Mhp Reg S Regulatory News (MHPC)

PRESS RELEASE

April 02, 2014, Kyiv, Ukraine

MHP S.A.

Financial Results for the Fourth Quarter and Full Yearended December 31, 2013

MHP S.A. ("MHP" or the "Company", LSE ticker: "MHPC"), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, today announces its financial results for the fourth quarter 2013 and full year ended 31 December 2013.

Key operational highlights FY 2013

Vinnytsia - expansion project

· Phase 1 of the two-phase expansion project is now in its final stages of completion.

· During 2013 the number of poultry production units increased from three to nine, all working at full capacity.

· In H2 2014, Phase 1 will produce 220,000 tonnes of poultry per annum.

Poultry

· Owing to increasing production volumes at the Vinnytsia poultry farm, poultry production volumes in 2013 increased by 17% to 472,800 tonnes (2012: 404,000 tonnes).

· The Company's total volume of chicken meat sold to third parties increased by 19% to 447,000 tonnes (2012: 375,300 tonnes).

· MHP's market share of industrially produced chicken in Ukraine was approximately 50% and about one third of total poultry consumption.

· The average price decreased by 7% year-on-year to UAH 15.99 per kg (excluding VAT) compared to UAH 17.19 in 2012 mainly due to a significant increase in the share of lower-priced exports sales from 15% in 2012 to 28% in 2013.

· Total export sales of poultry in 2013 more than doubled compared to 2012, constituting close to 123,000 tonnes of chicken meat, which is around 28% of total chicken sales. In 2013, MHP opened 20 new export sales markets in Asia, the Middle East and Africa.

· In July 2013, MHP received permission ("EU numbers") from the EU authorities for exports of poultry products to the European countries. MHP has started to export its poultry products to the European market in October 2013 with sales of around 500 tonnes.

· In 2013 MHP sold 240,100 tonnes of sunflower oil, 23% more than in 2012, due to the increased production of the fodder mill at the Vinnytsia complex.

Grain Growing

· The total land bank at the end of 2013 comprised 360,000 hectares, an increase of around 75,000 hectares (35,000 ha are in Ukraine and 40,000 ha in the Russian Federation) from 2012.

· MHP harvested 287,000 hectares of grain and oilseed resulting in the production of around 2 million tonnes of crops, 23% more than in 2012.

· Grain prices in 2013 in Ukraine were lower than in 2012, but in line with international commodity market trends: however this has had a positive and continuing effect on MHP's poultry production costs since the start of 2014.

Other Agricultural

· Processed meat production remained the main contributor to the other agricultural segment.

· MHP is a market leader with close to 10% market share in meat processing in Ukraine.

· In 2013 MHP sales volumes slightly decreased by 6% to 33,210 tonnes compared to 35,200 tonnes in 2012 due to optimisation of the product portfolio during the year.

· Average sausage and cooked meat prices during 2013 increased by 6% to UAH 23.53 per kg (excluding VAT) compared to UAH 22.20 per kg (excluding VAT) in 2012.

Key financial highlights for FY 2013

· Revenue increased by 6% to US$1,496 million (2012: US$1,408 million), primarily due to increased production of poultry.

· EBITDA decreased by 16% to US$391 million (2012: US$468 million), and EBITDA margin decreased by 7 percentage points to 26% primarily due to low grain prices for the 2013 harvest.

· Net income decreased by 48% to US$162 million (2012: US$311 million) in line with EBITDA trends combined with increased depreciation and finance costs.

Commenting on the results, Yuriy Kosyuk, Chief Executive Officer of MHP, said:

Although 2013 was a challenging year for MHP, we made an important progress on a number of fronts. During the year, and in line with all Ukrainian grain growers, we faced lower market prices for our output year on year. Our robust and broadly-based operation served us well, and our vertically integrated model means that those low grain prices are now working in our favour in the form of lower poultry production costs in 2014.

Our agricultural capacity was boosted by our successful acquisition of 75,000 additional hectares of arable land. For the first time, this included 40,000 ha outside our borders, in the Russian Federation.

Having previously announced our intentions to increase production, during 2013 we continued to gradually phase in extra capacity at our new Vinnytsia complex. The Vinnytsia complex reinforces our ethos of self-sufficient vertical integration, bringing together the different facets of agriculture and poultry production under the efficient control of a single facility.

During the year, we substantially increased our exports, taking our poultry products to around 20 new countries with a wide geographical spread, ranging across Africa, the Middle East, China and Asia. This diversifies our customer base and provides a valuable hedge against any potential domestic issues and fluctuations.

We were also delighted to receive full EU certification for our products in September 2013. This was the successful conclusion of five years' concerted work to satisfy all compliance issues, and it will open up important possibilities.

It is also a sign of our growing maturity that we were in a position to make our first dividend payment in 2013. With our previous phase of major capital expenditure largely complete, we deemed the time was right to share the Company's success with our loyal shareholders. The dividend of $1.13 per share, which was declared as an interim payment for 2013, amounted to US$120 million, or 39% of net profit. Our intention is to maintain dividend payments in the future and, for 2014, to declare an interim dividend in May 2014; the amount of this dividend is expected to reflect both the profits generated in 2013 and the outlook for 2014.

We have entered 2014 with optimism as we have created a sound platform for future progress in operational and financial performance. Despite the recent political turmoil in Ukraine, domestic demand for poultry during the first months of 2014 remained strong; increasing by around 20% compared with last year, and all of MHP's facilities have continued to operate normally through the first quarter. With the investment in the first phase of the Vinnytsia complex scheduled to be completed in 2014 and our expanded land bank, we will have the production capacity to penetrate more international markets than ever before."

- end -

MHP's management will host a conference call for investors and analysts followed by a Q&A session on the day of the results at 16.00 Kyiv / 14.00 London / 09.00 New York / 17.00 Moscow.

The dial-in details are:

Date: Wednesday, 2 April 2014

Time: 09.00 New York / 14.00 London / 16.00 Kyiv / 17.00 Moscow

Title: MHP - Q4 and FY2013 Financial Results

UK Standard International +44 (0) 1452 560 304

UK Free Call 0844 871 9299

Russia Free Call 8108 002 394 2044

USA Free Call 1866 926 5708

Conference ID 17663679

A live webcast of the presentation will be available at:

https://webconnect.webex.com/webconnect/onstage/g.php?t=a&d=667826264

Alternative URL:

https://webconnect.webex.com/

Click on "Unlisted Events"

Event number: 667 826 264 Event password: N/A

FINANCIAL OVERVIEW

*pps -percentage points.

Q4 2013 Consolidated Financial Results

Consolidated revenue of MHP amounted to US$418 million, which is 15% higher than US$364 million in Q4 2012. The main drivers of revenue growth in Q4 2013 were an increase of chicken meat sales volumes and grain sales volume year-on-year.

EBITDA totaled US$74 million, by 16% less than in Q4 2012 (US$88 million) mostly effected by lower EBITDA in grain growing segment. EBITDA margin decreased from 24% to 18%.

Net income from operations declined by 60% from US$30 million in Q4 2012 to US$12 million in Q4 2013, mostly in line with EBITDA trends and due to the effect of financial costs increase.

FY 2013 Consolidated Financial Results

For the full year MHP's revenue increased by 6% to US$1,496 million (2012: US$1,408 million) mainly as a result of chicken meat and sunflower oil sales volumes increase.

In 2013, EBITDA totaled US$391 million, by 16% lower than in 2012 (US$468 million), which was caused by high fodder costs during first nine months of the year and low grain prices for the 2013 harvest. EBITDA margin declined to 26%.

Net income decreased by 48% from US$311 million in 2012 to US$162 million in 2013, in line with EBITDA trend combined with increased depreciation (US$119 million in 2013 against US$87 million in 2012) and finance costs (US$110 million in 2013 against US$59 million in 2012). Net income margin decreased from 22% to 11%.

Functional currency

The functional currency for the Group's companies is the Ukrainian Hryvnia (UAH); the functional currency of the Russian Federation companies of the Group is Russian Rouble (RUB). However, for the convenience of analysts, MHP presents its financial statements in US dollars (US$), using the quarterly average and historical exchange rates.

MHP's operating assets are located in Ukraine and its revenues and costs are principally denominated in UAH. 39% of the Company's currency denominated proceeds and almost all financial costs are denominated in foreign currencies, primarily US dollars. Management believes that MHP's exposure to currency exchange rate fluctuations as a result of foreign currency costs is completely hedged by its US dollar revenue earned from the export of sunflower oil, sunflower husks, chicken meat and grains. In 2013 the Company generated US$585 million of foreign currency denominated proceeds, up by 22% compared with the US$480 million generated in 2012. This is mostly due to an increase in poultry export sales volumes.

* - Grain export sales during the year ended 31 December 2013 includes USD 14,249 thousand of gain received from operations, when goods are exchanged or swapped for goods which are of similar nature.

Poultry and related operations

*pps -percentage points.

Q4 2013 Poultry and related operations segment financial results

In Q4 2013 the volume of chicken meat sales to third parties on an adjusted-weight basis increased by 21% to 121,600 tonnes from 100,500 tonnes in Q4 2012 as a result of increased volumes at Vinnytsia complex. Export sales of chicken in Q4 2013 increased by 50% compared to Q4 2012 and constituted around 37,940 tonnes of chicken meat.

The average chicken meat sales price decreased by 9% to UAH 15.43 per kg of adjusted weight (excluding VAT) compared to the fourth quarter of 2012 due to higher share of export sales and lower export price as a result of new market penetration.

The exported volume of sunflower oil increased in Q4 2013 compared to Q4 2012. 64,820 tonnes of sunflower oil were sold for export at an average price of US$861 per tonne, which was by 24% less than US$1,136 in Q4 2012, in line with world market downward trends.

Revenue increased by 7% to US$302 million (Q4 2012: US$282 million) as a result of higher chicken meat sales volumes.

Poultry production cost in Q4 2013 decreased by 15% year-on-year due to lower grain prices, providing a good start for 2014.

Gross profit in Q4 2013 increased to US$93 million (Q4 2012: US$75 million) and EBITDA increased by 17% to US$104 million (Q4 2012: US$90 million) mostly in line with chicken meat sales volume growth. EBITDA margin increased from 32% to 35%.

FY 2013 Poultry and related operations segment financial results

In 2013 poultry production volumes increased by 17% to 472,800 tonnes of poultry meat (2012: 404,000 tonnes). The growth of volumes produced was mostly due to increased operations at the Vinnytsia poultry complex.

In 2013 MHP poultry sales volumes to third parties increased by 19% to 447,000 tonnes compared to 375,300 tonnes in 2012. About 28% of total poultry sales volumes amounted to export sales to CIS countries, Asia and Africa and other regions.

The average sales price of chicken meat decreased by 7% to UAH 15.99 per kg in 2013 compared to UAH 17.19 per kg in 2012 as a result of stable domestic prices combined with increased share of export and lower export price as a result of new market penetration.

In 2013 240,100 tonnes of sunflower oil were produced and sold for export, which is 23% more than in 2012 due to higher chicken meat production volume. Average price of sunflower oil decreased by 7% from to US$1,109 per tonne compared to US$1,033 per tonne in 2013 in line with world market trends.

The segment's revenue amounted to US$1,201 million, which is 11% more than US$1,083 million in 2012 mainly as a result of chicken meat and sunflower oil sales volumes increase.

Average poultry production costs in 2013 increased slightly, by approximately 3%, compared to 2012. As a result of the substantial rise in the grain price growth at the end of 2012, poultry production costs in the first nine months of 2013 increased by 13% year on year. However, following a sharp reduction in prices for grains harvested in 2013, poultry production costs in Q4 2013 decreased by 15%..

The gross profit was US$312 million in 2013, which is 9% less than US$343 million in 2012, gross profit margin declined from 32% in 2012 to 26% in 2013. EBITDA of poultry segment decreased by 5% to US$358 million in 2013 (2012: US$376 million) due to a softening in chicken meat prices and higher production costs. EBITDA margin decreased to 30% in 2013 compared to 35% in 2012.

Grain growing operations

In 2013 the Company operated on 287,000 hectares of land in grain growing operations. At the end of 2013 MHP's total land bank constituted around 360,000 hectares of which 320,000 ha are in Ukraine and 40,000 ha in the Russian Federation. Due to favorable weather conditions the harvest of MHP increased considerably to around 2 million tonnes of grains and oilseeds in 2013 compared to 1.6 million tonnes in 2012. However, high yields around the world led to a sharp decline in prices, and therefore lower revenues than in 2012. The Company's new 40,000 ha in the Russian Federation were also harvested by MHP in 2013 but were sowed by the previous owner; the contribution of this land to the Grain segment's financial results was therefore about zero in the reporting year.

As usual MHP's grain yields were significantly higher than Ukraine's average yields in 2013 as a consequence of the Company's operational efficiency and employment of best practice. MHP's yield of corn increased to 8.8 tonnes per hectare in 2013 compared to 7.6 tonnes per hectare in 2012; the same was observed for the yields of other grains and oilseeds in 2013.

MHP used the majority of the grain it produced in its own operations, but the considerable part of grain was sold to the third parties, which constituted the revenue of grain growing segment. In spite of high volume of grain harvested, revenue decreased by 21% to US$133 million in 2013 compared to US$169 million in 2012 as increased volumes effect was largely offset by significant grain price decline. Consequently, EBITDA per 1 hectare declined by 70% from US$447 per ha in 2012 to US$136 per ha in 2013.

* - Tonnes per hectare, net weight

** - Source: the State Statistics Committee of Ukraine

* - Includes barley, sugar beet and other crops

** - Includes fallow land

Other agricultural operations

* pps -percentage points.

The financial performance of other agricultural operations segment significantly improved in 2013 mainly due to better results from fruit business and positive trends in the meat processing and milk businesses.

Revenue of the segment increased by 8% to US$42 million in Q4 2013 compared to Q4 2012 and increased by 4% to US$162 million in 2013 compared to 2012. Revenue of other operations includes sales of fruit and milk, goose meat, foie gras, beef, pork and other agricultural products.

MHP's sales prices of meat processing products demonstrated positive dynamics during 2013. Average sausage and cooked meat prices rose by 7% to UAH 24.33 per kg excluding VAT in Q4 2013 and by 6% to UAH 23.53 per kg in 2013. MHP is a market leader in meat processing in Ukraine and market share of MHP remained at around 10%.

The gross profit of the segment increased to US$25 million in 2013 compared to US$7 million in 2012 as a result of higher profitability of meat processing, fruit and milk businesses. Positive IAS 41 effect US$ 15 million in 2013 mostly related to fruit business where the majority of orchards reached the level of full technological productivity.

EBITDA of Other agricultural operations rose to US$33 million in 2013 in line with an increase of the gross profit. EBITDA margin increased from 6% in 2012 to 20% in 2013.

Current financial position, cash flows and liquidity

MHP's cash flow from operating activities principally resulted from operating profit adjusted for non-cash items, such as depreciation, and for changes in working capital.

Cash flow from operations before working capital changes decreased to US$305 million in full year 2013 (2012: US$384 million) mostly in line with EBITDA decline.

In 2013 the decrease of working capital amounted to US$27 million. In the fourth quarter the Company usually purchases large volumes of sunflower seeds to meet considerable stock needed for the following year. However, in 2013 the investments required for sunflower seeds were lower than usual due to lower prices and forward financing transactions with international grain trader Toepfer. At the same time, lower CAPEX had also positive effect on working capital through zero growth of VAT receivables.

Total Net CAPEX was US$264 million in 2013, mostly related to the Vinnytsia project. Since the start of construction in May 2010, approximately US$700 million has been invested in the project as of the end of 2013.

Debt Structure

As of December 31, 2013, the MHP's total debt was US$1,302 million, most of which was denominated in US dollars. The average weighted cost of debt was below 8%.

60% of MHP`s total debt is the Eurobond, which matures in April 2020. After the Eurobond issue, MHP's debt structure improved significantly with the share of long-term bond increased to 90% at the end of 2013 compared to 72% at the end of 2012.

US$192 million of our long-term debt is principally represented by loans, covered by ECA; it matures at various times up to 2018. US$80 million of debt is accounted for IFC and EBRD loans for financing Company's working capital needs. US$60 million represents financing for the lease of agricultural machinery and equipment used in our grain growing activities and for vehicles for distribution, and has maturities up to 2018.

As of the end of 2013, MHP had US$172 million in cash. Net Debt increased to US$1,130 million as of December 31, 2013 compared to US$1,045 as of December 31, 2012. The Net Debt/EBITDA ratio at the end of the period was 2.89 (Eurobond covenant: 3.0).

As a hedge for currency risks, revenues from the export of sunflower oil, sunflower husks and chicken meat are denominated in US dollars, fully covering debt service expenses.

Outlook

Since November 2013, Ukraine has been subject to political instability. On 22 February 2014 the Parliament of Ukraine voted for a reinstatement of the 2004 Constitution and the dismissal of the incumbent President. New presidential elections are scheduled for May 2014 and a transitional government has been formed.

Despite the recent political turmoil in Ukraine, domestic demand for poultry during the first months of 2014 remained strong; increasing by around 20% compared with last year, and all of MHP's facilities have continued to operate normally through the first quarter.

At the beginning of February 2014, MHP was banned from exporting its poultry meat to the Russian Federation as well as to other Custom Union countries (Kazakhstan and Belarus). However, taking into account our diversified export channels (with around 40 countries in our portfolio), MHP's export sales across the regions are currently over 20% higher than during the same period last year, and in general are in line with our objectives.

During 2014, and exactly as planned, Phase 1 of the Vinnytsia complex will be fully complete. The final three production brigades are scheduled to be launched in operation in 2014, and by the close of the year the complex will reach its full production capacity of around 220,000 tonnes of chicken meat per annum.

During the first months of 2014 UAH devalued against major world currencies. However, taking into account the Company's business model of vertical integration, we foresee a positive effect arising from the currency's devaluation as most of our production costs are in local currency as well as MHP will achieve higher profitability in grains as domestic grain prices correlate with international prices set in hard currency (US dollars).

On 27 February 2014, pro-Russian forces took control of the parliament of Crimea, an autonomous region of Ukraine. The region then voted to hold a referendum on the status of Crimea in March 2014.

MHP owns several production facilities in the region and we are mindful of the uncertain situation there. However, the Group's reports show that, as of 31 December 2013, our assets in the Crimea region amounted to 5% of the Group's total assets generating in average 9% of operating profit per annum. Therefore, the Company does not consider this disruption to pose a significant risk to its total profitability in the future. Moreover, it is currently 'business as usual' at each of those production facilities.

Our intention is to maintain dividend payments in the future and, for 2014, to declare an interim dividend in May 2014; the amount of this dividend is expected to reflect both the profits generated in 2013 and the outlook for 2014.

We feel confident in delivering a strong year for MHP in 2014 both operationally and financially. This will be driven mainly by the increase in overall production of chicken meat at the Vinnytsia complex, and by the additional grains, which we will produce from land bank expansion in 2013. 

MHP S.A. AND ITS SUBSIDIARIES

Consolidated Financial Statements

For the year ended 31 December 2013

CONTENT

STATEMENT OF THE BOARD OF DIRECTORS' RESPONSIBILITIES FOR THE PREPARATION

AND APPROVAL OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013........ (a)

INDEPENDENT AUDITOR'S REPORT...................................................................................................... (i)

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

Consolidated statement of comprehensive income...................................................................................... 6

Consolidated statement of financial position............................................................................................... 7

Consolidated statement of changes in equity.............................................................................................. 8

Consolidated statement of cash flows........................................................................................................ 9

Notes to the сonsolidated financial statements......................................................................................... 11

1. Corporate information...................................................................................................................... 11

2. Changes in the group structure......................................................................................................... 12

3. Summary of significant accounting policies....................................................................................... 14

4. Critical accounting judgments and key sources of estimation uncertainty............................................. 26

5. Segment information....................................................................................................................... 28

6. Revenue......................................................................................................................................... 30

7. Cost of sales.................................................................................................................................. 31

8. Selling, general and administrative expenses..................................................................................... 31

9. VAT refunds and other government grants income.............................................................................. 32

10. Finance costs.............................................................................................................................. 33

11. Income tax................................................................................................................................... 33

12. Property, plant and equipment....................................................................................................... 36

13. Land lease rights.......................................................................................................................... 39

14. Long-term VAT recoverable, net..................................................................................................... 40

15. Biological assets.......................................................................................................................... 40

16. Inventories................................................................................................................................... 43

17. Agricultural produce...................................................................................................................... 43

18. Taxes recoverable and prepaid, net................................................................................................ 43

19. Trade accounts receivable, net....................................................................................................... 43

20. Cash and cash equivalents............................................................................................................ 44

21. Shareholders' equity..................................................................................................................... 45

22. Bank borrowings........................................................................................................................... 45

23. Bonds issued............................................................................................................................... 46

24. Finance lease obligations.............................................................................................................. 48

25. Trade accounts payable................................................................................................................ 49

26. Other current liabilities.................................................................................................................. 49

27. Related party balances and transactions........................................................................................ 49

28. Contingencies and contractual commitments.................................................................................. 50

29. Dividends..................................................................................................................................... 52

30. Fair value of financial instruments................................................................................................... 52

31. Risk management policies............................................................................................................ 53

32. Pensions and retirement plans....................................................................................................... 59

33. Earnings per share....................................................................................................................... 59

34. Subsequent events....................................................................................................................... 59

35. Authorization of the consolidated financial statements..................................................................... 59

STATEMENT OF THE BOARD OF DIRECTORS' RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

The Board of Directors is responsible for the preparation of the consolidated financial statements that present fairly the consolidated financial position of MHP S.A. and its subsidiaries (the "Group") as of 31 December 2013 and the consolidated results of its operations, cash flows and changes in equity for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").

In preparing the consolidated financial statements, the Board of Directors is responsible for:

· properly selecting and applying accounting policies;

· presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's consolidated financial position and financial performance;

· making an assessment of the Group's ability to continue as a going concern.

The Board of Directors, within its competencies, is also responsible for:

· designing, implementing and maintaining an effective and sound system of internal controls, throughout the Group;

· maintaining adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Group, and which enable them to ensure that the consolidated financial statements of the Group comply with IFRS;

· maintaining statutory accounting records in compliance with local legislation and accounting standards in the respective jurisdictions;

· taking such steps as are reasonably available to them to safeguard the assets of the Group; and

· preventing and detecting fraud and other irregularities.

The consolidated financial statements of the Group for the year ended 31 December 2013 were authorized for issue by the Board of Directors on 1 April 2014.

Board of Directors' responsibility statement

We confirm that to the best of our knowledge the directors report, which is incorporated into the annual report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of

MHP S.A.

5, rue Guillaume Kroll

L-1882 Luxembourg

Report on the consolidated financial statements

Following our appointment by the General Meeting of the Shareholders dated 29 April 2013, we have audited the accompanying consolidated financial statements of MHP S.A., which comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Responsibility of the Board of Directors' for the consolidated financial statements

The Board of Directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Responsibility of the réviseur d'entreprises agréé

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the réviseur d'entreprises agréé's judgment including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the réviseur d'entreprises agréé considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of MHP S.A. as of 31 December 2013, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Emphasis of matter

We draw your attention to Note 28to the consolidated financial statements. The impact of the continuing economic crisis and political turmoil in Ukraine and their final resolution are unpredictable and may adversely affect the Ukrainian economy and the operations of the Group. Our opinion is not qualified in respect of this matter.

Report on other legal and regulatory requirements

The directors' report, which is the responsibility of the Board of Directors, is consistent with the consolidated financial statements and includes the information required by the law of 19 December 2002 on the commercial and companies register and on the accounting records and annual accounts of undertakings, as amended with respect to the corporate governance statement.

For Deloitte Audit

société à responsabilité limitée

Cabinet de révision agréé

Sophie Mitchell, Réviseur d'enterprises agréé

Partner

1 April 2014

560, rue de Neudorf

L-2220 Luxembourg

Consolidated statement of comprehensive income

for the year ended 31 December 2013

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages [11] to [59] form an integral part of these consolidated financial statements

Consolidated statement of financial position

as of 31 December 2013

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages 11 to 59 form an integral part of these consolidated financial statements

Consolidated statement of changes in equity

for the year ended 31 December 2013

(in thousands of US dollars, unless otherwise indicated)