1 Sep 2015 07:31
31 August 2015
ROS AGRO financial results for 1H 2015 and Q2 2015
31 August 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 six months ended 30 June 2015.
1H 2015 Highlights
- Sales amounted to RR 32,589 million (US$ 565 million (*)), an increase of RR 5,944 million compared to 1H 2014;
- Adjusted EBITDA (**) amounted to RR 10,697 million (US$ 185 million), an increase of RR 4,194 million compared to 1H 2014;
- Adjusted EBITDA margin increased from 24% to 33%;
- Net profit for the period amounted to RR 7,220 million (US$ 125 million);
- Net debt position (***) as of 30 June 2015 was RR 1,525 million (US$ 27 million);
- Net Debt/ Adjusted EBITDA (LTM) (****) as of 30 June 2015 was 0.1x.
Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Group, said:
"In the second quarter the company continued to be very profitable gaining from favorable prices."
Key consolidated financial performance indicators
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014* | Units | % | 30 June 2015 | 30 June 2014* | Units | % | |
Sales | 32,589 | 26,645 | 5,944 | 22 | 18,466 | 15,569 | 2,898 | 19 |
Gross profit | 12,612 | 9,058 | 3,554 | 39 | 6,624 | 5,099 | 1,525 | 30 |
Gross margin, % | 39% | 34% | 5% | 36% | 33% | 3% | ||
Adjusted EBITDA | 10,697 | 6,503 | 4,194 | 65 | 5,597 | 4,073 | 1,524 | 37 |
Adjusted EBITDA margin, % | 33% | 24% | 8% | 30% | 26% | 4% | ||
Net profit for the period | 7,220 | 6,287 | 933 | 15 | 2,968 | 4,046 | (1,077) | (27) |
Net profit margin % | 22% | 24% | -1% | 16% | 26% | -10% |
*See appendix 1 for the disclosure of reclassification adjustments made to the 1H 2014 and Q2 2014 figures
Key financial performance indicators by segments*
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales, incl. | 32,589 | 26,645 | 5,944 | 22 | 18,466 | 15,569 | 2,898 | 19 |
Sugar | 14,258 | 10,833 | 3,425 | 32 | 9,459 | 6,336 | 3,124 | 49 |
Meat | 8,476 | 7,225 | 1,252 | 17 | 4,524 | 4,835 | (310) | (6) |
Agriculture | 2,230 | 1,619 | 611 | 38 | 657 | 869 | (213) | (24) |
Oil | 8,193 | 7,976 | 217 | 3 | 4,114 | 4,151 | (37) | (1) |
Other | 19 | 26 | (7) | (27) | 10 | 12 | (2) | (19) |
Eliminations | (588) | (1,034) | 446 | 43 | (297) | (634) | 337 | 53 |
Gross profit, incl. | 12,612 | 9,058 | 3,554 | 39 | 6,624 | 5,099 | 1,525 | 30 |
Sugar | 5,090 | 2,444 | 2,646 | 108 | 2,871 | 1,221 | 1,650 | 135 |
Meat | 4,115 | 4,316 | (201) | (5) | 2,448 | 2,684 | (236) | (9) |
Agriculture | 919 | 222 | 697 | 314 | 258 | 103 | 155 | 150 |
Oil | 2,366 | 2,122 | 244 | 11 | 952 | 1,086 | (134) | (12) |
Other | 19 | 26 | (7) | (27) | 10 | 12 | (2) | (19) |
Eliminations | 105 | (71) | 176 | - | 86 | (6) | 92 | - |
Adjusted EBITDA, incl. | 10,697 | 6,503 | 4,194 | 65 | 5,597 | 4,073 | 1,524 | 37 |
Sugar | 4,452 | 1,740 | 2,712 | 156 | 2,577 | 855 | 1,722 | 201 |
Meat | 3,962 | 3,138 | 823 | 26 | 2,193 | 2,456 | (263) | (11) |
Agriculture | 1,043 | 497 | 546 | 110 | 304 | 248 | 56 | 23 |
Oil | 1,057 | 991 | 67 | 7 | 321 | 439 | (118) | (27) |
Other | (783) | (250) | (533) | (214) | (418) | (134) | (284) | (212) |
Eliminations | 965 | 386 | 579 | 150 | 621 | 209 | 411 | 197 |
Adjusted EBITDA margin, % | 33% | 24% | 8% | 30% | 26% | 4% | ||
Sugar | 31% | 16% | 15% | 27% | 13% | 14% | ||
Meat | 47% | 43% | 3% | 48% | 51% | -2% | ||
Agriculture | 47% | 31% | 16% | 46% | 29% | 18% | ||
Oil | 13% | 12% | 0% | 8% | 11% | -3% |
* In Q2 2015 the management decided not to present the Far East operations as separate business segment, as it was reported in Q1 2015 financial results, and allocate these operations between Meat, Agriculture and Oil segment on the basis of the economic sense of the underlying operations. The financial information for Q1 2015 for Meat, Agriculture and Oil segment had been adjusted accordingly. The consolidated financial results for Q1 2015 remain unchanged.
Sugar Segment
The financial results of the sugar segment for 1H 2015 and Q2 2015 compared to 1H 2014 and Q2 2014 respectively are presented in the table below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales | 14,258 | 10,833 | 3,425 | 32 | 9,459 | 6,336 | 3,124 | 49 |
Cost of sales | (9,393) | (8,644) | (750) | (9) | (6,652) | (5,204) | (1,447) | (28) |
Gains less losses from trading sugar derivatives | 225 | 254 | (30) | (12) | 63 | 89 | (26) | (29) |
Gross profit | 5,090 | 2,444 | 2,646 | 108 | 2,871 | 1,221 | 1,650 | 135 |
Gross profit margin | 36% | 23% | 13% | 30% | 19% | 11% | ||
Distribution and selling expenses | (755) | (764) | 9 | 1 | (441) | (406) | (35) | (9) |
General and administrative expenses | (401) | (326) | (75) | (23) | (197) | (137) | (60) | (44) |
Other operating income/ (expenses), net | 266 | (24) | 290 | - | 218 | (25) | 243 | - |
Operating profit | 4,200 | 1,330 | 2,871 | 216 | 2,451 | 654 | 1,798 | 275 |
Adjusted EBITDA | 4,452 | 1,740 | 2,712 | 156 | 2,577 | 855 | 1,722 | 201 |
Adjusted EBITDA margin | 31% | 16% | 15% | 27% | 13% | 14% |
Sales in the sugar segment in 1H 2015 increased compared to 1H 2014 as a result of a significant increase in sale prices that was partly offset by a decrease in sales volume. Sales in Q2 2015 as compared to Q2 2014 increased as a result of an increase both in sales prices and sales volume.
Sugar sales and production volumes and the average sales prices per kilogram (excl. VAT) were as follows:
Six months ended | Variance | Three months ended | Variance | |||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sugar production volume (in thousand tonnes) , incl. | 183 | 226 | (43) | (19) | 96 | 136 | (40) | (29) |
beet sugar | - | 15 | (15) | (100) | - | - | - | - |
cane sugar | 183 | 211 | (28) | (13) | 96 | 136 | (40) | (29) |
Sales volume (in thousand tonnes) | 353 | 389 | (36) | (9) | 242 | 215 | 27 | 13 |
Sale price (roubles per kg, excl. VAT) | 39.6 | 27.1 | 12.5 | 46 | 38.2 | 28.5 | 9.7 | 34 |
Other operating income in 1H 2015 include RR 109 million of operating foreign exchange differences gain and RR 229 million of gain from writing down of intercompany loan received from the holding company (eliminated in consolidation adjustments on the Group level).
A significant increase in the sale prices in 1H 2015 compared to 1H 2014 was the main driver of an increase in profitability of the segment.
Meat Segment
The financial results of the meat segment for 1H 2015 and Q2 2015 compared to 1H 2014 and Q2 2014 respectively are presented in the table below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales | 8,476 | 7,225 | 1,252 | 17 | 4,524 | 4,835 | (310) | (6) |
Gain on revaluation of biological assets and agricultural produce | 4,179 | 4,608 | (429) | (9) | 2,523 | 2,792 | (269) | (10) |
Cost of sales | (8,540) | (7,517) | (1,024) | (14) | (4,599) | (4,943) | 343 | 7 |
Gross profit | 4,115 | 4,316 | (201) | (5) | 2,448 | 2,684 | (236) | (9) |
Gross profit margin | 49% | 60% | -11% | 54% | 56% | -1% | ||
Gross profit excl. effect of biological assets revaluation | 3,515 | 2,598 | 917 | 35 | 1,852 | 2,153 | (301) | (14) |
Adjusted gross profit margin | 41% | 36% | 6% | 41% | 45% | -4% | ||
Distribution and selling expenses | (47) | (16) | (31) | (188) | (30) | (9) | (21) | (235) |
General and administrative expenses | (365) | (176) | (189) | (107) | (185) | (89) | (95) | (107) |
Other operating income, net | 298 | 51 | 247 | 484 | 229 | 31 | 198 | 639 |
incl. reimbursement of operating costs (government grants) | 247 | 26 | 221 | 846 | 202 | 26 | 176 | 676 |
Operating profit | 4,000 | 4,174 | (173) | (4) | 2,463 | 2,617 | (154) | (6) |
Adjusted EBITDA | 3,962 | 3,138 | 823 | 26 | 2,193 | 2,456 | (263) | (11) |
Adjusted EBITDA margin | 47% | 43% | 3% | 48% | 51% | -2% |
17% increase in Sales in 1H 2015 as compared to 1H 2014 was driven mainly by an increase in pork sales prices. The dynamics of sales in Q2 2015 compared to Q2 2014 are negative due to a decrease by RR 168 million in sales of grain surplus (RR 81 million in Q2 2015 vs. RR 249 million in Q2 2014) and a decrease in sales volume of pork that was partly compensated by an increase 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 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales volume (in thousand tonnes) | 83 | 80 | 3 | 4 | 42 | 46 | (5) | (10) |
Sale prices (roubles per kg, excl. VAT) | 100.9 | 87.3 | 13.7 | 16 | 106.9 | 99.4 | 7.6 | 8 |
The breakdown of adjusted EBITDA between Belgorod Meat, Tambov Meat and Far East meat project is as follows:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales, incl. | 8,476 | 7,225 | 1,252 | 17 | 4,524 | 4,835 | (310) | (6) |
Belgorod Meat | 4,042 | 3,349 | 693 | 21 | 2,138 | 2,152 | (14) | (1) |
Tambov Meat | 4,435 | 3,876 | 559 | 14 | 2,386 | 2,683 | (297) | (11) |
Gross profit, incl. | 4,115 | 4,316 | (201) | (5) | 2,448 | 2,684 | (236) | (9) |
Belgorod Meat | 1,931 | 2,118 | (187) | (9) | 1,077 | 1,277 | (200) | (16) |
Tambov Meat | 2,183 | 2,198 | (14) | (1) | 1,371 | 1,407 | (35) | (3) |
Adjusted EBITDA, incl. | 3,962 | 3,138 | 823 | 26 | 2,193 | 2,456 | (263) | (11) |
Belgorod Meat | 1,854 | 1,549 | 305 | 20 | 987 | 1,132 | (146) | (13) |
Tambov Meat | 2,132 | 1,589 | 542 | 34 | 1,221 | 1,324 | (103) | (8) |
Far East Meat | (24) | - | (24) | - | (15) | - | (15) | - |
Adjusted EBITDA margin, % | 47% | 43% | 3% | 48% | 51% | -2% | ||
Belgorod Meat | 46% | 46% | 0% | 46% | 53% | -6% | ||
Tambov Meat | 48% | 41% | 7% | 51% | 49% | 2% | ||
Far East Meat | n/a | n/a | n/a | n/a | n/a | n/a |
An increase in General and administrative expenses relates to a construction of slaughter house and basically comprise of an increase in payroll costs: by RR 120 million in 1H 2015 as compared to 1H 2014 and by RR 64 million in Q2 2015 compared to Q2 2014.
An increase of income from government grants accompanied by a decline in charitable donations and other social costs resulted in significant increase of Other operating income, net in 1H 2015 compared to 1H 2014 and Q2 2015 compared to Q2 2014.
Agricultural Segment
The segment's area of controlled land now stands at 500 thousand hectares, including 27 thousand hectares in the Far Eastern region. The financial results of the agricultural segment for 1H 2015 and Q2 2015 compared to 1H 2014 and Q2 2014 respectively are presented below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales | 2,230 | 1,619 | 611 | 38 | 657 | 869 | (213) | (24) |
Gain on revaluation of biological assets and agriculture produce | - | - | - | - | - | - | - | - |
Cost of sales | (1,312) | (1,397) | 85 | 6 | (399) | (766) | 367 | 48 |
Gross profit | 919 | 222 | 697 | 314 | 258 | 103 | 155 | 150 |
Gross profit margin | 41% | 14% | 27% | 39% | 12% | 27% | ||
Gross profit excl. effect of biological assets and agricultural produce revaluation | 1,284 | 486 | 798 | 164 | 410 | 260 | 150 | 58 |
Adjusted gross profit margin | 58% | 30% | 28% | 62% | 30% | 33% | ||
Distribution and selling expenses | (301) | (127) | (174) | (137) | (104) | (30) | (74) | (247) |
General and administrative expenses | (253) | (181) | (72) | (40) | (128) | (63) | (65) | (103) |
Other operating income/ (expenses), net | 7 | 91 | (84) | (92) | (61) | (16) | (45) | (272) |
incl. reimbursement of operating costs (government grants) (government grants) | 166 | 149 | 17 | 11 | 53 | - | 53 | - |
Operating profit/ (loss) | 373 | 5 | 367 | 6,813 | (35) | (6) | (29) | (455) |
Adjusted EBITDA | 1,043 | 497 | 546 | 110 | 304 | 248 | 56 | 23 |
Adjusted EBITDA margin | 47% | 31% | 16% | 46% | 29% | 18% |
An increase in Sales by 38% in 1H 2015 compared to 1H 2014 resulted from an increase in sales prices of all crops and an increase in wheat and soya beans sales volume that was partly offset by a decrease in sunflower seeds, barley and corn sales volume.
Sales volumes by product were as follows:
Thousand tonnes | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
sugar beet | - | 12 | (12) | (100) | - | - | - | - |
grain | 231 | 174 | 57 | 33 | 81 | 67 | 14 | 21 |
incl. sold to other segments | 38 | 89 | (51) | (57) | 10 | 34 | (24) | (72) |
sunflower seeds | 1 | 32 | (31) | (97) | 0 | 31 | (31) | (100) |
incl. sold to other segments | - | 31 | (31) | (100) | - | 31 | (31) | (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 | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
wheat | 8.4 | 5.7 | 2.7 | 46 | 7.4 | 5.9 | 1.5 | 26 |
barley | 9.3 | 5.5 | 3.8 | 69 | 7.4 | 5.5 | 1.9 | 34 |
sunflower seeds | 20.9 | 12.8 | 8.1 | 63 | 19.8 | 12.8 | 7.0 | 55 |
peas | 11.1 | 8.2 | 2.9 | 36 | 9.2 | 8.6 | 0.6 | 7 |
corn | 7.0 | 5.0 | 1.9 | 39 | 7.0 | 5.4 | 1.6 | 30 |
Other operating income, net in 1H 2015 and Q2 2015 include RR 117 million of loss from lost harvest write-off (1H 2014 and Q2 2014: RR 4 million).
Oil segment
The financial results of the oil segment for 1H 2015 and Q2 2015 compared to 1H 2014 and Q2 2014 respectively are presented below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales | 8,193 | 7,976 | 217 | 3 | 4,114 | 4,151 | (37) | (1) |
Cost of sales | (5,827) | (5,854) | 27 | 0 | (3,161) | (3,065) | (96) | (3) |
Gross profit | 2,366 | 2,122 | 244 | 11 | 952 | 1,086 | (134) | (12) |
Gross profit margin | 29% | 27% | 2% | 23% | 26% | -3% | ||
Distribution and selling expenses | (1,205) | (1,123) | (83) | (7) | (584) | (635) | 51 | 8 |
General and administrative expenses | (275) | (199) | (76) | (38) | (131) | (102) | (29) | (28) |
Other operating income/ (expenses), net | 90 | 3 | 87 | 3,385 | 18 | 16 | 1 | 9 |
Operating profit | 975 | 803 | 172 | 21 | 255 | 365 | (110) | (30) |
Adjusted EBITDA | 1,057 | 991 | 67 | 7 | 321 | 439 | (118) | (27) |
Adjusted EBITDA margin | 13% | 12% | 0.5% | 8% | 11% | -3% |
In the beginning of February 2015 the Group acquired an entity situated in Far East region and engaged in buying and processing on third-party production facilities of soya beans (tolling operations). Starting the February of 2015 the income and expenses of this company are included in the Group's consolidated financial statements within the oil segment.
The breakdown of Sales, Gross profit and Adjusted EBITDA between the Samara oil plant, the Ekaterinburg fat plant and Far East tolling operations with soybean is as follows:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Sales, incl. | 8,193 | 7,976 | 217 | 3 | 4,114 | 4,151 | (37) | (1) |
Samara oil plant | 5,110 | 5,560 | (450) | (8) | 2,298 | 2,781 | (483) | (17) |
Ekat. fat plant | 3,569 | 3,061 | 508 | 17 | 1,852 | 1,614 | 239 | 15 |
Far East | 871 | - | 871 | - | 562 | - | 562 | - |
Eliminations(*) | (1,357) | (644) | (712) | (111) | (598) | (244) | (355) | (146) |
Gross profit, incl. | 2,366 | 2,122 | 244 | 11 | 952 | 1,086 | (134) | (12) |
Samara oil plant | 1,274 | 1,280 | (6) | (0) | 410 | 646 | (236) | (37) |
Ekat. fat plant | 1,052 | 881 | 171 | 19 | 504 | 434 | 70 | 16 |
Far East | 131 | - | 131 | - | 73 | - | 73 | - |
Eliminations(*) | (90) | (38) | (52) | (136) | (35) | 6 | (41) | - |
Adjusted EBITDA, incl. | 1,057 | 991 | 67 | 7 | 321 | 439 | (118) | (27) |
Samara oil plant | 802 | 849 | (47) | (6) | 224 | 432 | (208) | (48) |
Ekat. fat plant | 211 | 142 | 69 | 48 | 75 | (12) | 87 | - |
Far East | 64 | - | 64 | - | 27 | - | 27 | - |
Eliminations(*) | (20) | (1) | (20) | (2,991) | (5) | 19 | (24) | - |
Adjusted EBITDA margin, % | 13% | 12% | 0% | 8% | 11% | -3% | ||
Samara oil plant | 16% | 15% | 0% | 10% | 16% | -6% | ||
Ekat. fat plant | 6% | 5% | 1% | 4% | -1% | 5% | ||
Far East | 7% | n/a | n/a | 5% | n/a | n/a |
(*) In the previous reporting periods the effect of eliminations of intra-segment transactions within oil segments was allocated to the Samara oil plant. In the current presentation, financial results of the Samara oil plant are shown on stand-alone basis. Eliminations of intra-segment transactions are presented separately in "Eliminations" line item.
Sales volumes by product were as follows:
Thousand tonnes | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Ekat. fat plant | ||||||||
mayonnaise | 27.2 | 24.9 | 2.3 | 9 | 15.0 | 14.2 | 0.8 | 6 |
margarine | 19.5 | 20.1 | (1) | (3) | 8.5 | 9.0 | (1) | (6) |
Samara oil plant | ||||||||
sunflower oil, third-party parties sales | 58 | 133 | (75) | (56) | 28 | 67 | (39) | (58) |
sunflower oil, sales to Ekat. fat plant | 32 | 24 | 8 | 32 | 15 | 9 | 6 | 64 |
sunflower meal | 87 | 142 | (56) | (39) | 43 | 68 | (25) | (37) |
Far East | ||||||||
soybean raw oil | 2.6 | - | 2.6 | - | - | - | - | - |
soybean processed oil | 0.7 | - | 0.7 | - | 0.7 | - | 0.7 | - |
soybean meal | 27 | - | 27 | - | 19 | - | 19 | - |
A significant decrease in sales volume of raw oil and meal in 1H 2015 compared to 1H 2014 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 Q2 2015 compared to Q2 2014.
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 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
mayonnaise | 71.5 | 57.5 | 14.0 | 24 | 73.9 | 56.9 | 17.0 | 30 |
margarine | 66.2 | 51.1 | 15.1 | 29 | 62.9 | 52.3 | 10.6 | 20 |
sunflower raw oil, third-party sales | 45.1 | 27.9 | 17.2 | 62 | 42.0 | 28.1 | 13.9 | 49 |
sunflower meal | 13.1 | 8.5 | 4.6 | 55 | 12.1 | 9.3 | 2.8 | 30 |
soybean raw oil | 24.2 | - | n/a | - | - | - | - | - |
soybean processed oil | 60.3 | - | n/a | - | 60.3 | - | n/a | - |
soybean meal | 28.6 | - | n/a | - | 27.4 | - | n/a | - |
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 | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June 2014 | Units | % | 30 June 2015 | 30 June 2014 | Units | % | |
Net cash from operating activities, incl. | 9,762 | 7,457 | 2,305 | 31 | 7,332 | 4,825 | 2,506 | 52 |
Operating cash flow before working capital changes | 10,233 | 6,431 | 3,803 | 59 | 5,391 | 4,142 | 1,249 | 30 |
Working capital changes | 741 | 1,643 | (902) | (55) | 2,299 | 899 | 1,400 | 156 |
Net cash used in investing activities, incl. | (3,825) | (2,321) | (1,504) | (65) | (2,525) | (1,391) | (1,134) | (82) |
Purchases of property, plant and equipment and inventories intended for construction | (3,707) | (2,222) | (1,485) | (67) | (2,618) | (1,436) | (1,182) | (82) |
Net cash used in financing activities | (9,666) | (5,027) | (4,639) | (92) | (13,442) | (4,235) | (9,207) | (217) |
Net decrease in cash and cash equivalents | (4,998) | (46) | (4,953) | (10,857) | (9,929) | (980) | (8,949) | (913) |
(*) See Appendix 4
The main investments in property, plant and equipment and inventories intended for construction in 1H 2015 were made in the agricultural segment in the amount of RR 1,392 million (1H 2014: RR 844 million), representing purchases of machinery and equipment, and in the sugar division in the amount of RR 1,286 million (1H 2014: RR 628 million), related to the modernization of sugar plants. Significant investments were also made in the meat segment in the amount of RR 660 million (1H 2014: RR 673 million), related to the construction of a slaughter house in Tambov region.
Debt position and liquidity management
in RR million | 30 June 2015 | 31 December 2014 | Variance | |
Units | % | |||
Gross debt | 24,983 | 22,306 | 2,678 | 12 |
Short term borrowings | 16,873 | 12,500 | 4,374 | 35 |
Long term borrowings | 8,110 | 9,806 | (1,696) | (17) |
Net debt | 1,525 | 3,617 | (2,092) | (58) |
Short term borrowings, net | (5,771) | (5,493) | (278) | (5) |
Long term borrowings, net | 7,296 | 9,110 | (1,814) | (20) |
Adjusted EBITDA (LTM***) | 22,264 | 18,069 | 4,194 | 23 |
Net debt/Adjusted EBITDA (LTM) | 0.1 | 0.2 | (0.1) |
Net finance expense
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2015 | 30 June* 2014 | Units | % | 30 June 2015 | 30 June* 2014 | Units | % | |
Net interest expense | (1,034) | (41) | (993) | (2,422) | (444) | 289 | (733) | - |
Gross interest expense | (1,650) | (1,212) | (438) | (36) | (926) | (550) | (376) | (68) |
Reimbursement of interest expense | 616 | 1,171 | (555) | (47) | 482 | 839 | (357) | (43) |
Interest income | 466 | 462 | 4 | 1 | 210 | 209 | 1 | 0 |
Gains less losses from bonds held for trading* | 637 | 272 | 365 | 134 | 142 | 272 | (130) | (48) |
Other financial expenses, net | (821) | (232) | (589) | (254) | (1,114) | (112) | (1,002) | (895) |
Financial foreign exchange difference losses net of gains | (813) | (232) | (581) | (250) | (1,107) | (112) | (995) | (888) |
Other financial expenses, net | (8) | (1) | (7) | (700) | (7) | - | (7) | - |
Total net finance income | (752) | 461 | (1,213) | - | (1,206) | 658 | (1,864) | - |
*See appendix 1 for the disclosure of reclassification adjustments made to the 1H 2014and Q2 2014 figures
In 1H 2015 the Group continued to enjoy benefits from the state agriculture subsidies programme. RR 616 million of subsidies received covered 37% of gross interest expense.
Other financial expenses, net relates mainly to financial foreign exchange differences losses net of gains that increased by RR 581 million in 1H 2015 compared to 1H 2014 and by RR 995 million in Q2 2015 compared to Q2 2014.
(*)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 500 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 1H 2015 and Q2 2015 financial results for investors and analysts.
Details of call:
Date | 31 August 2015 |
Time | 6:00 PM (Moscow) /4:00 PM (London) |
Subject | ROS AGRO PLC First half 2015 financial results |
UK Toll Free UK Local Line | 0800 279 5004 +44 20 3427 0503 |
USA Toll Free USA Local Line | 1877 280 2342 +1 646 254 3366 |
Russia Toll Free | +7 495 213 0979 |
Conference ID | 1484738 |
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 six months ended 30 June 2015 (in RR thousand)
Six months ended 30 June | Three months ended 30 June | |||
2015 | 2014* | 2015 | 2014* | |
Sales | 32,588,701 | 26,644,701 | 18,466,451 | 15,568,580 |
Gain on revaluation of biological assets and agriculture produce | 4,178,852 | 4,607,728 | 2,522,842 | 2,791,559 |
Cost of sales | (24,380,126) | (22,448,898) | (14,428,413) | (13,350,389) |
Gains less losses from trading sugar derivatives | 224,642 | 254,216 | 63,349 | 89,480 |
Gross profit | 12,612,069 | 9,057,747 | 6,624,229 | 5,099,230 |
Distribution and selling expenses | (2,270,785) | (1,937,962) | (1,140,089) | (1,043,550) |
General and administrative expenses | (2,073,982) | (1,141,485) | (1,055,234) | (528,204) |
Share-based remuneration | (1,991) | (52,399) | (1,001) | (26,716) |
Other operating income/ (expenses), net | 419,480 | 162,320 | 175,947 | (4,337) |
Operating profit | 8,684,791 | 6,088,221 | 4,603,852 | 3,496,422 |
Interest expense | (1,033,962) | (41,015) | (444,675) | 288,544 |
Interest income | 466,162 | 462,481 | 210,210 | 209,147 |
Gains less losses from bonds held for trading * | 636,601 | 271,760 | 141,948 | 271,760 |
Other financial income/ (expenses), net | (821,075) | (232,467) | (1,114,478) | (111,938) |
Share of results of associates | 21,552 | 1,147 | 19,750 | 1,147 |
Profit before taxation | 7,954,070 | 6,550,126 | 3,416,607 | 4,155,083 |
Income tax expense | (734,505) | (263,133) | (448,218) | (109,261) |
Profit for the period | 7,219,565 | 6,286,994 | 2,968,389 | 4,045,821 |
Total comprehensive income for the period | 7,219,565 | 6,286,994 | 2,968,389 | 4,045,821 |
Profit is attributable to: | ||||
Owners of ROS AGRO PLC | 7,221,020 | 6,289,788 | 2,968,782 | 4,046,751 |
Non-controlling interest | (1,455) | (2,794) | (393) | (930) |
Profit for the period | 7,219,565 | 6,286,994 | 2,968,389 | 4,045,821 |
Total comprehensive income is attributable to: | ||||
Owners of ROS AGRO PLC | 7,221,020 | 6,289,788 | 2,968,782 | 4,046,751 |
Non-controlling interest | (1,455) | (2,794) | (393) | (930) |
Total comprehensive income for the period | 7,219,565 | 6,286,994 | 2,968,389 | 4,045,821 |
Earnings per ordinary share for profit attributable to the equity holders of ROS AGRO PLC, basic and diluted (in RR per share) | 306.53 | 266.94 | 126.02 | 171.78 |
*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 for 12M 2014). The result of fair value revaluation as well as the result from the disposal of bonds is included in "Gains less losses 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 six months ended 30 June 2015 (in RR thousand)
Six months ended 30 June 2015 | Sugar | Meat | Other agriculture | Oil | Other | Eliminations | Total |
Sales | 14,258,412 | 8,476,136 | 2,230,417 | 8,192,951 | 18,900 | (588,115) | 32,588,701 |
Gain on revaluation of biological assets and agriculture produce | - | 4,178,852 | - | - | - | - | 4,178,852 |
Cost of sales | (9,393,405) | (8,540,353) | (1,311,881) | (5,827,177) | - | 692,689 | (24,380,126) |
incl. Depreciation | (461,604) | (600,769) | (107,160) | (105,919) | - | (28,627) | (1,304,079) |
Gains less losses from trading sugar 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) |
Share-based remuneration | - | - | - | - | (1,991) | - | (1,991) |
Other operating income/(expenses), net | 265,861 | 298,284 | 7,407 | 89,726 | 10,711,321 | (10,953,120) | 419,480 |
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) | (10,711,321) | 10,953,120 | (419,480) |
Share-based remuneration | - | - | - | - | 1,991 | - | 1,991 |
Reimbursement of operating costs (government grants) | - | 246,895 | 166,227 | - | - | - | 413,122 |
Gain on revaluation of biological assets and agriculture produce | - | (4,178,852) | - | - | - | - | (4,178,852) |
Gain on initial recognition of agricultural produce attributable to realised agricultural produce | - | - | 364,715 | - | - | 761,896 | 1,126,611 |
Revaluation of biological assets attributable to realised biological assets and included in cost of sales | - | 3,579,308 | 1,110 | - | - | - | 3,580,417 |
Adjusted EBITDA* | 4,451,938 | 3,961,880 | 1,043,267 | 1,057,487 | (782,736) | 965,375 | 10,697,211 |
* Non-IFRS measure
Appendix 2 (continued). Segment information for the six months ended 30 June 2014 (in RR thousand)
Six months ended 30 June 2014 | Sugar | Meat | Other agriculture | Oil | Other | Eliminations | Total |
Sales | 10,833,233 | 7,224,526 | 1,619,004 | 7,976,295 | 26,061 | (1,034,418) | 26,644,701 |
Gain on revaluation of biological assets and agriculture produce | - | 4,607,728 | - | - | - | - | 4,607,728 |
Cost of sales | (8,643,891) | (7,516,521) | (1,397,372) | (5,854,260) | - | 963,146 | (22,448,898) |
incl. Depreciation | (332,382) | (699,789) | (147,799) | (122,925) | - | (18,803) | (1,321,698) |
Gains less losses from trading sugar derivatives | 254,216 | - | - | - | - | - | 254,216 |
Gross profit | 2,443,558 | 4,315,733 | 221,631 | 2,122,035 | 26,061 | (71,271) | 9,057,747 |
Distribution and Selling, General and administrative expenses | (1,089,412) | (192,588) | (307,631) | (1,321,917) | (286,482) | 118,582 | (3,079,447) |
incl. Depreciation | (53,122) | (7,502) | (22,039) | (67,882) | (10,837) | 7,189 | (154,192) |
Share-based remuneration | - | - | - | - | (52,399) | - | (52,399) |
Other operating income/(expenses), net | (24,323) | 50,789 | 91,391 | 2,574 | 2,304,026 | (2,262,138) | 162,320 |
incl. Reimbursement of operating costs (government grants) | - | 26,103 | 149,143 | - | - | - | 175,246 |
Operating profit/ (loss) | 1,329,823 | 4,173,934 | 5,391 | 802,693 | 1,991,206 | (2,214,827) | 6,088,221 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 385,503 | 707,291 | 169,838 | 190,807 | 10,837 | 11,614 | 1,475,890 |
Other operating (income) /expenses, net | 24,323 | (50,789) | (91,391) | (2,574) | (2,304,026) | 2,262,138 | (162,320) |
Share-based remuneration | - | - | - | - | 52,399 | - | 52,399 |
Reimbursement of operating costs (government grants) | - | 26,103 | 149,143 | - | - | - | 175,246 |
Gain on revaluation of biological assets and agriculture produce | - | (4,607,728) | - | - | - | - | (4,607,728) |
Gain on initial recognition of agricultural produce attributable to realised agricultural produce | - | - | 267,204 | - | - | 327,234 | 594,438 |
Revaluation of biological assets attributable to realised biological assets and included in cost of sales | - | 2,889,608 | (2,952) | - | - | - | 2,886,655 |
Adjusted EBITDA* | 1,739,650 | 3,138,418 | 497,233 | 990,926 | (249,584) | 386,159 | 6,502,802 |
* Non-IFRS measure
Appendix 3. Consolidated statement of financial position as at 30 June 2015 (in RR thousand)
30 June 2015 | 30 June 2014 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 5,318,019 | 10,316,313 |
Short-term investments | 18,064,975 | 8,863,789 |
Trade and other receivables | 2,815,403 | 2,347,714 |
Prepayments | 1,486,785 | 2,085,599 |
Current income tax receivable | 82,332 | 22,119 |
Other taxes receivable | 2,287,926 | 1,310,407 |
Inventories | 10,585,026 | 15,508,659 |
Short-term biological assets | 10,474,822 | 3,454,937 |
Total current assets | 51,115,288 | 43,909,537 |
Non-current assets | ||
Property, plant and equipment | 32,817,951 | 29,519,968 |
Inventories intended for construction | 31,536 | 32,846 |
Goodwill | 1,565,854 | 1,191,832 |
Advances paid for property, plant and equipment | 1,081,933 | 2,669,373 |
Long-term biological assets | 1,762,789 | 1,793,059 |
Long-term investments and receivables | 1,990,861 | 929,129 |
Investments in associates | 108,960 | 87,407 |
Deferred income tax assets | 833,677 | 1,016,544 |
Other intangible assets | 341,911 | 338,699 |
Restricted cash | 50,330 | 17,373 |
Total non-current assets | 40,585,800 | 37,596,230 |
Total assets | 91,701,089 | 81,505,767 |
Liabilities and EQUITY | ||
Current liabilities | ||
Short-term borrowings | 16,873,286 | 12,499,623 |
Trade and other payables | 6,628,320 | 2,772,385 |
Current income tax payable | 88,886 | 475,850 |
Other taxes payable | 2,026,253 | 1,706,091 |
Total current liabilities | 25,616,745 | 17,453,949 |
Non-current liabilities | ||
Long-term borrowings | 8,110,185 | 9,806,306 |
Government grants | 1,791,923 | 1,962,562 |
Deferred income tax liability | 249,779 | 463,649 |
Total non-current liabilities | 10,151,887 | 12,232,517 |
Total liabilities | 35,768,632 | 29,686,466 |
Equity | ||
Share capital | 9,734 | 9,734 |
Treasury shares | (505,880) | (505,880) |
Share premium | 10,557,573 | 10,557,573 |
Share-based payment reserve | 1,293,189 | 1,291,198 |
Retained earnings | 44,563,530 | 40,159,833 |
Equity attributable to owners of ROS AGRO PLC | 55,918,146 | 51,512,458 |
Non-controlling interest | 14,310 | 306,843 |
Total equity | 55,932,456 | 51,819,301 |
Total liabilities and equity | 91,701,089 | 81,505,767 |
Appendix 4. Consolidated statement of cash flows for the six months ended 30 June 2015 according to the Group's management accounts (in RR thousand) - NOT IFRS PRESENTATION
Six months ended | Six months ended | |
30 June 2015 | 30 June 2014 | |
Cash flows from operating activities | ||
Profit before income tax | 7,954,070 | 6,550,127 |
Adjustments for: | ||
Depreciation and amortization | 1,488,611 | 1,475,890 |
Interest expense | 1,650,066 | 1,208,110 |
Government grants | (1,096,437) | (1,420,479) |
Interest income | (466,162) | (462,481) |
Loss/ (gain) on initial recognition of agricultural produce, net | 1,126,611 | 594,438 |
Change in provision for net realisable value of inventory | (1,432) | 172,732 |
Share of results of associates | (21,552) | (1,147) |
Revaluation of biological assets, net | (598,435) | (1,721,073) |
Change in provision for impairment of receivables and prepayments | (2,388) | 28,511 |
Foreign exchange (gain) / loss | 579,680 | 231,815 |
Share based remuneration | 1,991 | 52,399 |
Lost harvest write-off | 117,056 | 4,446 |
Gains less losses from bonds held for trading | (636,601) | (271,759) |
Loss/ (gain) on disposal of property, plant and equipment | 36,350 | 15,208 |
Other non-cash and non-operating expenses, net | 102,042 | (26,134) |
Operating cash flow before working capital changes | 10,233,470 | 6,430,603 |
Change in trade and other receivables and prepayments | (1,088,160) | (468,781) |
Change in other taxes receivable | (980,955) | (34,222) |
Change in inventories | 4,767,771 | 4,754,078 |
Change in biological assets | (6,500,800) | (4,329,848) |
Change in trade and other payables | 3,916,916 | 1,558,018 |
Change in other taxes payable | 626,417 | 164,130 |
Cash generated from operations | 10,974,659 | 8,073,978 |
Income tax paid | (1,212,669) | (616,837) |
Net cash from operating activities | 9,761,990 | 7,457,141 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (3,707,385) | (2,222,330) |
Purchases of other intangible assets | (59,252) | (58,176) |
Proceeds from sales of property, plant and equipment | 11,417 | 23,050 |
Purchases of associates | - | (23,601) |
Investments in subsidiaries, net of cash acquired | 4,845 | - |
Movement in restricted cash | (74,792) | (41,261) |
Dividends received | - | 1,146 |
Proceeds from sale of subsidiaries, net of cash disposed | (46) | - |
Net cash from investing activities | (3,825,213) | (2,321,172) |
Cash flows from financing activities | ||
Proceeds from borrowings | 16,517,672 | 6,725,256 |
Repayment of borrowings | (13,831,811) | (14,635,896) |
Interest paid | (1,427,132) | (1,126,520) |
Change in cash on bank deposits* | (16,353,042) | 8,804,541 |
Purchases of bonds | - | (5,244,138) |
Proceeds from sales of bonds* | 7,567,628 | - |
Loans given* | (901,043) | (867,046) |
Loans repaid* | 314,450 | 482,928 |
Interest received* | 296,981 | 599,495 |
Proceeds from government grants | 925,797 | 1,278,523 |
Transactions with non-controlling interest | (4,105) | - |
Purchases of treasury shares | - | (44,033) |
Dividends paid to owners of ROS AGRO PLC | (2,760,324) | (1,000,000) |
Other financial activities | (10,889) | - |
Net cash from financing activities | (9,665,817) | (5,026,889) |
Net effect of exchange rate changes on cash and cash equivalents | (1,269,255) | (154,697) |
Net increase/ (decrease) in cash and cash equivalents | (4,998,295) | (45,618) |
Cash and cash equivalents at the beginning of the period | 10,316,314 | 2,672,764 |
Cash and cash equivalents at the end of the period | 5,318,019 | 2,627,146 |
(*) 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.