Last checked at 26 Aug 2016 09:00
26 August 2016
ROS AGRO financial results for 1H 2016 and Q2 2016
26 August 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 six months ended 30 June 2016.
1H 2016 Highlights
- Sales amounted to RR 38,210 million (US$ 544 million1), an increase of RR 5,621 million compared to 1H 2015;
- Adjusted EBITDA2 amounted to RR 8,071 million (US$ 115 million), a decreaseof RR 2,626 million compared to 1H 2015;
- Adjusted EBITDA margin decreased from 33% in 1H 2015 to 21% in 1H 2016;
- Net profit for the period amounted to RR 2,033 million (US$ 29 million);
- Net debt position3 as of 30 June 2016 was negative and amounted to RR -2,574 million (US$ -40 million);
- Net Debt/ Adjusted EBITDA as of 30 June 2016 was -0.12x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:
"Second quarter reflected weak performance of the season end. Oil & fat factories' capacity utilization was low due to the deficit of raw material, consumer business suffered from weakness of CIS export markets and mayonnaise price war. Meat business was slowly improving from the market surplus shock. Sugar and agriculture divisions continue to perform well - the second quarter results include the SG&A costs of acquired Razgulyai assets. Net income was influenced by decrease of government subsidies."
Key consolidated financial performance indicators
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales | 38,210 | 32,589 | 5,621 | 17 | 20,472 | 18,466 | 2,006 | 11 |
Gross profit | 8,118 | 12,612 | (4,494) | (36) | 4,469 | 6,624 | (2,155) | (33) |
Gross margin, % | 21% | 39% | -17% | 22% | 36% | -14% | ||
Adjusted EBITDA | 8,071 | 10,697 | (2,626) | (25) | 3,207 | 5,597 | (2,390) | (43) |
Adjusted EBITDA margin, % | 21% | 33% | -12% | 16% | 30% | -15% | ||
Net profit for the period* | 2,033 | 7,220 | (5,187) | (72) | 1,666 | 2,968 | (1,303) | (44) |
Net profit margin % | 5% | 22% | -17% | 8% | 16% | -8% | ||
*Net profit for the period is affected by non-cash loss on revaluation of biological assets and agricultural produce. See details in business-sections below. Net profit for the period excl. effect of biological assets and agricultural produce revaluation amounted to RR 5,384 million in 1H 2016 and RR 2,221 million in Q2 2016 (1H 2015: RR 7,748 million; Q2 2015: RR 3,031 million), a decrease of RR 2,364 million or 31% compared to 1H 2015 and RR 810 million or 27% compared to Q2 2015.
Key financial performance indicators by segments
in RR million | Year ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales, incl. | 38,210 | 32,589 | 5,621 | 17 | 20,472 | 18,466 | 2,006 | 11 |
Sugar | 15,219 | 14,258 | 961 | 7 | 9,342 | 9,459 | (117) | (1) |
Meat | 7,858 | 8,476 | (619) | (7) | 4,243 | 4,524 | (281) | (6) |
Agriculture | 4,546 | 2,230 | 2,316 | 104 | 1,184 | 657 | 528 | 80 |
Oil and Fat | 11,649 | 8,193 | 3,456 | 42 | 5,901 | 4,114 | 1,788 | 43 |
Other | 50 | 19 | 31 | 164 | 32 | 10 | 22 | 234 |
Eliminations | (1,112) | (588) | (524) | (89) | (231) | (297) | 66 | 22 |
Gross profit, incl. | 8,118 | 12,612 | (4,494) | (36) | 4,469 | 6,624 | (2,155) | (33) |
Sugar | 5,345 | 5,090 | 255 | 5 | 2,562 | 2,871 | (310) | (11) |
Meat | 229 | 4,115 | (3,885) | (94) | 1,003 | 2,448 | (1,445) | (59) |
Agriculture | 725 | 919 | (193) | (21) | 170 | 258 | (88) | (34) |
Oil and Fat | 1,754 | 2,366 | (611) | (26) | 682 | 952 | (270) | (28) |
Other | 50 | 19 | 31 | 164 | 32 | 10 | 22 | 234 |
Eliminations | 14 | 105 | (90) | (86) | 21 | 86 | (65) | (76) |
Adjusted EBITDA, incl. | 8,071 | 10,697 | (2,626) | (25) | 3,207 | 5,597 | (2,390) | (43) |
Sugar | 4,399 | 4,452 | (53) | (1) | 2,084 | 2,577 | (493) | (19) |
Meat | 1,366 | 3,962 | (2,596) | (66) | 815 | 2,193 | (1,378) | (63) |
Agriculture | 1,632 | 1,043 | 589 | 56 | 69 | 304 | (235) | (77) |
Oil and Fat | (70) | 1,057 | (1,127) | - | (283) | 321 | (605) | - |
Other | (1,023) | (783) | (240) | (31) | (425) | (418) | (6) | (2) |
Eliminations | 1,767 | 965 | 802 | 83 | 948 | 621 | 327 | 53 |
Adjusted EBITDA margin, % | 21% | 33% | -12% | 16% | 30% | -15% | ||
Sugar | 29% | 31% | -2% | 22% | 27% | -5% | ||
Meat | 17% | 47% | -29% | 19% | 48% | -29% | ||
Agriculture | 36% | 47% | -11% | 6% | 46% | -40% | ||
Oil and Fat | -1% | 13% | -14% | -5% | 8% | -13% | ||
Sugar Segment
The financial results of the sugar segment for 1H 2016 and Q2 2016 compared to 1H 2015and Q2 2015 respectively are presented in the table below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales | 15,219 | 14,258 | 961 | 7 | 9,342 | 9,459 | (117) | (1) |
Cost of sales | (10,211) | (9,393) | (817) | (9) | (6,822) | (6,652) | (170) | (3) |
Net gain/ (loss) from trading sugar derivatives | 337 | 225 | 112 | 50 | 41 | 63 | (23) | (36) |
Gross profit | 5,345 | 5,090 | 255 | 5 | 2,562 | 2,871 | (310) | (11) |
Gross profit margin | 35% | 36% | -1% | 27% | 30% | -3% | ||
Distribution and selling expenses, General and administrative expenses | (1,470) | (1,155) | (314) | (27) | (809) | (638) | (171) | (27) |
Other operating income/ (expenses), net | 107 | 266 | (159) | (60) | 136 | 218 | (82) | (38) |
Operating profit | 3,983 | 4,201 | (218) | (5) | 1,889 | 2,451 | (563) | (23) |
Adjusted EBITDA | 4,399 | 4,452 | (53) | (1) | 2,084 | 2,577 | (493) | (19) |
Adjusted EBITDA margin | 29% | 31% | -2% | 22% | 27% | -5% | ||
Growth in sales of the sugar segment in 1H 2016 compared to 1H 2015 was a result of higher sales prices, that was partly offset by a slight decrease in sales volume. Sales volumes in Q2 2016 decreased by 23% that led to 1% decrease in sales despite sales price growth.
Sugar sales, production volumes and average sales prices per kilogram (excl. VAT) wereas follows:
Six months ended | Variance | Three months ended | Variance | |||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sugar production volume(in thousand tons), incl. | 68 | 183 | (115) | (63) | 68 | 96 | (28) | (29) |
beet sugar | 6 | - | 6 | - | 6 | - | 6 | - |
cane sugar | 63 | 183 | (120) | (66) | 63 | 96 | (33) | (35) |
Sales volume(in thousand tons) | 344 | 353 | (9) | (3) | 219 | 242 | (23) | (10) |
Average sales price(roubles per kg, excl. VAT) | 42.1 | 39.6 | 2.5 | 6 | 41.1 | 38.2 | 2.9 | 8 |
Meat Segment
The financial results of the meat segment for 1H 2016 and Q2 2016 compared to 1H 2015and Q2 2015 respectively are presented in the table below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales | 7,858 | 8,476 | (619) | (7) | 4,243 | 4,524 | (281) | (6) |
Net gain/ (loss) on revaluation of biological assets and agricultural produce* | (472) | 600 | (1,071) | - | 541 | 596 | (55) | (9) |
Cost of sales* | (7,156) | (4,961) | (2,195) | (44) | (3,781) | (2,673) | (1,109) | (41) |
Gross profit | 229 | 4,115 | (3,885) | (94) | 1,003 | 2,448 | (1,445) | (59) |
Gross profit margin | 3% | 49% | -46% | 24% | 54% | -30% | ||
Gross profit excl. effect of biological assets revaluation | 701 | 3,515 | (2,814) | (80) | 462 | 1,852 | (1,390) | (75) |
Adjusted gross profit margin | 9% | 41% | -33% | 11% | 41% | -30% | ||
Distribution and selling expenses, General and administrative expenses | (384) | (412) | 29 | 7 | (201) | (214) | 13 | 6 |
Other operating income/ (expenses), net | 229 | 298 | (69) | (23) | 55 | 229 | (174) | (76) |
incl. reimbursement of operating costs (government grants) | 108 | 247 | (139) | (56) | 10 | 202 | (193) | (95) |
Operating profit | 75 | 4,000 | (3,925) | (98) | 857 | 2,463 | (1,606) | (65) |
Adjusted EBITDA | 1,366 | 3,962 | (2,596) | (66) | 815 | 2,193 | (1,378) | (63) |
Adjusted EBITDA margin | 17% | 47% | -29% | 19% | 48% | -29% | ||
(*) See appendix 1 for the disclosure of reclassification adjustments made to 1H and Q2 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:
Six months ended | Variance | Three months ended | Variance | |||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales volume (in thousand tonnes), incl. | 74 | 82 | (8) | (10) | 38 | 41 | (3) | (8) |
livestock pigs | 34 | 78 | (44) | (57) | 18 | 38 | (20) | (53) |
processed pork | 40 | 4 | 36 | 830 | 20 | 3 | 17 | 613 |
Average sale prices (roubles per kg, excl. VAT): | ||||||||
livestock pigs | 85.5 | 101.1 | (15.7) | (15) | 88.2 | 107.6 | (19.5) | (18) |
processed pork | 117.4 | 123.2 | (5.8) | (5) | 123.3 | 125.4 | (2.1) | (2) |
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.
Net loss on revaluation of biological assets and agricultural produce in 1H 2016 resulted from a decrease in market prices for live pigs and an increase in cost of livestock, that in turn was caused by an increase in feed costs.
Agricultural Segment
As at 30 June 2016 the segment's area of controlled land stands at 610 thousand hectares, including 45 thousand hectares in the Far Eastern region. The financial results of the agricultural segment for 1H 2016 and Q2 2016 compared to 1H 2015 and Q2 2015 respectivelyare presented below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales | 4,546 | 2,230 | 2,316 | 104 | 1,184 | 657 | 528 | 80 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce* | (1,278) | (366) | (912) | (249) | (229) | (152) | (77) | (50) |
Cost of sales* | (2,544) | (946) | (1,598) | (169) | (786) | (247) | (539) | (219) |
Gross profit | 725 | 919 | (193) | (21) | 170 | 258 | (88) | (34) |
Gross profit margin | 16% | 41% | -25% | 14% | 39% | -25% | ||
Gross profit excl. effect of biological assets and agricultural produce revaluation | 2,003 | 1,284 | 719 | 56 | 398 | 410 | (11) | (3) |
Adjusted gross profit margin | 44% | 58% | -14% | 34% | 62% | -29% | ||
Distribution and selling expenses, General and administrative expenses | (900) | (553) | (347) | (63) | (465) | (232) | (233) | (100) |
Other operating income/ (expenses), net | 102 | 7 | 95 | n/a | (48) | (61) | 13 | 21 |
incl. reimbursement of operating costs (government grants) | 192 | 166 | 26 | - | 33 | 53 | (20) | - |
Operating profit | (73) | 373 | (445) | - | (343) | (35) | (308) | (872) |
Adjusted EBITDA | 1,632 | 1,043 | 589 | 56 | 69 | 304 | (235) | (77) |
Adjusted EBITDA margin | 36% | 47% | -11% | 6% | 46% | -40% | ||
(*) See appendix 1 for the disclosure of reclassification adjustments made to 1H and Q2 2015 figures.
An increase in sales prices and volumes were the main drivers of an increase in sales in 1H 2016and Q2 2016 compared to 1H 2015 and Q2 2015.
Sales volumes by product were as follows:
Thousand tonnes | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
grain | 278 | 231 | 47 | 20 | 84 | 81 | 3 | 4 |
incl. sold to other segments | 21 | 38 | (17) | (45) | 12 | 10 | 3 | 27 |
sunflower seeds | 33 | 1 | 32 | n/a | 0.13 | 0.11 | 0.02 | 21 |
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 | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
wheat | 8.8 | 8.4 | 0.4 | 5 | 8.5 | 7.4 | 1.2 | 16 |
barley | 10.1 | 9.3 | 0.9 | 9 | 10.0 | 7.4 | 2.6 | 35 |
sunflower seeds | 23.6 | 20.9 | 2.8 | 13 | 21.2 | 19.8 | 1.4 | 7 |
peas | 0.0 | 11.1 | (11.1) | (100) | 0.0 | 9.2 | (9.2) | (100) |
corn | 8.5 | 7.0 | 1.5 | 22 | 8.6 | 7.0 | 1.6 | 23 |
Net loss on revaluation of biological assets and agricultural produce in H1 2016 represents the realisation of gain from crops revaluation, recognised for harvest of 2015 in the financial statements of 2015 and remained unrealised as at 31 December 2015.
In IFRS financial statements of 2015 the Group recognised gain from all crops, harvestedin 2015, including crops in stock at the year-end. Consequently, the crops in stock as at31 December 2015 were measured at market prices prevailing at the time of harvest. In IFRS financial statements for 2016, as these crops are realised, the gain on revaluation is writtenoff in the statement of comprehensive income decreasing the profit of the segment. The gainon revaluation of crops and its subsequent realisation do not affect the Adjusted EBITDA figure.
Other operating income, net is significantly higher in 1H 2016 as no loss from lost harvest write-off occurred in the current period compared to RR 117 million of expenses in 1H 2015. Lost harvest write-off is represented by damage of crops due to unfavourable weather conditions.
Oil and Fat segment
The financial results of the oil and fat segment for 1H 2016 and Q2 2016 compared to 1H 2015 and Q2 2015 respectively are presented below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales | 11,649 | 8,193 | 3,456 | 42 | 5,901 | 4,114 | 1,788 | 43 |
Cost of sales | (9,894) | (5,827) | (4,067) | (70) | (5,220) | (3,161) | (2,058) | (65) |
Gross profit | 1,754 | 2,366 | (611) | (26) | 682 | 952 | (270) | (28) |
Gross profit margin | 15% | 29% | -14% | 12% | 23% | -12% | ||
Distribution and selling expenses, General and administrative expenses | (2,007) | (1,480) | (526) | (36) | (1,059) | (714) | (345) | (48) |
Other operating income/ (expenses), net | 122 | 90 | 33 | 36 | 62 | 18 | 44 | 248 |
Operating profit | (130) | 975 | (1,105) | - | (316) | 255 | (571) | - |
Adjusted EBITDA | (70) | 1,057 | (1,127) | - | (283) | 321 | (605) | - |
Adjusted EBITDA margin | -1% | 13% | -14% | -5% | 8% | -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 | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Sales, incl. | 11,649 | 8,193 | 3,456 | 42 | 5,901 | 4,114 | 1,788 | 43 |
Samara oil plant | 7,255 | 5,110 | 2,145 | 42 | 3,970 | 2,298 | 1,673 | 73 |
Ekat. fat plant | 4,363 | 3,569 | 794 | 22 | 2,299 | 1,852 | 446 | 24 |
Far East | 1,705 | 871 | 835 | 96 | 709 | 562 | 147 | 26 |
Eliminations(*) | (1,675) | (1,357) | (318) | 23 | (1,077) | (598) | (478) | 80 |
Gross profit, incl. | 1,754 | 2,366 | (611) | (26) | 682 | 952 | (270) | (28) |
Samara oil plant | 701 | 1,274 | (572) | (45) | 190 | 410 | (221) | (54) |
Ekat. fat plant | 972 | 1,052 | (79) | (8) | 522 | 504 | 19 | 4 |
Far East | 191 | 131 | 60 | 46 | 50 | 73 | (24) | (33) |
Eliminations(*) | (110) | (90) | (20) | 22 | (80) | (35) | (44) | 125 |
Adjusted EBITDA, incl. | (70) | 1,057 | (1,127) | (107) | (283) | 321 | (605) | (188) |
Samara oil plant | 202 | 802 | (601) | (75) | (3) | 224 | (227) | (101) |
Ekat. fat plant | (290) | 211 | (501) | (237) | (206) | 75 | (281) | (374) |
Far East | 59 | 64 | (5) | (8) | (37) | 27 | (64) | (235) |
Eliminations(*) | (41) | (20) | (21) | 102 | (38) | (5) | (33) | 679 |
Adjusted EBITDA margin, % | -1% | 13% | -14% | -5% | 8% | -13% | ||
Samara oil plant | 3% | 16% | -13% | 0% | 10% | -10% | ||
Ekat. fat plant | -7% | 6% | -13% | -9% | 4% | -13% | ||
Far East | 3% | 7% | -4% | -5% | 5% | -10% | ||
Intra-segment sales include sales of raw oil from Samara oil plant to Ekaterinburg fat plant.
Far East operations in 1H and Q2 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 1H 2015 included tolling operations with soya bean on the related party's production facilities.
Sales volumes by product were as follows:
thousand tons | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
mayonnaise | 33.0 | 27.2 | 5.8 | 21 | 18.6 | 15.0 | 3.6 | 24 |
margarine | 17.2 | 19.5 | (2) | (12) | 7.5 | 8.5 | (1) | (12) |
processed sunflower oil | 5.3 | 2.2 | 3 | 139 | 2.2 | 1.8 | 0.3 | 18 |
sunflower oil, 3rd parties sales | 86 | 58 | 28 | 47 | 47 | 28 | 19 | 69 |
sunflower oil, sales to Ekat. fat plant | 28 | 32 | (4) | (12) | 18 | 15 | 4 | 25 |
sunflower meal | 86 | 87 | (1) | (1) | 42 | 43 | (1) | (3) |
soybean raw oil | - | 2.6 | n/a | n/a | - | - | - | - |
soybean processed oil | 5.8 | 0.7 | 5.1 | 718 | 3.4 | 0.7 | 2.7 | 377 |
soybean meal | 40 | 27 | 13 | 49 | 14 | 19 | (5) | (25) |
The average sale prices per kilogram (excl. VAT) for sales to third parties were as follows:
RR per kilogram, excl. VAT | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
mayonnaise | 76.4 | 71.5 | 4.9 | 7 | 76.9 | 73.9 | 3.1 | 4 |
margarine | 71.0 | 66.2 | 4.8 | 7 | 73.0 | 62.9 | 10.1 | 16 |
processed sunflower oil | 75.4 | 53.0 | 22.5 | 42 | 75.6 | 52.4 | 23.2 | 44 |
sunflower raw oil, 3rd parties sales | 54.5 | 45.1 | 9.4 | 21 | 51.9 | 42.0 | 9.9 | 24 |
sunflower meal | 12.5 | 13.1 | (0.6) | (5) | 12.9 | 12.1 | 0.9 | 7 |
soybean raw oil | - | 24.2 | n/a | n/a | - | - | - | - |
soybean processed oil | 69.3 | 60.3 | 8.9 | 15 | 65.6 | 60.3 | 5.3 | 9 |
soybean meal | 29.8 | 28.6 | 1.3 | 4 | 28.9 | 27.4 | 1.6 | 6 |
Significant 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 | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Net cash from operating activities, incl. | 8,487 | 9,762 | (1,275) | (13) | 7,631 | 7,332 | 299 | 4 |
Operating cash flow before working capital changes | 7,828 | 10,233 | (2,405) | (24) | 3,690 | 5,391 | (1,701) | (32) |
Working capital changes | 1,253 | 741 | 511 | 69 | 4,050 | 2,299 | 1,751 | 76 |
Net cash from investing activities, incl. | (12,324) | (3,825) | (8,498) | (222) | (11,014) | (2,525) | (8,489) | (336) |
Purchases of property, plant and equipment and inventories intended for construction | (3,631) | (3,707) | 76 | 2 | (2,475) | (2,618) | 143 | 5 |
Net cash from financing activities | 9,865 | (9,666) | 19,530 | 0 | 9,654 | (13,442) | 23,096 | 0 |
Net increase/ (decrease) in cash and cash equivalents | 6,064 | (4,998) | 11,062 | 0 | 6,719 | (9,929) | 16,648 | 0 |
(*) See Appendix 4
The main investments in property, plant and equipment and inventories intended for construction in 1H 2016 were made in the agro segment in the amount of RR 2,051 million (1H 2015:RR 1,392 million), related to purchases of machinery and equipment, and in the sugar division in the amount of RR 731 million (1H 2015: RR 1,286 million), related to the modernization of sugar plants.
Debt position and liquidity management
in RR million | 30 June 2016 | 31 December 2015 | Variance | |
Units | % | |||
Gross debt | 43,801 | 49,898 | (6,097) | (12) |
Short-term borrowings | 18,896 | 25,860 | (6,964) | (27) |
Long-term borrowings | 24,905 | 24,038 | 868 | 4 |
Net debt | (2,573) | 15,147 | (17,719) | - |
Short-term borrowings, net | (10,697) | 5,823 | (16,521) | - |
Long-term borrowings, net | 8,124 | 9,323 | (1,199) | (13) |
Adjusted EBITDA | 21,797 | 24,423 | (2,626) | (11) |
Net debt/ Adjusted EBITDA | (0.12) | 0.62 | (0.7) | |
Net finance income/ (expense)
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2016 | 30 June 2015 | Units | % | 30 June 2016 | 30 June 2015 | Units | % | |
Net interest expense | (1,902) | (1,034) | (868) | (84) | (591) | (445) | (146) | (33) |
Gross interest expense | (2,594) | (1,650) | (944) | (57) | (1,174) | (926) | (248) | (27) |
Reimbursement of interest expense | 692 | 616 | 76 | 12 | 583 | 482 | 101 | 21 |
Interest income | 2,033 | 466 | 1,567 | 336 | 1,076 | 210 | 866 | 413 |
Net gain/ (loss) from bonds held for trading | (13) | 637 | (650) | - | (13) | 142 | (155) | - |
Other financial income, net | (1,036) | (800) | (237) | (30) | (182) | (1,073) | 891 | 83 |
Net foreign exchange gain/ (loss) | (1,021) | (813) | (208) | (26) | (182) | (1,108) | 926 | 84 |
Other financial income / (expenses), net | (16) | 14 | (29) | - | (1) | 34 | (35) | - |
Total net finance income | (919) | (730) | (188) | (26) | 290 | (1,166) | 1,456 | - |
In 2016 the Group continued to enjoy benefits from the state agriculture subsidies programme.In 1H 2016 RR 692 million of subsidies received covered 27% of gross interest expense.
Other financial income, net relates mainly to net financial foreign exchange losses.
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(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 610 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 1H and Q2 2016 financial results for investors and analysts.
Details of call:
Date | 26 August 2016 |
Time | 4:00 PM (Moscow) /2:00 PM (London) |
Subject | ROS AGRO PLC First half 2016 financial results |
UK Toll Free UK Local Line | 0800 279 4977 +44 20 3427 1913 |
USA Toll Free USA Local Line | 1877 280 2296 +1 646 254 3364 |
Russia Toll Free | +7 495 213 0978 |
Conference ID | 3722617 |
Contacts:
Sergey Tribunsky Chief Investment Officer LLC Group of Companies Rusagro Phone: +7 495 363 1661 stribunsky@rusagrogroup.ru |
Appendix 1. Unaudited consolidated statement of comprehensive income for the six months ended 30 June 2016 (in RR thousand)
Six months ended 30 June | Three months ended 30 June | |||
2016 | 2015 | 2016 | 2015 | |
Sales | 38,209,790 | 32,588,701 | 20,472,026 | 18,466,451 |
Net gain on revaluation of biological assets and agricultural produce* | (3,350,542) | (528,176) | (555,442) | (43,255) |
Cost of sales* | (27,078,097) | (19,673,098) | (15,488,607) | (11,862,317) |
Net gain from trading derivatives | 337,299 | 224,642 | 40,842 | 63,349 |
Gross profit | 8,118,450 | 12,612,069 | 4,468,819 | 6,624,229 |
Distribution and selling expenses | (3,200,968) | (2,270,785) | (1,676,730) | (1,140,089) |
General and administrative expenses | (2,491,463) | (2,073,982) | (1,228,524) | (1,055,234) |
Other operating income/ (expenses), net | 598,121 | 417,489 | 195,926 | 174,946 |
Operating profit | 3,024,140 | 8,684,791 | 1,759,491 | 4,603,852 |
Interest expense | (1,902,230) | (1,033,962) | (591,110) | (444,675) |
Interest income | 2,032,885 | 466,162 | 1,076,286 | 210,210 |
Net gain/ (loss) from bonds held for trading | (12,907) | 636,601 | (12,907) | 141,948 |
Other financial income/ (expenses), net | (1,036,480) | (799,522) | (182,493) | (1,094,727) |
Profit before income tax | 2,105,408 | 7,954,070 | 2,049,268 | 3,416,607 |
Income tax expense | (72,384) | (734,505) | (383,422) | (448,218) |
Profit for the year | 2,033,024 | 7,219,565 | 1,665,846 | 2,968,389 |
Other comprehensive income: Items that may be subsequently reclassified to profit and loss: | ||||
Change in value of available-for-sale financial assets | (189,757) | - | (173,438) | - |
Income tax relating to other comprehensive income | 37,951 | - | 34,688 | - |
Total comprehensive income for the period | 1,881,219 | 7,219,565 | 1,527,095 | 2,968,389 |
Profit is attributable to: | ||||
Owners of ROS AGRO PLC | 2,034,063 | 7,221,020 | 1,669,691 | 2,968,782 |
Non-controlling interest | (1,039) | (1,455) | (3,845) | (393) |
Profit for the period | 2,033,024 | 7,219,565 | 1,665,846 | 2,968,389 |
Total comprehensive income is attributable to: | ||||
Owners of ROS AGRO PLC | 1,882,258 | 7,221,020 | 1,530,941 | 2,968,782 |
Non-controlling interest | (1,039) | (1,455) | (3,845) | (393) |
Total comprehensive income for the period | 1,881,219 | 7,219,565 | 1,527,095 | 2,968,389 |
Earnings per ordinary share for profit attributable to the owners of ROSAGRO PLC, basic and diluted(in RR per share) | 86.34 | 306.53 | 70.88 | 126.02 |
(*)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 1H 2015 and Q2 2015 "Gain/ (loss) on revaluation of biological assets and agricultural produce" amounted to RR 4,178,852 thousand and RR 2,522,842 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 4,707,028 in 1H 2015 and RR 2,566,097 million in Q2 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 six months ended 30 June 2016 (in RR thousand)
1H 2016 | Sugar | Meat | Agriculture | Oil and Fat | Other | Eliminations | Total |
Sales | 15,219,196 | 7,857,591 | 4,546,268 | 11,648,661 | 49,898 | (1,111,825) | 38,209,789 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | (471,733) | (1,277,856) | - | - | (1,600,953) | (3,350,542) |
Cost of sales | (10,210,772) | (7,156,417) | (2,543,752) | (9,894,272) | - | 2,727,116 | (27,078,097) |
incl. Depreciation | (466,223) | (932,320) | (274,391) | (120,267) | - | (4,098) | (1,797,299) |
Net gain/ (loss) from trading derivatives | 336,580 | - | 720 | - | - | - | 337,300 |
Gross profit | 5,345,004 | 229,441 | 725,380 | 1,754,389 | 49,898 | 14,338 | 8,118,450 |
Distribution and Selling, General and administrative expenses | (1,469,537) | (383,546) | (900,378) | (2,006,839) | (1,083,252) | 151,122 | (5,692,430) |
incl. Depreciation | (57,045) | (7,837) | (62,260) | (62,318) | (10,710) | 3,396 | (196,774) |
Other operating income/(expenses), net | 107,338 | 229,493 | 102,391 | 122,250 | 7,126,612 | (7,089,963) | 598,121 |
incl. Reimbursement of operating costs (government grants) | - | 107,853 | 192,272 | - | - | - | 300,125 |
Operating profit | 3,982,805 | 75,388 | (72,607) | (130,200) | 6,093,258 | (6,924,503) | 3,024,141 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 523,268 | 940,157 | 336,651 | 182,585 | 10,710 | 702 | 1,994,073 |
Other operating (income) /expenses, net | (107,338) | (229,493) | (102,391) | (122,250) | (7,126,612) | 7,089,963 | (598,121) |
Reimbursement of operating costs (government grants) | - | 107,853 | 192,272 | - | - | - | 300,125 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | 471,733 | 1,277,856 | - | - | 1,600,953 | 3,350,542 |
Adjusted EBITDA* | 4,398,735 | 1,365,638 | 1,631,781 | (69,865) | (1,022,644) | 1,767,115 | 8,070,760 |
* Non-IFRS measure
Appendix 2 (continued). Unaudited segment information for the six months ended 30 June 2015 (in RR thousand)
1H 2015 | Sugar | Meat | Agriculture | Oil and Fat | Other | Eliminations | Total |
Sales | 14,258,412 | 8,476,136 | 2,230,417 | 8,192,951 | 18,900 | (588,115) | 32,588,701 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | 599,544 | (365,824) | - | - | (761,896) | (528,176) |
Cost of sales | (9,393,405) | (4,961,045) | (946,057) | (5,827,177) | - | 1,454,585 | (19,673,098) |
incl. Depreciation | (461,604) | (600,769) | (107,160) | (105,919) | - | (28,627) | (1,304,079) |
Net gain/ (loss) from trading derivatives | 224,642 | - | - | - | - | - | 224,642 |
Gross profit | 5,089,650 | 4,114,636 | 918,536 | 2,365,775 | 18,900 | 104,573 | 12,612,069 |
Distribution and Selling, General and administrative expenses | (1,155,123) | (412,426) | (553,247) | (1,480,342) | (814,027) | 70,397 | (4,344,767) |
incl. Depreciation | (55,807) | (11,550) | (38,767) | (66,135) | (12,391) | 118 | (184,532) |
Other operating income/(expenses), net | 265,861 | 298,284 | 7,407 | 89,726 | 10,709,330 | (10,953,120) | 417,489 |
incl. Reimbursement of operating costs (government grants) | - | 246,895 | 166,227 | - | - | - | 413,122 |
Operating profit | 4,200,389 | 4,000,494 | 372,696 | 975,159 | 9,914,203 | (10,778,150) | 8,684,791 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 517,411 | 612,320 | 145,927 | 172,054 | 12,391 | 28,509 | 1,488,611 |
Other operating (income) /expenses, net | (265,861) | (298,284) | (7,407) | (89,726) | (10,709,330) | 10,953,120 | (417,489) |
Reimbursement of operating costs (government grants) | - | 246,895 | 166,227 | - | - | - | 413,122 |
Net gain/ (loss) on revaluation of biological assets and agricultural produce | - | (599,544) | 365,824 | - | - | 761,896 | 528,176 |
Adjusted EBITDA* | 4,451,938 | 3,961,880 | 1,043,267 | 1,057,487 | (782,736) | 965,375 | 10,697,211 |
* See appendix 1 for the disclosure of reclassification adjustments made to the 1H 2015 figures.
** Non-IFRS measure
Appendix 3. Unaudited consolidated statement of financial position as at 30 June 2016(in RR thousand)
30 June 2016 | 31 December 2015 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 10,465,662 | 4,401,703 |
Restricted cash | 4,442 | - |
Short-term investments | 22,454,106 | 30,129,049 |
Trade and other receivables | 2,343,857 | 3,504,497 |
Prepayments | 724,048 | 1,186,836 |
Current income tax receivable | 197,765 | 41,816 |
Other taxes receivable | 3,184,507 | 1,613,361 |
Inventories | 16,778,376 | 22,569,821 |
Short-term biological assets | 8,514,404 | 3,616,397 |
Total current assets | 64,667,167 | 67,063,480 |
Non-current assets | ||
Property, plant and equipment | 38,303,435 | 34,607,999 |
Inventories intended for construction | 47,369 | 26,851 |
Goodwill | 7,785,532 | 2,403,562 |
Advances paid for property, plant and equipment | 5,895,952 | 5,392,600 |
Long-term biological assets | 1,839,392 | 1,913,224 |
Long-term investments | 17,893,192 | 15,378,412 |
Investments in associates | 431,405 | 431,404 |
Deferred income tax assets | 1,372,202 | 1,490,657 |
Other intangible assets | 743,226 | 709,965 |
Long-term restricted cash | 3,739 | 71,142 |
Total non-current assets | 74,315,444 | 62,425,816 |
Total assets | 138,982,611 | 129,489,296 |
Liabilities and EQUITY | ||
Current liabilities | ||
Short-term borrowings | 18,896,082 | 25,860,464 |
Trade and other payables | 6,286,076 | 3,736,755 |
Current income tax payable | 51,435 | 383,535 |
Other taxes payable | 2,824,089 | 2,359,135 |
Total current liabilities | 28,057,682 | 32,339,889 |
Non-current liabilities | ||
Long-term borrowings | 24,905,352 | 24,037,539 |
Government grants | 2,438,824 | 2,043,667 |
Deferred income tax liability | 602,068 | 496,235 |
Total non-current liabilities | 27,946,244 | 26,577,441 |
Total liabilities | 56,003,926 | 58,917,330 |
Equity | ||
Share capital | 12,269 | 9,734 |
Treasury shares | (505,880) | (505,880) |
Share premium | 26,856,220 | 10,557,573 |
Share-based payment reserve | 1,111,832 | 1,295,213 |
Retained earnings | 55,457,208 | 59,188,050 |
Equity attributable to owners of ROS AGRO PLC | 82,931,649 | 70,544,690 |
Non-controlling interest | 47,036 | 27,276 |
Total equity | 82,978,685 | 70,571,966 |
Total liabilities and equity | 138,982,611 | 129,489,296 |
Appendix 4. Unaudited consolidated statement of cash flows for the six months ended 30 June 2016 (in RR thousand) - NOT IFRS PRESENTATION (*)
Six months ended | Six months ended | |
30 June 2016 | 30 June 2015 | |
Cash flows from operating activities | ||
Profit before income tax | 2,105,407 | 7,954,070 |
Adjustments for: | ||
Depreciation and amortization | 1,994,058 | 1,488,611 |
Interest expense | 2,594,000 | 1,650,066 |
Government grants | (1,151,258) | (1,096,437) |
Interest income | (2,032,885) | (466,162) |
Loss/ (gain) on disposal of property, plant and equipment | 49,778 | 36,350 |
Net loss on revaluation of biological assets and agricultural produce | 3,350,542 | 528,176 |
Change in provision for net realisable value of inventory | 119,345 | (1,432) |
Foreign exchange loss, net | 999,023 | 579,680 |
Lost harvest write-off | - | 117,056 |
Net loss/ (gain) from bonds held for trading | 12,907 | (636,601) |
Change in provision for impairment of other taxes receivables | (259,953) | - |
Other non-cash and non-operating expenses, net | 47,111 | 80,093 |
Operating cash flow before working capital changes | 7,828,075 | 10,233,470 |
Change in trade and other receivables and prepayments | 1,035,671 | (1,088,160) |
Change in other taxes receivable | (1,040,258) | (980,955) |
Change in inventories | 5,236,906 | 4,767,771 |
Change in biological assets | (5,239,835) | (6,500,800) |
Change in trade and other payables | 853,780 | 3,916,916 |
Change in other taxes payable | 406,352 | 626,417 |
Cash generated from operations | 9,080,691 | 10,974,659 |
Income tax paid | (594,085) | (1,212,669) |
Net cash from operating activities | 8,486,606 | 9,761,990 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (3,615,816) | (3,707,244) |
Purchases of other intangible assets | (115,215) | (59,252) |
Proceeds from sales of property, plant and equipment | 47,503 | 11,417 |
Purchases of inventories intended for construction | (15,289) | (141) |
Investments in subsidiaries, net of cash acquired | (8,687,889) | 4,845 |
Movement in restricted cash | 63,010 | (74,792) |
Proceeds from sale of subsidiaries, net of cash disposed | - | (46) |
Net cash from investing activities | (12,323,696) | (3,825,212) |
Cash flows from financing activities | ||
Proceeds from borrowings | 13,106,619 | 16,517,672 |
Repayment of borrowings | (20,656,158) | (13,831,811) |
Interest paid | (2,143,766) | (1,427,132) |
Change in cash on bank deposits* | (4,300,780) | (16,353,042) |
Purchases of bonds* | (2,197,350) | - |
Proceeds from sales of bonds* | 3,318,378 | 7,567,628 |
Loans given* | (1,211,219) | (901,043) |
Loans repaid* | 9,211,522 | 314,450 |
Interest received* | 2,024,388 | 296,981 |
Proceeds from government grants | 1,546,414 | 925,797 |
Purchases of non-controlling interest | - | (4,105) |
Proceeds from issue of own shares, net of transaction cost | 16,301,181 | - |
Dividends paid to owners Ros Agro PLC | (5,149,286) | (2,760,324) |
Other financial activities | 14,585 | (10,889) |
Net cash from financing activities | 9,864,528 | (9,665,818) |
Net effect of exchange rate changes on cash and cash equivalents | 36,517 | (1,269,255) |
Net increase/ (decrease) in cash and cash equivalents | 6,063,955 | (4,998,295) |
Cash and cash equivalents at the beginning of the period | 4,401,703 | 10,316,314 |
Cash and cash equivalents at the end of the period | 10,465,662 | 5,318,019 |
(*) 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.