30th Aug 2013 07:00
30 August 2013, Moscow
Ros Agro financial results for 1H 2013 and Q2 2013
Moscow, 30 August 2013 - 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 2013.
1H 2013 Highlights
- Sales amounted to RR 14,343 million rubles (US$ 462 million), an increase of RR 283 million compared to 1H 2012;
- Adjusted EBITDA (*) amounted to RR 1,580 million (US$ 51 million), a decrease of RR 2,398 million compared to 1H 2012;
- Adjusted EBITDA margin amounted to 11%;
- Net loss for the period amounted to RR 283 million (US$ 9 million);
- Net debt position (**) as of 30 June 2013 was RR 15,170 million (US$ 464 million);
- Net Debt/ EBITDA (LTM) (***) as of 30 June 2013 was 2.4x.
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 2nd quarter Rusagro returned to profitability. Sugar, meat and oil divisions continued to show weak performance due to the lack/quality of raw material and weakness in prices. We expect these divisions to improve results in 3Q as the new agricultural season starts in Russia."
Key consolidated financial performance indicators
in RR million | Six months ended | % change | Three months ended | % change | ||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 | |||
Sales | 14,343 | 14,060 | 2% | 7,926 | 7,758 | 2% |
Gross profit | 2,094 | 5,014 | -58% | 1,265 | 2,852 | -56% |
Gross margin, % | 15% | 36% | 16% | 37% | ||
Adjusted EBITDA | 1,580 | 3,978 | -60% | 1,039 | 2,491 | -58% |
Adjusted EBITDA margin, % | 11% | 28% | 13% | 32% | ||
Net (loss)/profit for the period | (283) | 1,917 | -115% | 295 | 1,360 | -78% |
Net profit margin % | -2% | 14% | 4% | 18% | ||
Key financial performance indicators by segments
in RR million | Six months ended | % change | Three months ended | % change | ||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 | |||
Sales, incl. | 14,343 | 14,060 | 2% | 7,926 | 7,758 | 2% |
Sugar | 7,374 | 6,383 | 16% | 4,596 | 3,565 | 29% |
Meat | 2,508 | 2,625 | -4% | 1,434 | 1,402 | 2% |
Agriculture | 1,201 | 1,071 | 12% | 349 | 272 | 28% |
Oil | 3,536 | 4,359 | -19% | 1,585 | 2,536 | -37% |
Other | 77 | 143 | -46% | 38 | 54 | -30% |
Eliminations | (352) | (522) | -33% | (76) | (71) | 7% |
Gross profit, incl. | 2,094 | 5,014 | -58% | 1,265 | 2,852 | -56% |
Sugar | 944 | 1,957 | -52% | 559 | 1,224 | -54% |
Meat | 108 | 1,184 | -91% | 228 | 628 | -64% |
Agriculture | 211 | 149 | 42% | 56 | (42) | -232% |
Oil | 829 | 1,527 | -46% | 385 | 900 | -57% |
Other | 77 | 143 | -46% | 38 | 54 | -30% |
Eliminations | (75) | 54 | -238% | (0) | 87 | -100% |
Adjusted EBITDA, incl. | 1,580 | 3,978 | -60% | 1,039 | 2,491 | -58% |
Sugar | 292 | 1,236 | -76% | 213 | 877 | -76% |
Meat | 455 | 1,215 | -63% | 406 | 659 | -38% |
Agriculture | 380 | 21 | 1696% | 157 | (111) | -241% |
Oil | 249 | 1,020 | -76% | 6 | 627 | -99% |
Other | (148) | (83) | 77% | (42) | (38) | 13% |
Eliminations | 352 | 570 | -38% | 299 | 477 | -37% |
Adjusted EBITDA margin, % | 11% | 28% | 13% | 32% | ||
Sugar | 4% | 19% | 5% | 25% | ||
Meat | 18% | 46% | 28% | 47% | ||
Agriculture | 32% | 2% | 45% | -41% | ||
Oil | 7% | 23% | 0% | 25% | ||
Sugar Segment
Financial results of the sugar segment for 1H 2013 and Q2 2013 compared to 1H 2012 and Q2 2012 respectively are presented in the table below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
Sales | 7,374 | 6,383 | 991 | 16 | 4,596 | 3,565 | 1,031 | 29 |
Cost of sales | (6,552) | (4,470) | (2,082) | 47 | (4,070) | (2,384) | (1,686) | 71 |
Gains less losses from trading sugar derivatives | 123 | 44 | 79 | 181 | 32 | 44 | (11) | (26) |
Gross profit | 944 | 1,957 | (1,012) | (52) | 559 | 1,224 | (666) | (54) |
Gross profit margin | 13% | 31% | -18% | - | 12% | 34% | -22% | - |
Distribution and selling expenses | (617) | (593) | (24) | 4 | (351) | (322) | (29) | 9 |
General and administrative expenses | (363) | (318) | (46) | 14 | (154) | (127) | (28) | 22 |
Other operating (expenses)/ income, net | (61) | 15 | (77) | (501) | (65) | 5 | (71) | (1,295) |
Operating (loss)/profit | (97) | 1,062 | (1,159) | (109) | (11) | 781 | (793) | (101) |
Adjusted EBITDA | 292 | 1,236 | (943) | (76) | 213 | 877 | (664) | (76) |
Adjusted EBITDA margin | 4% | 19% | -15% | 5% | 25% | -20% | ||
Sales in sugar segment increased as a result of sales volume increase which was partially offset by decrease in sales prices.
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 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
Sugar production volume (in thousand tons) , incl. | 142 | 112 | 31 | 28 | 109 | 49 | 60 | 121 |
beet sugar | 34 | 62 | (28) | (45) | - | - | - | - |
cane sugar | 108 | 49 | 59 | 120 | 108 | 49 | 59 | 120 |
Sales volume (in thousand tons) | 291 | 245 | 45 | 19 | 179 | 133 | 46 | 34 |
Sale price (rubles per kg, excl. VAT) | 24 | 25 | (1) | (4) | 24 | 26 | (1) | (5) |
Cost of sales increased by 47% due to the following main factors:
· increase in sales volume;
· increase in production volume of raw cane sugar that has higher costs per unit comparing to beet sugar;
· decreased sugar beet conversion ratio for the harvest of 2012 comparing to the harvest of 2011.
Exceeded growth in cost of sales in comparison with sales resulted in decreased profitability of the segment.
Meat Segment
Financial results of meat segment for 1H 2013 and Q2 2013 compared to 1H 2012 and Q2 2012 respectively are presented in the table below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
Sales | 2,508 | 2,625 | (118) | (4) | 1,434 | 1,402 | 32 | 2 |
(Loss)/gain on revaluation of biological assets | (58) | 1,076 | (1,134) | (105) | 190 | 580 | (390) | (67) |
Cost of sales | (2,342) | (2,517) | 176 | (7) | (1,396) | (1,354) | (42) | 3 |
Gross profit | 108 | 1,184 | (1,076) | (91) | 228 | 628 | (400) | (64) |
Gross profit margin | 4% | 45% | -41% | 16% | 45% | -29% | ||
Gross profit excl. effect of biological assets revaluation | (21) | 1,115 | (1,136) | (102) | (38) | 583 | (621) | (106) |
Adjusted gross profit margin | -1% | 42% | -43% | -3% | 42% | -44% | ||
Distribution and selling expenses | (15) | (10) | (6) | 58 | (5) | 6 | (11) | (182) |
General and administrative expenses | (174) | (158) | (15) | 10 | (83) | (79) | (4) | 5 |
Other operating income/(expenses), net | 202 | (59) | 261 | (440) | 201 | (80) | 282 | (351) |
Operating profit | 120 | 956 | (836) | (87) | 341 | 475 | (133) | (28) |
Adjusted EBITDA | 455 | 1,215 | (760) | (63) | 406 | 659 | (253) | (38) |
Adjusted EBITDA margin | 18% | 46% | -28% | 28% | 47% | -19% | ||
Decrease in Sales by 4% was driven by opposing dynamics in prices and sales volumes of pork. Sales prices dropped by 25%. Sales volume of pork more than doubled as a result of launching new pig breeding facilities in both the Belgorod and Tambov regions. Resulted increase in internal consumption of the fodder led to the termination of mixed fodder sales to third parties.
Sales volumes by product and the average sales prices per kilogram (excl. VAT) were as follows:
Six months ended | Variance | Three months ended | Variance | |||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
Sales volume (in thousand tons): | ||||||||
pork | 44 | 29 | 15 | 52 | 24 | 15 | 9 | 60 |
fodder | - | 26 | (26) | (100) | - | 14 | (14) | (100) |
Sale prices (rubles per kg, excl. VAT): | ||||||||
pork | 57 | 82 | (25) | (31) | 58 | 83 | (24) | (29) |
fodder | - | 11 | (11) | (100) | - | 11 | (11) | (100) |
Minor Loss on revaluation of biological assets (pigs) in 1H 2013 compared to significant profit in 1H 2012 is explained by drop in pork market prices and increase in cost of production. This increase was in turn driven by an increase in grain prices and by the launch of new pig breeding facilities which had not reached full capacity utilization and therefore had higher costs per unit of production as compared to established facilities.
Other operating income, net in 1H 2013 mainly comprised of the government grants provided in Belgorod region for support of pork producers in market conditions of increased feed costs. The total government grants included in other operating income of the segment in 1H 2013 amounted to RR 248 million compared to RR 2 million in 1H 2012.
The breakdown of adjusted EBITDA between Belgorod Meat and Tambov Meat is as follows:
in RR million | Six months ended 30 June 2013 | Six month ended 30 June 2012 | Three months ended 30 June 2013 | Three months ended 30 June 2012 | ||||
Belgorod Meat | Tambov Meat | Belgorod Meat | Tambov Meat | Belgorod Meat | Tambov Meat | Belgorod Meat | Tambov Meat | |
Sales to 3rd parties and other segments | 2,014 | 494 | 2,624 | 1 | 1,155 | 279 | 1,401 | 1 |
Adjusted EBITDA | 621 | (167) | 1,264 | (49) | 472 | (66) | 698 | (38) |
Adjusted EBITDA margin | 31% | -34% | 48% | - | 41% | -24% | 50% | - |
Negative dynamics in profitability and Adjusted EBITDA figure for the meat segment was driven by a decrease in sales prices accompanied by an increase in feed costs. Increase in losses of Tambov Bacon, that started sales of consumable livestock only in Q4 2012, had an additional negative impact on the Adjusted EBITDA for the segment.
Agricultural Segment
The area of controlled land of the segment now stands at 454 thousand hectares. Financial results of the agricultural segment for 1H 2013 and Q2 2013 compared to 1H 2012 and Q2 2012 respectively are presented below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
Sales | 1,201 | 1,071 | 130 | 12 | 349 | 272 | 77 | 28 |
Cost of sales | (990) | (922) | (68) | 7 | (293) | (315) | 21 | (7) |
Gross profit/(loss) | 211 | 149 | 62 | 42 | 56 | (42) | 98 | (232) |
Gross profit margin | 18% | 14% | 4% | 16% | -16% | 32% | ||
Gross profit excl. effect of biological assets revaluation attributable to realized crops included in Cost of sales | 563 | 298 | 265 | 89 | 142 | (33) | 174 | (533) |
Adjusted gross profit margin | 47% | 28% | 19% | 41% | -12% | 53% | ||
Distribution and selling expenses | (155) | (100) | (55) | 54 | (41) | 10 | (51) | (536) |
General and administrative expenses | (290) | (322) | 33 | (10) | (128) | (167) | 39 | (23) |
Other operating income/(expenses), net | 48 | (37) | 85 | (228) | 51 | (23) | 74 | (317) |
Operating loss | (185) | (311) | 125 | (40) | (64) | (224) | 160 | (72) |
Adjusted EBITDA | 380 | 21 | 359 | 1,696 | 157 | (111) | 269 | (241) |
Adjusted EBITDA margin | 32% | 2% | 30% | 45% | -41% | 86% | ||
Sales increased by 12% as the result of an increase in sales prices and grain sales volumes, partially offset by a decrease in the sales volume of sugar beet. Sales volumes by product were as follows:
thousand tons | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
sugar beet | 76 | 163 | (87) | (54) | - | - | - | - |
grain | 108 | 98 | 10 | 10 | 30 | 27 | 3 | 12 |
incl. sold to Meat segment | 8 | 1 | 7 | 604 | - | - | - | - |
sunflower seeds | - | 4 | (4) | (100) | - | - | - | - |
incl. sold to Meat segment | - | - | - | - | - | - | - | - |
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 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
wheat | 8.2 | 4.6 | 3.6 | 80 | 8.2 | 5.6 | 2.6 | 46 |
barley | 7.4 | 4.7 | 2.7 | 57 | 7.3 | 4.7 | 2.6 | 54 |
sunflower seeds | 14.7 | 9.0 | 5.7 | 63 | - | - | - | - |
peas | 8.5 | 6.3 | 2.2 | 35 | 8.4 | 6.2 | 2.2 | 35 |
corn | 2.4 | 4.8 | (2.4) | (50) | 2.4 | 4.6 | (2.2) | (47) |
Oil segment
Financial results of the oil segment for 1H 2013 and Q2 2013 compared to 1H 2012 and Q2 2012 respectively are presented below:
in RR million | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
Sales | 3,536 | 4,359 | (824) | (19) | 1,585 | 2,536 | (951) | (37) |
Cost of sales | (2,707) | (2,832) | 125 | (4) | (1,201) | (1,636) | 435 | (27) |
Gross profit | 829 | 1,527 | (699) | (46) | 385 | 900 | (516) | (57) |
Gross profit margin | 23% | 35% | -12% | 24% | 35% | -11% | ||
Distribution and selling expenses | (539) | (469) | (70) | 15 | (366) | (264) | (103) | 39 |
General and administrative expenses | (189) | (174) | (15) | 9 | (89) | (79) | (10) | 12 |
Other operating income/(expenses), net | 76 | (12) | 88 | (743) | 41 | (3) | 44 | (1,574) |
Operating profit/(loss) | 177 | 873 | (696) | (80) | (30) | 555 | (584) | (105) |
Adjusted EBITDA | 249 | 1,020 | (771) | (76) | 6 | 627 | (622) | (99) |
Adjusted EBITDA margin | 7% | 23% | -16% | 0% | 25% | -24% | ||
The breakdown of Sales, Gross profit and Adjusted EBITDA between the Samara oil plant and Ekaterinburg fat plant is as follows:
in RR million | Six months ended 30 June 2013 | Six month ended 30 June 2012 | Three months ended 30 June 2013 | Three months ended 30 June 2012 | ||||
Samara oil plant | Ekat. fat plant | Samara oil plant | Ekat. fat plant | Samara oil plant | Ekat. fat plant | Samara oil plant | Ekat. fat plant | |
Sales to 3rd parties and other segments | 1,087 | 2,449 | 2,072 | 2,287 | 283 | 1,303 | 1,362 | 1,174 |
Internal sales | 642 | - | 752 | - | 307 | - | 428 | - |
Gross profit | 196 | 633 | 874 | 653 | 42 | 342 | 566 | 334 |
Gross profit margin | 11% | 26% | 31% | 29% | 7% | 26% | 32% | 28% |
Adjusted EBITDA | 29 | 220 | 625 | 394 | (90) | 95 | 420 | 207 |
Adjusted EBITDA margin | 2% | 9% | 22% | 17% | -15% | 7% | 23% | 18% |
Consolidated sales of the segments decreased as a result of a significant decrease in 3rd parties sales volumes at the Samara oil plant. The volume of the raw oil and meal sales fell because of the smaller volumes of production that in turn were caused by the overall decrease in the market supply of sunflower seeds and related high prices of seeds in late 2012 and early 2013. The effect of raw oil sales decrease was partly offset by an increase in sales volumes at the Ekaterinburg fat plant and increase in sales prices of the segment.
Sales volumes by product were as follows:
thousand tons | Six months ended | Variance | Three months ended | Variance | ||||
30 June 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
mayonnaise | 26 | 25 | 1 | 3 | 15 | 14 | 0 | 3 |
margarine | 17 | 16 | 2 | 11 | 8 | 7 | 2 | 25 |
raw oil, 3rd parties sales | 22 | 55 | (34) | (61) | 5 | 36 | (30) | (85) |
raw oil, internal sales | 19 | 24 | (5) | (19) | 9 | 14 | (4) | (32) |
meal | 39 | 71 | (32) | (45) | 11 | 39 | (28) | (71) |
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 2013 | 30 June 2012 | Units | % | 30 June 2013 | 30 June 2012 | Units | % | |
mayonnaise | 55.9 | 54.0 | 2 | 3 | 56.1 | 54.0 | 2 | 4 |
margarine | 50.5 | 49.8 | 1 | 1 | 51.1 | 50.2 | 1 | 2 |
raw oil, 3rd parties sales | 33.8 | 32.4 | 1 | 4 | 33.5 | 33.1 | 0 | 1 |
meal | 9.1 | 4.1 | 5 | 124 | 9.4 | 4.6 | 5 | 103 |
Cost of sales decreased insignificantly, but this change comprised of the two significant and opposed dynamics: a decrease as a result of the Samara oil plant's reduction in sales volumes and an increase as a result of sunflower seed prices increase.
The rise in sunflower seeds market prices together with a reduction of the share of raw oil used in production of mayonnaise and margarine and produced internally led to the decrease in the segment's profitability.
Key consolidated cash flow indicators
in RR million | Six months ended | % change | Three months ended | % change | ||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 | |||
Net cash from operating activities, incl. | 3,472 | 3,256 | 7% | 2,154 | 1,333 | 62% |
Operating cash flow before working capital changes | 1,153 | 3,839 | -70% | 567 | 2,371 | -76% |
Working capital changes | 2,483 | (381) | -752% | 1,648 | (934) | -277% |
Net cash from/ (used) in investing activities, incl. | 6,788 | (2,951) | 330% | 4,533 | (3,637) | 225% |
Purchases of property, plant and equipment and inventories intended for construction | (1,693) | (3,601) | 53% | (1,178) | (2,303) | 49% |
Investments in financial assets related to financing activities(*) | 8,441 | 793 | 965% | 5,741 | (1,143) | 602% |
Net cash (used in) / from financing activities | (10,341) | (4,436) | 133% | (5,835) | 1,806 | -423% |
Net (decrease) / increase in cash and cash equivalents | (65) | (4,115) | -98% | 860 | (475) | -281% |
(*) See Appendix 4
The main investments in property, plant and equipment and inventories intended for construction in 1H 2013 were made in the meat segment in the amount of RR 775 million (1H 2012: RR 2,661 million) and were related to the construction of a new pig-breeding complex and a fodder plant in Tambov region. Significant investments were also made in the agricultural segment in the amount of RR 527 million (1H 2012: RR 557 million), representing purchases of machinery and equipment, and in the sugar division in the amount of RR 266 million (1H 2012: RR 339 million).
Debt position and liquidity management
in RR million | 30 June 2013 | 31 December 2012 | % change |
Gross debt | 38,920 | 48,540 | -20% |
Short term borrowings | 19,565 | 24,414 | -20% |
Long term borrowings | 19,355 | 24,126 | -20% |
Net debt | 15,170 | 17,257 | -12% |
Short term borrowings, net | (2,858) | (2,379) | 20% |
Long term borrowings, net | 18,027 | 19,636 | -8% |
Adjusted EBITDA (LTM***) | 6,384 | 8,781 | -27% |
Net debt/Adjusted EBITDA (LTM) | 2.4 | 2.0 |
The Group maintained a healthy debt structure; 58% of net debt relates to amounts with more than 3 years maturity.
Net finance expense
in RR million | Six months ended | % change | Three months ended | % change | ||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 | |||
Net interest expense | (1,140) | (530) | 115% | (403) | (191) | 111% |
Gross interest expense | (1,903) | (1,022) | 86% | (915) | (499) | 83% |
Reimbursement of interest expense | 763 | 492 | 55% | 512 | 308 | 66% |
Interest income | 1,160 | 533 | 118% | 580 | 266 | 118% |
Other financial expenses, net | (6) | - | - | - | 133 | -100% |
Total net finance expense | 14 | 3 | 367% | 177 | 208 | -15% |
In 1H 2013 the Group continued to enjoy benefits from the state agriculture subsidies program. RR 763 million of subsidies received had covered 40% of gross interest expense.
(*) Adjusted EBITDA is defined as operating profit before taking into account (i) depreciation, (ii) other operating income, net (other than reimbursement of fuel and fertilizers and feed costs (government grants)), (iii) the difference between gain on revaluation of biological assets and agricultural produce recognized during the period and the gain on initial recognition of agricultural produce attributable to realized agricultural produce together with revaluation of biological assets attributable to realized biological assets included in cost of sales for the period (iv) provision/(reversal of provision) for net realizable value, (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 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 and, according to the National Union of Pig Breeders, is currently the fifth largest pig breeding complex in Russia. 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 approximately 454 thousand hectares of land 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 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 Q1 2013 financial results for investors and analysts.
Details of call:
Date | 30 August 2013 |
Time | 5:00 PM (Moscow) / 2:00 PM (London) / 9:00 AM (New-York) at the same day |
Subject | ROS AGRO PLC 6M 2013 Financial Results |
UK Toll Free UK Local Line | 0800-358-5271 44-20-7190-1595 |
USA Toll Free USA Local Line | 1-877-941-6013 1-480-629-9822 |
Russia Toll Free | 7 (495) 580 9543 |
Conference ID | 4636810 |
Contacts:
Sergey Tribunsky Chief Investment Officer (Deputy CEO on Investment) LLC Rusagro Group Phone: +7 495 363 16 61 stribunsky@rusagrogroup.ru | Vladimir Gromov First Deputy CEO LLC Rusagro Group
Phone: +7 495 363 16 61 |
Appendix 1. Unaudited consolidated statement of comprehensive income for the six months ended 30 June 2013 (in RR thousand)
Six months ended 30 June: | Three months ended 30 June: | |||
2013 | 2012 | 2013 | 2012 | |
Sales | 14,343,130 | 14,059,739 | 7,926,342 | 7,758,205 |
Gain on revaluation of biological assets and agriculture produce | (58,114) | 1,075,972 | 189,901 | 579,683 |
Cost of sales | (12,313,854) | (10,165,445) | (6,883,565) | (5,529,965) |
Gains less losses from trading sugar derivatives | 122,839 | 43,754 | 32,294 | 43,597 |
Gross profit | 2,094,001 | 5,014,020 | 1,264,972 | 2,851,519 |
Distribution and selling expenses | (1,272,763) | (1,122,783) | (763,387) | (569,316) |
General and administrative expenses | (1,214,433) | (1,167,844) | (520,371) | (530,911) |
Share-based remuneration | (125,773) | (258,391) | (63,234) | (129,195) |
Other operating income/ (expenses), net | 264,300 | (103,948) | 224,758 | (99,494) |
Operating profit | (254,668) | 2,361,054 | 142,738 | 1,522,603 |
Interest expense | (1,140,934) | (529,926) | (403,171) | (191,600) |
Interest income | 1,160,340 | 533,405 | 579,851 | 265,859 |
Other financial (expenses)/ income, net | (6,336) | 275 | (95) | 133,410 |
(Loss)/ profit before taxation | (241,598) | 2,364,808 | 319,323 | 1,730,272 |
Income tax expense | (41,031) | (447,403) | (24,011) | (370,501) |
(Loss)/ profit for the period | (282,629) | 1,917,405 | 295,312 | 1,359,771 |
Total comprehensive (loss)/ income for the period | (282,629) | 1,917,405 | 295,312 | 1,359,771 |
(Loss)/ profit is attributable to: | ||||
Owners of ROS AGRO PLC | (282,686) | 1,789,872 | 298,315 | 1,269,646 |
Non-controlling interest | 57 | 127,533 | (3,003) | 90,125 |
(Loss)/ profit for the period | (282,629) | 1,917,405 | 295,312 | 1,359,771 |
Total comprehensive (loss)/ income is attributable to: | ||||
Owners of ROS AGRO PLC | (282,686) | 1,789,872 | 298,315 | 1,269,646 |
Non-controlling interest | 57 | 127,533 | (3,003) | 90,125 |
Total comprehensive (loss)/ income for the period | (282,629) | 1,917,405 | 295,312 | 1,359,771 |
Earnings per ordinary share for (loss)/ profit attributable to the equity holders of ROS AGRO PLC, basic and diluted (in RR per share) | (11.98) | 75.39 | 12.64 | 53.48 |
Appendix 2. Unaudited segment information for the six months ended 30 June 2013 (in RR thousand)
Six months ended 30 June 2013 | Sugar | Meat | Other agriculture | Oil | Other | Eliminations | Total |
Sales | 7,373,742 | 2,507,609 | 1,201,269 | 3,535,521 | 76,608 | (351,619) | 14,343,130 |
Gain on revaluation of biological assets and agriculture produce | - | (58,114) | - | - | - | - | (58,114) |
Cost of sales | (6,552,127) | (2,341,898) | (989,930) | (2,706,800) | (20) | 276,920 | (12,313,854) |
incl. Depreciation | (304,881) | (408,508) | (97,505) | (115,276) | - | (18,400) | (944,570) |
Gains less losses from trading sugar derivatives | 122,839 | - | - | - | - | - | 122,839 |
Gross profit | 944,454 | 107,598 | 211,339 | 828,722 | 76,588 | (74,699) | 2,094,000 |
Distribution and Selling, General and administrative expenses | (980,009) | (189,115) | (444,465) | (727,578) | (234,474) | 88,446 | (2,487,196) |
incl. Depreciation | (52,836) | (6,721) | (17,724) | (32,646) | (10,269) | 1,244 | (118,951) |
Share-based remuneration | - | - | - | - | (125,773) | - | (125,773) |
Other operating income/(expenses), net | (61,359) | 201,608 | 47,760 | 75,846 | 998,255 | (997,810) | 264,300 |
incl. Reimbursement of fuel and fertilisers and feed costs (government grants) | - | 248,456 | 146,305 | - | - | - | 394,760 |
Operating profit | (96,915) | 120,090 | (185,366) | 176,989 | 714,596 | (984,063) | (254,669) |
Adjustments: | |||||||
Depreciation included in Operating Profit | 357,717 | 415,228 | 115,229 | 147,921 | 10,269 | 17,156 | 1,063,521 |
Other operating (income) /expenses, net | 61,359 | (201,608) | (47,760) | (75,846) | (998,255) | 997,810 | (264,300) |
Share-based remuneration | - | - | - | - | 125,773 | - | 125,773 |
Reimbursement of fuel and fertilisers and feed costs (government grants) | - | 248,456 | 146,305 | - | - | - | 394,760 |
Gain on revaluation of biological assets and agriculture produce | - | 58,114 | - | - | - | - | 58,114 |
Gain on initial recognition of agricultural produce attributable to realised agricultural produce | - | - | 330,780 | - | - | 321,376 | 652,157 |
Revaluation of biological assets attributable to realised biological assets and included in cost of sales | - | (186,672) | 20,617 | - | - | - | (166,055) |
Provision/ (Reversal) for net realizable value costs | (30,090) | 1,083 | - | - | - | - | (29,006) |
Adjusted EBITDA* | 292,072 | 454,693 | 379,804 | 249,065 | (147,618) | 352,280 | 1,580,296 |
* Non-IFRS measure
Appendix 2 (continued). Unaudited segment information for the six months ended 30 June 2012 (in RR thousand)
Six months ended 30 June 2012 | Sugar | Meat | Other agriculture | Oil | Other | Eliminations | Total |
Sales | 6,383,109 | 2,625,321 | 1,071,036 | 4,359,350 | 142,803 | (521,880) | 14,059,739 |
Gain on revaluation of biological assets and agriculture produce | - | 1,075,972 | - | - | - | - | 1,075,972 |
Cost of sales | (4,470,157) | (2,517,429) | (921,905) | (2,831,905) | - | 575,952 | (10,165,444) |
incl. Depreciation | (241,570) | (284,736) | (106,722) | (115,011) | - | (14,440) | (762,480) |
Gains less losses from trading sugar derivatives | 43,754 | - | - | - | - | - | 43,754 |
Gross profit | 1,956,706 | 1,183,863 | 149,131 | 1,527,445 | 142,803 | 54,072 | 5,014,021 |
Distribution and Selling, General and administrative expenses | (910,297) | (168,104) | (422,604) | (642,780) | (231,077) | 84,236 | (2,290,626) |
incl. Depreciation | (34,228) | (8,891) | (25,513) | (20,102) | (4,960) | - | (93,695) |
Share-based remuneration | - | - | - | - | (258,391) | - | (258,391) |
Other operating income/(expenses), net | 15,315 | (59,302) | (37,224) | (11,794) | 5,287 | (16,230) | (103,948) |
incl. Reimbursement of fuel and fertilisers and feed costs (government grants) | - | 1,641 | 13,814 | - | - | - | 15,455 |
Operating profit | 1,061,724 | 956,457 | (310,697) | 872,871 | (341,378) | 122,078 | 2,361,055 |
Adjustments: | |||||||
Depreciation included in Operating Profit | 275,799 | 293,628 | 132,235 | 135,113 | 4,960 | 14,440 | 856,175 |
Other operating (income) /expenses, net | (15,315) | 59,302 | 37,224 | 11,794 | (5,287) | 16,230 | 103,948 |
Share-based remuneration | - | - | - | - | 258,391 | - | 258,391 |
Reimbursement of fuel and fertilisers and feed costs (government grants) | - | 1,641 | 13,814 | - | - | - | 15,455 |
Gain/ (loss) on revaluation of biological assets and agriculture produce | - | (1,075,972) | - | - | - | - | (1,075,972) |
Gain on initial recognition of agricultural produce attributable to realised agricultural produce | - | - | 148,569 | - | - | 417,105 | 565,674 |
Revaluation of biological assets attrubitable to realised biological assets and included in cost of sales | - | 1,006,733 | - | - | - | - | 1,006,733 |
Provision/ (Reversal) for net realizable value costs | (86,641) | (26,846) | - | - | - | - | (113,487) |
Adjusted EBITDA* | 1,235,567 | 1,214,944 | 21,144 | 1,019,778 | (83,314) | 569,854 | 3,977,973 |
* Non-IFRS measure
Appendix 3. Unaudited consolidated statement of financial position as at 30 June 2013 (in RR thousand)
30 June 2013 | 31 December 2012 | |
ASSETS | ||
Current assets | ||
Cash and cash equivalents | 1,955,038 | 2,019,867 |
Short-term investments | 21,424,982 | 25,532,275 |
Trade and other receivables | 1,632,090 | 1,811,768 |
Prepayments | 429,714 | 538,480 |
Current income tax receivable | 157,473 | 128,881 |
Other taxes receivable | 1,325,361 | 2,585,889 |
Inventories | 7,279,713 | 13,441,518 |
Short-term biological assets | 5,836,760 | 1,244,129 |
Total current assets | 40,041,131 | 47,302,807 |
Non-current assets | ||
Property, plant and equipment | 28,509,300 | 27,453,447 |
Inventories intended for construction | 401,702 | 1,160,022 |
Goodwill | 1,175,578 | 1,175,578 |
Advances paid for property, plant and equipment | 1,053,094 | 1,199,625 |
Advances paid for intangible assets | 155,145 | 246,010 |
Long-term biological assets | 1,604,034 | 1,352,059 |
Long-term investments | 1,562,425 | 4,721,083 |
Deferred income tax assets | 193,650 | 237,838 |
Other intangible assets | 130,977 | 56,553 |
Restricted cash | 53,460 | 91,111 |
Total non-current assets | 34,839,366 | 37,693,326 |
Total assets | 74,880,497 | 84,996,133 |
Liabilities and EQUITY | ||
Current liabilities | ||
Short-term borrowings | 19,564,534 | 24,413,533 |
Trade and other payables | 2,786,459 | 2,615,403 |
Current income tax payable | 20,684 | 59,735 |
Other taxes payable | 1,017,442 | 1,274,876 |
Total current liabilities | 23,389,118 | 28,363,547 |
Non-current liabilities | ||
Long-term borrowings | 19,355,148 | 24,126,365 |
Government grants | 870,678 | 722,617 |
Deferred income tax liability | 237,412 | 337,524 |
Total non-current liabilities | 20,463,239 | 25,186,506 |
Total liabilities | 43,852,357 | 53,550,053 |
Equity | ||
Share capital | 9,734 | 9,734 |
Treasury shares | (461,847) | (461,847) |
Share premium | 10,557,573 | 10,557,573 |
Share-based payment reserve | 1,184,268 | 1,058,495 |
Retained earnings | 19,729,852 | 20,211,049 |
Equity attributable to owners of ROS AGRO PLC | 31,019,581 | 31,375,004 |
Non-controlling interest | 8,559 | 71,076 |
Total equity | 31,028,140 | 31,446,080 |
Total liabilities and equity | 74,880,497 | 84,996,133 |
Appendix 4. Unaudited consolidated statement of cash flows for the six months ended 30 June 2013 (in RR thousand)
Six months ended | Six months ended | |
30 June 2013 | 30 June 2012 | |
Cash flows from operating activities | ||
(Loss)/ profit before taxation | (241,598) | 2,364,808 |
Adjustments for: | ||
Depreciation of property, plant and equipment | 1,063,521 | 856,175 |
Interest expense | 1,903,463 | 1,022,176 |
Government grants | (1,207,686) | (554,060) |
Interest income | (1,160,340) | (533,405) |
Gain on initial recognition of agricultural produce, net | 652,157 | 565,674 |
Change in provision for net realisable value of inventory | (29,006) | (113,487) |
Revaluation of biological assets, net | (107,941) | (69,238) |
Change in provision for impairment of receivables and prepayments | 121,121 | 13,199 |
Unrealised foreign exchange (gain) / loss | (22,201) | (57,700) |
Share based remuneration | 125,773 | 258,391 |
Lost harvest write-off | 13,798 | 30,212 |
Change in provision for impairment of advances paid for property, plant and equipment | 18,806 | 37,262 |
Other non-cash and non-operating expenses, net | 23,428 | 19,066 |
Operating cash flow before working capital changes | 1,153,295 | 3,839,073 |
Change in trade and other receivables and prepayments | 109,096 | (81,423) |
Change in other taxes receivable | 1,260,529 | (141,258) |
Change in inventories | 6,204,710 | 3,087,587 |
Change in biological assets | (4,753,757) | (4,167,814) |
Change in trade and other payables | (80,035) | 1,109,910 |
Change in other taxes payable | (257,434) | (188,048) |
Cash generated from operations | 3,636,404 | 3,458,027 |
Income tax paid | (164,599) | (201,727) |
Net cash from operating activities | 3,471,804 | 3,256,300 |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (1,671,141) | (2,883,064) |
Purchases of other intangible assets | (7,023) | (3,705) |
Proceeds from sales of property, plant and equipment | 39,477 | 15,393 |
Purchases of inventories intended for construction | (22,240) | (718,238) |
Change in promissory notes* | - | (292,236) |
Change in cash on bank deposits* | 7,467,954 | 718,532 |
Loans given | (37,500) | (113,923) |
Loans repaid | 5,906 | 3,894 |
Interest received* | 973,279 | 366,627 |
Movement in restricted cash | 39,527 | (44,175) |
Net cash from/ (used in) investing activities | 6,788,238 | (2,950,894) |
Cash flows from financing activities | ||
Proceeds from borrowings | 4,161,443 | 11,306,418 |
Repayment of borrowings | (13,734,516) | (14,863,114) |
Interest paid | (2,172,356) | (1,300,932) |
Purchases of non-controlling interest | (11,084) | (182,617) |
Dividends paid | (107) | - |
Proceeds from government grants | 1,415,939 | 604,047 |
Net cash used in financing activities | (10,340,682) | (4,436,198) |
Net effect of exchange rate changes on cash and cash equivalents | 15,810 | 16,148 |
Net decrease in cash and cash equivalents | (64,830) | (4,114,644) |
Cash and cash equivalents at the beginning of the period | 2,019,867 | 5,457,567 |
Cash and cash equivalents at the end of the period | 1,955,038 | 1,342,923 |
(*) 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.
Related Shares:
AGRO.L