Regarding impact of ban of imports of agricultural products to the Russian market and ban of imports of goods of Crimean origin into the European Union


From August 6, 2014 Russia decided to suspend import  of milk and other agricultural products from all of the EU and some other countries into the Russian Federation.

Raw milk sales account for 15-20 per cent of Agrowill Group's annual revenue.

During the first seven months of this year Agrowill Group sold 14 thousand tons of raw milk and during year 2014 total sale of raw milk is expected about 24 thousand tons.

Raw milk is sold for Lithuanian dairies which were sold significant part of their production on the Russian market.

Due to ban of imports of agricultural products to the Russian market Lithuanian dairies has already reduced the purchase price of raw milk in Lithuania. Depending on the situation with aforementioned ban, and other factors, it is likely the further price correction may happen.

Reduced raw milk purchase price or the likely further correction in the future of raw milk purchase price, may have a negative impact on Agrowill Group's financial results, but the Company does not pose a threat to business continuity.

Agrowill Group this year expect to harvest 72-74 thousand tons of grain and other crops (including - appr. 3 thousand tons in Crimea). The Council Decision 2014/386 and the European Council Regulation (EU) No. 692/2014 establishes the ban of imports of goods of  Crimean origin into the European Union.

Agrowill Group subsidiaries in Crimea will sell this year's grain harvest (appr. 3 thousand tons) in others, ie. non-EU, markets. Prices for grains are higher in EU by 25-30 percent in comparison with Crimea. The different price levels of grains in the EU and non-EU markets may non-materially negatively impact the Company's financial results.

Selling of mushrooms in Russian market is insignificant and it's ban will not impact on the Company's financial results.

 

         Vladas Bagavičius
         Member of the Board
         +370 5 233 53 40