Q3 and 9M 2012 Financial Results

PRESS RELEASE

November 15, 2012, Kyiv, Ukraine

MHP S.A.

Unaudited Financial Results for the Third Quarter and Nine Months

ended 30 September 2012

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 2012.

Key operational highlights

Poultry and related operations

o During the first nine months of 2012 ("9M 2012") all the Company's chicken production facilities continued to operate at full capacity.

o Consumer demand 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 2012 was around 50%.

o During 9M 2012 MHP increased its overall production volumes by 4,000 tonnes to 295,000 tonnes mostly driven by an increase in production in Q3 2012 due to the trial production start at the Vinnytsia complex.

o The average chicken meat price in Q3 2012 increased by 9% to UAH 17.57 per kg of adjusted weight (excluding VAT) when compared to Q3 2011. Through 9M 2012 average chicken prices increased by 20% to UAH 17.29 per kg (9M 2011: UAH 14.39 per kg).

o In 9M 2012 MHP sold 147,100 tonnes of sunflower oil at an average price US$ 1,100 per tonne, which decreased by 15% from US$ 1,297 in 9M 2011, in line with international commodity market trends.

o Export sales of chicken meat during 9M 2012 increased by more than 20% compared to the same period last year, to almost 11% of MHP's total chicken sales.

Grain growing

o During 9M 2012 the Company's land bank remained stable at 280,000 hectares of land.

o The Company's 2012 harvest campaign is almost complete. MHP's crops yields are significantly higher than Ukraine's average.

o Current MHP's corn yield is about 8.0 tonnes per 1 hectare. The corn harvest is on track and over 85% complete.

Other agriculture

o Due to the product portfolio optimization, sausage and cooked meat production volumes decreased by 6% to 26,610 tonnes in 9M 2012 compared to 28,200 tonnes in 9M 2011.

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

Vinnytsia - new green field expansion project

o Construction of Phase 1 (US$ 750 million) of Vinnytsia project is running to schedule and on budget.

o The sunflower crushing plant and fodder plant have been launched into operations.

o The poultry complex is working in a testing mode as planned.

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

Key financial highlights

Q3 2012 highlights

o Revenue increased by 10% to US$ 389 million (Q3 2011: US$ 352 million).

o EBITDA increased by 4% to US$ 149 million (Q3 2011: US$ 143 million).

o EBITDA margin remained high and constituted 38%.

o Net income decreased by 3% to US$ 111 million (Q3 2011: US$ 115 million) due to non-cash foreign exchange differences.

9M 2012 highlights

o Revenue increased by 19% to US$ 1,044 million (9M 2011: US$ 880 million).

o EBITDA increased by 26% to US$ 379 million (9M 2011: US$ 301 million)

o EBITDA margin increased to 36% from 34% in 9M 2011.

o Net income increased by 40% to US$ 281 million (9M 2011: US$ 201 million).

Commenting on the results, Yuriy Kosyuk, Chief Executive Officer, said:

"Strong and sustainable revenue and EBITDA growth and maintenance of our sector-leading margins reflect the strength of our uniquely self-sufficient business model and put us in a strong position to continue delivering against our targets for 2012.

During the period poultry prices in Ukraine continued to show a growing dynamic and we continued to focus on what we do best - producing and marketing a range of popular, dependable, high quality and affordable poultry products.

Preliminary results in our grain growing segment are favorable mostly due to successful crop management and strong grain prices worldwide. Harvest of early crops, such as rapeseeds and wheat as well as sunflower, proceeded well and resulted in good and even higher yields than in 2011. MHP's yields, as usual, are much higher than Ukraine's average. Meanwhile, initial observations indicate that our corn harvests will also produce good yields.

We remain as confident as we have ever been that MHP will carry on implementation of its strategy and keep on delivering positive financial results and achieving growth in shareholder value."

- 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, 15 November 2012

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

Title: MHP - Q3 and 9M 2012 Financial Results

International/UK Dial in: +44 (0) 1452 560 304

USA free call: +1 631 621 5256

Russia free call 8108 002 394 2044

Conference ID 64451043

A live webcast of the presentation will be available at:

 https://webconnect.webex.com/webconnect/onstage/g.php?t=a&d=665995350

Alternative URL:

https://webconnect.webex.com/

Click on "Unlisted Events"

Financial overview

* pps - percentage points

Q3 2012 Consolidated Financial Results

Consolidated revenue totaled US$ 389 million, 10% greater than US$ 352 million in Q3 2011 due to the growth of chicken meat price and higher sunflower oil and grain sales volumes. Export sales constituted 36% of total revenue in Q3 2012.

Q3 2012 EBITDA increased by 4% to US$ 149 million (Q3 2011: US$ 143 million) and remained at high level constituting 38% in Q3 2012.

Net income from operations decreased by 3% to US$ 111 million (Q3 2011: US$ 115 million) due to non-cash foreign exchange losses of US$ 4 million in Q3 2012 related to Euro/USD exchange rate (in Q3 2011 there were non-cash foreign exchange gains of US$ 6 million). Net income margin decreased from 33% to 28%.

9M 2012 Consolidated Financial Results

The dynamics of consolidated financial results of 9M 2012 are strong. Revenue reached US$ 1,044 million in 9M 2012, which is 19% greater than US$ 880 million in 9M 2011. The main reasons for the high growth in revenue were the increase in chicken price as well as an increase in the volume of grain sold. Export sales amounted to 33% of total revenue of MHP.

EBITDA was US$ 379 million, 26% higher year-to-year (9M 2011: US$ 301 million) as a consequence of vigorous financial result in poultry segment. Consolidated EBITDA margin increased from 34% in 9M 2011 to 36% in 9M 2012 reflecting a substantial increase in chicken prices.

Net income totaled US$ 281 million, which is 40% higher than in 9M 2011. Net margin increased from 23% in 9M 2011 to 27% in 9M 2012.

Poultry and related operations

* pps - percentage points

Q3 2012 Poultry and related operations segment financial results

In Q3 2012 the production volume of chicken meat increased by 7% to 104,800 tonnes due to the trial production start at the Vinnytsia complex. Chicken meat sales volumes to third parties decreased by 7% to 93,200 tonnes compared to Q3 2011 as a result of sales of almost 10,000 tonnes of chicken meat from stocks in Q3 2011.

The average chicken meat price in Q3 2012 increased by 9% to UAH 17.57 per kg of adjusted weight (excluding VAT) compared to UAH 16.11 per kg in Q3 2011

In Q3 2012, there were 52,350 tonnes of sunflower oil sold for export at an average price of US$ 1,084 per tonne. Decline in sunflower oil price by 16% was compensated by 28% growth of sunflower sales volume, that was resulted in 9% rise of sunflower oil revenue in Q3 2012 compared to Q3 2011.

The segment's revenue increased slightly by 2% to US$ 278 million (Q3 2011: US$ 273 million) as a consequence of higher chicken meat prices and higher sunflower oil sales volume.

Segment's gross profit increased by 21% to US$ 89 million (Q3 2011: US$ 73 million), with gross profit margin increasing from 27% in Q3 2011 to 32% in Q3 2012.

EBITDA of the poultry segment reached US$ 94 million in Q3 2012, which is 15% greater than in Q3 2011 and in line with an increase in gross profit. EBITDA margin increased from 30% in Q3 2011 to 34% in Q3 2012.

9M 2012 Poultry and related operations segment financial results

During 9M 2012 chicken meat sales volumes to third parties slightly decreased by 3% to 274,800 tonnes compared to 282,000 tonnes in 9M 2011 due to sales of almost 10,000 tonnes of chicken meat from stocks in Q3 2011. Average chicken meat price increased by 20% to UAH 17.29 per kg (9M 2011: UAH 14.39 per kg).

Average sunflower oil price decreased by 15% to US$ 1,100 per tonne in line with world trends, while sunflower oil sales volume grew by 17% in Q3 2012 compared to Q3 2011.

In 9M 2012 the poultry segment's revenue totaled US$ 801 million, which is 11% greater than US$ 719 million in 9M 2011.

Poultry production costs in 9M 2011 were slightly higher compared to 9M 2011, mainly due to higher utilities prices. Gross profit increased by 45% year-on-year to US$ 267 million. Gross profit margin rose from 26% in 9M 2011 to 33% in 9M 2012 as a result of the chicken price increase.

Poultry export sales in 9M 2012 increased by around 20% year-on-year to US$ 66 million, which constituted about 11% of revenue from chicken meat sales.

During nine months of 2012 EBITDA increased by 42% to US$ 287 million (9M 2011: US$ 203 million) in line with gross profit growth. EBITDA margin amounted to 36% in 9M 2012 compared to 28% in 9M 2011.

Grain growing operations

In 2012 the Company harvests around 250,000 hectares of land in grain growing operations and cultivates around 30,000 hectares of land in other agricultural operations. Total land bank in 2012 remains relatively stable at around 280,000 hectares.

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

** Includes soybean, barley and sugar beet

*** Based on 85% completed corn harvest

As a result of MHP's operational efficiency and employment of best practice, MHP's grain yields in 2012 remained strong, despite unfavorable weather conditions in Ukraine's 2011/2012 campaign.

* Tonnes per hectare

** MHP - net weight, Ukraine - bunker weight

In 2012 the Company's yields of early crops are almost double Ukraine's average and even higher than MHP's yields last year. Corn and sunflower yields are in line with MHP's forecast for this year taking into account weather conditions.

The Company's corn harvest is ongoing and as of today is over 85% complete. The current net yield is averaging about 8.0 tonnes per hectare, which is slightly less than MHP's corn yield of 9.5 in 2011, but significantly higher than Ukraine's average of 4.5 tonnes per hectare (Source: Committee of Statistics).

In 9M 2012 the grain growing segment revenue totaled US$ 126 million, which is 135% greater than in 9M 2011as a result of higher grain volumes.

As usual, a significant part of the Q3 2012 financial results in grain segment is generated by IAS 41 gains from revaluation of grains in stocks and corn in fields. In 9M 2012 EBITDA of grain growing operations segment remained almost the same as in 9M 2012 (US$ 105 million in 9M 2012 vs US$ 104 in 9M 2011).

Other agricultural operations

Due to our continued strategy of product mix optimization, production volumes of sausages and cooked meats decreased by 7% year-ton-year to 10,100 tonnes in Q3 2012 and by 6% to 26,610 tonnes in 9M 2012. Nevertheless, MHP's share of the Ukrainian meat processing market is about 10% as usual.

During 9M 2012 average sausage and cooked meat prices were gradually rising. Prices increased by 8% to UAH 22.34 per kg excluding VAT in Q3 2012 vs Q3 2011 and by 13% to UAH 22.02 per kg excluding VAT in 9M 2012 vs 9M 2011.

In Q3 2012 the segment's revenue rose slightly by 3% year-to-year. In 9M 2012 revenue totaled US$ 116 million, which is 9% greater than in 9M 2011 mainly due to growth of price of meat processing.

The segment's gross profit amounted to US$ 3 million in Q3 2012, 26% less than in Q3 2011, and US$ 8 million in 9M 2012, 22% less than in 9M 2011. EBITDA of other agricultural operations segment decreased by 47% to US$ 2 million in Q3 2012 year-to-year and by 19% to US$ 9 million in 9M 2012 year-to-year. EBITDA margin declined to 4% in Q3 2012 compared to 8% in Q3 2011 and to 7% in 9M 2012 compared to 10% in 9M 2011.

Current Group financial position, cash flow and liquidity

In 9M 2012 the increase of working capital totaled US$ 97 million and was mainly related to:

- Increase in biological assets US$ 93 million, mostly related to corn in fields and also including about US$ 15 million due to start of trial production of Vinnytsia facilities;

- Increase in VAT recoverable related to the intensive CAPEX program, US$ 42 million;

- Decrease in agricultural produce US$ 50 mostly due to export sales and internal consumption of corn harvested in 2011.

Total CAPEX was US$ 78 million in Q3 2012 and US$ 295 million in 9M 2012, with most of this related to the capital intensive Vinnytsia project. Since the start of construction in May 2010, approximately US$ 570 million has been invested into this project.

During the 9M 2012 period, the Group repurchased, under the share buy-back program, an additional 3,445,000 of its outstanding ordinary shares for a total cash consideration of US$ 41.5 million.

Vinnytsia - new green field project

Construction works at the Vinnystia complex are to schedule and on budget. Significant progress has already been made with the poultry farm, fodder complex and infrastructure at the Vinnytsia site.

Poultry Farm

·; Hatchery is complete and launched in operations;

·; 3 brigades (chicken rearing zones) with 38 chicken houses in each are complete and launched in testing operations, 9 brigades are under construction;

·; Construction of the slaughter house for Phase 1 (220,000 tonnes of poultry per annum) is complete and launched in testing operations.

Fodder Plant and Grain Storage Facilities

·; Fodder Plant and Sunflower Crushing Plant are in testing operations now.

Infrastructure and Social Responsibility

·; Construction of external water supply (60 km) is complete;

·; Construction of 45 km of new roads is complete;

·; Construction of 200 new residential apartments is complete.

Debt Structure

As of September 30, 2012, the Company's total debt was US$ 1,026 million, most of which was denominated in US dollars. The average weighted cost of debt was below 9%. Almost 60% of the Company's total debt is the Eurobond that matures in April 2015.

At the end of 9M 2012, MHP had US$ 82 million in cash and short-term bank deposits. Net debt increased to US$ 944 million as of September 30, 2012. Net Debt/EBITDA ratio at the end of the period was 1.97 versus 2.00 at the end of 2011 (Eurobond covenant: 2.5).

As a hedge for currency risks, revenues from the export of sunflower oil, sunflower husks and chicken meat are denominated in US Dollars, fully covering debt service expenses. During 9M 2012 the Company received US$ 342 million from export sales of sunflower oil, chicken meat and grains compared to US$ 244 in the same period of 2011.

Outlook

The Company continues to operate at full capacity and strong demand for poultry meat guarantees the total sales of the Company's chicken meat production.

Following the Company's strategy and objectives, MHP continues to develop export markets in order to establish reliable and long-term relationships. During the reporting period MHP expanded its operations in different regions and will continue its export expansion strategy further.

As the Company approaches the year end, its strong results for the first nine months provide a solid foundation for robust financial and operational results for the full year.

We are confident that we will be able to continue to implement our strategy and keep on delivering strong results 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

Interim condensed consolidated Financial Statements

For the nine-month period ended 30 September 2012

CONTENT

MANAGEMENT STATEMENT................................................................................................................ (a)

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2012

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME............................. 3

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION...................................... 4

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY...................................... 5

INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT......................................................... 7

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS................................. 8

1. Corporate information........................................................................................................................ 8

2. Basis of preparation and accounting policies....................................................................................... 9

3. Segment information....................................................................................................................... 10

4. Profit for the period.......................................................................................................................... 10

5. Property, plant and equipment.......................................................................................................... 11

6. Long-term VAT recoverable, net........................................................................................................ 11

7. Biological assets............................................................................................................................ 11

8. Inventories and agricultural produce.................................................................................................. 11

9. Treasury shares.............................................................................................................................. 11

10. Bank borrowings........................................................................................................................... 12

11. Bonds issued............................................................................................................................... 13

12. Trade accounts payable................................................................................................................ 13

13. Related party balances and transactions........................................................................................ 13

14. Contingencies and contractual commitments.................................................................................. 14

15. Currency risk............................................................................................................................... 15

16. Authorization of the interim condensed consolidated financial statements.......................................... 16

MANAGEMENT STATEMENT

To the best of our knowledge, the unaudited condensed consolidated interim financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

14 November 2012

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the nine-month period ended 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages 8 to 16 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as of 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board: 

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages 8 to 16 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the nine-month period ended 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages 8 to 16 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the nine-month period ended 30 September 2011

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board:

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages 8 to 16 form an integral part of these interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT

for the nine-month period ended 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

On behalf of the Board: 

Chief Executive Officer Yuriy Kosyuk

Chief Financial Officer Viktoria Kapelyushnaya

The accompanying notes on the pages 8 to 16 form an integral part of these interim condensed consolidated financial statements

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the nine-month period ended 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

1. Corporate information

MHP S.A. (the "Parent" or "MHP S.A."), a limited liability company (société anonyme) 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-1882 Luxembourg.

The controlling shareholder of MHP S.A. is the Chief Executive Officer of MHP S.A. Mr. Yuriy Kosyuk ("Principal Shareholder"), who owns 100% of the shares of WTI Trading Limited ("WTI"), which is the immediate majority shareholder of MHP S.A.

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-month period ended 30 September 2012 the Group employed about 25,000 people (31 December 2011: 24,800 people).

The Group has been undertaking a large-scale investment program to expand its poultry and related operations, and in May 2010, commenced construction of the greenfield Vinnytsya poultry complex. During the nine-month period ended 30 September 2012 construction works at Vinnytsya complex was performed as scheduled.

The primary subsidiaries, the principal activities of the companies forming the Group and the Parent's effective ownership interest as of 30 September 2012 and 31 December 2011 were as follows:

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.

Notes to the INTERIM CONDENSED Consolidated financial statements

for the nine-month period ended 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

2. Basis of preparation and accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the nine-month period ended 30 September 2012 have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") have been condensed or omitted. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of the Group management, necessary to fairly state the results of interim periods. Interim results are not necessarily indicative of the results to be expected for the full year.

The 31 December 2011 statement of financial position was derived from the audited consolidated financial statements.

Functional and presentation currencies

The functional currency of the Group is the Ukrainian Hryvnia ("UAH"). Transactions in currencies other than the functional currency of the Group are treated as transactions in foreign currencies. Such transactions are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are translated at the rates prevailing on the statement of financial position date. All realized and unrealized gains and losses arising on exchange differences are included in the consolidated statement of comprehensive income for the period.

These interim condensed consolidated financial statements are presented in US Dollars ("USD"), which is the Group's presentation currency.

The results and financial position of the Group are translated into the presentation currency using the following procedures:

·; Assets and liabilities for each statement of financial position presented are translated at the closing rate as of the date of that statement of financial position;

·; Income and expenses for each statement of comprehensive income are translated at exchange rates at the dates of the transactions;

·; All resulting exchange differences are recognized as a separate component of equity.

For practical reasons, the Group translates items of income and expenses for each period presented in the financial statements using the quarterly average rates of exchange, if such translations reasonably approximate the results translated at exchange rates prevailing at the dates of the transactions.

The following exchange rates were used:

Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2011.

Seasonality of operations

Poultry and related operations as well as other agricultural operations are not significantly exposed to the seasonal fluctuations.

Grain growing segment, due to seasonality and implications of IAS 41, in the first half of the year mainly reflects the sales of carried forward agricultural produce and effect of biological assets revaluation, while during the second half of the year it reflects sales of crops and effect of revaluation of agricultural produce harvested during the year. Also, grain growing segment has seasonal requirements for working capital increase during November - May, due to sowing campaign.

Notes to the INTERIM CONDENSED Consolidated financial statements

for the nine-month period ended 30 September 2012

(in thousands of US dollars, unless otherwise indicated)

3. Segment information

The following table presents revenue and profit information regarding the Group's operating segments for the nine-month period ended 30 September 2012:

1) Depreciation and amortization attributable to Grain growing segment for the nine-month period ended 30 September 2012 in the amount of USD 9,812 thousand was capitalized in biological assets (Note 7);

Depreciation and amortization for the nine-month period ended 30 September 2012 includes unallocated depreciation and amortization in the amount of USD 2,345 thousand.

The following table presents revenue and profit information regarding the Group's operating segments for the nine-month period ended 30 September 2011: