RNS Number : 0732L
Ros Agro PLC
11 May 2022
 

 

 

11 May 2022

 

ROS AGRO financial results for 1Q 2022

 

11 May 2022 - Today ROS AGRO PLC (the "Company"), the holding company
of Rusagro Group (the "Rusagro"), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the three months ended 31 March 2022.

 

 

1Q 2022 HIGHLIGHTS

 

-     Sales amounted to RUB 61,506 million (US$ 715 million1), an increase of RUB 11,573 million (+23%) compared to 1Q 2021;

-     Adjusted EBITDA2 amounted to RUB 16,887 million (US$ 196 million), an increase of RUB 5,718 million (+51%) compared to 1Q 2021;

-     Adjusted EBITDA margin rose from 22% in 1Q 2021 to 27% in 1Q 2022;

-     Net profit for the period amounted to RUB 2,240 million (US$ 26 million), a decrease of RUB 4,286 million (-66%);

-     Net debt position3 as of 31 March 2022 amounted to RUB 91,681 million (US$ 1,090 million);

-     Net Debt/Adjusted EBITDA (LTM4) as of 31 March 2022 was 1.70.

 

Commenting on the results, Timur Lipatov, CEO of Rusagro, said:

 

"In 1Q 2022 Rusagro continued to demonstrate growth of its revenue and adjusted EBITDA, but net profit decreased due to forex losses caused by money blocking by European banks. Supported by higher total sales volumes across all business segments except Sugar segment, net revenue increased by 23%. Moreover, as sales grew more than corresponding rise in costs of goods, adjusted EBITDA margin had a 5 pp improvement, which pushed EBITDA by 51% up in comparison to the same quarter of the previous year."

 


Key consolidated financial performance indicators

in RUB million

Three months ended

Variance

31 March 2022

31 March 2021

Units

%

Sales

 61,506

 49,933

 11,573

 23

Gross profit

 15,531

 10,089

 5,442

 54

Gross margin, %

25%

20%

5 pp

 

Adjusted EBITDA

 16,887

 11,169

 5,718

 51

Adjusted EBITDA margin, %

27%

22%

5 pp

 

Net profit for the period 1

 2,240

 6,526

(4,286)

(66)

Net profit margin %

4%

13%

(9) pp

 

Net profit for the period is affected by non-cash income/(loss) on revaluation of biological assets and agricultural produce.

 

Sales volume of Rusagro products in 1Q 2022

Three months ended

Variance

31 March 2022

31 March 2021

Units

%

Sugar

 177

 202

(24)

(12)

Pork products

 60

 58

 2

 3

Agriculture crops, incl.

 356

 272

 84

 31

     soybean

 102

 72

 30

 42

     corn

 101

 50

 50

 100

     wheat

 79

 143

(63)

(44)

     sugar beet

 59

 -

 59

 100

     sunflower seeds

 16

 8

 8

 100

Oil and fat products, incl.

 400

 385

 14

 4

     meal

 149

 118

 31

 26

     crude oil

 92

 103

(10)

(10)

     industrial fats

 79

 83

(4)

(4)

     dry whey mixes

 4

 3

 1

 27

     consumer oil & fat products

 72

 75

(4)

(5)

     consumer dairy products

 3

 3

 0

 1

 


KEY CONSOLIDATED CASH FLOW INDICATORS (NOT IFRS PRESENTATION*)

The key consolidated cash flow indicators presented according to management accounts methodology

in RUB million

Three months ended

Variance

31 March 2022

31 March 2021

Units

%

Net cash from operating activities, incl.

(5,130)

 8,417

(13,547)

 -

Operating cash flow before working capital changes

 17,146

 11,430

 5,716

 50

Working capital changes

(21,946)

(2,854)

(19,092)

(669)

Net cash from investing activities, incl.

(2,267)

(1,999)

(268)

(13)

Purchases of property plant and equipment and inventories intended for construction

(3,088)

(2,040)

(1,049)

(51)

Net cash from financing activities

 8,925

 2,967

 5,958

 201

Net effect of exchange rate changes on cash and cash equivalents

(7,960)

(30)

(7,930)

(26,338)

Net increase / (decrease) in cash and cash equivalents

(6,432)

 9,356

(15,787)

 -

(*) See Appendix 3

The key investments in property, plant and equipment and inventories intended for construction during 1Q 2022 were made in the Meat segment in the amount of RUB 1,277 million (1Q 2021: RUB 1,251 million) mainly due to the purchases related to the construction project in the Russian Far East. Investments in the Agriculture segment in the amount of RUB 830 million (1Q 2021: RUB 258 million), Oil and Fat segment in the amount of RUB 815 million (1Q 2021 : RUB 405 million), and Sugar segment in the amount of RUB 166 million (1Q 2021: RUB 126 million) mainly relate to purchases of machinery and equipment for production facilities renewal and maintenance.

Debt position and liquidity management

in RUB million

31 March 2022

31 December 2021

Variance

Units

%

Gross debt

180,015

172,724

7,291

4

Short-term borrowings

115,856

108,749

7,107

7

Long-term borrowings

64,159

63,975

184

0

Cash and cash equivalents, bank deposits and bonds

(88,334)

(99,315)

10,981

11

Short-term cash, deposits and bonds

(53,923)

(65,344)

11,421

17

Long-term cash, deposits and bonds

(34,411)

(33,971)

(440)

(1)

Net debt

91,681

73,409

18,272

25

Short-term borrowings, net

61,933

43,405

18,528

43

Long-term borrowings, net

29,748

30,004

(256)

(1)

Adjusted EBITDA (LTM4)

53,777

48,060

5,717

12

Net debt/ Adjusted EBITDA (LTM)

1.70

1.53

0.2 pp

 

Adjusted EBITDA (LTM)5 without other operating income/expenses

54,202

48,314

5,888

12

Net debt/ Adjusted EBITDA (LTM)5 without other operating income/expenses

1.69

1.52

0.2 pp

 

 

 

Net finance income/ (expense)

in RUB million

Three months ended

Variance

31 March 2022

31 March 2021

Units

%

Net interest expense

(1,515)

(1,294)

(221)

(17)

Gross interest expense

(4,555)

(1,785)

(2,770)

(155)

Reimbursement of interest expense

 3,040

 491

 2,550

 520

Interest income

 2,308

 1,819

 489

 27

Net gain/ (loss) from bonds held for trading

 0

(0)

 0

 -

Other financial income, net

(7,885)

(20)

(7,865)

(38,902)

Net foreign exchange gain/ (loss)

(7,829)

(32)

(7,797)

(24,397)

Other financial income / (expenses), net

(57)

 12

(68)

 -

Total net finance income/ (expenses)

(7,092)

 505

(7,596)

 -

Net debt increased at 31 March 2022 compared at 31 December 2021 as a result of an increase in short-term borrowings.

In 1Q 2022 Rusagro continued to enjoy benefits from the state agriculture subsidies programme. The Rusagro continued to receive bank loans with decreased preferential interest rates under the programme of government support. Under this programme, the government provides subsidies to the banks to compensate the loss of income on credits with decreased interest rates, given by the banks to agricultural producers. In 1Q 2022 IFRS accounts these credits are accounted according to its face value with no adjustments to prevailing market rates. The differences between nominal and market interest rate is recognized as either government grants in a statement of financial position for borrowings received with the purpose to finance investment projects or interest expenses in a statement of comprehensive income for general purpose borrowings.

Net finance income of 1Q 2021 in the sum of RUB 505 million changed to net finance expense in the amount of RUB 7,092 million in 1Q 2022 as the result of negative dynamics in forex losses in 1Q 2022 and increase in interest income on bank deposits in 1Q 2022, partially compensated by lower interest income on SolPro loans.

________________________________

(1) The exchange rates used for translation of RUB amounts into USD represent average Central Bank official exchange rate for the respective reporting period for income, expenses and profits and the Central Bank official exchange rate as at the reporting date for balance figures.

(2) Adjusted EBITDA is defined as operating profit before taking into account (i) depreciation included in operating profit, (ii) net gain/ (loss) on revaluation of biological assets and agricultural produce, (iii) non-recurring components of other operating income/ (expenses), net, (iv) share-based remuneration, (v) provision for impairment of loans issued (see Appendix 2 for the detailed calculation of Adjusted EBITDA). Adjusted EBITDA is not a measure of financial performance under IFRS. It should not be considered as an alternative to profit for the period as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. We believe that Adjusted EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of subsidiaries and other investments and our ability to incur and service debt.

(3) The Rusagro determines the net debt as short-term borrowings and long-term borrowings less cash and cash equivalents, bank deposits, bank promissory notes and bonds held for trading.

(4) LTM - The abbreviation for the "Last twelve months".

(5) Starting from the beginning of 2020 part of other operating income and expensed (recurring items) was included in Adjusted EBITDA calculation. Figures of 2022 and 2021 calculated using prior periods' logic (excluding other operating income/expenses) are shown in table Debt position and liquidity management above and in the diagram with Net debt/ LTM EBITDA trend analysis for comparative purposes



NOTE

ROS AGRO PLC (LSE, MOEX: AGRO) - a holding company of Rusagro Group, a leading Russian diversified food producer with vertically integrated operations in the following branches:

 

Agricultural:

Rusagro currently controls one of the largest land banks among Russian agriculture producers, with 643 thousand hectares of land under control located in the highly fertile Black Earth region of Russia (in the Belgorod, Tambov, Voronezh, Kursk, Orel regions) and in the Far East Primorye Region. Land and production sites are strategically located within
the same regions to optimize efficiency and minimize logistical costs. Rusagro is one
of the major sugar beet producers in Russia, but it also produces wheat and
corn, sunflower seeds and soybeans. These products are partially consumed by the Meat and Oil and Fat segments, supporting a synergistic effect and lowering price change risk.

 

Oil and Fat:

Rusagro is the leading crude sunflower oil and consumer margarine producer, second largest industrial fats and mayonnaise producer in Russia with products sold under eleven key brands, such as EZhK, Schedroye Leto, Mechta Khozyaiki, umbrella brand Ya Lublu Gotovit (includes Moskovskiy Provansal, Novosibirskiy Provansal and Saratovskiy Provansal), Rossiyanka and Saratovskiy Slivochniy, Benefitto, Maslava and Leto Krasno (红色夏日), which is sold on the Chinese market. Rusagro also produces dry industrial mixes, cheeses, butter and cream sold under three brands: Milie, Syrnaya Kultura and Ya Lublu Gotovit. Rusagro owns four crushing and two oil & fats plants and leases two milk processing plants. Owning its sunflower and soy oil production allows Rusagro to control the source of the sunflower and soybean oil required to produce oil and fats products.

 

Sugar:

Rusagro is one of the leading Russian sugar producers (№3 in Russia and №1 on cube white sugar market), producing sugar from sugar beet at nine production sites in four regions. Group produces white and brown sugar sold under the brands Russkii Sakhar, Chaikofsky, Mon Cafeand Brauni. The Sugar segment is vertically integrated and sugar beets are supplied by Rusagro's Agriculture segment, which ensures a consistent supply. The sugar segment also operates a cereal plant and sells buckwheat and rice under the brand Tyoplye Traditsii.

 

Meat:

Rusagro is №4 largest pork producer in Russia. It operates large commercial pig breeding complexes adhering to best practices regarding biosecurity standards, nucleus farms, compound feed plants, slaughterhouses and meat processing plants in Tambov and Belgorod Regions and in the Russian Far East. Since 2016, Rusagro sells retail products under its own brand Slovo Myasnika (Butcher's word).

 

 

CONFERENCE CALL

Rusagro management is organizing a conference call on Company's 1Q 2022 financial results for investors and analysts.

Details of the call:

Date:

11 May 2022

Time:

16:00 PM (Moscow) / 14:00 PM (London)

Subject:

ROS AGRO PLC 1Q 2022 Financial results

 

 

 

Password:

837093

Link:

https://ib-translations.zoom.us/j/82282274964?pwd=R3c4ZEtzNVpGZ1I1Wmh1dDkxbms5UT09

 

 

 

 

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.


 

 

CONTACTS

 

Svetlana Kuznetsova

IR & ESG Director

Phone:  +7 495 363 1661

E-mail: ir@rusagrogroup.ru

 

 

Appendix 1. Consolidated statement of comprehensive income for the Three months ended 31 March 2022 (in RUB thousand)


Three months ended

31 March


2022

2021

Sales

61,506,160

49,932,967

Net gain/(loss) on revaluation of biological assets and agricultural produce

(3,097,209)

(2,025,822)

Cost of sales

(42,877,789)

(37,818,491)

Net gain/(loss) from trading derivatives

-

(5)

Gross profit

15,531,162

10,088,649




Distribution and selling expenses

(3,629,180)

(1,862,951)

General and administrative expenses

(1,752,814)

(2,064,024)

Other operating income/(expenses), net

(617,294)

757,658

Operating profit / (loss)

9,531,874

6,919,332


 

 

Interest expense

(1,514,712)

(1,294,083)

Interest income

2,308,391

1,819,264

Net (loss)/gain from bonds

42

(239)

Other financial income/ (expenses), net

(7,885,447)

(20,218)

Profit before income tax

2,440,148

7,424,056




Income tax expense

(200,235)

(897,705)

Profit for the period

2,239,913

6,526,351

 

 

 

Other comprehensive income

-

-

Total comprehensive income for the period

 2,239,913

 6,526,351

 



Profit is attributable to:

 

 

Owners of ROS AGRO PLC

 2,240,631

 6,547,432

Non-controlling interest

(718)

(21,081)

Profit for the period

 2,239,913

 6,526,351

 



Total comprehensive income is attributable to:



Owners of ROS AGRO PLC

 2,240,631

 6,547,432

Non-controlling interest

(718)

(21,081)

Total comprehensive income for the period

 2,239,913

 6,526,351




Earnings per ordinary share for profit attributable to the owners of ROS AGRO PLC, basic and diluted
(in RR per share)

83.28

243.34

 


Appendix 2. Consolidated statement of financial position as at 31 March 2022
(in RUB thousand)

 

 


31 March 2022

31 December 2021

ASSETS

 


Current assets

 


Cash and cash equivalents

40,030,538

46,462,179

Restricted cash

53

47

Short-term investments

18,732,460

21,001,760

Trade and other receivables

13,521,097

12,558,401

Prepayments

17,208,585

5,414,032

Current income tax receivable

1,222,295

1,532,726

Other taxes receivable

6,900,652

8,321,193

Inventories and short-term biological assets

79,946,087

77,509,033

Total current assets

177,561,767

119,201,673

 



Non-current assets

 


Property, plant and equipment

119,296,660

119,159,412

Inventories intended for construction

1,435,752

1,604,570

Right-of-use assets

7,238,242

7,346,538

Goodwill

2,364,942

2,364,942

Advances paid for non-current assets

7,195,395

7,355,467

Long-term biological assets

4,201,125

2,744,863

Long-term investments and receivables

42,958,586

42,527,657

Investments in associates

390,782

359,782

Deferred income tax assets

5,514,996

4,835,268

Other intangible assets

1,385,734

1,144,057

Other non-current assets

31,944

79,125

Total non-current assets

192,014,158

189,521,681

Total assets

369,575,925

362,321,052

 

 


LIABILITIES and EQUITY

 

 

Current liabilities

 


Short-term borrowings

115,855,843

108,748,840

Lease liabilities

1,063,827

1,130,831

Trade and other payables

15,416,701

15,440,635

Provisions

542,707

494,709

Current income tax payable

758,544

464,471

Other taxes payable

4,830,751

7,454,558

Total current liabilities

138,468,373

133,734,044

 



Non-current liabilities

 


Long-term borrowings

64,159,311

63,975,025

Government grants

9,864,403

9,325,530

Lease liabilities

5,146,583

5,535,014

Deferred income tax liability

1,821,978

1,876,244

Total non-current liabilities

80,992,275

80,711,813

Total liabilities

219,460,648

214,445,857

 



Equity

 


Share capital

12,269

12,269

Treasury shares

(490,607)

(490,607)

Additional paid-in capital

26,964,479

26,964,479

Other reserves

1,363,177

1,363,177

Retained earnings

122,321,107

120,080,307

Equity attributable to owners of ROS AGRO PLC

150,170,425

147,929,625

Non-controlling interest

(55,148)

(54,430)

Total equity

150,115,277

147,875,195

Total liabilities and equity

369,575,925

362,321,052

 

 



Appendix 3. Consolidated statement of cash flows for the Three months ended 31 March 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)


Three months ended


31 March 2022

31 March 2021

Cash flows from operating activities



Profit before income tax

 2,440,149

 7,424,056

Adjustments for:

 

 

Depreciation and amortization

 3,817,073

 2,800,821

Interest expense

 4,554,909

 1,784,749

Government grants

(3,230,880)

(853,039)

Interest income

(2,308,390)

(1,819,264)

Loss/ (gain) on disposal of property, plant and equipment

(438,032)

 6,581

Net (gain) / loss on revaluation of biological assets and agricultural produce

 3,097,209

 2,025,822

Change in provision for impairment of loans issued

(70)

 31

Interest expense on leases

 56,386

 62,739

Realised deferred day-one gain

 -

(212,803)

Change in provision for net realisable value of inventory

 215,607

 377,172

Change in provision for impairment of receivables and prepayments

 47,807

 27,658

Foreign exchange (gain) / loss, net

 9,152,911

(69,897)

Net (gain) / loss from bonds held for trading

(42)

 239

Change in provision for impairment of advances paid for property, plant and equipment

(15,330)

(1,490)

Change in other provisions

 47,998

(83,243)

Loss on disposal of other assets

 3,608

 -

Gain on SolPro loans redemption

(320,080)

 -

Other non-cash and non-operating expenses, net

 25,125

(39,903)

Operating cash flow before working capital changes

 17,145,958

 11,430,229

Change in trade and other receivables and prepayments

(14,124,633)

(1,973,789)

Change in other taxes receivable

 1,420,541

 1,747,251

Change in inventories and biological assets

(6,668,934)

(3,709,768)

Change in trade and other payables

 20,162

 1,682,794

Change in other taxes payable

(2,593,539)

(600,821)

Cash generated from operations

(4,800,445)

 8,575,896

Income tax paid

(329,946)

(158,819)

Net cash from operating activities

(5,130,391)

 8,417,077

 

 

 



 

Appendix 3 (continued). Consolidated statement of cash flows the Three months ended 31 March 2022 (in RUB thousand) - NOT IFRS PRESENTATION (*)

 


Three months ended


31 March 2022

31 March 2021

Cash flows from investing activities

 

 

Purchases of property, plant and equipment

(2,981,847)

(1,869,918)

Purchases of other intangible assets

(360,947)

(35,805)

Purchases of land lease rights

(8,843)

(11,421)

Proceeds from sales of property, plant and equipment

 554,179

 72,100

Purchases of inventories intended for construction

(106,466)

(169,706)

Purchases of associates

(31,000)

(56,600)

Movement in restricted cash

 -

 37,839

Dividends received

 377,269

 -

Other investing activities

 291,096

 34,961

Net cash from investing activities

(2,266,559)

(1,998,550)

Cash flows from financing activities



Proceeds from borrowings

 21,004,197

 10,505,708

Repayment of borrowings

(14,674,650)

(5,981,704)

Interest paid

(937,229)

(640,348)

Change in cash on bank deposits

 5,308,072

(2,000,000)

Proceeds from sales of bonds with maturity over three months*

 140,783

 220,420

Loans given*

(250,000)

 -

Loans repaid*

(2,328,261)

 492,857

Interest received*

 1,132,611

 152,146

Proceeds from government grants

 32,198

 268,131

Dividends paid to owners Ros Agro PLC

(120)

 -

Repayment of lease liabilities

(502,443)

(50,118)

Other financial activities

 290

 -

Net cash from  financing activities

 8,925,448

 2,967,092

Net effect of exchange rate changes on cash and cash equivalents

(7,960,139)

(30,109)

Net increase/ (decrease) in cash and cash equivalents

(6,431,641)

 9,355,510

Cash and cash equivalents at the beginning of the period

 46,462,179

 11,866,798

Cash and cash equivalents at the end of the period

 40,030,538

 21,222,308

 

 

(*) 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.

 

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