Development strategy

The Group’s overall business strategy is to become the leading agricultural producer in Ukraine. Key elements of the Group strategy can be summarized below.

The Group has continually sought to improve financial and operational margins and it intends to continue improving its margins by implementing no-till technology on all of its harvested land which the Group expects will result in significant decreases in labor and fuel costs compared to other agricultural producers in Ukraine. Approximately 47,000 hectares in 2009 were cultivated by the Group using no-till technology.

The Company intends to further expand its harvested land bank by continuing to increase its land-lease rights in Luhansk region, particularly in areas near its elevator storage facilities. In the medium term, Agroton management intends to manageably expand its crop farming capacities through natural growth and by acquiring companies that control land plots, concentrating on fertile soils close to its existing farmlands.

The Company plans to further increase its elevator storage capacities through the acquisition and construction of elevators, in proportion to its planned expansion of its harvested land bank. Management believes that self-sufficiency in storage capacities enables the Group to achieve better pricing terms for its crops than can otherwise be obtained at harvest time.

The Group is focused on good corporate governance and intends to achieve standards comparable to well-governed Western companies. The Board of Directors of Agroton is responsible for setting and reviewing the strategy and approving major Group financial documents, including the annual budget and business plan. Two independent non-executive directors are present on the four-member Board, which meets at least two times per year.