BLACK EARTH FARMING LTD

BLACK EARTH FARMING LTD

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Company Overview
This UK-based company is engaged in the acquisition, development and farming of agricultural land assets in the Black Earth Region in Russia. It also acts as a holding company for a wholly owned Cyprus-based subsidiary Planalto Enterprises Limited and a number of wholly owned Russian subsidiaries under the joint name of Agro-Invest. The company, established in 2005 by Michel Orlov, has its registered office in St. Helier, Jersey, Channel Islands. It is publicly traded in Sweden on the Stockholm Stock Exchange (BEF.SDB) and operates in Moscow, Russia.
The company acquires, owns and cultivates agricultural land assets primarily in the Black Earth region in southwest Russia. It has also gained a strong market position in the Kursk, Tambov, Lipetsk, Samara, Voronezh and Ryazan areas, controlling more than 332,000 hectares of what perhaps is the world’s most fertile soil. Its activities include land acquisition, agricultural operations, dairy farming and meat production, and sales and customer management. The company focuses on crops, such as winter wheat, winter rape, barley, spring rape, sunflower, and corn maize. It harvested approximately 141,900 hectares in 2008.
The company aims to continue to acquire farmland in order to draw full benefits of economies of scale in its operations. It is among the first foreign financed companies to make substantial investments in Russian agricultural land assets to exploit the large untapped potential.
Business Summary
Black Earth Farming Ltd (“BEF”) is a company whose business concept is to acquire, develop and farm agricultural land assets in the Black Earth Region in Russia.
Description and history
Black Earth Farming Ltd (BEF) is a farming and land owning company that is incorporated in the Channel Islands and operates in Russia. It acquires, owns and cultivates agricultural land assets primarily in the Black Earth region in southwest Russia. The Company’s activities are structured into three divisions: the Kursk division, including the East and West clusters; the Tambov division, including the Kaluga, Lipetsk, Samara and Tambov clusters, and the Voronezh division, including the East, North, South and West clusters. As of December 31, 2007, the Company controlled approximately 289,000 hectares of land and the harvest comprised approximately 53,000 hectares. BEF is a holding company for a wholly owned Cyprus-based subsidiary Planalto Enterprises Limited and a number of wholly owned Russian subsidiaries under the joint name of Agro-Invest.

History
Black Earth Farming was established in 2005 by Michel Orlov and was among the first foreign-financed companies that undertook considerable investments into the Russian agricultural sector. The Company has by means of its early establishment gained a strong market position in the Kursk, the Tambov, the Lipetsk, the Samara, the Voronezh and the Ryazan Oblasts.

The Company raised seed capital of USD 7 million from Vostok Nafta and other strategic partners. Since the initial capital raise, three additional rights issues and a bond issue have been carried out. The first rights issue was undertaken in March 2006 and provided the Company with USD 45 million. The second rights issue was carried out in November 2006 and raised USD 70 million to the Company. In March 2007, a bond issue raised a further EUR 55 million in capital corresponding to approximately USD 70 million. In August 2007 the third rights issue was carried out which raised USD 40 million in capital.

Earlier, the Company has mainly focused on acquiring agricultural land and as of 31 March 2009 Black Earth Farming controlled 321,000 hectares of land, which in area corresponds to about twice the size of Luxembourg. Black Earth Farming has now entered a second more refined land acquisition phase, where the Company foremost target new acquisitions within close proximity to existing land masses, in order to create logistical benefits and other synergies. Significant investments in modern machinery and equipment is currently undertaken in conjunction with other operation enhancing measures such as thorough soil analysis and training of local workers in modern farming. The Company conducted its first harvest of approximately 5,900 hectares during the Agricultural year 2005/2006. The harvest was viewed as satisfactory in the light of unusually harsh weather conditions. The harvest mainly constituted of barley, winter wheat and spring rape. The Company has during the Agricultural year 2006/2007 completed its second harvest which amounted to circa 108,000 tons from about 53,000 hectares. The yield is considered satisfactory when the prevailing weather conditions for the Agricultural year 2006/2007 and the fact that the Company’s operations are expanding rapidly are taken into consideration. In November 2008 Black Earth Farming completed its third harvest cycle by collecting about 460,000 tonns of total gross harvest on 141,933 hectares.

Black Earth Farming received its first fully registered land ownership certificates in 2006, which is a significant milestone since it proves that the Company’s land acquisition process is consistent with Russian legislation and works in practice, as of 31 March 2009 the Company owned 106,000 hectares.

On 28 December 2007 the Company succesfully listed its shares on the First North market place in Stockholm, in the form of Swedish Depository Receipts.

Admission to trading of Black Earth Farming Ltd on NASDAQ OMX Stockholm (118/09)
On request of Black Earth Farming Ltd, company registration number 89973, NASDAQ OMX Stockholm AB has admitted the company’s Swedish depository receipts to trading on NASDAQ OMX Stockholm, with effect from June 22nd, 2009.

Established by Michel Orlov

Business Line
Engaged in the acquisition, development and farming of agricultural land assets in the Black Earth Region in Russia
Subsidiary
OAO KALACHEEVSKAYA SELKHOZHIMIA
Advisor
DELOITTE AB
IPO date
12/28/2007
US SIC Code
0119
Company Address
PO BOX 781
8, Church Street
City province or state postal code
JE4 0SG, ST HELIER
Phone: +44 2071 178100
Fax:
Country address: UNITED KINGDOM
Website url: www.blackearthfarming.com