Mriya operational update

New management of Mriya provided its update on current situation and presented data for operations in October-November. According to report total gross yield of the company in Y2015 made 320k tons of grains and oilseeds, harvested area made more than 120k ha.

Yields for late crops were mainly lower than expected, in a view of unfavorable weather conditions in regions of the company operations (so, it is general market situation). As a result yield per 1 ha for corn made only 4.4 tons (harvested area 12.3k ha), for soybeans close to 1.0 tons (18.6k ha). Sunflower seeds harvest suffered less, as generally this crop is more resistant to dry weather conditions vs., for example, soybeans. Yield of sunflower seeds made 2.1 tons per 1 ha (harvested area 18.9k ha). As a reminder last seasons harvest of winter wheat was quite acceptable at 4.1 tons per 1 ha (though lower than yield of other largest agro-holdings, which most likely had on average higher cost per 1 ha).

The company realized 110k tons of new harvest grains and oilseeds in October-November period, another close to 60k tons as of beginning of December are stored at the companys silos. Mriya repaid to its creditors USD 15M out of USD 25M emergency working capital loan provided by creditors to finance operations of the company in June15. The rest of loan is extended until 31 January16 (as can be seen covered by grains at silos). We expect that new emergency loan will be provided to the company to provide for sowing campaign in spring.

As for new season program, firstly, management of Mriya plans to increase total sown area up to 160k ha (from 120k ha in previous season). The company already increased sown area under winter wheat from 28.8k ha in last year up to 61.4k ha. Basing on report at the moment winter wheat is mainly in good and satisfactory condition, which is not the case for winter rapeseeds (out of sown 20.6k ha, estimated at the moment loss is 8.5k ha).

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