Myronivsky Hliboproductone of Ukraines leadingagro-industrial companies
J.P.Morgan Credit and Equities Emerging market conference October,2015 Good afternoon and good morning. Thank you for joining us todayfor MHPsconference call. During the call we would like to present you MHPs financialresults for the second quarter and semi annuals of 2015 ended 30 June I need to tell you that some of the things we discuss today are forwardlooking statements. Therefore I encourage you to use todays press releasefor the detailed information regarding our financial statement. On todays call we have CFO of MHP Victoriya Kapelyushnaya and myself,Anastasiya Sobotyuk, Head of Investor Relations and Communications. Wewill lead you through the presentation. As usual, at the end of the presentation we will have a question and answersession. Hope, everybody is ready, so we can start our call now. Slide #3 Macro Fundamentals. Disclaimer These materials may not be copied, published, distributed or transmitted. These materials do not constitute an offer to sell or the solicitation of an offer to buy the securities to be offered in connection with the offering. Those securities have not been, and will not be, registered under the United States Securities Act of 1933 (the Securities Act) and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. This presentation is made to and directed only at (i) persons outside the United Kingdom, (ii) investment professionals falling within Article 19(5) of the Financial and Markets Act 200 (Financial Promotion) Order 2005 (the Order), and (iii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (such persons, Relevant Persons). The Notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Notes will be engaged in only with, relevant persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents. This presentation contains forward looking statements, including statements about MHP S.A. beliefs and expectations. These statements are based on MHP S.A. current plans, estimates and projections, as well as its expectations of external conditions and events. All projections, valuations and statistical analyses are provided to assist the recipient in the evaluation of the matters described herein. They may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results and, to the extent that they are based on historical information, they should not be relied upon as an accurate prediction of future performance. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. This presentation is furnished on a confidential basis only for the use of the intended recipient and only for discussion purposes, may be amended and/or supplemented without notice and may not be relied upon for the purposes of entering into any transaction. The information presented herein will be deemed to be superseded by any subsequent versions of this presentation and is subject to the information later appearing in any related prospectus, offering circular, pricing supplement or other offer document. The information in this presentation is being provided by MHP S.A. The joint lead managers make no representation or warranty, express or implied, as to the accuracy or completeness of the information in this presentation, and nothing in this presentation is, or shall be relied upon as, a promise or representation by the joint lead managers. Certain information presented herein (including market data and statistical information) has been obtained from various sources which MHP S.A. considers to be reliable. However, MHP S.A. makes no representation as to, and accepts no responsibility or liability whatsoever for, the accuracy or completeness of such information. October 2015 MHPThe Leading Agro-industrial Company in Ukraine
Business Highlights 2015 Leading poultry producer in Ukraine: around 40% in poultry consumption and around 60% of industrially produced chicken in Ukraine Robust business model of vertical integration MHP operates a leading agricultural business with crop yields significantly higher than Ukraines average Poultry business is substantially supported by grain growing segment, which provides fodder for the poultry segment Vertically-integrated business provides best-in-class margins and a hedge against commodity price fluctuations Key operational figures Revenue andEBITDA Capacity as of September, 2015 Agricultural land bank in Ukraine 360,000 ha Meat processing(sausages, convenience food, etc) 100,000 t Chickens processing per week (heads) 8 million Poultry meat 600,000 t Feed production 1,650,000 t Sunflower oil production 300,000 t Good morning everyone, My name is Viktoriya Kapelyushna, I am Chief Financial Officer of MHP. Our company is a leading producer of chicken meat in Ukraine, with share about 50% in industrial production and 35% in consumption. Also we cultivate one of the largest land bank, including 320 thousand hectares in Ukraine and 40 thousand hectares in Voronezh region of Russian Federation. Our business is truly vertically integrated with the highest level of vertical integration compared to the same businesses anywhere in the world Despite challenging environment our business demonstrates high profitability during all our history October 2015 Macro Fundamentals GDP and CPI Dynamic Consumption per Capita by Meats
In H GDP was -16,3% with IMF forecast -9% in 2015 Inflation by the end of Q was over 40% year-to-date Currency ratio has stabilized in Q at between UAH per 1 USD Domestic consumption of meat is rather stable with consumer preference for poultry meat Ukraine is expected to gather strong harvest of over 60 million tonnes of which 36 million tonnes are to be exported Consumption per Capita by Meats UAH/USD Dynamic Ukraine's GDP in the second quarter of 2015 fell by 14.7% year-over-year. Economy ministry forecasts 0.4% GDP growth in Q4, 2015. The IMF and the government during the first review of the Extended Fund Facility program (EFF) changed their forecast for the fall in GDP this year to 9%, inflation - to 45.8%. The State Statistics Service in July 2015, for the first time since August 2013, recorded deflation in Ukraine which amounted to 1%, while in June inflation was 0.4%, in May - 2.2%. in annual terms - compared to the same month in inflation slowed to 55.3% from 57.5% in June. In general, over the first seven months of 2015 consumer prices in Ukraine increased by 39.3%. During Q currency rate has stabilized within a corridor of UAH per 1 USD. The NBU has the task to increase foreign exchange reserves and it is ready to do this in unlimited quantities at the lower end of the corridor UAH 21 per 1$ according to NBU Head Valeriya Gontareva. Over the last four months the country's foreign trade balance and current account have been balanced, and the NBU has sufficient international reserves standing at $12 billion. One of the recent news is that Ukraine and its main creditors agreed yesterday to restructure $18 billion of the countrys foreign debt, in a rare deal between bond funds and an emerging-market government. If the deal is approved by the Parliament of Ukraine, it would write off 20 percent of the nations foreign debt, helping to avoid a drawn-out. The deal also helps Ukraine meet a requirement of the International Monetary Fund to save $15.3 billion by reducing payments to commercial creditors over four years. Ukraine had to do so as a condition of receiving $34.7 billion in I.M.F. loans and aid from the United States and other Western nations. Several words about consumption of meat in Ukraine and harvest. In H consumption of different kinds of meat was rather stable with significant preference to poultry meat, first of all, because of affordability. We expect this trend will continue in the medium term future. Ukraine is expected to gather strong harvest of over 60 million tonnes of which 36 million tonnes are to be exported. Coming back to the Companys results, lets go on slide #4 Lets start from Macro Fundamentals during the first half of the year: Ukrainian GDP decreased by 3%. Fitch rating recently downgraded sovereign rating of Ukraine in national currency from B- to CCC and is expecting Ukrainian GDP to fall up to 6.5% this year. Year-on-year inflation constituted almost 6% Ukraines currency devalued against US dollar by around 50% year-on-year Ukraine is expected to gather one of the best harvests for the last 20 years of around 58 million tonnes (based on USDA estimates) Lets proceed to MHP operational results As usual MHP demonstrated strong results in operations: Poultry sales volume has increased by 23% more year-on-year mostly due to the Vinnytsia complex growth in capacity Due to the strong domestic demand, MHPs sales volumes in Ukraine in H increased by around 30% y-o-y Export of chicken meat in H increased by 4% year-on-year and reached 57,560 tonnes and constituted 23% of total poultry sales mainly due to an increased of sales to the Middle East, Northern Africa and some CIS countries. I would like to notify that the Russian Federation banned MHPs export since February Those volumes have been successfully redirected to other regions. During H MHP sold over 137,000 tonnes of sunflower oil, which is 23% more than in H1 2013 As a result of favorable weather and application of best practice technologies, MHP has strong harvest of early and late crops this year Lets move on Slide #7 Source: Company Information, SSSU October 2015 Unique Integrated Business model
MHP is fully self-sufficient in corn production and most other raw materialsa key competitive advantage to its peers worldwide Less exposure to commodity cost volatility due to high level of self-sufficiency Grain Sunflower Protein Fodder SunflowerHusks Hatching Eggs * Poultry ConvenienceFood, Processed Meat and Sausages Distribution Retail Own grain production satisfies 100% of the Companys corn and 15% of sunflower needs Special technology for producing protein from sunflower seeds 100% of fodder produced at 4 fodder mills. Grain stored specialised facilities Efficient operations waste recycling 100% self-sufficient in hatching eggs 100% of poultry processedat own facilities Well recognized nationwide brand Lehko! Growing share of processed meat and sausage market 100% of poultry delivered to customers within 24 hours 40% of poultry is sold via dedicated outlets Significant increase in capacities in (around 580,000 tons of chicken meat in 2015) 360,000 hectares of land under control in Ukraine Over 290,000 tonnes of sunflower oil 4 fodder mills Own grain storage facilities Increased self sufficiency in energy supplies to ensure lower costs 2 breeder farms *, around 300 mm hatching eggs per year 4 broiler farms, 580,000 tonnes of chicken meat per year Over 100,000 tonnes of convenience foods, sausages and cooked meat per year Fleet of around 500 vehicles Approx. 2,600 dedicated outlets The level of vertical integration of our business is the highest compared to the similar businesses anywhere in the world We cultivate corn and sunflower for our own consumption on 70% of our lands, we are 100% self-sufficient in corn and 15% self-sufficient in sunflower seeds. We process sunflower seeds to receive protein for fodder production and sunflower oil as by-product for export sales. All fodder for our chickens we produce and deliver by our self. Till August 2014 we were completely self-sufficient in hatching eggs, now after closure of one breeding farm in Eastern part of Ukraine- we are forced to export about 20% of eggs for meat production. We operate 5 poultry farm, each of them includes hatchery, growing premises, slaughter house and rendering. The biggest two are Vinnitska and Mironivska poultry farm, each produces 220 thousand tons per year. We sell and deliver chicken meat products across Ukraine through own distribution network. Our key sale channel on the domestic market are supermarkets (40%) franchisee network (40%) and the rest 20% we sell to meat processors, HORECa and distributors. * Till August 2014 we were completely self-sufficient in hatching eggs, now after closure one of our breeding farm in Donetsk region - we are forced toimport about 30% of eggs for poultry production. Financial Results by Segments
Based on H1 2015 Poultry and Related operations Grain Growing Segment Other Agricultural Segment Unallocated US$m Poultry andRelated Grain OtherAgriculture MHPConsolidated Revenue 452 52 47 551 % of Total Revenue 82% 9% 100% incl. Export sales 212 29 - 241 Gross Profit 175 63 7 245 EBITDA 206 62 (5) 270 EBITDA Contribution by Segment 76% 23% 3% -2% EBITDA Margin, % 46% n/a* 15% 49% Poultry segment, US$m Grain segment, US$m Other agro segment, US$m Total export sales, US$m Thank you, Anastasia! Good afternoon everyone. I will provide you with more detailed information about our financial results for the first half of 2015. We are on Slide #5, which shows our financial results by segment. As usual, poultry segment in H generated about 82% of total revenue and 76% of Companys EBITDA. Demand for level poultry meat remained high and stable. Of course national currency devaluation cause expectedly lower financial results compared to the previous year. Nevertheless, significant domestic price growth together with not so rapid increase in production cost resulted in stable and even higher margins for the segments financial results in H (+1% in Gross Margin, and+3% in Ebitda Margin). The grain segment contribution to total EBITDA includes the IAS41 effect was 23% and 9% of total revenue. Our third and smallest segment - Other agricultural operations - generated about 9% of consolidated revenue and 3% of consolidated EBITDA. We will discuss the development of all segments in details on the next slides. Our export operations generated about 44% of total revenue million dollars, almost the same amount as last year Please go to the next Slide #6 poultry segment *Adjusted EBITDA margin was calculated based on total sales, which would include inter-segment sales, of the grain growing operations segment, it would comprise 66%. October 2015 MHP: Profitability Revenue and EBITDA
Sustainable superior business profitability due to the vertical integration model and skilful cost control despite commodity price fluctuations Adjusted EBITDA margins of MHP were at consistently high levels, which confirms sustainability of MHPs operations despite challenges in Ukraine MHPs gross profit and EBITDA margins are much higher than those of international peers Superior profitability: 2014 EBITDA margin Adjusted EBITDA margin: Consolidated, Poultry, Grain Despite challenging environment our business demonstrates high profitability during all our history Our two key segments poultry and grain under one roof provide us a natural hedge against commodities price fluctuations Note: (1) Annual figures otherwise stated Source: Company information October 2015 MHP by Segments Grain Growing Operations
Segmental Performance 2014 Crops Yield of MHP vs. Ukrainian Average Current total land bank constituted 360,000 hectares In 2015 MHP expects to harvest around 330,000 hectares in Ukraine Harvesting campaign of sunflower, cornand soybeans recently started The Company expects good harvest Tonnes perha * 2015 Early Crops Yield of MHP vs. Ukrainian Average Lets start from Macro Fundamentals: There was no growth of GDP in 2013 against 2012 Deflation ration was 0.3% Ukraines currency was stable Ukraine gathered one of the best harvest for the last 20 years of around 60 million tonnes, which positively reflected in the countrys agri production increase by around14% year-on-year despite substantial grain price decrease internationally Lets proceed to MHP operational results As usual MHP demonstrated good results in operations: Overall poultry production volume has increased to around 473,000 tonnes, 17% more year-on-year mostly due to the Vinnytsia complex growth in capacity MHPs market share comprised around 50% of industrially produced chicken, constituted around one third of total poultry consumption in Ukraine Poultry export more than doubled and reached 123,000 tonnes of frozen meat, which is 28% of total poultry sales in 2013 However, due to a significant increase in the share of lower-priced exports sales, the average chicken meat price in 2013 decreased by 7% against 2012 As a result of favourable weather and application of best practice technologies, MHP gathered strong harvest of around 2 million tonnes Later during this presentation Victoria will provide you with more details with regard to the operational and financial results in grain growing segment. Lets move on Slide #6 * *- bunker weight Source: Company Information, SSSU October 2015 Grain Growing Financials H1 2015
UAH/USD 21.36 10.29 % US$m H115 H114 Revenue 52 19 174% IAS 41 standard gains 31 43 -28% Gross profit 63 47% EBITDA 62 40% Revenue H raised by 174% year-on-year and amounted to US$ 52 million mainly due to sales of 2014 harvest EBITDA H amounted to US$ 62 million mainly fromsales of grain harvested in 2014 as well as the effect of IAS 41 related to crops in fields as of 30 June 2015. Land Bank and EBITDA Dynamic Due to the harvest cycle and seasonality in grain division, the financial result of the segment is largely received in the second half of the year. In H Revenue increased almost 3 times compared to first months of 2014 and totaled US$52 million due to higher volumes of corn and wheat sold. EBITDA constituted US$ 62, and includes the effect of IAS 41 standard gains of US$ 31 million. In 2015 we will harvest in grain segment about hectares and driven by an increased land bank as a result of assets swap with Agrokultura - and quit good weather conditions, MHP expects a strong harvest and good financial results in even with current low grain prices level. The same as last year, financial result of grain segment will be positively affected bythe fact that most part of production expenses in this segment were spent in late 2014 early 2015 where exchange rate was lower than now. Lets proceed to the Slide #8 * - forecast October 2015 Poultry Production Capacity H1 2015
Vinnytsia Complex the Largest Poultry Facility in Europe Phase 1 of the Vinnytsia project (US$750 million investment) is in operations Owing to the increasing production volumes at the Vinnytsia poultry farm, poultry production volumes in H increased by 4% to 278,430 tonnes (H1 2014: 268,880 tonnes) Myronivka and Oril Leader farms to be expanded in 2015 at rearing sites so that first poultry volumes are expected in 2016 MHP is going to start investments in Phase 2 of Vinnytsia project at the end of 2015 aiming to increase chicken meat production volume by additional 100,000 tonnes in Capacity Increase Schedule CAGR (20102015)E: 10% Vinnytsia project 900 825 725 645 CAGR (20062010E): 28% Myronivka project 547 475 285 This year we increase our chicken meat production volume by approximately 15% - to 550 thousand tons due to put into operations additional 3 growing premises on Vinnitska poultry farm. In 2015 we will produce 600 thousand tons of chicken meat, as new Vinnitsa facilities will operate at full capacity during full year. We are going to start investments in 2-nd phase of Vinnitsa project in 2015 aiming to increase chicken meat production volume by additional 100,000 tons in About 30% of chicken meat we sell for export to different market, our export geography is diversified well and includes more than 40 contries in CIS, EU, Middle East and Northern Africa regions. In 2013 poultry export more than doubled and reached 123,000 tonnes of frozen meat At the beginning of 2013 about 50% of our total export was to Custom Union countries. In H MHP did not export to the Customs Union countries, as a result of the import ban imposed by the members of the Customs Union in the beginning of February 2014. But despite unfavorable conditions, MHP managed to redirect most of the volumes to the Middle East, Northern Africa, European Union and some CIS countries, further diversifying export markets and export volumes in H even slightly increased year-on-year. 225 173 133 October 2015 Poultry Export Export Volumes, 2011- H1 2015
In H poultry exports increased by 15% compared to H and reached 66,020 tonnes MHP stands for around 85% of total poultry exportfrom Ukraine Currently 4 MHP facilities has the EU license MHP persuades geographical diversification across exportmarkets Despite MHPs exports to Custom Union countries have beenbanned since February 2014, export volumes redirectedsuccessfully to other regions Export Volumes, H1 2015 Export Geography, 2010 CIS region: 8 countries Slide #7 Ukrainian industrial poultry market remained consolidated, where MHPs share comprised around 50% Having exported 123,000 tonnes of chicken, MHP accounted for around 85% of total poultry export from Ukraine MHP followed the strategy of export sales diversification, current main markets are CIS, Asia and the Middle East countries as well as the EU market and opened 20 new markets Lets start discussion of the financial results. Slide #9 Source: Company information, SSSU Note: by sales volume October 2015 Poultry and Related Operations Financials H1 2015
Volume Dynamic F UAH/USD 21.61 11.70 % 21.36 10.29 US$m Q215 Q214 H115 H114 Revenue 257 291 -12% 452 554 -18% - Poultry and other 196 231 -15% 338 437 -23% - Sunflower oil 61 60 2% 114 117 -3% IAS 41 standard gains (1) 20 n/a 37 -46% Gross profit 79 113 -30% 175 211 -17% Gross margin 31% 39% -8pps 38% 1pps EBITDA 93 123 -24% 206 238 -13% EBITDA margin 36% 42% -6pps 46% 43% 3pps EBITDA per 1 kg (net IAS 41) 0.65 0.74 0.72 0.80 -10% H Revenue and EBITDA In H chicken sales volume remained relatively flat (slightly grew by 2% year-on-year). Sales on domestic market in Q decreased by 8% year-on-year as a result of decreased sales in Donetsk and Luhansk regions of Ukraine. At the same time, export sales of H increased by 15% mostly due to higher volumes exported to European Union and also supported by the development of new markets. Export sales accounted for about 26% of total chicken meat sold in the first half of 2015. Average chicken price in H increased by ~60% - mostly due to domestic price growth reached +42% year-on-year Average export price decreased by approximately 10% in H compared to the same period of last year due to negative trend in income per capita in few CIS countries - as well as due to lower leg prices (about 20% of our export are chicken quarters and USA is real price-maker for this product). Average export price in first half of 2015 was 1.47 dollars per kg Average poultry production costs in H expectedly increased by around 40% year-on-year firstly - due to imported hatching eggs (we imported about 30% of total needs - to cover shortage after closing Shakhtarska breeding farm), secondly due to higher fodder cost as well as inflated overall production expenses. From other side hryvna devaluation gave us better production cost of sunflower protein, partially recovering negative factors. Financial results of poultry segment in H showed some decline year on year mostly due to currency devaluation. Revenue decreased by 18%, Gross profit decreased by 17% and EBITDA decreased by 13% comparing to the same period for 2014. EBITDA margin remained high and reached 46% (43% in H1 2014). EBITDA per kg of chicken meat before effect of IAS 41 in H was about US$ 0.72, which is 10% lower compared to H Lets move to the next Slide, #7 October 2015 Key Performance Revenue breakdown by segment
UAH/USD 21.61 11.70 % 21.36 10.29 US$m Q215 Q214 H115 H114 Revenue 309 329 -6% 551 637 -14% IAS 41 standard gains 33 64 -48% 50 80 -38% Gross profit 137 160 245 264 -7% Gross margin 44% 49% -5pps 41% 3pps EBITDA 147 166 -11% 270 272 -1% EBITDA margin 48% 50% -2pps 43% 6pps Net income before FX (loss)/gain 91 134 -32% 193 184 5% Net Income margin 29% -12pps 35% FX (loss)/gain 140 (88) n/a (254) (454) Net income after FX (loss)/gain 231 46 402% (61) (270) -77% Net income margin 75% 14% 61pps -42% 31pps Revenue breakdown by segment Net Income before FX and EBITDA During the first half of the year MHP demonstrated good performance due to vertical integration and operational efficiency: Operational H highlights Production volumes increased by 4% to 278,430 tonnes (H1 2014: 268,880 tonnes) The average chicken price increased by 58% to UAH per kg (excluding VAT) compared to UAH in H predominantly due to the currency depreciation Chicken meat export increased by 15% and reached 66,020 tonnes (H1 2014: 57,560 tonnes) FINANCIAL HIGHLIGHTS Q highlights Revenue of US$ 309 million, lower by 6% year-on-year Export revenue amounted to US$ 139 million, 45% of total revenue (Q2 2014: US$ 114 million, 35% of total revenue) Operating profit of US$ 127 million decreased by 14%; overall operating margin was 41% EBITDA margin lowered to 48% from 50%; EBITDA decreased to US$ 147 million from US$ 166 million Net profit for the period is US$ 231 million, compared to US$ 46 million for the Q H highlights Revenue of US$ 551 million, decrease of 14% year-on-year Export revenue amounted to US$ 241 million, 44% of total revenue (H1 2014: US$ 233 million, 37% of total revenue) Operating profit of US$ 235 million, up by 4% year-on-year EBITDA remained flat: US$ 270 million; EBITDA margin is 49%, up from 43% last year Net loss of US$ 61 million, including US$ 254 million related to non-cash foreign exchange translation losses And now I pass the word to Victoriya. She will take you from here and present you our financial results for the firstsix months of 2014 in greater details. October 2015 Note: 1) pps -percentagepoints Cash Flows Debt Profile
US$m Q215 Q214 H115 H114 Cash from operations 67 49 167 145 Change in working capital (60) (2) (103) (9) Net Cash from operations 7 47 64 136 Cash used in investing activities (20) (37) (66) (64) CAPEX (19) (36) (67) (65) Cash used in financing activities (115) (45) (4) (102) incl. dividends (50) (54) (74) Deposits - Total financing activities (116) (46) (3) (101) Total change in cash (128) (35) (6) (30) US$m Total debt 1,243 1,314 1,215 Long-term debt 1,053 953 899 Short-term loans 190 361 316 Cash and Deposits (80) (214) (100) Net debt 1,163 1,100 1,115 LTM EBITDA 553 572 555 Net Debt/LTM EBITDA 2.10 1.92 2.01 CAPEX Debt Profile Breakdown Debt Repayment Schedule US$m US$m 389 335 277 223 155 A few words about our cash flows and liquidity position (slide #9) Net cash generated from operating activities before working capital investments was US$167 million in H1 2015, by 16% higher compared to the same period of the previous year - which is in line with EBITDA trends if we exclude effect of non-cash IAS 41. In H investments in working capital were US$103 million, mostly related to crops in fields Total CAPEX in H is US$ 67 million - were mostly related purchase of agricultural machinery for grain growing business (it was mostly a replacement of existing machineries), reconstruction of Peremoga breeder farm, expansion on Myronivka and Oril Leader broiler farmsand soybean crushing plant this plant will be put into operations in autumn. To conclusion, a few words about our Debt: As of the end of the period, the Companys Net debt was US$ 1 billion and 163 million dollars. More than 60% of total debt is Eurobond maturing in 2020. Average weighted interest rate remained below 8%. Our liquidity is strong; at the end of H we had about US$ 80 million in cash mostly in dollars Net Debt to EBITDA ratio as of the end of Q was 2.1 vs. Eurobond covenant of 3. Almost all our debt is denominated in foreign currency, mostly in dollars. But having almost US$ 241 million revenue from export denominated in US$- we fully cover all the expenses denominated in foreign currency, including debt service expenses- and our currency balance remains positive. And now I give the floor to Anastasia to give you our current business update and outlook, Slide #10 119 223 October 2015 FOCUS ON FURTHER INTEGRATION
Strategy POULTRY To become the #1 poultry producer in Europe To serve growing local market To use export opportunities toEU countries and Middle East, Africa and Asia THE VINNYTSIA COMPLEX First phase (two charges) - additional 260,000 tonnes of chickenmeat per year launched in 2014 Second phase (first line - 130,000 tonnes per year)- investment starts in in 2016 Second phase (second line - 130,000 tonnes per year)anticipated from 2017) GRAIN GROWING Two key segments poultry and grain under one roof as natural hedge against commodities price fluctuations Highly profitable business Land bank expansion in Ukraine up to 500,000 ha FOCUS ON FURTHER INTEGRATION Using of co-generation technology and alternative energysources, project BIOGAS Construction of soybean processing plant Growing presence in segments of value-added products,such as meat processing and convenience foods Focus on promoting branded products EXPANSION ABROAD To acquire poultry producer or meat processorin EU Increase in diversity of export sales Expansion to the EU countries General Shareholder Meeting
Corporate Governance Corporategovernance at MHPcomplies with the requirements ofLuxemburg law and isbased on thegenerally acceptedstandards and practices stipulatedby the UK CorporateGovernance Code The Companyscorporate governanceprinciples, structure,procedures andpractices are set outin its Charter andCorporateGovernance Code The Board is in placesince 2005 General Shareholder Meeting Board of Directors Charles E Adriaenssen Chairman of the Board Non-Executive Director Yuriy Kosyuk John C Rich Nominations and Remunerations Committee Non-Executive Director Chief Executive Officer Non-Executive Director Yuriy Melnik John Grant Executive Director Non-Executive Director Audit Committee Viktoriya Kapelyushnaya Philippe Lamarche Executive Director, CFO Non-Executive Director - Executive Director -Independent Non-Executive Director H Financials Balance Sheet US$000 Property plant and equipment 1,262,742 1,142,011 1,486,681 Non-current biological assets 27,192 19,955 30,313 Other non-current assets 59,276 32,417 44,675 Total non-current assets 1,349,210 1,194,383 1,561,669 Cash and deposits 80,489 214,298 99,628 Inventories 140,355 172,783 203,248 Trade accounts receivable 45,307 42,338 59,619 Biological assets 309,447 109,441 133,254 Agricultural produce 65,474 106,663 159,655 Taxes recoverable and prepaid 69,762 53,428 46,441 Other current assets 36,433 21,133 29,974 Total current assets 747,267 720,084 731,819 Equity 735,070 479,816 945,522 Long-term debt 1,053,155 953,165 899,030 Other long-term liabilities 15,888 11,390 20,671 Total non-current liabilities 1,069,043 964,555 919,701 Trade accounts payable 32,540 30,838 42,821 Short-term debt 190,294 361,237 316,278 Other current liabilities 69,530 78,021 69,166 Total current liabilities 292,364 470,096 428,265 TOTAL EQUITY AND LIABILITIES 2,096,477 1,914,467 2,293,488 October 2015 Income Statement H1 2015 H1 2014 US$000 Total Revenue 550,995 637,267
Net change in fair value of bio-assets and agri-produce 50,025 79,740 Cost of sales (356,014) (453,256) Gross profit 245,006 263,751 Gross margin 44% 41% SG&A (36,691) (57,004) VAT refunds and other government grants income 23,695 35,062 Other operating income/ (expenses), net 2,511 (14,352) Operating profit 234,521 227,457 Depreciation 35,441 44,140 EBITDA 269,962 271,597 EBITDA margin 49% 43% Net finance income and expenses (54,505) (52,870) Foreign exchange (losses)/gains, net (mostly, non cash) (254,489) (454,355) Loss on disposal of subsidiaries (4,725) - Other (expenses)/income, net (1,396) (3,467) Profit before tax (80,594) (283,235) Taxes 19,398 13,594 Net income (61,196) (269,641) Net margin n/a October 2015 Cash Flow Statement H1 2015 H1 2014 US$000 OPERATING ACTIVITIES:
Cash from operations 166,704 144,737 Change in working capital (102,509) (8,595) Net Cash from operations 64,195 136,142 INVESTING ACTIVITIES: Cash used in investing activities (65,984) (64,100) Non-cash investments (1,426) (1,130) Deposits (120) - CAPEX (67,530) (65,230) FINANCING ACTIVITIES: Cash used in financing activities (4,288) (101,577) incl. dividends (49,996) (74,285) Non-cash financing 1,426 1,130 120 Total financing activities (2,742) (100,447) NET CHANGE IN CASH (6,077) (29,535) Effect of exchange rates (13,062) (21,348) TOTAL CHANGE IN CASH (19,139) (50,883) October 2015 12M 2014 Financials Balance Sheet US$000 Property plant and equipment 1,486,681 1,493,739 Non-current biological assets 30,313 70,442 Other non-current assets 44,675 94,731 Total non-current assets 1,561,669 1,658,912 Cash and deposits 99,628 172,470 Inventories 203,248 245,861 Trade accounts receivable 59,619 70,912 Biological assets 133,254 199,680 Agricultural produce 159,655 172,721 Taxes recoverable and prepaid 46,441 209,149 Other current assets 29,974 38,373 Total current assets 731,819 1,109,166 Equity 945,522 1,249,205 Long-term debt 899,030 1,183,395 Other long-term liabilities 20,671 7,043 Total non-current liabilities 919,701 1,190,438 Trade accounts payable 42,821 101,990 Short-term debt 316,278 118,851 Other current liabilities 69,166 107,594 Total current liabilities 428,265 328,435 TOTAL EQUITY AND LIABILITIES 2,293,488 2,768,078 October 2015 Income Statement 12M 2014 12M 2013 US$000 Total Revenue 1,379,048
1,496,079 Net change in fair value of bio-assets and agri-produce 52,911 13,634 Cost of sales (931,054) (1,185,987) Gross profit 500,905 323,726 Gross margin 36% 22% SG&A (110,817) (130,615) VAT refunds and other government grants income 89,896 100,885 Other operating expenses, net (19,973) (22,160) Operating profit before loss on impairment of assets in Donetsk region and reversal of impairment of property, plant and equipment, net 460,011 271,836 Loss on impairment of assets in Donetsk region, net (48,823) - Reversal of impairment of property, plant and equipment, net 3,787 Operating profit 414,975 Depreciation 94,663 119,014 EBITDA 554,674 390,850 EBITDA margin 40% 26% Net finance income and expenses (104,664) (106,009) Foreign exchange (losses)/gains, net (mostly, non cash) (777,677) (11,052) Gain from acquisition of subsidiaries 6,776 Other (expenses)/income, net (4,546) (1,316) Profit before tax (471,912) 160,235 Taxes 59,574 2,005 Net income (412,338) 162,240 Net margin -30% 11% October 2015 Cash Flow Statement US$000 12M 2014 12M 2013 OPERATING ACTIVITIES:
Cash from operations 410,217 305,034 Change in working capital (155,906) 26,592 Net Cash from operations 254,311 331,626 INVESTING ACTIVITIES: Cash used in investing activities (127,300) (224,066) Non-cash investments 2,850 39,172 Deposits 472 629 CAPEX (130,622) (263,867) FINANCING ACTIVITIES: Cash used in financing activities (174,768) (28,138) incl. treasury shares / dividends (103,322) (99,026) Non-cash financing Total financing activities (171,446) 11,663 NET CHANGE IN CASH (47,757) 79,422 Effect of exchange rates (25,085) (1,737) TOTAL CHANGE IN CASH (72,842) 77,685 October 2015 Contact us: For further enquiries: Anastasiya Sobotyuk
PJSC Myronivsky Hliboproduct 158 Akademica Zabolotnogo Str.,Kiev, 03143,Ukraine For further enquiries: Anastasiya Sobotyuk Head of Investor Relations Registered office: 5 rue Guillaume Kroll L-1822 Luxembourg Registered number: B116838