TIDMLKI
RNS Number : 7696N
Landkom International Plc
07 September 2011
7 September 2011
Landkom International PLC
Rapeseed and wheat harvest result
Landkom International PLC (AIM: LKI, "Landkom" or "the Group"),
the Ukrainian producer of agricultural commodities, announces the
results of its rapeseed and wheat harvests and the commencement of
a strategic review.
Highlights
-- 26,225 tonnes of rapeseed harvested, with an average yield
per hectare (ha) of 1.75 tonnes (2010: 2.5 tonnes per ha)
-- Gross profit on rapeseed crop expected to be approximately
$3.1m (2010: $2.2m)
-- 60,600 tonnes of wheat harvested, with an average yield per
ha of 3.3 tonnes (2010: 3.0 tonnes per ha)
-- Gross profit on wheat expected to be approximately $1.4m
(2010: loss $0.1m)
-- Other harvest crops, including 10,500 ha of maize, to be
harvested in October
-- As a result of lower than expected revenue generated from
rapeseed, the Board now does not expect to report a pre-tax profit
for the full year ended 31 October 2011
Neil Balfour, Landkom's Chairman said:
"Although the wheat harvest was successful, bringing in 60,600
tonnes at a yield of 3.3 tonnes per ha, the yield on the winter
rapeseed crop proved disappointing at only 1.75 tonnes per ha -
below the Board's expectations. However, rapeseed revenue was
supported by attractively priced contracts. The maize harvest is
due to start shortly and harvest of sunflower is under way. We have
already planted more than 11,000 ha of winter rapeseed with wheat
planting under way.
"The financial implications of a lower than anticipated rapeseed
harvest are being assessed. The Board is now reviewing the Group's
strategic options."
Rapeseed
The Group has completed the entire rapeseed harvest for 2011.
During this harvest season the Group harvested 26,225 tonnes of
winter and spring rapeseed, accepted, certified, clean and dried
from 14,996 ha. A further 1,165 ha of planted rapeseed was not
harvested due to weather damage. These results represent an average
yield per ha of 1.75 tonnes from harvested land. Winter rapeseed
contributed 1.9 tonnes per ha from 11,712 ha (2010: 2.5 tonnes per
ha) and the Group's first ever spring rapeseed harvest contributed
1.4 tonnes per ha from 3,284 ha (2010: nil)
The average yield achieved on the rapeseed harvest is below the
Board's expectations due to a combination of earlier hail damage
and heavy rains during harvest. Fields under regular cultivation
delivered above-average yields compared to fields planted for the
first time in the autumn last year.
As previously announced, the Group has contracted to supply
30,000 tonnes of rapeseed to buyers. While these agreements provide
for Landkom to vary the amount by up to 5 per cent. on average,
there will be a shortfall to cover. The Group does not anticipate
any problem with purchasing the amount of rapeseed required to meet
its contractual commitments, at a favourable price.
Wheat
The Group has completed its wheat harvest. In total, the Group
has harvested 60,600 tonnes of wheat from 18,200 planted ha (all
planted hectares were harvested). Of this total 45,640 tonnes of
winter wheat was harvested from 13,055 ha and 14,954 tonnes of
spring wheat was harvested from 5,137 ha. The yield is 3.5 tonnes
per ha for winter wheat (2010: 3.0) and 2.9 for spring wheat (2010:
3.0).
Other crops
The Group's other crops include 10,500 ha of maize, 2,000ha of
sunflower, 1,700 ha of soya and 600 ha of mixed crops for forage,
all of which will be harvested in late September and into October.
The planted maize is a significant increase on 2010 when 8,085 ha
were planted.
As previously announced, the Group has successfully completed
its harvest of barley in Crimea.
Planting
Autumn planting is now underway and the Group expects to plant
in excess of 13,500 ha of winter rapeseed before 10 September 2011
with other crops to follow. In total the Group expects to plant in
excess of 30,000 ha in its autumn planting programme.
Financial update
Total revenues from rapeseed are expected to be approximately
$15.1m (2010: $12.5m). The lower yield was due to weather
conditions and the very high moisture content in the harvested crop
which has needed to be dried before shipment. The lower yield has
been partially offset by the higher average net price of $575 per
tonne (2010: $327 per tonne) obtained through the forward sales
contracts. However, despite the higher sales prices, the lower than
expected yield on the rapeseed crop has meant that revenues from
the sale of rapeseed will be significantly lower than the Board's
previous expectations.
The Group expects direct operating costs for winter rapeseed to
be approximately $740 per planted ha (ex VAT) (2010: $650) and
spring rapeseed $560 (2010: n.a.), giving a gross profit of
approximately $2.5m for winter rapeseed (2010: $2.2m), and $0.6m
for spring rapeseed (2010: n.a.).
Revenues from wheat are expected to be in the region of $10.4m
(2010: $2.2m). After direct costs of $9.0m, Landkom expects to
achieve a gross profit on its wheat crop of approximately $1.4m
(2010: loss $0.1m).
The Group has sold forward 35,000 tons of its maize crop at an
average price of $280 per tonne excluding VAT and expects the net
price to be $221 per tonne after commissions, export tariffs and
delivery costs. If achieved, this will provide gross revenues of
$12.4m.
As a result of the lower than expected revenue generated from
rapeseed, the Group now does not expect to report a pre-tax profit
for the full year ended 31 October 2011.
The Group has bought chemicals, seeds and fertilizer in advance
of its autumn planting programme and will need to manage its cash
flow carefully.
Strategic review
The Board has also begun a review of the business to consider a
broad range of strategic alternatives.
For further information:
Landkom International Plc
(www.landkominternational.com)
Vitaliy Skotsyk, Chief Executive +380 50352 5029
John Mapplebeck, Finance Director +44 (0)20 7726 2690
Liberum Capital
Simon Atkinson/Tim Graham +44 (0)20 3100 2000
College Hill
Adrian Duffield/Rozi Morris +44 (0)20 7457 2020
This information is provided by RNS
The company news service from the London Stock Exchange
END
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