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Annual Report 2015

About Us

The story of one of the largest vertically-integrated agriculture industry holding companies in Russia and the CIS began in 1995 with sugar import operations and later import and processing of raw sugar cane in Russia. Soon the holding began to take shape, which can be divided into the following key stages:

 

 

1997-2003 Asset acquisitions

The Group acquires its first sugar plants in Belgorod region to maximize sugar trading profits.

In order to supply sugar plants with sugar beet, the Group launches its own agriculture project in Belgorod region. Land resources configuration provides for efficient sugar beet transport logistics – the distance from the field to the plant does not exceed 60 kilometers.

Building an integrated vertical for agriculture production, the Group acquires elevators to provide storage for its own grain and for trade transactions.

The Company expands into the production of vegetable oil and oil and fats production, which will later become a separate oil and fats division.

The Company focuses on expanding its presence on the Russian sugar market and launches its first retail brand in 2003.

Rusagro Group of Companies LLC was established on 3 February 2003 and today owns all assets of the Group. Operating activities are held by subsidiaries.

2004-2005 Establishment of the Rusagro Group

The holding company is incorporated.

The oil and fats division of the Group expands its presence on the market, acquiring assets in Voronezh region and Krasnodar territory.

Land bank expansion in Belgorod region.

The Group optimizes portfolio by selling grain trading and elevators that were not associated with the production and storage of the Company’s own grain.

2006-2007 Consolidation and expansion

The Group focuses on the sugar and agriculture businesses and decides to sell oil and fats assets in the south and center of Russia.

The Group invests the money raised into expanding land bank, the main aim of which is to provide sugar beet – the most profitable crop – to the Group’s sugar plants in Belgorod and Tambov regions.

A project to build a modern pig breeding complex was launched on the company’s own lands in Belgorod region.

2008-2010 Stage of growth and attaining leadership on key markets

After acquiring two of the largest sugar plants in Russia, the Group becomes a leading sugar manufacturer in the country and one of the retail brand leaders.

The pig breeding complex in Belgorod region is completed and reaches projected capacity and construction of a new complex begins in Tambov region.

The Group continues to expand its land bank and at the same time increases its crop yield by using modern equipment and technology.

2011 - Present. Entering the international shares market

2011 – the most important event of the year - access to international capital markets. The initial public offering took place on the London Stock Exchange and has brought the Company about 300 million dollars to finance long-term investment programs. In general, the Company's year bacame a time of record production and high price volatility. The production of vegetable oil is back to business.

As a result of the modernization of production lines in 2011, the total processing capacity of sugar beet increased by 13%, while the production capacity of the packed and compressed sugar (the most promising segment) grew by 33%. In 2011 the brand "Russian Sugar" was awarded as "Product of the Year" by National Trade Association.

Meat business became the fastest growing segment in the Group, and a leader in profits. The construction of new complexes in the Tambov and Belgorod regions is in progress, which will allow to triple the volume of pork production in the next two years.

Agro Business shows the record of harvests of sugar beet, grains and sunflowers. The Group relies on the introduction of modern technologies in plant growing. There is an increase in the land bank.

The fat and oil segment of the Group has retained its position as the largest producer of packaged margarine with a share of production in Russia is about 32% and the fifth largest producer of mayonnaise production 7% share.

2012 – the company shows the highest rate of EBITDA, makes use of positive price environment and making a record investment.

For the first time Agricultural business became the most profitable business - where projects on automation and precise farming have started.

Sugar business has managed to increase production and strengthen the leadership of consumer market of sugar. The large volume of production of sugar beet in Russia for the second year leads to lower prices, thereby limiting profitability.

Meat business was in the process of growth and increasing the assets in the form of construction of new pig farms and the beginning of construction of a new modern slaughter production in the Tambov region.

The main events of the year for the fat and oil division were the first full year of operation of Bezenchuk oil extraction plant and the purchase of the brand "Mechta Khozyaiki" where fat factory in Yekaterinburg began production of mayonnaise. Oil and fat business showed a record financial result.

2013 - the external factors have influences on the results of 2013: high commodity prices and low prices for sugar and pork. In the second half of the year the Company was able to achieve very good results. Revenues increased by 7.1%. Despite record investments The Group showed a positive free cash flow.

Agricultural business - keep a leadership on profit and performance. The Company continued to improve the efficiency of labor and implement computer-aided manufacturing.

Sugar business has increased the efficiency of the plants and consolidated leadership in the market. More than 50% of sugar was sold as a consumer product. The harvest in 2013 will reduce the cost and increase the price of sugar.

Adopted dividend policy - 25% of net profit under IFRS has been accepted.

2014 - the company is breaking all records set against a background of instability on loans, the reduction of state support in exchange rates and interest rates, changes in the retail trade and the reduction of consumer income. As a result, the Group's revenue rose to 59.1 billion rubles., EBITDA has reached 18.1 billion rubles., while net profit amounted to 20.2 billion rubles.

The largest contribution to growth in EBITDA was contributed by Meat business. The development of this segment was due to the commissioning of new production facilities in the Tambov region. The company became the second largest pork producer in Russia.

The sugar business has shown a significant increase in sales. Ruble devaluation and high quality raw materials have a positive influence in that business.

Agricultural division remains the basis of the Group, supplying raw materials to other business segments. The success achieved at the expense of a high yield and a competitive price level.

The fat segment also has shown growth at the end of 2014, whose volume of sales reached 14.9 billion rubles, and the rate of EBITDA - 1,9 billion rubles. The main achievements of this business segment include the record volumes of oil sales, margarine and an increase in capacity of elevators.

2015 - according to investment banks Rusagro recognized as the most profitable and fastest-growing company in the world in the consumer segment in the CIS. Every business division has new assets.

Land and fat and oil assets have been purchased in the Primorsky Krai, has started designing the pig-breeding project in the Primorye Territory, has began exporting products to China.

Development of meat production continues at the expense of commissioning of slaughter production and release to the retail consumer market.

Rusagro purchases government debt and shares of the Razgulyai company, which allowed to grow sugar business with a few sugar factories and land. The acquired assets will enhance significantly sugar and agricultural business.

The investment volume has reached 15 billion rubles, which were distributes to all business divisions.