Mhp Reg S Regulatory News (MHPC)

Segment Performance

Poultry and processed meat and related operations

Poultry meat

¹) Poultry meat consists of raw and unprocessed parts of chicken, meat after minor processing, meat after grinding and chicken meat with the addition of spices (marinated meat)

¹) pps - percentage points

The total volume of poultry meat sold to third parties in 9M 2023 increased by 13% to 535,201 tonnes (9M 2022: 473,740 tonnes) due to a significant increase in export sales. Domestic sales in 9M 2023 increased by 3% mainly due to higher demand in Ukraine compared to 9M 2022 when the full effects of the War affected results from March. Export sales in 9M 2023 increased by 21% y/y to 311,978 tonnes, mainly as a result of substantially decreased sales in 9M 2022 due to the effects of the War.

Poultry meat export prices in 9M 2023 decreased by 9% y/y, mainly driven by relative stabilization comparing to their maximum levels achieved in Q2 2022.

In 9M 2023 poultry meat prices on the domestic market in USD terms increased by 9% y/y, driven by increased sales volumes of high-margin fillet and due to higher costs resulting from significant inflation both in 2022 and 9M 2023.

Processed poultry meat

¹) Processed meat consists of meat after significant processing (added supplements like vegetables or breading), pre-cooked and ready-to-eat meat

 ²) pps - percentage points

Export sales volume of processed poultry meat increased by 40% to 3,825 tonnes in 9M 2023 compared to 2,737 tonnes in 9M 2022. The average price increased by 15% to USD$ 2.88 per kg in 9M 2023 (9M 2022: USD$ 2.51 per kg) driven mainly by an increase in raw material prices (spices, packaging and other components) as well as by a positive change in product mix.

Financial result and trends

1) pps - percentage points

In 9M 2023, revenue increased by 14% y/y as a result of sales volume increase of poultry meat and processed meat that was partly set off by lower meat price on export markets.

IAS 41 standard gain in 9M 2023 decreased to US$ 16 million y/y mainly as a result of a lower chicken meat price and optimization of meat stocks volumes comparing to 9M 2022.

Gross profit in 9M 2023 increased to US$ 311 million mainly driven by higher sales volumes of poultry meat on export markets partly set off by lower export prices.

In 9M 2023, adjusted EBITDA (net of IFRS 16) increased to US$ 260 million, mainly as a result of higher gross profit and lower War-related expenses.

Vegetable Oil Operations

Vegetable oil

In 9M 2023 MHP's sales of sunflower oil increased by 111% compared to 9M 2022 to 372,760 tonnes, mainly driven by an increase in production of sunflower cake due to both additional crushing capacity and a change in the recipe as well as partial restoration of logistic routes comparing to 9M 2022.

Sales of soybean oil amounted to 11,096 tonnes in Q3 2023 also increased by 44% y/y, and by 44% to 39,126 tonnes in 9M 2023, compared with 27,263 tonnes in 9M 2022 due to disruption in logistics in 2022.

Financial result and trends

1) pps - percentage points;

2) Related products consist of meal, cake, husk.

The segment's revenue in 9M 2023 increased by 54% to US$ 488 million that resulted in higher adjusted EBITDA (net of IFRS 16) of US$ 71 million compared to US$ 34 million in 9M 2022 driven by increase in sales volume of vegetable oil which was partly offset with lower prices in 9M 2023.

Agriculture operations

In 2023 MHP expects to harvest around 348,300 hectares of land.

As of today, MHP's harvesting campaign is complete on around 303,000 ha of land: corn harvesting is 82% complete, sunflower, soya, wheat and rapeseed were 100% complete harvested.

Crops current yields are as follows:

1) MHP yields are net weight, Ukraine yields are bunker weight.

The sowing campaign for winter crops has been fully completed, covering approximately 74,300 hectares (around 53% of land is under winter wheat, around 47% of land is under winter rapeseed).

Decrease of domestic grain prices and limited export capabilities as a result of continuous rocket strikes on Ukrainian ports infrastructure and termination of the Grain deal by Russia had a negative effect on segment performance. However it should be noted that these events will have limited impact on the overall Group performance, as almost all grains and oilseeds (except for rapeseeds and some wheat) are consumed internally.

Financial result and trends

Agriculture Operations Segment's revenue in 9M 2023 amounted to US$ 138 million compared to US$ 109 million in 9M 2022. The increase was mainly attributable to the higher volume of sales of corn purchased from farmers in Ukraine.

The reduction in Adjusted EBITDA (net of IFRS 16) to a negative result of US$ 32 million in H1 2023 from a positive result of US$ 55 million in 2022 was caused by lower revaluation of spring crops and agriculture produce as a result of the decrease in domestic prices due to limited export capabilities, as well as lower revaluation of milk cattle due to higher costs of milk production.

A significant decrease in international grain prices, as well as increased logistic costs due to the War impact, led to poor results in the Agriculture Operations Segment. The Company expects Agriculture Operations Segment EBITDA for 2023 to be significantly lower than in 2022.

European Operating Segment (PP)

In 9M 2023, poultry meat sales of the European Operating Segment increased to 63,219 tonnes. This was driven by an increase in HoReCa sales channel. Average price increased by 2% in Q3 2023 to EUR 3.42 (Q3 2022: EUR 3.34).

1) includes sausages and convenience foods

Meat processing product sales were up by 8% y/y to 12,946 tonnes in Q3 2023 (Q3 2022: 11,960 tonnes), at the same time increased by 15% compared with Q2 due to increase in sales of sausages. Average price in Q3 2023 increased by 7% to EUR 3.32.

Financial result and trends

1) pps - percentage points.

European Operating Segment's gross profit in 9M 2023 increased by 19% to US$ 411 million (9M 2022: US$ 345 million), due to the increase in sales volumes and prices.

Adjusted EBITDA (net of IFRS 16) amounted to US$ 67 million for 9M 2023 compared with US$ 56 million for 9M 2022 in line with gross profit. Adjusted EBITDA margin (net of IFRS 16) remained stable at 16%.

Current Group cash flow

1)Calculated as cash used for Purchases of property, plant and equipment plus cash used for purchases of other non-current assets

2)Calculated as Net Cash from operating activities plus Cash used in investing activities plus Cash used in financing activities

Cash flow from operations before changes in working capital for 9M 2023 declined to US$ 315 million (9M 2022: US$ 380 million), mainly as a result of interest payments of US$ 124 million in 9M 2023 compared to US$ 57 million in 9M 2022.

The differences in working capital changes between 9M 2023 and Q3 2023 compared to 9M 2022 and Q3 2022 respectively were mainly attributable to:

· return of stocks of chicken meat and vegetable oil to normal levels from the unusually high amounts in 2022, caused by disrupted logistics due to War activities, that has partly recovered afterward due to the Grain deal and diversification of delivery routes by the Group;

· lower investments in raw materials during 9M 2023 (energy supplies, fertilizers, plant protections materials, animal feed components) comparing to 9M 2022 due to relative stabilization of situation in Ukrainian economy and lower risk of disruptions in supply;

· stable amounts of trade accounts receivable compared to significant growth in sunflower oil and chicken meat receivables during 9M 2022;

It should be noted that investments in working capital will substantially increase in Q4 2023, resulting in substantial cash outflow for 2023 due to future required purchases of sunflower seeds, fertilizers and plant protection materials.

In 9M 2023 total CAPEX amounted to US$ 158 million, mainly related to maintenance and modernization projects, new products development of Ukrainian operations and expansion of Perutnina Ptuj production facilities. The increase from US$ 107 million in 9M 2022 is mainly due to higher investments in cost optimization and culinary strategy projects as well as purchases of diesel generators for mitigation of possible power outages impact.

Debt Structure and Liquidity

1)  Net of IFRS 16 adjustments: as if any lease that would have been treated as an operating lease under IAS 17 as 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 IFRS 16 on accounting for operating leases.

2) Indebtedness under trade credit facilities that is required to be repaid within 12 months of drawdown should be excluded for purposes of this calculation

As of 30 September 2023, MHP's cash and cash equivalents amounted to US$ 446 million, of which US$ 333 million was held by the Group's subsidiaries outside Ukraine. Under the repatriation rules instituted by the National Bank of Ukraine, the equivalent amounts of such cash and cash equivalents would need to be repatriated to Ukraine within six months of recognition of foreign currency proceeds from exports from Ukraine, which limits the Group's ability to utilize such cash and cash equivalents for repayment of indebtedness. At the same time, on November 10, 2023, the National Bank of Ukraine established a maximum settlement period of 90 calendar days for repatriating cash resulting from the export of a specified list of agricultural products.

The Net Debt / LTM adjusted EBITDA (net of IFRS 16) ratio was 2.51 as of 30 September 2023, well below the limit of 3.0 defined in the Eurobond agreement.

As of 30 September 2023, the share of long-term debt in the total outstanding debt decreased to 66% as the first US$ 500 million Eurobond, which is due for repayment in May 2024, is now classified as short-term.

Notes to Editors:

About MHP

MHP SE is the parent company of a leading international food & agrotech group with headquarters in Ukraine and also in the Balkans (Perutnina Ptuj Group).

Ukraine: MHP has the greatest market share and the highest brand recognition for its products. MHP owns and operates each of the key stages of 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). Vertical integration reduces MHP's dependence on suppliers and its exposure to increases in raw material prices. In addition to cost efficiency, vertical integration also allows MHP to maintain strict biosecurity and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale. To support its sales, MHP maintains a distribution network consisting of nine distribution and logistical centers, within major Ukrainian cities. MHP uses its trucks for the distribution of its products, which Management believes reduces overall transportation costs and delivery times.

MHP also has a leading grain cultivation business growing corn 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 is a leading poultry and meat-processing producer in the Balkans, has production assets in four Balkan countries: Slovenia, Croatia, Serbia, Bosnia and Herzegovina; owns distribution companies in Austria, North Macedonia and Romania and supplies products to 15 countries in Europe. Perutnina Ptuj is a vertically integrated company across all stages of chicken meat production - feed, hatching eggs production and hatching, breeding, slaughtering, sausages and further poultry processing production.

MHP trades on the London Stock Exchange under the ticker symbol MHPC since 2008.

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 three-month and nine-month period

ended 30 September 2023

CONTENTS

STATEMENT OF MEMBERS OF THE BOARD OF DIRECTORS................................................................. 3

MANAGEMENT REPORT........................................................................................................................ 4

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE-MONTH AND NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2023

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.............................................................................................................................................................. 6

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION..................................... 7

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY..................................... 8

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

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.............................. 10

1. Corporate information..................................................................................................................... 10

2. Basis of preparation and accounting policies................................................................................... 11

3. Segment information...................................................................................................................... 15

4. Revenue........................................................................................................................................ 18

5. Profit for the period........................................................................................................................ 19

6. Property, plant and equipment........................................................................................................ 19

7. Agricultural produce....................................................................................................................... 19

8. Inventories..................................................................................................................................... 19

9. Biological assets............................................................................................................................ 19

10.  Shareholders' equity.................................................................................................................... 20

11.  Bank borrowings.......................................................................................................................... 20

12.  Bonds issued.............................................................................................................................. 22

13.  Related party balances and transactions....................................................................................... 24

14.  Operating environment................................................................................................................. 25

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

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

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

18.  Subsequent events...................................................................................................................... 29

19.  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"), as amended, 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 2023 to30 September 2023 are presented on pages 6 to 29:

i. were prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union 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 as a whole and

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

15 November 2023

Members of the Board of Directors:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoriia Kapeliushna

Director John Grant

Director John Clifford Rich

Director Philip J Wilkinson

Director Andriy Bulakh

Director Christakis Taoushanis

Director Oscar Chemerinski

MANAGEMENT REPORT

Key financial highlights

During the nine-month period ended 30 September 2023, consolidated revenue increased by 22% to USD 2,294  million, compared to USD 1,876 million for the nine-month period ended 30 September 2022. Export sales for the nine-month period ended 30 September 2023 constituted 60% of total revenue at USD 1,385 million, compared to USD 1,110 million and 59% of total revenue for the nine-month period ended 30 September 2022. The increase in revenue was mainly attributable to an increase in the volume of chicken meat and vegetable oil sold, partly offset by a decline in export prices. The significant increase in volumes is a result of the low quantity sold in H1 2022, when export volumes were adversely affected by disruption in logistics caused by the Russian military invasion of Ukraine, resulting in a full-scale war (the "War"). Volumes had mostly recovered in H2 of 2022.

Gross profit increased by 16% to USD 463 million for the nine-month period ended30 September 2023 compared to USD 398 million for the nine-month period ended 30 September 2022. The increase was driven mainly by higher revenue from poultry meat and vegetable oils due to increased volumes sold. At the same time, higher production costs and a decrease in grain prices led to the negative revaluation of biological assets and harvested grains in Agriculture operations segment, which partly reduced the positive effect of Poultry and Vegetable oils operations.

Operating profit increased by 40% to USD 247 million for the nine-month period ended 30 September 2023 compared to USD 176 million for the nine-month period ended 30 September 2022. In March-September 2022, following the Russian invasion in February 2022, the Group incurred significant expenses related to the war (including write-offs of inventories, donations communities in Ukraine, and impairment of particular property, plant and equipment), which were significantly lower during the nine-month period ended 30 September 2023. This factor, together with an improvement in gross profit, resulted in an increase in operating profit.

Profit for the nine-month period ended 30 September 2023 amounted to USD 122 million, compared to a loss of USD 269 million for the nine-month period ended 30 September 2022. The increase is mainly due to higher operating profit and fixed exchange rate of the Ukrainian Hryvnia against the US Dollar as established by the National Bank of Ukraine, which resulted in a foreign exchange gain of USD 7 million for the nine-month period ended 30 September 2023 compared to a foreign exchange loss of USD 368 million for the nine-month period ended 30 September 2022.

Management believes that the above measures are frequently used by investors, analysts, and stakeholders to evaluate the efficiency of the Group's operations.

Dividends

In view of continuing War-related uncertainties and the resulting need to preserve liquidity to support the Company's ongoing business operations, the Directors decided not to declare a final dividend for the 2022 financial year. No interim dividend has been declared for the nine-month period ended 30 September 2023.

Risks and uncertainties

Russian invasion

On February 24, 2022, Russian forces began a military invasion of Ukraine, resulting in a full-scale war across the Ukrainian State (the "War").

As a result of the War, MHP has experienced a number of significant disruptions and operational issues within its business, described in detail in Note 14 Operating environment. Detailed information on this matter can also be found on pages 156 to 157 of the 2022 Annual Report, which is available at mhp.com.cy.

Management believes that the Group has adequate resources to continue operational existence for the foreseeable future. However, due to the currently unpredictable effects of the ongoing War on the key assumptions underlying management forecasts, Management concludes that a material uncertainty exists, which may cast significant doubt on the Group's ability to continue as a going concern.

Risks and uncertainties (continued)

Other risks and uncertainties

There are several potential risks and uncertainties that could have a material impact on the Group's performance over the remaining three 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 2022. A detailed explanation of the risks and how the Group seeks to mitigate these risks can be found on pages 212 to 215 of the 2022 Annual Report.

15 November 2023

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoriia Kapeliushna

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

for the three-month and nine-month period ended 30 September 2023

(in millions of US dollars, unless otherwise indicated)

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer  Viktoriia Kapeliushna

The accompanying notes on the pages 10 to 29 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as of 30 September 2023

(in millions of US dollars, unless otherwise indicated)