Q3 and 9M 2011 Financial Results

PRESS RELEASE

November 17, 2011, Kyiv, Ukraine

MHP S.A.

Unaudited Financial Results for the Third Quarter and Nine Months

Ended 30 September 2011

MHP S.A. ("MHP" or the "Company", LSE ticker: "MHPC"), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, today announces its unaudited results for the third quarter and the nine months ended 30 September 2011.

Key operational highlights

Poultry and related operations

o During the nine months of 2011 all the Company's chicken production facilities continued to operate at full capacity.

o Consumer demand for chicken remained high and the Company was able to sell close to 100% of the chicken meat produced.

o The Company's share of industrially produced chicken in Ukraine in 9M 2011 was around 50%.

o The volume of chicken meat sales to external customers in 9M 2011 increased by 13% year-on-year to 282,000 tonnes due to more effective use of existing capacity and decrease in stocks.

o The average chicken meat price for Q3 2011 was 15% higher compared to Q3 2010. In 9M 2011 the chicken meat price increased by 7% to UAH 14.39 compared to UAH 13.43 in 9M 2010.

o The average price of sunflower oil in 9M 2011 increased by 54% to US$ 1,297 per tonne.

Grain growing

o As of the end of nine months 2011 the Company cultivated 280,000 hectares of land under control.

o MHP's crops yields are significantly higher than Ukraine's average and MHP's yields previous year.

o Current MHP's corn yield is 9.8 tonnes per 1 hectare, which is 25% higher than MHP's corn yield in 2010; corn harvesting is ongoing and over 80% is complete.

Other agriculture

o Sausage and cooked meat production volumes increased by 17% to 28,200 tonnes in 9M 2011 compared to 9M 2010. The substantial volume growth was driven by increased production at Ukrainian Bacon in accordance with the Company's strategy of growing its meat processing operations.

o The Company's market share of Ukraine's sausage and cooked meat products was around 10%.

Vinnytsia - new green field expansion project

o Construction work on the Vinnytsia project, which commenced as announced previously in May 2010, is running to schedule and on budget.

o In the beginning of September, 400,000 m3 of silo launched (as a part of the Vinnytsia project).

o Mid 2012 is scheduled for a launch of a broiler farm in a testing mode.

o Production of Phase 1 is expected to be launched in the beginning of 2013 and reach its full capacity of 220,000 tonnes of poultry per annum in 2015.

Key financial highlights

Q3 2011 highlights

o Revenue increased by 39% to US$ 352 million.

o EBITDA increased by 44% to US$ 143 million.

o Consolidated EBITDA margin increased to 41% in Q3 2011 from 39% in Q3 2010.

o Net income increased greatly by 105% to US$ 115 million.

9M 2011 highlights

o Revenue increased by 30% to US$ 880 million (9M 2010: US$ 676 million).

o EBITDA increased by 30% to US$ 301 million (9M 2010: US$ 232 million)

o Consolidated EBITDA margin remained high at 34%.

o Net income increased by 27% to US$ 201 million (9M 2010: US$ 158 million).

Commenting on the results, Yuriy Kosiuk, Chief Executive Officer of MHP, said:

"Our financial results for the period have been very strong, with robust revenue and EBITDA growth and the maintenance of our sector-leading margins. Once again, we have reaped the benefits of our vertically integrated business model, which has served to mitigate the impact of grain price inflation.

We have seen a strong rise in the price of poultry in Ukraine during the period, in line with world poultry price dynamics, and we expect the price to steadily increase again as we look forward. Our expectations regarding grain segment results are favorable due to the significant land expansion in 2010 and strong grain prices.

I am also pleased to provide you today with an update on this year's harvests. The harvest of early crops, such as rape and wheat as well as sunflower, proceeded well and resulted in good yields, which, as usual, are much higher than the Ukrainian average. Meanwhile, initial observations indicate that our corn harvests will also produce good yields.

We are confident that we will be able to continue to implement our strategy and keep on delivering strong financial results cementing our position as one of the leading agro-industrial companies in Ukraine and the region.

- end -

MHP's management will host a conference call for investors and analysts followed by a Q&A session. The dial-in details are:

Date: Thursday, 17 November 2011

Time: 09.00 New York / 14.00 London / 16.00 Kyiv / 18.00 Moscow

Title: MHP - Q3 and 9M 2011 Financial Results

International/UK Dial in: +44 (0) 1452 555 566

USA free call: +1 866 966 9439

Russia free call 8108 002 097 2044

Conference ID 27134050

A live webcast of the presentation will be available at:

 https://webconnect.webex.com/webconnect/onstage/g.php?t=a&d=660577006

Alternative URL:

https://webconnect.webex.com/

Click on "Unlisted Events"

Event number: 660 577 006Event password: N/A

For further information please contact:

Financial overview

* Delta in a percentage for ratios (% indicators) is calculated as a difference between the ratio in the current reporting period and the ratio in the previous reporting period

Q3 2011 Consolidated Financial Results

Consolidated revenue totaled US$ 352 million, by 39% greater than in Q3 2010 (US$ 253 million). The main highlights of the quarter were the growth of chicken volume and chicken price. An increase of sunflower oil price as well as rise of processed meat volumes and price were additional drivers of revenue growth.

Q3 2011 EBITDA increased by 44% to US$ 143 million (Q3 2010: US$ 99 million. Grain and poultry prices growth stimulated consolidated EBITDA margin to increase from 39% in Q3 2010 to 41% in Q3 2011.

Net income from continuing operations increased greatly by 105% to US$ 115 million (Q3 2010: US$ 56 million) in line with EBITDA growth and also due to the net effect of non-cash foreign exchange losses of US$ 12 million in Q3 2010 related to Euro/USD exchange rate. Net income margin increased from 22% to 33%.

9M 2011 Consolidated Financial Results

Due to the strong Q3 2011 financial results, the financial results of 9M 2011 increased greatly in comparison with 9M 2010, while margins remained stably high. Revenue increased by 30% to US$ 880 million (9M 2010: US$ 676 million). This reflected the growth of chicken volume and price, sunflower oil price, meat processing products volume and price.

EBITDA was US$ 301 million, 30% higher year-to-year (9M 2010: US$ 232 million) as a consequence of vigorous financial result in grain growing segment. Consolidated EBITDA margin remained unchangeable at 34% in 9M 2011 compared to 9M 2010.

Net income grew by 27% to US$ 201 million (9M 2010: US$ 158 million) as a result of EBITDA year-to-year improvement. Non-cash foreign exchange losses/gains negatively influenced on the net income change, as the Company had US$ 3 million losses in 9M 2011 versus US$ 12 million gains in 9M 2010. Net margin was 23%, same as in 9M 2010.

Poultry and related operations

* Net IAS 41 effect

Q3 2011 Poultry and related operations segment financial results

During the third quarter of 2011 the volume of chicken meat sales to external consumers on an adjusted-weight basis was 99,900 tonnes, 23% more than in the third quarter of the previous year (Q3 2010: 81,000 tonnes). Such dynamics is the reflection of more effective use of existing capacity and decrease in stocks.

The average chicken meat price increased by 15% to UAH 16.11 per kg of adjusted weight (net VAT) in Q3 2011 compared to Q3 2010. The price growth is a procrastinated result of the grain price increase in Ukraine and worldwide at the end of 2010 and following world poultry price trends during the period in 2011. In Q3 2011, 40,900 tonnes of sunflower oil were sold mainly for export at an average price of US$ 1,284 per tonne, 49% higher than in Q3 2010 (US$ 862 per tonne).

The segment revenue increased by 34% to US$ 273 million (Q3 2010: US$ 204 million). Poultry export sales in Q3 2011 was 12% of total sales volume (constituting US$ 25 million), which is 3 times higher than in the same period last year.

In line with our expectations, in Q3 2011 poultry production costs continued the rising dynamics of the previous quarter, and the growth compared to Q3 2010 was mostly due to the increase in the market price of grain and utilities, while less favorable correlation between sunflower seeds and sunflower oil prices increased production cost of sunflower protein and as consequences production cost of chicken meat compared to both Q3 2010 and Q2 2011.

Segment gross profit decreased by 6% to US$ 73 million (Q3 2010: US$ 78 million), as well as gross profit margin fall from 38% in Q3 2010 to 27% in Q3 2011. EBITDA decreased by 6% to US$ 82 million (Q3 2010: US$ 87 million). EBITDA margin decreased from 43% in Q3 2010 to 30% in Q3 2011.

In the same time due to the Company's vertically integrated business model lower financial results of poultry segment in Q3 2011 and for the full year 2011 are compensated by higher profitability of grain segment.

9M 2011 Poultry and related operations segment financial results

Chicken meat sales volumes to the third parties increased by 13% to 282,000 tonnes in 9M 2011 compared to 249,500 tonnes in 9M 2010. The average chicken meat price increased by 7% to UAH 14.39 per kg (9M 2010: UAH 13.43 per kg). Average sunflower oil prices were US$ 1,297 per tonne, 54% more than in 9M 2010.

Segment revenue increased by 24% to US$ 719 million compared to US$ 579 million in 9M 2010. The growth of poultry production costs in 9M 2011 was approximately 20% year-to-year mainly driven by grain and utilities prices increase, as well as due to higher production cost of sunflower protein as a consequence of less favorable correlation between sunflower seeds and sunflower oil prices. Despite high rise of production costs, gross profit in 9 months of 2011 remained stable at US$ 185 million (9M 2010: US$ 184 million), while gross profit margin decreased from 32% in 9M 2010 to 26% in 9M 2011.

Poultry export sales in 9M 2011 was 9% of total sales volume (constituting US$ 50 million), which is 2 times higher than in the same period last year.

During nine months of 2011 EBITDA fell slightly by 2% to US$ 203 million (9M 2010: US$ 208 million). EBITDA margin decreased from 36% in 9M 2010 to 28% in 9M 2011 as a result of almost flat chicken meat prices during the first half of 2011.

Grain growing operations

Currently the Company cultivates approximately 280,000 hectares of land under control, including about 250,000 hectares in grain growing segment. The additional 100,000 hectares are being harvested in 2011 compared to 2010. The Company continues to focus on growing 4 main crops: corn, wheat, sunflower and rape.

* - Actual hectares under crop and excluding land left fallow as part of crop rotation

** - Includes soybean, barley and sugar beet

*** - Based on over 80% completed corn harvest

Favorable weather conditions during the 2010/2011 campaign and advanced technologies were resulted in strong crop yields, which are significantly higher than Ukraine's average and MHP's yields of 2010.

* - Tonnes per hectare

The Company has now completed its wheat, rapeseed, and sunflower harvests.

The Company's corn harvest is ongoing and as of today is over 80% complete. The current net yield is averaging about 9.8 tonnes per hectare (2010: 7.8 tonnes per hectare) compared to Ukraine's average of 6.3 tonnes per hectare (Source: Committee of Statistics).

Moreover, MHP has set a European record in corn yield this year, having harvested 19 tons per hectare from one of its grain growing enterprises due to the high level of technology and the quality of its application at all levels from soil preparation, planting, protection to harvesting.

From the total corn harvested this year, MHP not only will satisfy its internal needs for fodder production, but also export more than 400,000 tonnes of corn produce.

In 9M 2011 the grain growing segment revenue was US$ 54 million, 147% more than in 9M 2010. High growth of the revenue is a consequence of the harvested land and yields increase, resulted in higher sales volume of wheat and rape, as well as significantly higher price of rape compared to the last year.

Significant part of the Q3 2011 financial results in grain segment are generated by the IAS 41 standard gains from revaluation of  grains that will be sold or consumed during the next quarters. Grain growing operations segment EBITDA valued US$ 104 million, 169% more than in 2010.

Other agricultural operations

The financial results of this segment continued to show stable positive dynamics. Revenue in Q3 2011 increased by 36% to US$ 41 million compared to US$ 30 million in Q3 2010, mostly driven by the growth of meat processing products revenue. Fruit and milk sales increase also was reflected in the segment revenue growth. In 9M 2011 other agricultural operations revenue was US$ 107 million, 42% more than in 9M 2010.

During the nine months of 2011 the Company continued to increase the production of meat processing products and its market share currently constitutes about 10%. This reflected growth of sales volumes of sausage and cooked meat products by 10% to 10,900 tonnes in Q3 2011 compared to Q3 2010 and by 17% to 28,200 tonnes in 9M 2011 compared to 9M 2010. The main reasons of sales volume growth were the Ukrainian Bacon production rise and increasing consumer demand.

The average sausage and cooked meat prices dynamics in 9M 2011 and specifically in Q3 2011 is characterized by the positive trend. Prices increased by 17% in Q3 2011 (UAH 20.60 per kg excluding VAT in Q3 2011 compared to UAH 17.57 per kg in Q3 2010) and by 13% in 9M 2011 (UAH 19.57 per kg in 9M 2011 compared to UAH 17.26 per kg in 9M 2010).

The segment gross profit was US$ 4 million in Q3 2011, 68% more than in Q3 2010, and US$ 10 million in 9M 2011, 117% more than in 9M 2010. The growth of EBITDA was also considerable. EBITDA amounted US$ 3 million in Q3 2011, 71% higher than in Q3 2010, and US$ 11 million in 9M 2011, 118% higher than in 9M 2010. EBITDA margin moderately increased to 8% in Q3 2011 compared to 6% in Q3 2010 and to 10% in 9M 2011 compared to 7% in 9M 2010. Meat processing sub-segment EBITDA growth was the driver of good financial results of the whole other agricultural operations segment.

More than 50% of the meat required for the Company's meat processing operations is internally produced chicken meat.

Current Group financial position, cash flow and liquidity

Cash flow from operations before working capital changes increased to US$ 106 million in Q3 2011 (Q3 2010: US$ 83 million) and US$ 209 million in 9M 2011 (9M 2010: US$ 189) as a result of EBITDA growth.

In 9M 2011 change in working capital was US$ 39 million mainly related with:

·; cultivation of additional 100,000 hectares of land in grain growing segment, resulted in more grains in the fields at the end of 9M 2011;

·; Some technology changes in grain growing segment with increased proportion of fertilizers application in autumn in 2011/2012 sowing campaign;

·; VAT tax recoverable increase due to intensive CAPEX program of the Vinnytsia project.

Total CAPEX was US$ 98 million in Q3 2011 and US$ 236 million in 9M 2011, and the most part of CAPEX was related to the capital intensive Vinnytsia project.

Vinnytsia - new green field project

Construction work on the Vinnystia project, which commenced as announced previously in May 2010, is running to schedule and on budget. Significant progress has already been made with the poultry farm, fodder complex and infrastructure at the Vinnytsia site. All equipment required for Phase 1 is already contracted and is being dispatched now.

Poultry Farm

·; Construction of the hatchery is 90% complete

·; 2 brigades (chicken rearing zones) with 38 chicken houses in each are 70% complete

·; Construction of the slaughter house for Phase 1 (220,000 tonnes of poultry per annum) is 70% complete

Installation of the equipment commenced in September 2011.

Fodder Plant and Grain Storage Facilities

·; Construction of the sunflower seeds silo (200,000 m3) is complete, installation of the equipment is 95% complete

·; Construction of the grain silo (200,000 m3) is complete, installation of the equipment is 95% complete

·; Construction of Fodder Plant and Sunflower Crushing Plant is in progress now

Infrastructure and Social Responsibility

The construction of electric power substation with a capacity of 110 mW is complete, the transmission networks are 80% complete, system of gas supply (45 km) is 80% complete. The construction of water supply systems (60 km) is 80% complete and water treatment station with a capacity of 15 thousand m3 of water per day is 40% complete.

The construction of two independent electric power substations is complete. In addition, as part of the facility, MHP will be constructing 45 km of new roads (over 50% complete), 260 new residential apartments, a hostel with a capacity for 800 people and a kindergarten with a capacity for 260 children.

As announced earlier in June 2010, the Company is building additional sites at its Shakhtarska breeding farm for 300 million hatchery eggs production per annum to satisfy Vinnytsia poultry complex needs.

MHP has set up a section on its website dedicated to Project Vinnystia where regular updates will be provided, as well as photographs documenting the stages of the project: http://www.mhp.com.ua/en/node/1082/.

Debt Structure

As of September 30, 2011, the Company's total debt was US$ 869 million with an average weighted cost of debt around 9%. Approximately 70% of the Company's total debt is the Eurobond that matures in April 2015. The Company's total debt is mainly denominated in US dollars.

At the end of 9M 2011, MHP had US$ 137 million in cash and short-term bank deposits. Net debt of the Company as of September 30, 2011 remained stable at US$ 732 million comparable to the end of 1H 2011. While the Net Debt/EBITDA ratio at the end of the period decreased to 1.86 versus 2.10 at the end of 1H 2011 (Eurobond covenant: 2.5).

As a hedge for currency risks, revenue from the export of sunflower oil, sunflower husks and chicken meat are denominated in US Dollars, fully covering debt service expenses. During the nine months of 2011 the Company received about US$ 244 million from export sales of sunflower oil, chicken meat and grains compared to US$ 172 in the same period of 2010.

Outlook

Consumer demand for poultry meat continues to remain high that will guarantee the total sales of the Company's chicken meat production. As usual the Company is operating at full capacity and current chicken prices are around 17% higher compared to the same period of the previous year.

Following the Company's strategy and objectives, MHP continues to develop export markets in order to establish and/or to build a reliable and a long-term relationship.

The considerable and impressive growth of MHP's grain production will be reflected in increase of grain production external sales volumes that will support the Company's robust financials growth in the current year.

We continue to increase production volumes of sausages and cooked meat that we produce, whilst also producing a wider range of value-added products at our meat processing plants. The production volumes growth in 2011 will be the consequence of the meat processing capacity increase at the Ukrainian Bacon plant.

The CAPEX program in 2011 is mostly related to the construction and the beginning of equipment installation on the new Vinnitsa poultry production complex, where the construction is to schedule and on budget.

We are confident that we will be able to continue to implement our strategy and keep on delivering strong financial results cementing our position as one of the leading agro-industrial companies in Ukraine and the region.

- End -

Notes to Editors:

About MHP

MHP is the leading producer of poultry products in Ukraine with the greatest market share and highest brand recognition for its products. MHP owns and operates each of the key stages of chicken production processes, from feed grains and fodder production to egg hatching and grow out to processing, marketing, distribution and sales (including through MHP's franchise outlets). Vertical integration reduces MHP's dependence on suppliers and its exposure to increases in raw material prices. In addition to cost efficiency, vertical integration also allows MHP to maintain strict biosecurity and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale. To support its sales, MHP maintains a distribution network consisting of 11 distribution and logistical centres, within major Ukrainian cities. MHP uses its trucks for the distribution of its products, which Management believes reduces overall transportation costs and delivery times. MHP also has a leading grain cultivation business growing corn to support the vertical integration of its chicken production and increasingly other grains, such as wheat and rape, for sale to third parties. MHP leases agricultural land located primarily in the highly fertile black soil regions of Ukraine.

Since May 15, 2008, MHP has traded on the London Stock Exchange under the ticker symbol MHPC.

Forward-Looking Statements

This press release might contain forward-looking statements that refer to future events or forecast financial indicators for MHP S.A. Such statements do not guarantee that these are actions to be taken by MHP S.A. 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 S.A. does not intend to change these statements to reflect actual results.

MHP S.A.

AND ITS SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

For the nine months

ended 30 September 2011

MHP S.A. AND ITS SUBSIDIARIES

Page

On behalf of the Board

The notes on pages 7 to 16 form an integral part of these condensed consolidated financial statements.

On behalf of the Board

The notes on pages 7 to 16 form an integral part of these condensed consolidated financial statements.

On behalf of the Board

The notes on pages 7 to 16 form an integral part of these condensed consolidated financial statements. 

The notes on pages 7 to 16 form an integral part of these condensed consolidated financial statements.

On behalf of the Board

The notes on pages 7 to 16 form an integral part of these condensed consolidated financial statements.

MHP S.A. AND ITS SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2011

1. DESCRIPTION OF THE BUSINESS

MHP S.A. (the "Parent" or "MHP S.A."), a limited liability company registered under the laws of Luxembourg, was formed on 30 May 2006. MHP S.A. was formed to serve as the ultimate holding company of PJSC "Myronivsky Hliboproduct" ("MHP") and its subsidiaries. Hereinafter, MHP S.A. and its subsidiaries are referred to as the "MHP S.A. Group" or the "Group". The registered address of MHP S.A. is 5, rue Guillaume Kroll, L-1822 Luxembourg.

The principal business activities of the Group are poultry and related operations, grain growing, as well as other agricultural operations (meat processing, cultivation and selling fruits and producing beef and meat products ready for consumption).The Group's poultry and related operations integrate all functions related to the production of chicken, including hatching, fodder manufacturing, raising chickens to marketable age ("grow-out"), processing and marketing of branded chilled products and include the production and sale of chicken products, sunflower oil, mixed fodder and convenience food products. Grain growing comprises the production and sale of grains. Other agricultural operations comprise the production and sale of cooked meat, sausages, beef, milk, goose meat, foie gras, fruits and feed grains. During the nine months ended 30 September 2011, the Group employed over 23,000 people.

During the year ended 31 December 2010 the Group substantially increased its agricultural land bank as part of its vertical integration and diversification strategy through acquisitions of land lease rights.

During the year ended 31 December 2010 the Group also commenced construction of the greenfield Vinnytsya poultry complex.

The Group's operational facilities are located in different regions of Ukraine, including Kyiv, Cherkasy, Dnipropetrovsk, Donetsk, Ivano-Frankivsk, Vinnytsya, Kherson, Sumy, Khmelnitsk regions and Autonomous Republic of Crimea.

The primary subsidiaries and the principal activities of the companies forming the Group as of 30 September 2011 and 31 December 2010 were as follows: