Interim Report January – June 2007

Executive Summary

1H 2007 is the first reporting period for A/S Trigon Agri, following the group’s listing on Stockholm First North on May 18, 2007. 2007 will also be the first full year of operations for the group after the initial establishment of its activities in May 2006. As of the end of the reporting period, the group was carrying out farming activities in three clusters of operations: (i) cereals production cluster in Harkov, Ukraine, (ii) milk production cluster nearby St Petersburg, Russia and (iii) milk production cluster in Estonia. As of the reporting date, the total land area controlled and farmed by the group stood at 26,815ha.

1H 2007 was the first operational season for A/S Trigon Agri in its cereals production cluster nearby Harkov city in Ukraine (population 1.5 million inhabitants). The focus during the period in the cluster stood at (i) implementing the investment program required for upgrading the farms to modern production standards and (ii) completing all field-works in order take in the first harvest of the group in Ukraine during 2007. The total area currently controlled by the cluster is 22,658ha.

The group commenced harvesting in Harkov cluster on July 5, 2007 and has by now completed harvesting works for wheat and barley. The results of the harvest for the year were significantly affected by the very dry summer throughout Ukraine. Over 95% of the fields of the group in Harkov region did not receive any rainfall during the vegetation period. Nevertheless, in fields where field-works were fully prepared by the group (i.e. where no crop in progress in the fields was acquired from previous owners), the group achieved 90% of its first year production target for wheat, 44% for barley and expects to harvest 104% of the production target for sunflower and 92% for corn. At the same time, on a few fields where there was at least minimal rainfall (35mm against the normal level of 200mm), the productivity was around 113% of the expected first year’s production target. This gives significant confidence in the productivity potential of the area and shows that, subject to reasonable weather conditions, the productivity figures targeted by the group are set at conservative levels.

As part of the overall global trend, the cereals prices in Ukraine have seen a very significant price increase, with EXW elevator prices for all main crops gaining on average 50% during the reporting period. The price increase has been primarily driven by the global imbalances in the demand/supply equation, which will have a continued pressure on prices also during the future reporting periods. Such price increase more than offsets the dry weather caused losses in productivity.

On the investment program, the Harkov cluster has carried out the investments into farming equipment and production facilities in accordance with the planned schedule. The investment program was started in 2007 and will be completed in 2008. Given the progress and experience to date, the group expects the total investment per hectare to stay at the level which is approximately 10% lower than originally expected, nevertheless still achieving the same end-result. In addition, the group has been successful in acquiring the required storage space for its production areas. Two successful acquisition finalised over summer 2007, have taken the grain storage elevator capacity in the Harkov cluster to 50,000 tonnes. The elevators acquired are both (i) strategically very well located in the middle of the cereals production fields of the company, (ii) connected to the Ukrainian railroad system by fully functional railroad links and (iii) carry full licences allowing for immediate start of the operations. The total acquisition price together with renovation investments paid by the group for the storage space stood at EUR 2,455 thousand. This is less than 20% of what the required replacement investment for the same storage space would have been, if the capacity had been built up as a green-field investment.
In the two milk production clusters, one nearby St Petersburg in Russia and one in Estonia, the group has been carrying out an extensive investment program in order to launch production in two brand-new dairy units for the total of 1,850 animals during 4Q 2007. All construction works have proceeded in accordance with plans and within original time-tables. Additionally, the good weather conditions have allowed to gather sufficient silage for the animals for the upcoming winter season. The new dairy units are scheduled for opening on December 1, 2007 and December 13, 2007 in Russia and Estonia respectively. Similarly to cereals prices, milk prices have seen a very dramatic increase across Europe due to the demand being at historically highest level for last several decades. A shortage of stocks in Europe have driven up the prices for milk powder in the EU, which has had a corresponding effect on milk price levels in the group’s target countries of operation. As a result, based on ongoing discussions with purchasers of milk, the group is expecting a price increase for milk in its operating farms in Estonia of over 20% from 4Q 2007.

In regards to further expansion in Russia, the group has carried out significant preparatory works for establishing a new cluster nearby the city of Samara in Russia (population 1.1 million inhabitants), which will be focused on cereals production. The identified location is located in the Black Earth region and allows for building up a cereals production cluster of at least 50,000ha. The area is well covered by elevators, several of which are available for acquisitions and all of which are well connected to the Russian railroad network. The group has put in place a local team for operations in the area and has started the process of land acquisitions. The group also actively continues to work on pipeline opportunities to set up further clusters of operations in Russia. Further announcements will be published within due course.

In Ukraine, the group is continuously expanding its land area under control with a target of reaching around 30,000ha by the year-end. In parallel, it is carrying out active negotiations for acquisition of additional grain storage elevator storage space with an identified pipeline of over 10 rail-connected grain storage elevators.

Due to high prevailing market prices for cereals, the financial performance of the company for the reporting period has been better than previously expected. Revenue and other income for the group during the reporting period amounted to EUR 1,469 thousand. Net result from changes in fair value and inventories amounted to EUR 4,368 thousand. The operating profit of the group excluding overhead expenses, which have been built up keeping in mind the very significant expansion plans of the group, stood at EUR 667 thousand, whilst the respective figure after overheads amounted to EUR –46 thousand. The net result for the group for the reporting period stood at EUR –85 thousand.

Given the uncertainties involved in completing the harvesting and market conditions for selling the produce it is very difficult to give a clear expectation for the full financial year result. However, the group management is confident that the result will be significantly better than predicted during the share placement carried out in spring 2007. Under the best circumstances the company may reach a breakeven year excluding the potential additional expenses from upcoming acquisitions during the second half of 2007.

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