Mhp Reg S Regulatory News (MHPC)

06 September 2019, Limassol, Cyprus

MHP SE

Financial Results for the Second Quarter and Six Months Ended 30 June 2019

MHP SE (LSE:MHPC), the parent company of a leading international agro-industrial group with headquarters in Ukraine, focusing primarily on the production of poultry and cultivation of grain, today announces its results for the second quarter and six months ended 30 June 2019. Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "The Company" or "The Group".

EVENTS DURING AND POST REPORTING PERIOD

On 21 February 2019, MHP completed the acquisition of 90.69% of Perutnina Ptuj (PP), the largest producer of poultry meat and poultry meat products in the Balkans region of southeast Europe (https://www.mhp.com.ua/library/file/mhp-closes-pp-deal-final-final-docx.pdf).

On 26 April 2019, MHP announced that it had agreed a final settlement price of EUR 22.34 per share for the acquisition, representing a total enterprise value, for 100% of PP, of EUR 273 million, including net debt of EUR 34.5 million and a normalized value of working capital. The final purchase price for the 90.69% of the equity acquired was EUR 221 million (https://www.mhp.com.ua/library/file/pppricepr-extended-final-docx.pdf).

In June 2019, MHP increased its effective ownership in PP to 97.38%. PP is now reported separately as the "Europe operating segment".

OPERATIONAL HIGHLIGHTS

In 2019, MHP has continued to launch additional production sites as part of Phase 2 of the Vinnytsia Poultry Complex ('Complex'). Between January and September 2019, another three rearing sites (brigades) became operational, bringing the total to six. MHP is planning to launch an additional brigade in Q1 2020.

Q2 2019 highlights

·; Poultry production volume reached 182,306 tonnes, up 17% year-on-year (Q2 2018: 155,725 tonnes). Poultry production volumes of the Europe operating segment (PP) amounted to 15,631 in Q2 2019 tonnes

·; The average chicken meat price remained relatively stable year-on-year at UAH 40.06 per kg (excluding VAT) (Q2 2018: UAH 39.38 per kg). The average price of chicken meat produced by PP during Q2 2019 was EUR 2.67 per kg

·; Chicken meat exports increased by 39% to 97,439 tonnes (excluding PP's 2,194 tonnes), compared with 70,145 tonnes in Q2 2018

H1 2019 highlights

·; Poultry production volume reached 353,578 tonnes, up 15% year-on-year (H1 2018: 307,890 tonnes). Poultry production volumes of the Europe operating segment (PP) amounted to 20,587 tonnes

·; The average chicken meat price remained relatively stable year-on-year at UAH 39.63 per kg (excluding VAT) (H1 2018: UAH 39.17 per kg). The average price of chicken meat produced by PP during H1 2019 was EUR 2.65 per kg

·; Chicken meat exports increased by 43% to 190,484 tonnes (excluding PP's 3,562 tonnes) compared with 133,564 tonnes in H1 2018 as a result of increased exports mainly to MENA, the EU, Africa and Asia

FINANCIAL HIGHLIGHTS

Q2 2019 highlights

·; Revenue of US$ 510 million, increased by 31% year-on-year (Q2 2018: US$ 388 million)

·; Export revenue of US$ 284 million, comprising 56% of total revenue compared with US$ 223 million and 57% of total revenue in Q2 2018

·; Operating profit of US$ 127 million was down 15% year-on-year from US$ 150 million and operating margin declined from 39% to 25%

·; Adjusted EBITDA margin declined correspondingly from 45% to 32%, with adjusted EBITDA down from US$ 174 million to US$ 164 million

·; Net profit was US$ 138 million compared to US$ 100 million for Q2 2018, including foreign exchange gains of US$ 52 million compared with US$ 16 million in Q2 2018

H1 2019 highlights

·; Revenue of US$ 946 million, increased by 36% year-on-year (H1 2018: US$ 694 million)

·; Export revenue of US$ 552 million, comprising 58% of total revenue compared with US$ 385 million and 55% of total revenue in H1 2018

·; Operating profit of US$ 177 million was down 17% year-on-year from US$ 212 million and operating margin declined from 31% to 19%

·; Adjusted EBITDA margin declined correspondingly from 38% to 26%, with adjusted EBITDA down from US$ 263 million to US$ 247 million

·; Net profit was US$ 171 million, down 10% from US$ 190 million in H1 2018, including foreign exchange gains of US$ 72 million, similar to US$ 73 million in H1 2018

FINANCIAL OVERVIEW

* pps - percentage points

Average official FX rate for Q2 2019 UAH/US$ 26.56 and for Q2 2018 UAH/US$ 26.18

Average official FX rate for H1 2019 UAH/US$ 26.93 and for H1 2018 UAH/US$ 26.75

DIVIDENDS

On 21 March 2019, the Board of Directors of MHP SE approved the payment of an interim dividend of US$ 0.7474 per share, equivalent to approximately US$ 80 million, this dividend was paid to shareholders in Q2 2019.

OUTLOOK

A number of external factors are likely to impact the Group's performance in the second half of 2019 and beyond. In particular, although market conditions in Europe are currently challenging, we expect the impact of African Swine Fever in China and other Far Eastern markets to have a positive impact on meat prices over the coming months. Strong crop yields are expected in Ukraine, which should have a positive impact on MHP's financial results for the year.

MHP's production of chicken meat in Ukraine will increase by around 100,000 tonnes in the 2019 full year following expansion of Phase 2 of the Vinnytsia poultry complex. This is mostly destined for export, with total exports of chicken meat forecast at around 380,000 tonnes.

Perutnina Ptuj has performed ahead of our expectations since its acquisition in February 2019. Perutnina's production of chicken meat is projected to be around 80,000 tonnes and its financial performance is now expected to exceed pre-acquisition estimates, mainly as a result of cost optimization achieved under the management of MHP.

Overall, we remain confident in delivering full year results in line with the board's expectations.

DIAL-IN DETAILS

MHP's management will host a conference call for investors and analysts followed by Q&A on the day of the results

The dial-in details are:

Time: 14.00 London / 16.00 Kyiv / 09.00 New York

Title: Financial results for Q2 and H1 2019

UK: +44 2071943759

Ukraine: +38 0893239877

USA: +1 6467224916

Conference ID EV00094359

PIN code 17903874#

In order to follow the presentation together with the management, please register using the following link: https://event.onlineseminarsolutions.com/wcc/r/2073145-1/A20DD7B64DEF176DF710E76E2EE74E16?partnerref=rss-events

For Investor Relations enquiries, please contact:

Anastasia Sobotiuk (Kyiv) +38 044 207 99 58 a.sobotyuk@mhp.com.ua

For Analysts enquiries, please contact:

Iryna Bublyk (Kyiv) +38 044 207 00 04 i.bublik@mhp.com.ua

Segment Performance

Poultry and related operations

Chicken meat prices

The total volume of chicken meat sold to third parties in H1 2019 increased by 20% to 345,278 tonnes (H1 2018: 288,437 tonnes) as a result of growth in exports. In Q2 2019 export sales totaled 97,439 tonnes and increased by 39% compared to Q2 2018 export sales volume of 70,145 tonnes. In H1 2019 poultry exports increased by 43% to 190,484 tonnes (H1 2018: 133,564 tonnes). MHP continued to follow a strategy of both geographic diversification and product mix optimization, building-up export volumes of chicken meat in MENA countries (KSA, Iraq and UAE predominantly) and the EU.

The average chicken meat price remained almost at the same level year-on-year.

Vegetable oil

In Q2 2019, sunflower oil sales volume amounted to 86,661 tonnes, down 14% year-on-year. However, for the full period of H1 2019, MHP's sales of sunflower oil increased by 26% compared to H1 2018 to 186,487 tonnes. The increase in volumes in H1 2019 was driven mainly by an increase in production and by delivery terms changing from DAP (Delivered at Place) to FOB (Free on Board).

Sales of soybean oil were 9,097 tonnes in Q2 2019, 32% lower year-on-year, and 24,249 tonnes in H1 2019, 23% lower year-on-year, mainly reflecting high bases in the comparable periods in 2018. MHP also sells soybean cake to third parties.

* pps - percentage points

As a result of the increase in sales volumes of chicken meat and sunflower oil, revenue increased by 12% in H1 2019 compared to H1 2018.

The IAS 41 standard gain in Q2 2019 amounted to US$ 6 million (compared with a US$ 10 million loss in Q2 2018) mainly as a result of an increase in broiler chicken stocks due to the launch of new rearing sites.

Gross profit of the poultry and related operations segment for Q2 2019 increased by 10% compared to Q2 2018 to US$ 89 million. This was due to the increase in sales volume and an IAS 41 standard gain partly offset by increased production costs, reflecting higher cost of mixed fodder protein components as well as the higher payroll costs incurred since mid-2018. Poultry production costs in Q2 2019 remained almost at the same level as in Q1 2019 with the exception of the seasonal variance of utility costs.

In Q2 2019 adjusted EBITDA per kilogram of chicken meat decreased by 19% to US$ 0.46 as a result of the year-on-year increase in production and delivery costs.

Grain growing operations

In 2019 the Company expects to harvest around 360,000 hectares of land.

The Company's harvesting campaign of winter rapeseeds, barley and wheat is complete, so that winter crops current (bunker) yields are as follows:

Grain growing segment's revenue for H1 2019 amounted to US$ 83 million compared to US$ 13 million in H1 2018. The increase was mainly attributable to the higher amount of crops in stock designated for sale as of 31 December 2018, compared to stock for sale as of 31 December 2017, driven by the higher yields in 2018.

IAS 41 standard gain for H1 2019 amounted to US$ 26 million compared with US$ 78 million in H1 2018 mainly as a result of the revaluation of crops in fields (biological assets) at the reporting date. The decrease is driven mainly by expected slightly lower yields of spring crops in 2019 compared to 2018.

Meat processing and other agricultural operations segment

Sales volume of meat processing products slightly increased by 3% year-on-year and amounted to 9,094 tonnes in Q2 2019. The average processed meat price increased by 9% year-on-year to UAH 66.75 per kg in Q2 2019.

Sales volumes of convenience food in Q2 2019 increased by 3% to 4,400 tonnes. The average price in Q2 2019 decreased by 8% to UAH 40.61 per kg (excluding VAT), mainly due to product mix changes.

* pps - percentage points

** includes milk, cattle, goose meat, foie gras and feed grains.

Segment revenue of H1 2019 increased by 6% year-on-year to US$ 68 million mainly as a result of an increase in the price of processed meats as well as sales volume of processed meat and convenience food products. The segment's adjusted EBITDA decreased mainly due to lower returns earned from milk operations partly offset by higher meat processing results.

Europe operating segment

* results of PP from 21 February 2019 when the acquisition was completed

In Q2 2019 poultry sales of the newly-established Europe operating segment, which comprises the operations of Perutnina Ptuj, were 15,835 tonnes with an average price of EUR 2.67. In H1 2019 sales amounted to 21,014 tonnes with an average price of EUR 2.65.

* includes sausages and convenience foods

** results of PPJ from 21 February 2019 when the acquisition was completed

In Q2 2019 meat processing products sales constituted 8,430 tonnes with an average price of EUR 2.70, while in H1 2019 sales amounted to 11,092 tonnes with an average price of EUR 2.70.

* results of PPJ from 21 February 2019 when the acquisition was completed

Europe operating segment's revenue in Q2 2019 amounted to US$ 82 million, and US$ 107 million in H1 2019. Adjusted EBITDA was US$ 12 million and US$ 16 million for these periods, respectively. Adjusted EBITDA margin was 15% for both periods.

Current Group cash flow

* Calculated as Net Cash from operating activities plus Cash used in investing activities plus Total financial activities

Cash flow from operations before changes in working capital for H1 2019 amounted to US$ 138 million (H1 2018: US$ 137 million).

Positive cash flow from changes in working capital during H1 2019 compared to H1 2018 is mostly related to lower spending on inventory levels during H1 2019 due to higher opening levels of stocks of crops (sunflower and soya) designated for internal consumption as of 31 December 2018 compared to 31 December 2017, as well as an increase in amounts payable for seeds and agricultural chemicals to be paid in Q3 2019.

In H1 2019 total CAPEX amounted to US$ 59 million mainly related to the launch of production sites of Phase 2 of the Vinnytsia Poultry Complex.

Debt Structure and Liquidity

1) Net of IFRS 16 adjustments: as if any lease that would have been treated as an operating lease under IFRS and was in effect before the 1 January 2019, is treated as an operating lease for purposes of this calculation. In accordance with covenants in MHP's bond and loan agreements, these data exclude the effects of IFRS16 on accounting for operating leases.

2) Calculated as if acquisitions of subsidiaries had occurred on the first day of the four-quarter reference period. LTM adjusted EBITDA of Perutnina Ptuj d.d amounted to US$ 42 million for H1 2019

As of June 30, 2019, the share of long-term debt in the total outstanding debt decreased to 78% of total debt (90% of total debt as of 31 December 2018). The weighted average interest rate is around 7%.

As of 30 June 2019, MHP's cash and cash equivalents amounted to US$ 157 million. Net debt increased to US$ 1,341 million, compared to US$ 1,131 million as at 31 December 2018.

The Net Debt / LTM EBITDA ratio was 2.92 as of 30 June 2019, within the Eurobond covenant limit of 3.0.

As a hedge for currency risks, revenues from the export of grain, sunflower and soybean oil, sunflower husks, and chicken meat are denominated in US Dollars and Euros, more than fully covering debt service. Export revenue for H1 2019 amounted to US$ 552 million or 58% of total revenue (US$ 385 million or 55% of total sales in H1 2018).

Notes to Editors:

About MHP

MHP is the leading producer of poultry products not only in Ukraine, but also in the Balkans (Perutnina Ptuj Group).

Ukraine: MHP has the largest market share (around 57% of industrial production) and highest brand recognition for its products. MHP owns and operates each of the key stages of its chicken production processes, from feed grains and fodder production to egg hatching and grow-out to processing, marketing, distribution and sales (including through MHP's franchise outlets). Complete vertical integration practically eliminates MHP's exposure to raw material price fluctuations since its grain production exceeds internal consumption requirements, allowing the Company to be an important player in the international commodity trade. In addition to cost efficiency, vertical integration also enables MHP to maintain strict biosecurity and to control the quality of its inputs and the resulting quality and consistency of its products all the way to the point of sale. To support its sales, MHP maintains a distribution network consisting of nine distribution and logistical centres within major Ukrainian cities. MHP uses its own truck fleet to distribute its products, reducing overall transportation costs and delivery times.

MHP also has a leading grain cultivation business growing corn, soya and sunflower to support the vertical integration of its chicken production and increasingly other grains, such as wheat and rape, for sale to third parties. MHP leases agricultural land located primarily in the highly fertile black soil regions of Ukraine.

The Balkans: Perutnina Ptuj (PPJ) is a leading poultry and meat-processing producer in the Balkans, with production sites in four Balkan countries: Slovenia, Croatia, Serbia, Bosnia and Herzegovina. PPJ owns distribution companies in Austria, Macedonia and Romania and supplies products to 15 countries in Europe. PPJ is vertically integrated across all stages of chicken meat production - feed, hatching egg production, hatching, breeding, slaughtering, sausage production and further poultry processing.

Since May 15, 2008, MHP has traded on the London Stock Exchange under the ticker symbol MHPC.

Forward-Looking Statements

This press release might contain forward-looking statements that refer to future events or forecast financial indicators for MHP SE. Such statements do not guarantee that these are actions to be taken by MHP SE in the future, and estimates can be inaccurate and uncertain. Actual final indicators and results can considerably differ from those declared in any forward-looking statements. MHP SE does not intend to change these statements to reflect actual results.

MHP SE AND ITS SUBSIDIARIES

Interim condensed consolidated Financial Statements

As of and for the six-month period ended 30 June 2019

CONTENTS

STATEMENT OF MEMBERS OF THE BOARD OF DIRECTORS............................................................... (a)

MANAGEMENT REPORT...................................................................................................................... (b)

REVIEW REPORT OF INTERIM condensed consolidated FINANCIAL INFORMATION.................(c)

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2019

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.............................................................................................................................................................. 5

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION..................................... 6

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY..................................... 7

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS................................................ 9

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.............................. 11

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

2. Basis of preparation and accounting policies................................................................................... 12

3. Changes in the group structure........................................................................................................ 16

4. Segment information...................................................................................................................... 18

5. Profit for the period........................................................................................................................ 21

6. Deferred revenues.......................................................................................................................... 21

7. Property, plant and equipment........................................................................................................ 21

8. Inventories and agricultural produce................................................................................................ 21

9. Biological assets............................................................................................................................ 22

10. Trade accounts receivable, net and trade accounts payable........................................................... 22

11. Share capital............................................................................................................................... 22

12. Bank borrowings.......................................................................................................................... 22

13. Bonds issued.............................................................................................................................. 23

14. Related party balances and transactions....................................................................................... 26

15. Contingencies and contractual commitments................................................................................. 26

16. Fair value of financial instruments................................................................................................. 27

17. Risk management policy.............................................................................................................. 28

18. Dividends.................................................................................................................................... 29

19. Subsequent events...................................................................................................................... 29

20. Authorization of the interim condensed consolidated financial statements....................................... 29

STATEMENT OF MEMBERS OF THE BOARD OF DIRECTORS

In accordance with Article 10 of the Transparency Requirements (Securities for Trading on Regulated Market) Law 190(l)/2007 ("Law"), we the members of the Board of Directors of MHP SE confirm that to the best of our knowledge:

(a) The interim condensed consolidated financial statements for the period from 1 January 2019 to30 June 2019 that are presented on pages 5 to 29:

i. were prepared in accordance with International Financial Reporting Standards and in accordance with the provisions of Article 10 (4) of the Law, and

ii. give a true and fair view of the assets and liabilities, the financial position and the profits of MHP SE and the businesses that are included in the interim condensed consolidated financial statements, and

(b) the interim management report gives a fair review of the information required under Article 10 (6) of the Law.

5 September 2019

Members of the Board of Directors:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

Director Yuriy Melnyk

Director John Grant

Director John Clifford Rich

Director Roger Wills

Director Christakis Taoushanis

Director Roberto Banfi

MANAGEMENT REPORT

Key financial highlights

On 21 February 2019, the Group acquired 90.69% of the issued share capital and thereby obtained control of Perutnina Ptuj, a Slovenian based international meat-processing company and the most important and largest producer of poultry meat and poultry meat products in Southeast Europe (Note 3). Group financial results for the six-month period ended 30 June 2019 include the results of Perutnina Ptuj from 21 February 2019 when the acquisition was completed.

During the six-month period ended 30 June 2019 consolidated revenue increased by 36% and amounted to USD 946,033 thousand, compared to USD 693,762 thousand for the six-month period ended 30 June 2018. Export sales for the six-month period ended 30 June 2019 constituted 58% of total revenue and amounted to USD 552,418 thousand, compared to USD 385,001 thousand, 55% of total revenue for the six-month period ended 30 June 2018. The overall increase in revenue was mainly attributable to the acquisition of operations in Europe (Perutnina Ptuj) as well as increased Ukrainian export sales volume of chicken meat.

Gross profit decreased by 4% and amounted to USD 250,828 thousand for the six-month period ended30 June 2019 compared to USD 262,359 thousand for the six-month period ended 30 June 2018. The decrease was driven mainly by decrease of the gross profit in grain growing operations segment, partly offset by increase in poultry and related operations and the new Europe operating segment.

Operating profit decreased by 17% to USD 176,991 thousand for the six-month period ended 30 June 2019 compared to USD 212,414 thousand for the six-month period ended 30 June 2018, in higher rate compared to gross profit mainly as a result of an increase in selling, general and administrative expenses primarily due to the inclusion of additional expenses of Perutnina Ptuj as well as increased consulting services, advertising expense and representative costs.

Profit for the six-month period ended 30 June 2019 decreased by 10% and amounted to USD 171,481 thousand, compared to USD 190,479 thousand for the six-month period ended 30 June 2018, mainly due to an increase in administration, sales and distribution expenses partly offset by higher finance costs for the six-month period ended 30 June 2018 due to transaction related to the Eurobond issued in April 2018.

Dividends

On 21 March 2019, the Board of Directors of MHP SE approved the payment of an interim dividend of USD 0.7474 per share, equivalent to approximately USD 80,000 thousand, which was paid to shareholders during the six-month period ended 30 June 2019.

Risks and uncertainties

There are a number of potential risks and uncertainties, which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2018. A detailed explanation of these risks, and how the Group seeks to mitigate the risks, can be found on pages 162 to 167 of the Annual Report which is available at www.mhp.com.cy.

Correction of prior period disclosure errors

Subsequent to issuance of the consolidated financial statements as of and for the year ended 31 December 2018, the management of Group identified the errors in the disclosure of operating land lease commitments due to the fact that not all constructive obligations were captured in calculation. In addition, the management of the Group identified errors in disclosure of the impact on the amounts of the right of use asset and lease liability on initial application of IFRS 16 as of 1 January 2019. Issues identified in the underlying data were still under evaluation by management at the point of issuing these interim condensed consolidated financial statements and are planned to be addressed by the end of the year.

The effect of the restatement on the disclosure provided in the consolidated financial statements as of and for the year ended 31 December 2018 is disclosed in Note 2 to the interim condensed consolidated financial statements for the six-month period ended 30 June 2019. These restatements have no impact on the consolidated statement of financial position as of 31 December 2018, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and basic and diluted earnings per share for the year then ended.

5 September 2019

On behalf of the Board: 

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

Report on Review of interim condensed consolidated financial information

To MHP SE

Introduction

We have reviewed the accompanying interim condensed consolidated financial information of MHP SE ("the Company") and its subsidiaries (together with the Company, the "Group") on pages XX to XX which comprises the interim condensed consolidated statement of financial position as at 30 June 2019 and the interim condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory information ("the interim condensed consolidated financial information").

Board of Directors' responsibilities

The Company's Board of Directors is responsible for the preparation and presentation of this interim condensed consolidated financial information in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted by the European Union.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.

Auditor's Responsibility

Our responsibility is to express a conclusion on this interim condensed consolidated financial information based on our review. This report, including the conclusion, has been prepared for and only for the Company. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

Scope of Review

Except as explained in the Basis for Qualified Conclusion section of our report, we conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

We were not able to complete our review procedures on the underlying data used for the purpose of measuring and recognizing a right-of-use asset in the amount of USD 219,202 thousand and the associated lease liability in the amount of USD 224,969 thousand (of which USD 162,399 thousand is reported within non-current liabilities and USD 62,570 thousand is reported within current liabilities) in the statement of financial position as at 30 June 2019, and the respective adjustments recognized on transition to IFRS 16 as at 1 January 2019 as presented at Note 2, due to issues identified in the underlying data which, as of the date of authorisation of this interim condensed consolidated financial information, were still under evaluation by management. In addition, we were unable to complete our review of restatement adjustments in respect of land lease commitments under IAS 17 as at 31 December 2018 and 2017 as presented in Note 2 for the same reasons. Had we been able to complete our procedures in respect of these areas, matters might have come to our attention indicating that adjustments might be necessary to the interim financial information.

Qualified Conclusion

Except for the adjustments to the interim condensed consolidated financial information that we might have become aware of had it not been for the situation described in the Basis for Qualified Conclusion section of our report, based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial information for the six-month period ended 30 June 2019 is not prepared in all material respects, in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.

Deloitte Limited

Certified Public Accountants and Registered Auditors

Limassol, 5 September 2019

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the six-month period ended 30 June 2019

(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 29 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as of 30 June 2019

(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 29 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six-month period ended 30 June 2019

(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 29 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six-month period ended 30 June 2018

(in thousands of US dollars, unless otherwise indicated)