BLACK EARTH FARMING LTD.: BLACK EARTH FARMING LTD NINE MONTHS REPORT COVERING THE PERIOD JANUARY 1, 2007 - SEPTEMBER 30, 2007

Important events for the first nine months of 2007 

· Total revenue for the first nine months of 2007 increased significantly in
comparison with the same period in 2006, and amounted to RUR 391,242 thousand
or USD* 15,682 thousand. More than half of the revenue (56 percent of the total
amount) comprised gains on revaluation of the Company's biological assets and
agricultural produce, that is revaluation of the crops that will be harvested
in 2008, to the amount of RUR 10,115 thousand or USD* 405 thousand and
revaluation of the harvested but not sold agricultural produce, to the amount
of RUR 208,730 thousand or USD* 8,367 thousand. The revaluation was done in
accordance with the requirements of IAS 41. 

· The amount of revenue from sales of produced crops amounted to RUR 149,064
thousand or USD* 5,975 thousand for the period, in comparison with RUR 2,708
thousand or USD* 109 thousand for the same period in 2006. The main explanation
for the considerable difference is the large increase in amount of harvested
hectares and consequently size of harvest this year compared to last year.
Sales of milk and meat amounted to RUR 17,902 thousand or USD* 718 thousand in
comparison with RUR 1,500 thousand or USD* 60 thousand during the first nine
months of 2006. During the three quarters of 2007 sales of other goods and
services amounted to RUR 5,431 thousand or USD* 218 thousand while in the
similar period of 2006 the amount of other goods and services comprised RUR
1,558 thousand or USD* 62 thousand. 

· Cost of sales for the reporting period amounted to RUR 164,023 thousand or
USD* 6,574 thousand in contrast to last year's figure of RUR 4,372 thousand or
USD* 175 thousand. The largest groups of expenses were the following: 1)
Material expenses (57 percent of the total amount of cost of sales); 2)
Depreciation and amortization charge (12 percent); 3) Salary and social taxes
(10 percent); 4) Other direct production costs (21 percent). 

· Result before tax for the period constituted a loss before tax of RUR 85,660
thousand or USD* 3,433 thousand. As a result no dividends were either declared
or paid during the period in question. The largest income statement items that
significantly affected the result for the period were general and
administrative expenses that amounted to RUR 186,999 thousand or USD* 7,495
thousand, keeping in mind that the current organization has been built up to be
able to realize and manage the group's significant expansion plans. The general
and administrative expenses were made up of the following components: 1)
Salaries and social taxes which constituted up to 55 percent of the amount; 2)
Office and administrative expense - 40 percent; 3) Depreciation and
amortization charge - 5 percent. Net loss for the period was RUR 145,472
thousand or USD* 5,830 thousand. Current tax expense for the nine months of
2007 amounted to RUR 7,289 thousand or USD* 292 thousand in contrast to only
RUR 600 thousand or USD* 24 thousand for the similar period of prior year.
Deferred tax expense for the first nine months of 2007 was RUR 52,523 thousand
or USD* 2,105 thousand in comparison with RUR 821 thousand or USD* 33 thousand
for the nine months of 2006. Certain expenses concerned with land acquisition
are not deductible for tax purposes in the current period, which resulted in
the increase of the deferred tax expenses for the period in question. Tax
effect on revaluation of biological assets and agricultural produce also
affected the amount of deferred tax expense. 

· The period's cash inflow from financing activities amounted to RUR 2,734,811
thousand or USD* 109,615 thousand (the Company issued an additional 9.3 million
ordinary shares - which represented 38 percent of the amount and a long-term
bond - 62 percent). Net cash outflow from investing activities was RUR
1,697,614 thousand or USD* 68,043 thousand. Cash outflow from operating
activities was equal to RUR 889,132 thousand or USD* 35,639 thousand. 

· As of 30 September 2007 the Company controlled over 266,000 hectares of land
in the Black-Earth Region of Russia. The Company plans to increase the number
of hectares and have obtained control over 300,000 hectares by the end of 2007
or the first quarter 2008. 

Important events for the third quarter of 2007

· Total revenue for the third quarter of 2007 was RUR 152,807 thousand or USD*
6,124 thousand compared to RUR 4,208 thousand or USD* 169 thousand for the same
period in 2006. The main explanation for the considerable difference is the
large increase in amount of harvested hectares and consequently size of harvest
this year compared to last year. The sharp increase in the third quarter 2007
in comparison with the half year result can be explained by the seasonality of
the production cycle whereby the revenue is usually generated during the second
half of the year or even at the beginning of the upcoming year. The Company has
sold about 20 percent of its inventory as of 30 September 2007. 

· Result before tax for the period constituted a loss before tax of RUR 72,199
thousand or USD* 2,894 thousand. 

· Net loss for the third quarter of 2007 amounted to RUR 75,861 thousand or
USD* 3,040 thousand. The result for the period was significantly affected by
general and administrative expenses associated with the Head Office in Moscow.
The management of the Company plans to reach the break even point during the
next financial year or in 2009. 

(For complete report see attached file)


For additional information, please contact:

Gustav Wetterling, IR Director, Black Earth Farming Ltd, Tel: + 44 [0] 2071 178
100 

Notes to the Editor:

Black Earth Farming Ltd. is a leading farming and land owning company operating
in Russia. It acquires, owns and cultivates agricultural land assets primarily
in the fertile Black Earth region in southwest Russia. Black Earth Farming was
among the first foreign financed companies to make substantial investments in
Russian agricultural land assets, and because of its early establishment, Black
Earth Farming has now gained a strong market position in the Kursk, Tambov,
Lipetsk, Samara, Voronezh, Kaluga and Ryazan areas, controlling 277,000
hectares of what perhaps is the world's most fertile soil. Black Earth Farming
will continue to acquire farmland in order to draw full benefits of economies
of scale in its operations. 

In 2007, Black Earth Farming harvested approximately 52,000 hectares of crops,
of which the greater part was wheat. 

Founded in 2005 by Michel Orlov, the company has been developed by the listed
investment companies Vostok Nafta Investment Ltd. and Investment AB Kinnevik
(publ).