I'd like to welcome you to MHP's second quarter and first half 2023 results conference call. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by MHP's management and our IR team, followed by a question and answer session. Without further ado, I would now like to pass the line to the MHP team. Anastasiya, the floor is yours. Thank you very much, team. Dear stakeholders, good afternoon and good morning. Thank you for joining us today at MHP's conference call, dedicated to the second quarter and six months results. Together with CFO of MHP, Viktoria Kapelyushna, we will discuss MHP's financial and operational results, as well as current operational environment and expectations for 2023 in general, taking into account that the war in Ukraine continues. Today's call is based on press release and financial results published earlier today. However, during our call, we will discuss our projections and plans based on our assumptions, domestic and international trends. Please take it into account. I would like to inform everybody in advance that this call will last for an hour, and it is dedicated to Q2 and the semiannual results, financial results only. MHP's management call, dedicated to tender offer, will start at 3:00 P.M. UK time. We are moving on to slide number 3 now, and let me start from general overview for the second quarter of 2023. The war in Ukraine, with intensive fighting in the south and east of the country and irregular but frequent rocket and drone attacks against civilian infrastructure across Ukraine, continues. The bombing campaign, aimed at undermining the country's economic capability, shows no sign of abating, unfortunately. Macroeconomic situation, taking into account that many businesses have been adjusting to a new operational environment which remains unpredictably volatile, together with a significant level of support provided by international partners, we Ukrainians are grateful for. In the second quarter of 2023, GDP growth was at around 18%, with forecasted growth in 2023 at 2.3% is as expected. CPI slowed down to 1.5% compared to the first quarter, 2023, that was at 3%. FX remains fixed. With regard to harvest in 2023, Ukraine is expected to have another strong result, given that the weather conditions were favorable and therefore yields are expected to be strong. On this slide, you can see the forecast for 2023 harvest. If the harvest will be at 75 million tons, then 56 million tons can be exported with significant challenges on the way. Everything that cannot be exported due to the naval blockade and the overloaded railways will be stored in warehouses. At the same time, international grain prices continue to decrease, while logistic costs for exports continue to grow. Changes which took place in macro, operational environments were following: On July 18, 2023, Russia unilaterally decided not to extend the Black Sea Grain Initiative, originally signed by Ukraine. This was significantly restricted the capacity for seaborne trade for Ukrainian agricultural produce and increased logistic costs. And also on May 2, 2023, the European Commission adopted exceptional and temporary preventive measures on imports of a defined number of products from Ukraine to five member states. The European Commission lifted the restrictions on September 15, given that Ukraine agreed to tighten control over its agricultural exports. Despite this, Poland, Hungary, and Slovakia imposed restrictive nationwide prohibitions on a unilateral basis on a wider range of agricultural products that were previously restricted by the European Commission. Let me now proceed with the company's results for the second... Sorry, for the first six months of 2023. We are moving on slide number 5 of the presentation. Let me start with operational highlights. It should be noted that operational and financial results in the first half of 2022 were severely impacted by the onset of the war, making year-on-year comparison difficult. Poultry sales increased by 22% in the first half of 2023, driven mainly by exports, which increased by around 34% year-on-year. Despite different logistic challenges, either driven by the war or by the restrictions set by neighbor countries mentioned a little bit earlier. Total share of exports out of total poultry sales volumes increased to 58% from 53% last year. Financial results for the first half of 2023 are following: Group's revenue increased by 35% and reached over $1.5 billion, with export revenue representing 63% of total revenue. Adjusted EBITDA increased by 42% to $218 million, mainly driven by higher export volumes of poultry meat and vegetable oils, as well as lower war-related expenses. Net debt to LTM EBITDA ratio constituted, as you can see on this slide, 2.31. Let's go on slide number six with key financials for the second quarter of 2023, which were following: Group's revenue increased by 36% and reached over $800 million, with export revenue represented 63%. Adjusted EBITDA decreased by 9% year-on-year to over $100 million, with a EBITDA margin of 12%, significantly down as a result of substantially lower profitability in grain segment as a result of depressed grain prices. Let's move on slide number seven, where we have financial results by segments. This is the results for the six months of 2023. As you can see from the slide, poultry operations remained our key segment. The group generated the majority of total revenue, around 73% and almost 100% of the company's EBITDA. The European operating segment generated approximately 17% of total revenue and 17% of the company's EBITDA. Other two segments, such as grain segment and meat processing and other agricultural operations, generated around 5% each and, as you can see, grain segment has negative contribution to the company's EBITDA, where Viktoria will provide you more current or, more color on the drivers. Let's have a closer look at each business segment, and here I pass my words to Viktoria. Thank you, Anastasiya. Good afternoon, everyone. Let's have a precise look at poultry segment performance, slide number 8. Despite the number of difficulties due to the war in Ukraine, MHP delivered quite strong result in Q2 2023, thanks to combination of market environment and enormous amount of work undertaken by the MHP team. At the same time, the result for the next period of 2023 can be adversely affected by challenges and risks associated with war and market environment that are not under MHP's control. I will talk about the trend further in our presentation. Our strong result in Q2 2023 were made possible by the fact that our team was able to increase sunflower sales volume level and exceed the average mid price for market comparing Q1 this year. In H1, we had an additional positive effect on the cost of cake and feed for poultry production due to the favorable ratio of price for sunflower seed and oil. Currently, we see downward trend in sunflower oil prices, which may lead to a decrease of oil crushing margin and, as a result, to increase in poultry production cost. Export price in Q2 increased by 5% quarter-over-quarter as a result of increase in price for fillet and breast cap in the EU and UK channels. However, in Q3 2023, export prices started to decline. We expect the international price to continue to fluctuate and show negative trends based on assumption the international poultry price correlated further with the downward trend in the grain markets. Poultry meat in Ukraine increased by 8% compared to Q1 2023, driven mainly by increase in sales volume of high-margin product fillet, as well as increased share of sales of other relatively expensive ready-to-cook product. In Q3, poultry price in Ukraine have largely stabilized. MHP is regularly exposed to commodity price risk. To mitigate this risk, we continue to focus more and more on non-commodity products, ready- to- eat and ready- to- cook. However, penetrating and increasing our share of this market requires a lot of effort and expenses as of today and in the near future. Let's move to slide number 9, grain growing operations. It is important to highlight the export price for grain from Ukraine is significantly lower compared to the international price due to logistic cost substantial increase as a result of war in Ukraine, additionally challenged by recent termination of the Black Sea Grain Corridor. Obviously, this negatively affected the profitability of MHP, as well as all agri producer in Ukraine. EBITDA of grain segment, net of IFRS 16, in H1 this year, was negative at, negative at the level of $27 million, comparing to positive amount, $34 million last year. This was mainly due to significant decrease in international grain prices, which continued to decline in Q3, as well as increased logistic costs due to the war impact. We expect our grain segment profitability from the 2023 harvest to approach zero. All at the same time, all spring crops are currently in good condition, yield is expected better than in 2022 due to the good weather conditions in Ukraine. Let's proceed to slide number 10. The financial performance of the meat processing business is mostly stable year-on-year. Sales volume of meat processing products decreased, driven by temporary suspension of production facility, Ukrainian Bacon, in the Donetsk region, Q2 2022. We continue to develop our convenience food product. Today, all our, today, our production facility operate at 100%. Let's proceed to slide 11. Several words about Perutnina Ptuj. EBITDA of our European operating segment in H1 slightly increased, mainly due to the growth in capacity of sales volume in Serbia and Croatia, as well as slightly higher price of meat and meat processing product. A few words about our cash flow and liquidity position. Please go to slide 12. Cash from operation before change in working capital amount to $106 million, compared to $254 million last year. This amount included payment in February 2023, part of the deferred interest payment agreed with creditor in March 2022. Release of working capital amount to $70 million in H1, mostly due to reduction in stock of meat or grains, corn and sunflower at the end of Q2 this year, due to recovered logistic and group diversification and optimization action, while it was significantly disrupted due to the war activities last year. However, it should be noted that investment in working capital will substantially increase in H2 2023, resulting in substantial cash outflow due to the future requirement purchasing of sunflower seeds, fertilizers, seeds for our farming business, as well as termination of the grain deal by Russia, that causing significant restriction in the capacity for seaborne trade for Ukrainian agriculture export. Total CapEx in H1 amount $92 million and mainly related. Firstly, purchases of diesel generators to mitigate the impact of possible power outages, high investment in CapEx regarding related to cost optimization and culinary strategy project, maintenance and new product development, and also improvement of Perutnina Ptuj production facilities. Regarding debt, at the end of the period, the company total debt was nearly $1.5 billion. Net debt, about $1 billion. By the, as of the 30th of June, for the first time in our history, our short-term debt increased up to $725 million. This is because the first five hundred million euro bond, which is due for repayment in May 2024, is now classified as short term. The group has reached agreement in principle with a number of international and development financial institutions to enter in facilities agreement, providing up to four hundred million dollars in aggregate. We understand that our lenders expect us to utilize this liquidity in a tender offer exercise to buy back as many as possible notes, well in advance of the scheduled maturity in May 2024. The operating environment remains volatile, extremely challenging and unpredictable, including the NBU restriction regarding capital movements outside of Ukraine for the Ukrainian legal entities and individuals. The liquidity position at the end of the H1 was $502 million, $277 million of which was held by group subsidiaries outside Ukraine. It is important to note that according to rules instituted by NBU, the foreign currency proceeds of export from Ukraine must be repatriated to Ukraine within six months of recognition, which in principle limits our ability to utilize the offshore cash for debt service. Current environment and significant uncertainty, we estimate our minimum safe cash balance at $200 million. And now, I give the floor to Anastasiya for update and outlook. Thank you very much, Viktoria. Definitely, first half of the year was full of different challenges, which the company managed to overcome. Looking forward, we understand that although the situation in Ukraine will remain fluid and highly uncertain while the war is ongoing, the group's Ukrainian operations should continue. Poultry production continues to operate at 100%, at least now. Culinary transformation is on its way, and harvesting of spring crops carries on. After the reporting period at the beginning of September, the company signed a shareholder agreement with DHV, subsidiary of Tanmiah Food Company, in the case, a publicly listed company on the Saudi Stock Exchange. With intention to establish a joint venture in poultry farming in the Kingdom of Saudi Arabia, the joint venture is scheduled to be registered, hopefully in the fourth quarter of 2023. When it comes to expectations for the second half of 2023, results should be influenced primarily by customary market factors. In poultry business, for example, we expect some further downward correction in global poultry prices in the coming months. Increased logistic costs are expected to continue in 2023. Grain prices in Ukraine and internationally are expected to remain depressed in the second half, combined with the logistic difficulties in Ukraine, and despite good harvest yields, the company expects a weak financial performance in the grain segment, as already highlighted by Viktoria earlier. While poultry prices in Ukraine have largely stabilized, international prices are expected to continue to fluctuate around generally negative trend. Taking into account the announcement on a tender offer released today, later today at 3:00 P.M. UK time, within approximately 40 minutes, as mentioned at the beginning of our call, MHP will have a separate call with its bondholders. Please kindly join us following the instructions provided by JP Morgan team. Now, thank you very much. We are ready for questions. To ensure that all participants on today's call have equal opportunities, please follow the rule, one participant, two questions. Thank you for cooperation in advance. Team? Thank you, Anastasiya. So we will now move to the question and answer section. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you're dialed in by web, you can type the question in the box provided or request to ask a voice question. Our first question comes from Antonio Luis Gomez from Ninety One. Please go ahead. Hi there. Thank you for your time. Within the limits of what you can talk about before this tender call, could you outline, you know, the key terms of this new IFI loan that you're going to do in terms of maturity, and so forth? Antonio, Antonio, can you hear me? Yeah. This is Anastasiya. Unfortunately, we do not cover questions with regard to the tender offer at this call. So, please join our discussion, meaning at the conference call, in about 40 minutes. We cover only the questions with regard to the financial results. Okay. And Anastasiya, sorry, yes. I can answer for your question regarding the term. This facility for 6 year. Okay, great. And then in terms of your cash restrictions, correct me if I'm wrong, the IFI debt, you can—you're allowed to pay coupons on in US dollars from your local currency holdings. Is that correct? How does that look for your US dollar liquidity to pay the coupons of the remainder of your bonds? Yeah. Yeah. Look, first of all, you know that we paid in the past our coupon, yeah? And, yeah, you know, the NBU implemented and set up restricted, it seems to me, more than one year ago. Yeah, we, we, we paid in the past, and we understand that... Yes, and we understand that we need to pay coupon in the future, but anyway, it, it is a temporary solution. Okay. Okay, that makes sense. Great. I mean, I had more questions, but those are my two main ones. I guess we can talk at another time for the remainder. Thank you. Thank you. Thank you. Our next question comes from Anton Anikst from Knighthead Capital Management. Please go ahead. Good afternoon. How are you? Very nice job managing cash flows in Q2. I was hoping you would give us a little bit more detail on the various components of the $140+ million of cash generation. First of all, if I heard Vika correctly, the $70 million inflow from working capital did not include any meaningful VAT recoveries. Is that accurate? Yeah, please. Yeah, 70. If you question about our release of working capital within H1 was $70 million, yes, includes some of it VAT reimbursement, but very insignificant. Yeah. But please repeat the first part of the question. I was just looking at the various components of the cash flow, one of which was the $70 million of cash generation from working capital. I was confirming that was mostly inventory driven?... and that there was no meaningful- Yes. Yeah, you're completely right. Mostly, yeah, mostly related to decrease our inventory. Yeah, because by the end of the year, we have unusual stock, yeah, of sunflower seed, and meat, and oil. Yeah, and we decreased during the H1 2023. But during the presentation, I told that our for in H2, we will have investment in working capital because we need to buy big stock of sunflower seed, fertilizer. It is usual, because it is not something special for 2023. Yeah, every year, we usually buy a lot of fertilizer and seeds for our farming business and sunflower seeds. Understood. So just for an update on VAT would be very helpful. When we last spoke in May, you were expecting about $120 million for the full year 2023, of which I think as of May, you had only collected about $10 million, and you were looking to maybe collect $15 million-$20 million in the second quarter. No, we collect- Second quarter. Yeah, during the- Where, where, where are we today? During the H1, yeah, during the H1, it seems to me reimbursement of VAT, it was around $40 million. Yeah, around $40 million. Four zero? But you understand, it is always is a big. It is this, this amount always unfortunately not under our control 100%. Yeah. Sorry, just to confirm, Vika, 4, 0, $40 million? 40, yeah, around 40. Okay. Should we still expect maybe $80 million, or go above? Yeah, we still expect based on our forecast. But anyway, it is, I would like to repeat, not completely under our control. Of course. Understood. And then just curious, there was about $13 million of cash used in investing that was not CapEx. What was that? It was not the Saudi JV, because that was obviously after June 30th. Just, I will expect. Maybe we will send to you this information, Anastasiya, okay? That's fine. Okay? Okay. Yeah, we can follow up on Anastasiya. Yeah, yeah, we will send to you. Finally, in the same section, $32 million from financing, I'm assuming that's you drawing on the EBRD facility, or is there some- Yes. some other source of financing? Yes, you're correct. Yeah, yeah. But, but anyway. Yes, yeah, you're completely correct, but we repaid last month. Got it. And what's cash today? Obviously, very nice cash generation from March to June. Uh, yeah. Where do we stand today, and what are the splits? Yeah, you... Yes, if you ask me right now, around $410 million to around $410 million. Got it. And that's, what, half and half Ukraine, overseas, or what, what are the splits? Yes, yes, yes. I told yes, yeah, half of them in Ukraine, yeah. Okay. And then final question: we obviously saw the press release about the Tanmiah JV a couple of weeks ago. It looked like that only required $7 million of cash investment upfront. Should we expect more investment later? No, no. Yes, approximately $7 million, yeah. Are you contributing assets? Because it's 45% of BRL 200 million reais is obviously much more than $7 million. Do you understand my question? Yeah. Yeah. Yeah, we talk about the whole investment, but this JV, I would like to explain. We invest around $7 million, but we expect the JV will take loans. Over time- A loan. you will be required to invest more? Yeah. Yeah, yeah, yeah. Okay. A loan. That's all for now. Yeah. Yeah. All right. Thanks, Vika. Thank you. Just a reminder, if you have a question, please press star two on your phone and wait to be prompted. We have a text question from Sergey Makin at VR Capital. What security is being offered under the refinancing facility, and will the 2026, 2029 bondholders find themselves in a structurally subordinated position? Oh, sorry. Please repeat the question. Sorry. Yes, of course. So what security is being offered under the refinancing facility, and will the 2026, 2029 bondholders find themselves in a structurally subordinated position? No. Yeah, no. Yeah, it's unsecured. Yeah, unsecured. And yeah, the current... Yeah, the current, yes, one with the IFI, and, yes, Pari Passu. Okay. And, and, yes, at the same, at, at the same, how to say? At the same package of guarantor and almost the same covenant with our current euro bonds. . Okay. So we have a voice question from Nataliia Shpygotska. Please go ahead. Thank you very much for the call. Just a small clarification, if I've heard correctly, that the maturity of these new IFI facilities are six years? Thank you. Yeah, you're completely right, six years. But this six year with amortization credit, not bullet. Uh-huh, uh-huh, amortization. Okay? Thank you very much. Yeah. Thank you. Thank you. Okay, thank you. We have a question from Stella Cridge at Barclays. Please go ahead. Hi there. Afternoon, everybody. Many thanks for all the details so far. Two questions from me. The first one was, what do you plan for your CapEx to be for the whole of 2023? And secondly, what do you expect the working capital need will be in the second half of the year in total? That would be great. Thanks. Thank you for your question. Our CapEx in the H1, it was approximately $100 million, and approximately the same level, we understand that we invest in CapEx in the second half of the year, $100-$120. And regarding working capital, we expect an investment working capital for full year will be around $70-$80 million. That's great. Many thanks. Thank you. Okay, thank you. So we have a question from Dmitry Ivanov from JSS International. Please go ahead. Hi, Nastya, Viktoria. Thank you for the presentation. I have two questions. The first one, regarding your short-term bank loans. I think you have around $220 million of short-term bank loans. Could you please share some color on, like, strategy with regards to this, repayment of the short-term bank facilities? Like, do you plan to extend the facilities? Did you receive waivers from bank lenders? Because I remember it was August, December period when you had just to negotiate, renegotiate extensions. So any color on this short-term bank facilities would be helpful. And the second question, with regards to expectations of your EBITDA generation. So I remember that you previously guided for the full year EBITDA in line with the previous year EBITDA. Given the environment volatility in poultry prices and international markets and other things like some deterioration, do you still plan to generate same amount of EBITDA for the whole year? So what's like kind of outlook for the second half of 2023? Thank you very much. Yeah. Thank you for your question. Regarding first question, yeah, you're completely right. The total amount of short-term debt, $120, and we need until the short-term debt until the first quarter, approximately. And for us, very, very important to provide... Yeah, because you understand now we have short-term debt, $750 million, is anti-record in our history. And for lender, yeah, for banks, it's very important that we solved problem, yeah, solved issue regarding Eurobond 2024. That is, to be honest, is one of the, one of the reasons why we go to together with IFI, go to the tender, because we, we understand that we need, for us, it's very important to prolongate current short-term financing, yeah, short-term loan. Because, you understand, it's completely impossible in Ukraine to attract some new financing, not just for MHP, for all companies, even for MHP. That is why everything subject to how we—how to say—what result we achieved with our current tender regarding refinancing. No, not refinancing, prolongating, change maturity of short term. Regarding the second question about our EBITDA for full year, we understand that we had a quite good financial result in poultry segment, but at the same time, we understand that farming business, grain segment, under pressure. We talked a lot with the reason why international price, logistic cost. And now we see that our expectation about our EBITDA for full year similar and close to the last year. Thank you. Thank you very much. Just to confirm, the current short-term bank lenders asked for some prepayment of upcoming bonds. So it's a kind of condition precedent for them to extend maturity. So you haven't received any waivers yet, and they're waiting for the results of the tender. Is it correct? Yeah, no, today, right now, we don't need to have any waiver because our maturity by the end of the year. Yeah. Okay. That is why we yes. Yeah, it is not right now. Yes, by the end of the year, in December. December, January, it is. Mm-hmm. Sorry, and one last kind of question regarding key outflows. You already specified your CapEx guidance, working capital outflows. Are there any outflows we should be aware of? So for example, some investments in upcoming sowing campaign or harvest, so any other outflows apart from the mentioned working capital and CapEx that we like we should incorporate in our model? That would be very helpful. Thank you very much. No. No, just payment, interest payment. Yeah. This year it was $130. Taxes, approximately $20-$25. No, not something special. No. Okay. So all this investment in sowing campaign next year, so it's a part of working capital? So basically, we- Yeah. It's all- Yes. Yes, you're completely right. Yeah, that is why, that is why in the first half of the year, we have released in working capital, $70 million. Mm. In the second half of the year, we have investment in the working capital, approximately $140-$150 million. For full year, yeah, if you for full year, it is around $70-$80 million investment in working capital. Investment. Okay. Thank you very much for this clarification. Thank you. Yeah. Thank you. Just a final reminder, if you have a question, please press star two. We have a question from Vidya Vaira at Goldman Sachs. Please go ahead. Hi, congrats on the results. Just wanted to understand the working capital dynamics a little better. So does this $140 million working capital outflow in second half include any outstanding from that? Or, or that is just, you know, the, the working capital build up? Because I remember that last year we were not expecting much working capital investment for this year, given so many years of high working capital, plus grain prices coming down, poultry prices coming down. So what is driving this additional $140 million working capital investment in second half? Thank you. Okay, thank you for your question. Yeah, first of all, in the second half of the year, we will invest purchasing fertilizer. Yeah, fertilizer for sowing campaign. Yeah, for spring sowing campaign, because we always make stock of fertilizer by the end of the year, and seeds for grain business, for farming business. And additionally, we invest money for some to buy sunflower seeds, because every year by the end of the year, we have the stock of sunflower seeds approximately for four months. It is the main investment. And if you're regarding KAT, we expect that 50%, yeah, approximately, we will receive. 50, yeah, on the question. Thank you. One last question. If you can just explain in detail what you're seeing on the pricing side, in different markets, for export markets of poultry. And versus last year, how do you see the year to end? Will it be flat? Will it be much lower? Just some color there will be helpful. Thank you. Yeah, thank you for your question. What we see right now, right now in September, and we see the price in October, price of export market, price of chicken decreased approximately by minimum by 10%. Depends on the market, sometimes 8, sometimes around 10%. And, how we told during the presentation, we understand that price, usually price of, meat correlate with price of grain. And that is why, to be honest, we don't expect any increasing in price, the meat. And that is why we expect that our profitability and our financial result in the second half of year would be lower than in the first half. Thank you. Okay, thank you. So we have one more question from Nandini Bommakanti from JP Morgan. Please go ahead. Thanks for taking my question. So just one clarification for me. Does undrawn facilities of $93 million, does it include the EBRD facility of $90 million? Thanks. Yeah. Yeah, yeah, you're completely right, but we had this facility by at the first of July, because you understand our financial report is the first of July. Now, now, right now, we don't have this facility, and now we don't have any undrawn facility. Okay, understood. Thanks. Thank you. Okay, thank you. I think we have one last text question as well from Konstantin Chinarov. I think some of this was answered, but he does ask, "How much cash held offshore could be used to repay debt, coupon, and principal? No, annual coupon payment, yeah, annual payment of coupon is around $100 million. Okay, and, he also asks, "Could you please confirm whether the new $400 million international funding facility is secured or unsecured? Unsecured. Yeah, I told that our IFI facility has completely, you know, very similar covenant package and the same guarantor that we have in the eurobonds. Okay, perfect. Thank you. So I'm not seeing any more questions, so maybe I can hand back to you, Anastasiya, Viktoria, for closing comments. Thank you very much, Tim. I would like to thank the audience. I would like to thank our stakeholders for the call, for the questions, and see you soon at our next call, which will start in about 15 minutes. Thank you and have a lovely day. Bye. Thank you. Thank you very much. Bye-bye.