EFTA00724657.pdf

Andropovsk Farms Limited ("AFL) March 2009 A • UK company established in 2006 to grow edible cereals, animal feed and vegetable oils, combining western farming expertise with high-quality land and a low cost base in south-west Russia; • Current land area of around 14,200 Ha, expected to generate profits of around US$ 2.0 million during the current financial year calculated on the basis of the current prices of commodities; • Some of the lowest farming costs in the world; • Land held via long leases (49 years) to avoid ownership problems; • Immediate option on further 11,000 Ha on highly advantageous terms with future potential to increase to 40,000 + Ha; • Seeking to raise between US$ 7.0 and 10.0 million to acquire additional; land and fund working capital • First class relationship with local Government authorities. The farm • The existing farm comprises some 14,200 4 Sent -h Ha, of which around 10,200 is prime amble land and 3,800 prime pasture; • Situated in the southern Stavropol Krai region of Russia, the land comprises mainly high grade chernzym silts ("black earth") in one of the most productive areas of Russia's farming region; • Located less than 40km from the town of Kursavka, where the main line railway m s to the principal Russian grain port of Novorossisk - less than one day away - and where a 110,000 tonne silo is located, and less than 30km from the main trans-Caucasus highway; • Ideal climate, with warm continental weather patterns, average rainfall of 550 mm and generally mild winters; The land was obtained at highly competitive rates, with rents from as low as US$ 6.0 per Ha Duration of leases is up to 49 years, with capped rental reviews ; Prepared by Allen & Overy Moscow; Capped five year reviews on most leases; Pre-emption rights to purchase outright on formula price basis on most leases; Management believe that the leases are currently worth some US$550 per cultivated Ha. IL rl L It I L III' • 2008 was the company's first year of harvest . 7,700 Ha has been planted with Winter Wheat and Oil Seed Rape (OSR) for the 2009 season;; • AFL has built a first class, well motivated and led labour force; • Equipment is modern and highly efficient; • AFL has identified areas of efficiency potential in 2008 which it intends to implement in 2009; • Russia imports 50% of its beef requirement. Management are exploring the possibility of establishing a beef farming operation in 2010 and the Scottish Agricultural College (SAC) are in process of completing the feasibility study. Preliminary findings are already extremely positive. • EFTA00724657  2 ANDROPOVSK FARMS LIMITED Financials • AFL's cost of operation, (excluding Capex and interest on any debt) averages under $LIS290 per Ha; • The expected revenues for 2009 are around US$ 6.6 million (basis current prices) with EBITD in 2009 anticipated at $US 2.8 millions; Financing /Use of Proceeds • The proceeds raised for AFL will be used to, repay existing debt acquire the additional land available and to fund working capital including machinery and 26,000 mts drying/storage capacity: - USS 3.5 million to repay existing short term debt - USS 1.0 - 4.0 million for machinery and plant - USS 2.5 million to fund working capital and new farms; I IF 1 I f 1:g I Ir • The management team combines key skills of farming expertise (both in Western and Central & Eastern Europe), commodity trading experience, financial skills and insurance market knowledge: In 2009 we will bring additional agronomy skills to the team Managing Director — Guy Cheyney - 30 years international physical commodity trading and finance, UK, Far East and USA - 17 years trading in Russia, in depth knowledge of Russian systems and methods with first class relationships. - Registered with the FSA in London Director - Edward Close-Smith - 31 years experience in the international insurance market working as a Lloyd's broker. - 1996-2006. MD (North America) of Thompson Heath & Bond Ltd, Lloyd's broker. - 1986-1996. Bradstock Insurance London & North America - 1976-1986. C.T. Bowring & Co (Insurance) Ltd Director- David !Alley - 22 years experience in the international commodity markets. - Founding Partner RK Capital Management LLP. - B. Sc (honours) Economics 1987 Senior Farm Manager — Gordon Stephens - Over 20 years international fanning experience including Zambia, Libya and Romania - Specialist in Agricultural machinery and "big farm" management. • Founding shareholders: Guy Cheyney, Edward Close-Smith and Russian Administration 44.71% • Other shareholders, 55.29% • Total shares in issue 3,312,131 • Existing authorised share Capital; 6,000,000 • Guy Cheyney and Edward Close-Smith have options over 1,800,000 shares Tel: + Fax: + Email THIS DOCUMENT IS FOR INFORMATION ONLY EFTA00724658