Ros Agro S Regulatory News (AGRO)

August 30 2011, Moscow

Ros Agro financial results 1st half of the year 2011

Moscow, August 30, 2011 - Today ROS AGRO PLC, Holding Company of Rusagro Group, a leading Russian diversified food producer with vertically integrated operations, has announced the unaudited financial results for the period ended 30 June year 2011.

1st half of the year 2011 Highlights

- Consolidated Sales amounted to 18 843 mln roubles (658 mln USD), an increase of 4 396 mln roubles compared to 1st half of the year 2010;

- Adjusted EBITDA (*) amounted to 1 501 mln roubles (52 mln USD), a decrease of 1 719 mln roubles compared to 1st half of the year 2010;

- Adjusted EBITDA margin achieved is 8%;

- Adjusted Net profit (**) for the period of 796 mln roubles (28 mln USD) (in comparable terms with 1H 2010 excluding share-based remuneration of 360 mln and unrealized losses from trading sugar derivatives of 508 mln roubles);

- Net debt position (***) on 30 June 2011 of 13 371 mln roubles (476 mln USD);

- Net Debt/ EBITDA (LTM) 2,2x

Commenting on the results, Maxim Basov, member of the Board of Directors of ROS AGRO PLC and CEO of the Group said:

Looking at the 1st half of the year 2011 results we acknowledge that despite negative consequences of 2010 drought on 1Q 2011 results the company has managed to show good performance and has met its 1H targets.

In general, we are not able to influence raw material prices, but we are able to organize our operational activity and procedures in a way to compete successfully with other market players whatever the pricing situation is. Cumulative production and sales volumes of the Group demonstrate positive dynamics. We have achieved progress in modernization and expansion of our production capacities in each business division.

The Group is looking to the future with optimism as we continue to believe that our strategy, management team and low-cost production assets will allow The Company to earn profits and outcompete its rivals.

Consolidated Income statement, key indicators

Change of Sales and adjusted EBITDA as per divisions

Key operational and financial figures as per division

Sugar

During the reported period our seven sugar processing plants have produced 529 thousand tons of sugar, 25% more than in 1H 2010. Sales volume was 424 thousand tons, 14% more than last year. Net Sales of Sugar division has increased by 37% to 13 804 mln roubles (482 mln USD), average sale price was 28.42 roubles per kilogram excl. VAT. While performing the B2C expansion strategy, the Group continued to increase the refined packed cube sugar market share.

Division EBITDA was 1 085 mln roubles (38 mln USD), 51% less than in 1H 2010 primarily due to the smaller sales of beet sugar (by 60 thousand tones) and higher cost of beet sugar in 2010 than in 2009 as a result of summer drought 2010.

Meat

The meat sales volume during the reported period was 28 thousand tons, which was 10% less than last year. This is due to heat in Central Russia in summer 2010 and higher sales in 4Q of 2010. An average sale price was 75 roubles per kilogram excl. VAT. At the same time mixed fodder sales volume have increased by 65% to 33 thousand tons.

The key production efficiency figures were better than in 1H of last year.

Net Sales have increased by 11% to 2 400 mln roubles (84 mln USD), despite higher feed cost EBITDA has decreased by only 4% to 855 mln roubles (30 mln USD) with EBITDA margin of 35,6%.

The Group's biggest capital expenditure projects in Tambov and Belgorod region were progressing in accordance with plan.

Agricultural

The Group increased the area of controlled land to 414 thousand hectares. Since all of the 2010 harvest was sold in 2010 no significant income was reported in 1H2011. The Group is finishing grains harvest and has started sugar beet harvest.

Oil&Fat

The Group has launched vegetable oil production on its new extraction plant located in Samara region and has produced 13 thousand tons of oil.

Production volume of mayonnaise and consumer margarine have exceeded the 1H 2010 figures by 8% and 1% respectively.

Division Net Sales increased by 24% to 2 501 mln roubles (87 mln USD), with average margarine sale price of 47,5 roubles per kilogram excl. VAT (+3%) and mayonnaise sale price of 52,9 roubles per kilogram excl. VAT (+8%). Selling price increase could not offset an increase of vegetable oil price by more than 70% (due to 2010 drought). These factors have resulted in EBITDA decrease of 123% to (-81) mln roubles (-3 mln USD).

Consolidated Statement of cash flow - key indicators

Net cash from operating activities of (2 498) mln roubles have decreased by 110% as result of negative changes in profit described before. Cash flow from working capital changes was similar comparing to last year.

Capex investments during the reported period have totaled to 6 159 mln roubles, 242% higher than in 1H2010 primarily due to purchases of property and equipment in Agrocultural division of 3,6 bln roubles, in Meat division of 1,8 bln roubles and in Sugar division of 0,6 bln roubles.

For the capital expenditure financing purposes the Group uses both its own resources and gaining long-term loans (typically with maturities of seven to eight years) with the partial rebates of the interest expenses incurred provided by the State.

One of the main factors of increasing net cash from financing activities was the Group's IPO.

Debt position and liquidity management

Net finance expense:

Regardless of traditional seasonal peak the Group has had a relatively low leverage, well balanced net debt maturity structure and strong, longstanding relationships with leading Russian banks which provide us access to significant, long-term financing at competitive rates.

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Debt and deposit position of the Group are sufficiently balanced, all deposits were placed only into high quality Russian banks. Group Treasury aims are to maintain low currency risk (only functional currency Russian roubles) in deposit and credit portfolio. Ratio Net Debt/EBITDA on 30 June 2011 has been strengthened vs. ratio on 30 June 2010 and amounted 2,2x. On 30 June 2011 the Group has kept committed credit lines available on 16 bln roubles. The Group demonstrated attractive result in total financial costs which by 258 mln roubles is better than 1H2010. As an agricultural producer Rusagro benefits from government support in the form of government grants for repayment of interest paid. Gross debt excluding trade financing as of 30 June 2011 totally can be subsidized.

Appendices:

I. Unaudited Consolidated Statement of Comprehensive Income for the Six Months Ended 30 June 2011

II. Unaudited Consolidated Highlights as per divisions for the Six Months Ended 30 June 2011

III. Unaudited Consolidated Statement of Financial Position at 30 June 2011

IV. Unaudited Consolidated Cash Flow for the Six Months Ended 30 June 2011

(*) In order to provide investors with additional insight into the earnings of the Group and for the purpose of comparison with similar businesses, information is presented in accordance with the accounting policies adopted by the Group for the preparation of the Consolidated Financial Statements. This information is prepared on the basis of IFRS principles, but such segment information is not required by IFRS to be presented, and the Group presents such information in the notes to the Consolidated Financial Statements for comparison purposes only.

Adjusted EBITDA is defined as operating profit before taking into account (i) depreciation, (ii) other operating income, net (other than reimbursement of fuel and fertilisers (government grants)), (iii) the difference between gain on initial recognition of agricultural produce recognised in the year and the gain on initial recognition of agricultural produce attributable to realized agricultural produce for the year, and revaluation of biological assets of previous years attributable to realised biological assets and included in cost of sales (iv) provision/(reversal) for net realisable value, (v) share-based remuneration and (vi) unrealized losses from trading sugar derivative. Adjusted EBITDA is not a measure of financial performance under IFRS. You should not consider it an alternative to profit for the year 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.

(**) Adjusted Net profit is determined as Profit for the year excluding share-based remuneration of 360 mln roubles and unrealized losses from trading sugar derivatives of 508 mln roubles.

Share-based remuneration represents the fair value of shares of ROS AGRO PLC granted by the controlling shareholder in March 2011 to Maxim Basov as part of his compensation package and gradually expensed in statement of comprehensive income until 2014, providing Mr. Basov remains in the position of the Director.

Unrealized losses from trading sugar derivatives represent the revaluation of opened positions in raw sugar derivatives by their market value as at the reporting date. These derivatives relate to the Group's sugar inventories not realized as at the reporting date. When sugar are sold in the 3rd quarter the related position in derivatives will be closed at the prevailing market prices and resulted gains or losses will be reclassified above gross profit into Gains less losses from trading sugar derivatives line item in the statement of comprehensive income.

(***) The Group determines the net debt of the Group as outstanding bank loans and state budget loans less cash in hand, bank balances receivable on demand, bank deposits and promissory notes.

(****) The functional currency of the Group's consolidated entities is the Russian Rouble (RR). We believe that for the purpose of convenience some of the figures in the above Release could be presented in USD. For PL figures we have used an average exchange rate for the reported period of 28,6242 RR/USD, for the respective period 2010 - 30,0676 RR/USD. For the Balance sheet figures on 30 June 2011 and 30 June 2010 - 28,0758 RR/USD and 31,1954 RR/USD respectively. Recent changes in currency rate RR/USD has resulted significantly on financial indicators, recalculated in USD compared to the similar of the prior year.

(*****) In the current Release EBITDA ratio should be treated as Adjusted EBITDA. See definition as per note above.

Note:

ROS AGRO PLC (LSE: AGRO) - 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 seven production sites from both sugar beets and raw cane sugar. We produce white cube sugar and white packaged sugar branded under the brands Chaikofsky, Russkii Sakhar, Brauni. Our Sugar division is vertically integrated with the sugar beet cultivation in our Agriculture division, through which we strive to ensure a consistent supply of sugar beets.

Meat:

Our pig breeding project was launched in 2006 and, according to the National Union of Pig Breeders, is currently the fifth largest pig breeding complex in Russia. We have implemented the best practices regarding 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 approximately 415 thousand hectares of land currently under our control located in the highly fertile Black Earth region of Russia, in the Belgorod, Tambov and Voronezh regions. Land and production sites are strategically located within the same regions to optimize efficiency and minimize logistical costs. We believe we are a leading Russian sugar beet producer, and our agricultural division also produces winter wheat and barley, sunflower products and soybeans. These products are partially consumed by the meat division, supporting and developing the synergic effect and lowering the price change risk.

Oil&Fat:

We are a leading producer of mayonnaise and consumer margarine in Russia, such as Provansal EZhK and Schedroe Leto. In addition, in March 2011, we acquired control of an oil extraction plant located in Samara, through which we expect to be able to control the source of 100% of the vegetable oil required by our oil and fats production plant.

Our consolidated sales in 2010 amounted to 30 956 mln. RRles (1 018 mln. USD), adjusted EBITDA amounted to 7 916 mln RRles, (260 mln USD), Net profit - 5 158 mln RRles (169 mln USD). An average growth rate on Consolidated Sales shows more than 30% for the last three years and more than 75% on Adjusted EBITDA

Forward-looking statements

This announcement includes statements that are, or may be deemed to be forward-looking statements. These forward-looking statements can be identified, that they do not relate to the historical or current events, or relate 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 the result, actual future results may differ materially from the plans and expectations set out in these forward-looking statements.

The Group undertakes no obligation policy 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 organizes the presentation on conference call for investors and analytics

Details of call:

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Contacts:

Appendix 1. Unaudited consolidated statement of comprehensive income for the six months ended 30 June 2011 (in thousand roubles)

Appendix 2. Unaudited segment information for the six months ended 30 June 2011 (in thousand roubles)

Appendix 2 (continued). Unaudited segment information for the six months ended 30 June 2010 (in thousand roubles)

Appendix 3. Unaudited consolidated statements of financial positions as on 30 June 2011 (in thousand roubles)

Appendix 4. Unaudited consolidated statements of cash flows for the six months ended 30 June 2011 (in thousand roubles)