Prospectus for Offers of the Gdrs

IMPORTANT: You must read the following before continuing. The following applies to the Information Memorandum (the ‘‘Information Memorandum’’) following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the Information Memorandum. In accessing the Information Memorandum, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from the company described herein (the ‘‘Company’’) as a result of such access. THE FOLLOWING INFORMATION MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED OTHER THAN AS PROVIDED BELOW AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. THIS INFORMATION MEMORANDUM MAY ONLY BE DISTRIBUTED IN ‘‘OFFSHORE TRANSACTIONS’’ AS PERMITTED BY REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’) OR WITHIN THE UNITED STATES TO PERSONS REASONABLY BELIEVED TO BE QIBs (AS DEFINED HEREIN) IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT (‘‘RULE 144A’’) OR ANOTHER EXEMPTION FROM, OR TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS INFORMATION MEMORANDUM IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A ‘‘QIB’’), OR (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. Confirmation of Your Representation: In order to be eligible to view this Information Memorandum or make an investment decision with respect to the securities offered pursuant thereto, you must be (i) a person that is outside the United States for the purposes of Regulation S under the Securities Act or (ii) a QIB that is acquiring the securities for its own account or for the account of another QIB. This Information Memorandum is being sent at your request and by accepting the e-mail and accessing this Information Memorandum, you shall be deemed to have represented to the Company that you are outside the United States for the purposes of Regulation S under the Securities Act or that you are a QIB and that you consent to delivery of such Information Memorandum by electronic transmission. Except with respect to eligible investors in jurisdictions where such offer is permitted by law, nothing in this electronic transmission constitutes an offer or an invitation by or on behalf of either the issuer of the securities, J.P. Morgan Securities plc, UBS Limited and VTB Capital plc (the ‘‘Managers’’) to subscribe for or purchase any of the securities described herein, and access has been limited so that it shall not constitute a general solicitation or general advertising (each as defined in Regulation D under the Securities Act) or directed selling efforts (as defined in Regulation S under the Securities Act) in the United States or elsewhere. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Managers or any affiliate of the Managers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the Managers or such affiliate on behalf of the Company in such jurisdiction. This Information Memorandum may only be communicated or caused to be communicated to persons in the United Kingdom in circumstances where section 21(1) of the Financial Services and Markets Act 2000 does not apply and may be distributed in the United Kingdom only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the ‘‘Order’’), or (ii) are persons falling within Article 49(2)(a) to (d) (‘‘high net worth companies, unincorporated associations etc.’’) of the Order (all such persons together being referred to as ‘‘relevant persons’’). In the United Kingdom, the Information Memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which the Information Memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. This Information Memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission, and consequently none of the Company or the Managers, any person who controls any of them, or any director, officer, employee or agent of the Company or the Managers or any affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Information Memorandum distributed to you in electronic format and the hard copy version available to you on request from the Managers. You are reminded that you have accessed the attached Information Memorandum on the basis that you are a person into whose possession this Information Memorandum may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located, and you may not nor are you authorized to deliver or forward this document, electronically or otherwise, to any other person. If you have gained access to this transmission contrary to the foregoing restrictions, you will be unable to purchase any of the securities described herein. Actions That You May Not Take: You should not reply by e-mail to this announcement, and you may not purchase any securities by doing so. Any reply e-mail communications, including those you generate by using the reply function on your e-mail software, will be ignored and rejected. 25MAR201104573521

ROS AGRO PLC (a public company limited by shares incorporated under the laws of the Republic of Cyprus) Offering of 16,666,665 Global Depositary Receipts Offer Price: US$15 per GDR (the ‘‘Offer Price’’) This Information Memorandum (the ‘‘Information Memorandum’’) relates to an offering (the ‘‘Offering’’) by ROS AGRO PLC (the ‘‘Company’’) of 16,666,665 global depositary receipts (the ‘‘GDRs’’) representing 3,333,333 ordinary shares, each with a nominal value of A0.01 (‘‘Ordinary Shares’’), of the Company. Five GDRs represent an interest in one Ordinary Share. The GDRs are being offered (i) in the United States to certain persons reasonably believed to be qualified institutional buyers (‘‘QIBs’’), as defined in, and in reliance on, Rule 144A (‘‘Rule 144A’’) under the US Securities Act of 1933, as amended (the ‘‘Securities Act’’), or another exemption from the registration requirements of the Securities Act, and (ii) outside the United States in offshore transactions in reliance on Regulation S under the Securities Act (‘‘Regulation S’’). See ‘‘Plan of Distribution.’’ The Offering does not constitute an offer to sell, or solicitation of an offer to buy, securities in any jurisdiction in which such offer or solicitation would be unlawful. The GDRs have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered or sold within the United States, except to persons reasonably believed to be QIBs in reliance on Rule 144A or another exemption from the registration requirements of the Securities Act, or outside the United States in offshore transactions in reliance on Regulation S. Prospective purchasers are hereby notified that sellers of the GDRs may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a discussion of certain restrictions on transfers of the GDRs, see ‘‘Transfer and Selling Restrictions.’’ Mr. Vadim Moshkovich, the controlling beneficial shareholder of the Company, through Shiny Property Limited, a company controlled by him, has participated in the Offering and has agreed to purchase GDRs in an amount of approximately US$99.6 million. In addition, Mr. Maxim Basov, the Chief Executive Officer, has directly participated in the Offering and has agreed to purchase GDRs in an amount of approximately US$17.5 million. INVESTMENT IN THE GDRS INVOLVES A HIGH DEGREE OF RISK. The GDRs are of a specialist nature and should only be purchased and traded by investors who are particularly knowledgeable in investment matters. Potential investors should be prepared to bear the risk of a total loss of their investment. For a discussion of certain factors regarding the Company and the GDRs that should be considered by potential investors, see ‘‘Risk Factors.’’ In connection with the Company’s admission to the official list (‘‘Official List’’) of the United Kingdom Financial Conduct Authority (‘‘FCA’’) and the London Stock Exchange plc (the ‘‘London Stock Exchange’’) on April 13, 2011, a total of 120,000,000 GDRs were admitted to the Official List and the London Stock Exchange. There are currently 25,000,000 GDRs in issue. Following the Offering, there will be 120,000,000 GDRs admitted in aggregate, consisting of (i) 25,000,000 existing GDRs, (ii) 16,666,665 GDRs to be issued on or about May 5, 2016, and (iii) up to an additional 78,333,335 GDRs to be issued from time to time against the deposit of the Ordinary Shares with BNY (Nominees) Limited, as custodian (the ‘‘Custodian’’) acting on behalf of The Bank of New York Mellon in its capacity as depositary (the ‘‘Depositary’’). The GDRs have been admitted to trading in the ‘‘Level 1’’ part of the List of Securities Admitted to Trading on Closed joint-stock company ‘‘MICEX Stock Exchange’’ (‘‘MICEX’’), a part of the Moscow Exchange Group (‘‘MoEx’’), since November 26, 2014. No action by the Company is required for the newly-issued GDRs to be tradable on MICEX. No assurance can be given that thereafter the GDRs will continue to be admitted to trading on MICEX. See ‘‘Risk Factors – Risks Relating to the GDRs – There is no guarantee whether the listing of the GDRs on MICEX will be maintained.’’. The GDRs offered pursuant to Regulation S (the ‘‘Regulation S GDRs’’) will be evidenced by the existing master Regulation S global depositary receipt (the ‘‘Regulation S Master GDR’’), which is registered in the name of The Bank of New York Depository (Nominees) Limited, a nominee for The Bank of New York Mellon, London Branch, as common depositary for Euroclear Bank SA/NV (‘‘Euroclear’’) and Clearstream Banking, societ´ e´ anonyme (‘‘Clearstream Luxembourg’’). The GDRs offered pursuant to Rule 144A (the ‘‘Rule 144A GDRs’’) will be evidenced by the existing master Rule 144A global depositary receipt (the ‘‘Rule 144A Master GDR’’ and, together with the Regulation S Master GDR, the ‘‘Master GDRs’’) registered in the name of Cede & Co., as nominee for The Depository Trust Company (‘‘DTC’’) in New York. The Ordinary Shares represented by the GDRs will be held by the Custodian, for the Depositary. Except as described herein, beneficial interests in the Master GDRs will be held, and transfers thereof will be effected only through, Euroclear, Clearstream Luxembourg and DTC and their direct and indirect participants, including the Russian National Settlement Depositary (‘‘NSD’’). Transfers within Euroclear, Clearstream Luxembourg, DTC and NSD will be in accordance with the usual rules and operating procedures of the relevant system. It is expected that delivery of the GDRs will be made against payment therefor in same day funds at the closing of the Offering on or about May 5, 2016 (the ‘‘Closing Date’’) through Euroclear and Clearstream Luxembourg, with regard to the Regulation S GDRs, and through DTC, with regard to the Rule 144A GDRs. Each purchaser of the GDRs must pay for such GDRs in US Dollars. For important information about this Information Memorandum, see ‘‘Important Information.’’ Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers

20APR201603524791 UBS Investment Bank 20APR201603522028

The date of this Information Memorandum is April 28, 2016. IMPORTANT INFORMATION By accepting delivery of this Information Memorandum, you agree to the following. This Information Memorandum is being furnished by the Company solely for the purpose of enabling a prospective investor to consider the purchase of the GDRs. Any reproduction or distribution of this Information Memorandum, in whole or in part, any disclosure of its contents or use of any information herein for any purpose other than considering an investment in the GDRs is prohibited, except to the extent that such information is otherwise publicly available. None of J.P. Morgan Securities plc, UBS Limited or VTB Capital plc (together the ‘‘Managers’’) makes any representation, express or implied, or accepts any responsibility, with respect to the accuracy or completeness of any of the information in this Information Memorandum. This Information Memorandum is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company or the Managers that any recipient of this Information Memorandum should subscribe for or purchase the GDRs. Each potential subscriber or purchaser of the GDRs should determine for itself the relevance of the information contained in this Information Memorandum, and its subscription or purchase of the GDRs should be based upon such investigation as it deems necessary. The Company accepts responsibility for the information contained in this Information Memorandum and, having taken all reasonable care to ensure that such is the case, the information contained in this Information Memorandum is, to the best of the Company’s knowledge, in accordance with the facts and contains no omissions likely to affect its import. The contents of the websites of the Company and its subsidiaries do not form any part of this Information Memorandum. This Information Memorandum is personal to each offeree and does not constitute an offer to any other person or the public generally to purchase or otherwise acquire the GDRs. In making an investment decision regarding the GDRs, you must rely on your own examination of the Company and the terms of the Offering, including the merits and risks involved. No person has been authorized by the Company or the Managers to provide any information or to make any representations other than those contained in this Information Memorandum. You should carefully evaluate the information provided by the Company or the Managers in light of the total mix of information available to you, recognizing that none of the Company or the Managers can provide any assurance as to the reliability of any information not contained in this Information Memorandum. None of the Company or the Managers has authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this Information Memorandum is accurate only as of its date. Our business, financial condition, results of operations, prospects and the information set forth in this Information Memorandum may have changed since the date of this Information Memorandum. We have included our own estimates, assessments, adjustments and judgments in preparing some market information, which has not been verified by an independent third party. Market information included herein is, therefore, unless otherwise attributed to a third party source, to a certain degree subjective. While we believe that our own estimates, assessments, adjustments and judgments are reasonable and that the market information prepared by us accurately reflects the state of the industry and the markets in which we operate, there is no assurance that our own estimates, assessments, adjustments and judgments are the most appropriate for making determinations relating to market information or that market information prepared by other sources will not differ materially from the market information included herein. You should not consider any information in this Information Memorandum to be investment, legal or tax advice. You should consult your own counsel, accountant and other advisors for legal, tax, business, financial and related advice regarding purchasing the GDRs. None of the Company or the Managers makes any representation to any offeree or purchaser of the GDRs regarding the legality of an investment in the GDRs by such offeree or purchaser under applicable investment or similar laws. The Managers are acting exclusively for the Company and no one else in connection with the Offering and will not be responsible to any other person for providing the protections afforded to their respective clients or for providing advice in relation to the Offering.

i In connection with the Offering, the Managers and any of their respective affiliates acting as an investor for its or their own account(s) may subscribe for or purchase, as the case may be, the GDRs and, in that capacity, may retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such securities, any other securities of the Company or other related investments in connection with the Offering or otherwise. Accordingly, references in this Information Memorandum to the GDRs being issued, offered, subscribed or otherwise dealt with should be read as including any issue or offer to, or subscription or dealing by, the Managers or any of them and any of their affiliates acting as an investor for its or their own account(s). The Managers do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so. We may withdraw the Offering at any time, and we, the Managers reserve the right to reject any offer to purchase the GDRs, in whole or in part, and to sell to any prospective investor less than the full amount of the GDRs sought by such investor. The distribution of this Information Memorandum and the offer and sale of the GDRs may be restricted by law in certain jurisdictions. You must inform yourself about, and observe any such restrictions. See ‘‘Transfer and Selling Restrictions’’ elsewhere in this Information Memorandum. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the GDRs or possess or distribute this Information Memorandum and must obtain any consent, approval or permission required for your purchase, offer or sale of the GDRs under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales. None of the Company or any Manager accepts any responsibility for any violation by any person, whether or not it is a prospective purchaser of the GDRs, of any of these restrictions. This Information Memorandum does not constitute, and may not be used in connection with, any offer or solicitation in any such jurisdiction or to any person to whom it is unlawful to make such offer or solicitation. None of the Company or the Managers is making an offer to sell the GDRs or a solicitation of an offer to buy any of the GDRs to any person in any jurisdiction except where such an offer or solicitation is permitted.

ii NOTICE TO CERTAIN INVESTORS Notice to European Economic Area Investors This Information Memorandum has been prepared on the basis that all offers of the GDRs will be made pursuant to an exemption under the Information Memorandum Directive, as implemented in the Member States of the European Economic Area (the ‘‘EEA’’) from the requirement to produce a prospectus for offers of the GDRs. Accordingly, any person making or intending to make any offer within the EEA of the GDRs, which are the subject of the placement contemplated in this Information Memorandum should only do so in circumstances under which no obligation arises for the Company or any of the Managers to produce a prospectus for such offer. Neither the Company, nor the Managers have authorized, or will authorize, the making of any offer of the GDRs through any financial intermediary, other than offers made by the Managers that constitute the final placement of the GDRs contemplated in this Information Memorandum. Each person in a Member State of the EEA that has implemented the Prospectus Directive (a ‘‘Relevant Member State’’) who receives any communication in respect of, or who acquires any GDRs under, the offers contemplated in this Information Memorandum will be deemed to have represented, warranted and agreed to and with each Manager and the Company that: • it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and • in the case of any GDRs acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive: • the GDRs acquired by it in the Offering have not been acquired on behalf of, or with a view to the offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Managers has been given to the offer or resale; or • where GDRs have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Securities is not treated under the Prospectus Directive as having been made to such persons. For the purposes of this provision, the expression an ‘‘offer to the public’’ in relation to any GDRs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offering and any GDRs to be offered so as to enable an investor to decide to purchase or subscribe for the GDRs, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the Prospectus Directive includes any relevant implementing measure in each Relevant Member State.

Notice to United Kingdom Investors This Information Memorandum is only being distributed to and is only directed at (i) persons who are outside the United Kingdom, (ii) investment professionals falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the ‘‘Order’’) or (iii) high net worth entities falling within Article 49(2)(a) to (d) of the Order, or other persons to whom it may lawfully be communicated (such persons collectively being referred to as ‘‘Relevant Persons’’). The GDRs are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such GDRs will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this Information Memorandum or any of its contents.

Notice to United States Investors NEITHER THE US SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION IN THE UNITED STATES NOR ANY OTHER US REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED OF THE GDRS OR PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OF THE GDRS OR THE ACCURACY OR ADEQUACY OF THIS INFORMATION MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES.

iii Notice to Russian Investors This Information Memorandum does not constitute a public offer or advertisement for the GDRs in Russia, and is not an offer, or an invitation to make offers, to sell, purchase, exchange or otherwise transfer the GDRs to any persons in Russia, except to the extent permitted under Russian law. Neither the GDRs nor any prospectus or any other document relating to them have been or will be registered with the Central Bank of Russia (the ‘‘CBR’’). Therefore, ‘‘placement’’ of the GDRs in Russia is prohibited. The GDRs are not being offered, sold or delivered in Russia or to any Russian resident except as may be permitted by Russian law.

Notice to Cyprus Investors No issue or offer or invitation to subscribe or purchase or otherwise procure subscribers or purchasers for the GDRs within or in Cyprus is made except in compliance with the provisions of the Public Offer and Prospectus Law No. 114(I)/2005, as amended, or the Companies Law, Cap 113 of the laws of Cyprus, as amended. Without prejudice to the foregoing, the GDRs shall not be advertised, offered, transferred or sold as part of their initial distribution or at any time thereafter to or for the benefit of any persons (including legal and non-legal entities) resident, incorporated, established, domiciled or having their usual residence in Cyprus or to any such person located within the territory of Cyprus except to the extent permitted by and in accordance with Cyprus law and regulations.

Notice to Canadian investors The GDRs may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the GDRs must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this Information Memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the Managers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this Offering.

iv REFERENCES In this Information Memorandum: • all references to ‘‘US Dollar,’’ ‘‘US Dollars’’ or ‘‘US$’’ are to the currency of the United States; • all references to ‘‘rouble,’’ ‘‘roubles,’’ ‘‘Russian roubles’’ or ‘‘RUB’’ are to the currency of the Russian Federation; • all references to ‘‘Euro’’ or ‘‘E’’ are to the currency of the member states of the European Union participating in the European Monetary Union; • all references to ‘‘Russia’’ or ‘‘Russian’’ are to the Russian Federation; • all references to the ‘‘United States,’’ ‘‘U.S.’’ or ‘‘US’’ are to the United States of America; and • all references to the ‘‘EU’’ are to the European Union and its member states as at the date of this Information Memorandum. Unless the context otherwise requires, all references in this Information Memorandum to the ‘‘Company’’ are to ROS AGRO PLC, and all references in this Information Memorandum to ‘‘Rusagro’’ or the ‘‘Group’’ refer collectively to the Company and its subsidiaries. All references in this Information Memorandum to ‘‘we,’’ ‘‘us,’’ ‘‘our’’ and similar terms refer to the Company or the Group, as the context may require.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Information Memorandum contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the US Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), which reflect our views with respect to our results of operations, financial condition, business strategy and our plans and objectives for future operations. These forward-looking statements relate to us and the industry in which we operate. Statements that include the words ‘‘expect,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘believe,’’ ‘‘project,’’ ‘‘anticipate,’’ ‘‘will,’’ ‘‘target,’’ ‘‘aim,’’ ‘‘may,’’ ‘‘would,’’ ‘‘could,’’ ‘‘continue’’ and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the US federal securities laws or otherwise. All forward-looking statements included in this Information Memorandum address matters that involve risks, uncertainties and other important factors beyond our control that could cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. These factors include but are not limited to the following: • changes in political, social, legal or economic conditions in Russia; • our ability to respond to legal and regulatory developments and restrictions in relation to the industries in which we operate; • our ability to obtain necessary regulatory approvals and licenses for our business; • our ability to service our existing indebtedness; • our ability to fund future operations and capital needs through borrowings or otherwise; • changes in our liquidity, capital resources or capital expenditures; • our ability to successfully implement any of our business strategies; • our expectations about demand for products we sell; • competition in the marketplace; • changes in consumer preferences; • inflation and fluctuations in currency exchange rates and interest rates; • our success in identifying other risks to our business and managing the risks of the aforementioned factors;

v • expectations about our future capital expenditures both at the Group level and at the level of our divisions; and • those described in the part of this Information Memorandum entitled ‘‘Risk Factors,’’ which should be read in conjunction with the other cautionary statements that are included in this Information Memorandum. Any forward-looking statements in this Information Memorandum reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our business, results of operations, financial condition, growth strategy and liquidity. Any forward-looking statements speak only as of the date of this Information Memorandum. Subject to any obligations under any applicable law, we undertake no obligation to update publicly or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to us, and those acting on behalf of us, are expressly qualified in their entirety by this section. Prospective investors should specifically consider the factors identified in this Information Memorandum that could cause actual results to differ before making an investment decision.

AVAILABLE INFORMATION We have agreed that for so long as any GDRs are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act, we will, during any period in which we are neither subject to Section 13 or Section 15(d) of the Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner upon the request of such holder, beneficial owner or prospective purchaser, the information required to be delivered to such persons pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holder or beneficial owner of such restricted securities.

SERVICE OF PROCESS AND ENFORCEMENT OF CIVIL LIABILITIES Our presence outside the United States and the United Kingdom may limit the legal recourse investors have against us. The Company is incorporated under the laws of the Republic of Cyprus. Most of our directors and senior managers named in this Information Memorandum reside outside the United States and the United Kingdom, principally in Russia. All our assets and a substantial portion of the assets of our directors and senior managers are located outside the United States and the United Kingdom, principally in Russia. As a result, investors may not be able to effect service of process within the United States or the United Kingdom upon us, our directors or senior managers or enforce automatically US or UK court judgments obtained against us, our directors or senior managers in jurisdictions outside the United States and the United Kingdom, including actions under the civil liability provisions of US securities laws. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions outside the United States and the United Kingdom, liabilities predicated upon US or UK securities laws. Judgments rendered by a court in any jurisdiction outside the Russian Federation may not be enforced by courts in Russia unless (i) there is an international treaty in effect providing for the recognition and enforcement of judgments in civil cases between the Russian Federation and the country where the judgment is rendered, and/or (ii) a federal law of the Russian Federation provides for the recognition and enforcement of foreign court judgments. We are not aware of a treaty or convention directly providing for the recognition and enforcement of judgments in civil and commercial matters between the United Kingdom or the United States and the Russian Federation. However, we are aware of at least one instance in which Russian courts have recognized and enforced an English court judgment. The basis for this was a combination of the principle of reciprocity and the existence of a number of bilateral and multilateral treaties to which both the United Kingdom and the Russian Federation are parties. The courts decided that such treaties constituted grounds for the recognition and enforcement of the relevant English court judgment in Russia. In the absence of established court practice, however, it is difficult to predict whether a Russian court would be inclined in any particular instance to recognize and enforce an English court judgment on these grounds.

vi In addition, Russian courts have limited experience in the enforcement of foreign court judgments. The limitations described above may significantly delay the enforcement of any court judgment, or completely deprive investors of effective legal recourse for claims related to their investment in the GDRs. The Russian Federation is party to the United Nations (New York) Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the ‘‘New York Convention’’). Consequently, Russian courts should generally recognize and enforce in the Russian Federation an arbitral award from an arbitral tribunal, on the basis of the rules of the New York Convention (subject to qualifications provided for in the New York Convention and compliance with Russian procedural regulations and other procedures and requirements established by Russian legislation). However, it may be difficult to enforce arbitral awards in the Russian Federation due to a number of factors, including: • the inexperience of the Russian courts in international commercial transactions; • official and unofficial political resistance to the enforcement of awards against Russian companies in favor of foreign investors; and • the inability of Russian courts to enforce such awards. The Arbitrazh procedural code of the Russian Federation (the ‘‘Arbitrazh Procedural Code’’) sets out certain grounds for Russian courts to refuse to recognize and enforce any such arbitral award. The Arbitrazh Procedural Code and other Russian procedural legislation could change; therefore, among other things, other grounds for Russian courts to refuse the recognition and enforcement of foreign courts’ judgments and foreign arbitral awards could arise in the future. In practice, reliance upon international treaties may meet with resistance or a lack of understanding on the part of a Russian court or other officials, thereby introducing delay and unpredictability into the process of enforcing any foreign judgment or foreign arbitral award in the Russian Federation.

vii PRESENTATION OF FINANCIAL AND OTHER INFORMATION The financial information set forth herein has, unless otherwise indicated, been derived from the audited consolidated financial statements of the Group as of and for the three years ended December 31, 2015, 2014 and 2013 (the ‘‘Consolidated Financial Statements’’) prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘‘IFRS’’) and the requirements of the Cyprus Companies Law, Cap. 113.

Presentation of Non-IFRS Measures This Information Memorandum contains non-IFRS measures and ratios, including Adjusted EBITDA, Net Debt, Net Debt to Adjusted EBITDA ratio, Gross Profit Margin, Net Profit Margin, Adjusted EBITDA Margin, Net Working Capital and Capital Expenditures. The Company presents non-IFRS measures and ratios because management believes such measures and ratios are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Group’s industries. These measures have limitations as an analytical tool, and they should not be considered in isolation, or as a substitute for analysis of the Group results as reported under IFRS.

Adjusted EBITDA The Group defines Adjusted EBITDA as operating profit before taking into account (i) depreciation; (ii) other operating income/expenses, net (other than reimbursement of operating costs (government grants)); (iii) the difference between the aggregate gain on initial recognition of agricultural produce and gain from the change in fair value less estimated point-of-sale costs of biological assets less gains related to realized biological assets and agricultural produce; (iv) share-based remuneration; (v) provision/(reversal of provision) for net realizable value of agricultural products in stocks. Group’s calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. Adjusted EBITDA is not a measure of financial performance under IFRS. It should not considered it an alternative to profit for the year as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Some of the limitations of using the Group’s Adjusted EBITDA as a financial measure include the following: (i) Adjusted EBITDA does not reflect the impact of financing costs, which are significant and could further increase if the Group incurs more debt, on the Group’s operating performance, (ii) Adjusted EBITDA does not reflect the impact of income taxes on the Group’s operating performance, (iii) Adjusted EBITDA does not reflect the impact of depreciation and amortization on the Group’s operating performance. The assets of the Group’s business that are being depreciated and/or amortized will likely have to be replaced in the future and such depreciation and amortization expense may approximate the cost to replace these assets in the future. By excluding this expense from Adjusted EBITDA measures, they do not reflect the Group’s future cash requirements for these replacements, (iv) Adjusted EBITDA does not reflect the impact of gain or loss on disposal of property, plant and equipment, (v) Adjusted EBITDA excludes items that the Group considers to be one-off or unusual, but such items may in fact occur, and (vi) Adjusted EBITDA does not reflect net gain or loss on revaluation of biological assets and agricultural produce.

Net Debt The Group defines Net Debt as outstanding long-term borrowings and short-term borrowings less cash and cash equivalents, all bank deposits, bonds held for trading and banks’ promissory notes. The Group’s use of the term ‘‘net debt’’ may vary from other companies in its industry due to differences in accounting policies or in calculation methodology. Net Debt is not a measure defined by IFRS, has limitations and should not be considered in isolation, or as a substitute for financial information as reported under IFRS or as an alternative to any liquidity or leverage measures derived in accordance with IFRS.

Presentation of Market Share and Industry Data The information contained in this Information Memorandum has been partly obtained by the Group from external sources, including other private companies, agencies, international organizations and Russian authorities, such as the Russian Federal State Statistics Service (‘‘Rosstat’’), the CBR, the Union of Sugar Producers of Russia (‘‘Soyuzrossakhar’’), the Russian Oil and Fat Union, the National Union of Pig Breeders, Nielsen, BMI Research, Growth Technologies, Bloomberg, Euromonitor International (‘‘Euromonitor’’), FactSet, BEFL, the Institute for Agricultural Market Studies, U.S. Department of

viii Agriculture (‘‘USDA’’), the Ministry of Agriculture of the Russian Federation (the ‘‘Ministry of Agriculture’’), the Russian Federal Customs Service, the Federal Service for Veterinary and Phytosanitary Supervision (the ‘‘Rosselkhoznadzor’’), Food and Agriculture Organization of the United Nations (‘‘FAO’’) and the Organization of Economic Co-operation and Development (‘‘OECD’’), and the Group has relied on that information without carrying out any independent verification. We confirm that this data has been accurately reproduced and, so far as we are aware and have been able to ascertain from that published information, no facts have been omitted which would render the reproduced information inaccurate or misleading. However, in the preparation of this Information Memorandum, this third party information has not been independently verified nor has there been any investigation of the validity of the methodology of, or the basis used by, the third parties in producing such data or making estimates and forecasts. We, the Managers cannot give any assurance that any such information is accurate or, in respect of projected data, that such projections have been based on correct information and assumptions or that they will prove to be accurate. We name sources of third party information whenever such third party information is used in this Information Memorandum.

Operating segments and operational divisions The Group has four operating segments: Sugar, Meat, Agriculture and Oil and Fat. In this Information Memorandum we use both the terms ‘‘segments’’ and ‘‘divisions’’, which have the same meaning.

Rounding Certain amounts that appear in this Information Memorandum have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them, and the figures expressed as percentages may not total 100% when aggregated.

Exchange Rate Information The following tables show, for the periods indicated, certain information regarding the exchange rate between the rouble and the US Dollar, based on the official exchange rate quoted by the CBR. These rates may differ from the actual rates used in the preparation of our Consolidated Financial Statements and other financial information appearing in this Information Memorandum.

Roubles per US Dollar Period Years ended December 31, High Low Average(1) end 2013 ...... 33.47 29.93 31.91 32.73 2014 ...... 67.79 32.66 38.60 56.26 2015 ...... 72.88 49.18 60.96 72.88

Roubles per US Dollar Period Months High Low Average(1) end January 2016 ...... 83.59 72.93 76.31 75.17 February 2016 ...... 79.50 75.09 77.23 75.09 March 2016 ...... 75.90 67.61 70.51 67.61 April 2016 (up to and including April 28, 2016) ...... 68.89 65.03 66.83 65.16

(1) The average rates are calculated as the average of the daily exchange rates on each business day (which rate is announced by the CBR for each such business day) and on each non-business day (which rate is equal to the exchange rate on the previous business day). The exchange rate between the rouble and the US Dollar quoted by the CBR for April 28, 2016 was RUB 65.16 per US$1.00. No representation is made that the rouble or US Dollar amounts in this Information Memorandum could have been, can or will be able to be, converted to US Dollars or roubles, as the case may be, at any particular rate or at all.

ix TABLE OF CONTENTS

SUMMARY ...... 1 SUMMARY CONSOLIDATED FINANCIAL INFORMATION ...... 6 THE OFFERING ...... 10 RISK FACTORS ...... 14 USE OF PROCEEDS ...... 49 DIVIDEND POLICY ...... 50 CAPITALIZATION ...... 51 DILUTION...... 52 SELECTED CONSOLIDATED FINANCIAL INFORMATION ...... 53 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 59 INDUSTRY OVERVIEW ...... 87 BUSINESS ...... 105 MANAGEMENT...... 138 PRINCIPAL SHAREHOLDERS ...... 142 RELATED PARTY TRANSACTIONS ...... 143 REGULATION OF THE RUSSIAN AGRICULTURAL AND FOOD INDUSTRY ...... 146 DESCRIPTION OF THE SHARE CAPITAL AND APPLICABLE CYPRIOT LEGISLATION ...... 155 TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS ...... 162 SUMMARY OF PROVISIONS RELATED TO THE GLOBAL DEPOSITARY RECEIPTS WHILE IN MASTER FORM ...... 180 TAXATION ...... 182 PLAN OF DISTRIBUTION ...... 193 TRANSFER AND SELLING RESTRICTIONS ...... 195 SETTLEMENT AND DELIVERY ...... 199 INFORMATION RELATING TO THE DEPOSITARY ...... 203 LEGAL MATTERS ...... 204 INDEPENDENT AUDITORS ...... 205 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ...... F-1

x SUMMARY The following summary information should be read as an introduction to the Information Memorandum. Any decision to invest in the GDRs should be based on consideration of this Information Memorandum as a whole by the investor. Where a claim relating to the information contained in the Information Memorandum is brought before a court, the plaintiff investor might, under the national legislation of the Member States of the EEA, have to bear the costs of translating the Information Memorandum before the legal proceedings are initiated. Civil liability attaches to those persons who have tabled this summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Information Memorandum.

Business Rusagro is a leading Russian diversified food producer with vertically integrated operations. Our principal divisions are: • Sugar: We are the third largest sugar producer in Russia with a share of 14% of all sugar produced in Russia during 2015 (according to Soyuzrossakhar data) and with a share of 44% of all cube sugar produced in Russia during 2015 (according to Nielsen data). Our nine sugar processing plants (including three sugar plants being acquired from PJSC Group Razgulay and its subsidiaries (the ‘‘Razgulay group’’)) have an aggregate daily processing capacity of approximately 48,350 tons of sugar beets. Based on our internal estimates that our plants can process sugar beets for up to 130 days per year based on the length of the growing season, our plants have an aggregate annual processing capacity of 6.3 million tons of sugar beets (including processing capacity of three sugar plants being acquired from the Razgulay group). Our sugar conversion ratio for processing sugar beets was approximately 15.5% in 2015, 15.7% in 2014 and 12.3% in 2013. Our Sugar division is vertically integrated with the sugar beet cultivation in our Agriculture division, through which we strive to ensure a consistent supply of sugar beets. We are in the process of acquiring three sugar plants from the Razgulay group; see ‘‘Business – Recent Developments’’. • Meat: We are the second largest pork producer in Russia with a share of 6% of all pork produced in Russia during 2015 (according to the National Union of Pig Breeders). We sell livestock, carcasses, cuts and offals. Our pig breeding sites are located in the Belgorod and Tambov regions. Our pig breeding complex in the Tambov region also includes a slaughterhouse and meat processing facilities (with a capacity of 1.95 million heads a year), as well as rendering facilities. In total we currently have 13 pig farms and two operating breeding facilities. We produced approximately 195 thousand tons of live-weight in 2015, as compared to 187 thousand tons in 2014 and 135 thousand tons in 2013. We are currently launching a greenfield project in the Primorsky krai (in proximity to the Chinese border) that has a projected design capacity of at least 100 thousand tons of live-weight annually, which can potentially be further expanded to 300 thousand tons of live-weight annually. The project will also include a fodder plant, a slaughterhouse and meat processing facilities. See ‘‘Business – Strategy’’. • Agriculture: We currently control one of the largest land banks among Russian agriculture producers, with approximately 594 thousand hectares of land currently under our control primarily in the highly fertile Black Earth region of Russia, including approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions held by legal entities stakes in which are being acquired from the Razgulay group (source: BEFL Report on Russia’s Largest Agricultural Landholders as of April 2016, Company data), of which approximately 43% is owned by Rusagro. Approximately 55% of our land bank is located in the Belgorod region, approximately 26% is in the Tambov region, approximately 8% is in the Orel region, approximately 5% is in the Kursk region, approximately 4% is in the Primorsky krai and approximately 3% is in the Voronezh region. We believe we are a leading Russian sugar beet producer, supplying approximately 63%, 67% and 70% of the total sugar beets processed by our sugar plants in 2015, 2014 and 2013, respectively. Our Agriculture division also produces winter wheat and barley, sunflower seeds, soybeans and corn. In addition, we own and operate four grain elevators with a total storage capacity of approximately 361 thousand tons and other storage facilities with a total capacity of approximately 290 thousand tons. • Oil and Fat: We are among the top five producers of mayonnaise and consumer margarine in Russia. Based on market information obtained through Rosstat and the Russian Oil and Fat Union, we estimate that in Russia we are the largest consumer margarine producer with a market share of 45% in 2015 and the fifth largest mayonnaise producer with a market share of 11% in 2015. Our oil and fat production plant is located in Ekaterinburg, south of the Urals, and currently has an annual

1 production capacity of approximately 112 thousand tons of mayonnaise and approximately 57.9 thousand tons of consumer margarine. Through our oil extraction plant located in Samara, which has a daily processing capacity of 1.25 thousand tons of sunflower seeds, we control the source of 100% of the vegetable oil required by our oil and fat production plant. The soybean plant in Ussuriysk, in the Primorsky krai, has a capacity to produce approximately 26.9 thousand tons of refined oil and 10 thousand tons of mayonnaise per year and is a leading manufacturer of soybean oil, soybean oil feed, and mayonnaise and the only industrial soap manufacturer in the Far East of Russia.

Competitive Strengths Our strength lies in both the benefits we derive from the diversification of our operations as well the competitive advantages of each of our divisions. The Group as a whole has a number of competitive strengths, including: • Strong Russian agricultural sector fundamentals; • Market leadership positions across all our core divisions; • Efficient and stable business model benefiting from scale, vertical integration and diversification; • Strategically located state-of-the-art facilities; • Strong brand portfolio across products and price points; • Experienced management team widely recognized in the industry with a solid and proven track record and a highly committed controlling shareholder; and • Strong financial performance.

Strategy Our main strategic objective remains creating shareholder value by: • Expanding presence across all business areas with well defined organic as well as inorganic growth initiatives; • Developing new clusters – Far East project; • Developing new clusters – Greenhouse project; • Further developing of consumer brands; • Optimizing costs and continuously modernizing facilities; and • Further developing human capital.

The Company The issuer, ROS AGRO PLC, incorporated on December 1, 2009 under the laws of the Republic of Cyprus, is a holding company that owns 100% of OJSC Rusagro Group, incorporated on February 19, 2010 under the laws of the Russian Federation. OJSC Rusagro Group owns 100% less one participation interest of LLC Group of Companies Rusagro, which was formed on February 3, 2003. The predecessor to the Group was founded in 1995 to supply Ukrainian white sugar to major Russian confectioneries, and since then the Group has developed into a diversified food producer by expanding its operations into sugar processing, meat production, agriculture and oil and fat production.

Results of Operations Our consolidated sales were RUB 72,439 million, RUB 59,112 million and RUB 36,490 million for the years ended December 31, 2015, 2014 and 2013, respectively. Our gross profit for the year was RUB 31,433 million, RUB 24,082 million and RUB 8,858 million for the years ended December 31, 2015, 2014 and 2013, respectively. Our Adjusted EBITDA was RUB 24,423 million, RUB 18,069 million and RUB 6,784 million for the years ended December 31, 2015, 2014 and 2013, respectively, while our Adjusted EBITDA margin was 34%, 31% and 19% for the same years.

2 Recent Developments In March 2016, we participated in auctions to acquire certain assets of the Razgulay group. As a result of these auctions, we have entered into a preliminary agreement with the Razgulay group to acquire stakes in four Russian entities holding title to three sugar plants in the Kursk and Orel regions (with an aggregate current daily processing capacity of approximately 13,100 tons of sugar beets (Krivets-Sakhar, Otradinsky and Kshen sugar plants)) and title to approximately 27 thousand hectares of land in the Kursk region, 46 thousand hectares of land in the Orel region and 17 thousand hectares of land in the Belgorod region surrounding these plants. The aggregate price of these acquisitions is expected to amount to RUB 8.1 billion. We expect that all necessary legal and corporate procedures will be completed in the first half of 2016. See ‘‘Business – Recent Developments’’. In addition, in April 2016, we won an auction to acquire from the Razgulay group a buckwheat processing plant in the Voronezh region, with an annual production capacity of 45 thousand tons of buckwheat, for RUB 350 million. We expect to enter into a sale and purchase agreement and complete all necessary legal and corporate procedures in the first half of 2016. See ‘‘Business – Recent Developments’’. On March 28, 2016, our Board of Directors recommended that the Company’s shareholders approve dividend payment for 2015 of RUB 7,107,101 thousand, which represents 30% of our 2015 consolidated profit for the year. Our interim dividend paid in the first half of 2015 was RUB 1,800,959 thousand. The remaining dividend amount to be distributed for 2015 is RUB 5,306,142 thousand. The dividend per Ordinary Share will be fixed on the dividend record date set on May 27, 2016. The proposed dividend is subject to shareholder approval at the annual general meeting, which is scheduled to occur on May 27, 2016. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Events’’. In the first quarter of 2016 our Sugar segment’s sales of white sugar increased, and average sale prices increased, as compared to the first quarter of 2015. Within our Meat segment production volumes decreased in the first three months of 2016 due to the continuing shift to slaughter meat which leads to different weight base. Average sales prices in our Meat segment decreased slightly compared to the first quarter of 2015. Volumes and prices were subject to diverging trends in both our Oil and Fat and Agriculture segments. As a result of these trends, as well as other factors impacting our costs, including, among others, the time lag between sourcing of raw materials and their utilization, we would not expect our profitability to necessarily move in line with our revenues or volumes. Notwithstanding an overall increase of volumes and sales in the first quarter of 2016 compared to the same period last year, we believe that soaring sourcing costs might offset our top line progression and might result in profitability, in actual terms, directionally aligned with last year’s performance. At the same time our business is sensitive to continuing changes in commodity prices, and, as a result, these trends during the first quarter of 2016 may not be indicative of our full year results. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Events’’.

Risk Factors An investment in the GDRs involves a high degree of risk, including, but not limited to, risks associated with the following matters: • Appreciation in the value of the rouble against the US Dollar and Euro may materially adversely affect our financial condition and results of operations. • Outbreaks of certain diseases among our livestock could adversely affect our operations. • We face risks associated with the shrinkage of our inventory due to theft, managerial mistakes and other reasons. • Unexpected changes in growing conditions or natural disasters in the regions in which we operate may adversely affect our operations. • We are vulnerable to the cyclical nature of the global and domestic commodities markets. • Changes in our sow herd productivity, mortality and feed efficiency could adversely affect our operations. • We may be unable to procure sufficient volumes of raw materials from third parties to satisfy the demand of our business divisions.

3 • Any significant increase in costs or shortages of labor, energy or transportation supplies could have a material adverse effect on our operations. • Demand for our products may decline. • There can be no assurance that we will continue to receive the full benefits of Russian Government sponsored interest rate and other subsidy programs. • The Russian Government may modify import policy or discontinue its tariff systems for certain types of food products. • Failure to comply with existing government regulations, or increased governmental regulation of our operations, could result in substantial additional compliance costs, administrative penalties or closure of our facilities. • The Russian Government’s measures to stabilize the grain and other commodity prices may destabilize or distort the market. • Our export activities expose us to political and economic risks in foreign countries, as well as to risks related to import/export regulation. • We operate in a competitive industry and market segments and any inability to compete successfully may adversely affect our results of operations. • We initiated new greenfield projects in 2015 and continue to invest in our existing production facilities. Such investments may prove to be unprofitable. • The nature of our operations exposes us to the risk of environmental claims and sanctions. • Shares in certain of our operational subsidiaries and a material part of our operational assets are pledged to secure our debt obligations. • Covenants in the financing agreements of our subsidiaries may restrict our ability to borrow and invest or cause us to default under our existing loan agreements, which could affect our ability to operate and further expand our business. • We may be unable to obtain adequate managerial and operational resources to support our plans for the growth and expansion of our business. • We may not be able to complete or integrate successfully any recent and/or potential future acquisitions. • Our plans for growth may be restricted by Russian antimonopoly regulations. • We may be unable to operate our production facilities without interruption during peak harvesting periods of the agricultural season due to the condition of some of our equipment. • There are risks associated with the Group’s accounting and reporting systems and the internal controls relating to the preparation of IFRS financial statements. • There are risks associated with inadequate information technology systems. • We are not required to and do not comply with the Code of Corporate Governance of the Cyprus Stock Exchange. • Our controlling beneficial shareholder has the ability to exert influence over us, and his interests may conflict with those of other holders of our Ordinary Shares or the holders of the GDRs. • We may be subject to product liability claims and adverse publicity. • We have engaged in certain trading and hedging operations which may limit our potential gains and involve other risks. • Our trading and hedging operations are conducted through an affiliated company incorporated in the British Virgin Islands, which may involve certain Russian tax risks. • We may be unable to protect our intellectual property. • Deficiencies or ambiguities in privatization and bankruptcy legislation could be exploited to challenge our ownership of certain of our subsidiaries.

4 • The Company is a holding company of the Group and we are dependent upon our subsidiaries to meet our obligations. • We may not have or we may be unable to obtain sufficient insurance to protect ourselves from business risks. • Russian Agricultural Land Risks. • Political and Social Risks relating to Russia. • Economic Risks relating to Russia and Cyprus. • Legislative and Legal Risks relating to Russia. • Market price of the GDRs may be volatile. • The GDRs trade on more than one market, and this may result in increased volatility and price variations between such markets. • There is no guarantee whether the listing of the GDRs on MICEX will be maintained. • The Ordinary Shares underlying the GDRs are not listed and may be illiquid. • Additional issuances of our Ordinary Shares may reduce the percentage ownership interest of investors who purchased GDRs in this offering and future sales of Ordinary Shares or GDRs may affect the market price of the GDRs. • Voting rights with respect to the Ordinary Shares represented by the GDRs are limited. • Capital gains from the sale of the GDRs by non-resident investors may be subject to Russian withholding tax. • We may not declare dividends in the foreseeable future or may be unable to pay dividends if they are declared. • You will experience immediate and substantial dilution to net asset value, and the market price of the GDRs may fall below the Offer Price per GDR. • Holders of the GDRs may not be able to benefit from certain UK anti-takeover protections. • Holders of GDRs in certain jurisdictions may not be able to exercise their pre-emptive rights in relation to future issues of Ordinary Shares.

5 SUMMARY CONSOLIDATED FINANCIAL INFORMATION The following summary consolidated financial information shows selected historical consolidated financial information and other operating information of the Group as of December 31, 2015, 2014 and 2013 and for the three years then ended. The Consolidated Statements of Profit or Loss and Other Comprehensive Income Data, Consolidated Statements of Financial Position Data and Consolidated Statements of Cash Flows Data set forth below have been derived from, and should be read in conjunction with, the Consolidated Financial Statements included elsewhere in this Information Memorandum. The selected consolidated financial information should also be read in conjunction with ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ below. Adjusted EBITDA, Net Debt, Net Debt to Adjusted EBITDA ratio, Gross Profit Margin, Net Profit Margin, Adjusted EBITDA Margin, Net Working Capital, Capital Expenditures, and certain of the segmental data presented below are non-IFRS measures and were calculated by us based on data derived from the Consolidated Financial Statements. See ‘‘Presentation of Financial and Other Information – Presentation of non-IFRS Measures.’’

Consolidated Statements of Profit or Loss and Other Comprehensive Income Data

Year ended December 31, 2015 2014 2013 (in RUB thousands) Sales ...... 72,439,164 59,112,243 36,489,827 Net gain on revaluation of biological assets and agricultural produce ...... 2,040,860 2,593,685 266,593 Cost of sales ...... (43,271,410) (37,999,661) (28,073,757) Net gain from trading derivatives ...... 223,948 375,305 175,407 Gross profit ...... 31,432,562 24,081,572 8,858,070 Gross Profit Margin ...... 43% 41% 24% Distribution and selling expenses ...... (5,313,993) (4,472,174) (2,992,953) General and administrative expenses ...... (4,065,560) (2,991,315) (2,623,918) Share-based remuneration ...... (4,015) (54,423) (178,280) Other operating income/(expenses), net ...... 188,983 272,884 (116,537) Operating profit ...... 22,237,977 16,836,544 2,946,382 Interest expense ...... (2,041,743) (154,478) (1,380,376) Interest income ...... 1,576,601 1,010,951 2,022,986 Net gain/(loss) from bonds held for trading ...... 636,601 (1,397,230) – Other financial income/(expenses), net ...... 3,080,295 4,549,548 (56,272) Share of results of associates ...... 23,997 46,579 – Profit before income tax ...... 25,513,728 20,891,914 3,532,720 Income tax expense ...... (1,823,392) (714,935) (330,963) Profit for the year ...... 23,690,336 20,176,979 3,201,757 Net Profit Margin ...... 33% 34% 9% Other comprehensive income: Items that may be subsequently reclassified to profit or loss: Change in value of available-for-sale financial assets ...... (39,469) – – Income tax relating to other comprehensive income ...... 7,894 – – Total comprehensive income for the period ...... 23,658,761 20,176,979 3,201,757 Attributable to: Owners of ROS AGRO PLC ...... 23,450,617 20,134,178 3,201,534 Non-controlling interest ...... 208,144 42,801 223 Total comprehensive income for the period ...... 23,658,761 20,176,979 3,201,757

6 Consolidated Statements of Financial Position Data

At December 31, 2015 2014 2013 (in RUB thousands) ASSETS Current assets ...... 67,063,480 43,909,537 38,146,253 Non-current assets ...... 62,425,816 37,596,230 34,984,030 Total assets ...... 129,489,296 81,505,767 73,130,283 LIABILITIES AND EQUITY Current liabilities ...... 32,339,889 17,453,949 22,171,272 Non-current liabilities ...... 26,577,441 12,232,517 16,393,978 Total liabilities ...... 58,917,330 29,686,466 38,565,250 Total equity ...... 70,571,966 51,819,301 34,565,033 Total liabilities and equity ...... 129,489,296 81,505,767 73,130,283

Consolidated Statements of Cash Flows Data

Year ended December 31, 2015 2014 2013 (in RUB thousands) Operating cash flow before working capital changes ...... 22,973,305 17,553,166 5,945,624 Cash generated from operations ...... 18,290,329 16,730,359 4,903,316 Net cash from operating activities ...... 15,922,036 15,676,718 4,779,714 Net cash from/(used in) investing activities ...... (63,144,191) 2,880,602 11,924,082 Net cash from/(used in) financing activities ...... 42,337,116 (13,791,386) (16,072,246) Net effect of exchange rate changes on cash and cash equivalents ...... (1,029,571) 2,877,615 21,347 Net increase/(decrease) in cash and cash equivalents ...... (5,914,610) 7,643,549 652,897

Segment Information and non-IFRS Financial Measures

Sugar Meat Agriculture Oil and Fat Other Eliminations Total (in RUB thousands) Year ended December 31, 2015 Profit for the year(1) ...... –– – – – –23,690,336 Income tax expense ...... –– – – – –1,823,392 Share of results of associates ...... –– – – – –(23,997) Other financial (income)/expenses, net . . –– – – – –(3,080,295) Net (gain)/loss from bonds held for trading ...... –– – – – –(636,601) Interest income ...... –– – – – –(1,576,601) Interest expense ...... – – – – – – 2,041,743 Operating profit ...... 10,034,327 6,217,632 6,484,518 1,369,267 14,647,919 (16,515,686) 22,237,977 Adjustments: Depreciation included in Operating Profit ...... 970,293 1,319,637 889,702 351,924 24,677 (45,241) 3,510,992 Other operating (income) / expenses, net 63,221 (851,773) 228,584 (59,222) (16,180,603) 16,610,810 (188,983) Share-based remuneration ...... – – – – 4,015 – 4,015 Reimbursement of operating costs (government grants) ...... – 682,396 217,864 – – – 900,260 Net (gain)/loss on revaluation of biological assets and agricultural produce ...... – 303,980 (1,190,980) – – (1,153,860) (2,040,860) Adjusted EBITDA(2) ...... 11,067,841 7,671,872 6,629,688 1,661,969 (1,503,992) (1,103,977) 24,423,401

7 (2) Adjusted EBITDA by segment is defined as operating profit before taking into account (i) depreciation; (ii) other operating income/expenses, net (other than reimbursement of operating costs (government grants)); (iii) the difference between the aggregate gain on initial recognition of agricultural produce and gain from the change in fair value less estimated point-of-sale costs of biological assets less gains related to realized biological assets and agricultural produce; (iv) share-based remuneration; (v) provision/(reversal of provision) for net realizable value of agricultural products in stocks. Adjusted EBITDA is not a measure of financial performance under IFRS. You should not consider it an alternative to profit for the year as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. For the limitations of Adjusted EBITDA as an analytical tool see ‘‘Presentation of Financial and Other Information – Presentation of non-IFRS Measures.’’

Sugar Meat Agriculture Oil and Fat Other Eliminations Total (in RUB thousands) Year ended December 31, 2014 Profit for the year(1) ...... – – – – – – 20,176,979 Income tax expense ...... ––– – – –714,935 Share of results of associates ...... ––– – – –(46,579) Other financial (income)/expenses, net . . . ––– – – –(4,549,548) Net (gain)/loss from bonds held for trading ...... ––– – – –1,397,230 Interest income ...... ––– – – –(1,010,951) Interest expense ...... – – – – – – 154,478 Operating profit ...... 3,961,809 9,294,145 3,299,535 1,601,383 6,157,121 (7,477,449) 16,836,544 Adjustments: Depreciation included in Operating Profit . 928,971 1,355,503 819,945 366,779 24,873 961 3,497,032 Other operating (income)/expenses, net . . (82,069) (376,370) 150,321 (85,900) (7,236,857) 7,357,991 (272,884) Share-based remuneration ...... – – – – 54,423 – 54,423 Reimbursement of operating costs (government grants) ...... – 331,844 216,201 – – – 548,045 Net (gain)/loss on revaluation of biological assets and agricultural produce ...... – (1,776,114) (110,696) – – (706,875) (2,593,685) Adjusted EBITDA(2) ...... 4,808,711 8,829,008 4,375,306 1,882,262 (1,000,440) (825,372) 18,069,475

(1) The Group does not allocate profit for the year, income tax expense, share of results of associates, interest income, interest expense and other lines of the consolidated statement of profit or loss and other comprehensive income after operating profit between segments. Only totals are presented for such line items. (2) Adjusted EBITDA by segment is defined as operating profit before taking into account (i) depreciation; (ii) other operating income/expenses, net (other than reimbursement of operating costs (government grants)); (iii) the difference between the aggregate gain on initial recognition of agricultural produce and gain from the change in fair value less estimated point-of-sale costs of biological assets less gains related to realized biological assets and agricultural produce; (iv) share-based remuneration; (v) provision/(reversal of provision) for net realizable value of agricultural products in stocks. Adjusted EBITDA is not a measure of financial performance under IFRS. You should not consider it an alternative to profit for the year as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited. For the limitations of Adjusted EBITDA as an analytical tool see ‘‘Presentation of Financial and Other Information – Presentation of non-IFRS Measures.’’

8 Sugar Meat Agriculture Oil and Fat Other Eliminations Total (in RUB thousands) Year ended December 31, 2013 Profit for the year(1) ...... – – – – – – 3,201,757 Income tax expense ...... –– – – – – 330,963 Other financial (income)/expenses, net .... –– – – – – 56,272 Interest income ...... –– – – – – (2,022,986) Interest expense ...... – – – – – – 1,380,376 Operating profit ...... 606,971 964,137 1,192,650 689,455 2,289,984 (2,796,815) 2,946,382 Adjustments: Depreciation included in Operating Profit . 907,524 1,227,256 771,588 314,392 17,788 32,313 3,270,861 Other operating (income) / expenses, net . . 235,436 (186,377) (10,750) 21,443 (2,883,643) 2,940,428 116,537 Share-based remuneration ...... – – – – 178,280 – 178,280 Reimbursement of operating costs (government grants) ...... – 287,450 281,186 – – – 568,636 Net (gain) / loss on revaluation of biological assets and agricultural produce – (566,624) 126,447 – – 173,584 (266,593) Reversal of provision for net realizable value of agricultural products in stocks . . (30,090) – – – – – (30,090) Adjusted EBITDA(2) ...... 1,719,841 1,725,841 2,361,121 1,025,290 (397,591) 349,511 6,784,013

Net Working Capital

At December 31, 2015 2014 2013 (in RUB thousands) Trade and other receivables ...... 3,504,497 2,257,714 1,771,235 Prepayments ...... 1,186,836 2,085,599 824,622 Inventories ...... 22,569,821 15,508,659 13,865,425 Trade and other payables ...... (3,736,755) (2,772,385) (2,352,775) Net Working Capital(1) ...... 23,524,399 17,079,587 14,108,507

Net Debt

At December 31, 2015 2014 2013 (in RUB thousands) Long-term borrowings ...... 24,037,539 9,806,306 14,368,799 Short-term borrowings ...... 25,860,464 12,499,623 18,144,254 Cash and cash equivalents ...... (4,401,703) (10,316,313) (2,672,764) Banks’ promissory notes ...... – – (1,100,000) Bank deposits within short-term investments ...... (15,635,460) (992,200) (13,467,355) Bank deposits within long-term investments ...... (14,714,290) (696,500) (696,500) Bonds held for trading ...... – (6,684,189) – Net Debt(1) ...... 15,146,550 3,616,727 14,576,434 Adjusted EBITDA (for the year) ...... 24,423,401 18,069,475 6,784,013 Net Debt / Adjusted EBITDA ...... 0.62 0.20 2.15

(1) Net Working Capital and Net Debt are non-IFRS measures. Our calculation of these measures may be different from calculations used by other companies and therefore comparability may be limited. For the limitations of these measures as analytical tools see ‘‘Presentation of Financial and Other Information – Presentation of non-IFRS Measures.’’

9 THE OFFERING The Company ...... ROS AGRO PLC, a public company limited by shares incorporated under the laws of the Republic of Cyprus. The Offering ...... The Offering comprises 16,666,665 GDRs to be sold by the Company, with five GDRs representing an interest in one Ordinary Share. The Offering consists of (a) an offering of the GDRs in the United States to persons reasonably believed to be QIBs in reliance on Rule 144A under the Securities Act and (b) an offering of the GDRs in offshore transactions outside the United States in reliance on Regulation S. Managers ...... J.P. Morgan Securities plc, UBS Limited and VTB Capital plc. Share Capital ...... Our authorized share capital is 60,000,000 Ordinary Shares of A0.01 each. Prior to the Offering, our issued share capital consisted of 24,000,000 Ordinary Shares which have been fully paid. The rights attached to our Ordinary Shares are subject to applicable provisions of Cypriot law and our memorandum and articles of association, which are described under ‘‘Description of the Share Capital and Applicable Cypriot Legislation.’’ Offer Price ...... US$15 per GDR. The GDRs are payable at the Offer Price in US Dollars. Depositary ...... The Bank of New York Mellon. GDRs ...... Five GDRs will represent one Ordinary Share on deposit with the Custodian on behalf of the Depositary. The GDRs will be issued by the Depositary pursuant to a deposit agreement between the Company and the Depositary dated April 12, 2011 (the ‘‘Deposit Agreement’’). The Rule 144A GDRs will be evidenced by the existing Rule 144A Master GDR, and the Regulation S GDRs will be evidenced by the existing Regulation S Master GDR. See ‘‘Summary of Provisions Related to the Global Depositary Receipts While in Master Form’’. Except in the limited circumstances described herein, definitive GDR certificates will not be issued to holders in exchange for interests in the GDRs represented by the Master GDRs. See ‘‘Terms and Conditions of the Global Depositary Receipts’’. Closing Date ...... The GDRs are expected to be issued, and payment for them made, on or about May 5, 2016. Listing and Market for the GDRs . . . In connection with the Company’s admission to the Official List and the London Stock Exchange on April 13, 2011, a total of 120,000,000 GDRs were admitted to the Official List and the London Stock Exchange. There are currently 25,000,000 GDRs in issue. Following the Offering, there will be 120,000,000 GDRs admitted in aggregate, consisting of (i) 25,000,000 existing GDRs, (ii) 16,666,665 GDRs to be issued on or about May 5, 2016 and (iii) up to an additional 78,333,335 GDRs to be issued from time to time against the deposit of the Ordinary Shares with the Custodian acting on behalf of the Depositary. The GDRs have been admitted to trading on MICEX since November 26, 2014. Settlement Procedures ...... The existing Rule 144A GDRs have been accepted into DTC’s book-entry settlement system. The new Rule 144A GDRs will be represented by the existing Rule 144A Master GDR which is held in a book-entry form and registered in the name of

10 Cede & Co., as nominee for DTC. The new Regulation S GDRs will be represented by the existing Regulation S Master GDR which is registered in the name of The Bank of New York Depository (Nominees) Limited, as nominee for The Bank of New York Mellon, London Branch, as common depositary for Euroclear and Clearstream Luxembourg. Euroclear and Clearstream Luxembourg, as well as the NSD, accepted the Regulation S GDRs for settlement in their respective book-entry settlement systems. Except in limited circumstances described herein, investors may hold beneficial interests in the GDRs evidenced by the corresponding Master GDR only through DTC, Euroclear, Clearstream Luxembourg or NSD, as applicable. Transfers within DTC, Euroclear, Clearstream Luxembourg and NSD will be in accordance with the usual rules and operating procedures of the relevant system. In order to take delivery of the GDRs, investors must pay for them in same-day funds on or prior to the closing of the Offering and must have an appropriate securities account. See ‘‘Settlement and Delivery’’. The security identification numbers of the GDRs offered hereby are as follows: Rule 144A GDR ISIN: US7496551067 Rule 144A GDR Common Code: 061438564 Rule 144A GDR CUSIP: 749655 106 Rule 144A SEDOL: B5WKB43 Regulation S GDR ISIN: US7496552057 Regulation S GDR Common Code: 061438742 Regulation S GDR CUSIP: 749655 205 Regulation S SEDOL: B5MTFN7 London Stock Exchange Regulation S GDR trading symbol: AGRO London Stock Exchange Rule 144A GDR trading symbol: 62UL MICEX Regulation S GDR trading symbol: AGRO Transfer Restrictions ...... The GDRs will be subject to restrictions on transfer and sale. See ‘‘Transfer and Selling Restrictions.’’ Lock-Up ...... The Company, Shiny Property Limited, Mr. Vadim Moshkovich, the controlling beneficial shareholder of the Company and Mr. Maxim Basov, CEO and a minority shareholder of the Company, have agreed, subject to certain exceptions, not to offer, sell, contract or agree to sell, hypothecate, pledge, lend, mortgage, assign, charge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any shares of the Company or any securities convertible into or exercisable or exchangeable for, or substantially similar to, shares of the Company, or warrants or other rights to purchase such shares or any security or financial product whose value is determined directly or indirectly by reference to the price of the underlying securities, including equity swaps, forward sales and options or global depositary receipts representing the right to receive any such securities; enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of the Company or any securities convertible into or exercisable or exchangeable for such shares, or warrants or other rights to purchase such shares, whether any such transaction is to be

11 settled by delivery of such shares or such other securities, in cash or otherwise; or enter into any transaction with the same economic effect as, or agree to, or publicly announce an intention to effect any of the foregoing transactions, without the prior written consent of the Managers, for a period of 180 days from the Closing Date. Dividend Policy ...... In August 2013, our Board of Directors approved a dividend policy providing for annual payment of dividends at a minimum payout ratio of 25% of the Group’s profit for the year in accordance with IFRS. In May 2015, our Board of Directors approved the addition of interim dividend payments to our dividend policy. The dividends are paid twice a year with payout ratio of at least 25% of the Group’s profit for the year in accordance with IFRS. The Company will review its dividend policy from time to time based on its capital position against its current and expected cash flows and future capital expenditure requirements. Under its articles of association, the Company may pay dividends out of its profits. The Company’s shareholders may declare dividends at an annual general meeting by an ordinary resolution, provided that such dividends do not exceed the amount (if any) recommended by the Board of Directors. The Board of Directors may at any time declare an interim dividend, if it is satisfied there are sufficient profits. The Company’s shareholders, including holders of the GDRs, will be eligible to receive dividends declared by the Company in respect of the Ordinary Shares underlying the GDRs, subject to the terms of the Deposit Agreement. Cash dividends may be paid to the Depositary in any currency and, except as otherwise described under ‘‘Terms and Conditions of Global Depositary Receipts – Conversion of Foreign Currency,’’ are converted into US Dollars by the Depositary and paid to holders of the GDRs net of currency conversion expenses. The Depositary may deduct a fee of US$0.02 or less per GDR and other fees and expenses from any dividend distribution. See ‘‘Terms and Conditions of the Global Depositary Receipts – Depositary’s Fees, Costs and Expenses.’’ On March 28, 2016, our Board of Directors recommended that the Company’s shareholders approve dividend payment for 2015 of RUB 7,107,101 thousand, which represents 30% of our 2015 consolidated profit for the year. Our interim dividend paid in the first half of 2015 was RUB 1,800,959 thousand. The remaining dividend amount to be distributed for 2015 is RUB 5,306,142 thousand. The dividend per Ordinary Share will be fixed on the dividend record date set on May 27, 2016. The proposed dividend is subject to shareholder approval at the annual general meeting, which is scheduled to occur on May 27, 2016. Voting ...... If you hold shares, you are generally entitled, upon a poll, to one vote per Ordinary Share at a shareholders’ meeting, subject to certain exceptions described in ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Articles of Association – Meetings of Shareholders.’’ Under the Deposit Agreement, five GDRs carry the right to vote in respect of one Ordinary Share, subject to the provisions of Deposit Agreement described under ‘‘Terms and Conditions of the Global Depositary Receipts’’ and applicable Cypriot law and regulations.

12 The Depositary will endeavor to exercise on behalf of holders of the GDRs, at any meeting of holders of the Ordinary Shares of which the Depositary receives timely notice, the voting rights relating to the Ordinary Shares underlying the GDRs in accordance with instructions it receives from holders of the GDRs. We will notify the Depositary of any resolution to be proposed at any general meeting. See ‘‘Terms and Conditions of the Global Depositary Receipts – Voting Rights.’’ Use of Proceeds ...... The Company will receive gross proceeds of approximately US$250 million from the Offering. The Company expects that its expenses (including underwriting commissions, fees and expenses, assuming full payment of the discretionary fee to the Managers) incurred in connection with the Offering will be approximately US$5.1 million. The Company expects to receive net proceeds of approximately US$244.9 million from the Offering. The Group intends to use the net proceeds received from the Offering primarily for funding of: (i) a portion of its investment projects, including new food clusters in the Far East of Russia (including a pig breeding complex in the Primorsky krai) and in Central Russia (including greenhouse facilities in the Tambov region). We currently estimate our capital expenditure for the construction of a pig breeding complex in the Primorsky krai to be approximately RUB 60 billion, RUB 20-25 billion of which is expected to be spent during the first two to three years, and for the construction of greenhouse facilities in the Tambov region to be approximately RUB 20-25 billion; (ii) continuous modernization of our existing production facilities in each of our divisions, including three sugar plants being acquired from the Razgulay group; (iii) potential future acquisitions, including acquisitions of new land and production facilities; and otherwise for general corporate purposes. The Group will retain significant discretion over the use of net proceeds received from the Offering, and changes in the Group’s plans or in the business environment in which it operates could result in the use of its net proceeds in a manner that is different to that described above. Risk Factors ...... Prospective investors should carefully consider the risks discussed under ‘‘Risk Factors.’’

13 RISK FACTORS An investment in the GDRs involves a number of risks. Prospective investors should carefully consider the following information about these risks, together with the information contained elsewhere in this Information Memorandum, before deciding whether to invest in the GDRs. If any of the following risks actually occurs, our business, results of operations and financial condition or prospects could be materially and adversely affected. In that case, the trading price of the GDRs could decline and investors could lose all or part of their investment. We have described the risks and uncertainties that our management believes are material, but these risks and uncertainties may not be the only ones we face. Additional risks and uncertainties, including those which we currently do not know about or deem immaterial, may also result in decreased revenues, increased expenses or other events that could result in a decline in the price of the GDRs.

Risks Relating to our Business and Industry Appreciation in the value of the rouble against the US Dollar and Euro may materially adversely affect our financial condition and results of operations. We generate substantially all of our revenue from the sale of food products in the Russian Federation. While we generally receive roubles for these products, there is a strong correlation between the rouble prices for most of our products, such as sugar, in the Russian market and the international prices in US Dollar or Euro for such commodities on the global markets. Because a significant portion of our direct costs, including raw materials, labor and transportation costs, are largely incurred in roubles (although certain costs, such as interest expense, imported raw materials and purchases of equipment, are incurred in a variety of currencies, including US Dollars and Euro), there is a mismatch between part of our revenue which is impacted by fluctuations of foreign currency exchange rates and prices on global commodity markets and part of our costs which are paid in roubles. We do not currently hedge against foreign currency exchange rate risks. Accordingly, fluctuations in the exchange rate of the rouble against the US Dollar or Euro can have a significant effect on our revenue and profitability. Although the trend in recent years has been for the rouble to depreciate against the US Dollar (for example, the rouble depreciated by approximately 58.4% against the US Dollar over the period from January 1, 2013 to December 31, 2015), which tends to increase our rouble revenue and gross profit because stable US Dollar prices for our products translate into higher revenue (and only partial increase in cost of sales) in roubles, there can be no assurance that this trend will continue. The appreciation of the rouble against the US Dollar would have the opposite effect, and would reduce our revenue when expressed in roubles and thus tend to result in a decrease in our gross profit. Therefore, material fluctuations of the rouble against the US Dollar in future periods could have a material adverse effect on our business, results of operation, financial condition and prospects.

Outbreaks of certain diseases among our livestock could adversely affect our operations. Our pig herds may be subject to outbreaks of certain diseases. The outbreak of disease among our livestock or in regions in which we operate could significantly restrict our ability to conduct our operations. The productivity and profitability of our Meat division operations depends, to a great extent, on its ability to maintain animal health and control disease. Disease can reduce the number or productivity of our pig herd stock, and hamper the growth of offspring to maturity. Disease can be spread from other infected animals, in feed, in trucks, by rodents or birds, by people visiting the farms, through the air or through vehicles. We take precautions (which we believe are consistent with best practice in the food industry) to limit the susceptibility of our livestock to diseases and to limit the spread of any diseases to which they become subject, as described under ‘‘Business – Operations – Meat.’’ However, such measures may be insufficient and cannot completely eliminate the risk of disease that we may experience. In addition, if our livestock were to be infected, we would likely be required to destroy all the stock that was infected or likely to become infected. Among the diseases to which our livestock may be subject are highly contagious diseases that may spread rapidly between countries and regions. Although the Group has not previously experienced any significant outbreaks of disease, past outbreaks in the industry have resulted in the destruction of thousands of animals in affected countries and regions. An outbreak of a livestock disease could also result in the imposition of governmental restrictions on the sale or distribution of our products, even if our livestock is not infected with such diseases. Such measures could increase our cost of sales, create adverse publicity with respect to our business or result in a loss of consumer confidence in the products affected by the particular disease, resulting in declining demand for such products. In addition,

14 outbreaks of a livestock disease may impact demand and pricing for the relevant products even in regions in which no outbreak has occurred. Outbreaks of various swine diseases, in particular, African swine fever, the most dangerous swine disease, occur periodically in various Russian regions. The Federal Service for Veterinary and Phytosanitary Supervision publishes reports of the World Organization for Animal Health concerning the spread of diseases in Russia on its official web-site. According to a recent report prepared by Rosselkhoznadzor, outbreaks of African swine fever were reported in the Moscow region, Novgorod region, Penza region, Ryazan region, Kabardino-Balkariya republic and Crimea in 2016. The nearest outbreaks to our Meat division operations were within 170 kilometers of our facility in the Belgorod region in 2015. African swine fever is a highly contagious viral swine disease included in List A of the classification of diseases prepared by the World Organization for Animal Health. Today, there are no effective remedies to prevent African swine fever, and its treatment is prohibited. If a focus of the infection is identified, the diseased livestock are required to be eliminated. Diseased animals and any pigs with which they came into contact are required to be slaughtered and their carcasses subsequently cremated. In addition, the pig breeding infrastructure in the focus of infection focus is subject to strong disinfection measures, which may include the physical destruction of the facilities by burning. The presence of African swine fever in any of the facilities within our pig breeding complex may lead to the complete termination of our pig breeding business or cause material loss due to the elimination of the livestock and disinfection of the breeding facilities. Any outbreak of disease, or the possibility of an outbreak of disease, could have a material adverse effect on our business, results of operations and financial condition.

We face risks associated with the shrinkage of our inventory due to theft, employee mistakes and other reasons. We manufacture food products on a large scale at various locations throughout Russia. Because of the nature and scale of our operations, we face risks associated with the shrinkage of our inventory due to theft, employee mistakes and other reasons. For example, in June and July 2015, employee mistakes in operating climate control systems at our pig farms resulted in a loss of 1,326 pigs. In May 2014, we discovered a theft of pigs valued at RUB 3 million during the culling operations. We cannot give any assurance that incidences of inventory loss and theft will not increase in the future or that the measures we are taking will effectively reduce the problem of inventory shrinkage. Although some level of inventory shrinkage is an unavoidable cost of doing business, if we were to experience higher rates of inventory shrinkage or incur increased security costs to combat inventory theft, our operating profit and financial condition could be materially adversely affected.

Unexpected changes in growing conditions or natural disasters in the regions in which we operate may adversely affect our operations. The majority of our agricultural farmlands and our sugar and meat production facilities are located in the central region of the European part of Russia (referred to as the Black Earth region), our oil extraction facility is located in the Volga Federal District and we are developing agricultural farmlands, an additional meat production complex and oil and fat production facilities in the Primorsky krai, and climatic conditions in these regions may not always provide for optimal crop yields. As a result, we are susceptible to extreme changes in the growing conditions of these regions, which has an impact on production and the cost of raw materials in each of our business divisions. Our ability to obtain raw materials in a timely manner and in sufficient quantities may be affected by natural conditions, including, among others, drought, flood, pestilence, unexpected or heavy frost and other extreme weather conditions. The occurrence of these and other natural disasters could adversely affect our business in many ways, including the following: • our production and breeding operations materially depend on the availability of large supplies of fresh water, and our animals’ health and our ability to produce sugar, grow crops and operate our facilities at full capacity could be adversely affected if we experience a shortage of fresh water due to floods, droughts, depletion of underground aquifers or other environmental factors beyond our control; • one of the principal production costs of our pig breeding business is feed costs, and our feed costs may increase if crop supplies are reduced as a result of droughts, hail storms, extreme cold, insufficient snow during winter, crop diseases or other causes beyond our control; and

15 • our production and processing facilities and our pig herds could be materially damaged by floods, hurricanes, natural disasters and other environmental factors, which can cause the discharge of effluents or other waste into the environment, potentially resulting in our being subject to liability claims and regulatory sanctions. For example, during the summer and autumn of 2010, Russia experienced a prolonged period of abnormally high temperatures and both atmospheric and soil drought. The heat and drought damaged crops and reduced the quality of crop yields during 2010. The government of the Russian Federation (the ‘‘Russian Government’’) estimated that the heat and drought caused total direct damage to agricultural producers of RUB 41.6 billion and diminished the 2010 harvest by 30% across Russia. All our divisions suffered as a result of the drought. For example, a significant portion of the crops of our Agriculture division were damaged and/or destroyed as result of the unexpected weather conditions and our Sugar division experienced a significant decline in the production of sugar from sugar beets due to the limited availability of sugar beets in the regions surrounding our sugar plants, as well as increased production costs as a result of the lower quality of the sugar beets produced. During summer 2015, Russia experienced periods of drought, which negatively affected our crop production in 2015 as compared to 2014. Moreover, climate change may have significant long- and short-term effects on the agricultural regions of Russia that are impossible to predict. Such factors may cause us to be unable to produce crops and may cause the supply of raw materials to be delayed or unavailable to us, which may materially adversely affect our business, results of operations and financial condition.

We are vulnerable to the cyclical nature of the global and domestic commodities markets. Many of the food products that we produce and trade, as well as some raw materials, fuels, fertilizers and feed components that we purchase, are commodities, the market prices of which are influenced by a variety of factors beyond our control, including weather, the availability of raw materials, government programs and policies, crop yields, oil prices, changes in global demand and global production of similar and comparable products. Our Agriculture division and other third-party farming operations from which we purchase raw materials such as sugar beets and feed components (corn and soybean), have experienced significant cost increases due to a rise in the cost of mineral fertilizers. Although we have generally been able to increase the prices of our sugar and other food products to partially offset the increase in our operating and raw materials costs, if we are unable to increase our prices to offset future increases in such costs, our business, results of operations and financial condition may be materially adversely affected. Although the prices for agricultural commodities which we produce have been relatively stable over the past years, their sharp decrease or significant market downturns in the future may also negatively affect our revenues and profitability.

Changes in our sow herd productivity, mortality and feed efficiency could adversely affect our operations. Rapid expansion of our sow herd could adversely affect our average sow herd productivity (which is the number of offspring per sow per year that reach certain weight parameters) because the additional sows will be less productive in their earlier litters. Sow productivity can also be influenced by a number of other factors, including the health condition of our herds and their mortality, genetics and environment. For example, extreme heat during the summer and autumn of 2010 resulted in reduced sow productivity, reduced weight gain and increased livestock mortality during this period. Changes in feed nutrition efficiency (which is the amount of feed consumed to produce a kilogram of live weight in our pigs) affect per head feed consumption. As a result, they affect the aggregate cost of feed, which is the primary cost component in our pig-production operations. A number of factors influence feed nutrition efficiency, including the capacity and use of our finishing facilities, the health condition of our animals, genetics, the nutrient value of available feed ingredients and environmental factors. Because of the many factors involved, herd productivity and feed efficiency levels may decline in the future. Any decline in these levels may have a material adverse effect on our costs, operating margins or ability to compete with other pig producers.

16 We may be unable to procure sufficient volumes of raw materials from third parties to satisfy the demand of our business divisions. Our Agriculture division produces approximately 63% of the sugar beets processed by our Sugar division. In addition to growing our own sugar beets, we also purchase sugar beets from third parties. As part of our strategy, we intend to increase the percentage of sugar beets grown in-house. If we are unable to successfully implement our strategy, we will be required to continue to substantially rely on third-party producers of sugar beets to supply the raw materials for our sugar operations. In addition, approximately 38% of winter wheat and barley required by our Meat division to produce feed was provided by our Agriculture division during the buying campaign in July-December of 2015. We therefore rely on third- party producers of grain for our feed production. Any substantial reduction in supply or quality or unavailability of sufficient supply of raw materials produced by agricultural farms in the respective regions where our production facilities are located could have a material adverse effect on our profitability.

Any significant increase in costs or shortages of labor, energy or transportation supplies could have a material adverse effect on our operations. Our agricultural lands, processing and breeding facilities require qualified personnel and appropriate energy resources to operate, and a significant quantity of raw materials are delivered to our processing and breeding facilities by truck or railroad. Based on our management accounts, labor, energy and transportation costs comprise a significant part of our operating costs (exclusive of raw materials costs) on an annual basis. Any significant increases in electricity prices, labor costs or transportation costs will likely decrease our operating profits. Although some of these costs may be recoverable through our sales pricing, any shortage in labor or major increases in labor, energy or transportation costs could have a material adverse effect on our business, results of operations and financial condition.

Demand for our products may decline. Demand for the sugar and other food products that we produce depends on the general condition of the economy and consumer confidence as well as demographic factors and consumer preferences. Demand for our products may decline due to changes in consumer spending levels, preferences in tastes, demographic trends or perceptions about health concerns associated with the consumption of food products we produce. As income levels increase in Russia, consumers have generally exhibited a tendency to increase their consumption of premium-grade sugar. Conversely, during periods of economic uncertainty and decline, consumers tend to change the composition of their consumption in favor of lower-priced products and decrease their purchases of higher-margin premium products and brands. Health, dietary and other considerations may also result in changes to consumer preferences, which may in turn result in reduced demand for our products. The demand for our products may also be adversely affected by public concern about the ingredients, healthcare and other factors. Demand for our pork products also depends primarily on the general condition of the economy, consumer preferences, confidence and certain demographic factors. Our products also compete with other sources of protein, such as beef, poultry and other foods, which may be viewed by consumers as substitutes for our products, and increases in the prices of our products relative to these products may cause consumers to shift their consumption in favor of these other products. Reduced demand for our products, changes in the composition of consumption in any of our key product markets or reduced prices for our products as a result of these or other considerations could materially adversely affect our business, results of operations and financial condition.

There can be no assurance that we will continue to receive the full benefits of Russian Government sponsored interest rate and other subsidy programs. We benefit from various forms of support from the Russian Government as well as regional governments for our agricultural operations. We have participated in state-sponsored interest rate subsidy programs since 2006. Under these programs, the Russian Government reimburses 80% and regional governments reimburse up to 20% of an agricultural company’s interest expenses associated with the purchases of raw materials and agricultural production equipment, modernization and reconstruction investment programs. The maximum amount of the interest rate reimbursement is determined based on the CBR refinancing rate as of the date the credit is granted (or, if the interest rate under the credit agreement is subsequently increased, at the date of such increase). In 2015 and 2014, we received RUB 1,815,058 thousand and RUB

17 2,133,657 thousand, respectively, including deferred amounts, under such interest expense subsidy programs. In addition we receive direct subsidies related to our purchases of fertilizers and certain agricultural production equipment. There can be no assurance that we will continue to receive or be eligible for the full benefits of such government subsidies as a result of a variety of potential factors, such as not meeting the relevant program eligibility criteria, delays in applying for the relevant government subsidy and/or relevant subsidy quota limits being exceeded. In addition, since the third quarter of 2015, the repayment of a considerable amount of approved government subsidies was intermittent or past due, in particular, with respect to subsidies related to compensation of interest expense under short-term loans. The delays are believed to be attributed to financing restrictions established by the Ministry of Finance of the Russian Federation. In addition, since July 2015, the interest expense reimbursements under short-term loans were significantly curtailed. Any inability to receive government subsidies in the future may have a material adverse effect on our business, results of operations and financial condition.

The Russian Government may modify import policy or discontinue its tariff systems for certain types of food products. Russia has in place certain measures, including import bans, quotas and tariffs on the import of certain products including raw cane sugar and meat. See ‘‘Industry Overview’’. We currently benefit from the Russian Government’s intervention in the sugar market to stabilize sugar prices, promote the production and processing of sugar beets and curb foreign competition. In 2004, in order to stimulate the domestic sugar market through the production and processing of sugar beets, the Russian Government introduced a new system of tariffs on raw cane sugar imports with the goal of stimulating domestic sugar beet production. On October 6, 2007, Russia, Belarus and Kazakhstan established a customs union. In 2009, they signed several agreements that introduced a unified customs regime which became effective January 1, 2010. The raw cane sugar import tariffs are set inversely to the market price of raw cane sugar to ensure that the price of imported raw cane sugar and ultimately the price of white sugar produced from imported raw cane sugar do not fall below a certain minimum threshold in order to ensure the viability of domestic sugar beet and white sugar producers. We also benefit from an annual import quota of pork (of 430 thousand tons of pork) and high import duties for out of quota imports as well as a ban on import of live pigs from the EU and meat from the US due to veterinary rulings and as counter sanctions measures. Any modification or failure by the Russian Government to continue its policy of regulating the domestic sugar market or meat market through the existing import tariffs system or failure to extend it in the future may open our markets to increased foreign competition and may have a material adverse effect on our business, results of operations and financial condition.

Failure to comply with existing government regulations, or increased governmental regulation of our operations, could result in substantial additional compliance costs, administrative penalties or closure of our facilities. Our operations, properties and facilities are subject to regulation by various government entities and agencies. As a producer of food products we are subject to health and safety, production, packaging, quality, labelling and distribution standards. The operations of our production, breeding and distribution facilities are also subject to various environmental laws and workplace regulations. If we fail to comply with these regulations, we could be fined or a court could order the temporary closure of our facilities. Compliance with, or any violation of, current and future laws or regulations could require material additional expenditures by us or could otherwise materially adversely affect our business, results of operations and financial condition. See ‘‘Regulation of the Russian Agricultural and Food Industry.’’ In addition, our operations are dependent on having received the required licences, permits and approvals from Russian governmental authorities. Such licences, permits and approvals may be suspended, amended or terminated prior to the end of their terms or subject to periodic renewal. Therefore, our failure to comply with conditions specified in our licences, permits and approvals from Russian governmental authorities or renew them in a timely manner could result in suspension of our particular operations or compel us to incur costs in eliminating or remedying violations, which could have a material adverse effect on our business, results of operations and financial condition. In particular, once we completed the accession of LLC ‘‘Zherdevsky Elevator’’ to LLC ‘‘Agrotekhnologiy’’ in June 2015, the licence for operation of inflammable objects at the Zherdevsky grain elevator was automatically terminated. We are currently in the process of preparing required supporting documents and expect to obtain the renewed license in August 2016. So long as the new license is not obtained, the operations of our Zherdevsky grain elevator may be subject to suspension and we may incur administrative fines. Our failure to renew the license for operation of inflammable objects at the Zherdevsky grain elevator or obtain in a timely manner or renew required licences, permits and approvals from Russian governmental authorities could have a material adverse effect on our business, results of operations and financial condition.

18 The Russian Government’s measures to stabilize the grain and other commodity prices may destabilize or distort the market. On August 5, 2010, in an attempt to stabilize domestic prices, the Russian Government banned the export sale of wheat, meslin, barley, corn, rye and wheat for the period from August 15, 2010 until December 31, 2010 and further from January 2, 2011 until June 30, 2011. As a consequence of this measure domestic grain prices in Russia declined. Such a decline in grain prices had a detrimental effect on the revenues and margins of our Agriculture division. Any further export bans or other similar measures by the Russian Government to stabilize the market may prove to be ineffective and may lead to price distortion or otherwise negatively affect the Russian grain market, which may have a material adverse effect on our business, results of operations and financial condition.

Our export activities expose us to political and economic risks in foreign countries, as well as to risks related to import/export regulation. Export sales to Central Asian countries (such as Tajikistan, Kyrgyzstan, Uzbekistan, Kazakhstan and Turkmenistan) are important for our Oil and Fat division. Political and economic instability, increased governmental regulation of import/export sales of our products, imposition of adverse trade regulations or adverse changes in existing regulation in such countries may have a material adverse effect on our costs, operating margins or ability to effectively compete with domestic producers. We expect the volume of our export transactions to increase, which may increase our exposure to future changes in regulations. For example, a key part of our strategy is to develop our pig breeding facilities in the Primorsky krai from where we intend to export pork to the Chinese market. Currently there are import barriers on sales of pork to China, which are expected to be eased or lifted in the future. If these import barriers remain or if we face Russian export barriers on our future sales of pork to China, this may affect implementation of our strategy to export pork to the Chinese market.

We operate in a competitive industry and market segments and any inability to compete successfully may adversely affect our results of operations. We operate in highly competitive and consolidating markets with economies of scale and scope throughout the value chain from procurement, to production, distribution and marketing. Currently, we are one of the largest Russian companies engaged in the production of sugar, meat and other food products. The appearance of a new market participant in any of the segments in which we operate or an increase of market share by a current market participant may significantly increase competition. Our principal competitors may have superior access to financing or other competitive advantages, including more efficient or developed vertical integration and economies of scale or more competitive access to raw materials that could adversely affect our market share. We may need to increase our marketing efforts to maintain our current market position or engage in competitive pricing, which would result in increased operating costs and reduced profitability. Any such changes could have a material adverse effect on our business, results of operations and financial condition.

We initiated new greenfield projects in 2015 and continue to invest in our existing production facilities. Such investments may prove to be unprofitable. In 2015, we launched a greenfield pig breeding project in the Primorsky krai (the Far East of Russia). In addition, we plan to launch a greenhouse construction project in the Tambov region in the second half of 2016. We are required to obtain construction permits, consents and approvals from various governmental authorities, including fire, health and safety, environmental protection and sanitary departments and technical approvals from various utility providers, in order to commence the construction of these projects. The process of obtaining such authorizations in Russia is complicated, time consuming and subject to uncertainty. As a result, we are subject to risks typical for construction projects in Russia. If we fail to obtain the necessary construction permits, there is a risk that any construction that was commenced without a permit could be dismantled. We expect to obtain construction permits for our pig breeding project in the Primorsky krai by July 2016. Once construction of the required facilities is completed, we will need to apply for the necessary operational licenses, permits and approvals for the facilities. There can be no assurance that we will obtain these licenses, permits and approvals. We also continue to invest in the modernization of our existing facilities in each of our divisions. In particular, in 2016, we started construction of the new oil facility in the Samara region to refine, deodorize and bottle sunflower oil of up to 100,000 tons per year. We cannot be certain that our new pig breeding facilities, our new greenhouse facility, our new oil and fat production facility or our modernization efforts will be successful or will

19 generate significant revenues and be profitable in the future. Our inability to develop these and other projects within the specified timeframe, budget and construction standards may result in losses which could have a material adverse effect on our business, results of operations and financial condition.

The nature of our operations exposes us to the risk of environmental claims and sanctions. Because of the nature of our operations, we are subject to the risk of environmental claims, including nuisance claims by neighboring property owners. We face the risk of nuisance lawsuits even if we are operating in compliance with applicable regulations. We may be unable to effectively defend ourselves from possible environmental claims which may in the future result in administrative penalties and damages. In addition, under relevant Russian legislation, Russian regulatory agencies can impose various sanctions for violations of environmental standards. These sanctions may include civil and administrative penalties applicable to the Group and criminal and administrative penalties applicable to its officers. See also ‘‘Regulation of the Russian Agricultural and Food Industry.’’ Also, in connection with an environmental investigation, regulatory authorities can issue an order halting part or all of the production at a plant which has violated environmental standards. Any imposition of civil and administrative penalties or limitation or suspension, in part or whole, of production at our facilities could materially adversely affect our business, results of operations and financial condition.

Shares in certain of our operational subsidiaries and a material part of our operational assets are pledged to secure our debt obligations. Under loan agreements with Sberbank and Alfa-Bank, we pledged our shares in a substantial number of our subsidiaries, including 100% of the participatory interests in LLC Belgorodsky Bacon, LLC Tambovsky Bacon, LLC Rusagro-Primorye and 51% of the shares in OJSC Valuikisakhar. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness’’ for a description of the assets pledged under the Group’s material financing arrangements. Our failure to service such debt obligations or comply with the covenants of our financing arrangements may cause us to lose control over the Group’s business and/or a material part of our assets. Each of Sberbank and Alfa-Bank has the right to enforce its pledge in the event that we fail to comply with the obligations under the loan agreements with it. As of December 31, 2015, we had pledged property, plant and equipment with a net book value of RUB 8,448,932 thousand as collateral under loans granted to us. These pledged assets (excluding shares in subsidiaries) amounted to 6.5% of our total assets as of December 31, 2015. Any enforcement of these pledges over shares of our subsidiaries and other assets could cause us to lose operational control over, and ultimately our shareholdings in or the use of, such subsidiaries or pledged assets, inventory or livestock, as the case may be. Any such enforcement actions could have a material adverse effect on our business, results of operations and financial condition.

Covenants in the financing agreements of our subsidiaries may restrict our ability to borrow and invest or cause us to default under our existing loan agreements, which could affect our ability to operate and further expand our business. Almost all of our bank debt arrangements contain covenants that impose operating and financial restrictions on our subsidiaries, including restrictions on our ability to: • incur, assume or permit to exist additional indebtedness or guarantees while the borrower’s financial ratios are below predetermined levels; • engage in any transactions which have a material effect on the borrower’s assets or liabilities without prior approval or notice of the lender; • engage in any form of reorganization without notifying the lender; and • sell assets in excess of a predetermined threshold. The Group’s experience has been that the inclusion of covenants of this nature in bank debt arrangements is typical market practice in Russia. A breach of any of these covenants, including a failure to comply with the required financial covenants, could, following the expiration of any period for remedy, result in a default under our financing arrangements. In particular, in 2013 we breached a covenant under a loan

20 agreement with Sberbank, which breach was remedied in March 2014 and followed by an amendment to the terms of the relevant covenant. If we breach any covenant in our bank debt arrangements in the future and are unable to obtain relevant waivers or reach agreement on amendment of the terms of the breached covenants with lenders, the lenders under such arrangements may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. In addition, this could potentially result in a cross acceleration or cross default under our other debt agreements, which could have a material adverse effect on our business, results of operations and financial condition. The lenders also have the right in these circumstances to terminate any commitments they have to provide further borrowings. In addition, our ability to make payments on our debt depends upon our ability to maintain our operating performance at a satisfactory level, which is subject to general economic and market conditions and to financial, business and other factors, many of which we cannot control. Any breach of the covenants in our financing arrangements or the inability to service our debt through internally generated cash flow or other sources of liquidity may put us in default of our obligations to our creditors, which could have a material adverse effect on our business, results of operations and financial condition. In order to upgrade our facilities, expand our business, make future acquisitions or fund ongoing operations, we may need to secure further debt and may be required to pledge certain of our operating assets and goods as collateral. Restrictive covenants in the existing financing agreements may limit our flexibility to secure debt financing in the future and to operate generally. In addition, any onerous collateral requirement or lack of unencumbered property that can be offered as security may limit our ability to raise additional funds.

We may be unable to obtain adequate managerial and operational resources to support our plans for the growth and expansion of our business. Our strategy provides for the continued growth and expansion of our four business divisions. Managing such growth and expansion requires significant managerial and operational resources. Our ability to maintain our competitive position and to implement our business strategy (and, as a result, our future operating results) depend in significant part upon the continued contributions of a small number of our key senior management team as well as our middle management and technical personnel. The number of qualified managerial and technical personnel, particularly at the mid-management level, is limited in the regions of Russia where we operate, and there is intense competition for the services of such persons. Management of our growth requires, among other things: • continued development of financial and management systems; • implementation of adequate internal control over financial reporting procedures; • increased marketing activities; • identification of new opportunities for mergers and/or acquisitions; • hiring and training of new personnel; and • coordination among our logistical, technical, accounting, finance, marketing and sales personnel. Although we have established incentive schemes to retain our current senior management (see ‘‘Management – Remuneration of Directors and Senior Management’’), we can provide no assurance that we will do so, and we do not carry insurance in respect of the loss of the services of any of the members of our management. The loss or diminution in the services of members of our senior management team (whose contracts generally do not provide financial penalties for voluntary termination), failure to extend contracts with existing senior managers or arrange for an adequate replacement, or an inability to attract, retain and maintain additional senior management could have a material adverse effect on our business, results of operations and financial condition or prospects. Competition in Russia for personnel with relevant expertise is intense due to the small number of qualified individuals, and this situation seriously affects our ability to retain our existing senior management and attract additional qualified senior management, which could have a material adverse effect on our business, results of operations and financial condition.

21 We may not be able to complete or integrate successfully any recent and/or potential future acquisitions. We regularly evaluate potential acquisition targets and may in the future seek to acquire other businesses or legal entities in order to expand our operations. In particular, in 2015, we acquired control of a manufacturer of soybean oil, soybean oil feed and mayonnaise in the Primorsky krai (Primorskaya Soya). In 2016, we have entered into a preliminary agreement to acquire from the Razgulay group stakes in four legal entities operating three sugar plants and holding title to approximately 90 thousand hectares of land surrounding these plants. See ‘‘Business – Recent Developments’’. Our recent or current acquisitions and any potential future acquisitions may pose significant risks to our existing operations if such acquisitions cannot be successfully integrated. Such acquisitions may place additional demands on our managerial, operational, financial and other resources, create operational complexity requiring additional personnel and other resources and require enhanced control procedures. We can provide no assurance that our recent or any potential acquisitions will be concluded or successfully integrated. Our failure to complete or integrate successfully recent and/or any potential future acquisitions could have a material adverse effect on our business, results of operations and financial condition. Moreover, even if we are successful in integrating newly acquired assets, expected synergies and cost savings may not materialize, resulting in lower than expected benefits to us from such acquisitions. Additionally, when making acquisitions it may not be possible for us to conduct a detailed investigation of the nature of the assets being acquired due to, for example, time constraints in making the investment decision, the lack of adequate financial information on the target(s), and other factors. We may also become responsible for additional liabilities or obligations not foreseen at the time of an acquisition, which could have a material adverse effect on our business, results of operations and financial condition. Although the Company believes that it has historically successfully managed these risks as it has grown and expanded its operations, and views the expertise of its management in this regard as one of its primary strengths of the Group, the failure to successfully integrate recent and/or potential future acquisitions could have a material adverse effect on our business, results of operations and financial condition.

Our plans for growth may be restricted by Russian antimonopoly regulations. Under Russian antimonopoly regulations, the Federal Antimonopoly Service (‘‘FAS’’) may determine that a company controls over 35% of a given market or qualify a company as having a dominant position in that market if its market share is over 50%, in which case it is subject to regulatory restrictions, including restrictions on making further acquisitions in that market. Moreover, the FAS is entitled to establish that a company has a dominant position even if the entity has less than 35% in limited cases prescribed by Russian law. As we expand certain of our operations, the FAS may impose limitations on our business activities or may not grant approvals for future transactions. Restrictions on expansion may adversely affect our strategic plans for growth.

We may be unable to operate our production facilities without interruption during peak harvesting periods of the agricultural season due to the condition of some of our equipment. Our business depends on the continued operation of our processing facilities and transportation equipment. The operation of our processing facilities involves many risks, including risks related to the breakdown, failure or substandard performance of our equipment, improper installation or operation of the equipment and potential inability to make timely repairs or to comply with applicable government regulations. Although we attempt to implement modern technology and update our equipment on an ongoing basis, the condition of some of our equipment in several of our facilities may be outdated. At present, we do not have any business interruption insurance and any significant manufacturing disruptions or reductions in capacity could adversely affect our ability to process and sell our products in an efficient manner or at all, which could have a material adverse effect on our business, results of operations and financial condition. In addition, we may not be able to acquire or obtain access to new technology or other equipment used by our competitors and any such failure to acquire or obtain access would impair our ability to compete effectively and could adversely affect our business, results of operations and financial condition.

There are risks associated with the Group’s accounting and reporting systems and the internal controls relating to the preparation of IFRS financial statements. In light of the Group’s past and planned growth, the preparation of annual or interim IFRS financial statements may need more time than required by other companies and such financial statements may be

22 subject to a greater possibility of errors or misstatements. With each acquisition the Group seeks to adapt and incorporate the financial reporting system of the acquired operations quickly and efficiently. The Group’s ability to generate accurate financial information in a timely manner and to produce consolidated financial statements is currently dependent on a small group of accounting professionals. To address this risk the Group has implemented numerous controls to help ensure the accuracy of the financial information generated and continues to automate its processes where possible. In some cases, however, the Group may lack formal procedures for monitoring transactions and collecting financial and related information required for the preparation of IFRS accounts, or such procedures may be underdeveloped. As the Group develops its financial reporting system, it seeks to identify and mitigate such risks promptly. This may nevertheless adversely affect our business, results of operations and financial condition. The Group’s continuing automation of its data processing and data verification procedures and other internal controls have historically allowed it to prepare accurate financial statements in a timely manner. As such, notwithstanding anything in this risk factor, we believe that our accounting and reporting systems are sufficient to ensure compliance with requirements of the FCA’s Disclosure and Transparency Rules as a listed entity.

There are risks associated with inadequate information technology systems. The Group’s management information system, financial reporting system and system of internal controls are less developed in certain respects than those of competitors in more developed markets and may not provide the Group’s management with as detailed or as accurate information as those in more developed markets. In particular, the Group’s information technology systems do not provide fully automated processing of data and operations for a number of products and services on a Group-wide basis and do not permit all our subsidiaries to receive and provide information on a real-time basis. In addition, the quality of the network in certain remote areas of the Russian Federation may make it difficult to reach high levels of automation. The Group has data verification procedures in place to help ensure the accuracy of the financial and other data produced, including implementing a detailed and clear methodology that is largely automated to collect information from its local systems. Furthermore, the Group’s continuing automation of its data processing procedures and data verification procedures and other internal controls have historically allowed it to prepare accurate financial statements in a timely manner. The Group’s potential inability to maintain an adequate management information system, financial reporting system or system of internal controls may have a material adverse effect on the Group’s business, results of operations and financial condition. Notwithstanding anything in this risk factor, we believe that our information technology and financial reporting and internal control systems are sufficient to ensure compliance with requirements of the FCA’s Disclosure and Transparency Rules as a listed entity.

We are not required to and do not comply with the Code of Corporate Governance of the Cyprus Stock Exchange. Although we are incorporated in Cyprus, because our Ordinary Shares are not listed on the Cyprus Stock Exchange, we are not required to and do not comply with the Code of Corporate Governance of the Cyprus Stock Exchange. Our corporate governance requirements are established by our Articles of Association, which we believe are typical of a Cypriot public company. See ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Articles of Association.’’ In addition, notwithstanding that a substantial majority of our operations are conducted in Russia, because we are a Cypriot company we are not subject to and do not comply with the corporate governance standards applicable to Russian companies, except in so far as our Russian incorporated subsidiaries are required to comply with the corporate governance requirements contained in Russian company law. Moreover, the corporate governance requirements in Russia are generally less developed and less robust than those in more developed jurisdictions, such as in the US and the UK.

Our controlling beneficial shareholder has the ability to exert influence over us, and his interests may conflict with those of other holders of our Ordinary Shares or the holders of the GDRs. We are controlled by Mr. Vadim Moshkovich, who beneficially owns approximately 75% of our issued Ordinary Shares and, following the Offering, will beneficially own approximately 71% of our issued Ordinary Shares. See ‘‘Principal Shareholders.’’ While we believe that a certain level of involvement of Mr. Moshkovich in our operations has been and will continue to be important in the development of our

23 strategy, there can be no assurance that he will remain a significant shareholder in the future. Currently, Mr. Moshkovich is the Chairman of the Board of Directors of the Company and there is a number of related party transactions involving entities controlled by Mr. Moshkovich. See ‘‘Related Party Transactions – Entities controlled by the Owner’’. Our business could suffer, however, if Mr. Moshkovich ceases to be the controlling beneficial owner of the Group. In addition, in 2014 Mr. Moshkovich ceased to be a member of the Council of the Federation of the Federal Assembly of the Russian Federation (the upper chamber of the Russian parliament) representing the Belgorod region. While we have not experienced any adverse effects of this fact so far, there is no assurance that it will not result in the Group being unable to continue reaping the benefits of the government interest subsidies and other support programs offered. As a result of his controlling beneficial interest, Mr. Moshkovich has the ability to exert influence over us and certain actions that require shareholder approval, including, but not limited to, the increase or decrease of our authorized share capital, the election of directors, the declaration of dividends, the appointment of management and other policy decisions. The interests of our controlling shareholder could conflict with the interests of the holders of our Ordinary Shares or the GDRs. Furthermore, there can be no assurance that Mr. Moshkovich will continue to cooperate in the management of his controlling beneficial interest, and any conflicts of interest or disagreements between us regarding the management or operations of the Group could have a material adverse effect on our business, results of operations and financial condition.

We may be subject to product liability claims and adverse publicity. We are subject to food and feed industry risks which include, but are not limited to, spoilage, contamination, tampering or other adulteration of products. The production, packaging, marketing, distribution and sale of our food products may result in product liability, product recall and/or subsequent adverse publicity. In common with other food producers in Russia, we do not carry any product liability insurance. As a result, product liability claims relating to defective products could have a material adverse effect on our ability to successfully market our products and on our business, results of operations and financial condition. In addition, we may voluntarily determine, or government regulators may require us, to recall products that are, or are believed to have been produced from, contaminated or otherwise substandard products. Even if a product liability claim is not successful or we do not recall our products, we may be subject to negative publicity resulting from assertions that our products caused illness or injury, may potentially cause illness or injury, or are made from contaminated or substandard products. Product liability claims, the possibility of such claims, recalls of our products or any other claims or any negative publicity associated with the safety or reliability of our products could have a material adverse effect on our reputation, including the strength of our brand names, and relationships with existing and potential customers, and therefore, on our business, results of operations and financial condition.

We have engaged in certain trading and hedging operations which may limit our potential gains and involve other risks. Between 2013 and 2015, we implemented certain hedging techniques, such as derivatives, to reduce our exposure to risks related mainly to raw sugar commodity prices fluctuations and for other commercial purposes. Our hedging transactions to date have included purchasing various derivative instruments, including option and futures contracts, through the subsidiary, Limeniko Trade and Invest Limited (‘‘Limeniko’’), incorporated in the British Virgin Islands. We may in the future enter into these and other types of hedging arrangements to reduce exposure to fluctuations in the market prices of commodities we purchase or sell. These transactions may limit our potential gains if commodities prices were to rise over the price established by the hedge. However, if we do not engage in hedging transactions, then we may be more adversely affected by declines in commodities prices than our competitors who engage in hedging transactions. Additionally, hedging transactions may expose us to cash margin requirements. Although our exposure between 2013 and 2015 was not substantial, there is no assurance that such transactions will fully protect us from price volatility or that we will continue to be able to enter into such arrangements on commercially beneficial terms, if at all. Hedging transactions may expose us to the risk of losses in certain circumstances, which could have a material adverse effect on our business, results of operations and financial condition, including instances in which: • our production is less than expected;

24 • the counterparties to our hedging transactions fail to perform under the agreements; or • a sudden, unexpected event materially impacts commodities prices.

Our trading and hedging operations are conducted through the subsidiary incorporated in the British Virgin Islands, which may involve certain Russian tax risks. Since November 13, 2007 the British Virgin Islands (the ‘‘BVI’’) have been included in the ‘‘List of off-shore states and territories’’ by the Ministry of Finance of the Russian Federation (the ‘‘Ministry of Finance’’). In 2011, the BVI were moved to the list of ‘‘Jurisdictions that have substantially implemented internationally agreed tax standards’’ (the ‘‘white list’’) by the Organization for Economic Cooperation and Development. However, in Russia the BVI are still generally considered to be an off-shore jurisdiction. In addition, on 4 March 2016 the BVI has been included in the ‘‘List of states (territories) that do not provide for information exchange for tax purposes’’. As described in ‘‘– We have engaged in certain trading and hedging operations which may limit our potential gains and involve other risks’’ above, the Group’s Russian subsidiaries engage in certain hedging operations with our subsidiary Limeniko, which is incorporated in the BVI. These operations may be scrutinized by the Russian tax authorities and any tax deductions or Russian tax withholdings made in connection with such operations could be challenged by the Russian tax authorities. In addition, the operations and/or management of Limeniko may lead to challenges by the Russian tax authorities and attempts to recognize Limeniko as a Russian tax resident or to attribute profits generated by this entity to Russia via creation of a permanent establishment in Russia. Such additional tax exposures could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects (See also ‘‘– Legislative and Legal Risks Relating to Russia – Russian tax legislation includes new concept of corporate tax residency and permanent establishment rules, which may be applicable to the Group’’).

We may be unable to protect our intellectual property. Our profitability depends, in part, on the reputation in the market that we have built in connection with our brands and on our ability to defend these brands successfully against third-party challenges. We hold a number of trademarks which are registered in the name of the Group’s companies. The scope of the intellectual property legal protection available in the Russian Federation is not comparable to that available in the United States, Western Europe and other countries with more developed legal protection for intellectual property and legal systems. We may be unable to enforce our trademarks or otherwise protect proprietary rights with respect to our intellectual property, which could have a material adverse effect on our business, results of operations and financial condition. Furthermore, we may need to engage in litigation to enforce our intellectual property rights or to determine the validity and scope of the rights of third parties in the future, which could result in increased costs and if we are unable to protect these rights against infringement, there could be a material adverse effect on our business, results of operations and financial condition.

Deficiencies or ambiguities in privatization and bankruptcy legislation could be exploited to challenge our ownership of certain of our subsidiaries. Our business includes a number of principal operating subsidiaries which acquired assets through privatizations or in bankruptcy sales. A number of companies within the Group were privatized, and we may seek to acquire additional companies that have been privatized. In particular, shares of the companies that own our sugar plants and our oil and fat plant in Ekaterinburg were acquired by previous owners through privatization procedures. In addition, we obtained control over our oil extraction plant in Samara by purchasing shares of a Russian company which acquired approximately 7-10% of the plant’s assets from previous owners that, in turn, had acquired the assets in bankruptcy proceedings. Because privatization legislation has been vague, internally inconsistent and in conflict with other legislation, often including conflicts between federal and local privatization legislation, most, if not all, privatizations are arguably deficient and are therefore vulnerable to dispute. Although we believe we have complied in all material respects with all applicable laws and regulations in acquiring our subsidiaries or assets, there can be no assurance that these acquisitions will not be challenged as having been improperly conducted. The applicable limitations period has expired with regard to most of the assets acquired by our operating subsidiaries through privatization procedures, and the Company is not aware of any challenges with regard to these acquisitions. The company that owns the Samara oil extraction plant, control of which was acquired by the Group in March 2011, acquired assets from previous owners that had acquired the assets

25 through bankruptcy proceedings at the end of 2010. In December 2010, JSC Rosselkhozbank challenged the acquisition of such assets in the bankruptcy proceedings. Such challenge was successfully defended by us in the Arbitrazh court of the Samara region and it was dismissed by the court. In the event that any of our acquisitions of privatized subsidiaries or participation in privatization or bankruptcy sales is challenged as having been improperly carried out and we are unable to defeat such claims, we may lose our ownership interest in such subsidiaries or their assets, which could materially adversely affect our business, results of operations and financial condition.

The Company is a holding company of the Group and we are dependent upon our subsidiaries to meet our obligations. The Company is a holding company, and conducts its operations through subsidiaries. See ‘‘Business – Organization’’. We hold no significant assets other than direct and indirect investments in our operating companies and we are therefore dependent upon the receipt of sufficient dividend and interest income from our subsidiaries to meet our obligations. The Group’s main asset is the equity interest that it indirectly holds in LLC Group of Companies Rusagro (which holds the predominant share of the assets of the Group and conducts substantially all the business of the Group), registered in the Russian Federation. Our subsidiaries may from time to time be subject to restrictions on their ability to make such payments to us as a result of regulatory, fiscal and other restrictions. For example, in light of the economic slowdown in Russia and the sharp fall in the value of the Rouble seen in 2014 and 2015, there have been suggestions that the Russian authorities may impose restrictions on cross-border capital flows in an effort to stabilize the value of the Rouble. As such, OJSC Rusagro Group may be subject to any such currency control restrictions as may be imposed by the Russian authorities, which could limit its ability to make foreign- currency payments, including paying out dividends. In addition, dividend payments by our subsidiaries, if made, are subject to withholding tax in Russia (see also – ‘‘Withholding income tax could be imposed in Russia on dividends distributed from our Russian subsidiaries to the Company’’). Moreover, our ability to benefit from the distribution of any assets upon the liquidation of any of our subsidiaries will be subject to the prior claims of that subsidiary’s creditors, including trade creditors. A decrease in dividend income or interest payments from our operating entities or the insolvency of one of our subsidiaries may have a material adverse effect on our business, results of operations and financial condition.

We may not have or we may be unable to obtain sufficient insurance to protect ourselves from business risks. While we generally maintain the types of insurance customarily available to businesses in our industry in Russia, our insurance policies do not cover, and insurance is not commercially available, to cover all potential risks to which we are or may be exposed. We do not carry insurance comparable to that of major companies that operate in Western Europe or other jurisdictions with more developed insurance markets. Any insufficiency in insurance coverage with respect to all or certain business-related risks may expose us to substantial losses, which could materially adversely affect our business, results of operations and financial condition. Depending on the severity of the property damage we may suffer, we may not be able to re-establish our operations in a timely manner or at all, even if such loss is covered by insurance. For example, although our livestock is insured, we may not be able to fully replace losses to our livestock, particularly those arising as a result of disease. We also do not generally maintain separate funds or otherwise set aside reserves for these types of events. As we do not carry business interruption insurance with regard to all our operational entities, the loss or destruction of certain assets could have a material adverse effect on our business, results of operations and financial condition. In addition, there can be no assurance that we will be able to renew our insurance on comparable or satisfactory terms, if at all.

Russian Agricultural Land Risks The validity of our land or other real estate acquisition or leasehold arrangements may be challenged. We have incurred significant acquisition and development costs relating to agricultural land to which we have not yet registered title or leasehold interests, and there can be no assurance that we will be able to register title or leasehold interests in all such agricultural land. As of the date of this Information Memorandum, of the approximately 594 thousand hectares of land under our control, including approximately 90 thousand hectares of land under control of legal entities being acquired from the Razgulay group, we have registered ownership title with regard to approximately

26 43% of such land and have acquired valid leasehold interest with regard to approximately 57% of such land. Although we believe that most of our agricultural land acquisition and leasehold arrangements are in formal compliance with Russian law, if such arrangements that have been entered into based on our interpretation of the provisions of the Land Code of the Russian Federation dated October 25, 2001, as amended (the ‘‘Land Code’’) pertaining to the sale or lease of agricultural land were to be successfully challenged, we could lose our title to or leasehold interests in agricultural land acquired pursuant to such arrangements, as well as our capital investment in the land, and we may be unable to recover the payments we made therefor from uncreditworthy counterparties. In particular, with respect to our acquisition of title to certain land plots, governmental authorities may determine that the short period of time between the completion of the formalities to lease land and the subsequent purchase of that land, combined with the preliminary share purchase agreements, loan agreements and agency agreements that we often enter into are non-substantial agreements designed to avoid the pre-emptive right of regional and local authorities to purchase agricultural land. Such a determination could render our acquisition of the land void, which could have a material adverse effect on our business, results of operations and financial condition. Also, we are not able to verify the full historical chain of title to land and other real estate acquired by us, in particular with respect to past owners. Thus, we are exposed to the risk that our title may be challenged based on flaws in the title of previous owners. The quality and reliability of the official information in the public registers relating to land and real estate is generally not equivalent to that of more developed countries and such information may not be relied upon as entirely accurate or complete. Furthermore, under Russian law, ownership title and other rights in existence prior to January 31, 1998, certain encumbrances over real estate (including leases of less than one year, free of charge use agreements and other similar encumbrances) do not need to be registered. Accordingly, the government or other third parties may successfully claim the existence of rights or encumbrances over real estate owned or leased by us that are currently unknown to us. Additionally, a potential rise in real estate prices could lead to attempts to challenge our land acquisition arrangements by governmental officials and our counterparties in such arrangements. We typically obtain land by making payment to the owners in return for either (i) revocable powers of attorney from landowners that own more than 51% of the land shares in common ownership of land plots, (ii) non-binding short-term lease agreements with local government officials, (iii) oral agency agreements with landowners who agree to purchase all the land shares on our behalf using funds that we lend to them (the ‘‘Land Agents’’) or (iv) other non-binding arrangements. Although these arrangements enable us to exercise control over the cadastral process and registration of title to or leasehold interests in that land, and we believe that they are the least cumbersome and costly approach to consolidating and registering title and other rights to agricultural land, these arrangements do not vest in us valid title to the land or an enforceable right to occupy it. Although we have successfully used the above land acquisition techniques to obtain registered title to a large amount of land without incurring any losses to date, our reliance on such arrangements may expose us to significant risk in the event of opportunistic behavior by our counterparties during the period between making payment to counterparties and the registration of title to or leasehold interests in the land. Additionally, other risks include, without limitation, the death or incapacitation of a land owner, the death or incapacitation of a Land Agent or a change of a governmental administration. If the foregoing were to occur, we may be required to renegotiate our arrangements with our counterparty’s successor, and there can be no assurance that we would be able to enter into an appropriate arrangement on commercially reasonable terms or at all. We typically incur significant expenses to rehabilitate and cultivate the land immediately after making payment to obtain the use of such land. We may not receive registered title to or a registered long-term lease for the relevant land, in which case we would also lose our investment of time and capital in the rehabilitation of the land. A potential increase in real estate prices may increase the likelihood of opportunistic behavior by our counterparties and competitors. In the event that such or other factors systematically prejudice the viability of the arrangements we use to control the cadastral process and registration of land, the loss of opportunities to acquire land, the loss of capital investment in the rehabilitation of land or the inability to

27 recover our payments for the land could materially adversely affect our business, results of operations, financial condition or prospects.

A change in Russian law or a Russian court’s interpretation of the present Russian law may result in a determination that our foreign ownership structure does not permit us to indirectly own Russian agricultural land. Russian law prohibits a foreign controlled entity from directly owning agricultural land in Russia. Specifically, Russian law states that foreign citizens, foreign legal entities, stateless persons and legal entities in which more than 50% of their shares are owned by foreign citizens or foreign legal entities may lease, but may not own Russian agricultural land. Although the ultimate beneficial owner of the Group is a Russian citizen, more than 50% of the share capital of JSC Group Rusagro is directly held by non-Russian entity. Because the Company is a holding company, we do not directly own Russian agriculture land and therefore believe that we are not in violation of the restriction on ownership of Russian agricultural land. However, should the law change, or should a Russian court apply a broader interpretation of the restriction, it could be determined that our agricultural land is held by a foreign legal entity. A change in Russian law or a determination by a Russian court that we impermissibly own Russian agricultural land could result in our ownership of Russian agricultural land being ruled void or we may be obligated to dispose of our agricultural land which could have a material adverse effect on our business, results of operations and financial condition.

We lease a number of land plots under short-term lease agreements with local authorities and individuals. We control approximately 27% of our land bank pursuant to short-term lease agreements (11 months or less, with or without automatic prolongation) with local authorities, individuals and legal entities. Sometimes it may be impossible or impracticable to enter into long-term lease agreements (which require registration with public registers relating to land and real estate) as (i) landlords may fail to possess proper registered rights to land plots for the required long-term period, (ii) land plots may be subject to surveying or (iii) land plots may be subject to liens or other rights of third parties whose consent is required for entering into long-term lease agreements. Upon expiry of any such short-term lease agreements, the lessor may refuse to extend the lease agreement or decide to re-enter into the lease agreement for an indefinite period of time. Under Russian law land lease agreements concluded for an indefinite term may be terminated by either party at any time at his or her own discretion with three months’ prior notice. We may be unable to renew any or all of our short-term land lease agreements at all or unable to renew them on commercially acceptable terms. If we fail to renew leases for a considerable part of our land or find other land in the locations where we operate, we may be unable to implement our expansion strategy in our agricultural business or may be forced to reduce our agricultural operations, which would materially adversely affect our business, results of operations and financial condition.

We use a portion of our agricultural land and other real estate without valid legal title. We currently do not hold registered ownership title or valid leasehold interest with regard to approximately 1% of land we use. It is often impossible or impracticable to acquire land plots or enter into lease agreements with respect to land plots as there is no information on the boundaries of the relevant land plots in the state land cadaster that would allow the land plot to be identified as a real estate object. With respect to the land for which we do not hold registered ownership title or valid leasehold interest, we may compete against other potential tenants or acquirers, including other agribusinesses which may have comparable or superior financial and other resources, to lease or acquire into ownership the land we use. We use a number of land plots allocated, or ‘‘marked off,’’ following declaration of the respective land shares as ‘‘unclaimed shares.’’ The land plots which were ‘‘marked off’’ from ‘‘unclaimed shares’’ that are under our control represent approximately 0.35% of the total land under our control. In an attempt to obtain leasehold rights with respect to such land plots, we have entered into lease agreements and/or undocumented lease arrangements with various regional or local authorities. Such regional and local authorities have not obtained valid legal title with regard to these land plots and therefore cannot grant leasehold rights for these land plots to us. Therefore, such lease arrangements are void and our use of such land plots may be challenged and terminated at any time. Furthermore, we may be penalized for the illegal use of land plots. The current maximum administrative fine for the unauthorized occupation of land or use of land without legal grounds is 3% of the cadastral value of the plot (but may not exceed RUB 700,000) or, if the cadastral value has not been determined,

28 RUB 200,000 per violation for legal entities. Additionally, if the actual legal owners of the land plots file an action against us seeking recovery of unjust enrichment and a court renders judgment against us, we may be required to repay all profits we have received from our operations on these land plots. Use of the land without valid legal title may also lead to claims for unjust enrichment or damages being filed against us by the owners of the relevant land. A potential rise in real estate prices could increase the likelihood of challenges to our land lease arrangements by governmental officials and/or legal owners. Such legal actions brought against us could have a material adverse effect on our business, results of operations and financial condition. For more details see ‘‘– The validity of our land acquisition or leasehold arrangements may be challenged. We incurred significant acquisition and development costs relating to agricultural land to which we have not yet registered title or leasehold interests, and there can be no assurance that we will be able to register title or leasehold interests in all such agricultural land’’ and ‘‘Regulation of the Russian Food and Agricultural Industry – Agricultural Land – The Acquisition of Agricultural Land.’’ In addition, on the land we control, we may not have registered title to certain structures other than our main production constructions (some of which may be used for ancillary production purposes). If we fail to obtain leasehold interests with regard to this land, or properly register ownership of any structures located thereon, we may be forced to reduce our agricultural operations and may lose any investments already made, which may materially adversely affect our business, results of operations and financial condition.

Certain regional regulations may restrict us from acquiring title to additional land and/or restrict the size of our land plots, which could have a material adverse effect on our business, results of operations and financial condition. Conducting business in the Russian Federation often requires both formal authorization and informal support from federal and local governmental authorities. Consequently, we depend on the support of governmental authorities at both federal and local levels. Local legislative regulations in certain regions of Russia may restrict us from acquiring additional land or restrict the size of agricultural land plots, which could impair our ability to expand and grow in accordance with our business strategy. In the regions in which we operate, authorities restricted the size of agricultural land plots that may be owned by one individual or one legal entity within the territory of a given municipality. For example, in the Belgorod region and Tambov region, one individual or legal entity may not own more than 30% of the agricultural area within the territory of any municipality thereof and in the Primorsky krai this limit is 10%. Several of the Company’s subsidiaries own land that is concentrated in a particular municipality. We believe that we are not in violation of the restrictions on ownership of land in any of the respective municipalities, however, should the law change, or should a Russian court apply a broader interpretation of the restrictions, it could be determined that we are in violation of such restrictions. Such regulations and limitations on our ability to acquire land or expand our business could have a material adverse effect on our business, results of operations and financial condition.

Political and Social Risks Relating to Russia The Ukraine crisis, and its possible escalation and resulting international sanctions, and their possible expansion could materially adversely affect the value of investments in Russia, including the GDRs, as well as the Group’s business, financial condition, results of operation and prospects. The significant civil unrest and political instability in Ukraine and the armed conflict in Eastern Ukraine remains unresolved and has affected the relations between Russia and Ukraine. On March 16, 2014, a referendum was held in Crimea pursuant to which it was reported that a majority of those who voted were in favor of succession from Ukraine and joining Russia as a federal subject. On March 17, 2014, the parliament of Crimea declared independence from Ukraine and officially applied to the Russian authorities with a request to join Russia which on March 18, 2014 was followed by the signing of an agreement between Russia and the Republic of Crimea on the acceptance of the Republic of Crimea into Russia. On March 21, 2014, the Russian parliament passed legislation extending the effect of Russian laws and state authorities to the territory of Crimea. These events in Crimea and the resulting change in Crimea’s legal status have prompted a negative reaction from the international community, with the EU, the United States and Ukraine, amongst others, refusing to recognize the referendum in Crimea. The significant escalation of the armed conflict in Eastern Ukraine between the Ukrainian army and local militia throughout the second half of 2014 and the first quarter of 2015 has destabilized the region and put further pressure on the international relations between Russia and certain foreign countries and political partnerships, including the United States and the EU. In relation to these events, the United States and the EU (as well as other countries such as Norway, Canada,

29 Japan and Australia) have instituted economic sanctions against Russia. For example, a number of Russian government officials, businessmen, banks (including Bank Rossiya, one of the Group’s lenders) and companies have been subject to asset seizures (and in the case of individuals, travel bans) in the EU and United States, and U.S. and EU persons have been restricted in their ability to do business and provide funds or other economic resources to such individuals and entities. In addition, the EU and United States have also instituted so-called ‘sectoral’ sanctions restricting the ability of several of Russia’s leading banks – including Sberbank, the Group’s largest lender, and Gazprombank, which is also a lender to the Group, from accessing international capital markets (as EU and U.S. persons are prohibited from extending them debt financing in excess of 30 days or dealing in their new equity issuances and providing related services). Similar sectoral sanctions have been applied against several prominent Russian oil and gas and defense companies. These sectoral sanctions have increased the cost of capital in Russia and have contributed to the rise of interest rates in Russia over the past year. Other international sanctions have been imposed in respect of, among other things, Russian military defense entities, dual use technologies, sophisticated off-shore oil drilling technologies and companies doing business in Crimea. The sectoral sanctions were reviewed by the Council of the EU in December 2015 and were extended until July 31, 2016, and may be extended further. The reactions of international investors to escalating geopolitical tensions and the economic sanctions described above have had an adverse effect on the Russian financial markets and have increased capital outflows from funds focused on Russia, Eastern/Emerging Europe and to some extent emerging markets. The ability of Russian companies and banks to obtain funding from the international capital and loan markets has also been hampered as a result of decreased demand from the international investor base and reduced issuer activity. The conflict in Ukraine is ongoing and could continue to escalate. Full-fledged hostilities between Ukraine and Russia would likely cause further significant economic disruption and could lead to further sanctions that would isolate Russia from the world economy. Even at current levels, the ongoing fighting in Eastern Ukraine may lead to further sanctions against Russian individuals or entities. The escalation of sanctions against Russia may have a further negative impact on the Russian economy and the Russian financial and banking markets, increase capital outflows or worsen the general business and investment climate in Russia. For example, there have been proposals to cut off Russia from the international SWIFT payment system, which would likely severely disrupt banking services in Russia and cross-border trade. The sanctioning of individuals or entities with whom we do business or the expansion of sanctions to target broader segments of the Russian economy could have a material adverse effect on our business, results of operations and financial condition.

Russian countermeasures to international economic sanctions, such as the current Russian ban prohibiting the import of certain foodstuffs from certain foreign countries, or other nationalistic legislation aimed to make Russia more self-sufficient or punish foreign interests, could affect the value of the GDRs. In August 2014, in a countermeasure to the international economic sanctions imposed against Russia in response to the Ukraine crisis, the Russian Government imposed a ban on certain food imports from certain countries that had imposed sanctions on Russia: the European Union countries, Norway, the United States, Canada and Australia. The ban prohibits the import from these countries to Russia of various food stuffs including beef, pork, poultry, fish, milk and dairy products, vegetables, fruits and nuts. The ban was extended to one more year in June 2015 and expanded to Iceland, Liechtenstein, Albania and Montenegro in August 2015. The ban is currently scheduled to expire in August 2016, but may be extended. Uncertainty and speculations around its extension or removal may potentially affect the value of the GDRs.

Political and governmental instability, including conflicts among federal, regional and local authorities and other political conflicts, could create an uncertain operating environment hindering our long-term planning ability and could have an adverse effect on our business, results of operations, financial condition and prospects. The Russian political system may be vulnerable to popular dissatisfaction, including dissatisfaction with the results of the privatizations of the 1990s, as well as to demands for autonomy from certain regional and ethnic groups. The course of political and other reforms has in some respects been uneven and the composition of the Russian government has at times been unstable. Since 1991, Russia has sought to transform itself from a one-party state with a centrally planned economy to a democracy with a market- oriented economy. As a result of the sweeping nature of the reforms, and the limited success of some of

30 them, the Russian political system remains vulnerable to popular dissatisfaction, as well as to unrest by some social and ethnic groups. Political conditions in Russia were highly volatile in the 1990s, as evidenced by frequent conflicts among executive, legislative and judicial authorities, which negatively affected Russia’s business and investment climate. Vladimir Putin was elected President of Russia in March 2000. Since that time, Russia has generally experienced a higher degree of governmental stability. In March 2008, Dmitry Medvedev was elected President of Russia, and Mr. Putin served as the Russian prime minister for his entire administration. In March 2012, Mr. Putin was elected as President and took office on May 7, 2012, for a term of six years; Mr. Medvedev now serves as the Prime Minister. Whilst this has provided governmental stability, opposition organizations have been active since mid-2012. This may in the future lead to increased, or more disruptive, protest activity, popular dissatisfaction and political instability, and possibly a cycle of civil protest followed by increased authoritarianism. Future political instability could result in a worsening of the overall economic situation, including capital flight and a slowdown of investment and business activity. Future shifts in governmental policy and regulation in Russia also could lead to political instability and disrupt or reverse political, economic and regulatory reforms. Possible future changes in the government, major policy shifts or a lack of consensus between the President of Russia, the government, Russia’s parliament and powerful economic groups could lead to political instability. Political instability may disrupt day-to-day operations and have an adverse effect on our business, results of operations, financial condition and prospects. Russia is a federation of various sub-federal political units. The delineation of authority and jurisdiction among the members of Russia and the federal government is, in many instances, unclear and remains contested. Lack of consensus between the federal government and local or regional authorities often results in the enactment of conflicting legislation at various levels and may lead to further political instability. In particular, conflicting laws have been enacted in areas such as licensing. Some of these laws and governmental and administrative decisions implementing them, as well as certain transactions consummated pursuant to them, have in the past been challenged in the Russian courts, and such challenges may occur in the future. Such lack of consensus hinders our long-term planning efforts and creates uncertainties in our operating environment, either of which may prevent us from effectively and efficiently carrying out its business strategy. With any investment in a foreign country, there exists the risk of adverse political or regulatory developments including, but not limited to, nationalization, appropriation without fair compensation, terrorism, war or currency restrictions, which could have a material adverse effect on our business, results of operations, financial condition and prospects. Emerging markets such as Russia are also subject to heightened volatility based on economic, military and political conflicts. See ‘‘– The Ukraine crisis, and its possible escalation and resulting international sanctions, and their possible expansion could materially adversely affect the value of investments in Russia, including the GDRs, as well as the Group’s business, financial condition, results of operation and prospects’’. In addition, Russia’s involvement in an armed conflict in Syria since September 2015, which followed a request from the Syrian government to provide support in fighting the Islamic State of Iraq and Syria (‘‘ISIS’’), an extremist militant group, may put further pressure on the international relations between Russia and other countries. In particular, on November 24, 2015, a Turkish fighter jet shot down a Russian bomber aircraft near the Turkish-Syrian border. The incident resulted in a bilateral crisis, with Russia imposing economic sanctions against Turkey. This has led to a decrease in export-import and investment activity between the countries. Russia’s involvement in the conflict in Syria could further lead to an escalation of geopolitical tensions, the possible introduction or expansion of international sanctions against Russia by other countries and an increased risk of terrorist attacks. In particular, on October 31, 2015, a Russian airbus A321 with 224 people on board crashed while en route from Egypt to Russia, leaving no survivors. The Russian Federal Security Service determined the incident to be a terrorist act and ISIS claimed responsibility for bombing the plane. The emergence of any new tensions or the escalation of existing tensions in the region could negatively affect the economy of Russia and other countries that are involved. Such tensions or conflicts may lead to reduced liquidity, trading volatility and significant reductions in the price of listed Russian securities, with a resulting negative effect on the liquidity and trading prices of the GDRs and the ability to raise debt or equity capital in the international capital markets.

31 In addition, ethnic, religious, historical and other divisions have, on occasions, given rise to tensions and, in certain cases, military conflict and terrorist attacks. Such tensions, military conflicts or terrorist activities could have significant political consequences, including the imposition of a state of emergency in some or all regions of Russia. Moreover, any terrorist attacks and the resulting heightened security measures may cause disruptions to domestic commerce and could have a material adverse effect on our business, results of operations, financial condition and prospects.

Social instability, particularly that caused by worsening economic conditions and turmoil in the Russian financial markets, could lead to labor and social unrest, increased support for renewed centralized authority, nationalism or violence. Failure of the Russian Government to adequately address social problems has led in the past, and could lead in the future, to labor and social unrest. Moreover, the worsening economic conditions and turmoil in the financial markets in Russia may result in high unemployment, the failure of state and private enterprises to pay full salaries on time and the failure of salaries and benefits generally to keep pace with the increasing cost of living. In 2009, as a result of large-scale lay-offs and failures to pay salaries on time relating to the economic downturn, there were a number of social protests, particularly in cities relying on a single industry or enterprise to provide employment to a majority of people in those cities. The Russian Government halted the disruptions, but there can be no assurance that such protests will not occur again in the future. Such labor and social unrest could have political, social and economic consequences, such as increased support for a renewal of centralized authority, increased nationalism, including support for re-nationalization of property, or expropriation of, or restrictions on, foreign involvement in the economy of Russia, as well as increased violence. Any of these consequences could have an adverse effect on confidence in Russia’s political and social environment and the value of investments in Russia, restrict our operations and lead to a loss of revenue, or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects.

The reversal of reform policies or government policies targeted at specific individuals or companies could have an adverse effect on our business as well as investments in Russia more generally. Any significant struggle over the direction of future reforms or the reversal of the reform process could lead to a further deterioration in Russia’s investment climate that might constrain our ability to obtain financing in the international capital markets, limit our sales in Russia or otherwise have a material adverse effect on our business, results of operations, financial condition and prospects. In the recent past, Russian authorities have prosecuted some Russian companies, their senior managers and their shareholders on tax evasion and related charges. In some cases, the result of such prosecutions has been the imposition of prison sentences for individuals and/or significant claims for unpaid taxes with respect to companies such as Yukos, Mechel, TNK-BP and VimpelCom. Some analysts contend that such prosecutions demonstrate a willingness to reverse key political and economic reforms of the 1990s. Other analysts, however, believe that these prosecutions are isolated events that relate to the specific individuals and companies involved and do not signal any deviation from broader political and economic reforms or a wider program of asset redistribution.

Crime and corruption could create a difficult business climate in Russia. The political and economic changes in Russia in the 1990s have resulted in a decrease in the effectiveness of actions of law enforcement authorities against crime and corruption. The local and international press has reported that significant organized criminal activity has arisen, particularly in large metropolitan centers, and that high levels of corruption exist in Russia, including the bribing of government officials for the purpose of instigating investigations by government agencies. Press reports have also described instances in which government officials engage in selective investigations and prosecutions to further their commercial interests or those of certain individuals. Additionally, some members of the Russian media are alleged regularly to publish disparaging articles in return for payment. The presence of organized or other crime, the demands of corrupt officials or potential future claims that we have been involved in official corruption could result in negative publicity or disrupt our ability to conduct our business effectively, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

32 Incomplete, unreliable or inaccurate official data and statistics could create uncertainty. The official data published by Russian federal, regional and local government agencies are substantially less complete or reliable than those of some of the more economically developed countries in Europe and North America. Official statistics may also be produced on different bases than those used in more economically developed countries. Additionally, we rely on and refer to information and statistics from various third-party sources and our own internal estimates. For example, substantially all the information contained in this Information Memorandum concerning our competitors has been derived from publicly available information, including press releases, and/or information provided by our competitors to the relevant union of producers to which we belong. We believe that these sources and estimates are reliable, but we have not independently verified them. However, to the extent that such sources or estimates are based on official data released by Russian federal, regional and local government agencies, they will be subject to the same uncertainty. Any discussion of matters relating to Russia in this Information Memorandum is, therefore, subject to uncertainty due to concerns about the completeness or reliability of available official and public information.

Speculations or allegations about the beneficial shareholder or senior officers of the Group may harm our reputation. In the past, mass media in Russia, including those that are established and well-known, published information regarding alleged criminal charges against Mr. Vadim Moshkovich, our controlling beneficial shareholder. According to Mr. Moshkovich, information on any criminal prosecution and charges against him which appeared in the mass media is false. The Group has not conducted any independent investigation regarding such allegations and does not have a view regarding the veracity of such allegations. Whilst not commenting on the nature of these particular charges, there is a noted tendency among the local and international press to generate, from time to time, speculative reports that contain allegations of criminal conduct or corruption on the part of Russian companies or individuals within Russian companies, irrespective of whether those allegations have any basis in fact. In addition, the Russian press and other non-traditional media have been, from time to time, suspected of publishing biased articles and reports in return for payment. Any negative publicity, even if such information is false and inaccurate, may harm our business reputation and could materially adversely affect our reputation, business, results of operations and financial condition and the price of the GDRs.

Economic Risks Relating to Russia and Cyprus Economic instability in Russia could have an adverse effect on our business. Any of the following risks, which the Russian economy has experienced at various times in the past and some of which are currently occurring, may have or have already had a significant adverse effect on the investment climate in Russia and, in turn, may adversely affect or have already adversely affected the Group: • significant declines in GDP and consumption; • high levels of inflation; • sudden price declines in the natural resource sector; • high state debt/GDP ratio; • an unstable currency and instability in the local currency market; • lack of reform in the banking sector and a weak banking system providing limited liquidity to Russian enterprises; • pervasive capital flight; • corruption and the penetration of organized crime into the economy; • significant increases in unemployment and underemployment; • the impoverishment of a large portion of the Russian population; • large amount of unprofitable enterprises which continue to operate due to deficiency in the existing bankruptcy procedure and the use of fraudulent bankruptcy actions to take unlawful possession of property;

33 • wide use of barter and non-liquid bills in settlements for commercial transactions; • widespread tax evasion; and • growth of the grey-market economy. The Russian economy was adversely affected by the global economic crisis that began in the second half of 2008, which manifested itself through extreme volatility in debt and equity markets, reductions in foreign investment, sharp decreases in GDP and rise of unemployment around the world. While the situation globally has stabilized since then to a certain extent, the Russian economy experienced a new slowdown in 2013. According to Rosstat, GDP growth fell from 3.4% in 2012 to 1.3% in 2013, 0.7% in 2014 and decreased by 3.7% in 2015, the worst year for the Russian economy since 2009, when Russian GDP fell 7.8% in real terms. Given the importance of the energy sector to the Russian economy, a principal reason for this downturn is the fall of global oil prices – the price of the global benchmark Brent crude has fallen from US$111/barrel (‘‘bbl’’) on June 30, 2014 to US$37/bbl on December 31, 2015 and US$38.7/bbl on April 1, 2016 and is widely predicted not to significantly recover for some time to come. The international sanctions arising from the Ukraine crisis have also undercut confidence in the Russian economy and added to the cost of capital. The lack of confidence in the Russian economy led to a decline in the value of the rouble in relation to the US Dollar in late 2014 and 2015: the average rouble/US Dollar exchange rate was 37.97 roubles per 1 US Dollar in 2014 and 62.27 roubles per 1 US Dollar for the first quarter of 2015, 52.68 roubles per 1 US Dollar for the second quarter of 2015, 63.02 roubles per 1 US Dollar for the third quarter of 2015, 65.93 roubles per 1 US Dollar for the fourth quarter of 2015. This has been accompanied by rising inflation (with year-on-year consumer price growth of 6.6% in 2012, 6.5% in 2013, 11.4% in 2014 and 12.9% in 2015 (Source: Rosstat)). Another indicator of lack of confidence in the Russian economy is increased capital flight, which reached US$56.9 billion in 2015 and US$153 billion in 2014, compared to US$61.6 billion in 2013 and US$53.9 billion in 2012. The weakening of the Russian economy and the deterioration of Russian government finances (which rely significantly on taxes on oil revenues) has also led to international rating agencies to lower Russia credit ratings: on January 26, 2015 Standard & Poor’s cut its long-term foreign currency sovereign bound rating for Russia to ‘BB+’ with negative outlook, and on February 20, 2015 Moody’s cut its sovereign debt rating for Russia to Ba1 with negative outlook; each of these ratings is below ‘investment grade’. Credit ratings for a number of Russian companies and banks have been lowered in the past months, another factor contributing to an increased cost of capital in the Russian economy.

Emerging markets such as Russia are generally subject to greater risks than more developed markets, and global financial or economic crises or even turmoil in any large emerging market country could have an adverse effect on our business and the value of the GDRs. Russia’s economy is vulnerable to market downturns and economic slowdowns elsewhere in the world, and, generally, investing in emerging markets such as Russia is only suitable for sophisticated investors who fully appreciate that these markets are subject to greater risk than more developed markets, including in some cases significant legal, economic and political risks. Investors should also note that emerging markets such as Russia are subject to rapid change and that the information set out in this Information Memorandum may become outdated relatively quickly. Global financial or economic crises or even financial turmoil in any large emerging market country tend to adversely affect prices in markets of most or all emerging market countries as investors move their money to more stable developed markets. The Russian markets were highly volatile beginning in the second half of 2008, principally due to the impact of the global financial and economic crisis on the Russian economy. Such volatility has caused market regulators to temporarily suspend trading on MICEX and RTS (MICEX and RTS merged in 2011 to form MoEx) on several occasions. MICEX and RTS have experienced significant overall declines since their peak levels in May 2008. More recently, as a result of a sharp decline in oil prices during the second half of 2014 and 2015 (the price of the global benchmark Brent crude has fallen from US$111/bbl on 30 June 2014 to US$37/bbl on December 31, 2015 decreasing to below US$30/bbl in the beginning of 2016) and the economic effect of the international sanctions, the RTS (US Dollar) index of the Russian stock market decreased by more than 50% during the second half of 2014 and has not recovered since then. As happened in the past, financial problems or an increase in the perceived risks associated with investing in emerging economies could dampen foreign investment in Russia and adversely affect the Russian economy. See ‘‘– Economic instability in Russia could have an adverse effect on our business’’. In addition, during such times, businesses that operate in emerging markets can face severe liquidity constraints as foreign funding sources are withdrawn, making it difficult for these businesses to

34 conduct their operations (in particular, if their working capital becomes insufficient) and/or to implement their strategies (for example, if projects are suspended or cancelled as a result of a lack of funding to finance capital expenditure). Accordingly, investors should exercise particular care in evaluating the risks involved and must decide for themselves whether, in light of those risks, their investment is appropriate. Potential investors are urged to consult with their own legal and financial advisers before making an investment in the GDRs.

Inflation could increase our costs. The Russian economy has been characterized by high rates of inflation, including an annual inflation rate of 84.4% in 1998. According to Rosstat, the annual inflation rate in Russia (measured as change in the consumer price index) was 6.6% in 2012, 6.5% in 2013, 11.4% in 2014 and 12.9% in 2015 (Source: Rosstat). Certain of our costs, such as salaries, construction costs and rent and utilities costs, are sensitive to rises in the general price level in Russia. Due to competitive pressures or regulatory constraints we may not be able to increase our prices sufficiently to preserve our margins. As a result, high rates of inflation could increase our costs, and there can be no assurance that we will be able to maintain or increase our margins.

The physical infrastructure in Russia is in poor condition, which may lead to interruptions in effective financial and economic activity, and efforts by the Russian Government to improve the country’s infrastructure may result in increased costs for the Group. The physical infrastructure in Russia is largely outdated and in certain respects has not been adequately funded and maintained. Russia’s poor physical infrastructure disrupts the transportation of goods and supplies as well as communications and adds costs to doing business in Russia. Particularly affected are the rail and road networks, power-generation and transmission networks, communication systems and building stock. Road conditions throughout Russia are poor, with many roads not meeting minimum requirements for use and safety. Power disruptions also occur, disrupting normal business activity. Furthermore, in August 2009, an accident occurred at the Sayano-Shushenskaya Hydroelectric Power Plant, the largest hydro power plant in Russia in terms of installed capacity, when water from the Yenisei River flooded the turbine and transformer rooms at the power plant’s dam, killing more than 70 people and causing billions of roubles in damage. As a result of the accident, the plant has halted power production, leading to severe power shortages for both residential and industrial consumers. The Russian Government is actively pursuing the reorganization of the nation’s rail, electricity and telephone systems. Any such reorganization may result in increased charges and tariffs but not produce the desired improvements in infrastructure. In addition, these reorganizations may be halted or delayed in certain circumstances, which may lead to a further deterioration in Russia’s infrastructure network. For example, in November 2015 the Russian Government introduced new federal highway tolls for trucks hauling more than 12 tons. The Government has said the fee would be used to build road infrastructure throughout Russia. The Government had planned to nearly double the tariff in March 2016 but has made the decision to freeze it until October 2016 amid the protests of long-haul truckers and transport companies. It is expected that the introduction of this tariff and its potential increase may, to some extent, increase road transportation costs in Russia. The poor condition or further deterioration of Russia’s physical infrastructure may harm the national economy, disrupt the transportation of goods and supplies, add costs to doing business in Russia and interrupt our business operations, including, among others, delivery of our products to our customers and ability to fully comply with product quality standards, each of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

The Russian banking system remains underdeveloped and weaknesses in the Russian banking sector make it more susceptible to market downturns or economic slowdowns. The Russian banking and other financial systems are not well developed and regulated, and Russian legislation relating to banks and bank accounts is subject to varying interpretations and inconsistent application. The August 1998 financial crisis resulted in the bankruptcy and liquidation of many Russian banks and almost entirely eliminated the developing market for commercial bank loans at that time. Many Russian banks do not meet international banking standards, and the transparency of the Russian banking sector in some respects still lags behind international banking standards. Aided by inadequate supervision by the regulators, many banks do not follow existing CBR regulations with respect to lending criteria,

35 credit quality, loan loss reserves or diversification of exposure. The imposition of more stringent regulations or interpretations could lead to weakened capital adequacy and the insolvency of some banks. In addition, the number of non-performing loans increased considerably as a result of the impact of the recent global financial and economic crisis. As a result of the global financial and economic crisis, there was a rapid decrease in lending by Russian banks in the end of 2008 and during 2009, while lending terms became more onerous. As a result, many Russian companies were subject to severe liquidity constraints due to the limited supply of domestic savings and the withdrawal of foreign funding sources. The global financial and economic crisis led to the collapse or bailout of some Russian banks and to significant liquidity constraints for others. With the Russian economy expected to continue experience a recession in 2016, the Russian banking sector may face renewed instability. For example, according to the CBR, the level of non-performing loans issued to legal persons in the Russian banking sector has increased from 4.79% as of January 1, 2014 to 8% as of January 1, 2016. Throughout 2014 and the first half of 2015, a number of Russian banks have experienced financial difficulties, or failed to make sufficient loss provisions, that have caused them to become insolvent, have their licenses revoked or to recognize large loan impairments that required steps to replenish their capital. Intensified withdrawal of banking licenses as a result of the inability of certain banks to meet the mandatory requirements of the CBR, failure to comply with anti-money laundering regulations or other reasons could result in lower confidence in the Russian banking system. The CBR’s December 2014 RUB 127 billion bail-out of Trust Bank, Russia’s 22nd largest bank by assets, the largest bank bail-out in Russian history to date, may be symptomatic of weaknesses in the Russian banking sector. With few exceptions (notably the state-owned banks), the Russian banking system suffers from weak depositor confidence, high concentration of exposure to certain borrowers and their affiliates, poor credit quality of borrowers and related party transactions. Risk management, corporate governance and transparency and disclosure often remain below international best practices. We generally conduct our banking activities through, and maintains accounts in, a small number of Russian banks, including Sberbank, Alfa-Bank, Rosselkhozbank, Rosbank, Vnesheconombank and Locko Bank. The bankruptcy or insolvency of one or more of these banks could adversely affect us. A banking crisis or the bankruptcy or insolvency of the banks in which we hold our funds could prevent us from accessing our funds or affect our ability to complete banking transactions, or may result in the loss of its deposits altogether, which would have a material adverse effect on our business, results of operations, financial condition and prospects.

Potential increase in tax burden. As a result of the economic downturn, the Russian Government is operating with a state budget deficit and the government may implement further Russian tax legislation to introduce additional mechanisms for raising revenues for the Russian Government. During past years the rate of direct mandatory contributions to the Social Security Fund, the Medical Insurance Fund and the Pension Fund has increased, and the possibility of further increases in the tax burden cannot be excluded. Such changes could entail increased tax rates, the removal of tax benefits and the introduction of new taxes which could have a material adverse effect on our business, results of operations, financial condition and prospects.

Distributions by the Company may be subject to Defence Tax in Cyprus. Special Contribution for the Defence of the Republic (‘‘Defence Tax’’) at the rate of 17% would be payable by a Cypriot company on the actual and deemed dividends to the extent that it is ultimately owned by individuals who are both Cyprus tax resident and Cyprus domiciled. A Cypriot company which does not distribute at least 70% of its after tax profits within two years of the end of the year in which the profits arose, would be deemed to have distributed this amount as a dividend two years after that year end. The Defence Tax on deemed dividend distribution would be payable to the extent these profits are attributable to the individual shareholders (including the holders of the GDRs) which are both Cyprus tax residents and Cyprus domiciled as well as corporate shareholders (including the holders of the GDRs) which are ultimately owned by individuals who are both Cyprus tax resident and Cyprus domiciled. Defence Tax may also be payable on deemed dividends in case of liquidation or capital reduction of the Company. We will debit such Defence Tax paid against the profits attributable to the respective Cypriot shareholders. For distributions to Cyprus corporate shareholders which are ultimately owned by individuals who are both Cyprus tax resident and Cyprus domiciled the amount of this deemed dividend distribution (subject to Defence Tax) is reduced by any actual dividend (not subject to Defence Tax) paid out of the profits of the relevant year at any time up to the date of the deemed distribution. The profits to be taken into account in determining the deemed dividend do not include fair value adjustments to movable or immovable property

36 (if any). Imposition of such a tax could have a material adverse effect on our business, results of operations and financial condition.

Interest expenses may not be deductible by the Company. According to Cypriot tax law, interest expenses are tax deductible if they are incurred wholly and exclusively for the production of taxable income. However, no deduction is allowed for interest applicable or deemed to be applicable to the cost of purchasing assets not used for business purposes. This restriction on the deductibility of interest expense applies during the seven years from the date of purchase of the relevant asset. In this respect, investment in a subsidiary is considered a non-business asset in Cyprus and any interest expense that relates (or is deemed to relate) to the acquisition/financing of such asset (even if the subsidiary distributes dividends on a regular basis) is not considered tax deductible in Cyprus, subject to conditions. Consequently, if the Company holds assets not used in the business (such as shares in subsidiaries), then all or part of the interest expense of the Company incurred on loans provided from lenders (both corporations and individuals) for the acquisition/financing of such assets should be considered non-deductible for tax purposes in Cyprus.

The Company may be deemed to be tax resident or to have a permanent establishment outside of Cyprus. According to the provisions of the Cyprus Income Tax Law a company is considered to be a resident of Cyprus for tax purposes if is considered to be managed and controlled from Cyprus. Cypriot residence for tax purposes for corporate taxpayers is determined on the basis of place of management and control. The Cypriot tax authorities interpret ‘‘management and control’’ by reference to the concept of ‘‘central management and control’’, following the principles established in various common law countries (e.g. UK). Based on the relevant case law, the Cypriot tax authorities have taken the view that in determining where the ‘‘management and control’’ of a company is, one should focus mainly on the place where top level decisions are made. The central policy core of the company and the highest level at which the company is controlled and policy decisions are taken is usually considered to be in the place where the company’s Board of Directors meet. In the case where the majority of the Board of Directors of the Company comprises of tax residents or citizens of the Russian Federation, this may increase the risk of the Company being deemed as not managed and controlled in Cyprus and therefore not tax resident in Cyprus. This may result in the Company not being subject to the Cypriot tax regime other than in respect of Cyprus sourced income and being subject to the tax regime of the country in which it is tax resident. Further, the Company would not be eligible for benefits under the tax treaties entered into between Cyprus and other countries. The Company may also be considered as a Russian tax resident as of January 1, 2015 under the new concept of corporate tax residency in Russia, if the Company’s executive body (or bodies) or executive officers (in charge for planning and control over the enterprise) regularly exercise their functions from Russia. In case both Cyprus and Russia recognize the Company as their tax resident, the tax residency of the Company may be determined in accordance with the ‘‘tie-breaker’’ provision in the Russia-Cyprus tax treaty. Where the Company is tax resident outside of Cyprus or has a permanent establishment in another jurisdiction e.g., in the Russian Federation or elsewhere, this could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects (See also ‘‘– Legislative and Legal Risks Relating to Russia – Russian tax legislation includes new concept of corporate tax residency and permanent establishment rules, which may be applicable to the Group’’).

Legislative and Legal Risks Relating to Russia Weaknesses relating to the Russian legal system and Russian laws create an uncertain environment for investment and business activity in Russia and thus could have an adverse effect on our business. Risks associated with the Russian legal system include, to varying degrees, the following: • inconsistencies between: (i) federal laws; (ii) decrees, orders and regulations issued by the President, the Russian Government and federal ministries; and (iii) regional and local laws, rules and regulations;

37 • a lack of judicial and administrative guidance on interpreting legislation as well as a lack of sufficient commentaries on judicial rulings and legislation; • the relative unavailability of Russian legislation and court decisions in an organized manner that facilitates understanding of such legislation and court decisions; • the relative inexperience of jurists, judges and courts in interpreting newly adopted legislation and complex commercial arrangements; • substantial gaps in the legal framework due to the delay or absence of implementing regulations for certain legislation; • a lack of judicial independence from political, social and commercial forces; • alleged corruption within the judiciary and the governmental authorities; • problematic and time-consuming enforcement of both Russian and non-Russian judicial orders and international arbitration awards; • a high degree of discretion on the part of governmental authorities, leaving significant opportunities for arbitrary and capricious government action; and • bankruptcy procedures that are not well developed and are subject to abuse. Legislation relating to disclosure and reporting requirements and anti-money laundering legislation have been enacted in the Russian Federation not long ago. The concept of fiduciary duties being owed by management or directors to their companies or shareholders is relatively new to Russian law. Violations of disclosure and reporting requirements or breaches of fiduciary duties could have a material adverse effect on our business, results of operations, financial condition and prospects. Additionally, the relatively recent enactment of many laws and the lack of consensus about the aims, scope, content and pace of economic and political reforms have resulted in ambiguities, inconsistencies and anomalies in the Russian legal system. The enforceability and underlying constitutionality of more recently enacted laws are in doubt, and many new laws remain untested. Moreover, the courts have limited experience in interpreting and applying many aspects of business and corporate law. Russian legislation also often contemplates implementing regulations that have not yet been promulgated, leaving substantial gaps in the regulatory infrastructure. In addition, there is no assurance that court decisions favorable to us and our operations will not be reconsidered in the future. For example, in accordance with a resolution adopted by the Supreme Arbitration Court of the Russian Federation, a judgment challenged in the course of supervisory proceedings can be reconsidered in light of discovery of new facts, provided that since the delivery of such judgment, application of legal provisions on which it is based has been changed by a resolution of the Supreme Arbitration Court of the Russian Federation. As a result of such change, we may not be able to benefit from a previous application or court practice used in our favor, which could have a material adverse effect on our business, results of operations, financial condition and prospects. Any or all of these weaknesses could affect our ability to enforce our legal rights in Russia, including rights under our contracts, or to defend against claims by others in Russia.

It may be difficult to ascertain the validity and enforceability of title to land in Russia and the extent to which it is encumbered or to obtain certain approvals, consents or registrations and to comply with the requirements contained in such approvals, consents, registrations and other regulations. Following the dissolution of the Soviet Union, land reforms commenced in Russia and real estate legislation changed continuously. Over the following years, more than 100 federal laws, presidential decrees and governmental resolutions were enacted or issued. Almost all Russian regions passed their own real estate legislation. In many instances, there was no certainty regarding which municipal, regional or federal government body had power to sell, lease or otherwise dispose of land. In 2001, the Russian Civil Code was amended, and the new Russian Land Code as well as a number of other federal laws regulating land use and ownership was enacted. Numerous amendments to the Russian Land Code regarding, among other things, allocation of public lands to private persons and companies came into force on March 1, 2015. Nevertheless, the legal framework relating to the ownership and use of land and other real property in Russia is not yet sufficiently developed to support private ownership of land and other real property to the same extent as is common in countries with more developed market

38 economies. Because of Russia’s vast territory and difficulties of being in a transitional phase, the process of surveying and title registration may last for many years. Thus, it is often difficult to ascertain the validity and enforceability of titles to land in Russia and the extent to which titles are encumbered. Moreover, in order to use and develop land and other real estate in Russia, approvals or consents of or registrations with various federal, regional and local governmental authorities are required. Furthermore, it is not always clear which governmental body has the right to provide land into lease in relation to certain land plots; construction approval procedures are intricate and such approvals may be contested or totally cancelled, which may lead to treating constructed buildings and facilities as ‘‘unauthorized’’; and building and environmental regulations often contain requirements that are difficult to fully comply with in practice. Failure to obtain the required approvals, consents or registrations and to comply with the requirements contained in such approvals, consents, registrations and other regulations may lead to severe consequences for landowners and other real estate owners and lessees, including with respect to any current construction activities. These failures and other uncertainties mentioned above may have a material adverse effect on our business, results of operations, financial condition and prospects. See also ‘‘– Russian Agricultural Land Risks.’’

Lack of independence and inexperience of the judiciary, the difficulty of enforcing court decisions and governmental discretion in enforcing claims could prevent us or you from obtaining effective redress in a court proceeding, which could have an adverse effect on our business or the value of the GDRs. The independence of the judicial system and the prosecutor general’s office and their immunity from economic, political and nationalistic influences in Russia is less than complete. The court system is often understaffed and underfunded. Judges may be inexperienced in the area of business and corporate law. Judicial precedents generally have no binding effect on subsequent decisions. Not all Russian legislation and court decisions are readily available to the public or organized in a manner that facilitates understanding. The Russian judicial system can be slow, and court orders are not always enforced or followed by law enforcement agencies. Additionally, the press has often reported that court claims and governmental prosecutions are sometimes influenced by or used in furtherance of political aims or private interests. We may be subject to such claims and may not be able to receive a fair hearing. These factors make judicial decisions in Russia difficult to predict and effective redress uncertain and could have a material adverse effect on our business, results of operations, financial condition and prospects.

Government action could have an adverse effect on our business and reduce the value of the GDRs. Government authorities have a high degree of discretion in the Russian Federation and at times appear to act selectively or arbitrarily, without hearing or prior notice, and sometimes in a manner that may not be in full accordance with the law or that may be influenced by political or commercial considerations. Moreover, the Russian Government also has the power in certain circumstances, by regulation or government act, to interfere with the performance of, nullify or terminate contracts. Unlawful, selective or arbitrary governmental actions have reportedly included denial or withdrawal of licenses, sudden and unexpected tax audits or investigations, criminal prosecutions and civil actions. Federal and local government entities also appear to have used common defects in matters surrounding share issuances and registration as pretexts for court claims and other demands to invalidate such issuances or registrations or to void transactions, seemingly for political purposes. Standard & Poor’s has expressed concerns that ‘‘Russian companies and their investors can be subjected to government pressure through selective implementation of regulations and legislation that is either politically motivated or triggered by competing business groups.’’ In this environment, our competitors may receive preferential treatment from the government, potentially giving them a competitive advantage. Unlawful, selective or arbitrary government action, if directed at our operations, could lead to the loss of agricultural lands, production assets, termination of contracts, invalidation of share issuances, civil litigation, criminal proceedings and imprisonment of key personnel, any of which could have a material adverse effect on our business, results of operations, financial condition and prospects. We note that the Group is periodically subject to tax inspections, pursuant to which the tax authorities may seek to assess additional tax liabilities. Moreover, the Group’s Agriculture division sells sugar beets to its Sugar division, and the purchase price is determined based on a formula that reflects several factors, including the amount of sugar extracted from such beets and the price at which such sugar is sold by the Sugar division. See ‘‘Business – Operations –

39 Sugar.’’ Tax authorities may challenge this methodology and seek to impose additional tax liabilities, which may have a material adverse effect on the Group’s business, results of operations and financial condition.

The Russian taxation system is relatively underdeveloped. The Group is subject to a broad range of taxes and other compulsory payments imposed at the federal, regional and local levels, including, but not limited to, profits tax, value added tax, property tax, social and other taxes. Historically, the system of tax collection has been relatively ineffective, resulting in the imposition of new taxes in an attempt to increase government revenues. Tax laws, such as the Tax Code of Russia (the ‘‘Tax Code’’), have been in force for a short period relative to tax laws in more developed market economies, and the implementation of these tax laws is often unclear or inconsistent both at the level of the Russian tax authorities and the Russian courts, resulting in frequent and sometimes contradictory changes in the interpretation of existing laws. Although the quality of Russian tax legislation has generally improved with the introduction of the Tax Code, it is subject to frequent amendments, as well as frequent changes to social security contributions that are currently being revised and there can be no assurance that the Russian authorities will not impose arbitrary or onerous taxes or contributions (including an increase in existing tax rates, additional requirements for applying reduced withholding tax rates) and penalties, or introduce new or expand existing anti-abuse and anti-offshore tax concepts. Furthermore, Russian taxpayers, the Ministry of Finance, the Russian tax authorities and the courts often interpret tax laws differently. There can be no assurance that the Russian tax authorities and courts will not take positions contrary to those set out in private clarification letters issued by the Ministry of Finance in response to specific taxpayer queries. In some instances, the Russian tax authorities have applied new interpretations of tax laws retroactively, issued tax claims for periods for which the statute of limitations had expired and reviewed the same tax period several times. In practice, the Russian tax authorities frequently interpret the tax laws in ways that do not favor taxpayers, who often have to resort to court proceedings to defend their position against the tax authorities. During the past several years, the Russian tax authorities have shown a tendency to take more assertive positions in their interpretation of tax legislation which has led to an increased number of material tax assessments as a result of tax audits of companies operating in various industries, including in the agricultural industry. Furthermore court rulings on tax or other related matters by different courts relating to the same or similar circumstances may also be inconsistent or contradictory. The courts, from time to time, also have construed tax legislation in a manner not consistent with its plain language and unfavorable to taxpayers. In addition to the usual tax burden imposed on Russian taxpayers, these conditions complicate tax planning and related business decisions. For example, tax laws are unclear with respect to the deductibility of certain expenses and the Russian court practice and rules on interest deductibility limitations are subject to frequent changes. Despite the Group’s best efforts to comply with applicable tax laws, these uncertainties could possibly expose the Group to significant fines and penalties and to potentially severe enforcement measures, could result in a greater than expected tax burden and could have a material adverse effect on the Group’s business, results of operations, financial condition or prospects. In Decision No. 138-O of July 25, 2001, the Russian Constitutional Court introduced the concept of a ‘‘taxpayer acting in bad faith’’ without clearly stipulating the criteria for its application. This concept is not clearly defined in Russian tax law. Nonetheless, the Russian tax authorities have made increasing use of this concept, including denying taxpayers the right to rely on the letter of the tax law. In the past, the Russian tax authorities and courts have exercised significant discretion in interpreting this concept in a manner that is unfavorable to taxpayers. On October 12, 2006, the Plenum of the Supreme Arbitration Court of Russia issued Resolution No. 53 (the ‘‘Resolution’’), which introduced the concept of ‘‘unjustified tax benefit’’, which is described in the Resolution by reference to circumstances such as absence of business purpose or to transactions where the form does not match the substance, and which could lead to the disallowance of relevant tax benefits resulting from the transaction or the re-characterization of the transaction for tax purposes. There is a growing practice where the tax authorities and courts exercise significant discretion in interpreting this concept in a manner that is unfavorable to taxpayers, including by imposing additional tax liabilities on taxpayers. Although the intention of this Resolution was to combat tax law abuses, in practice there can be no assurance that the tax authorities will not seek to apply this concept in a broader sense than may have been intended by the Supreme Arbitration Court.

40 The above conditions create tax risks in Russia that are more significant than the tax risks typically found in countries with more developed tax systems. There can be no assurance that the Tax Code will not be changed in the future in a manner adverse to the stability and predictability of the tax system. These risks and uncertainties complicate the Group’s tax planning and related business decisions, potentially exposing the Group to significant fines, penalties and enforcement measures. The introduction of new taxes, amendments to current taxation rules or introduction of new anti-avoidance measures (including the ‘‘de-offshoring’’ rules) or other revenue raising measures may have a substantial impact on the overall amount of the Group’s tax liabilities. There can be no assurance that the Group would not be required to make substantially larger tax payments in the future (the Russian Government is currently discussing potential tax increases for companies in different industries and potential revision and increase of social security contributions), which may adversely affect its financial results. In addition to creating a substantial tax burden, these risks and uncertainties affects the Group’s tax planning and could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

A loss of or change to preferential tax treatment with respect to certain tax incentives may adversely affect the Group’s business, financial condition, results of operations and prospects. Certain operating companies of the Group enjoy preferential tax treatment with respect to the Russian corporate profits tax, which are applicable to agricultural producers and/or companies, which signed investment or other types of contracts with Russian regional authorities. The Group considers these benefits to be material to the Group’s profitability and cash flows. However, if the preferential tax treatment with respect to the taxes that the Group benefits from were to change or be abolished (whether by suspension of the respective temporary incentives or investment contracts, amendments to Russian legislation, adoption of new regulations by the Russian tax authorities or otherwise) such that the relevant operating subsidiaries were subjected to a higher tax rates, such changes could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Russian transfer pricing legislation is unclear. Transfer pricing legislation in Russia, which was effective before January 1, 2012 was broad in scope and vaguely drafted, generally leaving wide room for interpretation by the Russian tax authorities and courts. Limited guidance existed as to how these rules should have been applied. Moreover, in the event that a transfer pricing adjustment was assessed by the Russian tax authorities, the former transfer pricing rules did not provide for an offsetting adjustment to the related counterparty in the relevant transaction. New Russian transfer pricing legislation came into effect on January 1, 2012. Although largely based on international transfer pricing principles developed by the OECD, there are certain significant differences in how these principles are reflected in the Russian rules. The new rules can apply to a wider number of transactions beyond those with related parties, including transactions with companies registered in offshore jurisdictions. This new legislation has significantly increased taxpayers’ compliance costs and efforts and effectively shifted the burden of proving market prices from the Russian tax authorities to the taxpayer. The rules are expected to result in more stringent supervision by a special transfer pricing audit department over the transfer pricing rules as well as new reporting and documentation requirements. Currently, the new transfer pricing rules contain a number of ambiguous provisions, which may be subject to arbitrary interpretation by the Russian tax authorities. There are neither official clarifications nor established administrative and court practice of applying the new transfer pricing rules. Due to the uncertainties in the interpretation of Russian transfer pricing legislation, which was in effect before 2012 and arbitrary interpretation of the new transfer pricing rules by the Russian tax authorities, no assurance can be given that the Russian tax authorities will not challenge prices of the transactions of the Group and make adjustments, apply enforcement measures to the Group as well as significant fines and penalties, which could have a material adverse effect on the Group’s business, unless the Group will be able to confirm the use of market prices with respect to controlled transactions, supported with the appropriate transfer pricing documentation. The imposition of additional tax liabilities under the Russian transfer pricing legislation may have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

41 Repeated tax audits and extension of liability beyond the limitation period may result in additional tax assessments. Tax returns together with related documents are subject to review and investigation by the Russian tax authorities, which have the power to impose severe fines and late payment interest charges on taxpayers. Generally, tax returns remain open and subject to inspection by the Russian tax authorities for a period of three calendar years immediately preceding the year in which the decision to initiate a tax inspection is taken. Tax audits can however go beyond this general three year term to cover a tax period for which an amended tax return (if any) has been filed. In addition, under the Tax Code and the position of the Constitutional Court of Russia, the statute of limitations for tax liabilities, including tax penalties and fines, may be extended beyond the three-year term if a taxpayer has obstructed or hindered a tax inspection or created insurmountable obstacles for the tax audit. Because the terms ‘‘obstructed’’, ‘‘hindered’’ and ‘‘insurmountable obstacles’’ may be broadly interpreted by the tax authorities when seeking tax adjustments and penalties beyond the three-year term, the statute of limitations may not be entirely effective. Also Federal Law No. 308-FZ, dated October 22, 2014, extended rights of Russian investigators to initiate criminal prosecutions against responsible officers of companies (normally, but not limited to, the general director and chief accountant) in connection with large scale tax underpayments not based on tax audit results and independently determine amounts of tax underpayments, which may result in unjustified and greater scrutiny of the operations of the Group, and in case of initiating criminal prosecutions, suspension of the duties of persons involved in the management of the Group and diverting the attention of management resources. According to the legal position expressed by the Plenum of the Supreme Arbitration Court of Russia in Resolution No. 57, dated July 30, 2013, Russian taxes, which were not withheld on payments to foreign recipients and respective penalties may be collected from a Russian taxpayer who failed to act as tax agent. Tax audits may result in additional costs to the Group if the relevant tax authorities conclude that the Group did not satisfy its tax obligations in any given year. Such audits may also impose additional burdens on the Group by diverting the attention of management resources. The outcome of these audits could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

Currently, Russian companies of the Group cannot be consolidated for Russian tax purposes. Effective January 1, 2012, Russia introduced new tax consolidation rules. Under these rules, a Russian company holding directly or indirectly 90%, of the shares of its Russian subsidiaries may consolidate for Russian profits tax purposes if the group meets certain requirements: (1) the joint accrued amount of federal taxes (except for taxes paid in connection with cross-border transfers) for the previous year exceeds RUB 10 billion (approximately US$137 million); (2) combined turnover according to the financial statements of the companies for the previous year exceeds RUB 100 billion (approximately US$1.4 billion); and (3) combined assets on the first day of the year of consolidation according to the financial statement exceed RUB 300 billion (approximately US$4.1 billion). Currently, it is not anticipated that the Group will meet the required thresholds and there is a current freeze on registration of new consolidated tax groups until 2018 (which may be further extended). Consequently, tax losses of any Russian legal entity in the Group may not be used to reduce the tax liability of any other Russian legal entity of such Group. If the Group is unable to consolidate its financial results for tax purposes, this may have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

Withholding income tax could be imposed in Russia on dividends distributed from our Russian subsidiaries to the Company. Dividends paid by a Russian legal entity to a foreign legal entity are subject to Russian withholding income tax at the 15% ordinary rate, although this tax rate may be reduced under an applicable double taxation treaty. OJSC Rusagro Group, a Russian company will be generating the source of the future dividends paid to the Company. Accordingly the Company intends to rely on the Russia-Cyprus tax treaty to reduce withholding tax on dividends. The Russia-Cyprus tax treaty allows reduction of withholding income tax on dividends paid by a Russian company to a Cypriot company to 10% provided that the following conditions are met: (1) the Cypriot company is a tax resident of Cyprus within the meaning of the Russia-Cyprus tax treaty; (2) the Cypriot company is the beneficial owner of the dividends; (3) the dividends are not attributable to a permanent establishment of the Cypriot company in Russia; and (4) the treaty clearance procedures established by the Russian Tax Code are duly performed. This rate could be further reduced to 5% if the

42 direct investment of the Cypriot company in a Russian company paying the dividends is at least A100,000. If the Company claims reduction of the Russian withholding tax under the Russia-Cyprus tax treaty, there is a risk that the Russian tax authorities would challenge such reduced withholding tax rate and apply the ordinary 15% tax rate under the Russian ‘‘beneficial ownership’’ rules, which apply as of January 1, 2015 (introduced into the Russian Tax Code by Federal Law No. 376-FZ, dated November 24, 2014). Under the revised provisions of the Tax Code, a foreign recipient of income cannot be recognized as the ‘‘beneficial owner’’ of income and cannot be subject to tax treaty protection, if it has only limited powers to dispose of the income, exercises intermediary functions with respect to such income in the interest of another person, does not exercise any other functions and takes no risks, and directly or indirectly transfers all or most of the income to another person, which would not otherwise be entitled to the same tax treaty benefits. Currently OJSC Rusagro Group has a right to request a confirmation that the Company is the ‘‘beneficial owner’’ of income; as of January 1, 2017 the Company will be required to provide such confirmations. The Russian ‘‘beneficial ownership’’ rules may be more restrictive compared to the authorized OECD approach and in the absence of a clear set of supporting documents may be aggressively applied by the Russian tax authorities and courts. As a result, there can be no assurance that the Group would be able to benefit from the reduced withholding income tax rate which, in practice, could have a material adverse effect on the results of the Group’s operations and financial condition and the trading price of the GDRs. For example, the Company may incur the 15% withholding income tax at source on dividend payments from its Russian subsidiaries if the treaty clearance procedures established by the Russian Tax Code (including providing documents confirming the ‘‘beneficial ownership’’ of income received) are not duly performed at the date when dividend payments are made. In this case, the Company may seek to claim as a refund the difference between the 15% tax withheld and the tax at the reduced rate of 10% or 5%, as appropriate. However, there can be no assurance that such difference would be refunded, which could have a material adverse effect on the Company’s business, results of operations and financial condition.

Russian tax legislation includes new concept of corporate tax residency and permanent establishment rules, which may be applicable to the Group. As of January 1, 2015 the Tax Code contains a new concept of corporate tax residency (introduced by Federal Law No. 376, dated November 24, 2014), according to which a foreign company can be recognized as a Russian tax resident and be fully taxable in Russia, if at least one of the following requirements is met: (i) executive body (or bodies) of the company regularly exercise their functions with respect to this company from Russia and (ii) executive officers of the company (in charge for planning and control over the enterprise) primarily exercise executive management of this company from Russia. Under the Russian Tax Code, if any of the above requirements is met for both Russia and a foreign state the company would be recognized as a Russian tax resident if at least one of the following additional criteria is met: (i) accounting and management accounting of the company is performed in Russia, (ii) documents (records) management is based in Russia, or (iii) operational human resources management is performed in Russia. At the same time, the foreign company should not be recognized as a Russia tax resident because the following activities may have been exercised in Russia: (i) activities related to the authority of the general shareholders’ meeting, (ii) activities related to preparation Board of Directors meeting and (iii) exercising of separate functions related to planning and control (strategic planning, budgeting, preparation and compilation of consolidated financial statements and management accounts, analysis of the foreign company’s activity, audit and internal control, adoption of standards, methods and/policies which apply to all or to a substantial part of the subsidiaries of the foreign company) over the foreign company. If both Russia and a foreign state (e.g., Cyprus) recognize the company as their tax resident, the tax residency of the company may need to be determined in accordance with the ‘‘tie-breaker’’ provision in the applicable tax treaty concluded with Russia. However, there is currently no practice of applying corporate tax residency ‘‘tie-breaker’’ provisions in Russia and therefore, there may be no assurance that the results of such application would be consistent with the international practice and would not create additional tax burden for the taxpayer. Apart from the new concept of corporate tax residency, the Tax Code contains permanent establishment rules, which are generally consistent with the authorized OECD approach. According to both the Russian Tax Code and tax treaties concluded with Russia, a foreign entity creates a permanent establishment in Russia if it regularly exercises business activities (potentially including management functions) on the territory of Russia through a fixed place of business or a dependent agent except for activities of an auxiliary and preparatory nature and simple signing of contracts based on the head office explicit written

43 instructions. However, the practical application of taxing foreign legal entities with permanent establishments in Russia is not well developed. As a result, foreign companies with limited operations in Russia that would not rise to the level of creating a permanent establishment under international norms may be at risk of being treated as having a permanent establishment in Russia and hence may be subject to Russian taxation. Although the Company and its foreign subsidiaries intend to conduct their affairs so that they are not treated as having a permanent establishment in Russia, no assurance can be given that they will not be treated as having such a permanent establishment. If the Company and its foreign subsidiaries are treated as having a permanent establishment in Russia, they would be subject to Russian taxation in a manner broadly similar to the taxation of a Russian legal entity. The Tax Code contains rules on attributing profits of foreign companies to their Russian permanent establishment, which are not sufficiently developed. There is a risk that the Russian tax authorities might seek to assess Russian taxes on the entire income (turnover) of a foreign company. The new tax residency rules create the risk that the Company or its foreign subsidiaries may be treated as Russian tax residents, or alternatively as having a taxable Russian permanent establishment (to which substantial profits will be attributed) by the tax authorities and thus may be subject to taxation in Russia (including corporate profits tax at an ordinary rate of 20% and/or other applicable rates (including withholding tax rates) and 18% VAT). Additional Russian taxes or penalties could have a material adverse effect on the Group’s business, financial condition, results of operations and prospects.

Shareholder liability under the corporate law of Russia could result in us becoming liable for the obligations of our subsidiaries. Russian law generally provides that shareholders in a Russian joint stock company or participants of a limited liability company are not liable for the obligations of such a company and bear only the risk of loss of their investment. This may not be the case, however, when one legal entity is capable of determining decisions made by another entity. The legal entity capable of determining such decisions is called the effective parent entity (osnovnoye obshchestvo in Russian). The legal entity whose decisions are capable of being so determined is called the effective subsidiary entity (docherneye obshchestvo in Russian). The effective parent bears joint and several liability for transactions entered into by the effective subsidiary in carrying out business decisions if the effective subsidiary enters such transactions acting under binding instructions of the effective parent or its consent (save for cases of corporate approvals). Moreover, under Russian law, an effective parent is secondarily liable for an effective subsidiary’s debts if an effective subsidiary becomes insolvent or bankrupt as a result of the action of an effective parent. In these instances, the other shareholders of the effective subsidiary may claim compensation for the effective subsidiary’s losses from the effective parent that causes the effective subsidiary to take action or fail to take action knowing that such action or failure to take action would result in losses. Accordingly, in our position as an effective parent, we could be liable in some cases for the debts of our effective subsidiaries.

Russian legislation may not adequately protect against expropriation and nationalization. The Russian Government has enacted legislation to protect foreign investment and other property against expropriation and nationalization. In the event that such property is expropriated or nationalized, legislation provides for fair compensation. However, there is no assurance that such protections would be enforced. Expropriation or nationalization of our business could have a material adverse effect on our business, results of operations, financial condition and prospects and the price of the GDRs.

Restrictive currency regulations may adversely affect our business and financial condition. Notwithstanding significant liberalization of the Russian currency control regime and the abolishment of certain restrictions from January 1, 2007, under Federal Law No. 173-FZ ‘‘On Currency Regulation and Currency Control’’ of December 10, 2003, as amended (the ‘‘Currency Law’’), current regulations still contain a number of limitations on foreign currency operations. In particular, Russian companies must notify Russian tax authorities on opening, closing and changes of details of bank accounts denominated in any currency with banks located outside of the Russian Federation. Such a notification must be filed within one month from the date on which such an account was opened or closed or on which the account details were changed. Russian companies must also provide the Russian tax authorities with quarterly reports on the cash flow in such accounts. Moreover, certain currency control restrictions were not repealed from January 1, 2007, and these include a general prohibition of foreign currency operations between Russian companies (except for the operations specifically listed in the Currency Law and the operations between

44 the authorized banks specifically listed in the CBR regulations) and the requirement to repatriate, subject to certain exemptions, export-related earnings to Russia. Restrictions on our ability to conduct some of these transactions could increase our costs, or prevent us from continuing necessary business operations, or from successfully implementing our business strategy, which could have a material adverse effect on our business, results of operations, financial condition and prospects. As a result of the current state of the banking sector, considerable delays may occur in the transfer of funds within, and the remittance of funds out of, Russia. Any delay or other difficulty in transferring or remitting funds could limit our ability to meet payment and debt obligations as they become due, which could result in the acceleration of debt obligations and cross-defaults and, in turn, have a material adverse effect on our business, results of operations and financial condition and prospects.

Risks Relating to the GDRs Market price of the GDRs may be volatile. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. The liquidity of a securities market is often a function of the volume of the underlying shares that are publicly held by unrelated parties. After giving effect to the Offering, the principal shareholders will continue to hold significant controlling interest in the Company. The Group cannot be certain that a more active trading market for the GDRs will develop following the Offering or that it will be maintained. If a more active trading market for the GDRs does not develop, the price of the GDRs may be more volatile and it may be more difficult to complete a buy or sell order of a certain size for the GDRs. In addition, other factors may contribute to volatility in the market price for the GDRs. For example, our results may also fall below our expectations and the expectations of securities analysts and investors. In addition, stock markets, including the London Stock Exchange and MICEX, from time to time experience extreme market-wide price and volume fluctuations due to macroeconomic factors, changes in perception and pricing of risk, and other factors. As a result of any one or more of the foregoing factors, the market price of the GDRs may decline below the Offer Price.

The GDRs trade on more than one market, and this may result in increased volatility and price variations between such markets. The GDRs are traded on the London Stock Exchange and on MICEX. Trading in the GDRs on these markets could be made in different currencies (British pounds, US Dollars and Euros on the London Stock Exchange and roubles on MICEX) and at different times (due to different time zones, trading days and public holidays in the United Kingdom and Russia). The trading prices of the GDRs on these two markets may differ due to these and other factors. The liquidity of trading in the GDRs on MICEX has been and is likely to remain limited. Trading of a small number of GDRs on that market could adversely impact the price of the GDRs on that market significantly and could, in turn, impact the price on the London Stock Exchange. The GDRs are fully fungible between both markets (except as noted in ‘‘– There is no guarantee whether the listing of the GDRs on MICEX will be maintained’’). Any decrease in the trading price of the GDRs on one of these markets could cause a decrease in the trading price of the GDRs on the other market. Additionally, as there is no direct trading or settlement between the two stock markets, the time required to move the GDRs from one market to another may vary, and there is no certainty of when GDRs that are moved will be available for trading or settlement.

There is no guarantee whether the listing of the GDRs on MICEX will be maintained. To date, there have been very few precedents of admission of foreign securities to public trading in Russia and of follow-on offerings of such securities. Russia has only recently codified the rules relating to admission of foreign securities to public offering and trading in Russia, and such rules are still being developed. In particular, the relevant Russian regulations governing the admission eligibility criteria and the listing criteria for foreign securities are not well developed and remain largely untested and open to conflicting interpretations. Consequently, it may not always be clear how to apply such regulations with respect to the Group which may result in subsequent cancellation of the admission to trading for some or all of the GDRs and de-listing of the GDRs from MICEX. We can provide no assurance that we will be able to maintain the admission of GDRs to trading on MICEX or inclusion in the quotation list. The Company’s existing GDRs have been admitted to trading on MICEX since November 2014. The Group is relying on the understanding discussed with MICEX that the Company’s GDRs have been admitted to

45 trading on MICEX as a class and any new securities of the class are also admitted. Although, no action by the Company is required for the newly-issued GDRs to be tradable on MICEX, the rules relating the admission of foreign securities to public offering and trading in Russia remain largely untested and open to conflicting interpretations, therefore the Company can provide no assurance that additional actions by the Company are not required in connection with admission of the newly-issued GDRs and it will be able to maintain the admission of GDRs to trading on MICEX. Moreover, in order to maintain its admission or listing on MICEX, the Company is required to comply with Russian securities law rules, including certain listing, reporting and disclosure requirements. A material failure to comply with these rules may constitute grounds for de-listing of the GDRs from MICEX. Such compliance may be particularly problematic due to the new, untested nature of the relevant Russian regulations and the lack of official guidance from the CBR on their interpretation and implementation. The Company can provide no assurance that it will be able to maintain the admission of the GDRs to trading on MICEX or inclusion in the quotation list.

The Ordinary Shares underlying the GDRs are not listed and may be illiquid. Unlike many other GDRs traded on the London Stock Exchange, our Ordinary Shares are neither listed nor traded on any stock exchange, and we do not intend to apply for the listing or admission to trading of our Ordinary Shares on any stock exchange. As a result, a withdrawal of shares by a holder of the GDRs, whether by election or due to certain events described under ‘‘Terms and Conditions of the Global Depositary Receipts’’ will result in that holder obtaining securities that are significantly less liquid than the GDRs and the price of those shares may be discounted as a result of such withdrawal.

Additional issuances of our Ordinary Shares may reduce the percentage ownership interest of investors who purchased GDRs in this offering and future sales of the Ordinary Shares or the GDRs may affect the market price of the GDRs. In order to raise funding in the future, we may issue additional Ordinary Shares, including in the form of the GDRs. Holders of our Ordinary Shares have statutory pre-emptive rights entitling them to purchase a percentage of every issuance of our Ordinary Shares. As a result, holders of our Ordinary Shares may purchase the Ordinary Shares we may issue in the future, including in the form of GDRs, in order to preserve their percentage ownership interest in us thereby reducing the percentage ownership interest of other investors, including holders of the GDRs who do not have such pre-emptive rights. In addition, sales, or the possibility of sales, of substantial numbers of the Ordinary Shares or the GDRs in the public markets following the Offering could have an adverse effect on the trading prices of the GDRs. Moreover, newly issued preferred shares may have rights, preferences or privileges senior to those of the shares underlying the GDRs.

Voting rights with respect to the Ordinary Shares represented by the GDRs are limited. GDR holders will have no direct voting rights with respect to the Ordinary Shares represented by the GDRs. The GDR holders will be able to exercise voting rights with respect to the shares represented by the GDRs only in accordance with the provisions of the Deposit Agreement and relevant requirements of Cypriot law. See ‘‘Terms and Conditions of the Global Depositary Receipts’’. Therefore, there are practical limitations upon the ability of GDR holders to exercise their voting rights due to the additional procedural steps involved in communicating with them. Holders of the Ordinary Shares will receive notice directly from us and will be able to exercise their voting rights either personally or by proxy. GDR holders, by comparison, will not receive notice directly from us. Rather, in accordance with the Deposit Agreement, we will provide notice to the Depositary. The Depositary has undertaken, in turn, and provided that there are no US, UK or Cypriot legal prohibitions (including, without limitation, the Listing Rules and Prospectus Rules of the FCA and the Admission and disclosure standards of the London Stock Exchange), to distribute to the GDR holders as soon as practicable after receipt notice of such meeting, copies of voting materials (if and as received by the Depositary from us) and a statement as to the manner in which instructions may be given by the GDR holders. In order to exercise their voting rights, the GDR holders must then instruct the Depositary how to vote the Ordinary Shares represented by the GDRs they hold. As a result of this additional procedural step involving the Depositary, the process for exercising voting rights may take longer for GDR holders than for holders of the shares, and we cannot assure the GDR holders that they will receive voting materials in time to enable them to return voting instructions to the Depositary

46 in a timely manner. The Ordinary Shares underlying the GDRs for which the Depositary does not receive timely voting instructions will not be voted, except that if no voting instructions are received by the Depositary in respect of the GDRs, the holder of such GDRs is deemed to have instructed the Depositary to grant a discretionary proxy to, and therefore the relevant votes may be exercised by, a person designated by the Company.

Capital gains from the sale of the GDRs by non-resident investors may be subject to Russian withholding tax. As of January 1, 2017 under the Russia-Cyprus tax treaty capital gains on the sale of shares deriving more than 50% of their value from immovable property situated in Russia may be taxed in Russia. Based on the revised provision of Article 309 of the Tax Code, profits derived from the sale of shares of companies the assets of which are more than 50% (directly or indirectly) represented by real property located in Russia, as well as ‘‘derivative financial instruments’’ based on such shares (other than shares that are regarded as ‘‘publicly traded’’ – i.e., listed on a stock exchange and for which the market quote has been determined at least once for the preceding three month period) should be subject to Russian withholding tax at the rate of 20%. Interpretation of the above provisions is associated with a significant level of ambiguity. First, it is not clear whether the revised provisions should be applied to the sale of GDRs (as GDRs are neither shares nor ‘‘derivative financial instruments’’, as defined). Second, it is not clear whether the exemption of ‘‘publicly traded’’ shares could be applied (as the Shares are not, and will not be, listed on any stock exchange). Third, there is no guidance on how to determine whether Russian real property assets comprise more than 50% of the assets of a holding company such as the Company in respect of the assets of its Russian subsidiaries. Finally, the Tax Code does not contain a mechanism for paying Russian withholding tax when the shares are sold by a foreign seller to a foreign buyer; therefore, payment of tax or its collection by the tax authorities would present considerable practical difficulties. Gains derived by foreign individual investors, from their disposition of participation interest, shares or other securities, such as GDRs in Russia are deemed to be Russian-source income, and generally will be subject to Russian tax withheld at source in case the disposition is made or income is paid by a Russian legal entity or a foreign legal entity with a permanent establishment in Russia acting as a tax agent. The Tax Code does not contain any clear guidance as to when income from the sale of shares/GDRs should be deemed to be received from Russian sources and the Russian tax authorities may apply various criteria in order to determine the source of the sale or other disposal, including looking at the place of conclusion of the transaction, the location of the Issuer, the location of the register, or other similar criteria. Taking into account the current real property portfolio of the Group the Russian real property assets do not exceed 50% of its total assets based on the consolidated financial statement. Therefore, the risk that transactions with the GDRs may be subject to 20% Russian withholding tax may be low and appear in case the market value of the Russian real property substantially exceeds its book value or the Group makes larger investments in the Russian real property in the future. Application of such withholding tax, or any assertion by the Russian tax authorities that such withholding tax applies, may adversely affect the trading price of the GDRs.

We may not declare dividends in the foreseeable future or may be unable to pay dividends if they are declared. If justified by the profits of the Company we may decide to make dividend distributions on the Ordinary Shares, such dividend distributions must be, in the case of annual dividends, recommended by our Board of Directors and approved by our shareholders or, in the case of interim dividends, declared by our Board of Directors, none of whom is under any obligation to either recommend or approve any dividend payments. In recommending or approving dividends, our Board of Directors and shareholders will take into account various factors, such as our operating results, financial condition and current and anticipated cash needs. In addition, our ability to pay dividends is subject to our articles of association the Companies Law Cap. 113, as amended, and other legal and other requirements and restrictions at the holding company level. See ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Dividend and Distribution Rights’’ and ‘‘Dividend Policy.’’

You will experience immediate and substantial dilution to net tangible book value, and the market price of the GDRs may fall below the Offer Price per GDR. The Offer Price per GDR is substantially higher than the net tangible book value per GDR as at December 31, 2015. For more information on dilution, see ‘‘Dilution.’’

47 Holders of the GDRs may not be able to benefit from certain UK anti-takeover protections. Our Ordinary Shares are not listed on any stock exchange. As we are incorporated in Cyprus, we are not subject to the United Kingdom’s City Code on Takeovers and Mergers (the ‘‘City Code’’) with respect to consideration, disclosure requirements and procedural matters applicable to the offer, and subject to the Cypriot Takeover Bids Law No. 41(I)/2007, as amended (the ‘‘Takeover Bids Law’’), with respect to company law matters, including the threshold for a mandatory bid. Cypriot law does not contain provisions similar to those applicable to takeovers in the United Kingdom. In addition, although it is not certain under the relevant legislation as to whether the Takeover Bids Law would apply to GDRs and/or whether GDRs fall within the definition of ‘‘securities’’ contained therein, the position of Cyprus Securities and Exchange Commission (‘‘CySec’’) appears to be that the legislation applies and in the absence of a decision of the Cypriot courts on the matter, this position should be taken into account. See ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Cypriot Law’’. As a result, a prospective bidder may gain control of us in circumstances in which some holders of our GDRs do not receive, or are not given the opportunity to receive, treatment equal to that received by our controlling shareholder.

Holders of the GDRs in certain jurisdictions may not be able to exercise their pre-emptive rights in relation to future issues of the Ordinary Shares. In order to raise funding in the future, we may issue additional Ordinary Shares, including in the form of the GDRs. According to Cypriot law, in general only existing registered holders of shares in a Cyprus public company are entitled to direct pre-emptive rights on the issue of new shares in that company as described in ‘‘Description of Share Capital and Applicable Cypriot Legislation.’’ Holders of the GDRs shall have no direct pre-emptive rights with respect to the newly allotted shares of the Company. Moreover, holders of GDRs in certain jurisdictions (including the United States) may not be able to exercise pre-emptive rights for the Ordinary Shares represented by the GDRs unless the applicable securities law requirements in such jurisdiction (including, in the United States, in some circumstances the filing of a registration statement under the Securities Act) are adhered to or an exemption from such requirements is available. We are unlikely to adhere to such requirements and an exemption may not be available. Accordingly, such holders may not be able to exercise their pre-emptive rights on future issuances of the Ordinary Shares, and, as a result, their percentage ownership interest would be reduced.

48 USE OF PROCEEDS The Company will receive gross proceeds of approximately US$250 million from the Offering. The Company expects that its expenses (including underwriting commissions, fees and expenses, assuming full payment of the discretionary fee to the Managers) incurred in connection with the Offering will be approximately US$5.1 million. The Company expects to receive net proceeds of approximately US$244.9 million from the Offering. The Group intends to use the net proceeds received from the Offering primarily for funding of: (i) a portion of its investment projects, including new food clusters in the Far East of Russia (including a pig breeding complex in the Primorsky krai) and in Central Russia (including greenhouse facilities in the Tambov region). We currently estimate our capital expenditure for the construction of a pig breeding complex in the Primorsky krai to be approximately RUB 60 billion, RUB 20-25 billion of which is expected to be spent during the first two to three years, and for the construction of greenhouse facilities in the Tambov region to be approximately RUB 20-25 billion; (ii) continuous modernization of our existing production facilities in each of our divisions, including three sugar plants being acquired from the Razgulay group; (iii) potential future acquisitions, including acquisitions of new land and production facilities; and otherwise for general corporate purposes. The Group will retain significant discretion over the use of the net proceeds received from the Offering, and changes in the Group’s plans or in the business environment in which it operates could result in the use of its net proceeds in a manner that is different to that described above. No proceeds from the Offering will be brought or applied within Cyprus.

49 DIVIDEND POLICY The Company will review its dividend policy from time to time based on its capital position against its current and expected cash flows and future capital expenditure requirements. In August 2013, our Board of Directors approved a dividend policy providing for annual payment of dividends at a minimum payout ratio of 25% of the Group’s profit for the year. In May 2015, our Board of Directors approved the addition of interim dividend payments to our dividend policy. The dividends are to be paid twice a year with payout ratio of at least 25% of the Group’s profit for the year in accordance with IFRS. To the extent that we declare and pay dividends, owners of GDRs on the relevant record date will be entitled to receive dividends payable in respect of Ordinary Shares underlying the GDRs, subject to the terms of the Deposit Agreement. Cash dividends may be paid to the Depositary in any currency and, except as otherwise described under ‘‘Terms and Conditions of the Global Depositary Receipts – Conversion of Foreign Currency’’, are converted into US Dollars by the Depositary and paid to holders of GDRs net of currency conversion expenses. The Depositary may deduct a fee of US$0.02 or less per GDR and other fees and expenses from any dividend distribution. See ‘‘Terms and Conditions of the Global Depositary Receipts – Depositary’s Fees, Costs and Expenses.’’ The Company’s ability to pay dividends may also be restricted by Cypriot law and the Company’s articles of association (see ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Rights Attaching to Ordinary Shares – Dividend and Distribution Rights’’) and dependent upon the receipt of dividends and other distributions from the Company’s subsidiaries which is in turn contingent upon the sufficiency of their earnings, cash flows and distributable reserves and their ability to make dividend payments to us in accordance with regulatory, fiscal and/or other restrictions.

50 CAPITALIZATION The following table sets forth the capitalization of the Group as at December 31, 2015, on an actual basis and as adjusted to give effect to the Offering. The capitalization table has been prepared for illustrative purposes only and because of its nature addresses a hypothetical situation and, therefore, does not represent the Group’s actual financial position or results. The following table should be read in conjunction with ‘‘Use of Proceeds,’’ ‘‘Selected Consolidated Financial Information,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Business’’ and the Consolidated Financial Statements and the related notes thereto.

As at December 31, 2015 Actual As adjusted(1) (in RUB thousands) Short-term borrowings ...... 25,860,464 25,860,464 Long-term borrowings ...... 24,037,539 24,037,539 Equity ...... Share capital(2) ...... 9,734 12,194 Treasury shares ...... (505,880) (505,880) Share premium ...... 10,557,573 26,513,236 Share-based payment reserve ...... 1,295,213 1,295,213 Retained earnings ...... 59,188,050 59,188,050 Equity attributable to owners of ROS AGRO PLC ...... 70,544,690 86,502,813 Non-controlling interest ...... 27,276 27,276 Total equity ...... 70,571,966 86,530,089 Total capitalization ...... 120,469,969 136,428,092

(1) Adjusted to give effect to the receipt of the net proceeds of RUB 15,958 million (after deducting aggregate underwriting commissions, fees and expenses relating to the Offering of approximately RUB 332 million as described in ‘‘Use of Proceeds’’), but not adjusted for any other changes subsequent to December 31, 2015. (2) At December 31, 2015, December 31, 2014, and December 31, 2013 issued and paid-up share capital consisted of 24,000,000 ordinary shares with par value of Euro 0.01 each. After December 31, 2015 several companies of the Group separately entered into revolving credit facility agreements with Alfa-Bank. Indebtedness under such facilities approximately totalled RUB 5,335,506 thousand as of March 31, 2016, of which RUB 4,700,000 thousand relates to one revolving credit facility agreement between Alfa-Bank and OJSC Znamensky Sugar Plant. For description of this facility see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness’’.

51 DILUTION Interests of investors investing in the GDRs will be diluted to the extent of the difference between the Offer Price per GDR and the net tangible book value per GDR immediately following the completion of the Offering. Net tangible book value per GDR represents the amount of the Company’s total tangible assets less total liabilities and non-controlling interest, divided by the number of GDRs issued and outstanding at a relevant date. Investors participating in the Offering will incur immediate substantial dilution once the Offering is completed. The Group’s net tangible book value on December 31, 2015 was RUB 67,431 million (US$925 million), representing RUB 561.9 (US$7.7) per GDR, calculated using 24,000,000 Ordinary Shares, each Ordinary Share represented by five GDRs (or 120,000,000 GDRs). After the Offering of 16,666,665 GDRs at an Offer Price of US$15.0 (RUB 977.4) per GDR, after deducting the estimated underwriting commission and expenses payable by the Company in connection with the Offering, the Group’s as adjusted net tangible book value on December 31, 2015, would have been RUB 610.2 (US$8.6) per GDR. This represents an immediate increase in net tangible book value of RUB 48.3 (US$0.9) per GDR and an immediate dilution of RUB 367.2 (US$6.4), or 38% (43% for US$) per GDR to the new investors purchasing the GDRs in this Offering. The following table sets forth this per share dilution:

US$(1)(2) RUB(1)(2) Offer Price per GDR ...... 15.0 977.4 Net tangible book value per GDR at December 31, 2015 ...... 7.7 561.9 Increase in pro forma net tangible book value per GDR attributable to the Offering(3) ...... 0.9 48.3 Pro forma as adjusted net tangible book value per GDR after the Offering ...... 8.6 610.2 Dilution per GDR to new investors ...... 6.4 367.2 Percentage of dilution per GDR to new investors ...... 43% 38%

(1) Except where percentages are indicated. (2) The GDRs are payable at the Offer Price in US Dollars, while the Group’s consolidated financial statements are presented in roubles. For the purposes of this presentation, exchange rates used were as quoted by the CBR as of (i) December 31, 2015, exchange rate of US Dollar 1.00 to RUB 72.8827 for net tangible book value before the effect of the Offering and (ii) April 28, 2016, exchange rate of US Dollar 1.00 to RUB 65.1618 for the Offer Price and adjusted net tangible book value after the Offering. (3) After giving effect to approximately US$5.1 million of expenses to be paid by us in connection with the Offering.

52 SELECTED CONSOLIDATED FINANCIAL INFORMATION The following selected consolidated financial information shows our historical consolidated financial information and other operating information as of December 31, 2015, 2014, and 2013 and for the three years then ended. The Consolidated Statements of Profit or Loss and Other Comprehensive Income Data, Consolidated Statements of Financial Position Data and Consolidated Statements of Cash Flows Data set forth below has been derived from, and should be read in conjunction with, the Consolidated Financial Statements included elsewhere in this Information Memorandum. The selected consolidated financial information should also be read in conjunction with ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ below. Adjusted EBITDA, Net Debt, Net Debt to Adjusted EBITDA ratio, Gross Profit Margin, Net Profit Margin, Adjusted EBITDA Margin, Net Working Capital, Capital Expenditures, and certain of the segmental data presented below are non-IFRS measures and were calculated by us based on data derived from the Consolidated Financial Statements. See ‘‘Presentation of Financial and Other Information – Presentation of non-IFRS Measures.’’

Selected Consolidated Financial Information Relating to the Group Consolidated Statements of Profit or Loss and Other Comprehensive Income Data

53 Consolidated Statements of Financial Position Data

Consolidated Statements of Cash Flows Data

54 Segment Information and non-IFRS Financial Measures

Year ended December 31, 2015 Sugar Meat Agriculture Oil and Fat Other Eliminations Total (in RUB thousands) Profit for the year(1) ...... –– – – – –23,690,336 Income tax expense ...... –– – – – –1,823,392 Share of results of associates . . –– – – – –(23,997) Other financial (income)/ expenses, net ...... –– – – – –(3,080,295) Net (gain)/loss from bonds held for trading ...... –– – – – –(636,601) Interest income ...... –– – – – –(1,576,601) Interest expense ...... – – – – – – 2,041,743 Operating profit ...... 10,034,327 6,217,632 6,484,518 1,369,267 14,647,919 (16,515,686) 22,237,977 Adjustments: Depreciation included in Operating Profit ...... 970,293 1,319,637 889,702 351,924 24,677 (45,241) 3,510,992 Other operating (income) / expenses, net ...... 63,221 (851,773) 228,584 (59,222) (16,180,603) 16,610,810 (188,983) Share-based remuneration .... – – – – 4,015 – 4,015 Reimbursement of operating costs (government grants) . . . – 682,396 217,864 – – – 900,260 Net (gain)/loss on revaluation of biological assets and agricultural produce ...... – 303,980 (1,190,980) – – (1,153,860) (2,040,860) Adjusted EBITDA(2) ...... 11,067,841 7,671,872 6,629,688 1,661,969 (1,503,992) (1,103,977) 24,423,401

55 Year ended December 31, 2014 Sugar Meat Agriculture Oil and Fat Other Eliminations Total (in RUB thousands) Profit for the year(1) ...... – – – – – – 20,176,979 Income tax expense ...... –––– – –714,935 Share of results of associates . . . –––– – –(46,579) Other financial (income)/ expenses, net ...... –––– – –(4,549,548) Net (gain)/loss from bonds held for trading ...... –––– – –1,397,230 Interest income ...... –––– – –(1,010,951) Interest expense ...... –––– – –154,478 Operating profit ...... 3,961,809 9,294,145 3,299,535 1,601,383 6,157,121 (7,477,449) 16,836,544 Adjustments: Depreciation included in Operating Profit ...... 928,971 1,355,503 819,945 366,779 24,873 961 3,497,032 Other operating (income)/ expenses, net ...... (82,069) (376,370) 150,321 (85,900) (7,236,857) 7,357,991 (272,884) Share-based remuneration ..... – – – – 54,423 – 54,423 Reimbursement of operating costs (government grants) .... – 331,844 216,201 – – – 548,045 Net (gain)/loss on revaluation of biological assets and agricultural produce ...... – (1,776,114) (110,696) – – (706,875) (2,593,685) Adjusted EBITDA(2) ...... 4,808,711 8,829,008 4,375,306 1,882,262 (1,000,440) (825,372) 18,069,475

56 Year ended December 31, 2013 Sugar Meat Agriculture Oil and Fat Other Eliminations Total (in RUB thousands) Profit for the year(1) ...... – – – – – – 3,201,757 Income tax expense ...... –– – – – –330,963 Other financial (income)/expenses, net...... –– – – – –56,272 Interest income ...... –– – – – –(2,022,986) Interest expense ...... – – – – – – 1,380,376 Operating profit ...... 606,971 964,137 1,192,650 689,455 2,289,984 (2,796,815) 2,946,382 Adjustments: Depreciation included in Operating Profit ...... 907,524 1,227,256 771,588 314,392 17,788 32,313 3,270,861 Other operating (income) / expenses, net ...... 235,436 (186,377) (10,750) 21,443 (2,883,643) 2,940,428 116,537 Share-based remuneration ...... – – – – 178,280 – 178,280 Reimbursement of operating costs (government grants) ...... – 287,450 281,186 – – – 568,636 Net (gain) / loss on revaluation of biological assets and agricultural produce ...... – (566,624) 126,447 – – 173,584 (266,593) Reversal of provision for net realizable value of agricultural products in stocks ...... (30,090) – – – – – (30,090) Adjusted EBITDA(2) ...... 1,719,841 1,725,841 2,361,121 1,025,290 (397,591) 349,511 6,784,013

Net Working Capital

57 Net Debt

(1) Net Working Capital and Net Debt are non-IFRS measures. Our calculation of these measures may be different from the calculation used by other companies and therefore comparability may be limited. For the limitations of these measures as analytical tools see ‘‘Presentation of Financial and Other Information – Presentation of non-IFRS Measures.’’

Capital Expenditures

(1) Calculated as cash flows used by the Group for purchases of property, plant and equipment and inventories intended for construction in 2015, 2014, and 2013, respectively.

58 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations as of and for the years ended December 31, 2015, 2014 and 2013 should be read in conjunction with our Consolidated Financial Statements and the other information included elsewhere in this Information Memorandum. This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including those described under ‘‘Risk Factors’’ and ‘‘Cautionary Note Regarding Forward-Looking Statements.’’

Overview Rusagro is a leading Russian diversified food producer with vertically integrated operations. We operate in four core markets: Sugar, Meat, Agriculture and Oil and Fat. Our sugar, agricultural and pig breeding operations are located in close proximity to each other in the Belgorod, Tambov, Kursk, Orel and Voronezh regions, and our oil and fat operations are located in Ekaterinburg in the Sverdlovsk region and in Samara. In addition, in 2015 we started developing agricultural, oil and fat and pig breeding projects in the Primorsky krai. Our business operates the following business segments: • Sugar: Sales of the segment consist of sale of white sugar, which is produced from both sugar beets and raw cane sugar. Costs of the segment are associated with production of white sugar and include the costs of sugar beet, limestone, coal and other raw materials, depreciation of production facilities and allocated payroll expenses. The only source of inter-segment sales comes from the lease of facilities to our Agriculture segment. The share of total intra-group sales was 0.4%, 0.4% and 0.6% in 2015, 2014, and 2013, respectively. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales was 45%, 38% and 46% in 2015, 2014, and 2013, respectively. • Meat: Sales of the segment are derived from our pig breeding operations through the sale of livestock, carcasses, cuts and offals. The costs of the Meat segment pertain to the cultivation of pigs and include the costs of fodder, products for animal care, allocated payroll expenses, and depreciation of our breeding facilities. The segment has no regular sales to other segments. In 2013 insignificant sales were incurred from storage services provided to Agricultural segment. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales was 25%, 30% and 20% in 2015, 2014, and 2013, respectively. • Agriculture: In this segment the primary activity is harvesting and selling agricultural produce. The segment’s primary costs include the purchase of seeds, fertilizers, fuels and allocated payroll expenses. The Agriculture segment sells all harvested sugar beets to our Sugar segment and part of harvested grain to our Meat segment for production of fodder. The total share of intra-group sales were 65.4%, 61.3% and 60.9% in 2015, 2014, and 2013, respectively. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales was 20%, 18% and 23% in 2015, 2014, and 2013, respectively. • Oil and Fat: Sales of the segment are derived from the sale of mayonnaise, consumer margarine, and raw and processed sunflower and soy oils. The segments costs are associated with extraction of vegetable oil and production of mayonnaise and include the purchase of sunflower oil and sunflower seeds from third parties, depreciation of its production facilities and allocated payroll expenses. The segment regularly sells oilseeds meal and soybean meal to the Meat segment, and its total share of intra-group sales were 3.3%, 0.5% and 0.2% in 2015, 2014, and 2013, respectively. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales was 24% in 2015, 25% in 2014, and 24% in 2013. Certain of our businesses are not included within the reportable operating segments as they are not included in the reports provided to management. The results of these operations are included in ‘‘Other’’. The Company, OJSC Rusagro Group and LLC Group of Companies Rusagro that represent the Group’s head office and investment holding functions and earn revenue considered incidental to the Group’s activities are also included in ‘‘Other’’.

59 Factors Affecting Results of Operations Our results of operations are primarily affected by the following factors:

Commodity Prices and Foreign Exchange Fluctuations The Group’s primary business is the production and sale of commodities and products produced from commodities (consumer margarine, mayonnaise, sugar, and meat). Commodity raw materials comprise a substantial part of the Group’s cost of sales (e.g. seeds, sugar beets, vegetable oil, fodder, etc.). Accordingly, fluctuations of global commodity prices have a significant impact on the Group’s performance. Commodity prices are dependent on Russian and global macroeconomic conditions which are beyond the Group’s control or ability to influence. The Group’s primary market is Russia, although fluctuations in global commodity prices directly affect prices within Russia. The Group’s presentation and functional currency is the rouble, and substantially all of its revenues and expenses are in roubles. However, global commodities prices typically have a high correlation with movements in the US Dollar. The depreciation of the rouble against the US Dollar tends to increase the Group’s sales in roubles, and to a lesser extent its expenses, by increasing commodity prices expressed in roubles. Appreciation of the rouble against the US Dollar tends to have the opposite effect. Between January 2012 and July 2014, the rouble has depreciated against the US Dollar (from 32.20 roubles per US Dollar as of January 1, 2012 to 33.84 roubles per US Dollar as of July 1, 2014). The rouble fell sharply against the US Dollar towards the end of 2014 to as low as 56.26 roubles per US Dollar at December 31, 2014. After a slight increase in the first half of 2015, the exchange rate of the rouble against US Dollar continued to fall, reaching 72.88 roubles per US Dollar as at December 31, 2015. See ‘‘Presentation of Financial and Other Information’’. The effect of this devaluation has been an increase in rouble-denominated commodity prices in all periods under review, despite the general trend of stable or declining international commodity prices.

Changes in our Production Volumes, Prices and Product Mix Sales for the Group are critically dependent on our production volumes. Increasing production volumes typically also results in higher cost of goods sold. Apart from adding to our production capacity, we have focused on efficiency measures to increase production volumes while limiting the increase in cost of goods sold. For example, our Sugar segment seeks to increase production not only by increasing plant production capacity, but also by modernizing plants to improve conversion ratio from sugar beets to white sugar. Our Meat segment increases production by increasing the number of livestock, and by modernizing its production facilities to diversify the range of meat products. Our Agriculture segment seeks to increase production not only by increasing the number of hectares of land that are cultivated, but also by introducing technology and machinery which reduce production costs per ton while improving average harvest yield per hectare. Within our Oil and Fat segment, we seek to improve the efficiency of our production facilities by replacing equipment lines and updating technology. The Group’s products encompass a range of prices. The Group’s product mix shifts from period to period are based on a number of factors including crop rotations, availability of raw materials and product management. The shift between products with different prices and margins can have a material effect on the overall sales and profitability of the Group.

60 The table below sets out selected operational and non-IFRS financial information by product within our business segments1.

Change Change 2015 (%) 2014 (%) 2013 Sugar Sales (tons sold) ...... 783,809 4% 752,275 15% 653,275 Beet sugar ...... 599,806 12% 534,566 (2)% 544,899 Cane Sugar ...... 184,003 (16)% 217,709 101% 108,376 Average price per ton (RUB thousand) ...... 40,350 42% 28,384 16% 24,574 Total segment sales (RUB million) ...... 32,853 46% 22,464 32% 16,963 Segment cost of sales (RUB million) ...... (20,290) 22% (16,649) 18% (14,087) Net gain from trading derivatives (RUB million) . . 224 (40)% 375 114% 175 Gross profit (RUB million) ...... 12,787 107% 6,190 103% 3,051 Gross profit margin ...... 39% 11% 28% 10% 18% Meat Sales (tons sold) ...... 172,378 (4)% 180,397 56% 115,424 Marketable livestock ...... 141,419 (18)% 172,883 52% 113,730 Carcass ...... 23,915 219% 7,508 344% 1,694 Large cuts ...... 5,832 971% 6 – – Offal ...... 1,212 – – – – Average price per kg (RUB) Marketable livestock ...... 99.4 4% 95.7 51% 63.6 Carcass ...... 127.1 3% 124.0 21% 102.4 Large cuts ...... 147.3 3% 143.1 – – Offal ...... 50.6 – – – – Total segment sales (RUB million) ...... 18,117 2% 17,751 139% 7,421 Segment cost of sales (RUB million) ...... (11,728) 16% (10,114) 48% (6,821) Net gain/(loss) from revaluation of biological assets and agricultural produce (RUB million) . . (304) (117)% 1,776 213% 567 Gross profit (RUB million) ...... 6,085 (35)% 9,413 707% 1,167 Gross profit margin ...... 34% (19)% 53% 37% 16% Agriculture Sales (tons sold) ...... 3,250,181 5% 3,101,935 (14)% 3,586,795 barley ...... 309,534 24% 249,406 103% 123,105 sugar beet ...... 2,538,277 9% 2,330,346 (21)% 2,935,289 wheat ...... 284,838 (5)% 299,459 (27)% 407,771 peas(1) ...... 3,381 (90)% 34,090 82% 18,741 sunflower seeds ...... 21,525 (78)% 98,540 186% 34,510 soy ...... 11,536 3% 11,251 (57)% 25,909 corn ...... 76,583 89% 40,568 (2)% 41,469 other ...... 4,509 (88)% 38,276 – – Average price per kg (RUB) barley ...... 8.6 74% 4.9 (20)% 6.2 sugar beet ...... 2.9 41% 2.1 43% 1.5 wheat ...... 8.7 36% 6.4 8% 5.9 peas(1) ...... 12.2 36% 9.0 10% 8.2 sunflower seeds ...... 21.1 34% 15.8 61% 9.8 soy ...... 23.3 38% 16.9 (1)% 17.0 corn ...... 7.6 54% 4.9 23% 4.0 other ...... 5.2 156% 2.0 – – Total segment sales (RUB million) ...... 14,211 33% 10,710 26% 8,529 Segment cost of sales (RUB million) ...... (6,672) 15% (5,827) 9% (5,369)

1 Sales, cost of sales and gross profit are presented before inter-segment eliminations. Sales in respective segments are slightly higher than multiplication of average prices by respective volumes because by-products derived during ordinary production process are also sold at certain scrap value and are not presented in this table.

61 Change Change 2015 (%) 2014 (%) 2013 Net gain/(loss) from revaluation of biological assets and agricultural produce (RUB million) . . 1,191 973% 111 188% (126) Gross profit (RUB million) ...... 8,730 75% 4,994 65% 3,034 Gross profit margin ...... 61% 14% 47% 11% 36% Oil and Fat Sales (tons sold) ...... 490,001 (20)% 609,539 81% 336,587 Mayonnaise ...... 66,193 15% 57,704 2% 56,644 Margarine ...... 43,288 (9)% 47,416 16% 40,919 Crude Vegetable oil ...... 170,907 (31)% 246,693 108% 118,460 Processed sunflower oil ...... 7,866 (57)% 18,319 – – Processed soybean oil ...... 5,634 – – – – Oilseeds meal ...... 146,723 (39)% 239,407 99% 120,563 Soybean meal ...... 49,390 – – – – Average price per kg (RUB) Mayonnaise ...... 72.7 23% 59.0 4% 56.8 Margarine ...... 70.7 30% 54.5 7% 50.8 Vegetable oil ...... 48.3 64% 29.5 (6)% 31.5 Processed sunflower oil ...... 61.4 53% 40.2 – – Processed soybean oil ...... 59.1 – – – – Oilseeds meal ...... 13.4 50% 9.0 15% 7.8 Soybean meal ...... 28.6 – – – – Total segment sales (RUB million) ...... 17,252 16% 14,920 67% 8,920 Segment cost of sales (RUB million) ...... (12,664) 20% (10,552) 61% (6,567) Gross profit (RUB million) ...... 4,588 5% 4,368 86% 2,352 Gross profit margin ...... 27% (2)% 29% 3% 26%

(1) The crop is not harvested any longer

Sugar segment Sales before inter-segment elimination increased from RUB 16,963 million in 2013 to RUB 32,853 million in 2015, and gross profit margin increased from 18% in 2013 to 39% in 2015. This increase was primarily due to higher rouble-denominated sugar prices. The average price for white sugar increased by 16% in 2014 and by 42% in 2015. In addition, an increase in sugar production volumes contributed to higher sales. The Group achieved higher volumes by modernizing equipment in the sugar plants to increase the sugar beet to white sugar conversion ratio.

Meat segment Average market prices for pig meat increased in 2014 by 51% which lead to a significant increase in sales of the segment, as well as increase in gross profit margin from 16% in 2013 to 53% in 2014. In 2015 increase in prices and marginality was lower and gross profit margin declined from 53% in 2014 to 34% in 2015. Decrease in gross profit and marginality in 2015 was primarily driven by an increase in cost of sales by 16%, which in turn was driven by an increase in prices for grain, vegetable oil and other components of fodder. Decrease in volumes of sold meat in 2015 was primarily caused by diversification of product mix sold by the Meat segment with the launch of Tambov slaughter house (from predominantly livestock to livestock, carcasses, offals and large cuts). Sales of livestock result in more tons of sold meat than sale of the same livestock through carcasses, offals and large cuts.

Agriculture segment Sales in Agriculture segment are primarily driven by the sales of sugar beets. In 2014 prices for sugar beets increased by 43% which lead to increase in sales of Agriculture segment. Increase in prices was partially offset by a decrease in volumes of sold sugar beets. Prices for virtually all commodities sold by the Agriculture segment increased in 2014 which lead to increase in gross profit margin from 36% in 2013 to 47% in 2014. In 2015 prices for agricultural produce continued to grow. That had led to increase in gross profit margin of the segment from 47% in 2014 to 61% in 2015.

62 Oil and Fat segment Increase in sales in 2014 was primarily driven by an increase in volumes of sold vegetable oil, consumer margarine and mayonnaise. Slight increase in prices of consumer margarine and mayonnaise resulted in commensurate increase in profit margin from 26% in 2013 to 29% in 2014. During 2015 prices for all key outputs of the segment increased. In particular, prices of consumer margarine, mayonnaise, and vegetable oil increased by 30%, 23%, and 64%, respectively. However, gross profit margin decreased from 29% in 2014 to 27% in 2015 primarily due to 64% increase in prices of vegetable oil, which is the primary component for production of consumer margarine and mayonnaise.

Seasonality and Price Fluctuations Changes in commodity prices during the agricultural seasons can affect our results. For example, the Group’s Sugar segment typically produces sugar from sugar beets from September to December using sugar beets harvested in September to November. Because sugar prices are generally lowest at the end of the sugar beet campaign, the Group seeks to store sugar produced using sugar beets to sell over an extended period in more favorable pricing conditions. The Group usually has a material inventory of white sugar at the year end and tends to sell it gradually during the year. Typically, there is a significant time lag between the incurrence of costs and generation of revenue in the Sugar segment. Seeds are planted in the first six months and the associated revenue is recognized only when sugar beets are harvested, converted into white sugar and sold the following year. Accordingly, growth in the price of white sugar leads to increased profit margins in the Group’s Sugar segment as seeds are purchased and costs are recognized in a period of lower prices and sugar beets are extracted and converted into white sugar in a period of higher prices. Our Agricultural and Meat businesses are similarly seasonal, as we typically incur significantly higher operating costs during the first half of the calendar year and generate significantly higher sales volumes and revenues in the second half of the calendar year, particularly in the fourth quarter. In Agriculture, narrow seeding periods result in a high concentration of our operating costs in the spring of each year, and the narrow harvest period can put significant downward pressure on prices for agricultural products which are typically at their lowest levels immediately after the harvest. The Agriculture segment’s storage facilities, including our elevators, which are primarily used to store grain such as wheat and barley, and bag technology for grain storage, enable us to mitigate the impact of seasonal price fluctuations by spreading the sale of our grain harvest over a more extended period, including times when prices are typically at their peak. As with the Sugar segment, protracted growth in prices for our agricultural and meat products has led to the increase in profit margins in those segments. In our Oil and Fat segment, sales of consumer margarine are typically higher during winter months, while sales of mayonnaise products are generally higher in the summer months as well as in December due to increased demand for ingredients for traditional Russian holiday foods. Accordingly, our Oil and Fat segment is less seasonal as sales provide relatively stable cash flow throughout the year.

Government Involvement in the Russian Agricultural Sector Enterprises engaged in agricultural production operations in Russia receive various forms of support from the Russian Government as well as from regional governments. Our key benefits come from reduced tax rates on our profits and reductions in certain other taxes, interest rate subsidies on qualifying borrowings and direct support from the federal and regional budgets. Direct support is usually non-recurring and includes reimbursement for designated capital expenditures and subsidy for utilization agricultural land (‘‘hectare-based’’ subsidy). During 2013 to 2015 our key subsidy was the reimbursement of interest expense. The summary of subsidies received by the Group in 2015, 2014 and 2013 are below:

Year ended December 31 2015 2014 2013 (in RUB thousands) Reimbursement of interest expense (government grants) ...... 1,815,058 2,133,657 2,243,592 Reimbursement of operating expenses (government grants) ...... 900,260 548,045 568,636 Total ...... 2,715,318 2,681,702 2,812,228 Due to increased state budget deficits the government is expected to continue reducing subsidies to agricultural companies. We expect this reduction to be gradual and consistent with the trend in the period from 2013 to 2015.

63 Taxation The Group’s profits from its different segments are taxed at different rates. Our Meat and Agriculture segments (Russian companies – taxpayers) treated as agricultural producers for corporate profit tax purposes, are subject to 0% corporate profit tax, while other segments (Russian companies – taxpayers) are subject to ordinary 20% corporate profit tax rate under the Russian Tax Code. The local governments are entitled to reduce the regional portion of the profit tax rate for certain types of activities. In the Samara region the Group’s tax on profit generated from extraction of vegetable oil has been reduced to 15.5% for the period from 2012 to 2016. Accordingly, a higher proportion of profit generated by the Group’s Meat and Agriculture segments lowers our effective tax rate. Group entities operating in other jurisdictions are taxed at 0% and 12.5%.

Recent events In March 2016, we participated in auctions to acquire certain assets of the Razgulay group for RUB 8,100,000 thousand. See ‘‘Business – Recent Developments’’ On March 28, 2016, our Board of Directors recommended that the Company’s shareholders approve dividend payment for 2015 of RUB 7,107,101 thousand, which represents 30% of our 2015 consolidated profit for the year. Our interim dividend paid in the first half of 2015 was RUB 1,800,959 thousand. The remaining dividend amount to be distributed for 2015 is RUB 5,306,142 thousand. The dividend per Ordinary Share will be fixed on the dividend record date set on May 27, 2016. The proposed dividend is subject to shareholder approval at the annual general meeting, which is scheduled to occur on May 27, 2016. In the first quarter of 2016 our Sugar segment’s sales of white sugar increased, and average sale prices increased, as compared to the first quarter of 2015. Within our Meat segment production volumes decreased in the first three months of 2016 due to the continuing shift to slaughter meat which leads to different weight base. Average sales prices in our Meat segment decreased slightly compared to the first quarter of 2015. Volumes and prices were subject to diverging trends in both our Oil and Fat and Agriculture segments. As a result of these trends, as well as other factors impacting our costs, including, among others, the time lag between sourcing of raw materials and their utilization, we would not expect our profitability to necessarily move in line with our revenues or volumes. Notwithstanding an overall increase of volumes and sales in the first quarter of 2016 compared to the same period last year, we believe that soaring sourcing costs might offset our top line progression and might result in profitability, in actual terms, directionally aligned with last year’s performance. At the same time our business is sensitive to continuing changes in commodity prices, and, as a result, these trends during the first quarter of 2016 may not be indicative of our full year results.

Description of Key Operating and Financial Items The following is a description of our key operating and financial items. For more information on the accounting policies on the basis of which the Consolidated Financial Statements are prepared, see ‘‘– Critical Accounting Estimates and Judgments in Applying Accounting Policies’’ and the notes to the Consolidated Financial Statements included elsewhere in this Information Memorandum.

Sales We derive substantially all our sales from the sale of sugar, sales of livestock and processed meat products by our pig breeding business and sales of agricultural products and oil products. ‘‘Other’’ income represents non-core inter-company transactions, eliminated on consolidation.

Net gain/ (loss) on revaluation of biological assets and agricultural produce Net gain on revaluation of biological assets and agricultural produce represents the difference between the aggregate gain on initial recognition of agricultural produce and gain from the change in fair value less estimated point-of-sale costs of biological assets less gains related to realized biological assets and agricultural produce.

64 Cost of Sales Cost of sales of the Group comprises the following items: • Raw materials and consumables used represent the largest component of cost of sales, and consist, in large part, of: (i) for the Sugar segment, raw cane sugar sourced by us from the international market and sugar beets, approximately 63% of which were sourced from our Agriculture segment in 2015 (including only sugar beets processed by the Group for its own sugar production), with the remaining amount sourced from the domestic market; (ii) for the Meat segment, fodder and products for animal care less gain on revaluation of biological assets related to realized biological assets; (iii) for the Agriculture segment, fertilizers, plant protection agents, seed, fuel for equipment use; and (iv) for the Oil and Fat segment, vegetable oil, including sunflower, rapeseed and soybean oil. • Payroll consists of salaries paid to our employees engaged in production operations and also includes overtime pay, performance-related bonuses, vacation and sick pay. Payroll also comprises employment-related taxes, such as contributions to the State Pension Fund, State Social Insurance Fund and State Medical Insurance Fund and contributions toward mandatory workplace accident insurance. During the three-year period ended December 31, 2015, salaries generally rose due to (i) an overall increase in our workforce, and (ii) an increase in line with inflation in the Russian market. • Depreciation consists of depreciation of production facilities within our property, plant and equipment and remained relatively flat during the three-year period ended December 31, 2015. • Services include primarily packaging services, freight transportation services, repair and maintenance services and rent costs associated with leasing the Group’s land bank. • Provision/(reversal of provision) for net realizable value is the difference between the provision for net realizable value created at the current reporting date and the same provision created at the previous reporting date. The provision is created if the cost of inventories exceeds their net realizable value in the amount of the difference. Net realizable value is the estimated selling price in the ordinary course of business less selling expenses. • Other includes costs relating to taxes included in cost of sales, preserving sanitary conditions and inspections related thereto, laboratory tests and certification of products.

Net gain/ (loss) from trading derivatives Net gain/ (loss) from trading derivatives represent gain or loss realized by the Group relating to its raw sugar derivatives trading. Between 2013 and 2015, the Group hedged against the volatility in the raw sugar market prices by trading futures and options on raw sugar on the ICE Futures US market.

Distribution and selling expenses Distribution and selling expenses primarily consist of transportation and loading services, payroll for employees associated with distribution and selling activities, depreciation and amortization, advertising, materials, fuel and energy and other costs, including primarily marketing research and warehouse maintenance.

General and administrative expenses General and administrative expenses primarily consist of payroll for corporate and administrative employees, taxes (excluding income tax), bank services, services of professional organizations (such as auditors’ fees), depreciation and rent of administration buildings.

Other operating income/ (expenses), net Other operating income/(expenses), net, primarily consist of government grants for reimbursement of operating expenses, net operating foreign exchange gains and loss, the amortization of deferred income related to government subsidies in connection with the purchase of property, plant and equipment, charitable donations and social costs. In 2015, other material component of Other operating income/ (expenses), net included, the ‘‘lost harvest write-off’’ which represent costs of crops damaged due to unfavorable weather conditions.

65 Interest expense Interest expense includes interest expense associated with our borrowings and obligations under our capitalized financial leases, offset by the reimbursement by federal and regional governments of interest the Group pays on borrowings in connection with our operations, including our sugar production operations, construction of the pig breeding facilities, production of crops in our Agriculture segment and investment programs in the Agriculture and Sugar segments.

Interest income Interest income includes interest earned on bank deposits, promissory notes purchased, bonds held for trading and loans issued by the Group.

Other financial income/ (expenses), net Other financial income/(expenses), net includes financial foreign exchange gain/(loss), net on bank deposits and bonds, and other financial expenses, net.

Net gain/ (loss) from bonds held for trading Net gain/ (loss) from bonds held for trading represent result of operations with bonds classified as held for trading, i.e. for which fair value can be easily assessed. In the year ended December 31, 2014, the Group acquired bonds held for trading denominated in US Dollars in order to invest its cash surplus with the intention of generating a profit from short-term price fluctuations. Between March and April 2015 the Group disposed of all bonds held for trading. This is considered as non-recurring activity of the Group. As a result of the bond trades the Group accrued a loss of RUB 1,397,230 thousand in the year ended December 31, 2014 and a gain of RUB 636,601 thousand in the year ended December 31, 2015.

66 Results of operations for the year ended December 31, 2015 compared to the year ended December 31, 2014 The following table sets forth each of our statements of profit or loss and other comprehensive income line items for the years ended December 31, 2015 and 2014 in absolute terms and as a percentage of sales:

Year ended December 31, 2015 2014 (in RUB Percentage (in RUB Percentage thousands) of sales thousands) of sales Sales ...... 72,439,164 100 59,112,243 100 Net gain on revaluation of biological assets and agricultural produce ...... 2,040,860 3 2,593,685 4 Cost of sales ...... (43,271,410) (60) (37,999,661) (64) Net gain from trading derivatives ...... 223,948 – 375,305 1 Gross profit ...... 31,432,562 43 24,081,572 41 Distribution and selling expenses ...... (5,313,993) (7) (4,472,174) (8) General and administrative expenses ...... (4,065,560) (6) (2,991,315) (5) Share-based remuneration ...... (4,015) – (54,423) – Other operating income, net ...... 188,983 – 272,884 – Operating profit ...... 22,237,977 31 16,836,544 28 Interest expense ...... (2,041,743) (3) (154,478) – Interest income ...... 1,576,601 2 1,010,951 2 Net gain/ (loss) from bonds held for trading ..... 636,601 1 (1,397,230) (2) Other financial income, net ...... 3,080,295 4 4,549,548 8 Share of results of associates ...... 23,997 – 46,579 – Profit before income tax ...... 25,513,728 35 20,891,914 35 Income tax expense ...... (1,823,392) (3) (714,935) (1) Profit for the year ...... 23,690,336 33 20,176,979 34 Other comprehensive income: Change in value of available-for-sale financial assets ...... (39,469) – – – Income tax relating to other comprehensive income ...... 7,894 – – – Total comprehensive income for the period ...... 23,658,761 33 20,176,979 34 Attributable to: Owners of ROS AGRO PLC ...... 23,450,617 32 20,134,178 34 Non-controlling interest ...... 208,144 – 42,801 – Total comprehensive income for the period ...... 23,658,761 33 20,176,979 34

Sales During the year ended December 31, 2015, sales increased by 23%, from RUB 59,112,243 thousand for the year ended December 31, 2014 to RUB 72,439,164 thousand for the year ended December 31, 2015. This increase primarily resulted from 46% increase in sales of Sugar segment, which in turn was triggered by 42% increase in prices for white sugar.

67 The following table presents sales by each segment for the years ended December 31, 2015 and 2014:

Year ended December 31, 2015 2014 (in RUB thousands) Sugar ...... 32,853,298 22,463,664 Meat...... 18,117,255 17,750,521 Agriculture ...... 14,210,787 10,710,176 Oil and Fat ...... 17,252,029 14,920,094 Other ...... 41,924 45,558 Eliminations ...... (10,036,129) (6,777,770) Total ...... 72,439,164 59,112,243

Sales before inter-segment eliminations in the Sugar segment increased by 46% from RUB 22,463,664 thousand for the year ended December 31, 2014 to RUB 32,853,298 thousand for the year ended December 31, 2015, primarily as a result of a 42% increase in the price of white sugar and a 4% increase in our sugar sales volume. The 4% increase in sales volume resulted partly from an increase in the conversion ratio of sugar beets to white sugar. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales represented 45% for the year ended December 31, 2015, as compared to 38% in 2014. Sales before inter-segment eliminations in the Meat segment increased by 2% from RUB 17,750,521 thousand for the year ended December 31, 2014 to RUB 18,117,255 thousand for the year ended December 31, 2015, primarily as a result of increase in prices of all types of meat products sold by the Group that was partially offset by a decrease of volume sold. The decrease in volume sold was primarily due to a change in product mix, as the Group started selling offals and large cuts which contribute less volume than livestock but are usually priced higher. Sales before inter-segment eliminations in the Agriculture segment increased by 33% from RUB 10,710,176 thousand for the year ended December 31, 2014 to RUB 14,210,787 thousand for the year ended December 31, 2015, primarily due to a significant increase in sale prices. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales increased from 18% for the year ended December 31, 2014 to 20% for the year ended December 31, 2015. Sales before inter-segment eliminations in the Oil and Fat segment increased by 16% from RUB 14,920,094 thousand for the year ended December 31, 2014 to RUB 17,252,029 thousand for the year ended December 31, 2015, primarily as a result of a 23% increase in prices of mayonnaise and 30% increase in prices for consumer margarine, partially offset by a decrease in volumes of sold margarine and sunflower oil. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales remained relatively flat (25% of sales for the year ended December 31, 2014 and 24% for the year ended December 31, 2015).

Net gain on revaluation of biological assets and agricultural produce The fair market value of our biological assets and harvest during 2015 exceeded our costs to produce such assets and crops, and we recognized a gain on revaluation of biological assets and agricultural produce of RUB 2,040,860 thousand. This represents the difference between the aggregate gain on the initial recognition of agricultural produce and from the change in fair value less estimated point-of-sale costs of biological assets, which amounted to RUB 11,886,647 thousand and the gains related to realised biological assets and agricultural produce, which amounted to RUB 9,845,787 thousand. In 2014 we recognized a gain of RUB 2,593,685 thousand. This represented the difference between the aggregate gain on the initial recognition of agricultural produce and from the change in fair value less estimated point-of-sale costs of biological assets, which amounted to RUB 12,243,734 thousand and the gains related to realized biological assets and agricultural produce, which amounted to RUB 9,650,049 thousand. Such gain decreased in 2015 as compared to 2014, primarily as a result of lower prevailing market prices at the time of harvest in 2015 compared to 2014.

68 Cost of sales During the year ended December 31, 2015, cost of sales increased by 14%, from RUB 37,999,661 thousand for the year ended December 31, 2014 to RUB 43,271,410 thousand for the year ended December 31, 2015. This increase primarily resulted from increase in cost of sales of Sugar segment which in turn was triggered by 41% increase in prices for sugar beets which is a key component in production of white sugar. The following table presents cost of sales by each segment for the years ended December 31, 2015 and 2014 and as a percentage of sales before inter-segment eliminations for each segment in the corresponding period.

Year ended December 31, 2015 2014 Percentage of Percentage of corresponding corresponding segment sales segment sales (in RUB before (in RUB before thousands) eliminations thousands) eliminations Sugar ...... 20,289,816 62 16,648,910 74 Meat...... 11,728,195 65 10,114,025 57 Agriculture ...... 6,671,663 47 5,827,146 54 Oil and Fat ...... 12,664,459 73 10,552,318 71 Other ...... – – Eliminations ...... (8,082,723) (5,142,738) Total ...... 43,271,410 37,999,661

In the Sugar segment, cost of sales before inter-segment eliminations increased by 22% from RUB 16,648,910 thousand for the year ended December 31, 2014 to RUB 20,289,816 thousand for the year ended December 31, 2015, primarily as a result of 42% increase in prices for sugar beets, which is a key input raw material for the Sugar segment. The increase in prices for sugar beets was partially driven by depreciation of rouble in 2015. Cost of sales before inter-segment eliminations in the Meat segment increased by 16% from RUB 10,114,025 thousand for the year ended December 31, 2014 to RUB 11,728,195 thousand for the year ended December 31, 2015, which was primarily the result of an increase in prices of raw materials and consumables used in fodder that in turn resulted from the increase in prices for commodities due to rouble depreciation in 2015. Cost of sales before inter-segment eliminations in the Agriculture segment increased by 14% from RUB 5,827,146 thousand for the year ended December 31, 2014 to RUB 6,671,663 thousand for the year ended December 31, 2015 as a result of increase in prices of commodities (primarily, seeds) and fertilizers, which in turn was triggered by rouble depreciation in 2015. Cost of sales before inter-segment eliminations in the Oil and Fat segment increased by 20% from RUB 10,552,318 thousand for the year ended December 31, 2015 to RUB 12,664,459 thousand for the year ended December 31, 2014, primarily as a result of increases in prices of vegetable oil used in production, which in turn was triggered by rouble depreciation in 2015.

Net gain from trading derivatives During 2015 the Group hedged against the volatility in the raw sugar market by trading futures and options on raw sugar on the ICE Futures US market and realized a gain on its hedging activities related to the raw cane sugar market in the amount of RUB 223,948 thousand as compared to RUB 375,305 thousand in 2014.

Gross Profit As a result of increase in prices, particularly in the Sugar and Agriculture segments, our gross profit increased by 31% from RUB 24,081,572 thousand for the year ended December 31, 2014 to RUB 31,432,562 thousand for the year ended December 31, 2015, with our gross profit margin increasing from 41% in 2014 to 43% in 2015. Increase in gross profit primarily resulted from increase in sales of the Sugar segment due to increase in prices for white sugar by 42%. This was partially offset by a decrease in gross profit in the Meat segment due to increase in cost of sales.

69 The following table presents gross profit by each segment for the years ended December 31, 2015, and 2014 and as a percentage of sales before inter-segment eliminations in each segment for the corresponding period.

Year ended December 31, 2015 2014 Percentage of Percentage of corresponding corresponding segment sales segment sales (in RUB before (in RUB before thousands) eliminations thousands) eliminations Sugar ...... 12,787,201 39 6,190,059 28 Meat...... 6,085,080 34 9,412,610 53 Agriculture ...... 8,730,333 61 4,993,726 47 Oil and Fat ...... 4,587,570 27 4,367,776 29 Other ...... 41,924 45,558 Eliminations ...... (799,546) (928,157) Total ...... 31,432,562 24,081,572

Gross profit in the Sugar segment increased by 107% from RUB 6,190,059 thousand for the year ended December 31, 2014 to RUB 12,787,201 thousand for the year ended December 31, 2015, with the gross profit margin increasing from 28% in 2014 to 39% in 2015. The increase in gross profit margin primarily resulted from a 42% increase in prices for white sugar. Gross profit in the Meat segment decreased by 35% from RUB 9,412,610 thousand for the year ended December 31, 2014 to RUB 6,085,080 thousand for the year ended December 31, 2015, with the gross profit margin decreasing from 53% in 2014 to 34% in 2015. The decrease in gross profit and profit margin was a result of increased prices for raw materials, particularly grain and vegetable oil, which are commonly used in preparing the fodder, which exceeded a marginal increase in meat sale prices. Increase in prices for meat was less material in 2015. Gross profit in the Agriculture segment increased by 75% from RUB 4,993,726 thousand for the year ended December 31, 2014 to RUB 8,730,333 thousand for the year ended December 31, 2015, with the gross profit margin increasing from 47% in 2014 to 61% in 2015. The increase in gross profit as well as profit margin was a result of increase in prices of all agricultural production sold by the Group, which resulted in a higher spread between revenue accrued in the year ended December 31, 2015 and the majority of costs accrued in previous year. Gross profit in the Oil and Fat segment increased by 5% from RUB 4,367,776 thousand for the year ended December 31, 2014 to RUB 4,587,570 thousand for the year ended December 31, 2015, with the gross profit margin decreasing from 29% in 2014 to 27% in 2015. The decrease in gross profit margin was primarily caused by the fact that prices for the key raw material (vegetable oil) increased more than the sales price of the resulting products (consumer margarine and mayonnaise).

Distribution and selling, General and administrative expenses During the year ended December 31, 2015, our distribution and selling, general and administrative expenses (‘‘DSGA expenses’’) increased by 26%, from RUB 7,463,489 thousand for the year ended

70 December 31, 2014 to RUB 9,379,553 thousand for the year ended December 31, 2015. The following table presents breakdown of DSGA expenses for the corresponding period.

Year ended December 31, 2015 2014 (in RUB Percentage (in RUB Percentage thousands) of sales thousands) of sales Payroll ...... 3,314,523 5 2,481,350 4 Transportation and loading services ...... 2,545,974 4 2,206,486 4 Advertising ...... 945,610 1 656,830 1 Depreciation and amortization ...... 416,219 1 343,269 1 Taxes, excluding income tax ...... 347,386 – 364,655 1 Services of professional organizations ...... 252,096 – 136,985 – Materials ...... 245,768 – 224,645 – Fuel and energy ...... 131,351 – 94,333 – Rent...... 109,299 – 85,254 – Security ...... 93,910 – 79,586 – Bank services ...... 69,730 – 63,168 – Repair and maintenance ...... 45,947 – 45,725 – Travelling expenses ...... 53,452 – 30,729 – Communication ...... 44,045 – 23,027 – Provision for impairment of receivables ...... 28,755 – 46,120 – Insurance ...... 17,484 – 16,310 – Statutory audit fees ...... 1,538 – 1,538 – Other ...... 716,466 1 563,479 1 Total ...... 9,379,553 13 7,463,489 13

Increase in payroll expenses was primarily due to a general increase in staff after the commencement of slaughterhouse operations in the Meat segment, and an increase in total remuneration of senior management of the Group from RUB 876,776 thousand in the year ended December 31, 2014 to RUB 1,230,938 thousand in the year ended December 31, 2015. The Group’s transportation and loading expenses increased by 15% from RUB 2,206,486 thousand in the year ended December 31, 2014 to RUB 2,545,974 thousand in the year ended December 31, 2015. This was primarily driven by an increase of volumes of goods sold and changes in transportation tariffs. All of the Group’s advertising expenses are incurred in its Oil and Fat segment. The Group’s advertising expenses increased by 44% from RUB 656,830 thousand in the year ended December 31, 2014 to RUB 945,610 thousand in the year ended December 31, 2015. The increase was principally caused by expenses on advertising campaigns to promote the Mechta Khoziayki brand in 2015.

Interest expense Interest expense comprises the following:

Year ended December 31, 2015 2014 (in RUB thousands) Interest expense ...... 3,856,801 2,288,135 Reimbursement of interest expense (government grants) ...... (1,815,058) (2,133,657) Total ...... 2,041,743 154,478

Interest expense increased by more than 13 times from RUB 154,478 thousand for the year ended December 31, 2014 to RUB 2,041,743 thousand for the year ended December 31, 2015, due to a combination of several factors: an increase in borrowings during 2015, higher average interest rates in 2015, and decrease in reimbursement of interest expense (government grants).

71 Interest income Interest income increased by 56% from RUB 1,010,951 thousand for the year ended December 31, 2014 to RUB 1,576,601 thousand for the year ended December 31, 2015 as a result of an increase in the amount of bank deposits held during the year and higher interest rates on deposits in 2015.

Other financial income/(expenses), net Other financial income decreased by 32% from RUB 4,549,548 thousand for the year ended December 31, 2014 to RUB 3,080,295 thousand for the year ended December 31, 2015 primarily as a result of a decrease of financial foreign exchange differences attributable to bonds held for trading, which were sold in March and April 2015.

Profit for the year As a result of the foregoing factors, we generated a profit for the year of RUB 23,690,336 thousand in 2015, which represents a 17% increase over the profit for the year of RUB 20,176,979 thousand in 2014. Profit for the year represented 33% of our sales in 2015 compared to 34% in 2014.

Non-IFRS Financial Measures – Adjusted EBITDA for the year ended December 31, 2015 compared to the year ended December 31, 2014 Management assesses the performance of the operating segments using non-IFRS measures, such as Adjusted EBITDA. Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to profit for the year as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited.

Summary of Adjusted EBITDA for the years ended December 31, 2015 and 2014

Year ended December 31, 2015 2014 Percentage of Percentage of corresponding corresponding segment sales segment sales (in RUB before (in RUB before thousands) eliminations thousands) eliminations Sugar ...... 11,067,841 34 4,808,711 21 Meat...... 7,671,872 42 8,829,008 50 Agriculture ...... 6,629,688 47 4,375,306 41 Oil and Fat ...... 1,661,969 10 1,882,262 13 Other ...... (1,503,992) (1,000,440) Eliminations ...... (1,103,977) (825,372) Total Adjusted EBITDA(*) ...... 24,423,401 18,069,475

* See ‘‘Selected Consolidated Financial Information’’ for a reconciliation of Adjusted EBITDA to profit for the year Our Adjusted EBITDA increased by 35% from RUB 18,069,475 thousand for the year ended December 31, 2014 to RUB 24,423,401 thousand for the year ended December 31, 2015, primarily as a result of increases in the Adjusted EBITDA of the Sugar and Agriculture segments. The Adjusted EBITDA in our Sugar segment increased, primarily as a result of a 42% increase in white sugar prices. In the Agriculture segment, our Adjusted EBITDA increased primarily as a result of an increase in prices for all products of Agriculture segment. These increases in Adjusted EBITDA were offset by a decrease in the Adjusted EBITDA of our Meat segment, resulting from a decrease in gross profit margin primarily due to the 64% increase in the average prices of vegetable oil which is used in the production of fodder.

72 Results of operations for the year ended December 31, 2014 compared to the year ended December 31, 2013 The following table sets forth each of our statements of profit or loss and other comprehensive income line items for the years ended December 31, 2014 and 2013 in absolute terms and as a percentage of sales:

Year ended December 31, 2014 2013 (in RUB Percentage (in RUB Percentage thousands) of sales thousands) of sales Sales ...... 59,112,243 100 36,489,827 100 Net gain on revaluation of biological assets and agricultural produce ...... 2,593,685 4 266,593 1 Cost of sales ...... (37,999,661) (64) (28,073,757) (77) Net gain from trading derivatives ...... 375,305 1 175,407 – Gross profit ...... 24,081,572 41 8,858,070 24 Distribution and selling expenses ...... (4,472,174) (8) (2,992,953) (8) General and administrative expenses ...... (2,991,315) (5) (2,623,918) (7) Share-based remuneration ...... (54,423) – (178,280) – Other operating income/(expenses), net ...... 272,884 – (116,537) – Operating profit ...... 16,836,544 28 2,946,382 8 Interest expense ...... (154,478) – (1,380,376) (4) Interest income ...... 1,010,951 2 2,022,986 6 Net gain/(loss) from bonds held for trading ...... (1,397,230) (2) – – Other financial income/(expenses), net ...... 4,549,548 8 (56,272) – Share of results of associates ...... 46,579 – – – Profit before income tax ...... 20,891,914 35 3,532,720 10 Income tax expense ...... (714,935) (1) (330,963) (1) Profit for the year ...... 20,176,979 34 3,201,757 9 Total comprehensive income for the period ...... 20,176,979 34 3,201,757 9 Attributable to: Owners of ROS AGRO PLC ...... 20,134,178 34 3,201,534 9 Non-controlling interest ...... 42,801 – 223 – Total comprehensive income for the period ...... 20,176,979 34 3,201,757 9

Sales During the year ended December 31, 2014, sales increased by 62%, from RUB 36,489,827 thousand for the year ended December 31, 2013 to RUB 59,112,243 thousand for the year ended December 31, 2014. This increase primarily resulted from increase in sales of Sugar, Meat and Oil and Fat segments. The increase in sales in Sugar and Meat segments was principally driven by an increase in average prices for meat (51%) and for sugar (16%). The increase in sales in Oil and Fat segment was principally due to increase in volumes of vegetable oil, consumer margarine and mayonnaise sold. The following table presents sales by each segment for the years ended December 31, 2014 and 2013:

Year ended December 31, 2014 2013 (in RUB thousands) Sugar ...... 22,463,664 16,962,740 Meat...... 17,750,521 7,421,338 Agriculture ...... 10,710,176 8,529,185 Oil and Fat ...... 14,920,094 8,919,552 Other ...... 45,558 117,486 Eliminations ...... (6,777,770) (5,460,474) Total ...... 59,112,243 36,489,827

73 Sales before inter-segment eliminations in the Sugar segment increased by 32% from RUB 16,962,740 thousand for the year ended December 31, 2013 to RUB 22,463,664 thousand for the year ended December 31, 2014, primarily as a result of 16% increase in prices for white sugar during 2014 and a 15% increase in volumes of sold white sugar due to higher conversion ratio of sugar beets to sugar in 2014. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales represented 38% for the year ended December 31, 2014, as compared to 46% in 2013. Sales before inter-segment eliminations in the Meat segment more than doubled from RUB 7,421,338 thousand for the year ended December 31, 2013 to RUB 17,750,521 thousand for the year ended December 31, 2014, primarily as a result of 50% increase in the price for meat during 2014 and a 58% increase in volumes of sold meat. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales increased from 20% for the year ended December 31, 2013 to 30% for the year ended December 31, 2014. Sales before inter-segment eliminations in the Agriculture segment increased by 26% from RUB 8,529,185 thousand for the year ended December 31, 2013 to RUB 10,710,176 thousand for the year ended December 31, 2014, primarily as a result of substantial increase in prices for majority of agricultural products. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales decreased from 23% for the year ended December 31, 2013 to 18% for the year ended December 31, 2014. Sales before inter-segment eliminations in the Oil and Fat segment increased by 67% from RUB 8,919,552 thousand for the year ended December 31, 2013 to RUB 14,920,094 thousand for the year ended December 31, 2014, primarily as a result of the increase in prices for consumer margarine (7%), mayonnaise (4%) and oilseeds meal (15%), as well as an increase in volumes of sold oilseeds meal (99%). Significant increase in sales of oilseeds meal was a result of active trading operations with this commodity in the first three quarters of 2014. The segment’s sales before inter-segment eliminations as a percentage of the Group’s total sales remained relatively flat (24% of sales for the year ended December 31, 2013 and 25% for the year ended December 31, 2014).

Net gain on revaluation of biological assets and agricultural produce The fair market value of our biological assets and harvest during 2014 exceeded our costs to produce such assets and crops, and we recognized a gain on revaluation of biological assets and agricultural produce of RUB 2,593,685 thousand. It resulted as difference between the aggregate gain on the initial recognition of agricultural produce and from the change in fair value less estimated point-of-sale costs of biological assets, which amounted to RUB 12,243,734 thousand, and gains related to realized biological assets and agricultural produce, which amounted to RUB 9,650,049 thousand. In 2013 we recognized a gain of RUB 266,593 thousand. It resulted as the difference between aggregate gain on the initial recognition of agricultural produce and from the change in fair value less estimated point-of-sale costs of biological assets, which amounted to RUB 3,489,463 thousand, and gains related to realized biological assets and agricultural produce, which amounted to RUB 3,222,870 thousand. Such gain significantly increased in 2014 as compared to 2013, primarily as a result of higher prevailing market prices at the time of harvest in 2014, which in turn was triggered by a significant deterioration of the rouble against the US Dollar in 2014.

Cost of sales During the year ended December 31, 2014, cost of sales increased by 35%, from RUB 28,073,757 thousand for the year ended December 31, 2013 to RUB 37,999,661 thousand for the year ended December 31, 2014. This increase primarily resulted from increase in cost of sales in Meat and Agriculture segments, which was primarily driven by an increase in prices for fodder components, and barley and wheat, which are basic raw materials for Meat and Agriculture segments, respectively.

74 The following table presents cost of sales by each segment for the years ended December 31, 2014, and 2013 and as a percentage of sales before inter-segment eliminations for each segment in the corresponding period.

Year ended December 31, 2014 2013 Percentage of Percentage of corresponding corresponding segment sales segment sales (in RUB before (in RUB before thousands) eliminations thousands) eliminations Sugar ...... 16,648,910 74 14,087,051 83 Meat...... 10,114,025 57 6,820,765 92 Agriculture ...... 5,827,146 54 5,368,770 63 Oil and Fat ...... 10,552,318 71 6,567,290 74 Other ...... – – Eliminations ...... (5,142,738) (4,770,119) Total ...... 37,999,661 28,073,757

In the Sugar segment, cost of sales before inter-segment eliminations increased by 18% from RUB 14,087,051 thousand for the year ended December 31, 2013 to RUB 16,648,910 thousand for the year ended December 31, 2014, primarily as a result of a 16% increase in prices for sugar beets, which is a primary input of the segment. Cost of sales before inter-segment eliminations in the Meat segment increased by 48% from RUB 6,820,765 thousand for the year ended December 31, 2013 to RUB 10,114,025 thousand for the year ended December 31, 2014, which was primarily the result of increases in prices of raw materials and consumables used in fodder that in turn resulted from the increase in prices for commodities due to rouble depreciation in 2014. Cost of sales before inter-segment eliminations in the Agriculture segment increased by 9% from RUB 5,368,770 thousand for the year ended December 31, 2013 to RUB 5,827,146 thousand for the year ended December 31, 2014 as a result of increase in prices of commodities (primarily, seeds) and fertilizers, which in turn was triggered by rouble depreciation in 2014. Cost of sales before inter-segment eliminations in the Oil and Fat segment increased by 61% from RUB 6,567,290 thousand for the year ended December 31, 2013 to RUB 10,552,318 thousand for the year ended December 31, 2014, primarily as a result of increase in volumes of vegetable oil and consumer margarine produced and sold.

Gross Profit As a result of increase in prices of most key outputs of the Group, particularly in the Sugar, Oil and Fat and Meat segments, our gross profit increased by 172% from RUB 8,858,070 thousand for the year ended December 31, 2013 to RUB 24,081,572 thousand for the year ended December 31, 2014, with our gross profit margin increasing from 24% in 2013 to 41% in 2014. This increase primarily resulted from increase in gross profit earned by Meat and Sugar segments, which in turn was driven by an increase in average prices for white sugar (16%) and meat (51%) in 2014.

75 The following table presents gross profit by each segment for the years ended December 31, 2014, and 2013 and as a percentage of sales before inter-segment eliminations in each segment for the corresponding period.

Year ended December 31, 2014 2013 Percentage of Percentage of corresponding corresponding segment sales segment sales (in RUB before (in RUB before thousands) eliminations thousands) eliminations Sugar ...... 6,190,059 28 3,051,096 18 Meat...... 9,412,610 53 1,167,197 16 Agriculture ...... 4,993,726 47 3,033,968 36 Oil and Fat ...... 4,367,776 29 2,352,262 26 Other ...... 45,558 117,486 Eliminations ...... (928,157) (863,939) Total ...... 24,081,572 8,858,070

Gross profit in the Sugar segment increased by 103% from RUB 3,051,096 thousand for the year ended December 31, 2013 to RUB 6,190,059 thousand for the year ended December 31, 2014, with the gross profit margin increasing from 18% in 2013 to 28% in 2014 as a result of 16% increases in price of white sugar and 15% increase in volume of white sugar sold in 2014 as compared to 2013. Gross profit in the Meat segment increased by more than 8 times from RUB 1,167,197 thousand for the year ended December 31, 2013 to RUB 9,412,610 thousand for the year ended December 31, 2014, with the gross profit margin increasing from 16% in 2013 to 53% in 2014. The increase in gross profit and profit margin was caused by an increase in prices for livestock by 50%, which was primarily driven by rouble depreciation in 2014, and increase in volumes of sold meat by 50% in 2014 as compared to 2013. Gross profit in the Agriculture segment increased by 65% from RUB 3,033,968 thousand for the year ended December 31, 2013 to RUB 4,993,726 thousand for the year ended December 31, 2014, with the gross profit margin increasing from 36% in 2013 to 47% in 2014. The increase in gross profit and profit margin was a result of an increase in the prices of sunflower seeds harvested by the Agriculture segment by 186% and general increase in agricultural commodity prices due to rouble depreciation in 2014. Gross profit in the Oil and Fat segment increased by 86% from RUB 2,352,262 thousand for the year ended December 31, 2013 to RUB 4,367,776 thousand for the year ended December 31, 2014, with the gross profit margin increasing from 26% in 2013 to 29% in 2014. The increase in gross profit margin was relatively modest, while most part of increase in gross profit resulted from increase in volumes of consumer margarine and vegetable oil (by 14% and 71%, respectively).

76 Distribution and selling, General and administrative expenses During the year ended December 31, 2014, our distribution and selling, general and administrative expenses (‘‘DSGA expenses’’) increased by 33%, from RUB 5,616,871 thousand for the year ended December 31, 2013 to RUB 7,463,489 thousand for the year ended December 31, 2014. The following table presents DSGA expenses for the years ended December 31, 2014, and 2013. Year ended December 31, 2014 2013 Percentage of Percentage of (in RUB corresponding (in RUB corresponding thousands) sales thousands) sales Payroll ...... 2,481,350 4 1,900,935 5 Transportation and loading services ...... 2,206,486 4 1,498,138 4 Advertising ...... 656,830 1 393,080 1 Depreciation and amortization ...... 343,269 1 283,851 1 Taxes, excluding income tax ...... 364,655 1 388,223 1 Services of professional organizations ...... 136,985 – 115,026 – Materials ...... 224,645 – 189,000 1 Fuel and energy ...... 94,333 – 97,986 – Rent...... 85,254 – 67,721 – Security ...... 79,586 – 91,166 – Bank services ...... 63,168 – 49,689 – Repair and maintenance ...... 45,725 – 39,301 – Travelling expenses ...... 30,729 – 32,093 – Communication ...... 23,027 – 27,618 – Provision for impairment of receivables ...... 46,120 – 126,144 – Insurance ...... 16,310 – 16,703 – Statutory audit fees ...... 1,538 – 1,866 – Other ...... 563,479 1 298,331 1 Total ...... 7,463,489 13 5,616,871 15

Payroll expenses increased by 31% from RUB 1,900,935 thousand for the year ended December 31, 2013 to RUB 2,481,350 thousand for the year ended December 31, 2014. This increase primarily relates to increase in remuneration to senior management from RUB 263,259 thousand in the year ended December 31, 2013 to RUB 876,776 thousand in the year ended December 31, 2014. Transportation and loading services expenses increased by 47% from RUB 1,498,138 thousand for the year ended December 31, 2013 to RUB 2,206,486 thousand for the year ended 31 December 2014. This increase was primarily driven by an increase of volumes of goods sold and changes in transportation tariffs. All advertising expenses of the Group are incurred in Oil and Fat segment. Advertising expenses increased by 67% from RUB 393,080 thousand for the year ended December 31, 2013 to RUB 656,830 thousand for the year ended December 31, 2014. This increase was principally caused by expenses on advertising campaigns to promote the Mechta Khoziayki brand in 2014.

Interest expense Interest expense comprises the following: Year ended December 31, 2014 2013 (in RUB thousands) Interest expense ...... 2,288,135 3,623,968 Reimbursement of interest expense (government grants) ...... (2,133,657) (2,243,592) Total ...... 154,478 1,380,376

Interest expense decreased by 89% from RUB 1,380,376 thousand for the year ended December 31, 2013 to RUB 154,478 thousand for the year ended December 31, 2014 driven by 37% decrease in the gross amount of interest expenses (before deduction of government reimbursement of these expenses) from RUB 3,623,968 thousand in 2013 to RUB 2,288,135 thousand in 2014. Gross interest expense decreased as a result of lower balances of long-term borrowings (decrease by 32% as at December 31, 2014 as compared to December 31, 2013) and short-term borrowings (decrease by 31% as at December 31, 2014 as compared to December 31, 2013).

77 Interest income Interest income decreased by 50% from RUB 2,022,986 thousand for the year ended December 31, 2013 to RUB 1,010,951 thousand for the year ended December 31, 2014 as a result of 41% decrease in short-term investments.

Other financial income/(expenses), net Other financial income/(expenses), net increased from expense of RUB 56,272 thousand for the year ended December 31, 2013 to income of RUB 4,549,548 thousand for the year ended December 31, 2015, primarily as a result of increase in financial foreign exchange differences attributable to bonds held for trading, which were acquired in 2014, and increase in short-term bank deposits denominated in Euros and US Dollars, and significant appreciation of these currencies against the rouble in 2014.

Profit for the year As a result of the foregoing factors, we generated a profit for the year of RUB 20,176,979 thousand in 2014, a 530% increase over the profit for the year of RUB 3,201,757 thousand in 2013. Profit for the year represented 34% of our sales in 2014 compared to 9% in 2013.

Non-IFRS Financial Measures – Adjusted EBITDA for the year ended December 31, 2014 compared to the year ended December 31, 2013 Management assesses the performance of the operating segments using non-IFRS measures, such as Adjusted EBITDA. Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to profit for the year as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and therefore comparability may be limited.

Summary of Adjusted EBITDA for the years ended December 31, 2014 and 2013

Year ended December 31, 2014 2013 Percentage of Percentage of corresponding corresponding segment sales segment sales (in RUB before (in RUB before thousands) eliminations thousands) eliminations Sugar ...... 4,808,711 21 1,719,841 10 Meat...... 8,829,008 50 1,725,841 23 Agriculture ...... 4,375,306 41 2,361,121 28 Oil and Fat ...... 1,882,262 13 1,025,290 11 Other ...... (1,000,440) (397,591) Eliminations ...... (825,372) 349,511 Total Adjusted EBITDA(*) ...... 18,069,475 6,784,013

* See ‘‘Selected Consolidated Financial Information’’ for discussion of the method of calculation of Adjusted EBITDA. Our Adjusted EBITDA increased by 166% from RUB 6,784,013 thousand for the year ended December 31, 2013 to RUB 18,069,475 thousand for the year ended December 31, 2014, primarily as a result of increases in the Adjusted EBITDA of the Sugar, Meat and Agriculture segments. The Adjusted EBITDA in our Sugar segment increased as a result of increases in the price of sugar. In the Meat segment, our Adjusted EBITDA increased primarily as a result of an increase in prices for meat and volumes of sold production. The Adjusted EBITDA of our Agriculture segment increased as a result of increases in prices and volumes of sunflower seeds and certain other types of agricultural produce.

Liquidity and Capital Resources Our primary sources of working capital and long-term funding have been short-term and long-term borrowings and cash flows from operating activities. Our primary use of funds has been to finance operating activities, capital expenditures, business acquisitions, and repayment of short-term and long-term borrowings. Our plan going forward is to finance our operating activities, capital expenditures, interest and

78 dividends primarily from our free cash flow, as well as to finance our capital expenditures through the proceeds of the Offering, together with additional borrowings. We may also use proceeds of the Offering to make targeted acquisitions when appropriate market opportunities are available. See ‘‘Use of Proceeds.’’

Liquidity As of December 31, 2015, we had total cash and cash equivalents of RUB 4,401,703 thousand, denominated in roubles, US Dollars and Euros. Our short-term investments increased to RUB 30,129,049 thousand as of December 31, 2015 from RUB 8,953,789 thousand as of December 31, 2014. Our short-term investments decreased during 2014 to RUB 8,953,789 thousand as of December 31, 2014 from RUB 15,266,561 thousand as of December 31, 2013. The increase in short-term investments in 2015 was largely due to an increase in bank deposits and purchase of bonds and loans as part of the acquisition of debt (bonds and loans) and equity of Razgulay group from Vnesheconombank (‘‘VEB’’) in November 2015. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness.’’ Decrease in short-term investments in 2014 as compared to 2013 was largely due to decrease in bank deposits, which was partially offset by an increase in bonds held for trading.

Net Working Capital The Group’s sales and cash flow are subject to seasonal fluctuations, particularly in relation to agricultural harvest periods. The Group has historically managed this seasonality by supplementing operating cash flows with revolving credit facilities available to the Group from Sberbank, Alfa-Bank, other banks, and VEB. The Group generally incurs more short-term liabilities in the first half of the year in connection with the planting of crops in the Agriculture segment, with working capital increasing during the first three quarters of the year, before decreasing in the fourth quarter as a result of sales of crops harvested in the Agriculture segment and an increase in seasonal sales in the Oil and Fat segment. Net Working Capital2 increased by RUB 6,444,812 thousand in 2015 over 2014 compared to an increase of RUB 2,971,080 thousand in 2014 over 2013 due to (i) a significant increase in inventories from RUB 13,865,425 thousand as at December 31, 2013 to RUB 15,508,659 thousand as at December 31, 2014 and RUB 22,569,821 thousand as at December 31, 2015 due to increase in prices and volumes of finished goods; (ii) a steady increase in trade and other receivables from RUB 1,771,235 thousand as at December 31, 2013 to RUB 2,257,714 thousand as at December 31, 2014 and RUB 3,504,497 thousand December 31, 2015 due to commensurate growth in sales. Our trade and other receivables increased to RUB 3,504,497 thousand as of December 31, 2015 from RUB 2,257,714 thousand as of December 31, 2014. Our trade and other receivables increased during 2014 to RUB 2,257,714 thousand as of December 31, 2014 from RUB 1,771,235 thousand as of December 31, 2013. The Group’s provision for impairment of trade and other receivables was RUB 174,007 thousand as of December 31, 2015, compared to a provision of RUB 144,897 thousand as of December 31, 2014 and RUB 95,548 thousand as of December 31, 2013, respectively. We establish provisions for impairment based on our analysis of customer counterparty credit risk, changes in payment trends, actual receipts and our analysis of future cash flows.

Cash Flows Set forth below is a summary of our cash flows for the years ended December 31, 2015, 2014 and 2013:

Year ended December 31, 2015 2014 2013 (RUB thousands) Net cash from operating activities ...... 15,922,036 15,676,718 4,779,714 Net cash from/(used in) investing activities ...... (63,144,191) 2,880,602 11,924,082 Net cash from/(used in) financing activities ...... 42,337,116 (13,791,386) (16,072,246)

2 Defined as sum of trade and other receivables, prepayments and inventories less trade and other payables

79 Net cash from operating activities Net cash from operating activities slightly increased in 2015 by RUB 245,318 thousand from RUB 15,676,718 thousand for the year ended December 31, 2014 to RUB 15,922,036 thousand for the year ended December 31, 2015. This increase principally reflected increase in profitability, partially offset by changes in working capital, including increase in inventories in 2015. Net cash from operating activities increased in 2014 by RUB 10,897,004 thousand from RUB 4,779,714 thousand for the year ended December 31, 2013 to RUB 15,676,718 thousand for the year ended December 31, 2014. This increase principally reflected higher profit before income tax of RUB 20,891,914 thousand in 2014 compared to RUB 3,532,720 thousand of profit before income tax in 2013. The increase from 2013 to 2014 levels was primarily due to increase in profitability triggered by an increase in commodity prices and depreciation of rouble against US Dollar.

Net cash (used in)/from investing activities Net cash used in investing activities in 2015 was RUB 63,144,191 thousand primarily as a result of the acquisition of debt (bonds and loans) and equity of Razgulay group and funds placed with banks as deposits. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness.’’ Net cash from investing activities in 2014 was RUB 2,880,602 thousand primarily as a result proceeds from cash withdrawals of deposits in the amount of RUB 16,604,773 thousand offset by purchases of property, plant and equipment and other intangible assets totaling to RUB 5,358,177 thousand, purchases of bonds totaling to RUB 5,244,138 thousand, and placement of funds as deposit in banks totaling to RUB 4,141,047 thousand. Net cash from investing activities in 2013 was RUB 11,924,082 thousand primarily as a result of proceeds from cash withdrawals from deposits totaling RUB 32,345,354 thousand and purchases of property, plant and equipment and other intangible assets totaling RUB 4,329,598 thousand, partially offset by deposits placed with banks totaling RUB 18,346,112 thousand.

Net cash from/(used in) financing activities Net cash from financing activities in 2015 was RUB 42,337,116 thousand as a result of proceeds from borrowings in the amount of RUB 63,966,110 thousand, of which RUB 33,914,546 thousand relate to the loan from VEB granted for acquisition of debt (loans and bonds) and equity of Razgulay group, and the remaining amount relates to other loans from banks, and proceeds from government grants of RUB 3,014,204 thousand. This increase was partially offset by repayments of borrowings of RUB 16,657,102 thousand, interest paid in the amount of RUB 3,416,791 thousand, and dividends paid to the owners of the Company totaling to RUB 4,546,749 thousand. Net cash used in financing activities in 2014 was RUB 13,791,386 thousand as a result of repayments of borrowings totaling to RUB 27,169,213 thousand, interest paid in the amount of RUB 2,295,898 thousand and dividends paid to the owners of the Company in the amount of 3,206,582. This cash outflow was partially offset by proceeds from borrowings of RUB 15,875,925 thousand and proceeds from government grants of RUB 3,048,946 thousand. Net cash used in financing activities in 2013 was RUB 16,072,246 thousand as a result of repayment of borrowings totaling to RUB 31,891,024 thousand and interest paid of RUB 4,127,094 thousand, which were partially offset by proceeds from borrowings of RUB 16,157,846 thousand and proceeds from government grants of RUB 4,049,217 thousand.

Capital Expenditures Our total capital expenditures in 2015 were RUB 11,438,252 thousand, compared to capital expenditures of RUB 5,207,714 thousand and RUB 4,249,029 thousand in 2014 and 2013, respectively. These amounts comprise purchases of land, property, plant and equipment and purchases of inventories intended for

80 construction. Our capital expenditures by segment for the three years ended December 31, 2015, 2014 and 2013 are set forth in the following table:

Year ended December 31, 2015 2014 2013 (in RUB thousands) Sugar ...... 2,919,538 1,600,262 789,548 Meat...... 5,238,807 1,324,218 2,501,349 Agriculture ...... 2,625,332 2,055,275 715,508 Oil and Fat ...... 608,399 201,366 233,180 Other ...... 46,176 26,593 9,444 Total Capital Expenditures ...... 11,438,252 5,207,714 4,249,029 In 2014 and 2015, the Group significantly increased its asset base by completing a number of high-profile projects. In 2014, capital expenditures comprised investments of RUB 1,324,218 thousand in the Meat division mainly for construction of the slaughterhouse in the Tambov region, RUB 2,055,275 thousand in acquisition of new agricultural machinery and equipment for Agriculture division and RUB 1,600,262 thousand in modernization of sugar plant in Sugar division. In 2015, capital expenditures primarily comprised purchases of machinery and equipment for Agriculture segment in the amount of RUB 2,625,332 thousand, modernization of sugar plants in the amount of RUB 2,919,538 thousand and construction of a cluster of pig farms in the Far East region (RUB 5,238,807 thousand). As at December 31, 2015, the Group had outstanding contractual commitments in respect of purchases or construction of property, plant and equipment in the amount of RUB 10,045,193 thousand, as compared to capital expenditures commitments as at December 31, 2014 of RUB 1,759,762 thousand and as at December 31, 2013 of RUB 1,326,523 thousand. We also plan to make capital expenditures of approximately RUB 20,374 billion in 2016 not including potential mergers and acquisition transactions.

Indebtedness As of December 31, 2015, we had short-term borrowings of RUB 25,860,464 thousand and long-term borrowings of RUB 24,037,539 thousand. The following table summarizes our significant borrowings as of December 31, 2015, which remain outstanding as of March 31, 2016. For additional information, see the discussion following and the notes to the Consolidated Financial Statements. As at December 31, 2015 substantially all our indebtedness is denominated in roubles.

Amount Principal outstanding Nominal Amount/Credit as of Interest Limit Line December 31, Date of Rate(1) (RUB 2015 (RUB Lender Borrower Agreement Repayment (%) thousands) thousands) Vnesheconombank ...... LLC Group of Nov 26, 2015 Nov 27, 2028 1 33,914,546 13,900,000 Companies Rusagro Sberbank ...... LLC Tambovsky Bacon Jan 27, 2011 Jan 26, 2019 9.65 9,000,000 5,419,204 Alfa-Bank ...... LLC Rusagro-Primorye Mar 31, 2015 Dec 30, 2022 11.5 12,650,000 3,780,000 Alfa-Bank ...... CJSC Oct 28, 2015 Oct 27, 2016 9.5 3,000,000 2,185,300 Samaraagropererabotka Alfa-Bank ...... OJSC Znamensky Oct 27, 2015 Oct 26, 2016 9.5 2,000,000 1,772,245 Sugar Plant Alfa-Bank ...... LLC Primorskaya Soya Oct 9, 2015 Oct 7, 2016 9.5 2,000,000 1,124,500 Sberbank ...... OJSC Valuikisakhar Jan 13, 2012 Jan 11, 2019 11.3 1,500,000 949,853 JSC VTB Bank ...... CJSC Oct 2, 2015 Sep 30, 2016 specified in 1,800,000 749,191 Samaraagropererabotka each tranche, 12.4-12.65

(1) Nominal interest rates exclude reimbursement of certain of our interest expenses by the Russian Government.

81 The following is a summary of the main terms of our key outstanding loans and credit facilities.

LLC Group of Companies Rusagro Facility Agreement with VEB In November 2015 the Group entered into a transaction with VEB to acquire the debt (loans and bonds) and equity (19.97% shares in PJSC Group Razgulay) of Razgulay group, for a total consideration of RUB 33,914,546 thousand paid by the Group in cash. To finance the transaction, the Group entered into a thirteen-year loan from VEB in the amount of RUB 33,914,546 thousand at 1% interest per annum. The fair value of the loan as at the inception date was RUB 13,900,000 thousand, as determined by applying the effective interest rate of 13.23%. The loan is measured at an amortized cost with an effective interest rate of 13.23%. The loan is secured by a thirteen-year deposit placed by the Group with VEB in the amount of RUB 13,900,000 thousand at an interest rate of 12.84% per annum. The cost to the Group of the financial assets acquired in this transaction representing the fair value of the loan obtained from VEB was allocated to the individual identifiable financial assets based on their relative fair values at the date of acquisition. The facility must be repaid on November 27, 2028. As of December 31, 2015, RUB 13,900,000 thousand (fair value of the loan at the inception date) under the credit facility was outstanding.

LLC Tambovsky Bacon Facility Agreement with Sberbank On January 27, 2011, LLC Tambovsky Bacon entered into Non-Revolving Credit Facility Agreement No. 5373 with Sberbank providing for a non-revolving credit facility with a credit limit of RUB 9,000,000 thousand bearing interest of 9.65% per annum. The facility is to be repaid on January 26, 2019. The facility was provided for the purposes of financing construction of a pig breeding complex. This credit facility is secured by pledges of 100% of the participatory interests in LLC Belgorodsky Bacon and in LLC Tambovsky Bacon, pledge of movable and immovable property and land plots owned by LLC Tambovsky Bacon and by guarantees provided by LLC Group of Companies Rusagro and LLC Belgorodsky Bacon. As of December 31, 2015, there was RUB 5,419,204 thousand outstanding under this credit facility.

LLC Rusagro-Primorye Facility Agreement with Alfa-Bank On March 31, 2015, LLC Rusagro-Primorye entered into Non-Revolving Credit Facility Agreement No. 01C79L with Alfa-Bank providing for a non-revolving credit facility with a credit limit of RUB 12,650,000 thousand bearing interest of 11.5% per annum. The facility is to be repaid on December 30, 2022. Under this facility agreement, LLC Rusagro-Primorye covenanted to serve preliminary notice to Alfa-Bank if any affiliate of LLC Rusagro-Primorye contemplates a public or private offering of existing shares, GDRs and other securities in Russia or abroad. Failure to do so may lead to the outstanding amount under the facility agreement being declared immediately due and payable to Alfa-Bank. The facility was provided for the purposes of construction of pig breeding complexes, feed stuff plants and slaughterhouses. This credit facility is secured by pledge of 100% of the participatory interest in LLC Rusagro-Primorye and its property complex (real estate, land plots, vehicles, equipment, livestock etc.), guarantees provided by LLC Group of Companies Rusagro, OJSC Group Rusagro, LLC Tambovsky Bacon, LLC Belgorodsky Bacon and LLC Rusagro-Sakhar. As of December 31, 2015, there was RUB 3,780,000 thousand outstanding under this credit facility.

CJSC Samaraagropererabotka Facility Agreement with Alfa-Bank On October 28, 2015, CJSC Samaraagropererabotka entered into Non-Revolving Credit Facility Agreement No. 01FE8L with Alfa-Bank providing for a non-revolving credit facility with a credit limit of RUB 3,000,000 thousand bearing interest of 9.5% per annum. The facility is to be repaid on October 27, 2016. The facility was provided for the purposes of purchasing agricultural raw materials for primary and industrial processing of crop products. This credit facility is secured by a guarantee provided by LLC Group of Companies Rusagro. As of December 31, 2015, there was RUB 2,185,300 thousand outstanding under this credit facility.

Other Borrowings Other than for state budget loans providing for interest rates at one quarter of the CBR key rate, our other borrowing facilities are in accordance with market terms. There were no state budget loans outstanding as of December 31, 2015.

82 Significant Borrowings after December 31, 2015 On February 29, 2016, OJSC Znamensky Sugar Plant entered into Revolving Credit Facility Agreement No. 01GS8L with Alfa-Bank providing for a revolving credit facility with a credit limit of RUB 4,700,000 thousand bearing interest of 12,1% per annum. The facility is to be repaid on February 28, 2017. Under this facility agreement, OJSC Znamensky Sugar Plant covenanted to serve preliminary notice to Alfa-Bank if an affiliate of OJSC Znamensky Sugar Plant contemplates a public or private offering of existing shares, GDRs and other securities in Russia or abroad. Failure to do so may lead to the outstanding amount under the facility agreement being declared immediately due and payable by Alfa-Bank. The facility was provided for the purposes of financing and reimbursement of expenses connected with sugar beet purchases, including advance payments to the producers. This credit facility is secured by a guarantee provided by LLC Rusagro-Sakhar. As of March 31, 2016, there was RUB 4,700,000 thousand outstanding under this credit facility.

Contractual Obligations The table below summarizes the principal categories of our contractual obligations as of December 31, 2015. The actual obligations we will pay in future periods may vary from those reflected in the table below:

Contractual undiscounted cash flows Carrying Less than Within More than value Total 1 year 2 years 3-5 years 5 years (RUB thousands) Borrowings and loans .... 49,898,003 77,749,759 27,291,872 6,070,736 11,656,338 32,730,813 principal amount ...... 49,710,587 69,581,257 25,496,431 4,651,272 8,935,161 30,498,393 interest ...... 187,416 8,168,502 1,795,441 1,419,464 2,721,177 2,232,420 Financial liabilities within trade and other payables 1,858,198 1,858,198 1,858,198 – – – Total contractual obligations ...... 51,756,201 79,607,957 29,150,070 6,070,736 11,656,338 32,730,813

Off-Balance Sheet Arrangements We do not have off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, sales, expenses, results of operations, liquidity, capital expenditures, or capital resources.

Quantitative and Qualitative Information about Market Risk Our activities expose us to a variety of financial risks: market risk (including foreign exchange risk, cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk. Our overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. We do not use derivative financial instruments to hedge such risk exposures except for the raw sugar commodity price risk management. Operating risk management is carried out on the level of the finance function of our business segments with overall monitoring and control by management of the Group. We are in the process of implementing principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest-rate risk, credit risk, use of non-derivative financial instruments, and investing excess liquidity.

Market risk Market risk, associated with financial instruments, is a risk of change of fair value of financial instruments or the future cash flows expected on a financial instrument, owing to changes in interest rates, exchange rates, prices for the commodities or other market indicators. From the risks listed above, the Group is essentially exposed to the risks associated with changes in interest rates, exchange rates and commodity prices.

Cash flow and fair value interest rate risk The Group’s income and operating cash flows are exposed to changes in market interest rates. The Group’s interest rate risk arises from short-term and long-term borrowings. Borrowings at variable rates expose the Group to cash flow interest rate risk. Borrowings at fixed rates expose the Group to fair value

83 interest rate risk. The Group’s policy is to maintain most of its borrowings in fixed rate instruments. The Group does not have formal policies and procedures in place for management of fair value interest rate risk. Interest rates under most of the Group’s borrowings are fixed. However, the terms of the contracts specify the right of the creditor change the interest rate (in both directions), which can be based, among other triggers, on a decision of the CBR to change the key rate. Additionally, under government budget loans the Group pays interest at quarter of the current key rate of the CBR. Bank deposits and issued loans bear fixed interest rate and therefore are not exposed to cash flow interest rate risk. The Group analyses its interest rate exposure on a continuous basis. Various scenarios are considered taking into consideration refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each scenario, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions. During the year ended December 31, 2015, variance of interest rate on borrowings by 600 basis points translates into variance of profit before taxation approximately in the amount of RUB 7,851,461 thousand (2014: RUB 1,224,699 thousand, 2013: RUB 226,394 thousand).

Foreign exchange risk As at December 31, 2014 and December 31, 2013, foreign exchange risk emerged on cash in banks, short-term investments, long-term investments, trade and other receivables, borrowings and trade and other payables denominated in foreign currency. At December 31, 2015, if the Russian rouble had appreciated/depreciated by 30% (December 31, 2014: 30%, December 31, 2013: 10%) against the US Dollar with all other variables held constant, the Group’s profit before taxation would have been RUB 2,610,244 thousand lower/higher (2014: RUB 4,974,049 thousand lower/higher, 2013: RUB 81,370 thousand higher/lower). At December 31, 2015 if the Russian rouble had appreciated/depreciated by 30% (December 31, 2014: 30%, December 31, 2013: 10%) against the Euro with all other variables held constant, the Group’s profit before taxation would have been RUB 78,269 thousand (2014: RUB 269,005 thousand, 2013: RUB 96,423 thousand) lower/higher.

Purchase price risk The Group purchases raw sugar and manages its exposure to this commodity price risk through financial derivatives. In 2015, the Group’s total purchases of raw sugar were RUB 3,434,006 thousand (2014: RUB 3,490,541 thousand, 2013: RUB 1,641,337 thousand). The Group trades raw sugar derivatives on ICE Futures US through an agent. Through derivatives, management aims to offset its long position in sugar inventory in order to minimize effects of price fluctuations on the results of the Group. The gains less losses on trading sugar derivatives of RUB 223,948 (2014: gains less losses on trading sugar derivatives of RUB 375,305 thousand, 2013: gains less losses on trading sugar derivatives of RUB 175,407 thousand) are presented as a separate line within Statement of Comprehensive Income for the year. The Group is exposed to equity securities price risk arising on investments held by the Group and classified in the consolidated statement of financial position either as available for sale or at fair value through profit or loss. The Group does not manage its price risk arising from investments in equity securities.

Sales price risk The Group is exposed to financial risks arising from changes in prices of its finished products. Changes in white sugar prices from January until August are closely related to changes in world raw sugar prices that is implicitly managed through the raw sugar derivatives (see above). The storage facilities of own sugar plants permit to build up stocks of white sugar to defer sales to more favorable price periods. The Group is exposed to financial risks arising from changes in milk, meat and crops prices (see above).

84 Credit risk Credit risk represents risk of losses for the Group as a result of default by one or more of our counterparties on their obligations to remit to us cash and cash equivalents and other financial assets. Activities of the Group that give rise to credit risk include granting loans, making sales to customers on credit, placing deposits with other entities and performing other transactions with counterparties giving rise to financial assets. We have no collateral held as security for our financial assets and have geographical concentration of credit risk in the Russian market as the majority of our customers conduct their businesses in the Russian Federation. In order to minimize our credit risk related to cash in banks and bank deposits, we deposit cash in financial institutions which are considered to have a minimal risk of a default.

Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, our Treasury aims to maintain flexibility in funding by keeping committed credit lines available.

Significant Accounting Policies A detailed description of the main accounting policies used in preparing the Consolidated Financial Statements is set forth in the Note 2 to the Consolidated Financial Statements included elsewhere in this Information Memorandum.

Critical Accounting Estimates and Judgments in Applying Accounting Policies The Group makes estimates and assumptions that affect the amounts recognized in the financial statements and the carrying amounts of the assets and liabilities within the next financial year. Estimates and judgments are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgments, apart from those involving estimations, in the process of applying the accounting policies. Judgments that have the most significant effect on the amounts recognized in the consolidated financial statements, and estimates that can cause a significant adjustment to the carrying amounts of assets and liabilities within the next reporting period include:

Useful lives of property, plant and equipment The estimation of the useful lives of items of property, plant and equipment is a matter of judgment based on the experience with similar assets. The future economic benefits embodied in the assets are consumed principally through use. However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of the economic benefits embodied in the assets. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. The following primary factors are considered: (a) expected usage of the assets; (b) expected physical wear and tear, which depends on operational factors and maintenance program; and (c) technical or commercial obsolescence arising from changes in market conditions. Were the estimated useful lives to differ by 10% from management’s estimates, the impact on the depreciation charge for the year would be to increase it by RUB 563,021 thousand (2014: RUB 387,279 thousand; 2013: RUB 360,619 thousand) or decrease it by RUB 278,747 thousand (2014: RUB 336,658 thousand; 2013: RUB 304,438 thousand).

Fair value of livestock and agricultural produce Fair value less estimated point-of-sale costs of livestock at the end of each reporting period was determined using the physiological characteristics of the animals, management expectations concerning the potential productivity and market prices of animals with similar characteristics. Fair value of the Group’s bearer livestock is determined by using valuation techniques, as there were no observable market prices near the reporting date for pigs of the same physical conditions, such as weight and age. The fair value of the bearer livestock was determined based on the expected quantity of remaining farrows for pigs, and the market prices of the young animals. The fair value of mature animals is determined based on the expected cash flow from the sale of the animals at the end of the production usage. The cash flow was calculated based on the actual prices of sales of culled animals from the Group’s

85 entities to independent processing enterprises taking place near the reporting date, and the expected weight of the animals. Future cash flows were discounted to the reporting date at a current market- determined pre-tax rate. In the fair value calculation of the immature animals of bearer livestock management considered the expected culling rate. For detailed discussion of key inputs used in the fair value measurement of bearer livestock of the Group refer to Note 2 of the Consolidated Financial Statements.

Impairment test of property, plant and equipment and intangible assets Changes in the operating environment of the Group in 2014 (refer to Note 1 of the Consolidated Financial Statements) were identified by management as impairment indicators, and so the Group estimated recoverable amounts of property, plant and equipment and other intangible assets of each of its cash generating units (CGUs) as at December 31, 2014 based on value-in-use calculations. As a result of this assessment no impairment losses were recognized. It was determined that a reasonably possible shift in the assumptions underlying the value-in-use calculations would not lead to the impairment of property, plant and equipment and other intangible assets as of December 31, 2014. As of December 31, 2015 and December 31, 2013, management determined that there were no indicators that would necessitate performing an impairment test of property, plant and equipment and other intangible assets.

Estimated impairment of goodwill The recoverable amount of the Group’s cash-generating units has been determined based on a value-in use calculation using cash flow projections based on financial budgets approved by the Group management covering a five-year period and the expected market prices for the Group’s key products for the same period according to leading industry publications.

Deferred income tax asset recognition The recognized deferred tax asset represents income taxes recoverable through future deductions from taxable profits and is recorded in the statement of financial position. Deferred income tax assets are recorded to the extent that realization of the related tax benefit is probable. The future taxable profits and the amount of tax benefits that are probable in the future are based on a medium-term business plan prepared by management and extrapolated results thereafter. The business plan is based on management expectations that are believed to be reasonable under the circumstances. The key assumptions in the business plan are Adjusted EBITDA margin and pre-tax discount rate.

Tax legislation Russian tax, currency and customs legislation is subject to varying interpretations.

Foreign currency and translation methodology Functional and presentation currency The functional currency of the Group’s consolidated entities is the rouble, which is the currency of the primary economic environment in which the Group operates. The rouble has been chosen as the presentation currency for these consolidated financial statements.

Translation of foreign currency items into functional currency Transactions in foreign currencies are translated to Russian Roubles at the official exchange rate of the CBR at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities at year-end exchange rates are recognized in profit or loss.

86 INDUSTRY OVERVIEW The following information includes extracts from publicly available information, data and statistics and has been extracted from official sources and other sources that we believe to be reliable. We accept responsibility for accurately reproducing such information, data and statistics and as far as we are aware no facts have been omitted which would render such information misleading, but we accept no further responsibility in respect of such information, data and statistics. Such information, data and statistics may be approximations or use rounded numbers.

Overview Prices for crops and livestock products showed diverse trends in 2014. Among crops, two consecutive years of strong harvests globally put further pressure on prices of soft commodities, including cereals and oilseeds. Tighter supplies due to factors including herd rebuilding and disease outbreaks supported high meat prices. The major growth in demand is in developing countries, where continued but slowing population growth, rising per capita incomes, rapid expansion of the middle class and urbanization all lead to surging demand for food. Rising incomes prompt consumers to diversify their diets by increasing their consumption of animal protein relative to starches. For this reason, the prices of meat products are expected to remain high relative to the prices of crops; while among crops the prices of coarse grains and oilseeds used for feed should rise relative to the prices of food staples. These structural trends are in some cases offset by specific factors, such as a flat demand for maize-based ethanol. Prices for most meat products, particularly beef, reached record levels in 2014 and stabilized in 2015 at slightly lower levels. At the same time, the outbreak of Porcine Epidemic Diarrhea virus (PEDv) in the United States and African swine fever in Belarus and the European Union impacted pig meat supply and prices. Sheep meat prices also increased following several years of flock reduction in New Zealand, which was a result of transforming sheep farms into more profitable dairy operations. Given the substitutability among the various types of meat, the higher prices for beef, sheep meat and pig meat also supported poultry prices. International sugar prices continued their decline as production exceeded consumption for the fifth consecutive season since 2010. This decline was particularly pronounced due to the devaluation of the Brazilian real with respect to the US Dollar. Brazil is the world’s largest sugar exporter, and its currency fluctuations effects global raw sugar markets. The 2015 season was a turning point in terms of production growth, with nearly no growth in global sugar production as increases in Europe were offset by large decreases in Brazil and Pakistan. Nevertheless some of the major sugar producers are expected to cut their production in response to the low prices.

Global food prices since December 2010

Wheat Soybeans Oats Corn Sugar 140 120 100 80 60 40 20 Dec-10 Nov-11 Sep-12 Aug-13 Jun-14 May-1520APR201601123992 Mar-16

Source: FactSet. Prices rebased to 100 Note: Prices shown for futures continuous contracts The Russian food market had been growing at a relatively fast pace in the past and this trend is expected to continue in the future (in local currency terms). Based on the data from Business Monitor International Ltd., it is expected to grow from RUB 9.1 trillion in 2014 to RUB 9.7 trillion in 2015E. The market is forecasted to reach approximately RUB 12.8 trillion by 2019E, with per capita food consumption rising from RUB 68.5 thousand to RUB 91.1 thousand over the 2015E-2019E period.

87 Food Consumption in Russia

52.0 58.2 63.7 68.5 74.2 79.7 85.3 91.1 12.8 12.0 11.3 10.5 9.7 9.1 8.3 7.4

2012 2013 2014 2015E 2016E 2017E 2018E 2019E Food consumption, RUBtrn Food consumption, RUBk per capita 20APR201601123844

Source: Business Monitor International Ltd. The Group operates across Russia and has businesses in four industry segments: sugar, meat, agriculture and oil and fat. The characteristics of the markets and business segments may be considerably different in terms of the respective market dynamics, competition and regulatory framework. As a result, this Industry Overview includes a discussion of each of the Group’s four segments from both a global and Russian perspective.

Global Sugar Industry Except where otherwise indicated, the data in this ‘‘Global Sugar Industry’’ section is sourced from OECD-FAO Agricultural Outlook 2015-2024, which is prepared jointly by OECD and FAO. After significant increases in sugar production over the past four seasons, leading to large production surpluses, international sugar prices fell to pre-2010 levels. With global sugar production expected to exceed global sugar consumption in 2016, sugar quotations are anticipated to remain under downward pressure.

Raw cane sugar price development White sugar price development (US$ / ton) (US$ /ton)

700 800 600 700 500 600 500 400 400 300 300 200 200 100 100 0 0 2024 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2018 2020 2022 2024 2000 2002 2004 2010 2012 2014 20APR201601124670 2006 2008 2016 20APR201601125542

Source: Sugar prices in real terms, deflated by US GDP deflator (2005 = 1) World sugar prices are expected to continue to be volatile and to oscillate between 2015 to 2024 around a moderately upward trend but to decline in real terms. The international raw sugar price (Intercontinental Exchange No. 11 contract nearby futures) is projected to reach US$364/t (US$16.5 cts/lb) in nominal terms in 2024. Similarly, the indicator world white sugar price (Euronet, Liffe futures Contract No. 407, London) is projected to reach US$434/t (US$19.7 cts/lb) in nominal terms in 2024, and the white sugar premium is expected to narrow over the coming decade. Brazil’s cost of production of sugar expressed in US Dollars and the allocation of Brazilian sugarcane crop between sugar and ethanol production are key elements in the determination of world sugar price levels between 2015 and 2024, as Brazil is the world’s largest sugar exporter.

88 Based on normal weather conditions and a set of assumed macroeconomic expectations , global sugar production is projected to increase by 2.2% annually in the coming decade to reach nearly 220 Mt by 2024. Most of the additional production is expected to originate in countries producing sugarcane rather than sugar beet, and is more attributed to area expansion notably in Brazil, even though yield improvements are foreseen for sugar crops and sugar processing. A higher share of the world’s sugarcane production is expected to be devoted to producing ethanol, anticipated to rise from about 20% between 2012 and 2014) to 26% by 2024. Sustained by a steady growth in sugar demand, global consumption of sugar is projected to grow at around 2% annually, slightly higher than in the previous decade, to reach 214 Mt in 2024. World sugar demand growth is anticipated to occur in some developing countries mainly in Africa and Asia. In contrast, sugar consumption is projected to show little, or no growth, in many of the developed countries consistent with their status as mature or saturated sugar markets. As a result, the global stock-to-use ratio (level of carryover stock for the commodity as a percentage of total use of the commodity) is expected to decrease on average at 36% on between 2015 and 2024, compared to 40% between 2012 to 2014. Over the coming decade, exports are expected to remain highly concentrated, with Brazil keeping its position as the world’s leading exporter (around 40%) and Thailand boosting its market share as well. Imports, on the other hand, are expected to remain more diversified. Depending on its level of sugar production, India is projected to continue to face large imports or exports. The share of sugar that is traded relative to global sugar production should increase slightly to reach 33% in 2024 with growing domestic production helping to support growing consumption in developing countries. On the medium term, alternative sweeteners, in particular high fructose corn syrup, are set to compete further with sugar in the sweetener market. However, sugar’s share of the global sweeteners market is expected to continue to account for about 80% of the total. The projections in this outlook are based on the assumption that sugar prices will be sufficiently attractive in the short term to encourage new investments in producing countries, both at the farm and processing level. Any shocks, such as changes in sugar policies originating from the major producing countries, economic situation, oil price especially for highly mechanized producers and processors), exchange rates or weather conditions could impact external growth outlook, with consequences for producers and consumers.

Russian Sugar Industry Sugar consumption in Russia has been relatively stable over the last few years, with an average of approximately 5.4-5.7 million tons consumed annually in 2011-2015.

Sugar consumption by type (million tons)

8 7 6 5.5 5.7 5.7 5.4 5.7 5 4 3 million tons 2 1 0 2011 2012 2013 201420APR201601125137 2015

Source: BMI Demand for sugar in Russia is slightly seasonal, with consumption typically starting to grow in May and peaking in July, partly due to the increase in production of soft drinks and ice cream. Home canning also accounts for a major part of the sugar consumption peak in the summer season. One of the main sources of Russian sugar production is sugar beets, which currently accounts for approximately 90% of the total production in 2015, according to Soyuzrossakhar. The increase of the beet sugar share of the total sugar market volume in recent years from 57% in 2010 is a result of government programs supporting domestic sugar producers, including favorable import tariff policies and the latest Programme for Development of Sugar Beet Sub-complex in Russia for 2013 to 2015 (see ‘‘Regulation of the

89 Russian Agricultural and Food Industry’’). Nonetheless, imported raw cane sugar also plays an important role as it enables a full-year production cycle and balances the deficit of beet sugar in the market.

Sugar beet harvesting Sugar production by type (‘000 hectares and 100 kg/hectare) (million tons) 442 1,800 450 8 392 409 1,460 362 370 400 7 1,500 325 323 1,292 375 1,160 350 6 282 292 100 kg per ha 2.4 1,200 241 1,143 300 0.6 996 1,060 1,022 5 0.5 904 919 250 2.6 2.9 2.4 0.5 0.7 900 799 819 819 4 3.1 1.8 200 2.0 ths. ha 179 600 150 million tons 3 4.7 4.9 5.1 100 2 4.4 4.4 300 3.2 3.2 3.5 3.2 50 1 2.5 2.7 0 0 0 1990 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cultivated area (sugar beet) Yield20APR201601124995 Beet sugar Cane sugar 20APR201607303175

Source: Rosstat Source: Soyuzrossakhar, Ministry of Agriculture, Company data In 1990, approximately 1.5 million hectares were used to cultivate sugar beets, yielding an average of 17.9 tons per hectare, according to Rosstat. Since then, the total cultivated area has been reduced to 1.0 million hectares, whereas the yield has improved to 37.5 tons per hectare, an increase of 110% compared to 1990. In 2005, the Russian sugar industry had a total of 799 thousand hectares of cultivated area under sugar beets, with a yield of an average of 28.2 tons per hectare. Total cultivated area under sugar beets increased significantly in 2015 to 1,022 thousand hectares, showing an 11% growth over the 2014 figure, resulting in a compound annual growth rate (‘‘CAGR’’) of 2.5% between 2005 and 2015. In the meantime, yield has also shown a significant improvement, growing by 33% to 37.5 tons per hectare in 2015 compared to 2005. After a record yield of 44.2 tons per hectare in 2013 due to favorable weather conditions, it decreased somewhat in recent years, driven by seasonality factors. In 2015 the principal sugar beet growing areas were the Central Federal District, accounting for 54% of the total production, the Southern Federal District, accounting for 21%, the Volga Federal District, accounting for 17%, the North Caucasian Federal District, accounting for 6%, and the Siberian Federal District, accounting for 2%. The Russian white sugar market is relatively consolidated, with the top five producers in 2015 accounting for approximately 66% of all sugar production. The other 34% of producers are comprised of smaller players, each contributing 2% or less to total production.

White sugar main players by output in 2015

Prodimeks 20%

Other 34%

Dominant 15%

Razgulay 7% Rusagro Sucden 14% 10% 20APR201601125671

Source: Company data

90 In August 2015 sugar prices hit the lowest levels in more than a seven year period. However, with the weakening of the Brazilian real slowing since September 2015, global average monthly sugar prices have been increasing during the September-December period. To increase the share of domestically produced beet sugar, existing Russian regulations aim to sustain the price of sugar in the Country by controlling import duties for raw cane sugar. The processing of raw cane sugar is mostly used to meet the demand and to cover down-time costs between January and August, when sugar beet is not available.

Sugar price evolution Import duties on raw sugar prices (US$ /ton) (US$ /ton) 1,200 1,200

1,000 1,000

800 800

600 600

400 400

200 200

0 0 01/13 04/13 08/13 12/13 04/14 08/14 12/14 04/15 08/15 12/15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Krasnodar sugar contract Raw sugar (NY Sugar 11) Domestic raw sugar (Sugar11+duty) 20APR201601125280 Russian Customs Import Duty Domestic raw sugar (Sugar 11 + Russian customs20APR201601124204 import duty)

Source: Institute for Agricultural Market Studies, FactSet, Source: FactSet, Russian Federal Customs Service Russian Federal Customs Service Currently, the import duty on white sugar is US$340 per ton. Since 2004, Russia has used a ‘‘floating’’ import duty on raw cane sugar, which has an inverse relationship with the global market price. The duty is adjusted throughout the year, driven by seasonal factors, to allow for profitable production during both raw cane sugar and sugar beet processing seasons. In 2009, Russia, Kazakhstan and Belarus signed several agreements that introduced a unified customs regime for sugar tariff regulation effective since January 1, 2010. The regime and the duty size can be amended only by the consent of all three members. Even though the Russian Federation joined the World Trade Organization (WTO) on August 22, 2012, adopting commitments on market access, domestic support and export subsidies, which establish gradual reduction or elimination of tariffs on a number of agricultural products, it managed to maintain the variable import tariff for raw cane sugar. However, during 2013-2014 the upper variable tariff rate was reduced from US$270 per ton to US$250 per ton. Generally, under the current regime raw cane sugar duty floats within a range of US$140-250 per ton during the year, though the price band is adjusted upwards between May and July to reflect for seasonality. Due to the decline of global sugar prices in the first part of 2015, import duty remained at US$240-250 per ton level during most of the year.

Global Meat Industry Except where otherwise indicated, the data in this ‘‘Global Meat Industry’’ section is sourced from OECD-FAO Agricultural Outlook 2015-2024, which is prepared jointly by OECD and FAO. Meat prices reached record levels in 2014, driven mainly by an increase in beef prices. At the same time, the Porcine Epidemic Diarrhea virus (PEDv) in the United States and African swine fever in Europe decreased pig meat supply in 2014 pushing pig meat prices upwards. Sheep meat prices also increased in 2014 following several years of flock reduction in New Zealand, induced by transforming sheep farms to more profitable dairy operations and accentuated by drought conditions whilst substitutability among the various meats ensured firm demand and strong poultry prices.

91 Meat prices in comparison to other agricultural products

Beef Pork Poultry Oilseeds Protein meal Vegetable oil Wheat 450 400 350 300 250 200 150 100 50 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 202020APR201601124361 2022 2024

Source: Prices in real terms, rebased to 100 Global meat production rose by almost 20% over the last decade, led by growth in poultry and pig meat. Over the next decade, global meat production is expected to expand at a slower rate, at a CAGR of 1.4% over the 2014-2024 period, and in 2024 is projected to be 17% higher than between 2012 and 2014. Developing countries are projected to account for the vast majority of the total increase through a higher use of protein in feed rations in the region. Global annual meat consumption per capita is expected to reach 35.5 kg retail weight equivalent (‘‘r.w.e.’’) by 2024, an increase of 1.6 kg r.w.e. compared to the levels between 2012 and 2014. This additional consumption is expected to consist mainly of poultry. Globally, per capita consumption of pig and bovine meat is expected to remain stable at levels comparable to the levels between 2012 and 2014. In absolute terms, consumption per capita of meat in developed countries is expected to remain more than double that in developing countries (68 kg r.w.e. compared to 28 kg r.w.e. in 2024). However, consumption growth in developed countries between 2015 and 2014 is expected to remain low relative to developing regions. Rapid population growth and urbanization within many developing regions is expected to remain a core driver of total consumption growth. In per capita terms, global pig meat consumption is expected to remain relatively stagnant between 2015 and 2024. In developing markets, particularly Latin America and Asia, pig meat consumption continues to expand, with significant growth evident in Vietnam and Korea, as well as Argentina, Brazil, Paraguay, Ukraine and Uruguay. Pig meat consumption has grown rapidly over the past few years in Argentina and Uruguay, fuelled by increased domestic production, improved quality and favorable relative prices that have positioned pork as one of the preferred meats.

Average 2010-2014 per capita pork consumption (kilogram per capita) and % CAGR 2010-2015

(0.7%) 1.9% 1.4% 0.1% 0.7% 1.8% 1.2% (0.1%) 2.0%

40.7 40.1 31.0 27.3 25.8 25.2 23.4 21.8 20.5

EU (28) China Korea US Australia Russia Chile Canada20APR201601123408 New Zealand

Source: OECD-FAO Agricultural Outlook 2015-2024, EIU World meat exports in the 2014-2024 period are expected to be 25% above the levels between the 2012-2014 period; and are projected to grow at an average annual rate of 2.2%, compared to an average annual rate of 3.8% in the previous decade. The main factor for this trade slowdown is the expansion of domestic meat production in traditionally importing countries in the developing world. The primary drivers of export growth are expected to be poultry and bovine meat shipments, projected to represent 81% of the additional meat exports in 2024, particularly to Sub-Saharan Africa, the Near East and Vietnam, when compared with the period between 2012 and 2014. Developed countries are expected to account for slightly less than half of global meat exports in 2024. The United States is projected to account for nearly 30% of the increase of all meats exported in 2024, followed by the European Union and Canada. Meat exports from the European Union are anticipated to marginally

92 grow between 2015 and 2024 due to a tight domestic supply resulting in part from animal welfare regulations that limit stocking density. Other traditional exporting countries are expected to maintain a high share of the global meat trade, notably Brazil which is expected to account for 26% of the additional shipments in 2014. Brazilian meat exports are expected to benefit from strong international demand helped by the ongoing depreciation of the Brazilian real, which is projected to reinforce its presence in the numerous destinations it currently supplies. Argentina’s, India’s and Thailand’s meat sectors are also expected to benefit from favorable meat to feed price ratios and strengthen their export positions. Brazil is expected to increase its pig meat exports to the Russian Federation, due to the one-year import ban imposed on traditional suppliers in 2014. Part of Brazil’s increased market share of the Russian Federation’s pig meat market is expected to be carried forward in the medium term.

Development for meat imports for selected countries (‘000 tons)

2010-2014 2024 +3.9% (43.5)% +82.6%

2,576 2,647 2,330 2,421 +5.7% +7.9% 1,422 1,504 1,454 1,449 992 1,071

Japan Mexico Russia Korea China20APR201601123552

Russian Meat Industry The Russian meat market is one of the largest in the world, accounting for approximately 4% of the global meat consumption in 2015. Russian meat consumption (consisting of poultry, beef, pork and other) was approximately eleven million tons in 2015. The Russian market has been relatively flat in volume terms over the past few years and is expected to grow by 0.5% in 2016, according to OECD-FAO estimates. The National Union of Pig Breeders estimates meat consumption in 2015 at around 72 kilograms per capita, and is relatively low compared to the Soviet era peak of approximately 82 kilograms per capita. However, it is on par with average per capita meat consumption in developed countries, according to OECD estimates (65 kilograms per capita in 2015). According to the National Union of Pig Breeders, the share of pork in overall meat consumption has declined from approximately 36% in 2010 to approximately 33% in 2015. Pork is the second largest segment in Russia’s meat consumption after poultry, according to the National Union of Pig Breeders. Total pork consumption has declined by more than 11% in 2014 due to an increase in prices and reduction of purchasing power of consumers, resulting in a CAGR of (0.6)% between 2010 and 2015. Poultry and beef consumption, on the other hand, accounted for 45% and 20%, respectively, in 2015, with a CAGR of 5.8% and (3.4)%, respectively, between 2010 and 2015. Pork and beef are the most expensive among the three major meat categories, with pork prices amounting to RUB 271 per kilogram and beef prices amounting to RUB 315 per kilogram in December 2015, while poultry prices were RUB 133 per kilogram during the same period. From 2010 to 2015, beef prices grew at the highest CAGR of 9.6%, while pork and poultry prices grew at 6.4% and 4.9%, respectively.

93 Domestic retail meat and wholesale livestock prices (RUB per kg)

350 315 300 277 249 245 250 236 275 271 199 200 212 220 215 199 150 137 133 117 107 105 102 101 95 100 70 80 78 75 82 92 58 69 73 70 50 71 71 56 57 61 53 0 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Poultry (Chicken) Beef Pork Poultry (livestock) Cattle Pigs 20APR201601123691

Source: Rosstat

Pork consumption and production in Russia (million tons)

CAGR ‘15–17=1.3%

3.8 3.6 3.8 3.5 3.3 3.4 3.5 3.3 3.2 3.0 3.1 3.1 2.8 2.6 2.3 2.4

2010 2011 2012 2013 2014 2015 2016E 2017E Pork consumption Pork production 20APR201607303047

Source: National Union of Pig Breeders Pork consumption in Russia increased between 2010 and 2013, driven by the growth of disposable income. However, due to the increase in pork prices and decreasing disposable income, consumption declined substantially in 2014. Total consumption of pork is expected to remain flat, reaching 3.4 million tons in 2015 and 3.5 million tons in 2017, according to the National Union of Pig Breeders. Also, according to the National Union of Pig Breeders, per capita consumption of pork grew at a CAGR of 2.7% per annum between 2005 and 2015, from 17.8 kilograms in 2005 to 23.3 kilograms in 2015. Going forward, per capita pork consumption is expected to trend upwards as disposable incomes rebound. The Moscow office of the USDA Foreign Agricultural Service expects that the current low level of meat consumption will rebound in the upcoming years driven by the decreasing price volatility and market adjustment after the negative effects of trade interruptions as domestic producers will start to supply more reasonably priced pork to the market. Consumer demand is also expected to shift back to pork from poultry once the economy recovers from the current crisis. In the last few years, the Russian market for pork products has exhibited significant signs of structural change. New pig breeding capacities have come online, which have contributed to significant increase in domestic production. Pork product prices have also increased significantly as a result of the introduction of import restrictions by the Russian government in August 2014 in response to sanctions previously imposed by some countries on the Russian Federation over the security situation in Ukraine. The prohibition covers imports of pork and several other products from the European Union, United States, Canada, Australia and Norway. Mainly driven by the introduction of the import restrictions, import share of Russian pork consumption has decreased from about 34% in 2010 to about 10% in 2015, according to the National

94 Union of Pig Breeders. Imports share decrease can also be attributable to the growth of domestic production, stimulated by direct state support measures aimed to promote import substitution, including subsidized loans and tax benefits.

Russian total pork consumption and imports (million tons)

5.0 50.0%

3.8 3.8 4.0 3.6 40.0% 3.5 3.4 3.4

3.0 33.7% 33.4% 32.7% 30.0%

26.4% mm tons 2.0 20.0%

1.0 12.6% 10.0% 9.9%

0.0 0.0% 2010 2011 2012 2013 2014 2015 Pork consumption Import as % of consumption 20APR201601124828

Source: National Union of Pig Breeders The market for pork production in Russia remains highly fragmented, with the 10 largest producers accounting for approximately 45% of total gross production volume in 2015. However consolidation of the sector continues: the share of the 10 largest producers in 2010 total gross production volume was approximately 38%, according to the National Union of Pig Breeders. Moreover, most competition occurs on a regional level. According to the National Union of Pig Breeders, the share of plants with obsolete equipment in total industrial production of pork declined from 86% in 2005 to 6% in 2015. It is expected that the share of plants with obsolete equipment will continue to decline and reach 3% in 2020. The following table summarizes positions of the major Russian pig breeding companies in 2015:

Production in live weight, % of gross Production share in 2015 ‘000 tons market production Miratorg ...... 384.90 12.2% Rusagro ...... 187.82 6.0% Cherkizovo ...... 169.56 5.4% Agro-Belogorie ...... 162.85 5.2% Agrarnaya Gruppa ...... 106.25 3.4% Agrokomplektatsia ...... 102.13 3.2% Kopitaniya ...... 93.20 3.0% Velikoluksky Svinovodchesky Complex ...... 85.22 2.7% APK Don ...... 69.19 2.2% Ostankino ...... 65.00 2.1%

Source: National Union of Pig Breeders The Russian government has introduced a number of measures aimed at providing support to local agricultural producers and to stimulate domestic pork production. The main state measures include import quotas, access to long-term loans and interest rate subsidies and tax benefits. Russia introduced a tariff-rate quota regime on meat in 2003. The tariff-rate quota (‘‘TRQ’’) is a two-tiered tariff where the rate charged depends on the volume of imported meat. A lower (in-quota) tariff is charged on imports within the quota volume. A higher (over-quota) tariff is charged on imports in excess of the quota volume. The measure was intended to support local meat prices and stimulate the domestic production of meat and meat products.

95 The Russian Government managed to preserve domestic market protection levels after WTO accession, including tariff-rate quota for poultry and beef. For pork, the Russian Federation has agreed to a TRQ of 430 000 tons for fresh, chilled and frozen pork and pork products with a zero in-quota tariff and 65% tariff for over-quota volumes. On November 21, 2015, the Russian Government issued a decree on the distribution of Russia’s 2016 tariff-rate quotas for beef, pork, and poultry with volumes unchanged from 2015 level. On January 1, 2020, the Russian Federation is scheduled to adopt a tariff-only regime for pork with a bound duty of 25%, making the domestic pork market more open to import competition. The quota volumes were distributed among existing importers based on historical considerations, i.e., based on the actual import volumes over the preceding three years. The quota volumes were linked to specific countries based on historical considerations as well. On August 7, 2014 the Russian Government announced a restriction on imports of a wide range of food products in response to sanctions previously imposed by some countries over the security situation in Ukraine. The prohibition covers imports of beef, pork, poultry, processed meats, fish and other seafood, milk and milk products, vegetables, fruits and nuts from the European Union, United States, Canada, Australia and Norway. According to the OECD, the affected products account for two thirds of all food expenditure by Russian households. 36% of these products (by value) came from the affected countries. For some products, the share of imports from the affected countries was quite high: 71% for pork and 53% for fish and seafood. The OECD also notes that pig meat is one of the products most affected by the ban. Long-term loans (typically with maturities of up to eight years) may be granted to agricultural producers, including pig breeding operators, for modernization of production facilities and equipment, short-term loans for working capital financing, and direct interest rate subsidies for up to 100% of the CBR refinancing rate. In July 2012, the Russian Government adopted the State Program for Development of Agriculture and Regulation of Agricultural Commodities Markets in 2013-2020. The program planned to allocate RUB 2.1 trillion for the development of agriculture and food markets between 2013 and 2020. In February 2016, the Russian Ministry of Agriculture stated that federal authorities will receive a further RUB 31.3 billion in subsidies to partially compensate agricultural producers for interest paid on investment loans in the animal farming and meat cattle breeding segments. The Russian Ministry of Agriculture has also stated that the budget allocated for supporting agricultural producers in 2016 will remain at RUB 237 billion, the same as in 2015. Similarly, agricultural producers, including pig breeding operators, are eligible for significant tax benefits under various government support programs. The Russian Tax Code provides for a 0% corporate profits tax (compared to the ordinary 20% corporate profits tax rate) to companies recognized as agricultural producers i.e., entities generating at least 70% of their revenues through the production, processing and sale of agricultural products. In addition, there are certain rebates on VAT (10% instead of 18%). (See ‘‘Regulation of the Russian Agricultural and Food Industry’’)

Global Agricultural Industry Except where otherwise indicated, the data in this ‘‘Global Agricultural Industry’’ section is sourced from OECD-FAO Agricultural Outlook 2015-2024, which is prepared jointly by OECD and FAO. In the past, agricultural crops, such as grain and oilseeds, have primarily been used for human food or animal feed. Additionally, oil price development together with environmental concerns has, in general, given rise to an increasing demand for agricultural crops as raw material in energy production. International crop prices have been declining since 2013, in response to two successive record harvests in grains and oilseeds. The resulting ample supplies and replenished stocks gives rise to expectations of nominal prices declining further in the short term, before returning to a marginally upward trend for the rest of the period between 2015 and 2024.

Grain market The grains market in 2014 was characterized by ample supply. Two consecutive record maize harvests in the United States and above average maize, barley and yields in the European Union and the Russian Federation drove global coarse grain stocks up to record levels and market prices to their lowest levels in the past five years. The wheat market in 2014 had a similar trend as harvests were good in most of the major wheat producing countries, with significant production gains in Argentina, the Commonwealth of Independent States (‘‘CIS’’) and the European Union. However, wheat production in 2015 is expected to fall below the record output in 2014, reflecting an expected decline in winter wheat production in Europe,

96 with yields anticipated to return to average levels from the previous year’s highs. Global rice production in 2014 reached almost 495 Mt in milled rice equivalent, slightly lower than 2013 levels and well below levels that would have been attained had growth continued at its ten year trend of 2% annually. This was largely due to climatic setbacks in Asia resulting in production declines in India, Indonesia, Nepal, Sri Lanka and Thailand. For the first time in a decade, global rice utilization surpassed production, resulting in a drawdown of global rice stocks to 177 Mt. Cereal prices started at low levels in 2014, compared to those recorded since 2007. In the short term, slower economic growth, historically high production over the past two years that led to stocks build-up, as well as low oil prices may cause prices to decrease further. However in the medium term, the price development in nominal terms is expected to be cost driven, increasing slightly behind inflation and thus moderately declining in real terms. For rice, the turning point to an increasing nominal price path is expected a season later than for other grains, given huge rice stocks accumulated in Thailand. Average nominal prices of the three cereals between 2015 and 2024 are projected to be 6% to 15% lower than in the previous decade. Production of cereals is expected to increase over the next decade. In 2024 production is expected to be 14% greater than between 2012 and 14, mainly driven by yield improvements, while area expansion is expected to be limited. Relative to the period between 2012 and 2014, production in 2024 is projected to increase by similar magnitudes for wheat (12%), coarse grains (15%) and rice (14%). An additional 86 Mt of global wheat supply is projected with a large share being produced in India (15 Mt), the Russian Federation (13 Mt), China (8 Mt) as well as the European Union and Argentina (7 Mt each). Coarse grain production is set to increase by 194 Mt (United States 51 Mt, China 37 Mt, European Union 12 Mt, the Russian Federation 6 Mt and Ukraine 6 Mt). The global increase of 70 Mt in rice production is expected to be dominated by Asian countries (61 Mt) mainly India (17 Mt), Indonesia (8 Mt), Bangladesh, Thailand (6 Mt), Vietnam and China (5 Mt). Global cereal consumption is expected to grow by 388 Mt reaching 2 786 Mt by 2024. Wheat consumption is expected to increase by 13% compared to the period between 2012 and 2014, and to continue to be dominated by food use at a constant share of about 69% of total use. Feed use of wheat is projected to increase predominately in China, the Russian Federation and the European Union. Coarse grain consumption continues to be dominated by feed use accounting for more than two thirds of the increase in global consumption (additional 156 Mt of feed use). Most of the additional feed is going to be consumed in developing countries (1 030 Mt) to feed an expanding livestock sector. Food use of rice is expected to drive total consumption up to 562 Mt by 2024. The growth is expected to be higher in developing countries (1.2% annually) than in developed countries (0.4% annually) with Asian countries accounting for almost 80% of global consumption increase.

Oilseed market The main oilseeds are copra (coconut), cottonseed, palm kernel, peanut, rapeseed, soybean and sunflower seed. Global oilseeds production in 2014 reached record levels for the second year in a row, and have stabilized at slightly lower levels in 2015 with the expectation that they will remain at this level going forward. Thus, oilseed prices have fallen considerably and remain under pressure. At the same time soybean production increased faster than production of rapeseed, sunflower seed and groundnuts (the other included oilseeds), increasing the sector’s concentration. Vegetable oil production did not increase commensurate with oilseeds production due to a slower expansion of palm oil and the increasing share of soybeans, which have considerably lower oil content than other main oilseeds. In contrast, demand growth has slowed in recent years due to stagnating biodiesel production from vegetable oils in developed countries, resulting in low vegetable oil prices. Current low prices are expected to lead to increasing food demand in the near future. In nominal terms all oilseeds and oilseed product prices are projected to increase less than the assumed inflation rate between 2015 and 2024. Resulting real prices are expected to decline slightly, based on the assumption of further efficiency gains in the sector which enables it to meet the growing global demand at real prices below the current level. The price relationships within the sector will shift slightly. Due to saturation in per capita food demand in many emerging economies and reduced growth in biodiesel production from vegetable oils, real vegetable oil prices are expected to decline faster than real protein meal prices. Between 2015 and 2024, global oilseeds production is expected to continue its expansion, yet at a growth rate of 1.6% annually it is expected to fall short of the 3.5% annual growth rate experienced during the last decade. Production of rapeseed in Canada and the European Union is expected to grow much slower than

97 in the previous decade as high oil-containing oilseeds like rapeseed are more affected by the slower growth in vegetable oil prices. International oilseeds trade accounts for a consistently high share of global production of around 31% during the next decade. The main flow continues from the Americas (United States and Brazil) to Asia (mainly China). Globally, crushing of oilseeds into meal (cake) and oil dominates the use of oilseeds; direct food use is significant only in a few Asian countries. By 2024 more than 87% of the world oilseed production is expected to be crushed. Vegetable oil includes the oil from crushing oilseeds (around 53%), palm (36%), palm kernel, coconut and cottonseed. World vegetable oil production will likely continue to remain concentrated among a few countries in the coming decade. Despite a slowdown in area expansion, significant growth still occurs in the main palm oil producing regions of Indonesia and Malaysia. The other source of growth is soybean oil produced in the crush of the increasing soybean production. Demand growth for vegetable oil is expected to slow down in the coming decade due to reduced growth in per capita food use in developing countries (at 1.1% annually between 2015 and 2024 compared to 2.7% in the previous decade), and stagnant biodiesel production from vegetable oils due to the gradual fulfilment of quotas and expected reductions in biodiesel production targets. Protein meal production and consumption is dominated by soybean meal. Compared to the past decade, consumption growth of protein meal is expected to slow down significantly between 2015 and 2024, reflecting both slower growth in global livestock production and a degree of saturation in the inclusion of protein meal in feed rations. Commercial farms have increasingly optimized the use of protein meal in feed ration in important developing countries, especially China dampening demand. Chinese consumption of protein meal is projected to grow by 2.0% annually between 2015 and 2014, compared to 7.8% annually in the previous decade, still exceeding the growth rate of animal production however. Growth in world trade in oilseeds is expected to slow down considerably in the next decade, compared to the previous decade. In the 2004-2014 period oilseeds imports grew at a rate of 6.6% per year. In the 2014-2024 period, oilseeds imports are forecasted to grow 1.6% per year. This development is directly linked to the projected deceleration of oilseed crush in China. Because livestock production increases rapidly in the main protein meal producing countries, domestic use of protein meal increases and trade will likely only expand slightly in the coming decade, resulting in a declining share of trade in world production.

Russian Agricultural Industry Russia possesses one of the world’s largest available land stocks, accounting for 9% of global arable land. According to FAOSTAT, as of 2013 Russian agricultural area was equal to 217 million hectares, the sixth largest after China, United States, Australia, Brazil and Kazakhstan. The country shows a legacy of industrial size farming land plots, with over 122 million hectares of arable land, of which only 78.1 million hectares were cultivated in 2013, according to Rosstat, with the rest being unused fallow land.

Agricultural area 2013 Arable land 2013 (million hectares) (million hectares)

China 515 India 157 USA 405 USA 152 Australia 397 Russia 122 Brazil 279 EU 108 Kazakhstan 217 China 106 Russia 217 Brazil 76 EU 186 Australia 46 India 180 Canada 46 Saudi Arabia 173 Argentina 40 Argentina 149 20APR201604093206 Nigeria 34 20APR201604093354

Source: FAOSTAT (Latest available data) According to FAOSTAT, Russia is the world’s second largest sunflower seed producer after Ukraine, with 22% global market share in 2014, producing 9.0 million tons, the second largest sugar beet producer after the European Union, with 13% market share in 2014, producing 33.5 million tons, and the third largest producer of wheat, with 8% of global production in 2014, producing 60 million tons.

98 Following the dissolution of the Soviet Union in 1991, large state and collective farms were forced to cope with the sudden loss of heavy government subsidies, the transfer from state-controlled to market prices and the abandonment of a planned economy. Furthermore, the use of mineral fertilizer and other costly inputs fell significantly, decreasing yields. After the Russian economic crisis in 1998, the agricultural sector began to show signs of improvement with a rebound in grain yields, which is believed to reflect improved methods of land cultivation, the re-equipping of the agricultural industry with modern efficient machinery and the transition from Soviet-style agricultural enterprises to more efficient market-driven small and medium enterprises and private farms. However, throughout the 1990s, the viability of the sector was highly dependent on government subsidies and support, with the Russian Government establishing fixed orders for goods and therefore guaranteeing demand until price liberalization occurred in 1996. The greater emphasis on Russian agriculture, along with the increase in global grain prices, has resulted in the expansion of existing farms and the construction of new ones, with incremental investments especially in agronomic technologies boosting production efficiency. Russian agricultural yields remain lower than yields in developed markets. According to OECD, in 2014 wheat yield in Russia was 2.5 tons per hectare, 24% lower than average wheat yield for developed countries while coarse grains yield was 2.3 tons per hectare, 61% lower than average coarse grains yield for developed countries. The primary factors behind this are the low usage of fertilizers, sub-efficient crop rotation, poor soil management and obsolete equipment. It is expected that yields will increase in the coming years, as the farm management process becomes more efficient. This will ultimately affect land prices as, historically, lower Russian yields have led to significantly lower prices for arable land compared to European countries. Improved infrastructure, economies of scale from consolidation and further development are believed to be the primary drivers leading to expected appreciation in the coming years.

Russian grain market Russia is the world’s fourth largest coarse grain producer, the third largest producer of wheat globally and the world’s largest producer of barley. According to Rosstat, the total grain crop in 2015 was 104.8 million tons – the second largest production over the last five years, second only to the record grain production of 105.3 million tons in 2014. Over the last several years, yield has shown significant improvements, rising from 1.8 tons per hectare in 2012 to 2.4 tons per hectare in 2015.

Russian grain production 1990-2015

200 3.0

2.4 2.4 2.4 2.5 160 2.3 2.2 2.2 2.0 2.0 1.8 1.8 2.0 120 116.7 108.2 105.3 104.8 t / ha 97.1 94.2 92.4 1.5 81.5 m tons 80 70.9 61.0 1.0

40 0.5

0 0.0 1990 2007 2008 2009 2010 2011 2012 2013 2014 2015 Wheat Barley Corn Grain legumes Other Yield 20APR201606042332

Source: Rosstat Note: blended-average yield for grains and grain legumes The grain market in Russia presents significant room for efficiency improvements, with increasing investments in new technologies and improving quality of agricultural labor. Currently, grain yields are relatively low compared to developed countries but, according to FAOSTAT estimates, are expected to improve by 3% (for wheat) to 6% (for coarse grains) by 2020 through the use of better technology and seeds and more effective fertilizers.

99 Domestic grain prices have demonstrated high volatility over the last years. Russian wheat prices spiked at the end of 2014 – beginning of 2015 due to the increase of export on the back of the rouble devaluation. However, the price trajectory flattened in the first months of 2015 after the imposition of an export duty (15% plus A7.5 but no less than A35 per ton of wheat) by the Russian Government in December 2014. The export duty was then amended in May 2015 and again in October 2015 to 50% of the contract value less RUB6,500 but no less than RUB10 per ton of wheat.

Russian grain price development (RUB/ton)

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000 2010 2010 2011 2012 2013 2014 2015 Soft wheat, 3rd grade Fodder wheat Barley Corn Gulf Wheat (12%, FOB)20APR201606042197

Source: Rosstat, Bloomberg Grain consumption in Russia is relatively stable, staying at approximately 64 million to 71 million tons annually in recent years. In 2014-2015 Russia exported a record 31 million tons of grain annually due to the domestic currency devaluation, record harvests and significant inventory of grains.

Russian grain import and export (million tons)

35 30.1 30.7 30

25 21.8 22.5 20 18.3 19.0 16.6 15 13.6 13.9 11.1 10

5 2.3 1.1 1.0 0.4 0.4 0.7 1.2 1.5 0.9 0.7 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Export Import 20APR201604094887

Source: Rosstat

Russian oilseeds market Russia is one of the largest oilseed producers in the world, with 22% market share in sunflower seeds (9.0 million tons) in 2014. Soybean production reached a historic high in 2015 (approximately 2.8 million tons) demonstrating growth of 10% over the previous year volume produced. Sunflower production reached a historic high in 2013 (about 10.6 million tons) and then declined to 9.0 million tons in 2014 due to adverse weather conditions. In 2015 sunflower production increased to 9.8 million tons.

100 Oilseed consumption has remained relatively stable over the past three years, with total production and consumption almost equal in recent years.

Oilseeds(1) production 1990-2015 Oilseeds consumption in Russia (million tons)

2.0 20 18.0 1.6 1.5 1.5 15.0 1.4 1.5 15 14.5 14.5 14.5 14.5 1.3 14.0 1.3 1.2 1.4 1.2 1.1 1.3 1.4 1.4 12.3 12.4 12.0 1.1 1.3 1.6 2.8 t / ha 1.8 2.6 1.1 1.1 1.0 10 9.0 9.3 9.0 1.8 8.4

mm tons 1.0 1.0 0.7 0.9 0.9 7.0 6.0 0.7 1.2 10.6 0.5 9.7 9.0 9.8 5 0.7 8.0 7.4 6.5 3.0 5.7 5.3 3.4 0.0 0.0 0 1990 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E2017E Sunflower Soybean 20APR201604094135 Sunflower, yield Soybean, y20APR201604094277ield Source: Rosstat Source: OECD (1) Includes only sunflower and soybean seeds.

Russian oilseeds price development (RUB/ton)

25,000

20,000

15,000

10,000

5,000

0 2010 2010 2011 2012 2013 2014 2015 Sunflower Soybean 20APR201604095592

Source: Rosstat The Russian Government has aimed to support and stimulate growth in domestic agricultural production through a number of programs. The main federal support legislation is the Federal Special-Purpose Programme for Development of Agriculture and Regulation of Markets of Agricultural Products, Raw Materials and Foodstuff for 2013 to 2020 (see ‘‘Regulation of the Russian Agricultural and Food Industry’’). The program planned to allocate RUB2.1 trillion for the development of agriculture and food markets during the period. Main benefits of the governmental support include: • loans and interest rate subsidies – long-term loans (typically with maturities of five to eight years) for modernization, short-term loans for working capital, and direct interest rate subsidies for up to 100% of the CBR refinancing rate; • tax benefits, including option to pay 0% profit tax (instead of a regular corporate rate of 20%) as well as certain rebates on VAT (10% instead of 18%).

Global Oil & Fats Industry According to Euromonitor, the oil and fats market comprises olive oil, vegetable and seed oil, cooking fats, butter, margarine and spreadable oils and fats. Mayonnaise is included in the sauces, dressings and

101 condiments category, of which some of the sub-categories are ketchup, mayonnaise, mustard, bouillon, salad dressings and pasta sauces. Total retail volume of margarine is approximately 1.2 million tons for 2015, declining by 0.3% annually since 2006, while global retail value of margarine is around US$3.9 billion. The retail mayonnaise volume grew 1.0% annually from 2006, reaching 2.3 million tons in 2015, and the market is valued at around US$9.5 billion in retail value.

Global margarine and mayonnaise retail volume (million tons)

Margarine Mayonnaise

1,192 1,199 1,202 1,204 1,201 1,194 2,228 2,268 2,292 2,320 2,329 2,317

2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 201420APR201604093525 2015

Source: Euromonitor World per capita retail margarine consumption was 0.2 kilograms in 2015, with Western Europe, Eastern Europe and the United States above that level at 0.6, 0.6, and 0.2 kilograms of retail volume, respectively. Global mayonnaise per capita retail volume was 0.3 kilograms in 2015, well below the 4.2 kilograms in Russia.

Margarine retail volume per capita 2015 Mayonnaise retail volume per capita 2015 (kilograms) (kilograms) 0.6 0.6 4.2

2.7 0.3 0.2 0.2

0.9 0.7 0.3

Western Eastern Russia USA World Europe Europe 20APR201604093866 Russia Eastern USA Western World Europe Europe20APR201604093999

Source: Euromonitor The global margarine market is relatively consolidated, with the top 10 players having approximately 47% aggregate market share in 2015. Unilever dominates as the leader with a market share of 26.3% of retail value, followed by Indofood Sukses Makmur and San Miguel, with 4.4% and 3.2% of market shares, respectively. Excluding Unilever, the remaining top nine players account for 21% of the market. Similarly, the mayonnaise market is relatively consolidated with Unilever and Kraft having a combined market share of 37.1%. The top 10 players account for 61.2% of the global retail market.

102 Top 10 global players in margarine by sales, 2015

Retail market Retail value Company share (%) (US$ million) Unilever ...... 26.3 1,022 Indofood Sukses Makmur Tbk ...... 4.4 170 San Miguel ...... 3.2 123 Agra Industrier ...... 3.1 120 Bunge ...... 2.9 112 ConAgra Foods ...... 1.6 62 Alicorp ...... 1.6 61 Land O’ Lakes ...... 1.3 51 Pars Vegetable Oil ...... 1.2 48 Willowton Group ...... 1.2 46

Top 10 global players in mayonnaise by sales, 2015

Retail market Retail value Company share (%) (US$ million) Unilever ...... 25.1 2,389 Kraft Heinz ...... 12.0 1,144 Kewpie ...... 6.6 631 Essen Production ...... 3.1 295 McCormick & Co ...... 2.9 276 EFKO-Sloboda ...... 2.5 233 NMZhK...... 2.4 232 Nestle´ ...... 2.3 216 Empresas Polar ...... 2.2 214 Solnechnye Produkty ...... 2.1 202

Source: Euromonitor

Russian Oil & Fats Industry Domestic prices of sunflower oil, one of the main raw materials for mayonnaise and other oil and fat products, are strongly correlated with global prices.

Global and Russian sunflower oil price development (US$/ton)

1,600

1,400

1,200

1,000

800

600

400 2011 2012 2013 2013 2014 2015 2015 Russia FOB Rotterdam FOB 20APR201604095180

Source: Company data

103 Mayonnaise is considered to be ‘‘universal seasoning’’ added to most dishes in Russia and the CIS. According to Euromonitor, mayonnaise retail volume per capita in 2015 amounted to approximately 4.2 kilograms. In recent years production has been growing at a CAGR of 1.4% between 2011 and 2015.

Russian mayonnaise production Russian mayonnaise production volume (‘000 tons) breakdown, 2015 CAGR ’11-15=1.4% Unilever Other Yanta 3% 3% 4% Essen 25% 833 846 822 Ros Agro 778 767 11%

Solnechnye Produkty 15% NMZhK 20% 0 2011 2012 2013 201420APR201606041922 2015 EFKO 19% 20APR201606042055

Source: Rosstat, Russian Oil and Fat Union Note: Market share data is shown for Oil and Fat Union members only As shown on the right chart above, the top five players account for 90% of production. Russian producers control most of the production volume with only one significant foreign player, Unilever, accounting for 3% of the volume. The market is geographically segmented and is characterized by significant power of local players in particular regions and strong brand loyalty. Russian consumer margarine production has remained stable during the last few years, with 93 thousand tons produced in 2015 and 2011-2015 CAGR of (0.1%).

Russian consumer margarine market Russian consumer margarine production volume (‘000 tons) breakdown, 2015 CAGR ’11-15=(0.1%) Other Yevdakovsky 6% MZhK 96 93 92 90 93 12%

Ros Agro 45% Solnechnye Produkty 18%

NMZhK 19% 2011 2012 2013 201420APR201604094720 2015 20APR201606041791

Source: Company data, Russian Oil and Fat Union Note: Production and market share data is shown for Oil and Fat Union members only Similar to the Russian mayonnaise market, domestic companies control major share of local consumer margarine production, while the top three players controlled about 82% of total production volume in 2015. Rusagro has historically been the largest player in this sector and in 2015 produced 45% of the total consumer margarine manufactured in Russia, followed by NMZhK and Solnechnye Produkty (18-19% of total production volume each). Given relatively flat domestic market dynamics, population and economic growth in Central Asia offers an attractive export opportunity for Russian producers.

104 BUSINESS Overview Rusagro is a leading Russian diversified food producer with vertically integrated operations. We operate in four core markets: Sugar, Meat, Agriculture and Oil and Fat. Our sugar, agricultural and pig breeding operations are located in close proximity to each other in the Belgorod, Tambov, Kursk, Orel and Voronezh regions, and our oil and fat operations are located in Ekaterinburg in the Sverdlovsk region and in Samara. In addition, in 2015 we started developing agricultural, oil and fat and pig breeding projects in the Primorsky krai. In the year ended December 31, 2015, sales of our Sugar division (before inter-segment eliminations) were RUB 32,853 million, and Adjusted EBITDA was RUB 11,068 million; sales of our Meat division (before inter-segment eliminations) were RUB 18,117 million, and Adjusted EBITDA was RUB 7,672 million; sales of our Agriculture division (before inter-segment eliminations) were RUB 14,211 million, and Adjusted EBITDA was RUB 6,630 million; and sales of our Oil and Fat division (before inter-segment eliminations) were RUB 17,252 million, and Adjusted EBITDA was RUB 1,662 million. Our principal divisions are: • Sugar: We are the third largest sugar producer in Russia with a share of 14% of all sugar produced in Russia during 2015 (according to Soyuzrossakhar data) and with a share of 44% of all cube sugar produced in Russia during 2015 (according to Nielsen data). Our nine sugar processing plants (including three sugar plants being acquired from the Razgulay group) have an aggregate daily processing capacity of approximately 48,350 tons of sugar beets. Based on our internal estimates that our plants can process sugar beets for up to 130 days per year based on the length of the growing season, our plants have an aggregate annual processing capacity of 6.3 million tons of sugar beets (including processing capacity of three sugar plants being acquired from the Razgulay group). Our sugar conversion ratio for processing sugar beets was approximately 15.5% in 2015, 15.7% in 2014 and 12.3% in 2013. Our Sugar division is vertically integrated with the sugar beet cultivation in our Agriculture division, through which we strive to ensure a consistent supply of sugar beets. We are in the process of acquiring three sugar plants from the Razgulay group: see ‘‘– Recent Developments’’. • Meat: We are the second largest pork producer in Russia with a share of 6% of all pork produced in Russia during 2015 (according to the National Union of Pig Breeders). We sell livestock, carcasses, cuts and offals. Our pig breeding sites are located in the Belgorod and Tambov regions. Our pig breeding complex in the Tambov region also includes a slaughterhouse and meat processing facilities (with a capacity of 1.95 million heads a year), as well as rendering facilities. In total we currently have 13 pig farms and two operating breeding facilities. We produced approximately 195 thousand tons of live-weight in 2015, as compared to 187 thousand tons in 2014 and 135 thousand tons in 2013. We are currently launching a greenfield project in the Primorsky krai (in proximity to the Chinese border) that has a projected design capacity of at least 100 thousand tons of live-weight annually, which can potentially be further expanded to 300 thousand tons of live-weight annually. The project will also include a fodder plant, a slaughterhouse and meat processing facilities. See ‘‘– Strategy’’. • Agriculture: We currently control one of the largest land banks among Russian agriculture producers, with approximately 594 thousand hectares of land currently under our control primarily in the highly fertile Black Earth region of Russia, including approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions held by legal entities stakes in which are being acquired from the Razgulay group (source: BEFL Report on Russia’s Largest Agricultural Landholders as of April 2016, Company data), of which approximately 43% is owned by Rusagro. Approximately 55% of our land bank is located in the Belgorod region, approximately 26% is in the Tambov region, approximately 8% is in the Orel region, approximately 5% is in the Kursk region, approximately 4% is in the Primorsky krai and approximately 3% is in the Voronezh region. We believe we are a leading Russian sugar beet producer, supplying approximately 63%, 67% and 70% of the total sugar beets processed by our sugar plants in 2015, 2014 and 2013, respectively. Our Agriculture division also produces winter wheat and barley, sunflower seeds, soybeans and corn. In addition, we own and operate four grain elevators with a total storage capacity of approximately 361 thousand tons and other storage facilities with a total capacity of approximately 290 thousand tons. • Oil and Fat: We are among the top five producers of mayonnaise and consumer margarine in Russia. Based on market information obtained through Rosstat and the Russian Oil and Fat Union, we estimate that in Russia we are the largest consumer margarine producer with a market share of 45%

105 in 2015 and the fifth largest mayonnaise producer with a market share of 11% in 2015. Our oil and fat production plant is located in Ekaterinburg, south of the Urals, and currently has an annual production capacity of approximately 112 thousand tons of mayonnaise and approximately 57.9 thousand tons of consumer margarine. Through our oil extraction plant located in Samara, which has a daily processing capacity of 1.25 thousand tons of sunflower seeds, we control the source of 100% of the vegetable oil required by our oil and fat production plant. The soybean plant in Ussuriysk, in the Primorsky krai, has a capacity to produce 26.9 thousand tons of refined oil and 10 thousand tons of mayonnaise per year and is a leading manufacturer of soybean oil, soybean oil feed, and mayonnaise and the only industrial soap manufacturer in the Far East of Russia. Our consolidated sales were RUB 72,439 million, RUB 59,112 million and RUB 36,490 million for the years ended December 31, 2015, 2014 and 2013, respectively. Our gross profit for the year was RUB 31,433 million, RUB 24,082 million and RUB 8,858 million for the years ended December 31, 2015, 2014 and 2013, respectively. Our Adjusted EBITDA was RUB 24,423 million, RUB 18,069 million and RUB 6,784 million for the years ended December 31, 2015, 2014 and 2013, respectively, while our Adjusted EBITDA margin was 34%, 31% and 19% for the same years.

Strong Russian agricultural sector fundamentals We enjoy favorable sector fundamentals in each of the four segments where we are present: Sugar, Meat, Agriculture and Oil and Fat. Russia has one of the highest levels of per capita sugar consumption (approximately 40 kg in 2015) globally, with sugar production from sugar beet (89% of total sugar production in Russia in 2015) benefiting from the high import duties on cane sugar. The Russian pork market has strong growth potential driven by the expected per capita pork consumption growth to European levels, further production industrialization and import substitution. Moreover, the CIS market is an important source of demand for Russian producers given the fact that approximately 90% of total pork exports in 2015 were to CIS countries (Source: National Union of Pig Breeders). Russia is one of the largest agricultural commodities exporters globally, strategically located in close proximity to major export destinations with 2016 year-to-date export volumes of 23.5 million tons of wheat (14.4% of global export), 3.8 million tons of corn (2.9% of global export) and 3.0 million tons of barley (11.4% of global export), according to USDA. Russia accounts for more than 50% of the world’s superior quality Black Earth (chernozem) area, which is partially located in the Belgorod and Tambov regions (the Eurasian chernozem belt). Russia is the largest sunflower oil and mayonnaise markets globally. Mayonnaise consumption in Russia reached 709 thousand tons in 2015, implying 4.9 kg per capita consumption (Source: BMI Research). Despite the fact that Russia is the largest consumer of sunflower oil, it still lags behind many countries on per capita vegetable oil consumption.

Market leadership positions across all our core divisions We are the third largest sugar producer in Russia, with a 14% market share in 2015 (according to Soyuzrossakhar). We believe that our current acquisition of the Razgulay group’s three sugar plants will allow to increase our sugar processing capacities by 35% to 40% (as compared to our sugar processing capacities before the acquisition), potentially leading to an approximately 5% increase in market share. We are the second largest pork producer in Russia, with a 6% market share in 2015, having increased our share approximately two fold from 3% in 2014 (according to the National Union of Pig Breeders). We are the largest producer of consumer margarine in Russia, with a 45% market share in 2015, and the fifth largest producer of mayonnaise with a 11% market share in 2015 (according to Rosstat and the Russian Oil and Fat Union). We are one of the largest agricultural companies in Russia, with approximately 594 thousand hectares of land (including approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions held by legal entities stakes in which are being acquired from the Razgulay group), four elevators with 361,000 tons of grain storage capacity and 290,000 tons of outdoor storage facilities. Upon completion of the current acquisition of stakes in four legal entities from the Razgulay group, we will obtain control

106 over 90 thousand hectares of land in the Kursk, Orel and Belgorod regions adjacent to the sugar plants being acquired from the Razgulay group, which can be used for sugar beet cultivation.

Efficient and stable business model benefiting from scale, vertical integration and diversification We differentiate ourselves as one of the largest vertically integrated agribusiness groups in Russia. We believe we are well-positioned to drive industry consolidation given our scalable cluster-oriented business model. Our enhanced control of the value chain is designed to improve profitability, diminishes exposure to commodity cycles and ensures the sustainable quality of final products. We have a high level of self-sufficiency in the procurement of key raw materials, which protects us from unfavorable price changes for a substantial portion of raw materials. For example, our Sugar division produces sugar from sugar beets grown by our Agriculture division, we use grains produced by our Agriculture division to produce fodder for our Meat division, and our Agriculture division utilizes waste products from our Meat division as a fertilizer.

Strategically located state-of-the-art facilities Our sugar processing plants are strategically located in close proximity to our sugar beet growing area, which minimizes transportation, logistical and sugar beet purchasing costs, and allows us to easily shift production between facilities to optimize the use of available resources. We are one of the few Russian producers who have implemented a desugarisation process (sugar recovery from beet molasses) in our value chain. Modern technologies in our pig breeding operations and maintenance investments in the upkeep of our equipment allows us to be a cost leader in pig production in Russia. In addition, we implement high standards of biosecurity at our pig production complexes and strive to ensure that pigs produced by us are healthy and of superior quality. Our oil and fat plants (other than Primorskaya Soya) are located not far from our agricultural farmlands. Our Samara oil plant is one of a few Russian plants to receive international GMP+2 B Good Manufacturing Practice certificate. We have a high level of self-sufficiency in grain storage capacity, which provides us with an opportunity to sell crops at more favorable prices. We believe our investments into land, agricultural machinery and equipment (totaling RUB 2.6 billion, 2.1 billion and 0.7 billion in 2015, 2014 and 2013, respectively) help us deliver above market crop yields.

Strong brand portfolio across products and price points We develop existing and new brands to further reach out to final customers. In Oil and Fat, our brands (EZhK Gotovim doma, EZhK Provansal, Schedroe leto, Mechta Khoziayki) are taking a leading position in the Russian and CIS ketchup, mustard, mayonnaise, consumer margarine and other spreads markets (according to Nielsen data). In Sugar, we offer a selection of sugar products across all of the popular package sizes addressing the demand of different consumer categories. Our main sugar brands are Chaikofsky, Russkii Sakhar, Brauni and Mon Caf´e. In Meat, we recently announced the launch of the retail pork brand Slovo Myasnika, and plan to become one of the top three largest retail pork products producers in Russia with an expected annual growth of between 15% and 20%.

Experienced management team widely recognized in the industry with the solid and proven track record and a highly committed controlling shareholder Our senior management team is widely recognized in the industry and has a successful track record of value creation through organic growth and mergers and acquisitions to strengthen our business and develop new business lines, which has contributed to the doubling of our revenues over the last five years. Our corporate management is supported by members of our Board of Directors, who have diverse cultural and professional backgrounds and strong industry expertise. Our founder, controlling shareholder and a Chairman of the Board of Directors, Mr. Vadim Moshkovich, has significant industry expertise and is involved in defining our strategy. We believe he has successfully transformed our business from a sugar importer into a leading diversified agricultural business, through a number of greenfield projects and acquisitions.

107 Strong financial performance Between 2013 to 2015, we achieved strong top-line growth of approximately 41% per annum, with our consolidated sales exceeding RUB 72 billion in 2015. Our growth was primarily attributable to growth in the Sugar, Meat and Oil and Fat divisions, which have grown approximately 39%, 56% and 39% per annum, respectively, in 2013, 2014 and 2015. Our sales across our core divisions were primarily driven by strong price growth due to a depreciation of the rouble in 2014 and 2015. Our gross profit margin significantly improved during 2014 and 2015, on the basis of slower cost of sales over sales growth. Our Adjusted EBITDA margin is reflective of gross profit margin developments, with even greater improvement indicating existing economies of scale effects. Following completion of the construction of our pork breeding facilities in the Tambov region and our sunflower crushing facilities in Samara in 2013 and 2014, we began deleveraging to decrease Net Debt to Adjusted EBITDA ratio to 0.2 by 2014. By the end of 2015, our Net Debt to Adjusted EBITDA ratio increased to 0.62, primarily due to a loan received from VEB to finance the acquisition of the Razgulay group’s debts and 19.97% shares in PJSC Group Razgulay from VEB.

Strategy Our Board of Directors adopted our strategy seven years ago, and the realization of our strategy is primarily based on our vertically integrated structure. In 2015, the Board of Directors slightly revised our strategy by adding an additional focus on the development of human capital, geographic expansion and business diversification. Our main strategic objective remains creating shareholder value.

Expanding presence across all business areas with well defined organic as well as inorganic growth initiatives We keep screening and monitoring new assets and investing in projects to expand our existing capacity to maintain and enhance leading positions in our core markets. Our strategy includes: further expansion of land bank by approximately 40 thousand hectares in the Tambov and Belgorod regions supported by an increase in storage capacity and improvement in logistics; further acquisitions of land in the Primorsky krai to expand our agriculture operations in the Far East; developing designs for the new oil facility in the Samara region to refine, deodorize and bottle sunflower oil with a capacity of 100 thousand tons per year; selective acquisition of sugar plants together with new land to grow sugar beets or within the existing sugar beet growing area; improvement of crop mix in favor of crops with higher sales potentials (with corn and soybean expected to be the key drivers of the crop sales); expansion into new markets, including South East Asia, China, the Middle East, United Arab Emirates and Japan, primarily exporting pork, agriculture products such as corn and oil and fat products; and the acquisition of new facilities in Central Russia to produce mayonnaise under our existing flagship brands.

Developing new clusters – Far East project In 2014, we began to implement large-scale investment projects intended to create a major agribusiness cluster in the Primorsky krai. In 2014, we acquired approximately 26 thousand hectares to be used for cultivation of soya (79%) and corn (21%), and in 2015, we acquired a 75% stake in a soya processing plant. The success of this project is expected to be driven by high demand from the Asian markets and lack of sufficient domestic production in the Primorsky krai. This is supported by a number of additional growth drivers. The Company has entered into an agreement with the Corporation for the Development of the Far East on the construction of electricity and road infrastructure for the Far East project through federal budget. In addition, there is a strong export potential of soya and corn into China, Korea and Japan and the Primorsky krai is well situated on the border with China, one of the biggest food markets in the world, and in close proximity to other Asian markets including Japan and South Korea. In 2016 we plan to begin construction of a pig breeding complex in the Primorsky krai with a projected design capacity of at least 100 thousand tons of live-weight annually, which can potentially be further expanded to 300 thousand tons of live-weight annually if barriers on import of pork to China are eased or lifted, which we expect to occur within the next two to three years. The start of production is planned for 2019 with first phase full capacity utilization to be reached in 2020. Our capital expenditures for this project are expected to amount to approximately RUB 60 billion (including RUB 20 billion to RUB 25 billion during first two to three years). In the mid-term we plan to construct in the Primorsky krai a fodder plant, slaughterhouse and meat processing facilities, with a projected capacity of approximately 975 thousand heads a year.

108 Developing new clusters – Greenhouse project The introduction of import sanctions for European and Turkish vegetable producers has led to a significant deficit in the Russian green goods market and has been associated with a corresponding increase in prices, creating a competitive advantage for domestic producers of green vegetables. The deficit of modern greenhouse facilities in Russia by the end of 2015 amounted to more than 2 thousand hectares (according to the research of the industry analytical agency Growth Technologies). In the second half of 2016, we plan to launch the large-scale construction of greenhouse facilities to produce vegetables and green goods all year round in the Michurinsk district of the Tambov region. This includes installing technologically advanced systems with supplementary lighting (to compensate for relatively low light levels in the Tambov region), automatic climate control and computer watering to grow vegetable for sale in retail chains. The first 50+ hectares stage commissioning is expected in the second half of 2017, with the potential launch of the second 50+ hectares phase in the second half of 2018. The project requires capital expenditures of approximately RUB 20 billion to RUB 25 billion. We expect the project to benefit from: the low cost of electricity with low capital expenditures due to its connection to high-voltage power grids; the catchment area which covers regions with a total population above 100 million people; and a high level of production automatization, resulting in lower labor costs.

Further developing consumer brands We believe the business-to-consumer market is a promising area of business development, and plan to continue investing in existing brands and developing new ones in our Oil and Fat division in order to further increase our market share. The development of our Mechta Khoziayki brand into a national brand is expected to increase our market share on the Russian mayonnaise market to 4.7% by the end of 2016. The introduction of a sunflower branded bottled oil is also expected to support further brand enhancement. As a next significant step, we expect to increase the vertical integration of our Meat division by producing branded processed meat products for customers under the Slovo Myasnika brand. We are also considering a further expansion of our brands in our Sugar division, including sugar cubes and packaged sugar.

Optimizing costs and continuously modernizing facilities We aim to become the lowest cost producer in the segments in which we operate. We are focused on the continued increase of efficiencies in our production facilities and product quality due to continued investments in equipment and latest technologies. We expect to continue the modernization of our sugar plants to increase sugar production as well as reduce sugar production costs. In addition, we plan construction of an edible oil refining and bottling facility adjacent to our existing Samara plant. We expect to optimize land productivity and maximize profitability per hectare of arable land ratio. We also expect to enhance our control over the value chain and maximize our self-sufficiency in key input materials. For example, we expect to maximize our self-sufficiency in sugar beet for sugar production through the acquisition of new land around existing and newly acquired sugar plants, as well as making upfront storage and logistics infrastructure investments. We also expect to continue automation of agricultural processes and introduce advanced agricultural technologies.

Further developing human capital Across all business segments, we are carefully evaluating the qualifications and expertise of our staff in order to identify deficits in competences, design plans for personal development and improve the quality and efficiency of human resources. In general, we expect to increase the percentage of internal promotions as compared to external hires. The percentage of internal promotions has steadily increased, and in 2015 reached 34% of total hires compared to 28% in 2014.

History and Development We began our operations as a sugar producer in 1995. We subsequently expanded into agricultural production to grow sugar beets to support our sugar processing business, and as we rotated crops to optimize production, we developed our grain production and trading businesses. We launched our first retail brand, Chaikofsky sugar, in 2003. In 2006, we launched our pig breeding project near our agricultural fields in the Belgorod region. To further diversify our operations, we developed an oil and fat business, which primarily produces vegetable oil, mayonnaise and consumer margarine.

109 From 2008 to 2011, we continued to expand our operations and the land bank under our control and increase our crop yields through the use of modern equipment and technology. In 2009, we acquired two additional sugar processing plants in the Belgorod and Tambov regions, increasing our annual processing capacities for both sugar beets and raw cane sugar while further expanding the production capacity at our sugar processing plants in 2010. In 2010, we increased the land bank under our control to 380 thousand hectares. In 2011, we yielded a record harvest of 497 thousand tons of wheat, barley and beans. As a result, our market shares in Russia in the sugar and oil and fat industries continued to rise. We also continued to develop our pig breeding business by increasing the efficiency of our breeding technologies and expanded our pig breeding operations through construction of additional breeding facilities in the Tambov region. In 2011, we acquired control of an oil extraction plant in Samara, close to our oil and fat production facility in Ekaterinburg, which reached its full design daily capacity of 1,050 tons of sunflower seeds in the same year. In 2011, we completed our international public offering of GDRs which were admitted to trading on the London Stock Exchange. From 2012 to 2015, we significantly increased capital investments to expand our operations and the land bank under our control, and capitalized on our internal vertical integration synergies. We also continued to develop our pig breeding business and improve our production efficiency. In 2014, construction of our pig breeding complexes in the Tambov region was completed and our pig breeding complexes were ranked as the second largest in Russia by the National Union of Pig Breeders. In 2015, we launched our slaughterhouse and meat processing facilities in the Tambov region, with a design capacity of 1.95 million heads a year. In 2014, we acquired approximately 26 thousand hectares of land in the Primorsky krai where we expect to grow crops such as corn and soybeans and develop an additional pig breeding complex, slaughterhouse and meat processing facilities. Construction of the additional pig breeding complex, which has a projected design capacity of at least 100 thousand tons of live-weight annually and can potentially be further expanded to 300 thousand tons of live-weight annually, is expected to begin in 2016 and the start of production is planned for 2019. In November 2015, we purchased the debt (loans and bonds) of the Razgulay group from VEB and 19.97% of shares in PJSC Group Razgulay. In order to finance these acquisitions, we obtained a loan from VEB in the amount of RUB 33.9 billion, bearing an interest rate of 1% per annum repayable in 13 years. The loan is secured by our deposit with VEB in the amount of RUB 13.9 billion bearing an interest rate of 12.84% per annum for the same term. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations – Indebtedness’’.

Recent Developments In March 2016, we participated in auctions to acquire certain assets of the Razgulay group. As a result of these auctions, we have entered into a preliminary agreement with the Razgulay group to acquire stakes in four Russian entities holding title to three sugar plants in the Kursk and Orel regions (with an aggregate current daily processing capacity of approximately 13,100 tons of sugar beets (Krivets-Sakhar, Otradinsky and Kshen sugar plants)) and title to approximately 27 thousand hectares of land in the Kursk region, 46 thousand hectares of land in the Orel region and 17 thousand hectares of land in the Belgorod region surrounding these plants. Upon completion of the acquisition we will acquire (i) 100% interest in legal entities operating Krivets-Sakhar and Otradinsky sugar plants as well as holding title to 27 thousand hectares of land in the Kursk region and 46 thousand hectares of land in the Orel region, (ii) 97.25% interest in a legal entity operating the Kshen sugar plant, and (iii) 59% interest in a legal entity holding title to approximately 17 thousand hectares of land in the Belgorod region. We may increase these holdings in the future to the extent we are able to reach agreement on acquisition of the remaining stakes from the minority shareholders. The aggregate price of these acquisitions is expected to amount to RUB 8.1 billion. We expect that all necessary legal and corporate procedures will be completed in the first half of 2016. In addition, in April 2016, we won an auction to acquire from the Razgulay group a buckwheat processing plant in the Voronezh region with an annual production capacity of 45 thousand tons of buckwheat for RUB 350 million. We expect to enter into a sale and purchase agreement and complete all necessary legal and corporate procedures in the first half of 2016.

110 Organization As of the date of this Information Memorandum, our significant subsidiaries are as follows:

Limeniko Trade and Invest. 100% 100% 99.99% LLC Group of Companies Limited (1) (2) ROS AGRO PLC OJSC Rusagro Group (3) (BVI)(4) Rusagro

Sugar Meat Agriculture Oil and Fat

100% 100% 100% OJSC Znamensky LLC Belgorodsky 100% OJSC Fats and Oil (11) Sugar Plant(5) Bacon(8) LLC Rusagro-Invest Integrated Works(14)

100% 100% 100% LLC LLC Tambovsky LLC 100% (6) Samaraagropromperera OJSC Valuikisakhar Bacon(9) Agrotekhnologiy(12) botka(15)

100% 100% 100% 75% LLC LLC Rusagro- LLC Primorskaya JSC Primagro(13) Rusagro-Sakhar(7) Primorie(10) 20APR201607302914Soya(16)

(1) The Company; (2) Holding company; (3) Management of the Group’s operations; 0.01% participatory interest is held by Vadim N. Moshkovich, Chairman of the Board of Directors; (4) Commodities acquisition and hedging operations; (5) Ownership and operation of sugar plants; currently under reorganization by way of transformation into LLC Rusagro-Tambov; (6) Ownership and operation of sugar plants and control of land in the Belgorod region; (7) Sugar division trading company, sales operations; (8) Operation of pig breeding complex in the Belgorod region, management of Meat division; currently under reorganization by way of accession to LLC Tambovsky Bacon (expected to be completed by the end of April 2016); (9) Operation of pig breeding complex in the Tambov region; currently under reorganization by way of accession of LLC Belgorodsky Bacon thereto (expected to be completed by the end of April 2016); (10) Construction of pig breeding complex in the Primorsky krai; (11) Agricultural operations management; (12) Control of land in the Tambov region, ownership of the Nikiforovsky grain elevator; (13) Control of land in the Primorsky krai; (14) Ownership and operation of Ekaterinburg oil and fat plant, manages Oil and Fat division; (15) Ownership and operation of Samara oil extraction plant; (16) Ownership and operation of oil and fat plant in Ussuriysk (Primorskaya Soya); 25% participatory interest is held by an unrelated third party.

Operations The following is a description of each of our four divisions:

Sugar Overview Our vertically integrated sugar production business currently operates six sugar plants and in the process of acquiring entities operating three additional sugar plants from the Razgulay group that produce sugar from both sugar beets and raw cane sugar, with an aggregate daily processing capacity of approximately 48,350 tons of sugar beets (including the capacity of the plants being acquired from the Razgulay group). Based on our internal estimates that our plants can process sugar beets for up to 130 days per year based on the

111 length of the growing season, our plants have an aggregate annual processing capacity of 6.3 million tons of sugar beets (including three sugar plants being acquired from the Razgulay group). Three of our nine plants are located in the Belgorod region, three are located in the Tambov region, two are in the Kursk region and one in the Orel region. Four of our sugar plants were acquired between 1994 and 2008. In 2009 we acquired two additional sugar plants, Nikiforovsky, located in the Dmitriyevka village, in the Tambov region, and the other, Chernyansky, located in the Chernyanka village in the Belgorod region. In March 2016 we entered into a preliminary agreement to acquire legal entities operating Krivets-Sakhar, Kshen and Otradinsky sugar plants in Kursk and Orel regions with a daily processing capacity of approximately 3,500 tons, 4,200 tons and 5,400 tons of sugar beets, respectively, from the Razgulay group. Each of our nine plants has its own cultivation region located primarily within an approximately 60-kilometer radius of the plant, which helps ensure the timely and cost-efficient supply of sugar beets to the plants. We have planned further investment to continue to modernize our plant equipment and machinery, and to help strengthen our market leadership in conversion rates and efficiency. For example, in 2016, we have budgeted an investment of RUB 1,007 million to increase the daily processing capacity of our Znamensky sugar plant to 8,000 tons of sugar beets by way of increase of the power of pulp dryers, silage construction and reconstruction of beet washing facilities and an investment of RUB 195 million to increase the daily processing capacity of our Nika plant to 5,500 tons of sugar beets by way of modernization of pulp dryers and vacuum evaporating units. In addition, we plan an investment of approximately RUB 2,500 million to increase the daily processing capacity of the Kshen sugar plant to 5,000 tons of sugar beets by 2017 and the Krivets-Sakhar sugar plant to 6,000 tons of sugar beets by 2018. We produce sugar from sugar beets during the months that sugar beets are harvested. We refer to this period as the ‘‘sugar beet campaign’’. The sugar beet campaign occurs from approximately September through December, depending on weather conditions. This period can be extended if we have significant stocks of sugar beets at the end of the harvesting period. In 2015, approximately 63% of the sugar beets we processed were sourced through sugar beets grown by our Agriculture division, approximately 29% through third party sugar beet purchases and approximately 8% through ‘‘tolling’’ arrangements, whereby we process sugar beets of third parties and return the resulting sugar to them after retaining a portion of the sugar for ourselves as payment for our processing services (an average of approximately 34%). In 2014, approximately 67% of the sugar beets we processed were sourced from our Agriculture division, approximately 23% through third party sugar beet purchases and approximately 10% through ‘‘tolling’’ arrangements. In 2013, approximately 70% of the sugar beets we processed were sourced from our Agriculture division, approximately 27% through third party sugar beet purchases and approximately 3% through ‘‘tolling arrangements’’. We aim to decrease the share of sugar beets processed through purchases of sugar beets and tolling arrangements primarily by increasing the share of self-produced sugar beets through continued expansion of the sugar beet crops grown by our Agriculture division. As another example of our ability to capitalize on synergies between our different divisions, in 2010 we incorporated filters into our sugar beet processing equipment which allow us to extract calcium carbonate out of the sugar production process. Calcium carbonate is a natural by-product of the processing of sugar beets and is utilized by our Agriculture division to aid fertilization, helping to return the soil to a more neutral ph level. In addition, other by-products of sugar beet processing can be used for fodder additions. During several weeks a year within the period from February to July, we produce sugar by processing imported raw cane sugar. As a result, we are able to offer our customers a consistent supply of sugar throughout the year, which helps us to maintain our customer relationships and increase our share of the Russian sugar market. We are a significant raw cane sugar processor in the Russian market. According to Soyuzrossakhar, our sugar plants produced approximately 29% of the 618 thousand tons of raw cane sugar produced in Russia in 2015. The sugar we produce is primarily sold in 25 or 50 kilogram bags of white sugar to bulk sugar wholesalers, industrial users and Russian State Reserves Agency. This type of product constituted approximately 67% of our Sugar division sales in 2015 in volume terms. We also produce retail products, primarily in the form of one kilogram bags, branded packed sugar and sugar cubes. Retail products constituted the remaining 33% of the Group’s Sugar division sales in 2015. We produce retail products sold under our brand names as well as some private-label sugar products for certain retail chain customers. In 2015, almost 96% by volume of retail products we produced were branded products. We produce white cube sugar, white and brown sugar sticks and white packaged sugar branded under the mid-market brand Chaikofsky, white cube sugar and white packaged sugar branded under economy brand Russkii Sakhar, white shaped cube sugar under the premium brand Mon Caf´e and we repackage light and dark brown cane sugar produced by third- parties under the premium brand Brauni.

112 In addition, in 2015, our Sugar division started production of a new category of packaged cereals. In May 2015, our Valuikisakhar sugar plant started packaging unbranded long-grain unsteamed rice and in December 2015 we launched a new brand, Teplie Traditsii, under which we produce retail packaged long-grain steamed rice, long-grain unsteamed rice, round-grain rice and whole grain buckwheat. We currently source rice and buckwheat from third party wholesale sellers in Russia, however in April 2016, we won an auction to acquire from the Razgulay group a buckwheat processing plant in the Voronezh region with an annual production capacity of 45 thousand tons of buckwheat. See ‘‘– Recent Developments’’. We plan to further develop our packaged cereals production.

Key assets Key assets of our Sugar division include our nine sugar plants (including three sugar plants being acquired from the Razgulay group). The annual processing capacity of each of our sugar plants is described below in terms of capacity to process sugar beets and raw cane sugar. For sugar beets, a plant’s capacity is referred to as its ‘‘slicing capacity,’’ which indicates the volume of sugar beets that the plant can slice and process. The actual volume of sugar produced from such volume of sugar beets is a function of the plant’s sugar conversion ratio, which will vary depending on the polarization of the particular sugar beets, that is, how much sugar the sugar beets contain, and the plant’s efficiency in extracting the sugar from the beets. In 2015, 2014 and 2013 our plants had an average sugar conversion ratio of 15.5%, 15.7% and 12.3%, respectively, for sugar beets and 98.4%, 98.5% and 97.3%, respectively, for raw cane sugar. For raw cane sugar, a plant’s capacity refers to the volume of raw cane sugar that it can process. The volume of refined cane sugar produced from a given volume of raw cane sugar is a function of the sugar conversion ratio, which varies with the quality of the raw cane sugar and the plant’s efficiency in processing the raw cane sugar. We have historically purchased our raw cane sugar primarily from Brazil, as we have found the Brazilian raw cane sugar generally to be of the highest quality available on the market, and we are typically able to achieve sugar conversion ratios of up to 99%. Ranked by size and relative importance to the Sugar division operations, our nine sugar plants (including three sugar plants being acquired from the Razgulay group) are:

Nikiforovsky Sugar Plant • Located in the village of Dmitriyevka in the Nikiforovsky district of the Tambov region, 40 kilometers west of the city of Tambov • Built in 1965, the plant was acquired by the Group in November 2009 • Significantly modernized in 2009 and 2010, including the installation of a tower diffusion with a capacity of up to 7,000 tons, two press-filters, two drum slicers, an additional cold pre-defecator and three additional juice filters • Daily processing capacity: 7,000 tons of sugar beets or 1,100 tons of raw cane sugar

Znamensky Sugar Plant • Located in the town of Znamenka in the Tambov region, 50 kilometers south of Tambov • Built in 1972, the plant was acquired by the Group in 2002 • Significantly modernized in 2007, including installation of AMA filters, installation of a second diffusion unit, overhaul of the sugar end, installation of pulp drying and granulation facility, and underwent significant refurbishment in 2010, including modernization of the washer and installation of two drum slicers, additional AMA filters, vacuum evaporating units with circulation, new steam condensation unit, three vertical crystallizers and three new centrifuges. In 2016 we launched a facility for molasses desugarisation with an annual capacity of 100 thousand tons of molasses, which will enable us to increase the sugar production of up to 40 thousand tons of sugar a year • Daily processing capacity: 6,500 tons of sugar beets or 850 tons of raw cane sugar

Zherdevsky Sugar Plant • Located in the town of Zherdevka in the Tambov region, 120 kilometers south of Tambov • Built in 1938, the plant was acquired by the Group in 1999

113 • Significantly modernized in 2008 and 2009, which included installation of four centrifuges and the commissioning of a pulp drying unit, in 2013 the sugar beet processing capacity was increased to 5,500 tons and in 2015 further to 6,000 tons • Daily processing capacity: 6,000 tons of sugar beets

Chernyansky Sugar Plant • Located in Chernyanka village in the Belgorod region, 90 kilometers north-east of Belgorod • Built in 1961, the plant was acquired by the Group in November 2009 • Significantly modernized in 2009 during preparation of the plant for raw cane sugar and sugar beet processing after the plant’s operations had been suspended for more than a year and in 2010, which included installation of a new defeco-saturation unit, lime kiln modification, washing station modernization, installation of three centrifuges and sugar dying unit modernization • Daily processing capacity: 5,500 tons of sugar beets

Valuikisakhar • Located in the town of Valuiki in the Belgorod region, 115 kilometers east of the city of Belgorod • Built in 1973, the plant was acquired by the Group in 1999 • Significantly modernized in 2009, including overhaul of the defeco-saturation unit and installation of a line for sugar packaging in one kilogram plastic bags • Daily processing capacity: 5,250 tons of sugar beets or 750 tons of raw cane sugar

Nika • Located in the Pyatnitskoye village in the Belgorod region, 90 kilometers east of Belgorod • Built in 1954, the plant was acquired by the Group in 1998 • Nika is the only sugar plant in the Belgorod region that produces pressed powdered sugar and pressed refined sugar • Significantly modernized in 2009, including installation of seven BMA centrifuges, commissioning of the pulp drying and granulation facility, installation of AMA filters • Daily processing capacity: 5,000 tons of sugar beets or 750 tons of raw cane sugar

Otradinsky Sugar Plant • Located in the Otradinskoye town of the Mtsensky area in the Orel region, 30 kilometers of the city of Orel • Built in 1964, the plant was acquired by the Group in 2016 • Daily processing capacity: 5,400 tons of sugar beets

Kshen Sugar Plant • Located in the Kshensky town in the Kursk region, 132 kilometers of the city of Kursk • Built in 1951, the plant was acquired by the Group in 2016 • Daily processing capacity: 4,200 tons of sugar beets

Krivets-Sakhar • Located in the Seim town of the Manturovsky area in the Kursk region, 91 kilometers of the city of Kursk • Built in 1965, the plant was acquired by the Group in 2016 • Daily processing capacity: 3,500 tons of sugar beets

114 Sugar Plant Summary The following table illustrates the annual processing capacity and the 2015 production of our sugar plants (excluding three sugar plants being acquired from the Razgulay group):

(1) Daily Processing 2015 Production Capacity (in Number of thousand tons) Processing Sugar Raw Cane (in tons of sugar) From: Days Beet Sugar Raw Raw Head-count, Slicing Processing Sugar Cane Sugar cane 2015 Sugar Plant Capacity Capacity Beets Sugar Total Beet sugar Average Nikiforovsky ...... 7.00 1.10 109,247 92,632 201,808 104 93 421 Znamensky ...... 6.50 0.85 127,845 58,335 186,179 124 69 346 Valuikisakhar ...... 5.25 0.75 98,561 32,096 130,657 120 45 315 Nika ...... 5.00 0.75 80,467 80,467 119 45 399 Chernyansky ...... 5.50 – 92,239 92,239 115 – 280 Zherdevsky ...... 6.00 – 103,920 103,920 123 – 290 Subtotal or average, as applicable . 5.88 0.86 612,279 183,062 795,341

(1) Includes processing of sugar beets under tolling agreements. The 2015 Rusagro sugar plant production figures above include sugar processed from sugar beets on behalf of third parties through tolling arrangements. The calculation of Rusagro’s share of total sugar production in Russia for 2015 of 14% (based on Soyuzrossakhar data) is based on the 2015 sugar production year, which includes production of sugar from raw cane sugar during the calendar year 2015 and from sugar beets during the 2015 sugar beet campaign. Our sugar plants are located in close proximity to the fields in the Belgorod, Tambov, Kursk, Orel and Voronezh regions where significant quantities of sugar beets are produced, particularly our land bank on which we grow sugar beets. Each of our nine plants has its own cultivation region located primarily within an approximately 60-kilometer radius of the plant.

Rusagro Sugar Plants and Land Bank

20APR201604093690

Packaging Since 2009, we have acquired and developed retail packaging facilities at certain of our sugar plant sites. The Nikiforovsky and Valuikisakhar plants package sugar in plastic bags, and the Chernyansky plant

115 packages sugar in paper bags. Our Nika plant produces and packages sugar cubes. Subject to the limitations on the type of packaging (for example, plastic compared to paper bags), our plants can readily switch between the brands they package.

Capital Expenditures and Maintenance We make significant ongoing investments in the maintenance and modernization of our existing equipment, and we have increased our processing capacity by expanding operations at our existing plants. For the years ended December 31, 2013, 2014 and 2015, our capital expenditures in our Sugar division totaled RUB 0.8 billion, RUB 1.6 billion and RUB 2.9 billion, respectively. In 2013, 2014 or 2015, we made material investments to expand the sugar beet processing capacity at our existing plants by modernizing pressing lines, pulp drying facilities and heating systems, acquisition of machinery and equipment. In 2016 our Znamensky plant was one of the few Russian producers to launch a facility for molasses desugarisation with an annual capacity of 100 thousand tons of molasses, which will enable us to increase the sugar production of up to 40 thousand tons of sugar a year. Our capital expenditures budget for our Sugar division for 2016 is approximately RUB 1.9 billion, which includes approximately RUB 1 billion for increasing of the daily processing capacity of our Znamensky sugar plant and approximately RUB 0.2 billion for increasing of the daily processing capacity of our Nika sugar plant (this budget excludes expenses on our planned acquisition of the buckwheat plant, see ‘‘– Recent Developments’’). Because of the seasonality of sugar production, we have naturally established maintenance periods. Each year, our plants suspend operations during January and February following the sugar beet campaign, and again in August as we wind down the processing of raw cane sugar in anticipation of the upcoming sugar beet campaign. The periods during which our plants suspend operations fluctuate each year depending primarily on the timing of the sugar beet campaign.

Procurement of raw materials We produce sugar from sugar beets during the sugar beet campaign, and following the campaign we produce sugar by processing raw cane sugar, typically during several weeks a year within the period from February to July (inclusive). Our annual production of sugar from each of these processes has historically been divided as follows:

Sugar Production(1) for the Year Ended December 31, Sugar Process 2015 2014 2013 Beet Sugar ...... 76% 69% 82% Cane Sugar ...... 24% 31% 18% Total ...... 100% 100% 100% Total Annual Sugar Production (in tons) ...... 765,527 716,359 610,450

(1) Excluding production of sugar for the benefit of third parties under tolling agreements. The most significant component of the cost of these production processes is the cost of the sugar beets and raw cane sugar. In 2015, the cost of sugar beets constituted approximately 70% of the total cost of producing beet sugar, and the cost of raw cane sugar constituted approximately 95% of the total cost of producing cane sugar. The prices of sugar beets and raw cane sugar is generally a function of the prevailing global market price for sugar, and thus they are sensitive to the underlying volatility of the global sugar price. As a result, increases in sugar input prices can generally be transferred to our customers as increases in sugar sales prices. See ‘‘– Sales and Distribution’’ below. Based on our management reporting estimates, in 2015, 2014 and 2013 our average cost per ton of producing sugar from sugar beets was approximately RUB 27,102, RUB 22,015 and RUB 20,550. Typically, however, in years that are not affected by extreme weather conditions affecting the quantity and quality of available sugar beets, our average cost per ton of producing sugar from sugar beets is significantly lower than our average cost per ton of producing sugar from raw cane sugar. For example, based on our management reporting estimates, in 2015, our average cost to produce a ton of sugar from sugar beets was approximately RUB 27,102, while our average cost to produce a ton of sugar from raw cane sugar was approximately RUB 32,826.

116 As seen from the sugar production figures above, in 2015 we produced approximately 76% of our sugar by processing sugar beets. We acquire the sugar beets from three sources: our Agriculture division, third-party producers through sugar beet purchases, and third-party producers through tolling arrangements. Our preferred source of sugar beets is from our Agriculture division, and our sugar plants process all sugar beets produced by our Agriculture division. We also acquire sugar beets from third-party producers through purchases and through tolling arrangements, whereby we process sugar beets for third parties and retain a portion of the sugar beets provided in lieu of monetary payment for our processing services. In 2015, of the sugar beets used to produce the beet sugar owned by us (not including beet sugar produced on behalf of third parties through tolling arrangements), 63% were acquired from our Agriculture division, 29% through purchases from third-party producers, and 8% through tolling arrangements. In 2014, the comparable sugar beet figures were: 67% acquired from our Agriculture division, 23% acquired through purchases from third-party producers, and 10% acquired through tolling arrangements. In 2015 and 2014 in addition to the sugar beets processed for our own account, we processed approximately 314 thousand tons and 326 thousand tons, respectively, of sugar beets on behalf of third parties as a result of our tolling arrangements. Sugar beets acquired from our Agriculture division are acquired pursuant to contracts between the respective entities in the Sugar and Agriculture divisions, which are established annually and determine the purchase price of the sugar beets through an agreed formula. This formula is based on several factors, including the price for the beet sugar produced from such sugar beets realized by the Sugar division upon sale, the sugar content of the beets upon delivery of the sugar beets to the Sugar division and the final conversion ratio that the applicable sugar plant achieves after processing such sugar beets. The formula is modelled after the formula typically used by the Group and other sugar processors in tolling arrangements to determine the effective price paid for sugar beets acquired through such arrangements. The use of these formulas historically has resulted in higher prices paid for the sugar beets acquired through such arrangements than those paid by the Group for sugar beets acquired through third party purchases. As part of our tolling arrangements in 2015, we retained an average of approximately 34% of the sugar produced from beets supplied for processing by such third parties as payment for our processing services. Sugar beets acquired from third-party producers are acquired from numerous small, local producers on negotiated market terms. As noted above, our cost per ton of producing sugar from sugar beets in a typical year is significantly lower than the cost of producing it from raw cane sugar. As a result, we are striving to increase the proportion of sugar we produce from sugar beets and we are also seeking to reduce our dependence on sugar beets purchased from third parties and acquired through tolling arrangements, in each case by increasing the volume of sugar beets produced by our Agriculture division. To accomplish these goals, we seek to acquire control of new land on which we are able to grow sugar beets, and we also continue to maximize the production of sugar beets from our existing fields. See ‘‘– Agriculture – Land Bank’’. The balance of the sugar we produce is through processing raw cane sugar. In 2015, 2014 and 2013 we processed approximately 184 thousand tons, 219 thousand tons and 109 thousand tons, respectively, of raw cane sugar. We use the Intercontinental Exchange Sugar No. 11 contract, the world benchmark contract for raw cane sugar trading, to determine the price of raw cane sugar we acquire from our suppliers. We source our raw cane sugar primarily from south and central Brazil, as we have historically found that Brazilian sugar provides the highest conversion ratio of up to 99%. We purchase our raw cane sugar from leading traders in the raw cane sugar market, such as Glencore and Cargill International S.A., with many of whom we have longstanding relationships. According to Soyuzrossakhar, our sugar plants produced approximately 29% of the 618 thousand tons of raw cane sugar produced in Russia in 2015. We obtain natural gas for production through government regulated pricing arrangements that significantly lower our fuel-related production costs. If our usage exceeds our allocated quota for the fuel to be provided at reduced rates, we then purchase fuel at market rates.

117 Products & brands The following table illustrates the sugar products we sell and the allocation between wholesale, industrial and retail products:

Share of Share of Share of total 2015 total 2014 total 2013 sugar sales sugar sales sugar sales Product Product Segment (by ton) (by ton) (by ton) Bags (25, 50kg), big bags, bulk ...... White sugar Wholesale, 61.4% 51.2% 43.6% Industrial Bags (25, 50kg) ...... White sugar State 5.6% 6.5% 5.3% reserves Retail /Small Wholesale ...... White packed sugar; Economy, 33% 42.3% 51.1% white cube sugar; white Mid-market shaped cube sugar; white, and brown and assorted sugar Premium sticks; Brown dark and light granulated sugar Total ...... 100% 100% 100% Total sugar sales (in thousand tons) .... 784 753 653

Storage Facilities Once produced, our sugar is transported to our storage facilities at each of our plants prior to being sold. The Nikiforovsky sugar plant has two silos, which can each store up to 15 thousand tons of sugar, for an aggregate storage capacity of approximately 30 thousand tons of sugar. Each of our other sugar plants has on-site storage facilities in which we store sugar in bags. Our storage capacity for sugar stored in these warehouses totals approximately 430 thousand tons. Sugar can be readily stored for up to 12 months in the Nikiforovsky silos or in bags in our storage facilities. The amount of sugar we store in these facilities generally increases during the sugar beet campaign and reaches a peak at the end of the campaign. Because the supply of sugar is elevated during the sugar beet campaign and immediately thereafter, sugar prices typically are lower during this period. Our storage capacity allows us to store sugar produced during this period for sale later in the year, when sugar prices have typically increased. Once our beet sugar stores are sold, we typically maintain cane sugar inventory equal to approximately two months of sales.

Sales and Distribution The distribution of our products is primarily coordinated by our sales office in the Moscow region. Our sugar sales functions form a part of the operations of LLC Rusagro-Sakhar, and the Sugar division is managed through LLC Rusagro-Center. See ‘‘– Organization’’ above. Our products are distributed through three primary channels. We primarily sell bagged sugar in 25 or 50 kilogram bags to sugar wholesalers. In 2015, approximately 35.2% of our sugar by volume was sold to such wholesalers (including 5.6% to federal consumers). We also sell sugar directly to industrial customers, such as confectioners and other food producers, and in 2015, approximately 31.8% of our sales by volume were to industrial consumers. Finally, we sell packaged products directly to retail points and indirectly via distributors. Our retail sales constituted approximately 33.0% of our sales by volume in 2015 (of which 7.3% was represented by cube sugar). Our retail sugar products include white cube sugar, white and brown sugar sticks and packaged white and brown cane sugar sold under the Chaikofsky, Russkii Sakhar, Mon Caf´e and Brauni brands, and un-branded sugar packaged in one, three, five and 10 kilogram packages. We began producing cube sugar under the Chaikofsky brand in 2003, and in 2010, we started production and sales of refined white sugar in 0.9kg packages in the mid-market segment under the Chaikofsky brand. We acquired the Russkii Sakhar packaged sugar operations in connection with our acquisition of the Nikiforovsky plant in 2009, and during 2010, we began producing products branded under the Russkii Sakhar brand. We have been producing white shaped cube sugar under the Mon Caf´e brand and light and dark brown cane sugar under the Brauni brand since 2008. We also produce private label sugar products for certain of our retail chain customers, such as X5 Retail Group, Seventh Continent and Metro. Our range of private label products includes packaged sugar in one, three and five kilogram packages and sugar cubes. We offer private label products as a service to our customers to enhance our relationships with them.

118 The major industrial customers of our sugar products include Lebedyansky (an affiliate of PepsiCo), Nestle, Mondelez Russia, United Confectioners, Danone Industry and Wimm-Bill-Dann Foods, with whom we have long-standing relationships. These customers primarily purchase sugar in 50 kilogram bags for industrial use. Retail customers of our packaged products include major retail chains in Russia, such as Magnit, Auchan, Lenta, Metro and X5 Retail Group. We generally conduct business with local distributors or affiliated entities of these customers. Our customer base is widespread, both with respect to the distribution of our sales among our customers, as well as geographically. None of our customers individually accounted for more than 10% of our total revenues from sales of sugar products in 2015, and our ten largest customers together accounted for approximately 35% of our total sugar sales (both by sales volume and by revenues from the sale of sugar products). The price at which we sell our sugar to industrial customers is negotiated with each customer, and varies depending on the overall sugar market conditions and the needs of each customer. The price at which we sell to wholesale or industrial customers is primarily set at the spot rate for bulk sugar, which fluctuates with the sugar market. The price of our retail packaged sugar is also generally reset daily to reflect the spot rate for bulk sugar. The price for our cubed sugar products is periodically reset to reflect market conditions, but such price adjustments do not occur as frequently as the adjustments in the spot rate for bulk sugar. We typically adjust our selling price for our cubed sugar products not more than once a month (for certain products, once a quarter). The distribution network used to deliver our products varies depending on the channel through which the product is sold. We utilize both independent trucking companies and the Russian railroad system. Deliveries to sugar wholesalers are usually made by railroad. Sales directly to industrial customers are generally delivered via truck directly to their factories, although a few factories accept delivery by railroad as well. We deliver our retail products primarily through local distributors. Distributors in the European part of Russia receive deliveries by truck, while deliveries to distributors in other areas of the country are made primarily by railroad. The European region in which we deliver products by truck includes the Moscow Region, St. Petersburg, Orel, Voronezh, Rostov-on-Don, Samara, Ulyanovsk, Tver, Pskov, Ryazan, Nizhny Novgorod and Saratov. For the distributors in the rest of the country, we typically deliver the sugar by railroad to a wholesaler to whom we sell our products that is located in the area of the distributor, and the sugar is then delivered by truck from the wholesaler’s facilities to the individual distributors. Our truck deliveries are made under contracts with up to 10 different trucking service suppliers, and we are not dependent on any particular supplier. The volume of our deliveries by truck is increasing as our retail business increases. Our railroad deliveries are primarily made through ‘‘Pervaya Gruzovaya Kompanya’’, the largest private railway operator, and we also try to utilize other smaller, private railroad companies where possible.

Competition According to Soyuzrossakhar, total sugar production is Russia amounted to 5,717 thousand tons. Our significant competitors in the Russian sugar market are Prodimex, Dominant and Sucden. Based on information obtained from Soyuzrossakhar and on our internal production estimates, the Group and these other top three producers accounted for approximately 59% of total Russian sugar production in 2015. This production share information includes production both by the Group and through tolling arrangements. Based on this production share information, we estimate that the Group and Prodimex accounted for approximately 14% and 20%, respectively, of the Russian sugar production in 2015, Dominant produced approximately 15% of the sugar produced in Russia in 2015, and Sucden had production share of approximately 10%, during this period. We estimated that the Group and Prodimex accounted for approximately 14% and 22%, respectively, of the Russian sugar production in 2014, Dominant produced approximately 13% of the sugar produced in Russia in 2014, and Sucden had respective production share of approximately 9% during this period. With regard to the sugar cube market, there are currently only a small number of sugar cube producers in Russia, and our most significant competitors in this market are Belgospishcheprom (Belarus producer) and Lensakhar (Kuskov’s manufacturer), a sugar cube producer based in St. Petersburg. According to the latest information compiled by Nielsen on 16 cities in Russia dated February 2016 (including, for example, Moscow, St. Petersburg and Ekaterinburg), Rusagro’s average sugar cube market share by volume in these

119 16 cities was approximately 44% in 2015, while Belgospishcheprom’s average 2015 market share was 6%, and the average market share of Lensakhar, the next largest sugar cube producer, was 4%. Competition from imported sugar is limited due to the protective duties applied to imported sugar. See ‘‘Regulation of the Russian Agricultural and Food Industry.’’

Quality Assurance We maintain strict quality controls over our production. There are currently several official state quality standards used in production of granulated and refined sugar in Russia – GOST 21-94 and GOST 22-94. Most of the sugar produced in Russia is granulated sugar produced to the GOST 21-94 standard, with a small portion produced to the GOST 22-94 standard, typically utilized in products that require refined sugar, such as sugar cubes or sugar colas. Most of the sugar we produce is granulated sugar produced in accordance with the GOST 21-94 standard. To produce our pressed sugar products (i.e., sugar cubes), we further refine the sugar to meet the GOST 22-94 standard. We have established quality assurance policies and procedures to ensure that the sugar we produce meets the official quality measurements. These procedures include systematic laboratory testing of our raw materials to ensure the relevant physical characteristics of the inputs fall within the parameters established under the contracts pursuant to which we acquire such inputs. We also test samples of the sugar throughout processing to ensure that the sugar output will meet the applicable state quality standard. We then test the final output to confirm that it complies with the applicable standard.

Meat Overview According to the National Union of Pig Breeders, we operate the second largest pig breeding complex in Russia by production volumes. Our goal is to become a leader in Russia in production efficiency through application of advanced pig breeding technologies, optimization of resource management and utilization of synergies between our Agriculture division and pig breeding operations. Our pig breeding operations consist of breeding and rearing pigs and producing fodder at facilities located in the Belgorod region and Tambov region. We launched our pig breeding project in 2006, with initial investment in the construction of a pig breeding complex and a fodder plant in the Belgorod region, a further investment in 2011 in a pig breeding complex and fodder plant in the Tambov region, and a further investment in 2015 in a greenfield project in the Primorsky krai. Our pig breeding complexes currently consist of six pig breeding farms for 4,800 sows each and one stud farm for 2,400 sows clustered in the Belgorod region, within 60 kilometers of our fodder plant (production capacity of 40 tons/hour) adjacent to our Nezhegolsky grain elevator with a capacity of 200 thousand tons, and seven pig breeding farms for 4,800 sows each and two stud farms for 1,200 and 1,700 sows in the Tambov region, with a fodder production complex (production capacity of 50 tons/hour) attached to our Zherdevsky grain elevator with a capacity of 45 thousand tons. Our complex in the Tambov region also includes a slaughterhouse and meat processing facilities with a projected capacity of 1.95 million heads a year, which is expected to be reached in 2016, as well as rendering facilities. Our greenfield project in the Primorsky krai will include breeding complex, with a projected design capacity of at least 100 thousand tons of live-weight annually, which can potentially be further expanded to 300 thousand tons of live-weight annually, as well as a fodder plant, slaughterhouse and meat processing facilities, with a projected capacity of approximately 947 thousand heads a year. We began construction of our first pig breeding complex in the Belgorod region, Belgorodsky Bacon, in 2006 and began breeding livestock there in 2007. In 2011 we started construction of an additional pig breeding complex in the Tambov region and began breeding livestock there in 2012, reaching the full design capacity of 115 thousand tons of live-weight in 2014. In 2013 our pig stock at complexes both in the Belgorod region and the Tambov region reached an average of approximately 1,674 thousand heads and has not changed since then. As of January 1, 2016, our farms in the Belgorod region held approximately 731 thousand pigs, 34 thousand sows and 2.4 thousand brood sows and our farms in the Tambov region held approximately 943 thousand pigs, 40 thousand sows and 2.9 thousand brood sows. In 2015, 2014 and 2013 we produced 195 thousand tons, 187 thousand tons and 135 thousand tons of live-weight, respectively. In 2015, the brood sows in our pig breeding complexes produced an average of 2.25 farrows, with an average of approximately 12.73 pigs per farrow. Our average marketable pig live-weight in 2015 was 107.4 kilograms.

120 In 2015, the pigs we produced were sold as livestock and as pork carcasses and cuts. During 2014 and 2013, we sold primarily livestock, along with a small portion of pork carcasses in 2014. In 2015 and 2014, we produced a total of 35 thousand and 9 thousand tons of processed pork, respectively. We also produce fodder at two fodder complexes primarily for internal use in our pig breeding complexes. We are currently in the process of developing an additional pig breeding complex in the Primorsky krai with a projected design capacity of at least 100 thousand tons of live-weight annually, which can potentially be further expanded to 300 thousand tons of live-weight annually. The project will also include a fodder plant, a slaughterhouse and meat processing facilities. We expect construction of the pig breeding complex to begin in 2016, and the start of production is planned for 2019.

Breeding facilities Our current pig breeding complex in the Belgorod region include the following six farms: Alexandrovsky, Bulanovsky, Druzhba, Mayak, Yutanovsky and Shidlovsky as well as a stud farm Progress clustered within 40 kilometers of one another. Progress has production and rearing facilities for the renewal of our sow population, a boar site for semen collection and a quarantine site for all incoming pigs. The other six farms are self-sustained pig-breeding complexes with all the necessary facilities for breeding and growing pigs, including reproduction, rearing and fattening sites. Progress has a capacity of 2,400 brood sows and the capacity of each other farm is 4,800 sows, not including our brood sows. Operations at Progress focus on sow population renewal and processing of incoming pigs, and we produce marketable pigs at the remaining six farms. Our current pig breeding complex in the Tambov region includes seven farms (Burnaksky, Pichaevsky, Lipovsky, Maryevsky, Belyaevsky, Izmaylovsky and Sayukinsky), as well as two stud farms Natalievsky and Osinovsky each with boar sections and a quarantine site clustered within 80 kilometers of one another. Stud farms have a capacity of 1,200 and 1,700 brood sows, and each of the other farms has a capacity of 4,800 sows. The facilities and processes are similar at each of these farms. Sows deliver pigs at a designated production site. When pigs reach a weight of seven kilograms, which typically occurs around the age of 24 days, they are transferred to a rearing site. Pigs spend approximately 30 days at the rearing site until they reach a weight of 30 kilograms, after which they are transferred to a fattening site. At the fattening site, the pigs grow to approximately 105 to 120 kilograms, typically by the age of 165 to 172 days, after which they are ready to be slaughtered or sold. In 2015, 2014 and 2013 sales of live pigs comprised approximately 78%, 95% and 100% of our revenues from pork production, respectively. We retain pig breeding experts from Cargill to provide on-site consultations on breeding and feeding technologies. We are currently in the process of selecting the pig breeding equipment to be used in our pig breeding complex to be constructed in the Primorsky krai. Our farms are located on land in the Belgorod region and the Tambov region controlled by the Group, which allows us to utilize farm waste in our agriculture operations where possible and facilitates implementation of biosecurity measures. We are currently assessing potential opportunities to expand our agricultural operations into the Primorsky krai to benefit from such synergies there as well. We breed our livestock from sows produced by brood sows and boars imported from PIC, Topigs and Danbred, leading suppliers of breeding stock in the world. In 2015, we imported approximately 600 brood sows to renew our sow population. PIC and Topigs livestock produce high quality bacon with a thin strip of fat, while Danbred livestock yield both high meat production and high breeding capabilities. We purchase genetically improved cross-breeds of Large White, Landrace and Duroc pigs. The average life-span of a brood sow is approximately two and a half years, and one brood sow typically produces five to seven litters of pigs over the course of her life. For the new pig breeding complex being constructed in the Primorsky krai, we plan to acquire the brood sows from DanAvl. Our analysis indicates that DanAvl pig supplies have consistently resulted in healthier, more productive animals in the region and we expect these pigs to be the best fit with our planned production requirements for this complex.

121 Production Costs Fodder is the primary raw material in our pig rearing process, constituting approximately 56% of the total cost of production of livestock. Our second largest production cost is depreciation and maintenance, which, according to our management accounts, constituted 18% of our total production costs in 2015. None of the other components of our production costs constituted more than 10% of our total costs (including labor costs of 7%). In 2015, 2014 and 2013 our annual fodder consumption per ton of live-weight produced was 2.99 tons, 3.05 tons and 2.7 tons, respectively.

Capital Expenditures The Group has invested RUB 6.67 billion (net of VAT) in our pig breeding operations in the Belgorod region since their inception as a greenfield project in 2006 and RUB 10.45 billion (net of VAT) in our pig breeding operations in the Tambov region since their inception as a greenfield project in 2011. Operations at our pig breeding complexes reached their maximum design capacity at the end of 2009 in the Belgorod region and in 2014 in the Tambov region, and limited capital expenditures in the next few years are planned with regard to the existing Belgorodsky Bacon and Tambovsky Bacon complexes, primarily to maintain and improve the existing technologies. In 2015 we introduced a food safety management system at our complexes, which was certified by SGS. We have budgeted an investment of RUB 343 million to increase the headcount capacity of our farms in the Belgorod region by 14,300 heads, which will enable us to increase the production of pork by approximately 8.1 thousand tons of live-weight a year. We have also budgeted an investment of RUB 2,184 million to increase the headcount capacity of our farms in the Tambov region by 30,240 heads and 6,000 sow heads, which will enable us to increase the production of pork by approximately 22 thousand tons of live-weight a year. The planned facility in the Primorsky krai is expected to be constructed in three stages, with a total capital expenditures budget of RUB 60 billion (including RUB 20 billion to RUB 25 billion during first two to three years). The actual capital expenditures in 2015 and projected capital expenditures for each of the next three years relating to each of our pig breeding complexes are as follows:

2015 2016 2017 2018 (Actual) (Projected) (Projected) (Projected) Total (in RUB millions) Belgorodsky Bacon ...... 140 718 475 281 1,658 Tambovsky Bacon ...... 979 3,677 1,635 867 7,468 Complex in the Primorsky krai ...... 4,120 6,177 12,156 5,894 24,681 Total ...... 5,239 10,573 14,267 7,072 33,807

Fodder plants We produce pig fodder at the fodder plants adjacent to our Nezhegolsky grain elevator, situated in close proximity to the pig breeding complex in the Belgorod region and our Zherdevsky grain elevator in close proximity to our pig breeding complex in the Tambov region. The distance from the elevators to each of our farms in both the Belgorod region and the Tambov region ranges from 12.8 to 100 kilometers. By operating our own fodder plants, we aim to control availability and quality of feed and help minimize animal health risks. Our fodder plant in the Belgorod region was commissioned in May 2008 and currently has an annual capacity of approximately 372 thousand tons of feed (40 tons of feed an hour). Our fodder complex in the Tambov region was commissioned in 2013 and currently has an annual capacity of approximately 298 thousand tons of feed (50 tons of feed an hour). In 2015, 2014 and 2013 our fodder plants produced approximately 579 thousand tons, 565 thousand tons and 359 thousand tons of feed, all of which was consumed by our pigs. Our fodder complex in the Tambov region has its own grain storage facility of 120 thousand tons. Our plans for the pig breeding complex in the Primorsky krai include the construction of an additional fodder plant.

122 Our two fodder plants produce granulated feed from grain (wheat and barley) representing approximately 53% of fodder production cost, corn (representing approximately 11% of production cost), sunflower and soybean meal (representing approximately 6% of production cost), sunflower oil, mineral additives, vitamins and other ingredients. The largest production costs of fodder is grain which, according to our management accounts, constituted approximately 53% (including wheat and barley) of our fodder production costs in 2015. We also purchase premixed concentrates to supplement the nutritional content of the fodder, which are tailored to our specific needs. We currently use 24 recipes of blends to meet different dietary and cost requirements. We can efficiently change the composition of feed blends according to our needs as well as availability and cost efficiency of components. Diet is determined by age, function, health and other characteristics of a pig. As we strive to improve our production efficiency, we continue to develop our in-house expertise regarding feeding requirements, including any special dietary requirements, for our pigs and we also regularly consult with Cargill regarding their diet. We acquire grain from our Agriculture division and third-party suppliers, in each case at arms’ length, market prices. When purchasing grain, we survey the grain market and purchase grain from our Agriculture division only when such acquisition is the most cost efficient option. Acquiring grain from our Agriculture division is often the most cost efficient choice, particularly because grain can be loaded directly into our fodder plant from our elevators via a conveyer belt system, thus minimizing transportation time and cost. As a result, during the buying campaign in July-December of 2015, approximately 38% of our required grain for feed (including wheat and barley) was provided by our Agriculture division. Grain acquired from third parties typically consists of grain mixes utilized in our feed production that our Agriculture division does not produce. Our fodder plant includes a laboratory responsible for confirming the quality of all ingredients used in our feed, which enables us to ensure a high quality of feed and maintain biological security. Once produced, feed is delivered to the farms by our own trucks.

Sales and distribution We conduct all our sales through Belgorodsky Bacon and Tambovsky Bacon, which operate the pig breeding complexes and sell the live pigs produced and fresh and chilled pork carcasses and cuts. The following table presents sales volume for each of the years ended December 31, 2015, 2014 and 2013:

2015 2014 2013 (thousand tons) Livestock ...... 141 173 113 Processed pork ...... 35 9 2 Total ...... 176 182 115

The design production capacity of our pig farms in the Belgorod region is approximately 83 thousand tons of live-weight per year, and we achieved this rate of annual production in 2009. The design production capacity of our pig farms in the Tambov region is 115 thousand tons of live-weight per year, and we achieved this rate of annual production in 2014. Our pig farms in the Belgorod region exceed their design capacity and produce approximately 90 thousand tons of live-weight. Our live pigs are sold to meat processors mainly in the Central Federal District, Volga Federal District and Southern Federal District of Russia, primarily in the Belgorod, Voronezh, Volgograd, Penza and Moscow regions. Our largest customers are Bobrovsky Meat Plant, Bogdanovsky Meat Plant, Vepoz Trade House and Obukhovsky Meat Plant. These five customers represent approximately 48% of our sales in 2015, while our 10 largest customers represent approximately 63% of our sales in 2015. We typically enter into framework contracts with our customers annually, whereby the price of our products fluctuates weekly based on specified demand and supply conditions. The geographical area in which we sell our live pigs is limited by the logistical requirements of transporting live pigs (within approximately 1,000 km), as death rates increase with the distance over which the pigs must travel. In 2012 we started construction of our slaughterhouse and meat processing facilities in the Tambov region, with a design capacity of 1.95 million heads a year. In 2015 these facilities were operating in a test mode and processed 254 thousand heads. The facilities consist of four units covering all stages of meat processing and production of end products such as pork carcasses, pork cuts and retail products such as semi-finished

123 chilled pork cuts. Since 2016 we have started producing retail products under our own brand name Slovo Myasnika. The product line includes chilled pork cuts, forcemeat and vinegar pickled meat. We plan to increase the production of this retail product line by 15 to 20% a year supplying it to major retail chains such as Auchan, Lenta and X5 Retail Group with the aim to become among the top three major retail pork meat producers in Russia. We also plan to expand the geographic distribution of our meat products, including retail products, to foreign markets such as China, South Korea, Japan, other countries in South East Asia and Africa, subject to our production capacities and import barriers in the destination countries.

Competition According to the National Union of Pig Producers, from 2012 to 2015 the share of imported pork decreased from approximately 32% in 2012 to 9% in 2015. This decrease is supported by an annual import quota (of 430 thousand tons of pork) and high import duties for out of quota imports as well as a ban on import of live pigs from the EU and meat from the US due to veterinary rulings and as counter sanctions measures. As a result, the primary competition for our products comes from other domestic industrial producers. We operate in an unconsolidated industry. Our main peers in the pig breeding business are Miratorg and Agro-Belogorye in the Belgorod Region and large pig breeding complexes in other regions, such as Cherkizovo and Siberian Agricultural Group.

Biological security We seek to implement best practices regarding biosecurity at our pig farms in order to produce pigs of high quality and reduce the risk of diseases. We sought the advice of Cargill specialists on biosecurity matters as we designed and constructed our existing pig breeding complex, and we expect to continue to consult such specialists as we construct our new pig breeding facilities. We observe the following biological and veterinary requirements at our farms: Geographic separation. Our farms are located on land controlled by the Group. There are no animal breeding farms or households within a 10-kilometer zone around our farms. Also, our farms are located at a distance of one to three kilometers from one another. Our pigs thus avoid contact with other animals, which helps prevent the pigs from contracting diseases from such animals and allows us to effectively implement other biosecurity measures. Specialization. We separate our pigs by age and function: young pigs, pigs, sows and boars are each kept at different sites. Such separation helps prevent transfer of diseases. Restricted access. Access to all areas within our farms as well as the areas surrounding the farms is strictly controlled. Only designated authorized personnel are allowed to enter a particular site. There are showers at each site and any visitor must comply with ‘‘shower in/shower out’’ procedures, which also requires them to leave all personal belongings outside the site and wear special clothing when entering the site. Vehicles can enter the farms territory only after being washed and disinfected. All entries and exits by visitors (including our employees) and vehicles are registered and strictly monitored. Feed control. Our fodder plant laboratory checks all ingredients that we use for the production of feed for quality and purity, including, among other things, the absence of pathogens, infectious agents or toxicity. All feed undergoes thermal treatment before it is provided to the pigs, to help prevent the spread of diseases through their feed. Strict sanitation procedures. We have established procedures for the regular cleansing and disinfection of the sites at the farms. We implement an ‘‘all in/all out’’ principle that involves filling a site with pigs of the same generation and refreshing the site upon completion of the growth period so that the entire facility is occupied by only a single generation of pigs. This allows us to clean and disinfect unoccupied sites between generations. We also regularly vaccinate our pigs to prevent and treat any known diseases. Monitoring of diseases. Our veterinary specialists monitor information about the spread of any diseases or emergence of new diseases, as well as scientific developments in the field of biosecurity and veterinary safety. We seek to quickly react to any outbreak of animal diseases in the regions where we operate, and continue to monitor outbreaks and responses. For example, in 2010 and 2011, we reacted quickly to outbreaks of African swine fever in the Volgograd, Krasnodarskiy, Rostov and Stavropolskiy regions, promptly ceasing any purchases of fodder produced in the regions and any deliveries of our live pigs to

124 meat processors located in the infected region. In 2013, 2014 and 2015, there have not been any significant outbreaks of diseases in our pig breeding complexes.

Agriculture Overview Our agricultural business produces sugar beets, grains, primarily winter wheat and barley, and other crops including sunflower seeds, corn and soybeans. The Group currently has a land bank of approximately 594 thousand hectares (410 thousand hectares of arable land) under its control in the Belgorod, Tambov, Kursk, Orel and Voronezh regions, all of which is located primarily in the Black Earth region of Russia as well as in the Primorsky krai (including approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions held by legal entities stakes in which are being acquired from the Razgulay group). Of the approximately 594 thousand hectares we control, we own approximately 252 thousand hectares, or 43%. We have made material investments in agricultural machinery and equipment to help improve our efficiency and crop yields. Our Agriculture division owns four grain elevators located in the Belgorod and Tambov regions. Our Nezhegolsky and Chaplyzhensky elevators are located in the villages of Shebekino and Dolgoye, respectively in the Belgorod region, our Zherdevsky and Nikiforovsky elevators are located in the villages of Zherdevka and Dmitriyevka, respectively, in the Tambov region. We store grain in these elevators for later sale to customers when we expect that the additional revenues generated by higher grain prices at the time of future sales will exceed the storage and distribution expenses incurred to store the grain, and each of our grain elevators is strategically located to optimize storage and distribution control. In addition, in March 2016 we acquired the Kolyshleisky elevator, located in the village of Kolyshley in the Penza region, which we utilize for storage in our trading operations. Our agricultural production benefits from strong governmental support, in the form of partial reimbursement of debt interest payments and costs of fertilizers, fuel and crop protection agents, and grants of tax privileges. See ‘‘Regulation of the Russian Agricultural and Food Industry.’’

Land bank We control a land bank of approximately 594 thousand hectares primarily in the fertile Black Earth belt of Russia and in the Primorsky krai (including approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions held by legal entities stakes in which are being acquired from the Razgulay group). Of this amount, approximately 55% is located in the Belgorod region, approximately 26% is in the Tambov region, approximately 8% is in the Orel region, approximately 5% is in the Kursk region, approximately 3% is in the Voronezh region and approximately 4% is in the Primorsky krai. We own approximately 43% of the land bank under our control. Most of the land we own is located in the Belgorod region, representing approximately 26.9% of the land bank under our control and approximately 49% of our land bank in the Belgorod region. We own approximately 53% of our land bank in the Kursk region, 45% of our land bank in the Orel region, 26% of our land bank in the Tambov region and 61% of our land bank in the Primorsky krai. In addition, we control approximately 30% of our total land bank through registered long-term leases and approximately 27% through short-term leases (for 11 months or less, with or without automatic prolongation). We control through registered long-term leases approximately 41% of our land bank in the Belgorod region, 40% of our land bank in the Kursk region, 47% of our land bank in the Orel region, 63% of our land bank in the Tambov region, 100% of our land bank in the Voronezh region and 38% of our land bank in the Primorsky krai. We primarily lease such land from owners who own such land through a joint ownership structure, which forces us to participate in certain arrangements to obtain leasehold interests in such land. Approximately 1% of our land is controlled by the Group even though we do not have legal title or leasehold interests in the land. These land plots are controlled by the Group through various means, including (i) land plots leased from the state following declaration of the respective land shares as ‘‘unclaimed shares’’; (ii) land plots under lease agreements which have not been entered into the state land cadastre; (iii) land plots without lease agreements or any other title transfer arrangements; and (iv) land plots for which the leasehold interests are in the process of being registered. See ‘‘Risk Factors – Russian Agricultural Land Risks.’’

125 Our land bank has consistently grown over the last several years. Since 2011 to 2015, we increased the land bank under our control by approximately 80 thousand hectares in the Belgorod and Tambov regions from 424 thousand hectares in 2011 to 504 thousand hectares as of the end of 2015. In March 2016, we entered into a preliminary agreement with the Razgulay group to acquire stakes in Russian entities holding title to approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions. See ‘‘– Recent developments’’. We seek to continue this expansion of the land bank under our control by approximately 40 thousand hectares in 2016, which we expect to accomplish through acquisition of additional land in the Belgorod and Tambov regions. In addition, we plan further acquisitions of land in the Primorsky krai to expand our agriculture operations in the Far East. We estimate that approximately 83% of the land under our control is arable, and almost all the arable land under our control is cultivated. None of our arable land is excluded from the production cycle. In recent years, we utilized our arable land in the following proportions, and expect to utilize our land in 2016 as follows:

Proportion of cultivated Proportion Total Proportion Total Proportion Total land utilized of cultivated Production of cultivated Production of cultivated Production in 2016, land utilized in 2015 (in land utilized in 2014 (in land utilized in 2013 (in Use expected in 2015 thousand tons) in 2014 thousand tons) in 2013 thousand tons) Sugar Beets .... 14% 17% 2,538 16% 2,330 19% 2,935 Winter Wheat . . . 13% 21% 285 21% 299 26% 408 Barley ...... 18% 23% 310 22% 249 20% 123 Peas...... 4% 0% 3 5% 34 5% 18 Sunflowers ..... 7% 6% 22 10% 99 8% 35 Corn ...... 4% 5% 77 3% 41 3% 41 Soybeans ...... 17% 17% 12 9% 11 7% 26 Fallow ...... 6% 9% – 11% – 10% – Other ...... 18% 2% 5 3% 38 3% 0 Total ...... 100% 100% 3,252 100% 3,101 100% 3,586

Crops and Production Sugar beets When the Group began producing sugar, we sought to minimize our reliance on raw cane sugar imports for our production for two primary reasons. First, the cost of raw cane sugar imports is subject to significant volatility, and we sought a cheaper raw materials source. Second, as discussed above under ‘‘– Sugar’’, the margin on producing sugar from sugar beets can be significantly higher than producing it by processing raw cane sugar. As a result, we increased our sugar beet cultivation area from 33 thousand hectares in 2007 to approximately 71 thousand hectares in 2015. All sugar beets produced by the Agriculture division are utilized by our Sugar division. In 2015 and 2014, our Agriculture division supplied approximately 2,538 thousand tons and 2,330 thousand tons of sugar beets, respectively, to the Sugar division, which represented approximately 63% and 67%, respectively, of the total sugar beets processed by the Group’s sugar plants. We employ a method of cultivation developed in the United States which has allowed us to reduce our equipment costs. This cultivation strategy utilizes inter-row spacing of 56 centimeters, which enables us to use our equipment more efficiently, relying primarily on tractor-propelled equipment (as opposed to self-propelled equipment). Most of our land is clustered in large plots, and we have found this method of cultivation is well suited for farming large land plots. We are committed to sustainable farming. Our crop rotation policy in sugar beets, winter wheat and barley farming is designed to ensure that our soil is not exhausted. Changing the crops grown in each field encourages biodiversity in the surrounding areas. Additionally, the integration of our operations in the Agriculture and Meat divisions offers significant environmental advantages, as the manure produced in the pig breeding complexes can be utilized to fertilize the fields for the various crops, thus increasing efficiency and reducing the use of chemical fertilizers. The sugar beet seeds we use are primarily cross-breeds of foreign sugar beet breeds. We generally are able to acquire our sugar beet seed from any of approximately 10 different suppliers, including KVS and Syngenta.

126 Grains The two main grain crops grown by the Agriculture division are winter wheat and barley. The grain produced is both sold externally and used internally to produce pig fodder for use in our Meat division. Any grain not purchased by our Meat division is sold on the open market. In 2015, our Meat division used approximately 172 thousand tons of winter wheat, barley, corn and peas from our Agriculture division, which accounted for approximately 41% of such products purchased by the Meat division to produce fodder. We produce winter wheat of consumer and fodder quality. The suitability of the wheat we produce for either consumer use or animal fodder is dependent on the weather conditions during the period in which the crops are grown. We have historically grown two types of barley, one of which may be used for brewing, and the other is used for animal fodder. Brewing barley may also be used in animal fodder. Our winter wheat seed is mostly developed in Russia, while our barley seed is a combination of internally produced seed and selected foreign seed best suited to the growing conditions in the relevant regions in Russia. As with our sugar beet seed, our grain seeds come from numerous international suppliers. We often use several different seeds from different suppliers within a particular crop to help maximize production.

Other products The Agriculture division also produces sunflower seeds, corn and soybeans. All these crops are produced for both internal consumption and external sale. Although we used to grow peas, since 2013 we have been replacing peas with soybeans which we believe is more profitable, and assists in increasing the nitrogen content of the soil and decreasing the consumption of nitrogen fertilizers. We source the seed for these crops from a number of different suppliers as well. Our sugar beet and corn seed is imported, while the soybean and wheat seed we use is a selection of seeds produced in Russia. Historically, we have occasionally inherited existing dairy farm operations when we acquire control of additional farmland. We have downsized these operations to focus on the most efficient and cost effective production methods, such that our milk production operations are currently profitable, generating RUB 129 million in revenues in 2015.

Production Costs The most significant production inputs include labor, fertilizer, plant protection agents, seed and fuel necessary to operate our equipment. In 2015, based on our management accounts, fertilizer, crop protection agents, labor and seeds constituted approximately 22%, 15%, 13% and 12%, respectively, of the total production costs of our Agriculture division, while none of the other production inputs represented more than approximately 10% of the total production costs. We purchase mineral fertilizers from domestic Russian suppliers. We acquire fertilizers through an annual auction process, in which we focus on price, payment terms and logistics of each prospective supplier. The price of fertilizer can fluctuate significantly from year to year. In our experience, a significant portion of Russian fertilizer is exported, and foreign demand materially affects the price of fertilizer on the domestic market. Approximately 80-95% of our plant protection agents are sourced domestically, and there is a wide and diverse market for these products both domestically and abroad. We consistently monitor the market for these products to ensure that we utilize the most efficient and effective combination to maximize our crop yields.

Equipment We regularly modernize and replace our existing farm equipment. As we have elected to employ the method of sugar beet cultivation developed in the United States, our sugar beet equipment that can accommodate this method is imported from the United States or Europe, from producers such as John Deere and Holmer. This equipment is pulled by tractors, and the tractors may be used throughout the season to pull the different types of equipment we use for all our crops, such as our seeding machines and harvesting machines, as well as machines used to distribute fertilizer and plant protection agents and

127 machines that prepare soil for planting. As a result, we are able to employ our tractors from March until November, depending on weather conditions. The U.S. machines we use are designed to accommodate larger fields. For example, our machines can seed 24 or 36 rows simultaneously, whereas seeding machines designed in Europe for smaller fields are generally able to seed only 12 or 18 rows simultaneously.

Capital Expenditures and Maintenance We make significant ongoing investments in the maintenance and modernization of our existing equipment, and we are expanding our land bank. For the years ended December 31, 2015, 2014 and 2013, capital expenditures in our Agriculture division totaled RUB 2.6 billion, RUB 2.1 billion and RUB 0.7 billion, respectively. In particular, in 2014, we acquired control over approximately 26 thousand hectares of land in the Primorsky krai. In March 2016, we contracted to acquire control over approximately 90 thousand hectares of land in the Kursk, Orel and Belgorod regions. In March 2016 we also acquired the Kolyshleisky elevator, which is located in the village of Kolyshley in the Penza region. Other capital expenditures were used to acquire machinery and equipment, renew the truck fleet, modernize fuelling stations, machinery and tractor stations and upgrade our IT systems. Our capital expenditures budget for the Agriculture division contemplates expenditures of approximately RUB 7.1 billion in 2016 (which do not include expenditures on our acquisitions of the Razgulay group’s assets or the Kolyshleisky elevator) to overhaul and modernize our existing equipment, purchase new machinery and equipment, renew the truck fleet, upgrade our IT systems. In addition, we seek to expand our land bank by approximately 40 thousand hectares in 2016, which we expect to accomplish by acquisition of additional land in the Belgorod and Tambov regions. We also plan further acquisitions of land in the Primorsky krai to expand our agriculture operations in the Far East. As a result of the seasonality of our agriculture operations, we have naturally established maintenance periods. Each year, operations are suspended following the applicable harvest season. The periods during which our operations are suspended fluctuate each year depending on our crop rotations and the timing of the harvest season of each applicable crop.

Storage facilities Once harvested, we have the capacity to store grain in our four elevators in the Agriculture division, which have a total storage capacity of approximately 361 thousand tons and we also own other storage facilities of approximately 290 thousand tons, located near our fields. In addition, in March 2016, we acquired the Kolyshleisky elevator in the Penza region with a total storage capacity of approximately 45 thousand tons, which we utilize for storage in our trading operations. All crops we produce other than sugar beets, for example winter wheat, barley, sunflower and corn seeds and soybeans, may be stored in the elevators. Sugar beets are not suitable for storage in our elevators, and they are transported directly to our sugar plants for processing or stored for short periods in our fields until they are required at our sugar plants. Our elevators are as follows: • Nezhegolsky Elevator • The Group’s largest elevator is located in Shebekino village, in the south-west of the Belgorod region in close proximity to our pig breeding operations and to the Ukrainian border, a favorable location for access to grain export transportation routes and our main customers • Built in 1980, the elevator was acquired by the Group in 2001 • Full capacity of the elevator is 200 thousand tons • Daily intake capacity of the elevator is 8 thousand tons for grain delivered by vehicles and 4 thousand tons for railroad delivery • Daily unloading capacity is 3 thousand tons for vehicles and 3 thousand tons for railroad • The Nezhegolsky elevator complex also includes the fodder production plant operated by our Meat division to supply fodder for its operations

128 • Zherdevsky Elevator • The Zherdevsky elevator is located in the south of the Tambov region, 100 kilometers from Tambov • Built in 1914 and doubled in size in 1976, the elevator was acquired by the Group in 2008 • Full capacity of the elevator is 45 thousand tons • Daily intake capacity of the elevator is 1.6 thousand tons for grain delivered by vehicles • Daily unloading capacity is 1 thousand tons for vehicles and 0.7 thousand tons for railroad • Nikiforovsky (Dmitrievsky) Elevator • Our elevator in Nikiforovsky is located on the grounds of the Nikiforovsky sugar plant • Built in 2006, the elevator was acquired by the Group in 2009 • Full capacity of the elevator is currently 21 thousand tons • Daily intake capacity of the elevator is 1.6 thousand tons for grain delivered by vehicles • Daily unloading capacity is 1 thousand tons for vehicles and 0.9 thousand tons for railroad • Chaplyzhensky Elevator • The Chaplyzhensky elevator is located in the Belgorod region • Built in 1961, the elevator was acquired by the Group in 2011 • Full capacity of the elevator is currently 95 thousand tons, including the on-site warehouse • Daily intake capacity of the elevator is 3 thousand tons for grain delivered by vehicles and 0.8 thousand tons for railroad delivery • Daily unloading capacity is 3 thousand tons for vehicles and 1.3 thousand tons for railroad • Kolyshleisky Elevator (used by our trading division) • The Kolyshleisky elevator is located in the Penza region • Built in 1973, the elevator was acquired by the Group in 2016 • Full capacity of the elevator is currently 45 thousand tons • Daily intake capacity of the elevator is 2 thousand tons for grain delivered by vehicles and 0.5 thousand tons for railroad delivery • Daily unloading capacity is 0.4 thousand tons for vehicles and 0.8 thousand tons for railroad The locations of our elevators help to maximize efficiency in our distribution network. Our elevators are located near our fields to minimize transportation of the grain from the fields for storage in the elevators. Once the grain is stored in one of our elevators, we sell the right to an agreed volume of grain to customers, and the customers come to our elevator sites to retrieve the grain on an as-needed basis. The Belgorod region has a significant number of pork and poultry producers that require grain for fodder, and our elevators are well positioned to supply grain to these customers. Our elevators allow us to store our products for one to three years, thus enabling us to take advantage of grain price volatility. In addition to our elevators, we have six storage sites near our fields (four in the Belgorod region and two in the Tambov region), which collectively can hold an additional approximately 290 thousand tons of grain. On these sites we primarily store wheat and barley in plastic bags which can hold up to 185 tons of grain each. Grain sealed into such plastic bags can be stored outside, and we implement various safety measures to ensure the grain is protected and kept free of contamination. Once sealed, grain can be stored in these plastic bags for up to 12 months. Once a bag is opened, the grain contained therein is either loaded onto customers’ trucks or railroad cars or moved to one of our grain elevators, as these bags cannot be resealed. Storage in plastic bags can be more cost effective for us than storing grain in elevators, and we can readily expand this type of storage to meet increases in production when necessary.

129 Transportation To transport the grain to our elevators for storage, we currently employ third-party transportation service providers. We work with several service providers, with whom we have long-standing and reliable track records. Once the grain is stored in our elevators and purchased by a customer, the customer is responsible for retrieving the grain purchased and transporting the grain from the elevators. Customers generally transport the grain via truck or by railroad. If a customer takes the grain via truck, we receive a loading fee for our services required to load the trucks.

Sales, Production Costs and Distribution The breakdown of our gross sales (before inter-segment eliminations) by product in our Agriculture division was as follows:

Product 2015 2014 2013 Sugar Beets ...... 53% 46% 50% Barley ...... 19% 11% 9% Wheat ...... 17% 18% 28% Pea...... 0% 3% 2% Sunflower ...... 3% 15% 4% Soy...... 2% 2% 5% Corn ...... 4% 2% 2% Other ...... 2% 4% 0% Total ...... 100% 100% 100% Total Sales (millions of roubles) ...... 14,211 10,710 8,529

In addition, our yields in 2015, 2014 and 2013 were as follows:

Number of Number of Number of Hectares Average Hectares Average Hectares Average Average Sales Price Cultivated Yield per Cultivated Yield per Cultivated Yield per per Ton in 2015 in 2015, Hectare in in 2014, Hectare in in 2013, Hectare in (thousands of Use thousands 2015 (tons) thousands 2014 (tons) thousands 2013 (tons) roubles) Sugar Beets ...... 71 35.7 63 37.1 70 40.8 2.9 Winter Wheat ...... 86 3.6 81 4.7 99 4.2 7.5 – milling wheat; 8.1 – feed wheat Barley ...... 95 2.9 84 3.5 75 2.3 7.7 – feed barley Corn ...... 19 5.6 13 3.6 10 5.2 Oil Seeds ...... 23 2.3 37 1.9 29 2.4 21.1 Soybeans ...... 71 1.5 35 0.5 26 1.2 23.3 Other ...... 44 0.8 76 0.9 66 1.0 – Total ...... 410 – 388 – 375 – –

All the sugar beets produced by the Agriculture division are consumed by our Sugar division. The sales price of the sugar beets is established by agreement between our Agriculture and Sugar divisions, using a formula that reflects several factors, including the amount of sugar extracted from such beets and the price at which such sugar is sold by the Sugar division. Individual agreements are executed between the applicable entities in our Sugar division which control the individual sugar plants and the various entities in our Agriculture division that grow the sugar beets. The agreements are typically executed in January each year, providing for delivery of the sugar beets in November of the same year. Depending on applicable cash requirements of our divisions, Sugar division entities may prepay for some or all of the expected sugar beets. Our grains are used by our Meat division to produce fodder. The Meat division acquires grain from our Agriculture division at arms’ length at the prevailing market price of the applicable grain. If the Meat division is able to obtain grain from an alternate source on better terms, it will purchase such grain from the alternate source rather than from the Agriculture division, and the grain produced by the Agriculture

130 division will be sold to third-party customers instead. The Meat division acquired approximately 172 thousand tons of the winter wheat, barley, corn and peas produced by the Agriculture division in 2015. Other than the Sugar and Meat divisions, the customers of our Agriculture division include large grain traders that operate world-wide, such as Cargill, Glencore International AG and Louis Dreyfus, regional domestic customers that use grain to support operations such as meat production, and customers that use grain for consumer uses, such as grain mills and bakeries. Our Agriculture division sales force is located in the Belgorod and Tambov regions. The terms of our sales contracts are negotiated by our sales manager, who is based in the Belgorod region. We sell our agriculture products to customers representing various industries at open auctions. Based on our management accounts, the Meat division, accounted for approximately 25% (or approximately 172 thousand tons) of our sales of grain products (including winter wheat, barley, corn and peas) in 2015 by volume and 11% of our sales in 2015 by sales revenue (or RUB 660 million). We sold the remaining grain produced to more than 10 other customers in 2015, and none of our other customers individually accounted for more than 10% of the total sales of grain products in 2015. We also plan to expand the geographic distribution of our grains to foreign markets such as China, South Korea, Japan, other countries in South East Asia and Africa, subject to our production capacities and import barriers in the destination countries. In particular, in January 2016 we supplied the first shipment of 10 thousand tons of corn to Japan. We plan to increase production of corn for export on our land in the Primorsky krai.

Competition With regard to our production of sugar beets, all our production volumes are sold to our Sugar division, and the sugar beet processing capacity of our Sugar division is currently significantly higher than the volume of sugar beets we are able to produce. We therefore do not currently face any competition with regard to the volumes of sugar beets sold, but the price at which we sell the sugar beets is dependent on, among other things, the price at which the resulting processed sugar is sold, and such price generally fluctuates with the spot rate for sugar. With regard to the markets for our other agricultural products, they continue to be very fragmented. We have historically found that our competitive advantages in this industry stem from our diverse product mix and our economies of scale in our production, as well as our ownership and control of our own storage facilities.

Oil and Fat Overview Our Oil and Fat division includes two independent directions: production of vegetable oil at our oil extraction plant in Samara and production of sauces and fats at our oil and fat plant located in Ekaterinburg. In addition, the soybean plant in Ussuriysk, in the Primorsky krai (Primorskaya Soya), is a leading manufacturer of soybean oil, soybean oil feed, and mayonnaise and the only industrial soap manufacturer in the Far East of Russia. We believe we are a leader in both markets, being one of the largest sunflower seed processor, the largest consumer margarine producer with a market share of 45% in 2015 and the fifth largest mayonnaise producer with a market share of 11% in 2015, based on market information obtained through Rosstat and the Russian Oil and Fat Union We intend to build on our current business and continue to expand within Russia and Belarus and into Central Asia, particularly in Uzbekistan, Kazakhstan, Tajikistan, Kyrgyzstan, Turkmenistan, Azerbaijan, Georgia and Armenia and also into Europe to Moldova, Germany and Israel.

Vegetable oil According to the Russian Oil and Fat Union, we are one of the eighth largest processor of sunflower seeds, with a market share of 4%. In 2015, vegetable oil production accounted for approximately 34% of our

131 gross oil and fat sales. Based on our management accounts, our vegetable oil production for 2015, 2014 and 2013 was as follows:

2015 2014 2013 Production 2015 Total Production 2014 Total Production 2013 Total Volume, Revenues, Volume, Revenues, Volume, Revenues, thousand RUB thousand RUB thousand RUB Product tons thousands tons thousands tons thousands Raw sunflower oil ...... 153 4,681,248 188 5,877,733 110 2,319,767 Soybean oil ...... 18 397,823 – – – – Bottled sunflower oil ...... – 482,649 – 736,626 – – Total Production (thousand tons) ...... 170 188 110 Total Revenues (RUB thousands) ...... 5,561,720 6,614,359 2,319,767

In 2015, vegetable oil meal production accounted for approximately 18% of our gross oil and fat sales. Based on our management accounts, our vegetable oil meal production for 2015, 2014 and 2013 was as follows:

2015 2014 2013 Production 2015 Total Production 2014 Total Production 2013 Total Volume, Revenues, Volume, Revenues, Volume, Revenues, thousand RUB thousand RUB thousand RUB Product tons thousands tons thousands tons thousands Sunflower oil meal ...... 144 1,943,114 171 2,148,708 106 940,395 Soybean oil meal ...... 53 1,423,233 – – – – Total Production (thousand tons) ...... 197 171 106 Total Revenues (RUB thousands) ...... 3,386,348 2,148,708 940,395

Our Samara oil extraction plant is located in a region with large sunflower harvests and is the leading vegetable oil producer in the region. In 2015, our production of mayonnaise, consumer margarine and other products required about 53% of the volume of vegetable oil produced by the plant. The remaining portion was sold to third parties, 34% of which was exported to Turkey, Kazakhstan and Azerbaijan. High protein sunflower oil feed produced by the plant in 2015 was sold to third parties, 96.5% of which was exported to the EU and South East Asia. Our retail oil products are produced under the brands Maslava, Schedroe Leto and Mechta Khoziayki.

Sauces and fats Based on market information obtained through Rosstat and the Russian Oil and Fat Union, we estimate that in Russia we are the largest consumer margarine producer with a market share of 45% in 2015 and the fifth largest mayonnaise producer with a market share of 11% in 2015. Based on information obtained from Nielsen, in January to November 2015, we led the mayonnaise market in the Ural region of Russia with a share of total market sales by volume of approximately 48% and were among the largest 5 mayonnaise producers in Russia with a share of 5%, and we led the consumer margarine market in the Ural region of Russia with an approximate 60% share of total market sales by volume and were among the largest three margarine producers in Russia with a share of 12% in this same period. In addition, according to Nielsen, in Kazakhstan, we had a share of approximately 9% of total consumer margarine market sales by volume and a share of approximately 11% of total mayonnaise market sales by volume during autumn 2015. We produce a wide range of related products, and we frequently design new products to meet market demand. With our product prices ranging from economy to the mid to upper price segments, we have a presence in almost every price segment in the market. The core brands of our oil and fat products are all registered in Russia. In 2015, mayonnaise and consumer margarine accounted for approximately 40% of our gross oil and fat sales. We also produce ketchup, sauces, mustard, refined oil products and soaps, primarily to meet market demand and the product mix requirements of our customers and maximize efficiency in our production process. Under the Provansal EZhK brand, we primarily produce mayonnaise, as well as mustard, ketchup and some premium economy and mid-market consumer margarine for the Russian market under the EZhK

132 Gotovim doma brand. The Provansal EZhK brand accounted for 29% of our sales by volume in 2015. For our Central Asian markets, we primarily produce margarine, spreads and refined oil for the mid- to upper- market under the Schedroe Leto brand. The Schedroe Leto brand accounted for 32% of our sales by volume in 2015. We also produce mayonnaise, refined oil, sauces, ketchup and mustard under the Mechta Khoziayki brand, soybean and vegetable oil under the Maslava brand and mayonnaise and soap under the Soya co. brand. The Mechta Khoziayki brand accounted for 18% of our sales by volume in 2015. The Maslava and the Soya co. brands accounted for 2% of our sales by volume in 2015. Almost all our revenues from sauces and fats division are currently derived from sales of branded products. We also produce a small amount (e.g., less than 0.07% of our mayonnaise production) of private label products for the retail chain Kirovskiy to enhance our relationship with this customer, which allows us to increase the shelf space for our products at retail sales points, thereby decreasing shelf space for our competitor’s products. Based on our management accounts, our mayonnaise and margarine production and sales allocation for 2015, 2014 and 2013 was as follows:

2015 2014 2013 Production Production Production Product Volume Revenues Volume Revenues Volume Revenues Mayonnaise ...... 60.0% 61.1% 55.1% 56.8% 57.5% 60.8% Margarine and Spreads ...... 40.0% 38.9% 44.9% 43.2% 42.5% 39.2% Total ...... 100% 100% 100% 100% 100% 100% Total Production (thousand tons) ...... 107.8 104.9 97.5 Total Revenues (RUB thousands) ...... 7,875,637 5,989,838 5,296,083

Our primary mayonnaise products are branded as follows:

Share in mayonnaise sales by volume Brand Product Description in 2015 Brand Logo Illustrations Provansal EZhK Packaged in doy-packs, sachet 42% bags, containers, squeeze bottles, glass jars and plastic tubs Provansal EZhK Domashny Packaged in doy-packs, 14% (homemade) containers and plastic tubs Provansal EZhK Salatny (for Packaged in doy-packs, 1% salad) containers and plastic tubs 20APR201603461296 Provansal EZhK Myagky Packaged in doy-packs, 0.2% vkus (mild flavor) containers and plastic tubs Provansal EZhK with lemon Packaged in doy-packs 0.2% juice Provansal EZhK olive Packaged in doy-packs 1% Provansal EZhK with quail Packaged in doy-packs 0.4% egg Mechta Khoziayki Mayonnaise tastes: classic, olive, 37% proven¸cal 67% and non-dairy. 20APR201603472386 Packaged in doy-packs Soya co. Range includes proven¸cal, <1% nezhny krem (mild cream), 20APR201603474960 domashniy (homemade). Packaged in doy-packs, containers and plastic tubes

133 Our primary consumer margarine and spreads products are branded as follows:

Share in margarine sales by volume Brand Product Description in 2015 Product Illustrations Schedroe Leto Flavored vegetable oil spreads sold in 97% plastic tubs Flavor: creamy and chocolate. Foil 20APR201603482858 packaged margarine EZhK. Gotovim doma Foil and paper packaged margarine 2% (for home cooking) 20APR201603465808 Stolnoye Foil packaged margarine 0.3% 20APR201603485534 Our ketchup and mustard products are typically packaged in plastic squeeze bottles or tubes, and our refined oil products primarily consist of bottle refined oil. We have established a well-balanced product line and pursue a consistent marketing policy for our products.

Key assets In 2011, we acquired an oil extraction plant in Samara, in the Volga Federal District. Plant operations primarily consist of production of unrefined sunflower oil and high protein sunflower oil feed. The plant’s sunflower seed processing capacity is estimated at 1,250 tons a day. Currently, the annual production capacity of this plant is approximately 117 thousand tons of unrefined sunflower oil and 165 thousand tons of high protein sunflower oil feed. The plant operates five elevators with a capacity to store 155,000 tons of sunflower seeds. Since acquiring the plant, the Oil and Fat division has consistently invested in modernizing the plant’s various production facilities, including investing of approximately RUB 478 million from 2013 to 2015. In August 2014 the plant was among a few oil processing plants in Russia to receive an international GMP+2 B Good Manufacturing Practice certificate, which enables it to increase exports to the European markets. In 2016, we started construction of the new oil facility in the Samara region to refine, deodorize and bottle sunflower oil of up to 100,000 tons per year. We have budgeted RUB 785 million for 2016 to construct the facility to refine, deodorize and bottle sunflower oil. In addition, in order to reduce logistic expenses on oil delivery, in 2015 we established a river logistic point in Yekaterinovka, in the Samara region. Our oil and fat plant located in Ekaterinburg, the administrative center of the Sverdlovsk region, is, according to the Russian Oil and Fat Union, the largest packaged margarine production plant and the fifth largest mayonnaise production plant in Russia by volume in 2015. The plant, built in 1959, became part of the Group when we acquired approximately 54% of the outstanding shares of Zhirovoy Kombinat in 2003. During the period from 2004 to 2008, we acquired additional shares of Zhirovoy Kombinat, and the Group currently owns all of the outstanding shares of the company. Plant operations primarily include the production of mayonnaise, consumer margarine and spreads, ketchups, mustard, sunflower oil and soaps (overall over 50 products). Currently, the annual production capacity of this plant is approximately 57.9 thousand tons of consumer margarine and 112 thousand tons of mayonnaise. The plant has a capacity to store up to 6.5 thousand tons of vegetable oil. The key suppliers of our plant equipment include Gerstenberg Schreder, Mespack, Stephan Machinery and Hermann Waldner. Historically, the Oil and Fat division has consistently invested in modernizing its various production facilities, including investing of approximately RUB 738 million from 2013 to 2015. We have budgeted RUB 1,160 million for 2016 to, among other things, expand production capacities of the plant. In 2015 we acquired a 75% share in LLC Primorskaya Soya in Ussuriysk, in the Primorsky krai, one of the largest manufacturer of soybean oil, soybean oil feed, and mayonnaise and the only industrial soap manufacturer in the Far East of Russia. Plant operations primarily include the production of vegetable oil, mayonnaise, consumer margarine, toilet and laundry soap and soybean oil feed which is used as fodder supplement. Currently, the annual production capacity of this plant is approximately 26.9 thousand tons of refined oil and 10 thousand tons of mayonnaise. The plant has a capacity to store up to 4.9 thousand tons of vegetable oil. We have budgeted RUB 176 million for 2016, mainly to expand production capacities of the plant.

134 Procurement of raw materials In 2015, our oil extraction plant in Samara processed approximately 349 thousand tons of sunflower seeds. We typically hedge the price of sunflower seeds by selling sunflower seeds produced by our Agriculture division to the market in the regions where we produce seeds and buying them as a raw material for Oil and Fat division in the regions where our plants are located. In addition, in 2015, our oil extraction plant in Samara and Primorskaya Soya processed approximately 94 thousand tons of soybeans. In 2015, approximately 45% of the soybeans processed were sourced through third party purchases and approximately 55% through tolling arrangements. The primary cost component of our sauces and fats products is vegetable oil. Generally, we use sunflower and soybean oil as the primary vegetable oil in our production. In our consumer margarine products, we also combine other oils, such as coconut or palm oil, to achieve a desired consistency. The recipes for both our mayonnaise and consumer margarine products are adapted to market fluctuations in the price and availability of the various vegetable oils. In 2015, approximately 94% of the primary input vegetable oil (including 100% of the soybean oil) were sourced from our oil extraction plant in Samara and Primorskaya Soya and approximately 6% was purchased from Russian suppliers. Currently, our average monthly demand for vegetable oil is approximately 11.2 thousand tons, and we have capacity to store up to 11.4 thousand tons of vegetable oil, including 6.5 thousand tons at our Ekaterinburg plant and 4.9 thousand tons at the Primorskaya Soya plant. This storage capacity allows us to take advantage of market fluctuations in oil prices. The next largest individual components of cost of mayonnaise, consumer margarine and consumer oil production are packaging and labor.

Capital Expenditures For the years ended December 31, 2015, 2014 and 2013, capital expenditures in our Oil and Fat division totaled RUB 608 million, RUB 201 million and RUB 233 million, respectively. They were primarily used for maintenance of existing operations, development of production capacities and upgrading equipment as well as achieving compliance with technical regulations of the Customs Union. Our aggregate budget for capital expenditures for the Oil and Fat division for 2016 is RUB 2,121 million primarily to further develop our production facilities, including construction of the new oil facility in the Samara region to refine, deodorize and bottle sunflower oil, expanding production capacities of the Ekaterinburg plant and developing facilities of Primorskaya Soya.

Sales and distribution Our distribution process varies depending on the region in which we are distributing. We sell raw vegetable oil produced at our Samara plant to customers representing various industries via monthly internal auctions where we collect suggested prices from our purchasers. We make deliveries based on a best price basis, primarily in the Ural, Volga, Siberia and North-Western Federal Districts of Russia. We export up to approximately 34% of our vegetable oil production to Turkey, Kazakhstan and Azerbaijan. We handle sales of our mayonnaise, consumer margarine and other retail sauces and fats through distributors with whom we have established relationships. Where permitted by the market, we avoid exclusive distributors and prefer to work with several mid-size companies. This strategy offers more control over the commercial terms of distribution and helps us to avoid dependence on a single distributor. We generally work with several distributors per territory (2-15 distributors per region), and we require that our distributors have the ability to cover 100% of the relevant territory. Also, each retail sales point to which we deliver must be able to work with at least two different distributors, with the exception of retail chains which often work exclusively with a single distributor. When we sell our products through distributors, our products are delivered to and paid for by the distributors, but we are still able to negotiate the terms of sale with the retail chains directly, such as amount of shelf space allocated to our products and the retail sales price for our products. In the Sverdlovsk region, by operating our own truck delivery network, we sell our products directly to retail points of sale and small wholesalers. Our products are delivered to distributors primarily by truck and also via railroad. We utilize three or four trucking service providers with whom we have established relationships to deliver our products by truck. Railroad deliveries are made through Russian Railways, the Russian state-owned railroad service provider. Our Oil and Fat division sales force is primarily located in Ekaterinburg, near our production plant. We also have small sales offices located throughout the regions in which we sell, with approximately 20 persons

135 per office. Typically our oil and fat sales force receives approximately 60% of its compensation through salary, and approximately 40% comes from bonuses which are awarded based on several key performance indicators, such as their effectiveness in implementing the division’s established distribution plan. The Group sells its oil and fat products to a diverse group of customers across almost all price segments, and we believe we are therefore less sensitive to fluctuations in demand from any particular customer or within a particular segment of the market. Based on our management accounts, none of our customers individually accounted for more than 10% of the total value of our sales of oil and fat products in 2015, and our ten largest customers together accounted for approximately 21% of our total oil and fat sales by sales volume and approximately 26% of our total oil and fat sales by volume, excluding intra-group sales. The various retail sales points to which we sell our oil and fat products include retail chains (such as Magnit, X5, Monetka in Russia and Action Master in Uzbekistan), traditional retail stores, which include over-the-counter stores as well as self-services stores, and wholesale and semi-wholesale marketplaces. We also believe our product line is seasonally balanced. At the same time, significant mayonnaise sales occur in winter, with a spike in sales in December as consumers purchase mayonnaise in anticipation of the new year, and consumer margarine is mostly in demand in winter. Production of both these products allows for more even sales volumes throughout the year.

Competition Our main competitors in the Russian vegetable oil market are Solnechnye Produkty, Aston, Yug Rusi, NMZhK and Bunge. Our major competitors in the Russian mayonnaise market are Essen, NMZhK, EFKO and Solnechnye Produkty. According to the Russian Oil and Fat Union, these four main competitors produced approximately 79% of the mayonnaise consumed in Russia in 2015. According to the Russian Oil and Fat Union, each of these producers produced the following percentages of mayonnaise consumption in Russia in 2015: Essen – 25%, NMZhK – 20%, EFKO – 19%, Solnechnye Produkty – 15%, and we produced approximately 11% of the mayonnaise consumed in Russia. According to the Russian Oil and Fat Union, the other top two consumer margarine producers (NMZhK with a share of approximately 19% and Solnechnye Produkty with a share of approximately 18%) produced approximately 37% of the consumer margarine consumed in Russia in 2015 (our share is 45%). We did not experience any significant changes in the competitive landscape in the markets in which we operate during 2015. We believe that the significant fragmentation in the market has created opportunities for expansion of our operations through consolidation of existing production, which should allow us to benefit from further economies of scale.

Employees As at December 31, 2015, we had approximately 10,607 thousand full time equivalent employees (‘‘FTE’’), divided among our production divisions and corporate operations as follows:

Number of Employees as of December 31, 2015 Division Agriculture ...... 3,368 Meat...... 2,846 Sugar ...... 2,202 Oil and Fat ...... 2,078 General Corporate ...... 113 Total ...... 10,607

We also outsource some responsibilities, in particular our harvesting and security functions, the costs of which are accounted for in our DSGA expenses and those workers are not included in our FTE count. We provide employees with market compensation and benefits, social security allowance, medical care and housing at cost price, invest in education and development of our employees and contribute to the development of the regions where we operate by, among other things, maintaining high standards of environmental protection and labor safety, construction of infrastructure and participating in charitable

136 and sponsorship activities. Employee compensation is generally based on several key performance indicators, such as their effectiveness in implementing the division’s established production or distribution plans. In particular, our sales force receives approximately 60% of its compensation through salary, and approximately 40% from bonuses awarded based on key performance indicators. In addition, we implement an incentive program for our senior management team. See ‘‘Management – Remuneration of Directors and Senior Management’’. We have entered into collective bargaining agreements with our employees at most of our sites providing for general terms of employment. We do not have labor unions at our sites, except for the labor union at our Ekaterinburg plant. We have not experienced any industrial action by our employees. We believe relations with our employees are good.

Information Technology We use Microsoft Share Point 2010 as our web portal and electronic document system; ET-Web/Lumesse as our personnel management system; ServiceDesk/ServiceNow as our customer support system; 1C as our accounting management system; Oracle Hyperion Planning as our budget and accounting system; and SAP ERP as our resources planning system. In addition, we have begun to implement a system for consolidating our financial accounts to Oracle Hyperion Financial Management, which we expect to complete in the third quarter of 2016.

Intellectual Property All our key brands including Chaikofsky, Russkii Sakhar, Brauni, Mon Caf´e, Slovo Myasnika, Provansal EZhK, EZhK Gotovim doma, Schedroe Leto and Mechta Khoziayki are registered trademarks in Russia and in the countries where we export the relevant products (including Armenia, Kazakhstan, Turkmenistan, Mongolia, Moldova, Kyrgyzstan, Tajikistan, Uzbekistan, Azerbaijan, Belarus, China, Ukraine, Germany, Israel, Georgia, Serbia). The trademarks are registered in Russia for 10 years and will need to be renewed after the expiry of this term. See also ‘‘Risk Factors – Risks Relating to Our Business and Industry – We may be unable to protect our intellectual property’’.

Environment The Group operates in an environmentally sensitive business and in a legal environment of increasingly strict environmental restrictions and requirements. In our pig breeding business, the primary concerns relate to the disposal of manure and the use of antibiotics and other pharmaceutical substances in treating the livestock, as well as the transmission of disease. The principal environmental concerns in our Agriculture division relate to the use of chemical fertilizers and pesticides as well as genetically modified crops. The environmental rules on agriculture are less developed in Russia than in other industrialized nations. We believe that we comply in all material respects with the environmental standards applicable to us under Russian laws and regulations, other than as described in ‘‘Risk Factors – Risks Relating to Our Business and Industry – Failure to comply with existing government regulations, or increased governmental regulation of our operations, could result in substantial additional compliance costs, administrative penalties or closure of our facilities’’. We have not been involved in any material legal proceedings that are, or have been in the 12 months preceding the date of this Information Memorandum, related to environmental protection issues. See ‘‘Risk Factors – Risks Relating to Our Business and Industry – Outbreaks of certain diseases among our livestock could adversely affect our operations.’’

Insurance The Group generally maintains the types of insurance customarily available to businesses in our industry in Russia, including insurance against property loss, transportation losses and workplace injuries. We also provide our employees with medical and other insurance as required by Russian law. Other than where required by law or described above, we have not purchased third-party liability insurance. Our insurance policies currently in force are provided by a number of major Russian insurance companies. See ‘‘Risk Factors – Risks Relating to Our Business and Industry – We may not have or we may be unable to obtain sufficient insurance to protect ourselves from business risks.’’

Litigation During the 12 months preceding the date of this Information Memorandum, there have been no governmental, legal or arbitration proceedings (nor any such proceedings which are pending or threatened of which we are aware), which may have, or have had in the recent past significant effects on the Company’s and/or the Group’s financial position or profitability.

137 MANAGEMENT Board of Directors Overview Our Board of Directors currently consists of five members. All the current directors were elected at the general shareholders’ meeting on May 22, 2015 and their terms expire on the date of the next annual general shareholders’ meeting, which is expected to occur on May 27, 2016. No changes to the current composition of the Board of Directors are expected to occur at the next annual general shareholders’ meeting. For details on the Board of Directors’ procedure and powers, see ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Directors.’’

Membership The table below sets forth our members of the Board of Directors:

Year of Year of Name Birth appointment Position Vadim N. Moshkovich . . 1967 2015 Chairman of the Board of Directors Richard A. Smyth ..... 1962 2011 Member of the Board of Directors (independent), Member of the Audit Committee Ganna Khomenko ..... 1977 2011 Member of the Board of Directors (independent), Compliance Officer, Member of the Audit Committee Anastasios Televantides . 1948 2011 Member of the Board of Directors (independent), Chairman of the Audit Committee Maxim D. Basov ...... 1975 2011 Member of the Board of Directors and Chief Executive Officer Vadim Nikolaevich Moshkovich is the Chairman of the Board of Directors of the Company. He was appointed to the Board of Directors of the Company in May 2015. Mr. Moshkovich is the founder of the Company and beneficially owns approximately 75% of the Company’s Ordinary Shares. From May 2006 to December 2014, Mr. Moshkovich was a member of the Council of the Federation of the Federal Assembly of the Russian Federation (the upper chamber of the Russian parliament) representing the Belgorod region. In the beginning of the 2000s, he also was a member of the board of directors of Sobinbank. Mr. Moshkovich has deep expertise in the agricultural sector since he started working in the agricultural business in 1995, first as Head of ZAO Shugarimpeks and then as Head of Shugarimpeks Trading Company until 1999. In 1999, he became the General Director and co-owner of the group of companies consolidated into Rusagro in 2003. Mr. Moshkovich graduated from Moscow State Institute of Radio Engineering, Electronics and Automation in 1992. Richard Andrew Smyth has been a member of the Board of Directors of the Company since February 25, 2011. He was Chairman of the Board of Directors of the Company from February 2011 until May 2015. Since January 2009, he has served as the Regional President for Central Europe and CIS of Mars corporation. From 2003 to 2009, he served as a General Manager in LLC Mars. Mr. Smyth graduated from Oxford University in 1984. Anastasios Televantides has been a member of the Board of Directors since November 2011. Mr. Televantides has served as Chief Executive Officer of Cypro Direct Limited since 2008. He was with PricewaterhouseCoopers Cyprus for more than twenty years, under many responsibilities including Partner in charge of the Limassol office and Deputy Managing Partner. He has served as a director in Pharmascience International Limited, a Canadian pharmaceutical group, Frigstad Engineering Limited, a Norwegian oil rig building group, Gazprombank Financial Services Limited and Olivant Investments Limited. Mr. Televantides has served as Member of the Board of ICPAC, Honorary Treasurer of Limassol Chamber of Commerce and Industry, Member of the Human Capital Steering Group of PricewaterhouseCoopers Europe, and Chairman of the Projects Committee of the Limassol Bishopric. He has a Chartered Certified Accountant (FCCA) diploma. Ganna Khomenko has been a member of the Board of Directors of the Company since February 25, 2011. Since July 2009, Ms. Khomenko has been owner and Managing Director of Fudiciana Trust (Cyprus) Limited, a trustee and corporate services firm. From 2007 to 2009, she was the Chief Executive Officer and a member of the board of directors of IFG Trust (Cyprus) Limited. Ms. Khomenko acted as the Manager of the Corporate Department of Excel-Serve Management Limited from 2006 to 2007. She currently serves

138 as a member of the board of directors of Interpipe Limited (since 2009), Steel.One Limited (since 2007), Saleks Investments Limited (since 2007) and Pantolis Limited (since 2008). Ms. Khomenko studied International Law in the Institute of International Relations, Kyiv Taras Shevchenko University and graduated from Keele University in the UK in 1999. Maxim Dmitrievich Basov is the Chief Executive Officer of the Group and has been a member of the Board of Directors of the Company since February 25, 2011. Mr. Basov joined the Group in July 2009 as the General Director of LLC Group of Companies Rusagro. From 2006 to 2009 he was the General Director of Metalloinvest Group and was also the General Director of various holding companies of the group (including OJSC Metalloinvest, OJSC Gasmetal and OJSC CK Metalloinvest). From 2004 to 2006 Mr. Basov served as the first deputy chairman of the board of directors in Interpipe Limited. He graduated from New York University (USA) in 1996.

Senior Management As of the date of this Information Memorandum, our senior management is as follows:

Year of Name birth Position Maxim D. Basov ...... 1975 Chief Executive Officer Anton G. Ulanov ...... 1980 Head of Meat Division Sergei A. Tribunsky ...... 1987 Investment Director, Director for M&A, Capital Markets and Investor Relations Nikolay A. Zhirnov ...... 1975 Head of Sugar Division Konstantin A. Beldushkin ..... 1974 Head of Agriculture Division Vladimir P. Philiptsev ...... 1970 Head of Oil and Fat Division Maxim Dmitrievich Basov in addition to being the member of Board of Directors is also Chief Executive Officer. The information on Mr. Basov is provided in ‘‘– Board of Directors’’ above. Anton Gennadievich Ulanov joined the Group as the Head of the Meat division of LLC Group of Companies Rusagro on 25 April 2016. Prior to that this position was held by Mr. Maxim Basov. Before joining us, Mr. Anton Ulanov held the position of Chief Executive Officer of Kuban Agro. From 2010 to 2012, Mr. Anton Ulanov worked as the Director General of SOTEX Research and Production Enterprise. From 2008 to 2010, he served as the Director of Economic Affairs and Finance of GAZ Automobile Plant. From 2003 to 2008, Mr. Anton Ulanov held positions in RusPromAvto Management Company and the GAZ Group. Mr. Anton Ulanov graduated from the Nizhny Novgorod State Technical University majoring in Automation of Technological Processes and Production as well as Economics and Company Management. Sergey Andreevich Tribunsky has been the Investment Director, Director for M&A, Capital Markets and Investor Relations of LLC Group of Companies Rusagro since February 2015. He joined the Group in 2009. Prior to that, he worked as analyst at the Investment Bank Renaissance Capital. He graduated from the Lomonosov Moscow State University in 2007 with a masters’ degree in economics (project management). Nikolay Alexandrovich Zhirnov has served as the Head of the Sugar division of LLC Group of Companies Rusagro since October, 2011. Mr. Zhirnov joined the Group in September 2009 as Commercial Director of LLC Rusagro-Center. Recently, Mr. Zhirnov was appointed as General Director of LLC Rusagro- Center. Prior to joining the group, he was General Director of Sportland Russia of Sportland International from 2005 until 2009. From 1997 until 2005 he worked at Wrigley Russia. He graduated from Chelyabinsk State Technical University in 1996 as an engineer-mathematician. He also received an MBA from Stockholm School of Economics in 2004. Konstantin Alekseevich Beldushkin has served as the Head of the Agriculture division of LLC Group of Companies Rusagro since August, 2013. In 1996, he graduated from Moscow State Institute for International Relations, and received a specialist degree in international economic relations. In 1995 he received an MBA in business management from City University of New York, Baruch Business School. He served as the deputy director for strategic development, investment and optimization in Interpipe Group, CenterInvest Group, and Bain & Company. From August 2009 until January 2012 he served as the Head of Strategy of the group. In January 2012 he became the Head of Rusagro-Invest LLC.

139 Vladimir Pavlovich Filiptsev has served as the Head of the Oil and Fat division of LLC Group of Companies Rusagro since January, 2016. In December 2014, he was appointed as General Manager of the Group’s Ekaterinburg factory. He started his career in Coca-Cola, where he worked for seven years, most recently as Sales Director. From 1996 until 2011 he worked at Wrigley Russia, SubMiller, Russki Standart Rust Ink. In 1991, he graduated from the Bauman Moscow State Technical Institute.

Interests of Directors and Senior Management As of the date of this Information Memorandum, the members of the Board of Directors, Mr. Vadim Moshkovich, Mr. Maxim Basov, Mr. Richard Smyth and Mr. Anastasios Televantides, held interest in the Company: • Mr. Vadim Moshkovich has no direct interest in the Company. The number of the Ordinary Shares held indirectly through Shiny Property Limited, a company controlled by him, is 17,999,996, or approximately 75% of the Ordinary Shares.(1) • The number of the Ordinary Shares directly held by Mr. Maxim Basov is 1,657,303, or approximately 6.9% of the Ordinary Shares, including 657,303 Ordinary Shares represented by the GDRs.(2) • The number of the Ordinary Shares directly held by Mr. Richard Andrew Smyth is 6,225 represented by the GDRs. • The number of the Ordinary Shares directly held by Mr. Anastasios Televantides is 2,000 represented by the GDRs.

(1) Following the Offering, Shiny Property Limited will own 19,327,829 Ordinary Shares, including 1,327,833 Ordinary Shares in the form of GDRs, or 70.7%;

(2) Following the Offering, Mr. Maxim Basov will own 1,890,636 Ordinary Shares, including 890,636 Ordinary Shares in the form of GDRs, or 6.9%;

Conflict of Interest There are no actual or potential conflicts of interest between the duties that any member of the Board of Directors or the senior management owes to the Company and such members’ private interests and/or other duties.

Corporate Governance U.K. Corporate Governance Code As a Cypriot company with GDRs admitted to the Official List, the Company is not required to comply with the provisions of the U.K. Corporate Governance Code.

MICEX Requirements Currently, under Russian law and MICEX regulations, so long as the GDRs are listed on the London Stock Exchange, no additional corporate governance requirements resulted from the admission to trading of the GDRs on MICEX.

Cyprus Law Requirements Although we are incorporated in Cyprus, because our shares are not listed on the Cyprus Stock Exchange, we are not required to and do not comply with the Code of Corporate Governance of the Cyprus Stock Exchange. In addition, notwithstanding that a substantial majority of our operations are conducted in the Russian Federation, because we are a Cyprus company we are not subject to and do not comply with the corporate governance standards applicable to Russian companies, except in so far as our Russian incorporated subsidiaries are required to comply with the corporate governance requirements contained in Russian company law. For more details, see ‘‘Description of the Share Capital and Applicable Cypriot Legislation – Cypriot Law.’’

Audit Committee The Board of Directors has established an audit committee. The Audit Committee is primarily responsible for (i) rendering assistance to the Board of Directors of the Company in decisions-making in the sphere of

140 the Company’s audit and reporting; (ii) effectiveness of control on the part of the Board of Directors of the Company over the Company’s financial and economic activity by way of preliminary consideration (iii) evaluating our internal control and risk management procedures, (iv) assuring the qualification and independence of our independent auditors and overseeing the audit process and (v) resolving matters arising during the course of audits and coordinating internal audit functions. The Audit Committee consists of three members appointed by the Board of Directors. The current members are Richard Smyth, Ganna Khomenko and Anastasios Televantides.

Internal Audit Commission Apart from the Audit Committee of the Board of Directors of the Company, the Company’s subsidiary, OJSC Rusagro Group, is required by Russian law to form an Internal Audit Commission or elect an Internal Auditor. The supervision of financial and operational activities is currently carried out by Mr. Dmitry N. Brekhov, our Internal Auditor, who was appointed in October 2010. Among other things, the Internal Auditor verifies the accuracy of our financial reporting and accounting under Russian law. Mr. Brekhov has served as an auditor in audit firm LLC ‘‘SHATS’’ since 2003. He also served as head of internal audit department in LLC ‘‘GK Dominant’’ in 2009, and in LLC ‘‘Antanta-Kapital’’ from 2007 to 2009. From 2003 to 2007 he also served as the head of the internal audit department of LLC ‘‘AIK ‘‘AGRIKO’’.

Remuneration of Directors and Senior Management Remuneration of our key management personnel, included in payroll costs, comprised short-term remuneration such as salaries, discretionary bonuses and other short-term benefits totaling RUB 1,230,938 thousand for the year ended December 31, 2015. We do not provide pension, retirement or similar benefits to our directors and senior management, other than those required by law. None of our directors or senior management is a party to any service contract with us where such contract provides for benefits upon termination of employment. In 2014 we initiated a share incentive plan for our senior management. Under the plan the members of our senior management are granted GDRs on condition that they remain in their positions for a particular term. The number of GDRs granted is dependent on the average market price of GDRs for the relevant terms of office. In 2015, our expenses on this program amounted to RUB 4,015 thousand.

Litigation Statement about Directors and Senior Management At the date of this Information Memorandum, none of our directors or senior management for at least the previous five years: • has had any convictions in relation to fraudulent offences; • has held an executive function in the form of a senior manager or a member of the administrative, management or supervisory bodies, of any company at the time of or preceding any bankruptcy, receivership or liquidation; or • has been subject to any official public incrimination and/or sanction by any statutory or regulatory authority (including any designated professional body) nor has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company.

141 PRINCIPAL SHAREHOLDERS The following table sets out information regarding the ownership of the Company’s Ordinary Shares immediately before and after the Offering.

Ordinary Shares owned Ordinary Shares owned immediately prior to the immediately after the Offering Offering Number of Number of Ordinary Ordinary Shareholder Shares Percentage Shares Percentage Shiny Property Limited(1) ...... 17,999,996 75% 19,327,829 70.7% Maxim Basov(2) ...... 1,657,303 6.9% 1,890,636 6.9% Group’s treasury shares ...... 442,530 1.8% 442,530 1.6% Others(3) ...... 8,225 0.03% 8,225 0.03% Fiduciana Directors Limited ...... 1 0.00% 1 0.00% Fiduciana Management Limited ...... 1 0.00% 1 0.00% Fiduciana Nominees (Cyprus) Limited ...... 1 0.00% 1 0.00% Fiduciana Trustees (Cyprus) Limited ...... 1 0.00% 1 0.00% Free float ...... 3,891,942 16.2% 5,664,109 20.7% Total ...... 24,000,000 100% 27,333,333 100%

(1) Shiny Property Limited owns 17,999,996 Ordinary Shares and the remaining holding is Ordinary Shares in the form of GDRs. (2) Maxim Basov directly owns 1,000,000 Ordinary Shares and the remaining holding is Ordinary Shares in the form of GDRs.

(3) Includes Ordinary Shares in the form of GDRs held by Mr. Richard Smyth and Mr. Anastasios Televantides. See ‘‘Management – Interests of Directors and Senior Management’’. The Company is controlled by Shiny Property Limited, which is in turn controlled by Mr. Vadim Moshkovich, who beneficially owns approximately 75% of our outstanding Ordinary Shares immediately prior to the Offering and will continue to beneficially own a significant controlling interest immediately following the Offering assuming all GDRs are offered. Mr. Vadim Moshkovich through Shiny Property Limited has participated in the Offering and has agreed to purchase GDRs in an amount of approximately US$99.6 million (6,639,165 GDRs). Shiny Property Limited, was incorporated on December 28, 2010 under the laws of the British Virgin Islands, as a BVI business company with limited liability with company number 1621539. The principal legislation under which Shiny Property Limited operates is the BVI Business Companies Act, 2004 and the regulations and orders made thereunder. The registered office and principal place of business of Shiny Property Limited is at Jipfa Building, 3rd Floor, 142 Main Street, Road Town, Tortola, British Virgin Islands. Shiny Property Limited was incorporated on December 28, 2010 and since its incorporation has not had any material relationship with the Company or the Group other than as a shareholder of the Company. Our Chief Executive Officer, Mr. Maxim Basov owns 1,657,303 of the Ordinary Shares, or 6.9% immediately prior to the Offering, the most part of which he initially acquired from Shiny Property Limited in 2011 through his wholly owned company Viarde Holdings Limited and in 2014 he was registered as a direct shareholder. Mr. Maxim Basov has participated in the Offering and has agreed to purchase GDRs in an amount of approximately US$17.5 million (1,166,666 GDRs). Each of Fiduciana Directors Limited, Fiduciana Management Limited, Fiduciana Nominees (Cyprus) Limited and Fiduciana Trustees (Cyprus) Limited is a company organized under the law of the Republic of Cyprus with its registered address at 8 Mykinon, Nicosia, 1065, Cyprus. Each of these shareholders is 100% beneficially owned and controlled by Fiduciana Trust (Cyprus) Limited, who holds its one share in the Company on behalf of Mr. Moshkovich. The Group holds 2,212,648 of its own GDRs that is equivalent of approximately 442,530 Ordinary Shares. None of the Company’s shareholders has voting rights different from any other holders of our shares. To our knowledge, there are no arrangements in place that may result in a change of control of the Company.

142 RELATED PARTY TRANSACTIONS The following sets forth our transactions with related parties, as defined in the International Accounting Standard 24 ‘‘Related Parties Disclosure’’, in accordance with IFRS, for the three years ended December 31, 2015, 2014 and 2013. For further details of these transactions, see Note 26 to our Consolidated Financial Statements appearing elsewhere in this Information Memorandum. Parties are generally considered to be related if the parties are under common control or if one party has the ability to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. All of the Group’s related party transactions during the year ended December 31, 2015, 2014 and 2013 consist of transactions with members of the Board of Directors and other senior management, transactions with the entities controlled by the Owner and transactions with the entities controlled by the senior management. The Group is ultimately controlled by Mr. Vadim Moshkovich (the ‘‘Owner’’), who controlled 75% of issued Ordinary Shares of the Company as at December 31, 2015, December 31, 2014, and December 31, 2013.

Senior management Share-purchase agreements In 2014 the Group initiated a new share option incentive scheme for its senior management. Under the scheme the employees will be granted the GDRs provided that they remain in their position up to a specific date in the future. The number of GDRs granted will be dependent on average market prices of GDRs for the period preceding this date. Expenses under this incentive scheme incurred for the year ended December 31, 2015 in the amount of RUB 4,015 thousand (2014: RUB 2,772 thousand, 2013: nil) are included in ‘‘Share-based remuneration’’ line in the Consolidated Statements of Profit or Loss and Other Comprehensive Income. As at December 31, 2015, the share-based payment reserve accumulated in equity as a result of the share- based payment transactions amounted to RUB 1,295,213 thousand (as at December 31, 2014: RUB 1,291,198 thousand, as at December 31, 2013: RUB 1,236,775 thousand).

Other remuneration to senior management Remuneration to fourteen (2014: thirteen, 2013: seventeen) representatives of senior management, included in payroll costs, comprised short-term remuneration such as salaries, discretionary bonuses and other short-term benefits totalling RUB 1,230,938 thousand in the year ended December 31, 2015, including RUB 134,450 thousand payable to the State Pension Fund (in the year ended December 31, 2014: RUB 876,776 thousand and RUB 77,037 thousand respectively, in the year ended December 31, 2013: RUB 263,259 thousand and RUB 21,915 thousand respectively).

The Company Directors’ remuneration Included in the share-based compensation and other remuneration to senior management disclosed above, are the Company directors’ fees, salaries and other short-term benefits totalling RUB 1,002,393 thousand in the year ended December 31, 2015 (in the year ended December 31, 2014: RUB 779,015 thousand; in the year ended December 31, 2013: RUB 304,866 thousand).

Loan agreements with the senior management In 2014 the Group issued loans to its senior management team in the amount of RUB 17,515 thousand, all of which were outstanding as of December 31, 2015. The interest accrued on loans to senior management was RUB 1,445 thousand for the year ended December 31, 2015.

143 Entities controlled by the Owner Transactions and balances with entities controlled by the Owner are presented in the table below:

Year ended December 31 Transactions 2015 2014 2013 (in RUB thousands) Sales of goods and services ...... 1,585 4,203 552 Purchases of property, plant and equipment ...... 2,300,010 1,331,115 266,913 Purchases of goods ...... – 1,386 – Acquisition receivables under cession of rights ...... 7,915 Loans received ...... – 1,000,000 Loans repaid ...... – 1,000,000 Interest accrued on loans received ...... – – 2,270 Interest paid ...... – – 2,270

At December 31, Balances 2015 2014 2013 (in RUB thousands) Advances paid for property, plant and equipment ...... – 1,935,302 2,246,229 Trade and other receivables ...... – 2,922 215 Trade and other payables ...... – (34,150) (4,566) As at December 31, 2015 the Group had no outstanding contractual commitments or claims in respect of entities controlled by the Owner. Purchases of property, plant and equipment in 2015 and 2014 in the amount of RUB 2,300,010 thousand and RUB 1,331,115 thousand, respectively, related to construction of slaughtering facilities and production of by-products on Tambovsky Bacon. In 2013 loans received from the entities controlled by the Owner were denominated in roubles with interest rate of 8.4%. The loans were fully repaid in 2013.

Entities controlled by the senior management Transactions and balances with entities controlled by the senior management are presented in the table below:

Year ended December 31, Transactions 2015 2014 2013 (in RUB thousands) Sale of goods and services ...... 77,620 229,860 106,379 Purchases of goods ...... 408 2,661,479 709,144 Purchases of services ...... – 41,408 42,351 Provision for impairment of receivables ...... – 24,162 – Reversal of provision for impairment of receivables ...... 24,162 – – Foreign exchange differences gain, net ...... – 9,317 – Purchases of property, plant and equipment ...... – 8,227 – Loans issued ...... 362,600 860,105 1,076,721 Loans repayments received ...... 362,600 1,176,945 759,981 Interest accrued on loans issued ...... 11,352 45,485 14,098 Interest received ...... 11,320 49,373 10,210 Loans received ...... 83,484 50,000 – Interest accrued on loans received ...... 4,535 65 – Interest paid on loans received ...... 3,516

144 At December 31, Balances 2015 2014 2013 (in RUB thousands) Trade and other receivables, gross ...... 62 24,162 86,186 Provision for impairment of trade and other receivables ...... – (24,162) – Prepayments ...... – – 3,733 Short-term loans issued ...... – – 316,840 Interest receivable ...... – – 3,888 Trade and other payables ...... (15) (22,749) (78,767) Short-term loans received ...... (60,216) (50,000) – Interest payable ...... (1,084) (65) – Loans issued to the entities controlled by the senior management are denominated in roubles with interest rate of 13,93% in the year ended December 31, 2015 (in the year ended December 31, 2014: 12%; in the year ended December 31, 2013: 12%). Loans were fully repaid in 2015. Loan received from the entities controlled by the senior management is denominated in roubles with interest rate of 9.5% till December 31, 2014 and average monthly MosPrime1M rate less 3% since January 1, 2015. Trade and other receivables impaired as at 31 December 2014 were fully paid in the beginning of 2015. As at December 31, 2015 the Group had no outstanding contractual commitments in respect of purchases or construction of property, plant and equipment from the entities controlled by the senior management (as at December 31, 2014: RUB 147,558 thousand, as at December 31, 2013: RUB 794,840 thousand).

Associates Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50 percent of the voting rights. Transactions and balances and with associates are presented in the table below:

Year ended December 31, Transactions 2015 2014 2013 (in RUB thousands) Sales of goods and services ...... 71,833 – – Purchases of goods ...... 54,990 9,322 – Purchases of services ...... 123,517 202 –

At December 31, Balances 2015 2014 2013 (in RUB thousands) Trade and other payables ...... (90,140) (2) – Short-term loans issued ...... 305,000 – –

145 REGULATION OF THE RUSSIAN AGRICULTURAL AND FOOD INDUSTRY Set out below is a summary of material information concerning the regulation of the Russian agricultural and food industries. This description does not purport to be a complete description of all laws and regulations applicable to our business and should not be read as such. Compliance with requirements imposed pursuant to the below laws may be costly and time-consuming, and may, in certain cases, result in delays in the commencement or continuation of our operations. Violation of any of the applicable legal requirements could result in civil and administrative sanctions for non-complying companies and/or their managers and criminal sanctions for non-complying managers. Regulatory authorities exercise considerable discretion in matters of interpretation, application and enforcement of applicable laws and regulations, as well as in matters of issuance, renewal or withdrawals of consents and permits and are empowered with the right to conduct scheduled or unscheduled inspections.

Regulatory Authorities At the federal level, the Ministry of Agriculture is the principal body that regulates the operation of the agricultural industry in Russia. The Ministry of Agriculture is responsible for the development of governmental policy in the sector, including the adoption of rules concerning investment, agricultural land use and monitoring, foreign trade, support of scientific research, and employment. At the regional level, regional governments and municipal authorities may issue implementing regulations, instructions and orders. See also ‘‘Risk Factors – Political and Social Risks Relating to Russia – Political and governmental instability, including conflicts among federal, regional and local authorities and other political conflicts, could create an uncertain operating environment hindering our long-term planning ability and could have an adverse effect on our business, results of operations, financial condition and prospects’’. Among the other key government bodies regulating the agriculture sector in Russia are: The Federal Veterinary and Phytosanitary Supervision Service, which is supervised by the Ministry of Agriculture. This service regulates the use of fertilizers, agricultural chemicals, pesticides, quarantine, plant protection, exercises control over veterinary medicine, and controls the quality and safety of grain, fodder and its components as well as millfeeds; The Ministry of Economic Development, which is responsible for the development of governmental policy and regulation relating to various aspects of business activity, property relations and investment activity and development of special purpose programs; The Federal Service of State Registration, Cadastre and Cartography (Rosreestr), which is supervised by the Ministry of Economic Development. This service carries out land use planning and control, cadastral evaluation of lands and maintenance of cadastre; The Ministry of Health Protection, which is responsible for regulating, among others, the areas of sanitary and epidemiological safety; The Federal Service for Supervision in the Area of Protection of Consumer Rights and Human Welfare, which is the principal federal body authorized to supervise sanitary and epidemiological issues in the Russian Federation. It is also responsible for development of governmental policy and regulation of consumer rights protection. This service, which is overseen by the Russian Government, enforces sanitary and epidemiological rules, develops and issues sanitary and epidemiological standards, performs sanitary and epidemiological supervision and monitors compliance with sanitary standards for the storage and sale of products, their quality and safety at wholesale and retail outlets, as well as supervises consumer rights protection; The Federal Service for Environmental, Technological, and Nuclear Supervision, supervised by the Russian Government, which is responsible for development of policy in the areas of, among others, environmental and technological supervision and industrial safety; and The Federal Service for Natural Resource Management Supervision, which is supervised by the Ministry of Natural Resources and Ecology. This service is responsible for supervision in the area of natural resource management, monitoring compliance with environmental protection regulations and controlling negative industrial impact on the environment, including disposal of industrial waste. The Federal Customs Service, which develops governmental policy and the regulatory regime for customs operations and exercises control over the transfer of goods across the borders of the Russian Federation.

146 The Federal Antimonopoly Service, which is the principal federal body authorized to supervise the regulatory regime for competition protection.

Legal Framework The Russian Federation has enacted specific legislation governing the operation of the agricultural and food industry and activities of agricultural and food production enterprises. Federal Law No. 264-FZ dated December 29, 2006, as amended, ‘‘On Development of Agriculture,’’ outlines the legal framework for the implementation of state policy and state support programs in the agricultural sector. The law sets forth a number of state agricultural objectives, including increasing the competitiveness of Russian agricultural products, the stable development of rural areas, and the recovery and recultivation of agricultural natural resources. Federal Law No. 53-FZ dated December 2, 1994, as amended, ‘‘On Purchase and Supply of Agricultural Products, Raw Materials and Provisions for State Needs,’’ regulates legal principles of the formation, placement and execution of state orders for the purchase and delivery of agricultural products, raw materials and provisions for state needs by Russian legal entities. The law also provides for the provision of benefits and subsidies to such Russian legal entities. Federal Law No. 184-FZ dated December 27, 2002, as amended, ‘‘On Technical Regulation,’’ provides for the development, enactment, application and enforcement of mandatory technical requirements and the voluntary standards relating to products (including buildings) and the engineering, production, construction, installation, adjustment, exploitation, storage, transportation, selling and utilization processes related to the products. Compliance with the obligatory technical regulations is supervised by the authorized state organizations. Generally, a number of other regulations also apply to food products and production equipment. For example, requirements for storage, production, labelling, transportation and sale of food are established by state standards, sanitary rules, hygienic requirements and other numerous regulations. Our facilities are also subject to numerous regulations and requirements concerning workplace health and safety. These requirements address, among other things, the working conditions in our facilities (including hygiene) as well as the safety of the production process. Additionally, on January 30, 2010, President Medvedev signed a decree No. 120 ‘‘On Approval of the Food Security Doctrine of the Russian Federation’’. The doctrine is aimed at ensuring reliable food supplies for the Russian population, developing agriculture within Russia, and achieving other similar goals and is based on the ‘‘National Security Strategy Up to 2020.’’ To achieve the stated goals, the doctrine, among other things, sets forth targets for the level of domestic production as a percentage of total Russian consumption for certain food products, including sugar, meat and grains. On December 31, 2015, President Putin signed a decree No. 683 adopting new National Security Strategy of the Russian Federation. Adopted strategy aims to increase effectiveness of state support for agricultural business as well as to boost modernization of agricultural facilities and enhance infrastructure of the domestic market.

Agricultural and Sugar Business Federal Law No. 4973-1 dated May 14, 1993, as amended, ‘‘On Grain,’’ regulates the state support of grain production. To meet the needs of the Russian Federation for grain, the Russian Government has established federal and regional grain funds that purchase grain from grain producers and suppliers. Sovereign loans and budgetary loans may be granted for the purchase of grain for the federal and regional grain funds. The law also provides for subsidies related to the acquisition of farming equipment and seed processing facilities. Federal Law No. 109-FZ dated July 19, 1997, as amended, ‘‘On Safe Use of Pesticides and Agricultural Chemicals,’’ regulates the use of pesticides and agricultural chemicals in order to ensure public health and environmental protection. This law sets forth the requirements for state registration, expert examination and confirmation of compliance of pesticides and agricultural chemicals, and establishes a general legal framework for the production, storage, transportation, import, export, sale and use of pesticides and agricultural chemicals, as well as their disposal and burial. Federal Law No. 4-FZ dated January 10, 1996, as amended, ‘‘On Land Reclamation,’’ sets forth the legal basis for land reclamation, the powers of the state and local authorities in the sphere of land reclamation as well as the legal status of individuals and legal entities engaged in land reclamation.

147 The Russian Federation has acceded to the Grains Trade Convention 1995 (the ‘‘GTC’’) in accordance with the Government Decree No. 845-R dated June 28, 2007. The GTC applies to trade in wheat, maize (corn), barley and other grains and related products. It seeks to enhance cooperation in the grain trade, promote expansion and openness in the grain sector, and contribute to grain market stability by improving market transparency through information sharing, analysis and consultation on grain market and policy developments.

Pig Breeding Business Federal Law ‘‘On Livestock Breeding’’ No. 123-FZ dated August 3, 1995, as amended, regulates breeding, production and use of broodstock in the livestock breeding industry. Law of the Russian Federation No. 4979-1 dated May 14, 1993, as amended ‘‘On Veterinary,’’ establishes measures for prevention of the spread of infectious and other animal diseases, and mitigation of consequences, if any such disease takes place. The law sets forth special requirements for construction of breeding farms and livestock management and regulates procedure for development, approval, adoption and application of veterinary rules. We are also subject to certain other industry requirements related to design and construction of our pig breeding facilities, ecology and hygiene. In compliance with the International Plant Protection Convention and standards established by the World Health Organization, International Office of Epizootics and other international organizations, the Ministry of Agriculture issued Order No. 258 dated July 23, 2010, enacting the ‘‘Regulations on Determination of the Zoo-Sanitary Status of Pig Farms and Other Organizations Engaged in Pig Slaughtering, Processing and Storage of Pig Breeding Products.’’ These regulations establish four levels of a zoo-sanitary status of pig farms (compartmentalization) in order to ensure a favorable epizootic status of pig farms and to prevent spread of contagious diseases of animals in the Russian Federation. All the pig farms in the Belgorod region have been assigned a highest level of the zoo-sanitary status (IV), indicating that they conform to the high international standards. In addition, depending on location, certain local laws and regulations may set additional requirements for enterprises that are engaged in food production and distribution.

Oil and Fat Business Federal Law No. 29-FZ dated January 2, 2000, as amended, ‘‘On Quality and Safety of Food Products,’’ establishes a general framework for the production and distribution of food products, such as the confirmation of compliance and state registration of new food products, ensuring that food products conform to certain quality, safety and sanitary requirements, as well as requirements for packaging, storage, transportation and sale of food products and for the destruction of poor-quality and unsafe products. Technical Regulation of the Customs Union (TR TS 024/2011) ‘‘Technical Regulations of Oil and Fat Products’’ adopted by the Decision of Customs Union Commission No. 883 dated December 9, 2011, as amended, provides for requirements as to oil and fat products (both food and non-food) and to production, storage, transportation and sale of such products. Regulation ‘‘On State Monitoring and Control Over Securing Quality and Safety of Food Products,’’ approved by Government Resolution No. 987 dated December 21, 2000, as amended, identifies the government agencies that are responsible for supervising and monitoring the quality and safety of food products. Regulation ‘‘On Monitoring of Quality and Safety of Food Products and Health of People,’’ approved by Government Resolution No. 883 dated November 22, 2000, as amended, sets forth the rules for monitoring of the quality, safety of food products and public health. Regulation ‘‘On Carrying Out an Expertise of Defective and Hazardous Raw Materials and Food Products and their Utilisation and Disposal,’’ approved by Government Resolution No. 1263 dated September 29, 1997, as amended, sets forth the procedure for carrying out an expert examination of defective and hazardous raw materials and food products.

148 Construction The Town-Planning Code of the Russian Federation (the ‘‘Town-Planning Code’’) No. 190-FZ dated December 29, 2004, as amended sets forth general requirements for construction processes, including land-use planning and the procedures for obtaining construction permits, commissioning certificates and government examination of project documentation. Pursuant to the Town-Planning Code, before commencing construction of industrial facilities, a legal entity or individual must first obtain a construction permit from the government authorities and submit project documentation to the government for examination. Commencement of a newly constructed facility requires that a commissioning certificate be issued by a governmental authority that has granted the construction permit. Failure to obtain such permit, certificate or other approval documentation may be regarded as a violation of Russian law and may lead to administrative fines and demolition of the facility as unauthorized construction.

Environment Federal Law No. 7-FZ dated January 10, 2002, as amended, ‘‘On Environmental Protection’’ sets forth charges for some types of activities that have negative effects on the environment, including atmosphere and water emissions. Any emissions in excess of agreed limits may lead to administrative fines. In addition, the law establishes several registers for facilities that may negatively impact the environment. Federal Law No. 96-FZ dated May 4, 1999, as amended, ‘‘On Atmospheric Air Protection’’ describes general standards of air quality and atmosphere emission limit values. The law provides that atmosphere emissions must be accompanied by a permit issued by governmental authorities. Failure to obtain such permit or to comply with the other provisions of this law may lead to administrative or criminal liability. Federal Law No. 116-FZ dated July 21, 1997, as amended, ‘‘On Industrial Safety of Hazardous Industrial Facilities’’ provides legal, economic and social grounds for securing industrial facilities’ operations and focuses on preventing accidents on such facilities. The law establishes that technical equipment must comply with mandatory technical requirements in the Russian Federation. Federal Law No. 68-FZ dated December 21, 1994, as amended, ‘‘On Citizens and Territory Protection from Natural and Man-Made Emergency Situations’’ sets forth general rules for protection of land, air and water space in the territory of the Russian Federation and the environment from natural and man-made emergency situations.

State Support The current agricultural policy of the Russian Government is focused on stimulating growth in production, primarily by addressing financial problems in the sector. In this regard, the Russian Government has introduced several federal programs aimed at supporting growth in the agricultural sector.

Agricultural and Sugar Business In December 2002 the Russian Government adopted the Federal Special-Purpose Programme for Social Development of Rural Areas until 2012 (later extended until 2013), which was aimed at improving the living conditions in rural areas by establishing a plan to improve rural area infrastructure through the development of electricity, water and communications facilities and construction and/or reconstruction of road networks. In July 2013 the Russian Government adopted the Federal Special Purpose Programme for Sustainable Development of Rural Areas for the years 2014 to 2017 and for the Period until 2020. The key objectives of the program are construction of housing, social and engineering facilities in rural areas, stimulation of investment into agricultural sector and construction and/or reconstruction of road networks. In October 2013, the Russian Government adopted the Federal Special Purpose Programme for Development of Agricultural Land Reclamation for the years 2014 to 2020. The key objectives of the program are to increase productivity and sustainability of agricultural production, to expand productive capacity of lands selected for reclamation and to increase efficiency of utilization of the natural resources. In July 2012, the Russian Government adopted the State Programme for Development of Agriculture and Regulation of Markets of Agricultural Products, Raw Materials and Foodstuff for the years 2013 to 2020. The program provides for comprehensive supporting measures across various agriculture sectors, for example, seed, crop and vegetable production, livestock breeding as well as measures to support innovation and modernization, development of wholesale distribution centers and financing of the

149 agricultural activities. The program was developed in accordance with the Food Security Doctrine of the Russian Federation (adopted on January 30, 2010, by President’s decree No. 120) in order to facilitate replacement of imported products with domestic products and improve competitiveness of Russian agricultural production. The Russian Government has also established a program in accordance with Federal Law No. 83-FZ dated July 9, 2002, as amended, ‘‘On Financial Rehabilitation of Agricultural Producers,’’ to recover loans previously extended by the federal government and regional or local governments to agricultural entities who have defaulted on their loan repayment obligations. The law provides for various means of debt restructuring, including through write-offs of penalties and fines, temporary suspension of debt repayment obligations, establishing new amounts and periods for instalment repayments and the write-offs of principal and interest. On July 25, 2011 Federal Law No. 260-FZ ‘‘On the State Support of Agricultural Insurance and on Amendments to the Federal Law on Agriculture Development’’ was adopted. The law specifies terms and conditions of state support with respect to insurance of agricultural production against natural disasters. The state supported insurance covers risks of losses of agricultural crops, orchards, and livestock. The law provides that farmers’ insurance premium payable under eligible insurance contracts is reduced by 50%, while the remainder is paid by the government directly to the insurance company. The Programme for Development of Sugar Beet Sub-complex in Russia for the years 2013 to 2015, approved by Order of the Ministry of Agriculture No. 248 dated June 14, 2013, provides for measures to increase sugar production from sugar beet, improve competitive ability and efficiency of the industry and increase export of sugar and its by-products as a result of modernization of existing production facilities and warehouses, stimulating export and developing transport infrastructure. In addition, the Russian Government created financial companies specializing in support of the agriculture sector, Joint Stock Company Russian Agricultural Bank (‘‘Rosselkhozbank’’) in 2000, for servicing agriculture commodity producers and JSC ‘‘Rusagroleasing’’ (‘‘Rusagroleasing’’) in 2001, to facilitate the replacement of outdated agricultural machinery. As of April 1, 2016, the Russian Government (through the Federal Agency of Property Management) owned 100% shares in Rosselkhozbank and 99.99% in Rusagroleasing. Currently, Rusagroleasing is the largest agricultural leasing company in Russia. Currently, Rosselkhozbank has 76 branches and 1106 supplementary offices in Russia. In 2012, the Strategy of Rosselkhozbank until 2020 was adopted. The strategy provides that 70-75% of total loan facilities shall be extended to agriculture, fish and timber producers as well as to individuals and businesses residing in the rural areas.

State Purchase and Commodity Interventions The Russian grain market is characterized by price volatility. In an effort to control this price volatility, the Russian Government enacted the ‘‘Rules for State Grain Purchase and Commodity Interventions for Regulation of Prices on the Agricultural Products Market’’ approved by Government Regulation No. 580 dated August 3, 2001, as amended. Under these rules, a state agent appointed by the Ministry of Agriculture based on the results of a tender, purchases grain with the aim of preventing a price decrease at the end of the harvest season (grain purchase interventions) and sells this grain stock in the event of a price increase (commodity interventions). As a general rule, grain purchase interventions and commodity interventions are performed through tenders on a commodity exchange. During 2010, the Russian Government initiated 11 interventions (sessions) and purchased 353,700 tons of grain from the 2009 harvest. The interventions were reinstated in February 2011 by the Government Decree No. 63-r, dated January 26, 2011. The Government started sales of grain from the state intervention fund on February 4, 2011 on the National Commodity Exchange to stabilize grain prices on the market which suffered from price fluctuations caused by the weak harvest in 2010. In 2011, the Russian Government sold 921,550 tons and purchased 419,310 tons of grain. In 2012 and 2013, the Russian Government sold 5,898,064 tons of grain during the commodity interventions. The purchase interventions in 2013 to 2015 amounted to 3,121,450 tons of grain, according to calculation made by OJSC ‘‘Unified Grain Company’’, the state agent for purchase and commodity interventions on the grain market.

Agricultural Land Agricultural land use is regulated primarily by the Land Code and Federal Law No. 101-FZ dated July 24, 2002, as amended, ‘‘On the Turnover of Lands of Agricultural Designation’’ (the ‘‘Law on Agricultural

150 Land Turnover’’). The Land Code is the principal act governing the use and protection of land in Russia. It regulates various matters concerning land, including categories of land, seizure of land plots for state and municipal needs, rights and duties of land owners, users and tenants when exploiting land plots and valuation of land. The Law on Agricultural Land Turnover regulates the possession, use and disposition of agricultural land plots, establishes the rules and limitations applicable to transactions with land, regulates the issuance of participatory shares in the right of common ownership to agricultural land plots and determines the conditions for granting land plots from federal, regional or municipal-owned land designated for agricultural use and the seizure thereof by federal, regional or municipal authorities. The issue of private land ownership in the Russian Federation has often turned on the question of whether foreign citizens can own agricultural land or merely lease it. The Law on Agricultural Land Turnover provides that foreign citizens, foreign legal entities, stateless persons and entities with more than 50% of foreign capital may only lease agricultural land plots and it entitles regional legislative authorities to restrict the size of agricultural land plots that may be owned by one individual or legal entity within the territory of one municipality, provided that such size may not be less than 10% of the agricultural area within the territory of such municipality. Moreover, the Law on Agricultural Land Turnover states that if the owner of agricultural land fails to use the land for agricultural purposes during a three-year period (excluding a period of time of up to two years necessary for ‘‘development’’ of land), the regional government may petition the court to seize such agricultural land. The mortgage of agricultural land plots is regulated by Federal Law No. 102-FZ, ‘‘On the Pledge (Mortgage) of Immovable Property,’’ dated July 16, 1998, as amended. Federal Law No. 101-FZ, ‘‘On State Regulation of Agricultural Designation Land Fertility Procurement,’’ dated July 16, 1998, as amended, sets forth the legal basis for state regulation of the fertility of land designated for agricultural use.

The Acquisition of Agricultural Land During the Soviet era, agricultural land was organized into massive collective farms which were tended by large labor forces from the surrounding region. Upon the dissolution of the Soviet Union, and prior to the adoption of the Land Code and the Law on Agricultural Land Turnover, the collective farms were reorganized and ownership of the land was either (i) retained by the Russian Federation and/or the local government or (ii) was privatized by giving each collective farm laborer and/or the entity that managed the collective farm an interest in the land. However, rather than survey, register and segregate the collective farms thereby giving the government or each private owner an interest in a defined piece of property, various types of entitlement instruments were issued in different regions of Russia (generally referred to herein as ‘‘Land Shares’’) which represented an undefined interest in the land. The development of a market for agricultural land has been impeded by specific regimes of various types of lands and ownership structures that evolved after the end of the Soviet era, and by the absence of a clear regulatory regime that governed the sale and purchase of agricultural land. The adoption of the Law on Agricultural Land Turnover in July 2002 recognized the difficulties that arose from the privatization of the collective farms and introduced rules and regulations that are designed to facilitate the disposition and acquisition of both Land Shares and the underlying agricultural land, as appropriate. Specifically, the Law on Agricultural Land Turnover established that: • Agricultural land may be directly purchased and sold subject to a right of first refusal by the regional government or the municipality. • Transactions involving Land Shares are subject to general rules of joint ownership stipulated by the Civil Code. Under the general rule stipulated by the Civil Code, a Land Share may be purchased by a third party subject to a right of first refusal by the other holders of Land Shares in joint ownership (‘‘Land Share Owners’’). According to the recent amendments to Russian legislation, transactions on sale of Land Shares should be certified by a Russian notary. • If an agricultural land plot is owned by more than five Land Share Owners, the transactions are subject to the additional requirements and limitations established in the Law on Agricultural Land Turnover. In particular, (i) a Land Share Owner may only sell that share to another Land Share Owner of the relevant agricultural land or to an agricultural company using the relevant agricultural

151 land and (ii) possession, use and disposal of land (the interest in which is represented by the Land Shares) is subject to decisions of the general meeting of the Land Share Owners. • A third party may lease agricultural land that is owned via Land Shares without purchasing the Land Shares. The decision on lease of an agricultural land plot shall be made by the general meeting of the Land Share Owners. The Land Share Owners who ‘‘demonstrated disagreement’’ with such transactions are entitled to receive a part of the land plot corresponding to their Land Share. • Agricultural land owned by the Russian Federation, by regional governments or by local governments may be sold or leased via a public auction. An auction is not required for allocation of land into lease or ownership to: • a lessee of government or municipality owned agricultural land if it requests to (i) purchase the land after a period of three years of lease or (ii) to enter into a new lease agreement after the lease expiration, provided that the relevant land was properly used by the lessee (an acquisition price or rent are established by the regional or local government; if a land plot is acquired into ownership, such price may not exceed cadastral value of the land); • an agricultural company that uses a municipality owned agricultural land that was allocated to the municipality pro rata to its Land Share interest provided that the relevant agricultural company filed an application with the municipality to acquire into ownership or to lease the relevant land within the period of six months from state registration of municipality ownership to the land (price of acquisition into ownership may not exceed 15% of cadastral value of the land, and rent payments may not exceed 0.3% of cadastral value of the land). • The owner(s) of a Land Share may allocate a portion of the agricultural land plot to itself (themselves) by either (i) a decision of the meeting of Land Share Owners approving the land surveying for the proposed land plots or (ii) carrying out the land surveying for the proposed land plots and later approving it with other Land Share Owners. A notice to other Land Share Owners or a public notice is required. If no objections are received within 30 days of the notice, the land surveying is deemed approved. According to applicable Russian law, Land Shares that have not been disposed by their owner for three years since acquisition of such shares or for which information on ownership is unknown, may be deemed ‘‘unclaimed shares’’. This rule does not apply to Land Shares that have been registered by their owners with the government registration authorities. Local authorities make a list of Land Share Owners whose Land Shares may be deemed ‘‘unclaimed shares’’ (the ‘‘List’’) for approval by the general meeting of Land Share Owners. The List must be published 3 months in advance of the general meeting of Land Share Owners. Land Share Owners that are on the List may notify the local authorities of their objection and should be excluded from the List upon such notification. If the List is not approved by the general meeting of Land Share Owners within 4 months since the date of its publication, the local authorities may approve it. Upon approval of the List by the general meeting of the Land Share Owners or local authorities, the Land Shares of the Land Share Owners on the List shall be deemed ‘‘unclaimed shares’’. Local authorities may then petition the court to acquire such ‘‘unclaimed shares’’. See ‘‘Risk Factors – Russian Agricultural Land Risks – We use a portion of our agricultural land and other real estate without valid legal title.’’

Pig Breeding Business The program of the Ministry of Agriculture ‘‘Development of Pig Breeding in Russia in 2013 to 2015,’’ approved by Order No. 128 dated March 6, 2013, provides for measures aimed at improving economic conditions for pork production, financial incentives for industrial pig breeding, creating the network of breeding and genetic centers. The first breeding and genetic center, LLC ‘‘Znamenskiy BGC’’, was built in the Orel region in 2006 with total capacity of 200 thousand sows. LLC ‘‘Znamenskiy BGC’’ is able to provide pig farms with quality breeding-stock based on which the farms may grow 10 to 11 million pigs per year. The state program of the Belgorod region ‘‘Development of Agriculture and Fishery in the Belgorod region for the years 2014 to 2020,’’ approved by the Regulation of the Government of the Belgorod region No. 439-pp dated October 28, 2013, as amended, is aimed at, among other things, development of competitive pig breeding, and provides for a number of protective measures of pig breeding business in the Belgorod region. The total amount of funding of the program amounts to RUB 162.2 billion.

152 Government Resolution ‘‘On Application of Tariff Rate Quotas in respect of Cattle Meat, Pork and Poultry Meat in 2016’’ No. 1251 dated November 21, 2015, which imposes quotas on pork import, is aimed at protection and stimulation of the domestic pork producers.

Taxation Russia applies a broad range of taxes and other mandatory payments imposed at the federal, regional and local levels, including, but not limited to profits tax, value added tax, property tax, social and other taxes to Russian operating companies, including agricultural producers. The Russian Tax Code provides for a 0% corporate profits tax (compared to the ordinary 20% corporate profits tax rate) to companies recognized as agricultural producers i.e., entities generating at least 70% of their revenues through the production, processing and sale of agricultural products. This tax incentive is applied by certain Russian operating companies of the Group engaged in production of agricultural products.

Import/Export Customs legislation in Russia is based on the unified rules of the Customs Union that entered into force on January 1, 2010, and the rules of the Eurasian Economic Union that was launched on January 1, 2015. Therefore, currently all Russian foreign trade regulations are primarily based on rules established by agreements and decisions taken at the level of the Customs Union and Eurasian Economic Union. The export of agricultural products from the Russian Federation is primarily regulated by Federal Law No. 164-FZ dated December 8, 2003, as amended, ‘‘On Fundamental Principles of Regulation of Foreign Trade Activity,’’ according to which the import and export of goods is carried out, as a general rule, without any quantitative restrictions. The Russian Government in exceptional cases has the right to impose temporary restrictions or bans on the export of goods to prevent or reduce a critical shortage in the domestic market of food or other products that are of crucial importance. With the objective of regulating foreign trade in goods, including protecting the domestic market and stimulating the economy, import and export customs duties are imposed in accordance with Russian law. In order to secure parity of wheat supply on the domestic market and abroad, the Russian Government reintroduced export customs duties on wheat and meslin effective from July 1, 2015 (Government Resolution No. 513, dated May 28, 2015). Imports of sugar, rice, wheat and barley into the Russian Federation are subject to import duties levied by the customs authorities in accordance with the Customs Code of the Customs Union at rates established in the ‘‘Unified Customs Tariff of the Eurasian Economic Union’’ approved by Decision of the Council of the Eurasian Economic Commission No. 54 dated July 16, 2012, ‘‘On Adoption of the Unified Classification of Goods Applicable to Foreign Economic Activities of the Eurasian Economic Union and the Unified Customs Tariff of the Eurasian Economic Union.’’ (the ‘‘Unified Customs Tariff’’). According to the Unified Customs Tariff, import duties on raw cane sugar float from US$50 to US$270 per ton depending on sugar price at the New York commodity exchange and the season. The current rates vary from US$140 to US$250 per ton. According to the Unified Customs Tariff, the import duty on white sugar is fixed at US$340 per ton from January 1, 2011. Government Resolution ‘‘On Application of Tariff Rate Quotas in Respect of Cattle Meat, Pork and Poultry Meat in 2016’’ No. 1251 dated November 21, 2015, set the quotas on pork import. The import quota on pork is fixed at 400 thousand tons for 2016. See ‘‘Industry Overview’’.

Accession of Russia to the WTO On December 16, 2011, Russia signed the Accession Protocol to the World Trade Organization (‘‘WTO’’). The relevant ratification procedures were completed on July 21, 2012, and on August 22, 2012, the formal accession of the Russian Federation to the WTO became effective. As part of its accession to the WTO, Russia has agreed to lower its tariffs on a wide range of products. Average duties after full implementation of tariff reductions will be 7.1% for oil seed fats and oils (the tariff as of the date of accession was 9.0%) and US$223 per ton for sugar (the tariff on the date of accession was US$243 per ton).

153 Russian Food Sanctions On August 6, 2014, President Decree No. 560 ‘‘On Special Economic Measures to Protect Russia’s Security’’, as amended, entered into force. It establishes a one-year ban on import of certain food and food products originating from countries that have imposed economic sanctions on Russian entities and (or) individuals (the United States, all European Union countries, Canada, Australia, Norway, Ukraine, Albania, Montenegro, Iceland and Liechtenstein). The list of banned goods is set out in Government Resolution No. 778 ‘‘On Measures Aimed at Implementation of President Decrees No. 560 as of August 6, 2014 and No. 320 as of 24 June 2015’’, dated August 7, 2014, as amended (the ‘‘Food Sanctions Regulation’’). The ban took effect on August 7, 2014, and was extended for one more year starting from August 6, 2015. The Food Sanctions Regulation looks to the ‘‘country of origin’’ of foodstuffs, and not to the ultimate beneficial owner of such foodstuffs. In November 2015, as a result of the incident with a Turkish fighter jet shooting down a Russian bomber aircraft near the Turkish-Syrian border, Russia imposed a number of economic sanctions against Turkey, including bans on import of certain food and food products from Turkey. Starting from August 6, 2015, any banned goods transported to the territory of Russia shall be confiscated and destroyed (except for the goods transported by individuals for personal consumption and goods subject to customs transit procedure). The competent authorities entitled to confiscate and destroy banned goods are the Federal Customs Service, Federal Service for Supervision in the Area of Protection of Consumer Rights and Human Welfare and the Federal Service for Veterinary and Phytosanitary Supervision.

Consumer Protection Federal Law No. 2300-1 ‘‘On Protection of Consumers’ Rights’’, dated February 7, 1992, as amended (the ‘‘Consumer Protection Law’’), establishes a general framework for regulating the relationships between retailers, manufacturers and service providers, on the one hand, and consumers, on the other hand, in connection with the sale of goods, performance or works and rendering of services. This law sets forth the rights of individuals vis-a-vis` producers, sellers and service providers, including the right to purchase goods of good quality and the right to receive information, and specifies the consequences for violation of consumers’ rights. A claim for damage caused to health, life or property as a result of a defective design or formula or other defect in such goods, or failure to provide a consumer with complete and reliable information concerning such goods, works or services may be brought against a manufacturer (as well as seller or service provider) at the consumer’s discretion. In this case, strict liability is applied regardless of whether or not contractual relations exist. A seller that satisfied the consumer’s claim may have recourse to the manufacturer if it purchased the goods directly from the latter. Compliance with requirements imposed pursuant to the above law may be costly and time-consuming, and may, in certain cases, result in delays in the commencement or continuation of the Group’s operations. Violation of any of the applicable legal requirements could result in civil and administrative sanctions for non-complying companies and/or their managers and criminal sanctions for non-complying managers. The regulatory authority, Federal Service for Supervision in the Area of Protection of Consumer Rights and Human Welfare, exercises considerable discretion in matters of interpretation, application and enforcement of applicable laws and regulations, and is empowered with the right to conduct scheduled or unscheduled inspections.

154 DESCRIPTION OF THE SHARE CAPITAL AND APPLICABLE CYPRIOT LEGISLATION Set forth below is a description of the Company’s share capital, the material provisions of the Company’s memorandum and articles of association in effect on the date of this Information Memorandum and certain requirements of Cypriot legislation. Holders of GDRs will be able to exercise their rights with respect to the Ordinary Shares underlying the GDRs only in accordance with the provisions of the Deposit Agreement, see ‘‘Terms and Conditions of the Global Depositary Receipts’’, and the relevant requirements of Cypriot law.

General The Company was incorporated in Cyprus as a private company limited by shares on December 1, 2009 under the name Matchzone Holdings Limited and has conducted business since that date. In February, 2011, the Company changed its name to ROS AGRO PLC and converted into a public company. The principal legislation under which the Company operates, and under which the Ordinary Shares have been created, is the Companies Law, Cap. 113 of Cyprus (as amended) (the ‘‘Cyprus Companies Law’’). The Company’s registered number is 258621, and its registered office is at 8 Mykinon, Nicosia, 1065, Cyprus. The telephone number of the Company’s registered office is +357 224 608 90.

Purpose The Company’s purpose includes, among other things, the carrying on of investments and trade. All objects for which the Company is formed are set forth in Clause 3 of its memorandum of association.

Share Capital The authorized share capital of the Company consists of 60,000,000 Ordinary Shares. Issued share capital of the Company consists of 24,000,000 Ordinary Shares each with a nominal value of A0.01. On April 8, 2016 the Extraordinary General Meeting of the shareholders of the Company resolved to grant to the Board of Directors the power and authority to issue up to 10,000,000 Ordinary Shares from the unissued authorized share capital of the Company. The authority to the Board of Directors to allot and issue shares from the unissued authorized share capital is valid until 31 December 2016. The Ordinary Shares are in registered form and certified form. The Company does not have in issue any listed or unlisted securities not representing its share capital. Neither the Company nor any of its subsidiaries (nor any party on its behalf) holds any of its Ordinary Shares. Neither the Company nor any of its subsidiaries has any outstanding convertible securities, exchangeable securities or securities with warrants or any relevant acquisition rights or obligations over the Company’s or any of the subsidiaries’ authorized but unissued capital or undertakings to increase its issued share capital. None of the Company’s shares are currently in issue with a fixed date on which entitlement to a dividend arises and there are no arrangements in force whereby future dividends are waived or agreed to be waived.

Articles of Association The Company’s current articles of association were adopted on February 9, 2011 with the latest amendments thereto dated May 22, 2015. The following is a brief summary of certain material provisions of the Company’s articles of association.

Rights attaching to the Ordinary Shares Issue of shares Unissued shares may be issued as shares of any class, including shares of an existing class. At a general meeting (whether annual or extraordinary), the Company’s shareholders may by ordinary resolution authorize the directors to, upon complying with the provisions of the articles of association and Sections 60A and 60B of the Cyprus Companies Law, allot or otherwise dispose of any unissued shares in the appropriate manner as regards the persons, the time and, in general, the terms and conditions as the directors may decide. The Company may not issue shares at a discount. Any authority granted to the Board of Directors by the shareholders at a general meeting to allot and issue shares shall have a maximum duration of five years, which may be renewed one or more times at the general meeting, each time for a maximum five year period.

155 The issue of shares is also subject to statutory pre-emption rights. For more information, see below.

Pre-emption rights The Cyprus Companies Law confers on shareholders certain rights of pre-emption with respect to the allotment of newly issued shares. Unless otherwise determined by resolution approved at a general meeting of shareholders in accordance with the provisions of Section 60B(5) of the Cyprus Companies Law, all new shares and/or other securities which are convertible into shares in the Company that are to be issued for cash, shall be offered to the existing shareholders of the Company on a pro-rata basis to the participation of each shareholder in the capital of the Company. Any such offer shall be made upon written notice to all the shareholders specifying the number of the shares and/or other securities convertible into shares in the Company, which the shareholder is entitled to acquire and the time periods within which the offer, if not accepted, shall be deemed to have been rejected. If, until the expiration of the said time period, no notification is received from the person to whom the offer is addressed stating that such person accepts the offered shares or other securities which are convertible into shares of the Company, the directors may dispose of such shares or other securities in any manner as they deem more advantageous for the Company.

Voting rights Subject to any special rights or restrictions as to voting attached to shares (of which there are none at present), every holder of shares who is present in person or by proxy shall have one vote for each share held by him or her. Proxies may vote only on a poll vote. A corporate shareholder may, by resolution of its directors or other governing body, authorize a person to act as its representative at general meetings and that person may exercise the same powers as the corporate shareholder could exercise if it were an individual shareholder. No shareholder shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of his shares in the Company have been paid.

Dividend and distribution rights Under its articles of association, the Company may pay dividends out of its profits. The Company’s shareholders may declare dividends at an annual general meeting by an ordinary resolution, provided that such dividends do not exceed the amount (if any) recommended by the Board of Directors. The directors may from time to time and subject to the provisions of Section 169C of the Cyprus Companies Law pay to shareholders such interim dividends as appear to the directors to be justified by the Company’s profits but no dividend will be paid otherwise than out of net accumulated profits. The directors may set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for any purpose to which the profits may, at their discretion, either be employed in the Company’s business or be invested in such investments as the directors may from time to time think fit. The directors may also, without placing the same to the reserve, carry forward any profits which they may think prudent not to divide.

Variation of rights Without prejudice to any special rights previously conferred on the holders of any existing shares or classes of shares (of which there are none at present), any shares in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Company may from time to time by ordinary resolution determine. If at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of the issue of the shares of the class) may be varied only in accordance with Section 59A(1) of the Cyprus Companies Law by (i) a resolution approved at a separate general meeting of the holders of the shares of that class and (ii) a resolution approved at a separate general meeting of the shareholders of the Company. The provisions of the Company’s articles of association relating to general meetings shall apply to every such separate general meeting, except that the necessary quorum shall consist of shareholders holding or representing by proxy more than 50% plus one of that class.

156 Alteration of capital The Company may, from time to time, by resolution of the shareholders, increase the share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe. The Company may by an ordinary resolution of the shareholders: • consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; • subdivide its existing shares, or any of them, into shares of smaller amount than is fixed by the memorandum of association, subject, nevertheless, to the provisions of Section 60(1)(d) of the Cyprus Companies Law; • cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person. The Company may also, by special resolution sanctioned by the court, reduce its share capital, any capital redemption reserve fund or any share premium account in any manner, subject to the requirement of the Cyprus Companies Law. For further discussion of resolutions, see ‘‘– Resolutions.’’

Redemption of shares Subject to the provisions of Section 57 of the Cyprus Companies Law, any preference shares may, with the sanction of an ordinary resolution, be issued on the condition that they are, or at the option of the Company are liable to be, redeemed on such terms and in such manner as the Company, prior to the issue of such shares, may determine by special resolution.

Winding up If the Company shall be wound up, the liquidator, may, with the sanction of an extraordinary resolution of the Company’s shareholders, and any other sanction required by the Cyprus Companies Law: • divide among the shareholders in specie or in kind all or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the shareholders or different classes of shareholders; and • vest all or any part of such assets in trustees, upon such trusts for the benefit of the contributories as the liquidator shall think fit, but so that no shareholder shall be compelled to accept any shares or other securities which subject the shareholder to any liability.

Form and transfer of shares The instrument of transfer of any share shall be executed by or on behalf of the transferor and the transferee, and the transferor shall be deemed to be the holder of the share until the name of the transferee is entered into the register of shareholders in respect of such share. If the shares, titles or securities of the Company are being traded in a foreign market, the Company may register the transfer of share or debentures of the Company even if a proper instrument of transfer is not presented, provided that the transfer is effected in accordance with the regulations governing the said foreign market.

Directors Number of directors The minimum number of directors shall be two (in accordance with the Cyprus Companies Law) and the maximum shall be five, and at least two directors shall be independent directors. An independent director is a director free of any business, family or other relationship with the Company, its controlling shareholder(s), the management of either the Company or entities with significant connections with the Company that would create a conflict of interest such as to impair his or her judgment. A director who is an employee of the Company or a company associated with it may not qualify as an independent director.

157 The Company may, from time to time, by ordinary resolution of the shareholders, increase the number of directors.

Board of directors The quorum necessary for the transaction of the business of the directors shall be fixed by the directors and, unless so fixed, shall be at least 50% of the directors or their alternates, including at least one independent director. If a quorum is not present within half an hour from the start of the board meeting, the meeting must be adjourned to the same time, place and day in the following week, or such other time, place and day as the directors present may determine. The quorum required for the transaction of business at such adjourned meeting is the same as the initial meeting, except that there is no requirement for a minimum number of independent directors. Additionally, a resolution in writing, signed and approved by letter, facsimile or electronic communication by each director or his alternate shall be as valid and effective for all purposes as if the same had been passed at a meeting of the directors duly convened and held. Any director or a member of a committee of the directors may participate in a meeting of the directors or such committee by means of conference telephone or similar communications equipment whereby all persons participating in the meeting can hear each other and participation in a meeting in this manner shall be deemed to constitute presence in person at such meeting. Questions arising at any meeting of the Board of Directors shall be decided by a majority of votes. In the case of equality of votes, the chairman shall not have a second or casting vote. A director may, and the secretary on the requisition of a director shall, at any time, summon a meeting of the directors. The directors may delegate any of their powers to a committee or committees, including but not limited to the Audit Committee, consisting of such member or member of their body as they think fit. Subject to any regulations imposed on it by the Directors, a committee may meet and adjourn as it thinks proper and questions arising at any meeting shall be determined by a majority of votes of the members present.

Appointment of directors Only shareholders shall be entitled to appoint a director to office. At any time, and from time to time, the shareholders may by ordinary resolution, appoint any person as director and determine the period for which such person is to hold office, provided that any director so appointed shall hold office only until the next following annual general meeting and shall then be eligible for re-election. The shareholding qualification for directors may be fixed by the Company be resolution of the shareholders at a general meeting, and unless and until so fixed, no qualification shall be required (no such shareholding qualification has been fixed at present). Only shareholders shall be entitled to remove a director from office. The Company may by special resolution of the shareholders remove a director at any time. The Company may also, by ordinary resolution of the shareholders of which special notice has been given in accordance with Section 136 of the Cyprus Companies Law, remove any director before the expiration of his period of office notwithstanding anything in the articles of association or in any agreement between the Company and such director. Such removal shall be without prejudice to any claim such director may have for damages for breach of any contract of service between him and the Company. The office of director shall be vacated if the director: • ceases to be a director by virtue of Section 176 of the Cyprus Companies Law (directors duty to hold a specified share holding qualification); or • becomes bankrupt or makes any arrangement or composition with his creditors generally; or • becomes prohibited from being a director by reason of any order made under section 180 of the Cyprus Companies Law (disqualification from holding the position of director on the basis of fraudulent or other conduct); or • becomes of unsound mind; or • resigns his office by advance notice in writing to the Company.

158 Directors’ interests A director who is in any way directly or indirectly interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the directors in accordance with Section 191 of the Cyprus Companies Law. Directors who have an interest in any contract, agreement or settlement proposed to be concluded between the Company and a third party may attend the meeting of the Board of Directors or committee at which the matter is discussed but shall not have the right to vote (and shall not be counted in the quorum). None of these restrictions shall apply in relation to: • any arrangement for the provision to any director, of any security or guarantee in relation to money which he paid or obligations which he undertook in favor of the Company; or • any arrangement for the provision by the Company of any security to third parties in relation to a liability or obligation of the Company for which the director himself assumed responsibility whether wholly or in part pursuant to any guarantee or by the deposit of any security; or • any contract by a director to subscribe for or underwrite shares or debentures of the Company. The directors may hold any other office or profit making position in the Company along with the office of director (other than the office of an independent auditor) for such period and on such terms (as to remuneration and other matters) as the directors may determine; and no director or prospective director shall be disqualified on the grounds of holding such office from contracting with the Company whether with regard to his tenure or any such other office or place of profit or as a vendor, purchaser or otherwise; nor shall any such contract, or any contract or settlement concluded by or on behalf of the Company in which any director has any interest, be liable to be cancelled; nor shall any director so contracting or having such an interest be liable to account to the Company for any profit realized by any such contract or settlement by reason of such director holding that office or of the fiduciary relationship thereby established. The directors may act either personally or in a professional capacity for the Company, and the director or his firm shall be entitled to remuneration for professional services as if he were not a director, provided that a director or his firm shall not act as auditor to the Company. Only independent directors shall be entitled to remuneration, which shall be determined from time to time by the shareholders of the Company at a general meeting. The directors may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors or in connection with the business of the Company.

Directors’ powers The business of the Company shall be managed by the directors, who may exercise all such powers of the Company as are not, by the Cyprus Companies Law or by the articles of association, required to be exercised by the shareholders in general meeting, subject nevertheless to any provisions of the articles of association, of the Cyprus Companies Law and of any regulations (which are not in conflict with the articles of association or the provisions of the Cyprus Companies Law) as may be prescribed by the Company at a general meeting; however, no regulation made by the Company at a general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made.

Meetings of shareholders The first annual general meeting must be held within 18 months of incorporation and thereafter, not more than 15 months shall elapse between the date of one annual general meeting and the next. The directors may, whenever they think fit, decide to convene an extraordinary general meeting. Extraordinary general meetings shall also be convened on requisition or, in default, they may be convened by such requisitionists as provided by Section 126 of the Cyprus Companies Law, for example shareholders holding at least 10% of the issued share capital of the Company. If at any time there are not, within Cyprus, sufficient directors capable of forming a quorum, any director or any two shareholders may convene an extraordinary general meeting in the same manner, or as approximately as possible, as such meetings would be convened by the directors. The annual general meeting, a meeting convened to pass a special resolution or any other meeting shall be called by at least twenty-one days’ written notice. In case of special business, the notice shall specify the general nature of that business and in the case of a meeting convened for passing a special or extraordinary

159 resolution, the intention to propose a special or extraordinary resolution as the case may be. The meetings of the Company may be called by shorter notice and shall be deemed to have been duly called if it is so agreed: • in the case of a meeting called as the annual general meeting, by all the shareholders entitled to attend and vote; and • in the case of any other meeting, by a majority in number of the shareholders having a right to attend and vote at the meeting, being a majority together holding not less than 95% in nominal value of the shares giving that right. A notice convening a general meeting must be sent to each of the shareholders, provided that the accidental failure to give notice of a meeting to, or the non-receipt of notice of a meeting by any person entitled to receive notice, shall not invalidate the proceedings at that meeting to which such notice refers. All shareholders are entitled to attend the general meeting or be represented by a proxy authorized in writing. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands, every shareholder present in person shall have one vote, and on a poll, every shareholder shall have one vote for each share of which he is the holder (which may be given personally or by proxy). The quorum for a general meeting will consist of two or more shareholders representing more than 50% plus one of the voting share capital of the Company, present in person or by proxy. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved. In any other case, it shall stand adjourned to the same day of the next week, at the same time and place or on such other day and at such other time and place as the directors may determine and if at the adjourned meeting a quorum is not formed within half an hour from the time appointed for the meeting, the shareholders present shall form a quorum. Subject to the provisions of the Cyprus Companies Law, a resolution in writing signed by all the shareholders entitled to receive notice of and to attend and vote at general meetings (or being corporations by their duly authorized representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held.

Resolutions The Cyprus Companies Law names three types of resolutions that may be submitted to a shareholder vote: ordinary resolutions, extraordinary resolutions and special resolutions. There is no definition in the Cyprus Companies Law of ordinary resolution. An ordinary resolution must be approved by a majority vote of shareholders having voting rights present at the meeting, voting in person or through a proxy. An ordinary resolution put to vote at an annual general meeting or an extraordinary general meeting must be preceded by a twenty-one days’ prior written notice of the meeting which must specify that the meeting to take place will be an annual general meeting. Section 135 of the Cyprus Companies Law defines extraordinary resolutions and special resolutions. An extraordinary resolution must be approved by at least three quarters of shareholders having voting rights present at the meeting, voting in person or through a proxy. An extraordinary resolution must be preceded by a twenty-one days’ prior written notice of the meeting which must specify the intention to propose an extraordinary resolution. A special resolution must be approved by at least three quarters of shareholders having voting rights present at the meeting, voting in person or through a proxy. In all cases in computing the majority on a poll reference shall be made to the number of votes cast for and against the resolution. A special resolution is required, among other things, to amend the articles of association, to change the name of the company, to reduce company’s share capital and to amend the objectives of the company. A special resolution must be preceded by a twenty-one days’ prior written notice of the meeting which must specify the intention to propose a special resolution. A resolution may be taken up and passed as a special resolution at a meeting which has been convened upon less than twenty-one days’ prior notice, provided that the majority of shareholders having voting rights and holding at least 95% of the nominal value of the shares with voting rights agree to such reduced notice.

Cypriot Law The principal legislation under which the shares have been created and under which the Company was formed and now operates is the Cyprus Companies Law. The liability of shareholders is limited. Under the Cyprus Companies Law, a shareholder of a company is not personally liable for the acts of the company, save that a shareholder may become personally liable by reason of his or her own acts.

160 According to the Cyprus Companies Law, whenever shares are issued in exchange for a cash consideration, the shareholders have pre-emption rights with respect to such issuance of shares on a pro rata basis. These pre-emption rights may be disapplied by a resolution of the general meeting which is passed by a two thirds majority if less than half of all the votes are represented at the meeting and by a simple majority if at least half of all the votes are represented at the meeting. The directors have an obligation to present to the relevant general meeting a written report which explains the reasons for the disapplication of the pre-emption rights and justifies the proposed allotment price of the shares. As a company with its registered office in Cyprus whose securities represented by GDRs are listed on a regulated market in the United Kingdom, any offer for such GDRs will be subject to the provisions of the United Kingdom City Code on Takeovers and Mergers (the ‘‘City Code’’) with respect to consideration, disclosure requirements and procedural matters applicable to the offer, while Cypriot law (Takeover Bids Law No. 41(I)/2007, as amended) would apply to such an offer in relation to company law matters, including the threshold for a mandatory bid. Pursuant to Article 5(1) of Directive 2004/25/EC of the Parliament and Council of the European Union dated April 21, 2004 on takeover bids (the ‘‘Takeover Directive’’), all member states of the European Union are required to introduce legislation requiring any person who, together with those acting in concert with him, acquires ‘‘control’’ of a company having its registered office in that member state, to make a mandatory offer to all holders of securities of the company. Pursuant to the Takeover Directive, the percentage of voting rights conferring ‘‘control’’ is to be determined by the rules of the member state in which the company has its registered office. Currently applicable Cypriot law contains provisions relating to mandatory offers requiring any person who acquires shares in a company to which such law applies, which together with the shares already held by him and by persons acting in concert with him, carry 30% or more of such company’s voting rights, to make a general offer for that company’s entire issued share capital. The following cases constitute a non exhaustive list of situations where the obligation to make a bid applies: (a) Where the offeror holds no securities or holds securities representing less than 30% of the voting rights of a company and with an acquisition of the securities he/she reaches or supersedes 30% of the voting rights of the company; or (b) Where the offeror already holds a percentage equal to or greater than 30% and below 50% of the voting rights of a company and increases his/her percentage of holding. Although, it is not certain under the relevant legislation as to whether the Takeover Bids Law would apply to GDRs and/or whether GDRs fall within the definition of ‘‘securities’’ contained therein, the position of CySec appears to be that the legislation applies and in the absence of a decision of the Cypriot courts on the matter, this position should be taken into account. Section 201 of the Cyprus Companies Law contains provisions on the power to acquire shares of shareholders dissenting from a scheme or contract approved by the majority. The effect of these provisions is that where a scheme or contract is approved for the transfer of shares or any class of shares in a company to another company (the ‘‘transferee company’’), and the offer is accepted by the holders of 90% in value of the shares concerned, the transferee company can upon the same terms acquire the shares of shareholders who had not accepted the transfer, unless otherwise ordered by the court. If the transferee company already holds more than 10% in value of the shares concerned, additional requirements need to be met for these provisions to apply. If the transferee company making the take-over bid acquires sufficient shares to aggregate, together with those which it already holds (or by nominee), more than 90% in value then, within one month of the date of the transfer which gives the 90%, it must give notice of the fact to the remaining shareholders and such shareholders may, within three months of the notice, require the transferee to acquire their shares and the transferee company shall be bound to do so upon the same terms as in the offer or as may be agreed between them or upon such terms as the court may order. There have been no public takeover bids by third parties for all or any part of the Company’s equity share capital since its date of incorporation.

161 TERMS AND CONDITIONS OF THE GLOBAL DEPOSITARY RECEIPTS The following terms and conditions (subject to completion and amendment and excepting sentences in italics) will apply to the GDRs, and will be endorsed on each Global Depositary Receipt certificate: The Global Depositary Receipts (‘‘GDRs’’) represented by this certificate are issued in respect of Ordinary Shares, each with a nominal value of A0.01 (the ‘‘Shares’’) in ROS AGRO PLC (the ‘‘Company’’) pursuant to and subject to an agreement dated 12 April 2011, and made between the Company and The Bank of New York Mellon in its capacity as depositary (the ‘‘Depositary’’) for the ‘‘Regulation S Facility’’ and for the ‘‘Rule 144A Facility’’ (such agreement, as amended from time to time, being hereinafter referred to as the ‘‘Deposit Agreement’’). Pursuant to the provisions of the Deposit Agreement, the Depositary has appointed BNY (Nominees) Limited as Custodian (the ‘‘Custodian’’) to receive and hold on its behalf any relevant documentation respecting certain Shares (the ‘‘Deposited Shares’’) and all rights, interests and other securities, property and cash deposited with the Custodian which are attributable to the Deposited Shares (together with the Deposited Shares, the ‘‘Deposited Property’’). The Depositary shall hold Deposited Property for the benefit of the Holders (as defined below) as bare trustee in proportion to their holdings of GDRs. In these terms and conditions (the ‘‘Conditions’’), references to the ‘‘Depositary’’ are to The Bank of New York Mellon and/or any other depositary which may from time to time be appointed under the Deposit Agreement, references to the ‘‘Custodian’’ are to BNY (Nominees) Limited or any other custodian from time to time appointed under the Deposit Agreement and references to the ‘‘Main Office’’ mean, in relation to the relevant Custodian, its head office in the city of London or such other location of the head office of the Custodian in Cyprus as may be designated by the Custodian with the approval of the Depositary (if outside the city of London) or the head office of any other custodian from time to time appointed under the Deposit Agreement. The GDRs will upon issue be represented by interests in a Regulation S Master GDR, evidencing Regulation S GDRs, and by interests in a Rule 144A Master GDR, evidencing Rule 144A GDRs (as each such term is defined in the Deposit Agreement). The GDRs are exchangeable in the circumstances set out in ‘‘Summary of Provisions Relating to the Global Depositary Receipts while in Master Form’’ for a certificate in definitive registered form in respect of GDRs representing all or part of the interest of the holder in the relevant Master GDR. References in these Conditions to the ‘‘Holder’’ of any GDR shall mean the person or persons registered on the books of the Depositary maintained for such purpose (the ‘‘Register’’) as holder. These Conditions include summaries of, and are subject to, the detailed provisions of the Deposit Agreement, which includes the forms of the certificates in respect of the GDRs. Copies of the Deposit Agreement are available for inspection at the specified office of the Depositary and each Agent (as defined in Condition 17) and at the Main Office of the Custodian. Terms used in these Conditions and not defined herein but which are defined in the Deposit Agreement have the meanings ascribed to them in the Deposit Agreement. Holders of GDRs are not party to the Deposit Agreement and thus, under English Law, have no contractual rights against, or obligations to, the Company or Depositary. However, the Deed Poll executed by the Company in favour of the Holders provides that, if the Company fails to perform the obligations imposed on it by certain specified provisions of the Deposit Agreement, any Holder may enforce the relevant provisions of the Deposit Agreement as if it were a party to the Deposit Agreement and was the ‘‘Depositary’’ in respect of that number of Deposited Shares to which the GDRs of which he is the Holder relate. The Depositary is under no duty to enforce any of the provisions of the Deposit Agreement on behalf of any Holder of a GDR or any other person.

1. Withdrawal of Deposited Property and Further Issues of GDRs 1.1 Any Holder may request withdrawal of, and the Depositary shall thereupon relinquish, the Deposited Property attributable to any GDR upon production of such evidence of the entitlement of the Holder to the relative GDR as the Depositary may reasonably require, at the specified office of the Depositary or any Agent accompanied by: (a) a duly executed order (in a form approved by the Depositary) requesting the Depositary to cause the Deposited Property being withdrawn to be delivered at the Main Office of the Custodian, or (at the request, risk and expense of the Holder, and only if permitted by applicable law from time to time) at the specified office located in New York, London or Cyprus of the Depositary or any Agent, or to the order in writing of, the person or persons designated in such order;

162 (b) the payment of such fees, taxes, duties, charges, costs, expenses and governmental charges as may be required under these Conditions or the Deposit Agreement; (c) the surrender (if appropriate) of GDR certificates in definitive registered form properly endorsed in blank or accompanied by proper instruments of transfer satisfactory to the Depositary to which the Deposited Property being withdrawn is attributable; and (d) the delivery to the Depositary of a duly executed and completed certificate substantially in the form set out in Schedule 4, Part B to the Deposit Agreement (or as amended by the Depositary in accordance with Clause 3.10 of the Deposit Agreement and Condition 1.8), if Deposited Property is to be withdrawn or delivered in respect of surrendered Rule 144A GDRs. 1.2 Upon production of such documentation and the making of such payment as aforesaid for withdrawal of the Deposited Property in accordance with Condition 1.1, the Depositary will direct the Custodian, by tested telex, facsimile or SWIFT message, within a reasonable time after receiving such direction from such Holder, to deliver at its Main Office to, or to the order in writing of, the person or persons designated in the accompanying order: (a) a certificate (if any) for, or other appropriate instrument of title (if any) to or evidence of a book-entry transfer in respect of the relevant Deposited Shares, registered in the name of the Depositary or its nominee and accompanied by such instruments of transfer in blank or to the person or persons specified in the order for withdrawal and such other documents, if any, as are required by law for the transfer thereof; and (b) all other property forming part of the Deposited Property attributable to such GDR, accompanied, if required by law, by one or more duly executed endorsements or instruments of transfer in respect thereof; provided however that the Depositary may make delivery at its specified office in New York of any Deposited Property which is in the form of cash; PROVIDED THAT the Depositary (at the request, risk and expense of any Holder so surrendering a GDR): (i) will direct the Custodian to deliver the certificates for, or other instruments of title to, or book-entry transfer in respect of, the relevant Deposited Shares and any document relative thereto and any other documents referred to in sub-paragraphs 1.2(a) and (b) of this Condition (together with any other property forming part of the Deposited Property which may be held by the Custodian or its agent and is attributable to such Deposited Shares); and/or (ii) will deliver any other property forming part of the Deposited Property which may be held by the Depositary and is attributable to such GDR (accompanied, if required by law, by one or more duly executed endorsements or instruments of transfer in respect thereof); in each case to the specified office located in New York or London of the Depositary (if permitted by applicable law from time to time) or at the specified office in Cyprus of any Agent as designated by the surrendering Holder in the order accompanying such GDR. 1.3 Delivery by the Depositary, any Agent and the Custodian of all certificates, instruments, dividends or other property forming part of the Deposited Property as specified in this Condition will be made subject to any laws or regulations applicable thereto. 1.4 The Depositary may, in accordance with the terms of the Deposit Agreement and upon delivery of a duly executed order (in a form reasonably approved by the Depositary) and a duly executed certificate substantially in the form of (a) Schedule 3 of the Deposit Agreement (which is described in the following paragraph) (or as amended by the Depositary in accordance with Clause 3.10 of the Deposit Agreement and Condition 1.8) by or on behalf of any investor who is to become the beneficial owner of the Regulation S GDRs or (b) Schedule 4, Part A of the Deposit Agreement (which is described in the second following paragraph) (or as amended by the Depositary in accordance with Clause 3.10 of the Deposit Agreement and Condition 1.8) by or on behalf of any investor who is to become the beneficial owner of Rule 144A GDRs from time to time execute and deliver further GDRs having the same terms and conditions as the GDRs which are then outstanding in all respects (or the same in all respects except for the first dividend payment on the Shares represented by such further GDRs) and, subject to the terms of the Deposit Agreement, the Depositary shall accept for deposit any further Shares in connection therewith, so that such further

163 GDRs shall form a single series with the already outstanding GDRs. References in these Conditions to the GDRs include (unless the context requires otherwise) any further GDRs issued pursuant to this Condition and forming a single series with the already outstanding GDRs. The certificate to be provided in the form of Schedule 3 of the Deposit Agreement certifies, among other things, that the person providing such certificate is located outside the United States and will comply with the restrictions on transfer set forth under ‘‘Transfer and Selling Restrictions.’’ The certificate to be provided in the form of Schedule 4, Part A, of the Deposit Agreement certifies, among other things that the person providing such certificate is a qualified institutional buyer (as defined in Rule 144A under the US Securities Act of 1933, as amended (the ‘‘Securities Act’’) (‘‘QIB’’)) or is acting for the account of another person and such person is a QIB and, in either case, will comply with the restrictions on transfer set forth under ‘‘Transfer and Selling Restrictions.’’ 1.5 Any further GDRs issued pursuant to Condition 1.4 which (i) represent Shares which have rights (whether dividend rights or otherwise) which are different from the rights attaching to the Shares represented by the outstanding GDRs, or (ii) are otherwise not fungible (or are to be treated as not fungible) with the outstanding GDRs, will be represented by a GDR certificate in definitive form or a separate temporary Regulation S Master GDR and/or temporary Rule 144A Master GDR. Upon becoming fungible with outstanding GDRs, such further GDRs shall be evidenced by a Regulation S Master GDR and/or a Rule 144A Master GDR (by increasing the total number of GDRs evidenced by the relevant Regulation S Master GDR or Rule 144A Master GDR by the number of such further GDRs, as applicable). 1.6 The Depositary may issue GDRs against rights to receive Shares from the Company (or any agent of the Company recording Share ownership). No such issue of GDRs will be deemed a ‘‘Pre-Release’’ as defined in Condition 1.7. 1.7 Unless requested in writing by the Company to cease doing so, and notwithstanding the provisions of Condition 1.4, the Depositary may execute and deliver GDRs or issue interests in a Regulation S Master GDR or a Rule 144A Master GDR, as the case may be, prior to the receipt of Shares (a ‘‘Pre-Release’’). The Depositary may, pursuant to Condition 1.1, deliver Shares upon the receipt and cancellation of GDRs, which have been Pre-Released, whether or not such cancellation is prior to the termination of such Pre-Release or the Depositary knows that such GDR has been Pre-Released. The Depositary may receive GDRs in lieu of Shares in satisfaction of a Pre-Release. Each Pre-Release will be (a) preceded or accompanied by a written representation and agreement from the person to whom GDRs or Deposited Property are to be delivered (the ‘‘Pre-Releasee’’) that such person, or its customer, (i) owns or represents the owner of the corresponding Deposited Property or GDRs to be remitted (as the case may be), (ii) assigns all beneficial right, title and interest in such Deposited Property or GDRs (as the case may be) to the Depositary in its capacity as such and for the benefit of the Holders, and (iii) will not take any action with respect to such GDRs or Deposited Property (as the case may be) that is inconsistent with the transfer of beneficial ownership (including without the consent of the Depositary, disposing of such GDRs or Deposited Property, as the case may be), other than in satisfaction of such Pre-Release, (b) at all times fully collateralised with cash or such other collateral as the Depositary determines in good faith will provide substantially similar liquidity and security, (c) terminable by the Depositary on not more than five (5) business days’ notice, and (d) subject to such further indemnities and credit regulations as the Depositary deems appropriate. The number of GDRs which are outstanding at any time as a result of Pre-Release will not normally represent more than thirty per cent. of the total number of GDRs then outstanding; provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate and may, with the prior written consent of the Company, change such limit for the purpose of general application. The Depositary will also set dollar limits with respect to Pre-Release transactions hereunder with any particular Pre-Releasee on a case by case basis as the Depositary deems appropriate. The collateral referred to in sub-paragraph (b) above shall be held by the Depositary as security for the performance of the Pre-Releasee’s obligations in connection herewith, including the Pre-Releasee’s obligation to deliver Shares and/or other securities or GDRs upon termination of a Pre-Release transaction anticipated hereunder (and shall not, for the avoidance of doubt, constitute Deposited Property hereunder). The Depositary may retain for its own account any compensation received by it in connection with the foregoing including, without limitation, earnings on the collateral.

164 The person to whom any Pre-Release of Rule 144A GDRs or Rule 144A Shares is to be made pursuant to this Condition 1.7 shall be required to deliver to the Depositary a duly executed and completed certificate substantially in the form set out in Schedule 4 Part A of the Deposit Agreement (or as amended by the Depositary in accordance with Clause 3.10 of the Deposit Agreement and Condition 1.8). The person to whom any Pre-Release of Regulation S GDRs or Regulation S Shares is to be made pursuant to this paragraph shall be required to deliver to the Depositary a duly executed and completed certificate substantially in the form set out in Schedule 3 of the Deposit Agreement (or as amended by the Depositary in accordance with Clause 3.10 of the Deposit Agreement and Condition 1.8). 1.8 The Depositary may make such amendments to the certificates contained in the Deposit Agreement in Schedule 3 and in Schedule 4 Parts A and B as it may determine are required in order for the Depositary to perform its duties under the Deposit Agreement, or to comply with any applicable law or with the rules and regulations of any securities exchange, market or automated quotation system upon which the GDRs may be listed or traded, or to comply with the rules or requirements of any book entry system by which the GDRs may be transferred, or to confirm compliance with any special limitations or restrictions to which any particular GDRs are subject.

2. Suspension of Issue of GDRs and of Withdrawal of Deposited Property The Depositary shall be entitled, at its reasonable discretion, at such times as it shall determine, to suspend the issue or transfer of GDRs (and the deposit of Shares) generally or in respect of particular Shares. In particular, to the extent that it is in its opinion practicable for it to do so, the Depositary will refuse to accept Shares for deposit, to execute and deliver GDRs or to register transfers of GDRs if it has been notified by the Company in writing that the Deposited Shares or GDRs or any depositary receipts representing Shares are listed on a U.S. Securities Exchange or quoted on a U.S. automated inter dealer quotation system unless accompanied by evidence satisfactory to the Depositary that any such Shares are eligible for resale pursuant to Rule 144A under the Securities Act. Further, the Depositary may suspend the withdrawal of Deposited Property during any period when the Register, or the register of shareholders of the Company is closed or, generally or in one or more localities, suspend the withdrawal of Deposited Property or deposit of Shares if deemed necessary or desirable or advisable by the Depositary in good faith at any time or from time to time, in order to comply with any applicable law or governmental or stock exchange regulations or any provision of the Deposit Agreement or for any other reason. The Depositary shall (unless otherwise notified by the Company) restrict the withdrawal of Deposited Shares where the Company notifies the Depositary in writing that such withdrawal would result in ownership of Shares exceeding any limit under any applicable law, government resolution or the Company’s constitutive documents or would otherwise violate any applicable laws.

3. Transfer and Ownership The GDRs are in registered form. Title to the GDRs passes by registration in the Register and accordingly, transfer of title to a GDR is effective only upon such registration. The Depositary will refuse to accept for transfer any GDRs if it reasonably believes that such transfer would result in violation of any applicable laws. The Holder of any GDR will (except as otherwise required by law) be treated by the Depositary and the Company as its beneficial owner for all purposes (whether or not any payment or other distribution in respect of such GDR is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, or theft or loss of any certificate issued in respect of it) and no person will be liable for so treating the Holder. Interests in Rule 144A GDRs represented by the Rule 144A Master GDR may be transferred to a person whose interest in such Rule 144A GDRs is subsequently represented by the Regulation S Master GDR only upon receipt by the Depositary of written certifications (in the forms provided in the Deposit Agreement) from the transferor and the transferee to the effect that such transfer is being made in accordance with Rule 903 or Rule 904 of Regulation S under the Securities Act.

4. Cash Distributions Whenever the Depositary shall receive from the Company any cash dividend or other cash distribution on or in respect of the Deposited Shares (including any amounts received in the liquidation of the Company) or otherwise in connection with the Deposited Property, the Depositary shall, as soon as practicable, convert the same into United States dollars in accordance

165 with Condition 8. The Depositary shall, if practicable in the opinion of the Depositary, give notice to the Holders of its receipt of such payment in accordance with Condition 23, specifying the amount per Deposited Share payable in respect of such dividend or distribution and the earliest date, determined by the Depositary, for transmission of such payment to Holders and shall as soon as practicable distribute any such amounts to the Holders in proportion to the number of Deposited Shares represented by the GDRs so held by them respectively, subject to and in accordance with the provisions of Conditions 9 and 11; PROVIDED THAT: (a) in the event that the Depositary is aware that any Deposited Shares are not entitled, by reason of the date of issue or transfer or otherwise, to such full proportionate amount, the amount so distributed to the relative Holders shall be adjusted accordingly; and (b) the Depositary will distribute only such amounts of cash dividends and other distributions as may be distributed without attributing to any GDR a fraction of the lowest integral unit of currency in which the distribution is made by the Depositary, and any balance remaining shall be retained by the Depositary beneficially as an additional fee under Condition 16.1(d).

5. Distributions of Shares Whenever the Depositary shall receive from the Company any distribution in respect of Deposited Shares which consists of a dividend or free distribution of Shares, the Depositary shall cause to be distributed to the Holders entitled thereto, in proportion to the number of Deposited Shares represented by the GDRs held by them respectively, additional GDRs representing an aggregate number of Shares received pursuant to such distribution. Such additional GDRs shall be distributed by an increase in the number of GDRs represented by the Master GDRs or by an issue of certificates in definitive registered form in respect of GDRs, according to the manner in which the Holders hold their GDRs; PROVIDED THAT, if and in so far as the Depositary deems any such distribution to all or any Holders not to be reasonably practicable (including, without limitation, due to the fractions which would otherwise result or to any requirement that the Company, the Custodian or the Depositary withhold an amount on account of taxes or other governmental charges) or to be unlawful, the Depositary shall (either by public or private sale and otherwise at its discretion, subject to all applicable laws and regulations) sell such Shares so received and distribute the net proceeds of such sale as a cash distribution pursuant to Condition 4 to the Holders entitled thereto.

6. Distributions other than in Cash or Shares Whenever the Depositary shall receive from the Company any dividend or distribution in securities (other than Shares) or in other property (other than cash) on or in respect of the Deposited Property, the Depositary shall distribute or cause to be distributed such securities or other property to the Holders entitled thereto, in proportion to the number of Deposited Shares represented by the GDRs held by them respectively, in any manner that the Depositary may deem equitable and practicable for effecting such distribution; PROVIDED THAT, if and in so far as the Depositary deems any such distribution to all or any Holders not to be reasonably practicable (including, without limitation, due to the fractions which would otherwise result or to any requirement that the Company, the Custodian or the Depositary withhold an amount on account of taxes or other governmental charges) or to be unlawful, the Depositary shall deal with the securities or property so received, or any part thereof, in such way as the Depositary may determine to be equitable and practicable, including, without limitation, by way of sale (either by public or private sale and otherwise at its discretion, subject to all applicable laws and regulations) and shall (in the case of a sale) distribute the resulting net proceeds as a cash distribution pursuant to Condition 4 to the Holders entitled thereto.

7. Rights Issues If and whenever the Company announces its intention to make any offer or invitation to the holders of Shares to subscribe for or to acquire Shares, securities or other assets by way of rights, the Depositary shall as soon as practicable give notice to the Holders, in accordance with Condition 23, of such offer or invitation, specifying, if applicable, the earliest date established for acceptance thereof, the last date established for acceptance thereof and the manner by which and time during which Holders may request the Depositary to exercise such rights as provided below or, if such be

166 the case, specifying details of how the Depositary proposes to distribute the rights or the proceeds of any sale thereof. The Depositary will deal with such rights in the manner described below: (a) if and to the extent that the Depositary shall, at its discretion, deem it to be lawful and reasonably practicable, the Depositary shall make arrangements whereby the Holders may, upon payment of the subscription price in dollars or other relevant currency together with such fees, taxes, duties, charges, costs and expenses as may be required under the Deposit Agreement and completion of such undertakings, declarations, certifications and other documents as the Depositary may reasonably require, request the Depositary to exercise such rights on their behalf with respect to the Deposited Shares and to distribute the Shares, securities or other assets so subscribed or acquired to the Holders entitled thereto by an increase in the numbers of GDRs represented by the Master GDRs or an issue of certificates in definitive registered form in respect of GDRs, according to the manner in which the Holders hold their GDRs; or (b) if and to the extent that the Depositary shall at its discretion, deem it to be lawful and reasonably practicable, the Depositary will distribute such rights to the Holders entitled thereto in such manner as the Depositary may at its discretion determine; or (c) if and to the extent that the Depositary deems any such arrangement and distribution as is referred to in paragraphs (a) and (b) above to all or any Holders not to be lawful and reasonably practicable (including, without limitation, due to the fractions which would otherwise result or to any requirement that the Company, the Custodian or the Depositary withhold an amount on account of taxes or other governmental charges) or to be unlawful, the Depositary (i) will, PROVIDED THAT Holders have not taken up rights through the Depositary as provided in (a) above, sell such rights (either by public or private sale and otherwise at its discretion subject to all applicable laws and regulations) or (ii) may, if such rights are not transferable, in its discretion, arrange for such rights to be exercised and the resulting Shares or securities sold and, in each case, distribute the net proceeds of such sale as a cash distribution pursuant to Condition 4 to the Holders entitled thereto. (d) (i) Notwithstanding the foregoing, in the event that the Depositary offers rights pursuant to Condition 7(a) (the ‘‘Primary GDR Rights Offering’’), if authorised by the Company to do so, the Depositary may, in its discretion, make arrangements whereby in addition to instructions given by a Holder to the Depositary to exercise rights on its behalf pursuant to Condition 7(a), such Holder is permitted to instruct the Depositary to subscribe on its behalf for additional rights which are not attributable to the Deposited Shares represented by such Holder’s GDRs (‘‘Additional GDR Rights’’) if at the date and time specified by the Depositary for the conclusion of the Primary GDR Rights Offering (the ‘‘Instruction Date’’) instructions to exercise rights have not been received by the Depositary from the Holders in respect of all their initial entitlements. Any Holder’s instructions to subscribe for such Additional GDR Rights (‘‘Additional GDR Rights Requests’’) shall specify the maximum number of Additional GDR Rights that such Holder is prepared to accept (the ‘‘Maximum Additional Subscription’’) and must be received by the Depositary by the Instruction Date. If by the Instruction Date any rights offered in the Primary GDR Rights Offering have not been subscribed by the Holders initially entitled thereto (‘‘Unsubscribed Rights’’), subject to Condition 7(d)(iii) and receipt of the relevant subscription price in dollars or other relevant currency, together with such fees, taxes, duties, charges, costs and expenses as it may deem necessary, the Depositary shall make arrangements for the allocation and distribution of Additional GDR Rights in accordance with Condition 7(d)(ii). (ii) Holders submitting Additional GDR Rights Requests shall be bound to accept the Maximum Additional Subscription specified in such Additional GDR Rights Request but the Depositary shall not be bound to arrange for a Holder to receive the Maximum Additional Subscription so specified but may make arrangements whereby the Unsubscribed Rights are allocated pro rata on the basis of the extent of the Maximum Additional Subscription specified in each Holder’s Additional GDR Rights Request.

167 (iii) In order to proceed in the manner contemplated in this Condition 7(d), the Depositary shall be entitled to receive such opinions from Cypriot counsel and US counsel as in its discretion it deems necessary which opinions shall be in a form and provided by counsel reasonably satisfactory to the Depositary and at the expense of the Company and may be requested in addition to any other opinions and/or certifications which the Depositary shall be entitled to receive under the Deposit Agreement and these Conditions. For the avoidance of doubt, save as provided in these Conditions and the Deposit Agreement, the Depositary shall have no liability to the Company or any Holder in respect of its actions or omissions to act under this Condition 7(d) and, in particular, the Depositary will not be regarded as being negligent, acting in bad faith, or in wilful default if it elects not to make the arrangements referred to in Condition 7(d)(i). The Company has agreed in the Deposit Agreement that it will, unless prohibited by applicable law or regulation, give its consent to, and if requested use all reasonable endeavours (subject to the next paragraph) to facilitate, any such distribution, sale or subscription by the Depositary or the Holders, as the case may be, pursuant to Conditions 4, 5, 6, 7 or 10 (including the obtaining of legal opinions from counsel reasonably satisfactory to the Depositary concerning such matters as the Depositary may reasonably specify). If the Company notifies the Depositary that registration is required in any jurisdiction under any applicable law of the rights, securities or other property to be distributed under Conditions 4, 5, 6, 7 or 10 or the securities to which such rights relate in order for the Company to offer such rights or distribute such securities or other property to the Holders or owners of GDRs and to sell the securities corresponding to such rights, the Depositary will not offer such rights or distribute such securities or other property to the Holders or sell such securities unless and until the Company procures the receipt by the Depositary of an opinion from counsel reasonably satisfactory to the Depositary that a registration statement is in effect or that the offering and sale of such rights or securities to such Holders or owners of GDRs are exempt from registration under the provisions of such law. Neither the Company nor the Depositary shall be liable to register such rights, securities or other property or the securities to which such rights relate and they shall not be liable for any losses, damages or expenses resulting from any failure to do so. If at the time of the offering of any rights, at its discretion, the Depositary shall be satisfied that it is not lawful or practicable (for reasons outside its control) to dispose of the rights in any manner provided in paragraphs (a), (b), (c) and (d) above, the Depositary shall permit the rights to lapse. The Depositary will not be responsible for any failure to determine that it may be lawful or feasible to make such rights available to Holders or owners of GDRs in general or to any Holder or owner of a GDR or Holders or owners of GDRs in particular.

8. Conversion of Foreign Currency Whenever the Depositary shall receive any currency other than United States dollars by way of dividend or other distribution or as the net proceeds from the sale of securities, other property or rights, and if at the time of the receipt thereof the currency so received can in the judgement of the Depositary be converted on a reasonable basis into United States dollars and distributed to the Holders entitled thereto, the Depositary shall as soon as practicable convert or cause to be converted, by sale or in any other manner that it may reasonably determine, the currency so received into United States dollars. If such conversion or distribution can be effected only with the approval or licence of any government or agency thereof, the Depositary may make reasonable efforts to apply, or procure that an application be made, for such approval or licence, if any, as it may deem desirable. If at any time the Depositary shall determine that in its judgement any currency other than United States dollars is not convertible on a reasonable basis into United States dollars and distributable to the Holders entitled thereto, or if any approval or licence of any government or agency thereof which is required for such conversion is denied or, in the opinion of the Depositary, is not obtainable, or if any such approval or licence is not obtained within a reasonable period as determined by the Depositary, the Depositary may distribute such other currency received by it (or an appropriate document evidencing the right to receive such other currency) to the Holders entitled thereto to the extent permitted under applicable law, or the Depositary may in its discretion hold such other currency without liability for interest for the benefit of the Holders entitled thereto. If any conversion of any such currency can be effected in whole or

168 in part for distribution to some (but not all) Holders entitled thereto, the Depositary may at its discretion make such conversion and distribution in United States dollars to the extent possible to the Holders entitled thereto and may distribute the balance of such other currency received by the Depositary to, or hold such balance for the account of, the Holders entitled thereto, and notify the Holders accordingly.

9. Distribution of any Payments 9.1 Any distribution of cash under Conditions 4, 5, 6, 7 or 10 will be made by the Depositary to Holders on the record date established by the Depositary for that purpose (such date to be as close to the record date set by the Company as is reasonably practicable) and, if practicable in the opinion of the Depositary, notice shall be given promptly to Holders in accordance with Condition 23, in each case subject to any laws or regulations applicable thereto and (subject to the provisions of Condition 8) distributions will be made in United States dollars by cheque drawn upon a bank in New York City or, in the case of the Master GDRs, according to usual practice between the Depositary and Clearstream, Euroclear or DTC, as the case may be. The Depositary or the Agent, as the case may be, may deduct and retain from all moneys due in respect of such GDR in accordance with the Deposit Agreement all fees, taxes, duties, charges, costs and expenses which may become or have become payable under the Deposit Agreement or under applicable law or regulation in respect of such GDR or the relevant Deposited Property. 9.2 Delivery of any securities or other property or rights other than cash shall be made as soon as practicable to the Holders on the record date established by the Depositary for that purpose (such date to be as close to the record date set by the Company as is reasonably practicable), subject to any laws or regulations applicable thereto. If any distribution made by the Company with respect to the Deposited Property and received by the Depositary shall remain unclaimed at the end of three years from the first date upon which such distribution is made available to Holders in accordance with the Deposit Agreement, all rights of the Holders to such distribution or the proceeds of the sale thereof shall be extinguished and the Depositary shall (except for any distribution upon the liquidation of the Company when the Depositary shall retain the same) return the same to the Company for its own use and benefit subject, in all cases, to the provisions of applicable law or regulation.

10. Capital Reorganization Upon any sub-division, consolidation or other reclassification of Deposited Shares or any other part of the Deposited Property or upon any reduction of capital, or upon any reorganization, merger or consolidation of the Company or to which it is a party (except where the Company is the continuing corporation), the Depositary shall as soon as practicable give notice of such event to the Holders and at its discretion may treat such event as a distribution and comply with the relevant provisions of Conditions 4, 5, 6 and 9 with respect thereto, or may execute and deliver additional GDRs in respect of Shares or may require the exchange of existing GDRs for new GDRs which reflect the effect of such change.

11. Withholding Taxes and Applicable Laws 11.1 Payments to Holders of dividends or other distributions on or in respect of the Deposited Shares will be subject to deduction of Cypriot and other withholding taxes, if any, at the applicable rates. 11.2 If any governmental or administrative authorisation, consent, registration or permit or any report to any governmental or administrative authority is required under any applicable law in Cyprus in order for the Depositary to receive from the Company Shares or other securities to be deposited under these Conditions, or in order for Shares, other securities or other property to be distributed under Condition 4, 5, 6 or 10 or to be subscribed under Condition 7 or to offer any rights or sell any securities represented by such rights relevant to any Deposited Shares, the Company has agreed to apply for such authorisation, consent, registration or permit or file such report on behalf of the Holders within the time required under such laws. In this connection, the Company has undertaken in the Deposit Agreement to the extent reasonably practicable to take such action as may be required in obtaining or filing the same. The Depositary shall not be obliged to distribute GDRs representing such Shares, Shares, other securities or other property deposited under these Conditions or make any offer of any such rights or sell any securities corresponding to any such rights with respect to which (as notified to the Depositary by the Company) such authorisation,

169 consent, registration or permit or such report has not been obtained or filed, as the case may be, and shall have no duties to obtain any such authorisation, consent, registration or permit, or to file any such report.

12. Voting Rights 12.1 Holders will have voting rights with respect to the Deposited Shares. The Company has agreed to notify the Depositary of any resolution to be proposed at a General Meeting of the Company on which the holders of the Shares are entitled to vote and the Depositary will vote or cause to be voted the Deposited Shares in the manner set out in this Condition 12. The Company has agreed with the Depositary that it will promptly provide to the Depositary sufficient copies, as the Depositary may reasonably request, of notices of meetings of the shareholders of the Company and the agenda therefor as well as written requests containing voting instructions by which each Holder may give instructions to the Depositary to vote for or against each and any resolution specified in the agenda for the meeting, which the Depositary shall send to any person who is a Holder on the record date established by the Depositary for that purpose (which shall be the same as the corresponding record date set by the Company or as near as practicable thereto) as soon as practicable after receipt of the same by the Depositary in accordance with Condition 23. The Company has also agreed to provide to the Depositary appropriate proxy forms to enable the Depositary to appoint a representative to attend the relevant meeting and vote on behalf of the Depositary. 12.2 In order for each voting instruction to be valid, the voting instructions form must be completed and duly signed by the respective Holder (or in the case of instructions received from the clearing systems should be received by authenticated SWIFT message) in accordance with the written request containing voting instructions and returned to the Depositary by such record date as the Depositary may specify. 12.3 The Depositary will exercise or cause to be exercised the voting rights in respect of the Deposited Shares so that a portion of the Deposited Shares will be voted for and a portion of the Deposited Shares will be voted against any resolution specified in the agenda for the relevant meeting in accordance with the voting instructions it has received from Holders. 12.4 If the Depositary is advised in the opinion referred to in Condition 12.7 below that it is not permitted by Cypriot law to exercise the voting rights in respect of the Deposited Shares differently (so that a portion of the Deposited Shares may be voted for a resolution and a portion of the Deposited Shares may be voted against a resolution) the Depositary shall, if the opinion referred to in Condition 12.7 below confirms it to be permissible under Cypriot law, calculate from the voting instructions that it has received from all Holders (x) the aggregate number of votes in favour of a particular resolution and (y) the aggregate number of votes opposed to such resolution and cast or cause to be cast in favour of or opposed to such resolution the number of votes representing the net positive difference between such aggregate number of votes in favour of such resolution and such aggregate number of votes opposed to such resolution. 12.5 The Depositary will only endeavour to vote or cause to be voted the votes attaching to Shares in respect of which voting instructions have been received, except that if no voting instructions are received by the Depositary (either because no voting instructions are returned to the Depositary or because the voting instructions are incomplete, illegible or unclear) from a Holder with respect to any or all of the Deposited Shares represented by such Holder’s GDRs on or before the record date specified by the Depositary, such Holder shall be deemed to have instructed the Depositary to give a discretionary proxy to a person designated by the Company with respect to such Deposited Shares, and the Depositary shall give a discretionary proxy to a person designated by the Company to vote such Deposited Shares, PROVIDED THAT no such instruction shall be deemed given, and no such discretionary proxy shall be given, with respect to any matter as to which the Company informs the Depositary (and the Company has agreed to provide such information in writing as soon as practicable) that (i) the Company does not wish such proxy to be given, or (ii) such matter materially and adversely affects the rights of holders of Shares.

170 12.6 If the Depositary is advised in the opinion referred to in Condition 12.7 below that it is not permissible under Cypriot law or the Depositary determines that it is not reasonably practicable to vote or cause to be voted such Deposited Shares in accordance with Conditions 12.3, 12.4 or 12.5 the Depositary shall not vote or cause to be voted such Deposited Shares. 12.7 Where the Depositary is to vote in respect of each and any resolution in the manner described in Conditions 12.3, 12.4 or 12.5 above the Depositary shall notify the Chairman of the Company and appoint a person designated by him as a representative of the Depositary to attend such meeting and vote the Deposited Shares in the manner required by this Condition. The Depositary is entitled to request the Company to provide to the Depositary, and where such request has been made shall not be required to take any action required by this Condition 12 unless it shall have received, an opinion from the Company’s legal counsel (such counsel being reasonably acceptable to the Depositary) at the expense of the Company to the effect that such voting arrangement is valid and binding on Holders under Cypriot law and the statutes of the Company and that the Depositary is permitted to exercise votes in accordance with the provisions of this Condition 12 but that in doing so the Depositary will not be deemed to be exercising voting discretion. 12.8 By continuing to hold GDRs, all Holders shall be deemed to have agreed to the provisions of this Condition as it may be amended from time to time in order to comply with applicable Cypriot law. 12.9 The Depositary shall not, and the Depositary shall ensure that the Custodian and its nominees do not, vote or attempt to exercise the right to vote that attaches to the Deposited Shares, other than in accordance with instructions given, or deemed given, in accordance with this Condition.

13. Recovery of Taxes, Duties and Other Charges, and Fees and Expenses due to the Depositary The Depositary shall not be liable for any taxes, duties, charges, costs or expenses which may become payable in respect of the Deposited Shares or other Deposited Property or the GDRs, whether under any present or future fiscal or other laws or regulations, and such part thereof as is proportionate or referable to a GDR (the ‘‘Charges’’) shall be payable by the Holder thereof to the Depositary at any time on request or may be deducted from any amount due or becoming due on such GDR in respect of any dividend or other distribution. The Depositary may sell (whether by way of public or private sale and otherwise at its discretion, subject to all applicable laws and regulations) for the account of the Holder an appropriate number of Deposited Shares or amount of other Deposited Property and will discharge out of the proceeds of such sale any Charges, and any fees or expenses due to the Depositary from the Holder pursuant to Condition 16, and subsequently pay any surplus to the Holder. Any request by the Depositary for the payment of Charges shall be made by giving notice pursuant to Condition 23.

14. Liability 14.1 In acting hereunder the Depositary shall have only those duties, obligations and responsibilities expressly specified in the Deposit Agreement and these Conditions and, other than holding the Deposited Property for the benefit of Holders as bare trustee, does not assume any relationship of trust for or with the Holders or owners of GDRs or any other person. 14.2 Neither the Depositary, the Custodian, the Company, any Agent, nor any of their agents, officers, directors or employees shall incur any liability to any other of them or to any Holder or owner of a GDR or any other person with an interest in any GDRs if, by reason of any provision of any present or future law or regulation of Cyprus or any other country or of any relevant governmental authority, or by reason of the interpretation or application of any such present or future law or regulation or any change therein, or by reason of any other circumstances beyond their control, or in the case of the Depositary, the Custodian, any Agent, or any of their agents, officers, directors or employees, by reason of any provision, present or future, of the constitutive documents of the Company, any of them shall be prevented, delayed or forbidden from doing or performing any act or thing which the terms of the Deposit Agreement or these Conditions provide shall or may be done or performed; nor shall any of them incur any liability to any Holder or owner of GDRs or any other person with an interest in any GDRs by reason of any exercise of, or failure to exercise, any voting rights attached to the Deposited Shares or any of them or any other discretion or power provided for in the Deposit Agreement. Any such party may rely on, and shall be protected in acting upon, any written notice, request, direction or other document believed by it to be genuine and to

171 have been duly signed or presented (including a translation which is made by a translator believed by it to be competent or which appears to be authentic). 14.3 Neither the Depositary nor any Agent shall be liable (except for its own wilful default, negligence or bad faith or that of its agents, officers, directors or employees) to the Company or any Holder or owner of GDRs or any other person, by reason of having accepted as valid or not having rejected any certificate for Shares or GDRs or any signature on any transfer or instruction purporting to be such and subsequently found to be forged or not authentic or for its failure to perform any obligations under the Deposit Agreement or these Conditions. 14.4 The Depositary and its agents may engage or be interested in any financial or other business transactions with the Company or any of its subsidiaries or affiliates, or in relation to the Deposited Property (including without prejudice to the generality of the foregoing, the conversion of any part of the Deposited Property from one currency to another), may at any time hold or be interested in GDRs for its own account, and shall be entitled to charge and be paid all usual fees, commissions and other charges for business transacted and acts done by it as a bank, and not in the capacity of Depositary, in relation to matters arising under the Deposit Agreement (including, without prejudice to the generality of the foregoing, charges on the conversion of any part of the Deposited Property from one currency to another and on any sales of property) without accounting to Holders or any other person for any profit arising therefrom. 14.5 The Depositary shall endeavour to effect any such sale as is referred to or contemplated in Conditions 5, 6, 7, 10, 13 or 21 or any such conversion as is referred to in Condition 8 in accordance with the Depositary’s normal practices and procedures but shall have no liability (in the absence of its own wilful default, negligence or bad faith or that of its agents, officers, directors or employees) with respect to the terms of such sale or conversion or if such sale or conversion shall not be reasonably practicable. 14.6 The Depositary shall not be required or obliged to monitor, supervise or enforce the observance and performance by the Company of its obligations under or in connection with the Deposit Agreement or these Conditions. The Company shall not be required or obliged to monitor, supervise or enforce the observance and performance by the Depositary of the obligations under or in connection with the Deposit Agreement or these Conditions. 14.7 Except in cases of its wilful default, negligence or bad faith, the Depositary shall have no responsibility whatsoever to the Company, any Holders or any owner of GDRs or any other person as regards any deficiency which might arise because the Depositary is subject to any tax in respect of the Deposited Property or any part thereof or any income therefrom or any proceeds thereof. 14.8 In connection with any proposed modification, waiver, authorisation or determination permitted by the terms of the Deposit Agreement, the Depositary shall not, except as otherwise expressly provided in Condition 22, be obliged to have regard to the consequence thereof for the Holders or the owners of GDRs or any other person. 14.9 Notwithstanding anything else contained in the Deposit Agreement or these Conditions, the Depositary may refrain from doing anything which could or might, in its opinion, be contrary to any law of any jurisdiction or any directive or regulation of any agency or state or which would or might otherwise render it liable to any person and the Depositary may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation. 14.10 The Depositary may, in relation to the Deposit Agreement and these Conditions, act or take no action on the advice or opinion of, or any certificate or information obtained from, any lawyer, valuer, accountant, banker, broker, securities company or other expert whether obtained by the Company, the Depositary or otherwise (subject to Condition 14.13), and shall not be responsible or liable for any loss or liability occasioned by so acting or refraining from acting or relying on information from persons presenting Shares for deposit or GDRs for surrender or requesting transfers thereof. 14.11 Any such advice, opinion, certificate or information (as discussed in Condition 14.10 above) may be sent or obtained by letter, telex, facsimile transmission, telegram or cable and (subject to Condition 14.13) the Depositary shall not be liable for acting on any advice, opinion, certificate or information purported to be conveyed by any such letter, telex or facsimile transmission although (without the Depositary’s knowledge) the same shall contain some error or shall not be authentic.

172 14.12 The Depositary may call for and shall be at liberty to accept as sufficient evidence of any fact or matter or the expediency of any transaction or thing, a certificate, letter or other communication, whether oral or written, signed or otherwise communicated on behalf of the Company by a director of the Company or by a person duly authorised by a director of the Company or such other certificate from persons specified in Condition 14.10 above which the Depositary considers appropriate and the Depositary shall not be bound in any such case to call for further evidence or be responsible for any loss or liability that may be occasioned by the Depositary acting on such certificate. 14.13 The Depositary shall have no obligation under the Deposit Agreement except to perform its obligations as specifically set out therein without wilful default, negligence or bad faith. 14.14 The Depositary may delegate by power of attorney or otherwise to any person or persons or fluctuating body of persons, selected with reasonable care, whether being a joint Depositary of the Deposit Agreement or not and not being a person to whom the Company may reasonably object, all or any of the powers, authorities and discretions vested in the Depositary by the Deposit Agreement and such delegation may be made upon such terms and subject to such conditions, including power to sub-delegate and subject to such regulations as the Depositary may in the interests of the Holders think fit, provided that no objection from the Company to any such delegation as aforesaid may be made to a person whose financial statements are consolidated with those of the Depositary’s ultimate holding company. Any delegation by the Depositary shall be on the basis that the Depositary is acting on behalf of the Holders and the Company in making such delegation. The Company shall not in any circumstances and the Depositary shall not (provided that it shall have exercised reasonable care in the selection of such delegate) be bound to supervise the proceedings or be in any way responsible for any loss, liability, cost, claim, action, demand or expense incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate. However, the Depositary shall, if practicable, and if so requested by the Company, pursue (at the Company’s expense and subject to receipt by the Depositary of such indemnity and security for costs as the Depositary may reasonably require) any legal action it may have against such delegate or sub-delegate arising out of any such loss caused by reason of any such misconduct or default. The Depositary shall, within a reasonable time of any such delegation or any renewal, extension or termination thereof, give notice thereof to the Company. Any delegation under this Condition which includes the power to sub-delegate shall provide that the delegate shall, within a specified time of any sub-delegation or amendment, extension or termination thereof, give notice thereof to the Company and the Depositary. 14.15 The Depositary may, in the performance of its obligations hereunder, instead of acting personally, employ and pay an agent, whether a solicitor or other person, to transact or concur in transacting any business and do or concur in doing all acts required to be done by such party, including the receipt and payment of money. 14.16 The Depositary shall be at liberty to hold or to deposit the Deposit Agreement and any deed or document relating thereto in any part of the world with any banking company or companies (including itself) whose business includes undertaking the safe custody of deeds or documents or with any lawyer or firm of lawyers of good repute, and the Depositary shall not (in the case of deposit with itself, in the absence of its own negligence, wilful default, or bad faith or that of its agents, directors, officers or employees) be responsible for any losses, liability or expenses incurred in connection with any such deposit. 14.17 Notwithstanding anything to the contrary contained in the Deposit Agreement or these Conditions, the Depositary shall not be liable in respect of any loss or damage which arises out of or in connection with its performance or non-performance, or the exercise or attempted exercise of (or the failure to exercise any of) its powers or discretions, under the Deposit Agreement, except to the extent that such loss or damage arises from the wilful default, negligence or bad faith of the Depositary or that of its agents, officers, directors or employees. Without prejudice to the generality of the foregoing, in no circumstances shall the Depositary have any liability for any act or omission of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of Deposited Shares or otherwise. 14.18 No provision of the Deposit Agreement or these Conditions shall require the Depositary to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.

173 14.19 For the avoidance of doubt, the Depositary shall be under no obligation to check, monitor or enforce compliance with any ownership restrictions in respect of GDRs or Shares under any applicable Cypriot law as the same may be amended from time to time. Notwithstanding the generality of Condition 3, the Depositary shall refuse to register any transfer of GDRs or any deposit of Shares against issuance of GDRs if notified by the Company, or the Depositary becomes aware of the fact, that such transfer or issuance would result in a violation of the limitations set forth above. 14.20 No disclaimer of liability under the Securities Act is intended by any provision of the Deposit Agreement or these Conditions.

15. Issue and Delivery of Replacement GDRs and Exchange of GDRs Subject to the payment of the relevant fees, taxes, duties, charges, costs and expenses and such terms as to evidence and indemnity as the Depositary may require, replacement GDRs will be issued by the Depositary and will be delivered in exchange for or replacement of outstanding lost, stolen, mutilated, defaced or destroyed GDRs upon surrender thereof (except in the case of the destruction, loss or theft) at the specified office of the Depositary or (at the request, risk and expense of the Holder) at the specified office of any Agent.

16. Depositary’s Fees, Costs and Expenses 16.1 The Depositary shall be entitled to charge the following remuneration and to receive the following remuneration and reimbursement (such remuneration and reimbursement being payable on demand) from the Holders in respect of its services under the Deposit Agreement: (a) for the issue of GDRs (other than upon the issue of GDRs pursuant to the Offering) or the cancellation of GDRs upon the withdrawal of Deposited Property: U.S.$5.00 or less per 100 GDRs (or portion thereof) issued or cancelled; (b) for issuing GDR certificates in definitive registered form in replacement for mutilated, defaced, lost, stolen or destroyed GDR certificates: a sum per GDR certificate which is determined by the Depositary to be a reasonable charge to reflect the work, costs and expenses involved; (c) for issuing GDR certificates in definitive registered form (other than pursuant to (b) above): the greater of U.S.$1.50 per GDR certificate (plus printing costs) or such other sum per GDR certificate which is determined by the Depositary to be a reasonable charge to reflect the work plus costs (including but not limited to printing costs) and expenses involved; (d) for receiving and paying any cash dividend or other cash distribution on or in respect of the Deposited Shares: a fee of U.S.$0.02 or less per GDR for each such dividend or distribution; (e) in respect of any issue of rights or distribution of Shares (whether or not evidenced by GDRs) or other securities or other property (other than cash) upon exercise of any rights, any free distribution, stock dividend or other distribution: U.S.$5.00 or less per 100 outstanding GDRs (or portion thereof) for each such issue of rights, dividend or distribution; (f) for transferring interests from and between the Regulation S Master GDR and the Rule 144A Master GDR: a fee of U.S.$0.05 or less per GDR; (g) a fee of U.S.$0.03 or less per GDR (or portion thereof) per calendar year for depositary services which shall be payable as provided in paragraph (i) below; (h) a fee of U.S. $0.01 or less per GDR per annum for local share registry inspection and related services by the Depositary or the Custodian or their respective agents, which shall be payable as provided in paragraph (i) below; and (i) any other charge payable by the Depositary, any of the Depositary’s agents, including the Custodian, or the agents of the Depositary’s agents, in connection with the servicing of Deposited Shares or other Deposited Property (which charge shall be assessed against Holders as of the date or dates set by the Depositary and shall be payable at the sole

174 discretion of the Depositary by billing such Holders for such charge or deducting such charge from one or more cash dividends or other cash distributions), together with all expenses (including currency conversion expenses), transfer and registration fees, taxes, duties and charges payable by the Depositary, any Agent or the Custodian, or any of their agents, in connection with any of the above. 16.2 The Depositary is entitled to receive from the Company the fees, taxes, duties, charges costs and expenses as specified in a separate agreement between the Company and the Depositary.

17. Agents 17.1 The Depositary shall be entitled to appoint one or more agents (the ‘‘Agents’’) for the purpose, inter alia, of making distributions to the Holders. 17.2 Notice of appointment or removal of any Agent or of any change in the specified office of the Depositary or any Agent will be duly given by the Depositary to the Holders.

18. Listing The Company has undertaken in the Deposit Agreement to use its commercially reasonable endeavours to maintain, so long as any GDR is outstanding, an admission for the GDRs to the Official List and to trading on the regulated market of the London Stock Exchange. For that purpose the Company will pay all fees and sign and deliver all undertakings required by the Financial Services Authority, or its successor organization, and/or the London Stock Exchange in connection with such admission. In the event that the admission to the Official List and to trading on the London Stock Exchange is not maintained, the Company has undertaken in the Deposit Agreement to use its commercially reasonable endeavours with the reasonable assistance of the Depositary (provided at the Company’s expense) to obtain and maintain a listing of the GDRs on any other internationally recognised stock exchange.

19. The Custodian The Depositary has agreed with the Custodian that the Custodian will receive and hold (or appoint agents approved by the Depositary to receive and hold) all Deposited Property for the account and to the order of the Depositary in accordance with the applicable terms of the Deposit Agreement which include a requirement to segregate the Deposited Property from the other property of, or held by, the Custodian PROVIDED THAT the Custodian shall not be obliged to segregate cash comprised in the Deposited Property from cash otherwise held by the Custodian. The Custodian shall be responsible solely to the Depositary PROVIDED THAT, if and so long as the Depositary and the Custodian are the same legal entity, references to them separately in these Conditions and the Deposit Agreement are for convenience only and that legal entity shall be responsible for discharging both functions directly to the Holders and the Company. The Custodian may resign or be removed by the Depositary by giving prior notice, except that if a replacement Custodian is appointed which is a branch or affiliate of the Depositary, the Custodian’s resignation or discharge may take effect immediately on the appointment of such replacement Custodian. Upon the removal of or receiving notice of the resignation of the Custodian, the Depositary shall promptly appoint a successor Custodian, which shall, upon acceptance of such appointment, and the expiry of any applicable notice period, become the Custodian. The Depositary in its discretion may appoint a substitute or additional custodian or custodians, which shall, upon acceptance of such appointment, become the Custodian under the Deposit Agreement. The Depositary shall notify Holders of such change in accordance with Condition 23. Notwithstanding the foregoing, the Depositary may temporarily deposit the Deposited Property in a manner or a place other than as therein specified; PROVIDED THAT, in the case of such temporary deposit in another place, the Company shall have consented to such deposit, and such consent of the Company shall have been delivered to the Custodian. In case of transportation of the Deposited Property under this Condition, the Depositary shall obtain appropriate insurance at the expense of the Company if and to the extent that the obtaining of such insurance is reasonably practicable and the premiums payable are of a reasonable amount.

175 20. Resignation and Termination of Appointment of the Depositary 20.1 The Company may terminate the appointment of the Depositary under the Deposit Agreement by giving at least 90 days’ prior notice in writing to the Depositary and the Custodian, and the Depositary may resign as Depositary by giving at least 90 days’ prior notice in writing to the Company and the Custodian. Within 30 days after the giving of either such notice, notice thereof shall be duly given by the Depositary to the Holders in accordance with Condition 23. The termination of the appointment or the resignation of the Depositary shall take effect on the date specified in such notice; PROVIDED THAT no such termination of appointment or resignation shall take effect until the appointment by the Company of a successor depositary under the Deposit Agreement and the acceptance of such appointment to act in accordance with the terms thereof and of these Conditions, by the successor depositary. The Company has undertaken in the Deposit Agreement to use its commercially reasonable endeavours to procure the appointment of a successor depositary with effect from the date of termination specified in such notice as soon as reasonably possible following notice of such termination or resignation. Upon any such appointment and acceptance, notice thereof shall be duly given by the Depositary to the Holders in accordance with Condition 23. 20.2 Upon the termination of the appointment or resignation of the Depositary and against payment of all fees and expenses due to the Depositary from the Company under the Deposit Agreement, the Depositary shall deliver to its successor as depositary sufficient information and records to enable such successor efficiently to perform its obligations under the Deposit Agreement and shall deliver and pay to such successor depositary all property and cash held by it under the Deposit Agreement. The Deposit Agreement provides that, upon the date when such termination of appointment or resignation takes effect, the Custodian shall be deemed to be the Custodian thereunder for such successor depositary, and shall hold the Deposited Property for such successor depositary, and the Depositary shall thereafter have no obligation under the Deposit Agreement or the Conditions (other than liabilities accrued prior to the date of termination of appointment or resignation or any liabilities stipulated in relevant laws or regulations).

21. Termination of Deposit Agreement 21.1 Either the Company or the Depositary but, in the case of the Depositary, only if the Company has failed to appoint a replacement Depositary within 90 days of the date on which the Depositary has given notice pursuant to Condition 20 that it wishes to resign, may terminate the Deposit Agreement by giving 90 days’ prior notice to the other and to the Custodian. Within 30 days after the giving of such notice, notice of such termination shall be duly given by the Depositary to Holders of all GDRs then outstanding in accordance with Condition 23. 21.2 During the period beginning on the date of the giving of such notice by the Depositary to the Holders and ending on the date on which such termination takes effect, each Holder shall be entitled to obtain delivery of the Deposited Property relative to each GDR held by it, subject to the provisions of Condition 1.1 and upon compliance with Condition 1, payment by the Holder of the charge specified in Condition 16.1(a) and Clause 10.1(a)(i) of the Deposit Agreement for such delivery and surrender, and payment by the Holder of any sums payable by the Depositary and/or any other expenses incurred by the Depositary (together with all amounts which the Depositary is obliged to pay to the Custodian) in connection with such delivery and surrender, and otherwise in accordance with the Deposit Agreement. 21.3 If any GDRs remain outstanding after the date of termination, the Depositary shall as soon as reasonably practicable sell the Deposited Property then held by it under the Deposit Agreement and shall not register transfers, shall not pass on dividends or distributions or take any other action, except that it will deliver the net proceeds of any such sale, together with any other cash then held by it under the Deposit Agreement, pro rata to Holders of GDRs which have not previously been so surrendered by reference to that proportion of the Deposited Property which is represented by the GDRs of which they are the Holders. After making such sale, the Depositary shall be discharged from all obligations under the Deposit Agreement and these Conditions, except its obligation to account to Holders for such net proceeds of sale and other cash comprising the Deposited Property without interest.

176 22. Amendment of Deposit Agreement and Conditions 22.1 Subject to Condition 22.3, all and any of the provisions of the Deposit Agreement and these Conditions (other than this Condition 22) may at any time and from time to time be amended by agreement between the Company and the Depositary in any respect which they may deem necessary or desirable. Notice of any amendment of these Conditions (except to correct a manifest error) shall be duly given to the Holders by the Depositary, and any amendment (except as aforesaid) which shall increase or impose fees payable by Holders or which shall otherwise, in the opinion of the Depositary, be materially prejudicial to the interests of the Holders (as a class) shall not become effective so as to impose any obligation on the Holders until the expiration of 30 calendar days after such notice shall have been given. During such period of 30 calendar days, each Holder shall be entitled to obtain, subject to and upon compliance with Condition 1, delivery of the Deposited Property relative to each GDR held by it upon surrender thereof, payment of the charge specified in Condition 16.1(a) for such delivery and surrender and otherwise in accordance with the Deposit Agreement and these Conditions. Each Holder at the time when such amendment so becomes effective shall be deemed, by continuing to hold a GDR, to approve such amendment and to be bound by the terms thereof in so far as they affect the rights of the Holders. In no event shall any amendment impair the right of any Holder to receive, subject to and upon compliance with Condition 1, the Deposited Property attributable to the relevant GDR. 22.2 For the purposes of this Condition 22, an amendment shall not be regarded as being materially prejudicial to the interests of Holders if its principal effect is to permit the creation of GDRs in respect of additional Shares to be held by the Depositary which are or will become fully consolidated as a single series with the other Deposited Shares PROVIDED THAT temporary GDRs will represent such Shares until they are so consolidated. 22.3 The Company and the Depositary may at any time by agreement in any form amend the number of Shares represented by each GDR, provided that each outstanding GDR represents the same number of Shares as each other outstanding GDR, and at least 30 calendar days notice of such amendment is given to the Holders, but in no circumstances shall any amendment pursuant to this Condition 22.3 be regarded as an amendment requiring 30 calendar days notice in accordance with Condition 22.1.

23. Notices 23.1 Any and all notices to be given to any Holder shall be duly given if personally delivered, or sent by mail (if domestic, first class, if overseas, first class airmail) or air courier, or by facsimile transmission confirmed by letter sent by mail or air courier, addressed to such Holder at the address of such Holder as it appears on the transfer books for GDRs of the Depositary, or, if such Holder shall have filed with the Depositary a written request that notices intended for such Holder be mailed to some other address, at the address specified in such request. 23.2 Delivery of a notice sent by mail or air courier shall be effective three days (in the case of domestic mail or air courier) or seven days (in the case of overseas mail) after despatch, and any notice sent by facsimile transmission, as provided in this Condition, shall be effective when the intended recipient has confirmed by telephone to the transmitter thereof that the recipient has received such facsimile in complete and legible form. The Depositary or the Company may, however, act upon any facsimile transmission received by it from the other or from any Holder, notwithstanding that such facsimile transmission shall not subsequently be confirmed as aforesaid.

24. Reports and Information on the Company 24.1 The Company has undertaken in the Deposit Agreement (so long as any GDR is outstanding) to furnish the Depositary with six copies in the English language (and to make available to the Depositary, the Custodian and each Agent as many further copies as they may reasonably require to satisfy requests from Holders) by mail, or one copy in the English language by facsimile or electronic transmission of any financial statements or accounts that it makes generally available to its shareholders (beginning with the 31 December 2010 annual audited financial statements of the Company), including but not limited to any financial statement or accounts that may be required by law or regulation or in order to maintain a listing for GDRs on the London Stock Exchange, or another stock exchange in accordance with Condition 18 as soon as practicable following the publication or availability of such communications.

177 24.2 The Depositary shall upon receipt thereof give due notice to the Holders that such copies are available upon request at its specified office and the specified office of any Agent. 24.3 For so long as any of the GDRs remains outstanding and are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under the Securities Act, if at any time the Company is neither subject to and in compliance with the reporting requirements of Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as amended, nor exempt from such reporting requirements by complying with the information furnishing requirements of Rule 12g3-2(b) thereunder, the Company has agreed in the Deposit Agreement to supply to the Depositary such information, in the English language and in such quantities as the Depositary may from time to time reasonably request, as is required to be delivered to any Holder or beneficial owner of GDRs or to any holder of Shares or a prospective purchaser designated by such Holder, beneficial owner or holder pursuant to a Deed Poll executed by the Company in favour of such persons and the information delivery requirements of Rule 144A(d)(4) under the Securities Act, to permit compliance with Rule 144A thereunder in connection with resales of GDRs or Shares or interests therein in reliance on Rule 144A under the Securities Act and otherwise to comply with the requirements of Rule 144A(d)(4) under the Securities Act. Subject to receipt, the Depositary will deliver such information, during any period in which the Company informs the Depositary it is subject to the information delivery requirements of Rule 144(A)(d)(4), to any such holder, beneficial owner or prospective purchaser but in no event shall the Depositary have any liability for the contents of any such information.

25. Copies of Company Notices The Company has undertaken in the Deposit Agreement to transmit to the Custodian and the Depositary on or before the day when the Company first gives notice, by mail, publication or otherwise, to holders of any Shares or other Deposited Property, whether in relation to the taking of any action in respect thereof or in respect of any dividend or other distribution thereon or of any meeting or adjourned meeting of such holders or otherwise, such number of copies of such notice and any other material (which contains information having a material bearing on the interests of the Holders) furnished to such holders by the Company (or such number of English translations of the originals if the originals were prepared in a language other than English) in connection therewith as the Depositary may reasonably request. If such notice is not furnished to the Depositary in English, either by the Company or the Custodian, the Depositary shall, at the Company’s expense, arrange for an English translation thereof (which may be in such summarised form as the Depositary may deem adequate to provide sufficient information) to be prepared. Except as provided below, the Depositary shall, as soon as practicable after receiving notice of such transmission or (where appropriate) upon completion of translation thereof, give due notice to the Holders which notice may be given together with a notice pursuant to Condition 9.1, and shall make the same available to Holders in such manner as it may determine.

26. Moneys held by the Depositary The Depositary shall be entitled to deal with moneys paid to it by the Company for the purposes of the Deposit Agreement in the same manner as other moneys paid to it as a banker by its customers and shall not be liable to account to the Company or any Holder or any other person for any interest thereon, except as otherwise agreed and shall not be obliged to segregate such moneys from other moneys belonging to the Depositary.

27. Severability If any one or more of the provisions contained in the Deposit Agreement or in these Conditions shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained therein or herein shall in no way be affected, prejudiced or otherwise disturbed thereby.

28. Governing Law 28.1 The Deposit Agreement, the GDRs, and all non-contractual obligations arising from or connected with the Deposit Agreement and the GDRs, are governed by, and shall be construed in accordance with, English law except that the certifications set forth in Schedules 3 and 4 to the Deposit

178 Agreement and any provisions relating thereto shall be governed by and construed in accordance with the laws of the State of New York. The rights and obligations attaching to the Deposited Shares will be governed by Cypriot law. The Company has agreed that all disputes in respect of the Deposit Agreement and the Deed Poll shall be submitted to arbitration in the London Court of International Arbitration. 28.2 The Company has agreed that any disputes (each a ‘‘Dispute’’) which may arise out of or in connection with the GDRs (including any dispute relating to the existence, validity or termination of the GDRs, or any noncontractual obligation arising out of or in connection with the GDRs, or the consequences of the nullity of the GDRs), and accordingly any legal action or proceedings arising out of or in connection with the GDRs (‘‘Proceedings’’) shall be resolved by arbitration and not litigation. Disputes shall be referred to arbitration under the Rules of the London Court of International Arbitration (the ‘‘Rules’’) and finally resolved by arbitration under the Rules which Rules are deemed to be incorporated by reference into this Condition. Judgement upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 28.3 In the event that the Depositary is made a party to, or is otherwise required to participate in, any litigation, arbitration, or Proceeding (whether judicial or administrative) which arises from or is related to or is based upon any act or failure to act by the Company, or which contains allegations to such effect, upon notice from the Depositary, the Company has agreed to fully cooperate with the Depositary in connection with such litigation, arbitration or Proceeding. 28.4 The Company irrevocably appoints Law Debenture Corporate Services Limited at the address of its registered office from time to time, being at the date hereof at Fifth Floor, 100 Wood Street, London EC2V 7EX, England, as its agent in England to receive process which may be served in any suit or Proceeding in England arising out of or relating to the Deposited Shares, the GDRs, the Conditions or this Agreement and the Company agrees to receive service of process in any suit or Proceedings in New York arising out of or relating to the Deposited Shares, the GDRs, the Conditions or this Agreement by mail at its registered office address. If for any reason the Company does not have such an agent in England, it will promptly appoint a substitute process agent and notify the Holders and the Depositary of such appointment. The Depositary irrevocably appoints The Bank of New York Mellon, London Branch (Attention: The Manager), of 48th Floor, One Canada Square, London E14 5AL as its agent in England to receive process which may be served in any suit or Proceeding in England arising out of or relating to the Deposited Shares, the GDRs, the Conditions or this Agreement and the Depositary agrees to receive service of process in any suit or Proceedings in New York arising out of or relating to the Deposited Shares, the GDRs, the Conditions or this Agreement by mail at its registered office address. If for any reason the Depositary does not have such an agent in England, it will promptly appoint a substitute process agent and notify the Holders and the Company of such appointment. Nothing herein shall affect the right to serve process in any other manner permitted by law. 28.5 To the extent that the Company may in any jurisdiction claim for itself or its assets or revenues immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that such immunity (whether or not claimed) may be attributed in any such jurisdiction to the Company or its assets or revenues, the Company has agreed not to claim and irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction.

179 SUMMARY OF PROVISIONS RELATED TO THE GLOBAL DEPOSITARY RECEIPTS WHILE IN MASTER FORM The new GDRs will be evidenced by (i) the Regulation S Master GDR in registered form and (ii) the Rule 144A Master GDR in registered form. The Rule 144A Master GDR has been deposited with The Bank of New York Mellon in New York as custodian for DTC and is registered in the name of Cede & Co., as nominee for DTC. The number of Rule 144A GDRs represented by the Rule 144A Master GDR will be increased accordingly on the date the new Rule 144A GDRs are issued. The Regulation S Master GDR has been be deposited with The Bank of New York Mellon, London Branch as common depositary for Euroclear and Clearstream (and is registered in the name of The Bank of New York Depository (Nominees) Limited as nominee for the common depositary). The number of Regulation S GDRs represented by the Regulation S Master GDR will be increased accordingly on the date the new Regulation S GDRs are issued. The Regulation S Master GDR and the Rule 144A Master GDR contain provisions which apply to the GDRs while they are in master form, some of which modify the effect of the Conditions of the GDRs set out in this document. The following is a summary of certain of those provisions. Unless otherwise defined herein, the terms defined in the Conditions shall have the same meaning herein. The Master GDRs will only be exchanged for certificates in definitive registered form representing GDRs in the circumstances described in (i), (ii), (iii) or (iv) below in whole but not in part. The Depositary has irrevocably undertaken in the Master GDRs to deliver certificates evidencing GDRs in definitive registered form in exchange for the relevant Master GDR to the Holders within 60 days in the event that: (i) DTC, in the case of the Rule 144A Master GDR, or Euroclear or Clearstream, in the case of the Regulation S Master GDR, notifies the Company that it is unwilling or unable to continue as depositary and a successor depositary is not appointed within 90 calendar days; or (ii) either DTC in the case of Rule 144A Master GDR, or Euroclear or Clearstream in the case of the Regulation S Master GDR, is closed for business for a continuous period of 14 calendar days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so, and, in each case, no alternative clearing system satisfactory to the Depositary is available within 45 calendar days; or (iii) in respect of the Rule 144A Master GDR, DTC or any successor ceases to be a ‘‘clearing agency’’ registered under the United States Securities Exchange Act of 1934, as amended; or (iv) the Depositary has determined that, on the occasion of the next payment in respect of the Master GDRs, the Depositary or its agent would be required to make any deduction or withholding from any payment in respect of the Master GDRs which would not be required were the GDRs represented by certificates in definitive registered form, provided that the Depositary shall have no obligation to so determine or to attempt to so determine. Any exchange shall be at the expense (including printing costs) of the Company. A GDR evidenced by an individual definitive certificate will not be eligible for clearing and settlement through Euroclear, Clearstream or DTC. Upon any exchange of a Master GDR for certificates in definitive registered form, or any exchange of interests between the Rule 144A Master GDR and the Regulation S Master GDR pursuant to Clause 4 of the Deposit Agreement, or any distribution of GDRs pursuant to Conditions 5, 7 or 10 or any reduction in the number of GDRs represented thereby following any withdrawal of Deposited Property pursuant to Condition 1, the relevant details shall be entered by the Depositary on the register maintained by the Depositary whereupon the number of GDRs represented by the relevant Master GDR shall be reduced or increased (as the case may be) for all purposes by the number so exchanged and entered on the register. If the number of GDRs represented by a Master GDR is reduced to zero such Master GDR shall continue in existence until the obligations of the Company under the Deposit Agreement and the obligations of the Depositary pursuant to the Deposit Agreement and the Conditions have terminated.

Payments, Distributions and Voting Rights Payments of cash dividends and other amounts (including cash distributions) will, in the case of GDRs represented by the Regulation S Master GDR be made by the Depositary through Euroclear and Clearstream and, in the case of GDRs represented by the Rule 144A Master GDR, will be made by the Depositary through DTC, on behalf of persons entitled thereto upon receipt of funds therefor from the

180 Company. A free distribution or rights issue of Shares to the Depositary on behalf of the Holders will result in the record maintained by the Depositary being marked up to reflect the enlarged number of GDRs represented by the relevant Master GDR. Holders of GDRs will have voting rights as set out in the Terms and Conditions of the Global Depositary Receipts.

Surrender of GDRs Any requirement in the Terms and Conditions of the Global Depositary Receipts relating to the surrender of a GDR to the Depositary shall be satisfied by the production by Euroclear and Clearstream (in the case of GDRs represented by the Regulation S Master GDR), or DTC (in the case of GDRs represented by the Rule 144A Master GDR), on behalf of a person entitled to an interest therein of such evidence of entitlement of such person as the Depositary may reasonably require, which is expected to be a certificate or other documents issued by Euroclear or Clearstream, or DTC, as appropriate. The delivery or production of any such evidence shall be sufficient evidence, in favor of the Depositary, any Agent and the Custodian of the title of such person to receive (or to issue instructions for the receipt of) all money or other property payable or distributable in respect of the Deposited Property represented by such GDRs.

Notices For as long as the Regulation S Master GDR is registered in the name of nominee for a common depository holding on behalf of Euroclear and Clearstream, and the Rule 144A Master GDR is registered in the name of DTC or its nominee, notices to Holders may be given by the Depositary by delivery of the relevant notice to Euroclear and Clearstream, or (as appropriate) DTC, for communication to persons entitled thereto in substitution for delivery of notices in accordance with Condition 23. The Master GDRs shall be governed by and construed in accordance with English law.

181 TAXATION The following summary of certain material US federal income, United Kingdom and Cypriot tax consequences of ownership of the GDRs is based upon laws, regulations, decrees, rulings, income tax conventions (treaties), administrative practice and judicial decisions in effect at the date of this Information Memorandum. Legislative, judicial or administrative changes or interpretations may, however, be forthcoming that could alter or modify the statements and conclusions set forth herein. Any such changes or interpretations may be retroactive and could affect the tax consequences to holders of the GDRs. This summary does not purport to be a legal opinion or to address all tax aspects that may be relevant to a holder of the GDRs. Each prospective holder is urged to consult its own tax adviser as to the particular tax consequences to such holder of the ownership and disposition of the GDRs, including the applicability and effect of any other tax laws or tax treaties, and of pending or proposed changes in applicable tax laws as of the date of this Information Memorandum, and of any actual changes in applicable tax laws after such date.

Certain Material United States Federal Income Tax Considerations The following is a summary of certain material US federal income tax considerations relevant to US Holders (as defined below) acquiring, holding and disposing of GDRs. This summary is based on the US Internal Revenue Code of 1986 (the ‘‘Code’’), its legislative history, final, temporary and proposed US Treasury regulations, administrative and judicial interpretations thereof, all as in effect as of the date hereof and all of which are subject to change, possibly with retroactive effect, as well as on the Convention between the Government of the United States and the Government of the Republic of Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the ‘‘Treaty’’). This summary does not discuss all aspects of US federal income taxation that may be relevant to investors in light of their particular circumstances, such as investors subject to special tax rules (including, without limitation: (1) financial institutions; (2) insurance companies; (3) dealers in stocks, securities, or currencies or notional principal contracts; (4) regulated investment companies; (5) real estate investment trusts; (6) tax-exempt organizations; (7) partnerships, pass-through entities, or persons that hold GDRs through pass-through entities; (8) holders that own (directly, indirectly or constructively) 10% or more of the voting stock of the Company; (9) investors that hold GDRs as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for US federal income tax purposes; (10) investors that have a functional currency other than the US Dollar and (11) US expatriates and former long-term residents of the United States), all of whom may be subject to tax rules that differ significantly from those summarized below. This summary does not address tax consequences applicable to holders of equity interests in a holder of the GDRs, US federal estate, gift or alternative minimum tax considerations, the US federal unearned Medicare contribution tax or non-US, state or local tax considerations. This summary only addresses investors that will acquire GDRs in the Offering, and it assumes that investors will hold their GDRs as capital assets (generally, property held for investment). For the purposes of this summary, a ‘‘US Holder’’ is a beneficial owner of GDRs that is for US federal income tax purposes: (1) an individual who is a citizen or resident of the United States; (2) a corporation (or other entity taxable as a corporation) created in, or organized under the laws of, the United States or any state thereof, including the District of Columbia; (3) an estate the income of which is includible in gross income for US federal income tax purposes regardless of its source; or (4) a trust (i) if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all the trust’s substantial decisions, or (ii) that has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. For US federal income tax purposes, US Holders of GDRs generally should be treated as owners of the Ordinary Shares represented by the GDRs. Accordingly, except as otherwise noted, the US federal income tax consequences discussed below apply equally to US Holders of GDRs or the underlying Ordinary Shares.

Dividends Subject to the discussion under ‘‘– Passive Foreign Investment Company rules’’ below, the gross amount of a distribution made by the Company on the Ordinary Shares underlying the GDRs generally will be treated as a dividend includible in the gross income of a US Holder as ordinary income to the extent of the Company’s current and accumulated earnings and profits as determined under US federal income tax

182 principles. Such dividends will not be eligible for the dividends received deduction allowed to corporations. The Company does not expect to maintain calculations of earnings and profits for US federal income tax purposes. Therefore, a US Holder should expect that such a distribution will generally be treated as a dividend. Subject to certain exceptions for short-term and hedged positions, the US Dollar amount of dividends received by certain non-corporate holders will be subject to taxation at a maximum rate of 20% if the dividends are ‘‘qualified dividends.’’ Dividends paid on GDRs or Ordinary Shares will be treated as qualified dividends if the company is eligible for the benefits of a comprehensive income tax treaty with the United States that the US Internal Revenue Service (the ‘‘IRS’’) has approved for the purpose of the qualified dividend rules, provided that the company was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a passive foreign investment company, or PFIC. The Treaty has been approved by the IRS for the purposes of the qualified dividend rules. However, in order for a Cyprus company to qualify for this status, it is necessary that its existence in Cyprus not have a principal purpose of obtaining treaty benefits under the Treaty. In non-precedential advice issued in 2013, the IRS held that a Cyprus holding company, organized under the laws of Cyprus, which owned an operating subsidiary in a third country, was established for reasons unrelated to the Treaty. The ruling indicated that the Cyprus holding company had never earned U.S.-source income or claimed any benefit under the Treaty. Accordingly, a US individual who owned stock in the Cyprus holding company was held to be entitled to treat dividends he received from the Cyprus holding company as ‘‘qualified dividends’’. If, as the Company believes, it was established in Cyprus for purposes unrelated to the Treaty and it has not been and does not expect to become a PFIC, any dividends paid by the Company may be treated as ‘‘qualified dividends.’’ However, in the absence of a specific ruling from the IRS, there can be no assurance that the IRS would not challenge such a determination. Accordingly, a holder of GDRs should consult his or her own tax advisor about the eligibility of dividends paid by the Company to be treated as ‘‘qualified dividends.’’ Dividends generally will constitute income from sources outside the United States for foreign tax credit limitation purposes. The amount of any distribution of property other than cash will be the fair market value of the property on the date of the distribution. The US Dollar value of any distribution made by the Company in foreign currency, including the amount of any taxes withheld from such distributions, must be calculated by reference to the exchange rate in effect on the date of actual or constructive receipt of such distribution by the Depositary, regardless of whether the foreign currency is in fact converted into US Dollars at that time. If the foreign currency so received is converted into US Dollars on the date of receipt, such US Holder generally will not recognize foreign currency gain or loss on such conversion. If the foreign currency so received is not converted into US Dollars on the date of receipt, such US Holder will have a basis in the foreign currency equal to its US Dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currency generally will be treated as ordinary income or loss to such US Holder and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

Sale or other disposition Subject to the discussion under ‘‘– Passive Foreign Investment Company rules’’ below, a US Holder generally will recognize a gain or a loss for US federal income tax purposes upon a sale or other disposition of its GDRs in an amount equal to the difference between the amount realized from such sale or disposition and the US Holder’s adjusted tax basis in such GDRs, as determined in US Dollars. A US Holder’s adjusted tax basis in a GDR generally will be its US Dollar cost. The US Dollar cost of a GDR purchased with foreign currency generally will be the US Dollar value of the purchase price paid on the date of purchase. Such gain or loss generally will be capital gain or loss and will be long-term capital gain (taxable at a reduced rate for non-corporate US Holders, such as individuals) or loss if, on the date of sale or disposition, such GDRs were held by such US Holder for more than one year. The deductibility of capital losses is subject to significant limitations. Such gain or loss realized generally will be treated as derived from US sources. The surrender of GDRs in exchange for Ordinary Shares (or vice versa) should not be a taxable event for US federal income tax purposes and US Holders should not recognize any gain or loss upon such a surrender. A US Holder’s tax basis in withdrawn shares will be the same as such holder’s tax basis in the GDRs surrendered, and the holding period of the shares will include the holder’s holding period for the GDRs.

183 A US Holder that receives foreign currency from a sale or disposition of GDRs generally will realize an amount equal to the US Dollar value of the foreign currency on the date of sale or disposition or, if such US Holder is a cash basis or electing accrual basis taxpayer and the GDRs are treated as being traded on an ‘‘established securities market’’ for this purpose, the settlement date. If the GDRs are so treated and the foreign currency received is converted into US Dollars on the settlement date, a cash basis or electing accrual basis US Holder will not recognize foreign currency gain or loss on the conversion. If an accrual basis tax payer makes such election, the election must be applied consistently from year to year and cannot be revoked without the consent of the IRS. If the foreign currency received is not converted into US Dollars on the settlement date, the US Holder will have a basis in the foreign currency equal to the US Dollar value on the settlement date. Any gain or loss on a subsequent conversion or other disposition of the foreign currency generally will be treated as ordinary income or loss to such US Holder and generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

Passive Foreign Investment Company rules In general, a corporation organized or incorporated outside the United States is a PFIC in any taxable year in which, after taking into account the income and assets of certain subsidiaries, either (1) at least 75% of its gross income is classified as ‘‘passive income’’ or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. The applicable US tax rules can, in some circumstances, treat a company involved in commodity transactions as realizing passive income and possessing passive assets. The Company believes its activities should currently constitute ‘‘qualified active sales’’ and ‘‘qualified hedging transactions’’ as those terms are defined in the applicable US tax rules. However, there can be no assurance that the Company has been and/or will continue to satisfy those tests in the future, as the rules are complex and in some cases their application can be uncertain. Based on the present nature of its activities, including the planned use of the proceeds from the Offering, and the present composition of its assets and sources of income, the Company believes that it was not a PFIC for the year ending on December 31, 2015 and it does not expect to become a PFIC for the current year or for any future taxable year. There can be no assurances, however, that the Company will not be considered to be a PFIC for any particular year because PFIC status is factual in nature, generally cannot be determined until the close of the taxable year in question, and is determined annually. If the Company were a PFIC in any taxable year, US Holders could be subject to materially adverse United States federal income tax consequences. Further, if the Company is classified as a PFIC in any year that a US Holder holds GDRs, the Company generally will continue to be treated as a PFIC with respect to that US Holder in all succeeding years, regardless of whether the Company continues to meet the income or asset test described above. Certain elections (including a mark-to-market election) may be available to US Holders that may mitigate the adverse consequences resulting from PFIC status. Prospective investors are urged to consult an independent tax advisor regarding the application of the PFIC rules to an investment in the GDRs.

US information reporting and backup withholding A US Holder may be subject to information reporting unless it establishes that payments to it are exempt from these rules. For example, payments to corporations generally are exempt from information reporting and backup withholding. Payments that are subject to information reporting may be subject to backup withholding if a US Holder does not provide its taxpayer identification number and otherwise comply with the backup withholding rules. Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules are available to be credited against a US Holder’s US federal income tax liability and may be refunded to the extent they exceed such liability, provided the required information is timely provided to the IRS. Certain US Holders may be required to report information with respect to such holders’ interests in ‘‘specified foreign financial assets,’’ including stock of a non-US corporation or GDRs that is not held in an account maintained by certain financial institutions, if the aggregate value of all such assets exceeds certain dollar thresholds. Persons who are required to report specified foreign financial assets and fail to do so may be subject to substantial penalties. US Holders are urged to consult their own tax advisors regarding

184 the foreign financial asset reporting obligations and their possible application to the holding of the GDRs or Ordinary Shares.

UK Tax Considerations The following statements are intended to apply only as a general guide to the applicable provisions of current UK tax law and to the current published practice and published interpretation of HM Revenue & Customs (‘‘HMRC’’) at the date of this Information Memorandum, all of which is subject to change, possibly with retroactive effect. They are intended to apply only to holders of the GDRs who (1) are resident (in the case of individuals only, domiciled) solely in the UK for UK tax purposes; and (2) who do not have a permanent establishment or fixed base in Cyprus or in any other jurisdiction with which the holding of the GDRs is connected (for the purpose of this summary, ‘‘UK Holders’’). In addition, the summary only addresses the principal UK tax consequences for (1) UK Holders who hold their GDRs as investments, (2) who have not (and are not deemed to have) acquired their GDRs by reason of an office or employment, and (3) who are the absolute beneficial owners of their GDRs (and that a holder of the GDRs is beneficially entitled to the underlying Ordinary Shares and to any dividends paid in respect of those shares). The statements may not apply to certain classes of UK Holders of the GDRs such as dealers, brokers or traders in shares or securities and other persons who hold GDRs otherwise than as an investment, or to persons who (together with their associates) have a 10% or greater interest in the Company. The statements do not address the tax consequences for UK Holders of the GDRs who are financial institutions, insurance companies, collective investment schemes, pension schemes, charities or tax-exempt organizations. The statements also assume that (1) the Company is not excluded from any or all of the benefits of the double tax treaty between the UK and Cyprus, (2) there is no register, and there will continue to be no register, in the UK in respect of the GDRs or the underlying Ordinary Shares, (3) that neither the GDRs nor the underlying Ordinary Shares will be paired with shares issued by a company incorporated in the UK and (4) that the GDRs will not be issued by a depositary incorporated in the UK. If any assumption referred to above is incorrect, the analysis in the following paragraphs may differ. The following is intended only as a general guide and is not intended to be, nor should it be considered to be, legal or tax advice to any particular UK Holder. Accordingly, potential investors should satisfy themselves as to the overall tax consequences, including, specifically, the consequences under UK law and published practice and published interpretation of HMRC, of the acquisition, ownership and disposal of the GDRs in their own particular circumstances, by consulting their own professional tax advisers. Prospective subscribers for or purchasers of GDRs who are in any doubt as to their tax position regarding the acquisition, ownership and disposition of their GDRs, are seeking to be taxed on the remittance basis, or who are subject to tax in a jurisdiction other than the UK should consult their own professional tax advisers.

Dividends Individuals Dividends received by individual UK Holders will be subject to UK income tax on the full amount of the dividend paid, grossed up for the amount of the non-refundable UK dividend tax credit referred to below. The rate of UK income tax which is chargeable on the gross amount of dividends received in the tax year 2015/2016 by (i) additional rate taxpayers is 37.5%; (ii) higher rate taxpayers is 32.5%; and (iii) basic rate taxpayers is 10%. Individual UK Holders will be entitled to a non-refundable tax credit equal to one-ninth of the amount of the dividend received from the Company, which will be taken into account in computing the gross amount of the dividend which is chargeable to UK income tax. The tax credit will be credited against the UK Holder’s liability (if any) to UK income tax on the gross amount of the dividend. After taking the tax credit into account, the effective rate of tax (i) for additional rate taxpayers will be approximately 30.6% of the dividend paid; (ii) for higher rate taxpayers will be 25% of the dividend paid; and (iii) for basic rate taxpayers will be nil. An individual shareholder who is not subject to UK income tax on dividends received from the Company will not be entitled to claim repayment of the tax credit in respect of such dividends. An individual’s dividend income is treated as the top slice of their total income which is chargeable to UK income tax. The UK Government has announced that, with effect from April 6, 2016, the non-refundable dividend tax credit will be abolished and replaced with a £5,000 tax-free dividend allowance. Following the introduction

185 of the dividend allowance, the rate of UK income tax which is chargeable on dividend income in excess of £5,000 received by (i) additional rate taxpayers will be 38.1%; (ii) by higher rate taxpayers will be 32.5%; and (iii) by basic rate taxpayers will be 7.5%. The UK Government will introduce the legislation for the replacement of the dividend tax credit with the dividend allowance in Finance Bill 2016.

Companies A UK Holder within the charge to UK corporation tax should generally be entitled to exemption from UK corporation tax in respect of dividend payments. However, if the conditions for the exemption are not or cease to be satisfied, or a UK Holder elects for an otherwise exempt dividend to be taxable, UK corporation tax will be chargeable on the amount of the dividend. If potential investors are in any doubt as to their position, they should consult their own professional advisers.

Withholding tax Dividend payments in respect of the GDRs should not be subject to UK withholding tax.

Provision of information HMRC has powers to obtain information relating to securities in certain circumstances. This may include details of the beneficial owners of GDRs (or the persons for whom GDRs are held), details of the persons to whom payments derived from GDRs are or may be paid and information and documents in connection with transactions relating to GDRs. Information may be required to be provided by, amongst others, the holders of GDRs, persons by or through whom payments derived from GDRs are made or credited or who receive such payments (or who would be entitled to receive such payments if they were made), persons who effect or are a party to transactions relating to GDRs on behalf of others and certain registrars or administrators. In certain circumstances, the information obtained by HMRC may be exchanged with tax authorities in other countries.

Chargeable gains A disposal or deemed disposal of the GDRs by a UK Holder may, depending on the UK Holder’s circumstances and subject to any available exemption or relief, give rise to a chargeable gain or an allowable loss for the purposes of the taxation of chargeable gains. The principal factors that will determine the capital gains tax position on a disposal or deemed disposal of GDRs are the extent to which the holder realizes any other capital gains in the tax year in which the disposal is made, the extent to which the holder has incurred capital losses in that or any earlier tax year and the level of the annual allowance of tax-free gains in that tax year (the ‘‘Annual Exemption’’). The Annual Exemption for the 2015/2016 tax year is £11,100, and remains at the same level for the 2016/2017 tax year. If, after all allowable deductions, an individual UK Holder’s taxable income for the year exceeds the basic rate income tax limit, a taxable capital gain accruing on the disposal or deemed disposal of GDRs will be taxed at 28%. In other cases, a taxable capital gain accruing on the disposal or deemed disposal of GDRs may be taxed at 18%, 28% or a combination of both rates. An individual holder of the GDRs who has ceased to be resident in the UK for tax purposes (including by reason of the application of a double taxation treaty) for a period of (broadly speaking) less than five years and who disposes or is deemed to dispose of the GDRs during that period may also be liable on his or her return to the UK to tax on any chargeable gain realized (subject to any available exemption or relief). A corporate UK Holder will generally be subject to UK corporation tax on any chargeable gain arising from a disposal or deemed disposal of the GDRs. Such a holder should be entitled to an indexation allowance, which applies to reduce capital gains to the extent that such gains arise due to inflation. The allowance may reduce a chargeable gain, but will not create an allowable loss.

Stamp Duty and Stamp Duty Reserve Tax (‘‘SDRT’’) The following statements assume that there is, and will continue to be, no register in the UK in respect of the GDRs or the underlying Ordinary Shares, that neither the GDRs nor the underlying Ordinary Shares will be paired with shares issued by a company incorporated in the UK and that the GDRs will not be issued by a depositary incorporated in the UK. Assuming that any document effecting a transfer of, or containing an agreement to transfer, the GDRs is neither (1) executed in the UK nor (2) relates to any property situated, or to any matter or thing done or to

186 be done, in the UK (which may include involvement of UK bank accounts in payment mechanics), then no UK stamp duty should be payable on such a document. No SDRT should be payable in respect of any agreement to transfer the GDRs. No UK stamp duty or SDRT should be payable on: • the issue of the GDRs; • the delivery of GDRs into DTC, Euroclear or Clearstream; or • any dealings in the GDRs once they are issued into DTC, Euroclear or Clearstream, where such dealings are effected in electronic book entry form in accordance with the usual procedures of DTC, Euroclear or Clearstream and not by written instrument of transfer.

Inheritance tax UK inheritance tax may be chargeable on the death of, or in certain circumstances on a gift by, the owner of GDRs, where the owner is an individual who is domiciled or is deemed to be domiciled in the UK. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rates apply to gifts where the donor reserves or retains some benefit.

The proposed European financial transactions tax (‘‘FTT’’) On February 14, 2013, the European Commission published a proposal (the ‘‘Commission’s Proposal’’) for a Directive for a common FTT in Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain (the ‘‘FTT Participating Member States’’). However, in December 2015 Estonia stated that it would no longer participate in the FTT. The Commission’s Proposal has very broad scope and could, if introduced in its current form, apply to certain dealings in GDRs (including secondary market transactions) in certain circumstances. Under the Commission’s Proposal, the FTT could apply in certain circumstances to persons both within and outside of the FTT Participating Member States. Generally, it would apply to certain dealings in GDRs where at least one party is a financial institution, and at least one party is established in an FTT Participating Member State. A financial institution may be, or be deemed to be, ‘‘established’’ in an FTT Participating Member State in a broad range of circumstances, including (a) by transacting with a person established in an FTT Participating Member State or (b) where the financial instrument which is subject to the dealings is issued in an FTT Participating Member State. The FTT remains subject to negotiation between the FTT Participating Member States. Additional EU Member States may decide to participate and/or certain of the FTT Participating Member States may decide to withdraw. The FTT may also be altered prior to any implementation, the timing of which remains unclear. Prospective holders of GDRs are advised to seek their own professional advice in relation to the FTT.

Cyprus Tax Considerations General Cyprus Tax Considerations Tax residency Companies A company which is considered to be a resident for tax purposes in Cyprus is subject to tax in Cyprus on income accruing or arising from sources both within and outside of Cyprus in respect of any profits or other benefits from any business, any dividend, interest or discount, taking into account certain exemptions.

Tax residency A tax resident company is a company which is considered to be managed and controlled from Cyprus. Cypriot residence for tax purposes for corporate taxpayers is determined on the basis of place of management and control.

187 The Cypriot tax authorities interpret ‘‘management and control’’ by reference to the concept of ‘‘central management and control’’, following the principles established in various common law countries (e.g. UK). Based on the relevant case law, the Cypriot tax authorities have taken the view that in determining where the ‘‘management and control’’ of a company is, one should focus mainly on the place where top level decisions are made. The central policy core of the company and the highest level at which the company is controlled and policy decisions are taken is usually considered to be in the place where the company’s Board of Directors meet. It is generally accepted and in line with international tax practices that the following conditions should be considered to determine if a company classifies as a resident of Cyprus for tax purposes: • All important decisions are taken in Cyprus. This is achieved by either having meetings of the Board of Directors take place in Cyprus or providing a broad power of attorney to Cypriot entities or individuals, empowering them to manage the affairs of the company; • The majority of directors are residents of Cyprus; • The accounting of the relevant entity is carried out in Cyprus; • Bank accounts are operated from Cyprus, even if the accounts are maintained with banks established outside Cyprus; • An actual office is maintained in Cyprus; • Hard copies of commercial documentation (agreements, invoices, etc.) are stored in the office facilities of the Cypriot entity.

Physical persons With respect to a physical person (say a GDR holders), he /she is considered to be a resident of Cyprus for tax purposes if he/ she is physically present in Cyprus for a period or periods exceeding in aggregate more than 183 days in any one calendar year.

Rates of taxation A company which is considered to be a resident of Cyprus for tax purposes is subject to corporate income tax in Cyprus (‘‘Corporate Income Tax’’) on its worldwide income or other benefits from any business, subject to certain exemptions. The rate of Corporate Income Tax in Cyprus is 12.5%. A physical person who is resident in Cyprus for tax purposes, is subject to income tax on a scaled basis with the first Euro 19.500 being subject to 0%, from A19,501 to A28,000 being subject to 20%, from A28,001 to A36,300 being subject to 25%, from A36,301 to A60,000 being subject to 30% and for over A60,000 being subject to 35%. Special Contribution for Defence Tax (‘‘Defence Tax’’) also applies to certain types of income received by or credited to Cyprus tax residents only. Since July 16, 2015 individuals need to be both Cyprus tax resident and Cyprus domiciled in order to be subject to Defence Tax. Defence Tax applies, subject to certain exemptions, at the following tax rates: • 3% on 75% of rental income; • 30% on interest income either not arising in the ordinary course of the business, or not closely connected thereto (passive interest income); • 17% on dividend income received or deemed to be received by Cyprus tax resident and Cyprus domiciled individuals from Cyprus companies or from abroad; and • 17% on dividend income received or deemed to be received by a Cyprus tax resident company from a non Cyprus tax resident company. Such dividends are not subject to taxation if (i) the foreign company paying the dividend does not engage more than 50% directly or indirectly in activities which lead to passive income (non-trading income), or (ii) the foreign tax burden on the income of the company paying the dividend is not substantially lower than the tax burden in Cyprus (e.g., a tax rate of 6.25% or more is not considered to be substantially lower).

188 Dividend income received by a Cyprus tax resident company from other Cyprus tax resident companies is exempt from Defence Tax, subject to certain provisions. When the exemption does not apply, the dividend income is subject to Defence Tax at the rate of 17%. Dividend income received by a Cyprus tax resident company from another Cyprus tax resident company is subject to the Deemed Dividend Distribution (‘‘DDD’’) rules (please see ‘‘– Taxation of income and gains of the GDR holders – Deemed distribution rules’’). Defence Tax is levied on the gross amount of income without any deduction for expenses. Capital gains tax (‘‘Capital Gains Tax’’) is levied in Cyprus (when the disposal is not subject to Corporate Income Tax) at the flat rate of 20% on profits from the disposal of immovable property located in Cyprus or the shares of companies which directly own immovable property located in Cyprus. Since 17 December 2015 shares of companies which indirectly own immovable property located in Cyprus if at least 50% of the market value of the said shares derives from such immovable property are subject to Capital Gains Tax. Shares listed on a recognized stock exchange are excluded from these provisions.

Taxation of income and gains of the Company Gains from the disposal of securities Any gain from disposal of securities by the Company should be exempt from Corporate Income Tax irrespective of the trading nature of the gain, the number of shares held or the holding period and should not be subject to Defence Tax. Such gains are also outside the scope of Capital Gains Tax provided that the company the shares of which are disposed of does not own directly or indirectly subject to conditions, any immovable property located in Cyprus. The definition of securities includes ordinary and preference shares, founder’s shares, options on titles, debentures, bonds, short positions on titles, futures/forwards on titles, swaps on titles, depositary receipts on titles, rights of claims on bonds and debentures (rights on interest of these instruments are not included), index participations (only if they result in titles), repurchase agreements or repos on titles, participations in companies (Russian OOO and AO, US LLC provided that their profits are subject to taxes, Romanian SA and SRL and Bulgarian AD and OOD), units in open-end or closed-end collective investment schemes that have been incorporated, registered and operate in accordance with the provisions of the relevant legislation of the incorporation country, such as Mutual Funds, International Collective Investment Schemes and Undertakings for Collective Investments in Transferable Securities. GDRs are considered to fall within the scope of the definition of a security as they represent participations in titles. The Russia-Cyprus double taxation treaty grants Cyprus the exclusive right to tax capital gains realized on the disposal of Russian securities by a Cypriot resident company, except for capital gains on the sale of shares deriving more than 50% of their value from immovable property situated in Russia. Provisions on taxation of capital gains on the sale of shares in property rich companies become effective as of January 1, 2017. Under the Russian Tax Code, profits derived from the sale of shares of companies the assets of which are more than 50% (directly or indirectly) represented by real property located in Russia, as well as ‘‘derivative financial instruments’’ based on such shares (other than shares that are regarded as ‘‘publicly traded’’ – i.e., listed on a stock exchange and for which the market quote has been determined at least once for the preceding three month period) should be subject to Russian withholding tax at the rate of 20%. Taking into account the current real property portfolio of the Group the Russian real property assets do not exceed 50% of its total assets based on the consolidated financial statement, and therefore the sale of shares in the Group may not be taxed in Russia. However, in certain cases the shares in the Group may be taxed in Russia e.g., if the value of the Russian real property owned by the Group or its subsidiaries is substantially increased (revaluated) or the Group makes larger investments in the Russian real property.

Dividends to be received by the Company Dividends paid by a Russian legal entity to a foreign legal entity are generally subject to Russian withholding income tax at the rate of 15%, although this tax rate may be reduced under an applicable double taxation treaty. The Russia- Cyprus double taxation treaty allows reduction of the withholding income tax on dividends paid by a Russian company to a Cypriot company to 10% provided that the following conditions are met: (1) the Cypriot company is a tax resident of Cyprus within the meaning of the Russia-Cyprus double taxation treaty; (2) the Cypriot company is the beneficial owner of the dividends; (3) the dividends are not attributable to a permanent establishment of the Cypriot company in Russia; and (4) the treaty clearance procedures are duly performed. This rate can be further reduced to 5% if the

189 direct investment of the Cypriot company in the Russian company paying the dividends is the equivalent of at least A100,000. Dividend income of a Cyprus tax resident company (whether received from a Cypriot tax resident or non Cypriot tax resident company) is exempt from Corporate Income Tax in Cyprus. Dividend income from a Cypriot tax resident company is exempt from Defence Tax, but will be subject to the DDD rules (please see ‘‘– Deemed distribution rules’’). Dividend income received from non-Cypriot tax resident companies is exempt from Defence Tax, unless the company paying the dividend engages more than 50% directly or indirectly in activities which lead to passive income (non-trading income) and the foreign tax burden of the company paying the dividend is substantially lower than the tax burden on the income of the company in Cyprus receiving the dividend (in practice ‘‘foreign tax burden being significantly lower’’ means that such company is taxed at an effective tax rate of less than 6.25%). If the Defence Tax exemption does not apply, dividends from non-Cypriot tax resident companies are subject to 17% Defence Tax. Russian withholding tax as well as the Russian underlying tax (i.e. corporate profit tax of the Russian subsidiary which is paying the dividends), can be credited against any such Defence Tax payable in Cyprus. This credit should be available provided that the proper documentation can be provided to the Cyprus tax authorities evidencing the fact that the Russian tax was withheld at source on the relevant dividend income and the profit tax was paid in Russia by the company paying the dividend. The amount of the credit shall not exceed the amount of Defence Tax which would be ascertained on the amount of the income as computed before the credit is given in accordance with the provisions of the Cyprus Income Tax Law.

Interest income Interest paid by a Russian legal entity to a foreign legal entity is generally subject to Russian withholding income tax at the rate of 20%, although this tax rate may be reduced or eliminated under an applicable double taxation treaty. The Russia-Cyprus double taxation treaty allows elimination of the withholding income tax on interest paid by a Russian company to a Cypriot company provided that the following conditions are met: (1) the Cypriot company is a tax resident of Cyprus within the meaning of the Russia- Cyprus double taxation treaty; (2) the Cypriot company is the beneficial owner of interest income; (3) interest income is not attributable to a permanent establishment of the Cypriot company in Russia; and (4) the treaty clearance procedures are duly performed. Interest reclassified into dividends under Russian thin capitalization rules should be treated as dividends for the purpose of Russia- Cyprus double taxation treaty as well. Any interest accruing to the Company in the ordinary carrying on of any business, including any interest closely connected with the ordinary carrying on of the business (including interest accruing to a collective investment scheme, open-ended or closed ended type) qualifies as business income (active interest income) and is subject to Corporate Income Tax in Cyprus at a rate of 12.5% after the deduction of any relevant business expenses. Such interest income is exempt from Defence Tax. If interest income is considered to arise from investment activities of a company (passive interest income), such interest income is subject to Defence Tax at a rate of 30% on a gross basis. Specifically, interest income arising in connection with the provision of loans to related or associated parties should be generally considered as income arising from activities closely connected with the ordinary carrying on of business activities and should be exempt from Defence Tax and only be subject to Corporate Income Tax. Moreover, interest income arising from ‘back to back’ loan activities is also considered to be active interest income subject to taxation in a similar manner. As a matter of principle, the assessment of whether interest income is derived from trading activities is decided on a case by case basis.

Taxation of income and gains of the GDR holders Gains from disposal of GDRs by the GDR holders A gain realized on the sale of GDRs by a non-Cyprus tax resident holder is not subject to taxation in Cyprus. A gain realized on the sale of GDRs by a Cyprus tax resident holder is exempt from taxation in Cyprus as GDRs are considered to fall within the definition of securities for Cypriot tax purposes as they represent participation in titles.

190 Dividends to be received by the GDR holders Dividends to be received from the Company by non Cyprus tax-resident GDR holders are not subject to taxation in Cyprus, either by way of withholding or otherwise. Dividends to be received from the Company by Cyprus tax-resident corporate GDR holders which are ultimately owned by non Cyprus tax resident or Cyprus tax resident but non Cyprus domiciled individuals are not subject to taxation in Cyprus, either by way of withholding or otherwise. Dividends to be received from the Company by Cyprus tax-resident corporate GDR holders which are ultimately owned by Cyprus tax resident and Cyprus domiciled individuals are subject to taxation in Cyprus, subject to certain provisions. When the exemption does not apply, the dividend income is subject to Defence Tax at the rate of 17% and the Company is required to withhold such tax from the dividend. Dividends to be received from the Company by Cyprus tax resident individual GDR holders are subject to Defence Tax at the rate of 17% and the Company is required to withhold such tax from the dividend.

Deemed distribution rules Defence Tax at the rate of 17% is payable by a Cypriot tax resident company on the deemed dividend to the extent is ultimately owned by individuals who are both Cyprus tax resident and Cyprus domiciled. These deemed distribution rules do not apply to non Cyprus tax-resident and Cyprus tax resident and non Cyprus domiciled shareholders. Under these rules a Cypriot resident company which does not distribute 70% of its adjusted accounting profits for deemed dividend distribution purposes, net of Corporate Tax, Defence Tax, Capital Gains Tax, foreign tax not credited within two years from the end of the year in which the profits arose, is deemed to have distributed this amount as a dividend two years after that year end. For distributions to corporate shareholders which are ultimately owned by individuals who are both Cyprus tax resident and Cyprus domiciled the amount of this deemed dividend distribution (which is subject to Defence Tax) is reduced by any actual dividend (not subject to Defence Tax) paid out of the profits of the relevant year at any time up to the date of the deemed distribution. The accounting profits to be taken into account in this respect do not include any fair value adjustments to the value of movable or immovable property. Deemed distribution rules may also be applicable in case of the liquidation (in certain situations) or the capital reduction of a company.

Withholding taxes No withholding taxes shall apply in Cyprus with respect to payments of interest, dividends and royalties (except in the case of royalties earned on rights used within Cyprus, which are subject to a Withholding tax of 10%, 5% in the case of cinematographic films) by the Company to a non-resident person (either a corporation or individual). There is no withholding tax in Cyprus on interest income paid to a Cypriot tax resident corporate lender. This rule applies unless the Company issues a corporate bond, note or any other similar fixed income instrument and the resident lender receiving the interest is not considered to have generated this interest in the course of its ordinary activities or in connection with activities closely connected to the ordinary carrying on of its business in which case the Company would have an obligation withhold Defence Tax at the rate of 30% on payments made in favor of such Cypriot tax resident corporate lender. Any payment of interest by the Company to a Cypriot tax resident individual lender is not subject to withholding tax in Cyprus. This rule applies unless the Company issues a corporate bond, note or any other similar fixed income instrument in which case the Company would have an obligation to withhold Defence Tax at the rate of 30% on payments made in favor of Cypriot tax resident individual holders.

Capital duty Capital duty is payable to the Registrar of Companies in respect of the registered authorized and issued share capital of a Cypriot company upon its incorporation and upon subsequent increases therein. The capital duty rates are as follows: • A105 payable upon incorporation of a Cypriot company plus of 0.6% on the initial authorized share capital; • 0.6% of the face value of additional registered authorized share capital; and

191 • A20 flat duty on every issue, whether the shares are issued at their (par) face value or at a (share) premium.

Share premium is not subject to capital duty. Stamp duty Cyprus levies stamp duty on every document if: • it relates to any property situated in Cyprus; or • it relates to any matter or thing which is performed or done in Cyprus, irrespective of the place where it is executed. Stamp duty on a contractual agreement entered into on or after March 1, 2013 is levied at the following progressive rates: • no stamp duty is payable on the first A5,000 of consideration stated in the contract; • on consideration between A5,001 to A170,000 the rate is 0.15%; • on consideration exceeding A170,000 the rate is 0.2%. The maximum amount of stamp duty payable is A20,000 per contact which applies to contracts with a consideration value of A10.046.250 or more. With regard to loans to be provided by the Company to its foreign subsidiary, the Commissioner of Stamp Duty in Cyprus is usually expected to be satisfied that the loan agreements should not be subject to stamp duty in Cyprus provided the agreement is governed by a foreign law and is to be submitted to the courts of a foreign jurisdiction, the contract is executed outside of Cyprus, the loan asset is not secured or to be secured by way of a registered charge on Cypriot assets, such as shares in companies, either in Cyprus or abroad and the funds are used outside Cyprus.

192 PLAN OF DISTRIBUTION The Offering consists of an offering by the Company of 16,666,665 GDRs. Under the terms of, and subject to the conditions contained in, the underwriting agreement, dated April 28, 2016, between the Company and the Managers (the ‘‘Underwriting Agreement’’), the Managers named below have agreed, severally but not jointly, to procure purchasers for, or failing which, to purchase, at the Offer Price, the number of the GDRs indicated below:

Number of Manager GDRs J.P. Morgan Securities plc ...... 5,555,555 UBS Limited ...... 5,555,555 VTB Capital plc ...... 5,555,555 Total: ...... 16,666,665 The GDRs will be represented by a Rule 144A Master GDR Certificate and a Regulation S Master GDR Certificate and will be subject to certain restrictions as further discussed in ‘‘Terms and Conditions of the Global Depositary Receipts.’’ Mr. Vadim Moshkovich, the controlling beneficial shareholder of the Company, through Shiny Property Limited, a company controlled by him, has participated in the Offering and has agreed to purchase GDRs in an amount of approximately US$99.6 million. In addition, Mr. Maxim Basov, the Chief Executive Officer, has directly participated in the Offering and has agreed to purchase GDRs in an amount of approximately US$17.5 million. Closing and settlement are expected to take place on May 5, 2016. The Managers shall receive an underwriting commission of approximately US$3.7 million in respect of the Offering (assuming full payment of the discretionary fee to the Managers), which commissions are payable by the Company. Other than such commissions, the total expenses in connection with the Offering will be approximately US$1.4 million, which will be paid by the Company. The Company’s total expenses are expected to be approximately US$5.1 million. The Company has provided the Managers with certain representations and warranties under the Underwriting Agreement. Some of these representations and warranties are in relation to the Company’s business, the GDRs and the contents of this Information Memorandum. The obligations of the Managers to procure purchasers for the GDRs or to purchase the GDRs are subject to obtaining corporate approvals for the issue, transfer, offer, sale and delivery of the Ordinary Shares and the GDRs by the Company and other conditions contained in the Underwriting Agreement, such as the receipt by the Managers of customary officers’ certificates, comfort letters and legal opinions. The Underwriting Agreement provides that, upon the occurrence of certain events, such as the suspension or limitation of trading on the London Stock Exchange, MICEX or certain other stock exchanges or a material adverse change in the financial condition or business of the Company and its subsidiaries, and on certain other conditions, the Managers have the right, collectively but not individually, to withdraw from the Offering before delivery of any GDRs and to terminate the Underwriting Agreement. The Company has agreed in the Underwriting Agreement, subject to its terms, to indemnify the Managers against certain liabilities in connection with the Offering. In addition, the Company has agreed to reimburse the Managers for certain of their expenses.

Lock-up The Company, Shiny Property Limited, Mr. Vadim Moshkovich, the controlling beneficial shareholder of the Company and Mr. Maxim Basov, CEO and a minority shareholder of the Company, have agreed, subject to certain exceptions, not to offer, sell, contract or agree to sell, hypothecate, pledge, lend, mortgage, assign, charge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any shares of the Company or any securities convertible into or exercisable or exchangeable for, or substantially similar to, shares of the Company, or warrants or other rights to purchase such shares or any security or financial product whose value is determined directly or indirectly by reference to the price of the underlying securities, including equity swaps, forward sales and options or global depositary receipts representing the right to receive any such securities; enter into any swap or other

193 arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of the Company or any securities convertible into or exercisable or exchangeable for such shares, or warrants or other rights to purchase such shares, whether any such transaction is to be settled by delivery of such shares or such other securities, in cash or otherwise; or enter into any transaction with the same economic effect as, or agree to, or publicly announce an intention to effect any of the foregoing transactions, without the prior written consent of the Managers, for a period of 180 days from the Closing Date.

Other The Managers and their respective affiliates have engaged in transactions with, and provided various investment banking, financial advisory and other services for, the Company and its affiliates, for which they received customary fees. The Managers and their respective affiliates may provide such services to the Company and its affiliates in the future. In connection with the Offering, each of the Managers and any affiliate acting as an investor for its own account may take up GDRs and in that capacity may retain, purchase or sell for its own account such GDRs and any related investments and may offer or sell such GDRs or other investments otherwise than in connection with the Offering. Accordingly, references in this Information Memorandum to the GDRs being offered or placed should be read as including any offering or placement of GDRs to the Managers and any affiliate acting in such capacity. No Manager intends to disclose the extent of any such investment or transactions otherwise than to the Company and in accordance with any legal or regulatory obligation to do so. In addition, in connection with the Offering, certain of the Managers may enter into financing arrangements with investors, such as share swap arrangements or lending arrangements where the GDRs are used as collateral, which could result in such Managers acquiring shareholdings in the Company.

194 TRANSFER AND SELLING RESTRICTIONS Transfer Restrictions Rule 144A GDRs Each purchaser of GDRs located in the United States, by its acceptance of delivery of this Information Memorandum, will be deemed to have represented, agreed and acknowledged as follows: • The purchaser: (1) is a QIB as that term is defined by Rule 144A under the Securities Act; (2) is aware that, and each beneficial owner of such GDRs has been advised that, the sale to it is being made in reliance on Rule 144A under the Securities Act or another exemption from, or transaction not subject to, the registration requirements of the Securities Act; (3) is acquiring such GDRs for its own account or for the account of one or more QIBs; and (4) if it is acquiring such GDRs for the account of one or more QIBs, has sole investment discretion with respect to each such account and has full power to make the acknowledgements, representations and agreements herein on behalf of each such account. • The purchaser is aware that the GDRs purchased pursuant to Rule 144A under the Securities Act or another exemption from, or transaction not subject to, the registration requirements of the Securities Act have not been and will not be registered under the Securities Act and are being offered in the United States only in transactions not involving any public offering in the United States and are ‘‘restricted securities’’ as defined in Rule 144(a)(3) under the Securities Act. • In the future, if the purchaser decides to offer, resell, pledge or otherwise transfer the GDRs purchased pursuant to Rule 144A under the Securities Act or another exemption from, or transaction not subject to, the registration requirements of the Securities Act, such GDRs may be offered, sold, pledged or otherwise transferred only in accordance with the following legend, which the GDRs purchased pursuant to Rule 144A under the Securities Act or another exemption from, or transaction not subject to, the registration requirements of the Securities Act will bear unless otherwise determined by the Company and the Depositary in accordance with applicable law: THIS MASTER RULE 144A GLOBAL DEPOSITARY RECEIPT AND THE ORDINARY SHARES OF ROS AGRO PLC REPRESENTED HEREBY (THE ‘‘SHARES’’) HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE HOLDER OR BENEFICIAL OWNER HEREOF BY PURCHASING OR OTHERWISE ACQUIRING THE RULE 144A GDRS REPRESENTED BY THIS RULE 144A MASTER GDR, AGREES FOR THE BENEFIT OF ROS AGRO PLC THAT THE RULE 144A GDRS AND THE SHARES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER (‘‘QIB’’) (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES; PROVIDED THAT IN CONNECTION WITH ANY TRANSFER UNDER (B) ABOVE, THE TRANSFEROR SHALL PRIOR TO THE SETTLEMENT OF SUCH SALE, WITHDRAW THE SHARES FROM THE RULE 144A FACILITY (AS DEFINED IN THE DEPOSIT AGREEMENT) AND INSTRUCT THAT SUCH SHARES BE DELIVERED TO THE CUSTODIAN UNDER THE DEPOSIT AGREEMENT FOR DEPOSIT IN THE REGULATION S FACILITY (AS DEFINED IN THE DEPOSIT AGREEMENT) THEREUNDER. THE HOLDER OF THE RULE 144A GDRs REPRESENTED HEREBY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY SUBSEQUENT PURCHASER OF SUCH RULE 144A GDRs OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. THE BENEFICIAL OWNER OF SHARES RECEIVED UPON CANCELLATION OF ANY RULE 144A GLOBAL DEPOSITARY RECEIPT MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SHARES INTO ANY DEPOSITARY RECEIPT FACILITY IN RESPECT OF SHARES ESTABLISHED OR MAINTAINED BY A DEPOSITARY BANK, OTHER THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SHARES ARE ‘‘RESTRICTED SECURITIES’’ WITHIN THE

195 MEANING OF RULE 144(a)(3) UNDER THE SECURITIES ACT. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THE SHARES OR ANY RULE 144A GLOBAL DEPOSITARY RECEIPTS. • For so long as Ordinary Shares are restricted securities, it will not deposit such Ordinary Shares into any depositary receipt facility in respect of shares established and maintained by a depositary bank other than a Rule 144A restricted depositary receipt facility. • The Company, the Managers and their affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements. • Prospective purchasers are hereby notified that the sellers of the GDRs purchased pursuant to Rule 144A under the Securities Act may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A under the Securities Act.

Regulation S GDRs Each purchaser of the GDRs offered in reliance on Regulation S (the Regulation S GDRs) will be deemed to have represented and agreed as follows (terms used in this paragraph that are defined in Regulation S are used herein as defined therein): • the purchaser is, at the time of the offer to it of GDRs and at the time the buy order originated, outside the United States for the purposes of Rule 903 under the Securities Act; • the purchaser is aware that the Regulation S GDRs have not been and will not be registered under the Securities Act and are being offered outside the United States in reliance on Regulation S; • any offer, sale, pledge or other transfer made other than in compliance with the above-stated restrictions shall not be recognized by the Company in respect of the Regulation S GDRs; and • the Company, the Managers and their affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements.

Selling Restrictions The distribution of this Information Memorandum and the offer of the GDRs in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any restrictions, including those set out in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

General No action has been or will be taken in any jurisdiction that would permit a public offering of the GDRs, or possession or distribution of this Information Memorandum or any other offering material, in any country or jurisdiction where action for that purpose is required. Accordingly, the GDRs may not be offered or sold, directly or indirectly, and neither this Information Memorandum nor any other offering material or advertisement in connection with the GDRs may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. Persons into whose possession this Information Memorandum comes should inform themselves about and observe any restrictions on the distribution of this Information Memorandum and the offer of the GDRs, including those in the paragraphs above. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Information Memorandum does not constitute an offer to subscribe for or buy any of the GDRs offered hereby to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction. No dealer, salesperson or other person has been authorized to give any information or to make any representation not contained in this Information Memorandum, and, if given or made, such information or representation must not be relied upon as having been authorized by us or any Manager. Neither the delivery of this Information Memorandum nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs since the date hereof or that the information contained in this Information Memorandum is correct as of a date after its date.

196 United States The GDRs have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States and may not be offered or sold within the United States except in transactions exempt from, or not subject to, the registration requirements of the Securities Act and in compliance with any applicable state securities laws. The Underwriting Agreement provides that the Managers may directly or through their respective US broker- dealer affiliates arrange for the offer and resale of the GDRs within the United States only to persons reasonably believed to be QIBs in reliance on Rule 144A or another exemption from, or transaction not subject to, registration under the Securities Act. In addition, until 40 days after the commencement of this Offering, an offer or sale of the GDRs within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.

European Economic Area In relation to each Relevant Member State, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the ‘‘Relevant Implementation Date’’), an offer to the public of any GDRs, which are the subject of the Offering may not be made in that Relevant Member State. Notwithstanding the foregoing, an offer to the public in that Relevant Member State of any GDRs may be made at any time with effect from and including the Relevant Implementation Date under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: • to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; • to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year, (ii) a total balance sheet of more than A43,000,000 and (iii) an annual net turnover of more than A50,000,000, as shown in its last annual or consolidated accounts; or • in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of GDRs shall result in a requirement for the publication by us or the Managers of a prospectus pursuant to Article 3 of the Prospectus Directive or a supplement thereto. For the purposes of this provision, the expression an ‘‘offer to the public’’ in relation to any GDRs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any GDRs to be offered so as to enable an investor to decide to purchase or subscribe for any GDRs, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. This EEA selling restriction is in addition to any other selling restrictions set out in this Information Memorandum. Each person in a Relevant Member State who receives any communication in respect of, or who acquires any GDRs under, the offers contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with each Manager and the Company that: (a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and (b) in the case of any GDRs acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the GDRs acquired by it in the Offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Managers has been given to the offer or resale; or (ii) where GDRs have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those GDRs to it is not treated under the Prospectus Directive as having been made to such persons.

197 For the purposes of this representation, the expression an ‘‘offer’’ in relation to any GDRs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any GDRs to be offered so as to enable an investor to decide to purchase or subscribe for the GDRs, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State.

United Kingdom Each Manager has represented and agreed that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA received by it in connection with the issue or sale of any GDRs, in circumstances in which section 21(1) of the FSMA does not apply to the Company; and (b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the GDRs in, from or otherwise involving the United Kingdom.

Cyprus Each of the Managers has represented and agreed: (1) that in relation to the GDRs, it will not provide from within Cyprus all or any ‘‘Investment Services or Activities’’ or ‘‘Ancillary Services’’ (as such terms are defined in the Markets in Financial Instruments and Activities and Regulated Markets Law, Law 144(I) of 2007 and any Directives issued pursuant thereto (‘‘IS Law’’)) or otherwise provide Investment Services or Activities and/or Ancillary Services from outside Cyprus to residents or persons domiciled in Cyprus or otherwise conclude in Cyprus any transaction relating to such Investment Services and Activities and/or Ancillary Services in contravention of the IS Law and the regulations made or pursuant thereto; and (2) that it will not issue an offer or invitation to subscribe or purchase or otherwise procure subscribers or purchasers for the GDRs within or in Cyprus except in compliance with the provisions of the Public Offer and Prospectus Law, Law 114(I)/2005 or the Companies Law, Cap 113 of the Laws of Cyprus, as amended.

Russia Each of the Managers has agreed that it has not offered or sold or otherwise transferred and will not offer or sell or otherwise transfer as part of its initial distribution or at any time thereafter any GDRs to or for the benefit of any person (including legal persons) resident, incorporated, established or having their usual residence in the Russian Federation or to any person located within the territory of the Russian Federation except to the extent permitted under Russian law.

198 SETTLEMENT AND DELIVERY Each purchaser of the GDRs must pay for such GDRs in US Dollars.

Clearing and Settlement of GDRs Custodial and depositary links have been established between Euroclear, Clearstream Luxembourg, NSD and DTC to facilitate the initial issue of the GDRs offered in the Offering and cross-market transfers of the GDRs associated with secondary market trading.

Euroclear and Clearstream Luxembourg Euroclear and Clearstream Luxembourg each hold securities for participating organizations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream Luxembourg provide to their respective participants, among other things, services for safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream Luxembourg participants are financial institutions throughout the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Euroclear and Clearstream Luxembourg have established an electronic bridge between their two systems across which their respective customers may settle trades with each other. Indirect access to Euroclear or Clearstream Luxembourg is also available to others, such as banks, brokers, dealers and trust companies, which clear through or maintain a custodial relationship with a Euroclear or Clearstream Luxembourg participant, either directly or indirectly. Distributions of dividends and other payments with respect to book-entry interests in the GDRs held through Euroclear or Clearstream Luxembourg will be credited, to the extent received by the Depositary, to the cash accounts of Euroclear or Clearstream Luxembourg participants in accordance with the relevant system’s rules and procedures.

DTC DTC is a limited-purpose trust company organized under the laws of the State of New York, a ‘‘banking organization’’ within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a ‘‘clearing corporation’’ within the meaning of the New York Uniform Commercial Code and a ‘‘clearing agency’’ registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities for DTC participants and facilitates the clearance and settlement of securities transactions between DTC participants through electronic computerized book-entry changes in DTC participants’ accounts. DTC participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Holders of book-entry interests in the GDRs holding through DTC will receive, to the extent received by the Depositary, all distributions of dividends or other payments with respect to book-entry interests in the GDRs from the Depositary through DTC and DTC participants. Distributions in the United States will be subject to relevant tax laws and regulations of the United States. See ‘‘Taxation – Certain Material United States Federal Income Tax Considerations’’. As DTC can act on behalf of DTC direct participants only, who in turn act on behalf of DTC indirect participants, the ability of beneficial owners who are indirect participants to pledge book-entry interests in the GDRs to persons or entities that do not participate in DTC, or otherwise take actions with respect to book-entry interests in the GDRs, may be limited.

NSD NSD is the central securities depository of the Russian Federation and is a part of the Moscow Exchange Group. NSD is Russia’s national numbering agency and the substitute numbering agency for the CIS and is authorized to assign the international ISIN and CFI codes. NSD is a central system for handling securities by law. The status of central securities depository was assigned to the NSD by an order of the Federal Service for Financial Markets (dissolved in September 2013, authority transferred to the Bank of Russia in March 2014) on November 6, 2012. NSD holds a professional securities market participant license for depositary activity, a clearing activities license and a license to perform banking operations. NSD holds

199 securities for participating organizations and facilitates the clearance and settlement of securities transactions between its participants through electronic book-entry changes in accounts of such participants. NSD participants are financial institutions, including underwriters, securities brokers and dealers, banks, clearing corporations and certain other organizations and entities. Access to NSD is also available to other organizations and entities which clear through or maintain a custodial relationship with an NSD participant, either directly or indirectly.

Registration and Form of GDRs Book-entry interests in the new GDRs held through Euroclear and Clearstream Luxembourg will be represented by the Regulation S Master GDR registered in the name of The Bank of New York Depository (Nominees) Limited, as nominee for The Bank of New York Mellon, London Branch, as common depositary for Euroclear and Clearstream Luxembourg. Book-entry interests in the new GDRs held through DTC will be represented by the Rule 144A Master GDR registered in the name of Cede & Co., as nominee for DTC, which will be held by the Depositary as custodian for DTC. As necessary, the Depositary will adjust the amounts of GDRs on the relevant register to reflect the amounts of GDRs held through Euroclear, Clearstream Luxembourg and DTC, respectively. Beneficial ownership in the GDRs will be held through financial institutions, including NSD, as direct and indirect participants in Euroclear, Clearstream Luxembourg and DTC. The aggregate holdings of book-entry interests in the GDRs in Euroclear, Clearstream Luxembourg, DTC and NSD will be reflected in the book-entry accounts of each such institution. Euroclear, Clearstream Luxembourg, DTC and NSD, as the case may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interest in the GDRs, will be responsible for establishing and maintaining accounts for their participants and customers having interests in the book-entry interests in the GDRs. The Depositary will be responsible for maintaining a record of the aggregate holdings of GDRs registered in the name of the common depositary for Euroclear and Clearstream Luxembourg and the nominee for DTC. The Depositary will be responsible for ensuring that payments received by it from the Company for holders holding through Euroclear or Clearstream Luxembourg are credited to Euroclear or Clearstream Luxembourg as the case may be, and the Depositary will also be responsible for ensuring that payments received by it from the Company for holders holding through DTC are received by DTC. The address for DTC is 55 Water Street, New York, New York 10041, United States. The address for Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium. The address for Clearstream, Luxembourg is 42 Avenue J.F. Kennedy, L-1855 Luxembourg, Luxembourg. The address for NSD is 1/13, building 8, Sredniy Kislovskiy Lane, Moscow 125009, Russia. The Company will not impose any fees in respect of the GDRs; however, holders of book-entry interests in the GDRs may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear, Clearstream Luxembourg, DTC or NSD and certain fees and expenses payable to the Depositary in accordance with the terms of the Deposit Agreement.

Global Clearance and Settlement Procedures Initial Settlement The new GDRs will be in global form evidenced by the two Master GDRs. Purchasers electing to hold book-entry interests in the new GDRs through Euroclear or Clearstream Luxembourg accounts will follow the settlement procedures applicable to depositary receipts. DTC participants acting on behalf of purchasers electing to hold book-entry interests in the new GDRs through DTC will follow the delivery practices applicable to depositary receipts.

Secondary Market Trading For a description of the transfer restrictions relating to the GDRs, see ‘‘Transfer and Selling Restrictions – Transfer Restrictions’’. Trading between Euroclear and Clearstream Luxembourg participants. Secondary market sales of book-entry interests in the GDRs held through Euroclear or Clearstream Luxembourg to purchasers of book-entry interests in the GDRs through Euroclear or Clearstream Luxembourg will be conducted in accordance with the normal rules and operating procedures of Euroclear or Clearstream Luxembourg and will be settled using the normal procedures applicable to depositary receipts.

200 Trading between DTC participants. Secondary market sales of book-entry interests in the GDRs held through DTC will occur in the ordinary way in accordance with DTC rules and will be settled using the procedures applicable to depositary receipts, if payment is effected in US Dollars, or free of payment, if payment is not effected in US Dollars. Where payment is not effected in US Dollars, separate payment arrangements outside DTC are required to be made between the DTC participants. Trading between NSD Participants. Secondary market sales of book-entry interests in the GDRs held through NSD to purchasers of book-entry interests in the GDRs through NSD will be conducted in accordance with the normal rules and operating procedures of NSD and will be settled using the usual procedures applicable to depositary receipts. Trading between DTC seller and Euroclear/Clearstream Luxembourg purchaser. When book-entry interests in the GDRs are to be transferred from the account of a DTC participant to the account of a Euroclear or Clearstream Luxembourg participant, the DTC participant must send to DTC a delivery free of payment instruction at least two business days prior to the settlement date. DTC will in turn transmit such instruction to Euroclear or Clearstream Luxembourg, as the case may be, on the settlement date. Separate payment arrangements are required to be made between the DTC participant and the relevant Euroclear or Clearstream Luxembourg participant. On the settlement date, DTC will debit the account of its DTC participant and will instruct the Depositary to instruct Euroclear or Clearstream Luxembourg, as the case may be, to credit the relevant account of the Euroclear or Clearstream Luxembourg participant, as the case may be. In addition, on the settlement date, DTC will instruct the Depositary to (i) decrease the amount of book-entry interests in the GDRs registered in the name of a nominee for DTC and represented by the Rule 144A Master GDR and (ii) increase the amount of book-entry interests in the GDRs registered in the name of the common nominee for Euroclear and Clearstream Luxembourg and represented by the Regulation S Master GDR. Trading between Euroclear/Clearstream Luxembourg seller and DTC purchaser. When book-entry interests in the GDRs are to be transferred from the account of a Euroclear or Clearstream Luxembourg participant to the account of a DTC participant, the Euroclear or Clearstream Luxembourg participant must send to Euroclear or Clearstream Luxembourg a delivery free of payment instruction at least one business day prior to the settlement date. Separate payment arrangements are required to be made between the DTC participant and the relevant Euroclear or Clearstream Luxembourg participant, as the case may be. On the settlement date, Euroclear or Clearstream Luxembourg, as the case may be, will debit the account of its participant and will instruct the Depositary to instruct DTC to credit the relevant account of Euroclear or Clearstream Luxembourg, as the case may be, and will deliver such book-entry interests in the GDRs free of payment to the relevant account of the DTC participant. In addition, Euroclear or Clearstream Luxembourg, as the case may be, shall on the settlement date instruct the Depositary to (i) decrease the amount of the book-entry interests in the GDRs registered in the name of the common nominee and evidenced by the Regulation S Master GDR and (ii) increase the amount of the book-entry interests in the GDRs registered in the name of a nominee for DTC and represented by the Rule 144A Master GDR. Trading between NSD Seller and Euroclear/Clearstream, Luxembourg Purchaser. When book-entry interests in the GDRs are to be transferred from the account of an NSD participant to the account of a Euroclear or Clearstream, Luxembourg participant, the NSD participant must submit a delivery free of payment or a delivery versus payment instruction to the NSD at least one business day prior to the settlement date. In case of delivery free of payment, separate payment arrangements are required to be made between the NSD participant and the relevant Euroclear or Clearstream, Luxembourg participant, as the case may be. On the settlement date, NSD will debit the account of its participant, and Euroclear or Clearstream, Luxembourg, as the case may be, will debit the account of NSD with Euroclear or Clearstream, Luxembourg, as the case may be, and will credit the account of its participant, and will deliver such book-entry interests in the GDRs free of payment or versus payment to the relevant account of the Euroclear or Clearstream, Luxembourg participant. Trading between Euroclear/Clearstream, Luxembourg Seller and NSD Purchaser. When book-entry interests in the GDRs are to be transferred from the account of a Euroclear or Clearstream, Luxembourg participant to the account of an NSD participant, the Euroclear or Clearstream, Luxembourg participant must submit a delivery free of payment or a delivery versus payment instruction to Euroclear or Clearstream, Luxembourg, as the case may be, at least one business day prior to the settlement date. In case of delivery free of payment, separate payment arrangements are required to be made between the

201 NSD participant and the relevant Euroclear or Clearstream, Luxembourg participant, as the case may be. On the settlement date, Euroclear or Clearstream, Luxembourg, as the case may be, will debit the account of its participant and will credit the account of NSD with Euroclear or Clearstream, Luxembourg, as the case may be, and will deliver such book entry interests in the GDRs free of payment or versus payment to the account of NSD with Euroclear or Clearstream, Luxembourg, as the case may be, for further transfer to the relevant NSD participant. Trading between NSD Seller and DTC Purchaser. When book-entry interests in the GDRs are to be transferred from the account of an NSD participant to the account of a DTC participant, the NSD participant must submit a delivery free of payment or a delivery versus payment instruction to the NSD at least one business day prior to the settlement date. In case of delivery free of payment, separate payment arrangements are required to be made between the NSD participant and the relevant Euroclear or Clearstream, Luxembourg participant, as the case may be. On the settlement date, NSD will debit the account of its participant, and Euroclear or Clearstream, Luxembourg, as the case may be, will debit the account of NSD with Euroclear or Clearstream, Luxembourg, as the case may be, and will instruct the Depositary to instruct DTC to credit the relevant account of Euroclear or Clearstream, Luxembourg, as the case may be, and will deliver such book-entry interests in the GDRs free of payment or versus payment to the relevant account of the DTC participant. In addition, Euroclear or Clearstream, Luxembourg, as the case may be, will on the settlement date instruct the Depositary to (i) decrease the amount of the book-entry interests in the GDRs registered in the name of the common nominee and represented by the Regulation S Master GDR and (2) increase the amount of the book-entry interests in the GDRs registered in the name of a nominee for DTC and represented by the Rule 144A Master GDR. Trading between DTC Seller and NSD Purchaser. When book-entry interests in the GDRs are to be transferred from the account of a DTC participant to the account of an NSD participant, the DTC participant must send a delivery free of payment or a delivery versus payment instruction to DTC at least one business day prior to the settlement date. DTC will, in turn, transmit such instruction to Euroclear or Clearstream, Luxembourg, as the case may be, and Euroclear or Clearstream, Luxembourg, as the case may be, will transmit it to NSD on the settlement date. In case of delivery free of payment, separate payment arrangements are required to be made between the DTC participant and the NSD participant. On the settlement date, DTC will debit the account of its participant and will instruct the Depositary to instruct Euroclear or Clearstream, Luxembourg, as the case may be, to credit the account of NSD with Euroclear or Clearstream, Luxembourg, as the case may be, for further credit to the relevant NSD participant. In addition, DTC will on the settlement date instruct the Depositary to (i) decrease the amount of the book-entry interests in the GDRs registered in the name of the nominee for DTC and represented by the Rule 144A Master GDR and (2) increase the amount of the book-entry interests in the GDRs registered in the name of the common nominee for Euroclear and Clearstream, Luxembourg and represented by the Regulation S Master GDR.

General Although the foregoing sets forth the procedures of Euroclear, Clearstream Luxembourg, DTC and NSD in order to facilitate the transfers of interests in the GDRs among participants of Euroclear, Clearstream Luxembourg, DTC and NSD, none of Euroclear, Clearstream Luxembourg, DTC or NSD are under any obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Group, the Managers, the Depositary, the Custodian or their respective agents will have any responsibility for the performance by Euroclear, Clearstream Luxembourg, DTC or NSD or their respective participants of their respective obligations under the rules and procedures governing their operations.

202 INFORMATION RELATING TO THE DEPOSITARY The Depositary is a state-chartered New York banking corporation and a member of the United States Federal Reserve System, subject to regulation and supervision principally by the United States Federal Reserve Board and the New York State Department of Financial Services. The Depositary was constituted in 1784 in the State of New York. It is a wholly owned subsidiary of The Bank of New York Mellon Corporation, a Delaware bank holding company. The principal office of the Depositary is located at 225 Liberty Street, New York, New York 10286, United States. Its principal administrative offices are located at 101 Barclay Street, New York, New York 10286, United States. A copy of the Depositary’s By-laws, as amended, together with copies of The Bank of New York Mellon Corporation’s most recent financial statements and annual report are available for inspection at www.bnymellon.com or the principal administrative offices of the Depositary located at 101 Barclay Street, New York, New York 10286, United States and at The Bank of New York Mellon, One Canada Square, London E14 5AL, United Kingdom.

203 LEGAL MATTERS Certain legal matters in connection with the Offering will be passed upon for the Company with respect to U.S. and English law by Baker & McKenzie LLP in London, England, with respect to Russian law by Baker & McKenzie – CIS, Limited in Moscow, Russia, and with respect to Cypriot law by Harneys Aristodemou Loizides Yiolitis LLC in Limassol, Cyprus. Certain legal matters in connection with the Offering will be passed upon for the Managers with respect to U.S. and English law by White & Case LLP in London, England and with respect to Russian law by White & Case LLC in Moscow, Russia.

204 INDEPENDENT AUDITORS The consolidated financial statements of ROS AGRO PLC as of and for the years ended December 31, 2015, 2014 and 2013 included in this Information Memorandum have been audited by PricewaterhouseCoopers Limited, independent auditors, of Julia House, 3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus, as stated in their report appearing herein.

205 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements of ROS AGRO PLC for the three years ended December 31, 2015, 2014 and 2013 Report of the Board of Directors ...... F-4 Directors’ Responsibility Statement ...... F-9 Independent Auditor’s Report ...... F-10 Consolidated Statements of Financial Position ...... F-12 Consolidated Statements of Profit or Loss and Other Comprehensive Income ...... F-13 Consolidated Statements of Cash Flows ...... F-14 Consolidated Statements of Changes In Equity ...... F-15 Notes to the Consolidated Financial Statements ...... F-17

F-1

ROS AGRO PLC

International Financial Reporting Standards Consolidated Financial Statements for the three years ended 31 December 2015, 2014 and 2013 and Independent Auditor’s Report

F-2

Contents

BOARD OF DIRECTORS AND OTHER OFFICERS REPORT OF THE BOARD OF DIRECTORS DIRECTORS’ RESPONSIBILITY STATEMENT INDEPENDENT AUDITOR’S REPORT

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Financial Position ...... 1 Consolidated Statements of Profit or Loss and other Comprehensive Income ...... 2 Consolidated Statements of Cash Flows ...... 3 Consolidated Statements of Changes in Equity ...... 4

Notes to the Consolidated Financial Statements

1. Background ...... 6 2. Summary of significant accounting policies ...... 7 3. Cash and cash equivalents ...... 22 4. Short-term investments ...... 23 5. Trade and other receivables ...... 24 6. Prepayments ...... 24 7. Other taxes receivable ...... 25 8. Inventories ...... 25 9. Property, plant and equipment ...... 26 10. Biological assets ...... 27 11. Long-term investments ...... 29 12. Investments in associates ...... 29 13. Share capital, share premium and transactions with non-controlling interests ...... 32 14. Borrowings ...... 33 15. Trade and other payables ...... 38 16. Other taxes payable...... 39 17. Government grants ...... 39 18. Sales...... 39 19. Cost of sales ...... 40 20. Distribution and selling expenses ...... 40 21. General and administrative expenses...... 40 22. Other operating income/ (expenses), net ...... 41 23. Interest expense and other financial income/ (expenses), net ...... 41 24. Goodwill ...... 42 25. Income tax ...... 45 26. Related party transactions ...... 47 27. Earnings per share ...... 50 28. Segment information...... 51 29. Financial risk management ...... 56 30. Contingencies ...... 64 31. Commitments ...... 65 32. Subsequent events ...... 65

F-3 ROS AGRO PLC BOARD OF DIRECTORS AND OTHER OFFICERS

Board of Directors

Mr. Vadim Moshkovich (appointed 22 May 2015) Chairman of the Board of Directors President of LLC Group of Companies Rusagro Mr. Anastassios Televantides Chairman of the Audit Committee Non-executive Director Mrs. Natalia Bykovskaya (resigned 22 May 2015) Member of the Audit Committee Executive Director Deputy CEO of LLC Group of Companies Rusagro

Mr. Richard Andrew Smyth Member of the Audit Committee Non-executive Director Mrs. Ganna Khomenko Member of the Audit Committee Non-executive Director Mr. Maxim Basov Executive Director Chief Executive Officer of OJSC Rusagro Group and LLC Group of Companies Rusagro

Board Support

The Company Secretary is available to advise all Directors to ensure compliance with the Board procedures.

Company Secretary

Fiduciana Secretaries Limited 8 Mykinon CY-1065, Nicosia Cyprus

Registered office

8 Mykinon CY-1065, Nicosia Cyprus

F-4 ROS AGRO PLC REPORT OF THE BOARD OF DIRECTORS

The Board of Directors presents its report together with the audited consolidated financial statements of ROS AGRO PLC (the “Company”) and its subsidiaries (collectively the “Group”) for the three years ended 31 December 2015, 2014 and 2013. The Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and the requirements of the Cyprus Companies Law, Cap. 113. Principal activities The principal activities of the Group are the agricultural production (cultivation of sugar beet, grain and other agricultural crops), cultivation of pigs, processing of raw sugar and production of sugar from sugar beet, vegetable oil production and processing. Review of development, position and performance of the Group’s business In 2015 revenue increased by RR 13,326,921 thousand or 23%. All four main segments demonstrated increase in revenue. The major contributor to the sales growth was the Sugar segment where sales increased by RR 10,389,634 thousand or 46% comparing to the previous year. Growth in sales of the Sugar segment was a result of a significant increase in average sales prices by 42% in 2015. Higher sales volumes of sugar beet, barley and corn and higher average sales prices of all crops (barley, corn, sugar beet, wheat, pea and sunflower seeds) led to an increase in sales of the Agriculture segment that was partly offset by a decrease in sales volumes of sunflower seeds, pea and wheat. Overall sales in the Agriculture segment increased by RR 3,500,611 thousand or 33%. Sales growth in the Oil and Fat segment by RR 2,331,935 thousand or 16% was driven by an increase in sales volume of mayonnaise and an increase in sales prices of consumer margarine, mayonnaise, sunflower raw oil and sunflower meal that was partly offset by a drop in volumes of margarine, sunflower raw oil and sunflower meal sold. Sales turnover in the Meat segment increased by RR 366,734 thousand or 2% thanks to the positive price factor that was partly offset by a decrease sales volumes. In 2014 revenue increased by RR 22,622,416 thousand or 62%. All segments demonstrated increase in revenue. The major contributor to the sales growth was the Meat segment where sales increased by RR 10,329,183 thousand or 139% comparing to the previous year. Growth in sales of the Meat segment resulted from a significant increase in sales volume with the first full year of operation of new pig-breeding facilities in Tambov region after their launch in 2013 and an increase in average sales prices. Sales growth in the Oil and Fat segment by RR 6,000,542 thousand or 67% was driven by an increase in sales volume and an increase in sales prices of consumer margarine, mayonnaise and sunflower meal that was partly offset by a decrease in sales prices of raw oil. Both volume and price factors positively contributed to an increase in sales of the Sugar segment where sales increased by RR 5,500,924 thousand or 32%. Higher sales volume of barley, pea and sunflower seeds and higher average sales prices of sugar beet, wheat, pea and sunflower seeds led to an increase in sales of the Agriculture segment that was partly offset by a decrease in sales prices of barley and in sales volume of sugar beet, wheat and soya bean. Overall sales in the Agriculture segment increased by RR 2,180,991 thousand or 26%. In 2015 Adjusted EBITDA increased by RR 6,353,926 thousand or 35%. Sugar segment and Agriculture segment demonstrated an increase in Adjusted EBITDA by 6,259,130 or 130% and 2,254,382 or 52%, respectively, as a result of an increase in sales volumes and sales prices as described above together with the continuous improvement in the efficiency of operations. In the Meat segment Adjusted EBITDA decreased by RR 1,157,136 thousand or 13%, in the Oil and Fat segment drop in Adjusted EBITDA amounted to RR 220,293 thousand or 12%. In 2014 Adjusted EBITDA increased by RR 11,285,462 thousand or 166%. All divisions demonstrated an increase in Adjusted EBITDA as a result of an increase in sales volume and sales prices as described above together with the continuous improvement in the efficiency of operations. In the Meat segment Adjusted EBITDA increased by RR 7,103,167 thousand or 412%, in the Sugar segment growth in Adjusted EBITDA amounted to RR 3,088,870 thousand or 180%. The Agriculture segment demonstrated RR 2,014,185 thousand or 85% of an increase in Adjusted EBITDA. Adjusted EBITDA in the Oil and Fat segment increased by RR 856,972 thousand or 84%. In 2015 the Group investments in property, plant and equipment and inventories intended for construction amounted to RR 11,438,252 thousand on a cash basis. Investments of RR 5,238,807 thousand were made in the Meat segment and related mainly to the construction in Far East region. The Sugar segment invested RR 2,919,538 thousand in modernization of the sugar plants. The Agriculture segment invested RR 2,625,332 thousand in acquisition of new agricultural machinery and equipment.

F-5 ROS AGRO PLC REPORT OF THE BOARD OF DIRECTORS

Review of development, position and performance of the Group’s business (continued) In 2014 the Group investments in property, plant and equipment and inventories intended for construction amounted to RR 5,207,714 thousand on a cash basis. Investments of RR 1,324,218 thousand were made in the Meat segment mainly for construction of the slaughter house in Tambov region. The Agriculture segment invested RR 2,055,275 thousand in acquisition of new agricultural machinery and equipment. The Sugar segment invested RR 1,600,262 thousand in modernization of the sugar plants. Principal risks and uncertainties The Group’s critical estimates and judgments and financial risk management are disclosed in Notes 2 and 29 to the consolidated financial statements. The Group’s operating environment is disclosed in Note 1 to the consolidated financial statements. The Group’s contingencies are disclosed in Note 30 to the consolidated financial statements. Future developments The Group adheres to its strategy the main purpose of which is to become the largest vertically integrated agricultural company in the Russian market. In 2016 and beyond, the Group plans to continue modernization and expansion of its production and storage facilities in all business segments. The Group plans to make further expansion in the Far Eastern region where it develops agricultural and meat business.

Results The Group’s results for the year are set out on page 2 of the consolidated financial statements. Dividends Pursuant to its Articles of Association the Company may pay dividends out of its profits. In August 2013 the Board of Directors has approved a new dividend policy with payout ratio of at least 25% of the Group’s profit for the year applicable starting from the year ended 31 December 2013. To the extent that the Company declares and pays dividends, owners of Global Depositary Receipts (hereafter also referred as “GDRs”) on the relevant record date will be entitled to receive dividends payable in respect of Ordinary Shares underlying the GDRs, subject to the terms of the Deposit Agreement. The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to pay dividends to the Company in accordance with the relevant legislation and contractual restrictions. The payment of such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable reserves. The maximum dividend payable by the Company`s subsidiaries is restricted to the total accumulated retained earnings of the relevant subsidiary, determined according to the Russian law. In 2015 the Company declared and distributed RR 1,800,959 thousand of interim dividends for the first half of 2015. Given the Company owns 2,212,648 of its own GDRs (5 GDRs represent 1 share) which are excluded from dividend distribution, interim dividends for 2015 amounted to RR 76.45 per share. In 2015 the Company also declared final dividends out of the profits for the year 2014 amounting to RR 3,063,227 thousand. Given the Company has already paid interim dividends out of the profits for the first half of 2014, with a total pay-out RR 2,000,029 thousand, the total distributed amount for 2014 was RR 5,063,256 thousand. In addition, given the Company owns 2,212,648 of its own GDRs, which were excluded from dividend distribution, the dividend was RR 130.03 per share (the equivalent USD 2.35 per share based on the CBRF rate 55.3328 as of 8 April 2015).

In 2014 the Company declared and distributed RR 1,000,000 thousand of final dividends out of the profits for the year 2013 and RR 2,000,029 thousand of interim dividends out of the profits for the first half of 2014. Given the Company owns 2,212,648 of its own GDRs (5 GDRs represent 1 share), which are excluded from dividend distribution, the dividends for 2013 amounted to RR 42.45 per share and interim dividends for 2014 amounted to RR 84.90 per share. There were no dividends announced and paid during the year ended 31 December 2013.

F-6 ROS AGRO PLC REPORT OF THE BOARD OF DIRECTORS

Dividends (continued) Subsequent to the year ended 31 December 2015, the Board of Directors recommends the payment of dividends for the year 2015 amounting to RR 7,107,101 thousand. Given the Company has already paid interim dividends for the first half of 2015, with a total pay-out RR 1,800,959 thousand, the additional distributed amount for 2015 is RR 5,306,142 thousand. The dividend per share will be fixed at the dividend Record date set on 27 May 2016.

The proposed dividend is subject to approval by the shareholders at the Annual General Meeting. These parent company financial statements do not reflect the dividends that have not been approved on the reporting date.

Share capital There were no changes in the share capital of the Company.

The role of the Board of Directors The Company is governed by its Board of Directors (hereafter also referred as “the Board”) which is collectively responsible to the shareholders for the successful performance of the Group. The Board sets corporate strategic objectives, ensuring that the necessary financial and human resources are in place for the Group to meet its objectives and reviewing management performance. The Board of Directors sets the Group’s values and standards and ensures all obligations to shareholders are understood and met. The Board believes it maintains a sound system of internal control to safeguard the Group’s assets and shareholders’ investments in the Group.

Members of the Board of Directors The members of the Board of Directors at 31 December 2015 and at the date of this report are shown in the beginning of these consolidated financial statements. All of them were members of the Board throughout the year ended 31 December 2015, except Mr Vadim Moshkovich who was appointed as Director on 22 May 2015. Mrs Natalia Bykovskaya, who held office at 1 January 2015, resigned on 22 May 2015. In 2015, Mr Vadim Moshkovich was elected as a Chairman of the Board of Directors replacing Mr Richard Andrew Smyth on that position. During the year Mr Richard Andrew Smyth was elected as a member of the Audit Committee. In accordance with the Company’s Articles of Association, one third of the Directors shall retire by rotation and seek re-election at each Annual General Meeting. The Company’s Directors’ remuneration is disclosed in Note 26.

Directors’ Interests The Directors Mr Vadim Moshkovich, Mr. Maxim Basov, Mr. Richard Smyth and Mr. Anastassios Televantides held interest in the Company as at 31 December 2015, 2014 and 2013. Mr Vadim Moshkovich has no direct interest in the Company as at 31 December 2015 (31 December 2014: none and 31 December 2013: none). The number of shares held indirectly through a company controlled by him as at 31 December 2015 is 17,999,996 (31 December 2014: 17,999,996 and 31 December 2013: 17,999,996). In addition as at 31 December 2013, 200,000 shares were held indirectly by Mr. Vadim Moshkovich through his family relationship with Mrs. Natalia Bykovskaya. The number of shares directly held by Mr. Maxim Basov as at 31 December 2015 is 1,657,303 (31 December 2014: 1,459,904 and 31 December 2013: none). In addition as at 31 December 2013, 1,165,458 shares were held indirectly by Mr. Maxim Basov through an entity controlled by him. The number of shares directly held by Mr. Richard Andrew Smyth as at 31 December 2015 is 6,225 (31 December 2014: 6,000, 31 December 2013: 6,000). The number of shares directly held by Mr. Anastassios Televantides as at 31 December 2015 is 2,000 (31 December 2014: 2,000, 31 December 2013: 2,000).

F-7 F- F- F- F- F- ROS AGRO PLC CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

Year ended Year ended Year ended Notes 31 December 2015 31 December 2014 31 December 2013 Sales 18 72,439,164 59,112,243 36,489,827 Net gain on revaluation of biological assets 2,040,860 2,593,685 266,593 and agricultural produce 10 Cost of sales 19 (43,271,410) (37,999,661) (28,073,757) Net gain from trading derivatives 29 223,948 375,305 175,407 Gross profit 31,432,562 24,081,572 8,858,070

Distribution and selling expenses 20 (5,313,993) (4,472,174) (2,992,953) General and administrative expenses 21 (4,065,560) (2,991,315) (2,623,918) Share-based remuneration 26 (4,015) (54,423) (178,280) Other operating income/ (expenses), net 22 188,983 272,884 (116,537) Operating profit 22,237,977 16,836,544 2,946,382

Interest expense 23 (2,041,743) (154,478) (1,380,376) Interest income 1,576,601 1,010,951 2,022,986 Net gain/ (loss) from bonds held for trading 636,601 (1,397,230) - Other financial income/ (expenses), net 23 3,080,295 4,549,548 (56,272) Share of results of associates 12 23,997 46,579 - Profit before income tax 25,513,728 20,891,914 3,532,720

Income tax expense 25 (1,823,392) (714,935) (330,963) Profit for the year 23,690,336 20,176,979 3,201,757

Other comprehensive income: Items that may be subsequently reclassified to profit and loss: Change in value of available-for-sale (39,469) - - financial assets 14 Income tax relating to other 7,894 - - comprehensive income Total comprehensive income for 23,658,761 20,176,979 3,201,757 the period

Profit is attributable to: Owners of ROS AGRO PLC 23,482,192 20,134,178 3,201,534 Non-controlling interest 208,144 42,801 223 Profit for the period 23,690,336 20,176,979 3,201,757

Total comprehensive income is attributable to: Owners of ROS AGRO PLC 23,450,617 20,134,178 3,201,534 Non-controlling interest 208,144 42,801 223 Total comprehensive income for 23,658,761 20,176,979 3,201,757 the period

Earnings per ordinary share for profit attributable to the owners of ROS AGRO PLC, basic and diluted (in RR per share) 27 996,80 854.59 135.67

2 The accompanying notes 1 to 32 form an integral part of these consolidated financial statements. F-13 ROS AGRO PLC CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

Year ended Year ended Year ended 31 December 31 December 31 December Notes 2015 2014 2013 Cash flows from operating activities Profit before income tax 25,513,728 20,891,914 3,532,720 Adjustments for: Depreciation and amortization 19,20,21 3,510,992 3,497,032 3,270,861 Interest expense 23 3,856,801 2,288,135 3,623,968 Government grants 22,23 (2,933,099) (2,821,533) (2,918,386) Interest income (1,576,601) (1,010,951) (2,022,986) Loss/ (gain) on disposal of property, plant and equipment 22 32,582 (5,038) 169,518 Net gain on revaluation of biological assets and agricultural produce 10 (2,040,860) (2,593,685) (266,593) Change in provision for net realisable value of inventory 19 (173,998) 485,767 (30,090) Share of results of associates (23,997) (46,579) - Gain from buy-out of promissory notes issued 22 - (41,094) - Change in provision for impairment of receivables and prepayments 20 28,755 46,120 126,144 Foreign exchange gain, net 22,23 (3,001,430) (4,694,826) (37,534) Share based remuneration 26 4,015 54,423 178,280 Write-off of work in progress 22 - - 55,229 Lost harvest write-off 22 327,991 5,530 31,071 Net (gain)/ loss from bonds held for trading (636,601) 1,397,230 - Change in provision for impairment of advances paid for property, plant and equipment 22 (9,432) (454) 18,714 Loss on disposal of subsidiaries, net 22 1,142 179,405 - Loss on other investments 22 26,142 7,747 191,480 Other non-cash and non-operating expenses, net 67,175 (85,977) 23,228 Operating cash flow before working capital changes 22,973,305 17,553,166 5,945,624 Change in trade and other receivables and prepayments (1,117,623) (963,488) (779,457) Change in other taxes receivable (251,233) 104,214 1,117,390 Change in inventories (3,162,095) (1,015,731) (406,568) Change in biological assets (896,493) 268,410 (605,257) Change in trade and other payables 481,675 370,457 (265,517) Change in other taxes payable 262,793 413,331 (102,899) Cash generated from operations 18,290,329 16,730,359 4,903,316 Income tax paid (2,368,293) (1,053,641) (123,602) Net cash from operating activities 15,922,036 15,676,718 4,779,714 Cash flows from investing activities Purchases of property, plant and equipment (11,423,459) (5,206,184) (4,232,694) Purchases of other intangible assets (256,505) (151,993) (96,904) Proceeds from sales of property, plant and equipment 46,529 44,135 72,300 Purchases of inventories intended for construction (14,793) (1,530) (16,335) Proceeds from cash withdrawals from deposits 34,162,514 16,604,773 32,345,354 Deposits placed with banks (59,209,261) (4,141,047) (18,346,112) Purchases of associates 6,12 - (377,493) - Investments in subsidiaries, net of cash acquired 6,24 (931,395) (498,692) - Purchases of bonds 14 (3,433,426) (5,244,138) - Proceeds from sales of bonds held for trading 7,567,628 134,904 - Purchases of promissory notes - (1,700,000) (2,900,000) Proceeds from sales of promissory notes - 2,800,000 3,068,267 Loans given (1,168,351) (2,455,350) (1,122,198) 3 The accompanying notes 1 to 32 form an integral part of these consolidated financial statements. F-14 ROS AGRO PLC CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE) Year ended Year ended Year ended 31 December 31 December 31 December Notes 2015 2014 2013 Loans repaid 1,106,602 1,847,683 907,674 Purchases of loans issued 14 (30,080,733) - - Movement in restricted cash (90,993) (14,970) 88,708 Interest received 981,885 1,239,633 2,152,715 Dividends received - 1,146 18 Proceeds from sale of subsidiaries, net of cash disposed (46) (275) - Purchases of other investments 14 (400,387) - - Proceeds from sales of other investments - - 3,289 Net cash from investing activities (63,144,191) 2,880,602 11,924,082 Cash flows from financing activities Proceeds from borrowings 63,966,110 15,875,925 16,157,846 Repayment of borrowings (16,657,102) (27,169,213) (31,891,024) Interest paid (3,416,791) (2,295,898) (4,127,094) Sale of non-controlling interest 164,316 6,758 - Purchases of non-controlling interest 13, 24 (168,421) (7,289) (261,084) Dividends paid to owners Ros Agro PLC (4,546,749) (3,206,582) - Proceeds from government grants 3,014,204 3,048,946 4,049,217 Purchases of treasury shares 13 - (44,033) - Other financial activities (18,451) - (107) Net cash used in financing activities 42,337,116 (13,791,386) (16,072,246) Net effect of exchange rate changes on cash and cash equivalents (1,029,571) 2,877,615 21,347 Net increase/ (decrease) in cash and cash equivalents (5,914,610) 7,643,549 652,897 Cash and cash equivalents at the beginning of the year 3 10,316,313 2,672,764 2,019,867 Cash and cash equivalents at the end of the year 3 4,401,703 10,316,313 2,672,764

F-15 ROS AGRO PLC CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

Attributable to owners of ROS AGRO PLC Share-based Share Treasury Share payment Retained Non-controlling Notes capital shares premium reserve earnings* Total interest Total equity Balance at 1 January 2013 9,734 (461,847) 10,557,573 1,058,495 20,211,049 31,375,004 71,076 31,446,080 - - - - 3,201,534 3,201,534 223 3,201,757 Total comprehensive income for the year Share based remuneration 26 - - - 178,280 - 178,280 - 178,280 Acquisition of non-controlling interest 13 - - - - (198,235) (198,235) (62,849) (261,084) 9,734 (461,847) 10,557,573 1,236,775 23,214,348 34,556,583 8,450 34,565,033 Balance at 31 December 2013

9,734 (461,847) 10,557,573 1,236,775 23,214,348 34,556,583 8,450 34,565,033 Balance at 1 January 2014 - - - - 20,134,178 20,134,178 42,801 20,176,979 Total comprehensive income for the year Purchases of treasury shares 13 - (44,033) - - - (44,033) - (44,033) Share based remuneration 26 - - - 54,423 - 54,423 - 54,423 Dividends 13 - - - - (3,000,029) (3,000,029) (788) (3,000,817) Recognition of non-controlling interests 24 ------79 79 on acquisition of subsidiaries Derecognition of non-controlling interests 22 ------27,098 27,098 on disposal of subsidiaries Acquisition of non-controlling interest 13 - - - - (3) (3) (528) (531) Disposal of ownership interests in 13 - - - - (188,661) (188,661) 229,731 41,070 subsidiaries without loss of control Balance at 31 December 2014 9,734 (505,880) 10,557,573 1,291,198 40,159,833 51,512,458 306,843 51,819,301

9,734 (505,880) 10,557,573 1,291,198 40,159,833 51,512,458 306,843 51,819,301 Balance at 1 January 2015 - - - - 23,450,617 23,450,617 208,144 23,658,761 Total comprehensive income for the year Share based remuneration 26 - - - 4,015 - 4,015 - 4,015 Dividends 13 - - - - (4,864,186) (4,864,186) - (4,864,186) Acquisition of subsidiaries 24 ------(750) (750) Acquisition of non-controlling interest 13 - - - - 479,259 479,259 (646,930) (167,671) Disposal of ownership interests in 13 - - - - (37,473) (37,473) 159,969 122,496 subsidiaries without loss of control Balance at 31 December 2015 9,734 (505,880) 10,557,573 1,295,213 59,188,050 70,544,690 27,276 70,571,966 * Retained earnings in the separate financial statements of the Company is the only reserve that is available for distribution in the form of dividends.

5 The accompanying notes 1 to 32 form an integral part of these consolidated financial statements. F- ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

1. Background Description of the business These consolidated financial statements were prepared for ROS AGRO PLC (hereinafter the “Company”) and its subsidiaries (hereinafter collectively with the Company, the “Group”). The Group is ultimately controlled by Mr. Vadim Moshkovich (hereinafter the “Owner”), who controls 75.00% of issued shares in ROS AGRO PLC as at 31 December 2015, 31 December 2014 and 31 December 2013. The principal activities of the Group are: − agricultural production (cultivation of sugar-beet, grain and other agricultural crops); − cultivation of pigs; − processing of raw sugar and production of sugar from sugar-beet; − vegetable oil extraction and processing.

The registered office of ROS AGRO PLC is at 8 Mykinon, CY-1065, Nicosia, Cyprus. The Group operates in the Russian Federation except for financial derivatives trading activity (Note 29). Principal subsidiaries of the Group included into these consolidated financial statements are listed below. The Group’s ownership share is the same as voting share. Group’s share in the share capital, % 31 December 31 December 31 December Entity Principal activity 2015 2014 2013 OJSC Rusagro Group Investment holding, financing 100 100 100 LLC Group of Companies Investment holding, Rusagro financing 100 100 100 Sugar segment LLC Rusagro- Sakhar Sugar division trading company, sales operations 100 100 100 OJSC Valuikisakhar Beet and raw sugar processing 99.9 99.9 99.9 OJSC Sugar Plant Znamensky Beet and raw sugar processing 100 89.2 99.2 Limeniko Trade and Invest Trading operations with Limited goods and derivatives 100 100 100 Oil and Fat segment OJSC Fats and Oil Integrated Oil processing Works 100 100 100 CJSC Samaraagroprompererabotka Oil extraction 100 100 100 Oil extraction and LLC Primorskaya Soya processing 75.0 - - Meat segment LLC Belgorodsky Bacon (former Cultivation of pigs OJSC Belgorodsky Bacon) 100 100 100 LLC Tambovsky Bacon Cultivation of pigs 100 100 100 LLC Rusagro-Primorie Cultivation of pigs 100 - - Agriculture segment LLC Rusagro-Invest Agriculture 100 100 100 LLC Agrotehnology (former OJSC Agriculture Agrotehnology) 100 100 100 CJSC Primagro (former OJSC Agriculture Uchkhoz PGSKHA) 100 - - LLC Zherdevsky Elevator (former Grain elevator OJSC Zherdevsky Elevator) -* 100 99.4

*In 2015 the Group undertook legal reorganization in its Agriculture segment. As part of this reorganization process LLC Zherdevsky Elevator was merged into the fellow subsidiary LLC Agrotehnology.

F-17 6 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

1. Background (continued) Operating Environment of the Group Russian Federation. The Russian Federation displays certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations (Note 30). During 2014 and during 2015 the Russian economy was negatively impacted by low oil prices, ongoing political tension in the region and continuing international sanctions against certain Russian companies and individuals, all of which contributed to the country’s economic recession characterised by a decline in gross domestic product. The financial markets continue to be volatile and are characterised by frequent significant price movements and increased trading spreads. Russia's credit rating was downgraded to below investment grade. This operating environment has a significant impact on the Group’s operations and financial position. Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the future effects of the current economic situation are difficult to predict and management’s current expectations and estimates could differ from actual results. 2. Summary of significant accounting policies 2.1. Basis of preparation These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial statements have been prepared under the historical cost convention, as modified by the initial recognition of financial instruments based on fair value, financial instruments categorized as at fair value through profit or loss, revaluation of available-for-sale financial assets, biological assets that are presented at fair value less point-of-sale costs and agricultural produce which is measured at fair value less point-of-sale costs at the point of harvest. The Group entities registered in Russia keep their accounting records in Russian Roubles in accordance with Russian accounting regulations (RAR). These consolidated financial statements significantly differ from the financial statements prepared for statutory purposes under RAR in that they reflect certain adjustments, which are necessary to present the Group’s consolidated financial position, results of operations, and cash flows in accordance with IFRS as adopted by the EU. As of the date of the authorisation of these consolidated financial statements all International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and effective as at 1 January 2015 have been adopted by the EU through the endorsement procedure established by the European Commission. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Change in presentation of comparative information In 2015 the Group changed the way of presentation of gains or losses on initial recognition of agricultural produce and gains or losses on revaluation of biological assets. In the consolidated statements of profit or loss and other comprehensive income for the year ended 31 December 2014 and for the year ended 31 December 2013 all the gross gains and losses arising from initial recognition of biological assets and agricultural produce and from changes in fair-value-less-cost-to-sell of biological assets were included as a separate line "Gain/ (loss) on revaluation of biological assets and agricultural produce" above the gross profit line. Gain recorded on initial recognition of agricultural produce attributable to the realized agricultural produce and the result of revaluation of biological assets attributable to the realized biological assets were included in line "Cost of sales".

F-18 7 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.1. Basis of preparation (continued) Change in presentation of comparative information (continued) In the consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2015 the gains and losses arising from initial recognition of biological assets and agricultural produce and from changes in fair-value-less-cost-to-sell of biological assets and the amount of these gains and losses, related to realised biological assets and agricultural produce, are included in line "Net gain/ (loss) on revaluation of biological assets and agricultural produce” above the gross profit line. Although IFRS do not specify where, in the consolidated statement of profit or loss and other comprehensive income, gains or losses arising from initial recognition of biological assets and agricultural produce and from changes in fair-value-less-cost-to-sell of biological assets should be presented, the Group management believes that the new presentation enhances the quality, internal consistency and comparability of the financial statements, simplify the calculation of EBITDA and increase the comparability of financial information with the companies of non-agricultural sector by providing more relevant information. The effect of this change in presentation on the comparative information is summarised below: Changed Change in As previously Year ended 31 December 2014 presentation presentation presented Consolidated statements of profit or loss and other comprehensive Income Net gain on revaluation of biological assets and 2,593,685 (9,650,049) 12,243,734 agricultural produce Cost of sales (37,999,661) 9,650,049 (47,649,710) Gross profit 24,081,572 - 24,081,572

Changed Change in As previously Year ended 31 December 2013 presentation presentation presented Consolidated statements of profit or loss and other comprehensive Income Net gain on revaluation of biological assets and 266,593 (3,222,870) 3,489,463 agricultural produce Cost of sales (28,073,757) 3,222,870 (31,296,627) Gross profit 8,858,070 - 8,858,070

The Group makes estimates and assumptions that affect the amounts recognized in the consolidated financial statements and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgements are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the consolidated financial statements, and estimates that can cause a significant adjustment to the carrying amounts of assets and liabilities within the next reporting period include: Useful lives of property, plant and equipment The estimation of the useful lives of items of property, plant and equipment is a matter of judgement based on the experience with similar assets. The future economic benefits embodied in the assets are consumed principally through use. However, other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of the economic benefits embodied in the assets. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. The following primary factors are considered: (a) expected usage of the assets; (b) expected physical wear and tear, which depends on operational factors and maintenance programme; and (c) technical or commercial obsolescence arising from changes in market conditions. Were the estimated useful lives to differ by 10% from management’s estimates, the impact on the depreciation charge for the year would be to increase it by RR 563,021 (2014: RR 387,279; 2013: RR 360,619) or decrease it by RR 278,747 (2014: RR 336,658; 2013: RR 304,438) (Note 2.6).

F-19 8 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.2. Critical accounting estimates and judgements in applying accounting policies Fair value of livestock and agricultural produce The fair value less estimated point-of-sale costs of livestock at the end of each reporting period was determined using the physiological characteristics of the animals, management expectations concerning the potential productivity and market prices of animals with similar characteristics. The fair value of the Group’s bearer livestock is determined by using valuation techniques, as there were no observable market prices near the reporting date for pigs and cows of the same physical conditions, such as weight and age. The fair value of the bearer livestock was determined based on the expected quantity of remaining farrows and calves for pigs and cows, respectively, and the market prices of the young animals. The fair value of mature animals is determined based on the expected cash flow from the sale of the animals at the end of the production usage. The cash flow was calculated based on the actual prices of sales of culled animals from the Group’s entities to independent processing enterprises taking place near the reporting date, and the expected weight of the animals. Future cash flows were discounted to the reporting date at a current market-determined pre-tax rate. In the fair value calculation of the immature animals of bearer livestock management considered the expected culling rate. Key inputs used in the fair value measurement of bearer livestock of the Group were as follows: 31 December 2015 31 December 2014 31 December 2013 Pigs Pigs Pigs Cows (sows) Cows (sows) Cows (sows) Length of production usage in calves / farrows 5 5 5 5 5 5 Market prices for comparable bearer livestock in the same region (in Russian Roubles/kg, excl. VAT) 186 320 166 284 122 229

Should the key assumptions used in determination of fair value of bearer livestock have been 10% higher/lower with all other variables held constant, the fair value of the bearer livestock as at the reporting dates would be higher or lower by the following amounts: 31 December 2015 31 December 2014 31 December 2013 10% 10% 10% 10% 10% 10% increase decrease increase decrease increase decrease Cows Length of production usage in calves 2,591 (3,080) 2,439 (2,981) 2,633 (2,995) Market prices for comparable bearer livestock in the same region 10,550 (10,550) 11,190 (11,190) 14,934 (14,934)

Pigs Length of production usage in farrows 29,753 (11,067) 38,114 (19,368) 25,185 (13,192) Market prices for comparable bearer livestock in the same region 111,992 (111,992) 109,803 (109,803) 97,102 (97,102)

The fair value of consumable livestock (pigs) is determined based on the market prices multiplied by the livestock weight at the end of each reporting period, adjusted for the expected culling rates. The market price of consumable pigs being the key input used in the fair value measurement was 89 Russian Roubles per kilogram, excluding VAT, as at 31 December 2015 (31 December 2014: 99 Russian Roubles per kilogram, excluding VAT; 31 December 2013: 62 Russian Roubles per kilogram, excluding VAT). Should the market prices used in determination of fair value of consumable livestock have been 10% higher/lower with all other variables held constant, the fair value of the consumable livestock as at 31 December 2015 would be higher/lower by RR 320,299 (31 December 2014: RR 296,596, 31 December 2013: RR 186,678).

9 F-20 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.2. Critical accounting estimates and judgements in applying accounting policies (continued) Fair value of livestock and agricultural produce (continued) The fair value less estimated point-of-sale costs for agricultural produce at the time of harvesting was calculated based on quantities of crops harvested and the prices on deals that took place in the region of location on or about the moment of harvesting and was adjusted for estimated point-of-sale costs at the time of harvesting. The average market prices (Russian Roubles/tonne, excluding VAT) used for fair value measurement of harvested crops were as follows: 2015 2014 2013 Sugar beet 2,966 2,034 1,421 Winter wheat 7,352 5,069 5,163 Barley 6,887 4,301 5,243 Sunflower 22,702 11,404 9,453 Pea n/a 7,500 5,909 Corn 7,662 5,196 4,489 Soya bean 21,862 17,186 17,414

Should the market prices used in determination of fair value of harvested crops have been 10% higher/lower with all other variables held constant, the fair value of the crops harvested in 2015 would be higher/lower by RR 1,555,566 (2014: RR 926,545, 2013: RR 851,390). Estimated impairment of goodwill The Group tests goodwill for impairment at least annually. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates as further detailed in Note 24. No Impairment was recognized during the year. Impairment test of property, plant and equipment and other intangible assets Changes in the operating environment of the Group in 2014 (Note1) were identified by management as impairment indicators, and so the Group estimated recoverable amounts of property, plant and equipment and other intangible assets of each of its cash generating units (CGUs) as at 31 December 2014 based on value-in-use calculations. As a result of this assessment no impairment losses were recognised. It was determined that a reasonably possible shift in the assumptions underlying the value-in-use calculations would not lead to the impairment of property, plant and equipment and other intangible assets as of 31 December 2014. As of 31 December 2015 and 31 December 2013 management determined that there were no indicators that would necessitate performing an impairment test of property, plant and equipment and other intangible assets). Deferred income tax asset recognition The recognised deferred tax asset represents income taxes recoverable through future deductions from taxable profits and is recorded in the statements of financial position. Deferred income tax assets are recorded to the extent that realisation of the related tax benefit is probable. The future taxable profits and the amount of tax benefits that are probable in the future are based on a medium-term business plan prepared by management and extrapolated results thereafter. The business plan is based on management expectations that are believed to be reasonable under the circumstances. The key assumptions in the business plan are EBITDA margin and pre-tax discount rate (Notes 24, 25). Tax legislation Russian tax, currency and customs legislation is subject to varying interpretations (Note 30). 2.3. Foreign currency and translation methodology Functional and presentation currency The functional currency of the Group’s consolidated entities is the Russian Rouble (RR), which is the currency of the primary economic environment in which the Group operates. The Russian Rouble has been chosen as the presentation currency for these consolidated financial statements.

F- 10 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.3. Foreign currency and translation methodology (continued) Translation of foreign currency items into functional currency Transactions in foreign currencies are translated to Russian Roubles at the official exchange rate of the Central Bank of the Russian Federation (CBRF) at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities at year-end exchange rates are recognised in profit or loss. 2.4. Group accounting Consolidation Subsidiaries are those investees, including structured entities, that the Group controls because the Group (i) has power to direct relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of investor’s returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether the Group has power over another entity. For a right to be substantive, the holder must have practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than majority of voting power in an investee. In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, such as those that relate to fundamental changes of investee’s activities or apply only in exceptional circumstances, do not prevent the Group from controlling an investee. Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries other than those acquired from parties under common control. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The Group measures non-controlling interest on a transaction by transaction basis, either at: (a) fair value, or (b) the non-controlling interest's proportionate share of net assets of the acquiree. Goodwill is measured by deducting the fair value of net assets of the acquiree from the aggregate of the fair value of the consideration transferred for the acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in the acquiree held immediately before the acquisition date. Any negative amount (“negative goodwill, bargain purchase”) is recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all liabilities and contingent liabilities assumed and reviews appropriateness of their measurement. The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent consideration arrangements but excludes acquisition related costs such as advisory, legal, valuation and similar professional services. Transaction costs related to the acquisition and incurred for issuing equity instruments are deducted from equity; transaction costs incurred for issuing debt as part of the business combination are deducted from the carrying amount of the debt and all other transaction costs associated with the acquisition are expensed. Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. The Company and all of its subsidiaries use uniform accounting policies consistent with the Group’s policies. Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests which are not owned, directly or indirectly, by the Company. Non-controlling interest forms a separate component of the Group’s equity.

11 F-22 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.4. Group accounting (continued) Associates Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50 percent of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of changes in net asset of investee after the date of acquisition. Dividends received from associates reduce the carrying value of the investment in associates. Other post-acquisition changes in the Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the consolidated profit or loss for the year as the share of results of associates, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii); all other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit or loss within the share of results of associates.

However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The cost of an associate acquired in stages is measured as the sum of the consideration paid for each purchase plus a share of investee’s profits and other equity movements. Any acquisition-related costs are treated as part of the investment in the associate. Purchases of non-controlling interests The Group applies economic entity model to account for transactions with owners of non-controlling interest. The difference, if any, between the carrying amount of a non-controlling interest acquired and the purchase consideration is recorded as capital transaction in the statements of changes in equity. Purchases of subsidiaries from parties under common control Business combinations involving entities under common control (ultimately controlled by the same party, before and after the business combination, and that control is not transitory) are accounted for using the predecessor basis of accounting. Under this method the consolidated financial statements of the acquiree are included in the consolidated financial statements from the beginning of the earliest period presented or, if later, the date when common control was established. The assets and liabilities of the subsidiary transferred under common control are accounted for at the predecessor entity’s IFRS carrying amounts using uniform accounting policies on the assumption that the Group was in existence from the date when common control was established. Any difference between the carrying amount of net assets, including the predecessor entity's goodwill, and the consideration for the acquisition is accounted for in these consolidated financial statements as an adjustment to retained earnings within equity. Disposals of subsidiaries and associates

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

F-23 12 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.5. Property, plant and equipment Property, plant and equipment are carried at cost less accumulated depreciation and provision for impairment, if any. Assets under construction are accounted for at purchase cost less provision for impairment, if required. Costs of minor repairs and maintenance are expensed when incurred. Cost of replacing a major part or component of property, plant and equipment items is capitalized and the replaced part is retired. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the financial statements. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in operating profit or loss for the year within other operating income and expenses. 2.6. Depreciation Depreciation on property, plant and equipment other than land and assets under construction is calculated using the straight-line method to allocate their cost to the residual values over their estimated useful lives: Asset category Useful life, years Buildings 15-50 Constructions 5-50 Machinery, vehicles and equipment 3-20 Other 4-6 Assets are depreciated on a straight-line basis from the month following the date they are ready for use. The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. The residual value of an asset is nil if the Group expects to use the asset until the end of its physical life. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 2.7. Biological assets and agricultural produce Biological assets of the Group consist of unharvested crops (grain crops, sugar beets and other plant crops) and livestock (pigs and cows). Livestock is measured at their fair value less estimated point-of-sale costs. Fair value at initial recognition is assumed to be approximated by the purchase price incurred. Point-of-sale costs include all costs that would be necessary to sell the assets. All the gains or losses arising from initial recognition of biological assets and from changes in fair-value-less-cost-to-sell of biological assets less the amounts of these gains or losses related to the realised biological assets are included in a separate line “Net gain/ (loss) on revaluation of biological assets and agricultural produce” above the gross profit line. At the year-end unharvested crops are carried at the accumulated costs incurred, which approximate the fair value since little biological transformation has taken place since initial cost incurrence due to the seasonal nature of the crops. Unharvested crop-growing costs represent costs incurred to plant and maintain seed crops which will be harvested during the subsequent reporting period. Subsequent to the year-end unharvested crops are measured at fair value less estimated point-of-sale costs. A gain or loss from the changes in the fair value less estimated point-of-sale costs less the amount of such gain or loss related to the realisation of agricultural products is included as a separate line “Net gain/ (loss) on revaluation of biological assets and agricultural produce" above the gross profit line. Upon harvest, grain crops, sugar beets and other plant crops are included into inventory for further processing or for sale and are initially measured at their fair value less estimated point-of-sale costs at the time of harvesting. A gain or loss arising on initial recognition of agricultural produce at fair value less estimated point-of-sale costs is recognised in profit or loss in the period in which it arises. Bearer livestock is classified as non-current assets; consumable livestock and unharvested crops are classified as current assets in the consolidated statements of financial position.

F-24 13 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.8. Goodwill Goodwill on acquisitions of subsidiaries is presented separately in the consolidated statements of financial position. Goodwill is carried at cost less accumulated impairment losses, if any. The Group tests goodwill for impairment at least annually and whenever there are indications that goodwill may be impaired. Goodwill is allocated to the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the business combination. Such units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger than an operating segment. Gains or losses on disposal of an operation within a cash-generating unit to which goodwill has been allocated include the carrying amount of goodwill associated with the operation disposed of, generally measured on the basis of the relative values of the operation disposed of and the portion of the cash- generating unit which is retained. 2.9. Intangible assets The Group’s intangible assets other than goodwill have definite useful lives and primarily include capitalised computer software, patents, trademarks and licences. Acquired computer software licences, patents and trademarks are capitalised on the basis of the costs incurred to acquire and bring them to use. Intangible assets are amortised using the straight-line method over their useful lives: Asset category Useful life, years Trademarks 5-12 Software licences 1-3 Capitalised internal software development costs 3-5 Other licences 1-3 If impaired, the carrying amount of intangible assets is written down to the higher of value in use and fair value less costs to sell. 2.10. Impairment of non-current assets The Group’s non-current assets except for deferred tax, biological assets and financial assets are tested for impairment in accordance with the provisions of IAS 36, Impairment of Assets. The Group makes an assessment whether there is any indication that an asset may be impaired at each reporting date, except for goodwill which is tested at least annually regardless of whether there are any indications of impairment. If any such indication exists, an estimate of the recoverable amount of the asset is made. IAS 36 requires an impairment loss to be recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of an asset is the higher of the asset’s fair value less costs to sell and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its life. 2.11 Financial instruments Financial instruments – key measurement terms Depending on their classification financial instruments are carried at fair value or amortised cost as described below. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is the current bid price for financial assets and current asking price for financial liabilities which are quoted in an active market. For assets and liabilities with offsetting market risks, the Group may use mid-market prices as a basis for establishing fair values for the offsetting risk positions and apply the bid or asking price to the net open position as appropriate. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange or other institution and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

14 F-25 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.11. Financial instruments (continued) Financial instruments – key measurement terms (continued) Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of financial data of the investees are used to fair value certain financial instruments for which external market pricing information is not available. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on solely observable market data (that is, the measurement requires significant unobservable inputs). Transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs. Amortised cost is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any write-down for incurred impairment losses. Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to maturity amount using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of related items in the statements of financial position. The effective interest method is a method of allocating interest income or interest expense over the relevant period so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the net carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the whole expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate. Classification of financial instruments The Group classified its financial instruments into the following measurement categories: financial assets at fair value through profit or loss, available-for-sale financial assets and loans and receivables. Initial recognition and measurement of financial instruments A financial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument. The Group’s financial assets and liabilities are initially recorded at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets. Subsequently to initial recognition financial instruments are measured as described below.

15 F-26 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.11 Financial instruments (continued) Derecognition of financial instruments The Group derecognises financial assets when (i) the assets are redeemed or the rights to cash flows from the assets have otherwise expired or (ii) the Group has transferred substantially all the risks and rewards of ownership of the assets or (iii) the Group has neither transferred nor retained substantially all risks and rewards of ownership but has not retained control. Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled. Offsetting financial instruments. Financial assets and liabilities are offset and the net amount reported in the statements of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must be legally enforceable in all of the following circumstances: (i) in the normal course of business, (ii) in the event of default and (iii) in the event of insolvency or bankruptcy. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss have two subcategories: (i) assets designated as such upon initial recognition, and (ii) those classified as held for trading. Trading investments are securities or other financial assets which are either acquired for generating a profit from short-term fluctuations in price or trader’s margin, or are included in a portfolio in which a pattern of short-term trading exists. The Group classifies financial assets into trading investments if it has an intention to sell them within a short period after acquisition, i.e. within 1 to 3 months. Trading investments also include financial derivatives. Trading investments are not reclassified out of this category even when the Group’s intentions subsequently change. Other financial assets at fair value through profit or loss are financial assets designated irrevocably, at initial recognition, into this category. Recognition and measurement of this category of financial assets is consistent with the above policy for trading investments. Management designates financial assets into this category only if (a) such classification eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; or (b) a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information on that basis is regularly provided to and reviewed by the Group’s key management personnel. Loans and receivables Loans and receivables are unquoted non-derivative financial assets with fixed or determinable payments other than those that the Group intends to sell in the near term. Loans and receivables comprise accounts receivable, cash and cash equivalents, restricted cash, bank deposits, unquoted promissory notes and loans issued. Loans and receivables are initially recognised at their fair value plus transaction costs and subsequently carried at amortised cost using effective interest method. Available-for-sale financial assets Available-for-sale investments are carried at fair value. Available-for-sale financial assets are non- derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investments within twelve months of the reporting date. Financial liabilities All the Group’s financial liabilities fall into the following measurement categories: (a) held for trading which are represented by financial derivatives and (b) other financial liabilities. Liabilities held for trading are carried at fair value with changes in value recognised in profit or loss for the year in the period in which they arise. Other financial liabilities are carried at amortised cost.

16 F-27 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.11 Financial instruments (continued) Presentation of results from sugar trading derivatives The Group engages in raw sugar derivative trading transactions through an agent on ICE Futures US primarily in order to manage the raw sugar purchase price risk (Note 29). As such transactions are directly related to the core activity of the Group, and their results are presented above gross profit as 'Gains less losses from trading sugar derivatives' in the consolidated statements of profit or loss and other comprehensive income. Management believes that the presentation above gross profit line appropriately reflects the nature of derivative operations of the Group. Impairment of financial assets carried at amortised cost Impairment losses are recognised in profit or loss when incurred as a result of one or more events (“loss events”) that occurred after the initial recognition of the financial asset and which have an impact on the amount or timing of the estimated future cash flows of the financial asset or a group of financial assets that can be reliably estimated. If the Group determines that no objective evidence exists that impairment was incurred for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. The primary factors that the Group considers in determining whether a financial asset is impaired are its overdue status and realisability of related collateral, if any. The following other principal criteria are also used to determine whether there is objective evidence that an impairment loss has occurred: - any portion or instalment is overdue and the late payment cannot be attributed to a delay caused by the settlement systems; - the counterparty experiences a significant financial difficulty as evidenced by its financial information that the Group obtains; - the counterparty considers bankruptcy or a financial reorganisation.

If the terms of an impaired financial asset held at amortised cost are renegotiated or otherwise modified because of financial difficulties of the counterparty, impairment is measured using the original effective interest rate before the modification of terms. Impairment losses are always recognised through an allowance account to write down the asset’s carrying amount to the present value of expected cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account through profit or loss for the year.

Uncollectible assets are written off against the related impairment loss provision after all the necessary procedures to recover the asset have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are credited to profit or loss for the year. 2.12. Cash and cash equivalents, investments Cash and cash equivalents comprise cash in hand, cash held on demand with banks, bank deposits with original maturity of less than three months, other short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents are carried at amortised cost using the effective interest method. Bank deposits with original maturities of more than three months and less than twelve months are classified as short-term investments and are carried at amortised cost using the effective interest method. Bank deposits with original maturity of more than twelve months are classified as long-term and are carried at amortised cost.

F-28 17 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.13. Prepayments Prepayments classified as current assets represent advance payments to suppliers for goods and services. Prepayments for construction or acquisition of property, plant and equipment and prepayments for intangible assets are classified as non-current assets. Prepayments are carried at cost less provisions for impairment, if any. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss for the year. 2.14. Inventories Inventories are stated at the lower of cost or net realisable value. Cost is determined on the weighted average basis. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses. Raw materials intended for the operating activities of the Group, finished goods and work in progress are classified as current assets. Materials intended for construction are classified as non-current assets as “Inventories intended for construction”. 2.15. Borrowings Borrowings are recognised initially at their fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective interest method; any difference between the amount at initial recognition and the redemption amount is recognised as interest expense over the period of the borrowings. Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as part of the costs of those assets. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use or sale. The Group capitalises borrowing costs that could have been avoided if it had not made capital expenditure on qualifying assets. Borrowing costs capitalised are calculated at the Group’s average funding cost (the weighted average interest cost is applied to the expenditures on the qualifying assets), except to the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset. Where this occurs, actual borrowing costs incurred less any investment income on the temporary investment of those borrowings are capitalised. 2.16. Trade and other payables Trade and other payables are recognised when the counterparty has performed its obligations under the contract, and are carried at amortised cost using the effective interest method. 2.17. Value added tax Output value added tax related to sales is payable to tax authorities on the earlier of (a) collection of the receivables from customers or (b) delivery of the goods or services to customers. Input VAT is generally recoverable against output VAT upon receipt of the VAT invoice. The tax authorities permit the settlement of VAT on a net basis. VAT related to purchases where all the specified conditions for recovery have not been met yet is recognised in the statements of financial position and disclosed separately within other taxes receivable, while input VAT that has been claimed is netted off with the output VAT payable. Where provision has been made for impairment of receivables, impairment loss is recorded for the gross amount of the debtor, including VAT. 2.18. Other taxes payable Other taxes payable comprise liabilities for taxes other than on income outstanding at the reporting date, accrued in accordance with legislation enacted or substantively enacted by the end of the reporting period.

18 F-29 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.19. Income tax Income taxes have been provided for in the financial statements in accordance with legislation enacted or substantively enacted by the end of the reporting period. The income tax charge or credit comprises current tax and deferred tax and is recognised in profit or loss for the year. Current tax Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable profits or losses for the current and prior periods. Deferred tax Deferred income tax is provided in full, using the balance sheet liability method, on tax losses carry forward and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax balance is determined using tax rates that have been enacted or substantially enacted at the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. The Group's uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the end of the reporting period and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of the expenditure required to settle the obligations at the end of the reporting period. 2.20. Employee benefits Payroll costs and related contributions Wages, salaries, contributions to the Russian Federation state pension and social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the year, in which the associated services are rendered by the employees of the Group. Pension costs The Group contributes to the Russian Federation state pension fund on behalf of its employees and has no obligation beyond the payments made. The contribution was approximately 17.9% (2014: 17.6%, 2013: 18.7%) of the employees’ gross pay and is expensed in the same period as the related salaries and wages. The Group does not have any other legal or constructive obligation to make pension or other similar benefit payments to its employees. Share-based payment transactions The Group accounts for share-based compensation in accordance with IFRS 2, Share-based Payment. The fair value of the employee services received in exchange for the grant of the equity instruments is recognized as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the instruments granted measured at the grant date. For share-based compensation made to employees by shareholders, an increase to share-based payment reserve in equity is recorded equal to the associated compensation expense each period.

19 F-30 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.21. Provisions for liabilities and charges Provisions for liabilities and charges are recognised where the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. 2.22. Revenue recognition Revenues and related cost of sales are recognised when goods are shipped and the title and significant risks and rewards of ownership pass to the customer in accordance with the contractual sales terms. Sales are measured at the fair value of consideration received or receivable for the goods sold and services rendered, net of discounts and value added taxes, and after eliminating sales between the Group companies. The amount of revenue arising from exchanges of goods or services is measured at the fair value of the goods or services received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the goods or services received cannot be measured reliably, the revenue is measured at the fair value of the goods or services given up, adjusted by the amount of any cash or cash equivalents transferred. Non-cash transactions are excluded from the cash flow statements. Interest income is recognised on a time-proportion basis using the effective interest method. Dividend income is recognised when the right to receive payment is established. 2.23. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker. Segments whose revenue, result or assets are ten percent or more of all the segments are reported separately. 2.24. Government grants Government grants comprise compensation of interest expense under bank loans and government grants relating to costs and property, plant and equipment. Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government grants and are credited to profit or loss on a straight-line basis over the expected lives of the related assets. Government grants relating to costs are deferred and recognised in profit or loss as other operating income over the period necessary to match them with the costs that they are intended to compensate. Compensation of interest expense under bank loans is credited to profit or loss over the periods of the related interest expense unless this interest was capitalised into the carrying value of assets in which case it is included in non-current liabilities as government grants and credited to profit or loss on a straight-line basis over the expected lives of the related assets. The benefit of a government loan at a below-market rate of interest is treated as a government grant. The loan is recognised and measured in accordance with IAS 39 Financial Instruments: Recognition and Measurement. The benefit of the below-market rate of interest is measured as the difference between the initial carrying value of the loan determined in accordance with IAS 39 and the proceeds received. Government grants are recognized at their fair value when there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants cash inflows are presented in financing activities section of the consolidated statements of cash flows. 2.25. Dividends Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved, appropriately authorised and are no longer at the discretion of the Group. Any dividends declared after the reporting period and before the financial statements are authorised for issue are disclosed in the subsequent events note.

20 F-31 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.26. Operating leases Where the Group is a lessee in a lease which does not transfer substantially all the risks and rewards incidental to ownership from the lessor to the Group, the total lease payments are charged to profit or loss for the year on a straight-line basis over the lease term. The lease term is the non-cancellable period for which the lessee has contracted to lease the asset together with any further terms for which the lessee has the option to continue to lease the asset, with or without further payment, when at the inception of the lease it is reasonably certain that the lessee will exercise the option (Note 31). 2.27. Share capital and share premium Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Any excess of the fair value of consideration receivable over the par value of shares issued is recorded as share premium in equity. Share premium can only be resorted to for limited purposes, which do not include the distribution of dividends, and is otherwise subject to the provisions of the Cyprus Companies Law on reduction of share capital. 2.28. Treasury shares Where the Company or its subsidiaries purchase the Company’s equity instruments, the consideration paid, including any directly attributable incremental costs, net of income taxes, is deducted from equity attributable to the Company’s owners until the equity instruments are cancelled, reissued or disposed of. Where such equity instruments are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s owners. 2.29. Amendments of the consolidated financial statements after issue Any changes to these consolidated financial statements after issue require approval of the Group’s management and the Board of Directors who authorised these consolidated financial statements for issue. 2.30. Adoption of new or revised standards and interpretations During the current year the Group adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2015. This adoption did not have a material effect on the accounting policies of the Company relevant to its parent company financial statements. At the date of approval of these financial statements the following financial reporting standards were issued by the International Accounting Standards Board but were not yet effective: Adopted by the European Union Amendments Amendments to IFRS 11- Accounting for Acquisitions of Interests in Joint Operations (issued on 6 May 2014 and effective for the periods beginning on or after 1 January 2016). Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortization (issued on 12 May 2014 and effective for the periods beginning on or after 1 January 2016) Amendments to IAS 16 and IAS 41 - Agriculture: Bearer plants (issued on 30 June 2014 and effective for annual periods beginning 1 January 2016) Amendments to IAS 27 - Equity Method in Separate Financial Statements (issued on 12 August 2014 and effective for annual periods beginning 1 January 2016). Annual Improvements to IFRSs 2012-2014 (issued on 25 September 2014 and effective for annual periods beginning on or after 1 January 2016). Amendments to IAS 1 - Disclosure Initiative (issued in December 2014 and effective for annual periods on or after 1 January 2016). The Group is currently assessing the impact of the new amendments on its financial statements.

21 F-32 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

2. Summary of significant accounting policies (continued) 2.30. Adoption of new or revised standards and interpretations (continued)

Not yet adopted and not yet endorsed by the European Union New standards IFRS 9 Financial Instruments (issued in July 2014 and effective for annual periods beginning on or after 1 January 2018). IFRS 14, Regulatory Deferral Accounts (issued in January 2014 and effective for annual periods beginning on or after 1 January 2016). IFRS 15, Revenue from Contracts with Customers (issued on 28 May 2014 and effective for the periods beginning on or after 1 January 2017). IFRS 16 "Leases" (issued in January 2016 and effective for annual periods beginning on or after 1 January 2019). Amendments Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (issued on 11 September 2014, effective date is deferred indefinitely). Amendment to IFRS 10, IFRS 12 and IAS 28 - Investment Entities: Applying the Consolidation Exception (issued in December 2014 and effective for annual periods on or after 1 January 2016). Amendments to IAS 12 - Recognition of Deferred Tax Assets for Unrealised Losses (issued in January 2016 and effective for annual periods beginning on or after 1 January 2017). Amendments to IAS 7 - Disclosure Initiative (issued on 29 January 2016 and effective for annual periods beginning on or after 1 January 2017). The Group’s Board of Directors assesses the impact of new standards and interpretations at the point when these are endorsed by the European Union. As a result the impact of the above new standards and interpretations that have not been endorsed by the European Union has not been assessed.

3. Cash and cash equivalents

31 December 31 December 31 December 2015 2014 2013 Bank deposits with original maturity of less than 2,579,395 9,668,025 1,670,000 three months Bank balances receivable on demand 1,693,211 634,623 844,891 Brokerage accounts 124,899 7,668 154,914 Interest receivable on bank deposits within cash 3,690 5,831 2,631 equivalents Cash in hand 363 166 328 Cash in transit 145 - - Total 4,401,703 10,316,313 2,672,764

The Group had the following currency positions: 31 December 31 December 31 December 2015 2014 2013 Russian Roubles 3,215,750 1,509,449 2,227,235 US Dollars 1,018,231 8,806,460 259,592 Euro 167,480 74 185,831 Other 242 330 106 Total 4,401,703 10,316,313 2,672,764

The weighted average interest rate on cash at bank balances presented within cash and cash equivalents was 7.70% at 31 December 2015 (31 December 2014: 2.49%, 31 December 2013: 5.36%). As at 31 December 2015 the cash amounts of RR 71,142 (31 December 2014: RR 17,373, 31 December 2013: RR 2,404) were restricted under irrevocable bills of credit issued for purchases of property, plant and equipment, which were included in “Restricted cash” line within non-current assets in the consolidated statements of financial position.

22 F-33 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

4. Short-term investments 31 December 31 December 31 December 2015 2014 2013 Bank deposits with original maturity over three months 15,635,460 992,200 13,467,355 Loans issued to third parties (Note 14) 10,130,187 996,522 6,383 Bonds (Note 14) 3,318,378 - - Interest receivable on bank deposits within short- term investments 497,070 34,463 326,621 Loans issued to related parties (Note 26) 322,515 17,515 316,840 Interest receivable on bonds (Note 14) 151,005 - - Interest receivable on loans issued to third parties 44,462 11,409 739 Financial derivatives 28,444 95,627 8,298 Interest receivable on loans issued to related parties (Note 26) 1,528 83 3,888 Bonds held for trading - 6,684,189 - Interest receivable on bonds held for trading - 121,781 - Promissory notes - - 1,100,000 Interest receivable on promissory notes - - 36,437 Total 30,129,049 8,953,789 15,266,561

Bonds held for trading were denominated in US dollars and mature in period from 2021 till 2043. Nominal interest rates on bonds vary between 4.20% and 7.75% with interest payable every six months. Bonds held for trading were acquired with the intention of generating a profit from short-term price fluctuations and for the purpose of these consolidated financial statements were classified as trading investments with measurement at fair value through profit and loss. In March-April 2015 the Group disposed all the bonds held for trading. In 2015 the net gains from bonds held for trading amounted to RR 636,601 (2014: RR 1,397,230 of net losses, 2013: nil). The bank deposits within short-term investments are denominated in the following currencies: 31 December 31 December 31 December 2015 2014 2013 Russian Roubles 8,234,100 992,200 13,467,355 Euro 113,090 US dollars 7,288,270 - Total 15,635,460 992,200 13,467,355

As at 31 December 2015 the interest rates on bank deposit within short-term investments vary between 0.7% and 11.6% (31 December 2014: 9.15% and 10.3%; 31 December 2013: 6.75% and 11.3%). As at 31 December 2015 the weighted average interest rate on the bank deposits equals 7.05% (31 December 2014: 9.97%, 31 December 2013: 8.26%). As at 31 December 2015 bank deposits in the amount of RR 6,034,100 (31 December 2014: RR 442,200, 31 December 2013: RR 12,350,375) were pledged as collateral for the Group’s borrowings (Note 14). As at 31 December 2015 loans issued to third parties were denominated in Russian Roubles with interest rate varying between 0% and 16.0% (31 December 2014: 0% and 11.0%; 31 December 2013: 8.0%). The weighted average interest rate on the loans issued to third parties equals 1.72% (31 December 2014: 8.22%, 31 December 2013: 8.0%). Promissory notes were denominated in Russian Roubles and represented by promissory notes of Sberbank RF (Note 29). At 31 December 2013 promissory notes in the amount of RR 1,100,000 were pledged as collateral for the Group’s borrowings (Note 14).

23 F-34 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

5. Trade and other receivables 31 December 31 December 31 December 2015 2014 2013 Trade receivables 3,123,931 2,033,757 1,600,014 Receivables for sale of ownership interests in - 41,086 - subsidiaries Other 161,442 107,179 42,649 Less: provision for impairment (Note 29) (174,007) (144,897) (95,548) Total financial assets within trade and other 3,111,366 2,037,125 1,547,115 receivables Deferred charges 393,131 220,589 224,120 Total trade and other receivables 3,504,497 2,257,714 1,771,235

The above financial assets within trade and other receivables are denominated in the following currencies: 31 December 31 December 31 December 2015 2014 2013 Russian Roubles 2,426,009 1,355,383 1,335,996 US dollars 684,581 673,897 211,119 Euro 776 7,845 - Total 3,111,366 2,037,125 1,547,115

Reconciliation of movements in the trade and other receivables impairment provision Trade Other receivables receivables As at 1 January 2013 24,444 14,484 Accrued 139,971 7,482 Utilised (87,069) (3,764) As at 31 December 2013 (Note 29) 77,346 18,202 Accrued 17,717 36,098 Utilised (1,183) (2,872) Disposal of subsidiaries (404) (8) As at 31 December 2014 (Note 29) 93,476 51,421 (Reversed)/ Accrued (22,785) 52,656 Utilised (3,061) (3,299) Acquisition of subsidiaries 5,294 304 As at 31 December 2015 (Note 29) 72,924 101,082

The majority of the Company’s trade debtors are proven counterparties with whom the Company has long-lasting sustainable relationships. 6. Prepayments Prepayments classified as current assets represent the following advance payments: 31 December 31 December 31 December 2015 2014 2013 Prepayments under share purchase agreements - 773,713 - Prepayments for transportation services 167,232 131,618 211,539 Prepayments to customs 156,697 651,907 228,868 Deposit for participation in auction 141,344 - - Prepayments under insurance contracts 136,929 149,512 3,922 Interest expenses prepaid - 186,473 149,677 Prepayments for advertising expenses 100,636 74,125 16,574 Prepayments for fuel and energy 69,934 39,613 63,322 Prepayments for barley 69,243 - - Prepayments for sunflower seeds 43,842 43,842 51,284 Prepayments for sugar 43,840 11,038 6,279 Prepayments for sugar beet 30,000 10,000 2,876 Prepayments for fertilizers - - 22,546 Other prepayments 288,569 76,862 138,816 Less: provision for impairment (61,430) (63,104) (71,081) Total 1,186,836 2,085,599 824,622

24 F-35 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

6. Prepayment (continued) Prepayments under share purchase agreements as at 31 December 2014 include prepayments for the shares of following companies: In the end of 2014 the Group entered into agreement for purchase of 29.00% of ordinary shares of OJSC Pugachevskiy elevator for cash consideration of RR 320,000 to be paid in advance. The consideration was transferred to the seller in the end of 2014, but the shares were actually transferred to the Group in August 2015 (Note 12). In the end of 2014 the Group won through the public auction a right to purchase 100.00% ownership interest of the share capital of OJSC “Experimental entity of Primorskaya State Agricultural Academy” (OJSC “Uchkhoz PGSKHA”) for cash consideration in the amount of RR 131,471. The consideration was transferred to the seller in the end of 2014, but the shares were actually transferred to the Group in January 2015 (Note 24). In the end of 2014 the Group entered into a preliminary share purchase agreement for acquisition of 100.00% ownership interest in LLC “Rusagro-Primorie” for cash consideration of RR 300,000 to be paid in advance in US dollars at the exchange rate of 56.4940 Russian Roubles per US Dollar. The consideration in the amount of RR 322,242 was transferred to the seller in the end of 2014. The main agreement was signed in February 2015 (Note 24). Reconciliation of movements in the prepayments impairment provision: 2015 2014 2013 As at 1 January 63,104 71,081 94,069 Reversed (1,119) (7,695) (21,309) Acquisition of subsidiaries (351) - - Utilised (204) (282) (1,679) As at 31 December 61,430 63,104 71,081

As at 31 December 2015 prepayments classified as non-current assets and included in “Advances paid for property, plant and equipment” line in the statements of financial position in the amount of RR 5,392,600 (31 December 2014: RR 2,669,373, 31 December 2013: RR 2,334,610) represent advance payments for construction works and purchases of production equipment.

7. Other taxes receivable 31 December 31 December 31 December 2015 2014 2013 Value added tax receivable 1,797,910 1,463,020 1,484,827 Other taxes receivable 12,860 2,065 2,581 Less: provision for impairment (197,409) (154,678) - Total 1,613,361 1,310,407 1,487,408

8. Inventories 31 December 31 December 31 December 2015 2014 2013 Raw materials 7,521,626 6,906,165 6,033,844 Finished goods 12,951,444 7,164,295 6,481,945 Work in progress 2,372,509 1,916,237 1,354,577 Less: provision for write-down to net realisable value (275,758) (478,038) (4,941) Total 22,569,821 15,508,659 13,865,425

25 F-36 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

9. Property, plant and equipment Machinery, Land and vehicles and Construc- Assets under buildings equipment tions construction Other Total Cost (Note 2.5) As at 1 January 2013 13,696,611 17,433,983 1,844,827 5,546,887 185,260 38,707,568 Additions 71,130 787,122 1,225 3,816,409 547 4,676,433 Transfers 4,741,330 2,213,580 1,384,770 (8,342,813) 3,133 - Disposals (311,461) (329,552) (12,338) (1,374) (6,335) (661,060) As at 31 December 2013 18,197,610 20,105,133 3,218,484 1,019,109 182,605 42,722,941

Accumulated depreciation (Note 2.6) As at 1 January 2013 (2,579,254) (8,133,690) (423,438) - (117,739) (11,254,121) Charge for the year (787,101) (2,509,709) (195,076) - (18,956) (3,510,842) Disposals 152,144 241,937 7,730 - 5,327 407,138 As at 31 December 2013 (3,214,211) (10,401,462) (610,784) - (131,368) (14,357,825) Net book value as at 31 December 2013 14,983,399 9,703,671 2,607,700 1,019,109 51,237 28,365,116

Cost (Note 2.5) As at 1 January 2014 18,197,610 20,105,133 3,218,484 1,019,109 182,605 42,722,941 Additions 196,679 1,634,462 3,257 3,150,028 2,897 4,987,323 Acquisitions through business combinations (Note 24) 38,831 10,860 680 - 83 50,454 Transfers 77,061 968,763 226,895 (1,277,397) 4,678 - Disposals (14,301) (244,189) (1,041) (18,693) (2,160) (280,384) Disposal through disposal of subsidiaries (96,840) (33,151) (5,206) (855) (441) (136,493) As at 31 December 2014 18,399,040 22,441,878 3,443,069 2,872,192 187,662 47,343,841

Accumulated depreciation (Note 2.6) As at 1 January 2014 (3,214,211) (10,401,462) (610,784) - (131,368) (14,357,825) Charge for the year (909,174) (2,622,256) (214,537) - (15,775) (3,761,742) Disposals 7,106 222,410 770 - 2,133 232,419 Disposal through disposal of subsidiaries 30,279 30,331 2,241 - 424 63,275 As at 31 December 2014 (4,086,000) (12,770,977) (822,310) - (144,586) (17,823,873) Net book value as at 31 December 2014 14,313,040 9,670,901 2,620,759 2,872,192 43,076 29,519,968

Cost (Note 2.5) As at 1 January 2015 18,399,040 22,441,878 3,443,069 2,872,192 187,662 47,343,841 Additions 988,182 2,134,112 67,164 6,276,787 52,146 9,518,391 Acquisitions through business 434,326 39,400 7,225 2,171 - 483,122 combinations (Note 24) Transfers 1,645,847 3,258,267 833,427 (5,740,958) 3,417 - Disposals (577,248) (385,923) (26,460) (2,217) (8,345) (1,000,193) Disposal through disposal of (650) - (49) - (207) (906) subsidiaries As at 31 December 2015 20,889,497 27,487,734 4,324,376 3,407,975 234,673 56,344,255

Accumulated depreciation (Note 2.6) As at 1 January 2015 (4,086,000) (12,770,977) (822,310) - (144,586) (17,823,873) Charge for the year (980,884) (3,101,202) (240,658) - (15,940) (4,338,684) Disposals 25,038 369,686 23,138 - 8,287 426,149 Disposal through disposal of - - - - 152 152 subsidiaries As at 31 December 2015 (5,041,846) (15,502,493) (1,039,830) - (152,087) (21,736,256) Net book value as at 31 December 2015 15,847,651 11,985,241 3,284,546 3,407,975 82,587 34,607,999

26 F-37 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

9. Property, plant and equipment (continued) As at 31 December 2015 property, plant and equipment with a net book value of RR 8,448,932 (31 December 2014: RR 9,609,240, 31 December 2013: RR 8,905,057) were pledged as collateral for the Group’s borrowings (Note 14). As at 31 December 2014 the assets under construction related mainly to the construction of slaughter house in Tambov region and modernization programme on the Group’s sugar plants. The slaughter and boning workshops of slaughter house was put into operation in May 2015. As at 31 December 2015 the construction of semi-finished products workshop of slaughter house in Tambov region and modernization programme on the Group’s sugar plants was not finalised. During the reporting period, the Group has not capitalised any interest expenses within assets under construction (2014: RR 674, 2013: RR 228,624). The average capitalisation rates in 2014 and 2013 were 9.65% and 10.05%, respectively. 10. Biological assets The fair value of biological assets belongs to level 3 measurements in the fair value hierarchy. Pricing model is used as a valuation technique for biological assets fair value measurement. There were no changes in valuation technique during the years ended 31 December 2015, 2014 and 2013. The reconciliation of changes in biological assets between the beginning and the end of the year can be presented as follows: Short-term biological assets Consumable Unharvested livestock, pigs crops Total As at 1 January 2013 748,657 495,472 1,244,129 Increase due to purchases and gain arising from cost inputs 6,931,985 5,692,430 12,624,415 Gain on initial recognition of agricultural produce - 1,709,015 1,709,015 Lost harvest write-off (Note 22) - (31,071) (31,071) Decrease due to harvest and sales of the assets (7,635,349) (7,527,862) (15,163,211) Gain arising from changes in fair value less estimated point-of-sale costs 1,829,528 - 1,829,528 As at 31 December 2013 1,874,821 337,984 2,212,805 Increase due to purchases and gain arising from cost inputs 9,687,028 5,593,220 15,280,248 Gain on initial recognition of agricultural produce - 2,870,540 2,870,540 Lost harvest write-off (Note 22) - (5,530) (5,530) Decrease due to harvest and sales of the assets (17,200,766) (8,360,611) (25,561,377) Gain arising from changes in fair value less estimated point-of-sale costs 8,658,251 - 8,658,251 As at 31 December 2014 3,019,334 435,603 3,454,937 Increase due to purchases and gain arising from cost inputs 12,089,194 8,333,237 20,422,431 Gain on initial recognition of agricultural produce - 6,257,208 6,257,208 Lost harvest write-off (Note 22) - (327,991) (327,991) Decrease due to harvest and sales of the assets (16,911,968) (14,385,854) (31,297,822) Gain arising from changes in fair value less estimated point-of-sale costs 5,107,634 - 5,107,634 As at 31 December 2015 3,304,194 312,203 3,616,397

27 F-38 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

10. Biological asset (continued) Long-term biological assets Bearer livestock Pigs Cows Total As at 1 January 2013 1,169,064 182,995 1,352,059 Increases due to purchases and breeding costs of growing livestock 715,516 175,760 891,276 Decreases due to sales (508,399) (132,261) (640,660) Loss arising from changes in fair value less estimated point-of-sale costs (8,772) (40,308) (49,080) As at 31 December 2013 1,367,409 186,186 1,553,595 Increases due to purchases and breeding costs of growing livestock 654,646 79,131 733,777 Decreases due to sales (1,044,986) (98,869) (1,143,855) Disposal through disposal of subsidiaries (Note 22) - (65,401) (65,401) Gain arising from changes in fair value less estimated point-of-sale costs 688,015 26,928 714,943 As at 31 December 2014 1,665,084 127,975 1,793,059 Increases due to purchases and breeding costs of growing livestock 726,858 47,207 774,065 Decreases due to sales (1,115,637) (63,406) (1,179,043) Acquisitions through business combinations - 3,338 3,338 Gain arising from changes in fair value less estimated point-of-sale costs 518,261 3,544 521,805 As at 31 December 2015 1,794,566 118,658 1,913,224

In 2015 the aggregate gain on initial recognition of agricultural produce and from the change in fair value less estimated point-of-sale costs of biological assets amounted to RR 11,886,647 (2014: RR 12,243,734, 2013: RR 3,489,463). Included in the above amounts there are gains related to realised biological assets and agricultural produce amounting to RR 9,845,787(2014: RR 9,650,049, 2013: RR 3,222,870). Livestock population were as follows: 31 December 31 December 31 December 2015 2014 2013 Cows (heads) 2,109 2,802 5,543 Pigs within bearer livestock (heads) 83,387 81,251 79,121 Pigs within consumable livestock (tonnes) 39,822 32,127 30,977

Cows are cultivated for the purpose of production of milk. In 2015 the milk produced amounted to 4,329 tonnes (2014: 9,357 tonnes, 2013: 12,101 tonnes). In 2015 total area of cultivated land amounted to 410 thousand ha (2014: 388 thousand ha, 2013: 375 thousand ha). The main crops of the Group’s agricultural production and output were as follows (in thousands of tonnes): 2015 2014 2013 Sugar beet 2,538 2,318 2,871 Winter wheat 307 379 416 Barley 271 291 173 Sunflower 55 70 71 Pea - 27 25 Corn 109 49 53 Soya bean 105 18 30

Key inputs in the fair value measurement of the livestock and the agricultural crops harvested together with sensitivity to reasonably possible changes in those inputs are disclosed in Note 2.2.

28 F-39 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

10. Biological asset (continued) Long-term biological assets (continued) Biological assets with a carrying value of RR 693,348 (31 December 2014: RR 684,303, 31 December 2013: RR 520,049) were pledged as collateral for the Group’s borrowings (Note 14). The Group is exposed to financial risks arising from changes in milk, meat and crops prices. The Group does not anticipate that milk or crops prices will decline significantly in the foreseeable future except some seasonal fluctuations and, therefore, has not entered into derivative or other contracts to manage the risk of a decline in respective prices. The Group reviews its outlook for milk, meat and crops prices regularly in considering the need for active financial risk management. 11. Long-term investments 31 December 31 December 31 December 2015 2014 2013 Bank deposits with original maturity over twelve months 14,714,290 696,500 696,500 Available-for-sale financial assets (Note 14) 380,212 19,305 26,712 Interest receivable on bank deposits within long- term investments 251,959 182,717 118,291 Loans issued to third parties 26,629 26,526 26,484 Other long-term investments 5,322 4,081 2,828 Total 15,378,412 929,129 870,815

The above long-term investments are denominated in Russian Roubles. As at 31 December 2015 bank deposits in the amount of RR 14,714,290 (31 December 2014: RR 696,500, 31 December 2013: RR 696,500) were pledged as collateral for the Group’s borrowings (Note 14). Bank deposits include restricted deposit in Vnesheconombank in amount of RR 13,900,000 which could not be withdrawn till 27 November 2028 (Note 14). 12. Investments in associates On 4 August 2015 the Group acquired 29.00% of the share capital of OJSC Pugachevskiy elevator for RR 320,000 (Note 6). On 21 March 2014 the Group acquired 31.00% of the share capital of OJSC Totskiy elevator for RR 23,601. On 26 August 2014 the Group acquired further 68.87% of the share capital and obtained control of OJSC Totsiy elevator (see Note 24). On 24 July 2014 the Group invested RR 25 in share capital of LLC Rusprotein and thereby acquired 25% of ownership interest in the investee. On 26 September 2014 the Group acquired 10.50% of ownership interest in CJSC Status for RR 33,867. Together with previously held 14.50% the Group share in CJSC Status reached 25.00%. Acquisition of ownership interest in OJSC Pugachevskiy elevator was accounted using the provisional amounts of assets and liabilities of the investees as the Group had not finalized the fair value determination of these assets and liabilities at the moment of preparation of these consolidated financial statements. The grain elevator is situated in the close proximity to the Group’s oil extraction plant CJSC Samaraagroprompererabotka. The goodwill arising on acquisition will allow to develop synergies and achieve cost savings on the combination of the businesses. As at 31 December 2014 acquisition of LLC Rusprotein and CJSC Status was accounted using the provisional amounts of assets and liabilities of the investees. In 2015 an independent professional appraiser performed valuation of the fair value of these assets and liabilities as at the acquisition date. The fair value appeared to be equal to the provisional amounts presented as at 31 December 2014. The balances have not been restated. The fair values of identifiable assets and liabilities of OJSC Totskiy elevator were determined using discounted cash flow models. The valuation of property, plant and equipment was performed by an independent professional appraiser.

29 F-40 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

12. Investments in associates (continued)

The tables below summarise the information on net assets or liabilities of the acquired associates at the date of acquisition, consideration transferred and other details of the transactions described above.

Year ended 31 December 2015 OJSC Pugachevskiy elevator

Share of ownership interest acquired 29% Cash consideration transferred 320,000 Total consideration 320,000

Provisional fair value of net assets/ (liabilities) of associate acquired 61,404 Group's share in the net assets/ (liabilities) of associate acquired 17,807 Goodwill arising from the acquisition 302,193

LLC Rusprotein CJSC OJSC Totskiy Year ended 31 December 2014 (consolidated) Status elevator Total

Share of ownership interest acquired 25% 25% 31% Cash consideration transferred 25 33,867 23,601 57,493 Investment in the acquiree prior to the acquisition - 7,387 - 7,387 Total consideration 25 41,254 23,601 64,880

Fair value of net assets/ (liabilities) of associates acquired (10,085) 348,661 59,859 398,435

Non-controlling interest in net assets/ (liabilities) (4,538) - - (4,538) Group's share in the net assets/ (liabilities) of associates acquired net of non-controlling interest (1,387) 87,165 18,556 104,334 Goodwill arising from the acquisition 1,412 - 5,045 6,457 Excess of the fair value of net assets acquired over the cost of the investment - 45,912 - 45,911

The Group's interests in its principal associates were as follows: Group's share in the share capital Name of entity Principal activity 31 December 2015 31 December 2014 31 December 2013 OJSC Pugachevskiy elevator Grain elevator 29.00% - - LLC Rusprotein Holding company 25.00% 25.00% - CJSC Status Registrar 25.00% 25.00% -

The country of incorporation of the Group’s associates, as well as their principal place of business, is the Russian Federation. The associates incorporated as CJSC have share capital consisting solely of ordinary shares. Ownership interests in CJSC Status, LLC Rusprotein and OJSC Pugachevskiy elevator are held directly by the Group.

30 F-41 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

12. Investments in associates (continued) All Group’s associates are private companies and there are no quoted market prices available for their shares. The table below summarizes the movements in the carrying amount of the Group's investment in associates: 2015 2014 2013

Carrying amount at 1 January 87,407 - -

Fair value of share of net assets/ (liabilities) of associates acquired 17,807 104,334 - Goodwill arising on acquisition 302,193 6,457 - Share of profit/ (loss) of associates 23,997 667 - De-recognition of investments in associates as a result of business combination (Note 24) - (24,051) -

Carrying amount at 31 December 431,404 87,407 -

Summarized financial information is reconciled to the carrying amount of investments in associates as follows: 2015 2014 2013

Net assets/ (liabilities) of associate acquired 461, 710 333,826 -

Group's share in the net assets/ (liabilities) of associate acquired 103,822 104,334 - Goodwill arising on acquisitions 303,605 6,457 -

Share of profit/ (loss) of associates 23,997 667 - De-recognition of investments in associates as a result of business combination (Note 24) - (24,051) - Carrying amount at 31 December 431,404 87,407 -

Summarized financial information of each material associate is as follows at 31 December 2015: OJSC Pugachevskiy LLC Rusprotein elevator (consolidated)* CJSC Status Total

Current assets 48,443 648,394 561,052 1,257,889 Non-current assets 20,556 421,729 32,514 474,799 Current liabilities (4,342) (873,169) (172,781) (1,050,292) Non-current liabilities (3,253) (217,433) - (220,686) Net assets/ (liabilities) 61,404 (20,479) 420,785 461,710

Revenue 31,281 1,058,268 805,009 1,894,558 Profit or loss/ Total comprehensive (5,559) 55,717 71,155 121,313 income or loss

31 F-42 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

12. Investments in associates (continued) Summarized financial information of each material associate is as follows at 31 December 2014:

LLC Rusprotein (consolidated)* CJSC Status Total

Current assets 775,728 456,091 1,231,819 Non-current assets 468,408 41,983 510,391 Current liabilities (1,100,507) (148,445) (1,248,952) Non-current liabilities (159,432) - (159,432) Net assets/ (liabilities) (15,803) 349,629 333,826

Revenue 480,476 159,039 650,169 Profit or loss/ Total comprehensive income or loss (5,652) 968 (3,231)

*Financial information on LLC Rusprotein is provided on consolidated basis including financial information of all its subsidiaries. There are no contingent liabilities relating to the Group’s interest in the associates. As at 31 December 2015 the cumulative unrecognised share of loss of LLC Rusprotein is nil. As at 31 December 2014 the carrying value of the Group’s investment in LLC Rusprotein was nil. The unrecognised share of loss of this associate was RR 753 for 2014.

13. Share capital, share premium and transactions with non-controlling interests Share capital and share premium At 31 December 2015, 2014 and 2013, issued and paid share capital consisted of 24,000,000 ordinary shares with par value of Euro 0.01 each. At 31 December 2015, 2014 and 2013, the authorised share capital consisted of 60,000,000 ordinary shares with par value of Euro 0.01 each. Share premium represents the excess of contributions received over the nominal value of shares issued. Treasury shares In 2015 there were no acquisitions of treasury shares. In 2014, the Company acquired 200,040 of its own GDRs, that is equivalent to approximately 40,008 shares, through purchases on the Main Market of the London Stock Exchange (2013: no acquisitions of own GDRs). The total amount paid to acquire the GDRs in 2014 was RR 44,033. The GDRs are held as ‘treasury shares’. At 31 December 2015 and 2014 the Group held 2,212,648 of its own GDRs (31 December 2013: 2,012,608 own GDRs) that is equivalent of approximately 442,530 shares (31 December 2013: 402,522 shares). In 2015 the Company distributed RR 3,063,227 of dividends for the second half of 2014 and RR 1,800,959 of interim dividends for the first half of 2015. The dividends for the second half of 2014 amounted to RR 130.03 per share and interim dividends for 2015 amounted to RR 76.45 per share. In 2014 the Company distributed RR 1,000,000 of dividends for the year 2013 and RR 2,000,029 of interim dividends for the first half of 2014. The dividends for 2013 amounted to RR 42.45 per share and interim dividends for 2014 amounted to RR 84.90 per share. Purchases of non-controlling interests In 2015 the Group increased its share in OJSC Sugar Plant Znamensky to 100.0%. The consideration paid was RR 45,175. The difference between the carrying amount of the non-controlling interest and the purchase consideration in the amount of RR 245,903 was recorded as a capital transaction in the statements of changes in equity.

32 F-43 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

13. Share capital, share premium and transactions with non-controlling interests (continued) In 2015 the Group increased its share in OJSC Valuikisakhar to 99.9%. The consideration paid was RR 122,496. The difference between the carrying amount of a non-controlling interest and the purchase consideration in the amount of RR 233,356 was recorded as a capital transaction in the statements of changes in equity. In 2014 the Group increased its share in LLC Zherdevsky Elevator and OJSC Totskiy elevator (Note 24) to 100%. The consideration paid was RR 531. The difference between the carrying amount of a non- controlling interest and the purchase consideration in the amount of RR 3 was recorded as a capital transaction in the statements of changes in equity. In 2013 the Group increased its share in CJSC Samaraagroprompererabotka by 25.1%. The consideration paid was RR 251,000. The excess of consideration paid over the Group’s share of identifiable net assets acquired amounted to RR 196,465. In 2013 the Group bought out 100% of additional share issue of its subsidiary OJSC Zherdevsky Elevator. As a result of this transaction the amount of non-controlling interest in the subsidiary increased by RR 416 with a corresponding decrease in retained earnings. In 2013 the Group acquired shares in several other subsidiaries from minority shareholders for a total consideration of RR 10,084. The excess of consideration paid over the Group’s share of identifiable net assets acquired amounted to RR 1,354. Disposal of interest in a subsidiary without loss of control In 2015 the Group disposed of 10% of ownership interests in OJSC Valuikisakhar for consideration in the amount of RR 122,496. The difference between the carrying amount of a non-controlling interest and the consideration received in the amount of RR 37,473 was recorded as a capital transaction in the statements of changes in equity. In 2014 the Group disposed 10% of ownership interests in OJSC Sugar Plant Znamensky for consideration in the amount of RR 41,070. The difference between the carrying amount of a non- controlling interest and the consideration received in the amount of RR 188,661 was recorded as a capital transaction in the statements of changes in equity. 14. Borrowings Short-term borrowings

31 December 2015 31 December 2014 31 December 2013 Interest Carrying Interest Carrying Interest Carrying rate amount rate amount rate amount

Bank loans 3.9-19.9% 20,326,442 11.5-13.8% 6,850,000 0.9-12.0% 12,434,311 Loans received from third parties 6.0% 327,249 6.0% 821,109 2.0-5.0% 1,145,771 Loans received from related parties (Note 26) 8.9% 60,216 9.5% 50,000 - Finance leases 4,136 - - Interest accrued on borrowings from third parties 182,196 65,575 29,330 Interest accrued on borrowings from related parties (Note 26) 1,084 65 26,682 Current portion of long-term borrowings 4,959,141 4,712,874 4,508,160 Total 25,860,464 12,499,623 18,144,254

33 F-44 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

14. Borrowings (continued) All short-term borrowings are at fixed interest rate. The above borrowings are denominated in the following currencies: 31 December 31 December 31 December 2015 2014 2013 Russian Roubles 25,289,533 11,648,901 15,930,470 US Dollars 169,006 - 1,086,309 Euro 401,925 850,722 1,127,475 Total 25,860,464 12,499,623 18,144,254

Long-term borrowings 31 December 2015 31 December 2014 31 December 2013 Interest Carrying Interest Carrying Interest Carrying rate amount rate amount rate amount

Bank loans 1.0-17.5% 28,996,680 9.5-13.0% 14,291,423 9.5-13.0% 18,388,106 ¼ of the ¼ of the Government loans - CBRF rate* 227,758 CBRF rate* 263,137 Promissory notes issued and loans received from third parties - - 2.0% 225,716 Less current portion of long- term borrowings from:

Bank loans 1.0-13.0% (4,959,141) 9.5-13.0% (4,485,117) 9.5-11.5% (4,508,160)

¼ of the Government loans - CBRF rate* (227,758) - Total 24,037,539 9,806,306 14,368,799

*The above loans were provided at subsidised interest rates by the Government and were initially measured at an effective rate of 12% The above borrowings are denominated in the following currencies: 31 December 31 December 31 December 2015 2014 2013 Russian Roubles 24,037,539 9,806,306 14,183,035 US Dollars - - 185,764 Total 24,037,539 9,806,306 14,368,799 In November 2015 the Group entered into a transaction with Vnesheconombank (hereinafter – “VEB”) for acquisition of debt (loans and bonds) and equity (19.97% shares in PJSC Group Razguliay) of PJSC Group Razguliay and its subsidiaries (hereinafter – “Razguliay Group”). The total consideration for this acquisition amounted to RR 33,914,546 and was paid by the Group in cash. For the purpose of financing of this transaction, the Group raised a thirteen-year loan from VEB in the amount of RR 33,914,546 at 1% per annum. The fair value of this loan at inception date was RR 13,900,000 determined using the effective interest rate of 13.23%. The loan is measured at amortized costs with an effective interest rate of 13.23%. The loan is secured by a thirteen-year deposit placed by the Group with VEB in the amount of RR 13,900,000 at interest rate of 12.84% per annum. The cost of the Group of financial assets acquired in this transaction representing fair value of the loan obtained from VEB was allocated to the individual identifiable financial assets based on their relative fair values at the date of acquisition. The acquired ownership interest in Razguliay Group (19.97% of shares) was accounted for as available- for-sale investment and included in Long-term investments (Note 11). At the date of initial recognition they were recognised at fair value of RR 400,387 which was equal to the market value of the shares according to the quotes at MOEX shortly before the date of the transaction. Subsequently these shares are measured at fair value within other comprehensive income subject to impairment testing. These shares were determined to be within level 1 of the fair value hierarchy. As at 31 December 2015 the fair value of the acquired ownership interest amounted to RR 360,918 (Note 11).

34 F-45 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

14. Borrowings (continued) The acquired bonds were accounted for as available-for-sale investment and included in Short-term investments (Note 4). At the date of initial recognition they were recognised at fair value of RR 3,433,426 (including accumulated coupon income) which was equal the market value of the bonds according to the quotes at MOEX shortly before the date of the transaction. Subsequently these bonds are measured at fair value within other comprehensive income subject to impairment testing. These bonds were determined to be within level 2 of the fair value hierarchy. As at 31 December 2015 the acquired bonds (including interest receivable) amounted to RR 3,469,383 (Note 4). The acquired loans were accounted for as loans and receivables and included in Short-term investments (Note 4). At the date of initial recognition they were recognised at the relative fair value of RR 10,066,187. Subsequently these loans receivables are measured at amortised cost subject to impairment testing. As at 31 December 2015 the acquired loans amounted to RR 10,066,187 (Note 4).

Maturity of long-term borrowings: 31 December 31 December 31 December Fixed interest rate borrowings: 2015 2014 2013 2 years 4,651,272 3,333,332 4,456,205 3-5 years 8,935,161 6,440,774 9,004,833 More than 5 years 10,451,106 32,200 644,624 Total 24,037,539 9,806,306 14,105,662

31 December 31 December 31 December Floating interest rate borrowings: 2015 2014 2013 2 years - - 263,137 Total - - 263,137

For details of property, plant and equipment and biological assets pledged as collateral for the above borrowings see Note 9 and Note 10 respectively. For details of promissory notes and bank deposits pledged as collateral for the above borrowings refer to Notes 4 and 11. Shares of several companies of the Group are pledged as collateral for the bank borrowings, as follows: Pledged shares, % 31 December 31 December 31 December 2015 2014 2013 LLC Group of Companies Rusagro - - 50.0 LLC Tambovsky Bacon 100.0 100.0 100.0 LLC Belgorodsky Bacon (former OJSC Belgorodsky Bacon) 100.0 100.0 100.0 LLC Rusagro-Primorie 100.0 - - OJSC Valuikisakhar 51.0 51.0 51.0 OJSC Sugar Plant Znamensky - 51.0 -

Compliance with covenants Under long-term borrowings facility agreements, the Group is required to comply with certain financial and non-financial covenants. If any of covenants are breached, the repayment can be demanded by the respective lender, up to immediate repayment. There were no breaches of covenants in 2015 and 2014. In 2013 there was a breach of one covenant under a loan agreement with Sberbank which was made in 2011 and related to a pledge of property, plant and equipment items which were sold. The Group has not received a waiver from the bank before 31 December 2013. In March 2014 the breach was remedied with an amendment to the pledge agreement signed with Sberbank. This loan amounted to RR 885,946 as at 31 December 2013. Taking into account the remedy obtained the Group presented this loan in 2013 within long-term borrowings in these consolidated financial statements.

35 F-46 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

14. Borrowings (continued) Net Debt* As part of liquidity risk management, the Group Treasury analyses its net debt position. The Group management determines the Net Debt of the Group as outstanding long-term borrowings and short-term borrowings less cash and cash equivalents, all bank deposits, bonds held for trading and banks’ promissory notes. The Group management compares net debt figure with Adjusted EBITDA (Note 28) and considers the normal level of Net Debt/Adjusted EBITDA ratio to be not more than 3. As at 31 December 2015, 2014 and 2013 the net debt of the Group was as follows: 31 December 31 December 31 December 2015 2014 2013 Long-term borrowings 24,037,539 9,806,306 14,368,799 Short-term borrowings 25,860,464 12,499,623 18,144,254 Cash and cash equivalents (4,401,703) (10,316,313) (2,672,764) Banks’ promissory notes (Note 4) - - (1,100,000) Bank deposits within short-term investments (Note 4) (15,635,460) (992,200) (13,467,355) Bank deposits within long-term investments (Note 11) (14,714,290) (696,500) (696,500) Bonds held for trading (Note 4) - (6,684,189) - Net debt* 15,146,550 3,616,727 14,576,434 including long-term Net debt 9,323,249 9,109,806 13,672,299 including short-term Net debt 5,823,301 (5,493,079) 904,135 Adjusted EBITDA* (Note 28) 24,423,401 18,069,475 6,784,013 Net debt/ Adjusted EBITDA* 0.62 0.20 2.15

* not an IFRS measure. For the purpose of conformity with the methodology of the Group's Net Debt calculation, cash flows from investing and financing activities in the Group management accounts are presented as follows: Year ended 31 December 2015 Management According to IFRS Reclassifications accounts Cash flows from investing activities Purchases of property, plant and equipment (11,423,459) - (11,423,459) Purchases of inventories intended for construction (14,793) - (14,793) Proceeds from cash withdrawals from deposits 34,162,514 (34,162,514) - Deposits placed with banks (59,209,261) 59,209,261 - Purchases of bonds (3,433,426) 3,433,426 - Proceeds from sales of bonds held for trading 7,567,628 (7,567,628) - Loans given (1,168,351) 1,168,351 - Purchases of loans issued (30,080,733) 30,080,733 - Loans repaid 1,106,602 (1,106,602) - Interest received 981,885 (981,885) - Other cash flows in investing activities* (1,632,797) - (1,632,797) Net cash from investing activities (63,144,191) 50,073,142 (13,071,049) Cash flows from financing activities Proceeds from borrowings 63,966,110 - 63,966,110 Repayment of borrowings (16,657,102) - (16,657,102) Proceeds from cash withdrawals from deposits - 34,162,514 34,162,514 Deposits placed with banks - (59,209,261) (59,209,261) Purchases of bonds - (3,433,426) (3,433,426) Proceeds from sales of bonds held for trading - 7,567,628 7,567,628 Loans given - (1,168,351) (1,168,351) Purchases of loans issued - (30,080,733) (30,080,733) Loans repaid - 1,106,602 1,106,602 Interest paid (3,416,791) - (3,416,791) Interest received - 981,885 981,885 Proceeds from government grants 3,014,204 - 3,014,204 Other cash flows in financing activities* (4,569,305) - (4,569,305) Net cash used in financing activities 42,337,116 (50,073,142) (7,736,026)

36 F-47 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

14. Borrowings (continued) Net Debt (continued)

Year ended 31 December 2014 Management According to IFRS Reclassifications accounts Cash flow from investing activities Purchases of property, plant and equipment (5,206,184) - (5,206,184) Purchases of inventories intended for construction (1,530) - (1,530) Proceeds from cash withdrawals from deposits 16,604,773 (16,604,773) - Deposits placed with banks (4,141,047) 4,141,047 - Purchases of bonds held for trading (5,244,138) 5,244,138 - Proceeds from sales of bonds held for trading 134,904 (134,904) - Purchases of promissory notes (1,700,000) 1,700,000 - Proceeds from sales of promissory notes 2,800,000 (2,800,000) - Loans given (2,455,350) 2,455,350 - Loans repaid 1,847,683 (1,847,683) - Interest received 1,239,633 (1,239,633) - Other cash flows in investing activities* (998,142) - (998,142) Net cash used in investing activities 2,880,602 (9,086,458) (6,205,856) Cash flow from financing activities Proceeds from borrowings 15,875,925 - 15,875,925 Repayment of borrowings (27,169,213) - (27,169,213) Proceeds from cash withdrawals from deposits - 16,604,773 16,604,773 Deposits placed with banks - (4,141,047) (4,141,047) Purchases of bonds held for trading - (5,244,138) (5,244,138) Proceeds from sales of bonds held for trading - 134,904 134,904 Purchases of promissory notes - (1,700,000) (1,700,000) Proceeds from sales of promissory notes - 2,800,000 2,800,000 Loans given - (2,455,350) (2,455,350) Loans repaid - 1,847,683 1,847,683 Interest paid (2,295,898) - (2,295,898) Interest received - 1,239,633 1,239,633 Proceeds from government grants 3,048,946 - 3,048,946 Other cash flows in financing activities* (3,251,146) - (3,251,146) Net cash from financing activities (13,791,386) 9,086,458 (4,704,928)

37 F-48 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

14. Borrowings (continued) Net Debt (continued) Year ended 31 December 2013 According to Management IFRS Reclassifications accounts

Cash flow from investing activities Purchases of property, plant and equipment (4,232,694) - (4,232,694) Purchases of inventories intended for construction (16,335) - (16,335) Proceeds from cash withdrawals from deposits 32,345,354 (32,345,354) - Deposits placed with banks (18,346,112) 18,346,112 - Purchases of promissory notes (2,900,000) 2,900,000 - Proceeds from sales of promissory notes 3,068,267 (3,068,267) - Loans given (1,122,198) 1,122,198 - Loans repaid 907,674 (907,674) - Interest received 2,152,715 (2,152,715) - Other cash flows in investing activities* 67,411 - 67,411 Net cash used in investing activities 11,924,083 (16,105,700) (4,181,618)

Cash flow from financing activities Proceeds from borrowings 16,157,846 - 16,157,846 Repayment of borrowings (31,891,024) - (31,891,024) Proceeds from cash withdrawals from deposits - 32,345,354 32,345,354 Deposits placed with banks - (18,346,112) (18,346,112) Purchases of promissory notes - (2,900,000) (2,900,000) Proceeds from sales of promissory notes - 3,068,267 3,068,267 Loans given - (1,122,198) (1,122,198) Loans repaid - 907,674 907,674 Interest paid (4,127,094) - (4,127,094) Interest received - 2,152,715 2,152,715 Proceeds from government grants 4,049,217 - 4,049,217 Other cash flows in financing activities* (261,191) - (261,191) Net cash from financing activities (16,072,246) 16,105,700 33,454 *See details in the consolidated statements of cash flows.

15. Trade and other payables 31 December 31 December 31 December 2015 2014 2013 Trade accounts payable 1,693,025 1,335,137 1,038,789 Payables for land rent - - 4,385 Other payables 165,173 107,817 123,848 Total financial liabilities within trade and other 1,858,198 1,442,954 payables 1,167,022 Payables to employees 1,149,900 703,211 804,335 Advances received 728,657 626,220 381,418 Total trade and other payables 3,736,755 2,772,385 2,352,775

Financial liabilities within trade and other payables of RR 187,623 (31 December 2014: RR 28,124, 31 December 2013: RR 12,336) are denominated in US Dollars, financial liabilities within trade and other payables of RR 145,150 are denominated in Euro (31 December 2013: RR 57,892, 31 December 2013: RR 24,991). All other financial liabilities within trade and other payables are denominated in Russian Roubles.

38 F-49 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

16. Other taxes payable 31 December 31 December 31 December 2015 2014 2013 Value added tax 2,143,870 1,540,487 1,151,109 Unified social tax 105,987 62,545 51,785 Property tax 49,849 60,672 67,378 Personal income tax 30,725 17,258 25,469 Transport tax 2,885 2,987 2,995 Other 25,819 22,142 28,527 Total 2,359,135 1,706,091 1,327,263

17. Government grants During 2013-2015 the Group received government grants from Tambov and Belgorod regional governments and the Federal government in partial compensation of the investments into acquisition of equipment for agricultural business and sugar processing and the investments into construction of the pig-breeding farms and the slaughter house. The receipts of these grants in 2015 amounted to RR 426,544 (2014: RR 338,070, 2013: RR 697,936). These grants are deferred and amortised on a straight-line basis over the expected lives of the related assets. Additionally, in 2013-2015 the Group obtained the government grants for reimbursement of interest expenses on bank loans received for construction of the pig-breeding farms in Belgorod and Tambov. The government grants related to interest expenses capitalised into the carrying value of assets, were similarly deferred and amortised on a straight-line basis over the expected lives of the related assets. There were no deferred government grants, related to capitalised interest expense in 2015 (2014: nil, 2013: RR 322,265). At the end of 2014 and 2013 the Group prepaid interest expenses on some of its bank loans for 2015 and 2014 respectively (Note 6) and obtained government grants in the amount of RR 127,657 in 2014 (2013: RR 98,490) for partial reimbursement of these interest expenses. These grants are deferred as at the reporting date and included in the consolidated statements of profit or loss and other comprehensive income in the following financial year together with the related interest expenses. The movements in deferred government grants in the statements of financial position were as follows: 2015 2014 2013 As at 1 January 1,962,562 1,735,151 722,617 Government grants received 426,544 465,732 1,118,691 Amortization of deferred income to match related interest expenses (127,658) (98,490) - Amortization of deferred income to match related depreciation (Note 22) (217,781) (139,831) (106,157) As at 31 December 2,043,667 1,962,562 1,735,151

Other bank loan interests, which had been refunded by the state, were credited to the consolidated statements of profit or loss and other comprehensive income and netted with the interest expense (Note 23). Other government grants received are included in Note 22. 18. Sales 2015 2014 2013 Sales of goods 72,163,124 58,880,617 36,369,913 Sales of services 276,040 231,626 119,914 Total 72,439,164 59,112,243 36,489,827

Sales in 2015 include revenue arising from exchange of goods amounting to RR 244,241 (2014: RR 193,744, 2013: RR 183,588) and exchange of services amounting to RR 161,904 (2014: RR 152,711, 2013: RR 48,789).

39 F-50 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

19. Cost of sales 2015 2014 2013 Raw materials and consumables used 34,688,854 29,221,079 20,556,447 Depreciation 3,094,773 3,153,763 2,987,010 Services 2,698,680 2,341,741 2,311,022 Payroll 2,849,488 2,548,293 2,149,426 Other 113,613 249,018 99,942 Provision/ (Reversal of provision) for net realisable value (173,998) 485,767 (30,090) Total 43,271,410 37,999,661 28,073,757

Payroll costs include statutory pension contributions of RR 472,369 (2014: 408,678, 2013: RR 354,893). 20. Distribution and selling expenses 2015 2014 2013 Transportation and loading services 2,545,974 2,206,486 1,498,138 Payroll 744,375 659,504 430,151 Advertising 945,610 656,830 393,080 Depreciation and amortization 266,403 248,679 195,725 Materials 166,523 157,119 119,613 Fuel and energy 92,148 62,176 46,903 Provision for impairment of receivables 28,755 46,120 126,144 Other 524,205 435,260 183,199 Total 5,313,993 4,472,174 2,992,953

Payroll costs include statutory pension contributions of RR 110,848 (2014: 94,199, 2013: RR 66,850). 21. General and administrative expenses 2015 2014 2013 Payroll 2,570,148 1,821,846 1,470,784 Taxes, excluding income tax 347,386 364,655 388,223 Services of professional organisations 252,096 136,985 115,026 Depreciation 149,816 94,590 88,126 Rent 109,299 85,254 67,721 Security 93,910 79,586 91,166 Materials 79,245 67,526 69,387 Bank services 69,730 63,168 49,689 Repair and maintenance 45,947 45,725 39,301 Fuel and energy 39,203 32,157 51,083 Travelling expenses 53,452 30,729 32,093 Communication 44,045 23,027 27,618 Insurance 17,484 16,310 16,703 Statutory audit fees 1,538 1,538 1,866 Other 192,261 128,219 115,132 Total 4,065,560 2,991,315 2,623,918

Payroll costs above include statutory pension contributions of RR 296,769 (2014: RR 214,778, 2013: RR 184,748). In respect of the year ended 31 December 2015, fees of RR 191 (2014: RR 421; 2013: RR 464) for other non-assurance services charged by the Company’s statutory auditor were included within “Services of professional organisations”.

40 F-51 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

22. Other operating income/ (expenses), net 2015 2014 2013 Reimbursement of operating expenses (government grants) 900,260 548,045 568,636 Operating foreign exchange gains and losses, net (127,752) 143,181 - Amortization of deferred income to match related depreciation (Note 17) 217,781 139,831 106,157 Gain from buy-out of promissory notes issued - 41,094 - Rental income (11,508) 9,342 17,904 Gain/ (loss) on disposal of property, plant and equipment (32,582) 5,038 (169,518) Provision for impairment of advances paid for property, plant 9,432 and equipment 454 (18,714) Settlement of accounts receivable previously written-off - - 49,853 VAT refunded under the court decision - - 22,571 Charitable donations and social costs (410,381) (509,819) (400,590) Loss on disposal of subsidiaries, net* (1,142) (179,405) - Loss on other investments (26,142) (7,747) (191,480) Lost harvest write-off (Note 10) (327,991) (5,530) (31,071) Write-off of work in progress - - (55,229) Other (992) 88,400 (15,056) Total 188,983 272,884 (116,537)

Lost harvest write-off is represented by damage of crops due to unfavourable weather conditions.

In the end of 2014 the Group disposed of one non-core subsidiary OJSC Oskolskie Prostory: Summarised financial information of the disposed subsidiary at the date of disposal as well as other details of the disposal are provided below:

Cash and cash equivalents 274 Trade and other receivables 736 Prepayments 781 Other taxes receivable 262 Inventories 22,781 Property, plant and equipment 73,218 Long-term biological assets 65,401 Total assets 163,453

Trade and other payables (10,075) Other taxes payable (1,055) Long-term borrowings (443,850) Total liabilities (454,980)

Non-controlling interest 27,098 Writing-off of intercompany loans provided to the disposed subsidiary (443,818) Fair value of consideration received 16 Loss on disposal of subsidiaries (179,405) Cash inflow on disposal - Cash outflow on disposal, net of cash disposed (275)

23. Interest expense and other financial income/ (expenses), net Interest expense comprised of the following: 2015 2014 2013 Interest expense 3,856,801 2,288,135 3,623,968 Reimbursement of interest expense (government grants) (1,815,058) (2,133,657) (2,243,592) Interest expense, net 2,041,743 154,478 1,380,376

41 F-52 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

23. Interest expense and other financial income/ (expenses), net (continued) Other financial income/ (expenses), net comprised of the following items: 2015 2014 2013 Financial foreign exchange differences gain, net 3,129,182 4,551,644 37,534 Other financial expenses, net (48,887) (2,096) (93,806) Other financial income/ (expenses), net 3,080,295 4,549,548 (56,272)

24. Goodwill 2015 2014 2013 Carrying amount at 1 January 1,191,832 1,175,578 1,175,578 Acquisitions of subsidiaries 1,211,730 16,254 - Carrying amount at 31 December 2,403,562 1,191,832 1,175,578

The carrying amount of goodwill is allocated to the following CGUs: 31 31 December December 31 December 2015 2014 2013 Oil Primorie CGU 986,232 - - Oil Samara CGU 667,329 667,329 651,075 Agriculture Center CGU 178,133 178,133 178,133 Sugar CGU 346,370 346,370 346,370 Agriculture Primorie CGU 225,498 - - Total 2,403,562 1,191,832 1,175,578 On 22 January 2015 the Group acquired 100.00% of the share capital of OJSC Uchkhoz PGSKHA for cash consideration in the amount of RR 131,471. On 02 February 2015 the Group acquired 100.00% of the share capital of LLC Rusagro-Primorie for cash consideration in the amount of RR 322,242. Both entities are situated in Far East region. The consideration for these shares was transferred to the sellers in the end of 2014 (see Note 6). The goodwill arising on acquisitions of OJSC Uchkhoz PGSKHA and LLC Rusagro-Primorie is primarily attributable to the expected profitability of the acquired businesses. The goodwill arising on acquisitions was allocated to Agriculture Primorie CGU. On 08 October 2015 the Group acquired 75.00% of the share capital of LLC Primorskaya soya for cash consideration in the amount of RR 983,981. The entity is situated in Far East Primorie region and engaged in soya bean oil extraction and processing. The goodwill arising on acquisition was allocated to Oil Primorie CGU and attributable to acquired customer base and expected profitability of the acquired business.

42 F-53 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

24. Goodwill (continued) The following table summarises the consideration paid, the fair value (provisional amounts in relation to LLC Primorskaya soya) of assets acquired, liabilities assumed and non-controlling interest at the acquisition date: OJSC Uchkhoz LLC Rusagro- LLC Primorskaya PGSKHA Primorie soya Consideration transferred 131,471 322,242 983,981

Recognised amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents 18 4,827 47,741 Short-term investments - - 300,000 Trade and other receivables 20,358 197,921 0 Prepayments 819 57,778 13,019 Current income tax receivable - 927 - Other taxes receivable 31 19,304 8,760 Inventories 2,370 415,148 4,996 Property, plant and equipment 169,595 251,133 62,394 Long-term biological assets 3,179 - - Other intangible assets - 233,604 - Deferred income tax assets - - 729 Short-term borrowings (17,577) (966,868) - Long-term borrowings (8,663) - - Trade and other payables (47,773) (98,977) (440,365) Current income tax payable (188) - - Other taxes payable (6,678) (1,687) (275) Deferred income tax liability - (385) - Total identifiable net assets 115,491 112,725 (3,001)

Non-controlling interest - - 750 Goodwill arising from the acquisition 15,980 209,517 986,232

Total purchase consideration and previously held interest in the acquire 131,471 322,242 983,981 Less: Prepayments at the beginning on the reporting period (131,471) (322,242) - Less: Cash and cash equivalents of subsidiary acquired (18) (4,827) (47,741) Outflow of cash and cash equivalents on acquisition in 2015 (18) (4,827) 936,240 The fair values of identifiable assets and liabilities of OJSC Uchkhoz PGSKHA and LLC Rusagro-Primorie were determined using discounted cash flow models. The valuation of property, plant and equipment was performed by an independent professional appraiser. Acquisition of LLC Primorskaya soya was accounted using the provisional amounts of assets and liabilities of the investees as the Group had not finalized the fair value determination of these assets and liabilities at the moment of preparation of these consolidated financial statements. On 21 March 2014 the Group acquired 31.00% of the share capital of OJSC Totskiy elevator for RR 23,601. On 26 August 2014 the Group acquired further 68.87% of the share capital for RR 52,434 and obtained control of OJSC Totskiy elevator, a grain elevator situated in Orenburg region within a zone of operations of the Group’s oil extraction plant Samaraagroprompererabotka. The goodwill of RR 16,254 arising from the acquisition was allocated to Oil Samara CGU.

43 F-54 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

24. Goodwill (continued) The following table summarises the consideration paid for OJSC Totskiy elevator, the fair value of assets acquired, liabilities assumed and non-controlling interest at the acquisition date. OJSC Totskiy elevator Consideration transferred 52,434 Fair value of equity interest in Totskiy held before the business combination 24,051 Total consideration 76,485 Recognized amounts of identifiable assets acquired and liabilities assumedCash and cash equivalents 7,455 Trade and other receivables 1,598 Prepayments 823 Current income tax receivable 550 Other taxes receivable 79 Inventories 3,421 Property, plant and equipment 50,453 Deferred income tax assets 6,953 Trade and other payables (1,011) Other taxes payable (867) Deferred income tax liability (9,145) Total identifiable net assets 60,309 Non-controlling interest (79) Goodwill arising from the acquisition 16,255

Total purchase consideration and previously held interest in the acquiree 76,485 Less: Non-cash consideration (24,051) Less: Cash and cash equivalents of subsidiary acquired (7,455) Outflow of cash and cash equivalents on acquisition in 2014 44,979 The carrying amount of goodwill as at 31 December 2015, 2014 and 2013 was tested for impairment. The recoverable amount of the Group’s cash-generating units has been determined based on a value-in- use calculation using cash flow projections based on financial budgets approved by the Group management covering a five-year period and the expected market prices for the Group’s key products for the same period according to leading industry publications. Cash flows beyond the five-year period are projected with a long-term growth rate of 3.5% per annum (31 December 2014: 2.6%, 31 December 2013: 2.8% per annum). As a result of the testing, no impairment losses were recognised. Assumptions used for value-in-use calculations to which the recoverable amount is most sensitive were: EBITDA margin* Pre-tax discount rate 2015 2014 2013 2015 2014 2013 Oil Primorie CGU 1.8-9.0% n/a n/a 15.4% n/a n/a Oil Samara CGU 6.9-14.3% 15.2-16.5% 19.7-20.0% 18.6% 24.2% 18.5% Agriculture Center CGU 26.9-27.6% 26.6-28.2% 25.3-28.0% 15.4% 19.2% 15.1% Sugar CGU 18.2-18.3% 28.9% 14.5-14.6% 18.8% 23.7% 18.3% Agriculture Primorie CGU 24.2-35.5% n/a n/a 15.4% n/a n/a * EBITDA margin is calculated as the sum of operating cash flows before income tax and changes in working capital divided by the amount of cash flow received from trade customers. A reasonably possible shift in key assumptions underlying the value-in-use calculations would not lead to impairment of goodwill as of 31 December 2015, 2014 and 2013.

44 F-55 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

25. Income tax 2015 2014 2013 Current income tax charge 2,257,362 1,206,375 491,595 Deferred tax (credit)/ charge (433,970) (491,440) (160,632) Income tax expense 1,823,392 714,935 330,963

The Group companies domiciled in Russia were subject to an income tax rate of 20% (2014: 20%, 2013: 20%) of taxable profits, except for profit on sales of agricultural produce taxable at 0% (2014: 0%, 2013: 0%) and profit obtained from the Group’s oil extraction activity in Samara region subject to a reduced rate of 15.5% in 2012-2016. Group entities operating in other tax jurisdictions were taxed at 0% and 12.5% (2014: 0% and 12.5%, 2013: 0% and 12.5%). The current income tax charge represents a tax accrual based on statutory taxable profits. A reconciliation between the expected and the actual taxation charge is as follows: 2015 2014 2013 Profit before tax: 25,513,727 20,891,914 3,532,720 - taxable at 0% 15,259,322 22,466,117 2,395,657 - taxable at 12.5% 2,739,003 (2,649,289) 19,974 - taxable at 15.5% 930,022 1,110,058 367,455 - taxable at 20% 6,585,380 (34,973) 749,634 Theoretical tax charge calculated at the applicable tax rate of 20%, 15.5% and 12.5% (2014: 20%, 15.5% and 12.5%, 2013: 20%, 15.5% and 12.5%) 1,803,605 (166,097) 209,379

Tax effect of items which are not deductible or assessable for taxation purposes: - non-taxable income (402,079) (24,102) (13,226) - non-deductible expenses 194,622 491,665 114,278 - share of results of associates - (9,316) - - share based remuneration 803 10,885 35,656 Utilisation of previously unrecognised tax losses 2,839 (3,847) - Withholding income tax on dividends distributed 184,211 210,550 - Deferred tax charge/ (credit) in respect of withholding income tax on dividends to be distributed 38,689 184,211 - Adjustments of income tax in respect of prior years and tax penalties 6,367 30,509 (3,778) Other (5,665) (9,523) (11,346) Income tax expense 1,823,392 714,935 330,963

45 F-56 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

25. Income tax (continued) Differences between IFRS as adopted by the EU and local statutory taxation regulations give rise to certain temporary differences between the carrying value of certain assets and liabilities for financial reporting purposes and their tax bases. Deferred taxes are attributable to the following:

Deferred tax Deferred tax credited/ assets/ (charged) to Deferred tax (liabilities) other credited/ 1 January acquisition/ comprehensive (charged) to 31 December 2015 disposal income profit or loss 2015 Tax effects of deductible/ (taxable) temporary differences: Property, plant and equipment (410,666) 14 - 10,016 (400,636) Impairment of receivables 148,372 (350) - (2,374) 145,648 Payables 21,242 - - 12,424 33,666 Financial assets 44,563 4,002,909 7,894 1,794 4,057,160 Inventory and biological assets 538,087 - - 367,184 905,271 Borrowings - (4,002,909) - - (4,002,909) Loss carried forward 364,978 - - 84,294 449,272 Withholding income tax on dividends to be distributed (184,211) - - (38,689) (222,900) Other 30,530 - - (680) 29,850 Net deferred tax (liability) / asset 552,895 (336) 7,894 433,969 994,422

Recognised deferred tax asset 1,016,544 1,490,657 Recognised deferred tax liability (463,649) (496,235)

Deferred tax Deferred tax assets/ credited/ 1 January (liabilities) (charged) to 31 December 2014 acquisition profit or loss 2014 Tax effects of deductible/ (taxable) temporary differences: Property, plant and equipment (416,756) (9,113) 15,203 (410,666) Impairment of receivables 65,238 6,081 77,053 148,372 Payables 75,131 - (53,889) 21,242 Financial assets 38,400 835 5,328 44,563 Inventory and biological assets 232,074 - 306,013 538,087 Loss carried forward 32,006 - 332,972 364,978 Withholding income tax on dividends to be distributed - - (184,211) (184,211) Other 37,553 5 (7,028) 30,530 Net deferred tax asset / (liability) 63,646 (2,192) 491,441 552,895

Recognised deferred tax asset 353,674 1,016,544 Recognised deferred tax liability (290,028) (463,649)

46 F-57 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

25. Income tax (continued) Deferred tax Deferred tax assets/ credited/ 1 January (liabilities) (charged) to 31 December 2013 acquisition profit or loss 2013 Tax effects of deductible/ (taxable) temporary differences: Property, plant and equipment (447,224) - 30,468 (416,756) Impairment of receivables 41,552 - 23,686 65,238 Payables 59,787 - 15,344 75,131 Financial assets 29,700 2,700 6,000 38,400 Inventory and biological assets 168,312 - 63,762 232,074 Loss carried forward 29,803 - 2,203 32,006 Other 18,384 - 19,169 37,553 Net deferred tax asset / (liability) (99,686) 2,700 160,632 63,646

Recognised deferred tax asset 237,838 353,674 Recognised deferred tax liability (337,524) (290,028)

In the context of the Group’s current structure tax losses and current tax assets of different companies may not be set off against taxable profits and current tax liabilities of other companies and, accordingly, taxes may accrue even where there is a net consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate to the same taxable entity. 31 December 31 December 31 December 2015 2014 2013 Deferred tax assets: -Deferred tax asset to be recovered after more than 12 months 460,709 492,729 61,576 -Deferred tax asset to be recovered within 12 months 1,029,948 523,815 292,098 1,490,657 1,016,544 353,674 Deferred tax liabilities: -Deferred tax liability to be settled after more than 12 months (278,488) (269,442) (274,575) -Deferred tax liability to be settled within 12 months (217,747) (194,207) (15,453) (496,235) (463,649) (290,028) Total net deferred tax asset 994,422 552,895 63,646 The Group has not recognised a deferred tax liability of RR 2,446,762 (2014: RR 1,435,486, 2013: RR 1,158,114) in respect of temporary differences associated with undistributed earnings of subsidiaries and associates as the Group is able to control the timing of reversal of those temporary differences and it is probable that they will not reverse in the foreseeable future. In August 2013 the Board of Directors has approved a new dividend policy with payout ratio of at least 25% of net income. As the dividends will be distributed from net income of reporting period they will be subject to current withholding income tax at the applicable rate. Refer to Note 30 “Contingencies” for description of tax risks and uncertainties.

26. Related party transactions Parties are generally considered to be related if the parties are under common control or if one party has the ability to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. All of the Group’s related party transactions during the year ended 31 December 2015, 2014 and 2013 consist of transactions with members of the Board of Directors and other key management personnel, transactions with the entities controlled by the Owner and transactions with the entities controlled by the key management personnel.

47 F-58 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

26. Related party transactions (continued) Key management personnel Share-purchase agreements In March 2011 a company controlled by Mr. Maxim Basov, a Director of ROS AGRO PLC and the CEO of OJSC Rusagro Group, purchased 5% of shares of ROS AGRO PLC from a company controlled by the Owner through two separate agreements. Under the first agreement, 3.5% of ordinary shares of ROS AGRO PLC were purchased for USD 3.5 for all shares. The terms of the agreement provide that the shares remain effectively under control of the seller and are actually transferred to the buyer gradually until July 2014 provided that Mr. Basov remains in the position of the CEO of OJSC Rusagro Group. For the purpose of these consolidated financial statements this transaction was treated as an equity-settled share-based payment transaction, under which Mr. Maxim Basov, as an employee, is granted shares of the Company as part of his compensation for the services rendered to the Group. The fair value of shares granted, determined at the grant date, less cash paid for them by the buyer, is expensed in the consolidated statements of profit or loss and other comprehensive income in accordance with the graded vesting schedule with a corresponding increase in equity. Expenses recognised under this agreement for the year ended 31 December 2014 in the amount of RR 51,651 (2013: RR 178,280) are presented under the heading “Share-based remuneration” in the consolidated statements of profit or loss and other comprehensive income. Under the second agreement, 1.5% of ordinary shares of ROS AGRO PLC were purchased for USD 15,000,000. The shares were transferred to the buyer immediately. For the purpose of these consolidated financial statements this transaction was treated as an equity-settled share-based payment transaction that vested immediately. The difference between the fair value of shares granted and cash paid for them by the buyer in the amount of RR 85,895 was expensed in 2011 with a corresponding increase in equity. The fair value of shares granted above was determined in 2011 by using a discounted cash flow analysis. These calculations used cash flow projections based on financial budgets approved by the Group management covering a five-year period. The growth rate does not exceed the long-term average growth rate for the business sector of the economy in which the Group operates. The future cash flows were discounted using a discount rate of 12% and a long-term growth rate of 4%. The discount rate was derived from the Group’s post-tax weighted average cost of capital. In 2015 the both schemes were not available. In 2014 the Group initiated a new share option incentive scheme for its top-management. Under the scheme the employees will be granted a Company’s GDR provided the remain in their position up to a specific date in the future. The amount of GDRs granted will be dependent on the average market prices of GDRs for the period preceding this date. Expenses recognized under this agreement for the year ended 31 December 2015 in the amount of RR 4,015 (2014: RR 2,772, 2013: nil) are included in “Share-based remuneration” line in the consolidated statements of profit or loss or other comprehensive income. As at 31 December 2015, the share-based payment reserve accumulated in equity as a result of the above share-based payment transactions amounted to RR 1,295,213 (31 December 2014: RR 1,291,198, 31 December 2013: RR 1,236,775). Other remuneration to key management personnel Remuneration to 14 (2014: 13, 2013: 17) representatives of key management personnel, included in payroll costs, comprised short-term remuneration such as salaries, discretionary bonuses and other short-term benefits totalling RR 1,230,938 including RR 134,450 payable to the State Pension Fund (2014: RR 876,776 and RR 77,037 respectively, 2013: RR 263,259 and RR 21,915 respectively). The Company Directors’ remuneration Included in the share-based compensation and other remuneration to key management personnel disclosed above, are the Company directors' fees, salaries and other short-term benefits totalling RR 1,002,393 in respect of the year ended 31 December 2015 (2014: RR 779,015, 2013: RR 304,866).

48 F-59 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

26. Related party transactions (continued) Key management personnel (continued) Loan agreements with the Key management personnel Balances and transactions under the loan agreements with the Key management personnel consist of the following: Transactions 2015 2014 2013 Loans issued - 17,515 - Interest accrued on loans issued 1,445 83 - Loans repaid - - 75,580 Interest payable accrued - - 2,236 Interest paid - 26,682 11,431

Balances 31 December 31 December 31 December 2015 2014 2013 Short-term loans issued (Note 4) 17,515 17,515 - Interest receivable (Note 4) 1,528 83 - Interest payable (Note 14) - - 26,682 In 2014 loans issued to the Key management personnel are denominated in Russian Roubles with an interest rate of 8.25%.

Entities controlled by the Owner Balances and transactions with entities controlled by the Owner are presented in the table below:

Transactions 2015 2014 2013 Sales of goods and services 1,585 4,203 552 Purchases of property, plant and equipment 2,300,010 1,331,115 266,913 Purchases of goods - 1,386 - Acquisition receivables under cession of rights 7,915 Loans received - 1,000,000 Loans repaid - 1,000,000 Interest accrued on loans received - - 2,270 Interest paid - - 2,270

Balances 31 December 31 December 31 December 2015 2014 2013 Advances paid for property, plant and equipment - 1,935,302 2,246,229 Trade and other receivables - 2,922 215 Trade and other payables - (34,150) (4,566) In 2013 loans received from the Entities controlled by the Owner were denominated in Russian Roubles with an interest rate of 8.4%. The loans were fully repaid in 2013.

Entities controlled by the Key Management Personnel Balances and transactions with entities controlled by the Key management personnel are presented in the table below:

Transactions 2015 2014 2013 Sale of goods and services 77,620 229,860 106,379 Purchases of goods 408 2,661,479 709,144 Purchases of services - 41,408 42,351 Provision for impairment of receivables - 24,162 - Reversal of provision for impairment of receivables 24,162 - - Foreign exchange differences gain, net - 9,317 - Purchases of property, plant and equipment - 8,227 - Loans issued 362,600 860,105 1,076,721 Loans repayments received 362,600 1,176,945 759,981 Interest accrued on loans issued 11,352 45,485 14,098 Interest received 11,320 49,373 10,210 Loans received 83,484 50,000 - Interest accrued on loans received 4,535 65 - Interest paid on loans received 3,516

49 F-60 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

26. Related party transactions (continued) Entities controlled by the Key management personnel (continued) Balances 31 December 31 December 31 December 2015 2014 2013 Trade and other receivables, gross 62 24,162 86,186 Provision for impairment of trade and other receivables - (24,162) - Prepayments - - 3,733 Short-term loans issued (Note 4) - - 316,840 Interest receivable (Note 4) - - 3,888 Trade and other payables (15) (22,749) (78,767) Short-term loans received (Note 14) (60,216) (50,000) - Interest payable (Note 14) (1,084) (65) -

Loans issued to the entities controlled by the Key Management Personnel are denominated in Russian Roubles with an interest rate of 13,93% (31 December 2014: 12%;31 December 2013: 12%). Loans were fully repaid in 2015. Loan received from the entities controlled by the Key Management Personnel is denominated in Russian Roubles with an interest rate of 9.5% valid till 31 December 2014 and average monthly MosPrimeM1 rate minus 3% valid from 1 January 2015. Trade and other receivables impaired as at 31 December 2014 were fully paid in the beginning of 2015. As at 31 December 2015 the Group had no outstanding contractual commitments in respect of purchases or construction of property, plant and equipment from the entities controlled by the Key Management Personnel (31 December 2014: RR 147,558, 31 December 2013: RR 794,840).

Associates Balances and transactions with associates are presented in the table below: Transactions 2015 2014 2013 Sales of goods and services 71,833 - - Purchases of goods 54,990 9,322 - Purchases of services 123,517 202 - Reversal of provision for impairment of receivables 1 - -

Balances 31 December 31 December 31 December 2015 2014 2013 Trade and other payables (90,140) (2) - Short-term loans issued (Note 4) 305,000 - -

27. Earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding the effect of GDRs purchased by the Company and held as treasury shares. The Company has no dilutive potential financial instruments; therefore, the diluted earnings per share equals the basic earnings per share. 2015 2014 2013 Profit for the year attributable to the Company’s equity holders 23,482,192 20,134,178 3,201,534 Weighted average number of ordinary shares in issue 23,557,470 23,559,989 23,597,478 Basic and diluted earnings per share (RR per share) 996.80 854.59 135.67

50 F-61 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

28. Segment information Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (CODM) and for which discrete financial information is available. The CODM is a person or a group of persons who allocates resources and assesses the performance of the Group. The functions of CODM are performed by the Board of Directors of ROS AGRO PLC. Description of products and services from which each reportable segment derives its revenue The Group is organised on the basis of four main business segments: • Sugar – represents production and trading operation with white sugar; • Meat – represents cultivation of pigs and selling of consumable livestock to third parties; • Agriculture – represents cultivation of plant crops (sugar beet, grain crops and other plant crops) and dairy cattle livestock; • Oil and Fat – represents vegetable oil extraction, production and sales of mayonnaise, consumer margarine, and bottled vegetable oil. Certain of the Group's businesses are not included within the reportable operating segments, as they are not included in the reports provided to the CODM. The results of these operations are included in "Other" caption. The Company, OJSC Rusagro Group and LLC Group of Companies Rusagro that represent the Group's head office and investment holding functions and earn revenue considered incidental to the Group's activities are included in "Other" caption. Factors that management used to identify the reportable segments The Group’s segments are strategic business units that focus on different customers. They are managed separately because of the differences in the production processes, the nature of products produced and required marketing strategies. Segment financial information reviewed by the CODM includes: • Quarterly reports containing information about income and expenses by business units (segments) based on IFRS numbers, that may be adjusted to present the segments results as if the segments operated as independent business units and not as the division within the Group; • Quarterly reports with a breakdown of separate material lines of IFRS consolidated statements of financial positions and IFRS consolidated statements of cash flows by segment; • In addition to the main financial indicators, operating data (such as yield, production volumes, cost per unit, staff costs) and revenue data (volumes per type of product, market share) are also reviewed by the CODM on a quarterly basis. Measurement of operating segment profit or loss, assets and liabilities The CODM assesses the performance of the operating segments based on the Adjusted EBITDA figure for the period. Adjusted EBITDA figure is not an IFRS measure. Adjusted EBITDA is reconciled to IFRS operating profit in this Note. Adjusted EBITDA is defined as operating profit before taking into account: • depreciation; • other operating income/expenses, net (other than reimbursement of operating costs (government grants)); • the difference between the gain on revaluation of biological assets and agriculture produce recognised in the year and the gain on initial recognition of agricultural produce attributable to realised agricultural produce for the year and revaluation of biological assets attributable to realised biological assets and included in cost of sales; • share-based remuneration; • provision/(reversal of provision) for net realisable value of agricultural products in stocks. Transactions between operating segments are accounted for based on financial information of individual segments that represent separate legal entities.

51 F-62 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

28. Segment information (continued) Analysis of revenues by products and services Each business segment except for the “Agriculture” segment is engaged in the production and sales of similar or related products (see above in this note). The “Agriculture” segment in addition to its main activity of growing and harvesting agricultural crops, is engaged in the cultivation of dairy cattle livestock. Related revenue from sales of milk and other livestock products was RR 129,170 (2014: RR 246,057, 2013: RR 257,574). For the amount of revenue from services, which comprise mainly processing of sugar beet for third party agricultural enterprises, see Note 18. Geographical areas of operations All the Group’s assets are located in the Russian Federation. Distribution of the Group’s sales between countries on the basis of the customers’ country of domicile was as follows: 2015 2014 2013 Russian Federation 63,430,179 51,503,880 32,818,904 Foreign countries 9,008,985 7,608,363 3,670,923 Total 72,439,164 59,112,243 36,489,827

Major customers The Group has no customer or group of customers under common control who would account for more than 10% of the Group’s consolidated revenue. Information about reportable segment adjusted EBITDA, assets and liabilities Segment information for the reportable segments’ assets and liabilities as at 31 December 2015, 2014 and 2013 is set out below:

2015 Sugar Meat Agriculture Oil and Fat Other Eliminations Total Assets 31,410,307 30,244,245 21,709,942 13,162,156 99,309,537 (66,346,891) 129,489,296 Liabilities 21,591,826 17,182,039 11,974,529 8,952,662 22,840,212 (23,623,938) 58,917,330 Additions to non-current assets* 2,928,482 6,838,897 3,268,640 715,811 65,377 172,946 13,990,153

2014 Sugar Meat Agriculture Oil and Fat Other Eliminations Total Assets 22,076,701 25,931,180 14,862,851 6,539,443 55,020,631 (42,925,039) 81,505,767 Liabilities 14,856,089 14,289,901 6,384,683 3,770,635 7,501,156 (17,115,998) 29,686,466 Additions to non-current assets* 1,664,321 1,951,650 2,224,998 312,453 98,415 - 6,251,837

2013 Sugar Meat Agriculture Oil and Fat Other Eliminations Total Assets 18,446,108 26,546,283 16,579,398 7,132,230 52,510,508 (48,084,244) 73,130,283 Liabilities 12,742,005 20,254,982 11,179,482 5,773,683 12,545,109 (23,930,011) 38,565,250 Additions to non-current assets* 833,725 3,676,927 894,057 210,675 24,965 (1,356) 5,638,993

*Additions to non-current assets exclude additions to financial instruments and deferred tax assets, goodwill and restricted cash. Segment information for the reportable segments’ adjusted EBITDA for the years ended 31 December 2015, 2014 and 2013 is set out below:

52 F-63 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

28. Segment information (continued) 2015 Sugar Meat Agriculture Oil and Fat Other Eliminations Total Sales (Note 18) 32,853,298 18,117,255 14,210,787 17,252,029 41,924 (10,036,129) 72,439,164 Net gain/ (loss) on revaluation of biological assets and agricultural produce (Note 10) - (303,980) 1,190,980 - - 1,153,860 2,040,860 Cost of sales (Note 19) (20,289,816) (11,728,195) (6,671,663) (12,664,459) - 8,082,723 (43,271,410) incl. Depreciation (861,985) (1,290,757) (731,891) (223,818) - 13,678 (3,094,773) Net gain/ (loss) from trading derivatives 223,719 - 229 - - - 223,948 Gross profit 12,787,201 6,085,080 8,730,333 4,587,570 41,924 (799,546) 31,432,562 Distribution and Selling, General and administrative expenses (Notes 20, 21) (2,689,653) (719,221) (2,017,231) (3,277,525) (1,570,593) 894,670 (9,379,553) incl. Depreciation (108,308) (28,880) (157,811) (128,106) (24,677) 31,563 (416,219) Share-based remuneration - - - - (4,015) - (4,015) Other operating income/(expenses), net (Note 22) (63,221) 851,773 (228,584) 59,222 16,180,603 (16,610,810) 188,983 incl. Reimbursement of operating costs (government grants) - 682,396 217,864 - - - 900,260 Operating profit 10,034,327 6,217,632 6,484,518 1,369,267 14,647,919 (16,515,686) 22,237,977 Adjustments: Depreciation included in Operating Profit 970,293 1,319,637 889,702 351,924 24,677 (45,241) 3,510,992 Other operating (income) /expenses, net 63,221 (851,773) 228,584 (59,222) (16,180,603) 16,610,810 (188,983) Share-based remuneration - - - - 4,015 - 4,015 Reimbursement of operating costs (government grants) - 682,396 217,864 - - - 900,260 Net gain/ (loss) on revaluation of biological assets and agricultural produce - 303,980 (1,190,980) - - (1,153,860) (2,040,860) Adjusted EBITDA* 11,067,841 7,671,872 6,629,688 1,661,969 (1,503,992) (1,103,977) 24,423,401

* Non-IFRS measure

F- 53 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

28. Segment information (continued) 2014 Sugar Meat Agriculture Oil and Fat Other Eliminations Total Sales (Note 18) 22,463,664 17,750,521 10,710,176 14,920,094 45,558 (6,777,770) 59,112,243 Net gain/ (loss) on revaluation of biological assets and agricultural produce (Note 10) - 1,776,114 110,696 - - 706,875 2,593,685 Cost of sales (Note 19) (16,648,910) (10,114,025) (5,827,146) (10,552,318) - 5,142,738 (37,999,661) incl. Depreciation (823,648) (1,341,535) (713,102) (231,919) - (43,559) (3,153,763) Net gain/ (loss) from trading derivatives 375,305 - - - - - 375,305 Gross profit 6,190,059 9,412,610 4,993,726 4,367,776 45,558 (928,157) 24,081,572 Distribution and Selling, General and administrative expenses (Notes 20, 21) (2,310,319) (494,835) (1,543,870) (2,852,293) (1,070,871) 808,699 (7,463,489) incl. Depreciation (105,323) (13,968) (106,843) (134,860) (24,873) 42,598 (343,269) Share-based remuneration - - - - (54,423) - (54,423) Other operating income/(expenses), net (Note 22) 82,069 376,370 (150,321) 85,900 7,236,857 (7,357,991) 272,884 incl. Reimbursement of operating costs (government grants) - 331,844 216,201 - - - 548,045 Operating profit 3,961,809 9,294,145 3,299,535 1,601,383 6,157,121 (7,477,449) 16,836,544 Adjustments: Depreciation included in Operating Profit 928,971 1,355,503 819,945 366,779 24,873 961 3,497,032 Other operating (income) /expenses, net (82,069) (376,370) 150,321 (85,900) (7,236,857) 7,357,991 (272,884) Share-based remuneration - - - - 54,423 - 54,423 Reimbursement of operating costs (government grants) - 331,844 216,201 - - - 548,045 Net gain/ (loss) on revaluation of biological assets and agricultural produce - (1,776,114) (110,696) - - (706,875) (2,593,685) Adjusted EBITDA* 4,808,711 8,829,008 4,375,306 1,882,262 (1,000,440) (825,372) 18,069,475

* Non-IFRS measure

54 F- ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

28. Segment information (continued) 2013 Sugar Meat Agriculture Oil and Fat Other Eliminations Total Sales (Note 18) 16,962,740 7,421,338 8,529,185 8,919,552 117,486 (5,460,474) 36,489,827 Net gain/ (loss) on revaluation of biological assets and agricultural produce (Note 10) - 566,624 (126,447) - - (173,584) 266,593 Cost of sales (Note 19) (14,087,051) (6,820,765) (5,368,770) (6,567,290) - 4,770,119 (28,073,757) incl. Depreciation (799,937) (1,214,092) (680,016) (220,076) - (72,889) (2,987,010) Net gain/ (loss) from trading derivatives 175,407 - - - - - 175,407 Gross profit 3,051,096 1,167,197 3,033,968 2,352,262 117,486 (863,939) 8,858,070 Distribution and Selling, General and administrative expenses (Notes 20, 21) (2,208,689) (389,437) (1,852,068) (1,641,364) (532,865) 1,007,552 (5,616,871) incl. Depreciation (107,587) (13,165) (91,572) (94,316) (17,788) 40,577 (283,851) Share-based remuneration - - - - (178,280) - (178,280) Other operating income/(expenses), net (Note 22) (235,436) 186,377 10,750 (21,443) 2,883,643 (2,940,428) (116,537) incl. Reimbursement of operating costs (government grants) - 287,450 281,186 - - - 568,636 Operating profit 606,971 964,137 1,192,650 689,455 2,289,984 (2,796,815) 2,946,382 Adjustments: Depreciation included in Operating Profit 907,524 1,227,256 771,588 314,392 17,788 32,313 3,270,861 Other operating (income) /expenses, net 235,436 (186,377) (10,750) 21,443 (2,883,643) 2,940,428 116,537 Share-based remuneration - - - - 178,280 - 178,280 Reimbursement of operating costs (government grants) - 287,450 281,186 - - - 568,636 Net gain/ (loss) on revaluation of biological assets and agricultural produce - (566,624) 126,447 - - 173,584 (266,593) Reversal of provision for net realisable value of agricultural products in stocks (30,090) - - - - - (30,090) Adjusted EBITDA* 1,719,841 1,725,841 2,361,121 1,025,290 (397,591) 349,511 6,784,013

* Non-IFRS measure

55 F- ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including commodity price risk, foreign exchange risk, cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group does not use derivative financial instruments to hedge its risk exposures except for raw sugar commodity price risk management as described below. Operating risk management is carried out on the level of the finance function of the Group’s business segments with overall monitoring and control by management of the Group. The management is implementing principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest-rate risk, credit risk, use of non-derivative financial instruments, and investing excess liquidity. Credit risk The credit risk represents the risk of losses for the Group owing to default of counterparties on obligations to transfer to the Group cash and cash equivalents and other financial assets. Activities of the Group that give rise to credit risk include granting loans, making sales to customers on credit terms, placing deposits with banks and performing other transactions with counterparties giving rise to financial assets. The Group’s maximum exposure to credit risk at the reporting date without taking account of any collateral held is as follows: 31 December 2015 31 December 2014 31 December 2013 Long-term financial assets Bank deposits (Note 11) 14,714,290 696,500 696,500 Interest receivable (Note 11) 251,959 182,717 118,291 Loans issued (Note 11) 26,629 26,526 26,484 Restricted cash (Note 3) 71,142 17,373 2,404 Other long-term investments (Note 11) 5,322 4,081 2,828 Total long-term financial assets 15,069,342 927,197 846,507

Short-term financial assets Cash and cash equivalents (Note 3) 4,401,703 10,316,313 2,672,764 Bonds (Note 4) 3,318,378 - - Bonds held for trading (Note 4) - 6,684,189 - Financial assets within trade and other receivables (Note 5) 3,111,366 2,037,125 1,547,115 Bank deposits (Note 4) 15,635,460 992,200 13,467,355 Loans issued (Note 4) 10,452,702 1,014,037 323,223 Interest receivable (Note 4) 694,065 167,736 367,685 Financial derivatives (Note 4) 28,444 95,627 8,298 Promissory notes (Note 4) - - 1,100,000 Total short-term financial assets 37,642,118 21,307,227 19,486,440 Total 52,711,460 22,234,424 20,332,947

As at 31 December 2015 the Group has collateral against RR 301,327 of its trade receivables (31 December 2014: RR 212,130, 2013: RR 163,734). The Group has geographical concentration of credit risk in the Russian market since the majority of the Group’s customers conduct their business in Russian Federation.

F-67 56 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Credit risk (continued) For minimisation of credit risk related to cash in bank, bank deposits and restricted cash the Group places cash in financial institutions which at the moment of transaction have the minimum risk of a default. The table below shows the rating and balances with major banks at the reporting dates: 31 December 2015 31 December 2014 31 December 2013 Rating agency Rating Balance Rating Balance Rating Balance Vnesheconombank Fitch Ratings bbb- 14,071,183 - - Sberbank RF Fitch Ratings bbb- 8,909,772 bbb 1,595,394 bbb 530,763 Alfa Bank Fitch Ratings bb+ 8,636,157 bb+ 1,002,390 bb+ 11,518,566 VTB Bank Moody's Ba2 1,503,310 Ba1 570,596 - - Rosselkhozbank Fitch Ratings b- 1,263,951 bbb- 24 bbb- 380,501 Gazprombank Fitch Ratings bb- 500,460 - - Locko Bank Fitch Ratings b+ 457,256 b+ 456,102 b+ 924,322 Credit Suisse Fitch Ratings a 86,594 a 8,606,390 a 288,547 Bank of Cyprus Fitch Ratings ccc 16,817 - - Garanti Bank Moscow Fitch Ratings - bbb bbb 50,380 Credit bank of Moscow Fitch Ratings bb 21 bb - bb 1,370,856 Bank Saint Petersburg Fitch Ratings - bb- - bb- 2,064,437 UniCredit Bank Fitch Ratings - BBB - BBB- 42 Renaissance Capital Moody's - B3 522 - Other - 696 - 314 - 279 Total cash at bank, bank deposits and restricted cash (Note 3, 4, 11) 35,446,217 12,231,732 17,128,693

The table below shows the rating and balances of promissory notes with banks and other counterparties at the reporting dates: 31 December 2015 31 December 2014 31 December 2013 Rating agency Rating Balance Rating Balance Rating Balance

Sberbank RF Fitch Ratings BBB- - BBB - BBB 1,100,000 Total promissory notes (Note 4) - - 1,100,000

As at 31 December 2015, as at 31 December 2013 the Group does not have bond held for trading. The table below shows the rating and balances of bonds held for trading at 31 December 2014: 31 December 2015 31 December 2014 31 December 2013 Rating agency Rating Balance Rating Balance Rating Balance

VIMPELCOM HOLDINGS B.V. Moody's - - Ba3 1,350,202 - - ROSNEFT International Standard & Finance Limited Poor’s - - BBB- 1,292,416 - - Standard & GPN CAPITAL S.A. Poor’s - - BBB- 1,040,274 - - NOVATEK International Moody's - - Baa3 846,724 - - Sberbank RF Fitch Ratings - - BBB 858,576 - - Standard & GAZ CAPITAL SA Poor’s - - BBB- 495,797 - - Russian Federation Moody’s - - Baa3 474,345 - - Standard & Alfa Bank Poor’s - - BB+ 447,636 - - Total bonds (Note 4) - 6,805,970 -

57 F-68 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Financial assets that are neither past due nor impaired and not renegotiated as at the reporting date 31 December 2015 31 December 2014 31 December 2013

Long-term financial assets Bank deposits (Note 11) 14,714,290 696,500 696,500 Available-for-sale investments (Note 11) 380,212 19,305 26, 712 Interest receivable (Note 11) 251,959 182,717 118,291 Restricted cash (Note 3) 71,142 17,373 2,404 Loans issued (Note 11) 26,629 26,526 26,484 Other long-term investments (Note 11) 5,322 4,081 2,828 Total long-term financial assets 15,449,554 946,502 873,219

Short-term financial assets Bank deposits (Note 4) 15,635,460 992,200 13,467,355 Loans issued to third parties (Note 4) 7,613,640 996,522 6,383 Cash and cash equivalents (Note 3) 4,401,703 10,316,313 2,672,764 Bonds held for trading (Note 4) - 6,684,189 - Bonds (Note 4) 3,318,378 - - Trade receivables 2,947,205 1,940,558 1,517,320 Interest receivable (Note 4) 692,537 167,736 367,685 Other short-term receivables 45,491 95,221 23,864 Financial derivatives (Note 4) 28,444 95,627 8,298 Loans issued to related parties (Note 4) 17,515 17,515 316,840 Promissory notes (Note 4) - - 1,100,000 Total short-term financial assets 34,700,373 21,305,881 19,480,509 Total 50,149,927 22,252,383 20,353,728 Neither past due nor impaired trade receivables relate to the customers who have a long-standing relationship with the Group and a sound trading history. Concentrations of trade receivables by type of customer are as follows: 31 December 2015 31 December 2014 31 December 2013 Distribution and retail outlets 1,780,142 1,245,066 923,723 Manufacturers (candy, juice and other) 1,137,421 675,570 532,624 Other not categorised 29,642 19,922 60,973 Total trade receivables 2,947,205 1,940,558 1,517,320 The majority of the customers do not have independent ratings. To minimize the risk of default on payment of amounts due by counterparties for supplied goods or rendered services the Group regularly revises the maximum amount of credit and grace periods for each significant customer. Financial assets that are past due but not impaired as at the reporting date 31 December 2015 31 December 2014 31 December 2013 Overdue short-term loans issued - 3 months and less 2,516,547 - - - over 3 months 306,528 - - Total 2,823,075 - -

Financial assets that are impaired as at the reporting date The table below shows the analysis of impaired financial assets: 31 December 2015 31 December 2014 31 December 2013 Nominal Nominal Nominal value Impairment Value Impairment value Impairment Impaired receivables (Note 5): - trade receivables 176,726 (72,924) 93,476 (93,476) 82,694 (77,346) - other receivables 115,951 (101,083) 53,043 (51,421) 18,785 (18,202) Short-term loans issued 90,000 (26,000) - - - - Total 382,677 (200,007) 146,519 (144,897) 101,479 (95,548) Financial assets are impaired when there is evidence that the Group will not receive the full amount due or receive the full amount later than contracted. Factors to consider include whether the receivable is past due, the age of the receivable and past experience with the counterparty.

58 F-69 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Financial assets that would otherwise be impaired whose terms have been renegotiated The Group has no financial assets at 31 December 2015, 2014 and 2013 that would otherwise be impaired whose terms have been renegotiated. Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available. The Group Treasury analyses the net debt position as disclosed in Note 14. The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date: Carrying Contractual undiscounted cash flows At 31 December 2015 value Total 2016 2017 2018-2020 After 2020 Borrowings and loans (Note 14) - principal amount 49,710,587 69,581,257 25,496,431 4,651,272 8,935,161 30,498,393 - interest 187,416 8,168,502 1,795,441 1,419,464 2,721,177 2,232,420 Financial liabilities within trade and other payables (Note 15) 1,858,198 1,858,198 1,858,198 - - - Total 51,756,201 79,607,957 29,150,070 6,070,736 11,656,338 32,730,813

Carrying Contractual undiscounted cash flows At 31 December 2014 value Total 2015 2016 2017-2019 After 2019 Borrowings and loans (Note 14) - principal amount 22,240,290 22,241,066 12,434,760 3,333,332 6,440,774 32,200 - interest 65,639 3,305,439 1,758,362 814,336 727,428 5,313 Financial liabilities within trade and other payables (Note 15) 1,442,954 1,442,954 1,442,954 - - - Total 23,748,883 26,989,459 15,636,076 4,147,668 7,168,202 37,513

At 31 December 2013 Total 2014 2015 2016-2018 After 2018 Borrowings and loans (Note 14) - principal amount 32,457,041 32,518,073 18,088,242 4,745,705 9,004,833 679,293 - interest 56,012 4,979,043 2,311,294 1,186,137 1,444,768 36,844 Financial liabilities within trade and other payables (Note 15) 1,167,022 1,167,022 1,167,022 - - - Total 33,680,075 38,664,138 21,566,558 5,931,842 10,449,601 716,137

The rate of CBRF used for calculating interest payments for government loans (Note 14) is 17.00% (2013: 8.25%). The exchange rates used for calculating payments for bank borrowings denominated in currencies other than Russian Roubles: 31 December 2015 31 December 2014 31 December 2013 US Dollar 72,8827 56.2584 32.7292 Euro 79,6972 68.3427 44.9699

In addition the Group has commitments as disclosed in Note 31. Market risk Market risk, associated with financial instruments, is the risk of change of fair value of financial instruments or the future cash flows expected on a financial instrument, owing to change in interest rates, exchange rates, prices for the commodities or other market indicators. From the risks listed above the Group is essentially exposed to the risks associated with changes in interest rates, exchange rates and commodity prices.

59 F-70 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Market risk (continued) Cash flow and fair value interest rate risk The Group’s income and operating cash flows are exposed to changes in market interest rates. The Group’s interest rate risk arises from short-term and long-term borrowings. Borrowings at variable rates expose the Group to cash flow interest rate risk. Borrowings at fixed rates expose the Group to fair value interest rate risk. The Group’s policy is to maintain most of its borrowings in fixed rate instruments. The Group does not have formal policies and procedures in place for management of fair value interest rate risk. Interest rates under most of the Group’s borrowings are fixed. However, the terms of the contracts stipulate the right of the creditor for a unilateral change of the interest rate (both increase and decrease), which can be based, among other triggers, on a decision of the CBRF to change the refinancing rate. Additionally in 2014 and 2013, under government budget loans (Note 14) the Group paid interest at ¼ of the current refinancing rate of the CBRF. Bank deposits and loans issued bear fixed interest rate and therefore are not exposed to cash flow interest rate risk. The Group analyses its interest rate exposure on a continuous basis. Various scenarios are considered taking into consideration refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each scenario, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions. During the year ended 31 December 2015, had interest rate for borrowings with other than fixed rate been increased/decreased by 600 basis points the profit before taxation would have been RR 7,851,461 (2014: RR 1,224,699, 2013: RR 226,394) lower/higher. Foreign exchange risk As at 31 December 2015, 2014 and 2013, foreign exchange risk arises on cash in banks, short-term investments, long-term investments, trade and other receivables, borrowings and trade and other payables denominated in foreign currency (Notes 3, 4, 5, 13 and 14). At 31 December 2015, if the Russian Rouble had weakened/strengthened by 30% (31 December 2014: 30%, 31 December 2013: 10%) against the US dollar with all other variables held constant, the Group’s profit before taxation would have been RR 2,610,244 lower/higher (2014: 4,974,049 lower/higher, 2013: RR 81,370 higher/lower). At 31 December 2015 if the Russian Rouble had weakened/strengthened by 30% (31 December 2014: 30%, 31 December 2013: 10%) against the Euro with all other variables held constant, the Group’s profit before taxation would have been RR 78,269 (2014: RR 269,005, 2013: RR 96,423) lower/higher. Purchase price risk The Group purchases raw sugar and manages its exposure to this commodity price risk through financial derivatives. In 2015, the Group’s total purchases of raw sugar were RR 3,434,006 (2014: RR 3,490,541, 2013: RR 1,641,337). The Group trades raw sugar derivatives on ICE Futures US through an agent. Through derivatives, management aims to offset its long position in sugar inventory in order to minimise effects of price fluctuations on the results of the Group. The gains less losses on trading sugar derivatives of RR 223,948 (2014: RR 375,305, 2013: RR 175,407) are presented as a separate line within the consolidated statements of profit or loss and other comprehensive income. The Group is exposed to equity securities price risk arising on investments held by the Group and classified in the consolidated statements of financial position either as available for sale or at fair value through profit or loss (Note 11). The Group does not manage its price risk arising from investments in equity securities. Sales price risk Changes in white sugar prices from January until August are closely related to changes in world raw sugar prices that is implicitly managed through the raw sugar derivatives (see above). The storage facilities of own sugar plants permit to build up stocks of white sugar to defer sales to more favourable price periods. The Group is exposed to financial risks arising from changes in milk, meat and crops prices (Note 10).

60 F-71 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Fair value estimation The estimated fair values of financial instruments have been determined by the Group using available market information, where it exists, and appropriate valuation methodologies. However, judgement is necessarily required to interpret market data to determine the estimated fair value. The Russian Federation continues to display some characteristics of an emerging market and economic conditions continue to limit the volume of activity in the financial markets. Market quotations may be outdated or reflect distress sale transactions and therefore not represent fair values of financial instruments. Management has used all available market information in estimating the fair value of financial instruments. Financial assets carried at amortised cost The fair value of floating rate instruments is normally their carrying amount. The estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risk and remaining maturity. Discount rates used depend on credit risk of the counterparty. They are within level 3 of fair value hierarchy. Liabilities carried at amortised cost The fair value of floating rate instruments is normally their carrying amount. The estimated fair value of fixed interest rate instruments with stated maturity was estimated based on expected cash flows discounted at current interest rates for new instruments with similar credit risk and remaining maturity. They are within level 3 of fair value hierarchy. Financial instruments by measurement categories and fair values as at 31 December 2015 At fair value Other at through Total Loans and amortised Available for profit or carrying receivables cost sale loss amount Fair value Financial assets Cash and cash equivalents 4,401,703 - - - 4,401,703 4,401,703 Bonds (Note 4) - - 3,318,378 - 3,318,378 3,318,378 Loans issued (Note 4) 10,452,702 - - - 10,452,702 10,452,702 Bank deposits (Note 4) 15,635,460 - - - 15,635,460 15,635,460 Interest receivable (Note 4) 694,065 - - - 694,065 695,065 Financial derivatives (Note 4) - - - 28,444 28,444 28,444 Financial assets within trade and other receivables (Note 5) 3,111,366 - - - 3,111,366 3,111,366 Total short-term financial assets 34,295,296 - 3,318,378 28,444 37,642,118 37,642,118 Restricted cash 71,142 - - - 71,142 71,142 Loans issued (Note 11) 26,629 - - - 26,629 26,629 Bank deposits (Note 11) 14,714,290 - - - 14,714,290 14,714,290 Interest receivable (Note 11) 251,959 - - - 251,959 251,959 Available-for-sale investments (Note 11) - - 380,212 - 380,212 380,212 Other long-term investments (Note 11) 5,322 - - - 5,322 5,322 Total long-term financial assets 15,069,342 - 380,212 - 15,449,554 15,449,554 Total financial assets 49,364,638 - 3,698,590 28,444 53,091,672 53,091,672 Financial liabilities Short-term borrowings - 25,860,464 - - 25,860,464 25,860,464 Financial liabilities within trade and other payables (Note 15) - 1,858,198 - - 1,858,198 1,858,198 Total short-term financial liabilities - 27,718,662 - - 27,718,662 27,718,662 Long-term borrowings - 24,037,539 - - 24,037,539 24,037,539 Total long-term financial liabilities - 24,037,539 - - 24,037,539 24,037,539 Total financial liabilities - 51,756,201 - - 51,756,201 51,756,201

61 F-72 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Financial instruments by measurement categories and fair values as at 31 December 2014 Other at At fair value Total Loans and amortised Available through profit carrying receivables cost for sale or loss amount Fair value Financial assets Cash and cash equivalents 10,316,313 - - - 10,316,313 10,316,313 Bonds held for trading (Note 4) - - - 6,684,189 6,684,189 6,684,189 Loans issued (Note 4) 1,014,037 - - - 1,014,037 1,014,037 Bank deposits (Note 4) 992,200 - - - 992,200 992,200 Interest receivable (Note 4) 167,736 - - - 167,736 167,736 Financial derivatives (Note 4) - - - 95,627 95,627 95,627 Financial assets within trade and other receivables (Note 5) 2,037,125 - - - 2,037,125 2,037,125 Total short-term financial assets 14,527,411 - - 6,779,816 21,307,227 21,307,227 Restricted cash 17,373 - - - 17,373 17,373 Loans issued (Note 11) 26,526 - - - 26,526 16,379 Bank deposits (Note 11) 696,500 - - - 696,500 533,609 Interest receivable (Note 11) 182,717 - - - 182,717 102,208 Available-for-sale investments (Note 11) - - 19,305 - 19,305 19,305 Other long-term investments (Note 11) - - 4,081 - 4,081 861 Total long-term financial assets 923,116 - 23,386 - 946,502 689,735 Total financial assets 15,450,527 - 23,386 6,779,816 22,253,729 21,996,962 Financial liabilities Short-term borrowings - 12,499,623 - - 12,499,623 12,499,623 Financial liabilities within trade and other payables (Note 15) - 1,442,954 - - 1,442,954 1,442,954 Total short-term financial liabilities - 13,942,577 - - 13,942,577 13,942,577 Long-term borrowings - 9,806,306 - - 9,806,306 8,740,650 Total long-term financial liabilities - 9,806,306 - - 9,806,306 8,740,650 Total financial liabilities - 23,748,883 - - 23,748,883 22,683,227

62 F-73 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

29. Financial risk management (continued) Financial instruments by measurement categories and fair values as at 31 December 2013 Loans and Other at Available At fair value Total Fair value receivables amortised for sale through profit carrying

cost or loss amount Financial assets Cash and cash equivalents 2,672,764 - - - 2,672,764 2,672,764 Loans issued (Note 4) 323,223 - - - 323,223 323,223 Promissory notes (Note 4) 1,100,000 - - - 1,100,000 1,100,000 Bank deposits (Note 4) 13,467,355 - - - 13,467,355 13,467,355 Interest receivable (Note 4) 367,685 - - - 367,685 367,685 Financial derivatives (Note 4) - - - 8,298 8,298 8,298 Financial assets within trade and other receivables (Note 5) 1,547,115 - - - 1,547,115 1,547,115 Total short-term financial assets 19,478,142 - - 8,298 19,486,440 19,486,440 Restricted cash 2,404 - - - 2,404 2,404 Loans issued (Note 11) 26,484 - - - 26,484 26,484 Bank deposits (Note 11) 696,500 - - - 696,500 696,500 Interest receivable (Note 11) 118,291 - - - 118,291 118,291 Available-for-sale investments (Note 11) - - 26,712 - 26,712 26,712 Other long-term investments (Note 11) - - 2,828 - 2,828 2,828 Total long-term financial assets 843,679 - 29,540 - 873,219 873,219 Total financial assets 20,321,821 - 29,540 8,298 20,359,659 20,359,659 Financial liabilities Short-term borrowings - 18,144,254 - - 18,144,254 18,144,254 Financial liabilities within trade and other payables (Note 15) - 1,167,022 - - 1,167,022 1,167,022 Total short-term financial liabilities - 19,311,276 - - 19,311,276 19,311,276 Long-term borrowings - 14,368,799 - - 14,368,799 14,368,799 Total long-term financial liabilities - 14,368,799 - - 14,368,799 14,368,799 Total financial liabilities - 33,680,075 - - 33,680,075 33,680,075

The Group management uses discounted cash flow valuation technique in the financial instruments fair value measurement for level 3 measurements. The fair value is based on discounting of cash flows using 12.84-13.23% (2014: 13.31-18.31%, 2013: 11%) discount rate. Fair value of bonds held-for trading is derived from open active markets and is within level 1 of the fair value hierarchy. Fair value of bonds classified as available-for-sale is within level 2 of the fair value hierarchy and the inputs are derived from open market as the last quotations. Sensitivity to valuation inputs for financial assets and financial liabilities, if changing one or more of the unobservable inputs to reflect reasonably possible alternative assumptions would not change fair value significantly. For this purpose, significance was judged with respect to profit or loss, and total assets or total liabilities, or, when changes in fair value are recognised in other comprehensive income, total equity. There were no changes in valuation technique for level 3 recurring fair value measurements during the year ended 31 December 2015 (2014: none, 2013: none). Capital management The primary objective of the Group’s capital management is to maximize participants’ return while sustaining a reasonable level of financial risks. The Group does not have a quantified target level of participants’ return or capital ratios. To fulfil capital management objectives while providing for external financing of regular business operations and investment projects, the Group management compares expected return of these operations and projects with the costs of debt and maintains prudent financial risk management as described above. The Group companies complied with all externally imposed capital requirements throughout 2015, 2014 and 2013.

63 F-74 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

30. Contingencies Tax legislation Russian tax and customs legislation which was enacted or substantively enacted at the end of the reporting period is subject to varying interpretations when being applied to the transactions and activities of the Group. Consequently, tax positions taken by management and the formal documentation supporting the tax positions may be challenged tax authorities. Russian tax administration is gradually strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant counterparties. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year when decision about review was made. Under certain circumstances reviews may cover longer periods. Russian transfer pricing legislation was introduced from 1999 and was amended with effect from 1 January 2012. The new transfer pricing rules appear to be more technically elaborate and, to a certain extent, better aligned with the international transfer pricing principles developed by the Organisation for Economic Cooperation and Development (OECD). The new legislation provides the possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of controlled transactions (transactions with related parties and some types of transactions with unrelated parties), provided that the transaction price is not arm's length. Management believes that its pricing policy used in 2014 and preceding years is arm's length and it has implemented internal controls to be in compliance with the new transfer pricing legislation. Given the specifics of transfer pricing rules, the impact of any challenge of the Group’s transfer prices cannot be reliably estimated, however, it may be significant to the financial conditions and/or the overall operations of the Group. The Group includes companies incorporated outside of Russia. The tax liabilities of the Group are determined on the assumption that these companies are not subject to Russian profits tax, because they do not have a permanent establishment in Russia. This interpretation of relevant legislation may be challenged but the impact of any such challenge cannot be reliably estimated currently; however, it may be significant to the financial position and/or the overall operations of the Group. As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of such uncertain areas that reduce the overall tax rate of the Group. While management currently estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible risk that outflow of resources will be required should such tax positions and interpretations be challenged by the tax authorities. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of the Group. In addition to the above matters, at 31 December 2013 management estimated that the Group has other possible obligations from exposure to other than remote tax risks of RR 81,716. These exposures are estimates that result from uncertainties in interpretation of applicable legislation and related documentation requirements. As at 31 December 2015 and 2014 management determined that there were no such obligations. Management will vigorously defend the Group's positions and interpretations that were applied in determining taxes recognised in these consolidated financial statements if these are challenged by the authorities. Social obligations Some production companies of the Group have collective agreements signed with the employees. Based on these contracts the companies make social payments to the employees. The amounts payable are determined in each case separately and depend primarily on performance of the company. These payments do not satisfy the liability recognition criteria listed in IAS 19, “Employee Benefits”. Therefore, no liability for social obligations was recognised in these consolidated financial statements. Legal proceedings From time to time and in the normal course of business, claims against the Group may be received. On the basis of its own estimates, management is of the opinion that no material losses will be incurred in respect of claims. There are no current legal proceedings or other claims outstanding which could have a material effect on the results of operations and financial position of the Group. Operating environment of the Group The uncertainties related to the operating environment of the Group are described in Note 1.

64 F-75 ROS AGRO PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED 31 DECEMBER 2015, 2014 AND 2013 (IN THOUSANDS OF RUSSIAN ROUBLES, UNLESS NOTED OTHERWISE)

31. Commitments Contractual capital expenditure commitments As at 31 December 2015 the Group had outstanding contractual commitments in respect of purchases or construction of property, plant and equipment in the amount of RR 10,045,193 (31 December 2014: RR 1,759,762; 31 December 2013: RR 1,326,523). As at 31 December 2014 the Group had outstanding contractual commitments in respect of purchases of biological assets in the amount of RR 615 (31 December 2013: RR 3,132). Operating lease commitments As at 31 December 2015, the Group had 719 land lease agreements (31 December 2014: 678, 31 December 2013: 433), of these 398 land lease agreements (31 December 2014: 416, 31 December 2013: 170) fixed rent payments are defined and denominated in Russian Roubles. For these land lease agreements the future minimum lease payments under non-cancellable operating leases are as follows:

31 December 31 December 31 December 2015 2014 2013 Not later than 1 year 144,726 101,580 80,062 Later than 1 year and not later than 5 years 296,287 307,200 188,323 Later than 5 years 1,140,233 1,163,795 767,276 Total 1,581,246 1,572,575 1,035,661

In addition, in 321 land lease agreements (31 December 2014: 262, 31 December 2013: 263) the rent is established as a non-monetary measure based on a certain share of agricultural produce harvested or a fixed volume of harvested crops. For 2015 related rent expenses were RR 283,733 (2014: RR 217,752, 2013: RR 205,675). 32. Subsequent events The Board of Directors recommends the payment of dividends for the year 2015 amounting to RR 7,107,101 thousand. Given the Company has already paid interim dividends for the first half of 2015, with a total pay-out RR 1,800,959 thousand, the additional distributed amount for the year 2015 is RR 5,306,142 thousand. The dividend per share will be fixed at the dividend Record date set on 27 May 2016. The proposed dividend is subject to approval by the shareholders at the Annual General Meeting. These consolidated financial statements do not reflect the dividends that have not been approved on the reporting date. In March 2016 the Group entered into a preliminary agreement for the acquisition of controlling interest in share capital of three sugar plants and one agricultural entity. The main agreement is expected to be signed not later than 20 April 2016 provided the fulfilment by the seller and the buyer the precedent conditions on obtaining internal corporate approvals. The amount of consideration was agreed to be RR 8,100,000. There were no other material post balance sheet events occurring after the end of the reporting period requiring disclosure in these consolidated financial statements.

65 F-76 THE COMPANY ROS AGRO PLC 8 Mykinon Nicosia, 1065 Cyprus

JOINT GLOBAL COORDINATORS, JOINT BOOKRUNNERS AND JOINT LEAD MANAGERS J.P. Morgan Securities plc UBS Limited VTB Capital plc 25 Bank Street, Canary Wharf 1 Finsbury Avenue 14 Cornhill London E14 5JP London EC2M 2PP London EC3V 3ND United Kingdom United Kingdom United Kingdom

LEGAL ADVISERS TO THE COMPANY As to English and U.S. law As to Russian law As to Cypriot law Baker & McKenzie LLP Baker & McKenzie – CIS, Limited Harneys Aristodemou Loizides 100 New Bridge Street White Gardens, 10th Floor Yiolitis LLC London EC4V 6JA 9 Lesnaya Street Omrania Centre United Kingdom Moscow 125047 313 28th October Ave Russia Federation 3105 Limassol Cyprus

LEGAL ADVISERS TO THE JOINT GLOBAL COORDINATORS, JOINT BOOKRUNNERS AND JOINT LEAD MANAGERS As to English and U.S. law As to Russian law White & Case LLP White & Case LLC 5 Old Broad Street 4 Romanov Pereulok London EC2N 1DW 125009 Moscow United Kingdom Russian Federation

INDEPENDENT AUDITORS PricewaterhouseCoopers Limited Julia House 3 Themistocles Dervis Street CY-1066 Nicosia Cyprus

THE DEPOSITARY The Bank of New York Mellon 101 Barclay Street 22nd floor West, New York New York 10286 Merrill Corporation Ltd, London 16ZAZ71001