investors presentation - rusagro · 2019-11-22 · • novosibirsk region –1 oil and fat plant;...
TRANSCRIPT
20 November 2018
INVESTORS PRESENTATIONROS AGRO PLC
November 2019
2
ROS AGRO OVERVIEW
3
DISCLAIMER
IMPORTANT: You must read the following before continuing. The following applies to this document, the oral presentation of the information in this document
by ROS AGRO PLC (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively,the “Information”). In accessing the Information, you agree to be bound by the following terms and conditions.
The Information is not intended for potential investors and does not constitute or form part of, and should not be construed as an offer or the solicitation of anoffer to subscribe for or purchase securities of the Company, and nothing contained therein shall form the basis of or be relied on in connection with any contractor commitment whatsoever.
The Information has been prepared by the Company, and no other party accepts any responsibility whatsoever, or makes any representation or warranty, expressor implied, for the contents of the Information, including its accuracy, completeness or verification or for any other statement made or purported to be made inconnection with the Company and nothing in this document or at this presentation shall be relied upon as a promise or representation in this respect, whether as tothe past or the future.
The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-lookingstatements. Forward-looking statements give the Company’s current expectations and projections relating to its financial condition, results of operations, plans,objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words suchas “target,” “believe,” “expect,” “aim,” “intend,” “may,” “anticipate,” “estimate,” “plan,” “project,” “will,” “can have,” “likely,” “should,” “would,” “could” and otherwords and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other importantfactors beyond the Company’s control that could cause the Company’s actual results, performance or achievements to be materially different from the expectedresults, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerousassumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future.
No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness orcorrectness of the Information or the opinions contained therein. The Information has not been independently verified and will not be updated. The Information,including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results.The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in the Company’s expectations, anychange in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of thisdocument. Market data used in the Information not attributed to a specific source are estimates of the Company and have not been independently verified.
The Information is not intended for publication or distribution, directly or indirectly, in or into the United States or to any U.S. person (as defined in Regulation Sunder the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The Information is provided for information purposes only and is not, and must not beviewed as, an offer to buy, or solicitation of an offer to sell, securities in the United States or in any other jurisdiction. The Company has not registered, and doesnot intend to register, any part of the offering in the United States or to conduct a public offering of any securities in the United States, and securities may not beoffered or sold within the United States without registration except pursuant to an exemption from, or in a transaction not subject to, the registration requirementsof the Securities Act. Neither the Information nor any part or copy of it may be taken or transmitted into the United States, its territories or possessions, ordistributed, directly or indirectly, in the United States or its territories or possessions. Any failure to comply with this restriction may constitute a violation of UnitedStates securities laws.
18.1
24.4
18.2
1416.2
10.213.2
20.223.7
13.7
5.6
12.810.0
7.1
2014 2015 2016 2017 2018 9M '18 9M '19
EBITDA adj. Net profit
59.1
72.484.3
79.1 83.0
52.2
104.9
2014 2015 2016 2017 2018 9M '18 9M '19
COMPANY OVERVIEWA LEADING AGRICULTURAL COMPANY IN RUSSIA WITH A 21-YEARS HISTORY AND CONTINUED GROWTH
CONSOLIDATED SALES
41 in accordance with IFRS financials, FY audited by PwC
Vertically integrated and diversified operations with scale benefits
1
KEY GROWTH DRIVERS
RR billion
HIGHLIGHTS 2018
KEY PERFORMANCE INDICATORS 1
ADJ. EBITDA & NET PROFIT
Favorable Russian agriculture sector fundamentals and government support
4
State-of-the-art facilities with strategically important locations
2Strong brand portfolio across products and price points
3
5Experienced management with proven track record
6
LEVERAGE PROFILE
83SALES
RUB bn
19EBITDA
MARGIN
%
EBITDA
1616%
CAPEX
+1 pp
16,800 EMPLOYEES
Strong balance sheet which enables company to make acquisitions and grow
5%
16
Elevated leverage due to a) acquisition of SolPro debt and working capital and b) excess working capital due to increased level of inventories of sugar and grain ahead of expected price growth
RR billion
31% 34%
Adj. EBITDA margin
22% 18% 19%
Net profit margin
34% 33% 17% 7% 15%
20%
19%
13%
7%
RUB bn
RUB bn
DIVISIONS
5
3.6
15.6
4.3 6.6
13.3
50.2
20.1
21.0
0.2x 0.6x 0.2x 0.5x
3.4x2.6x
0
10
20
30
40
50
60
70
-10
-8
-6
-4
-2
0
2
4
2013 2014 2015 2016 2017 2018 9M '19
Net Debt, bn RR Net Debt/LTM EBITDA
54.3
BUSINESS MODELEFFICIENT AND STABLE CLUSTER-ORIENTED BUSINESS MODEL BENEFITING FROM SCALE, VERTICAL INTEGRATION AND DIVERSIFICATION
5Source: Company data
Note: 1 Also includes Food Expert, Colibri Fiori and Formula Chistoty brands; 2 SolPro consumer brands; 3 Market position among sugar consumer brands in respective segments
RA
W
MA
TER
IALS
B2
B A
ND
B2
C S
ALE
SIN
RU
SSIA
AN
D A
BR
OA
DP
RO
CES
SIN
G B
Y
IN-H
OU
SE F
AC
ILIT
IES
AGRICULTURE
SEGMENT
B2B B2C B2B B2C1 B2B B2C
Corn SoybeanGrains Sugar beetSunflower
Cultivation Planting Treatment anddressing
Harvesting Storage
B2B B2C
• Dehydrated whey
3rd party sales
Sugar production
Molasses desugarisation
Oil extraction and obtaining co-products
Oil and fats production
Slaughter house and meat processing
Compound feed production
Live pigs production
Pulp
Meal
(Required for production of extra grade sugar)
100% self-sufficiency
c. 50% c. 25% 100%
Brand new business segment currently operating on the basis of 2 production plants: Zavolzhsky dairy plant (Ulyanovsk region) and Koshkinsky butter & cheese plant (Samara region), one of the leading plants in this segment in Russia.
Fats & Cheese plant
Dairy plant
#23
#13
#13
2 2
22
2
Select clients Select clients Select clients
MILK PRODUCTSSUGAR SEGMENTOIL&FAT SEGMENTMEAT SEGMENT
BUSINESS SEGMENT PRODUCTSBRANDS
6
BRANDS13 KEY BRANDS WITH LEADING POSITIONS IN TARGET MARKETS SUPPORT GROUP’S STRATEGY
• White and brown sugar • Loose and pressed sugar• Shaped sugar and in sticks• Buckwheat• Rice
SUG
AR
MEA
TO
IL &
FA
TS
• Large cuts• Portion cuts• Small cuts• Minced meat
• Sunflower and soy oil• Mayonnaise and sauces• Margarines and spreads• Soap
• Cheese • ButterM
ILK
PR
OD
UC
TS
GEOGRAPHICAL PRESENCE
High degree of self-sufficiency in key raw materials and sufficient storage capacity help to minimize an impact of the unfavorable price changes
1 soy oil and fats plant
1 oil and fats plant producing consumer margarine and mayonnaise
1 oil extraction plant
5 elevators with 370k t of grain capacity
18 pig farms with capacity of 90k t sows
5 breeding farms
2 slaughterhouse with capacity 545 heads/hour
2 compound feed plants
Meat business
9 sugar plants with capacity of 54k t beet/day
1 desugarisation plant
1 cereal plant
Sugar business
Gra
ins
Sugar beet
Veg
etab
le o
il
Co
mp
ou
nd
feed
Source: Company data as of 30 September, 2019* not including SolPro
ASSETS OF THE COMPANY ARE LOCATED IN 12 RUSSIAN REGIONS
Enhanced control of the value chain improves profitability, diminishes exposure to commodity cycle and ensures the sustainable quality of final products
7
Oil& Fats business*Agriculture business
648k ha land bank
4 elevators with 916k t of grain capacity
Ongoing deal with SolPro allows Ros Agro Plc to have production in the following regions as well:
• Saratov Region – 1 oil and fat plant, 2 oil extraction plants and 8 elevators;
• Novosibirsk Region – 1 oil and fat plant;
• Moscow Region – 1 oil and fat plant.
Ros Agro Plc also operates 2elevators in Orenburg Region.
1 soy oil and fats plant Land bank of 97k haTo be launched in 2019-2021: 6 pig farms 1 breeding farm 1 compound feed plant 1 slaughterhouse and meat processing
3 sugar plants 8 pig farms 2 breeding farms 1 compound feed plant 1 slaughterhouse and meat processing 2 elevators Land bank of 311k ha
1 sunflower oil plant 3 elevators 1 cheese plant
Belgorod region
3 sugar plants 1 desugarisation plant 1 cereal plant 10 pig farms (2 more to launch in 2021) 3 breeding farms 1 compound feed plant 1 slaughterhouse and meat processing 2 elevators Land bank of 180k ha
Tambov and Voronezh regions
Samara region
Yekaterinburg
Primorsky Krai
Orel and Kursk regions
3 sugar plants Land bank of 61k ha
1 oil and fats plant
THE COMPANY IS WELL-POSITIONED TO DRIVE INDUSTRY CONSOLIDATION GIVEN ITS SCALABLE BUSINESS MODEL
ONE OF THE LARGEST VERTICALLY INTEGRATED AGRIBUSINESS GROUPS IN RUSSIA
Soybean
Mo
lasses
Live
sto
ck
2.1 2.6
5.16.2
2.0
2014 2015 2016 2017 2018
CAPEX, bn RR
0.20.6
1.0
1.61.2
2014 2015 2016 2017 2018
CAPEX, bn RR
1.6
2.92.5
3.4 3.1
2014 2015 2016 2017 2018
CAPEX, bn RR
1.3 5.2 8.1 6.3 9.4
2014 2015 2016 2017 2018
CAPEX, bn RR
…supported by rapid capacity and production expansion...
717 766 810984
773
34.6 34.650.3 53.0 53.9
1
9
17
25
33
41
49
57
65
73
81
89
97
300
400
500
600
700
800
900
100 0
110 0
2014 2015 2016 2017 2018
Sugar, k tProcessing capacity, k t/day
187193 194
207 205
15% 52%68%
87%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100 %
175
180
185
190
195
200
205
210
2014 2015 2016 2017 2018
Livestock, k t
Livestock processed,%
192
20 36 56
269
101
29 48
Vegetable oil Bottled oil Consumermargarine
Mayonnaise
2017 2018
PRODUCTIONONE OF THE LARGEST SUGAR, MEAT, AGRI AND OIL&FATS PRODUCERS IN RUSSIA WITH TOP MARKET POSITIONS
Source: Company data, Soyuzrossakhar, National Union of Pig Breeders, Russian Oil and Fats Union, BEFL
ROS AGRO PLC operates in 5 key segments…
…ensuring leading positions across all core businesses…
CONSUMER MARGARINE PRODUCER IN RUSSIA
№1
№2 MAYONNAISE & VEGETABLE OIL PRODUCER IN RUSSIA
№3 SUGAR PRODUCER IN RUSSIA
№3 AGRICULTURAL LAND HOLDER IN RUSSIA
13%
PRODUCTION, THS TONNES
№4PORK PRODUCER IN RUSSIA
5% SHARE IN RUSSIAN PRODUCTION
SHARE IN RUSSIAN PRODUCTION
BUSINESS SEGMENT SHARE IN PRODUCTION
…supported by investments for further growth.
INVESTMENTS
17RR bn
43RR bn
5RR bn
25RR bn
412 410
551 567 582
2014 2015 2016 2017 2018
OIL
& F
ATS
SUG
AR
MEA
TA
GR
ICU
LTU
RE
BUSINESS SEGMENT
10.714.2
21.2
19.4 20.8
7.2
15.2
41% 48%
29%
0%
24%
14%28%
2014 2015 2016 2017 2018 9M '18 9M '19
17.8
18.1
17.920.5 22.4
15.4
28.350%
42%
22%31% 31% 34%
24%
2014 2015 2016 2017 2018 9M '18 9M '19
9
22.5
32.937.2
30.4 24.1
17.723.2
21%34%
26%18% 20%
21% 11%
2014 2015 2016 2017 2018 9M '18 9M '19
14.917.3
19.9
18.8
26.314.7
50.213%
10%
(2%)
4%
11%
12%
3%
2014 2015 2016 2017 2018 9M '18 9M '19
SALES STRUCTURE
EBITDA STRUCTURE
Sugar Meat Oil & Fats Agriculture
as % of total before intersegment adjustments
as % of total before intersegment adjustments
OIL
& F
ATS
SUG
AR
MEA
TA
GR
ICU
LTU
RE
RETURNS STRUCTURE BY SEGMENT, 9M 2019SALES AND EBITDA MARGIN
RETURNS STRUCTUREFOUR KEY BUSINESSES CONTRIBUTE EQUALLY TO RETURNS WITH MEAT SEGMENT TO BE THE MOST PROFITABLE
Sales (RR bn) Adj. EBITDA margin (%) 2014-2018 Sales CAGR (%)
21%
17%
46%
14%2%
20%
34%13%
33%
0%
Source: IFRS data, FY audited by PwC
10
RUSAGRO BY SEGMENT
11
MEAT RUSSIAN MARKET
% of pork produced in Russia
TOP-4 MEAT PRODUCERS
18 2461
88 102
440
284 281 300
98
2014 2015 2016 2017 2018
Export ImportThousand tonnes
PORK TRADE IN RUSSIA
10%
6%5% 5%
№PRODUCER
IN RUSSIA
IN 2018
Source: Company data, National Union of Pig Breeders, APK-inform, Global monitoring, Federal Customs Service of Russia
CONTINUED PORK PRODUCTION GROWTH AND LIMITED EXPORT PUT PRESSURE ON LOCAL PRICES
2.2 2.4 2.7 2.9 3.1
0.7 0.70.7 0.6 0.63.0 3.13.4 3.5 3.7
2014 2015 2016 2017 2018
Household production Total
Slaughtered weight, million tonnes
PORK PRODUCTION
23.5 23.3 25.0 26.1 26.6
Per capita consumption, kg
969391
10096
Sale price, RR/kg excl. VAT
81 80 79
94
97
98
101
112 114
98
104
96
88 8790
96
95
102
9893
8284
1 2 3 4 5 6 7 8 9 10 11 12
2018 2019
MONTHLY PORK PRICES IN RUSSIA
Livestock in live weight, RUB/kg excl. VAT• Livestock local prices are declining since June, as players
started to launch new capacities, while export potential stays limited due to ASF and trade policy of China.
• Average 3Q 2019 livestock price is 91 RUB/kg (-17% y-to-y), while currently the price dropped to 84 RUB/kg.
• Average full year livestock price in 2019 is expected to be c. 6% lower y-to-y and reach 90 RUB/kg.
935
87119
142
7 7 5 9 4 4 10 19 18
173141
76
57 27
33 32 3041 36 41 43
94121
182 176162
176 169
39 39 3750
41 45 53
112
140
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
Livestock pigs Processed pork
PORK SALES VOLUME DYNAMICS
51 50 4453
5562
145
188
205207
194193187
Production, ths tn in live weight
Rusagro continues to increase production capacity (+30% 9M y-to-y) and processed pork sales (+29% 9M y-to-y)
12
MEAT RESULTS UPDATESWITCH TO PROCESSED PORK TOGETHER WITH HIGH PRICES INCREASED SALES, BUT HIGH GRAIN COSTS STARTED TO PUSH MARGINS DOWN
17.8 18.1 17.920.5
22.4
4.3 5.1 6.0 7.05.2 6.0 7.1
15.4
18.3
8.97.7
4.06.3 7.0
1.1 1.7 2.3 1.8 0.8 1.8 1.7
5.2 4.3
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
FINANCIAL RESULTS
+19%
-26%
Adj. EBITDA margin
50% 42% 22% 31% 31% 26% 33% 39% 26% 34% 24%
-15 pp
16%
+19%
-17%
29%
Adj. EBITDA, billion RUB Revenue, billion RUB
OPERATIONAL RESULTS
In 2019 Rusagro sold mostly culled pigs, which explains livestock sale prices below market level.
SALE PRICERUB/kg excl. VAT
97 10092 95
86
124134 136 135
146
2014 2015 2016 2017 2018
Livestock pigs
8086
107
91
71 76 81
117
136
166 166
133 136145
1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19
Processed pork
• In 9M 2019 Meat division increased its revenue by 19% to RUB 18 billion with EBITDA margin 24%.
• Increase in sales volume of processed pork by 30% caused by production growth by 30% due to launch of 3rd stage on Tambov Bacon (16%), CapitalAgroeffect (14%).
• Increase in feed cost and health protection.
• Loss due to swine foot and mouth disease in Primorsky Krai (partly compensated by insurance).
• Increase in administrative cost of farms in construction
9M 2019 RESULTS vs 9M 2018-10 pp
71
24%
KEY INVESTMENT PROJECTS ON TRACK
Far East (under construction)
Purpose: region diversification, export to AsiaCapacity: 75 thousand tons Location: UssuriyskProject cost: RUB 32 bn Launch: 2021Assets: 6 pig farms, 1 breeding farms, 1 compound feed mill, 1 slaughterhouse and 1recycling facility
Purpose: increase B2C salesCapacity: +58% slaughtering, +36% meat processing, 50kt of consumer productsLocation: Belgorod & TambovProject cost: RUB 6 bnLaunch: 2019-2020
Meat processing expansion*
13
MEAT SEGMENT STRATEGYPRODUCTION EXPANSION AND FURTHER INCREASE OF PROCESSED PORK SALES ARE KEY GROWTH TRIGGERS
39 58 58 58 5828
28 28 28 28
4372 75
6786
129
158 161
2019 2020 2021 2022 2023
Tambov project CapitalAgro (Belgorod) Far East project
PRODUCTION GROWTH PLANT
Ongoing projects will increase livestock production volume from 205 ths t (2018) to 360 ths t (2023) by adding extra 160 ths tn
• TIMELY LAUNCH OF ONGOING EXPANSION PROJECTS
• SLAUGHTERHOUSE EXPANSION
• RETAIL SALES DEVELOPMENT
• INCREASE PRODUCTIVITY GAINS OF LIVE PIGS
MID-TERM GOALS
Thousand tonnes of pork in live weight
SALES STRUCTURE PLAN 2021
% of sales volume
Consumer
products
40%
40%
20%
Категория 1
Large cuts
Livestock and other
pork cutting
products
* Investment projects requires approval
40
3938
40
42
4343
4243
41
38
393939
3938 38
39 3940 40
3939
1 2 3 4 5 6 7 8 9 10 11 12
2018 2019
5.7
0.8 0.71.2
5.8
0.90.6
1.2
Vegetable oil Mayonnaise& sauces
Consumermargarine
Industrial fats
2017 2018
14
OIL&FAT RUSSIAN MARKET
Million tonnes
CRUDE VEGETABLE OIL PRODUCTION
2.72.2
2.93.2
3.5
0.9 0.8 0.9 0.9 1.1
14/'15 15/'16 16/'17 17/'18 18/'19
Export ImportMillion tonnes
CRUDE VEGETABLE OIL TRADE IN RUSSIA
CRUDE SUNFLOWER OIL PRICES IN RUSSIA
RUB/kg excl. VAT
Million tonnes
OIL&FAT PRODUCTION
3.7 3.9 4.2 4.55.3
0.7 0.70.8
0.8
0.9
0.4 0.30.3
0.5
0.6
4.8 4.95.3
5.8
6.8
14/'15 15/'16 16/'17 17/'18 18/'19
Sunflower oil Soy oil Other oil
Source: Company data, Russian Oil and Fats Union, APK-inform, Federal Custom Service of Russia, Russian Federal Service for Statistics
HIGH YIELDS INCREASED OIL PRODUCTION IN RUSSIA AND ALLOWED EXPORT GROWTH TO BENEFIT FROM FAVORABLE GLOBAL PRICES
• Following forecast for good sunflower seeds harvest results in 2019, sale price of crude oil started to drop in August.
• Average 3Q 2019 crude sunflower oil price is 39.5 RUB/kg (-7% y-to-y), while currently the price dropped to 38.6 RUB/kg.
• Average full year crude sunflower oil price in 2019 is expected to be c. 4% lower y-to-y.
3 10 3 62 706
176199100 116 150 168
36 38 1183
148169
9285
409239
198 200253
302
65 6741
129
187168
136174
470
14 15 16 17 18 1Q'18
2Q'18
3Q'18
4Q'18
1Q'19
2Q'19
3Q'19
9M'18
9M'19
Industrial fats Bulk oil Meal
54 5337
125
153 152134
15
FINANCIAL RESULTS
OIL&FAT SEGMENT RESULTSTHREE FOLD SALES GROWTH AND GRADUALL EBITDA INCREASE SUPPORTED SEGMENT’S 3Q RESULTS
Adj. EBITDA, billion RUB Revenue, billion RUB
14.9 17.3 19.9 19.426.3
4.5 5.6 4.611.6
16.9 19.415.6 14.7
50.2
1.9 1.7-0.4
0.7 2.9 0.4 0.7 0.7 1.1 0.3 0.3 1.1 1.8 1.7
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
Adj. EBITDA margin
13% 10% -2% 4% -1% 9% 12% 15% 12%9% 3%2%
-8 pp
+60%
+237%
+242%
-5%
1%
-9 pp
SALE PRICE RUB/kg excl. VAT
OIL&FAT B2C PRODUCTS SALES VOLUME
58 66 77 59 4810 11 12 16 26 37 37 33
99
47 43 3736
29
8 6 7 910
10 11 20
31014 18
2097
9 1627 45 36
36 3752
109
14 15 16 17 18 1Q'18
2Q'18
3Q'18
4Q'18
1Q'19
2Q'19
3Q'19
9M'18
9M'19
Mayonnaise Margarine Bottled oil
269
192162157173
Production, ths tn144
439
Rusagro aims at growing bottled oil sales and becoming market leader in mayonnaise
OIL&FAT B2B PRODUCTS SALES VOLUME
OPERATIONAL RESULTS
80
82 83 81 79 80 8077
8286 86
81 81 81
54 54 56 57 55 53 54
4145 46 48
43 44 44
1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19
Mayonnaise Margarine
Bottled oil Bulk oil
9M 2019 RESULTS vs 9M 2018
• Oil & Fats sales increased as a result of tolling scheme with SolPro assets (during 1H19) and increased capacity, rented from SolPro (during 3Q19) and, as result, higher volumes of bulk and bottled oil and industrial fats sold.
• EBITDA margin decreased to 3% as all sales have been transferred to Rusagro, while profit remained on SolPro entities and was further withdrawn through interest income reflected below EBITDA. Starting from July 2019 all the SolPro plants are rented by Rusagro and margin is reflected in Rusagro EBITDA.
7%
16
OIL&FAT SEGMENT STRATEGY
Source: Russian Oil and Fats Union, Company estimates. Note: 1 Illustrative combination ROS AGRO and SolPro 2018 positions among mayonnaise producers in Russia (8% and 17% production share in 2018 respectively according to Russian Oil and Fats Union); 2Illustrative combination ROS AGRO and SolPro 2017 positions among vegetable oil producers in Russia (4% and 14% production share in 2017 respectively according to Russian Oil and Fats Union); 3 Illustrative combination ROS AGRO and SolPro 2018 positions among consumer margarine producers in Russia (41% and 26% production share in 2018 respectively according to Russian Oil and Fats Union); 4 Illustrative combination ROS AGRO and SolPro 2018 positions among industrial fats producers in Russia (1% and 23% production share in 2018 respectively according to Russian Oil and Fats Union); 5 NMZhK; 6 Solnechnye Producty; 7 Yug Rusi
MAYONNAISECONSUMER MARGARINE
VEGETABLE OIL
INDUSTRIAL FATS
67%
41%
27% 26%
5
№1Margarine
6
24%
18%14%
12%
44%
7
№2Vegetable Oil
6
6
2
53%
23% 22%
1%
№2Industrial Fats
6
4
3
25% 25%20% 20%
17%
8%
5
№2Mayonnaise
6
1
• INTEGRATION OF SOLPRO ASSETS
• INCREASE EXCTRACTION CAPACITIES
• EXPAND INDUSTRIAL OILS AND CONSUMER PRODUCTS SALES
MID-TERM GOALS
SOLPRO INTEGRATION AND SALES GROWTH WILL CONTINUE TO BE THE PRIORITY
SolPro deal turned Rusagro into top-2 producer of vegetable oil, mayonnaise, consumer margarine and industrial fats in Russia.
MARKET POSITION
17
SUGAR RUSSIAN MARKET
22%
16%
13%
№PRODUCER
IN RUSSIA
IN 2018
Dominant
Million tonnes
Sugar content
% of sugar produced in Russia
TOP-3 SUGAR PRODUCER
2324 26
28
3130
2826
29
33 34 343332 31
30
27
24 2522
2120
17
1 2 3 4 5 6 7 8 9 10 11 12
2018 2019Overproduction in 2016 and 2017 led to elevated stocks which together with forecasts for sugar output in 2019 push prices down to record low level
SUGAR PRICES IN RUSSIA
ISCO-KRASNODAR basis, RUB/kg excl. VAT
0.01 0.010.1
0.58
0.38
0.93 0.88
0.55
0.26 0.30
2014 2015 2016 2017 2018
Export Import
SUGAR TRADE IN RUSSIA
Source: Soyuzrossakhar, Federal Custom Service of Russia, IKAR
HIGH STOCKS LEVEL AND EXPECTED SUGAR PRODUCTION GROWTH PUSHED PRICES DOWN TO RECORD LOW LEVEL
17.8% 17.8% 16.0% 16.9% 17.9%
4.6 5.15.8
0.60.6
0.35… 5.7 6.16.5
5.9
2014 2015 2016 2017 2018
Beet sugar Cane sugar
Million tonnes
SUGAR PRODUCTION
4046
453431
ISCO-Krasnodar price, RUB/kg excl. VAT
• As the result of the increase of harvest area (1.2 planted land area, +1.6% y-to-y) and good weather condition led to high sugar beet yields and high sugar content (up to 20%), Institute for Agriculture Market Studies forecasts record high sugar production level of 6.6 million tonnes.
• With consumption level of 5.9 million tones and unsold stocks, overproduction may reach more than 1 million tonnesof sugar.
• Global prices stay low and limit export of Russian sugar.
• Average 3Q 2019 sugar price is 22 RUB/kg (-19% y-to-y), while currently the price dropped to 17 RUB/kg.
• Average full year sugar price in 2019 is expected to be c. 11% lower y-to-y and reach 26 RUB/kg.
22.5
32.937.2
30.4
24.1
5.2 5.5 7.1 6.64.5
11.17.6
17.7
23.2
4.8
11.19.6
5.5 5.20.7 1.7 1.3 1.3 1.1 1.3 0.2
3.7 2.6
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
Sales Adj. EBITDA
752 784866 900
702
166 161235
140 105
348 274
562
727
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
18
SUGAR SEGMENT RESULTSLOW SUGAR SALE PRICE PUSHED EBITDA AND MARGINS DOWN
FINANCIAL RESULTS
Adj. EBITDA margin
21% 34% 26% 10% 13% 30% 19% 21% 21% 11%25%18%
-17 pp
-87%
+7%
+31%
SUGAR SALES VOLUME
238231
786
990
809766717
Production, ths tn
Rusagro’s processing capacity stayed at the level of 2018, while expanding its desugarisation capacity which will increase sugar output in season 2019-2020
Thousand tonnes
OPERATIONAL RESULTS
SUGAR SALE PRICERUB/kg excl. VAT
28
40 39
31 31
2014 2015 2016 2017 2018
28
31
28
3536
30
27
1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19
• Higher stock has been accumulated by the end of 2018 (650 ths tn vs normal 450 ths tn) in view of expected prices growth in 9M 2019.
• Sugar sales revenue increased mainly due to sales volume increase by 29%. By-products sales revenue increased due to beat pulp and molasses selling prices increase.
• Adjusted EBITDA and EBITDA margin decreased sue to sugarbeet purchase prices growth by 39% (due to high sugar price during production season Aug’18 – Dec’18).
9M 2019 RESULTS vs 9M 2018-10 pp
9 17
212
535
167
207
Rusagro sale price is above wholesale market level due to its sales channel mix and own storage capacities.
11% 2%
-30%
19Source: Company data
Note: 1 In months
Desugarization station
Purpose: molasses deep processing for extra-grade sugar production
Capacity p.a.: 70 ths tn of sugar and 20 ths tn of betaine
Raw materials: molasses from ROS AGRO’s sugar plants
Location: Belgorod region
Project cost: RUB 5.7 bn
Launch: Q4 2019
DESUGARIZATION STATION PROJECT
№ Term1
2018 2019
Jan Feb Mar AprMa
y Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMa
y Jun Jul Aug Sep Oct Nov Dec
1. Design stage 11
2.Equipment procurement
4
3. Station construction 13
4. Silos construction 22
5.Installation of boilers and turbine
11
6.Equipment installation
10
7.Construction of containers
22
8.
Commissioning, reaching production capacity
3
Total: 24
OVERVIEW
CURRENT STATUS
SUGAR PROJECTS
• SUGAR LOSS DECREASE THROUGH THE LAUNCH OF NEW DESUGARIZATION STATION
• INCREASE STORAGE TERM FOR SUGAR BEET
• INTEGRATION OF THE LEADING TECHNOLOGY SOLUTIONS
MID-TERM GOALS
Desugarization plant construction in Belgorod Region
1112 12 12 12 11
10 910
9 107 7 7
88
9 9 910
11 11 11
1 2 3 4 5 6 7 8 9 10 11 12
2019 2018
1,000865
652 649
№3LANDHOLDER
IN RUSSIA
AgrocomplexTkachev’s
20
AGRICULTURE RUSSIAN MARKET OVERVIEW
Million tonnes
GRAINS AND OIL CROPS HARVEST
Thousand hectares
TOP-4 LANDHOLDERS, 2018
31 3033
43 45
2014 2015 2016 2017 2018
Million tonnes
GRAINS EXPORT
CROP PRICES IN RUSSIA*
91 93 105 120100
11 1214
1417
102 104119
134117
2014 2015 2016 2017 2018
Grains Oilseeds
RUB/kg excl. VAT
Source: APK-Inform* Grain prices are calculated as an average of 3rd, 4th wheat, forage wheat, forage barley, forage corn all EXW Central Russian Federal District. Oil crops prices are calculated as an average of sunflower seeds and soybeans EXW Central Russian Federal District, and soybeans EXW Far East Federal Districts.
RUSSIA IS EXPECTED TO HAVE GOOD HARVEST IN 2019
38393939
37
Harvest area grains, ths ha
2.9 3.0 3.4 3.2 3.1
Per hectare yields, tonnes
Grains
Oil crops 1.2 1.3 1.4 1.3 1.4
Harvest area oil crops, ths ha
111110
99
Russia mostly exports grains with Egypt and Turkey as its main destinations, but also has been gradually increasing oil crops export (1 million tonnes in 2018). Russia imported only 3 million tonnes of crops in 2018, mostly oil crops
2324 24
23
2222 22
2121
19 1919 2020
21
23
2425 25
24
22 22 23
1 2 3 4 5 6 7 8 9 10 11 12
2019 2018
GRAINS SALE PRICE OIL CROPS SALE PRICERUB/kg excl. VAT
• Institute for Agriculture Market Studies forecasts grains harvest to increase by 22% to 123 million tonnes.
• Local grain prices have recently started to grow: average 3Q wheat price was 9.8 RUB/kg reaching now 10.2 RUB/kg. Av. FY grains price in 2019 is c. 25% higher y-to-y (incl. wheat +22%).
• Oil crops prices are now dropping due to record high sunflower seeds harvest: average 3Q sunflower seeds price was 19.1 RUB/kg dropping now to 16.1 RUB/kg. Av. FY oil crops price in 2019 is expected to be c. 3% lower y-to-y (incl. sunflower -8%).
+117%
21
AGRICULTURE SEGMENT RESULTSHIGH SALES PRICE AND VOLUMES LED TO SALES AND EBITDA GROWTH
OPERATIONAL RESULTS
+5 pp +14 pp
10.7
14.2
21.218.8
20.8
4.21.7
3.8
13.8
3.2 3.85.9 7.0
15.2
4.46.6 6.2
0.01
5.0
0.01 0.2 0.8
4.0
- 0.31.3 1.5 1.0
4.2
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
+330%
FINANCIAL RESULTS
Revenue in RUB billion
Adj. EBITDA margin
29%41% 48% 29% 0% 24% 4% 9% 20% 14% 28%26%
+54%
35%
+89%
9M 2019 RESULTS vs 9M 2018
• Sales increased thanks to higher sales volumes and higher sales prices of all crops (except for sugar beet and soybean) on local market during Q3.
• Higher crops sales volumes were affected by management decision to postpone sales from the end of 2018 to Q1 2019 mainly due to expected increase in selling prices
• As at 30 September 2019 the Group’s area of controlled land stands at 648 ths ha (30 September 2018: 686 ths ha), including 607 ths ha of cultivated land (30 September 2018: 581 ths ha).
589672
8811008
771
113 156 114
389314
194
351 383
859
11034
232 253144
19 15 4107
3999 46 38
184
2014 2015 2016 2017 2018 1Q '18 2Q '18 3Q '18 4Q '18 1Q '19 2Q '19 3Q '19 9M '18 9M '19
Grains Oil crops
SALE PRICERUB/kg excl. VAT
6
97 6
9
17
22 22
18 20
2.12.9 2.4
1.82.5
2014 2015 2016 2017 2018
GrainsSugar beet
8 811 10
13 129
2023
27
22 2319 19
1.0 2.3 2.6 1.8
0
5
10
15
20
25
30
1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19
Oil crops
329224245
160
88
1062
1150930
693718
CROPS SALES VOLUMEGrains production, ths tn
Thousand tonnes Oil crops production, ths tn
In 2019 Rusagro planted 253 ths ha (-1% vs 2018) with grains, 213 ths ha (+24%) with oil crops, 88 ths ha with sugar beet. Total cultivated area increased by 5%.
25%
3.53.54.3
2.52.3
Sugar beet production, mln tn
2.5
1.00.9
0.91.0
22
APPENDIX
23
SEASONED MANAGEMENT TEAM AND BEST-IN-CLASS CORPORATE GOVERNANCE PRACTICESPUBLICLY LISTED SINCE 2011
Source: company data
KEY MANAGEMENT TEAM MEMBERS CORPORATE GOVERNANCE STRUCTURE
Roman Danilin
Head of the Dairy Products Division
• 2 years at Rusagro Group
• Former Head of Oil and Fats Division. Earlier CEO at the Eriomyshki Confectionery factory
COMPOSITION OF BOARD OF DIRECTORS
Vadim Moshkovich Chairman
• Founder
• Majority shareholder
Anna Khomenko
Board Member
• Owner and Managing Director of Fudiciana Trust (trustee and corporate services firm)
• Former CEO and a member of the Board of Directors of IFG Trust (financial services)
Richard Andrew Smyth
Independent Non-Executive Director
• Consultant for Mars Incorporated for Central Europe and CIS
• Former CEO at Mars Russia
Tassos TelevantidesIndependent Non-Executive Director
• Chairman of the Board Audit Committee
• Former Partner at PwC Cyprus for over 20 years
Maxim BasovChief Executive Officer
• 10 years at Rusagro Group
Nikolai Zhirnov
Head of the Sugar division
• 9 years at Rusagro Group
Dmitriy Garnov
Head of Agricultural Business
• 1 year Rusagro Group
• Former Director of the Crop Production Division in Cherkizovo Group
Nataliya Sakhnina
Head of the Oil and Fats Division
• Joined in 2019
• Former general director of JSC PanClu and earlier JSC Progress
GENERAL SHAREHOLDERS MEETING
SUBSIDIARIES
BOARD OF DIRECTORS Audit Commitee
Controlappointment
Reporting
Election Recommendations
Maxim Basov Chief Executive Officer
• 10 years at Rusagro Group
Evgeniy Sluchevskiy
Head of the Meat division
• Joined in 2019
• Former CEO of meat processing company
24
19 386 505
1 157 2 068
11 000 997
(1 360)
33 754
5 000
15 000
25 000
35 000
45 000
RevenueActual Q3
2018
Sugar Meat Agriculture Oil&Fats Milkproducts
Eliminations& other
RevenueActual Q3
2019
RR
mill
ion
Net revenue (IFRS) Actual Q3 2019 vs Actual Q3 2018
NET REVENUE, ADJUSTED EBITDA:
ACTUAL Q3 2019 VS ACTUAL Q3 2018
24
Net Revenue increased by RR 14,368 million (+74%):
• Sugar sales increased by RR 505 million (+7%) as a result of expected growth in sales
volume by 15%
• Meat sales increased by RR 1,157 million (+19%) due to an increase in sales volume of
livestock and processed pork
• Agriculture sales increased by RR 2,068 million (+54%) thanks to higher sales prices of
corn and sunflower and higher sales volumes of all crops (except for sugar beet) in Q3
2019 vs 2018
• Oil & Fats sales increased by RR 11,000 million (+237%) due to higher capacity related
to SolPro assets in rent and, as result, increase in sales volumes of bottled oil, bulk oil
and industrial fats
• Milk products sales reached RR 997 million in Q3 2019
Adjusted EBITDA margin dropped from 23% in Q3 2018 to 13% in Q3 2019
Adjusted EBITDA decreased by RR 67 million or 1%
Comments
4 477
(1 161)
(619)
684 410 45
574 4 410
23%
13%
0%
15%
30%
45%
60%
0
2 000
4 000
6 000
EBITDA Actual Q32018
Meat Oil&Fats Eliminations & other
EB
ITD
A m
arg
in
RR
mill
ion
Adjusted EBITDA Actual Q3 2019 vs Actual Q3 2018
+74%
(RR 14,368 million)
-1%
(RR -67 million)
25
52 201 5 508 2 912
8 190
35 550 2 829
(2 298)
104 891
20 000
35 000
50 000
65 000
80 000
95 000
110 000
RevenueActual 9M
2018
Sugar Meat Agriculture Oil&Fats Milk products Eliminations& other
RevenueActual 9M
2019
RR
mill
ion
Net revenue (IFRS) Actual 9M 2019 vs Actual 9M 2018
10 248
(1 104) (868)
3 240
(92)
48
1 755 13 226
20%
13%
0%
10%
20%
30%
40%
0
3 000
6 000
9 000
12 000
EBITDA Actual 9M 2018Sugar Meat Agriculture Oil&Fats Milk productsEliminations & otherEBITDA Actual 9M 2019
EB
ITD
A m
arg
in
RR
mill
ion
Adjusted EBITDA Actual 9M 2019 vs Actual 9M 2018
NET REVENUE, ADJUSTED EBITDA:
ACTUAL 9M 2019 VS ACTUAL 9M 2018
25
Net Revenue increased by RR 52,690 million (101%):
• Sugar sales increased by RR 5,508 million (31%) as a result of significantly
higher stock accumulated by the end of 2018 in view of expected growth of
selling prices in H1 2019 and, as result, higher sales volumes in 9m 2019
• Meat sales increased by RR 2,912 million (+19%) due to an increase in sales
volume of processed pork as a result of CapitalAgro acquisition and launch of
3rd stage on Tambov Bacon
• Agriculture sales increased by RR 8,190 million (+117%) thanks to higher sales
volumes and higher sales prices of all crops (except for sugar beet) in 9M 2019
vs 2018 as a result of transfer of sales from the end of 2018 to Q1 2019 in view
of expected increase of selling prices
• Oil & Fats sales increased by RR 35,550 million (+242%) as a result of tolling
scheme with SolPro assets (during 1H19) and increased capacity, rented from
SolPro (during 3Q19), increase in sales volumes of bottled oil, bulk oil and
industrial fats
• Milk products sales reached RR 2,829 million in 9M 2019
Adjusted EBITDA margin dropped from 20% in 9M 2018 to 13% in 9M 2019
Adjusted EBITDA increased by RR 2,978 million or 29%
Comments
+101%
(RR 52,690 million)
+29%
(RR 2,978 million)
26
STATEMENT OF COMPREHENSIVE
INCOME (IFRS)
ROS AGRO PLC
26
Units % Units %
Sales 104,891 52,201 52,690 101 33,754 19,386 14,368 74
Net gain / (loss) on revaluation of biological assets and
agricultural produce (3,284) 4,211 (7,495) (178) 627 5,111 (4,485) (88)
Cost of sales (82,702) (37,365) (45,336) (121) (26,622) (13,526) (13,096) (97)
Net gain / (loss) from trading derivatives (5) 6 (12) (181) 1 2 (1) (62)
Gross profit 18,900 19,053 (153) (1) 7,760 10,974 (3,214) (29)
0 - - - - - - - -
Distribution and selling expenses (9,324) (4,956) (4,368) (88) (3,078) (1,627) (1,451) (89)
General and administrative expenses (5,149) (4,061) (1,088) (27) (1,699) (1,419) (280) (20)
Share-based remuneration - - - - - - - -
Other operating (expenses)/ income, net 230 (532) 762 143 (83) (511) 428 84
Operating profit / (loss) 4,657 9,504 (4,847) (51) 2,900 7,417 (4,517) (61)
0 - - - - - - - -
Interest expense (3,942) (1,737) (2,205) (127) (1,225) (658) (566) (86)
Interest income 6,012 2,708 3,304 122 2,016 893 1,123 126
Net gain / (loss) from bonds held for trading (21) (29) 9 29 2 (21) 23 109
Other financial income/ (expenses), net 558 (36) 594 1,646 173 45 127 281
Share of results of associates - - - - - - - -
Profit / (loss) before taxation 7,264 10,410 (3,146) (30) 3,866 7,676 (3,810) (50)
0 - - - -
Income tax expense (119) (432) 314 73 (74) (61) (13) (21)
Profit / (loss) for the period 7,145 9,978 (2,832) (28) 3,792 7,615 (3,823) (50)
Change in value of available-for-sale financial assets - - - - - - - -
Net change in fair value of available-for-sale financial assets
transferred to profit or loss - - - - - - - -
Income tax relating to other comprehensive income - - - - - - - -
Income tax relating to other comprehensive income
transferred to profit or loss - - - - - - - -
Total comprehensive income / (loss) for the period 7,145 9,978 (2,832) (28) 3,792 7,615 (3,823) (50)
0
Profit / (loss) is attributable to:
Owners of ROS AGRO PLC 7,173 9,957 (2,784) (28) 3,800 7,615 (3,815) (50)
Non-controlling interest (28) 20 (48) (236) (8) - (8) -
Profit / (loss) for the period 7,145 9,978 (2,832) (28) 3,792 7,615 (3,823) (50)
0
Total comprehensive income / (loss) is attributable to:
Owners of ROS AGRO PLC 7,173 9,957 (2,784) (28) 3,800 7,615 (3,815) (50)
Non-controlling interest (28) 20 (48) (236) (8) - (8) -
Total comprehensive income / (loss) for the period 7,145 9,978 (2,832) (28) 3,792 7,615 (3,823) (50)
Actual 3Q 2019 Actual 3Q 2018Varianсes
Description Actual 9M 2018Actual 9M 2019Varianсes
27DEBT PROFILE (AS OF 30 SEPTEMBER 2019)
27
Debt position and liquidity management
Net finance income/ (expense)
Comments
Gross debt decreased by RR 5,929 million (-6%) up to RR 89,173 million
• Net debt decreased by RR 4,116 million (-8%) to RR 50,226 million
• Major banks and their share in the Group’s credit portfolio (excl. non-bank loans): Alfa bank
(41%), Rosselhozbank (23%), Vnesheconombank (16%), Sberbank (11%). The shares are
calculated taken into account the fair value adjustments made according to IFRS requirements for
the purpose of financial statements
Net finance income in 9M 2018 in the sum of RR 906 million increased to net finance income in
amount of RR 2,607 million in the 9M 2019 (188% or RR 1,701 million increase) due to:
• RR +3,304 million of increase in interest income as a result of accrual of interest on rights to
claims SolPro entities
• RR +570 million of an increase in other financial income due to revaluation effect of rights to
claims SolPro entities
• RR -2,179 million of increase in interest expense mainly as a result of interest on loan from RSHB
and Sberbank
Units %
Gross debt 89,173 95,102 (5,929) (6)
Short-term borrowings 23,693 32,514 (8,821) (27)
Long-term borrowings 65,481 62,588 2,893 5
Cash and cash equivalents, bank deposits
and bonds(38,947) (40,759) 1,812 4
Short-term cash, deposits and bonds (4,984) (4,543) (441) (10)
Long-term cash, deposits and bonds (33,964) (36,216) 2,252 6
Net debt 50,226 54,342 (4,116) (8)
Short-term borrowings, net 18,709 27,971 (9,262) (33)
Long-term borrowings, net 31,517 26,371 5,146 20
Adjusted EBITDA (LTM) 19,157 16,179 2,978 18
Net debt/ Adjusted EBITDA (LTM) 2.62 3.36 (0.7)
in RR million 30 September 2019 31 December 2018Variance
Units %
30
September
2019
30
september
2018
Units %
Net interest expense (3,942) (1,737) (2,205) (127) (1,225) (658) (566) (86)
Gross interest expense (4,870) (2,395) (2,475) (103) (1,512) (806) (706) (88)
Reimbursement of interest expense 928 658 270 41 288 148 139 94
Interest income 6,012 2,708 3,304 122 2,016 893 1,123 126
Net gain / (loss) from bonds held
for trading(21) (29) 9 29 2 (21) 23 -
Other financial income / (expenses),
net558 (36) 594 - 173 45 127 281
Net foreign exchange gain / (loss) (32) (56) 24 42 (43) 47 (90) -
Other financial income / (expenses),
net590 19 570 2,936 216 (2) 218 -
Total net finance income /
(expenses)2,607 906 1,701 188 966 259 707 273
VarianceThree months ended
in RR million 9M 2019 9M 2018
Variance
2.15
0.20
0.64
0.240.47
3.36
2.30
2.62
0.0х
0.5х
1.0х
1.5х
2.0х
2.5х
3.0х
3.5х
4.0х
31 Dec2013
31 Dec2014
31 Dec2015
31 Dec2016
31 Dec2017
31 Dec2018
30 Jun2019
30 Sep2019
Net debt / LTM EBITDA
28
223 779
10 520 7 038
(10 528)
2 224 957
(61) (821)
233 108
150 000
165 000
180 000
195 000
210 000
225 000
240 000
255 000
Assets 31 December2018
Cash & investments Receivables &prepayments
Intangible assets Assets 30 September2019
RR
mill
ion
Assets as of 30 September 2019 vs 31 December 2018
223 779
55
1 944
(5 928)
9 974 1 076 2 209 233 108
130 000
155 000
180 000
205 000
230 000
255 000
Liabilities &Equity 31December
2018
Equityexcl. RE
RE Borrowings Payables Governmentgrants
Taxes Liabilities &Equity 30
September2019
RR
mill
ion
Liabilities & Equity as of 30 September 2019 vs 31 December 2018
STATEMENT OF FINANCIAL POSITION:
KEY CHANGES 30 SEPTEMBER 2019 VS
31 DECEMBER 2018
ASSETS
• PPE & LT biological assets* increased by RR 10,520 million (RR +8,398 million in Meat, RR +1,181 million in
Sugar, RR +684 million in Agriculture). Increase is represented by large construction projects in Meat (Far
East) and Sugar (sugarizing plant in Belgorod). ROUA for RR 1,541 million (according to IFRS16) have been
transferred to PPE from IA in 3Q 2019. Hereinafter on this slide segments figures are presented excluding
intercompany balances
• Cash & Investments** increased by RR 7,038 million mainly due to acquisition of 22,5% in Agro-Belogorye for
RR 8,500 million. For more details refer to the next slide Cash Flows
• Inventories & ST biological assets decreased by RR 10,528 million, which was majorly (by RR 10,008 million)
caused by sales volumes in Sugar in Q2 and Q3 (for details please refer to Sugar segment PL slides)
• Receivables & Prepayments increased by RR 2,224 million mainly due to increase in Oil & Fat as part of
tolling scheme (AR increased on SAPP and AP increased on EZhK respectively vs SolPro entities)
• Taxes*** increased by RR 957 million as a result of a decrease in VAT receivable in amount of RR 570 million
(RR -295 million in Sugar, RR +78 million in Meat, RR +583 million in Agricultural division, RR -333 million in
Oil and RR -664 in Other), an increase in deferred tax asset by RR 1,846 million and a decrease in CIT by RR
318 million
• AHFS decreased by 821 million due to sale of Armavir Oil and Fat Plant equipment
LIABILITIES & EQUITY
• Equity (excl. RE) is lower by RR 55 million as the result of NCI
• Borrowings decreased by RR 5,928 million incl. RR -8,827 million of ST borrowings and RR +2,899 million of
LT borrowings
• Payables increased by RR 9,974 million (RR +4,410 million in Agriculture, RR +5,096 million in Oil). An
increase in in trade payables in Agricultural division is attributed to purchases of fertilizers and crop protection
agents. Other payables in Agricultural division increased by RR 1,541 million as liability from land lease rights
was recognized (according to IFRS16). Higher payables Oil are related to operations with SolPro entities.
Decrease in Payables in Other segment was due to as rights of claim were settled
• Government grants increased by RR 1,076 million, which included mainly RR +1,263 million of grants received
for pig-breeding farms and the slaughter house construction and RR -188 million amortization of previously
received grants
• Taxes*** increased by RR 2,209 million as a result of an increase in other taxes payable by RR 54 million and
an increase in deferred tax liability by RR 1,626 million
28
Comments
+4%
(RR 9,329 million)
+4%
(RR 9,329 million)
* include PPE, Inventories intended for construction, Advances paid for non-current assets and LT biological assets
** include Cash and cash equivalents, ST and LT Restricted cash, ST and LT investments, LT receivables, investments in associates
*** include Current income tax, Deferred income tax and Other taxes
29
CASH FLOWS:
ACTUAL 9M 2019 VS ACTUAL 9M
2018
29
Cash Flows according to Management view (Not IFRS presentation)**
(*) For detail see slide “Statement of cash flow according to Management view” in appendix
(**) For the purpose of conformity with the methodology of the Group's net debt calculation, cash flows on financial
assets related to financial activities (bank deposits, bonds, promissory notes, loans given) are reclassified to Cash
flows from financing activities in the Group's management accounts.
CAPEX* 9M 2019 vs 9M 2018, RR million
Comments
9M 2019 9M 2018
(*) CAPEX figures include cash outflows for purchases of property, plant
and equipment and inventories intended for construction (excl. intersegment purchases).
Main variances in cash flow statement line items between 9M 2019 and 9M 2018:
Net cash from operating activities:
• Changes in working capital increase by RR 11,728 million was mainly caused mainly by
inventory changes in Sugar due to different sales timing. Increase in payables amount was partly
compensated with increase in receivables amount. For more details please refer to SOFP slide.
Net cash from investing activities:
• RR -1,116 million decrease in PPE and inventory intended for construction related to finalizing of
construction of a pig farm in the Tambov region (see breakdown by segment in a chart below);
• RR -2,098 million in 9M 2018 related to purchase of shares in Capital Agro (RR -1,730 milion)
and Vozrozhdeniye (RR -393 million)
• RR -8,573 million in 9M 2019 related to purchase of shares in Agro-Belogorye (RR -8,500
million) and SoyuzSemSvekla RR -73 million)
• RR +479 million increase related to proceeds from sales of subsidiary Kolyshleiskiy Elevator.
Net cash from financing activities:
• RR -10,612 million net changes in borrowings due to higher repayment of borrowings in 9M
2019;
• RR +1,864 million net change in investment in financial asset mainly due to interest received
from bonds and rights of claims in result of SolPro deal;
• RR +1,404 million related to loan given to Agrosnab in 9M 2018;
• RR +2,324 million increase in proceeds from sales of bonds of RSHB and Evrokhim;
• RR -3,564 million decrease in bank deposits
Sugar, 2 690
Meat, 8 089
Agro, 1 423
Oil&Fats, 150 Others, 33
Sugar, 2 231
Meat, 7 547
Agro, 1 447
Oil&Fats, 883Others,
20
RR million
Actual
9m 2019
Actual
9m 2018
Variances
Actual vs Previous
Units %
Cash flows from operating activities
Profit before income tax 7,264 10,410 (3,146) (30)
Adjustments for non-cash and non-operating
(income)/expenses, net6,338 319 6,019 1,884
Operating cash flow before working capital changes 13,602 10,729 2,873 27
Change in trade and other receivables and prepayments (2,077) 2,137 (4,215) -
Change in other taxes receivable 570 329 241 73
Change in inventories and biological assets 6,448 (2,437) 8,885 -
Change in trade and other payables 9,364 2,888 6,477 224
Change in other taxes payable 347 7 341 5,232
Cash generated from operations 28,254 13,653 14,602 107
Income tax paid 43 (611) 655 -
Net cash from operating activities 28,298 13,041 15,256 117
Cash flows from investing activities
Purchases of property, plant and equipment and inventories
intended for construction (12,390) (12,097) (293) (2)
Investments in subsidiaries, net of cash acquired - (2,098) 2,098 -
Movement in restricted cash (242) 1 (243) -
Purchases of associates (8,573) (0) (8,573) (0)
Purchases of other intangible assets (258) (265) 7 3
Proceeds from sale of subsidiaries, net of cash disposed 479 - 479 -
Other investing activities 315 58 257 446
Net cash from investing activities (20,670) (14,402) (6,268) (44)
Cash flows from financing activities
Net cash flows on borrowings, incl. interest paid (11,319) (707) (10,612) (1,501)
Net cash flows on financial assets related to financial activities,
incl. interest received* 9,577 7,096 2,482 35
Proceeds from government grants 915 733 182 25
Purchases of non-controlling interest (0) (59) 59 100
Dividends paid to owners Ros Agro PLC (3,402) (3,486) 84 -
Other financial activities (45) 9 (54) -
Net cash from financing activities (4,273) 3,586 (7,859) -
Net effect of exchange rate changes on cash and cash
equivalents (114) 143 (257) -Net increase/ (decrease) in cash and cash equivalents 3,240 2,368 871 37
Cash and cash equivalents at the beginning of the period 1,728 4,860 (3,132) (64)
Cash and cash equivalents at the end of the period 4,968 7,229 (2,261) (31)
30
ADJUSTED EBITDA 9M 2019 (IFRS)
BREAKDOWN BY DIVISIONS
ROS AGRO PLC
30
9M 2019 Sugar Meat Agriculture Oil and Fat Other Elimination Total
Sales 23,242 18,296 15,218 50,217 3,052 (5,134) 104,891
Net gain / (loss) on revaluation of biological assets and
agricultural produce - (456) (2,245) - - (584) (3,284)
Cost of sales (19,411) (14,408) (9,715) (42,814) (2,682) 6,329 (82,702)
incl. Depreciation (1,439) (1,747) (1,372) (343) (6) (11) (4,919)
Net gain / (loss) from trading derivatives (5) - - - (0) - (5)
Gross profit / (loss) 3,826 3,431 3,258 7,403 370 611 18,900
General and administrative expenses, Distribution and
selling expenses (2,825) (1,413) (2,950) (6,159) (1,420) 293
(14,473)
General and administrative expenses (1,119) (863) (943) (1,191) (1,267) 233 (5,149)
Distribution and selling expenses (1,706) (550) (2,007) (4,968) (153) 60 (9,324)
incl. Depreciation (57) (49) (196) (84) (18) 11 (393)
Dep in General and administrative expenses (54) (44) (157) (42) (17) - (313)
Dep in Distribution and selling expenses (3) (5) (39) (42) (2) 11 (80)
Other operating (expenses)/ income, net 403 227 (103) (209) 10,801 (10,889) 230
incl. Reimbursement of operating costs (government
grants)53 50 100 - - -
203
Operating profit / (loss) 1,405 2,246 205 1,035 9,752 (9,985) 4,657
Adjustments:
Depreciation included in Operating Profit 1,495 1,796 1,569 428 24 - 5,312
Other operating income, net (403) (227) 103 209 (10,801) 10,889 (230)
Reimbursement of operating costs (government grants) 53 50 100 - - - 203
Net gain / (loss) on revaluation of biological assets and
agricultural produce- 456 2,245 - - 584
3,284
Adjusted EBITDA 2,550 4,320 4,221 1,672 (1,025) 1,488 13,226
31
ADJUSTED EBITDA 9M 2018 (IFRS)
BREAKDOWN BY DIVISIONS
ROS AGRO PLC
31
9M 2018 Sugar Meat Agriculture Oil and Fat Other Elimination Total
Sales 17,734 15,384 7,028 14,667 825 (3,436) 52,201
Net gain / (loss) on revaluation of biological assets and
agricultural produce - (53) 4,266 - - (2) 4,211
Cost of sales (12,956) (10,658) (4,568) (11,147) (686) 2,651 (37,365)
incl. Depreciation (1,547) (1,578) (507) (264) (2) (9) (3,908)
Net gain / (loss) from trading derivatives 6 - - - - - 6
Gross profit / (loss) 4,784 4,673 6,726 3,520 139 (788) 19,053
General and administrative expenses, Distribution and
selling expenses (2,741) (1,173) (2,199) (2,190) (881) 167 (9,017)
General and administrative expenses (1,204) (697) (918) (606) (800) 164 (4,061)
Distribution and selling expenses (1,538) (476) (1,281) (1,584) (81) 4 (4,956)
incl. Depreciation (65) (35) (136) (98) (18) 9 (343)
Dep in General and administrative expenses (60) (34) (107) (46) (18) - (266)
Dep in Distribution and selling expenses (5) (1) (29) (52) - 9 (78)
Other operating (expenses)/ income, net 3,378 92 (8) 49 13,969 (18,011) (532)
incl. Reimbursement of operating costs (government
grants) - 22 77 72 - - 171
Operating profit / (loss) 5,421 3,591 4,519 1,379 13,226 (18,632) 9,504
Adjustments: -
Depreciation included in Operating Profit 1,612 1,614 643 363 20 - 4,251
Other operating income, net (3,378) (92) 8 (49) (13,969) 18,011 532
Reimbursement of operating costs (government grants) - 22 77 72 - - 171
Net gain/ (loss) on revaluation of biological assets and
agricultural produce - 53 (4,266) - - 2 (4,211)
Adjusted EBITDA 3,654 5,188 981 1,764 (722) (618) 10,248
32
STATEMENT OF CASH FLOWS ACCORDING TO
MANAGEMENT VIEW (NOT IFRS
PRESENTATION) ROS AGRO PLC
32
RR million
Actual
9m 2019
Actual
9m 2018
Variances
Actual vs Previous
Units %
Cash flows from operating activities
Profit before income tax 7,264 10,410 (3,146) (30)
Adjustments for non-cash and non-operating (income)/expenses,
net:
Depreciation and amortization 6,242 5,778 464 8
Interest expense 3,890 2,395 1,494 62
Government grants (552) (1,140) 588 52
Interest income (6,012) (2,708) (3,304) (122)
Loss/ (gain) on disposal of property, plant and equipment 36 23 13 54
Net (gain) / loss on revaluation of biological assets and
agricultural produce 3,284 (4,181)7,466 -
Change in provision for net realisable value of inventory 23 (23) 47 -
Change in provision for impairment of receivables and
prepayments91 21 71 340
Foreign exchange (gain) / loss, net 51 109 (59) (54)
Lost / (reversal of) harvest write-off 101 13 89 704
Net (gain) / loss from bonds held for trading 21 29 (9) (29)
Change in provision for impairment of advances paid for property,
plant and equipment20 (39) 58 -
Loss / (gain) on disposal of subsidiaries, net (365) 49 (413) -
Loss / (gain) on other investments (144) 0 (144) -
Other non-cash and non-operating expenses, net (347) (6) (341) (5,331)
Operating cash flow before working capital changes 13,602 10,729 2,873 27
Change in trade and other receivables and prepayments (2,077) 2,137 (4,215) -
Change in other taxes receivable 570 329 241 73
Change in inventories 6,448 (2,437) 8,885 -
Change in trade and other payables 9,364 2,888 6,477 224
Change in other taxes payable 347 7 341 5,232
Cash generated from operations 28,254 13,653 14,602 107
Income tax paid 43 (611) 655 -
Net cash from operating activities 28,298 13,041 15,256 117
33
STATEMENT OF CASH FLOWS ACCORDING TO
MANAGEMENT VIEW (NOT IFRS
PRESENTATION) – CONTINUANCE ROS AGRO PLC
33
(*) Including in net cash
flows on financial assets
related to financial
activities.
Actual
9m 2019
Actual
9m 2018
Variances
Actual vs Previous
Units %
Cash flows from investing activities - -
Purchases of property, plant and equipment (11,811) (10,993) (818) (7)
Purchases of other intangible assets (258) (265) 7 3
Proceeds from sales of property, plant and equipment 170 58 112 194
Purchases of inventories intended for construction (579) (1,105) 525 48
Purchases of associates (8,573) (0) (8,573) 100
Investments in subsidiaries, net of cash acquired - (2,098) 2,098 -
Movement in restricted cash (242) 1 (243) -
Proceeds from sale of subsidiaries, net of cash disposed 479 - 478.71 -
Proceeds from sales of other investments 145 - 145 -
Net cash from investing activities (20,670) (14,402) (6,268) (44)
Cash flows from financing activities
Proceeds from borrowings 32,886 8,932 23,954 268
Repayment of borrowings (40,909) (7,227) (33,683) (466)
Interest paid (3,295) (2,412) (883) (37)
Dividends paid to owners Ros Agro PLC (3,402) (3,486) 84 -
Proceeds from sales of promissory notes* 100 - 100 -
Change in cash on bank deposits* 2,595 6,159 (3,564) (58)
Proceeds from sales of bonds with maturity over three months* 2,324 -2,324 -
Loans given* (189) (1,498) 1,309 87
Loans repaid* 1,864 4 1,861 51,080
Interest received* 2,883 2,430 453 19
Purchases of non-controlling interest (0) (59) 59 100
Proceeds from government grants 915 733 182 25
Lease payments (45) 9 (54) -
Net cash from financing activities (4,273) 3,586 (7,859) -
Net effect of exchange rate changes on cash and cash equivalents (114) 143 (257) -
Net increase/ (decrease) in cash and cash equivalents 3,240 2,368 871 37
Cash and cash equivalents at the beginning of the period 1,728 4,860 (3,132) (64)
Cash and cash equivalents at the end of the period 4,968 7,229 (2,261) (31)
34STATEMENT OF FINANCIAL POSITION (IFRS)
ROS AGRO PLC
34
RR million
Units %
ASSETS 233,108 223,779 9,329 4
Current assets
Cash and cash equivalents 4,968 1,728 3,240 187
Restricted cash 236 0 236 480,724
Short-term investments 8,898 8,551 347 4
Trade and other receivables 8,048 6,226 1,822 29
Prepayments 2,597 2,195 402 18
Current income tax receivable 215 533 (318) (60)
Other taxes receivable 3,850 4,420 (570) (13)
Inventories and short-term biological assets 42,549 53,077 (10,528) (20)
Total current assets 71,361 76,731 (5,370) (7)
Non-current assets
Property, plant and equipment 76,454 68,606 7,847 11
Inventories intended for construction 3,571 4,137 (566) (14)
Goodw ill 2,365 2,365 - -
Advances paid for property, plant and equipment 12,261 9,681 2,579 27
Long-term biological assets 3,309 2,650 659 25
Long-term investments and receivables 49,426 54,494 (5,068) (9)
Investments in associates 8,507 7 8,500 116,120
Deferred income tax assets 3,712 1,867 1,845 99
Other intangible assets 2,142 2,203 (61) (3)
Other non-current assets - 215 (215) (100)
Non-current assets held for sale - 821 (821) (100)
Total non-current assets 161,747 147,047 14,700 10
Total assets 233,108 223,779 9,329 4
31 December
2018
30 September
2019
Variances
35STATEMENT OF FINANCIAL POSITION (IFRS)
– CONTINUANCE ROS AGRO PLC
35
RR million
Units %
Liabilities and EQUITY 233,108 223,779 9,329 4
Current liabilities
Short-term borrow ings 23,693 32,514 (8,821) (27)
Trade and other payables 21,086 12,190 8,896 73
Current income tax payable 115 61 54 89
Other taxes payable 4,552 4,024 528 13
Total current liabilities 49,446 48,789 657 1
Non-current liabilities
Long-term borrow ings 65,481 62,588 2,893 5
Government grants 8,386 7,311 1,076 15
Deferred income tax liability 1,985 359 1,626 453
Other non-current liabilities 3,544 2,466 1,079 44
Total non-current liabilities 79,397 72,723 6,674 9
Total liabilities 128,843 121,512 7,331 6
Equity
Share capital 12 12 - -
Treasury shares (491) (491) - -
Additional paid-in capital 26,964 26,964 (0) (0)
Other reserves 1,345 1,327 18 1
Retained earnings 76,230 74,286 1,944 3
Equity attributable to owners of ROS AGRO PLC 104,061 102,099 1,962 2
Non-controlling interest 204 168 36 22
Total equity 104,265 102,267 1,999 2
Total liabilities and equity 233,108 223,779 9,329 4
31 December
2018
30 September
2019
Variances
36
CONTACTS
Svetlana KuznetsovaHead of Investment Department
E-mail: [email protected]
Tel.: +7 (495) 363-1661
www.rusagrogroup.ru/eng