20 November 2018
ROS AGRO INVESTOR PRESENTATION
March 2019
2
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 behalfof 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.
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3
BUSINESS OVERVIEW
ROS AGRO AT A GLANCEA LEADING AGRICULTURAL COMPANY IN RUSSIA WITH OVER 20 YEARS HISTORY AND STRONG FINANCIAL PERFORMANCE
KEY PERFORMANCE INDICATORS
HIGHLIGHTS
83
SALES 2018
RUB bn5%
EBITDA 2018
16 RUB bn16%
19
EBITDA MARGIN
2018
%+1 pp 3.4
NET DEBT /
LTM EBITDA
x2018
ADJ. EBITDA & NET PROFITRUB bn
6,8
18,1
24,4
18,214,0
16,2
3,2
20,223,7
13,7
5,6
12,8
2013 2014 2015 2016 2017 2018
EBITDA adj. Net profit
19% 31% 34%
Adj. EBITDA margin
22% 18%
Net profit margin
9% 34% 33% 17% 7%
19%
15%
36.5
59.1
72.4
84.379.1
83,0
2013 2014 2015 2016 2017 2018
CONSOLIDATED SALESRUB bn
5 segmentsas a part of largest vertically integrated agricultural holding in Russia
24 brandswith leading consumer positions in target markets1
Cycle neutraldiversified business model enabling to deliver strong margins at any point in cycle
80 regionsin Russia covered by in-house sales network with export to over 35 countries
№2mayonnaise producer in Russia with 25% production share3
№3agricultural land holder in Russia with 652 kha of land bank primarily located in the Black Earth regions2
№3sugar producer in Russia with 13% production share2
№4 pork producer in Russia with 5% production share2
Source: Soyuzrossakhar, National Union of Pig Breeders, Russian Oil and Fats Union, BEFL, Company estimates, 2018FY audited financials. Note: 1 Including consumer brands under SolPro and new Milk Products segment;2 Market positions among producers in Russia as of 2018; 3 Illustrative combination of ROS AGRO and SolPro positions among mayonnaise producers in Russia in 2018 (8 % and 17% production share in 2018 respectively according to Russian Oil and Fats Union); 4 Before elimination of intergroup operations and includes insignificant portion of consolidated financial results generated by Milk segment; 5 Illustrative Net Debt / EBITDA excl. SolPro debt (in the amount of RUB 19.9bn) and not accounting for an increase in the level of Working Capital due to elevated level of inventories of sugar and grain as well as investment into SolPro working capital
26%
24%28%
22%
REVENUE STRUCTURE
BY SEGMENT4
25%
35%14%
25%
Sugar Meat Oil & Fats Agriculture
EBITDA STRUCTURE
BY SEGMENT4
LEVERAGE PROFILE
14,6
3,6
15,6
4,3 6,613,3
20,1
21,0
2,2x
0,2x 0,6x 0,2x 0,5x
3.4x / <0.8x5
0
10
20
30
40
50
60
70
-10
-8
-6
-4
-2
0
2
4
2013 2014 2015 2016 2017 2018
Net Debt, RUB bn Net Debt/LTM EBITDA
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
54.3
WorkingCapital
SolPro Debt
4
Source: Soyuzrossakhar, National Union of Pig Breeders, Russian Oil and Fats Union, BEFL, Company estimates. Note: 1 Based on mayonnaise production; 2 Illustrative combination ROS AGRO and SolPro 2018 positions among producers in Russia (8 % and 17% production share in 2018 respectively according to Russian Oil and Fats Union); 3 Production in September – December; 4 ROS AGRO acquired the debt of JSC ALEV in the amount of RUB 0.9 billion and rented its production assets, namely, the Koshkinsky Butter and Cheese Plant in the Samara Region and the Zavolzhsky Dairy Plant in the Ulyanovsk Region; 5 Total implied annual production volume (calculated as annualized production of 9 kt in September – December 2018)
ROS AGRO: FROM SUGAR-FOCUSED PRODUCER TO THE LEADING RUSSIAN AGRICULTURAL PLATFORMM
ILK
PR
OD
UC
TS
2011Initial Public Offering
2016Secondary Public Offering
2018+Leading agricultural platform set for further growth
SUCCESSFUL DIVERSIFICATION BY STRENGTHENING MARKET POSITIONS AND ENTERING NEW BUSINESS SEGMENTS
Data for 2011 Data for 2018Data for 2016
Development of retail distribution channel
Assets modernization and capacity expansion
Expansion to Far East
TOP-13PRODUCER IN RUSSIA
DAIRY PRODUCTION STRUCTURE3
TOTAL DAIRY PRODUCTION
275
Dry mixes Cheese productButter Other
MEA
T #5PRODUCER
IN RUSSIA
Industry consolidation and expansion to new regions
Increasing production of processed meat and B2C products
Increasing productivity gain of live pigs
PORK SALES STRUCTURE
TOTAL PORKPRODUCTION
64
kt
Live pigs
100% #2PRODUCER
IN RUSSIA
PORK SALES STRUCTURE
Live pigs Carcass
Large cut Others
47%20%
26%
7%
194203% #4PRODUCER
IN RUSSIA
PORK SALES STRUCTURE
Live pigs Carcass
Large cut Others
16%
18%
43%
23% 205
TOTAL PORKPRODUCTION
kt
6%
TOTAL PORKPRODUCTION
kt
AG
RIC
ULT
UR
E
#2LANDHOLDER IN RUSSIA
Digitalization and automatization
Increasing in-house logistics capabilities
GROSS HARVEST STRUCTURE
TOTAL ARABLELAND
361
k ha
4%33% #2LANDHOLDERIN RUSSIA
GROSS HARVEST STRUCTURE
Cereal crop Oil crop Sugar beet Other
17%
79%
Cereal crop Oil crop Sugar beet
551
TOTAL ARABLE LAND
53% #3LANDHOLDER IN RUSSIA
GROSS HARVEST STRUCTURE
Cereal Crops Oil Crop Sugar Beet9%
39%
19%
7%
22%
71%
582
k ha
6%
TOTAL ARABLE LAND
k ha
Scalability potential
Group decided to launch4 Milk Products segment on the basis of the following 3 Key Investment Criteria:
Competitive advantage Position in industry
OIL
& F
ATS
#5PRODUCER IN RUSSIA
Integration of SolPro assets
Increasing capacity utilization
Launch of national brand
OIL & FATS PRODUCTION STRUCTURE
TOTAL OIL & FATS PRODUCTION
92
kt
Margarine Mayonnaise
62%
38% #5PRODUCER IN RUSSIA
OIL & FATS PRODUCTION STRUCTURE
Meal Unrefined oil Bottled oilMargarine Mayonnaise
41%
33%
2%8%
16%
487
TOTAL OIL & FATS PRODUCTION
429% #2PRODUCERIN RUSSIA
OIL & FATS PRODUCTION STRUCTURE
Meal Unrefined oil Bottled oilMargarine Industrial fats Mayonnaise
41%
35%
13%
4%1%6%
775
kt
59%
TOTAL OIL & FATS PRODUCTION
kt
1 1 1,2
kt
60%
21%
8%11%
Mid-term targets
SUG
AR
#2PRODUCER IN RUSSIA
Launch of 2nd
desugarization station
Increasing operational efficiency
SHARE OF BEET SUGAR IN TOTAL PRODUCTION
BEET SUGARPRODUCTION
462
kt
Beet sugar Cane sugar
41%
59%#3PRODUCER IN RUSSIA
SHARE OF BEET SUGAR IN TOTAL PRODUCTION
+52 p.p.
Beet sugar Cane sugar
93%
7%
750
BEET SUGARPRODUCTION
62%#3PRODUCER IN RUSSIA
SHARE OF BEET SUGAR IN TOTAL PRODUCTION
Beet sugar
100%
773
kt
3%
BEET SUGARPRODUCTION
kt
5
6
INVESTMENT HIGHLIGHTS
Unique agribusiness platform with leading positions across diverse segments
Robust vertical integration: from field to consumer capitalizing on leading brands
State-of-the-art facilities in strategically important locations
Established platform for further organic and M&A growth
Government support for agriculture sector5
2
6
1
7
Seasoned management team and best-in-class corporate governance practices
Strong financial performance
4
3
7
OIL & FATS AGRICULTURE
UNIQUE AGRIBUSINESS PLATFORM WITH LEADING POSITIONS ACROSS DIVERSE SEGMENTS
Source: Soyuzrossakhar, National Union of Pig Breeders, Russian Oil and Fats Union, BEFL (May, 2018 with correction for ROS AGRO land bank as of end of 2018), 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) ; 2 Illustrative 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 Dominant; 4 Agro-Belogorye; 5 Yug Rusi; 6 Solnechnye Producty; 7 PiR PAK; 8 Savushkin; 9
Based on 2018FY results; 10 Majority of 2018 export sales in Meat segment was held to Hong Kong, Vietnam and Belarus
PO
INT
IN C
YC
LEM
AR
KET
PO
SITI
ON
MILK PRODUCTS
TOP-15 CHEESE PRODUCERS
5% 5% 5%
2%
ROS AGRO IS THE ONLY INTEGRATED AGRIBUSINESS PLATFORM IN RUSSIA BENEFITING AT ANY POINT IN CYCLE
PRODUCER
IN RUSSIA
1
№22%
16%
13%
TOP-3 SUGAR PRODUCERS
SUGAR
№PRODUCER
IN RUSSIA
3
10%
6% 5% 5%
790676 652
25% 25% 20%
24% 18% 12%
TOP-3 MAYONNAISE PRODUCERS
MEAT
TOP-4 PORK PRODUCERS TOP-3 LAND HOLDERSTOTAL LAND BANK, KHA
№PRODUCER
IN RUSSIA№
LANDHOLDER
IN RUSSIA
№PRODUCER
IN RUSSIA
TOP-3 VEGETABLE OIL PRODUCERS
№PRODUCER
IN RUSSIA
CU
STO
MER
FO
CU
SR
eve
nu
e s
tru
ctu
re9
B2B
62% 38%
B2C
• Low cost asset base to serve growing market
• Promising platform for retail sales on the basis of 4 leading brands
B2B
71% 29%
B2C
• Stable sales to industrial producers
• Sale of sub-products
• Indirect exposure to export
• 5 leading consumer brands in all segments
• Stable demand
B2B
64% 36%
B2C B2B
57%
B2C
• Bulk sales to domestic and export10 markets
• Established sales channel in case of limited B2C demand
• Low elasticity of demand
• Distribution through leading retail chains
• Higher margins vs. B2B
• Export to CIS countries
• Meal supply to Meat segment
• 14 leading consumer brands sold in Russia & CIS
• Diversified offering driving margins
• Sales to open market and adjacent business segments at market prices
• Ability to balance segmental performance on consolidated basis
100%
B2B
43%
1
4
65
6
78
2
8
ROBUST VERTICAL INTEGRATION: FROM FIELD TO CONSUMER CAPITALIZING ON LEADING BRANDS
Source: 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
PR
OD
UC
TSA
LES
TO B
2B
AN
D B
2C
CLI
ENTS
IN R
USS
IA A
ND
AB
RO
AD
PR
OC
ESSI
NG
BY
IN
-HO
USE
FA
CIL
ITIE
S
AGRICULTURE BUSINESS
SUGAR SEGMENTOIL & FATS SEGMENTMEAT SEGMENT MILK PRODUCTS
B2B B2C B2B B2C1 B2B B2C
Corn SoybeanGrains Sugar beetSunflower
Cultivation PlantingTreatment and
dressingHarvesting Storage
2
B2B B2C
• Dehydrated whey
3rd party sales
Sugar production
Molasses desugarisationOil 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-sufficiencyc. 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
9
STATE-OF-THE-ART FACILITIES…
Source: company data
ASS
ETS
OV
ERV
IEW
MILK PRODUCTS
2 Plants
300 t – daily milk processing
capacity for Koshkinsky
14 kt p.a. – dry industrial mixes
production capacities
3C
AP
AC
ITY
D
YN
AM
ICS
TOTA
L C
AP
EX
SUNFLOWER PROCESSING CAPACITY kt / day
OVER RUB 90BN INVESTED SINCE 2011
SUGAR BEET PROCESSING CAPACITYkt / day
SUGAR
9 Sugar plants
54 kt / day – sugar beet
processing capacity
428 kt – sugar storage
capacity
34,6 35,1
50,3 53,0 53,9
2014 2015 2016 2017 2018
RUB BN
Since 2011
AGRICULTURE
652 k ha – a total land bank
93% of the land bank under
ownership or long-term lease
875 kt of grain – storage
capacity
412 410
551 567 582
2014 2015 2016 2017 2018
ARABLE LANDthousand hectares
RUB BN
Since 2011
MEAT
18 pig farms
234 kt – total annual
capacity of pork in live weight
650 kt – compound feed
production capacity
OIL & FATS
3 Plants
423 kt p.a. – sunflower seed
processing capacity
100 kt p.a. – production
capacity of vegetable oil products
0,5 0,6 0,60,8
1,3
2014 2015 2016 2017 2018
1,6 1,61,8 1,8 1,8
2014 2015 2016 2017 2018
PORK LIVESTOCKthousand heads
RUB BN RUB BN
Since 2011Since 2011
10
Source: company estimates, company approved CAPEX budget
Note: company estimations as of 2018 year end; land bank does not include arable land in Saratov region which is operated under temporarily lease agreement as a part of SolPro deal
Tambov and Voronezh regions
Orel and Kursk regions Belgorod region YekaterinburgSamara and Ulyanovsk
regionPrimorsky region
10 pig farms 3 breeding farms 1 compound feed plant 1 slaughterhouse
--
8 pig farms 2 breeding farm 1 compound feed plant 1 slaughterhouse
-- --
To be launched in 2019-20: 6 pig farms 1 breeding farm 1 compound feed plant 1 slaughterhouse 1 recycling facility
-- -- --
1 oil and fats plant
1 oil extraction plant
1 soy oil and fats plant
Land bank of 184k ha Land bank of 71k ha Land bank of 303k ha -- -- Land bank of 94k ha
3 sugar plants 1 cereal plant
3 sugar plants 3 sugar plants -- -- --
-- -- -- -- 1 cheese plant
(Koshkinsky) 1 dairy plant (Zavolzhsky)
--
OIL
&FA
TSM
ILK
P
RO
DU
CTS
SUG
AR
MEA
TA
GR
ICU
LTU
RE
3 …IN STRATEGICALLY IMPORTANT LOCATIONS THROUGHOUT RUSSIA CAPITALIZING ON CLOSE PROXIMITY BETWEEN KEY BUSINEES SEGMENTS
11
ESTABLISHED PLATFORM FOR FURTHER ORGANIC AND M&A GROWTH
Source: company data, Soyuzrossakhar, Russian Oil and Fats Union. Note: 1 Illustrative combination of ROS AGRO and SolPro positions among mayonnaise producers in Russia in 2018 (8 % and 17% production share in 2018 respectively according to Russian Oil and Fats Union)
FAVOURABLE MARKET STRUCTURE… … COUPLED WITH STRONG ROS AGRO DEVELOPMENT PLATFORM
OVERVIEW OF ONGOING INVESTMENT PROJECTS
ORGANIC GROWTH M&A ACTIVITY
DESCRIPTION INVESTMENTS
• Major project of pig farms construction in Tambov region with
c.97% completion as of 1 Mar 2019
• Vertically integrated facilities including 3 pig farms, slaughterhouse
and compound feed production set to produce 58kt of live weight
per annum
Tam
bo
v-3
OVERVIEW OF LATEST MAJOR M&A TRANSACTIONS
STRONG BALANCE SHEETOngoing strategy to keep leverage low to maintain flexibility in executing attractive investment projects and M&A transactions at the right time
PROVEN TRACK RECORD OF SUCCESFUL ACQUISITIONS AND INVESTMENT PROJECTSOver 5 M&A deals since 2011 including transformational acquisitions of Razguliay and SolProOver 10 investment projects in all business segments since 2011
DEFINED INVESTMENT CRITERIASet rule for new projects and M&A targets: Scalability potential | Competitive advantage | Position in industry
4
SATURATION OF DOMESTIC MARKET
Industry set for consolidation
Potential for operational efficiency increase
Favorable conditions for export growth
OVERLEVERAGED MARKET PLAYERS
High debt burden
Low quality management
Excess capital investments
LACK OF DIVERSIFICATION
Single product category players
Select competitors less prone to market volatility
RUB BN
• In 2016 Group commissioned its first molasses desugarization line at
Znamensky sugar plant
• Project has enabled Group to process 100kt of molasses and produce
extra-grade sugar for soft drink producers with additional 10kt of
betaine output
• In 2018 Group launched construction of 2nd desugarization stationDe
suga
riza
tio
nst
atio
n
RUB BN
TRANSACTION IMPACT
BEFORE AFTER
# #Mayonnaise producer
Daily group sugar beetprocessing capacity
+37%
SOLPRO
YEAR
FRAGMENTED MARKET STRUCTURE
Market share of key players is relatively low(especially in meat and milk segments)
Presence of small / single-product focused players in certain markets
SOLPRO
RAZGULIAY
ktkt
1
12
1.7
0.3
0.1
0.2
Total amount:RUB 2.3bn
49.7
24.4
11.2
49.1
14.5
10.0
Support of preferential lending to agricultural enterprises
Support of investment lending in the agroindustry
Reimbursement of direct costs on the launch/upgrade of production facilities
“Unified” regional subsidy
Unrelated support subsidy in crop production sector
Agricultural machinery fleet renewal
Other subsidies
Total amount:RUB 159bn
Source: Ministry of Agriculture of Russia, public sources, Company data1 Including “unified” regional subsidy
GOVERNMENT SUPPORT FOR AGRICULTURE SECTOR
TOTAL SUPPORT RUSSIA (2018E) RECEIVED BY ROS AGRO IN 2018
MEAT BUSINESS
• Expansion of Tambov-3 (2 pig-breeding farms with a total capacity of 38 ths tons per year)
MILK BUSINESS
• Development of dairy product cluster in Far East
Ros Agro could potentially draw down
RUB 150bn using subsidized by the government lending facilities at below
3% interest rate
RUB bn
Potential financing for expansion projects,such as:
RUB bn
1
• Pig-breeding cluster project in Samara region
• Meat business expansion in Far East
5
13
SEASONED MANAGEMENT TEAM AND BEST-IN-CLASS CORPORATE GOVERNANCE PRACTICESPUBLICLY LISTED SINCE 2011
Source: company data
KEY MANAGEMENT TEAM MEMBERS CORPORATE GOVERNANCE STRUCTURE
Stanislav Shalamkov
Head of the Dairy Division
• 1 year at ROS AGRO
• Former CEO of Bondar Cheese 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 ROS AGRO
Nikolai Zhirnov
Head of the Sugar division
• 9 years at ROS AGRO
Dmitriy Garnov
Head of Agricultural Business
• 1 year at ROS AGRO
• Former Director of the Crop Production Division in Cherkizovo Group
Roman Danilin
Head of the Oil and Fats Division
• 1 year at ROS AGRO
• Former CEO at the Eriomyshki Confectionery factory
6
GENERAL SHAREHOLDERS MEETING
SUBSIDIARIES
BOARD OF DIRECTORS Audit Commitee
Controlappointment
Reporting
Election Recommendations
Maxim Basov Chief Executive Officer
• 10 years at ROS AGRO
14
STRONG FINANCIAL PERFORMANCE …
Source: Audited IFRS accounts for FY16-FY181 Calculated as operating profit before taking into account D&A, other net operating income/expenses (other than reimbursement of operating costs (government grants)), the difference between the gain on revaluation of biological assets and agriculture produce recognized in the year and the gain on initial recognition of agricultural produce attributable to realised agricultural produce for the year and revaluation of biological assets attributable to realised biological assets and included in cost of sales ; 2 Calculated as a sum of accounts receivable, inventories less accounts payable; 3 Short-term and long-term borrowings less cash and cash equivalents, banks’ promissory notes, bank deposits within short-term and long-term investments and bonds held for trading; 4 Includes purchases of property, plant and equipment and inventories intended for construction; 5 Company expectations
KEY FINANCIAL INDICATORS IN 2016-2018 KEY HIGHLIGHTS
RUB m 2016 2017 2018
Sales 84,257 79,058 82,978
growth 16% (6%) 5%
Gross profit 25,725 17,955 24,158
margin 31% 23% 29%
Adj. EBITDA1 18,205 13,955 16,179
margin 22% 18% 19%
Net income 13,945 5,563 12,828
margin 17% 7% 15%
Net working capital2 27,157 22,089 43,047
Net debt3 4,342 6,604 54,342
Net Debt/Adj. EBITDA 0.2x 0.5x 3.4x
Capex4 16,713 17,534 15,564
• In 2018, the Company’s sales recovered reaching ca. RUB 83.0bn comparingto ca. RUB 79.1bn in 2017
• The growth was primarily attributable to positive developments in oil & fats,meat and agriculture segments
– Oil & Fats sales increased by RUB 6.9bn (+35%) as a result of workingwith SolPro assets, an increase in sales volume of bottled oil (due tostart production of bottled oil on SAPP plant) and increase in salesprices of bulk oil, bottled oil and meal
– Meat sales increased by RUB 1.8bn (+9%) due to an increase in salesprice and sales volume of processed pork
– Agriculture sales increased by RUB 2.1bn (+11%) on the back of anincrease in sales price of almost all crops and higher sales volume ofsugar beet, wheat and sunflower in Q4 2018 vs Q4 2017
– Sugar sales decreased by RUB 6.3bn (-21%) as a result of decrease insales volume of sugar due to the transfer of the sales to 1H 2019
• Gross profit margin significantly improved during 2018 on the basis of strongpricing environment across both commodity and consumer products withinagriculture and oil & fats businesses
• Adjusted EBITDA margin reflective of gross margin development, increasingby 16% or RUB 2.2bn
• Over 2016-2018, the Company invested more than RUB 50bn, significantlyincreasing its asset base (+50% 2018 vs. 2016)
• Execution of the largest projects – Far East (RUB 28.0bn) and Tambov-3 (RUB12.0bn) in Meat segment, desugarization station (RUB 5.7bn) in Sugarsegment is on track
RECOVERY IN TOP-LINE GROWTH
STRONG MARGINS
CAPITAL EXPENDITURES
NET WORKING CAPITAL
• Net Working Capital turnover does not follow specific trend and primarilydriven by seasonality factor of operations and selling strategy
• In 2018, Net Working Capital increased by RUB 21.0bn (95% YoY) primarilydriven by surge in inventories (by RUB23.3bn or 91% YoY)
• High inventory levels are attributable to the Company’s selling strategy withrespect to holding inventory in expectation of higher prices in H1 20195
7
15
… AND MODERATE LEVERAGE
• Net debt increased by RUB 47.7bn to RUB 54.3bn as compared to 2017
– Long-term borrowings increased by RUB 24.8bn (up 66%) to RUB 62.6bn as compared to 2017
– Increase in total debt is mainly related to financing raised for SolPro deal
• In 2017, the Company received bank loans with decreased preferential interest rates under the new programme of government support
– Under the programme, the government provides subsidies to the banks to compensate for the loss of income on credits with decreased interest rates given to agricultural producers
• In 2018, the Company received RUB 1.1bn in reimbursement of interest expense (under the state agriculture subsidies program) which covered 28% of gross interest expense
Source: Audited IFRS accounts for FY16-FY18 1 Adjusted EBITDA 2018 does not include financial results from SolPro assets; 2 Deferred liability due to RSHB; 3 Increase of sunflowers seed stock in Oil and Fat segment in result of working with SolnechnyeProducty assets
NET DEBT DEVELOPMENT LEVERAGE DEVELOPMENT
DEBT BREAKDOWN
By Maturity By Rate Type
Short-term borrowings
34%
Long-term borrowings
66%
Fixed rate100%
6.6
25.6
54.3
19.0
20.1
8.7
Net Debt(31-Dec-2017)
Net Debt Change(excl. SolPro)
Net Debt(31-Dec-2018)(excl. SolPro)
SolPro Debt
SolPro WCFinancing
Net Debt(31-Dec-2018)
0.5x 3.4x1.6x
RUB bn
NET DEBT / ADJUSTED EBITDA
Most of Company’s debt (ca. 100%) is RUB denominated
1
3
2
7
16
17
2.2 2.42.7 2.9 3.1
0.70.7
0.70.6
0.63.0
3.13.4
3.53.7
2014 2015 2016 2017 2018
Industrial production Household production
Source: Ministry of Agriculture of Russia, public data, company data1 Excluding VAT; 2 Includes Belarus and other countries
MEAT INDUSTRY OVERVIEW
PORK PRICE (Live-weight)1
KEY MARKET TRENDS
PORK PRODUCTION (Carcass-weight)
2019 GUIDANCE
PORK AND PORK PRODUCTS EXPORT (Carcass-weight)
#4
• Domestic production is narrowing margin with domestic consumption (currently, constitutes ca. 96%)
• Companies are actively pursuing export opportunities (CIS, Hong Kong, Vietnam)
• Price remains quite volatile
• Decrease in household production share
• Commissioning of new capacities on the ground of increasing consumption (by ca. 2-3%) and export opportunities (by up to 20%)
105
102
107 107106
97
90
89
86
107
112
125
108 106
89 89
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017 2018 2019
Average 2017: 102 RUB / kgAverage 2018: 106 RUB / kgAverage 2019 (YTD): 89 RUB / kg
m tons
17 1631
4635
3
11
20
26
0.42
7
7 21
13
12
15
20
1824
61
88
102
2014 2015 2016 2017 2018
Hong Kong Ukraine Vietnam Other
ths tons
2
RUB / kg
COMPANY’S POSITION
Producer with 5% production share
18
MEAT SEGMENT PERFORMANCE
Source: Company data1 Excluding VAT
FINANCIAL HIGHLIGHTS TOTAL PORK SALES VOLUME DYNAMICS
Sales (up RUB 1.8bn, +9% YoY)
• Large cuts sale price increased by 11.2 RUB/kg (+8% YoY) from 148.9 RUB/kg to 160.1 RUB/kg (excl. VAT), also carcass sale price increased by 11.4 RUB/kg (+9% YoY) from 124.9 RUB/kg to 136.3 RUB/kg (excl. VAT)
– Increase in prices was driven by exit of a number of poultry enterprises from the market (Belaya Ptica, Evrodon), import ban of pork from Brazil, as well as a number of African swine fever outbreaks on the back of increased pork demand
• Livestock sales volume decreased significantly by 30 ths. tons (-53% YoY) from 57 ths. tons to 27 ths. tons due to shift to high-value processed products
Adjusted EBITDA (up RUB 0.7bn, +12% YoY, margin 31%)
• Adjusted EBITDA increased by 12% up to RUB 7.0bn in 2018 due to sales growth on the back of stable margin levels
RECENT PERFORMANCE (2018 VS. 2017) AVERAGE REALISED PRICE DYNAMICS1
RUB bn ths tons
RUB / kg
17.9
20.522.4
4.0
6.3 7.0
22%
31%31%
2016 2017 2018
Sales Adj. EBITDA Adj. EBITDA margin
76
57
2732 31 30
42
6574
4
161219 22
2016 2017 2018Livestock Carcass Large cuts Consumer products Other pork cutting products
162 176 169
26%
39%53%
91.794.9 88.7
125.3124.9
136.3149.8
148.9 160.1170.6
190.6192.0
51.4
51.5
52.5
2016 2017 2018Livestock Carcass Large cuts Consumer products Offal
TOTAL SALES VOLUME
Widening price premium for processed
meat
19
Source: company estimates, company approved CAPEX budget
Note: 1 Preliminary estimates
1
2
3
KEY INVESTMENT PROJECTS / INITIATIVES
Far East
Purpose: region diversification, export to AsiaCapacity: 75 thousand tons Location: UssuriyskProject cost: RUB 28 bn Launch: 2021Assets: 6 pig farms, 1 breeding farms, 1 compound feed mill, 1 slaughterhouse and 1recycling facility
Purpose: increase B2C salesCapacity: +58%1 slaughtering, +36%1 meat processing, 50kt of consumer productsLocation: Belgorod & TambovProject cost: RUB 6 bnLaunch: 2019-2020
Meat processing expansionTambov 3+
Purpose: production increaseCapacity: 38 thousand tons of live pigsLocation: Tambov regionProject cost: RUB 8 bn Launch: 2021Assets: 2 pig farms
SEGMENT KEY INDUSTRY TRENDS MID-TERM GOALSM
EAT
Timely launch of ongoing expansion projects
Retail sales development
Slaughterhouse expansion
Increase productivity gains of live pigs
Increasing focus on B2C products
Increasing share of export sales
Sales prices volatility
MEAT SEGMENT STRATEGY
20
68%
10%
7%
15%
Vegetable oil Mayonnaise and sauces
Consumer margarine Industrial fats
Source: Ministry of Agriculture of Russia, public data, company data. Note: 1 Excluding VAT; 2 Illustrative 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 mayonnaise producers in Russia (8% and 17% production share in 2018 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)
• Ongoing market consolidation
• Increase in sunflower harvest area
SUNFLOWER OIL PRICE1
KEY MARKET TRENDS
OIL & FATS INDUSTRY OVERVIEW
GROSS OILSEED HARVEST
• Average sunflower oil price in 2019 may decrease on the back of large carry-over stocks from 2018
• Increase in sunflower oil export due to sunflower crop growth in 2018
• Exports of mayonnaise and margarine to the CIS nations is expected to grow
2019 GUIDANCE
MARKET STRUCTURE (2018)
Producer on the vegetable oil market with 18% production share2
Producer on the consumer margarine market with 67%4 production share
13.8 13.8
16.315.4
19.7
2014 2015 2016 2017 2018
78% 70% 74% 64% 82%
m tonsPROCESSING CAPACITY UTILISATION
Total production:8.6 m tons
42.3
38.6
35.9
38.8
40.6
39.5
40.440.1
38.4
41.9
42.8
42.6
38.639.5
40.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017 2018 2019
ths RUB / ton
Producer on the mayonnaise market with ca. 25% production share3
Average 2017: 39.1 ths RUB / tonAverage 2018: 40.6 ths RUB / tonAverage 2019 (YTD): 39.8 ths RUB / ton
COMPANY’S POSITION
#2
#1#2
21
OIL & FATS SEGMENT PERFORMANCE
Source: Company data1 Excluding VAT; 2 External sales only, includes sales of the bottled oil, unrefined oil and meal produced at SolPro oil exctraction plants
FINANCIAL HIGHLIGHTS SALES VOLUME2 AND PRICE OF CONSUMER PRODUCTS
Sales (up RUB 6.9bn, +35% YoY)
• Total sales grew due to an increase in sales prices of both consumer and commodity products as well as higher sales volume of commodity products
– Bottled oil sales jumped five-fold due to new bottling shop launch, development of distribution channels, rolling out of own retail trademarks and export growth
– Margarine sales dropped 18% on the back of a decline in exports and shrinking of domestic sales geography (focus on the "home" region)
– Mayonnaise sales decreased by 18% as a result of sales geography shrinking and leaving several retail networks, partially offset by the export growth
Adjusted EBITDA (up RUB 2.2bn, +319% YoY, margin 11%)
• Adjusted EBITDA increased due to gross margin expansion as well as the enhanced control of fixed costs
– Decreased cost of sales was driven by the reduction of variable costs due to production modernization, optimization of purchasing procedures and drop in production losses
RECENT PERFORMANCE (2018 VS. 2017) SALES VOLUME AND PRICE OF COMMODITY PRODUCTS
RUB bn SALES VOLUME ths tons
AVERAGE PRICE1
RUB / kg
SALES VOLUMEths tons
AVERAGE PRICE1
RUB / kg
19.9 19.4
26.3
(0.4)0.7
2.9
(2%)
4%
11%
2016 2017 2018
Sales Adj. EBITDAAdj. EBITDA margin
76.7
80.5
81.375.6 78.1
83.2
71.9
58.855.7
2016 2017 2018
Mayonnaise and saucesConsumer margarineBottled oil
116
150168200
253
302
3 10
2016 2017 2018
Unrefined oil Meal Industrial fats
48040631653.0
42.2 45.7
18.2 16.0 17.2
54.0
67.5
2016 2017 2018Unrefined oil MealIndustrial fats
TOTAL SALES VOLUME
TOTAL SALES VOLUME
77
5948
37 3629
18 20
97
2016 2017 2018
Mayonnaise and sauces Consumer margarine
Bottled oil
174115132
MID-TERM GOALS
• Grow bottled sunflower oil sales to B2C and industrial fats production
• Integration of SolPro and further consolidation opportunities
• Development of strong national brands
22
• Increasing export of crops (by 45% over the last 5 years)
• Growth in high margin crops such as soy, sunflower and barley
Source: Ministry of Agriculture of Russia, public data, company data1 Excluding VAT
GRAINS PRICE1
KEY MARKET TRENDS
AGRICULTIRE INDUSTRY OVERVIEW
TOTAL HARVEST
• Increase in crops harvest on the back of recovering yields
• Export may reach ca. 47 m tons of grain, with wheat accounting for 40 m tons
2019 GUIDANCE
HARVEST AREA
Largest land bank holder
YIELDS
91 93105
120100
11 12
14
14
17102 104
119
134
117
2014 2015 2016 2017 2018
Grains Oilseeds
OILSEEDS PRICE1
38.9 38.1
10.6 11.1
49.5 49.2
2017 2018
Grains Oilseeds
m tons
ths ha
3.2
1.3
3.1
1.4
Grains Oilseeds
2017 2018
tons / ha
7.1
9.29.5
7.7
9.6
9.0
10.9
12.0
9.0
11.3
2014 2015 2016 2017 2018
Domestic price Global price
ths RUB / ton
16.6
24.8
25.2
20.4
23.9
17.5
23.1
25.6
21.4 22.7
2014 2015 2016 2017 2018
Domestic price Global price
ths RUB / ton
COMPANY’S POSITION
#3
23
AGRICULTURE SEGMENT PERFORMANCE
Source: Company data1 Sugar beet sales are 100% internal and not presented here; 2 Excluding VAT
FINANCIAL HIGHLIGHTS SALES VOLUME DYNAMICS1
Sales (up RUB 2.1bn, +11% YoY)
• Increase in sales prices of all crops: wheat (+46% YoY), barley (+56% YoY), oilseeds
(+9% YoY) on the back of reduced harvest in Russia vs. previous year and concerns
of exporters around potential corn export duty implementation since 1st January
2019
• Decline in sales in 2018 was mainly driven by postponing part of sales to the first
half of 2019 on the expectations of more favourable price environment
Adjusted EBITDA (up RUB 4.9bn, 65x growth YoY, margin 24%)
• Adjusted EBITDA has significantly increased on the back of sales prices growth and
cost of sales remaining on par with 2017 level
RECENT PERFORMANCE (2018 VS. 2017) AVERAGE SALE PRICE DYNAMICS1,2
RUB bn
21.2
18.8
20.8
6.2
0.1
5.0
29%
0.4%
24%
2016 2017 2018
Sales Adj. EBITDA
Adj. EBITDA margin
413
710510
377
193
152
182169
91
50
84
54
91
105
109
7
10
54
2016 2017 2018
Wheat Barley Soy Sunflower seeds Corn Other
1,119 1,271 970
ths tons
21.220.0
23.521.7
17.1
18.6
8.1 7.910.19.4
5.3
7.57.4 6.1
8.9
7.26.2
9.7
2016 2017 2018
Wheat Barley Soy Sunflower seeds Corn Other
ths RUB / ton
• Improved control over fields
• Increase yields per hectare and quality of production
• Productivity growth via integration of IT and solutions
• Ongoing land restructuring
MID-TERM GOALSTOTAL SALES VOLUME
24
Source: Ministry of Agriculture of Russia, public data, company data1 Excluding VAT; 2 According to the Ministry of Agriculture of Russia
SUGAR INDUSTRY OVERVIEW
ISCO KRASNODAR PRICES1
KEY MARKET TRENDS
SUGAR PRODUCTION
2019 GUIDANCE
SUGAR BEET PROCESSING
#3
• Stable consumption (direct or indirect)
• Import and export alternatives determine price pattern
• The market likely to stay in “balance” following overproduction period
• Sugar beet harvest is likely to remain at 2018 level2
• Factoring-in stable price environment, export or import potential will remain limited
4.65.1
5.8
0.60.6
0.35.2
5.76.1
6.5
5.9
2014 2015 2016 2017 2018
Beet sugar Cane sugar
30.933.7
45.0 46.0
40.0
2014 2015 2016 2017 2018
17.8% 17.8% 16.0% 16.9% 17.9%
28.929.3
30.1
38.0
23.2
21.9
22.523.3
25.5
30.8
27.6
28.8
33.133.533.1
31.3
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2017 2018 2019
m tons
m tons
PROCESSING CONVERSION
RUB / kg
Average 2017: 28.1 RUB / kgAverage 2018: 28.7 RUB / kgAverage 2019 (YTD): 31.9 RUB / kg
COMPANY’S POSITION
Producer with 13% production share
25
SUGAR SEGMENT PERFORMANCE
Source: Company data1 Excluding VAT
FINANCIAL HIGHLIGHTS SUGAR BEET HARVEST AREA
Sales (down RUB 6.3bn, -21% YoY)
• The decrease in sales was driven by:
– Fall in the sugar sales volume from 900 ths tons in 2017 to 702 ths tons in 2018 (-22% YoY) due to decreased sugar production and Company’s plans to move part of sales to the first half of 2019 on the back of expected continued sugar price growth
– Average sugar sales price stayed at 2017 level of 30.6 RUB/kg (excl. VAT)
Adjusted EBITDA (down RUB 0.6bn, -11% YoY, margin 20%)
• Continued excess supply of sugar beet led to cost savings resulting in EBITDA margin growth
RECENT PERFORMANCE (2018 VS. 2017)
SUGAR PRODUCTION
AVERAGE SUGAR SALES PRICE1
RUB bn ths ha
ths tons
RUB / kg(22%) 0%GROWTH
37.2
30.4
24.1
9.65.5 4.9
26%
18%20%
2016 2017 2018
Sales Adj. EBITDA Adj. EBITDA margin
750
59
809
984
773
2016 2017 2018Beet sugar Cane sugar
39.4
30.6 30.6
2016 2017 2018
98 93 89
2016 2017 2018
44.2 37.8 39.1
HARVEST YIELDS, tons / ha
26
Source: company data, company approved CAPEX budget
Note: 1 In months
Desugarization station
Purpose: extra sugar extraction | production of extra-grade sugar for B2B clients
Capacity: up to 70 thn tons of sugar p.a. | up to 22 thn tons of betaine p.a.
Raw materials: molasses from ROS AGRO’s plants
Location: Belgorod region
Project cost: RUB 5.7 bn
Launch: Q4 2019
SEGMENT KEY INDUSTRY TRENDSSU
GA
RStable direct and indirect consumption
Import/export alternatives to determine price pattern
MID-TERM GOALS
DESUGARIZATION STATION PROJECT
№ Term1
2018 2019
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 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
1
2
SUGAR SEGMENT STRATEGY
Sugar loss decrease through the launch of new desugarization station
Increase storage term for sugar beet
Integration of the leading technology solutions
27
20 2332 3840 57
156
195198
279
217
325
6478
112
183
2014 2015 2016 2017 2018FRaw market milk Drinking milkFermented milk products CurdCheeses and cheese products ButterMargarine and spreads Ice-cream
Source: Ministry of Agriculture of Russia, public data, company data1 Excluding VAT
MILK INDUSTRY OVERVIEW
CHEESE PRODUCTION
KEY MARKET TRENDS
DAIRY PRODUCTION
2019 GUIDANCE
PRICES FOR KEY MILK PRODUCTS1
m tons
RUB / kg
ths tons
• Restoration of demand / supply balance
• Introduction of new production (processing plants)
• Intensification of production
• Consolidation of the sector and regional expansion
• Shift to most affordable dairy categories
• Gradual increase in semi-hard cheese category
• Growth in exports
• Reduction in imports
TOP-10 CHEESE PRODUCERS
11.7
0.7
0.6
0.4
0.3
0.1
0.1
Whole-milk products
Cheeses and cheeseproducts
Margarine andspreads
Ice-cream
Butter
Dried skimmed milk
Dried whole milk
Growth2014-2018
2%
34%
67%
(13%)
19%
(5%)
4%
33
398
51
354
EXPORT
IMPORT
107 57
115 189
98
22325
62
101
105
54
29
499
666
2014 2018
Hard cheese Cheese products Semi-hard cheese
Soft cheese Processed cheese Others
5%
5%
5%
5%
4%
4%
3%
3%
3%
3%
Top-10 producers
control only 40% of production
share
COMPANY’S MID-TERM GOAL
#3 Producer on the market
28
DAIRY PRODUCTS SEGMENT PERFORMANCE
Source: Company data1 Excluding VAT; 2 For instance, funds can be used to increase the throughput capacity of the milk receiving department up to 330 tons per day, to improve water treatment systems, and to purchase more advanced equipment; 3 Cheese product is the cheese produced with the use of vegetable fats
FINANCIAL HIGHLIGHTS DAIRY PRODUCTS OPERATIONAL HIGHLIGHTS (SEP-DEC 2018)
• Dairy products performance results were affected by the following factors:
– Utilisation rate of the butter and cheese plant was at 47% due to issues with milk purchasing and renewal of products sale contracts across all sales channels. In December 2018, milk supplies were streamlined
– In 2018, only 15% of cheese products and 3% of oil and fat products were sold via retail networks with 85% and 97% were sold to distributors and wholesale customers respectively
– Sales prices during Sep-Dec 2018 were in line with the average prices in the regions of sales
• In 2019, the average selling prices are expected to increase as a result of a change in product mix towards an increase in the share of packaged products, enhanced product quality level and consistency, brand promotion and development of relationships with retail networks
PERFORMANCE HIGHLIGHTS (SEP-DEC 2018) AVERAGE DAIRY PRODUCTS SALES PRICE1 (SEP-DEC 2018)
RUB m ths tons
RUB / kg
SALES BY FEDERAL DISTRICT
3
5.3
1.9
0.7 0.60.2 0.2
4.2
1.2
0.5 0.4 0.2 0.2
Dry mixes Cheese product Butter Cheese Spread Condensed whey
Production Sales
Volga44%
Central24%
Northwestern14%
Ural13%
Other5%
79.7
184.0
312.7
271.0
100.3
2.5
Dry mixes Cheese product Butter Cheese Spread Condensed whey
• Expansion to Far East
• Development of relationships with retail distribution networks
• Modernization of Koshkinsky Butter and Cheese Plant after completion of integration process2
MID-TERM GOALS
854
59
Revenue Adj. EBITDA
Sep-Dec 2018
7%
Adj. EBITDA margin
29
30
SOLPRO DEAL HIGHLIGHTSTRANSACTION OVERVIEW
Source: company data, Russian Oil and Fats UnionNote: 1 SolPro assets are legally owned by Quartlink Holding Limited (Cyprus); 2 2018 stand alone market position before acquisition by ROS AGRO; 3 Company’s preliminary estimations based on Russia’s Oil and Fats Union data for 2017; 4 For the 5 year period
TRANSACTION DESCRIPTION
• ROS AGRO is undergoing acquisition of SolPro1 (Solnechnye Products), one of the leading Russian Oil & Fats holdings with leading position in key consumer products (#4 in Mayonnaise2; #3 in consumer margarine2; #2 in industrial fats2; #2 in vegetable oil production3)
• Transaction is expected to be structured as an asset deal on the basis of bankruptcy auction with ROS AGRO acquiring select assets of SolPro with other assets being sold (similar structure was utilized during acquisition of Razgulay assets)
• Currently ROS AGRO assumed RUB 35bn debt (accounts for c. 80% of SolPro external debt) before Russian Agricultural Bank (RAB)
o ROS AGRO owes RUB 35bn to RAB and incurs principal and interest payments
o SolPro owes RUB 35bn to ROS AGRO and incurs principal and interest payments with key SolPro assets serving as a collateral
• Additionally, ROS AGRO acquired an option4 to buy 85% equity in SolPro holding company. Group does not plan to exercise this option as deal is expected to be assets-based
• Currently SolPro plants operate under historical sales agreements expiring in March 2019 and results are not consolidated into ROS AGRO operational and financial results
o SolPro Net Income is used to repay RUB 35bn loan to ROS AGRO. It is recognized as financial income in Group’s financial statements
o After expiration of historical sales agreements, SolPro plants are expected to be selling products through ROS AGRO sales platform with results being recognized in ROS AGRO operational and financial results
ILLUSTRATIVE TRANSACTION STRUCTURE
PR
E-D
EAL
SolPro1
Option for 85% in equityGroup does not plan to exercise this option
as deal is expected to be assets-based
V. BurovROS AGROTRA
NSA
CTI
ON
SolPro1
Russian Agricultural Bank (RAB)
c. RUB 35bn debt c. RUB 8bn debt
100%
V. Burov
Other debt holders
ROS AGRO
SolPro1
SolPro owes RUB 35bn to ROS AGROLiability is secured by key SolPro assets
ROS AGRO owes RUB 35bn to RAB
Russian Agricultural Bank (RAB)
Other debtors
Debt
Equity
15%
c. RUB 8bn debt
31
SOLPRO DEAL HIGHLIGHTS
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
DEAL RATIONALE
MAYONNAISE CONSUMER MARGARINE
25% 25%20% 20%
17%
8%
67%
41%
27% 26%
24%
18%
14%12%
44%
VEGETABLE OIL
53%
23% 22%
1%
INDUSTRIAL FATS
5 5
7
#2Mayonnaise
INSTANT STRENGTHENING OF ROS AGRO POSITIONS IN PRODUCTION
#1Margarine
#2Vegetable Oil
#2Industrial Fats
6 6
6
6
6
1
2
4
3
32
SOLPRO DEAL HIGHLIGHTSOVERVIEW OF KEY ASSETS
Source: public sources
Note: 1 B2B brand
Description
Location
Product
Capacity p.a.
Personnel
Major SolPro brands
Saratov Oil & Fat plant Atkarsky Oil Extraction plant Moscow Oil & Fat plant Novosibirsk Oil & Fat plant
Founded in 1953 Largest producer of margarine and
industrial fats in Russia #1 as of dish soap production in the
country
Saratov, Russia
Industrial fats Margarine Mayonnaise Dish soap
Margarine: 389 kt Mayonnaise: 47 kt Soap: 31 kt
c. 950 workers
Founded in 1913 One of the largest oil-processing
factories in Volga Region
Aktarsk, Saratov Region
Bottled sunflower oil Bulk sunflower oil Sunflower oil meal
Oilseeds: 548 kt
c. 600 workers
Founded in 1935 Serves as a pilot platform for
innovation in consumer fats segment
Moscow, Russia
Mayonnaise Mustard Sauces
Mayonnaise: 108 kt Mustard: 2 kt
c. 300 workers
Founded in 1918 Largest oil and fat producer in Siberia
Region
Novosibirsk, Russia
Mayonnaise Sauces
Mayonnaise: 26 kt
c. 100 workers
Volzhskiy terminal
Founded in 2013 One of the largest sunflower
processing factories in Russia The largest elevator in Volga Region
Saratov Region
Unrefined worm-press and extraction oil
Granulated oil meal
Oilseeds: 657 kt Unrefined oil: 279 kt
c. 400 workers
1
33
Source: Audited IFRS accounts for FY16-FY18
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18
ASSETS
Current assets
Cash and cash equivalents 6,751 ,712 4,860,335 1,728,396
Restricted cash 39 42 49
Short-term investments 17,230,012 18,457,778 8,551,238
Trade and other receivables 4,607,634 3,196,315 6,226,403
Prepayments 746,886 1,201 ,479 2,194,971
Current income tax receivable 97,461 212,026 533,459
Other taxes receivable 3,663,194 3,352,606 4,420,011
Inventories 29,538,204 25,665,886 49,011,008
Short-term biological assets 4,696,957 4,009,965 4,065,870
Total current assets 67,332,099 60,956,432 76,731,405
Non-current assets
Property, plant and equipment 45,791,288 56,390,084 68,606,452
Inventories intended for construction 38,963 795,314 4,136,855
Goodwill 2,225,304 1,826,258 2,364,942
Advances paid for property, plant and equipment 14,172,240 13,841,743 9,681,448
Long-term biological assets 1,745,467 1,719,784 2,650,201
Long-term investments 17,751 ,740 17,594,030 54,494,252
Investments in associates 110,504 7,320 7,320
Other non-current assets - 215,417
Deferred income tax assets 1,935,298 1,992,839 1,866,593
Other intangible assets 2,139,171 2,286,181 2,202,786
Non-current assets held for sale - 820,950
Total non-current assets 85,909,975 96,453,553 147,047,216
Total assets 153,242,074 157,409,985 223,778,621
(RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18
LIABILITIES AND EQUIТY
Current liabilities
Short-term borrowings 11,704,276 8,863,525 32,513,595
Trade and other payables 6,988,905 6,773,069 12,190,160
Current income tax payable 99,450 63,729 60,913
Other taxes payable 3,814,278 4,072,364 4,023,943
Total current liabilities 22,606,909 19,772,687 48,788,611
Non-current liabilities
Long-term borrowings 32,798,240 37,787,777 62,587,531
Government grants 3,712,593 6,377,469 7,310,975
Deferred income tax liability 535,514 744,113 359,051
Other non-current liability - - 2,465,813
Total non-current liabilities 37,046,347 44,909,359 72,723,370
Total liabilities 59,653,256 64,682,046 121,511,981
Equity
Share capital 12,269 12,269 12,269
Treasury shares (499,590) (491,978) (490,606)
Share premium 26,964,479 26,964,480 26,964,479
Share-based payment reserve 1,181 ,437 1,308,188 1,326,579
Retained earnings 65,690,082 64,758,966 74,286,089
Equity attributable to owners of Ros Agro 93,348,677 92,551,923 102,098,809
Non-controlling interest 240,141 176,016 167,831
Total equity 93,588,818 92,727,939 102,266,640
Total liabilities and equity 153,242,074 157,409,985 223,778,621
34
Source: Audited IFRS accounts for FY16-FY18
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(RUB ths)Year ended
31-Dec-16Year ended
31-Dec-17Year ended
31-Dec-18
Sales 84,256,585 79,057,860 82,977,711
Net (loss)/gain on revaluation of biological assets and agricultural produce 48,176 (2,976,169) 2,850,788
Cost of sales (58,915,613) (58,115,770) (61,679,842)
Net (loss)/gain from trading derivatives 335,997 (11,115) 8,890
Gross profit 25,725,145 17,954,806 24,157,547
Distribution and selling expenses (7,993,094) (8,360,963) (6,960,090)
General and administrative expenses (5,356,057) (4,878,534) (5,168,528)
Other operating (expenses) / income, net 2,099,192 (665,918) 593,112
Operating profit 14,475,186 4,049,390 12,622,041
Interest expense (3,614,107) (2,259,804) (2,884,418)
Interest income 4,465,667 4,189,550 4,002,952
Net gain/(loss) from bonds held for trading (422) 29,783 (41,940)
Other financial (expenses)/income, net (1,134,849) (38,968) (166,842)
Share of results of associates 20,831 11,060 -
Profit before income tax 14,212,306 5,981,011 13,531,793
Income tax expense (267,790) (417,848) (703,830)
Profit for the year 13,944,516 5,563,163 12,827,963
35
Source: Audited IFRS accounts for FY16-FY18 1 Over consideration paid
CONSOLIDATED STATEMENT OF CASH FLOWS
(RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18
Cash flows from operating activities
Profit before income tax 14,212,306 5,981,011 13,531,793
Adjustments for:
Depreciation and amortization 5,819,850 7,155,334 7,788,465
Interest expense 4,810,145 3,512,362 4,000,443
Government grants (1,943,206) (1,733,537) (1,915,530)
Interest income (4,465,667) (4,189,550) (4,002,952)
Loss/ (gain) on disposal of property, plant and equipment 31,217 78,849 126,228
Net (gain)/ loss on revaluation of bio. assets and agricultural produce (48,176) 2,976,169 (2,850,788)
Change in provision for net realizable value of inventory 92,961 2,222 63,905
Share of results of associates (20,831) (11,060) -
Change in provision for impairment of receivables and prepayments (28,388) 181,757 61,704
Foreign exchange (gain) / loss, net 1,074,439 (15,949) 63,468
Share based remuneration 4,026 19,761 18,391
Settlement of loans and accounts receivable previously written-off (937,545) (141,339) (139)
Lost / (reversal of) harvest write-off (63,450) 82,119 70,580
Net (gain) / loss from bonds held for trading 14,864 (29,783) 41,934
Change in provision for impairment of other taxes receivables (197,409) - -
Change in provision for impairment of advances paid for PPE (7,405) 6,220 (38,852)
Impairment of goodwill 589,416 399,046 -
Excess of the Group’s share of identifiable net assets acquired1 (905,140) - -
Other provisions (15,454) - -
Loss on sale of associates, net - 58,833 -
Loss on sale of other assets - - 102,997
Realized deferred day-one gain - - (274,111)
Gain from reposition of collateral - - (316,023)
Loss on other investments 7,820 401,453 -
Other non-cash and non-operating expenses, net 41,511 109,201 146,758
Operating cash flow before working capital changes 18,065,884 14,843,119 16,618,271
Change in trade and other receivables and prepayments 371,138 855,801 (4,050,515)
Change in other taxes receivable (1,440,920) 999,150 (1,050,067)
Change in inventories (6,093,853) 1,438,041 (19,788,602)
Change in biological assets 842,463 304,866 (1,069,740)
Change in trade and other payables 1,354,325 (568,000) 2,808,297
Change in other taxes payable (173,631) 223,637 141,469
Income tax paid (1,116,502) (423,213) (1,281,174)
Net cash from operating activities 11,808,904 17,673,401 (7,672,061)
(RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18
Cash flows from investing activities
Purchases of property, plant and equipment (16,642,716) (16,684,987) (12,895,786)
Purchases of other intangible assets (275,416) (514,318) (351,141)
Proceeds from sales of property, plant and equipment 71,637 29,891 75,168
Purchases of inventories intended for construction (69,787) (848,870) (1,968,594)
Proceeds from cash withdrawals from deposits 22,469,547 34,227,159 20,966,068
Deposits placed with banks (23,934,790) (35,976,815) (6,139,044)
Purchases of associates - (9,168) -
Proceeds from sale of associates - 42,116 -
Investments in subsidiaries, net of cash acquired (7,506,408) 79,426 (534,450)
Purchases of bonds with maturity over three months (2,566,211) - (19,900,000)
Purchases of promissory notes - - (100,000)
Proceeds from sales of bonds with maturity over three months 3,433,426 - -
Proceeds from sales of rights of claim 124,405 - -
Loans given (1,217,297) (7) -
Purchases of loans issued - - (882,492)
Loans repaid 11,261,011 428,559 369,008
Movement in restricted cash 64,117 (846) 658
Interest received 4,585,875 4,336,595 4,524,153
Purchases of other assets (52,532)
Proceeds from sales of other assets 1,325,100
Dividends received 12,198 19,558 -
Net cash used in investing activities (10,190,409) (14,871,707) (15,563,884)
Cash flows from financing activities
Proceeds from borrowings 26,104,909 18,819,053 49,981,866
Repayment of borrowings (33,949,009) (16,860,947) (25,326,315)
Interest paid (3,823,363) (2,865,059) (3,569,972)
Purchases of non-controlling interest (142,850) (81,218) (58,574)
Proceeds from issue of own shares, net of transaction cost 16,328,269 - -
Dividends paid to owners Ros Agro PLC (7,124,250) (6,146,486) (3,485,666)
Proceeds from government grants 3,487,866 2,674,618 2,309,106
Lease payments - (14,919) 11,942
Proceeds from sales of treasury shares 6,373 - -
Other financial activities (4,135) (4,625) 79,377
Net cash (used in)/from financing activities 883,810 (4,479,583) 19,941,764
Net effect of exchange rate changes on cash and cash equivalents (152,296) (213,488) 162,242
Net (decrease)/increase in cash and cash equivalents 2,350,009 (1,891,377) (3,131,939)
Cash and cash equivalents at the beginning of the year 4,401,703 6,751,712 4,860,335
Cash and cash equivalents at the end of the year 6,751,712 4,860,335 1,728,396