ROS AGRO Investor presentation June 2016
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 an offer 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 contract or commitment whatsoever. The Information has been prepared by the Company, and no other party accepts any responsibility whatsoever, or makes any representation or warranty, express or implied, for the contents of the Information, including its accuracy, completeness or verification or for any other statement made or purported to be made in connection 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 to the past or the future. The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-looking statements. 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 such as target, believe, expect, aim, intend, may, anticipate, estimate, plan, project, will, can have, likely, should, would, could and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company s control that could cause the Company s actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions 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 or correctness 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, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document. 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 S under 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 be viewed 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 does not 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 be offered or sold within the United States without registration except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of 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, or distributed, directly or indirectly, in the United States or its territories or possessions. Any failure to comply with this restriction may constitute a violation of United States securities laws. 2
Ros Agro at a glance Ros Agro a leading vertically integrated diversified agriculture holding with exposure to highly attractive market segments in Russia and CIS Business highlights Overview of Ros Agro segments 3 #2 sugar producer in Russia with 19% market share 1 #2 pork producer in Russia with 6% market share 1 #1 consumer margarine producer in Russia with 45% market share 1 #2 agricultural land holder in Russia with 608k ha of land bank primarily located in the Black Earth region of Russia Ros Agro operates vertically integrated business model which serves as a natural hedge against commodity price fluctuations and helps to deliver strong margins: Sugar is mainly produced from its own sugar beet Sugar Meat 9 sugar refineries Beet sugar production 2015: 582kt Cane sugar production 2015: 183kt 13 pig farms 3 breeding facilities Pork production 2015: 176kt Compound feed production 2015: 579kt 32,9 17,0 22,5 34% 10% 21% 2013 2014 2015 17,8 18,1 7,4 23% 50% 42% Meat business is secured by own fodder production 2013 2014 2015 In agricultural business Company's core crop yields are significantly higher than Russia's average 36,5 Consolidated sales and Adj. EBITDA dynamics 59,1 72,4 2013 2014 2015 Sales (RUBbn) Adj. EBITDA margin 19% 31% 34% 6,8 18,1 24,4 2013 2014 2015 Adj. EBITDA (RUBbn) Oil and Fats Agriculture Consumer margarine production 2015: 43kt Mayonnaise production 2015: 65kt Vegetable oil production 2015: 170kt Total land bank² of 608k ha 506k ha of arable land Crop production: Wheat 309kt Barley 275kt Corn 109kt Soybean 105kt 8,9 11% Sales (RUBbn) Adj. EBITDA margin (%) 14,9 17,3 13% 10% 2013 2014 2015 28% 8,5 41% 47% 10,7 14,2 2013 2014 2015 2013-2015 Sales CAGR (%) Source: Notes: Company data, Soyuzrossakhar, National Union of Pig Breeders, Russian Oil and Fats Union, BEFL 1 Based on volumes in 2015 including Razgulay; 3
Vertically integrated and diversified with scale benefits Efficient and stable cluster-oriented business model benefiting from scale, vertical integration and diversification Enhanced control of the value chain improves profitability, diminishes exposure to commodity cycle and ensures the sustainable quality of final products The company is well-positioned to drive industry consolidation given its scalable business model Tambov and Voronezh regions Yekaterinburg 3 sugar refineries 7 pig farms Oil and fats plant EZhK 2 breeding facilities 1 compound feed plant 1 slaughterhouse Land bank of 170k ha Primorsky Krai Orel and Kursk regions Pork production complex project 3 sugar refineries Controlling stake in soya oil Land bank of 70k ha extraction plant Land bank of 42k ha Belgorod region 3 sugar refineries Samara region 6 pig farms Oil extraction plant SAPP 1 breeding facility 1 compound feed plant Land bank of 326k ha High degree of selfsufficiency in key raw materials helps to minimize an impact of the unfavorable price changes Grains Agriculture business 609k ha land bank 4 elevators with 360kt of grain capacity and 290kt of outdoor storage in sleeves Meat business 13 pig farms 3 breeding facilities 2 compound feed plants One of the largest vertically integrated agribusiness groups in Russia Compound feed Sugar beet Oil & Fats business 1 soya oil extraction plant 1 oil and fats plant producing consumer margarine and mayonnaise Vegetable 1 oil extraction plant oil Sugar business 9 sugar refineries 4
Experienced management with a proven track record Experienced management team widely recognised in the industry with solid and proven track record and a highly committed controlling shareholder Founder and the controlling shareholder CEO and a shareholder Senior management Vadim Moshkovich Founder Chairman of the Board of Directors In May 2015, Mr. Moshkovich was appointed the Chairman of Ros Agro s Board of Directors In 2003, founded Ros Agro, consolidating agri businesses Mr. Moshkovich graduated from Moscow Institute of Radio Engineering, Electronics and Automation in 1992 Maxim Basov Chief Executive Officer Head of Meat Division Joined Ros Agro as the General Director in July 2009 During 2003-2009, held various management positions in Metalloinvest Group, Interpipe and Severstal Mr. Basov graduated from New York University in 1996 Sergey Tribunsky Investment Director, Director for M&A, capital markets, and investor relations Joined in 2009 Konstantin Beldushkin Head of Agriculture Division Joined in 2009 Nikolai Zhirnov Head of Sugar Division Joined in 2009 Vladimir Filiptsev Head of Oil&Fats Division Joined in 2014 2009 2010 2011 2012 2013 2014 2015 Mr. Basov joined Ros Agro as the General Director 2 sugar plants in Belgorod and Tambov were acquired Construction of breeding complex in Belgorod was completed Construction of breeding complex in Tambov began Land bank increased to 380 ths. ha 75% stake in Samara oil extraction plant (SAPP) was acquired Samara oil plant reached its full capacity of 1,050 tons of sunflower oil per day Record harvest over 497 ths. tons of crop IPO on LSE Construction work at Tambov Bacon led to the launch of 16 production sites Shidlovsky pork plant was launched and reached its full capacity in a year Sugar beet processing capacity expanded from 5 ths. tons to 5.5 ths. tons a day at the Zherdevskiy plant Construction of Tambov Bacon was completed Equipment upgrades at sugar plants Modernization of technology and equipment in agriculture division Modernization of equipment at Fats Plant in Yekaterinburg Launch of the slaughterhouse with an annual capacity of 2m heads in Tambov region The Company entered new markets of large cuts, chilled processed products, meat and bone meal and industrial fat Far East project launched c.20% equity and 100% debt of Razgulay acquired 5
Strong financial performance Strong Top-Line Growth (RUB bn) Key Highlights Growth 62% 23% During 2013-15 the Company achieved strong top-line growth of ca. 41% per annum with its sales exceeding RUB 72bn in 2015 59.1 72.4 The growth was primarily attributable to developments in the meat and oil & fats segments contributing 56% and 39% respectively 36.5 Sales were mainly driven by strong prices growth due to RUB depreciation during the past two years (2014 and 2015) 2013 2014 2015 Strong Profitability (%) Key Highlights 24% 19% 9% 41% 31% 43% 34% 34% 33% Gross profit margin significantly improved during 2014-15 on the basis of slower cost of sales over sales growth, which highlights the Company s ability to monetize end products RUB price growth Adjusted EBITDA margin is reflective of gross profit margin developments with even a greater improvement indicating existing economies of scale effects 2013 2014 2015 Gross profit margin 1 Adj. EBITDA margin Net income margin Conservative Leverage (RUB bn) Net income margin is supported by subsidised debts with lower effective interest rate, zero profit tax rate on sales of agricultural produce and reduced tax rate on profit obtained from the Company s oil extraction activity in Samara region in 2012-2016 (15.5%) Key Highlights 2.1x 14.6 3.6 0.2x 15.1 0.6x Following completion of pork breeding facilities in Tambov and sunflower crushing in Samara by 2013-14 the Company began deleveraging decreasing ND / EBITDA to ca. 0.2x by 2014 By the end of 2015 Net Debt reached ca. RUB 15.1bn primarily due to acquisition of Razgulay Group s debts and 19.97% shares from VEB. With the purpose of financing this acquisition, the Group raised the thirteen-year loan from VEB in the amount of ca. RUB 34bn at 1% per annum with amortized cost of RUB 13.9bn 2013 2014 2015 2 1 Net debt Net debt / Adj. EBITDA Source: Audited IFRS accounts for FY13-FY15 Notes: 1 Adjusted EBITDA calculated as a sum of operating profit post adjustments on D&A, other operating expenses, net gain / (loss) on revaluation of biological assets, share-based remuneration, reimbursement of government grants and reversal of provisions; 2 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 6
Strong Russian agri sector fundamentals: government regulation The agri sector enjoys strong government support aimed at protecting and developing domestic producers 8% 12% 17% 11% Government support breakdown (2015) RUB 220bn USD 3.6bn 1 52% Interest rate subsidies Crop growing (incl. indirect support) Animal breeding Infrastructure development Other Government Support by Target Sector (2016-2020) Government support of agricultural sector Food Security doctrine Ministry of Agriculture targets the following levels of self-sufficiency for 2020: sugar 90%, meat and meat products 85%, grains 95% and vegetable oil 90%, the majority of which have been already reached Interest rate subsidies In 2015, interest rate subsidies covered a substantial part of the interest rate payments for agriculture companies that attract loans for investments In 2016 the Government has mostly stopped providing interest rate subsidies for working capital (short-term loans) Favorable taxation Currently agricultural and meat producers are subject to 0% income tax VAT for agriculture companies is 10% vs. usual 18% Sugar Nearly all support to sugar producers in the Russian Federation is provided in the form of market price support (MPS) through import duties 32% 12% RUB 617bn 12% 16% 14% 15% Dairy cattle breeding Finance-payment system Animal breeding Agriculture Infrastructure Other The system is primarily designed to support domestic sugar producers from sugar beet when the global raw sugar prices are low and stabilise the market when the domestic sugar prices are high Pork meat Pork sector support employs two major protection mechanisms: annual import quota (430 kt of pork) and high import duties for out of quota import In addition, import of live pigs from EU and of meat from US was banned due to veterinary rulings and as counter sanctions measures Source: Ministry of Agriculture of the Russian Federation Note: 1 Converted from RUB using 2015 average CBR exchange rate of 61.07 7
Investment highlights 8
Key Elements of Ros Agro s Development Strategy Entry into new businesses Development of new food business: Greenhouse project in Tambov region Development of a new geographical clusters Backed by strong government support, taking advantage of the untapped resources of the Russian Far East to complete a large project in Primorsky Krai New clusters in Kursk and Orel regions to be developed Expansion of presence and strengthening market leadership in all business segments through M&A Analyzing all opportunities for acquisition in all existing business unites Looking for international expansion Research of new business possibilities in new food businesses Leverage strong balance and expertise in successful M&A execution to realize acquisition opportunities Organic growth and operational experience Top-2 CIS player in its key product segments, consistently growing market share Ongoing land bank expansion to support sugar and meat business organic development Completion of ambitious investment program in new production capacity and modernization 9
Growth in existing business Ros Agro continues to monitor new areas of business for the ongoing business expansion Expansion of land bank Land bank: +40 ths. ha 1 Further expansion of land bank in Tambov and Belgorod regions Storage capacity increase and logistics improvement Improve crop mix in favor of the crops with higher sales potential Corn and soybean are expected to be the key drivers of crop sales Introduction of a new oil plant in Samara region Expansion to new export markets Operational efficiency Capacity of a new oil plant: 100 ths. tons per year The Group is working on the designs of a plant in Samara region to refine, deodorize and bottle sunflower oil Technology development Company will continue expansion to new export markets: South Eastern Asia, China, Middle East, Japan Key products for export: pork, grains (including corn), oil and fats products Increase sugar yeilds per hectare Increase the operational efficiency in meat business Increase yields in agricultural business improvement New seeds production technology IT automatization in all businesses Soil research 1 Based on plans for 2016 10
Strong brand portfolio across products and price points Ongoing development of the existing and new brands to further reach out to final customers Oil and fats brands Top-5 in Russia with 5% market share 1 Top-1 in Ural region with 48% market share 1 11% market share in Kazakhstan 2 Top-3 in Russia with 12% market share 3 Top-1 in Ural region with 60% market share 3 9% market share in Kazakhstan 2 Nation-wide focused brand increasing its loyalty and market share 1.4% market share in Russia 1 and 1.0% in Kazakhstan 2 Mayonnaise Margarine Spreads Mayonnaise Ketchup Mayonnaise, sauces, mustard and vegetable oils Source: AC Nielsen Notes: 1 data as of Jan-Nov'15; 2 data as of Oct-Nov'15; 3 data as of Feb-Nov'15 Sugar brands Meat brand Chaikofsky Extra grade sugar: White sugar cubes White crystals Mon Cafe Extra grade Shaped refined sugar cubes Russkii Sakhar White sugar cubes White sugar crystals Brauni Brown granulated cane sugar Brown cane cubes 'Slovo miasnika' is a new B2C brand offering semi-finished meat products in the medium price range Aim to become top-3 largest producer in Russia Expected annual growth of 15-20% Production is based in Tambov Retail chains including Auchan, Metro, X5 confirmed their interest in the product 11
Development of new food clusters: Far East project Project success is expected to be driven by lack of sufficient domestic production in Primorsky Krai and high demand from Asian markets Start of the Project phase c. 27kha of construction of breeding facilities land acquired the pig breeding 2014A 2015A started 2016E facilities 2017E Further expansion of land bank 2018E First pig farms open 2019E Commercial production launched 2020E 1st phase full capacity utilisation reached Overview Exclusive location between major export markets Current status Midterm goals Agriculture 42k ha of land Current crop mix: 60% - soybeans 40% - corn Plans to increase land bank Planned shift of the crop mix towards corn Meat (Pork) Received government support in form of interest rate subsidy Design and feasibility study in progress Begin construction of 100 kt livestock pork facility in 2016 Construction of fodder plant and slaughterhouse Commence additional capacity construction of 200k t after completion of the 1st phase and China import policy change North China: Population: 300 m RUSSIAN FEDERATION Pork production project in Primorsky Krai: First phase capex RUB 20-25bn (50% already committed through debt financing) First phase capacity: 100 kt Growth drivers Japan: Population: 127 m The project is included in the government program of project financing Signed contract with the government on meat infrastructure project Strong export potential of soya and corn into China, Korea and Japan Primorsky Krai is also well situated geographically, on the border with China, one of the biggest food markets in the world as well as in close proximity to other attractive Asian markets including Japan and South Korea Access to lucrative China market with a potential to boost pork production South Korea: Population: 51 m, National Union of Pig Breeders 12
Development of new food clusters: Greenhouse project Hi-tech greenhouse located in Tambov region (town of Michurinsk, Central Russia) Project concept Project catchment area Technologically advanced greenhouse system with supplementary lightening, automatic climate control and computer controlled watering Product mix includes tomatoes, cucumbers, salads and herb plants Planned product distribution via retail chains expected to enable uninterrupted supply of over 2,000 tons of products on a weekly basis Harvested vegetable would be mainly supplied to retail chains in Moscow and Moscow region (respective end-market research conducted) First phase of production is scheduled to start in 2H'17 by commissioning of c.50ha The second phase is planned for 2H'18 by commissioning of further c.50ha Project requires capex of approx. RUB20bn St. Petersburg 1,100 km Arkhangelsk 1,600 km Syktyvkar 1,500 km Moscow Key project background and highlights 400 km Import sanctions against European and Turkish vegetable producers have led to a significant deficit on the Russian market resulting in price inflation Optimal location defined: Michurinsk is strategically located with a catchment area covering regions with total population over 100 million people The project is designed to deliver high returns due to: Low cost of electricity with low level of capex due to connection to high-voltage power grids High level of production automation, resulting in lower labor costs Krasnodar 1,050 km Michurinsk Orenburg 1,190 km 13
Financial overview 14
The Group s Financial Performance Recent Financial Performance (1Q16 vs. 1Q15) Net Revenue increased by RUB 3,6bn (+26%): Sugar sales increased by RUB 1,1bn (+22%) thanks to sales volume and price growth. Meat sales decreased by RUB 337m (-9%) mainly due to a decrease in sale price of livestock pigs and processed pork. Agriculture sales increased by RUB 1,8bn (+114%) mainly as a result of an increase in sales volume of soy, corn, sunflower and wheat, which was partly offset by a decrease in sales volume of barley. Oil & Fats sales increased by RUB 1,7bn (+41%) mainly as a result of an increase in sales volume of mayonnaise, sunflower oil and soybean meal and higher sale prices of all main products of the segment (except for meal). Adjusted EBITDA margin decreased from 36% in Q1 2015 to 27% in Q1 2016. Adjusted EBITDA decreased by RR 237 million or 5%. Sugar and Agriculture divisions showed an increase in Adjusted EBITDA. Meat and Oil & Fats divisions demonstrated negative dynamics in Adjusted EBITDA. RUBm 2014 2015 1Q 2015 1Q 2016 Sales 59 112 72 439 14 122 17 738 growth 62% 62% 73% 28% Gross profit 24 082 31 433 5 988 3 650 margin 41% 43% 42% 21% EBITDA 18 069 24 423 5 100 4 863 margin 31% 34% 36% 27% Net Income 20 177 23 690 4 251 367 margin 34% 33% 30% 2% Capex 5 208 11 438 1 089 1 156 Net Debt 3 617 15 147 1 984 14 619 xebitda 0,20x 0,62x 0,1x 0,6x Source: IFRS Accounts Overview Revenue 14 122 Revenue EBITDA Q1 2015 5 100 EBITDA Q1 2015 Revenue 59 112 Revenue 2014 EBITDA 18 069 EBITDA 2014 Sugar Meat Agri 1 078 ( 337) 10 389 1Q16 vs. 1Q15 1 788 Oil & Fats Other 1 668 (581) 366 3 501 2 332 (3 262) 72 439 Sugar Meat Agriculture Oil&Fats Eliminations & Other 17 738 Sugar Meat Agriculture Oil&Fats Eliminations Revenue & Other Q1 2016 439 (1 218) 823 (522) 241 4 863 Sugar Meat Agriculture Oil&Fats Eliminations & Other FY15 vs. FY16 6 259 (1 157) 2 254 (220) (783) Sugar Meat Agriculture Oil&Fats Eliminations & Other EBITDA Q1 2016 Revenue 2015 24 423 EBITDA 2015 15
Sugar Financial Highlights (RUB bn) Operating Highlights 22,5 21% 32,9 34% 11,1 39% 39% 611 Production (ths. tons) 765 87 0 Sales volume and price 43 44 40 752 784 28 111 125 4,8 4,8 5,9 1,9 2,3 2014 2015 1Q 2015 1Q 2016 Revenue EBITDA EBITDA margin 2014 2015 1Q 2015 1Q 2016 Under tolling agreements From sugar beet 2014 2015 1Q 2015 1Q 2016 Sales volume (ths. tons) Sales price (RUB/ kg) Sales (up RUB 1,1bn, +22% QoQ) Recent Performance (1Q16 vs. 1Q15) Transformation of Sugar Production Structure 2011 2015 The increase in sales was caused by the rise in the sales price from 42.7 RUB/kg to 44.0 RUB/kg (excl. VAT) (+3% QoQ); The increase in sales volume from 111 ths. tons in 1Q15 to 125 ths. tons in 1Q16 (+13% QoQ). Adjusted EBITDA (up RUB 440m, +23%, margin: null QoQ) The main factor is an increase in sales prices and sales volume, that was partly offset by an increase in cost per unit as a result of higher sugar beet prices for harvest of 2015 compared to harvest of 2014 3% 41% 56% From raw cane sugar 24% 76% From sugar beet From raw cane sugar From sugar beet Under tolling agreements 16
Meat (Pork) Financial Highlights (RUB bn) Operating Highlights 50% 42% 45% 17,8 18,1 8,8 7,7 15% 4,0 1,8 3,6 0,6 2014 2015 1Q 2015 1Q 2016 Revenue EBITDA EBITDA margin Production (ths. tons) 565 579 359 246 73 135 187 195 2012 2013 2014 2015 Group pork production Group compound feed production Sales volume and price 95,7 99,4 94,9 180 172 82,4 41 35 2014 2015 1Q 2015 1Q 2016 Offal Large cuts Carcass Marketable livestock Sales price (RUB/ kg) Recent Performance (1Q16 vs. 1Q15) Sales (down RUB 337m, -9% QoQ) Sales volume of livestock pigs decreased by 24 ths tn (-60%) from 40 ths tn to 16 ths tn; Sales volume of processed pork rose by 19 ths tn (+1215%) from 2 ths tn up to 21 ths tn; Livestock pigs sale price decreased by 12.5 ths rur/tn (-13%) from 94.9 ths RUB/tn to 82.4 ths rur/tn (excl. VAT); Processed pork sale price decreased by 7.6 ths rur/tn (-6%) from 119.4 ths rur/tn to 111.7 ths rur/tn (excl. VAT); Adjusted EBITDA (down RUB 1.2bn, -69%, margin -30% QoQ) RR -1,290 million a decrease in gross profit (excl. revaluation of pigs and depreciation) mainly due to an increase in feed costs and a decrease in sale price of livestock pigs; RR +54 million an increase in government grants for partial reimbursement of operating costs. Production Capacities The Group s meat business is comprised of two pork farming and breeding complexes in Central Russia: the Belgorod and Tambov regions Total sow population is ca. 36,000 heads and the overall herd is close to 400,000 heads Belgorod Tambov Number of farms 6 7 Farms capacity (sows) 28,800 32,000 Production capacity (tons pa) 90,000 115,000 17
Agriculture Financial Highlights (RUB bn) Operating Highlights 10,7 41% 14,2 47% 6,6 47% 46% Yields 2012-15 Ros Agro Russia Average Share in Ros Agro harvest* Wheat 3,6 2,5 36% Barley 2,9 2,3 32% Prices (RUB/kg) 2014 2015 1Q15 1Q16 Wheat 6,4 8,7 9,0 8,9 Barley 4,9 8,6 9,9 9,0 4,4 1,6 3,4 0,7 1,6 Sunflower 2,3 1,4 13% soybean 1.5 0,9 6% Sunflower seeds 15,8 21,1 21,0 23,6 Soybean 16,9 23,3 22,7 22,4 2014 2015 1Q 2015 1Q 2016 Revenue EBITDA EBITDA margin Corn 5,6 4,2 12%, Rosstat Corn 4,9 7,6 n\a 8,5 Sales (up RUB 1,8bn, +114% QoQ) The major positive factors are: Recent Performance (1Q16 vs. 1Q15) The increase in sales volumes of soy, corn, sunflower and wheat The major negative factor is: a decrease in sales volume of barley (-83%) Adjusted EBITDA (up RUB 823m, +111%, margin -1% QoQ) RR +876 million of an increase in gross profit (excl. effect of biological assets and agricultural produce revaluation and depreciation) mainly as a result of sale volumes increase RR -114 million of an increase in SG&A (incl. RR -46 million in payroll expenses and RR -44 million in storage expenses) mainly as the result of sales volume increase Land Bank Overview The key assets of the Group s agriculture division are located in the Belgorod and Tambov regions and include: Land bank: 608 ths. ha (509 ths. ha arable) Elevators: capacity of 360,000 tons of grain and 290,000 tons of outdoor storage in sleeves Ownership structure (2012) Ownership structure (2015) 46% 32% 22% Owned Short-term lease Long-term lease 30% 27% 43% Owned Short-term lease Long-term lease Notes: * 2015 data, excluding sugarbeet 18
Oil and Fats Financial Highlights (RUB bn) Sale Volumes and Prices 18% Sales volume (ths. tons) Prices (RUB/kg) 2014 2015 1Q15 1Q16 2014 2015 1Q15 1Q16 14,9 13% 17,3 10% Margarine 47 43 11 10 Mayonnaise 58 66 12 14 Margarine 55 71 69 69 Mayonnaise 59 73 69 76 4,1 5,74% 1,9 1,7 0,7 0,2 2014 2015 1Q 2015 1Q 2016 Revenue EBITDA EBITDA margin Raw oil (ext.) 247 171 50 48 Meal 239 147 44 44 Raw oil (ext.) 29 48 48 58 Meal 9 13 14 12 Recent Performance (1Q16 vs. 1Q15) Production Sales (up RUB 1,7bn, +41% QoQ) Sales increase is attributed to an increase in sales volume of mayonnaise, sunflower oil and soybean meal and higher sale prices of all main products of the segment (except for meal). Adjusted EBITDA (down RUB 522m, -71%, margin -14% QoQ) EZhK: an increase in sales prices, which was offset by 26% increase in cost of raw oil; SAPP: an increase in cost of sunflower seeds per unit by 51%, which was partly compensated by an increase in sales prices. Margarine & Mayonnaise (ths. tons) 65 55 56 58 47 41 43 36 152 Vegetable oil (ths. tons) 110 188 153 2012 2013 2014 2015 Margarine Mayonnaise 2012 2013 2014 2015 Vegetable oil 19
Debt Overview As of 31 Mar 2015 the total debt was ca. RUB 27bn (1.3x total debt/ EBITDA) Net debt was RUB 2.0bn (0.1x net debt/ EBITDA) Overview of Q1 2016 Gross debt decreased by RUB 3.1bn (down 6%) to RUB 46.8bn 68% of total gross debt is subsidized Net debt decreased by RUB 528m (down 3%) to RUB 14.6bn In 1Q16 the company continued to benefit from the state agriculture subsidies program RUB 109m of subsidies received covered 7.6% of gross interest expense Net other financial income/(expenses) decreased RUB 1,2bn RUB 856m of financial FOREX losses in 1Q16, compared to RUB 293m of net FOREX gain in 1Q15 All debt is RUB denominated Net Debt Evolution, RUB bn 15,1 14,6 3,6 0,6x 0,6x 0,2x 2014FY 2015FY 1Q 2016 Net debt Net debt/ LTM EBITDA Total Debt Breakdown (1Q16) By Maturity By Lender Gross Interest Expense, RUB m 3 857 51% RUB27bn 49% Short term borrowings Long term borrowings 39% RUB27bn 31% 19% Alfa bank Vneshecono mbank Sberbank 2 288 724 1 420 2014 2015 1Q 2015 1Q 2016 Net interest expense Reimbursement of interest expense 20
ROS AGRO PLC US$250 Million Follow-On Offering On April 28, 2016, ROS AGRO successfully completed a US$250 million follow-on offering ROS AGRO took advantage of the Russian market revival after the MSCI Russia index rose 23% year-to-date with RTS Volatility Index declining 20% and Brent Oil price rallying 18% in 2016 prior to deal launch At launch of the offering the founder and major shareholder of ROS AGRO, V.Moshkovich, announced his intention to participate in the offering in the amount of up to US$100m, with M.Basov, the Company s CEO and a minority shareholder, also stating his intention to participate Transaction Highlights The offering is consistent with ROS AGRO s strategy and provides the Company with greater financial flexibility in order to further support its growth including for funding of its new pig breeding complex in the Primorsky Krai and hi-tech greenhouse facilities in the Tambov region, continuous modernisation of production facilities and potential acquisitions and other purposes. There was a targeted wall-crossing process prior to deal announcement. The fully marketed and documented placing was launched on Thursday, April 21. Management roadshow began the next day in Moscow. On Monday, April 25, roadshow continued in London, then a day in New York and concluded in London on Wednesday, April 27. As was initially declared at deal launch, major shareholder and founder of the Company, Vadim Moshkovich, participated in the capital raise purchasing US$99.6m worth of GDRs. Additionally, Maxim Basov, CEO and a minority shareholder, participated in the amount of US$17.5 million. The final price was set at US$15 per GDR representing a discount of 12.5% to last close before launch and a 1.6% discount to the last close before deal completion. The offer price represents a 6.3% discount vs. 3M VWAP and a 1.2% premium vs 6M VWAP The offering of 16.7m GDRs represents 47 days of trading as measured by the combined 3M ADTV on the LSE and the MoEx corresponding to 12.2% of the postmoney total shares outstanding. Issuer: Incorporation: Deal Type: Listing: Offering Summary ROS AGRO PLC Cyprus Fully marketed and documented follow-on offering GDRs on LSE and MoEx Priced: April 28, 2016 Offer Price: Discount: Offer Size: Primary / Secondary: Use of Proceeds: Offering Structure: US$15 per GDR 12.5% to last close on LSE prior to launch 6.3% vs. 3M VWAP on LSE prior to launch 1.6% to last close on LSE prior to completion US$250m / 16.7m GDRs / 12.2% post money S/O / 47 trading days 100% primary To provide the Company with greater financial flexibility in order to further support its growth Offering to institutional investors outside the US under Reg S and into US under 144A Offering to qualified investors in Russia Allocations Geography (1) Overall Allocations Split Allocations Type (1) Lock-Up: 180 days for the Company, Founder and CEO 8% UK 9% US 9% 55% Cont. 18% Europe Scandi Source: Bloomberg 40% 7% 53% Institutional Founder CEO 39% 3% 58% Long Only Hedge Fund Other GDR Price, US$ ROS AGRO GDR Performance into Pricing 19 18 17 16 15 14 13 Books open Roadshow starts Books close Roadshow ends 20/4 21/4 22/4 25/4 26/4 27/4 28/4 29/4 5m 4m 3m 2m 1m 0m Volume, GDRs (1) Institutional tranche (excluding participation by V. Moshkovich and M. Basov)
Rusagro GDR Trading Snapshot Trading Stats Current GDR Price, US$ 13.85 Historical GDR Prices: 52w High 18.7 (23.03.16) 52w Low 7.5 (24.08.15) Current / 52w High, % 69% Shares Outstanding, m 136.7 MCap, US$m 1893 Free Float: Free Float, % 20.8% MCap Free Float, US$m 365 ADTV, US$m (1) 1 Month 5.6 3 Months 6.2 12 Months 3.0 Note: (1) Includes MOEX and LSE volumes Liquidity Breakdown (US$m) 3.0 2.8 12 months LSE 6.2 5.9 3 months MOEX Current Shareholder Structure Shareholder % Company US$m Moshkovich family 70.7% 1,242 Management 6.9% 121 Treasury GDRs 1.6% 28 Free Float 20.8% 365 Source: shareholdings as per RusAgro s website 5.6 5.2 1 month Rebased to RusAgro IPO Price, US$ 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Note: (2) Performance in US$ In terms of US$ 2016YTD Last 6 Months Last 12 Months Last 3 Years Since Rusagro IPO Since Rusagro SPO Rusagro Cherkizovo MHP Kernel MSCI Russia MSCI EM RUB / US$ Relative Performance Since IPO (2) 0 2011 2012 2013 2014 2015 2016 RusAgro (volume) RusAgro (price) Kernel Cherkizovo MHP MSCI Russia MSCI EM 8-apr-11 US$375m IPO US$15 / GDR (7%) (6%) (3%) RUB / US$ 13% 3% 16% 11% 28-apr-16 US$250m SPO US$15 / GDR (11%) (5%) 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 RusAgro Trading Volumes on MOEX and LSE, US$m Relative Performance Over Certain Periods (3) 4% 16% 8% 0% 4% (21%) (6%) (17%) (14%) 1% Rebased to RusAgro IPO Price, US$ 51% 36% 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Oct-15 Rusagro's of f er to acquire Razgulay s debt Apr-15 FY14 results Relative Performance Since 2015 (2) 0 Jan- Feb- Mar- May- Jun- Aug- Sep- Nov- Dec- Feb- Mar- May- 15 15 15 15 15 15 15 15 15 16 16 16 RusAgro (volume) RusAgro (price) Kernel Cherkizovo MHP MSCI Russia MSCI EM (51%) Nov-15 Acquisition of Razgulay 's debt and (10%) (17%) (33%) (51%) (18%) RUB / US$ Apr-16 SPO 19.97% shares Mar-16 FY15 results 127% (54%) (52%) (48%) (58%) (14%) (32%) (57%) (14%) (1%) (3%) (8%) (3%) (2%) 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 2% RusAgro Trading Volumes on MOEX and LSE, US$m Source: Bloomberg as of June 5, 2016 Note: (3) Not including dividends (where applicable) 22
Recap Leading Russian diversified food producer with vertically integrated operations Large, fast-growing sector with strong government support Impressive financial track record and strong balance sheet Successful track record of executing greenfield projects and acquisitions Experienced management team 23