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Financial Results for Q3 & 9M 2021

18th Nov 2021 07:09

RNS Number : 8050S

MHP SE

18 November 2021

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$, unless indicated otherwise)	Q3 2021	Q3 2020	% change1) YoY	9M 2021	9M 2020	% change1)
(in mln. US$, 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.

The dial-in details are:
Time:	14.00 London / 16.00 Kyiv / 09.00 New York
Title:	Financial results for Q3 and 9M 2021
UK:	+44 203 984 9844
Ukraine:	+380 89 324 0624
USA:	+1 718 866 4614

PIN code:	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$, unless indicated otherwise)	Q3 2021	Q3 2020	% change YoY1)	Q2 2021	% change QoQ1)	9M 2021	9M 2020	% change1)
(in mln. US$, 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$, unless indicated otherwise)	9M 2021	9M 2020	% change
(in mln. US$, 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
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
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$, except margin data)	Q3 2021	Q3 2020	% change YoY1)	Q2 2021	% change QoQ1)	9M 2021	9M 2020	% change1)
(in mln. US$, 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
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
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$, except margin data)	Q3 2021	Q3 2020	% change YoY1)	Q2 2021	% change QoQ1)	9M 2021	9M 2020	% change1)
(in mln. US$, 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 to30 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 ended30 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 periodended 30 September		Three-month periodended 30 September
	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 periodended 30 September		Nine-month periodended 30 September
	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/acquired	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 of30 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 periodended 30 September		Three-month periodended 30 September
	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 periodended 30 September		Three-month periodended 30 September
	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 oflong-term bank borrowings	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 1 year	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 of30 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

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.

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