REG - MHP SE - Financial Results for the First Quarter 2025
21/05/2025 07:00
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RNS Number : 5655J MHP SE 21 May 2025
21 May 2025, Limassol, Cyprus
MHP SE
Financial Results for the First Quarter ended 31 March 2025
MHP SE (LSE:MHPC), the parent company of a leading international food and agri
company headquartered in Ukraine, today announces its unaudited results for
the first quarter ended 31 March 2025. Hereinafter, MHP SE and its
subsidiaries are referred to as "MHP", "The Company" or "The Group".
Presentation of 2024 results for the conference call with stakeholders can be
found here: https://mhp.com.ua/en/mhp-se/results-and-presentations
(https://mhp.com.ua/en/mhp-se/results-and-presentations)
DIAL-IN DETAILS
MHP's management will host a conference call for investors and analysts
followed by Q&A on the day of the results.
The dial-in details are:
Time: 13.00 London / 15.00
Kyiv / 08.00 New York
Title: Financial results
for Q1 2025
UK: +44 203 984 9844
Ukraine: +380 89 324 0624
USA: +1 718 866 4614
PIN code: 645982
To follow the presentation with the management team, please use the following
link:
https://mm.closir.com/slides?id=645982
(https://mm.closir.com/slides?id=645982)
For Investor Relations enquiries, please contact:
Anastasia Sobotiuk (Kyiv) +38 050 339
29 99
+357 99 76 71 26
a.sobotyuk@mhp.com.ua (mailto:a.sobotyuk@mhp.com.ua)
Q1 2025 RESULTS
MHP is reporting good operational and financial results for Q1 2025 thanks to
stable export and domestic sales, continued strong demand for poultry and
non-commodity products, more favorable price environment for poultry products
and MHP team's success in minimizing adverse impacts and disruption to
production and operational cost. Future results may again be adversely
affected by War-related challenges that are not under MHP's control.
OPERATIONAL HIGHLIGHTS
Q1 2025
· Poultry meat production volume in Ukraine
remained stable y/y at 180,869 tonnes (Q1 2024: 178,487 tonnes). Poultry meat
production volumes at PP increased by 4% y/y to 35,272 tonnes (Q1 2024: 33,958
tonnes).
· MHP Ukraine's average poultry meat price
increased by 10% y/y to US$ 2.18 per kg (Q1 2024: US$ 1.99 per kg) excluding
VAT. The average price of poultry meat produced by PP stayed on the same level
y/y at EUR 3.55 per kg (Q1 2024: EUR 3.44 per kg).
· Poultry meat exports from Ukraine remained stable
y/y at 97,227 tonnes (Q1 2024: 98,055 tonnes).
FINANCIAL HIGHLIGHTS
Q1 2025
· Revenue increased by 8% y\y to US$ 779 million
(Q1 2024: US$ 719 million).
· Operating profit decreased to US$ 60 million,
down by 29% y/y (Q1 2024: US$ 84 million) and operating margin also decreased
to 8% (3M 2024: 12%).
· Adjusted EBITDA (net of IFRS 16) decreased by 7%
y/y to US$ 111 million (Q1 2024: US$ 119 million); adjusted EBITDA margin (net
of IFRS 16) also decreased to 14% (Q1 2024: 17%).
· Net profit of US$ 32 million (3M 2024: net profit
of US$ 16 million), primarily reflecting a US$ 13 million non-cash foreign
exchange gain in Q1 2025 compared with a US$ 40 million of loss in Q1 2024.
SEGMENT PERFORMANCE
Poultry and processed meat and related operations
Q1 2025
· Revenue increased by 6% at US$ 421 million(Q1
2024: US$ 398 million).
· Gross profit decreased to US$ 101 million fell by
11% y/y (Q1 2024: US$ 114 million) and gross margin also decreased to 24% (Q1
2024: 29%).
· Adjusted EBITDA (net of IFRS 16) decreased by 7%
y/y to US$ 80 million (Q1 2024: US$ 86 million); adjusted EBITDA margin (net
of IFRS 16) slightly decreased to 19% from 22%.
Vegetable oil operations
Q1 2025
· Revenue remained stable y/y at US$ 119 million
(Q1 2024: US$ 116 million).
· Gross profit decreased to US$ 1 million fall by
92% y/y (Q1 2024: US$ 13 million) and gross margin also decreased to 1% (1Q1
2024:11%).
· Adjusted EBITDA (net of IFRS 16) decreased by 92%
y/y to US$ 1 million (Q1 2024: US$ 12 million); adjusted EBITDA margin (net of
IFRS 16) also decreased to 1% from 10%.
Agriculture operations
Q1 2025
· Revenue increased by 33% y/y to US$ 92 million
(Q1 2024: US$ 69 million).
· Adjusted EBITDA (net of IFRS 16) increased to US$
35 million which is 106% y/y (Q1 2024: US$ 17 million).
European operating segment
Q1 2025
· Revenue at US$ 147 million was up by 8% y/y (Q1
2024: US$ 136 million).
· Gross profit increased to US$ 32 million up by 7%
y/y (Q1 2024: US$ 30 million) but gross margin remained unchanged at 22% (Q1
2024: 22%).
· Adjusted EBITDA (net of IFRS 16) increased by 6%
y/y to US$ 19 million (Q1 2024: US$ 18 million); adjusted EBITDA margin (net
of IFRS 16) remained at the same level of 13%.
CURRENT GROUP CASH FLOW
(in mln. Q1 2025 Q1 2024
US$)
Cash from operations 101 90
Change in working capital (56) 12
Net Cash from operating activities 45 102
Cash used in investing activities (60) (65)
Cash from financing activities 16 (73)
Total change in cash(1)) 1 (36)
(1))Calculated as Net Cash from operating activities plus Cash used in
investing activities plus Cash used in financing activities
Debt Structure and Liquidity
As at 31 March 2025 the Net Debt equals to US$ 1,192 million and LTM adjusted
EBITDA (net of IFRS 16) was at US$ 559 million (31 December 2024: US$ 1,179
million and US$ 566 million respectively).
The Net Debt / LTM adjusted EBITDA (net of IFRS 16) ratio was 2.13 as of 31
March 2025, well below the limit of 3.0 defined in the Eurobond agreement.
Notes to Editors:
About MHP
MHP SE is a publicly listed (London Stock Exchange) international food and
agri company, producing high-quality healthy food products that enhance
consumers' lives. The company operates in agriculture, food production, and
retail, with manufacturing facilities in Ukraine and South-Eastern Europe, as
well as subsidiaries in the Netherlands, the United Kingdom, the UAE, Saudi
Arabia, and other EU countries.
MHP employs over 36,000 people in Ukraine and abroad. The company exports its
products to more than 80 countries worldwide and manages a land bank of
360,000 hectares across 12 regions in Ukraine.
During the full-scale war, MHP sees its mission as supporting the economy and
food security of Ukraine. The company is the largest taxpayer in the
agricultural sector and is also one of the top 5 largest investors in the
country.
As a culinary company, MHP develops over 15 product brands, including Qualiko,
Sultanah, Аssilah, Nasha Ryaba, Apetytna, Lehko!, Bashchynskyi, Skott Smeat,
RyabChick, and others.
To ensure that Ukrainians always have access to high-quality and delicious
food, the company, together with its partners, develops several retail chains:
MeatMarket stores, Fresh Food, Nasha Ryaba and Döner Market restaurants,
which offer tasty and safe fast food.
MHP in Ukraine, in collaboration with its strategic partner, the Charitable
Foundation MHP - GROMADI, is actively engaged in community development
enhancing community livability, while also supporting those in greatest
need.
MHP in Ukraine is fostering the MHP Standing Together program, which provides
personalized assistance and comprehensive support to military personnel,
veterans, their families, and those awaiting the return of their loved ones
from the frontlines.
The founder and CEO of MHP is Ukrainian businessman Yuriy Kosyuk.
South-Eastern Europe: Perutnina Ptuj is a leading poultry and meat-processing
company in Southeast Europe. The company operates production facilities in
four countries of the region: Slovenia, Croatia, Serbia, and Bosnia and
Herzegovina. It also owns distribution companies in Austria, North Macedonia,
and Romania, and supplies its products to 26 countries across Europe. In
addition, Perutnina Ptuj is also present on the U.S. market and exports
directly to the United Arab Emirates.
Perutnina Ptuj is a vertically integrated company, managing every stage of
chicken meat production - from feed manufacturing, production and hatching of
eggs, to breeding, slaughtering, sausage production, and advanced poultry
processing.
Forward-Looking Statements
This press release might contain forward-looking statements that refer to
future events or forecast financial indicators for MHP SE. Such statements do
not guarantee that these are actions to be taken by MHP SE in the future, and
estimates can be inaccurate and uncertain. Actual final indicators and results
can considerably differ from those declared in any forward-looking statements.
MHP SE does not intend to change these statements to reflect actual results.
MHP SE AND ITS SUBSIDIARIES
Interim condensed consolidated Financial Statements
As of and for the three-month period ended 31 March 2025
CONTENTS
STATEMENT OF MEMBERS OF THE BOARD OF
DIRECTORS................................................................. 3
MANAGEMENT
REPORT........................................................................................................................
4
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE
THREE-MONTH PERIOD ENDED 31 MARCH 2025
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE
INCOME..............................................................................................................................................................
5
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION..................................... 6
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY..................................... 7
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS................................................ 9
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.............................. 11
1. Corporate
information.....................................................................................................................
11
2. Basis of preparation and accounting
policies...................................................................................
12
3. Changes in the group
structure........................................................................................................
13
4. Segment
information......................................................................................................................
14
5. Profit for the period
.......................................................................................................................
15
6. Property, plant and
equipment........................................................................................................
15
7. Inventories and agricultural
produce................................................................................................
15
8. Shareholders'
equity.......................................................................................................................
15
9. Bank
borrowings............................................................................................................................
16
10. Bonds
issued..............................................................................................................................
17
11. Related party balances and
transactions.......................................................................................
19
12. Operating
environment.................................................................................................................
20
13. Contingencies and contractual
commitments.................................................................................
21
14. Fair value of financial
instruments.................................................................................................
22
15. Risk management
policy..............................................................................................................
22
16. Subsequent
events......................................................................................................................
23
17. Authorization of the interim condensed consolidated financial
statements....................................... 23
STATEMENT OF MEMBERS OF THE BOARD OF DIRECTORS
In accordance with Article 10 of the Transparency Requirements (Securities for
Trading on Regulated Market) Law 190(l)/2007 ("Law"), as amended, the members
of the Board of Directors of MHP SE confirm that to the best of our knowledge:
(a) The interim condensed consolidated financial statements for
the period from 1 January 2025 to
31 March 2025 that are presented on pages 5 to 23:
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.
20 May 2025
Members of the Board of Directors:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
Director
John Clifford Rich
Director
Philip J Wilkinson
Director
Andriy Bulakh
Director
Christakis Taoushanis
Director
Oscar
Chemerinski
MANAGEMENT REPORT
Key financial highlights
During the three-month period ended 31 March 2025 consolidated revenue
increased by 8% to USD 779 million, compared to USD 719 million for the
three-month period ended 31 March 2024. Export sales for the three-month
period ended 31 March 2025 constituted 63% of total revenue and amounted to
489 USD million, compared to USD 453 million, 63% of total revenue for the
three-month period ended 31 March 2024. Revenue grew across all segments,
primarily driven by the Poultry and Agriculture segments, due to higher
poultry meat prices and increased grain sales volumes.
Gross profit decreased by 4% to USD 163 million for the three-month period
ended 31 March 2025, compared to USD 170 million for the three-month period
ended 31 March 2024. The decline was primarily driven by weaker margins in the
Poultry and Vegetable Oil segments, partially offset by improved performance
in the Agriculture operations.
Operating profit fell to USD 60 million for the three-month period ended
31 March 2025, down from USD 84 million for the same period in 2024. The
decrease was driven by adverse changes in gross profit and increased payroll
expenses within the selling, general, and administrative functions along with
additional war-related costs recorded under other operating expenses.
Profit for the three-month period ended 31 March 2025 was USD 32 million, up
from USD 16 million for the same period in 2024. This increase was mainly
attributable to the relative stabilization of Ukrainian Hryvnia against
US Dollar and EURO, leading to a foreign exchange gain of USD 13 million for
the three-month period ended 31 March 2025, compared to a loss of USD 40
million for the same period in 2024.
Dividends
In view of continuing War-related uncertainties and the resulting need to
preserve liquidity to support the Company's ongoing business operations, the
Directors decided not to declare a final dividend for the 2024 financial year.
No interim dividend has been declared for the three-month period ended 31
March 2025.
Risks and uncertainties
Russian invasion
On 24 February 2022, Russian forces began a military invasion of Ukraine
resulting in a full-scale war across the Ukrainian State (the "War"). Focused
on continuity and sustainability of its business and the preservation of value
for all stakeholders, the Group has concentrated on two key areas: the safety
of its employees and the food security of the country by prioritizing a
continuous supply of food to the population of Ukraine.
As a result of the War, MHP has experienced a number of significant
disruptions and operational issues within its business, which are described in
detail in Note 12 Operating environment. Detailed information on this matter
can also be found on page 171 of the Annual Report, which is available at
mhp.com.cy (https://mhp.com.cy/financial-reports/annual-reports/) .
Management believes that the Group has adequate resources to continue in
operational existence for the foreseeable future. However, due to the
currently unpredictable effects of the ongoing War on the significant
assumptions underlying management forecasts, Management concludes that a
material uncertainty exists, which may cast significant doubt about the
Group's ability to continue as a going concern and, therefore, the Group may
be unable to realize its assets and discharge its liabilities in the normal
course of business.
Other 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 nine 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
2024 Annual Report on 28 April 2025. A detailed explanation of the risks, and
how the Group seeks to mitigate them, can be found on pages 221 to 224 of the
Annual Report which is available at mhp.com.cy
(https://mhp.com.cy/financial-reports/annual-reports/) .
20 May 2025
On behalf of the Board:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
( ) Notes Three-month period ended 31 March 2025 Three-month period ended 31 March 2024
Revenue 4 779 719
Net change in fair value of biological assets and agricultural produce 4 (4) 10
Cost of sales (612) (559)
Gross profit 5 163 170
Selling, general and administrative expenses (87) (77)
Other operating income 2 3
Other operating expenses (18) (12)
Operating profit 60 84
Finance income 5 11
Finance costs 9, 10 (39) (41)
Foreign exchange gain/(loss), net 5, 15 13 (40)
Profit before tax 5 39 14
Income tax (expense)/benefit (7) 2
Profit for the period 32 16
Other comprehensive income
Items that may be reclassified to profit or loss:
Cumulative translation difference 30 (48)
Other comprehensive profit/(loss) for the period 30 (48)
Total comprehensive profit/(loss) for the period 62 (32)
Profit/(loss) attributable to:
Equity holders of the Parent 32 17
Non-controlling interests - (1)
32 16
Total comprehensive profit/(loss) attributable to:
Equity holders of the Parent 62 (31)
Non-controlling interests - (1)
62 (32)
Earnings per share
Basic and diluted earnings/ per share (USD per share) 0.30 0.16
On behalf of the Board:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
The accompanying notes on the pages 11 to 23 form an integral part of these
interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of 31 March 2025
(in millions of US dollars, unless otherwise indicated)
Notes 31 March 2025 31 December 2024
ASSETS
Non-current assets
Property, plant and equipment 6 2,357 2,301
Right-of-use assets 295 266
Intangible assets 67 66
Goodwill 79 65
Non-current biological assets 34 31
Investments in associates 6 21
Non-current financial assets 11 10
Deferred tax assets 1 1
2,850 2,761
Current assets
Inventories 7 463 381
Biological assets 223 169
Agricultural produce 7 328 437
Prepayments 41 47
Other current financial assets 16 19
Taxes recoverable and prepaid 67 57
Trade accounts receivable 255 200
Cash and cash equivalents 359 355
1,752 1,665
TOTAL ASSETS 4,602 4,426
EQUITY AND LIABILITIES
Equity
Share capital 8 285 285
Treasury shares 8 (45) (45)
Additional paid-in capital 174 174
Revaluation reserve 939 960
Retained earnings 2,105 2,052
Translation reserve (1,457) (1,486)
Equity attributable to equity holders of the Parent 2,001 1,940
Non-controlling interests 26 26
Total equity 2,027 1,966
Non-current liabilities
Bank borrowings 9 501 492
Bonds issued 10 895 894
Lease liabilities 220 197
Deferred tax liabilities 172 169
Deferred income 36 37
Other non-current liabilities 6 6
1,830 1,795
Current liabilities
Bank borrowings 9 288 271
Lease liabilities 94 79
Interest payable 9,10 37 24
Trade accounts payable 151 147
Contract liabilities 28 24
Other current liabilities 147 120
745 665
TOTAL LIABILITIES 2,575 2,460
TOTAL EQUITY AND LIABILITIES 4,602 4,426
On behalf of the Board:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
The accompanying notes on the pages 11 to 23 form an integral part of these
interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
Attributable to equity holders of the Parent
Share Treasury shares Additional paid-in capital Revaluation reserve Retained earnings Translation reserve Total Non-controlling interests Total equity
capital
Balance as of 1 January 2025 285 (45) 174 960 2,052 (1,487) 1,939 26 1,965
Profit for the period - - - - 32 - 32 - 32
Other comprehensive income - - - - - 30 30 - 30
Total comprehensive income for the period - - - - 32 30 62 - 62
Transfer from revaluation reserve to retained earnings - - - (33) 33 - - - -
Translation differences on revaluation reserve - - - 12 (12) - - - -
Balance as of 31 March 2025 285 (45) 174 939 2,105 (1,457) 2,001 26 2,027
On behalf of the Board:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
The accompanying notes on the pages 11 to 23 form an integral part of these
interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the three-month period ended 31 March 2024
(in millions of US dollars, unless otherwise indicated)
Attributable to equity holders of the Parent
Share Treasury shares Additional paid-in capital Revaluation reserve Retained earnings Translation reserve Total Non-controlling interests Total equity
capital
Balance as of 1 January 2024 285 (45) 174 706 1,793 (1,357) 1,556 11 1,567
Profit/(loss) for the period - - - - 17 - 17 (1) 16
Other comprehensive loss - - - - - (48) (48) - (48)
Total comprehensive income/(loss) for the period - - - - 17 (48) (31) (1) (32)
Transfer from revaluation reserve to retained earnings - - - (16) 16 - - - -
Translation differences on revaluation reserve - - - (21) 21 - - - -
Balance as of 31 March 2024 285 (45) 174 669 1,847 (1,405) 1,525 10 1,535
On behalf of the Board:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
The accompanying notes on the pages 11 to 23 form an integral part of these
interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise
indicated)
Notes Three-month period ended 31 March 2025 Three-month period ended 31 March 2024
Operating activities
Profit before tax 39 14
Non-cash adjustments to reconcile profit before tax to net cash flows
Depreciation and amortization expense 4 60 43
Net change in fair value of biological assets and agricultural produce 4 4 (10)
Change in allowance for irrecoverable amounts and direct 5 1
write-offs
Loss on disposal of property, plant and equipment and other non-current assets - 1
Finance income (5) (11)
Finance costs 39 41
Released deferred income (1) (1)
Foreign exchange (gain)/loss (13) 40
Operating cash flows before movements in working capital 128 118
Working capital adjustments
Change in inventories 7 (71) (72)
Change in biological assets (19) (16)
Change in agricultural produce 7 60 71
Change in prepayments made 8 5
Change in other current financial assets 1 2
Change in taxes recoverable and prepaid (10) (10)
Change in trade accounts receivable (49) (13)
Change in contract liabilities 4 7
Change in other current liabilities 8 22
Change in trade accounts payable 12 16
Cash generated by operations 72 130
Interest received 3 3
Interest paid (25) (25)
Income taxes paid (5) (6)
Net cash flows from operating activities 45 102
Investing activities
Purchases of property, plant and equipment (60) (57)
Proceeds from disposals of property, plant and equipment 1 1
Purchases of intangible assets (1) (2)
Purchases of non-current biological assets (1) -
Prepayments and capitalized initial direct costs under lease contracts - (1)
Loans provided - (4)
Divestments/(investments) in financial assets 1 (2)
Net cash flows used in investing activities (60) (65)
The accompanying notes on the pages 11 to 23 form an integral part of these
interim condensed consolidated financial statements
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
Notes Three-month period ended 31 March 2025 Three-month period ended 31 March 2024
Financing activities
Proceeds from bank borrowings 63 131
Repayment of bank borrowings (43) (73)
Repayment of bonds issued - (128)
Repayment of lease liabilities (4) (3)
Net cash flows from/(used in) financing activities 16 (73)
Net increase/(decrease) in cash and cash equivalents 1 (36)
Net foreign exchange difference on cash and cash equivalents 3 (10)
Cash and cash equivalents at 1 January 355 436
Cash and cash equivalents at 31 March 359 390
On behalf of the Board:
Chief Executive
Officer
Yuriy Kosyuk
Chief Financial
Officer
Viktoriia Kapeliushna
The accompanying notes on the pages 11 to 23 form an integral part of these
interim condensed consolidated financial statements
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the three-month period ended 31 March 2025
(in millions 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"), 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, vegetable oil, and agriculture operations. The Group's poultry and
related operations integrate all functions related to chicken production,
including hatching, fodder manufacturing, raising chickens to marketable age
("grow-out"), processing and sale of frozen and chilled chicken meat, as well
as processed meat products. Agriculture operations comprise producing and
selling grains and cattle breeding for milk production. Vegetable oil
operations include the production and sale of vegetable oil, cake, and husk.
As at 31 March 2025 the Group employed 36 777 people (31 December 2024: 36,306
people).
The primary subsidiaries, the principal activities of the companies forming
the Group and the Parent's effective ownership interest as of 31 March 2025
and 31 December 2024 were as follows:
Name Country of registration Year established/ Principal activities 31 March 2025 31 December 2024
acquired
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 88.5% 88.5%
oil production
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 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%
MHP Saudi Arabia Trading Saudi Arabia 2018 Trading in poultry meat 100.0% 100.0%
MHP Food UK Limited United Kingdom 2021 Trading in poultry meat 100.0% 100.0%
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 (represented by Perutnina Ptuj d.d. together with
its subsidiaries).
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
2. Basis of preparation and accounting policies
Basis of preparation
The interim condensed consolidated financial statements for the three-month
period ended 31 March 2025 have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" as adopted by the
European Union (EU). The interim condensed consolidated financial statements
do not include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the Group's annual
consolidated financial statements as of 31 December 2024, prepared in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union and the requirements of the Cyprus Companies
Law, Cap.113.
The interim condensed consolidated financial statements are presented in the
US dollars (USD) and all values are rounded to the nearest million, except
when otherwise indicated.
Going concern
In 2025, the Group has continued its operations in an environment severely
affected by the Russian invasion of Ukraine since 24 February 2022. The Group
concluded that the analysis of the observable impact of the War as described
on pages 171 and 217-218 of the Annual Report, which is available at
mhp.com.cy (https://mhp.com.cy/financial-reports/annual-reports/) , continues
to be relevant for these interim condensed consolidated financial statements.
The updates in the economic environment conditions during January-March 2025
are presented in Note 12 Operating environment.
Management has prepared financial forecasts, including cash flow projections,
covering the 2025-2026 budget cycle. These forecasts reflect expected economic
conditions, considering anticipated changes in the operating environment,
including the impact of the War and other relevant factors. The Group ensures
financial stability by continuously monitoring its obligations under existing
debt agreements and implementing necessary measures to meet its debt servicing
requirements in full and on time.
These forecasts indicate that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Directors have therefore
concluded that it is appropriate to apply the going concern basis of
accounting in preparing these consolidated financial statements. However, due
to the currently unpredictable effects of the ongoing War, the Directors have
concluded that a material uncertainty exists, which may cast significant doubt
on the Group's ability to continue as a going concern, in which case the Group
may be unable to realize its assets and discharge its liabilities in the
normal course of business.
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 the Ukrainian companies of the Group is the
Ukrainian Hryvnia ("UAH"); the functional currency of the Cyprus companies and
Luxembourg company of the Group is the US Dollar ("USD"); the functional
currency of the European companies of the Group is the Euro ("EUR"); the
functional currency of the United Arab Emirates companies is the Dirham
("AED"); the functional currency of the UK company is the British Pound
("GBP"); the functional currency of the Saudi Arabia company is the Saudi
Riyal ("SAR").
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 prevailing rates 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"),
the Group's presentation currency, and all values are rounded to the nearest
million, except when otherwise indicated.
The results and financial position of the Group are translated into the
presentation currency using the following procedures:
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
2. Basis of preparation and accounting policies (continued)
Functional and presentation currencies (continued)
· 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 are translated at exchange rates at the dates of the transactions;
· Exchange differences arising on translation for consolidation are
recognised in other comprehensive income and presented as a separate equity
component. 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 the revaluation reserve are translated at
the historical exchange rate. The revaluation reserve is translated at the
closing rate as of the statement of financial position date.
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.
The relevant exchange rates were:
Currency Closing rate as of 31 March 2025 Average for three months ended 31 March 2025 Closing rate as of 31 December 2024 Average for three months ended 31 March 2024
UAH/USD 41.4787 41.7563 42.039 38.1727
UAH/EUR 44.7472 43.8887 43.9266 41.4668
USD/EUR 1.0788 1.0511 1.0449 1.0863
USD/GBP 1.2946 1.2579 1.2594 1.2683
AED/USD 3.67 3.67 3.67 3.67
SAR/USD 3.75 3.75 3.75 3.75
Material 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 2024.
Seasonality of operations
Poultry and related operations, European operating segment, and Vegetable oils
operations segment are not significantly exposed to seasonal fluctuations.
Agriculture operations segment, due to seasonality and implications of IAS 41,
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,
Agriculture operations segment has seasonal requirements for working capital
increase from November to May due to the sowing campaign.
3. Changes in the group structure
Acquisition of Ukrainskyi Miasnyi Khutir
On 24 January 2025, the Group obtained control over Ukrainskyi Miasnyi Khutir
LLC, a Ukrainian meat processing company. The acquisition was carried out in
stages: an initial 24.9% stake was acquired in April 2024, increased to 49% in
August 2024, and completed with the acquisition of the remaining 51% in
January 2025.
The total estimated consideration for this acquisition is USD 15.6 million. At
the acquisition date, the fair value of the company's identifiable net assets
was USD 6.3 million, primarily consisting of property, plant and equipment,
inventories, trade and other accounts receivables and payables.
Goodwill of USD 9.3 million was recognized as part of the transaction,
reflecting expected synergies from the enhanced market presence in the
processed meat segment, access to established brands such as
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
3. Changes in the group structure (continued)
Acquisition of Ukrainskyi Miasnyi Khutir (continued)
"Ukrainskyi Miasnyi Khutir" and "Parowki", and anticipated operational
efficiencies from integrating support functions while maintaining the acquired
company's autonomous operations.
From the date of acquisition, Ukrainskyi Miasnyi Khutir contributed revenue of
USD 3 million to the Group`s results. Its contribution to net profit was not
material.
As of the date of approval of these consolidated financial statements, the
Group is in the process of completing the purchase price allocation for the
business combination, which is expected to be finalized within twelve months
from the acquisition date. In addition to goodwill, the allocation is likely
to result in the recognition of other intangible assets, such as trademarks
and customer relationships.
4. Segment information
The reportable segment information for the three-month period ended 31 March
2025 comprised:
Poultry Vegetable oils operations Agriculture operations European operating segment Total reportable segments Eliminations Consolidated
and related operations
External sales 421 119 92 147 779 - 779
Sales between segments 3 45 65 - 113 (113) -
Total revenue 424 164 157 147 892 (113) 779
Segment results 48 - 25 13 86 - 86
Unallocated corporate expenses (26)
Other expenses, net (1)) (21)
Profit before tax 39
Other information:
Depreciation and amortization expense (2)) 33 1 17 7 58 - 58
Net change in fair value of biological assets and agricultural produce 30 - (34) - (4) - (4)
(1)) Includes finance income, finance costs, foreign exchange gain.
(2)) Depreciation and amortization for the three-month period ended 31 March
2025 does not include unallocated depreciation and amortization in the amount
of USD 1.5 million.
The reportable segment information for the three-month period ended 31 March
2024 comprised:
Poultry Vegetable oils operations Agriculture operations European operating segment Total reportable segments Eliminations Consolidated
and related operations
External sales 398 116 69 136 719 - 719
Sales between segments 4 42 53 - 99 (99) -
Total revenue 402 158 122 136 818 (99) 719
Segment results 66 12 8 13 99 - 99
Unallocated corporate expenses (15)
Other expenses, net (1)) (70)
Profit before tax 14
Other information:
Depreciation and amortization expense (2)) 21 1 14 6 42 - 42
Net change in fair value of biological assets and agricultural produce 12 - 1 (3) 10 - 10
(1)) Includes finance income, finance costs, foreign exchange loss.
(2)) Depreciation and amortization for the three-month period ended 31 March
2024 does not include unallocated depreciation and amortization in the amount
of USD 0.8 million.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
5. Profit for the period
Gross profit decreased by 4% to USD 163 million for the three-month period
ended 31 March 2025, down from USD 170 million for the same period in 2024.
The decrease was largely attributable to diminished gross profits in the
poultry and vegetable oil operations. However, improved performance in the
agriculture segment helped to partially offset these losses.
Operating profit fell to USD 60 million for the three-month period ended
31 March 2025, down from USD 84 million for the same period in 2024. The
decrease was driven by adverse changes in gross profit and increased payroll
expenses within the selling, general, and administrative functions along with
additional war-related costs recorded under other operating expenses.
Profit for the three-month period ended 31 March 2025 was USD 32 million, up
from USD 16 million for the same period in 2024. This increase was mainly
attributable to the relative stabilization of Ukrainian Hryvnia against
US Dollar and EURO, leading to a foreign exchange gain of USD 13 million for
the three-month period ended 31 March 2025, compared to a loss of USD 40
million for the same period in 2024.
6. Property, plant and equipment
During the three-month period ended 31 March 2025, the Group's additions to
property, plant and equipment amounted to USD 66 million (three-month period
ended 31 March 2024: USD 59 million) mainly related to maintenance and
modernization of existing facilities.
There were no significant disposals of property, plant and equipment during
the three-month period ended 31 March 2025.
7. Inventories and agricultural produce
An increase in inventory balance as of 31 March 2025 compared to 31 December
2024 is mainly attributable to costs incurred by grain growing entities in
preparation for the upcoming spring sowing campaign. Additionally, increased
acquisitions of sunflower seeds intended for vegetable oil production have
contributed to this uptick.
A decrease of agricultural produce for three-month period ended 31 March 2025
was mainly as a result of consumption of internally produced grains that was
partially mitigated by increase of chicken meat stocks.
8. Shareholders' equity
As of 31 March 2025 and 31 December 2024 the authorized, issued and fully paid
share capital of MHP SE comprised the following number of shares:
31 March 2025 31 December 2024
Number of shares issued and fully paid 110,770,000 110,770,000
Less: Treasury shares (3,731,792) (3,731,792)
Number of shares outstanding 107,038,208 107,038,208
The authorized share capital as of 31 March 2025 and 31 December 2024 was EUR
221,540 million 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.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
9. Bank borrowings
The following table summarizes bank borrowings and credit lines outstanding as
of 31 March 2025 and 31 December 2024:
31 March 2025 31 December 2024
Currency WAIR (1)) USD' mln WAIR (1)) USD' mln mlm000
Non-current
EUR EURIBOR(2)) + 1.04% 116 EURIBOR(2)) + 1,03% 105
EUR 1.99% 4 1,50% 4
USD SOFR(3)) + 3.95% 337 SOFR(3))+ 3,95% 337
USD UIRD(4)) + 5.53% 42 UIRD(4))+ 5,53% 44
UAH UIRD4()) + 4,00% 2 UIRD(4))+ 4,00% 2
501 492
Current
EUR EURIBOR(2)) + 2.30% 35 EURIBOR(2)) + 2,30% 34
EUR 4.80% 54 4,60% 54
USD SOFR(3)) + 2.48% 32 SOFR(3)) + 2,48% 32
USD 5.70% 55 5,70% 45
Current portion of EUR EURIBOR(2)) + 1.04% 29 EURIBOR(2)) + 1,03% 26
long-term bank borrowings
EUR 1.99% 1 1,50% 1
USD SOFR(3)) + 3.95% 75 SOFR(3))+ 3,95% 74
USD UIRD(4)) + 5.53% 7 UIRD(4))+ 5,53% 5
288 271
Total bank borrowings 789 763
(1) ) WAIR represents the weighted average interest rate on
outstanding borrowings;
(2) ) According to the terms of the agreement, if market
EURIBOR becomes negative, it shall be deemed zero for the calculation of
interest expense;
(3) ) The Secured Overnight Financing Rate (SOFR) is a broad
measure of the cost of borrowing cash overnight collateralized by Treasury
securities;
(4) ) Ukrainian Index of Retail Deposit Rates (UIRD) -
indicative rate calculated at 15:00 Kyiv time of each Banking Day in the
Thomson Reuters system based on nominal rates on time deposits of individuals
in US Dollars for a period of 3 months with interest paid upon the expiration
of the deposit agreement, operating in 20 largest Ukrainian banks in the size
of the deposit portfolio of individuals;
The Group's borrowings are drawn from various banks, mostly from international
ones and Ukrainian subsidiaries of international banks as term loans, credit
line facilities. Repayment terms of principal amounts of bank borrowings vary
from monthly repayment to repayment on maturity depending on the terms of the
agreement with each bank.
As of 31 March 2025 and 31 December 2024, the Group's bank term loans and
credit lines bear either floating or fixed interest rates.
Term loans and credit line facilities were as follows as of 31 March 2025 and
31 December 2024:
31 March 2025 31 December 2024
Credit lines 176 164
Term loans 613 599
789 763
Bank borrowings and credit lines outstanding as of 31 March 2025 and 31
December 2024 were repayable as follows:
31 March 2025 31 December 2024
Within one year 288 271
In the second year 137 134
In the third to fifth year inclusive 344 336
After five years 20 22
789 763
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
9. Bank borrowings (continued)
As of 31 March 2025, the Group had undrawn facilities of USD 177 million (31
December 2024: USD 162 million). These undrawn facilities expire during the
period until January 2030.
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, Ptakhofabryka Snyatynska Nova, Vinnytska Ptakhofabryka,
Zakhid-Agro MHP, MHP-Urozhayna Krayina.
As of 31 March 2025, the Group had borrowings of USD 204 million that were
secured by property, plant and equipment with a collateral amount of USD 192
million (31 December 2024: USD 189 million and USD 188 million respectively).
As of 31 March 2025, the Group had borrowings of USD 85 million that were
secured by agricultural produce with a carrying amount of USD 107 million (31
December 2024: USD 84 million and USD 105 million respectively).
As of 31 March 2025 and 31 December 2024, interest payable on bank borrowings
was USD 18.0 million and USD 8.6 million, respectively.
Covenants
The Group, as well as its specified subsidiaries, have to comply with the
following maintenance covenants imposed by the banks providing the loans:
EBITDA to interest expenses ratio, current ratio, and liabilities to equity
ratio. These covenants are assessed periodically to ensure compliance, and the
Group is required to meet these covenants on a quarterly basis.
As of the reporting date, the carrying amount of non-current liabilities
related to these covenants is USD 327 million. The Group has reviewed all
relevant facts and circumstances and believes that is unlikely that the risk
of non-compliance with these covenants can be realized. This assessment
considers the Group's current financial position and historical performance,
along with its established processes for proactively managing financial
metrics to maintain compliance with covenant requirements. The Group
consistently monitors these metrics to ensure that all covenant obligations
are met.
Separately, in case of excess of Net Debt to EBITDA ratio (the Group's
leverage ratio), there are negative covenants in respect of restricted
payments, including dividends, additional indebtedness and restrictions on
mergers or consolidations, limitations on liens and dispositions of assets and
limitations on transactions with affiliates.
As of 31 March 2025 the Group has complied with all bank covenants. As of 31
March 2025, the Group's leverage ratio slightly increased to 2.13 to 1,
below the defined limit of 3.0 to 1, compared with 2.08 to 1 as at 31 December
2024 respectively.
10. Bonds issued
Bonds issued and outstanding as of 31 March 2025 and 31 December 2024 were as
follows:
Carrying amount Nominal amount
31 March 2025 31 December 2024 31 March 2025 31 December 2024
Non-current
6.25% Senior Notes due in 2029 348 348 350 350
6.95% Senior Notes due in 2026 547 546 550 550
895 894 900 900
Unamortized debt issuance cost - - (5) (6)
Total bonds issued 895 894 895 894
As of 31 March 2025 and 31 December 2024 amount of accrued interest on bonds
issued was USD 19.5 million and USD 15.4 million, respectively.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
10. Bonds issued (continued)
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 million 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 general corporate purposes.
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 in March and
September. 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.
6.95% Senior Notes
On 3 April 2018, MHP Lux S.A. issued USD 550 million 6.95% Senior Notes due in
2026 at par value. Out of the total issue amount, USD 416 million were
designated for redemption and exchange of the existing 8.25% Senior Notes due
in 2020.
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 in April and
October. 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 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 million 7.75% Senior Notes due in 2024
at par value. Out of the total issue amount, USD 245 million were designated
for redemption and exchange of existing 8.25% Senior Notes due in 2020.
To refinance part of these Notes, the Group secured up to USD 400 million in
facilities from DFC, IFC, and EBRD. These funds were used for repurchasing
Notes under Tender Offers in November 2023 (USD 151 million repurchased for
USD 128 million) and January 2024 (USD 138 million repurchased for USD 131
million). As the Group repurchased these Notes with discount, finance income
in the amount of USD 6 million was recognized in 2024 (2023: USD 22 million).
The remaining USD 211 million was repaid in May 2024.
As a result, all obligations under the 7.75% Senior Notes due in 2024 have
been fully discharged.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
10. Bonds issued (continued)
Covenants
Certain restrictions under the indebtedness agreements (e.g. incurrence of
additional indebtedness, restricted payments as defined above, dividends
payment) are dependent on the leverage ratio of the Group calculated as Net
Debt to EBITDA. 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, or incur additional debt except that
defined as a Permitted Debt. According to the indebtedness agreements, 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).
As of 31 March 2025 the Group has complied with all covenants. As of 31 March
2025, the Group's leverage ratio decreased to 2.13 to 1, below the defined
limit of 3.0 to 1, compared with 2.08 to 1 as at 31 December 2024
respectively.
11. Related party balances and transactions
For the purpose 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 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 under common control
The Group, in the ordinary course of business, enters into transactions with
related parties that are companies under common control of the Principal
Shareholder of the Group (Note 1) for the purchase and sale of goods and
services and the key management personnel 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 the Group's trading
activities do not vary significantly from the terms of similar transactions
with third parties.
Transactions with related parties during the three-month periods ended 31
March 2025 and 31 March 2024 were as follows:
in thousand USD 2025 2024
Interest charged on loans and finance aid provided 36 63
Sales of goods 91 227
Purchases from related parties 78 31
Key management personnel of the Group:
Loans provided - 131
Loans repaid 44 66
The balances owed to and due from related parties were as follows as of 31
March 2025 and 31 December 2024:
in thousand USD 2025 2024
Loans and finance aid receivable 3,635 5,287
Less: expected credit losses (2,337) (1,955)
1,298 3,332
Loans to key management personnel 3,607 3,336
Less: expected credit losses (792) (596)
2,816 2,740
Trade accounts receivable 317 346
Payables due to related parties 25 28
Payables due to associates 105 189
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
11. Related party balances and transactions (continued)
Loans and finance aid receivable
For loans and finance aid receivable, credit risk increased to the point where
it is considered credit-impaired. The expected credit loss for such loans
amounted to USD 1,841 thousand and USD 1,810 thousand as at 31 March 2025 and
31 December 2024 respectively.
Compensation of key management personnel
Total compensation of the Group's key management personnel included primarily
in selling, general and administrative expenses in the Consolidated Statements
of Profit and Loss and Other Comprehensive Income amounted to USD 2,916
thousand and USD 2,843 thousand for the periods ended 31 March 2025 and 2024,
respectively. Compensation of key management personnel consists of contractual
salary and performance bonuses paid.
12. Operating environment
On 24 February 2022, Russian forces commenced a military invasion of Ukraine,
resulting in a full-scale war across the Ukrainian State. The ongoing military
hostilities have led and continue to lead, to significant casualties,
dislocation of the population, damage to infrastructure, disruption to
economic activity in Ukraine. Some territories remain temporarily occupied,
further complicating the situation.
In 2024, Ukrainian businesses continued their activities in the challenging
economic environment, facing disruption of supply chains, rising operational
costs, and physical destruction of production facilities and infrastructure.
Between March and August 2024, Russian attacks on Ukrainian power generation
and distribution infrastructure led to the loss of a number of power
generating capacities, severe power outages and increased electricity price.
The stable operation of the Black Sea corridor, established during second half
of 2023, continued to support economic activities of Ukrainian companies.
However, logistic challenge, which arose from the blockade of the
Polish-Ukrainian border by Polish truckers and farmers during November 2023 -
April 2024, negatively impacted the country's external trade during this
period.
The European Union's Autonomous Trade Measures (ATMs), which have granted
Ukrainian agricultural products, including poultry, tariff-free access to EU
markets, are set to expire on June 5, 2025. These measures have played a
critical role in supporting Ukraine's economy during ongoing challenges.
However, their expiration could result in the reinstatement of tariffs and
quotas on key exports. The expiration of ATMs introduces uncertainty, and the
Company is closely monitoring developments and preparing to adapt to the
evolving trade landscape.
In the first quarter of 2025, the NBU estimates that real GDP grew by 0.5%
y/y, supported largely by a relatively stable electricity supply. However, GDP
growth for the full year is expected to remain subdued, constrained by the
ongoing impacts of the war. Key limiting factors include labour
shortages-exacerbated by a continued negative migration balance-increased
shelling, and damage to gas infrastructure, which is expected to raise
reliance on imports. Additionally, global trade tensions are weighing on
external demand. These challenges have led to a downward revision of the real
GDP growth forecast for 2025 to 3.1%.
In the first quarter of 2025, consumer inflation was expected to rise,
accelerating to 14.6% y/y in March, up from 12.0% in December 2024. A key
driver of this increase was the limited domestic food supply following last
year's poor harvests. While the primary impact of this factor was already
reflected at the end of 2024, its residual effects are still being felt.
However, these effects are expected to gradually subside as supply expands
with the arrival of new harvests, including greenhouse and household produce.
To stabilize the foreign exchange market, anchor inflation expectations, and
gradually bring inflation down to the 5% target over the policy horizon, the
NBU raised its key policy rate to 15.5%.
The NBU continued implementing its managed exchange rate flexibility policy,
first introduced in October 2023. Throughout the year, the official exchange
rate of the hryvnia against the US dollar gradually declined, following a
depreciation trend.
The Government continues to implement measures to stabilize markets and the
economy. International organizations (such as the IMF, EBRD, World Bank),
along with individual countries and charities, are providing Ukraine with
financing, donations and material support. International assistance remains an
important source of financing to meet state budget needs.
Despite the ongoing conflict, the Ukrainian economy has been demonstrating
remarkable resilience and adaptability, relying on international support and
domestic reforms to sustain recovery.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
12. Operating environment (continued)
The Group considers the following expenses incurred during the three-month
periods ended 31 March 2025 and 31 March 2024 to be directly related to or
driven by the continuing war:
2025 2024
Salary to mobilized employees(2)) 5.6 5.2
Community support donations(1)) 5.1 3.5
Write-off of inventories and biological assets(1)) 2.6 -
Other war-related expenses(1)) 0.8 1.0
Total amount recognized in profit or loss 14.1 9.7
(1) ) These expenses are presented within other operating
expenses in the consolidated statement of profit or loss and other
comprehensive income;
(2) ) These expenses are presented within cost of sales and
selling, general and administrative expenses in the consolidated statement of
profit or loss and other comprehensive income.
The Group, working with volunteers, has provided humanitarian aid (mainly
through food supply) to the people of Ukraine since the beginning of the war.
While the Ukrainian businesses and government institutions demonstrated a high
degree of adaptability and resilience in the face of challenges brought by the
full-scale military invasion, the related security and macroeconomic risks
remain high and continue to affect the economic situation in Ukraine. Due to
the unpredictability in the future course of the war and the uncertainty
regarding the timing of its cessation as well as availability of sustainable
international financial support, other geopolitical and macroeconomic factors,
it remains difficult to estimate the scale and direction of possible further
developments, both negative or positive, in the operating environment in
Ukraine at present.
13. Contingencies and contractual commitments
Taxation and legal issues
The Group carries its operations in various jurisdictions, with a significant
number of operations in Ukraine. Ukrainian legislation regarding taxation and
other regulatory matters, including currency exchange control and customs
regulations, is regularly changed and revisited. Non-compliance with tax laws
and regulations may lead to the imposition of severe penalties and fines.
Management believes that the Group has complied 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 regulations. The Group believes that it
complies with relevant transfer pricing requirements.
As of 31 March 2025 and 31 December 2024, management assessed the Group`s
possible exposure to tax risks for a total amount of USD 4 million related to
corporate income tax. No provision was recognised relating to such possible
tax exposure.
As of 31 March 2025, companies of the Group were engaged in ongoing litigation
with tax authorities for the amount of USD 34 million (31 December 2024: USD
35 million), including USD 3 million (31 December 2024: USD 5 million) 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 29 million as of 31 March 2025 (31 December 2024: USD 30
million) relates to cases where court hearings have taken place and where the
court in either the first or second instance has ruled in favour of the Group.
In addition, the Group maintained disputes with tax authorities in the amount
USD 2 million, which are not brought to the courts as at 31 December, but
there were not such disputes as at 31 March 2025.
Manage-ment believes that, based on the past history of court resolutions of
similar disputes upheld by the Group, it is unlikely that a significant
settlement would arise out of such lawsuits and, therefore, no respective
provision is required in the Group's financial statements.
Contractual commitments on purchase of property, plant and equipment
During the three-month period ended 31 March 2025, the companies of the Group
entered into a number of contracts with foreign suppliers for the purchase of
property, plant and equipment. These agreements are mainly related to
maintenance and modernization projects, new product development in Ukraine,
and expansion of Perutnina Ptuj production facilities. As of 31 March 2025,
purchase commitments amounted to USD 77 million (31 December 2024: USD 70
million).
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
14. 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 defined as the amount at
which the instrument could be exchanged in a current transaction between
knowledgeable willing parties in an arm's length transaction, other than in
forced or liquidation sale. 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, other
current assets, and trade accounts payable due to the short-term nature of the
financial instruments. The fair value of non-current financial assets is
measured by discounting the estimated future cash outflows, with reference to
market interest rates, and it approximates the carrying value of non-current
financial assets.
Set out below is the comparison of carrying amounts and fair values of the
Group's financial instruments, excluding those discussed above, in the
consolidated statement of financial position:
Carrying amount Fair value
31 March 2025 31 December 2024 31 March 2025 31 December 2024
Financial liabilities
Bank borrowings (Note 8) 806 772 806 774
Senior Notes due in 2026, 2029 (Note 9) 915 909 823 807
The fair value of bank borrowings was estimated by discounting the expected
future cash outflows by a market rate of interest for bank borrowings, 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.
In determining the fair value of financial instruments, the impact of
potential climate-related matters, including legislation, climate change, and
company climate objectives, which may affect the fair value measurement of
financial assets and liabilities, has been considered and found not to be
material.
15. Risk management policy
During the three-month period ended 31 March 2025 there were no material
changes to the objectives, policies and process for credit risk, capital risk,
liquidity risk, currency risk, interest rate risk, livestock diseases risk and
commodity price and procurement risk managing.
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 subsidiaries
undertake various export and import transactions and have certain loans and
borrowings denominated in foreign currencies. In particular, the Ukrainian
operations (with UAH as their functional currency) are primarily exposed to
the foreign currency risk. The Group does not use any derivatives to manage
foreign currency risk exposure. However, Management limits exposure to foreign
currency fluctuations to manage currency risk.
The carrying amounts of the Group's foreign currency denominated monetary
assets and liabilities as of
31 March 2025 and 31 December 2024 were as follows:
31 March 2025 31 December 2024
USD EUR USD EUR
Assets 218 108 215 97
Liabilities(1)) 1,494 160 1,470 153
Net liabilities 1,276 52 1,255 56
( 1) ) Currency denominated liabilities consist
mostly of bonds issued and bank borrowings.
Notes to the INTERIM CONDENSED Consolidated financial statements
for the three-month period ended 31 March 2025
(in millions of US dollars, unless otherwise indicated)
15. Risk management policy (continued)
The table below illustrates the Group's sensitivity to a change in the
exchange rate of the Ukrainian Hryvnia against the US Dollar and EUR. The
sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at period end for possible change
in foreign currency rates.
Change in foreign currency exchange rates Effect on profit
before tax
2025
Increase in USD exchange rate 10% (128)
Increase in EUR exchange rate 10% (5)
Decrease in USD exchange rate 2% 26
Decrease in EUR exchange rate 2% 1
2024
Increase in USD exchange rate 10% (126)
Increase in EUR exchange rate 10% (6)
Decrease in USD exchange rate 2% 25
Decrease in EUR exchange rate 2% 1
During the three-month period ended 31 March 2025, the Ukrainian Hryvnia
depreciated against the EUR by 1.8% but appreciated against the USD by 1.4%
(three-month period ended 31 March 2024: depreciated against the EUR by 0.4%
and the USD by 3.2%). As a result, during the three-month period ended 31
March 2025 the Group recognized net foreign exchange gain in the amount of USD
13 million (three-month period ended 31 March 2024: foreign exchange loss in
the amount of USD 40 million) in the consolidated statement of profit or loss
and other comprehensive income.
16. Subsequent events
Planned acquisition in 2025
Subsequent to the reporting date, MHP signed additional adherence deeds
following the Share Purchase Agreement (SPA) dated 20 March 2025 with
shareholders representing 41% of UVESA's share capital, increasing its total
acquired stake to 92%. Further details on this transaction are provided on the
page 225 of the 2024 Annual Report, which is available at mhp.com.cy
(https://mhp.com.cy/financial-reports/annual-reports/) .
There are no other subsequent events to mention.
17. 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 20 May 2025.
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