t
MHP SE announced its financial results for the third quarter and nine months ended 30 September 2021 on 18 November 2021. For Q3 2021, the company reported revenue of US$ 658 million and a net profit of US$ 145 million, while for the nine months, revenue was US$ 1,647 million and net profit was US$ 377 million. On 17 November, the Board of Directors approved a one-off special dividend of US$ 0.2803 per share, equivalent to US$ 30 million, and Yuriy Melnyk resigned from the Board effective 16 November 2021.
| Date | 18 Nov 2021 |
| Time | 07:09:05 |
| Category | Results |
| ID | 8050S |
18 November 2021, Limassol, Cyprus
MHP SE
Financial Results for the Third Quarter and Nine Months Ended 30 September 2021
MHP SE (LSE:MHPC), the parent company of a leading international agro-industrial group with headquarters in Ukraine, today announces its results for the third quarter and nine months ended 30 September 2021. Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "The Company" or "The Group".
Starting from the publication of its financial results for Q1 2021, MHP shows relevant comparisons of results not only year-on-year, but also to the preceding period. Accordingly, Q3 2021 results in Poultry, Meat Processing and European Operating segments are compared not only with Q3 2020, but also with Q2 2021. For Grain Growing Operations, where results are driven by seasonality effects, this comparison is not relevant.
OPERATIONAL HIGHLIGHTS
Q3 2021
· Poultry production volume in Ukraine increased by 7% year-on-year to 194,199 tonnes (Q3 2020: 181,661 tonnes). Poultry production volumes of the European Operating Segment (Perutnina Ptuj or PP) increased by 8% to 29,812 tonnes (Q3 2020: 27,615 tonnes).
· The average chicken meat price increased by 32% year-on-year to US$ 1.79 per kg (Q3 2020: US$ 1.36 per kg) (excluding VAT). The average price of poultry meat produced by PP during Q3 2021 was EUR 2.65 per kg (Q3 2020: EUR 2.48 per kg).
· Chicken meat exports totaled 108,963 tonnes, almost unchanged compared from 108,472 tonnes in Q3 2020.
9M 2021
· Poultry production volume in Ukraine slightly increased by 2% to 551,729 tonnes (9M 2020: 541,592 tonnes). Poultry production volumes of PP increased by 8% to 83,930 tonnes (9M 2020: 77,574 tonnes).
· The average chicken meat price increased by 22% year-on-year to US$ 1.64 per kg (9M 2020: US$ 1.34 per kg) (excluding VAT). The average price of poultry meat produced by PP was EUR 2.56 per kg (9M 2020: EUR 2.52 per kg).
· Chicken meat exports increased by 8% to 300,278 tonnes compared to 279,025 tonnes in 9M 2020.
FINANCIAL HIGHLIGHTS
Q3 2021
· Revenue of US$ 658 million, up by 20% year-on-year (Q3 2020: US$ 547 million).
· Export revenue increased to US$ 341 million, 11% higher year-on-year, representing 52% of total revenue (Q3 2020: US$ 309 million, 56% of total revenue).
· Operating profit increased to US$ 161 million up 188% year-on-year (Q3 2020: US$ 56 million); operating margin more than doubled to 24% (Q3 2020: 10%).
· Adjusted EBITDA (net of IFRS 16) increased by 115% to US$ 186 million; adjusted EBITDA margin (net of IFRS 16) increased from 16% to 28%.
· Net profit increased to US$ 145 million, compared to a loss US$ 47 million in Q3 2020, including non-cash foreign exchange gains of US$ 24 million (Q3 2020: US$ 61 million loss). Net profit before foreign exchange differences amounted to US$ 120 million compared to US$ 14 million in Q3 2020.
9M 2021
· Revenue increased to US$ 1,647 million, up by 16% year-on-year (9M 2020: US$ 1,414 million).
· Export revenue increased to US$ 843 million, 11% higher year-on-year, representing 51% of total revenue (9M 2020: US$ 761 million, 54% of total revenue).
· Operating profit increased to US$ 416 million, up by 114% year-on-year and operating margin increased from 14% to 25%.
· Adjusted EBITDA (net of IFRS 16) increased by 72% to US$ 519 million; adjusted EBITDA margin (net of IFRS 16) increased from 21% to 32%.
· Net profit increased to US$ 377 million, compared to a loss US$ 109 million in 9M 2020, primarily reflecting a US$ 75 million non-cash foreign exchange gain in 9M 2021 compared with a US$ 191 million foreign exchange loss in 9M 2020. Net profit before foreign exchange differences amounted to US$ 302 million compared to US$ 81 million in 9M 2020.
FINANCIAL OVERVIEW
|
(in mln. US$, unless indicated otherwise) |
|
Q3 2021
|
|
Q3 2020
|
% change1) YoY |
|
9M 2021
|
|
9M 2020
|
% change1) |
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
658 |
|
547 |
20% |
|
1,647 |
|
1,414 |
16% |
|
IAS 41 standard gains |
|
51 |
|
(17) |
400% |
|
176 |
|
29 |
507% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
215 |
|
103 |
109% |
|
573 |
|
322 |
78% |
|
Gross profit margin |
|
33% |
|
19% |
14 pps |
|
35% |
|
23% |
12 pps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
161 |
|
56 |
188% |
|
416 |
|
194 |
114% |
|
Operating profit margin |
|
24% |
|
10% |
14 pps |
|
25% |
|
14% |
11 pps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
208 |
|
106 |
96% |
|
552 |
|
332 |
66% |
|
Adjusted EBITDA margin |
|
32% |
|
19% |
13 pps |
|
34% |
|
23% |
11 pps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (net of IFRS 16) |
|
186 |
|
86 |
115% |
|
519 |
|
302 |
72% |
|
Adjusted EBITDA margin (net of IFRS 16) |
|
28% |
|
16% |
12 pps |
|
32% |
|
21% |
11 pps |
|
Net profit before foreign exchange differences |
|
120 |
|
14 |
764% |
|
302 |
|
81 |
273% |
|
Net profit margin before forex gain |
|
18% |
|
3% |
15 pps |
|
18% |
|
6% |
12 pps |
|
Foreign exchange result |
|
24 |
|
(61) |
139% |
|
75 |
|
(191) |
139% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit/(loss) |
|
145 |
|
(47) |
409% |
|
377 |
|
(109) |
446% |
|
Net profit margin |
|
22% |
|
-9% |
31 pps |
|
23% |
|
-8% |
31 pps |
1) pps - percentage points
Average official FX rate for Q3 2021 UAH/US$ 26.91 and for Q3 2020 UAH/US$ 27.60
Average official FX rate for 9M 2021 UAH/US$ 27.49 and for 9M 2020 UAH/US$ 26.53
DIVIDENDS
On 28 April 2021, shareholders of MHP at the AGM approved payment of an annual dividend of US$ 0.2803 per share, equivalent to US$ 30 million, to shareholders on the register as of 07 May 2021. The Board of Directors approved that no dividend will be paid on the Company's shares held in treasury. As of 30 September 2021, dividends were fully paid to shareholders.
At its meeting on 17 November, in recognition of the Company's exceptional performance in 2021, the Board of Directors approved the payment of a one-off special dividend of US$ 0.2803 per share, equivalent to US$ 30 million. Details of payment, which is expected to be made in December 2021, will be announced later this month. The Board will consider payment of its customary annual dividend in March 2022.
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The dial-in details are:
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Time:
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14.00 London / 16.00 Kyiv / 09.00 New York |
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Title: |
Financial results for Q3 and 9M 2021
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UK:
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+44 203 984 9844 |
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Ukraine:
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+380 89 324 0624 |
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USA:
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+1 718 866 4614 |
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PIN code:
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645982 |
In order to follow the presentation together with the management, please follow the link:
https://mm.closir.com/slides?id=645982
For Investor Relations enquiries, please contact:
Anastasia Sobotiuk (Kyiv) +38 044 207 99 58
Segment Performance
Poultry and Related Operations Segment
|
|
|
Q3 2021 |
Q3 2020 |
% change YoY1) |
Q2 2021 |
% change QoQ1) |
9M 2021 |
9M 2020 |
% change1) |
|
Poultry |
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
185,364 |
195,119 |
-5% |
181,804 |
2% |
521,538 |
523,759 |
0% |
|
Domestic sales volume, tonnes |
|
76,401 |
86,647 |
-12% |
72,749 |
5% |
221,260 |
244,735 |
-10% |
|
Export sales volume, tonnes |
|
108,963 |
108,472 |
0% |
109,055 |
0% |
300,278 |
279,025 |
8% |
|
Average price per 1 kg net of VAT, US$ |
|
1.79 |
1.36 |
32% |
1.67 |
7% |
1.64 |
1.34 |
22% |
|
|
|
|
|
|
|
|
|
|
|
|
Average price per 1 kg net of VAT, UAH (Ukraine) |
|
48.73 |
37.56 |
30% |
45.05 |
8% |
45.16 |
35.45 |
27% |
|
Average price per 1 kg net of VAT, US$ (Ukraine) |
|
1.81 |
1.30 |
39% |
1.63 |
11% |
1.64 |
1.26 |
30% |
|
Average price per 1 kg net of VAT, US$ (export) |
|
1.77 |
1.41 |
26% |
1.69 |
5% |
1.63 |
1.40 |
16% |
|
Culinary Products, tonnes |
|
2,702 |
747 |
262% |
1,743 |
55% |
5,101 |
760 |
571% |
|
|
|
|
|
|
|
|
|
|
|
|
Sunflower oil |
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
36,620 |
84,877 |
-57% |
35,192 |
4% |
127,760 |
248,233 |
-49% |
|
Soybeans oil |
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
12,571 |
11,511 |
9% |
11,871 |
6% |
35,587 |
33,121 |
7% |
|
|
|
|
|
|
|
|
|
|
|
1) pps - percentage points
Chicken meat prices
The total volume of chicken meat sold to third parties in 9M 2021 remained the same and constituted 521,538 tonnes (9M 2020: 523,759 tonnes). In Q3 2021 domestic sales decreased by 12% to 76,401 tonnes, compared to Q3 2020 (by 5% higher compared to Q2 2021), mainly due to decreased sales of frozen chicken: whole chicken, fillet and quarters. Poultry exports remained relatively stable both y/y and q/q.
Poultry export price in Q3 2021 increased by 25% year-on-year, and by 5% quarter-on-quarter, mainly driven by strong prices on breast and fillet in Europe as well as positive price trends for quarters and small chicken in the MENA region.
Poultry prices on the domestic market in Q3 2021 increased by 39% year-on-year mainly affected by a substantial poultry production cost increase since Q4 2020 and upward price trends for all proteins.
Vegetable oil
In Q3 2021, sunflower oil sales volume amounted to 36,620 tonnes, down 57% year-on-year. In 9M 2021 MHP's sales of sunflower oil decreased by 49% compared to 9M 2020 to 127,760 tonnes, mainly due to decrease in production as a result of a decreased share of sunflower cake in fodder (due to change in the fodder recipe).
Sales of soybean oil amounted to 12,571 tonnes in Q3 2021, 9% higher year-on-year, and 35,587 tonnes in 9M 2021, 7% higher year-on-year, mainly as a result of raising production to support the increased share of soybean cake in fodder and increased third party sales.
|
(in mln. US$, unless indicated otherwise) |
|
Q3 2021 |
Q3 2020 |
% change YoY1) |
Q2 2021 |
% change QoQ1) |
9M 2021 |
9M 2020 |
% change1) |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
433 |
362 |
20% |
392 |
10% |
1,140 |
970 |
18% |
|
- Poultry and other |
|
366 |
291 |
26% |
334 |
10% |
948 |
767 |
24% |
|
- Vegetable oil |
|
67 |
71 |
-6% |
58 |
16% |
192 |
203 |
-5% |
|
|
|
|
|
|
|
|
|
|
|
|
IAS 41 standard gains/(losses) |
|
(11) |
(17) |
35% |
18 |
-161% |
7 |
(11) |
-164% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
76 |
58 |
31% |
110 |
-31% |
219 |
176 |
24% |
|
Gross margin |
|
18% |
16% |
2 pps |
28% |
-10 pps |
19% |
18% |
1 pps |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
70 |
58 |
21% |
108 |
-35% |
210 |
180 |
17% |
|
Adjusted EBITDA margin |
|
16% |
16% |
0 pps |
28% |
-12 pps |
18% |
19% |
-1 pps |
|
Adjusted EBITDA per 1 kg (net of IAS 41) |
|
0.44 |
0.38 |
16% |
0.50 |
-12% |
0.39 |
0.36 |
8% |
1) pps - percentage points
Revenue increased by 18% in 9M 2021 compared to 9M 2020 mainly as a result of increased prices of chicken meat.
IAS 41 standard loss in Q3 2021 amounted to US$ 11 million (compared with a US$ 17 million loss in Q3 2020) mainly as a result of an increase in cost of chicken meat.
Gross profit in Q3 2021 increased by 31% year-on-year to US$ 76 million. This was mainly due to the increases in chicken meat prices. Poultry production costs in Q3 2021 increased compared to Q2 2021 reflecting higher cost of fodder.
Adjusted EBITDA in 9M 2021 increased by 17%, as a result of an increase in gross profit partly offset by an increase in administration, sales and distribution expenses.
Grain Growing Operations Segment
In 2021, the Company is to harvest around 355,000 hectares of land.
As of the date of this report, the Company's harvesting campaign is almost complete. All spring crop (corn, soybeans and sunflower) yields are expected to be good and are in line with the Company's expectations taking into account weather conditions.
Crops current yields are as follows:
|
|
|
20211) |
|
20203) |
||
|
|
|
MHP's average |
Ukraine's average |
|
MHP's average |
Ukraine's average |
|
|
|
tonnes per hectare |
|
tonnes per hectare |
||
|
|
|
|
|
|
|
|
|
Corn |
|
11.0 |
6.4 |
|
5.7 |
5.0 |
|
Wheat |
|
5.9 2) |
4.6 |
|
5.1 |
3.8 |
|
Sunflower |
|
3.4 |
2.4 |
|
2.9 |
2.0 |
|
Rapeseed |
|
3.2 2) |
2.9 |
|
2.6 |
2.3 |
|
Soya |
|
2.7 |
2.7 |
|
2.4 |
2.0 |
1) Ukraine - bunker weight, MHP: corn, sunflower, soya - bunker weight. 2) MHP: wheat, rapeseed - net yields. 3) MHP and Ukraine - net yields.
|
(in mln. US$, unless indicated otherwise) |
|
9M 2021 |
|
9M 2020 |
|
% change |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Revenue |
|
79 |
|
90 |
|
-12% |
|
|
|
|
|
|
|
|
|
IAS 41 standard gains |
|
165 |
|
39 |
|
323% |
|
|
|
|
|
|
|
|
|
Gross profit |
|
252 |
|
61 |
|
313% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
292 |
|
106 |
|
175% |
|
Adjusted EBITDA (net of IFRS 16) |
|
261 |
|
78 |
|
235% |
Revenue in 9M 2021 amounted to US$ 79 million compared to US$ 90 million in 9M 2020. The decrease was mainly attributable to the lower amount of crops in stock designated for sale as of 31 December 2020, compared to stock for sale as of 31 December 2019, mainly as a result of lower yields in 2020.
IAS 41 standard gain in 9M 2021 amounted to US$ 165 million compared to US$ 39 million in 9M 2020. The gain mainly represents the result of the revaluation of crops in fields (biological assets) at the reporting date, due to increases in grain prices and yields.
Meat Processing and Other Agricultural Operations segment
|
Meat processing products |
|
Q3 2021 |
Q3 2020 |
% change YoY |
Q2 2021 |
% change QoQ |
9M 2021 |
9M 2020 |
% change |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
9,378 |
8,870 |
6% |
8,462 |
11% |
25,447 |
25,392 |
0% |
|
Price per 1 kg net VAT, UAH |
|
83.37 |
72.14 |
16% |
80.72 |
3% |
80.02 |
70.75 |
13% |
Sales volume of meat processing products remained almost unchanged year-on-year and amounted to 25,447 tonnes in 9M 2021. The average processed meat price increased by 13% year-on-year to UAH 80.02 per kg in 9M 2021 driven mainly by an increase in raw material price (poultry meat).
|
Convenience food |
|
Q3 2021 |
Q3 2020 |
% change YoY |
Q2 2021 |
% change QoQ |
9M 2021 |
9M 2020 |
% change |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
5,442 |
6,054 |
-10% |
4,485 |
21% |
14,107 |
14,591 |
-3% |
|
Price per 1 kg net VAT, UAH |
|
47.58 |
40.81 |
17% |
50.91 |
-7% |
47.29 |
40.28 |
17% |
Sales volumes of convenience food in 9M 2021 remained stable and amounted to 14,107 tonnes. The average price in 9M 2021 increased by 17% to UAH 47.29 per kg (excluding VAT), due to increased sales of more expensive SKUs and expansion of cooperation with large HoReCa channels such as McDonalds Ukraine and KFC (since Q2 2021) with more marginal products sales increase.
|
(in mln. US$, except margin data) |
|
Q3 2021 |
Q3 2020 |
% change YoY1) |
|
Q2 2021 |
% change QoQ1) |
|
9M 2021 |
9M 2020 |
% change1) |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
49 |
39 |
26% |
|
42 |
17% |
|
126 |
106 |
19% |
|
- Meat processing |
|
41 |
29 |
41% |
|
34 |
21% |
|
102 |
82 |
24% |
|
- Other2) |
|
8 |
10 |
-20% |
|
8 |
0% |
|
24 |
24 |
0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IAS 41 standard gains/(losses) |
|
- |
- |
0% |
|
3 |
-100% |
|
3 |
- |
100% |
|
Gross profit |
|
3 |
6 |
-50% |
|
8 |
-63% |
|
16 |
14 |
14% |
|
Gross margin |
|
6% |
15% |
-9 pps |
|
19% |
-13 pps |
|
13% |
13% |
0 pps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
1 |
6 |
-83% |
|
6 |
-83% |
|
11 |
15 |
-27% |
|
Adjusted EBITDA margin |
|
2% |
15% |
-13 pps |
|
14% |
-12 pps |
|
9% |
14% |
-5 pps |
1)pps - percentage points
2)includes milk, cattle, and feed grains.
Revenue in 9M 2021 increased by 19% year-on-year to US$ 126 million due to increase in price of meat processing products. Adjusted EBITDA decreased to US$ 11 million due to lower meat processing results driven mainly by an increase in cost.
European Operating Segment
|
Poultry |
|
Q3 2021 |
Q3 2020 |
% change YoY |
Q2 2021 |
% change QoQ |
9M 2021 |
9M 2020 |
% change |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
19,367 |
16,804 |
15% |
19,508 |
-1% |
54,917 |
47,842 |
15% |
|
Price per 1 kg net VAT, EUR |
|
2.65 |
2.48 |
7% |
2.53 |
5% |
2.56 |
2.52 |
2% |
Poultry sales in Q3 2021 increased by 15% to 19,367 tonnes (Q3 2021: 16,804 tonnes) and decreased by 1% quarter-on-quarter. This was facilitated by increased production of chicken meat following expansion of facilities in Croatia and Serbia. Average prices showed positive to stable trends year-on-year and constituted EUR 2.65 in Q3 2021.
|
Meat processing products1) |
|
Q3 2021 |
Q3 2020 |
% change YoY |
Q2 2021 |
% change QoQ |
9M 2021 |
9M 2020 |
% change |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Sales volume, third parties tonnes |
|
11,030 |
10,218 |
8% |
9,868 |
12% |
30,046 |
28,853 |
4% |
|
Price per 1 kg net VAT, EUR |
|
2.76 |
2.69 |
3% |
2.80 |
-1% |
2.76 |
2.71 |
2% |
1) includes sausages and convenience foods
Meat processing product sales were up 8% year-on-year and amounted to 11,030 tonnes in Q3 2021 (Q3 2020: 10,218 tonnes) and 12% quarter-on-quarter. Average prices in Q3 2021 increased by 3% to EUR 2.76, remained relatively stable in 9M 2021 year-on-year.
|
(in mln. US$, except margin data) |
|
Q3 2021 |
Q3 2020 |
% change YoY1) |
Q2 2021 |
% change QoQ1) |
9M 2021 |
9M 2020 |
% change1) |
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
110 |
91 |
21% |
104 |
6% |
301 |
248 |
21% |
|
|
|
|
|
|
|
|
|
|
|
|
IAS 41 standard gains |
|
- |
(1) |
-100% |
2 |
-100% |
2 |
1 |
100% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
31 |
27 |
15% |
31 |
0% |
86 |
71 |
21% |
|
Gross margin |
|
28% |
30% |
-2 pps |
30% |
-2 pps |
29% |
29% |
0 pps |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
19 |
12 |
58% |
21 |
-10% |
52 |
40 |
30% |
|
Adjusted EBITDA margin |
|
17% |
13% |
4 pps |
20% |
-3 pps |
17% |
16% |
1 pps |
|
Adjusted EBITDA (net of IFRS 16) |
|
18 |
12 |
50% |
20 |
-10% |
50 |
38 |
32% |
|
Adjusted EBITDA margin (net of IFRS 16) |
|
16% |
13% |
3 pps |
19% |
-3 pps |
17% |
15% |
2 pps |
|
|
|
|
|
|
|
|
|
|
|
1) pps - percentage points.
Revenue increased by 21% to US$ 301 million in 9M 2021, mainly as a result of an increase in poultry sales volume. Adjusted EBITDA (net of IFRS 16) reached US$ 18 million and US$ 50 million in Q3 2021 and 9M 2021 respectively. An increase in Adjusted EBITDA in Q3 2021 year-on-year was mainly attributable to higher volumes sold and higher operational efficiencies that allowed PP to offset growing cost of raw materials.
Current Group Cash Flow
|
(in mln. US$) |
|
Q3 2021 |
|
Q3 2020 |
|
|
9M 2021 |
|
9M 2020 |
|
Cash from operations |
|
128 |
|
97 |
|
|
278 |
|
196 |
|
Change in working capital |
|
81 |
|
65 |
|
|
(20) |
|
(58) |
|
Net Cash from operating activities |
|
209 |
|
162 |
|
|
258 |
|
138 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in investing activities |
|
(41) |
|
(17) |
|
|
(96) |
|
(94) |
|
Including: |
|
|
|
|
|
|
|
|
|
|
CAPEX1) |
|
(38) |
|
(17) |
|
|
(92) |
|
(58) |
|
Cash from financing activities |
|
(44) |
|
(20) |
|
|
(58) |
|
(33) |
|
Dividends |
|
- |
|
- |
|
|
(38) |
|
(30) |
|
Total financial activities |
|
(44) |
|
(20) |
|
|
(96) |
|
(63) |
|
|
|
|
|
|
|
|
|
|
|
|
Total change in cash2) |
|
124 |
|
125 |
|
|
66 |
|
(19) |
1)Calculated as cash used for Purchases of property, plant and equipment plus cash used for purchases of other non-current assets
2)Calculated as Net Cash from operating activities plus Cash used in investing activities plus Total financial activities
Cash flow from operations before changes in working capital in 9M 2021 amounted to US$ 278 million (9M 2020: US$ 196 million).
Use of funds in working capital during 9M 2021 was mostly related to investments in crops in the fields to be harvested in 2021. The difference compared to 9M 2020 was mainly attributable to lower investments in inventory during 9M 2021 (sunflower and soya) designated for internal consumption.
In 9M 2021 total CAPEX amounted to US$ 92 million mainly related to modernization projects, new products development, maintenance and further improvements at Perutnina Ptuj production facilities.
Debt Structure and Liquidity
|
(in US$, millions) |
|
30 September 2021 |
|
31 December 2020 |
|
30 September 2020 |
|
Total Debt 1) |
|
1,451 |
|
1,462 |
|
1,461 |
|
LT Debt 1) |
|
1,431 |
|
1,453 |
|
1,443 |
|
ST Debt 1) |
|
20 |
|
36 |
|
30 |
|
Trade credit facilities2) |
|
- |
|
(27) |
|
(12) |
|
Cash and bank deposits |
|
(287) |
|
(218) |
|
(305) |
|
Net Debt1) |
|
1,164 |
|
1,244 |
|
1,156 |
|
LTM EBITDA 1) |
|
558 |
|
340 |
|
347 |
|
Net Debt / LTM EBITDA1) |
|
2.09 |
|
3.66 |
|
3.33 |
1) Net of IFRS 16 adjustments: as if any lease that would have been treated as an operating lease under IAS 17 as was in effect before the 1 January 2019, is treated as an operating lease for purposes of this calculation. In accordance with covenants in MHP's bond and loan agreements, these data exclude the effects of IFRS 16 on accounting for operating leases.
2) Indebtedness under trade credit facilities that is required to be repaid within 12 months of drawdown should be excluded for purposes of this calculation.
As of 30 September 2021, the share of long-term debt in the total outstanding debt remained at 99%. The weighted average interest rate was below 7%.
As of 30 September 2021, MHP's cash and cash equivalents amounted to US$ 287 million. Net debt decreased to US$ 1,163 million, compared to US$ 1,244 million as at 31 December 2020.
The Net Debt / LTM adjusted EBITDA (net of IFRS 16) ratio was 2.09 as of 30 September 2021, lower than the limit of 3.0 defined in the Eurobond agreement.
As a hedge for currency risks, revenue from the export of grain, sunflower and soybean oil, sunflower husks, and chicken meat are denominated in US Dollars and Euros, sufficient for covering debt service expenses. Export revenue for 9M 2021 amounted to US$ 843 million or 51% of total revenue (US$ 761 million or 54% of total sales in 9M 2020).
SUBSEQUENT EVENTS/CHANGES IN THE BOARD
The Company announces today that Mr. Yuriy Melnyk, taking into consideration the length of his service as an Executive Director of MHP SE and Chief Operational Officer of MHP SE and the significance of rotation of executive directors, resigned from the Board of MHP SE with effect from 16 November 2021. Mr. Melnyk will continue to serve the Company as First Deputy CEO. Executive Chairman, Dr John Rich commented: "On behalf of the Board, I would like to express my appreciation and thanks to Yuriy Melnyk for the enormous contribution he has made to the success and development of MHP over the last 11 years. We are delighted that he will continue to serve the company as First Deputy CEO."
Outlook
The powerful combination of positive price and weather trends reported at the time of our half-year results in September has continued unabated through the harvesting season, which is now substantially completed with record crop yields. The combination of high global grain prices and actions the Company has taken to lock in forward sales give us confidence that results for the full year will be at the top end of our earlier expectations, with EBITDA in excess of US$ 600 million.
Looking ahead to 2022, some of these trends are expected to soften, and this will be compounded by further substantial cost increases, particularly in fertilizer, fodder and utilities, which we are already experiencing in the fourth quarter of this year. As a result, next year's results are expected to revert to more customary levels after MHP's exceptional performance in 2021.
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) and in the EU.
Ukraine: MHP has the greatest market share (around 57% of industrial production) and 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 15 distribution and logistical centres, 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, Macedonia and Romania and supply products to 15 countries in Europe. Perutnina Ptuj is a vertically integrated company across all states of chicken meat production - feed, hatching eggs production and hatching, breeding, slaughtering, sausages and further poultry processing production.
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 nine-month period ended 30 September 2021
CONTENTS
STATEMENT OF MEMBERS OF THE BOARD OF DIRECTORS................................................................. 3
MANAGEMENT REPORT........................................................................................................................ 4
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2021
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.............................................................................................................................................................. 6
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION..................................... 8
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY..................................... 9
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS............................................... 11
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.............................. 13
1. Corporate information..................................................................................................................... 13
2. Basis of preparation and accounting policies................................................................................... 14
3. Changes in the group structure........................................................................................................ 15
4. Segment information...................................................................................................................... 16
5. Revenue........................................................................................................................................ 19
6. Profit for the period........................................................................................................................ 19
7. Deferred income............................................................................................................................ 20
8. Property, plant and equipment........................................................................................................ 20
9. Inventories and agricultural produce................................................................................................ 20
10. Biological assets......................................................................................................................... 20
11. Share capital............................................................................................................................... 20
12. Bank borrowings.......................................................................................................................... 21
13. Bonds issued.............................................................................................................................. 22
14. Related party balances and transactions....................................................................................... 24
15. Contingencies and contractual commitments................................................................................. 25
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"), as amended, 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 2021 to
30 September 2021 that 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.
17 November 2021
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 Christakis Taoushanis
MANAGEMENT REPORT
Key financial highlights
During the nine-month period ended 30 September 2021 consolidated revenue increased by 16% and amounted to USD 1,646,586 thousand, compared to USD 1,414,017 thousand for the nine-month period ended 30 September 2020. The increase in revenue was mainly attributable to increase in the export and domestic price as well as growth in export volume of chicken meat sold. Export sales for the nine-month period ended 30 September 2021 constituted 51% of total revenue and amounted to USD 842,948 thousand, compared to USD 761,244 thousand, and 54% of total revenue for the nine-month period ended 30 September 2020. The increase in export revenue was mainly attributable to increase in the price and volume of chicken meat sold.
Gross profit increased by 78% and amounted to USD 572,991 thousand for the nine-month period ended
30 September 2021 compared to USD 322,399 thousand for the nine-month period ended 30 September 2020. The increase was driven mainly by higher returns earned by the grain growing and poultry and related operations segments due to increase in grain and poultry meat prices respectively.
Operating profit increased by 114% and amounted to USD 416,153 thousand for the nine-month period ended 30 September 2021 compared to USD 194,410 thousand for the nine-month period ended 30 September 2020, mainly as a result of an increase in gross profit.
Profit from continuing operations for the nine-month period ended 30 September 2021 amounted to USD 376,847 thousand, compared to loss of USD 107,617 thousand for the nine-month period ended 30 September 2020. The growth is mainly due to increase in operating profit as well as appreciation of Ukrainian Hryvnia against US Dollar and EURO, which resulted in foreign exchange gain of USD 74,680 thousand for the nine-month period ended 30 September 2021 compared to loss of USD 190,500 thousand for the nine-month period ended 30 September 2020.
Having regard to the activities of the Group, management believes that the above measures are frequently used by investors, analysts and stakeholders to evaluate the efficiency of the Group's operations. For further information on the above measures, please refer to page 6 of the interim condensed consolidated financial statements for the nine-month period ended 30 September 2021.
Related parties
During the nine-month periods ended 30 September 2021 and 30 September 2020 the Group entered into transactions with related parties that are under common control of the Principal Shareholder of the Group (Note 1) in the ordinary course of business. Detailed information on operations with related parties is disclosed in Note 14.
Dividends
At the extraordinary general meeting, which was held on 28 April 2021, the Shareholders of MHP SE have approved payment of an annual dividend of USD 0.2803 per share, equivalent to USD 30,000 thousand to shareholders on the register as of 7 May 2021. As at 30 September 2021 dividends were fully paid to shareholders.
At its meeting on 17 November, in recognition of the Company's exceptional performance in 2021, the Board of Directors approved the payment of a one-off special dividend of US$ 0.2803 per share, equivalent to USD 30,000 thousand. Details of payment, which is expected to be made in December 2021, will be announced later this month. The Board will consider payment of its customary annual dividend in March 2022.
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 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 2020. A detailed explanation of the risks, and how the Group seeks to mitigate the risks, can be found on pages 154 to 157 of the annual report which is available at www.mhp.com.cy.
COVID-19
In 2020 a new coronavirus disease (COVID-19) spread rapidly all over the world resulting in the announcement of pandemic status by the World Health Organization in March 2020.
The world economy entered a period of unprecedented health care crisis that has already caused considerable global disruption in business activities and everyday life.
Risks and uncertainties (continued)
COVID-19
COVID-19 had an adverse impact on 2020 earnings, mainly because of the impact on prices and exported volumes as many global competitors were experiencing reduced demand and resulting excess capacity. At the end of 2020 and in 9M 2021 the situation stabilized temporarily, although it still could negatively impact the remainder of 2021. These challenges could increase our operating costs and negatively impact our volumes. Management cannot currently predict the ultimate impact that COVID-19 will have on short and long-term demand, as it will depend on, among other things, the severity and duration of the COVID-19 crisis.
Management has concluded that the event does not have an immediate material impact on the business operations. The Company's liquidity is expected to be adequate to continue to run operations and meet obligations as they become due in the foreseeable future.
17 November 2021
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 nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
|
|
|
Nine-month period |
|
Three-month period |
||||
|
|
Notes |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
4, 5 |
1,646,586 |
|
1,414,017 |
|
658,011 |
|
546,569 |
|
Net change in fair value of biological assets and agricultural produce |
4 |
176,279 |
|
29,180 |
|
50,953 |
|
(17,149) |
|
Cost of sales |
|
(1,249,874) |
|
(1,120,798) |
|
(494,058) |
|
(426,035) |
|
Gross profit |
6 |
572,991 |
|
322,399 |
|
214,906 |
|
103,385 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
(159,734) |
|
(134,494) |
|
(54,338) |
|
(46,225) |
|
Other operating income |
|
10,169 |
|
14,063 |
|
2,856 |
|
4,484 |
|
Other operating expenses |
|
(7,273) |
|
(7,558) |
|
(2,425) |
|
(5,275) |
|
Operating profit |
6 |
416,153 |
|
194,410 |
|
160,999 |
|
56,369 |
|
|
|
|
|
|
|
|
|
|
|
Finance income |
|
8,409 |
|
10,483 |
|
2,102 |
|
2,734 |
|
Finance costs |
12, 13 |
(109,347) |
|
(108,014) |
|
(37,581) |
|
(34,978) |
|
Foreign exchange gain/(loss), net |
6, 17 |
74,680 |
|
(190,500) |
|
24,177 |
|
(61,028) |
|
Other expenses, net |
|
(3,226) |
|
(7,127) |
|
(3,153) |
|
(1,919) |
|
Profit/(Loss) before tax |
|
386,669 |
|
(100,748) |
|
146,544 |
|
(38,822) |
|
Income tax expenses |
|
(9,822) |
|
(6,869) |
|
(2,003) |
|
(8,166) |
|
Profit/(Loss) for the period from continuing operations |
6 |
376,847 |
|
(107,617) |
|
144,541 |
|
(46,988) |
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year from discontinued operations |
|
179 |
|
(1,482) |
|
- |
|
- |
|
Profit/(Loss) for the period |
|
377,026 |
|
(109,099) |
|
144,541 |
|
(46,988) |
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (continued)
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
|
|
|
Nine-month period |
|
Nine-month period |
||||
|
|
Notes |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
|
Decrease in revaluation reserve as a result of impairment of property, plant and equipment |
3 |
(3,944) |
|
- |
|
161 |
|
- |
|
Deferred tax on revaluation of property, plant and equipment charged directly to other comprehensive income as result of intercompany sales |
|
|
|
985 |
|
|
|
985 |
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
|
Cumulative translation difference on retranslation to group's presentation currency |
|
45,508 |
|
(208,756) |
|
20,048 |
|
(58,714) |
|
Other comprehensive income/(loss) for the period |
|
41,564 |
|
(207,771) |
|
20,209 |
|
(57,729) |
|
Total comprehensive income/(loss) for the period |
|
418,590 |
|
(316,870) |
|
164,750 |
|
(104,717) |
|
|
|
|
|
|
|
|
|
|
|
Profit/(Loss) attributable to: |
|
|
|
|
|
|
|
|
|
Equity holders of the Parent |
|
360,463 |
|
(112,255) |
|
134,886 |
|
(45,021) |
|
Non-controlling interests |
|
16,563 |
|
3,156 |
|
9,655 |
|
(1,967) |
|
|
|
377,026 |
|
(109,099) |
|
144,541 |
|
(46,988) |
|
Total comprehensive income/(loss) attributable to: |
|
|
|
|
|
|
|
|
|
Equity holders of the Parent |
|
403,067 |
|
(317,797) |
|
154,893 |
|
(102,045) |
|
Non-controlling interests |
|
15,523 |
|
927 |
|
9,857 |
|
(2,672) |
|
|
|
418,590 |
|
(316,870) |
|
164,750 |
|
(104,717) |
|
Earnings/(Loss) per share from continuing and discontinued operations |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings/(loss) per share (USD per share) |
|
3.37 |
|
(1.05) |
|
1.26 |
|
(0.42) |
|
|
|
|
|
|
|
|
|
|
|
Earnings/(Loss) per share from continuing operations |
|
|
|
|
|
|
|
|
|
Basic and diluted earnings/(loss) per share (USD per share) |
|
3.37 |
|
(1.03) |
|
1.26 |
|
(0.42) |
On behalf of the Board:
Chief Executive Officer Yuriy Kosyuk
Chief Financial Officer Viktoriia Kapeliushna
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
|
|
Notes |
30 September 2021 |
|
31 December 2020 |
|
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Property, plant and equipment |
8 |
1,733,215 |
|
1,678,917 |
|
|
Right-of-use asset |
|
240,423 |
|
207,001 |
|
|
Intangible assets |
|
92,417 |
|
96,841 |
|
|
Goodwill |
|
68,292 |
|
70,614 |
|
|
Non-current biological assets |
|
31,313 |
|
25,584 |
|
|
Non-current financial assets |
|
28,385 |
|
23,083 |
|
|
Long-term bank deposits |
|
13,639 |
|
4,612 |
|
|
Deferred tax assets |
|
2,991 |
|
1,822 |
|
|
|
|
2,210,675 |
|
2,108,474 |
|
|
Current assets |
|
|
|
|
|
|
Inventories |
9 |
182,029 |
|
240,715 |
|
|
Biological assets |
10 |
513,608 |
|
175,085 |
|
|
Agricultural produce |
9 |
223,408 |
|
269,045 |
|
|
Prepayments |
|
38,093 |
|
16,776 |
|
|
Other current financial assets |
|
79,645 |
|
81,314 |
|
|
Taxes recoverable and prepaid |
|
55,096 |
|
54,647 |
|
|
Trade accounts receivable |
|
160,577 |
|
119,187 |
|
|
Cash and cash equivalents |
|
286,659 |
|
217,579 |
|
|
|
|
1,539,115 |
|
1,174,348 |
|
|
TOTAL ASSETS |
|
3,749,790 |
|
3,282,822 |
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Share capital |
11 |
284,505 |
|
284,505 |
|
|
Treasury shares |
|
(44,593) |
|
(44,593) |
|
|
Additional paid-in capital |
|
174,022 |
|
174,022 |
|
|
Revaluation reserve |
|
634,042 |
|
648,982 |
|
|
Retained earnings |
|
1,538,209 |
|
1,195,143 |
|
|
Translation reserve |
|
(975,288) |
|
(1,020,229) |
|
|
Equity attributable to equity holders of the Parent |
|
1,610,897 |
|
1,237,830 |
|
|
Non-controlling interests |
|
23,712 |
|
16,373 |
|
|
Total equity |
|
1,634,609 |
|
1,254,203 |
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Bank borrowings |
12 |
47,778 |
|
64,608 |
|
|
Bonds issued |
13 |
1,375,502 |
|
1,370,999 |
|
|
Lease liabilities |
17 |
169,582 |
|
136,495 |
|
|
Deferred income |
7 |
45,516 |
|
44,505 |
|
|
Deferred tax liabilities |
|
29,690 |
|
29,867 |
|
|
Other non-current liabilities |
|
6,785 |
|
7,233 |
|
|
|
|
1,674,853 |
|
1,653,707 |
|
|
Current liabilities |
|
|
|
|
|
|
Trade accounts payable |
|
198,528 |
|
149,768 |
|
|
Other current financial liabilities |
|
68,237 |
|
86,638 |
|
|
Advances received |
|
51,722 |
|
15,227 |
|
|
Bank borrowings |
12 |
16,399 |
|
39,788 |
|
|
Interest payable |
12,13 |
34,843 |
|
21,487 |
|
|
Lease liabilities |
17 |
70,599 |
|
62,004 |
|
|
|
|
440,328 |
|
374,912 |
|
|
TOTAL LIABILITIES |
|
2,115,181 |
|
2,028,619 |
|
|
TOTAL EQUITY AND LIABILITIES |
|
3,749,790 |
|
3,282,822 |
|
|
|
|
|
|
|
|
On behalf of the Board:
Chief Executive Officer Yuriy Kosyuk
Chief Financial Officer Viktoriia Kapeliushna
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
|
|
Attributable to equity holders of the Parent |
|
|
|
|
|
|
||||||||||
|
|
Share capital |
|
Treasury shares |
|
Additional paid-in capital |
|
Revaluation reserve |
|
Retained earnings |
|
Translation reserve |
|
Total |
|
Non-controlling interests |
|
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 1 January 2021 |
284,505 |
|
(44,593) |
|
174,022 |
|
648,982 |
|
1,195,143 |
|
(1,020,229) |
|
1,237,830 |
|
16,373 |
|
1,254,203 |
|
Profit for the period |
- |
|
- |
|
- |
|
- |
|
360,463 |
|
- |
|
360,463 |
|
16,563 |
|
377,026 |
|
Other comprehensive profit |
- |
|
- |
|
- |
|
(2,337) |
|
- |
|
44,941 |
|
42,604 |
|
(1,040) |
|
41,564 |
|
Total comprehensive profit for the period |
- |
|
- |
|
- |
|
(2,337) |
|
360,463 |
|
44,941 |
|
403,067 |
|
15,523 |
|
418,590 |
|
Transfer from revaluation reserve to retained earnings |
- |
|
- |
|
- |
|
(52,198) |
|
52,198 |
|
- |
|
- |
|
- |
|
- |
|
Dividends declared by the Parent (Note 18) |
- |
|
- |
|
- |
|
- |
|
(30,000) |
|
- |
|
(30,000) |
|
- |
|
(30,000) |
|
Dividends declared by subsidiaries |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(9,072) |
|
(9,072) |
|
Non-controlling interests arising in a business combination |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
888 |
|
888 |
|
Translation differences on revaluation reserve |
- |
|
- |
|
- |
|
39,595 |
|
(39,595) |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 30 September 2021 |
284,505 |
|
(44,593) |
|
174,022 |
|
634,042 |
|
1,538,209 |
|
(975,288) |
|
1,610,897 |
|
23,712 |
|
1,634,609 |
On behalf of the Board:
Chief Executive Officer Yuriy Kosyuk
Chief Financial Officer Viktoriia Kapeliushna
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the nine-month period ended 30 September 2020
(in thousands of US dollars, unless otherwise indicated)
|
|
Attributable to equity holders of the Parent |
|
|
|
|
|
|
||||||||||
|
|
Share capital |
|
Treasury shares |
|
Additional paid-in capital |
|
Revaluation reserve |
|
Retained earnings |
|
Translation reserve |
|
Total |
|
Non-controlling interests |
|
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 1 January 2020 |
284,505 |
|
(44,593) |
|
174,022 |
|
862,435 |
|
1,148,113 |
|
(842,188) |
|
1,582,294 |
|
13,572 |
|
1,595,866 |
|
Loss for the period |
- |
|
- |
|
- |
|
- |
|
(112,255) |
|
- |
|
(112,255) |
|
3,156 |
|
(109,099) |
|
Other comprehensive loss |
- |
|
- |
|
- |
|
985 |
|
- |
|
(206,527) |
|
(205,542) |
|
(2,229) |
|
(207,771) |
|
Total comprehensive loss for the period |
- |
|
- |
|
- |
|
985 |
|
(112,255) |
|
(206,527) |
|
(317,797) |
|
927 |
|
(316,870) |
|
Transfer from revaluation reserve to retained earnings |
- |
|
- |
|
- |
|
(60,730) |
|
60,730 |
|
- |
|
- |
|
- |
|
- |
|
Dividends declared by the Parent (Note 18) |
- |
|
- |
|
- |
|
- |
|
(30,000) |
|
- |
|
(30,000) |
|
- |
|
(30,000) |
|
Translation differences on revaluation reserve |
- |
|
- |
|
- |
|
(136,035) |
|
136,035 |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 30 September 2020 |
284,505 |
|
(44,593) |
|
174,022 |
|
666,655 |
|
1,202,623 |
|
(1,048,715) |
|
1,234,497 |
|
14,499 |
|
1,248,996 |
On behalf of the Board:
Chief Executive Officer Yuriy Kosyuk
Chief Financial Officer Viktoriia Kapeliushna
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
|
|
Notes |
Nine-month period ended 30 September 2021 |
|
Nine-month period ended 30 September 2020 |
|
Operating activities |
|
|
|
|
|
Profit/(Loss) before tax |
|
386,669 |
|
(100,748) |
|
Loss/(Profit) before tax from discontinued operations |
|
179 |
|
(1,482) |
|
Non-cash adjustments to reconcile profit or loss before tax to net cash flows |
|
|
|
|
|
Depreciation and amortization expense |
4 |
136,259 |
|
136,959 |
|
Net change in fair value of biological assets and agricultural produce |
4 |
(176,279) |
|
(29,180) |
|
Change in allowance for expected credit losses and direct write-offs |
|
(400) |
|
2,294 |
|
Loss on disposal of property, plant and equipment and other non-current assets |
|
725 |
|
775 |
|
Finance income |
|
(8,409) |
|
(10,483) |
|
Finance costs |
|
109,347 |
|
108,014 |
|
Released deferred income |
|
1,806 |
|
(1,127) |
|
Non-operating foreign exchange loss/(gain), net |
|
(74,680) |
|
190,500 |
|
Operating cash flows before movements in working capital |
|
375,217 |
|
295,522 |
|
Working capital adjustments |
|
|
|
|
|
Change in inventories |
|
65,069 |
|
13,050 |
|
Change in biological assets |
|
(121,468) |
|
(92,319) |
|
Change in agricultural produce |
|
40,836 |
|
35,411 |
|
Change in prepayments made |
|
(20,077) |
|
(667) |
|
Change in other current assets |
|
(1,566) |
|
800 |
|
Change in taxes recoverable and prepaid |
|
3,309 |
|
(7,507) |
|
Change in trade accounts receivable |
|
(40,154) |
|
(6,596) |
|
Change in advances received |
|
34,713 |
|
(28,662) |
|
Change in other current liabilities |
|
(32,823) |
|
1,785 |
|
Change in trade accounts payable |
|
51,799 |
|
26,393 |
|
Cash generated by operations |
|
354,855 |
|
237,210 |
|
Interest received |
|
5,802 |
|
8,742 |
|
Interest paid |
|
(94,991) |
|
(95,578) |
|
Income taxes paid |
|
(7,585) |
|
(12,341) |
|
Net cash flows from/(used in) operating activities |
|
258,081 |
|
138,033 |
|
Investing activities |
|
|
|
|
|
Purchases of property, plant and equipment |
8 |
(85,137) |
|
(53,048) |
|
Purchases of other non-current assets |
|
(6,528) |
|
(5,066) |
|
Proceeds from disposals of property, plant and equipment |
|
5,209 |
|
2,196 |
|
Proceeds from disposals of subsidiary |
3 |
671 |
|
2,700 |
|
Purchases of non-current biological assets |
|
(1,201) |
|
(437) |
|
Acquisition of subsidiaries, net of cash acquired |
3 |
(1,840) |
|
- |
|
Prepayments and capitalized initial direct costs under lease contracts |
|
(4,856) |
|
(3,274) |
|
Investments in short-term deposits |
|
(10,304) |
|
(193) |
|
Withdrawals of short-term deposits |
|
442 |
|
- |
|
Loans repaid by/(provided to) employees, net |
|
(136) |
|
(1,184) |
|
Loans provided to related parties |
14 |
(3,683) |
|
(36,080) |
|
Loans repaid by related parties |
14 |
11,000 |
|
- |
|
Net cash flows used in investing activities |
|
(96,363) |
|
(94,386) |
|
Financing activities |
|
|
|
|
|
Proceeds from bank borrowings |
|
79,533 |
|
76,604 |
|
Repayment of bank borrowings |
|
(116,962) |
|
(93,094) |
|
Repayment of lease liabilities |
|
(19,787) |
|
(14,884) |
|
Dividends paid |
18 |
(30,000) |
|
(30,000) |
|
Dividends paid by subsidiaries to non-controlling shareholders |
|
(8,398) |
|
(930) |
|
Net cash flows used in financing activities |
|
(95,614) |
|
(62,304) |
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
|
|
Notes |
Nine-month period ended 30 September 2021 |
|
Nine-month period ended 30 September 2020 |
|
Net decrease in cash and cash equivalents |
|
66,104 |
|
(18,657) |
|
Net foreign exchange difference on cash and cash equivalents |
|
2,976 |
|
(16,739) |
|
Cash and cash equivalents at 1 January |
|
217,579 |
|
340,735 |
|
Cash and cash equivalents at 30 September |
|
286,659 |
|
305,339 |
|
|
|
|
|
|
|
Non-cash transactions |
|
|
|
|
|
Non-cash repayments of lease liabilities |
|
6,000 |
|
5,727 |
On behalf of the Board:
Chief Executive Officer Yuriy Kosyuk
Chief Financial Officer Viktoriia Kapeliushna
The accompanying notes on the pages 13 to 29 form an integral part of these interim condensed consolidated financial statements
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
1. Corporate information
MHP SE (the "Parent" or "MHP SE"), a limited liability company (Societas Europaea) registered under the laws of Cyprus, was formed on 30 May 2006. Hereinafter, MHP SE and its subsidiaries are referred to as the "MHP SE Group" or the "Group". The registered address of MHP SE is 16-18 Zinas Kanther Street, Agia Triada, 3035 Limassol, Cyprus. The MHP SE shares are listed on the London Stock Exchange ("LSE") in the form of global depositary receipts ("GDRs").
The controlling shareholder of MHP SE is Mr. Yuriy Kosyuk ("Principal Shareholder"), who owns 100% of the shares of WTI Trading Limited ("WTI"), which is the immediate majority shareholder of MHP SE, which in turn directly owns of 59,7% of the total outstanding share capital of MHP SE.
The principal business activities of the Group are poultry and related operations, grain growing, as well as meat processing and other agricultural operations. The Group's poultry and related operations integrate all functions related to the production of chicken, including hatching, fodder manufacturing, raising chickens to marketable age ("grow-out"), processing and marketing of branded chilled products and include the production and sale of chicken products, vegetable oil, mixed fodder. Grain growing comprises the production and sale of grains. Meat processing and other agricultural operations comprise the production and sale of cooked meat, sausages, convenience food products, milk and feed grains. As at 30 September 2021 the Group employed 31,061 people (31 December 2020: 30,471 people).
The primary subsidiaries, the principal activities of the companies forming the Group and the Parent's effective ownership interest as of 30 September 2021 and 31 December 2020 were as follows:
|
Name |
Country of registration |
Year established/ |
Principal activities |
30 September 2021 |
31 December 2020 |
|
|
|
|
|
|
|
|
Raftan Holding Limited1) |
Cyprus |
2006 |
Sub-holding Company |
- |
100.0% |
|
Hemiak Investments Limited1) |
Cyprus |
2018 |
Sub-holding Company |
- |
100.0% |
|
Eledem Investments Limited1) |
Cyprus |
2006 |
Sub-holding Company |
- |
100.0% |
|
MHP Lux S.A. |
Luxembourg |
2018 |
Finance Company |
100.0% |
100.0% |
|
MHP |
Ukraine |
1998 |
Management, marketing and sales |
99.9% |
99.9% |
|
Myronivsky Plant of Manufacturing Feeds and Groats |
Ukraine |
1998 |
Fodder and vegetable oil production |
88.5% |
88.5% |
|
Vinnytska Ptakhofabryka |
Ukraine |
2011 |
Chicken farm |
100.0% |
100.0% |
|
Peremoga Nova |
Ukraine |
1999 |
Breeder farm |
99.9% |
99.9% |
|
Oril-Leader |
Ukraine |
2003 |
Chicken farm |
99.9% |
99.9% |
|
Myronivska Pticefabrika |
Ukraine |
2004 |
Chicken farm |
99.9% |
99.9% |
|
Starynska Ptakhofabryka |
Ukraine |
2003 |
Breeder farm |
100.0% |
100.0% |
|
Zernoprodukt MHP |
Ukraine |
2005 |
Grain cultivation |
99.9% |
99.9% |
|
Katerinopilskiy Elevator |
Ukraine |
2005 |
Fodder production and grain storage, vegetable oil production |
99.9% |
99.9% |
|
SPF Urozhay |
Ukraine |
2006 |
Grain cultivation |
99.9% |
99.9% |
|
Agrofort |
Ukraine |
2006 |
Grain cultivation |
99.9% |
99.9% |
|
MHP-Urozhayna Krayina |
Ukraine |
2010 |
Grain cultivation |
99.9% |
99.9% |
|
Ukrainian Bacon |
Ukraine |
2008 |
Meat processing |
79.9% |
79.9% |
|
MHP-AgroKryazh |
Ukraine |
2013 |
Grain cultivation |
51.0% |
51.0% |
|
MHP-Agro-S |
Ukraine |
2013 |
Grain cultivation |
51.0% |
51.0% |
|
Zakhid-Agro MHP |
Ukraine |
2015 |
Grain cultivation |
100.0% |
100.0% |
|
Perutnina Ptuj d.d. |
Slovenia |
2019 |
Poultry production |
100.0% |
100.0% |
|
MHP Trading FZE |
United Arab Emirates |
2018 |
Trading in vegetable oil and poultry meat |
100.0% |
100.0% |
|
MHP Food Trading |
United Arab Emirates |
2016 |
Trading in vegetable oil and poultry meat |
100.0% |
100.0% |
|
MHP B.V. |
Netherlands |
2014 |
Trading in poultry meat |
100.0% |
100.0% |
|
MHP Trade B.V. |
Netherlands |
2018 |
Trading in poultry meat |
100.0% |
100.0% |
1) On 19 April 2021 merger of MHP SE with its subsidiaries, namely Raftan Holding ltd, Hemiak Investments ltd and Eledem Investments ltd, took place. All assets and liabilities of merging companies have been transferred to the succeeding company MHP SE. Subsidiary companies were dissolved
The Group's primary operational facilities are located in different regions of Ukraine as well as in Southeast Europe, including Slovenia, Serbia, Croatia and Bosnia and Herzegovina.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
2. Basis of preparation and accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the nine-month period ended 30 September 2021 have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") have been condensed or omitted. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of the Group management, necessary to fairly state the results of interim periods. Interim results are not necessarily indicative of the results to be expected for the full year.
These interim condensed consolidated financial statements have been prepared on the assumption that the Group is a going concern and will continue in operation for the foreseeable future.
The 31 December 2020 statement of financial position was derived from the audited consolidated financial statements, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. Audited consolidated financial statements are available at www.mhp.com.cy.
Adoption of new and revised International Financial Reporting Standards
The adoption of the new or revised Standards did not have any effect on the financial position or performance of the Group and did not result in any changes to the Group's accounting policies and the amounts reported in the interim condensed consolidated financial statements of the Group.
Functional and presentation currencies
The functional currency of Ukrainian companies of the Group is the Ukrainian Hryvnia ("UAH"); the functional currency of the Cyprus companies and Luxembourg company of the Group is US Dollars ("USD"), the functional currency of the other European companies of the Group is EURO ("EUR"), the functional currency of the United Arab Emirates companies is Dirham ("AED"). Transactions in currencies other than the functional currency of the entities concerned are treated as transactions in foreign currencies. Such transactions are initially recorded at the rates of exchange ruling at the dates of the transactions. Monetary assets and liabilities denominated in such currencies are translated at the rates prevailing on the reporting date. All realized and unrealized gains and losses arising on exchange differences are recognized in the consolidated statement of profit or loss and other comprehensive income for the period.
These consolidated financial statements are presented in US Dollars ("USD"), which is the Group's presentation currency.
The results and financial position of the Group are translated into the presentation currency using the following procedures:
· Assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate as of the reporting date of that statement of financial position;
· Income and expenses for each consolidated statement of profit or loss and other comprehensive income are translated at exchange rates at the dates of the transactions;
· The exchange differences arising on translation for consolidation are recognised in other comprehensive income and presented as a separate component of equity. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is reclassified to profit or loss;
· All equity items, except for the revaluation reserve, are translated at the historical exchange rate. The revaluation reserve is translated at the closing rate as of the date of the statement of financial position.
For practical reasons, the Group translates items of income and expenses for each period presented in the financial statements using the quarterly average exchange rates, if such translations reasonably approximate the results translated at exchange rates prevailing at the dates of the transactions.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
2. Basis of preparation and accounting policies (continued)
Functional and presentation currencies (continued)
The following exchange rates were used:
|
Currency |
Closing rate as of 30 September 2021 |
Average for nine months ended 30 September 2021 |
Average for three months ended 30 September 2021 |
Closing rate as of 31 December 2020 |
Average for nine months ended 30 September 2020 |
Average for three months ended 30 September 2020 |
|
UAH/USD |
26.5760 |
27.4866 |
26.9110 |
28.2746 |
26.5261 |
27.5996 |
|
UAH/EUR |
30.9810 |
32.9022 |
31.7388 |
34.7396 |
29.8292 |
32.2429 |
|
USD/EUR |
1.1658 |
1.1970 |
1.1794 |
1.2287 |
1.1245 |
1.1682 |
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2020.
Seasonality of operations
Poultry and related operations, European operating segment and Meat processing and other agricultural operations are not significantly exposed to seasonal fluctuations.
Due to seasonality and implications of IAS 41, results of the Grain growing segment in the first half of the year mainly reflects sales of carried forward agricultural produce and the effect of biological assets revaluation, while during the second half of the year it reflects sales of crops and the effect of revaluation of agricultural produce harvested during the year. Also, grain growing segment has seasonal requirements for working capital increase from November to May, due to the sowing campaign.
3. Changes in the group structure
Discontinued operation
During the nine-month period ended 30 September 2020, the Group disposed of the Snyatynska poultry farm, which carried out goose meat and foie gras operations located in Ukraine, and was previously presented within Meat processing and other agricultural operations segment. Net assets as of the date of disposal amounted to USD 3,303 thousand. The total cash consideration amounted to USD 2,700 thousand, which was received during this reporting period.
During the nine-month period ended 30 September 2021, the Group disposed of the assets of its subsidiary Dobropilskyi GPP PrJSC, which was located in Ukraine and carried out grain storage operations, and was previously presented within Poultry and related operations segment. The net assets as of the date of disposal amounted to USD 620 thousand. Before sale the property plant and equipment included into the net assets disposed were impaired by USD 4,105 thousand. Impairment was recognized as decrease in revaluation reserve related to those property, plant and equipment. The total cash consideration amounted to USD 671 thousand, which was received during this reporting period.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the consolidated statement of profit or loss. All other notes to the financial statements include amounts for continuing operations, unless otherwise mentioned.
Acquisitions
On 01 June 2021, the Group acquired 51% share in the company Lubnym`yaso LLC, Ukrainian meat production plant, whose main economic activity is the production and sale of beef meat under the trade mark Scott Smeat. As of the date of acquisition, the net assets of the acquired meat production plant amounted to USD 1,800 thousand. Purchase consideration of acquired share is equal to USD 1,840 thousand and was paid in cash. The goodwill in the amount of USD 921 thousand is attributable to the expectations that this acquisition will support strategic transformation to a culinary company through launch of additional products.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
4. Segment information
The Group's business is managed on a worldwide basis, but operates manufacturing facilities and sales offices primarily in Ukraine and Europe.
Reportable segments are presented in a manner consistent with the internal reporting to the Group's chief operating decision maker ("CODM").
Segment information is analysed on the basis of the types of goods supplied by the Group's operating divisions. The Group's reportable segments under IFRS 8 are as follows:
|
Poultry and related operations segment:
|
• sales of chicken meat • sales of vegetable oil and related products • other poultry related sales |
|
Grain growing operations segment: |
• sales of grain |
|
Meat processing and other agricultural operations segment: |
• sales of meat processing products and other meat • other agricultural operations (milk, feed grains and other) |
|
European operating segment: |
• sales of meat processing and chicken meat products in Southeast Europe |
The accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 2. Sales between segments are carried out at market prices. The segment result represents operating profit under IFRS before unallocated corporate expenses and loss on impairment of property, plant and equipment. Unallocated corporate expenses include management remuneration, representative expenses, and expenses incurred in respect of the maintenance of office premises. This is the measure reported to the CODM for the purposes of resource allocation and assessment of segment performance.
European operating segment primarily includes sales of chicken meat and meat processing products, produced in the facilities of Perutnina Ptuj. However, the CODM manages this as a single segment, on the basis that each of research, development, manufacture, distribution and selling of chicken meat and meat processing products requires single marketing strategies, centralised budgeting process and centralised management of production operations.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
4. Segment information (continued)
The following table presents revenue and profit information regarding the Group's operating segments for the nine-month period ended 30 September 2021:
|
|
Poultry and related operations |
Grain growing operations |
Meat processing and other agricultural operations |
European operating segment |
Total reportable segments |
Eliminations |
Consolidated |
|
|
|
|
|
|
|
|
|
|
External sales |
1,140,327 |
79,245 |
126,158 |
300,856 |
1,646,586 |
- |
1,646,586 |
|
Sales between business segments |
33,532 |
134,539 |
267 |
- |
168,338 |
(168,338) |
- |
|
Total revenue |
1,173,859 |
213,784 |
126,425 |
300,856 |
1,814,924 |
(168,338) |
1,646,586 |
|
Segment results |
139,107 |
245,855 |
6,795 |
39,058 |
430,815 |
- |
430,815 |
|
Unallocated corporate expenses |
|
|
|
|
|
|
(14,662) |
|
Other expenses, net 1) |
|
|
|
|
|
|
(29,484) |
|
Profit before tax from continuing operations |
|
|
|
|
|
|
386,669 |
|
Other information: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense 2) |
71,343 |
45,932 |
4,685 |
13,258 |
135,218 |
- |
135,218 |
|
|
|
|
|
|
|
|
|
|
Net change in fair value of biological assets and agricultural produce |
7,010 |
164,812 |
2,774 |
1,683 |
176,279 |
- |
176,279 |
1) Includes finance income, finance costs, foreign exchange gain (net) and other expenses (net).
2) Depreciation and amortization for the nine-month period ended 30 September 2021 does not include unallocated depreciation and amortization in the amount of USD 1,041 thousand.
The following table presents revenue and profit information regarding the Group's operating segments for the nine-month period ended 30 September 2020:
|
|
Poultry and related operations |
Grain growing operations |
Meat processing and other agricultural operations |
European operating segment |
Total reportable segments |
Eliminations |
Consolidated |
|
|
|
|
|
|
|
|
|
|
External sales |
970,066 |
90,258 |
106,052 |
247,641 |
1,414,017 |
- |
1,414,017 |
|
Sales between business segments |
26,461 |
138,148 |
260 |
- |
164,869 |
(164,869) |
- |
|
Total revenue |
996,527 |
228,406 |
106,312 |
247,641 |
1,578,886 |
(164,869) |
1,414,017 |
|
Segment results |
106,765 |
61,195 |
9,561 |
26,375 |
203,896 |
- |
203,896 |
|
Unallocated corporate expenses |
|
|
|
|
|
|
(9,486) |
|
Other expenses, net 1) |
|
|
|
|
|
|
(295,158) |
|
Loss before tax from continuing operations |
|
|
|
|
|
|
(100,748) |
|
Other information: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense 2) |
73,391 |
44,305 |
5,132 |
13,733 |
136,561 |
- |
136,561 |
|
|
|
|
|
|
|
|
|
|
Net change in fair value of biological assets and agricultural produce |
(10,733) |
38,996 |
(307) |
1,224 |
29,180 |
- |
29,180 |
1) Includes finance income, finance costs, foreign exchange gain (net) and other expenses (net).
2) Depreciation and amortization for the nine-month period ended 30 September 2020 does not include unallocated depreciation and amortization in the amount of USD 662 thousand.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
4. Segment information (continued)
The following table presents revenue and profit information regarding the Group's operating segments for the three-month period ended 30 September 2021:
|
|
Poultry and related operations |
Grain growing operations |
Meat processing and other agricultural operations |
European operating segment |
Total reportable segments |
Eliminations |
Consolidated |
|
|
|
|
|
|
|
|
|
|
External sales |
432,975 |
66,756 |
48,536 |
109,744 |
658,011 |
- |
658,011 |
|
Sales between business segments |
13,487 |
14,935 |
119 |
- |
28,541 |
(28,541) |
- |
|
Total revenue |
446,462 |
81,691 |
48,655 |
109,744 |
686,552 |
(28,541) |
658,011 |
|
Segment results |
46,144 |
103,646 |
(169) |
15,139 |
164,760 |
- |
164,760 |
|
Unallocated corporate expenses |
|
|
|
|
|
|
(3,761) |
|
Other expenses, net 1) |
|
|
|
|
|
|
(14,455) |
|
Profit before tax from continuing operations |
|
|
|
|
|
|
146,544 |
|
Other information: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense 2) |
24,181 |
17,131 |
1,321 |
4,175 |
46,808 |
- |
46,808 |
|
|
|
|
|
|
|
|
|
|
Net change in fair value of biological assets and agricultural produce |
(11,416) |
62,658 |
(208) |
(81) |
50,953 |
- |
50,953 |
1) Includes finance income, finance costs, foreign exchange gain (net) and other expenses (net).
2) Depreciation and amortization for the three-month period ended 30 September 2021 does not include unallocated depreciation and amortization in the amount of USD 385 thousand.
The following table presents revenue and profit information regarding the Group's operating segments for the three-month period ended 30 September 2020:
|
|
Poultry and related operations |
Grain growing operations |
Meat processing and other agricultural operations |
European operating segment |
Total reportable segments |
Eliminations |
Consolidated |
|
|
|
|
|
|
|
|
|
|
External sales |
361,754 |
55,664 |
38,636 |
90,515 |
546,569 |
- |
546,569 |
|
Sales between business segments |
11,542 |
44,451 |
94 |
- |
56,087 |
(56,087) |
- |
|
Total revenue |
373,296 |
100,115 |
38,730 |
90,515 |
602,656 |
(56,087) |
546,569 |
|
Segment results |
34,998 |
12,359 |
4,351 |
8,311 |
60,019 |
- |
60,019 |
|
Unallocated corporate expenses |
|
|
|
|
|
|
(3,650) |
|
Other expenses, net 1) |
|
|
|
|
|
|
(95,191) |
|
Profit before tax from continuing operations |
|
|
|
|
|
|
(38,822) |
|
Other information: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense 2) |
22,872 |
20,522 |
1,625 |
4,285 |
49,304 |
- |
49,304 |
|
|
|
|
|
|
|
|
|
|
Net change in fair value of biological assets and agricultural produce |
(16,960) |
1,272 |
(678) |
(783) |
(17,149) |
- |
(17,149) |
1) Includes finance income, finance costs, foreign exchange gain (net) and other expenses (net).
2) Depreciation and amortization for the three-month period ended 30 September 2020 does not include unallocated depreciation and amortization in the amount of USD 181 thousand.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
4. Segment information (continued)
Non-current assets based on the geographic location of the manufacturing facilities were as follows as of
30 September 2021 and 31 December 2020:
|
|
2021 |
|
2020 |
|
|
|
|
|
|
Ukraine |
1,915,283 |
|
1,816,045 |
|
Europe |
250,377 |
|
262,912 |
|
|
2,165,660 |
|
2,078,957 |
1) Non-current assets excluding deferred tax assets, long-term bank deposits and non-current financial assets.
5. Revenue
Revenue for the nine-month and three-month periods ended 30 September 2021 and 2020 was as follows:
|
|
Nine-month period |
|
Three-month period |
||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
Poultry and related operations segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicken meat |
891,990 |
|
730,410 |
|
345,523 |
|
277,871 |
|
Vegetable oil and related products |
195,383 |
|
207,682 |
|
68,099 |
|
72,533 |
|
Other poultry related sales |
52,955 |
|
31,974 |
|
19,353 |
|
11,350 |
|
|
1,140,328 |
|
970,066 |
|
432,975 |
|
361,754 |
|
|
|
|
|
|
|
|
|
|
Grain growing operations segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grain |
79,245 |
|
90,258 |
|
66,756 |
|
55,664 |
|
|
79,245 |
|
90,258 |
|
66,756 |
|
55,664 |
|
|
|
|
|
|
|
|
|
|
Meat processing and other agricultural operations segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other meat |
101,860 |
|
85,078 |
|
40,563 |
|
31,746 |
|
Other agricultural sales |
24,298 |
|
20,974 |
|
7,973 |
|
6,890 |
|
|
126,158 |
|
106,052 |
|
48,536 |
|
38,636 |
|
|
|
|
|
|
|
|
|
|
European operating segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicken meat |
196,567 |
|
157,008 |
|
76,835 |
|
62,618 |
|
Other meat |
80,036 |
|
71,095 |
|
23,858 |
|
20,647 |
|
Other agricultural sales |
24,252 |
|
19,538 |
|
9,051 |
|
7,250 |
|
|
300,855 |
|
247,641 |
|
109,744 |
|
90,515 |
|
|
1,646,586 |
|
1,414,017 |
|
658,011 |
|
546,569 |
The geographic structure of revenue for the nine-month and three-month periods ended 30 September 2021 and 2020 was as follows:
|
|
Nine-month period |
|
Three-month period |
||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
Export |
842,948 |
|
761,244 |
|
341,384 |
|
308,523 |
|
Domestic |
803,638 |
|
652,773 |
|
316,627 |
|
238,046 |
|
|
1,646,586 |
|
1,414,017 |
|
658,011 |
|
546,569 |
6. Profit for the period
The Group's gross profit for the nine-month period ended 30 September 2021 increased compared to the nine-month period ended 30 September 2020 and amounted to USD 572,991 thousand (30 September 2020: USD 322,399 thousand). The increase was driven mainly by higher returns earned by the grain growing and poultry and related operations segments due to increase in grain and poultry meat prices respectively.
The Group's operating profit increased mainly as a result of an increase in gross profit partly offset by increase of administration, sales and distribution expenses.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
6. Profit for the period (continued)
The Group's profit for the period from continuing operations for the nine-month period ended 30 September 2021 increased compared to the nine-month period ended 30 September 2020 from USD 107,617 thousand of loss to profit of USD 376,847 thousand. A positive impact was attributable to growth of operating profit and an unrealized foreign exchange gain amounted to USD 74,680 thousand for the nine-month period ended 30 September 2021 compared to loss in amount of USD 190,500 thousand for the nine-month period ended 30 September 2020. Unrealized foreign exchange loss for the nine-month period ended 30 September 2021 was mostly attributable to bonds and bank borrowings denominated in foreign currencies due to UAH depreciation against USD and EUR.
7. Deferred income
Government grants for compensation of construction and reconstruction of livestock farms and compensation of cost of machinery and equipment are presented in the statement of the financial position as deferred income, which is recognised in profit or loss on a systematic basis over the useful life of the related assets. All other compensations received were recognised in consolidated statement of profit or loss and other comprehensive income in full. During the nine-month period ended 30 September 2021 the Group recognized government compensations in the consolidated statement of profit or loss and other comprehensive income in amount of USD 5,802 thousand (2020: USD 5,303 thousand).
During the nine-month periods ended 30 September 2021 and 30 September 2020, the Group received government compensations in accordance with EU farming subsidies policy and other compensations in accordance with the EU national programs of employment, assigned contributions for employees, and refunds of excise duties in amount of USD 4,705 thousand and USD 4,868 thousand respectively.
8. Property, plant and equipment
During the nine-month period ended 30 September 2021, the Group's additions to property, plant and equipment amounted to USD 85,137 thousand (nine-month period ended 30 September 2020: USD 53,048 thousand) mainly related to modernization projects, new products development and the maintenance and improvement of Perutnina Ptuj production facilities.
There were no significant disposals of property, plant and equipment during the nine-month periods ended 30 September 2021 and 30 September 2020.
The remaining part of the movement mainly relates to translation difference into the presentation currency.
9. Inventories and agricultural produce
A decrease of agricultural produce balances for nine-month period ended 30 September 2021 was mainly as a result of internal consumption of corn, sunflower, wheat and soya partly offset by harvest of current year.
Changes of inventory balances occurred due to consumption of purchased grain stock and due to the fact that as of 31 December 2020 expenses incurred in cultivating of fields which had to be planted in spring 2021 were capitalised in work in progress balance. As of 30 September 2021 these expenses were classified as crops in fields within biological assets, as the plants were already sown.
10. Biological assets
The increase in current biological assets as compared to 31 December 2020 is primarily related to crops in fields balance. The increase in crops in fields balance mainly relates to spring crops seeded in the first half of 2021 classified as biological assets as well as due to IAS 41 revaluation adjustment.
11. Share capital
As of 30 September 2021 and 31 December 2020 the authorized, issued and fully paid share capital of MHP SE comprised the following number of shares:
|
|
30 September 2021 |
|
31 December 2020 |
|
|
|
|
|
|
Number of shares issued and fully paid |
110,770,000 |
|
110,770,000 |
|
Number of shares outstanding |
107,038,208 |
|
107,038,208 |
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
11. Share capital (continued)
The authorized share capital as of 30 September 2021 and 31 December 2020 was EUR 221,540 thousand represented by 110,770,000 shares with par value of EUR 2 each.
All shares have equal voting rights and rights to receive dividends, which are payable at the discretion of the Group.
12. Bank borrowings
The following table summarizes bank borrowings and credit lines outstanding as of 30 September 2021 and 31 December 2020:
|
|
|
|
|
30 September 2021 |
|
31 December 2020 |
||
|
|
|
Currency |
|
WAIR 1) |
USD' 000 |
|
WAIR 1) |
USD' 000 |
|
|
|
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
|
|
|
|
|
EUR |
|
EURIBOR2) + 1.69% |
47,778 |
|
EURIBOR2) + 2.62% |
63,142 |
|
|
|
EUR |
|
|
- |
|
2.54% |
1,466 |
|
|
|
|
|
|
47,778 |
|
|
64,608 |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
UAH |
|
|
- |
|
6.25% |
3,537 |
|
|
|
USD |
|
|
- |
|
LIBOR + 3.25% |
15,000 |
|
|
|
EUR |
|
|
- |
|
2.30% |
8,601 |
|
Current portion of |
|
EUR |
|
EURIBOR2) + 1.69% |
16,399 |
|
EURIBOR2) + 2.62% |
12,650 |
|
|
|
|
|
|
16,399 |
|
|
39,788 |
|
Total bank borrowings |
|
|
|
64,177 |
|
|
104,396 |
|
1) WAIR represents the weighted average interest rate on outstanding borrowings.
2) According to the agreements terms, if market EURIBOR becomes negative, it shall be deemed to be zero for calculation of interest expense.
The Group's borrowings are drawn from various banks as term loans, credit line facilities and overdrafts. Repayment terms of principal amounts of bank borrowings vary from monthly repayment to repayment on maturity depending on the agreement reached with each bank. Interest on borrowings drawn with foreign banks is payable semi-annually.
As of 30 September 2021 and 31 December 2020, the Group's bank term loans and credit lines bear floating and fixed interest rates.
Bank borrowings and credit lines outstanding as of 30 September 2021 and 31 December 2020 were repayable as follows:
|
|
30 September 2021 |
|
31 December 2020 |
|
|
|
|
|
|
Within one year |
16,399 |
|
39,788 |
|
In the second year |
44,169 |
|
17,196 |
|
In the third to fifth year inclusive |
3,609 |
|
47,412 |
|
|
64,177 |
|
104,396 |
As of 30 September 2021, the Group had available undrawn facilities of USD 304,974 thousand (31 December 2020: USD 304,910 thousand). These undrawn facilities expire during the period from April 2022 until July 2024.
The Group, as well as particular subsidiaries of the Group has to ensure ongoing compliance with the following maintenance covenants imposed by the banks providing the loans: EBITDA to interest expenses ratio, current ratio and liabilities to equity ratio. Separately, when the Groups Net Debt to EBITDA ratio exceeds 3.0 to 1, negative covenants become applicable in respect of restricted payments, including dividends, capital expenditures, additional indebtedness and restrictions on mergers or consolidations, limitations on liens and dispositions of assets and limitations on transactions with affiliates. The Group subsidiaries are also required to obtain approval from lenders regarding property, plant and equipment to be used as collateral. During the nine-month period ended 30 September 2021 and year ended
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
12. Bank borrowings (continued)
31 December 2020 the Group has complied with all bank covenants. As at 30 September 2021, the Group's leverage ratio improved to 2.09 to 1 from 3.66 to 1 as at 31 December 2020.
The Group's bank borrowings are jointly and severally guaranteed by MHP, Myronivsky Plant of Manufacturing Feeds and Groats, Oril-Leader, Peremoga Nova, Starynska Ptakhofabryka, Zernoproduct MHP, Katerinopilskiy Elevator, Agrofort, SPF Urozhay, MHP SE, Scylla Capital Limited, Myronivska Pticefabrika, Vinnytska Ptakhofabryka, Zakhid-Agro MHP, MHP-Urozhayna Krayina.
As of 30 September 2021, the Group had borrowings of USD 38,936 thousand that were secured by property, plant and equipment with a carrying amount of USD 68,365 thousand (31 December 2020: USD 45,958 thousand and USD 83,837 thousand respectively).
As of 30 September 2021, the Group did not have any borrowings that were secured by agricultural produce (31 December 2020: borrowings of USD 15,000 thousand were secured by agricultural produce with carrying amount of USD 18,750 thousand).
As of 30 September 2021, the deposit with carrying amount of USD 2,627 thousand (31 December 2020: USD 3,632 thousand) was restricted as collateral to secure bank borrowings.
As of 30 September 2021 and 31 December 2020, interest payable on bank borrowings was USD 312 thousand and USD 730 thousand, respectively.
13. Bonds issued
Bonds issued and outstanding as of 30 September 2021 and 31 December 2020 were as follows:
|
|
Carrying amount |
|
Nominal amount |
||||
|
|
30 September 2021 |
|
31 December 2020 |
|
30 September 2021 |
|
31 December 2020 |
|
|
|
|
|
|
|
|
|
|
7.75% Senior Notes due in 2024 |
490,037 |
|
487,480 |
|
500,000 |
|
500,000 |
|
6.95% Senior Notes due in 2026 |
537,807 |
|
536,153 |
|
550,000 |
|
550,000 |
|
6.25% Senior Notes due in 2029 |
347,658 |
|
347,366 |
|
350,000 |
|
350,000 |
|
Unamortized debt issuance cost |
- |
|
- |
|
(24,498) |
|
(29,001) |
|
Total bonds issued |
1,375,502 |
|
1,370,999 |
|
1,375,502 |
|
1,370,999 |
As of 30 September 2021 and 31 December 2020 amount of interest payable on bonds issued was USD 34,531 thousand and USD 20,757 thousand, respectively.
6.25% Senior Notes
On 19 September 2019, MHP Lux S.A., a public company with limited liability (société anonyme) incorporated in 2018 under the laws of the Grand Duchy of Luxembourg, issued USD 350,000 thousand 6.25% Senior Notes due in 2029 at par value. The funds received were used to satisfy and discharge the 8.25% Senior Notes due in April 2020, for debt refinancing and for general corporate purposes.
All expenses associated with the placement of the 6,25% Senior Notes amounted to USD 2,888 thousand and were capitalized.
The Senior Notes are jointly and severally guaranteed on a senior basis by MHP SE, PrJSC "Oril - Leader", PrJSC "Myronivska Pticefabrika", "SPF "Urozhay" LLC, "Starynska Ptakhofabryka" ALLC, "Vinnytska Ptakhofabryka" LLC, "Peremoga Nova" SE, "Katerinopolskiy Elevator" LLC, PrJSC "MHP", PrJSC "Zernoprodukt MHP" and PrJSC "Agrofort".
Interest on the Senior Notes is payable semi-annually in arrears. These Senior Notes are subject to certain restrictive covenants including, but not limited to, limitations on the incurrence of additional indebtedness in excess of Net Debt to EBITDA ratio as defined by the indenture, restrictions on mergers or consolidations, limitations on liens and dispositions of assets and limitations on transactions with affiliates. If the Group fails to comply with the covenants imposed, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may, upon written notice to the Group, declare all outstanding Senior Notes to be due and payable immediately. If a change of control occurs, the Group shall make an offer to each holder of the Senior Notes to purchase such Senior Notes at a purchase price in cash in an amount equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest and additional amounts, if any.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
13. Bonds issued (continued)
6.95% Senior Notes
On 3 April 2018, MHP Lux S.A. issued USD 550,000 thousand 6.95% Senior Notes due in 2026 at par value. Out of the total issue amount USD 416,183 thousand were designated for redemption and exchange of the existing 8.25% Senior Notes due in 2020.
The part of expenses, connected with placement of the 6,95% Senior Notes amounted to USD 11,564 thousand were capitalized, including USD 10,413 thousands related to the exchange. All other related expenses in the amount of USD 32,915 thousand were expensed as incurred.
As a result of a non-substantial modification, the difference between the present value of the cash flows under the original and modified terms discounted at the original effective interest rate was recognised as a gain in the amount of USD 4,733 thousand at the date of modification in the consolidated profit or loss.
The Senior Notes are jointly and severally guaranteed on a senior basis by MHP SE, PrJSC "MHP", PJSC "Myronivsky Plant of Manufacturing Feeds and Groats", PrJSC "Zernoprodukt MHP", PrJSC "Agrofort", PrJSC "Oril-Leader", PrJSC "Myronivska Pticefabrika", "SPF "Urozhay" LLC, "Starynska Ptakhofabryka" ALLC, "Vinnytska Ptakhofabryka" LLC, "Peremoga Nova" SE, "Katerinopolskiy Elevator" LLC, Scylla Capital Limited.
Interest on the Senior Notes is payable semi-annually in arrears. These Senior Notes are subject to certain restrictive covenants including, but not limited to, limitations on the incurrence of additional indebtedness in excess of Net Debt to EBITDA ratio as defined by the indenture, restrictions on mergers or consolidations, limitations on liens and dispositions of assets and limitations on transactions with affiliates. If the Group fails to comply with the covenants imposed, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may, upon written notice to the Group, declare all outstanding Senior Notes to be due and payable immediately. If a change of control occurs, the Group shall make an offer to each holder of the Senior Notes to purchase such Senior Notes at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any.
7.75% Senior Notes
On 10 May 2017, MHP SE issued USD 500,000 thousand 7.75% Senior Notes due in 2024 at par value. Out of the total issue the amount of USD 245,200 thousand were designated for redemption and exchange of existing 8.25% Senior Notes due in 2020.
The carrying amount of the Senior Notes was adjusted on transition to IFRS 9. Under IFRS 9, as a result of a non-substantial modification, the difference between the present value of the cash flows under the original and modified terms discounted at the original effective interest rate should be recognised as a gain at the date of modification. The difference between the carrying amount of the Senior Notes under IAS 39 and IFRS 9 was recognised in opening retained earnings in the amount of USD 7,566 thousand.
The Senior Notes are jointly and severally guaranteed on a senior basis by PrJSC "MHP", PJSC "Myronivsky Plant of Manufacturing Feeds and Groats", PrJSC "Zernoprodukt MHP", PrJSC "Agrofort", PrJSC "Oril-Leader", PrJSC "Myronivska Pticefabrika", "SPF "Urozhay" LLC, "Starynska Ptakhofabryka" ALLC, Vinnytska Ptakhofabryka LLC, SE "Peremoga Nova", "Katerinopolskiy Elevator" LLC, Scylla Capital Limited.
Interest on the Senior Notes is payable semi-annually in arrears. These Senior Notes are subject to certain restrictive covenants including, but not limited to, limitations on the incurrence of additional indebtedness in excess of Net Debt to EBITDA ratio as defined by the indenture, restrictions on mergers or consolidations, limitations on liens and dispositions of assets and limitations on transactions with affiliates. If the Group fails to comply with the covenants imposed, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may, upon written notice to the Group, declare all outstanding Senior Notes to be due and payable immediately. If a change of control occurs, the Group shall make an offer to each holder of the Senior Notes to purchase such Senior Notes at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
13. Bonds issued (continued)
Covenants
Certain restrictions under the indebtedness agreements (e.g. incurrence of additional indebtedness, restricted payments, dividends payment) are dependent on the leverage ratio of the Group. Once the leverage ratio exceeds 3.0 to 1, it is not permitted for the Group to make certain restricted payments, declare dividends exceeding USD 30 million in any financial year, incur additional debt except that is defined as a Permitted Debt. According to the indebtedness agreement, the consolidated leverage ratio is tested on the date of incurrence of additional indebtedness or restricted payment and after giving pro forma effect to such incurrence or restricted payment as if it had been incurred or done at the beginning of the most recent four consecutive fiscal quarters for which financial statements are publicly available (or are made available). The Group has tested all the transactions occurred prior to publication of these financial statements and has complied with all the covenants defined by indebtedness agreement during the reporting periods ended 30 September 2021 and 31 December 2020.
As at 30 September 2021 the leverage ratio of the Group is 2.09 to 1 (31 December 2020: 3.66 to 1), lower than the defined limit 3.0 to 1. The Group believes that since as at the interim reporting date, it improved the leverage ratio and met the covenants imposed, the aforementioned restrictions are no longer applicable to the Group from 9 September 2021 the date of publication of reviewed interim condensed consolidated financial statements for the three and six months ended 30 June 2021.
14. Related party balances and transactions
For the purposes of these financial statements, parties are considered to be related if one party controls, is controlled by, or is under common control with the other party, or exercises significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.
Related parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be effected on the same terms and conditions as transactions between unrelated parties.
Transactions with related parties
The Group enters into transactions with related parties that are under common control of the Principal Shareholder of the Group (Note 1) in the ordinary course of business for the purchase and sale of goods and services and in relation to the provision of financing arrangements.
Terms and conditions of sales to related parties are determined based on arrangements specific to each contract or transaction. The terms of the payables and receivables related to trading activities of the Group do not vary significantly from the terms of similar transactions with third parties.
Transactions with related parties during the nine-month periods ended 30 September 2021 and 30 September 2020 were as follows:
|
|
2021 |
|
2020 |
|
|
|
|
|
|
Loans and finance aid provided to related parties |
3,683 |
|
36,080 |
|
Loans and finance aid repaid by related parties |
11,000 |
|
- |
|
Interest charged on loans and finance aid provided |
3,890 |
|
2,723 |
|
Interest on loans and financial aid repaid |
4,418 |
|
2,476 |
|
Sales of goods |
- |
|
76 |
|
Purchases from related parties |
391 |
|
12 |
|
|
|
|
|
|
Key management personnel of the Group: |
|
|
|
|
Loans provided |
631 |
|
1,722 |
|
Loans repaid |
576 |
|
716 |
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
14. Related party balances and transactions (continued)
Transactions with related parties (continued)
The balances owed to and due from related parties were as follows as of 30 September 2021 and 31 December 2020:
|
|
30 September 2021 |
|
31 December 2020 |
|
|
|
|
|
|
Loans and finance aid receivable |
65,350 |
|
73,035 |
|
Less: expected credit losses |
(4,399) |
|
(4,340) |
|
|
60,951 |
|
68,695 |
|
|
|
|
|
|
Loans to key management personnel |
4,683 |
|
4,698 |
|
Less: expected credit losses |
(417) |
|
(218) |
|
|
4,266 |
|
4,480 |
|
|
|
|
|
|
Trade accounts receivable |
115 |
|
109 |
|
Payables due to related parties |
25 |
|
17 |
Loans and finance aid receivable
On 21 January 2020, the Board approved a loan facility of up to USD 80,000 thousand to the company's principal shareholder, WTI Trading Limited ("WTI") to meet WTI's general liquidity requirements and other corporate purposes for a maximum of three years.
As of 30 September 2021, the Group had advanced loans to WTI in the aggregate amount of USD 60,000 thousand (31 December 2020: USD 67,400 thousand). The loans, with a maturity in December 2021 - June 2022, bear interest at a rate of 8.25% to 9.25% and are secured by a personal guarantee of WTI's ultimate beneficial owner.
Expected credit losses on these loans amounted to USD 1,761 thousand as at 30 September 2021 (31 December 2020: USD 1,969 thousand).
The Group's Directors believe that the loans were issued at arm's length terms and for fair market value, and that they were in the best interests and for the commercial benefit of the Group and do not violate the terms of the Senior Notes (Note 13).
Compensation of key management personnel
Total compensation of the Group's key management personnel that was paid for for the periods ended 30 September 2021 and 2020 amounted to USD 15,853 thousand and USD 11,916 thousand, respectively. Compensation of key management personnel consists of contractual salary and performance bonuses.
15. Contingencies and contractual commitments
Operating environment
Since 2016, the Ukrainian economy, which represents the core operating environment of the Group, has been demonstrating signs of stabilization after the years of political and economic tensions. Until the break-out of the coronavirus (COVID-19) pandemic in the first quarter 2020, the real GDP has been steadily growing, however it decreased by around 4.2% for year ended 31 December 2020. Real GDP increased by around 2.4% year on year for the nine-month period ended 30 September 2021 compared to decrease of 5.5% for the nine-month period ended 30 September 2020. The annual inflation amounted to 11.0% (2020: 2.3%).
Ukraine continues to limit its political and economic ties with Russia, in view of the annexation of Crimea, an autonomous republic of Ukraine, and an armed conflict with separatists continuing in certain parts of Luhanska and Donetska regions. As a result, the Ukrainian economy is refocusing on the EU market by realizing the potential of the established Deep and Comprehensive Free Trade Area with the EU.
To further facilitate business activities in Ukraine, the National Bank of Ukraine (the "NBU") has lifted the foreign currency proceeds surrender requirement from 20 June 2019, cancelled all limits on repatriation of dividends from July 2019 and gradually decreased its rate of refinancing, from 18.0% in January 2019 to 8.5% in November 2021.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
15. Contingencies and contractual commitments (continued)
Operating environment (continued)
The degree of macroeconomic uncertainty in Ukraine in 2021 still remains high due to a significant amount of public debt scheduled for repayment in 2021, which requires mobilizing substantial domestic and external financing in an increasingly challenging financing environment for the emerging markets. At the same time, the Ukrainian authorities have demonstrated their commitment to introduce reforms in order to boost economic growth, while maintaining macro-fiscal stability and liberalizing economic environment.
Further economic growth depends, to a large extent, upon the success of the Ukrainian government in realization of the planned structural reforms and effective cooperation with the International Monetary Fund (the "IMF") as well as the ability of the government to cope with the macroeconomic challenges posed by the confinement measures introduced to contain the spread of COVID-19.
The responses put in place by many countries, including Ukraine and the EU, to contain the spread of COVID-19 resulted in significant operational disruption for many companies and have significant impact on global financial markets. While food supply chains proved to be largely resilient during the pandemic and the confinement measures are now being progressively lifted or adapted in Ukraine and other countries, many uncertainties yet remain around the economic recovery, and thus around the evolution of the consumer demand and the supply chain stability. In particular, the forecast magnitude of the recession is such that it is expected to lead to a sharp increase in unemployment in the EU, negatively impacting private consumption and limiting the Group's ability to enjoy benefits from export supplies to the EU and other key markets.
Management has considered all available information about the future, including the impact of the COVID-19 outbreak on customers, suppliers and staff, as well as actual and projected foreseeable impact from various other factors. Management will continue to monitor the situation closely and will assess the need for additional measures in case the period of disruption prolongs or escalates further.
The Group reviews its non-financial assets to determine if any external or internal indicators of impairment exists. Based on these reviews, there were no indicators of impairment as of 30 September 2021.
Taxation and legal issues
The Group performs most of its operations in Ukraine and therefore falls within the jurisdiction of the Ukrainian tax authorities. Ukrainian legislation and regulations regarding taxation and other operational matters, including currency exchange control and custom regulations, continue to evolve. Legislation and regulations are not always clearly written and are subject to varying interpretations by local, regional and national authorities, and other Governmental bodies. Non-compliance with Ukrainian laws and regulations can lead to the imposition of severe penalties and fines. Future tax examinations could raise issues or assessments which are contrary to the Group companies' tax filings. Such assessments could include taxes, penalties and fines, and these amounts could be material. While the Group believes it has complied with local tax legislation, there are new significant changes to the tax legislation that may be introduced in the near future.
Management believes that the Group has been in compliance with all requirements of effective tax legislation.
The Group exports vegetable oil, chicken meat and related products, and performs intercompany transactions, which may potentially be in the scope of the Ukrainian transfer pricing ("TP") regulations. The Group has submitted the controlled transaction report for the years ended 31 December 2018 and 31 December 2019 within the required deadlines.
As of 30 September 2021, the Group's management assessed its possible exposure to tax risks for a total amount of USD 5,808 thousand related to corporate income tax (31 December 2020: USD 5,459 thousand). No provision was recognised relating to such possible tax exposure.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
15. Contingencies and contractual commitments (continued)
Operating environment (continued)
As of 30 September 2021, companies of the Group were engaged in ongoing litigation with tax authorities for the amount of USD 66,003 thousand (31 December 2020: USD 36,616 thousand), including USD 53,652 thousand (31 December 2020: USD 26,153 thousand) of litigations with the tax authorities related to disallowance of certain amounts of VAT refunds and deductible expenses claimed by the Group. Out of this amount, USD 22,917 thousand as of 30 September 2021 (31 December 2020: USD 289 thousand) relates to cases where court hearings have taken place and where the court in either the first or second instance has already ruled in favour of the Group. In addition, the Group maintains disputes with tax authorities in the amount USD 7,955 thousand, which are not brought to the Court as at 30 September 2021.
Manage-ment believes that, based on the past history of court resolutions of similar lawsuits by the Group, it is unlikely that a significant settlement will arise out of such lawsuits and no respective provision is required in the Group's financial statements as of the reporting date.
Contractual commitments on purchase of property, plant and equipment
During the nine-month period ended 30 September 2021, the companies of the Group entered into a number of contracts with foreign suppliers for the purchase of property, plant and equipment for the development of agricultural operations. As of 30 September 2021, purchase commitments on such contracts were primarily related to modernization projects, new products development and the maintenance and improvement of Perutnina Ptuj production facilities and amounted to USD 27,446 thousand (31 December 2020: USD 15,396 thousand).
16. Fair value of financial instruments
Fair value disclosures in respect of financial instruments are made in accordance with the requirements of IFRS 7 "Financial Instruments: Disclosure" and IFRS 13 "Fair value measurement". Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As no readily available market exists for a large part of the Group's financial instruments, judgment is necessary in arriving at fair value, based on current economic conditions and specific risks attributable to the instrument. The estimates presented herein are not necessarily indicative of the amounts the Group could realize in a market exchange from the sale of its full holdings of a particular instrument.
The fair value is estimated to be the same as the carrying value for cash and cash equivalents, short-term bank deposits, trade accounts receivables, and trade accounts payable due to the short-term nature of the financial instruments.
Set out below is the comparison by category of carrying amounts and fair values of all the Group's financial instruments, excluding those discussed above, that are carried in the consolidated statement of financial position:
|
|
Carrying amount |
|
Fair value |
||
|
|
30 September 2021 |
31 December 2020 |
|
30 September 2021 |
31 December 2020 |
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank borrowings (Note 12) |
64,489 |
105,126 |
|
58,996 |
103,737 |
|
Senior Notes due in 2024, 2026, 2029 (Note 13) |
1,410,033 |
1,391,756 |
|
1,482,897 |
1,515,005 |
The carrying amount of Bank borrowings and Senior Notes issued includes interest payable at each of the respective dates.
The fair value of bank borrowings was estimated by discounting the expected future cash outflows by a market rate of interest for bank borrowings 2.7% (31 December 2020: 3.4%), and is within Level 2 of the fair value hierarchy.
The fair value of Senior Notes was estimated based on market quotations and is within Level 1 of the fair value hierarchy
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
17. Risk management policy
During the nine-month period ended 30 September 2021 there were no changes to objectives, policies and processes for credit risk, capital risk, interest rate risk, livestock diseases risk and commodity price and procurement risk managing.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to settle all liabilities as they are due. The Group's liquidity position is carefully monitored and managed. The Group has in place a detailed budgeting and cash forecasting process to help ensure that it has adequate cash available to meet its payment obligations.
The following table details the Group's remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities using the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows as of 30 September 2021 and 31 December 2020. The amounts in the table may not be equal to the statement of financial position carrying amounts since the table includes all cash outflows on an undiscounted basis.
|
|
Carrying amount |
Contractual Amounts |
Less than |
From 2nd to 5th year |
After 5th year |
|
30 September 2021 |
|
|
|
|
|
|
Bank borrowings |
64,489 |
66,078 |
17,561 |
48,517 |
- |
|
Bonds issued |
1,410,033 |
1,882,375 |
98,850 |
1,367,900 |
415,625 |
|
Lease liabilities |
240,181 |
458,435 |
65,511 |
205,039 |
187,885 |
|
Trade accounts payable |
198,528 |
198,528 |
198,528 |
- |
- |
|
Other current financial liabilities |
68,237 |
68,237 |
68,237 |
- |
- |
|
Total |
1,981,468 |
2,673,653 |
448,687 |
1,621,456 |
603,510 |
|
|
|
|
|
|
|
|
31 December 2020 |
|
|
|
|
|
|
Bank borrowings |
105,126 |
109,620 |
42,150 |
67,470 |
- |
|
Bonds issued |
1,391,756 |
1,942,738 |
98,850 |
837,275 |
1,006,613 |
|
Lease liabilities |
198,499 |
405,127 |
57,204 |
184,699 |
163,224 |
|
Trade accounts payable |
149,768 |
149,768 |
149,768 |
- |
- |
|
Other current financial liabilities |
86,638 |
86,638 |
86,638 |
- |
- |
|
Total |
1,931,787 |
2,693,891 |
434,610 |
1,089,444 |
1,169,837 |
|
|
|
|
|
|
|
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Group undertakes certain transactions denominated in foreign currencies.
The Group does not use any derivatives to manage foreign currency risk exposure, Group management sets limits on the level of exposure to foreign currency fluctuations.
The carrying amounts of the Group's foreign currency denominated monetary assets and liabilities as of
30 September 2021 and 31 December 2020 were as follows:
|
|
30 September 2021 |
|
31 December 2020 |
||
|
|
USD |
EUR |
|
USD |
EUR |
|
|
|
|
|
|
|
|
Total assets |
238,604 |
71,704 |
|
209,298 |
31,412 |
|
Total liabilities |
1,416,091 |
40,148 |
|
1,416,722 |
59,904 |
Notes to the INTERIM CONDENSED Consolidated financial statements
for the nine-month period ended 30 September 2021
(in thousands of US dollars, unless otherwise indicated)
17. Risk management policy (continued)
Currency risk (continued)
The table below details the Group's sensitivity to strengthening/(weakening) of the UAH against USD and EUR. This sensitivity range represents management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for possible change in foreign currency rates.
|
|
Change in foreign currency exchange rates |
|
Effect on profit before tax |
|
2021 |
|
|
|
|
|
|
|
|
|
Increase in USD exchange rate |
15% |
|
(176,623) |
|
Increase in EUR exchange rate |
15% |
|
4,733 |
|
|
|
|
|
|
Decrease in USD exchange rate |
15% |
|
176,623 |
|
Decrease in EUR exchange rate |
15% |
|
(4,733) |
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
|
Increase in USD exchange rate |
15% |
|
(181,114) |
|
Increase in EUR exchange rate |
15% |
|
(4,274) |
|
|
|
|
|
|
Decrease in USD exchange rate |
15% |
|
181,114 |
|
Decrease in EUR exchange rate |
15% |
|
4,274 |
|
|
|
|
|
During the nine-month period ended 30 September 2021, the Ukrainian Hryvnia appreciated against the EUR by 12.1% and against the USD by 6.4% (nine-month period ended 30 September 2020: depreciated against the EUR and USD by 20.2% and 16.3% respectively). As a result, during the nine-month period ended 30 September 2021 the Group recognised net foreign exchange gain in the amount of USD 74,680 thousand (nine-month period ended 30 September 2020: foreign exchange loss in the amount of USD 190,500 thousand) in the interim condensed consolidated statement of profit or loss and other comprehensive income.
18. Dividends
At the extraordinary general meeting, which was held on 28 April 2021, the Shareholders of MHP SE have approved payment of an annual dividend of USD 0.2803 per share, equivalent to USD 30,000 thousand to shareholders on the register as of 7 May 2021. As at 30 September 2021 dividends were fully paid to shareholders.
On 13 April 2020, the Board of Directors approved payment of an interim dividend of USD 0.2803 per share, equivalent to USD 30,000 thousand to shareholders on the register as of 24 April 2020. As at 31 December 2020 dividends were fully paid to shareholders.
19. Subsequent events
At its meeting on 17 November, in recognition of the Company's exceptional performance in 2021, the Board of Directors approved the payment of a one-off special dividend of US$ 0.2803 per share, equivalent to USD 30,000 thousand. Details of payment, which is expected to be made in December 2021, will be announced later this month. The Board will consider payment of its customary annual dividend in March 2022.
20. Authorization of the interim condensed consolidated financial statements
These interim condensed consolidated financial statements were authorized for issue by the Board of Directors of MHP SE on 17 November 2021.