MRIYA

2010

ANNUALREPORT

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MRIYA unites traditional familyvalues, constant innovation andhighest quality standards

Employees

Mriya aspires to be anemployer of choice in the sec-tor

Society

Mriya strives to be a protector of the environment and of local communities.

Customers & Partners

Mriya aims to be a consistently reliable partners.

Shareholders

Mriya is determined to be one of the most efficient farming operations in the World

At Glance

Structure of the market where we operate

Market where we operate

Mission Core Values

Our mission and Values

Mriya’s mission is to consolidate and further expand its position to become one of the world’s leading and most efficient agricultural producers, with a focus on ensuring employee and customer satisfaction, producing high-quality harvest and creating value for its shareholders, as well as the communities in which it operates. The Company’s development is the result of efficient and rational use of natural and land resources, technical and technological innovations combined with con-siderable professional experience. As one of Ukraine’s largest agricultural compa-nies, Mriya understands the scale of its influence upon the social and economic development of Ukraine and recognises the necessity to grow in a responsible and sustainable way.

For Employees: Mriya aspires to be an employer of choice in the sector: to provide the best possible working conditions for our employees in order to ensure their safety, as well as to create opportunities for their professional development.

For Society: Mriya strives to be a protector of the environment and of local com-munities: to use natural and land resources in an efficient and rational manner.The Company applies new soil treatment and high-quality plant protection tech-nologies, and uses modern agricultural equipment and machinery.

For Customers & Partners: Mriya aims to be a consistently reliable partner: to produce high quality crops and to further strengthen its relationships with existing clients and partners, as well as to develop new relationships in key markets.

For Shareholders: Mriya is determined to be one of the most efficient farming operations in the World: to create shareholder value by successfully growing its production while maintaining high levels of profitability

STRIVING TO BECOME ONE OF THEWORLD’S LEADING AND MOST EFFICIENTAGRICULTURAL PRODUCERS

PLANTING THE SEEDS FOR THE FUTURE

Ukraine is considered to be one of the leading agricultural countries in the world with significant potential for future growth. The country has a long history of soft commodities production as it benefits from areas with expan-sive plains, fertile soils and favourable weather conditions. [In 1910, 36% of the world’s grain trade originated through wheat export from Black Sea ports. In 1940, Ukraine produced 26 million tons of grain including 8 million tons of wheat. The local agricultural sector was severely impacted by the Soviet revolution and the two World Wars. Production levels recorded in 1913 were not restored until 1955 when 32 million tons of grain was harvested. The wide-spread introduction of trac-tors, harvesters a year before the break-up of the USSR, grain production reached 51 million tons (which included 30 million tons of wheat).

After the collapse of the Soviet Union in the early 1990s, the agricultural sector experienced a severe crisis which led to a decrease of between 30% and 50% in production levels of most crops and livestock according to USDA. In 2001,

Market where we operate

Ukrainian Agricultural Overview

significant reforms were introduced in response to the protracted downturn of the Ukrainian agricultural sector. Most of the collective farms were dismantled and the land was distributed to em-ployees. Each farm worker received title to approximately four hectares of land and a share of property in the collec-tive farm. Finally, given that the sale of agricultural land was prohibited, many new owners leased their land back to newly-established private agricul-tural companies that then continued to operate on the land of former collec-tive farms. Simultaneously, Ukraine introduced a new law governing land ownership and land lease regulation. As a result of the sector reforms, Ukraine started to strengthen its position in the global agricultural commodities market. The agricultural sector represents an important share of the Ukrainian economic output, reaching 7% in 2008 according to the State Statistics Committee of Ukraine (“SSC”). Grain production levels in 2009 reached 46 million tons according to SSC, similar

to levels last achieved during the years of the Soviet Union. Currently, Ukraine is the third largest global coarse grain exporter and supplies 11m tons of grain or 10% of the total global grain trade according to USDA.

Ukraine is emerging as one of the world’s largest suppliers of grain and oilseeds. Should the country’s produc-tion of meat, eggs, other food products be considered compliant with the EU requirements, the country has signifi-cant export potential in areas beyond its current main agro export items – grain, vegetable oil, and oil seeds. Vast amount of high quality agricultural land, fairly mild climate, favourable location close to Europe and next to deep sea, rail and road export/import routs, up-side for yields on better machinery and higher quality of inputs, relatively low costs of production, make Ukrainian

agro sector one of the most attractive in the country overall, in our view.

The sector has attracted a lot of direct as well as institutional investments in recent years. We estimate free float of Ukrainian listed agro companies at $1.6bn, combined market capitalization at $5.2bn. We foresee equity capital markets activity by Ukrainian agro com-panies to remain intense as the sector offers high-return investment opportuni-ties which require capital to capture. Investments are required for land lease rights and agriculture equipment acqui-sition, construction or consolidation of processing capacities, investments in logistics infrastructure (silos, port termi-nals, transportation vehicles).

Market where we operate

INDUSTRY OVERVIEW

The term “cereals” is used as a broad term for wheat, coarse grain and rice. According to USDA, global cereals production has grown annually by 3.5% over the last three years to reach 2.2 billion tons in the 2009/10 agricultural year. (An agricultural year varies by country and commodity. According to USDA, the U.S. agricultural year for wheat, coarse grain and rice milled can vary between June–May and September–August ). In the preceding two agricultural years, world consump-tion according to USDA exceeded total output by approximately 82 million tons and 26 million tons, respectively, imply-ing year-end stock in 2009/10 of 473 million tons.

Agricultural production has increased steadily over the past several years to meet growing demand driven by global economic growth in general, a rising world population and the use of agricultural crops for bio-fuels. High demand combined with limited supply growth led to an environment of historically high prices during the past decade, peaking during 2008. Although agricultural commodity prices decreased during the global economic downturn during 2008 and 2009, they remain above long-term historic levels and the U.S. Department of Agriculture (“USDA”) expects that robust demand conditions will continue to support agricultural commodity prices over the medium term.

As growth in demand for cereals and oilseeds continues to outpace supply, world stock levels remain under pres-sure. The situation has been further ex-acerbated by the weak U.S. dollar in the last decade as net importing countries are able to continue importing despite record high world prices denominated in U.S. dollars. USDA data illustrates that, despite the good 2008 harvest, year-end stock levels in 2008 were sig-nificantly lower than historical averages. Stock levels started to recover in 2009 and a modest increase in grain stocks is expected in 2010, however, stock levels are not expected to revert to the record highs reached in the late 1990s.

Market Structureand Global Supply

Global AgriculturalMarket

Global Production and Stock Levels

The ability of global grains and oilseeds producers to expand production to meet global demand will depend on a number of supply factors such as yield improvement, ability to increase land dedicated to agricultural production, farm management and weather conditions.