Valinor Public Limited - Dom Maklerski BZ WBK SA

Increased competition in the Russian and Ukrainian agricultural industry could adverselyaffect the Group’s businessThe Group faces competition from other agricultural producers in Russia and Ukraine. TheGroup competes with different producers with respect to each crop it grows, who may havegreater financial, marketing, human and other resources than the Group. The liberalisation ofthe Russian and Ukrainian agricultural markets has made them more attractive to foreign andforeign-supported companies, which may enter these markets and increase competition. Inaddition, changes to import and export restrictions and the provision, reduction or withdrawalof subsidies in Russia and Ukraine could also lead to increased competition in the Russianand Ukrainian agricultural markets. Intensified competition with existing competitors and theentry of additional competitors in the Russian and Ukrainian agricultural markets could alsolead to increased competition for the use of existing infrastructure currently utilised by theGroup as well as for land that the Group considers most desirable. In particular, greatercompetition could lead to decreased availability of railway rolling stock, especially at peaktimes such as harvest season, and increased leasing costs for land, and there can be noassurances that in such circumstances the Group could secure the railway rolling stock itneeds at the appropriate time or continue to lease new land, or renew its existing leases, oncommercially acceptable terms or at all. Increased competition that decreases prices for theGroup's products, or for the infrastructure the Group needs to conduct its operations or toexpand, could prevent the Group from realising its expansion plans and have a materialadverse effect on its business, results of operations and financial condition.The Group depends on permits and other administrative approvalsThe Group’s operations are subject to numerous Russian and Ukrainian regulations whoserequirements are sometimes contradictory, and may be changed without public notice and/orapplied retrospectively. Russian and Ukrainian regulatory authorities exercise considerablediscretion in matters of enforcement and interpretation of law, regulations and standards, theissuance and renewal of permits and monitoring compliance. In certain circumstances,government authorities in Russia and Ukraine may seek to influence the issuance of permitsand the issuance process may also be influenced by outside commentary, political pressureand other factors. The Group actively monitors its compliance with existing regulations andrequirements. However, violations of any such regulations could result in various penalties,monetary fines or material disruption of the Group’s business. Moreover, the Group’soperations and production facilities could be affected by governmental programmes includingsanitary inspections, environmental protection or tax and market reforms that, in turn, maynegatively affect its business.Although Management believes that the Group’s existing legal and regulatory complianceprogrammes adequately address these concerns, they may turn out to be insufficient. Anyfailure of the Group’s legal and regulatory compliance programmes could have a materialadverse effect on the Group’s business, results of operations and financial condition.The Group is subject to environmental and health and safety laws and regulations, as wellas potential environmental liabilities, which may require it to make substantialexpendituresThe agriculture business involves a number or risks, including industrial accidents andenvironmental hazards. As a result, the Group is subject to various environmental protectionand occupational health and safety laws and regulations in Russia and Ukraine, including- 40 -