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A LEADING
INTERNATIONAL
FOOD AND AGROTECH
COMPANY
ANNUAL REPORT
AND ACCOUNTS 2022
CONTENTS
33 Key Performance
Indicators
38 Financial and Operational
Review
46 Measures of Financial
Performance
49 Risk Management
54 MHP’s Growth Pillars
& case studies
107 TCFD Disclosures
111 Non-Financial
InformationStatement
114 Chair’s Introduction to
Corporate Governance
116 Corporate Governance
Report
119 Board of Directors
127 Audit & Risk Committee
Report
133 Nominations and
RemunerationCommittee
Report
135 Sustainability and
International Affairs
CommitteeReport
137 Management Report
142 Statement of the Board
of Directors
143 Independent Auditor’s
Review
149 Consolidated Financial
Statements
155 Notes to Financial
Statements
218 Shareholder
Information
219 Glossary of Terms
STRATEGIC
REVIEW
BUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
GOVERNANCE
4 War in Ukraine
7 Performance Highlights
10 MHP at a Glance
15 Chair’s Statement
18 CEO’sStatement
20 Segment Overview
28 Our Business Model
STRATEGIC
REVIEW
0302 04 05
FINANCIAL STATEMENTS
GOVERNANCE
BUSINESS REVIEW
SHAREHOLDER INFORMATION
4 War in Ukraine
7 Performance Highlights
10 MHP at a Glance
15 Chair’s Statement
18 CEO’s Statement
20 Segment Overview
28 Our Business Model
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
4
WAR IN UKRAINE
WAR IN UKRAINE
The Group is managing successfully the
significant risks and challenges caused by
the sustained Russian attacks on Ukraine’s
infrastructure and is currently operating
at close to full production capacity.
At the time of publication, notwithstanding
the significant general uncertainties
inherent to the continued war, the
management team sees a significant
ongoing risk to operations due to
the recurring attacks on the critical
infrastructure of Ukraine which led to
a number of disruptions in operations,
particulary in the second half of 2022. The
frequent attacks on infrastructure have
continued in the first quarter of 2023.
For more information on the Group’s
management of War-related risks see
the Principal Risks and Uncertainties
section on page 50 and the Audit & Risk
Committee Report on page 127.
MHP’S RESPONSE TO THE WAR
The past year has demonstrated the
tremendous resilience and agility of
MHP’s business model and workforce.
The Group’s ability to maintain operations
and ensure stable production is also
attributable to the steps rapidly
implemented by the management team
at the start of the War in areas including
supply chain management and logistics.
Managing extreme uncertainty, ensuring
the safety of the workforce, and
maintaining operations and employment
were the greatest challenges following
the invasion. On 24 February 2022,
the Group established three war-time
priorities which remain unchanged today:
ensuring the safety and wellbeing of our
THEMILITARYINVASIONOFUKRAINEBY RUSSIANFORCESBEGANON24FEBRUARY
2022,MARKINGTHEBEGINNINGOFFULL-SCALEWARACROSSTHECOUNTRY.AT
THE TIME OF PUBLICATION OF THIS REPORT, THE WAR CONTINUES, INFLICTING
DESTRUCTIONONUKRAINE'SINFRASTRUCTUREANDITSPOPULATION.MANYLIVES
HAVE TRAGICALLY BEEN LOST, INCLUDING 58 MEMBERS OF OUR WORKFORCE
KILLEDINACTION AS OFTHEDATE OFTHIS REPORT; OUR THOUGHTS AREWITHTHE
FAMILIES OF THESE PATRIOTIC COLLEAGUES.
workforce; domestic food security; and
supporting Ukraine and its people. At the
same time, the Group put in place systems
to ensure constant communication with
all its stakeholders. Management teams
were devolved to enterprises in the
regions to provide effective leadership
and role models, to boost morale, and to
demonstrate courage and, above all, unity.
For an overview of the Board’s main areas
of focus since the outbreak of War, see
the Chair’s Introduction to Corporate
Governance on page 114.
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
5
SAFETY AND WELLBEING
OF OUR WORKFORCE 1
FOOD SECURITY
AND HUMANITARIAN AID 2
Since the outbreak of War, the workforce
has been united in undertaking every
effort possible to ensure that Ukrainians
have access to food now and in the
future. MHP’s businesses and sales teams
have continued to work and to assist
partners in all regions, often in dangerous
situations, operating large fleets of
logistics vehicles. Adaptations to
our business model included the
establishment of new routes to market
and two-way supply chains. For more
information, please see the CEO’s
Statement on page 18.
Working with volunteers and alongside
NGOs, the Group has provided over
12,000 tonnes of poultry, other food
products, and equipment pro bono to
residents of war zones, communities,
hospitals and maternity homes,
charitable institutions, and internally
displaced persons.
Following de-mining and the Ukrainian re-
claiming of land, the Group completed the
harvest on virtually all MHP’s land in 2022
(cropped land around 341,000 hectares
compared with 351,400 hectares in 2021).
MHP's culture of looking after its people
has never been more pertinent than over
the past year. Since the outbreak of the
War, the Group has spared no effort to
ensure the safety and well-being of its
workforce. MHP has (a) identified those
most at risk, relocating approximately 600
staff and their families from dangerous
locations to 'hubs' in safer areas (b)
endeavored to provide a safe working
environment for employees returning to
work and (c) continued to offer stable
employment to our workforce, committed
to ensure Ukraine's food security.
Broader ongoing support includes
packages of assistance to employees
who have suffered because of military
action; full coverage of treatment and
rehabilitation costs in the event of injury
caused by the hostilities; psychological
support; and the establishment of
children’s centres to enable employees to
go to work. More information on support
provided by the Group can be found in
Growth Pillars 2 and 3 on pages 63 and 75.
MHP is continuing to pay wages in full to
all employees seconded to the Ukrainian
Army. At the time of publication, that
number is over 1,700 people.
WAR IN UKRAINE
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
6
WAR-RELATED LOSSES, DISRUPTIONS AND COSTS
At the time of publication, the Group
has not suffered any material damage to
its facilities, infrastructure and produce
in Ukraine except for the destruction
of a leased storage facility in Kvitneve
village resulting in a loss of US$6 million
(approximately 3,000 tonnes) of frozen
poultry in March 2022. The “Ukrainian
Bacon” (meat-processing) operations in
the Donetsk region were suspended in April
2022 and subsequently transferred to other
locations in Ukraine.
In the second half of 2022, MHP experienced
a number of significant disruptions and
operational issues within its business
as a result of severe power outages in
Ukraine caused by Russia's attacks on
Ukrainian power generation and distribution
infrastructure. These outages caused
temporary instability of oilseed processing,
poultry and silo operations, which the
Company managed to mitigate equipping
its key assets with diesel generators.
The Group has incurred substantial
War-related costs. For the period
ended 31 December 2022. These
amounted to US$ 69 million, including
community support donations, write-
off of inventories and biological
assets, and other War-related expenses.
69 M
1
US$
THE GROUP HAS
INCURRED SUBSTANTIAL
WAR-RELATED COSTS OF
The Group remains highly responsive to
the Ukrainian population’s needs. MHP
has worked tirelessly in cooperation
with NGOs and local authorities, and
through the MHP Charitable organisation
“MHP – Gromadi”, to support the safety
and wellbeing of the people of Ukraine
through a range of cultural, social, and
economic initiatives.
Support to date has included the
purchase of modern ambulances and a
tow truck for the evacuation of medical
vehicles transporting wounded Ukrainian
soldiers; the provision of refrigeration
services for supermarkets; aid and
support (including healthcare, access
to social services and counselling) to
more than 300,000 internally displaced
persons (IDPs) from around 100 Ukrainian
centres; the provision of the Group’s
KOKO-branded baby food and other
hygiene products to 100,000 IDP children;
the establishment of two IDP shelters
in central and western Ukraine; and
financial contributions towards the
establishment of 75 bomb shelters in
kindergartens, schools and hospitals
across eight regions of Ukraine. The
Group’s National “Cinema for Victory!”
initiative was launched in August
2022 with the objectives of boosting
morale and providing support and
encouragement to communities and
IDPs. 1,306 film screenings were held in
2022 in 18 regions of Ukraine.
SUPPORT FOR UKRAINE
AND ITS PEOPLE
3
The Group also continues to support
Ukraine’s economy. To promote
the sustained development of
entrepreneurship during the War, MHP
has provided business grants for start-
ups and for the relocation of businesses
to safer areas, and, in response to Russia’s
relentless attacks on Ukraine’s energy
infrastructure, funding for projects
working to ensure local energy security.
Working with the Ministry of Agrarian
Policy and Food, the Group is supporting
the development and implementation
of business ideas for the development
of agriculture in communities and food
self-sufficiency. For more information on
the broad support provided, see Growth
Pillar 3 on page 75.
Key to the Group’s economic support
is the maintenance of our operations
and workforce. Throughout the War,
the Group has focussed on mobilising
employees and maximising employment
levels. This has been possible due to
the tremendous engagement of our
workforce and, often, the retraining of
employees, for example, in logistics. The
implementation of our adaptive approach
to remuneration also enabled the Group
to maintain maximum levels of activity
at the enterprises. For more details, see
Growth Pillar 3 on page 75.
WAR IN UKRAINE
1
Without loss on impairment of property, plant and
equipment (section War in Ukraine)
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
7
PERFORMANCE
HIGHLIGHTS
PERFORMANCE HIGHLIGHTS
FINANCIAL HIGHLIGHTS
REVENUE
NET DEBT NET DEBT/LTM
EBITDA RATIO
WAR-RELATED COSTS
2
EXPORT REVENUE EXPORT REVENUE AS
A % OF TOTAL REVENUE
ADJUSTED EBITDA
1
US$ million
US$ million
US$ million
US$ million US$ million+11% y/y y/y y/y+26% -41%
2,642
1,237
1.90
69
1,601
61%
3842,372
1,230
3.22
1,265
53%
648
2022
2022
2022 2022 20222021
2021
2021 2021 2021
2022
2022:
2021: NIL2021
1
Adjusted EBITDA is net of IFRS 16
2
Without loss on impairment of property, plant and
equipment (section War in Ukraine)
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
8
OPERATIONAL
HIGHLIGHTS
WE WORK FOR UKRAINE
RESILIENCE RESISTANCE INNOVATION
HUMANITARIAN AID
OVER
CARE FOR OUR WORKFORCEFINANCIAL SUPPORT
The Group is operating at almost
capacity utilisation despite
War-related challenges
Our vertically integrated
business model underpinned
our robust performance
Re-establishment of supply and
export routes has enabled the Group
to continue to export to over
countries
PARTNERSHIPS
Unprecedented ongoing
support from bondholders,
creditors, and suppliers
tonnes of poultry
donated pro bono
to Ukraine
of funding provided
for social projects
(incl. response to War)
Broad ongoing support for our
- strong workforce
and their families
paid in support of the elderly,
mobilised employees,
and their families
We will continue to support
Ukraine, its economy, and its
people
100%
70+
SUPPORT FOR MOBILISED
EMPLOYEES
people of our workforce mobilised
to the Ukrainian army;
MHP continues to pay their
salaries in full
1,700
US$12.9M US$ 28.4M
28,300
12,000
PERFORMANCE HIGHLIGHTS
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
9
OUR COMMITMENT TO
RESPONSIBLE BUSINESS
CONTINUES
CARBON TRUST
WATER USAGE
ENERGY MANAGEMENT — UKRAINE
Alltech ECO2
project finalised
Carbon Trust accreditation
process underway
TOTAL ENERGY USED
FROM RENEWABLE
SOURCES, TJ
OF WHICH
BIOGAS, TJ
UKRAINE
WATER USAGE
EUROPEAN OPERATING
SEGMENT WATER USAGE
STABLE STABLE
14.5 m
3
2.0 m
3
1,707 1,0311,691 1,065
2022 20222021 2021
GREENHOUSE GAS EMISSIONS — UKRAINE
SCOPE
2 EMISSIONS,
TONNES -7%
SCOPE
1 EMISSIONS,
TONNES -5%
353,413 373,673
2022 2021
220,985 237,776
2022 2021
For detailed information on
our approach to responsible
business see our six Growth
Pillars set out from page 54
onwards.
PERFORMANCE HIGHLIGHTS
y/y y/y
MILLION MILLION
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
10
MHP AT A GLANCE
WE ARE MHP
MHP is a leading international food and
agrotech company. The Group is focussed
on developing and providing high quality,
sustainable proteins, food products
and culinary solutions that are safe and
responsibly sourced.
The Group is the largest producer of
poultry, culinary and processed-meat
products, and grains and oils in Ukraine.
It is also one of the leaders in poultry
production and meat processing in
the Balkans through its Perutnina Ptuj
operations.
WE WORK FOR UKRAINE
Since the invasion of Ukraine by Russia
in February 2022, our near-term purpose
and strategy have evolved as we have
adapted to the rapidly changing situation.
Our immediate priority is to safeguard
the security of our workforce and the
people of Ukraine, and to work to ensure
food security. Our long-term purpose and
strategy remain unchanged.
For information on the Group’s response
to the War, and on the support provided
by MHP, see the War in Ukraine section
on page 4 and Growth Pillars 2 and 3 on
pages 63 to 77.
MHP AT A GLANCE
Since 2019, MHP has been transforming to
a culinary company. Its vision is to be a
world-leading sustainable food producer.
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
11
OUR PURPOSE
To provide our customers with high quality,
sustainable proteins, food products
and culinary solutions that are safe and
responsibly produced.
Our Purpose drives everything we do: our
strategy, our culture, and our approach to
responsible business.
RESPONSE TO WAR
The dynamic situation in Ukraine presents
both significant challenges and new
opportunities. Strategic adaptations
in response to the War have focussed
upon logistics and supply lines. For
more information see the War in Ukraine
section and the CEO’s Statement on
pages 4 and 18 respectively.
OUR STRATEGY
Our medium- to long-term strategic objectives remain unchanged.
EXPANSION OF
INTERNATIONAL SALES
AND DISTRIBUTION
NETWORK
BECOME THE
UNDISPUTED LEADER
IN THE AGRICULTURAL
MARKET OF UKRAINE
M&A OPPORTUNITIES
AND STRATEGIC
PARTNERSHIPS
CONTINUOUS
IMPROVEMENT AND
INNOVATION
INTERNATIONAL
DIVERSIFICATION AND
EXPANSION
TRANSFORMATION
TO A CULINARY
COMPANY
The continued development
of value-added food products,
supported by our state-of-the-
art culinary research centre,
and in collaboration with
customers and leading culinary
experts.
Development of retail and
HoReCa segments including
street food, dark kitchens, and
virtual restaurants.
Strategic partnerships with
food industry players, and
investment in businesses that
expand the Group’s culinary
expertise.
Client business development
training for all sales teams.
Continue to monitor and
explore M&A opportunities and
potentially acquire assets in the
UK, EU, and MENA.
The expansion of existing
and entry into new export
markets through market
targeting and increased sales
of higher margin, value-added
products.
Launch of new international
sales branches and
distribution offices, and the
potential establishment of
joint ventures.
Maintenance of the Group’s
“continuous improvement”
approach including optimising
human productivity; high biosecurity
standards; environmental standards;
health and safety; and animal
welfare practices, including the
antibiotic-free programme.
Ensure high efficiency crop
production through higher
yields and optimisation of cost
control, including the digitisation
of production and harvesting
processes.
Ensure the stability of the Group’s
landbank.
CULINARY TRANSFORMATION
Since 2019, MHP has been transforming
from a raw materials provider to an
international company specialising in
the development of culinary solutions
for its customers. This evolution reflects
the accelerating changes in the food
production landscape as consumer
preferences shift to sustainable food
choices and higher value-added
products.
MHP AT A GLANCE
OUR PURPOSE AND STRATEGY
THE GROUP’S NEAR-TERM PURPOSE AND STRATEGY HAVE EVOLVED AND ADAPTED
ASMHPHASPLAYEDALEADINGROLEINBOTHDOMESTICANDINTERNATIONAL
FOODSECURITYANDTHEPROVISIONOFHUMANITARIANAIDDURINGTHEWARIN
UKRAINE. OUR LONG-TERM PURPOSE AND STRATEGY REMAIN UNCHANGED.
BRAND PROMOTION
AND DEVELOPMENT
ALTERNATIVE ENERGY
PROJECTS
EFFICIENCY OF
BUSINESS PROCESSES
Constantly increase
production efficiency through
modernisation and innovation;
improvement in cost and quality
control; use of up-to-date
technology across all business
segments, including PP.
Continue to promote and
develop MHP’s strong
brands, both domestically
and internationally, through
consumer-driven innovation,
rigorous quality control,
and the introduction of new
products.
Expand alternative energy
projects including biogas,
biomethane, and biomass
with carbon capture and
storage (“BECCS”), resulting
in carbon sequestration].
PEOPLE AND
WORKFORCE
Development of the Group’s
approach to people, including
providing a healthy and safe
workplace and an environment
that enables every employee
to develop their skills to their
maximum potential.
STRATEGIC REVIEW
GOVERNANCEBUSINESS
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12
INTEGRITY
TRANSPARENCY
TEAMWORK
COURAGE
ACCOUNTABILITY
OUR CULTURE RESPONSIBLE BUSINESS
Our cultural identity and values drive the
way we work, our behaviours and our
decision making. They unite us.
Our Purpose is directly linked to six
Growth Pillars that guide us as we pursue
our strategy.
MHP aims to build a culture where
everyone’s welfare, health and safety, and
wellbeing matters within a workplace that
is welcoming to all.
Our values and culture have been actively
demonstrated during the War by the
support our workforce has provided
to the people of Ukraine and by the
tremendous courage, teamwork, and
resilience our people have shown
throughout.
Growth Pillars pages 54 to
106
Growth Pillars pages 54 to
106
STAKEHOLDER
ENGAGEMENT
pages 59 to 62
OUR PEOPLE AND
THEIRWELLBEING
pages 63 to 74
OUR ROLE IN SOCIETY
AND OUR LICENCE TO OPERATE
pages 75 to 77
BUSINESSCONDUCT
pages 87 to 93
THE PLANET
pages 94 to 106
RESPONSIBLE FOOD
PRODUCTION
pages 78 to 86
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
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STATEMENTS
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INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
13
WHERE WE OPERATE
MHP is headquartered in Ukraine with
operations in Ukraine and in the Balkans,
and with distribution centres in the UAE,
Saudi Arabia, the Netherlands
1
and the UK.
The Group has a strong position in
the domestic market and diversified
international markets, exporting to 72
countries, primarily in MENA, the EU and
CIS.
For more information on exports see the
CEO’s Statement and the Operational
and Financial Review on pages 18 and 38
respectively.
39%
Domestic
2
61%
Export
36% 17%
EU CIS
3%
Asia
10% 34%
Africa MENA
Group revenue by destination
2021
47%
Domestic
2
53%
Export
Group revenue by destination
2022
70+
WE EXPORT TO
COUNTRIES
1
Operations in the Netherlands also include a cutting
plant.
2
Domestic revenue comprises revenue generated
from sales by MHP Ukraine in Ukraine; and revenue
generated from sales by Perutnina Ptuj in the
Balkans.
GROUP REVENUE BY DESTINATION
SHARE OF POULTRY EXPORT VOLUME, %
MHP AT A GLANCE
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
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STATEMENTS
SHAREHOLDER
INFORMATION
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14
OUR OPERATIONS
BUSINESS SEGMENT REVENUE BY DESTINATION 2022
Poultry & Related
Operations
Meat-Processing &
Other Agricultural Operations
Grain Growing
Operations
European Operating
Segment
1
Domestic revenue for Poultry & Related Operations,
Grain Growing Operations and Meat-Processing &
Other Agricultural Operations comprises revenue
generated from sales by MHP Ukraine in Ukraine.
2
For the European Operating Segment, domestic
revenue comprises revenue generated from sales by
Perutnina Ptuj in the Balkans.
28%
Domestic
1
72%
Export
97%
Domestic
1
3%
Export
75%
Domestic
2
25%
Export
77%
Export
23%
Domestic
1
The Group is organised into and operates
through four business segments.
More detail on the products, brands and
strategy of the business segments can
be found in the Segment Overview on
page 20.
For information on the performance of
each business segment and the drivers
behind the year-on-year trends please
see the Financial and Operational Review
on page 38.
2022
4%
Meat-Processing
Products
& Other
8%
Grains
28%
Vegetable
Oils
60%
Chicken Meat
& Related
Products
GROUP EXPORT BY PRODUCT
2022
MHP has a vertically-integrated business
model, owning and operating modern
facilities at each of the key stages of the
chicken meat production process and
differentiating MHP from its peers.
See page 28 for more information on the
Group’s business model.
GROUP REVENUE BY BUSINESS
SEGMENT2022
71%
Poultry &
Related
Operations
2022
18%
European
Operating
Segment
6%
Grain
Growing
Operations
5%
Meat-Processing
& Other
Agricultural
Operations
MHP AT A GLANCE
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15
CHAIR’S
STATEMENT
CHAIR’S STATEMENT
DEAR SHAREHOLDER
2022WASANINTENSELYCHALLENGINGYEARDURINGWHICHOUROVERRIDING
PRIORITY WAS TO SURVIVE. HOWEVER, MHP ACHIEVED MUCH MORE: IT
MAINTAINEDITSOPERATIONSANDSTABLEPRODUCTIONANDCONTINUEDTO
INVEST, WHERE POSSIBLE, IN ITS STRATEGY AND VISION.
IT IS DIFFICULT TO DO JUSTICE IN WORDS TO THE TREMENDOUS SPIRIT OF
UKRAINE AND THE COURAGE OF ITS PEOPLE AND OUR WORKFORCE. SINCE
THEOUTBREAKOFWAR,MHPHASPROVIDEDSIGNIFICANTSUPPORTTOTHE
PEOPLEOFUKRAINEANDREMAINSANIMPORTANTPARTOFTHEFOODSUPPLY
CHAIN. OUR STRATEGYREMAINS UNCHANGED, THOUGH WEMUST TAKE EACH
DAYASITCOMESANDSWIFTLYADAPTINTHEFACEOFUNCERTAINTY.OUR
ROBUST PERFORMANCEDURINGTHEYEARIS TESTAMENTTOTHERESILIENCE
AND AGILITY OF OUR BUSINESS MODEL, AND THE BRAVERY AND TENACITY OF
OURPEOPLE.
CLEARLY THE GROUP’S STEPS TO DEVELOP MHP’S RESPONSIBLE BUSINESS
STRATEGYHAVEBEENSIGNIFICANTLYIMPACTEDBYTHEWAR. HOWEVER,MHP
REMAINSCOMMITTEDTODEVELOPINGITSAPPROACHANDTOCONTINUOUS
IMPROVEMENT IN BOTH ITS SUSTAINABILITY-RELATED ACTIVITIES AND
REPORTING. I HAVE PLEASURE IN PRESENTING MHP’S FIRST INTEGRATED
REPORTIN WHICH WE SET OUT FOR THE FIRST TIME THE SIX GROWTH PILLARS
OF OUR SUSTAINABILITY FRAMEWORK.”
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16
OUR PEOPLE
I want to express my heartfelt thanks to
our people for their efforts and sacrifices.
Many have placed themselves in very
dangerous situations to achieve our shared
goal of ensuring food security for Ukraine;
many have learned new skills and retrained;
all have demonstrated commitment and
courage; many were mobilized.
In these extraordinary circumstances,
I want to highlight the exceptional
contribution from Yuriy Kosyuk, our
founder and CEO. Yuriy has led from
the top, 24/7, since the start of the war.
His natural effervescence and optimism,
combined with his limitless energy
and drive, have had a tremendously
positive impact on our employees, our
management team, and our stakeholders;
he has been a role model for Ukraine.
I also wish to extend my thanks to the
non-executive members of the Board for
their support and special contributions
during wartime. There has been non-
stop communication between the non-
executives and the executive management
team. The non-executives have been
instrumental in rallying international
support and in ensuring that the world is
made aware of the grim realities of the
situation in Ukraine in using their networks
of international contacts to facilitate
progress; and in boosting morale. More
information on the Board’s contribution
and interaction with stakeholders can
be found in the Sustainability and
International Affairs Committee Report on
page 135 and the Corporate Governance
Report on page 116.
SUPPORT FROM OUR STAKEHOLDERS
AND PARTNERS
I am extremely grateful for the support
provided by the financial community
and for their continued backing of MHP,
which we hope will continue in the future
taking into account challenges of the War.
Of note was the unprecedented strong
support from our bank lenders and our
Eurobond holders during the consent
solicitation process in March 2022. I am
grateful too to the EBRD for its continued
support in the form of an extension to
the Group of a short-term facility of
EUR 24 million in June 2022 as part of its
Food Security Ukraine package, and for
its more recent US$ 100 million short-term
loan in February 2023 for PXF.
The Group has received generous
and widespread support from many
international partners and stakeholders.
It is, of course, not practicable in this
forum to mention all these contributions.
That said, I would like to briefly note the
support from AllTech E-CO2 and BASF,
namely in helping with our environmental
development projects and enzymes and
vitamins pro bono supply earlier this year
in order to help MHP during the war time.
As part of our commitment to effective
communication with all our stakeholders
during such challenging times, we have,
since April 2022, published monthly
operational trading updates in addition
to our ‘normal’ reporting schedule. For
more information on our engagement
with stakeholders, see Growth Pillar 1 on
page 59.
FY 2022 PERFORMANCE
Despite the very significant and ongoing
War-related challenges, the Group reported
a relatively robust performance for the FY
2022 with revenue of US$ 2,642 million, up
11% y/y, and EBITDA of US$ 384 million,
down 41% y/y. The decline in profitability
was driven by an 13% decrease in USD terms
in Ukraine poultry meat prices in Ukraine
including an 8% decline in export sales
volumes offset partly by a 40% increase
in export prices; and by a 26% decline in
harvest volumes mainly due to unfavourable
weather conditions during the summer and
autumn harvesting seasons. For detailed
commentary on the financial results
and our outlook for what will be another
challenging year in 2023 see the Financial
and Operational Review on page 38.
FINANCIAL POSITION
Following the Group’s robust FY 2022
performance and tremendous efforts to
maintain operations, production and sales
volumes, the Group is funded to maintain
operations and business continuity.
Given the ongoing military hostilities and
sustained attacks on Ukraine’s energy
infrastructure, the outlook still remains
highly uncertain. More information on
the Group’s financial position, cash flow,
debt structure and liquidity can be found
in the Financial and Operational Review
on page 38.
CORPORATE GOVERNANCE
The Group recognises the importance of
strong corporate governance in line with
good international practice and aims to
comply with the requirements of the UK
Corporate Governance Code 2018 (the
“UK Code”) to the extent practicable.
Despite the War, MHP has continued
to develop its approach to corporate
governance. Following consideration
during the year, the Group has drafted
a Diversity Statement which is due to
be approved by the Board in 2023. This
Statement sets out our commitment
to creating an equal and inclusive
working environment for people of all
backgrounds. In 2022, we updated the
Group’s Ethics and Compliance Programme
to manage effectively the new challenges
presented by the Russian invasion. More
information can be found in Growth Pillar 5:
Business Conduct on page 87.
FOLLOWING THE GROUP’S ROBUST FY 2022
PERFORMANCE AND TREMENDOUS EFFORTS TO
MAINTAIN OPERATIONS, PRODUCTION AND SALES
VOLUMES, THE GROUP IS FUNDED TO MAINTAIN
OPERATIONS AND BUSINESS CONTINUITY.
CHAIR’S STATEMENT
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17
CORPORATE GOVERNANCE
(CONTINUED)
On 7 March 2023, we were delighted to
announce the appointment of a new
Independent Non-Executive Director.
Mr. Oscar Chemerinski brings with him
extensive experience in agribusiness,
emerging markets, risk management,
sustainability and business strategy.
Following Mr. Chemerinski’s appointment,
and at the time of publication, the
Board comprises four Independent Non-
Executive Directors and four Executive
Directors, including the Executive Chair.
PLANET
MHP aims to conduct its activities in an
environmentally responsible manner and
to meet the global challenges presented by
climate change. Our green transformation
vision and decarbonisation process were
put in place before the War. Clearly,
progress has slowed, but in 2022 we
have reported lower greenhouse gas
emissions year-on-year as a result of
energy efficiency measures which are
carried out as part of the implementation
and requirements of the ISO 50001
energy management standard.
Our Net Zero 2030 target remains.
However, we must acknowledge that 2030
is a potentially moveable goal in the current
circumstances: if there is a relatively near-
term resolution to the War, 2030 may
prove achievable. If, however, the war
continues for a longer period then
realisation may be pushed back. The
potential importance of the Ukrainian
reconstruction phase in the achievement
of Net Zero cannot be underestimated.
Despite setbacks, we have made
progress during 2022. The Carbon
Trust accreditation process is now
underway: a remarkable achievement in
the challenging circumstances and one
which demonstrates the Group’s
desire to meet its Net Zero target
as soon as practicable. The Group
continues to use biogas to produce
electricity, industrial steam, and
heating. It is also integrating energy
storage technology and looking to roll
this out more widely, as well as investing
in biomethane projects. In addition,
for the first time, this Report discloses
information in line with the
recommendations of the Taskforce on
Climate Related Financial Disclosure
(“TCFD”). For TCFD and more information
on our progress and our work with
the Carbon Trust, see Growth Pillar 6 on
page 94.
DIVIDENDS
Given the uncertainties of War, and the
resulting need to preserve liquidity to
support the Group’s ongoing business
operations and sustain the population of
Ukraine, the Directors have decided not
to declare a final dividend for the 2022
financial year.
GLOBAL PARTNERSHIPS AND
DEVELOPMENTS
We continue to monitor global
developments and potential opportunities
to accelerate and expand our culinary
transformation, particularly in the UK,
EU, and MENA. A key tenet of our stated
strategy has been supplementing organic
growth with acquisitions, an approach
borne out by the success of the integration
of Perutnina Ptuj from 2019. That said,
whilst international expansion remains on
our agenda, it has inevitably had to take
a back seat during the War. However,
we have continued to make progress:
following the opening of two direct sales
branches in Saudi Arabia in 2021, and in
line with our continued investment in the
region, in February 2023 we announced
the signing of a memorandum of
understanding (“MoU”) with Tanmiah
Food Company, one of Saudi Arabia’s
leading producers of poultry and other
processed-meat products. The MoU is
the first step in the establishment of a
joint venture, the aim of which will be to
improve food security in the Kingdom.
For more information on strategy,
including future partnerships and
alliances, see the Purpose and Strategy
section on page 11.
While MHP has not been directly
affected, outbreaks of Avian Influenza
(“AI”) in both commercial and wild birds
continue to occur on an unprecedented
scale across Europe and the United
Kingdom. These outbreaks will continue
to present significant challenges for the
global poultry industry and coordinated
inter-governmental management of these
issues will be important for 2023. For more
information, see the Sustainability and
International Affairs Committee Report on
page 135.
DR JOHN RICH
Executive Chair,
MHP Board
11 April 2023
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18
CEO’SSTATEMENT
CEO’S
STATEMENT
MHPISUNITEDINWORKINGFORUKRAINE.RECOGNISINGTHEGROUPHASA
KEYRESPONSIBILITYFORENSURINGTHEFOODSECURITYOF THECOUNTRY,
NOWANDIN THEFUTURE,IWANTTOTHANKOURPEOPLEFORTHEIRTIRELESS
EFFORTS AND COURAGE: THE COURAGE TO WORK; THE COURAGE TO MAKE
DECISIONS IN CONDITIONS OF COMPLETE UNCERTAINTY; THE COURAGE TO
DEVELOP AND LEARN; THE COURAGE TO START SOMETHING NEW IN SUCH
CHALLENGINGTIMES.OURWORKFORCEHASGONEABOVEANDBEYONDTHE
CALL OF DUTY TO DELIVER UPON OUR SHARED GOALS.
ASSISTANCETOTHOSEWHOAREINNEEDCOPINGWITHCHALLENGESOFTHE
WAR: DISPLACED FAMILIES, ORPHANS, RETIRED, HOSPITALS AND SUPPORT
FORSOCIAL PROJECTSWASALSOONEOFOURMAIN PRIORITIESSINCE THE
BEGINNING OF THE WAR IN UKRAINE.
OURROBUST2022PERFORMANCEREFLECTSTHERESILIENCEOFTHEGROUP.
WECONTINUETODELIVERUPONOURSTRATEGY,ADAPTING,WHERENECESSARY,
TOTHECHALLENGESOFWAR.2023ISSETTOBEANOTHERDIFFICULTYEAR:
WE WILL CONTINUE TO MONITOR THE RISKS AND MANAGE UNCERTAINTY,
BUT WE WILL CONTINUE MOVING FORWARD.
MHP’S TRANSFORMATION TO A CULINARY
COMPANYBEGANIN2019AND CONTINUES.
OUR TRANSFORMATIVE MINDSET AND
COLLECTIVEWILLINGNESSTOEMBRACENEW
CHALLENGES AND ESTABLISH NEW WAYS
OF DOING THINGS IS NOWDEEPLY ROOTED
IN THE GROUP’S DNA, AND HAS PREPARED
US WELL FOR THE CURRENT UNEXPECTED
WARTIME CHALLENGES.”
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19
OPERATIONAL REVIEW
When Russia invaded Ukraine, we
immediately set out our priorities: to care
for our people, to maintain food security,
and to support Ukraine. Offline business
needs offline leadership, and, with our
management teams, I went direct to our
enterprises to demonstrate resilience,
unity, and our will to win, and to reorganise
business processes. With constant
communication channels in place, the
provision of psychological support, the
uninterrupted payment of stable wages,
and Group Management by their sides,
we were able to help our people gradually
adjust to the new realities. We transformed
businesses processes in response to war-
related operational challenges more quickly
than other companies in the market.
Operational challenges were very
significant: the mobilization of employees;
the disruption of supply chains; a
temporary decrease in the supply of
some goods, including vitamins and
minerals to produce feed, and plant
protection goods including pesticides;
the physical destruction of energy
and transport infrastructure; and the
temporary occupation of some territories.
Persistently high energy prices and
record-high inflation in partner countries
has also fueled price pressures in Ukraine.
Our strategy remains unchanged but
rapid adaptations were made to our
business model enabling us to maintain
operations and production. Our focus was
on logistics: by the end of April 2022, we
had substantially increased the number of
trucks in operation making it possible to
transport by road products previously
carried by rail or by sea. Our logistics
teams and drivers worked tirelessly,
often waiting for very prolonged periods
at Ukraine’s borders; our sales teams
continued to work; we constantly
communicated and cooperated with
domestic and international partners,
including distributors. Everything to ensure
food security for Ukraine’s population.
The establishment of new routes to
market enabled the continuation of
exports. International agreements
also facilitated routes and removed
restrictions. On 22 July 2022, the Black
Sea Grain Initiative was signed, putting in
place procedures to safely export grain
and vegetable oils from certain ports in
Ukraine. In Europe, we are grateful for
economic support under the Free Trade
Agreement in the form of the lifting of
quotas and the removal of tariffs on
Ukrainian produce imported into the
EU and Great Britain. At the time of
publication, the Group is exporting to
over 70 countries worldwide, a significant
achievement in the circumstances.
OUR CULINARY TRANSFORMATION
Our transformation to a culinary company
is fundamental and continued despite
setbacks. This progress is testament
to the determination and efforts of our
Management Team, many of whom are
new to the Company and all of whom
share a developmental mindset and
a focus on new opportunities. At the
outbreak of War in February 2022, we
stopped product development to focus
on providing the most necessary and
basic foods to domestic markets. Our
culinary centre in Kyiv operated as
a humanitarian hub during this time.
However, from the end of March 2022,
we resumed development and have since
continued to innovate. That same month,
we launched our own range of baby food
under our “KOKO” brand, produced from
our antibiotic- and growth hormone-free
“Nasha Ryaba” chicken. At the beginning
of the summer, we launched a frozen
semi-ready-to-eat pizza. We will continue
to evolve the food culture in Ukraine,
offering more high-quality and
tasty convenience, ready-to-cook
and ready-to-eat products, giving
consumers the opportunity to direct
their time towards other activities.
For more detailed information on our
transformation to a culinary company,
including the development of routes
to market and the Group’s culinary
“ecosystem”, see the Poultry & Related
Operations Segment Overview on page
20 and Growth Pillar 4: Responsible Food
Production, page 84.
OUR CULTURE AND VALUES
Our culture and values drive the way we
work, our behaviours, and our decision
making. They unite us. Both have been
actively demonstrated during the War by
the courage of our workforce, and the
humanitarian aid and support provided
to the people of Ukraine. We have never
been more vividly aware of who we are. For
this reason, we have started the process
of officially forming the Group’s Values.
This project continues with the active
participation of the Management Team,
and I look forward to updating you on this
process.
YURIY
KOSYUK
CEO and Founder, MHP
11 April 2023
WHEN RUSSIA INVADED UKRAINE, WE IMMEDIATELY
SET OUT OUR PRIORITIES: TO CARE FOR OUR PEOPLE,
TO MAINTAIN FOOD SECURITY, AND TO SUPPORT
UKRAINE.
CEO’SSTATEMENT
POULTRY EXPORT VOLUMES BY REGION IN TONNES, %
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STATEMENTS
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20
POULTRY & RELATED
OPERATIONS
PRODUCT 2022 2021
Chicken meat produced, tonnes 697,071 754,387
Hatching eggs, million 544 563
Sunflower oil, tonnes 318,202 212,425
Soybean oil, tonnes 44,620 47,493
Mixed fodder, tonnes 1,958,128 1,920,607
Biogas, MW 17 17
PRODUCTION FIGURES
1
CUSTOMERS
Supplies products to a number of
nationwide supermarket chains
including Fozzy, Metro Cash &
Carry, ECO, Novus and Auchan.
The Segment also produces and
sells vegetable oils, mainly to
international traders. This is an
important source of hard currency
revenue.
OPERATIONS
Processes and sells chicken meat (fresh and frozen, whole and
cuts); pre-prepared and culinary products (marinated chicken,
and ready-to-eat and ready-to-cook convenience food, including
restaurant-grade products); vegetable oils (sunflower and soya);
and mixed fodder.
Our operations support the circular
economy with by-products used to
produce biodiesel, biogas, culinary fats,
fodder and natural fertilisers.
Operations include three chicken meat complexes, two breeding
complexes, three sunflower oil plants, one soybean crushing
plant, three feed mills and two biogas complexes.
For more information on
our business model see
page 28.
21%
EU
2021
38%
MENA
23 %
CIS
12%
Africa
6%
Asia and other
34%
MENA
17%
CIS
10%
Africa
36%
EU
2022
3%
Asia and other
For more information
see Purpose and
Strategy on page 11.
STRATEGY
The Segment’s strategy is focussed on both international and
domestic markets as the Group continues its transformation to a
culinary company.
SEGMENT OVERVIEW
EXPORT MARKETS
International diversification and market
targeting, combined with the development of
both routes to market and value-added product
ranges.
DOMESTIC MARKETS
The development and production of more
value-added and further processed primary and
cooked products and the evolution of routes to
market through retail, HoReCa, modern trade
and franchises.
1
For more information on the Segment’s performance and year-on-year trends,
please see the Financial and Operational Review on page 38.
STRATEGIC REVIEW
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REVIEW
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21
CULINARY
TRANSFORMATION
OUR TRANSFORMATION TO A CULINARY COMPANY CONTINUES DESPITE SETBACKS
AND WAR-RELATED CHALLENGES.
ROUTES TO MARKET
STRATEGIC PARTNERSHIPS
PRODUCT DEVELOPMENT LED BY OUR CULINARY CENTRE
We continue to develop strategic
partnerships with players in the food
industry with the goal of bringing MHP
closer to the customer. One such partner
is Glovo, for which MHP is the only supplier
of semi-finished products for their virtual
(delivery or pick-up only) restaurants.
Progress continued with an order for new
concepts in March 2022, and the supply
of RTC products for their kitchens from
May 2022. MHP is now supplying these
products for Glovo’s operations outside
Ukraine. We also continue to invest in
businesses that expand our culinary
expertise and product portfolio.
Our focus on changing consumer
preferences and the sale of food from
franchised and owned stores close to the
consumer continues. At the end of 2022,
179 “MeatMarket” convenience stores
were in operation, embodying the
“MeatMarket 2.0” or “food experience”
concept launched in July 2021; and 98
“DonerMarket” gyro fast food stores
selling doner, shawarma and other
street food. At the same time, we have
been upgrading the format of our
existing and extensive network of “Nasha
Ryaba” retail stores to one of “fresh food”.
Immediately following the outbreak of War,
a third of our existing network of stores
was lost in occupied and de-occupied
territories. Despite these setbacks, our
franchisees have continued to work and
to open new stores. At the end of 2022,
additional 284 new format stores have
been operational.
Development is focussed on ready-to-eat (“RTE”) and ready-to-cook (“RTC”) products
and the application of modern technologies. This is led by our Culinary Centre in Kiev
which is an important platform for B2B, HoReCa and B2C development, and enables
MHP to undertake cutting-edge R&D and to bring together players from across the food
industry.
The Centre includes five demonstration kitchens; an industrial kitchen; a technology
workshop; a specially equipped workshop for pizza production; a sensory analysis
laboratory; and a studio kitchen. In February 2022, we launched LaStrava's ‘restaurant-
grade’ RTE meals: these are produced using high-pressure processing (“HPP”) technology
which allows storage of prepared dishes in chilled form for up to 56 days without
preservatives. MHP is the only company in Ukraine using this expertise.
For more information
on the financial
and operational
performance of Poultry
and Related Operations
see page 20.
SEGMENT OVERVIEW
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MHP’S CULINARY
ECOSYSTEM
RETAIL OUTLETS
Development of ready-
to-cook and ready-to-
eat products
CULINARY SOLUTIONS
MHP’s state-of-the-art and
unique Culinary Centre facilitates
innovation and brings together
players from the HoReCa industry
CULINARY CENTRE
Investments in businesses
that expand the Group’s
culinary expertise
INVESTMENTS
Strategic partnerships
with food industry
players
PARTNERSHIPS
Leading culinary experts of
Ukraine are responsible for
culinary direction and product
development
CULINARY EXPERTS
retail outlets
(owned and franchised)
1,522
SEGMENT OVERVIEW
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23
MAJOR BRANDS
Whole
Parts
Minced
Sliced
Ready to eat
ChilledMeat
Ukraine
Chilled
FrozenMeat & Culinary
Ukraine & Export
By-products
Whole
Parts
Minced
ChilledMeat
Ukraine Ukraine
Ukraine
By-products
Whole
Minced
Formed
Chilled FrozenMeat & Culinary
Whole
Parts
Marinated
Formed
Meat
Export
Frozen
Whole
Parts
ChilledMeat
Parts
Meat, Culinary,
Vegetable and Convenience
Chilled
Frozen
Umbrella food solution for HoReCa
Whole
Parts
Minced
Sous vide
Food
solutions
Meat & Convenience
Export
Frozen
Whole
Parts
Marinated
Minced
Formed
Ready to cook
Meat, Culinary, Vegetable and Convenience
Chilled Frozen
Umbrella food solution for HoReCa
Ready to cook
Ready to eat
Supplementary
products (e.g. mustard,
mayonnaise, ketchup)
Sausages
Smoked
Chicken
Pate
Processed meat
Ukraine Ukraine
Chilled
Processed meat
Chilled
Ready to eat
Ready to cook
Ukraine
Processed meat
Convenience
Ready to eat
Ready to cook
Chilled
Frozen
Meat
Ukraine & Export
Chilled
Frozen
Parts
Minced
By-products
Ready to eat
Formed
Ukraine Ukraine
Ready to cook
Convenience
Frozen
Convenience Chilled
Baby food
Ukraine Ukraine
Convenience
Dried meat
Ready to eat
Snacks
Convenience
Dried meat
Ready to eat
Snacks
SEGMENT OVERVIEW
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24
GRAIN GROWING
OPERATIONS
OPERATIONS
MHP is one of the leading grain cultivation
businesses in Ukraine.
The Segment grows corn, sunflower
and soybean as well as other grains
including rape and wheat, both for fodder
production to support the Group’s
chicken production, and to export for
sale to third parties.
In 2022, MHP harvested 340,748 ha
of land, yielding 1,934,647 tonnes of
grain, a decrease of 26% year-on-year
mainly driven by unfavourable weather
conditions during the summer and
autumn harvest seasons. For more
detailed information on Segment
performance and year-on-year trends,
see the Financial and Operational
Review on page 38.
Grain storage facilities totalled
1,605,918 m
3
with a capacity of
1,131,600 tonnes (in plastic bags).
18%
Sunflower
13%
Soya
12%
Wheat
8%
Repeseed
4%
Other
1
25%
Sunflower
7%
Soya
10%
Wheat
6%
Repeseed
6%
Other
1
SEGMENT OVERVIEW
LANDBANK
MHP leases agricultural land located primarily in the highly
fertile black soil regions of Ukraine.
In 2022, MHP’s total landbank constituted approximately
362,000 hectares (“ha”) of land, representing one of the
largest land portfolios in Ukraine. Despite the War, the
Group was able to complete the harvest on virtually all of
its land in 2022.
STRATEGY
The Group aims to become the undisputed leader in the
agricultural market in Ukraine and a pioneer in sustainable
agriculture.
Central to the achievement of these goals is increasing
the Segment’s profitability by ensuring high efficiency
crop production (through higher yields and optimisation of
cost control), as well as improving resource management
strategies and ensuring the stability of the landbank.
This will be achieved through innovation, the upgrading of
agricultural machinery, and the use of technology including
Artificial Intelligence (“AI”) and machine-learning algorithms
for real-time analysis, forecasting and facilitation of
decision making.
45% 46%
2022 2021
CROPPED AREA, HECTARES, %
CornCorn
1
Including barley, rye, sugar beet, sorghum, and
other and excluding land left fallow as part of crop
rotation.
STRATEGY
The Segment will continue to focus upon
its core meat-processing operations and
the evolution of its route-to-market strat-
egy through retail, HoReCa, modern trade
and franchises.
For more information on the financial and operational performance of Meat-
Processing & Other Agricultural Operations see page 42.
BRANDS
The Segment’s major brands are shown
on page 23, alongside the major Poultry &
Related Operations brands.
STRATEGIC REVIEW
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STATEMENTS
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25
MEAT-PROCESSING & OTHER
AGRICULTURAL OPERATIONS
SEGMENT OVERVIEW
PRODUCTION FIGURES, TONNES
PRODUCT 2022 2021
Convenience food 24,365 21,584
Processed meat 14,323 34,329
OPERATIONS
MHP produces and sells sausage, salami,
convenience foods and produce from
cattle and dairy operations.
It incorporates two facilities for the
production of prepared meat products,
a number of cattle farms and a beef-
processing facility.
The meat-processing operations are
the Segment’s core business and an
important driver of the Segment’s
profitability.
MHP is one of the leading players in
the highly fragmented meat-processing
market in Ukraine.
WAR AFFECT
One of the meat- processing facilities
was “Ukrainian Bacon”. As hostilities in
the Donetsk region intensified, MHP
has decided to temporarily suspend
operations of “Ukrainian Bacon” (meat-
processing operations, c.34,000 tonnes
annual capacity, Kramatorsk district,
Donetsk region). Despite the difficulties
encountered during the War, MHP has
operated “Ukrainian Bacon” for more than
a month (March 2022). The supply of raw
materials from the Company’s poultry
production facilities was necessary to
continue the production of finished
value-added products (convenience
food, sausages, pate).
MHP has asked its employees (over 1,900
people) and their families to move to safer
regions of Ukraine. Some employees were
redeployed to other MHP production
facilities.
MHP was working actively on the
commissioning of similar production sites
at MHP facilities in order to continue
to provide Ukrainians with high-quality
products under its “Bashchynsky”
brand, which were originally produced
at “Ukrainian Bacon”. However, such
commissioning required additional time
and resources.
BRANDS
EUROPEAN OPERATING SEGMENT PRODUCTION FIGURES
PRODUCT 2022 2021
Chicken meat produced, tonnes 124,040 111,973
Processed meat products, tonnes 43,938 41,411
Hatching eggs, million 78.2 75.4
Mixed fodder, tonnes 255,000 229,600
Biogas, MW 1 1
STRATEGIC REVIEW
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26
EUROPEAN OPERATING
SEGMENT (PERUTNINA PTUJ)
For information on the financial and
operational performance of European
Operating Segment see page 37.
SEGMENT OVERVIEW
OPERATIONS
The European Operating Segment
comprises 100% of Perutnina Ptuj (“PP”),
a leading poultry and processed-meat
producer in the Balkans.
It has production assets in Slovenia,
Croatia, Serbia, Bosnia and Herzegovina,
and distribution companies in Austria,
North Macedonia and Romania. It
supplies products to 18 European
countries.
Investment in the Serbian facilities
continued during the year, and will total
EUR 30 million by 2025e, with capex
focussed on the establishment of
broiler farms, the modernisation of the
slaughterhouse, and the construction of
a processing plant and hatchery.
STRATEGY
To become the number one producer
of poultry meat and processed-meat
products across the Balkans driven by
a focus on more value-added products,
export markets, and market penetration.
Over the past year, the Segment has
accelerated its culinary transformation,
establishing and increasing production of
new value-added products.
MEAT
MEAT PRODUCTS
FEED
SERVICES
MEAT PRODUCTS
MEAT PRODUCTS MEAT PRODUCTS
30
INVESTMENT IN OUR
SERBIAN FACILITIES
CONTINUES, AND
WILL TOTAL
BY 2025E
EUR
MILLION
STRATEGIC REVIEW
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STATEMENTS
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INFORMATION
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27
BRANDS
Meat
Natur
Poultry products,
with packaging
highlighting low fat
and cholesterol
content
Meat
Natur Premium
Products from
poultry bred in
accordance with
premium breeding
standards
Meat
Piknik
Cut and pre-
seasoned fresh
poultry products
Meat
Meðimursko
pile
Croatian, antibiotic-
free, fresh poultry
products
Meat Products
Perutnina Ptuj
Sausages, frank-
furters, frozen and
other ready-made
products
Meat Products
Slim & Fit
Low-fat poultry
products
Meat Products
Golica
Traditional
Slovenian
chicken franks
Classic
Classic
Poli
Classic
Poli
Light
Poli
Vegetables
Poli
Cheese
Ham
Poli
Hammy
Ham
Poli Kids
Chicken
Breast
Paté
Poli
Paté
Paté
Poli
Kids
Paté
Franks
Poli Dog
Franks
Poli
Kids
Convenience
Poli Rolls
Convenience
Poli Pizza
Classic
SEGMENT OVERVIEW
Classic
Classic
STRATEGIC REVIEW
GOVERNANCEBUSINESS
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STATEMENTS
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28
OUR BUSINESS MODEL IN 2022
OUR BUSINESS MODEL
HOW WE GENERATE
REVENUE
POULTRY & RELATED
OPERATIONS SEGMENT
MEAT-PROCESSING &
OTHER AGRICULTURAL
SEGMENT
GRAIN GROWING
SEGMENT
EUROPEAN OPERATING
SEGMENT*
We produce and sell chicken
meat (fresh and frozen);
culinary products; vegetable
oils (sunflower and soybean);
and mixed fodder.
We produce and sell sausages;
processed and cooked meat;
convenience foods; and
produce from cattle and dairy
operations.
We grow crops for fodder
production and for sale to
third parties.
We produce and sell chicken
meat and processed poultry
meat products.
TONNES OF POULTRY
PRODUCED
697,071
TONNES OF MEAT
PRODUCTS PRODUCED
32,443
TONNES OF CROPS
PRODUCED
1.9M
TONNES OF POULTRY
PRODUCED
124,040
MILLION
REVENUE
1,887
US$
MILLION
REVENUE
134
US$
MILLION
REVENUE
158
US$
MILLION
REVENUE
464
US$
*
Perutnina Ptuj's results are classified as the
European Operating Segment
STRATEGIC REVIEW
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29
HOW WE CREATE
VALUE
SUSTAINED INVESTMENT
IN INNOVATION,
BUSINESS EFFICIENCY
AND R&D
INTERNATIONAL
MARKETPLACE
SUSTAINABLE
FINANCIAL HEALTH
SUPPORT FOR
UKRAINE
Sustained CAPEX and R&D
programmes have enabled
consistent efficiency
improvements and cost controls,
developed and maintained
product quality, and ensured
high standards of product safety.
The Company continues to look
for dynamic and innovative ways
to develop its production and
agricultural processes to improve
efficiency, drive down costs
and reduce its environmental
impacts.
MHP is always looking at new
initiatives on product development
and for new markets for its
products, and now sells to over 70
countries.
Our businesses have a consistent
track record of strong revenue,
efficient costs and positive cash
generation providing a solid
platform for value creation.
Continued to serve Ukraine and
the world with poultry products,
vegetagle oils and grains in a War
environment, cooperating with
international partners and strongly
supporting communities on the
ground.
TRANSFORMATION TO
A CULINARY COMPANY
The transformation from a
raw materials provider to an
international culinary company
enables the Group to grow
its market as it responds to
customer demand for value-
added products.
1
RESPONSIBLE
BUSINESS
MHP has a group-wide
responsible business model.
2 3
45
6
OUR BUSINESS MODEL
STRATEGIC REVIEW
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REVIEW
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STATEMENTS
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INFORMATION
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30
OUR ASSETS
OUR PEOPLE BUSINESS CULTURE
MODERN AND EFFICIENT
PRODUCTION ASSETS
STRONG BRANDS
OWN RETAIL IN UKRAINE
AND AT PP
VERTICALLY-INTEGRATED
STRUCTURE
We have a highly skilled and
knowledgeable workforce (2022
MHP Group: 32,545 employees), an
experienced, strong and innovative
management team and we are
committed to continuously investing
in training and development.
We strive to create a business
culture in which our employees feel
empowered to make quick decisions
to capitalise on market opportunities
and gain competitive advantage.
Extensive investment has enabled
us to employ modern, state-of-the-
art production assets. The Company
believes that its chicken complexes
are amongst the most efficient in the
world.
Our brands have high market
recognition with a reputation for
quality, enabling products to be
sold at premium prices.
MHP and PP are continuing to
grow and develop their retail
operations both in Ukraine and
The Balkans/EU.
Our vertically-integrated structure
structure differentiates us from our
peers and enables us to reduce our
dependence on third-party suppliers
and our exposure to raw material
price volatility. It also ensures the
maintenance of strict biosecurity
and quality standards throughout
the production process.
OUR BUSINESS MODEL
STRATEGIC REVIEW
GOVERNANCEBUSINESS
REVIEW
FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
31
LAND SUNFLOWER
AND SOYBEAN
PROTEIN
FODDER
PRODUCTION
BIOGAS
BIOGAS
BREEDING
HATCHING
MHP
PERUTNINA PTUJ
POULTRY
PRODUCTION
MEAT-
PROCESSING
SLAUGHTER-
HOUSES
DISTRIBUTION RETAIL
Land on long-term
lease in Ukraine
with a harvest of
1.9 M tonnes of
grain in 2022
Land on long-
term lease in the
Balkans
3 production
facilities
44,620 tonnes
of soybean oil
produced,
2 breeding complexes
with 544 M hatching
eggs produced in
2022
4 locations,
80 M hatching eggs
produced (Slovenia,
Croatia, Bosnia &
Herzegovina and
Serbia)
3 facilities in
Slovenia, 1 in
Croatia and 1 in
Serbia
Soybean oil,
1 facility in Serbia
Hatchery of day old
chicken:
4 locations (Slovenia,
Croatia, Bosnia &
Herzegovina and
Serbia)
3 vertically-integrated poultry complexes,
from hatching to rearing and processing
1* production
facility
6 production
facilities
9 distribution
centers in
Ukraine
1 distribution
centres in
Ukraine
hectares
362,000
tonnes of mixed
fodder produced
1.9 M
tonnes of sunflower
oil produced
318,202
in-house
production
in-house
production
100% 100%
per week
8.1 M
tonnes
38,688
vehicles
403
Franchise outlets
1,526
4 locations
8% in-house
production
(Slovenia, Croatia,
Bosnia & Herzegovina
and Serbia)
5 facilities
(2 in Slovenia, 1 in
Croatia, 1 in Bosnia
& Herzegovina, 1 in
Serbia)
hectares tonnes of
soybean oil
tonnes of mixed
fodder produced
3,950 1,317 c.255,000
in-house
production
99%
in-house
production
86%
per week
1.2 M
tonnes
43,938
vehicles
38 18
in-house
production
in-house
production
100%
100%
2 complexes
1 complex
17 MW
1 MW
OUR BUSINESS MODEL
* due to severe
hostilities in Donetsk
region, MHP had to
cease operations at
“Ukrainian Bacon”
since April 2022
03 04 05
STRATEGIC REVIEW
01 BUSINESS
REVIEW
33 Key Performance Indicators
38 Financial and Operational Review
46 Measures of Financial Performance
49 Risk Management
54 MHP’s Growth Pillars
& case studies
59 Growth Pillar 1:
Stakeholder Engagement
63 Growth Pillar 2:
Our People and Their Wellbeing
75 Growth Pillar 3:
Our Role in Society and Our
Licence to Operate
78 Growth Pillar 4:
Responsible Food Production
87 Growth Pillar 5:
Business Conduct
94 Growth Pillar 6:
The Planet
107 TCFD Disclosures
111 Non-Financial Information
Statement
FINANCIAL STATEMENTS
GOVERNANCE
SHAREHOLDER INFORMATION
Adjusted Group EBITDA margin
1
, %
Adjusted Group EBITDA
1
, US$m
% of total revenue
Export Revenue, US$m Adjusted EBITDA margin
1
(Poultry & Related Operations), %
Adjusted EBITDA margin
1,2
(Grain Growing Operations), %
Group Adjusted EBITDA margin
1
, %
KEY PERFORMANCE INDICATORS
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
33
STRATEGIC
REVIEW
KEY PERFORMANCE
INDICATORS
WEMONITORPROGRESSAGAINSTTHEDELIVERYOFOURSTRATEGICGOALSUSING
SEVERALFINANCIAL KEYPERFORMANCEINDICATORS(“KPIS”).EACHKPIPROVIDES
AWAYOFMEASURINGELEMENTSOFOURSTRATEGY.OURSTRATEGYISFOCUSSED
UPON THE MEDIUM TO LONG TERM AND THEREFORE WECONSIDER HOW WE HAVE
PERFORMEDOVERANUMBEROFYEARS,SHOWINGTHEKPISFORTHELASTFIVE
YEARS.OURPERFORMANCEIN2022WASSIGNIFICANTLY IMPACTEDBYTHEWARIN
UKRAINE.
GROUP REVENUE
1,556
2,056
1,911
2,372
2018
2019
2020
2021
2022
US$m
GROUP EXPORT REVENUE
924
1,186
1,016
1,265
1,601
2018
2019
2020
2021
2022
59%
58%
53%
53%
61%
US$m
1
Adjusted EBITDA (net of IFRS 16) and Adjusted
EBITDA margin (net of IFRS 16) since 2019
2
Adjusted EBITDA margin for the Grain Growing
Operations was calculated based on revenue
that includes intercompany sales
GROUP ADJUSTED EBITDA
1
450
376
340
648
384
2018
2019
2020
2021
2022
29%
18%
18%
27%
15%
US$m
ADJUSTED EBITDA MARGIN
1
202120192018 2020 2022
25%
21%
12%
18%
18%
29%
29%
15%
17%
56%
27%
28%
2,642
18%
14%
15%
KEY PERFORMANCE INDICATORS
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
34
STRATEGIC
REVIEW
REVENUE, US$M EXPORT REVENUE, US$M ADJUSTED EBITDA, US$M
HOW WE CALCULATE IT
As reported. Revenue to destinations outside country of production. Adjusted EBITDA is defined as profit before tax, net finance costs,
depreciation and amortisation, net after-tax exceptional and non-
recurring items, net foreign exchange loss, and net other expenses.
WHY WE MEASURE IT
To ensure we are successful in growing the business. To ensure we are delivering on our strategy of international
expansion in turn leading to additional hard currency revenue.
Export revenue provides MHP with a natural hedge against local
currency volatility.
To track the underlying performance of the business.
2022 PROGRESS
Revenue was up 11% y/y mainly driven by a substantial increase in
sunflower oil sales.
Export revenue was up 26% y/y mainly driven by increased sales
of chicken meat and vegetable oils.
Adjusted EBITDA (net of IFRS 16) was down 41% y/y mainly due to
the impact of US$ 69 million of War-related expenses
which offset the price increases in export markets; adjusted
EBITDA margin (net of IFRS 16) decreased from 27% to 14%.
STRATEGY IN WAR
The Company's strategy remains unchanged but rapid adaptations
were made to our business model enabling us to maintain
operations and production, with a particular focus on logistics.
In response to logistics challenges in shipping to some export
markets, the strategy for export sales was focussed on increasing
access to markets such as the EU and UK, while adapting
logistics arrangements so as to continue to meet the needs of
our other export markets including MENA and CIS.
Following the Russian invasion, there was an immediate shift of
strategy to focus on survival of the business by adapting supply
chains in order to maintain production and distribution, while
managing the inevitable increase in costs.
CHANGE TO KPI
KPI unchanged y/y. KPI unchanged y/y. KPI unchanged y/y.
KEY PERFORMANCE
INDICATORS
Production of poultry,
thousand tonnes
Poultry exports,
thousand tonnes
Poultry exports
(as % of Poultry
sales volumes)
Thousand tonnes
KEY PERFORMANCE INDICATORS BY SEGMENT
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
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INFORMATION
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35
STRATEGIC
REVIEW
THE GROUP IS UNDERPINNED BY ITS VERTICALLY-INTEGRATED BUSINESS MODELS,
ITS EXPERIENCED MANAGEMENT TEAM AND ITS DIVERSIFIED DOMESTIC AND
INTERNATIONALMARKETS.ALLOFTHESEFACTORSCONTRIBUTEDTOTHEGROUP’S
ROBUSTPERFORMANCE DURING THE YEAR,BUT NEVERTHELESSPERFORMANCEIN
2022 WAS SIGNIFICANTLY IMPACTED BY THE WAR IN UKRAINE.
PRODUCTION AND
EXPORT VOLUMES
618
2018
287
41%
729
2019
357
53%
731
2020
374
54%
754
2021
402
57%
697
2022
368
55%
Revenue, US$m
Adjusted EBITDA, US$m
EBITDA per 1 kg, US$
US$m
REVENUE AND
ADJUSTED EBITDA
1
1,241
2018
311
0.53
1,368
2019
281
0.41
1,298
2020
194
0.30
1,607
2021
267
0.36
1,887
2022
270
0.39
1
Adjusted EBITDA is net of IFRS 16
POULTRY AND RELATED OPERATIONS
KEY PERFORMANCE
INDICATORS BY SEGMENT
PRODUCTION
OF GRAINS
Revenue, US$m
Adjusted EBITDA, US$m
Adjusted EBITDA per ha, US$
US$m
REVENUE AND
ADJUSTED EBITDA
1
181
2018
151
416
268
2019
60
167
134
2020
97
272
188
2021
338
962
158
2022
93
273
Corn
Wheat
Sunflower
YIELDS
2018
10.9
2019
6.1
3.2
9.4
2020
6.4
3.6
5.6
2021
5.1
2.8
10.0
2022
5.9
3.2
7.2
5.5
2.5
Thousand tonnes
Tonnes per hectare
KEY PERFORMANCE INDICATORS BY SEGMENT
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
36
STRATEGIC
REVIEW
1
Adjusted EBITDA is net of IFRS 16
2018
2019
2020
2021
2022
2,654
2,408
1,707
2,597
1,935
GRAIN GROWING
OPERATIONS
Revenue, US$m
Adjusted EBITDA
2
, US$m
Adjusted EBITDA margin
2
, %
REVENUE AND ADJUSTED
EBITDA
2
14%
ADJUSTED EBITDA MARGIN
2
IN 2022
335
2020
53
16%
401
2021
63
16%
464
2022
63
14%
271
2019
42
15%
US$m
KEY PERFORMANCE INDICATORS BY SEGMENT
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
SHAREHOLDER
INFORMATION
ANNUAL REPORT
AND ACCOUNTS 2022
37
STRATEGIC
REVIEW
EUROPEANOPERATING
SEGMENT (PP)
PRODUCTION OF MEAT-PROCESSING PRODUCTS, THOUSAND TONNES
1
2022
102
2022
2020
2019
1
Results from 21 February 2019 when the
acquisition of PP was completed
2
Adjusted EBITDA (net of IFRS 16) and
Adjusted EBITDA margin (net of IFRS 16)
70
2020
39
124 44
2021
112
2021
41
2019
30
PRODUCTION OF POULTRY, THOUSAND TONNES
1
FINANCIAL AND OPERATIONAL REVIEW
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
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INFORMATION
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38
STRATEGIC
REVIEW
FINANCIAL AND OPERATIONAL REVIEW
FINANCIAL
AND OPERATIONAL
REVIEW
697,071
POULTRY PRODUCTION
VOLUMES IN UKRAINE
DECREASED BY 8% Y/Y TO
(2021: 754,387 tonnes)
Poultry production volumes
for PP increased by 11% y/y
to 124,040 tonnes
(2021: 111,973 tonnes).
TONNES
368,379
CHICKEN MEAT EXPORT
VOLUMES FROM UKRAINE
DECLINED BY 8% Y/Y TO
(2021: 402,388 tonnes)
TONNES
US$ 1.95
MHP’S AVERAGE CHICKEN
MEAT PRICE INCREASED
BY 17% Y/Y TO
(2021: US$ 1.67 per kg)
excluding VAT.
The average price of poultry
meat produced by PP also
increased by 25% to EUR 3.24
per kg (2021: EUR 2.59 per kg).
PER KG
OPERATIONAL HIGHLIGHTS
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
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39
STRATEGIC
REVIEW
FINANCIAL HIGHLIGHTS
US$ 2,642
REVENUE INCREASED
BY 11% Y/Y TO
(2021: US$ 2,372 million)
mainly driven by an increase in poultry
export prices y/y and by an increase in
sunflower oil sales volumes, partly offset
by lower poultry volumes due to the
effects of War and export logistics.
MILLION
US$ 1,601
EXPORT REVENUE
INCREASED BY 26% Y/Y TO
(2021: US$ 1,265 million,
53% of total revenue)
representing 61% of total
Group revenue, driven by an
increase in poultry export
prices y/y and higher sunflower
oil volumes.
MILLION
US$ 255
OPERATING PROFIT
DECREASED BY 49% Y/Y TO
(2021: US$ 503 million)
and operating margin
decreased from 21% to 10%.
MILLION
US$ 384
ADJUSTED EBITDA
(NET OF IFRS 16) DECREASED
BY 41% Y/Y TO
(2021: 648 million)
mainly due to the impact of
US$ 69 million of War-related expenses
which offset the price increases in
export markets; adjusted EBITDA
margin (net of IFRS 16) decreased
from 27% to 15%.
MILLION
US$ 231
NET LOSS OF
(2021: profit of US$ 393 million)
primarily reflecting a US$
365 million non-cash foreign
exchange loss in 2022 (2021:
US$ 40 million foreign
exchange gain).
MILLION
FINANCIAL OVERVIEW
(in mln. US$, unless indicated otherwise) 2022 2021 % change
1
REVENUE
IAS 41 standard (loss)/profit
2,642
(128)
2,372
185
11%
-169%
GROSS PROFIT
Gross profit margin
War-related expenses
608
23%
(69)
745
31%
—
-19%
-8 pps
n/a
OPERATING PROFIT
Operating profit margin
255
10%
503
21%
-49%
-11 pps
ADJUSTEDEBITDA
Adjusted EBITDA margin
443
17%
709
30%
-38%
-13 pps
ADJUSTED EBITDA (NET OF IFRS 16)
Adjusted EBITDA margin (net of IFRS 16)
384
15%
648
27%
-41%
-12 pps
NET (LOSS)/PROFIT
Net (loss)/profit margin
(231)
-9%
393
17%
-159%
-26 pps
1
pps – percentage points
FINANCIAL AND OPERATIONAL REVIEW
BUSINESS REVIEW
GOVERNANCE FINANCIAL
STATEMENTS
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INFORMATION
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AND ACCOUNTS 2022
40
STRATEGIC
REVIEW
SEGMENT PERFORMANCE
POULTRY AND RELATED OPERATIONS SEGMENT
FINANCIAL RESULT AND TRENDS
PRODUCTION AND PRICES
2022 2021 % change
1
POULTRY
Sales volume
1
, third party, tonnes
665,975 704,010 -5%
Export sales volume, tonnes 368,379 402,388 -8%
Domestic sales volume, tonnes 297,596 301,622 -1%
Export sales, % of total sales 55% 57% - 2 pps
Average price per 1 kg net of VAT, US$ 1.95 1.67 17%
Average price per 1 kg net of VAT, UAH (Ukraine) 47.01 45.37 4%
Average price per 1 kg net of VAT, US$ (Ukraine) 1.45 1.66 -13%
Average price per 1 kg net of VAT, US$ (export) 2.33 1.67 40%
SUNFLOWER OIL
Sales volume, third party, tonnes
272,807 207,240 32%
SOYBEANS OIL
Sales volume, third party, tonnes
40,845 45,209 -10%
(in mln. US$, unless indicated otherwise) 2022 2021 % change
1
REVENUE
Poultry and other
Vegetable oil
IAS 41 standard gain
1,887
1,425
462
13
1,607
1,305
302
14
17%
9%
53%
-7%
GROSS PROFIT
Gross margin
375
20%
285
18%
32%
2 pps
War-related expenses (38)
—
n/a
ADJUSTEDEBITDA
Adjusted EBITDA margin
Adjusted EBITDA per 1 kg (net of IAS 41) (US$)
270
14%
0.39
267
17%
0.36
1%
-3 pps
8%
CHICKEN MEAT
The total volume of chicken meat sold to third
parties in 2022 decreased by 5% to 665,975
tonnes (2021: 704,010 tonnes) mainly due
to logistical challenges for export sales and
lower demand in Ukraine due to the effects
of the War.
D r i ve n by W a r- re l a t e d n ew s a n d c h a l l e nges
as well as by seasonality, in Q2 2022
poultry prices increased significantly.
However, from September 2022, due to
changes in the economic environment in
the EU and UK and increased competition
in the MENA region, poultry prices across
all export markets (MENA, EU and CIS)
from September 2022 started to decline
sharply, which resulted in an 11% q/q
decrease in price in Q4. Current prices
remain substantially lower than in Q3
2022. Moreover, MHP has, since March
2022, been facing significant y/y increase
in its export logistics costs, unlike our
international competitors which have
considerably lower logistics costs.
VEGETABLE OIL
In 2022, MHP’s sales of sunflower oil
increased by 32% y/y (2021: 207,240 tonnes),
mainly driven by an increase in production of
sunflower cake (due to a change in the fodder
recipe), which was substantially lower in Q4
2021 (when the fodder recipe was based more
on soybean cake) as well as positive changes
in logistics with faster ships turnaround.
Sales of soybean oil were 40,845 tonnes,
10% lower y/y, mainly as a result of lower
production volumes of soybean cake
required for the fodder recipe (substituted
by sunflower cake since Q2 2022), and
challenges associated with export logistics
because of the War in Ukraine.
In 2022, revenue increased by 17% y/y
driven by price increases in export markets,
partly offset by lower sales volumes of
meat.
Gross profit increased by 32% y/y to
US$375 million. The increase was mainly
driven by an increase in the price of
chicken meat, and a higher sales volume
and price of sunflower oil.
Adjusted EBITDA remained unchanged y/y,
mainly due to the impact of War-related
expenses (including donations, damages
and assets write-offs) which offset the price
increases in export markets.
1
Total poultry sales include domestic sales, export sales and sales of culinary products; data for 2021 has been
adjusted in line with this approach
1
pps – percentage points
665,975
THE TOTAL VOLUME OF CHICKEN MEAT
SOLD TO THIRD PARTIES DECREASED TO
TONNES
FINANCIAL AND OPERATIONAL REVIEW
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GRAIN GROWING OPERATIONS SEGMENT
In 2022, MHP harvested around 341,000
hectares of land in Ukraine and gathered
around 1.9 million tonnes of crops, 26% less
than in 2021, mainly due to unfavorable
weather condition during the summer and
the harvesting season in autumn. MHP’s
average yields remain well above the
average for Ukraine for all crops due to
operational efficiency and employment of
best practices.
The Grain Growing Operations Segment’s
revenue in 2022 was US$ 158 million (2021:
US$ 188 million). The 16% y/y decrease was
mainly attributable to the lower volumes
sold as a result of the late finishing of the
harvesting campaign, and lower yields of
corn, sunflower and wheat.
IAS 41 standard loss in 2022 was US$ 142
million (2021: a gain of US$ 169 million),
with the loss representing the net effect
of the revaluation of agricultural produce
(sunflower, corn, wheat and soya), as well
as a revaluation of fields due to lower
expected results from winter crops.
2022 Adjusted EBITDA (net of IFRS 16) of
the Segment decreased by 72% y/y, mainly
due to weaker harvest in 2022 compared
to the one in 2021, as well as higher grain
production costs due to increased prices
for main raw materials.
HARVEST RESULTS
YIELDS
2022
1
2021
1
Production
volume
in tonnes
Cropped
land
in hectares
Production
volume
in tonnes
Cropped
land
in hectares
Corn 1,088,476 151,850 1,624,173 163,295
Wheat 224,391 40,711 216,007 36,773
Sunflower 159,357 62,585 279,822 88,256
Rapeseed 104,849 27,520 71,055 21,522
Soybean 109,240 44,953 57,208 22,879
Other
2
248,334 13,129 348,590 18,715
TOTAL 1,934,647 340,748 2,596,855 351,440
2022
1
2021
1
MHP’s average Ukraine’s average MHP’s average Ukraine’s average
tonnes per hectare tonnes per hectare
Corn 7.2 6.6 10.0 8.0
Wheat 5.5
2
4.1 5.9 4.6
Sunflower 2.5 2.2 3.2 2.5
Rapeseed 3.8
2
2.9 3.3 3.0
Soya 2.4 2.4 2.5 2.7
1
Only land of Grain Growing Operations Segment.
2
Including barley, rye, sugar beet, sorghum and other and excluding land left fallow as part of crop rotation.
1
MHP yields are net weight, Ukraine yields are bunker weight.
FINANCIAL RESULT AND TRENDS
(in mln. US$ unless indicated otherwise) 2022 2021 % change
REVENUE
IAS 41 standard (loss)/gain
158
(142)
188
169
-16%
-184%
GROSS PROFIT 105 336 -69%
War-related expenses (6) — n/a
Adjusted EBITDA
Adjusted EBITDA (net of IFRS 16)
Adjusted EBITDA (net of IFRS 16) per 1 hectare
150
93
273
397
338
962
-62%
-72%
-72%
341,000
IN 2022, MHP
HARVESTED AROUND
HECTARES OF LAND
IN UKRAINE
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MEAT PROCESSING AND OTHER AGRICULTURAL
OPERATIONS SEGMENT
Meat processing products 2022 2021 % change
Sales volume, third party tonnes 14,284 33,954 -58%
Price per 1 kg net VAT, UAH 99.06 82.20 21%
Conveniencefood 2022 2021 % change
Sales volume, third party tonnes 18,159 18,857 -4%
Price per 1 kg net VAT, UAH 61.90 48.62 27%
Sales volumes of meat processing
products decreased by 58% y/y to 14,284
tonnes in 2022 (2021: 33,954 tonnes)
driven by War-related challenges that
resulted in the temporary suspension of
production facilities at “Ukrainian Bacon”
in the Donetsk region and the subsequent
partial redeployment of its operations
to Central Ukraine. The average price
increased by 21% y/y to UAH 99.06 per kg
in 2022, driven mainly by an increase in
raw material prices (spices, packaging and
other components).
Sales volumes of convenience food in
2022 decreased by 4% y/y to 18,159 tonnes
(2021: 18,857 tonnes), mainly driven by
significant disruptions in HoReCa (both
KFC and McDonalds temporarily ceased
operations in Ukraine in Q2 2022 because
of the War). The average price in 2022
increased by 27% y/y to UAH 61.90 per
kg, mainly driven by raw material price
increases as well as a focus on increased
sales of higher-margin products.
The Segment’s 2022 revenue decreased
by 24% y/y to US$ 134 million. Adjusted
EBITDA was US$ 8 million (2021:
US$ 11 million), mainly due to the effects
of the War and significant disruptions in
demand for the HoReCa segment.
FINANCIAL RESULT AND TRENDS
(in mln. US$, except margin data) 2022 2021 % change
1
REVENUE
Meat processing and convenience food
Other
2
IAS 41 standard loss
134
102
32
(1)
176
143
33
(1)
-24%
-29%
-3%
0%
GROSS PROFIT
Gross margin
15
11%
17
10%
-12%
1 pps
War-related expenses (5) — n/a
ADJUSTEDEBITDA
Adjusted EBITDA margin
8
6%
11
6%
-24%
0 pps
1
pps – percentage points.
2
includes milk, cattle, and feed grains.
14,284
SALES VOLUMES OF MEAT
PROCESSING PRODUCTS
DECREASED TO
TONNES
18,159
SALES VOLUMES OF
CONVENIENCEFOOD
DECREASED TO
TONNES
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EUROPEAN OPERATING SEGMENT (PP)
Poultry 2022 2021 % change
Sales volume, third party, tonnes 77,766 72,841 7%
Price per 1 kg net VAT, EUR 3.24 2.59 25%
Meat processing products
1
2022 2021 % change
Sales volume, third party, tonnes 43,277 40,366 7%
Price per 1 kg net VAT, EUR 3.09 2.78 11%
In 2022, poultry sales volumes increased
by 7% y/y to 77,766 tonnes. This was
driven by increased production of chicken
meat following the expansion of facilities
in Croatia and Serbia. The average price
of chicken meat increased by 25% y/y to
EUR 3.24 (2021: EUR 2.59).
Meat processing product sales increased
by 7% y/y to 43,277 tonnes ( 2021: 40,366
tonnes). The average price of meat
processing products increased by 11% y/y
to EUR 3.09.
FINANCIAL RESULT AND TRENDS
(in mln. US$, except margin data) 2022 2021 % change y/y
REVENUE
IAS 41 standard gain
464
2
401
3
16%
-33%
GROSS PROFIT
Gross margin
113
24%
106
26%
7%
-2 pps
ADJUSTEDEBITDA
Adjusted EBITDA margin
65
14%
66
16%
-2%
-2 pps
ADJUSTEDEBITDA (net of IFRS 16)
Adjusted EBITDA margin (net of IFRS 16)
63
14%
63
16%
0%
-2 pps
The European Operating Segment’s
revenue for 2022 increased by 16% y/y to
US$ 464 million (2021: US$ 401 million),
mainly driven by an increase in poultry
sales volumes and prices.
2022 adjusted EBITDA (net of IFRS 16) was
flat y/y at US$ 63 million (2021: US$ 63
million), with the adjusted EBITDA margin
(net of IFRS 16) declining by 2 pps to 14%.
1
pps – percentage points
1
Includes sausages and convenience food
77,766
POULTRY SALES
VOLUMES FOR THE
EUROPEAN OPERATING
SEGMENT INCREASED TO
TONNES
43,277
MEAT PROCESSING
PRODUCT SALES AT THE
EUROPEAN OPERATING
SEGMENT INCREASED TO
TONNES
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CURRENT GROUP CASH FLOW DEBT STRUCTURE AND LIQUIDITY
(in mln. US$) 2022 2021
Cash from operations 479 370
Change in working capital (341) (245)
Net Cash from operating activities 138 125
Cash used in investing activities (174) (100)
Including: CAPEX
1
(160) (143)
Cash from financing activities 57 35
Total change in cash
2
21 60
1
Calculated as cash used for purchases of property, plant and equipment plus cash used for purchases of other
non-current assets.
2
Calculated as net cash from operating activities plus cash used in investing activities plus cash used in financing
activities.
1
Net of IFRS 16 adjustments: as if any lease that would have been treated as an operating lease under IAS 17, as was
in effect before 1 January 2019, is treated as an operating lease for the purposes of this calculation. In accordance
with covenants in MHP’s bond and loan agreements, these data exclude the effects of IFRS 16 on accounting for
operating leases.
2
Indebtedness under trade credit facilities that is required to be repaid within 12 months of drawdown is excluded
for the purposes of this calculation.
Cash flow from operations for 2022
amounted to US $479 million (2021: US$
370 million). The higher cash generation
compared to EBITDA is mainly attributable
to a non-cash IAS 41 gain/(loss) on
revaluation of crops that will be realized
next year. Despite increase in Cash
obtained from operations, MHP needed
to invest it in working capital.
The investment in working capital is mostly
related to:
•
An increase in trade accounts receivable
for sunflower oil due to longer settlement
periods as a result of increased delivery
periods as well as lower advances
received for grains and meat;
• Higher volumes of oils as at the end
of 2022 designated for sale as well as
increased investments in fertilizers and
fuel before the spring sowing campaign.
In 12M 2022 total CAPEX was 12% higher
compared to 2021 and amounted to US$ 160
million. The increase in CAPEX year-on-year
is mainly attributable to the expansion of
operations and modernization of Perutnina
Ptuj production facilities. (including facilities
for environmental friendly production and
compliance) as well as the War-resilience
CAPEX (barges to facilitate exports, diesel
generators etc).
As of 31 December 2022, MHP’s cash and
cash equivalents amounted to US$ 300
million. Net debt remained broadly stable
y/y at US$ 1,237 million, compared to US$
1,230 million as at 31 December 2021, but
increased compared to US$ 1,186 as at 30
September 2022.
As of 31 December 2022, the share of long-
term debt in the total outstanding debt
remained unchanged at 98%.
The Net Debt / LTM adjusted EBITDA (net
of IFRS 16) ratio was 3.22 as of 31 December
2022, higher than the limit of 3.0 defined
in the Eurobond agreement.
To reiterate the principles underlying
its approach to balance sheet structure
and funding mix, the Company remains
committed to maintaining a robust
liquidity position as well as sustainable
debt leverage.
The Company’s debt management
strategy extends to both its private
and public debt instruments. While the
Company’s bond, loan and revolving credit
facilities remain largely unchanged from
before the War, the Company expects to
manage its debt portfolio proactively in
response to evolving market conditions,
subject to the NBU restrictions.
(in mln. US$) 31 December 2022 30 September 2022 31 December 2021
TotalDebt
1 2
1,537 1,503 1,505
LT Debt
1
1,507 1,480 1,489
ST Debt
1
182 168 126
Trade credit facilities
2
(152) (145) (110)
Cash and bank deposits (300) (317) (275)
Net Debt
1
1,237 1,186 1,230
LTM Adjusted EBITDA
1
384 404 648
Net Debt / LTM Adjusted EBITDA
1
3.22 2.94 1.90
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45
STRATEGIC
REVIEW
Company’s ongoing business operations
and to help sustain the population of the
country, the Board of MHP has decided
that no dividends are likely to be paid for
as long as the war continues.
SUBSEQUENT EVENTS
FACILITYAGREEMENT
WITH THE EBRD
In February 2023, the Group entered into
a facility agreement with the European
Bank for Reconstruction and Development
(EBRD) in the amount of US$ 100 million
(EBRD - US$ 90 million and a third party
lender - US$ 10 million). The loan is for the
purposes of financing the needs of the
Poultry and Related Operations Segment.
It is a seasonal loan, secured by sunflower
seeds and oil stocks, with maturity in
August 2023, and will be used to finance
the purchase of sunflower seeds and other
operational expenses associated with
production of sunflower oil and related
products. The loan includes
a number of
covenants and other
terms and conditions,
including a requirement that the Group
maintain certain financial ratios consistent
with those in the Group's Eurobond
agreements. The loan also contains a
number of reporting requirements.
APPOINTMENT OF A NEW
NON-EXECUTIVE DIRECTOR
Mr. Oscar Chemerinski was appointed as
an Independent Non-Executive Director
at the EGM held on 7 March 2023.
FORWARD-LOOKING
STATEMENTS
The 2022 Annual Report and Accounts
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.
FINANCIAL AND OPERATIONAL REVIEW
CURRENCY RISK
As a hedge for currency risks, revenue
from the exports of grain, sunflower and
soybean oil, sunflower husks and chicken
meat which, are denominated in US Dollars
and Euros, are more than sufficient to cover
debt service expenses. Export revenue for
12M 2022 amounted to US$ 1,601 million or
61% of total revenue (US$ 1,265 million or
53% of total sales in 12M 2021).
DIVIDENDS
Taking into account the current risks
and uncertainties following the Russian
invasion of Ukraine, and the resulting
need to preserve liquidity to support the
BUSINESS REVIEW
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46
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MEASURES OF FINANCIAL
PERFORMANCE
MHPHASINCLUDED CERTAIN MEASURES INTHIS REPORT THAT ARE NOT MEASURES
OFPERFORMANCEUNDER IFRS,INCLUDINGEARNINGSBEFOREINTEREST,TAXATION,
DEPRECIATIONAND AMORTISATION(“EBITDA”)ANDLASTTWELVEMONTHS’EBITDA
(“LTM EBITDA”) BOTH AT A CONSOLIDATED AND AT A SEGMENT LEVEL.
Adjusted EBITDA, LTM Adjusted EBITDA
and Segment Adjusted EBITDA are
presented in this Report because the
Directors consider them to be important
supplemental measures of the Group’s
financial performance. Additionally, the
Directors believe these measures are
frequently used by investors, analysts and
stakeholders to evaluate the efficiency
of the Group’s operations and its ability
to employ its earnings for the repayment
of debt, capital expenditure and working
capital requirements.
MHP defines Adjusted EBITDA as
profit for the year before income
tax expense, finance costs, finance
income,depreciation and amortisation
expense, impairment of goodwill and
property, plant and equipment net
foreign exchange gain/loss, and net
other expenses. Depreciation and
amortisation expenses are components
of both cost of sales and selling, general
and administrative expenses in the
consolidated financial statements.
The introduction of IFRS 16 on Leases
from January 2019 led to adjustments to
the financial statements. MHP has chosen
to present Adjusted EBITDA for 2021 and
2022 both before and after adjustment for
IFRS 16.
LTM Adjusted EBITDA (net of IFRS 16) is
defined as Adjusted EBITDA (net of IFRS
16) for the prior 12 consecutive months
ending on such date of measurement;
LTM Adjusted EBITDA is calculated
as if acquisitions of subsidiaries had
occurred on the first day of the prior 12
consecutive months ending on such date
of measurement.
LTM Adjusted EBITDA excludes the effects
of IFRS 16 on accounting for operating
leases. Adjusted EBITDA is derived by
adjusting EBITDA (as defined above) for
losses/gains on impairment/reversal of
MEASURES OF FINANCIAL PERFORMANCE
impairment of goodwill and property, plant
and equipment net losses on disposals
of subsidiaries, other expenses, net and
foreign exchange (loss)/gain. The Group
believes that this measure is more useful
in evaluating the financial performance
of the Company and its subsidiaries than
traditional EBITDA due to the exclusion
of items that Management considers not
to be representative of the underlying
operations of the Group.
The Group’s Segment measure in the
consolidated financial statements is
defined as “Segment result” and represents
operating profit by Segment before
unallocated corporate expense, being the
Segment measure reported to the chief
operating decision maker for the purposes
of resource allocation and assessment
of Segment performance. Within the
Strategic and Business Reviews, the
reported Segment result is adjusted for the
amount of depreciation and amortisation
per Segment in order to present “Segment
Adjusted EBITDA” to external users, which
MHP feels is a more commonly-used
external metric familiar to investors.
Net debt is defined as bank borrowings,
bonds issued and lease obligations less
cash and cash equivalents. Net debt (net
of IFRS 16) is defined as Net debt less the
effects of lease liabilities recognised under
IFRS 16. The Group believes that net debt
is commonly used by securities analysts,
investors and other interested parties in
the evaluation of a company’s leverage.
In MHP’s bond and loan agreement
covenants the definitions Adjusted
EBITDA, LTM Adjusted EBITDA and Net
debt exclude the effects of IFRS 16 on
accounting for operating leases. They are
calculated as if any lease that would have
been treated as an operating lease under
IAS 17 (as was in effect before 1 January
2019) is treated as an operating lease.
BUSINESS REVIEW
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47
STRATEGIC
REVIEW
Adjusted EBITDA is not a measure of
MHP’s operating performance under
IFRS, and should not be considered
as an alternative to profit for the year,
operating profit, segment result or any
other performance measures derived in
accordance with IFRS or as an alternative
to cash flow from operating activities or
as a measure of MHP’s liquidity. Such
measures presented in this Annual Report
may not be comparable to similarly titled
measures of performance presented
by other companies, and should not
be considered as substitutes for the
information contained in the consolidated
financial statements.
US$ THOUSAND 2022 2021
(Loss)/profit for the year from continuing operations (230,937) 396,795
Income tax (28,078) 6,914
Finance cost 154,705 150,424
Finance income (6,033) (10,531)
Depreciation and amortisation expense 158,906 192,858
EBITDA
48,563 736,460
Impairment of goodwill and property,
plant and equipment
29,242 10,607
Other expenses
- 2,867
Forex Loss/(Gain)
365,018 (40,466)
ADJUSTED EBITDA
442,823 709,468
ADJUSTED EBITDA (net of IFRS 16)
383,926 647,814
RECONCILIATION OF ADJUSTED EBITDA
US$ THOUSAND 2022 2021
Bank borrowings 293,831 225,062
Bonds issued 1,382,981 1,376,820
Lease obligations 229,323 281,250
Total debt 1,906,135 1,883,132
Cash and cash equivalents (300,489) (275,237)
Net debt 1,605,646 1,607,895
Effect of IFRS 16
(216,607) (268,919)
Trade credit facilities
(152,215) (110,086)
Net debt (net of IFRS 16) 1,236,824 1,228,890
RECONCILIATION OF NET DEBT
Calculation of net debt was aligned
with definitions used for the purpose of
assessment of compliance with debt
covenants provided in the respective loan
agreements. Thus, the accrued interest
which has been included previously as
part of the carrying amount of bank
borrowings, bonds issued and finance
lease obligations has been excluded from
the amount of total debt.
ASOF31DECEMBER2022AND2021,NETDEBTWASASFOLLOWS:
MEASURES OF FINANCIAL PERFORMANCE
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STRATEGIC
REVIEW
YEAR ENDED 31 DECEMBER 2022
US$ THOUSAND
POULTRY & RELATED
OPERATIONS SEGMENT
GRAIN GROWING
OPERATIONS SEGMENT
MEAT-PROCESSING &
OTHERAGRICULTURAL
OPERATIONS SEGMENT
EUROPEAN OPERATING
SEGMENT
ELIMINATIONS CONSOLIDATED
External sales 1,886,814 157,612 134,099 463,501 - 2,642,026
Sales between business
segments
55,234 338,425 470 - (394,129) -
Total revenue 1,942,048 496,037 134,569 463,501 (394,129) 2,642,026
SEGMENT RESULTS 198,324 88,480 4,030 44,886 - 335,720
Depreciation and
amortisation
72,130 61,398 3,796 20,139 - 157,463
Segment adjusted EBITDA
before unallocated
expenses
270,454 149,878 7,826 65,025 - 493,183
Unallocated expenses (51,803)
Unallocated depreciation
and amortisation
1,443
ADJUSTED EBITDA 442,823
MEASURES OF FINANCIAL PERFORMANCE
SEGMENT
PERFORMANCE
BUSINESS REVIEW
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STATEMENTS
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INFORMATION
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REVIEW
RISK MANAGEMENT
RISK MANAGEMENT
Since 24 February 2022, the environment
in which MHP operates has changed
significantly as a result of the Russian
invasion of Ukraine. The Group now
faces a wide range of substantive War-
related challenges, which are subject to
unpredictable and rapid change, so must
continuously assess levels of risk and
evaluate the actions required to protect
its operations and market position. Failure
to manage these issues could have a
substantial adverse impact on our business,
as we strive to maintain operations while
achieving our strategic goals and delivering
sustainable financial performance.
Accordingly, we have continuously adapted
our risk management processes and
embedded these throughout the Company
in order to align risk management, strategy
and performance across all entities and
enable agile decisions in response to the
changing circumstances.
RISK OVERSIGHT
The Audit & Risk Committee monitors
the effectiveness of the Company’s
risk management and control systems
by means of regular updates from
Management, reviews of the key findings
of the external and internal auditors, and
an annual review of the risk management
process. Results are reported regularly to
the Board, which has overall responsibility
for risk management. The Internal Audit
function provides objective assurance to
the Management team and to the Audit &
Risk Committee on the effectiveness of
risk management and helps Management
to continuously improve its risk
management framework and processes.
RISK MANAGEMENT
FRAMEWORK
The Company’s approach to the
identification and assessment of risks,
and the response to risks, is based on best
business practices and the international
COSO (Committee of Sponsoring
Organisations of the Treadway Commission)
Enterprise Risk Management Framework.
The COSO Framework enables us to
identify, classify, assess and manage the
risks that the Company faces in order to
provide reasonable assurance regarding
the achievement of the Company’s strategy
and objectives.
The implementation and functioning of
our Risk Management Policy is supported
by training programmes for management
and employees that emphasise open
communication, with every employee
sharing responsibility for identifying and
managing risks.
PRINCIPAL RISKS
War-related risks are by definition
substantive and, in the extreme, could
even be existential for the Company. While
the war continues, these therefore are the
most significant threats to MHP's business
continuity and accordingly are profiled at
the top of the following table of Principal
Risks. As many of these risks are outside
the Group’s control, the ongoing crisis
has driven MHP to become a more agile
company, with systematic, fast-paced, and
dynamic analysis of risks and consequent
implementation of mitigating actions. This
has forced the pace of development and
change, enhancing the Company's ability
and preparedness to respond to future
challenges.
As an example of the Company’s approach
to risk mitigation, in the fourth quarter
of 2022 a number of concerted missile
attacks on Ukrainian power infrastructure
caused significant disruption, resulting in
prolonged energy shortages across the
country. MHP's risk mitigation capabilities
were demonstrated by the fact that, after
a short break, its facilities were able to
resume operations at near full capacity,
with the intermittent national grid supply
supported by MHP's own biogas plants
backed up by diesel generators.
The principal risks the Group is facing
are listed in the table below. The list
is not exhaustive and additional risks
and uncertainties not currently known
to us, or that we currently deem to be
immaterial, may also materially adversely
affect our business, financial condition,
or results. We therefore remain vigilant
and proactive in identifying and mitigating
risks to ensure the continuity of our
operations.
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THE PRINCIPAL RISKS AND UNCERTAINTIES THE GROUP IS FACING ARE SHOWN BELOW
1
PRINCIPAL RISK HOW WE MANAGE THE RISK
TOP 5 WAR-RELATED RISKS
1. Missile attack on slaughter and production
facilitiesorfodder complexes
Energydisruption. Adoption of a balanced energy mix composed of the national grid, electricity from MHP biogas plants, and back-up diesel generators.
Firehazard. Fire engines stationed in production areas; provision of uninterrupted water supply; contractual agreements with the State Emergency Services
guaranteeing urgent arrival in case of fire.
Explosion hazard. Development of strict procedures to avert the risk of explosion and minimise the potential impact.
Destruction/breakdown of equipment or processing and manufacturing facilities. Increased warehousing of spare parts and equipment in storage facilities
remote from production sites; reservation of funds for restoration of property; emergency reconstruction protocols for plant and other key facilities.
Production stoppage.In the most severe situations, poultry breeding and hatching may be reduced and, where unavoidable, livestock thinned.
Financial impact.The Company has modelled a number of scenarios and analysed potential cost reductions, operating an agile business strategy.
2. Interruption to electricity supply MeatProcessingfacilities. Reduction of electricity consumption across the entire MHP supply chain.
Supply of products to customers. Greater focus on chilled poultry meat products and planned expansion of European freezing capacity.
Payment processing centre/distribution centre. Power generators are employed as back up in the case of supply outage or disruption.
3. Economic impact of the War on usual
commerciallevers
Vigilant monitoring.Monitoring all aspects of the markets in which MHP is present, coupled with production reduction scenarios and alternative options
for receiving and processing payment transactions.
Sufficient credit lines.Facilities were put in place prior to the invasion to cover liquidity risks.
4. Repeated blocking of grain exports by sea Contract performance. Triggering of force majeure provisions, contract cancellation or changing delivery routes.
Increased cost of land delivery. Agile delivery matrix utilising a mixture of trucks, rail and, where available, shipping.
5. Disruptions in supply of production raw
materials and resources
Supply contracts. Network of reliable and diverse suppliers selected.
Petroleumstocks. Increased through renting additional storage facilities.
Compound feed ingredients and additives. Increased warehousing capacity to store raw materials in right conditions. Minimised travel time and loading /
unloading time at transshipment centres and ports.
1
As of the date of the 2022 Annual Results release, 11 April 2023
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RISK MANAGEMENT
PRINCIPAL RISK HOW WE MANAGE THE RISK
OTHER WAR-RELATED RISKS
Loss of access to leased land, offices and
production facilities in the occupied territories
This geopolitical risk is largely outside of MHP’s control.
Where possible, mitigating factors may include the relocation of operations.
Loss of storage facilities and stocks
of produced goods and inventories
Adaptation of our business model, logistics and supply routes.
Additional storage facilities.
Absence or loss of employees resulting
in disruption of business processes
See Growth Pillar 2: Our People and Their Wellbeing on pages 63 to 74.
Mitigations to ensure that employee welfare is protected and strengthened include: evacuating employees deemed most at risk from dangerous areas to safer
“hubs”; ensuring no concentration of critical employees in one location, with back-up critical functions organised; training employees on defencive measures
on how they to behave and protect themselves in the War; building of shelters for employees; providing physical and psychological support to employees; and
changing motivation schemes to recognise and reward employees who ensure continuity of production and logistics.
Disruption of logistics routes in Ukraine See CEO’s Statement and Growth Pillar 2: Our People and Their Wellbeing on pages 18 and 63 respectively.
Business planning was adjusted to a month-by-month, then three-month, then six-month process.
Mitigating actions include: drawing on, training and/or re-skilling of volunteers, retailers, and drivers; expanding our fleet of trucks; adapting supply chains to the
new constraints; actions to ensure adequate stocks of all critical resources.
Inability to conduct export activities See CEO’s Statement on page 18.
Rapid adaptations to our business model and logistics routes.
Detailed contingency plans have been designed and are in place to maintain exports using as many routes as are available at any point in time.
Potential cyber-attack, loss of data and
disruption of business processes
See Growth Pillar 5: Business Conduct on pages 87 to 93.
Detailed contingency plans have been designed to respond to cyber-attack and the potential unavailability of IT systems.
Mitigations include the application of Microsoft’s latest security solutions in MHP’s cloud infrastructure to ensure that MHP’s systems detect and respond to
information security events that indicate a possible compromise.
BUSINESS RISKS
Fluctuations in prices for grains and related
products required for production input
MHP drives cost efficiency across all its businesses, supported by its vertically-integrated business model. MHP’s grain growing operations produce internally
100% of the corn required for poultry feed production. The Company adopts different approaches for improving feed recipes and the structure of feed so as
to optimise cost and increase the feed conversion ratio at the same time.
Fluctuations in demand for and market prices
of chicken meat
Although adversely affected by the reduction in Ukraine’s population during 2022, demand for chicken in the domestic market is expected to remain strong
as chicken meat is the most affordable kind of meat from both a price and diet perspective. MHP products are available for purchase through different sales
channels at all times and the Company offers competitive trade terms to its customers. MHP’s domestic strategy and in particular its focus on higher value-add
products are drivers for increasing the Company’s profitability from chicken meat sales in Ukraine.
In international markets, MHP continues to benefit from its strategy of geographic diversification of exports combined with product mix optimisation and a
focus on customised products for new potential markets.
Failure to implement growth strategy
and expansion into export markets
MHP has in place a long-term strategy for the Group’s expansion into diversified export markets. In spite of War-related disruption to exports during 2022,
MHP continues to export to over 70 international markets.
Outbreaks of Avian Influenza and other
livestock diseases
To ensure the well-being of livestock at MHP’s facilities, the Company has implemented high biosecurity standards and systems supplemented by a set of
preventive veterinary-sanitary and hygiene measures.
Inefficient procurement and an increase
in production costs
MHP strives to continually improve its procurement procedures and production processes. The procurement of strategic items is centralised with a high level
of regulation and control. KPIs are set and are closely monitored with a view to decreasing the costs of production.
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RISK MANAGEMENT
PRINCIPAL RISK HOW WE MANAGE THE RISK
BUSINESS RISKS (continued)
Occurrence of a material product quality
or product safety incident
MHP prioritises product safety and quality in line with international best practice and applicable regulations. It maintains robust quality and safety management
systems and has an excellent track record in this area.
Fluctuations in commodity prices such as gas,
fuel and energy
MHP tightly monitors and controls its gas, fuel and energy costs. Energy price risks are mitigated by a priority focus on developing renewable sources of energy
and a continued increase in the use of co-generation and alternative energy technology.
Lack of highly-qualified staff at strategic level
and production enterprises
MHP works to maintain positive relationships with employees and strives to build upon its reputation as a high-quality, responsible employer of choice.
Inefficient procurement and an increase
in production costs
MHP strives to continually improve its procurement procedures and production processes. The procurement of strategic items is centralised with a high level
of regulation and control. KPIs are set and are closely monitored with a view to decreasing the costs of production.
ENVIRONMENTAL RISKS
Global climate change MHP endeavors to conduct all its activities in an environmentally-responsible manner and to meet the global challenges presented by climate change.
A key tenet of the Company’s Sustainable Environmental Policy is to become carbon neutral by 2030. In 2021, MHP partnered with an independent third party
Alltech E-CO2 to audit greenhouse gas emissions and recomend measures to further reduce greenhouse gas emissions. There is also a target to achieve
carbon accreditation with the Carbon Trust and develop a strategy for carbon neutrality in 2023.
Irrational water use There is a range of preventive and monitoring approaches to ensure rational water consumption and to prevent pollution of surface waters and groundwater
aquifers at MHP.
Deforestation and conversion of high-carbon
lands into agricultural land, including drainage
of peat bogs
MHP is committed to zero deforestation and zero conversion of high-carbon lands to agricultural land.
MHP’s Sustainable Environmental Policy sets a number of objectives to contribute to sustainable development of the country at all locations, where the
Company has got its operations.
FINANCE RISKS
Fluctuations in foreign exchange rates The majority of MHP’s borrowings are denominated in US$. The resulting exposure is effectively hedged by the generation of around 61% of total revenue
in US$ in 2022 from the export of sunflower and soybean oils, chicken meat and grain. The hard currency revenue allows MHP to service dollar-denominated
obligations subject to the NBU regulations.
Fluctuations in interest rates MHP monitors its interest rate exposure and analyses the potential impact of interest rate movements on its net interest expenses.
Of MHP’s debt portfolio, 99% is at fixed interest rates, the majority being in the form of fixed-rate Eurobonds. Bank borrowings are mostly from foreign banks
or Ukrainian subsidiaries of international banks at rates lower than those available from Ukrainian banks.
Credit risk MHP has a diversified pool of customers. The amount of credit allowed to any one customer or group of customers, including supermarkets and franchisees,
is strictly controlled.
Credit risks are managed by security provisions included in agreements with customers. At foreign subsidiaries of MHP, an insurance company is involved to
approve the credit limit and to insure against risk of non-payment.
Liquidity risk MHP maintains efficient budgeting and cash management processes to ensure that adequate funds are available to meet its business requirements. MHP adopts
a flexible CAPEX programme enabling capital projects to be deferred if necessary. MHP holds cash balances in hard currency on correspondent accounts.
Inefficient investments MHP has developed and implemented procedures to ensure due process in this area. The Evaluation of Investment Projects procedure requires that the
Investment Committee approves investment projects. All of the Company’s investment projects are documented with a formal investment appraisal report and
financial model which are jointly approved by the Investment Committee. All major investment decisions require approval by the Board.
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RISK MANAGEMENT
PRINCIPAL RISK HOW WE MANAGE THE RISK
STAKEHOLDER RELATIONS RISKS
Local communities and NGOs MHP is in regular dialogue with its local communities and other stakeholders in the regions in which it operates. The Company aims to conduct these relationships
sensitively and with mutual respect.
Investor and other stakeholder relations MHP maintains an experienced and well-resourced communications and investor relations team that is supported by a national and international network of
professional advisors. The team ensures that information about the Company is distributed in a timely manner, is accurate and up-to-date. MHP also monitors
external commentary about its activities to ensure that any inaccuracies are addressed promptly. A qualitative measurement of the Company’s image is
performed on a regular basis and monitored by its senior management team and the Board.
COMPLIANCE RISKS
Legal and regulatory risk MHP’s management team actively monitors regulatory developments in the countries in which the Group operates.
Bribery and corruption MHP maintains robust anti-bribery and corruption policies and procedures, including a Code of Ethical Conduct, which are regularly reviewed and monitored
by the Audit & Risk Committee.
COMPLIANCE RISKS
Failure to comply with the covenants
under loan agreements
MHP has developed and follows control procedures to monitor compliance with covenants.
BUSINESS CONTINUITY RISK
Failure of IT systems could materially affect
MHP’s business
A full set of measures has been implemented across the Company to reduce the risk of IT system failure. Detailed contingency plans have been designed to
respond to cyber-attack and the potential unavailability of IT systems.
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MHP’S GROWTH PILLARS
MHP’S GROWTH
PILLARS
THISSECTIONOUTLINESTHEASPECTSOFMHP'SBUSINESSTHATHAVEBECOMEA
TOPPRIORITYSINCETHEINVASIONON24FEBRUARY 2022.THECRISISNECESSITATED
A SWIFT REASSESSMENT OF MHP'S ESTABLISHED METHODS OF ADDRESSING
THE SIX GROWTH PILLARS SET OUT BELOW. THIS LED TO SIGNIFICANT CHANGES,
REFINEMENTS,REDESIGNS,ANDTHEINTRODUCTIONOFVARIOUSDIFFERENTACTIVITIES
ANDPROCESSES.AT THESAMETIMEWASACHIEVEDAMIDSTEXCEPTIONALLYDIFFICULT
LOGISTICALCHALLENGES, THENEEDTOCONTINUEBUSINESS OPERATIONS,ANDTHE
URGENCYOF SAFEGUARDING MHP'SEMPLOYEESAND, WHEREAPPROPRIATE,THE
GENERAL PUBLIC. THROUGHOUT AT THE SAME TIME, THE GROUP ALSO CONTINUED
TO PLAY ITS PART IN MAINTAINING THE COUNTRY'S FOOD SECURITY.
Despite these significant challenges,
MHP has successfully advanced its
established commitments and plans in
several areas, such as addressing climate
change, enhancing business conduct
mechanisms, and offering opportunities
for employee growth and development.
These commitments and developments
will remain a priority for MHP throughout
the duration of the War and beyond.
Many aspects of MHP’s vital work
within Ukraine’s local communities
during the war in 2022 were and will
continue to be conducted in partnership
with the MHP-Gromadi Foundation
(“MHP-Gromadi” or “the Foundation”),
MHP’s charitable foundation. Further
information can be found at the
Foundation’s website (https://
mhpgromadi.org.ua).
DESPITE THE WAR, MHP
HAS SUCCESSFULLY
ADVANCED ITS
ESTABLISHED
COMMITMENTS AND
PLANS IN SEVERAL
AREAS DURING THE YEAR
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ALIGNING OUR SUSTAINABILITY
FRAMEWORK
MHP conducted regular stakeholder
engagement activities to establish its
approach to sustainability, create a
sustainability framework and prioritise its
sustainability-related activities. Despite
the challenges created by the War, the
principles and commitments recorded
below, which were fixed prior to 24
February 2022, remain in place and will
continue to be refined and developed
over time.
We support global stakeholder initiatives
(including those set up by governments,
regulators, the financial and investment
communities, and NGOs) to bring greater
transparency and consistency to how the
business world approaches sustainability
and discloses its performance.
Clearly our steps to develop MHP’s
approach have been affected by the
War. However, we remain committed to
achieving best practice and carefully
monitoring the development of global
standards including those relating to
climate change.
Key aspects of our approach include:
• identifying the United Nations
Sustainable Development Goals as the
appropriate sustainability framework to
align MHP’s approach to;
• attending and closely following the
outcomes of COP26 and considering
the recommendations; and
• developing our data collection to
enable us to report, applying the
Global Reporting Initiative.
The activities relating to the Six Growth
Pillars are delivered and assessed through
our strategy and policies, management
systems and processes, performance
measurement and monitoring, and
engagement with stakeholders.
OUR APPROACH
STAKEHOLDER
ENGAGEMENT
pages 59 to 62
OUR PEOPLE
AND THEIR
WELLBEING
pages 63 to 74
OUR ROLE IN
SOCIETY
AND OUR LICENCE
TO OPERATE
pages 75 to 77
BUSINESS
CONDUCT
pages 87 to 93
THE PLANET
pages 94 to 106
RESPONSIBLE
FOOD
PRODUCTION
pages 78 to 86
WHY
Our purpose is to provide our customers with high quality, sustainable proteins, food products and culinary
solutions that are safe and responsibly produced.
AREAS OF
FOCUS
(GROWTH
PILLARS)
Stakeholder
Engagement
Our People and
Their Wellbeing
Our Role in
Society and
Our Licence to
Operate
Responsible
Food Production
Business
Conduct
The Planet
HOW
Strategy and Policy Design
Continuous Management Systems Development
Rigorous Performance Measurement and Monitoring
REPORTING
GRI
TCFD
International Standards and
Guidelines
MHP’S GROWTH PILLARS
OUR SIX GROWTH PILLARS
GRI TABLE
MHP’s 2022 GRI table, which cross-
references the information within this
report, is available for download from
the MHP website (https://mhp.com.ua/
en/mhp-se/financial-reports).
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ALIGNMENT WITH THE UN SUSTAINABLE DEVELOPMENT GOALS
The United Nations Sustainable
Development Goals (“UN SDGs”) were
designed to provide a shared blueprint for
achieving peace, prosperity and wellbeing
for people and the planet, now and in the
future.
MHP’s responsible business strategy is
closely aligned with the UN SDGs and the
Group aims to contribute constructively
to positive global change. MHP aligns its
activities with all seventeen of the UN
SDGs.
MHP leverages its products and services,
workforce, investments and stakeholder
engagement activities to drive a process of
innovation and continuous improvement.
MHP’S GROWTH PILLARS
NO POVERTY1
END POVERTY IN ALL ITS FORMS EVERYWHERE
MHP plays an active and important role in the communities where its operations are based. It works with local stakeholders to improve
infrastructure, develop education and health, and to provide economic and employment opportunities. MHP’s role in its communities
within Ukraine has become particularly important since the commencement of the War. This is discussed throughout this Report.
UN GOALS MHP'S IMPACT AND CONTRIBUTION
END HUNGER, ACHIEVE FOOD SECURITY AND IMPROVED NUTRITION AND PROMOTE SUSTAINABLE AGRICULTURE
One of MHP’s main priorities following the invasion was to achieve and continuously maintain food security for the population of
Ukraine. Our efforts to achieve this are discussed throughout this Report.
MHP was one of the first Ukrainian companies to be verified by audit and permitted to label its products as antibiotic-free “Class A”, in
accordance with the standard “Voluntary requirements for poultry farms with poultry technology and production of poultry products
without the use of antimicrobial agents and/or without antimicrobial agents”.
All 37 of the Company’s labs undertake around 6,000 methods of analysis to study feed and raw materials, to achieve microbiological
and chemical parameters, and to ensure strict compliance with veterinary, biosafety and hygiene standards at all MHP facilities. All
livestock in Ukraine and the European Operating Segment have been vaccinated to prevent the presence of viral pathogens in poultry.
ZERO HUNGER2
SUPPORT HEALTH AND WELLBEING
Since the War began, MHP has prioritised the health, safety and wellbeing of its employees and the population of Ukraine. The Group
adopted a similar approach at the start of the global COVID-19 Pandemic in 2020 and made considerable efforts to support and assist
its workforce and their families. Health and safety at all the Group’s sites are important priorities that receive considerable management
attention.
ENSURE INCLUSIVE AND EQUITABLE QUALITY EDUCATION AND PROMOTE LIFELONG LEARNING OPPORTUNITIES FOR ALL
MHP provides meaningful and productive work and training for all of its employees and has continued to do this since the outbreak of
the war in Ukraine. MHP also supports many educational and learning activities within the communities where the Group is based.
QUALITY EDUCATION
4
ACHIEVE GENDER EQUALITY AND EMPOWER ALL WOMEN AND GIRLS
A strong area of focus for MHP is the creation of employment opportunities at all levels for women. The War in Ukraine has underpinned
the importance of this focus. Job flexibility and the requirement to keep MHP Ukraine operating during the war has underlined why this
approach is important to business continuity and long-term success.
GENDER EQUALITY
5
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UN GOALS MHP'S IMPACT AND CONTRIBUTION
9
REDUCE INEQUALITY WITHIN AND AMONG COUNTRIES
MHP is committed to providing equal opportunities for everyone who works for the Group and aims to set high employment standards
within the countries in which it operates.
REDUCE INEQUALITIES10
MHP’S GROWTH PILLARS
BUILD RESILIENT INFRASTRUCTURE, PROMOTE INCLUSIVE AND SUSTAINABLE INDUSTRIALISATION, AND FOSTER INNOVATION
Technological innovation and infrastructure development is at the heart of many of MHP’s activities as the Group seeks to drive
creativity, efficiency and change throughout its businesses. A prime example is the creation of the Innovation Department with the goal
of transforming MHP from a commodity company into a customer-focussed culinary company. In 2022, this development took another
step forward with the integration of our innovation experts into the Group’s Business Segment verticals. See also the Nominations and
Remuneration Committee Report on page 133.
Innovation and workforce flexibility have been some of the key features in the Group’s response to the challenges presented to it by the
war in Ukraine and have contributed significantly to the Group continuing its operations in a largely uninterrupted manner.
INDUSTRY INNOVATION
AND INFRASTRUCTURE
PROMOTE SUSTAINED, INCLUSIVE AND SUSTAINABLE ECONOMIC GROWTH, FULL AND PRODUCTIVE EMPLOYMENT AND
DECENT WORK FOR ALL
MHP prioritises providing workplaces that are welcoming and free of discrimination, bullying and harassment.
MHP’s rates of pay compare favourably to other large employers in Ukraine and elsewhere. The Group sees itself as an important
contributor to economic growth and stability within the communities where it operates and works closely with local stakeholders to
ensure that everyone benefits from the economic wealth generated by the Group’s activities.
Since the beginning of the war, MHP has been cooperating closely with Ukrainian authorities and other stakeholders to support the
effective operation of the economic infrastructure as it relates to the Company. The Group has supported its workforce and local
communities in a wide variety of ways to shield them from the economic impacts that have occurred.
DECENT WORK AND
ECONOMIC GROWTH
8
ENSURE ACCESS TO AFFORDABLE, RELIABLE, SUSTAINABLE AND MODERN ENERGY FOR ALL
Over the last few years, MHP has increasingly been focussing on its own renewable energy generation through the construction of biogas
plants at its facilities in Ukraine. This approach has supported the Group’s site facilities since the war began because it has enabled MHP to
continue its activities during energy shortages, especially after the very significant and sustained attacks in the second half of 2022.
AFFORDABLE AND CLEAN ENERGY
7
ENSURE AVAILABILITY AND SUSTAINABLE MANAGEMENT OF WATER AND SANITATION FOR ALL
The registers of wells and mineshafts for water at every MHP enterprise are regularly updated. Close attention is paid at all of MHP’s
businesses to ensuring that business activities do not contaminate natural water resources and reduce the availability of water for the
use of local communities.
CLEAN WATER AND SANITATION
6
6
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MAKE CITIES AND HUMAN SETTLEMENTS INCLUSIVE, SAFE, RESILIENT AND SUSTAINABLE
MHP works with its stakeholders to develop and protect the communities where the Group’s operations are based. These responsibilities
became a particularly important priority to the management team as a result of the global COVID-19 Pandemic and the invasion of Ukraine.
ENSURE SUSTAINABLE CONSUMPTION AND PRODUCTION PATTERNS
As a global company exporting to more than 70 countries, MHP’s approach to marketing is consistent with the International Chamber of
Commerce’s Marketing and Advertising Code and its framework for responsible food marketing communications and labelling. MHP is
committed to sustainable production and in particular to reducing its carbon footprint through the increased use of renewable energy.
MHP’S GROWTH PILLARS
UN GOALS MHP'S IMPACT AND CONTRIBUTION
TAKE URGENT ACTION TO COMBAT CLIMATE CHANGE AND ITS IMPACTS
MHP’s environmental policy includes a net zero emissions commitment by 2030. In recent years, the Group has taken a number of steps to
reduce the effects of its activities on the environment and to reduce its greenhouse gas emissions. These have included the construction
of biogas facilities which use waste generated by MHP’s other activities, and a consistent focus on energy use reduction activities.
LIFE BELOW WATER
14
CONSERVE AND SUSTAINABLY USE THE OCEANS, SEAS AND MARINE RESOURCES FOR SUSTAINABLE DEVELOPMENT
None of MHP’s sites are located close to oceans or seas. MHP uses shipping facilities to export its products and its suppliers are
required to adhere to the environmental requirements of the Group’s Business Partner Code of Conduct. This is available for download
from the main MHP website (www.mhp.ua).
PROTECT, RESTORE AND PROMOTE SUSTAINABLE USE OF TERRESTRIAL ECOSYSTEMS, SUSTAINABLY MANAGE FORESTS,
COMBAT DESERTIFICATION, AND HALT AND REVERSE LAND DEGRADATION AND HALT BIODIVERSITY LOSS
MHP prioritises the protection of the environment where the Group’s sites are located and strives to address the global challenge
presented by climate change.
STRENGTHEN THE MEANS OF IMPLEMENTATION AND REVITALISE THE GLOBAL PARTNERSHIP FOR SUSTAINABLE DEVELOPMENT
MHP conducts regular dialogue with a variety of stakeholders about its approach to sustainable development. During 2022, these
activities have included working with many internal and external stakeholders as MHP takes those steps towards protecting Ukraine and
its population that are appropriate to a company operating in a war-torn country.
PROMOTE PEACEFUL AND INCLUSIVE SOCIETIES FOR SUSTAINABLE DEVELOPMENT, PROVIDE ACCESS TO JUSTICE FOR ALL
AND BUILD EFFECTIVE, ACCOUNTABLE AND INCLUSIVE INSTITUTIONS AT ALL LEVELS
MHP has a robust approach to responsible business conduct and a zero-tolerance approach to bribery and corruption. MHP published
a revised Code of Ethics and a Supplier Code of Ethics in 2021.
Since the commencement of the war on 24 February 2022, everyone at MHP has been working hard to play their part in protecting the
democratic integrity of Ukraine and the wellbeing of its citizens.
PARTNERSHIP FOR THE GOALS17
PEACE, JUSTICE AND
STRONG INSTITUTIONS
16
LIFE ON LAND
15
CLIMATE
ACTION
13
RESPONSIBLE CONSUMPTION
AND PRODUCTION
12
SUSTAINABLE CITIES AND
COMMUNITIES
11
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GROWTH PILLAR 1
STAKEHOLDER
ENGAGEMENT
GROWTH PILLAR 1: STAKEHOLDER ENGAGEMENT
THECOMMENCEMENTOFRUSSIA’SINVASIONOFUKRAINEON24FEBRUARY2022MEANT
THATMHPHADTOIMMEDIATELYREVISEITSAPPROACHTOSTAKEHOLDERENGAGEMENT
AND PLAY AN ACTIVE ROLE IN ADDRESSING THE IMPLICATIONS OF THE CRISIS.
THE IMPORTANCE OF STAKEHOLDER
ENGAGEMENT DURING A TIME OF WAR
MH
P’s Board and Senior Management Team
recognised straightaway that effective
communications and stakeholder
engagement were essential to the
success of the Company’s response to the
Russian aggression.
They immediately resolved that the Group’s
top four wartime stakeholder engagement
priorities were to:
1. Support the needs of employees;
2. Address the needs of communities in
different parts of Ukraine;
3. Address the additional requests for
information from financial partners and
the investment community; and
4. Work with other stakeholders to maintain
food security and personal safety for the
Ukrainian population.
The Board and Senior Management Team
consider the results of the Company’s
efforts in this regard to be outstanding
and many features of these activities are
discussed throughout this Report.
Of particular note are successes in:
• maintaining high levels of communication
and engagement, which has been
central to MHP’s efforts to successfully
maintain its ongoing activities through
working with a wide variety of internal,
national and international stakeholders;
• participating in successful ongoing
negotiations with banks, bondholders
and shareholders to maintain MHP’s
liquidity and activities during the
emergency;
• cooperating with a wide variety of
internal and external stakeholders in
Ukraine to maintain food security for
everyone;
• applying various communication
channels, including social media,
to maintain communication with
employees and their families
particularly at the commencement of
the war;
• working with internal and external
stakeholders to organise the evacuation
of 600 employees and their families at
the start of the War, rehousing them
and then setting up two new “hubs” to
enable them to continue to work;
• partnering with internal and external
stakeholders to maintain IT integrity and
security, and enabling ongoing internal
and external communications; and
• working with internal and external
stakeholders to maintain a wide variety
of community support activities
across Ukraine and encourage
international stakeholders to provide
resources and support to the Ukrainian
population during the war.
MATERIALITY
ASSESSMENT
In previous years, MHP has conducted a
stakeholder materiality exercise to ensure
that it fully understands the views of its
stakeholders in relation to its recent,
current and future activities. Details of
this approach can be found in the 2021
Sustainability Report which is available for
download from the MHP website. Clearly
this approach had to be changed as a
result of the outbreak of the war. MHP’s
stakeholder engagement activities are
now focussed primarily on the top four
priorities listed to the left of this page.
This approach will continue until the end
of the War and will be adapted to the
changing circumstances that the Russian
aggression has created and will create
going forward. Over and above the top
four wartime priorities, work continued
across all areas of stakeholder
engagement.
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STAKEHOLDER
ENGAGEMENT
HIGHLIGHTS
The table below sets out how each
stakeholder group was understood and
addressed, drawing out highlights of the
Group’s activities during the year.
STAKEHOLDER KEY STAKEHOLDER ISSUES HOW MHP ENGAGES 2022 HIGHLIGHTS
WORKFORCE
MHP has a dedicated and experienced
workforce that is committed to, and is a
key element in, achieving MHP’s aims and
objectives. Taking care of our people is a
top priority.
• A shared vision of MHP’s commitment to the
country during the war;
• Personal and family welfare and security;
• Health and wellbeing, taking into account the
special circumstances created by the war;
• A conducive workplace featuring diversity,
inclusion, flexibility, responsible business
practice and clear communication;
• Provision of ongoing employment.
• Design of tailored programmes to address
the specific needs created by the war;
• Regular two-way communication;
• Clear communication of Company and
management goals;
• Training, education and mentoring;
• Programmes for the development of
innovative thinking;
• Corporate volunteering;
• Grievance mechanism;
• Regular surveys.
• Substantial two-way communication
resources were applied to ensure ongoing
communications and work activities during
the war;
• Communications played an important
role in maintaining morale, organising
the evacuation and rehousing of 600
employees and their families, organising
their return to work, and the setting up
of two new “hubs” following the outbreak
of War.
COMMUNITIES AND NGOS
MHP’s reputation and business continuity
are supported by its aim to be a proactive
and supportive member of its local
communities and a good neighbour.
• Wellbeing, personal safety and food security
during the war;
• Transparency, clear communication and
opportunities to engage;
• Development and support of local
infrastructure and services;
• Local employment opportunities.
• Stakeholder Engagement Plan adapted for
the special circumstances of the war;
• Joint activities with MHP-Gromadi to
support local communities;
• Grievance mechanism;
• Regional recruiting programme;
• Medical assistance in the village programme;
• Regular public meetings;
• Regular investment in public infrastructure in
partnership with local stakeholders.
• A large number of community support
activities have been conducted during
the War. These include arranging business
grants for start-ups and re-location,
building bomb shelters and putting up
tents, providing access to social services,
healthcare and counselling, providing
poultry and grain, boosting morale through
cinema screenings including on the front
line, encouraging food self-sufficiency
through the sowing of seeds, charging
batteries and generators, building up
heating stocks in preparation for blackouts
and power cuts, and cleaning local parks
and schools.
CUSTOMERS, BUSINESS PARTNERS AND
SUPPLIERS
MHP’s ongoing and uninterrupted business
continuity relies on the strength and
maintenance of its relationships with its
customers, suppliers and business advisors.
• Business continuity during the war;
• Adaptation of business methods and logistics
during the War;
• Fair business conduct, terms and conditions;
• MHP’s approach and performance relating to
biosecurity, product quality, environmental,
health and safety matters;
• Transparency, clear communication channels
and opportunities to engage.
• Adaptation and redesign of communication
channels to take into account the difficult
circumstances created by warfare;
• Interaction via the tender platform;
• Dedicated staff teams to interact with
customers, suppliers and business advisors;
• Provision of questionnaires;
• Participation in regular customer due
diligence processes.
• Working with a variety of stakeholders
to ensure ongoing food security for the
population of Ukraine;
• Working with a variety of stakeholders, both
domestically and internationally, to ensure
ongoing business activities at MHP’s sites.
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STAKEHOLDER KEY STAKEHOLDER ISSUES HOW MHP ENGAGES 2022 HIGHLIGHTS
SHAREHOLDERS, FINANCIERS AND THE
INVESTMENTCOMMUNITY
MHP’s ongoing access to capital and
liquidity depends on maintaining strong and
lasting relationships with investors, debt
providers, financiers and financial analysts.
• Ongoing liquidity and solvency of the Group;
• Regular access to management and
information during the War;
• Financial and share price performance;
• Credit rating;
• Strategy;
• Risk management;
• Environmental, social and governance
(“ESG”) approach and performance;
• Transparent, regular and proactive
communication and reporting.
• Provision of regular access to senior
management and IR personnel;
• Regular provision of conference calls for the
investment community;
• Quarterly results, trading updates, and ad
hoc announcements;
• One-to-one meetings with investors and
financiers;
• Annual general meeting;
• Dedicated IR section on the Company’s
website;
• Annual financial and non-financial reports;
• Site visits;
• Investor surveys.
• Successful negotiation with and
unprecedented support from bondholders
to ensure ongoing liquidity and MHP’s
capital base;
• Regular and ongoing dialogue with
shareholders and the finance community
to ensure ongoing support and full
understanding of MHP’s stability during the
duration of the armed aggression;
• Since April 2022, publication of monthly
operational trading updates in addition to
the Group’s normal reporting schedule.
GOVERNMENTS AND REGULATORS
MHP’s licence to operate is dependent on
its relations with government and regulators
and operating within the applicable laws
and regulations.
• Close partnership arrangements with
business to protect and support the
population and ensure food security during
the hostilities;
• Adherence to applicable laws and
regulations;
• Support and cooperation with local
economic development agencies;
• Investment into infrastructure, education and
medical facilities;
• Transparency, clear communication channels
and opportunities to engage.
• Regular dialogue to establish population
needs and requirements during the War and
to design plans to address them;
• Regular meetings with local government;
• Participation in local infrastructure, health
and education projects;
• Close cooperation with local regulators
over matters such as maintenance of
strict bio-security, health and safety and
environmental matters.
• Successfully working with local and national
authorities to undertake a wide variety of
community support projects to assist the
population of Ukraine during the war;
• Working with international authorities and
governments to facilitate the export of the
Group’s products during the War. For more
information, see the Sustainability and
International Affairs Committee Report on
page 135.
MEDIA
An important element of all of MHP’s key
stakeholder relations is that the media
reports timely and accurate information
about its activities.
• How MHP is working to support the
population and the country;
• Receipt of timely, complete and up-to-date
news and information about MHP’s activities;
• Contact information for the media;
• Transparency, clear communication channels
and opportunities to engage.
• Design of communication activity to address
the special circumstances created by the
armed aggression;
• Company websites;
• Regular distribution of Company news and
information;
• Availability of Senior Management for media
interviews and briefings;
• Site visits for the media.
• MHP has successfully used mainstream
and social media throughout the War to
maintain communications with a wide
variety of internal and external stakeholders
despite the challenging circumstances.
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SECTION 172 STATEMENT
Section 172 of the UK Companies Act
2006 requires each Director of the
Company to act in the way he or she
considers, in good faith, would most likely
promote the success of the Company for
the benefit of its members as a whole.
In this way, Section 172 requires a Director
to have regard, among other matters,
to the:
In discharging its Section 172 duties,
the Board has regularly considered the
factors set out above and the views of
key stakeholders. By considering MHP’s
objectives and commitment to responsible
business, together with its strategic
priorities, the Board aims to ensure that
its decisions are consistent, predictable,
and always in the best interests of the
business.
Further details of the Board’s activities can
be found in the Corporate Governance
Report on pages 116 to 118. This includes
how the Board reaches its decisions; the
matters discussed and debated during the
year; the stakeholder considerations that
were central to those discussions; and
how the Board fosters MHP’s relationships
with customers, suppliers and other
stakeholders. Other relevant information
can be found at MHP’s main corporate
website at www.mhp.ua.
IMPACT OF THE COMPANY’S OPERATIONS
ON LOCAL COMMUNITIES AND THE
ENVIRONMENT
NEED TO ACT FAIRLY BETWEEN
MEMBERS OF THE COMPANY
LIKELY CONSEQUENCES OF ANY
DECISIONS IN THE LONG TERM
DESIRABILITY OF THE COMPANY
MAINTAINING A REPUTATION FOR HIGH
STANDARDS OF BUSINESS CONDUCT
NEED TO FOSTER THE COMPANY’S
BUSINESS RELATIONSHIPS WITH
SUPPLIERS, CUSTOMERS, AND OTHERS
INTERESTS OF THE COMPANY’S
EMPLOYEES
THE BOARD AIMS TO ENSURE THAT ITS DECISIONS ARE
CONSISTENT, PREDICTABLE, AND ALWAYS IN THE BEST
INTERESTS OF THE BUSINESS
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GROWTH PILLAR 2
OUR PEOPLE AND
THEIR WELLBEING
THE WAR HAS HIGHLIGHTED THE IMPORTANCE OF OUR PEOPLE AS MHP’S
MOST VALUABLE ASSET. MHP’S ABILITY TO CONTINUE ITS OPERATIONS DESPITE
THEEXTRAORDINARYDIFFICULTIESPOSEDBYTHEWARISDIRECTLYATTRIBUTABLE TO
ITSWELL-ESTABLISHED CULTUREOFBUSINESSCOLLABORATIONANDCO-OPERATION.
OUR COMMITMENT MANAGEMENT APPROACH
We are building a culture in which people
realize their potential.
Everybody at MHP strives to achieve
the goal of zero fatalities and zero health
and safety incidents resulting in injury
or adversely affecting the health of
employees.
MHP’s human resources management
approach has four main elements:
• strategic workforce planning;
• efficient human resources management.
This includes designing optimal
structures, improving leadership
ability skills at all levels, building a high
performance culture, predicting and
mitigating human resources risks, and
building a productive corporate culture
based on Company values;
• talent acquisition management; and
• dedication to personal development
and growth.
MHP’s Management Team prizes diversity
as one of the Group’s greatest strengths.
Everyone is aware that the success of the
business depends on the collective skills,
backgrounds and experiences of all team
members. MHP strives to create a trusting
and productive workplace by treating
everybody with dignity and respect and
by promoting diversity and inclusion.
MHP’s Group companies aim to hire and
employ a workforce that represents the
communities in which the companies are
based.
MHP also promotes equal opportunities
in recruitment, career development and
financial benefits. The Group partners with
both universities and vocational schools
to recruit talent.
The HR strategy is set centrally in alignment
with the Group’s overall strategy, and
is then adjusted as appropriate to each
country. HR management processes are
aligned with the international standard ISO
9001:2015. MHP personnel management
systems at facilities outside Ukraine
comply with the ISO 9001:2015 standard.
To maintain this culture, MHP’s HR
team is also guided by the principle of
transparency in working with staff.
GROWTH PILLAR 2: OUR PEOPLE AND THEIR WELLBEING
MHP AIMS TO BUILD A
CULTURE WHERE EACH
AND EVERY PERSON’S
WELFARE, HEALTH AND
SAFETY AND WELLBEING
MATTERS
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MHP implements a risk-based approach
to occupational health and safety matters
in accordance with the appropriate
international standards.
This approach enables MHP’s management
to:
• identify potential safety issues and
assess the risks associated with them;
• assess the effectiveness of existing
safety measures and take improvement
action where necessary;
• maintain a culture of safety awareness
throughout the Group’s businesses;
• maintain management systems that
prevent accidents, occupational injuries
and diseases and employee exposure to
hazardous substances;
• motivate everyone to always maintain
safe working conditions; and
• regularly update MHP’s management
systems in line with industry best
practice.
Following the invasion in February
2022, an urgent management priority
was to ensure that employee welfare
was protected and strengthened. In
particular MHP’s management team
ensured that international occupational
safety standards were maintained whilst
uninterrupted work patterns and ongoing
production continued. This was achieved
through additional health and safety
training to ensure workforce safety under
the prevailing new conditions. Particular
attention was paid to supporting employee
mental health during the year.
HEALTH AND SAFETY
GROWTH PILLAR 2: OUR PEOPLE AND THEIR WELLBEING
Highlights of the occupational health &
safety policy include:
• a commitment to implement an
effective occupational health and
safety management programme;
• a requirement for each MHP business
to maintain a performance monitoring
programme managed by qualified
professionals, and which meets the
criteria of need, relevance, validity and
effectiveness;
• a statement that the achievement of
a healthy and safe workplace is the
responsibility of everyone who works
for MHP;
•
a requirement that all MHP’s businesses
conduct effective communication with
employees concerning health and safety
matters;
•
a requirement that all MHP’s businesses
conduct regular health and safety risk
assessments in line with the applicable
regulations and industry best practice;
and
•
a requirement that all MHP’s businesses
provide regular health and safety training
for everyone who works at the Group.
HEALTH AND SAFETY POLICY HIGHLIGHTS
MHP BUILDS TRANSPARENT
RELATIONSHIPS WITH ALL STAFF AND
PROTECTS THE PRIVACY OF EVERY
EMPLOYEE
MHP ADHERES TO THE PRINCIPLE
OF FREEDOM OF ASSOCIATION
MHP UNDERTAKES ALL NECESSARY
STEPS AND HAS RELEVANT PROCEDURES
IN PLACE TO COMPLY WITH RELEVANT
CURRENT REMUNERATION LEGISLATION
MHP PROHIBITS DISCRIMINATION BASED
ON PERSONAL CHARACTERISTICS THAT
ARE NOT RELATED TO WORKPLACE
ACTIVITIES OR TO THE PERFORMANCE
OF DUTIES
MHP ENSURES THAT THE PRINCIPLE
OF EQUAL OPPORTUNITIES APPLIES
ACROSS THE GROUP
MHP VALUES EACH EMPLOYEE AND WILL
SUPPORT EVERYONE TO FULLY REALISE
THEIR POTENTIAL
MHP PROHIBITS THE USE OF CHILD
LABOUR, FORCED LABOUR AND SLAVERY
HIGHLIGHTS OF THE GROUP’S HUMAN RESOURCES
POLICIES ARE SET OUT BELOW
MHP has a detailed occupational health
and safety policy which is available for
download (www.mhp.ua). The policy was
last updated in May 2020, is regularly
reviewed and is signed by the Chairman,
Chief Executive Officer and Chief Financial
Officer. The Board of Directors has overall
responsibility for occupational health and
safety at MHP.
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EMPLOYEE DATA - GENDER
EMPLOYEE DATA - EMPLOYMENT TENURE
UKRAINE
2022 Total 28,298 %
Male 17,262 61
Female 11,036 39
EUROPEAN OPERATING SEGMENT
Total 4,247 %
Male 1,869 44
Female 2,378 56
UKRAINE
2022 Total Permanent % Temporary %
28,298 27,016 95 1,282 5
EUROPEAN OPERATING SEGMENT
Total Permanent %
4,247 4,162 98
UKRAINE
2021 Total Permanent % Temporary %
27,366 26,794 98 572 2
EUROPEAN OPERATING SEGMENT
Total Permanent %
3,965 3,882 95
UKRAINE
2020 Total Permanent % Temporary %
26,766 26,136 98 630 2
EUROPEAN OPERATING SEGMENT
Total Permanent %
3,692 3,618 98
UKRAINE
2021 Total 27,366 %
Male 15,935 58
Female 11,431 42
EUROPEAN OPERATING SEGMENT
Total 3,965 %
Male 1,745 44
Female 2,220 56
UKRAINE
2020 Total 26,766 %
Male 16,202 61
Female 10,564 39
EUROPEAN OPERATING SEGMENT
Total 3,883 %
Male 1,618 44
Female 2,074 56
At 31 December 2022, 28,298
1
employees
worked for MHP in Ukraine (61% male,
39% female). In the European Operating
Segment, the total number of employees
at that date was 4,247 (44% male, 56%
female).
1)
A number of employees of MHP Ukraine, including
those undertaking multiple disciplines.
EMPLOYEE NUMBERS
AND GENDER DATA
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EMPLOYEE DATA – FULL/PART-TIME
EMPLOYEE DATA – EMPLOYMENT LEVEL
UKRAINE
2022 Total 28,298 Fullemployment % Part time %
Male 16,987
27,943 99
179
1
Female 10,956 176
EUROPEAN OPERATING SEGMENT
Total 4,247 Full employment % Part time %
Male 1,911
3,459 81
354
19
Female 2,336 434
UKRAINE
2021 Total 27,366 Full employment % Part time %
Male 15,935
27,366 98
265
2
Female 11,431 306
EUROPEAN OPERATING SEGMENT
Total 3,965 Full employment % Part time %
Male 1,646
3,753 95
12
5
Female 2,107 63
UKRAINE
2020 Total 26 766 Fullemployment % Part time %
Male 15,919
26,136 98
283
2
Female 10,217 347
EUROPEAN OPERATING SEGMENT
Total 3,883 Fullemployment % Part time %
Male 1,708
3,793 98
18
2
Female 2,085 72
UKRAINE
YEAR MANAGERS PROFESSIONALS OTHER
Number % Number % Number %
2022 2,462 9 5,056 18 20,780 73
2021 2,331 9 4,645 17 20,390 74
2020 2,046 8 4,278 16 20,442 76
EUROPEAN OPERATING SEGMENT
MANAGERS PROFESSIONALS OTHER
Number % Number % Number %
79 2 710 17 3,458 81
75 2 658 17 3,218 81
70 2 566 15 3,247 83
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EMPLOYEE DATA - AGE
EMPLOYEE DATA - RECRUITMENT
UKRAINE
YEAR Vinnytsia
Region
Volyn Region Dnipropetrovsk
Region
Donetsk
Region
Ivano-
Frankivsk
Region
Kyiv and Kyiv
Region
Lviv Region Sumy Region Cherkasy
Region
TOTAL
2022 2,440 46 762 88 100 2,687 97 81 2,744 9,045
2021 3,613 59 820 837 123 2,251 141 127 3,086 11,057
2020 2,809 43 443 714 94 1,448 99 151 2,076 7,877
EUROPEAN OPERATING SEGMENT
YEAR Slovenia Croatia Bosnia /
Herzegovina
Serbia Macedonia Romania Austria TOTAL
2022 337 162 141 454 0 1 2 1,097
2021 340 189 132 241 2 0 1 905
2020 569 135 80 201 3 1 0 989
UKRAINE
EMPLOYEES AGED UNDER 30 AGED BETWEEN
30 AND 50
AGED OVER 50
YEAR Number % Number % Number %
2022 5,111 18 16,447 58 6,740 24
2021 4,798 18 15,497 57 7,071 25
2020 5,086 19 15,524 58 6,156 23
EUROPEAN OPERATING SEGMENT
EMPLOYEES AGED UNDER 30 AGED BETWEEN
30 AND 50
AGED OVER 50
YEAR Number % Number % Number %
2022 568 13 2,235 53 1,444 34
2021 505 13 2,031 51 1,429 36
2020 459 12 2,040 52 1,384 36
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MANAGERIALPROFESSIONAL
DEVELOPMENT
MHP has always placed great emphasis on
training and development. Management
believes that the development of
professional skills adds significant value
and contributes to:
• professional and personal development
of employees, which helps maintain a
continuous flow of talent;
• improving task performance through
the acquisition of new skills and
qualifications; and
• role flexibility through reskilling and the
acquisition of new experience.
In 2022, training and development
activities continued and were largely
uninterrupted by the war. 574 employees
received professional training during the
year averaging 28 hours per participant (up
50% on 2021).
The main areas of focus for professional
training were:
• legislative requirements (for instance in
connection with workforce health and
safety);
• technological development; and
• obtaining professional qualifications
(79 key specialists improved their
qualifications during the year).
In 2022, MHP worked with a variety of
educational partners in the delivery of
workforce professional training. These
included the Odesa National University
of Food Technologies and the National
University of Bioresources and Nature
Management.
Management training though the People
Management 2.0 programme continued
during 2022. 398 employees participated
in the six modules with an average of 85
training hours per participant.
TRAINING AND DEVELOPMENT FOR
OTHER PARTS OF THE WORKFORCE
3,277 employees took part in training
events in 2022 (a fourfold increase on
2021). Average participation was 6.5 hours
per participant during the year.
Despite the disruption caused by the war,
the corporate training team continued to
organise training events for employees
involving both domestic and overseas
training partners. An example of this
continuity is the activities which took
place in April and May 2022 when 710
employees were involved in events that
addressed topics such as:
• task management;
• supporting workforce teams;
• designing business processes to
address the rapidly changing business
environment;
• crisis communications;
• managing business growth;
• conducting remote leadership in crisis
situations;
• successful aspects of business
behaviour; and
• harnessing the positive power of
influence.
Given the circumstances created by the
war, emphasis has been placed on online
training since the middle of the year.
MHP launched an English language
learning programme in Autumn 2022.
200 employees joined this project with
the cost being shared equally between
the Company and the employee.
DEVELOPMENT OF EMPLOYEE
ASSESSMENT MECHANISMS
MHP recently introduced a new system
of comprehensive personal assessment
which involves the creation of individual
development plans with the participation
of the employee, their line manager and
the HR team. 374 employees participated
in this process in 2022.
In addition, five management development
programmes commenced, designed
to address the outcomes of the
assessments. Around 100 managers took
part, drawn from across the business. On
average each programme comprises 100
hours of training over a five-to-eight-month
period in the form of workshops, working
in project teams, coaching and individual
consultations.
MHP’s comprehensive approach to
personnel evaluation continued in 2022.
More than 5,000 people were assessed
and pass ratings increased by 20%
compared to 2021. 275 employees at
senior, middle and specialist management
levels were assessed using additional
tools including 360 degree performance
evaluation, assessment centre analysis,
the use of personal and professional
diagnostics, and hard skills testing.
TRAINING AND DEVELOPMENT
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OCCUPATIONAL HEALTH AND SAFETY
MAINTAINING THE SAFETY AND
WELLBEING OF THE WORKFORCE
AFTER THE OUTBREAK OF WAR
At 08:00 on 24 February 2022, MHP’s
Senior Management Team assembled at
the Kyiv HQ and promptly established
three Group priorities
.
One of these was
to prioritise the safety of our people.
The Kyiv HQ was immediately closed and
the team realised that the first steps must
include the identification of colleagues,
and their families, who were at greatest
risk of death and injury, particularly
those who lived in or around Irpen, Bucha
and Kyiv. As a result, MHP promptly
arranged evacuation buses to transport
around 900 employees and their families
to safer parts of Ukraine.
In addition, the Management Team
prioritised communication with employees
and their families to ensure that everyone
understood MHP’s role in the war,
evacuation measures, salary payment
plans, assistance to families and victims,
and the availability of volunteer assistance.
MHP’s people management processes
were developed reactively and
quickly following the outbreak of
the war according to the changing
circumstances, and broadly consisted
of three phases: the rescue period; the
back-to-work period; and the adjusting
to new circumstances period.
RESCUE PERIOD
(24 FEBRUARY TO 15 MARCH)
Around 700 employees and family
members who were evacuated were
moved to a “hub” in the Vinnytsya region
and provided with accommodation. A
separate hub was set up in western Ukraine
to enable continuous business operations
and, in particular, to enable ongoing IT
and finance functions. February salaries
were paid early to support everyone in the
business. We commenced the delivery of
psychological support programmes for
everyone on 6 March.
An urgent assistance package was set up
for people who were particularly affected
by the war. Key benefits include:
• a promise to preserve the roles and
salaries of employees who join the
Ukrainian armed forces;
• immediate payment of UAH 100,000
to the family of deceased employees.
MHP also pays monthly benefits for ten
years amounting to the average monthly
salary of the deceased employee;
• immediate payment of UAH 100,000
to employees following the death of
a close family member because of
the War;
• a pledge to cover the full cost of
treatment and rehabilitation for
employees injured as a result of the
war; and
• the provision of financial assistance
due to the loss of working capacity (for
example a disability) caused by the war
(UAH 150,000 to 300,000).
BACK-TO-WORK PERIOD
(15 MARCH TO MID-MAY)
By 15 March, employees had been placed
in locations that were as safe as could be
practically achieved. Management felt
it was important that people returned to
work for their own personal wellbeing,
the maintenance of mental health, and
to enable the business to play a full role
in supporting the country during the war,
in particular maintaining food security.
To facilitate this an adaptive approach to
salary payment for the duration of the war
was devised and put in place.
During this period, many employees
exhibited a remarkable degree of
flexibility and preparedness to reskill or
retrain. By the end of March, a significant
part of the workforce had returned to
full-time work.
ADJUSTING TO NEW CIRCUMSTANCES
PERIOD (MID-MAY ONWARDS)
On 16 May, MHP re-opened its offices at
the Kyiv HQ and around 80% of employees
returned. Business planning, which had
commenced the annual review process
at the start of 2022, was adjusted at the
start of the war to become a month-
by-month planning process. By the end
of March, this shifted to a three-month
planning process and, in June, to a six-
month horizon. Senior Management
is now looking at a 12-month planning
horizon for 2023.
INSTALLATION OF FIRE-FIGHTING
FACILITIES
MHP established a voluntary fire brigade
following the outbreak of military action.
This initiative increased the protection
of MHP facilities particularly in view of
the remoteness of some of its locations
and the importance of maintaining the
country’s food security. Six teams were
established providing 24-hour, 7-days-a-
week cover supported by three new fire
engines and the appropriate fire-fighting
equipment.
A number of additional preventative
measures were taken to ensure employee
safety. These included:
• the provision of extensive fire-fighting
training for MHP’s teams and selected
members of the workforce;
• the provision of workforce civil
protection training with the State
Emergency Service and other
emergency services;
• development, maintenance and
protection of fire-fighting water
sources; and
• periodic inspections of fire-fighting
facilities to ensure readiness and
workforce protection.
SENIOR MANAGEMENT
IS NOW LOOKING AT A
12-MONTH PLANNING
HORIZON FOR 2023
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UKRAINE
2022 2021 2020
Lost time due to health and safety
incidents (hours)
9,891 17,097 3,160
Lost time due to health and safety
incidents (days)
1,174 1,822 392
Fatalities 3 1 0
High-severity incidents 9 12 5
Low-severity incidents 10 26 7
Total number of incidents 22 39 12
Lost working time frequency ratio
(person/hour)
0.73 1.03 0.45
Fatal accident ratio 0.14 0.03 0
EUROPEAN OPERATING SEGMENT
2022 2021 2020
Lost time due to health and safety
incidents (hours)
(6,720) (7,360) (6,240)
Lost time due to health and safety
incidents (days)
(840) (920) (780)
Fatalities 0 0 0
High-severity incidents 2 2 3
Low-severity incidents 8 9 113
Total number of incidents 10 11 116
Lost working time frequency ratio
(person/hour)
1.22 0.83 7.62
Fatal accident ratio 0 0 0
ORGANISATION OF ENTERPRISE SAFE
SHELTERS
Safe shelters have been provided at
MHP’s sites to provide protection during
air raids along with the development of
procedures and action plans to ensure
safe evacuation. The shelters have been
equipped with first aid facilities and
medicines at a cost of UAH 8.1 million and
with gas masks and respirators at a cost
of UAH 870,000.
INCIDENT INFORMATION – UKRAINE
Despite the difficulties presented by the
war, MHP’s Ukraine-based sites reported
a significant decrease in health and safety
incidents during 2022. This was a result of
a termination of operations at “Ukrainian
Bacon” because of the development of
the War in Ukraine as well as continuous
improvement and best international practice
implementation at all of MHP’s Ukraine-
based sites.
Unfortunately, three incidents occurred
during the year which led to employee
fatalities. In these circumstances, the
procedure is that internal and state
investigations are conducted in relation to
each incident and the findings are shared
around the organisation to ensure that
corrective action is taken, risk is minimised
and similar cases are avoided in the future.
INCIDENT INFORMATION – EUROPEAN
OPERATING SEGMENT
The information about incidents
presented below has been changed
and updated from the previous reports.
Please take it into account. The statistics
include data on sickness absence due to
work-related injury for a period of 4 to 6
months (i.e. Total number of accidents),
as well as shorter absences due to work-
related injuries.
In 2022, there were no fatalities at
Perutnina Ptuj Group.
INCIDENT INFORMATION
SAFE SHELTERS HAVE
BEEN PROVIDED AT
MHP’S SITES TO PROVIDE
PROTECTION DURING
AIR RAIDS ALONG WITH
THE DEVELOPMENT
OF PROCEDURES
AND ACTION PLANS
TO ENSURE SAFE
EVACUATION
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UKRAINE
2022 2021 2020
Number of employees participating in
training at special training centres
2,610 2,715 1,580
Number of employees participating in
training at MHP sites
14,852 15,045 8,203
EUROPEAN OPERATING SEGMENT
2022 2021 2020
Safety training hours 1,449 1,519 1,633
Number of employees 1,108 1,288 1,201
SAFETY TRAINING DATA
UKRAINE
2022 2021 2020
Total expenditure (UAH millions) 97.955 118.352 66.245
Financing of occupational health and
safety measures as a percentage of the
payroll
0.02 – 4.7 0.05 – 8.2 0.6 – 4.6
Expenditure on modern certified PPE
(UAH millions)
46.621 43.344 26.712
Training for employees in occupational
health and safety departments
(UAH millions)
2.791 1.902 1.069
EUROPEAN OPERATING SEGMENT
2022 2021 2020
Total expenditure (EUR) 125,642 113,642 108,705
Expenditure on modern certified PPE
(EUR)
1,141,423 1,097,494 1,067,819
HEALTH AND SAFETY EXPENDITURE
AND TRAINING DATA
INVESTMENT IN EMPLOYEE HEALTH AND SAFETY
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INTERNAL AUDITS AND INSPECTIONS
MHP’s internal safety audit mechanisms
were established in 2017. The system is
designed to support MHP’s other safety
management activities through the
identification of potential safety risks and
addressing them promptly. MHP is also
the subject of regular safety audits by the
Ukraine government’s State Employment
Service (unfortunately, regular external
audits stopped because of the War in
Ukraine, however, regular internal cross
facilities audits were in place in 2022).
The European Operating Segment’s
faciltities are under the relevant authorities
governance on a regular basis.
UKRAINE
2022 2021 2020
Number of State Employment Service inspections 0 16 1
Employee prosecutions following state inspections 0 28 0
Number of MHP internal audits conducted 45 42 9
EUROPEAN OPERATING SEGMENT
2022 2021 2020
Number of state safety inspections 15 7 10
Employee citations following state inspections 44 43 30
Number of MHP internal audits conducted 162 161 168
INTERNAL AUDIT AND INSPECTION DATA
THE GROUP’S
INTERNAL SAFETY
AUDIT MECHANISM
IS FOCUSSED ON THE
IDENTIFICATION OF
POTENTIAL RISKS AND
ADDRESSING THEM
PROMPTLY
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UKRAINE
2022 2021 2020
Workplaces with noise in excess of local
law / level established by IFC (85dBA)
328/107 318/45 154/53
Number of people at workplaces with noise
in excess of local law / level established by
IFC (85dBA)
4,292/1,561 4,330/514 4,875/1,606
Workplaces with dust concentration in
excess of local law / level established by IFC
96/61 110/33 66/36
Number of people at workplaces with dust
concentration in excess of local law / level
established by IFC
818/452 1,194/297 1,113/365
EUROPEAN OPERATING SEGMENT
2022 2021 2020
Workplaces with noise in excess of local
law / level established by IFC (85dBA)
44/107 43/45 44/53
Number of people at workplaces with noise
in excess of local law / level established by
IFC (85dBA)
310/1,561 335/514 328/1,606
Workplaces with dust concentration in
excess of local law / level established by IFC
19/61 19/33 16/36
Number of people at workplaces with dust
concentration in excess of local law / level
established by IFC
84/452 84/297 84/365
OCCUPATIONAL HEALTH
DATA
In recent years, no cases of occupational
diseases have been recorded within the
MHP Group. This has been achieved
through close monitoring of working
conditions at each location. Features of
these management systems include:
WORKPLACE NOISE AND DUST DATA
SUPPLY OF PERSONAL PROTECTION
EQUIPMENT (PPE)
REGULAR LABORATORY TESTING AND
INSTRUMENTATION CONTROL OF
WORKINGCONDITIONS
A PROGRAMME OF TECHNOLOGICAL
IMPROVEMENT
REDUCTION OF POTENTIALLY
HARMFUL ASPECTS OF
WORKPLACE FEATURES
(FOR EXAMPLE NOISE AND DUST)
WORKFORCE HEALTH MONITORING
ON A REGULAR BASIS
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KEY ACHIEVEMENTS
IN 2022
Despite significant challenges created
by the War, 2022 saw the following key
achievements:
• The creation and implementation of a
revised talent management system for
the Company including improvements
to personnel assessments, training and
development;
• Vacancies in Ukraine continued to
be filled promptly. 90% were filled in
accordance with the requirements of the
relevant business departments. This was
supported by the introduction of improved
recruitment processes;
• A Group-wide employee recognition
system was implemented through the
award of MHP Stars;
• A competitor remuneration strategy
was implemented as part of the review
of all salary grades to ensure fair and
competitive remuneration levels;
• Key structural changes were implemented.
These included the merger of the
export sales function with the customer
business development department and
organisational changes in the sustainable
development, horticulture and Perutnina
Ptuj HR departments;
• The organisation of shelters at MHP
enterprises: for personnel to stay during air
alarms and and the provision and storage
of basic necessities within the shelters to
ensure they have everything they need;
and
• At MHP’s enterprises in both Ukraine and
tin the European Operating Segment in
the Balkans, the Group met objectives
in the areas of workplace safety and fire
prevention.
A NEW MHP UKRAINE
RECRUITMENT WEBSITE WILL
BE LAUNCHED
IMPLEMENTATION OF AN ELECTRONIC
WORKFORCE MEDICAL SYSTEM AND THE
ALIGNMENT OF THE WORKFORCE HEALTH
AND FIRE SAFETY MANAGEMENT SYSTEM
WITH THE GLOBAL G.A.P. CERTIFICATION
REQUIREMENTS
THE EFFICIENCY OF INTERNAL
PERSONNELMANAGEMENT
PROCESSES WILL BE IMPROVED
AN IMPROVED SUCCESSION
CULTURE WILL BE DEVELOPED
ACROSS MHP’S BUSINESSES
THE DESIGN OF A WORKFORCE
PROGRAMME THAT WILL ENABLE
EMPLOYEES TO RETURN TO WORK
AFTER THEY HAVE BEEN SERVING IN
THE UKRAINE ARMED FORCES
PLANS FOR 2023
EUROPEAN OPERATION SEGMENT
• To complete the risk assessment
audit for all workplaces;
• To implement the occupational
health and safety policy for the PP
Group;
• To carry out regular and ongoing
training;
• To harmonise external systems of
professional OH&S and fire safety
functions;
• To keep OH&S committees and
occupational health and safety and
fire safety officers up to date; and
• To carry out an evacuation drill.
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GROWTH PILLAR 3
OUR ROLE IN SOCIETY
AND OUR LICENCE TO
OPERATE
GROWTH PILLAR 3: OUR ROLE IN SOCIETY AND OUR LICENCE TO OPERATE
OUR COMMITMENT MANAGEMENT APPROACH
MHP places great importance on
maintaining strong relationships with
local stakeholders, recognising that these
connections are critical to the long-term
success of the business.
At the start of the war on 24 February 2022,
MHP’s Board and Senior Management
Team resolved that it was absolutely
essential that everyone within the
organisation did everything necessary to
support the people of Ukraine, maintain
food security and contribute to keeping
everyone in the country as safe as
possible. The Team believes that the
survival of MHP is clearly tied to the
survival of Ukraine as a sovereign nation
and the wellbeing of its citizens. Thus, the
Company’s strategy during the War has
been centred around this core theme.
MHP works with a wide variety of
stakeholders to enable effective community
development through financial and “in-
kind” contributions. MHP’s activities
include volunteering and the provision
of products and services, supporting
internally displaced persons in creating
conditions for their life activities in
territories of Ukraine, ensuring their
basic needs: food, safety and jobs. More
details can be found in the Stakeholder
Engagement section on page 59. Following
the commencement of the War, MHP’s
Management Team placed particular focus
on assisting the population of Ukraine,
maintaining food security, supporting
infrastructure, wellbeing and morale.
In 2022, MHP continued to operate
its community development approach
through centralised activities and a focus
on working in partnership with other
large businesses, international donors
and national Ukrainian charities. This step
enabled the participating organisations to
share and develop their own expertise.
MHP regularly updates its Stakeholder
Interaction Plan which is available for
download from the main corporate
website (www.mhp.ua).
POLICY HIGHLIGHTS
MHP’s community development policy
focusses on five principles of respect.
These are:
1. Respect for the law;
2. Respect for sustainable development;
3. Respect for human rights;
4. Respect for diversity; and
5. Respect for the environment.
All potential aid or charity support
recipients are subject to a mandatory
confidential compliance check before a
project is supported.
MHP regularly assesses the impact and
effectiveness of the implementation of
social projects through regular dialogue
with the organisations it supports, with
employees, local communities and other
stakeholders.
MHP IS FOCUSSED ON
SUPPORTING UKRAINE,
MAINTAINING FOOD
SECURITY, SUPPORTING
INFRASTRUCTURE,
WELLBEING AND MORALE
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MHP’S SUPPORT STRATEGY
AND ACTIVITIES DURING
THE WAR
The work that MHP’s team has been
conducting has been partly an extensionof
existing community activities but it has
alsobeen sensitive and highly responsive to
the rapidly changing wartime circumstances.
This ensures that the efforts and activities
of the team are being channelled in the
most effective ways possible.
Much of this activity has been coordinated
through Charitable Organisation “MHP-
Gromadi Foundation”, which declares its
initiatives as Sustainable Development
Fund. More information about this
organisation and its activities can be
found at its LinkedIn pages and website
(https://mhpgromadi.org.ua).
The Foundation’s expenditure has grown
significantly since 2017 (UAH 11 million) and
rose by UAH 178 million in 2021 to UAH
297 million in 2022. The Foundation’s 2023
budget is UAH 334 million.
For more than six years, MHP-Gromadi
has been engaged in the development of
villages and small towns of Ukraine. This
activity was extended significantly following
the outbreak of the war.
During 2022, the following priorities were
identified:
• providing support to ensure the safety
of the population and the defence of
the country;
• delivery of assistance and support for
micro-enterprise projects to support
local communities;
• delivery of financial, material and
logistical support for a variety of social
programmes; and
• facilitation of communication with a
variety of local and national stakeholders.
KEY ACHIEVEMENTS
DURING 2022
MAINTENANCE OF FOOD SECURITY
About 12,000 tonnes of MHP-produced
food worth more than UAH 973 million has
been distributed. This has been sent to
residents who live in war zones, defenders
and rescuers, local communities that
have been badly affected by the war,
hospitals and maternity homes, charitable
institutions that care for vulnerable people
and internally displaced persons.
SUPPORT FOR MEDICAL INSTITUTIONS
UAH 20 million was allocated to the
purchase of modern emergency vehicles
within United24, the framework of the
global initiative of the President of
Ukraine. Five brand-new ambulances with
an estimated cost US$ 100,000 each were
provided to support the activities of the
medical profession during the War.
A Ministry of Defence medical institution
in the Kyiv region also received a modern
tow truck worth UAH 1.2 million from
MHP-Gromadi. The vehicle will assist with
the repair and maintenance of medical
vehicles provided for military personnel.
SUPPORT FOR INTERNALLY
DISPLACED PERSONS
MHP-Gromadi provided food for 300,000
internally displaced persons at around
100 different facilities located around
the country. Over 10,000 children were
provided with baby food (the recently
launched KOKO brand) and personal
hygiene products. Two accommodation
shelters were provided and equipped in
the Cherkasy and Vinnytsia regions.
FINANCIAL SUPPORT FOR
ACCOMMODATION SHELTERS
MHP-Gromadi provided financial support
for the provision of 75 accommodation
shelters located in facilities previously
used for education and medical care.
These are in small settlements in eight
regions of Ukraine. The total financial
support allocated to date is approximately
UAH 6.6 million. This support has
continued up to date.
WAS ALLOCATED TO THE
PURCHASE OF MODERN
EMERGENCY VEHICLES
WITHIN UNITED24
20 M
UAH
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ENCOURAGING BUSINESS
INNOVATION TO ADDRESS THE
EFFECTS OF THE WAR
MHP-Gromadi organised a business
innovation contest to encourage
entrepreneurship to address the negative
economic consequences of the invasion.
A large number of thoughtful and creative
applications were received and, to date,
around UAH 5 million has been allocated
to62 projects. These projects have received
their funding and are being developed.
A second competition was organised
to encourage business projects that
solve local energy security issues.
12 entrepreneurs from six regions of
Ukraine have already received funding
for their initiatives totalling approximately
UAH 1.1 million.
A third “Seeds for Victory” project in
cooperation with a Ministry of Agrarian
Policy and Food of Ukraine and other
Ukrainian NGOs was launched in support
of business solutions that increase the
food security of local communities,
develop cultivation and processing
facilities for the storage of agricultural
products, thereby increasing local
employment. Funds amounting to UAH
2.5 million have been provided to support
this initiative.
A “Seeds for Victory” project financial
support in cooperation with UN Global
Compact in Ukraine was also awarded to
two other business initiatives. The first
enabled restoration of the production
capacities of a quail farm at which the
premises were damaged by military
operations in the Kyiv region. The second
supported the development of dairy
production in the Ivano-Frankivsk region.
Finally, another innovation project aimed
at supporting a wide variety of social
projects that address the effects of the
war has supported 102 initiatives so far
with total funding provided amounting to
UAH 8.2 million.
CULTURAL SUPPORT TO IMPROVE
MORALE
The latest national cinema tour provided
by MHP-Gromadi commenced on 6 August
and ended on 31 October. This year it was
called “Cinema for Victory!”. Its purpose was
to improve morale, assist with the delivery
of motivational messages for people within
the armed forces, and support internally
displaced persons and local communities.
1,306 film screenings took place at 177
locations within 18 regions of Ukraine.
MHP-Gromadi also supported the Kozak
System music group's tour called “Let's
Sing for Victory”. The tour comprised
street concerts which have been taking
place since May. The events are free and
held in open spaces with close interaction
between the performers and the audience.
CARE FOR THE ENVIRONMENT
MHP-Gromadi and the Company have
also been organising efforts to improve
the environment within cities and
towns affected by the war within eight
regions and the city of Kyiv. Almost 800
employees have participated in activities
which have included cleaning park areas,
squares, and the streets of the towns
where they live. Local residents have also
been taking part.
OTHER MHP-GROMADI ACTIVITIES
These included:
• financial and material assistance to
families who were affected by injury or
death as a result of the war;
• design and execution of a seed sowing
campaign to encourage communities
to grow their own food. 115,000 seed
packs were distributed in 2022;
• supply of mental health support for
people affected by the war;
• support for building and restoring
agricultural projects damaged during
the war to improve food security;
• supply of technological assistance
to the Ukrainian state enabled aid to
be transferred aid to injured military
personnel; and
• logistical support and the supply of
equipment to assist the countrywide
defence activities.
CASE STUDY
COMMUNITY PROJECTS
DURING 2022
MHP-GROMADI AND
THE COMPANY HAVE
ALSO BEEN ORGANISING
EFFORTS TO IMPROVE THE
ENVIRONMENT WITHIN
CITIES AND TOWNS
AFFECTED BY THE WAR
WITHIN EIGHT REGIONS
AND THE CITY
OF KYIV
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The Board and Senior Management regard
this area of MHP’s activities as essential to
the success and reputation of the business,
and MHP is proud of its exemplary record in
relation to product quality and safety.
A key feature is the MHP Quality Service.
This function has a vertical management
struction headed by the Director of
Technology, Quality and Food Safety, of
which Quality Control Division comprises
four sub-divisions:
MHP’s facilities include 37 state-of-the-
art laboratories that monitor safety and
quality. This management system structure
is designed to ensure that regular and
uninterrupted controls and monitoring
are in place at every stage of production.
The European Operating Segment uses
an integrated management system that
combines quality management systems,
food safety management systems, and
environmental management systems.
Product quality and safety are also
carefully monitored within MHP’s
transportation systems.
MHP’s production facilities regularly
undergo internal and external audits
and State regulatory checks to ensure
compliance with the law and MHP’s own
rigorous internal requirements. These
are conducted by representatives of
the Department of Technology, Quality
and Food Safety. At least once a year,
enterprises also conduct their own self-
inspections. MHP requires suppliers and
contractors to align with its product quality
and safety approach, and has implemented
supplier approval standards which must
be passed before they commence
business with the Group. Since 2021, these
assessments have been conducted using
the SAP Ariba system which assists in
standardising and controlling the process
across all MHP’s businesses.
Animal welfare is a key priority for
everyone at MHP. The Group’s approach
is underpinned by five animal welfare
commitments.
ALL ANIMALS UNDER MHP’S CARE ARE:
FREE FROM THIRST,
HUNGER AND
MALNUTRITION
FREE FROM
DISCOMFORT
FREE FROM
INJURY OR
DISEASE
FREE FROM FEAR
AND DISTRESS
FREE TO DISPLAY
NORMAL
PATTERNS OF
BEHAVIOUR
Everyone at MHP is responsible for
ensuring that this approach and the Animal
Welfare Policy is adhered to at all times.
GROWTH PILLAR 4
OUR COMMITMENT
MHP will always maintain industry-leading
standards of product safety and quality at
all of its enterprises.
MHP will reduce its use of antibiotics in
the production process to further improve
the world-class safety standards which all
of the Group’s businesses already apply.
Animal welfare will continue to be a top
priority at all of the Group’s production
sites.
MHP will continue to regularly train
and educate its employees about the
importance of animal welfare.
MANAGEMENT APPROACH
RESPONSIBLE
FOOD PRODUCTION
01 02
CONTROLLING
DEPARTMENT
03
COMPLAINTS AND
COMPLIANCE
DEPARTMENT
04
TECHNICAL
REGULATION
DEPARTMENT
QUALITY
MANAGEMENT
AND CERTIFICATION
DEPARTMENT
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POLICY HIGHLIGHTS
MHP’s approach to product quality and
safety is governed by its Product Quality
and Safety Policy which applies to all of
its businesses. MHP's aprouch to animal
welfare is governed by its Animal Welfare
Policy. Both Policies are available for
download from the main Group website
(www.mhp.ua). The Policies are authorised
by the Board, regularly reviewed, and
communicated to all employees.
ACCESS CONTROL
An important element of MHP’s approach
to product quality and safety is the control
of access to its sites and production
facilities. MHP’s rigorous management of
this aspect is particularly important to the
maintenance of hygiene, product security,
safety and integrity.
MHP’s systems are maintained to
international standards, regularly reviewed
and inspected, and performance is
carefully measured and reviewed. Particular
attention in recent years has been paid to
digitisation and automation to reduce the
possibility of human error.
Access to MHP’s production facilities
is strictly controlled, granted only to
authorised persons, and close inspection
of the records of new employees is made
before access is granted by a Director or
responsible person. Company vehicles are
closely monitored using satellite and digital
technology, and MHP’s sites are monitored
around the clock applying security systems
maintained to international standards.
MHP’s approach to this important area
extends to its supply chain and the standards
that suppliers are expected to apply.
MHP’s rigorous approach to access
control also applies to its European
Operating Segment where similar
procedures are adopted towards site access,
security, inspection and access.
PRODUCT LABELLING
Product labelling is a fundamental aspect
of the maintenance of product security,
safety and quality, and is particularly
important to MHP’s relationships with
its customers. Addressing this area
effectively is one of the main functions
of the Department of Technical Regulation
which ensures that MHP adheres to the
appropriate regulatory and customer
requirements.
MHP’s systems provide accurate, reliable
and clear information about the food
product to the consumer. MHP did not
receive any complaints about its product
labelling in Ukraine in 2022.
Poultry products produced at Perutnina
Ptuj's facilities are labelled in accordance
with the applicable legislation on
the provision of food information to
consumers. Information is indicated by
the name of the product and located on
the package. Traceability is also clearly
communicated to consumers by information
on the product declaration.
PRODUCT QUALITY
AND SAFETY POLICY ANIMAL WELFARE POLICY
ANTIBIOTICS WILL
ONLY BE USED UNDER
THE STEWARDSHIP
OF THE STATE
VETERINARIANS
STOCKING DENSITIES
WILLMEETEU ANIMAL
WELFARE STANDARDS
MHP PROHIBITS THE
USE OF ANY GROWTH
PROMOTERS
MHP WILL ENSURE
ANIMALS ARE
PROTECTED
FROM HARM AND
STRESS DURING
TRANSPORTATION
MHP’S SITES WILL
ALWAYS PROVIDE AN
ENVIRONMENTTHAT
MEETS THE NATURAL
NEEDSOFANIMALS
MHP’S SITES WILL NOT
USE ANAESTHETICS
OR ANALGESICS
POULTRY REARING
WILL ALWAYS BE
CARRIED OUT IN AN
ENVIRONMENTTHAT
MEETS INDUSTRY
BEST PRACTICE
AND REGULATORY
REQUIREMENTS
(RELATING TO
MATTERS SUCH AS
SPACE, LIGHT, HEAT,
FOOD AND WATER
AVAILABILITY)
FLOCKS WILL BE
REARED ON THE
FLOOR WITH NO
USE OF CAGED
SYSTEMS
VETERINARY
CARE WILL BE
PROVIDED ONLY BY
PERSONNELHOLDING
THE RELEVANT
PROFESSIONAL
QUALIFICATIONS
SLAUGHTER WILL BE
CARRIED OUT USING
ONLY METHODS
THAT DO NOT CAUSE
PAIN OR STRESS TO
ANIMALS
MHP WILL USE THE
BEST AVAILABLE
TECHNOLOGY TO
MONITOR ANIMALS
AND THEIR REARING
CONDITIONS
MHP WILL NOT USE
EQUIPMENT THAT
MAY INJURE ANIMALS
WHEN HANDLING
THEM
MHP PROHIBITS
ALL SURGICAL
INTERVENTION
MHP WILL PURSUE
A STRATEGY OF
REDUCING THE USE
OF ANTIMICROBIAL
AGENTS
MHP WILL ADHERE
TO ALL APPLICABLE
LAWS AND
REGULATIONS,
MUTUALLY AGREED
GUIDELINES WITH
CUSTOMERS AND
CONSUMERS, AND
GLOBAL BEST
PRACTICE
MHP WILL CONDUCT
A PRODUCT QUALITY
AND SAFETY
STRATEGY REVIEW
AS PART OF EACH
ANNUALPLANNING
PROCESS
MHP WILL CONDUCT
REGULAR TRAINING
AND EDUCATION
ACTIVITIES WITH
ITS EMPLOYEES TO
ENSURE THEY ARE
FULLY CONVERSANT
WITH THE COMPANY’S
PRODUCT QUALITY
AND SAFETY
STANDARDS
MHP WILL CONDUCT
CONTINUOUS
ANALYSIS OF THE
QUALITY AND SAFETY
OF ITS PRODUCTS
MHP WILL REGULARLY
ENGAGE WITH
INTERESTEDMATERIAL
STAKEHOLDERS
ABOUT PRODUCT
QUALITY AND SAFETY
MHP WILL REGULARLY
REVIEW AND DEVELOP
ITS PRODUCT
QUALITY AND SAFETY
PROCEDURES IN
LINE WITH LEADING
INDUSTRY
DEVELOPMENTS
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EMPLOYEE TRAINING
Regular employee training about quality
and safety matters is conducted at all
Company sites. This includes education
about the requirements of regulatory and
international best practice standards and
the Company’s own internal standards
and procedures.
In 2022, the appropriate specialists in the
quality service successfully completed
external training on the requirements of
the updated version of the BRC Global
Standard (“BRCGS”) Food Safety Issue 9.
CONSUMER FEEDBACK
MHP encourages consumers to provide
feedback on product quality and safety
through a variety of contact channels.
This area is clearly an important element
of MHP’s safety and quality control and
procedures, and is closely monitored
throughout all of its businesses.
In 2022, the European Operating Segment
received no significant complaints, and
the number of complaints as a percentage
of total production was 0.094% (2021:
0.13%).
In Ukraine, feedback about product
quality and safety is processed
through the CRM (Client Relationship
Management) Service Cloud system
which was introduced in 2021. This
system ensures that all communications
are registered, inspected and actioned
to identity the root cause, corrective
actions, and areas for improvement.
The system contains a number of
consumer feedback facilities such as a
hotline and a centralised mailbox.
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GMP+B2
GMP+B3
GLOBAL G.A.P. -
POULTRY BREEDING
The Ukraine sites or subsidiaries
listed below are GLOBAL G.A.P.
implemented. GLOBAL G.A.P. rules
set out requirements for an integrated
agricultural production management
system, and encourage the adoption
of commercially viable farm assurance
schemes that promote sustainable
agriculture and the minimisation of
agro-chemical inputs.
• Myronivska PJSC Poultry Farm
Processing Complex Branch
• Vinnytsia Poultry Complex LLC
• Oril-Leader PJSC
• Peremoga Nova Poultry Farm
• Starynska Poultry Farm
ISO 22000:2018 - PROCESSING OF
POULTRY MEAT AND BEEF
The following subsidiaries have
ISO 22000 certification which
is an international food safety
management accreditation.
• Oril-Leader PJSC
• Lubnimyaso LLC
• Myronivska PJSC Poultry Farm
Processing Complex Branch
• Vinnytsia Poultry Complex LLC
• Katerynopil Elevator LLC
(production of oil)
• MHP Food Trading LLC
BRCGS FOOD SAFETY – OIL
PRODUCTION AND MEAT
PROCESSING
This is an international food
safety certification. The following
subsidiaries, sites or branches have
achieved this accreditation.
OIL PROCESSING FACILITIES
• PrJSC Myronivsky Plant of
Manufacturing Feeds and Groats
• Katerynopil Elevator LLC
• Vinnytsia Poultry Complex LLC
(Fodder Complex)
MEAT PROCESSING FACILITIES
• Myronivka Poultry Complex PJSC
• Vinnytsia Poultry Complex LLC
(Slaughter House)
• Lehko (separate subdivision
of PrJSC Myronivsky Plant of
Manufacturing Feeds and Groats)
• Foodservice LLC (legal name of
the MHP Culinary Centre)
HALAL CERTIFICATION
This is a voluntary certification
for the production of products
in line with Islamic customs. The
following meat-processing sites have
this accreditation.
• Myronivska PJSC Poultry Farm
(broiler chicken processing
complex)
• Vinnytsia Poultry Complex LLC
(processing complex)
• Lubnimyaso LLC
• Lehko (separate subdivision of
Myronivska PJSC)
KOSHER CERTIFICATION
• Myronivska PJSC (production of
cereals and feed)
• Katerynopil Elevator LLC
MANAGEMENT SYSTEM CERTIFICATIONS
MHP aligns its products with a wide range of international product and management
system certifications relating to quality, hygiene and safety. A comprehensive list is
recorded below.
GMP & HACCP - STORAGE OF
OIL SEEDS AND GRAINS
The following sites or subsidiaries
in Ukraine are accredited for good
management practices (“GMP”) which
are rules that set requirements for
production organisation and control.
They are also HACCP (Hazard
Analysis and Critical Control Points)
accredited. These are requirements
that ensure that MHP produces
products that are safe and of high
quality for consumers.
• Andriyashivsky Elevator Branch of
Urozhaina Kraina LLC
• Urozhayna Kraina LLC
• Yampil Elevator Branch of
Zernoproduct PJSC
• Branch of the Limited Liability
Company MHP-Agrokryazh
Vendychansky Elevator
• Branch of Zahid-Agro MHP LLC
Voskresintsivsky Elevator
• Novomoskovsk branch of Oril-
Leader PJSC (Reclamation)
• Novomoskovsk branch of Oril-
Leader PJSC (Kitaygorod)
• Novomoskovsk branch of Oril-
Leader PJSC (Rokytne)
• Perspectives Branch of
Zernoproduct PJSC
• Kaliniv Elevator Zernoproduct
PJSC
• Yagotyn Elevator Agro-S Branch
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ANIMAL REARING
Approximately 73% of MHP’s Ukrainian
broilers are COBB chickens. Their features
include low-feed conversion, a welfare-
friendly growth rate, and an ability to thrive
on low-density nutrition. The remaining
27% are ROSS chickens, the world’s most
popular broiler. Their characteristics also
include a welfare-friendly growth rate and
feed efficiency.
The European Operating Segment rears
broilers that comprise approximately 84%
ROSS and 16% COBB.
Turkeys are also reared in the European
Operating Segment (50% BUT Big 6 breed
and 50% Converter breed).
POULTRY-REARING DATA (UKRAINE)
2022 2021 2020
Total placed (heads) 439,839,157 460,068,517 427,436,298
Liveability (%) 96.3 97.2 96.5
Total slaughtered (heads) 423,680,615 447,125,097 412,667,628
Slaughtered weight (tonnes) 999,591 1,034,786 998,867
ANTIBIOTIC-FREE LABELLING
MHP was one of the first Ukrainian
companies to be verified by audit and
permitted to label its products with
antibiotic-free “Class A” in accordance
with the country’s regulatory standard.
ANIMAL WELFARE
STANDARDS AUDITS
MHP has an open and transparent
approach to farm audits which are
conducted regularly, both on a prearranged
and an unannounced basis. All 37 of the
Company’s labs undertake around 6,000
methods of analysis to study feed and raw
materials, to achieve microbiological and
chemical parameters, and to ensure strict
compliance with veterinary, biosafety and
hygiene standards at all MHP facilities.
In-house audits are conducted in
accordance with the annual plan. These
internal audits are run by competent
members of the MHP team selected from
Company sites other than the one to be
audited. External audits are conducted
by independent agencies DG SANTE (the
European Commission’s Directorate-
General for Health and Food Safety) and
the State Consumer Service.
In connection with military aggression on
the part of Russia, checks by DG SANTE
were not carried out in 2022. The activity
at the enterprises is carried out under
the supervision of an official doctor of
veterinary medicine, as well as through
periodic inspection of facilities by the
State Service of Ukraine on Food Safety
and Consumer Protection.
In 2022, there were 89 inspections at
the enterprises. There were no recorded
cases of non-compliance with the laws,
regulations and standards that MHP
adheres to in Ukraine and in the European
Operating Segment.
BIOSECURITY
All livestock in Ukraine and the European
Operating Segment have been vaccinated
to prevent the presence of routine viral
pathogens in poultry.
All of MHP’s facilities and management
practices have rigorous controls for the
prevention of Avian Influenza and other
harmful pathogens.
The activity at the enterprises is carried
out under the supervision of an official
doctor of veterinary medicine, as well as
through periodic inspection of facilities
by the State Service of Ukraine on Food
Safety and Consumer Protection.
In 2022, there were 89 inspections at
the enterprises. There were no recorded
cases of non-compliance with the laws,
regulations and standards that MHP
adheres to in Ukraine and in the European
Operating Segment.
ANTIBIOTIC REDUCTION AND PRODUCT LABELLING
The table below shows the planned and
actual (estimated for 2023) percentages
of MHP’s flocks that are participating
in the Group’s antibiotic reduction
programme. MHP seeks to minimise the
use of antibiotics through greater use
of organic acids and probiotics in the
production process.
2023e 2022 2021 2020 2019
Planned (%) 80 60 50 30 15
Achieved or estimated (%) 70 60 63 50 20
PROGRESS IN MHP’S ANTIBIOTIC-REDUCTION PROGRAMME (UKRAINE)
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THE DEPARTMENT OF
CREATING CONSUMER
LOVE
In 2022, the Department of Creating
Consumer Love was created and
launched a fresh approach to creating new
products.
The aim is to have a single mechanism for
collecting and reviewing ideas, tracking
each stage of the product life cycle from
idea submission to product launch, and
synchronising the tasks and roles of each
participating specialist at each stage.
MHP CULINARY CENTRE
In 2022, MHP implemented the
requirements of the BRC Global Standard
at the food service manufacturing
company Foodservice LLC (legal name of
the MHP Culinary Centre).
The Culinary Centre’s purpose is to
introduce ready-to-cook and ready-to-
eat food to Ukraine. Its facilities include:
• a sensory analysis laboratory;
• five open kitchens;
• an industrial kitchen;
a kitchen-studio;
• an R&D facility; and
• a pizza production line.
More information can be found in a case
study on page 84.
KEY ACHIEVEMENTS
IN 2022
• The process of raw material supplier
approval was digitised in the SAP Ariba
system.
• The requirements of the BRC Global
Standard were implemented at
Foodservice LLC.
• Start of culinary transformation at
Perutnina Ptuj.
• Over 80 culinary SKUs launched.
PLANS FOR 2023
UKRAINE
1. To certify LLC “Foodservice”
(MHP Culinary Centre) in
compliance with the requirements
of the BRCGS Food standard.
2. To certify Vinnytsia Poultry
Complex (poultry rearing) in
compliance with the requirements
of the Global G.A.P. standard in
order to confirm the implemented
Animal Welfare requirements.
3. Further improvement in quality and
safety management and controls
across MHP enterprises in Ukraine.
EUROPEAN OPERATION SEGMENT
Slovenia: “Antibiotic Free”
recertification.
Croatia: Certification with a new
standard “Proven quality of poultry
meat”.
Serbia:
• product quality and safety
assurance (internal and external
monitoring), successful audits,
continuous renewal of IFS FOOD,
ISO 22000, HACCP, HALAL
certificates;
• customer satisfaction survey
once a year.
Bosnia-Herzegovina:
• IFS standard certification;
• implementation of planned
internal and external audits for
HALAL, HACCP (rev. 2020),
ISO 9001 and ISO 14001;
• continuous monitoring and
application of valid legislation
in the production process;
• continuous monitoring and
application of valid legislation
in the production process.
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CASE STUDY
MHP'S CULINARY CENTRE
MHP'sCulinaryCentre is a unique, state-
of-the-art facility which first opened
its doors in June 2021. The Culinary
Centre, spans all stages of the product
development process, from exploring the
initial idea and testing its scalability on
production lines to undertaking consumer
tasting in its sensory analysis laboratory.
The mission of the Culinary Centre is to
introduce and propagate the concepts
of Ready to Cook (RtC) and Ready
to Eat (RtE) food across Ukraine. The
centre combines everything necessary
to provide the highest quality expert
input on culinary issues. The centre is
used to test concepts-from generating
ideas, developing a prototype, producing
mini-batches or industrialising culinary
solutions, and conducting master classes
and other training events.
Our extensive MHP team, which consists
of brand chefs, food engineers, chefs,
marketing and innovation specialists, as
well as tasters, take on new challenges
every day and constantly develop and
improve our products. Our mission is
to grow, develop, and change Ukrainian
culinary culture whilst maintaining our
status as an innovative market leader.
ASENSORYANALYSISLABORATORY
INDUSTRIALKITCHEN
R&DFACILITIES
5OPENKITCHENS
PIZZAPRODUCTIONLINE
ASTUDIOKITCHEN
CULINARYSCHOOL(CURRENTLYUNDERCONSTRUCTION)
MHP’s CULINARY CENTRE includes:
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SENSORY ANALYSIS
LABORATORY
The sensory analysis laboratory is
designed and operates in accordance with
best-in-class international standards. To
ensure the highest quality of sensory
analysis we introduced a testing program
to select and examine candidates to
become experts in sensory analysis
and calibration (in compliance with the
ISO 13300-1:2006) with the training
programme to be initiated in 2023.
The company's marketing service is also a
constant user of the laboratory's services
andcapabilities. Tasting panels are arranged
in close cooperation with
marketers to
provide insights for future marketing
purposes. Recruiting agencies are used to
form the tasting panels, taking into account
the taster's profile from the consumer
category, which includes age, gender, social
status, preferences and so on.
1. FORMALISE AND REFINE THE SELECTION OF WINNING RECIPES
When developing new products and searching for new combinations of flavours,
ingredients and technologies at the final stage of recipe development, sensory analysis
is used as a decision-making tool when calibrating the final version of the recipe.
The capabilities of the software allow you to analyse the organoleptic parameters of
product samples made according to different recipes and choose the best option that
received the highest number of points from the expert tasting panel.
2. SELECT OF SUPPLIERS IN THE TENDER
An individual approach to the development of questionnaires for professional
comparative tastings with the involvement of suppliers' representatives in the tasting
panel, and the analysis of the results using special software greatly facilitates the
selection of a supplier and guarantees impartiality.
3. COMPARE OF COMPETITIVE PRODUCTS ON THE MARKET
When developing a concept for creating a new product or a new technology, the first
stage is a comparative assessment of a competing product for example the pizza
market. In this case a thorough analysis of the organoleptic parameters of the dough,
filling, and sauces enabled the team of chefs and food engineers to develop perfect
competitive products.
Examples are the organisation and
execution of comparative tastings of meat
snacks and fruit snacks with an analysis of
the packaging concept.
Other cases include the organisation and
conduct of a tasting of shawarma and pizza
for a retail chain and the development of
a new menu for La Strava brand.
Over the past year the laboratory has provided us with significant experience and
learning opportunities. Utilising sensory methods and techniques such as blind tasting
we have been able to:
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PIZZA PRODUCTION LINE CULINARY SCHOOL
The Pizza Shop is a new facility in the
culinary centre which was commissioned
in the fall of 2022 and today produces more
than 15 stock-keeping units (“SKUs”)of
various pizzas with a capacity of 400 pieces
per hour. Despite the industrial scale, we
adhere to the concept of maintaining strict
controls and the utmost standards at all
stages; and our food engineers and brand
chef work daily to improve the offering.
A culinary school is planned to be
commissioned in 2023. It will include an
educational institution with specialised
training equipment, a transformable pop-
up restaurant that can be used to host
dinners, conduct culinary exams and act
as a themed restaurant for testing potential
formats. The school will have a room that
can be transformed into a lecture hall for
an audience of 100 seats. MHP employees
will teach students various culinary skills,
including how to be a meat sommelier.
OPEN KITCHENS
The MHP Culinary Centre showcases
to customers our unique ideas and
demonstrate our expertise. Our
experienced employees have the
knowledge and background that allows us
to provide unique culinary expertise for
the Ukrainian market.
There are six open kitchens that host
chefs specialising in each specific area:
catering, street food, pizzeria, HoReCa
(hotel, restaurant, catering), dark kitchen
(optimised for delivery businesses), and
studio kitchen. The equipment located in
these kitchens allows you to create and refine
newrecipes whilst refining existing ones.
The key to the success of the development
is the extensive experience and in-depth
expertise of food engineers, chefs,
marketing teams and other specialists who
work collaboratively to develop the best
products.
The main function of the studio kitchen
is to host events, with streaming facilities
available in an additional studio. It can also
be used to hold cultural events. As well
as boasting modern studio facilities, the
studio is equipped with some of the best
professional cooking equipment.
MHP used the studio to launch a
culinary YouTube channel to encourage
the population of Ukraine to continue
cooking, despite the challenges of the War.
The channel featured both external and
MHP chefs.
INDUSTRIAL KITCHEN
The Industrial Kitchen Is a state of the art and
designed production facility with the most
modern equipment, a unique production line
and experienced chefs. Being a high-end
culinary production line, industrial kitchen
is focused at the creation of high-quality
restaurant dishes. Our professionals make
their ideas come true by using the most up-
to-date tools, techniques and equipment.
The main spot at our Industrial kitchen Is
Its Innovative Hiperbaric system, which
allows to produce pascalized products, in
more details – cycle of treatment under
high pressure (High Pressure Processing)
ensuring an extended shelf life. The industrial
kitchen's packaging equipment system has
two high-performance units (Multivac and
Ulma) for food packaging and we are one of
the first companies to use SKIN packaging
system for ready-to-eat meals in Ukraine.
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GROWTH PILLAR 5
BUSINESS CONDUCT
OUR COMMITMENT
MHP strives to conduct its business
responsibly with all its stakeholders.
MANAGEMENT APPROACH
MHP’s Board of Directors closely
monitors the Company’s business
conduct progress and performance.
Responsibility for this aspect of the
business is divided between the Audit &
Risk Committee Public Relationsnd the
Sustainability and International Affairs
Committee.
This process resulted in the adoption
of MHP Compliance Roadmap in which
key strategic and operational goals were
identified.
In 2022, the Ethics and Compliance
Programme was again updated to manage
effectively the new challenges presented
by the Russian invasion to Ukraine.
The MHP Code of Ethics is approved by the
Board. Responsibility for its implementation
is assigned to the Compliance Officer.
All employees are required to comply
with the Company’s Code of Ethics and
compliance policies, and policies related
to gifts, business entertainment, conflict
of interest, anticorruption.
MHP aims to apply a “Zero-Tolerance”
approach towards corruption.
MHP’S BOARD OF
DIRECTORS CLOSELY
MONITORS PROGRESS
AND PERFORMANCE IN
THE COMPANY’S BUSINESS
CONDUCT
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POLICY HIGHLIGHTS
CODE OF ETHICS
MHP published its first Group-wide Code
of Ethics in 2017. An updated version
was published in 2021 and is available
for download from the MHP website
(www.mhp.ua).
The revised Code of Ethics is built around
three strategic priorities: protection;
security; and trust. The protection section
outlines the purpose and function of
the MHP Ethics Helpline, explains when
to contact it, and how the subsequent
processes operate. The security section
explains MHP’s anti-bribery and corruption
approach and highlights the Declaration
of Integrity with which all MHP’s business
partners are required to comply. The trust
section explains what employees should
explain, what employees should expect
from MHP, and what MHP expects from
its employees.
MHP has a detailed set of policies to address
responsible business matters including the
Code of Ethics. These are regularly reviewed,
communicated to all employees and
available for download from MHP’s website.
ETHICS HELPLINE
The Code of Ethics also includes details
of MHP’s Ethics Helpline. The Helpline can
be accessed by dialling 7-4-77 in Ukraine,
by email or via the helpline section on
MHP’s website (www.mhp.ua).
All employees are encouraged to use the
facility if:
• t
hey are in need of protection or support;
• they have been exposed to poor
treatment such as harassment or
bullying within the workplace;
• they suspect wrongful behaviour,
such as corruption or fraud, has been
committed or is about to occur; and
• they have suggestions or
recommendations about how MHP
can improve its business conduct.
A COMMITMENT TO PROMOTE A ZERO-
TOLERANCE CULTURE TOWARDS BRIBERY,
CORRUPTION AND UNETHICAL BUSINESS
BEHAVIOUR
WORKFORCE MEMBERS WILL RECEIVE REGULAR
COMMUNICATIONS ABOUT THEIR OBLIGATION
TO INFORM THE COMPANY ABOUT ACTUAL OR
IMMINENT BREACHES OF LAWS, REGULATIONS
OR COMPANY POLICIES
MHP WILL PROVIDE REPORTING FACILITIES
TO ENABLE MATTERS OF CONCERN TO BE
REPORTED TO SENIOR MANAGEMENT IN
CONFIDENCE
THE COMPANY DOES NOT MAKE POLITICAL
DONATIONS
MHP WILL NOT CONDUCT BUSINESS WITH OR
PROVIDE BENEFITS TO STATES, ENTITIES OR
INDIVIDUALS THAT ARE SUBJECT TO SANCTIONS,
AND WILL NOT PROVIDE ASSISTANCE OR
FACILITATE SANCTIONS AVOIDANCE
MHP WILL SELECT SUPPLIERS THAT COMPLY
WITH ITS RESPONSIBLE BUSINESS APPROACH IN
RELATION TO MATTERS SUCH AS ENVIRONMENT,
CLIMATE CHANGE, WORKFORCE, COMMUNITIES,
HEALTH AND SAFETY, BUSINESS CONDUCT AND
HUMAN RIGHTS
WORKFORCE MEMBERS ARE REQUIRED TO
INFORM THE COMPANY IMMEDIATELY IF THEY
BECOME AWARE OF ACTUAL OR IMPENDING
PERSONAL CONFLICTS OF INTEREST
THE ACCEPTANCE OR PROVISION OF GIFTS AND
ENTERTAINMENTISPROHIBITEDEXCEPT WHERE
THEY FALL WITHIN GENERALLY ACCEPTED
NOTIONSOFHOSPITALITY
MHP’S LEADERSHIP WILL PROMOTE A CULTURE
OF ADHERENCE TO THE APPLICABLE LAWS
AND REGULATIONS, AND ENSURE THAT THE
WORKFORCE HAS SUFFICIENT KNOWLEDGE OF
THESE REQUIREMENTS
MHP WILL PROVIDE THE APPROPRIATE LEVEL OF
WORKFORCE TRAINING ABOUT ITS APPROACH
AND REQUIREMENTS IN RELATION TO BUSINESS
CONDUCT MATTERS, AND THE REQUIREMENTS
OF ITS POLICIES
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MHP BUSINESS PARTNER
CODE OF CONDUCT
MHP also maintains and distributes
a Business Partner Code of Conduct
which is available for download from the
MHP website (www.mhp.ua). An updated
version was published and distributed
during 2021.
The Partner Code of Conduct outlines
MHP’s expectations in relation to its
suppliers and business partners, and also
what they should expect from MHP.
Key principles outlined in the Code
include:
• MHP’s willingness to listen to its
partners, to learn, and to progress and
improve together;
• MHP’s support for local Ukrainian
manufacturers, particularly in the
agricultural sector, and support for
their further development;
• MHP’s desire for mutual co-operation
to develop strengths and opportunities
and, in particular, for exploring and
expanding opportunities to export to
countries where MHP operates and
intends to operate;
• MHP’s requirement for business
partners to be open to ongoing
innovation and the use of state-of-the-
art new technologies;
• MHP’s requirement for business
partners to work as a team to achieve
joint success and improve product
quality;
• fairness and strict compliance with
the highest standards of ethics and
integrity; and
• the importance of continuous
improvement in relation to the
Sustainable Development Goals,
minimising environmental impact,
adopting a proactive social stance, and
implementing international standards
established within the framework
of the European Green Deal and
other important global and regional
agreements.
CONFLICT OF INTEREST
MANAGEMENT
The Compliance Office works closely
with business management to ensure
consistent and rigorous maintenance of
MHP’s business conduct policies.
These activities include addressing
conflicts of interest through the provision
of compliance advice, training and
outreach throughout the Group.
The activities of the Compliance Office
include:
• establishing a solid framework for
disclosure of any personal conflict of
interest;
• mapping the most common
occurrences and registering the risks
of situations arising exposing MHP to
organisational conflicts of interest;
• introducing a mandatory conflict of
interest disclosure form, addressing
regular and ad hoc occurrences;
• the delivery of regular staff
communications relating to their
obligations.
TAXATION
MHP's tax affairs are managed by the
Financial and Economic department,
which, if necessary, seeks the support of
professional advisers. MHP has no official
tax policy.
In practice, the Company's approach is
to comply with relevant and appropriate
legal requirements. An example is the
Tax Code of Ukraine (“the Code”).
MHP complies with the Code transparently
and reports monthly on VAT, quarterly on
income tax, and annually on corporate
income tax and other taxes. All
enterprises of the Company are subject
to audit by the State Tax Service in
accordance with the schedule of tax
inspections.
MHP continues to invest in the economy
of Ukraine. In 2022, MHP paid almost UAH
4.6 billion in the form of tax assessments
and contributions. UAH 1.026 billion was
transferred to the national budget for the
year. UAH 2.038 billion was transferred
to local budgets. The amount of the
single social contribution (“SSC”) for the
mandatory state social insurance of the
Company's workers was UAH 1.534 billion.
MHP CONTINUES TO
INVEST IN THE ECONOMY
OF UKRAINE, PAYING
ALMOST UAH 4.6 BILLION
IN TAXES DURING 2022
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IT SECURITY AND
DEVELOPMENT
MHP places significant emphasis on
the conduct of an ongoing programme
of technological development to both
maintain IT security and to develop the
efficiency of MHP’s businesses.
In 2021, MHP implemented Microsoft’s
latest security solutions in MHP’s cloud
infrastructure. This facility ensures that
MHP’s systems detect and respond to
information security events that indicate a
possible compromise of user credentials,
the presence of ransomware, suspicious
activity and other malicious actions.
ADDRESSING IT ISSUES
CREATED BY THE WAR
The onset of War presented many
challenges to the ongoing maintenance
and security of MHP’s IT systems.
These have been successfully addressed
and have continued to support the
organisation’s ongoing business activities.
In particular:
• the IT Department was tasked with
delivering an operational recovery
plan within 33 hours of the system
going down as a result of the Russian
aggression. The IT team was relocated
from Kyiv to a different location in
Ukraine and successfully delivered on
the objective;
• following a new working practice
approach, 210 colleagues have moved
to online working from home as their
responsibilities do not require close
contact with other colleagues to carry
out their duties;
• ongoing steps are being taken to ensure
close monitoring of MHP’s IT system
integrity and prevent cyber-attack.
Additionally, MHP has been conducting
employee training to increase user
awareness of information security and to
ensure that employees are aware of their
role and responsibility for compliance with
information security requirements. The
aim is to create a Group-wide information
security culture on an ongoing basis.
CREATING A PAPERLESS
ENVIRONMENT
During the year, MHP continued to
implement its electronic document
circulation plans but changed the focus
to encourage the creation of a paperless
environment.
The project scope included
documentation created by the
accounting and HR functions and the
creation of a single electronic archive
for storing documents.
The project’s main aims are to:
• change workforce attitudes towards
the use of paper and document storage;
• decrease risks associated with
document loss;
• create administrative time savings; and
• reduce costs and create environmental
benefits.
At the end of 2022, approximately 60% of
MHP’s documentation was transferred to
the new system. The project rollout will
continue in 2023.
MICROSOFT SECURITY SOLUTIONS
VULNERABILITY MANAGEMENT TO
IDENTIFYANDELIMINATE WEAKNESSES
IN THE COMPANY'S IT SYSTEMS. THIS
REDUCES THE LIKELIHOOD OF IT
SYSTEMS BEING HACKED THROUGH
VULNERABILITIES IN SOFTWARE AND
OPERATING SYSTEMS
A CENTRALISED PROCESS FOR
MONITORING INFORMATION SYSTEM
EVENTS WITH A VIEW TO IDENTIFYING
CYBER THREATS. THIS COVERS THE HEAD
OFFICE AND MHP GROUP ASSETS THAT
USE CENTRALISED IT SERVICES
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SUPPLY CHAIN MANAGEMENT
MHP values its business partners because
they are an integral part of creating value
for customers. In recent years, MHP has
been focussing on increasing the number
of farmers that it works with in Ukraine
in order to provide an equitable share of
economic benefits across the country.
UKRAINE
SUPPLIER TYPE SUPPLIERS
Large % Medium % Small %
Domestic
Non-
Domestic
Domestic
Non-
Domestic
Domestic
Non-
Domestic
Fertilisers 12 11 6 14 23 34
Plant protection materials 0 18 6 18 6 52
Agricultural machinery 0 14 3 63 3 17
Spare parts for agricultural machinery 0 6 1 10 1 82
IT technology 0 22 0 11 0 67
Fuels and lubricants 0 15 0 30 0 55
Gas 17 33 0 17 0 33
Laboratory kits 4 0 25 0 71 0
Laboratory materials 50 0 13 0 37 0
Veterinary products 5 4 25 1 65 0
Disinfectants and detergents 7 0 12 0 81 0
Overalls and disposable clothing 4 0 24 0 72 0
Personal protective equipment 5 0 19 0 76 0
Chemical products 5 0 16 0 79 0
Bio-additives and spices 17 5 19 0 56 3
Packaging materials 8 0 18 1 73 0
Day-old chicks 0 100 0 0 0 0
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The PP Group follows the quality, safety,
and traceability requirements of the
Company’s quality and environmental
policies. It selects its suppliers objectively
and transparently by taking into account
quality, reliability, and the best and
most efficient commercial terms, which
include price and payment terms and
environmental matters.
PP’s purchasing strategy is committed
to act in accordance with legislation,
rules, and principles of implemented
international, national and other standards
- including ISO 9001, ISO 14001, HACCP,
BRC, IFS, HALAL, PPR, McDonalds, IK,
Antibiotic-free breeding and others.
The PP Group also requires its suppliers
to comply with its corporate responsibility
approach in relation to matters such as
the environment, climate change, people,
local communities, health and safety,
business conduct, and human rights.
We evaluate our suppliers on a yearly
basis with surveys and questionnaires.
One of the evaluation criteria relates to
environmental management, and in this
way, we try to influence their approach to
responsible environmental management.
PP has rigorous quality management
systems in place which, prior to
procurement, impose high quality
requirements for purchased materials.
These materials must comply with
the requirements of ISO and HACCP
standards, BRC and IFS standards. All
materials supplied must also ensure
compliance with halal requirements.
EUROPEAN OPERATING SEGMENT (“PP”)
SUPPLIER TYPE SUPPLIERS
Large % Medium % Small%
Domestic
Non-
Domestic
Domestic
Non-
Domestic
Domestic
Non-
Domestic
Fertilisers 38 0 13 0 49 0
Seeds 29 0 14 0 57 0
Fuels and lubricants 27 0 20 0 53 0
Gas 50 0 20 0 30 0
Laboratory materials 0 0 0 8 80 12
Veterinary products (medicine and vaccines) 24 0 31 0 42 3
Disinfectants and detergents 3 0 8 0 84 5
Spices and additives 7 7 28 16 33 9
Packaging materials 18 14 19 10 25 14
Day-old chicks 0 27 13 40 7 13
Work protection 5 0 11 0 79 5
Corn 10 5 36 2 46 1
Wheat 10 5 16 1 67 1
Soya (meal, bean, cake) 21 46 15 0 18 0
DDGS (Dried distillers grains with solubles) 25 75 0 0 0 0
Soya oil 13 37 24 13 13 0
Corn oil 75 0 25 0 0 0
Premixes 33 17 0 0 33 17
Amino acids 25 41 17 17 0 0
The share of domestic suppliers decreased by two percentage points in 2022 (84% in 2022, 86% in 2021, 89% in 2020).
SUPPLY CHAIN MANAGEMENT (CONTINUED)
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MARKETING APPROACH
MHP strives for responsible marketing of
all products and brands in both domestic
and international markets.
The Company has a history of aligning its
business strategy with the Sustainable
Development Goals, its business goals
and MHP’s values.
This approach is the basis for creating
marketing strategies that meet marketing
goals and support the Group’s reputation.
The Company encourages and supports
moderate food consumption as part of
a healthy, active and balanced lifestyle,
focussing on family values.
MHP's approach to marketing, as a
global company operating in more than
70 countries, is consistent with the
International Chamber of Commerce's
Marketing and Advertising Code and its
framework for responsible food marketing
communications. The Group adheres
to these guidelines in its marketing
communications.
PRINCIPLE 1
MHP WILL NOT ADVERTISE IN ANY
MEDIA THAT IS SPECIFICALLY
PROVIDED FOR CHILDREN AGED
UNDER 12 YEARS OLD, INCLUDING
SHOWS, PRINT MEDIA, WEBSITES,
SOCIAL NETWORKS, MOVIES, AND
SMS / EMAIL MARKETING
MHP’S MARKETING STRATEGY REFLECTS THE FOLLOWING PRINCIPLES:
PRINCIPLE 2
MHP’S MARKETING WILL BE
TRUTHFUL AND ACCURATE, AND
NOT MISLEADING
PRINCIPLE 3
MHP’S BRANDS WILL BE PRESENTED
IN A WAY THAT ENCOURAGES
HEALTHY EATING HABITS AND A
BALANCED, HEALTHY LIFESTYLE
PRINCIPLE 4
MHP’S ONLINE MARKETING
ADHERES TO THE TERMS OF COPPA
IN UKRAINE (UKRAINE ONLINE
PRIVACY PROTECTION ACT),
INCLUDING OBTAINING PARENTAL
PRIOR CONSENT TO COLLECT
INFORMATION FROM CHILDREN
PRINCIPLE 5
MHP’S MARKETING ACTIVITY
IS PERMITTED TO SUPPORT
EDUCATIONAL PROGRAMMES FOR
CHILDREN UNDER 12 YEARS OLD IN
UKRAINE. ANY BRAND PRESENCE IN
THESE PROGRAMMES WILL SIMPLY
INDICATE AND ACKNOWLEDGE
FINANCIAL SUPPORT OR
SPONSORSHIP AND WILL NOT BE
USED FOR ADVERTISING PURPOSES
LEGAL AND RELATED MATTERS
In 2022, the Group did not receive
any complaints from third parties
(counterparties) or government agencies
about breaches of client privacy or
information. No material breaches of the
Company’s approach to anti-bribery and
corruption policies were noted during
2022.
The Anti-Monopoly Committee of Ukraine
(“AMCU”) opened an investigation into
the Company’s market position in Ukraine
in June 2019. At the time of publication
of this Report, the process has not been
concluded. MHP believes that it has
always adhered to the relevant parts of
the Company’s policy framework and
Ukraine’s laws regarding anticompetitive
activity. For the last four years, MHP has
been actively maintaining communications
with the AMCU, promptly providing all
necessary information in accordance
with official requests or the committee’s
requirements.
In addition, in 2021, the AMCU opened an
investigation in relation to possible signs
of violation of the law on the protection of
economic competition by the Company
during its acquisition of Lubnimyaso LLC
(manufacturers of meat products under
the Skott Smeat trademark), without
obtaining the appropriate permission.
MHP believes that this asset purchase
does not require a concentration
permit. Information and documentary
substantiation were provided to the
AMCU in official responses to requests.
The Company believes that after a
detailed study of all the materials, this
investigation will be closed.
Investigations into both cases are
ongoing.
ACHIEVEMENTS IN 2022
MHP’s IT security and use of technology
were an important element of the Group’s
successful business continuity strategy
and swift adaptation following the
outbreak of the war on 24 February 2022.
PLANS FOR 2023
MHP plans to introduce an e-course on
ethical behaviour for all MHP employees.
Additionally the Management Team plans
to promote awareness of the Ethics
Helpline facility.
The rollout of MHP’s electronic document
circulation project will continue to
progress the aim of creating a paperless
environment.
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