine and meal that was partly offset by a decrease in sales prices of raw oil.
Sales volumes by product were as follows:
Thousand tonnes | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
mayonnaise | 57.7 | 57.0 | 0.7 | 1 | 17.7 | 16.0 | 1.7 | 10 |
margarine | 47.4 | 41.0 | 6.4 | 16 | 16.3 | 14.0 | 2.3 | 16 |
raw oil, sales to third parties and other segments | 199 | 74 | 125 | 170 | 28 | 48 | (20) | (42) |
raw oil, internal sales (to Ekat. fat plant) | 47 | 45 | 2 | 5 | 11 | 23 | (12) | (54) |
meal | 239 | 121 | 118 | 98 | 41 | 71 | (30) | (42) |
The average sale prices per kilogram (excl. VAT) for sales to third parties were as follows:
RR per kilogram, excl. VAT | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
mayonnaise | 59.0 | 56.8 | 2.2 | 4 | 61.8 | 58.4 | 3.4 | 6 |
margarine | 54.5 | 50.8 | 3.7 | 7 | 59.9 | 50.7 | 9.2 | 18 |
raw oil, third-party sales | 29.5 | 31.5 | (2.0) | (6) | 38.7 | 30.6 | 8.1 | 27 |
meal | 9.0 | 7.8 | 1.2 | 15 | 10.1 | 7.0 | 3.1 | 45 |
A significant increase in sales volume of raw oil and meal in 12M 2014 compared to 12M 2013 related to the trading operations and tolling of own sunflower seeds on the related party's production facilities. These operations started in Q4 2013 and ceased in Q3 2014, which also explains a decrease in sales volume on raw oil and meal in Q4 2014 compared to Q4 2013.
An increase in Distribution and selling expenses is linked to an increase in sales volume and investments in marketing and advertising of the Mechta Khozyayki brand. Transportation and loading services increased by RR 583 million (from RR 480 million in 12M 2013 up to RR 1,063 million in 12M 2014). Advertising expenses increased by RR 266 million (from RR 367 million in 12M 2013 up to RR 633 in 12M 2014).
Key consolidated cash flow indicators (not IFRS presentation*)
The key consolidated cash flow indicators presented according to management accounts methodology were as follows:
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Net cash from operating activities, incl. | 15,677 | 4,780 | 10,897 | 228 | 1,752 | (901) | 2,653 | 0 |
Operating cash flow before working capital changes | 17,553 | 5,946 | 11,608 | 195 | 6,428 | 3,492 | 2,936 | 84 |
Working capital changes | (823) | (1,042) | 220 | 21 | (4,413) | (4,339) | (75) | (2) |
Net cash used in investing activities, incl. | (6,206) | (4,182) | (2,024) | (48) | (2,153) | (1,772) | (381) | (21) |
Purchases of property, plant and equipment and inventories intended for construction | (5,208) | (4,249) | (959) | (23) | (1,280) | (1,736) | 457 | 26 |
Net cash used in financing activities | (4,705) | 33 | (4,738) | - | 5,924 | 3,536 | 2,388 | 68 |
Net increase in cash and cash equivalents | 7,644 | 653 | 6,991 | 1,071 | 8,226 | 869 | 7,357 | 846 |
(*) See Appendix 4
The main investments in property, plant and equipment and inventories intended for construction in 12M 2014 were made in the agricultural segment in the amount of RR 2,055 million (12M 2013: RR 716 million), representing purchases of machinery and equipment, and in the meat segment in the amount of RR 1,324 million (12M 2013: RR 2,501 million), related to the construction of a slaughter house in Tambov region. Significant investments were also made in the sugar division in the amount of RR 1,600 million (12M 2013: RR 790 million), related to the modernisation of sugar plants.
Debt position and liquidity management
in RR million | 31 December 2014 | 31 December 2013 | Variance | |
Units | % | |||
Gross debt | 22,306 | 32,513 | (10,207) | (31) |
Short term borrowings | 12,500 | 18,144 | (5,645) | (31) |
Long term borrowings | 9,806 | 14,369 | (4,562) | (32) |
Net debt | 3,617 | 14,576 | (10,960) | (75) |
Short term borrowings, net | (5,493) | 904 | (6,397) | - |
Long term borrowings, net | 9,110 | 13,672 | (4,562) | (33) |
Adjusted EBITDA (LTM***) | 18,069 | 6,784 | 11,285 | 166 |
Net debt/Adjusted EBITDA (LTM) | 0.2 | 2.1 | (1.9) | |
The Group maintained a healthy debt structure: 76% of net debt relates to amounts with more than three years' maturity.
Net finance expense
in RR million | Year ended | Variance | Three months ended | Variance | ||||
31 December 2014 | 31 December 2013 | Units | % | 31 December 2014 | 31 December 2013 | Units | % | |
Net interest expense | (154) | (1,380) | 1,226 | 89 | (86) | 73 | (159) | - |
Gross interest expense | (2,288) | (3,624) | 1,336 | 37 | (548) | (906) | 358 | 40 |
Reimbursement of interest expense | 2,134 | 2,244 | (110) | (5) | 462 | 979 | (517) | (53) |
Interest income | 1,011 | 2,023 | (1,012) | (50) | 239 | 419 | (180) | (43) |
Losses less gains from bonds held for trading* | (1,397) | - | (1,397) | - | (1,274) | - | (1,274) | - |
Other financial income/ (expenses), net | 4,550 | (56) | 4,606 | - | 4,144 | 3 | 4,141 | |
Total net finance income | 4,010 | 587 | 3,423 | 583 | 3,023 | 495 | 2,528 | 511 |
*See appendix 1 for the disclosure of reclassification adjustments made to the 9M 2014 figures
In 12M 2014 the Group continued to enjoy benefits from the state agriculture subsidies programme. RR 2,134 million of subsidies received covered 93% of gross interest expense.
Other financial income/ (expenses), netchanged by RR 4,606 million from RR 56 million of net expenses in 12М 2013 to RR 4,550 million of net income in 12M 2014. The main reason is an increase in financial foreign exchange differences gain by RR 4,514 million from RR 38 million in 12M 2013 up to RR 4,552 million in 12M 2013. The foreign exchange differences gain in 12M 2014 related mainly to the bonds purchased and call deposits at Credit Swiss, all denominated in US Dollars.
(*)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.
(**) Adjusted EBITDA is defined as operating profit before taking into account (i) depreciation, (ii) other operating income, net (other than reimbursement of operating costs (government grants)), (iii) the difference between gain on revaluation of biological assets and agricultural produce recognised during the period and the gain on initial recognition of agricultural produce attributable to realised agricultural produce together with revaluation of biological assets attributable to realised biological assets included in cost of sales for the period (iv) provision/(reversal of provision) for net realizable value of agricultural produce, (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. You should not consider it 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.
(***) The Group determines the net debt as short-term borrowings and long-term borrowings less cash and cash equivalents, bank deposits and bank promissory notes and bonds within short-term and long-term investments.
(****) 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:
We are a leading Russian sugar producer, producing sugar on six production sites from both sugar beets and raw cane sugar. We produce white cube sugar and white packaged sugar sold under the brands Chaikofsky, Russkii Sakhar, Brauni. Our sugar segment is vertically integrated with sugar beet cultivation in our agriculture segment, through which we strive to ensure a consistent supply of sugar beets.
Meat:
Our pig breeding project was launched in 2006. 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 2014. 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 495 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 within the same regions to optimize efficiency and minimize logistical costs. We believe we are one of 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 consumed by the meat segment, supporting a synergistic effect and lowering price change risk.
Oil:
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 relate to future events and circumstances, a number of which are beyond the Rusagro Group's control. As a result, actual future results may differ materially from the plans and expectations set out in these forward-looking statements.
The Group undertakes no obligation to release the results of any revisions to any forward-looking statements that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document.
Rusagro management is organizing a conference call about its 12M 2014 and Q4 2014 financial results for investors and analysts.
Details of call:
Date | 10 April 2015 |
Time | 5:00 PM (Moscow) /3:00 PM (London) |
Subject | ROS AGRO PLC 2014 annual financial results |
UK Toll Free UK Local Line | 0800 279 4977 +44(0)20 3427 1901 |
USA Toll Free USA Local Line | 1877 280 1254 +1646 254 3360 |
Russia Toll Free | +7 495 213 0978 |
Conference ID | 5687899 |
Contacts:
Sergey Tribunsky Chief Investment Officer LLC Group of Companies Rusagro Phone: +7 495 363 1661 stribunsky@rusagrogroup.ru |
Appendix 1. Consolidated statement of comprehensive income for the year ended 31 December 2014 (in RR thousand)
Year ended 31 December | Three months ended 31 December | |||
2014 | 2013 | 2014* | 2013 | |
Sales | 59,112,243 | 36,489,827 | 17,726,153 | 13,370,221 |
Gain on revaluation of biological assets and agriculture produce | 12,243,734 | 3,489,463 | 2,850,669 | 1,110,858 |
Cost of sales | (47,649,710) | (31,296,627) | (13,008,695) | (11,479,428) |
Gains less losses from trading sugar derivatives | 375,305 | 175,407 | 81,397 | 51,132 |
Gross profit | 24,081,572 | 8,858,070 | 7,649,524 | 3,052,783 |
Distribution and selling expenses | (4,472,174) | (2,992,953) | (1,554,926) | (988,305) |
General and administrative expenses | (2,991,315) | (2,623,918) | (1,123,229) | (724,883) |
Share-based remuneration | (54,423) | (178,280) | (1,012) | (26,254) |
Other operating income/ (expenses), net | 272,884 | (116,537) | (49,628) | (190,420) |
Operating profit | 16,836,544 | 2,946,382 | 4,920,729 | 1,122,922 |
Interest expense | (154,478) | (1,380,376) | (85,826) | 72,924 |
Interest income | 1,010,951 | 2,022,986 | 239,470 | 419,013 |
Losses less gains from bonds held for trading* | (1,397,230) | - | (1,274,072) | - |
Other financial income/ (expenses), net | 4,549,548 | (56,272) | 4,143,888 | 2,514 |
Share of results of associates | 46,579 | - | 46,128 | - |
Profit before taxation | 20,891,914 | 3,532,720 | 7,990,318 | 1,617,373 |
Income tax expense | (714,935) | (330,963) | (307,492) | (292,398) |
Profit for the period | 20,176,979 | 3,201,757 | 7,682,826 | 1,324,975 |
Total comprehensive income for the period | 20,176,979 | 3,201,757 | 7,682,826 | 1,324,975 |
Profit is attributable to: | ||||
Owners of ROS AGRO PLC | 20,134,178 | 3,201,534 | 7,638,592 | 1,326,490 |
Non-controlling interest | 42,801 | 223 | 44,234 | (1,515) |
Profit for the period | 20,176,979 | 3,201,757 | 7,682,826 | 1,324,975 |
Total comprehensive income is attributable to: | ||||
Owners of ROS AGRO PLC | 20,134,178 | 3,201,534 | 7,638,592 | 1,326,490 |
Non-controlling interest | 42,801 | 223 | 44,234 | (1,515) |
Total comprehensive income for the period | 20,176,979 | 3,201,757 | 7,682,826 | 1,324,975 |
Earnings per ordinary share for profit attributable to the equity holders of ROS AGRO PLC, basic and diluted (in RR per share) | 854.59 | 135.67 | 324.25 | 56.21 |
*As a result of the full year audit 2014 the management corrected the accounting treatment of bonds, purchased in April-May 2014. In the consolidated financial statements for 6M 2014 and 9M 2014 the effect of market value revaluation of bonds in the amount of RR 271,760 thousand of gain and RR 123,158 thousand of loss, respectively, were presented in other comprehensive income, below the "Profit for the period" line item. In the audited consolidated financial statement for 12M 2014 these bonds are classified as trading investments with measurement at fair value through profit and loss (see note 4 of the audited consolidated financial statements). The result of fair value revaluation as well as the result from the disposal of bonds is included in "Losses less gains from bonds held for trading" line item. The classification of the bonds has been corrected retrospectively that led to the respective reclassification adjustments in statements of comprehensive income and statements of cash flows for 6M 2014 and 9M 2014.
Appendix 2. Segment information for the year ended 31 December 2014 (in RR thousand)
Year ended 31 December 2014 | Sugar | Meat | Other agriculture | Oil | Other | Eliminations | Total |
Sales | 22,463,664 | 17,750,521 | 10,710,176 | 14,920,094 | 45,558 | (6,777,770) | 59,112,243 |
Gain on revaluation of biological assets and agriculture produce | - | 9,346,266 | 2,897,468 | - | - | - | 12,243,734 |
Cost of sales | (16,648,910) | (17,684,177) | (8,613,918) | (10,552,318) | - | 5,849,613 | (47,649,710) |
incl. Depreciation | (823,648) | (1,341,535) | (713,102) | (231,919) | - | (43,559) | (3,153,763) |
Gains less losses from trading sugar derivatives | 375,305 | - | - | - | - | - | 375,305 |
Gross profit | 6,190,059 | 9,412,610 | 4,993,726 | 4,367,776 | 45,558 | (928,157) | 24,081,572 |
Distribution and Selling, General and administrative expenses | (2,310,319) | (494,835) | (1,543,870) | (2,852,293) | (1,070,871) | 808,699 | (7,463,489) |
incl. Depreciation | (105,323) | (13,968) | (106,843) | (134,860) | (24,873) | 42,598 | (343,269) |
Share-based remuneration | - | - | - | - | (54,423) | - | (54,423) |
Other operating income/(expenses), net | 82,069 | 376,370 | (150,321) | 85,900 | 7,236,857 | (7,357,991) | 272,884 |
incl. Reimbursement of operating costs (government grants) | - | 331,844 | 216,201 | - | - | - | 548,045 |
Operating profit | 3,961,809 | 9,294,145 | 3,299,535 | 1,601,383 | 6,157,121 | (7,477,449) | 16,836,544 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 928,971 | 1,355,503 | 819,945 | 366,779 | 24,872 | 961 | 3,497,031 |
Other operating (income) /expenses, net | (82,069) | (376,370) | 150,321 | (85,900) | (7,236,856) | 7,357,991 | (272,883) |
Share-based remuneration | - | - | - | - | 54,423 | - | 54,423 |
Reimbursement of operating costs (government grants) | - | 331,844 | 216,201 | - | - | - | 548,045 |
Gain on revaluation of biological assets and agriculture produce | - | (9,346,266) | (2,897,468) | - | - | - | (12,243,734) |
Gain on initial recognition of agricultural produce attributable to realised agricultural produce | - | - | 2,791,408 | - | - | (706,875) | 2,084,533 |
Revaluation of biological assets attributable to realised biological assets and included in cost of sales | - | 7,570,152 | (4,636) | - | - | - | 7,565,516 |
Adjusted EBITDA* | 4,808,711 | 8,829,008 | 4,375,306 | 1,882,262 | (1,000,440) | (825,372) | 18,069,475 |
* Non-IFRS measure
Appendix 2 (continued). Segment information for the year ended 31 December 2013 (in RR thousand)
Year ended 31 December 2013 | Sugar | Meat | Other agriculture | Oil | Other | Eliminations | Total |
Sales | 16,962,740 | 7,421,338 | 8,529,185 | 8,919,552 | 117,486 | (5,460,474) | 36,489,827 |
Gain on revaluation of biological assets and agriculture produce | - | 1,820,756 | 1,668,707 | - | - | - | 3,489,463 |
Cost of sales | (14,087,051) | (8,074,897) | (7,163,924) | (6,567,290) | - | 4,596,535 | (31,296,627) |
incl. Depreciation | (799,937) | (1,214,092) | (680,016) | (220,076) | - | (72,889) | (2,987,010) |
Gains less losses from trading sugar derivatives | 175,407 | - | - | - | - | - | 175,407 |
Gross profit | 3,051,096 | 1,167,197 | 3,033,968 | 2,352,262 | 117,486 | (863,939) | 8,858,070 |
Distribution and Selling, General and administrative expenses | (2,208,689) | (389,437) | (1,852,068) | (1,641,364) | (532,865) | 1,007,552 | (5,616,871) |
incl. Depreciation | (107,587) | (13,165) | (91,572) | (94,316) | (17,788) | 40,577 | (283,851) |
Share-based remuneration | - | - | - | - | (178,280) | - | (178,280) |
Other operating income/(expenses), net | (235,436) | 186,377 | 10,750 | (21,443) | 2,883,643 | (2,940,428) | (116,537) |
incl. Reimbursement of operating costs (government grants) | - | 287,450 | 281,186 | - | - | - | 568,636 |
Operating profit/ (loss) | 606,971 | 964,137 | 1,192,650 | 689,455 | 2,289,984 | (2,796,815) | 2,946,382 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 907,524 | 1,227,256 | 771,588 | 314,392 | 17,788 | 32,313 | 3,270,861 |
Other operating (income) /expenses, net | 235,436 | (186,377) | (10,750) | 21,443 | (2,883,643) | 2,940,428 | 116,537 |
Share-based remuneration | - | - | - | - | 178,280 | - | 178,280 |
Reimbursement of operating costs (government grants) | - | 287,450 | 281,186 | - | - | - | 568,636 |
Gain on revaluation of biological assets and agriculture produce | - | (1,820,756) | (1,668,707) | - | - | - | (3,489,463) |
Gain on initial recognition of agricultural produce attributable to realised agricultural produce | - | - | 1,773,091 | - | - | 173,585 | 1,946,676 |
Revaluation of biological assets attributable to realised biological assets and included in cost of sales | - | 1,254,131 | 22,063 | - | - | - | 1,276,194 |
Reversal of provision for net realisable value of agricultural produce | (30,090) | - | - | - | - | - | (30,090) |
Adjusted EBITDA* | 1,719,841 | 1,725,841 | 2,361,121 | 1,025,290 | (397,591) | 349,511 | 6,784,013 |
* Non-IFRS measure
Appendix 3. Consolidated statement of financial position as at 31 December 2014 (in RR thousand)
31 December 2014 | 31 December 2013 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 10,316,313 | 2,672,764 |
Short-term investments | 8,863,789 | 15,266,561 |
Trade and other receivables | 2,347,714 | 1,771,235 |
Prepayments | 2,085,599 | 824,622 |
Current income tax receivable | 22,119 | 45,433 |
Other taxes receivable | 1,310,407 | 1,487,408 |
Inventories | 15,508,659 | 13,865,425 |
Short-term biological assets | 3,454,937 | 2,212,805 |
Total current assets | 43,909,537 | 38,146,253 |
Non-current assets | ||
Property, plant and equipment | 29,519,968 | 28,365,116 |
Inventories intended for construction | 32,846 | 36,600 |
Goodwill | 1,191,832 | 1,175,578 |
Advances paid for property, plant and equipment | 2,669,373 | 2,334,610 |
Advances paid for intangible assets | - | 2,580 |
Long-term biological assets | 1,793,059 | 1,553,595 |
Long-term investments | 929,129 | 870,815 |
Investments in associates | 87,407 | - |
Deferred income tax assets | 1,016,544 | 353,674 |
Other intangible assets | 338,699 | 289,058 |
Restricted cash | 17,373 | 2,404 |
Total non-current assets | 37,596,230 | 34,984,030 |
Total assets | 81,505,767 | 73,130,283 |
Liabilities and EQUITY | ||
Current liabilities | ||
Short-term borrowings | 12,499,623 | 18,144,254 |
Trade and other payables | 2,772,385 | 2,352,775 |
Current income tax payable | 475,850 | 346,980 |
Other taxes payable | 1,706,091 | 1,327,263 |
Total current liabilities | 17,453,949 | 22,171,272 |
Non-current liabilities | ||
Long-term borrowings | 9,806,306 | 14,368,799 |
Government grants | 1,962,562 | 1,735,151 |
Deferred income tax liability | 463,649 | 290,028 |
Total non-current liabilities | 12,232,517 | 16,393,978 |
Total liabilities | 29,686,466 | 38,565,250 |
Equity | ||
Share capital | 9,734 | 9,734 |
Treasury shares | (505,880) | (461,847) |
Share premium | 10,557,573 | 10,557,573 |
Share-based payment reserve | 1,291,198 | 1,236,775 |
Retained earnings | 40,159,833 | 23,214,348 |
Equity attributable to owners of ROS AGRO PLC | 51,512,458 | 34,556,583 |
Non-controlling interest | 306,843 | 8,450 |
Total equity | 51,819,301 | 34,565,033 |
Total liabilities and equity | 81,505,767 | 73,130,283 |
Appendix 4. Consolidated statement of cash flows for the year ended 31 December 2014 according to the Group's management accounts (in RR thousand) - NOT IFRS PRESENTATION
Year ended | Year ended | |
31 December 2014 | 31 December 2013 | |
Cash flows from operating activities | ||
Profit before taxation | 20,891,914 | 3,532,720 |
Adjustments for: | ||
Depreciation and amortization | 3,497,032 | 3,270,861 |
Interest expense | 2,288,135 | 3,623,968 |
Government grants | (2,821,533) | (2,918,386) |
Interest income | (1,010,951) | (2,022,986) |
Loss/ (gain) on disposal of property, plant and equipment | (5,038) | 169,518 |
Loss/ (gain) on initial recognition of agricultural produce, net | (786,007) | 237,660 |
Change in provision for net realisable value of inventory | 485,767 | (30,090) |
Share of results of associates | (46,579) | - |
Gain from buy-out of promissory notes issued | (41,094) | - |
Revaluation of biological assets, net | (1,807,678) | (504,253) |
Change in provision for impairment of receivables and prepayments | 46,120 | 126,144 |
Foreign exchange gain, net | (4,694,826) | (37,534) |
Share based remuneration | 54,423 | 178,280 |
Write-off of work in progress | - | 55,229 |
Lost harvest write-off | 5,530 | 31,071 |
Losses less gains from bonds held for trading | 1,397,230 | - |
Change in provision for impairment of advances paid for property, plant and equipment | (454) | 18,714 |
Loss on disposal of subsidiaries, net | 179,405 | - |
Loss on other investments | 7,747 | 191,480 |
Other non-cash and non-operating expenses, net | (85,977) | 23,228 |
Operating cash flow before working capital changes | 17,553,166 | 5,945,624 |
Change in trade and other receivables and prepayments | (963,488) | (779,457) |
Change in other taxes receivable | 104,214 | 1,117,390 |
Change in inventories | (1,015,731) | (406,568) |
Change in biological assets | 268,410 | (605,257) |
Change in trade and other payables | 370,457 | (265,517) |
Change in other taxes payable | 413,331 | (102,899) |
Cash generated from operations | 16,730,359 | 4,903,316 |
Income tax paid | (1,053,641) | (123,602) |
Net cash from operating activities | 15,676,718 | 4,779,714 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (5,206,184) | (4,232,694) |
Purchases of other intangible assets | (151,993) | (96,904) |
Proceeds from sales of property, plant and equipment | 44,135 | 72,300 |
Purchases of inventories intended for construction | (1,530) | (16,335) |
Purchases of associates | (377,493) | - |
Investments in subsidiaries, net of cash acquired | (498,692) | - |
Movement in restricted cash | (14,970) | 88,708 |
Dividends received | 1,146 | 18 |
Proceeds from sale of subsidiaries, net of cash disposed | (275) | - |
Proceeds from sales of other investments | - | 3,289 |
Net cash used in investing activities | (6,205,855) | (4,181,618) |
Cash flows from financing activities | ||
Proceeds from borrowings | 15,875,925 | 16,157,846 |
Repayment of borrowings | (27,169,213) | (31,891,024) |
Interest paid | (2,295,898) | (4,127,094) |
Purchases of promissory notes* | (1,700,000) | (2,900,000) |
Proceeds from sales of promissory notes* | 2,800,000 | 3,068,267 |
Proceeds from cash withdrawals from deposits* | 16,604,773 | 32,345,354 |
Deposits placed with banks* | (4,141,047) | (18,346,112) |
Purchases of bonds* | (5,244,138) | - |
Proceeds from sales of bonds* | 134,904 | - |
Loans given* | (2,455,350) | (1,122,198) |
Loans repaid* | 1,847,683 | 907,674 |
Interest received* | 1,239,633 | 2,152,715 |
Proceeds from government grants | 3,048,946 | 4,049,217 |
Sale of non-controlling interest | 6,758 | - |
Purchases of non-controlling interest | (7,289) | (261,084) |
Purchases of treasury shares | (44,033) | - |
Dividends paid | (3,206,582) | (107) |
Net cash (used in)/ from financing activities | (4,704,929) | 33,454 |
Net effect of exchange rate changes on cash and cash equivalents | 2,877,615 | 21,347 |
Net increase in cash and cash equivalents | 7,643,549 | 652,897 |
Cash and cash equivalents at the beginning of the period | 2,672,764 | 2,019,867 |
Cash and cash equivalents at the end of the period | 10,316,313 | 2,672,764 |
(*) 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.