TIDMLKI
RNS Number : 4467K
Landkom International Plc
15 July 2011
15 July 2011
Landkom International Plc.
Maiden interim profit - on target for full year profit.
Landkom International PLC (AIM: LKI, "Landkom" or "the Group"),
the Ukrainian producer of agricultural commodities, announces its
results for the six months ending 30 April 2011.
Highlights
-- Revenues increase to $7.97m (2010: $1.93m), reflecting 2010
harvest
-- Pretax profit of $1.11m (2010: loss $4.32m)
-- Earnings per share of 0.3 cents (2010: loss 1.1 cents)
-- Group on target to achieve a pretax profit for the full
year
-- Turnaround and efficiency programme continued
-- 52,000 hectares planted in 2010/11 programme - up 30% on
2009/10
-- 5,000 tonnes of rapeseed sold forward at $600 per tonne - up
78% on 2010 forward sales
Post period end:
-- Harvest underway
-- Further forward sales agreements signed for 25,000 tonnes of
rapeseed at $600 per tonne
- Around 75% of 2011 rapeseed crop now forward sold
Vitaliy Skotsyk, Landkom CEO, commented
"The operational and managerial changes implemented over the
last two years, as well as the farming practices introduced, are
now showing the first positive financial rewards. This is the first
time that Landkom has reported a profit since its inception in
2007.
"We are building a substantial agricultural operation which will
be both sustainable and profitable business. As a result of our
successful forward sales programme already implemented, combined
with higher commodity prices, we remain confident of reporting our
first full year profit."
For further information:
Landkom International Plc
(www.landkominternational.com)
Vitaliy Skotsyk, Chief Executive +38 0503 525029
John Mapplebeck, Finance Director +44 (0)20 7726 2690
Liberum Capital
Simon Atkinson/Richard Bootle +44 (0)20 3100 2000
College Hill
Adrian Duffield/Rozi Morris +44 (0)20 7457 2020
Overview
Landkom's objective is to be a profitable and efficient producer
of agricultural commodities for the global food and biofuel
markets. This will be achieved through using the most efficient
farming technologies in combination with an experienced management
team.
The turnaround programme, started in the autumn of 2009, is now
showing good results in its first full 'farming' year. The Group is
confident that it can produce a profit for the first time this
financial year whilst continuing to explore ways to achieve further
efficiencies and extend the range of its business.
During the 2010/11 planting seasons, the Group planted in autumn
2010 28,856 ha and in spring 2011 to 23,132 ha. In total 51,988 ha,
a 30% increase on the previous year's planting programmes, were
planted.
The Group signed a contract forward selling 5,000 tonnes of
rapeseed in March 2011 for $600 per tonne which is estimated to be
equivalent to $575 per tonne after delivery costs. Since the period
end, a further 25,000 tonnes of rapeseed have been forward sold,
also for $600 per tonne. This is a substantial increase in price
per tonne on last year's sales, which were the equivalent of $327
per tonne.
Financial review
Revenues were $7.97m (2010: $1.93m) and largely consist of
proceeds of the sale of 2010 harvest crops from silo and storage;
the balance is a mix of livestock, transportation and other
income.
Revenues exclude recently signed forward sales agreements, which
are only accounted for when delivery is made.
Landkom has estimated the fair value of its biological assets as
at 30 April 2011 were $20.85m (2010: $9.84m). The cost of
production of these assets was $13.61m (2010: $9.34m), resulting in
an income statement gain of $7.24m (2010: $0.50m). This gain takes
into account the amount of biological transformation which occurred
at the reporting date, along with the Group's estimate of the
condition of the crops, and cost, yield, and sales price
expectations.
Direct costs were $6.32m (2010: $2.77m) and include the costs
associated with the sale of last year's harvest.
Administrative expenses increased to $3.24m (2010: $2.31m),
mainly due to additional staff costs as a result of the completion
of the new management structure.
The Group reported an EBITDA profit of $5.14m (2010: Loss
$0.73m) and operating profit of $1.19m (2010: loss $4.21m)
All of the Group's farming operations are now within entities on
a fixed agricultural tax system. As a result the Group expects it
tax charge to remain minimal for the foreseeable future.
Earnings per share were 0.3 cents (2010: loss 1.1 cents). Profit
for the period is $1.10m (2010: Loss $4.43m).
In March 2011, the Group signed a banking agreement with
Raiffeisen Bank Aval for $9m of short term financing to provide
general working capital support. In addition, the Group arranged
sale/lease facilities with UniCredit Leasing, a vehicle leasing
facility, and with Porsche Leasing. Post the period end, the Group
arranged a further lease facility for its new combine
harvesters.
Operational review
Operations
Landkom's farming operations continue to remain focussed on cost
control and margin. The Group has now cultivated 70% of its 74,000
ha land-bank, up from 54% in 2010. Landkom seeks to optimise its
performance with a balance of autumn and spring planting, an
optimal mix of crops and improved fleet of agricultural
machinery.
Planting
A total of 28,856 ha were planted in autumn 2010 for harvest in
2011; this is a 35% increase on the previous year. The crop, 45% of
which was rapeseed and 45% wheat, came through the winter with
minimal damage; less than 2% of crops were lost.
After planting 23,132 ha in the spring, 45% of which was maize
and 22% wheat, with the balance a mix of soya, rape, sunflower and
barley, the Group planted a total of 51,988 ha, a rise of 30% on
2010.
Storage and logistics
The Group's rail-side storage facility in Lviv Oblast has been
enhanced by the addition of a gas pipeline and a newly purchased
dryer, which dramatically increases drying capacity with reduced
drying cost. In addition, the Group has floor storage capacity of
35,000 tonnes and has contracted further silo capacity to be used
if needed.
Landkom has also now finished the construction of a railway link
from the silo area to the main line which will enable trucks to be
loaded directly at the silo, reducing handling costs.
The Group continues to hold equipment for the construction of a
second 20,000 tonne silo facility.
Land bank
As at 30 April 2011, Landkom had approximately 74,000 ha of land
in its land-bank across 10 Oblasts. Land is split into three
operating regions; west, south and central. The amount of land
under control has remained constant over the past 12 months,
although the Group has exchanged leases with other farming entities
to optimise its holding, taking on contiguous and better quality
land and releasing leases that are further away from its
operations. The average term of land lease is 8 years.
The Group's strategy is to cultivate full available land bank
and look for further opportunities.
Ukrainian operational environment
The moratorium on the purchase of land is currently set to
expire on 1 January 2012. The Ukrainian government has indicated
its intent to establish a properly functioning market for
agricultural land but creating the infrastructure and legal
framework is expected to take several years.
The Group's leases already provide the Group with a 'first
option' to buy if changes in the law take place.
Current trading and outlook
Field reports show that the crop has so far been in good
condition in each field before the harvest gets underway. The
harvest in the south is now well underway, and the harvest in the
centre and west has now started with barley and rape.
The Group has purchased on finance lease 11 new combine
harvesters. It has re-equipped its existing machinery with rapeseed
attachments, to ensure that its harvest can be completed as
efficiently as possible and to enable the land to be prepared for
the autumn planting programme. This increases the number of the
Group's own machines from 21 to 32 combines and reduces Landkom's
reliance on hired equipment.
Improved terms and priority arrangements have been agreed with
the suppliers of 34 contracted modern combines. This gives the
Group a total harvest fleet of 66 combines available for the
barley, wheat and rapeseed harvests in all its operations.
Since the period end, rapeseed forward sales contracts have been
signed for a further 25,000 tonnes at $600 per tonne. The total
forward sales represent approximately 75% of the Group's expected
rapeseed crop. This has been implemented to enable the management
to better plan operational cash flow, review possible capital
investments in farming equipment and storage and to plan its 2011
autumn planning programme.
Given the current condition of crops, the proximity of the
harvest, the increased wheat and barley prices Landkom expects for
sales agreements and in the absence of a material weather event
prior to the end of harvest, the Board is confident that the Group
should be able to report a pre-tax profit for the full financial
year.
Condensed consolidated statement of comprehensive income -
unaudited
For the 6 month period ended 30 April 2011
Audited
Unaudited Unaudited 12 months
6 months 6 months ended 31
ended 30 ended 30 October
April 2011 April 2010 2010
$000 $000 $000
------------------------------------- ------------ ------------ -----------
Continuing Operations
Revenue 7,974 1,930 16,799
Gains arising from changes in
value of biological assets 7,243 503 3,047
Direct costs (6,321) (2,774) (19,006)
Depreciation on farming property
plant & equipment (3,531) (3,357) (7,070)
Gross profit / (loss) 5,365 (3,698) (6,230)
Distribution costs - - (425)
Administrative expenses (3,236) (2,314) (4,920)
Other operating income 47 - 154
Other operating expense (590) (97) (700)
Net foreign exchange (loss) /
gain (401) 1,898 423
Operating profit / (loss) 1,185 (4,211) (11,698)
Exceptional items - - 103
Finance income 1 5 8
Finance costs (79) (109) (170)
Share of loss from associate - (5) (4)
Profit / (loss) before income
tax 1,107 (4,320) (11,761)
Income tax expense (8) (109) (86)
Profit / (loss) for period 1,099 (4,429) (11,847)
Other comprehensive income, net
of tax
Currency translation differences 406 (2,126) (840)
Total comprehensive profit / (loss)
for the period 1,505 (6,555) (12,687)
------------------------------------- ------------ ------------ -----------
Profit / (loss) for the period
attributable to:
Equity holders of the Company 1,294 (4,397) (11,418)
Non-controlling interests (195) (32) (429)
Total comprehensive profit /
(loss) for the period attributable
to:
Equity holders of the Company 1,700 (6,523) (12,258)
Non-controlling interests (195) (32) (429)
Earnings per share
(expressed in cents per share)
Basic profit / (loss) per ordinary
share 0.3c (1.1)c (2.7)c
------------------------------------- ------------ ------------ -----------
Restated in pence per share 0.2p (0.7)p (1.7)p
------------------------------------- ------------ ------------ -----------
Fully diluted profit / (loss)
per ordinary share 0.3c (1.1)c (2.7)c
------------------------------------- ------------ ------------ -----------
Restated in pence per share 0.2p (0.7)p (1.7)p
------------------------------------- ------------ ------------ -----------
Condensed consolidated statement of financial position -
unaudited
As at 30 April 2011
Audited
Unaudited Unaudited 12 months
30 April 30 April 31 October
2011 2010 2010
Note $000 $000 $000
-------------------------------- ------ ---------- ---------- ------------
Assets
Non-current assets
Property, plant and equipment 32,446 37,828 35,873
Intangible assets 260 17 229
32,706 37,845 36,102
--------------------------------------- ---------- ---------- ------------
Current assets
Biological assets 20,851 9,840 7,626
Inventories 7,702 6,728 9,936
Trade and other receivables 3,366 2,380 3,669
Cash and cash equivalents 775 2,170 2,341
32,694 21,118 23,572
--------------------------------------- ---------- ---------- ------------
Total Assets 65,400 58,963 59,674
---------------------------------------- ---------- ---------- ------------
Capital & reserves attributable to equity holders
of the Company
Share capital 789 789 789
Share premium 159,350 159,350 159,350
Retained loss (107,228) (101,911) (108,526)
Share-based payments reserve 1,589 1,833 1,710
Foreign exchange reserve (6,610) (8,302) (7,016)
---------------------------------------- ---------- ---------- ------------
Total equity attributable to
equity holders of the Company 47,890 51,759 46,307
Total equity attributable to
non-controlling interests (155) 137 (260)
Total equity 47,735 51,896 46,047
---------------------------------------- ---------- ---------- ------------
Liabilities
Non-current liabilities
Non-current payables - 291 290
- 291 290
--------------------------------------- ---------- ---------- ------------
Current liabilities
Trade and other payables 8,479 6,706 13,225
Borrowings 9,168 - 58
Other financial liabilities 18 70 54
17,665 6,776 13,337
--------------------------------------- ---------- ---------- ------------
Total liabilities 17,665 7,067 13,627
---------------------------------------- ---------- ---------- ------------
Total liabilities and shareholders'
equity 65,400 58,963 59,674
---------------------------------------- ---------- ---------- ------------
Condensed consolidated statement of changes in equity -
unaudited
For the 6 month period ended 30 April 2011
Total equity
Share attributable
Foreign based to equity
Share Share exchange payment Retained holders of Non-controlling Total
capital premium reserve reserve earnings the Company interest equity
$000 $000 $000 $000 $000 $000 $000 $000
----------------- -------- -------- --------- -------- ---------- ------------- ---------------- --------
Balance at 31
October 2009
(audited) 466 144,349 (6,176) 1,776 (97,754) 42,661 169 42,830
Loss for period - - - - (4,397) (4,397) (32) (4,429)
Currency
translation
differences - - (2,126) - - (2,126) - (2,126)
Total
comprehensive
income - - (2,126) - (4,397) (6,523) (32) (6,555)
Proceeds from
shares issued 323 - - - - 323 - 323
Premium from
shares issued - 15,832 - - - 15,832 - 15,832
Share-based
payments
charge - - - 297 - 297 - 297
Share issue
costs - (831) - - - (831) - (831)
Cancellation of
share options - - - (240) 240 - - -
Balance at 30
April 2010
(unaudited) 789 159,350 (8,302) 1,833 (101,911) 51,759 137 51,896
Loss for period - - - - (7,021) (7,021) (397) (7,418)
Currency
translation
differences - - 1,286 - - 1,286 - 1,286
Total
comprehensive
income - - 1,286 - (7,021) (5,735) (397) (6,132)
Proceeds from
shares issued - - - - - - - -
Premium from
shares issued - - - - - - - -
Share-based
payments
charge - - - 283 - 283 - 283
Cancellation of
share options - - - (406) 406 - - -
Share issue
costs - - - - - - - -
----------------- -------- -------- --------- -------- ---------- ------------- ---------------- --------
Balance at 31
October 2010
(audited) 789 159,350 (7,016) 1,710 (108,526) 46,307 (260) 46,047
----------------- -------- -------- --------- -------- ---------- ------------- ---------------- --------
Profit / (loss)
for period - - - - 1,294 1,294 (195) 1,099
Currency
translation
differences - - 406 - - 406 - 406
Total
comprehensive
income - - 406 - 1,294 1,700 (195) 1,505
Acquisition of
Non-controlling
interest - - - - - - 300 300
Share-based
payments
charge - - - (117) - (117) - (117)
Cancellation of
share options - - - (4) 4 - - -
Balance at 30
April 2011
(unaudited) 789 159,350 (6,610) 1,589 (107,228) 47,890 (155) 47,735
----------------- -------- -------- --------- -------- ---------- ------------- ---------------- --------
Condensed consolidated cash flow statement - unaudited
For the 6 month period ended 30 April 2011
Audited
Unaudited Unaudited 12 month
6 month period 6 month period period ended
ended 30 ended 30 31 October
April 2011 April 2010 2010
$000 $000 $000
Cash flows from operating
activities
Profit / (loss) before
tax 1,107 (4,320) (11,761)
Adjustments for:
- depreciation and
amortisation 3,955 3,485 7,299
- loss on disposal of
property, plant and
equipment 35 3 160
- share based payments
charge (117) 297 580
- provision on
receivable (39) - -
- impairment of goodwill
and investments 301 - -
- share of loss in
associate - 6 4
- gain on acquisition (103)
Fair value adjustment
recognised in the
statement of
comprehensive income:
- biological asset (7,243) (503) (3,047)
Non-operating activity
income/expense in the
statement of
comprehensive income:
- finance income (1) (5) (8)
- finance costs 79 109 170
Movements in working
capital:
- decrease / (increase)
in inventories 2,234 (1,562) (4,764)
- decrease / (increase)
in receivables 45 (3,734) (2,584)
- (decrease) / increase
in trade and other
payables (4,782) (1,378) 5,754
- income tax paid (8) (109) (86)
- net additions to
biological assets (5,981) (5,238) (481)
-------------------------- ---------------- ---------------- --------------
Net cash used in
operations (10,415) (12,949) (8,867)
-------------------------- ---------------- ---------------- --------------
Cash flows from investing
activities
- purchase of property,
plant and equipment (401) (299) (2,652)
- purchase of intangible
assets - - (84)
- proceeds from disposal
of property, plant and
equipment - - 417
- interest received 1 5 8
- loans to associated
companies 255 (477) (400)
- Acquisition of Morion
Agro PP net of cash
acquired - - (193)
Net cash used in
investing activities (145) (771) (2,904)
-------------------------- ---------------- ---------------- --------------
Cash flows from financing
activities
- proceeds from issue
of ordinary shares - 16,155 16,155
- payment of transaction
costs - (831) (831)
- proceeds from
borrowings 9,168 - -
- repayment of borrowings (59) - (24)
- finance costs (79) (109) (170)
- Repayment of finance
lease liabilities (37) - (884)
-------------------------- ---------------- ---------------- --------------
Net cash received from
financing activities 8,993 15,215 14,246
-------------------------- ---------------- ---------------- --------------
Net (decrease) / increase
in cash and cash
equivalents (1,567) 1,495 2,475
Cash and cash equivalents
at beginning of period 2,341 222 222
Effect of foreign
exchange variances 1 453 (356)
-------------------------- ---------------- ---------------- --------------
Cash and cash equivalents
at end of period 775 2,170 2,341
-------------------------- ---------------- ---------------- --------------
Notes to the consolidated interim financial information -
unaudited
1. Basis of preparation of financial information
This report was approved by the Directors on 14 July 2011.
The auditors' report for the 2010 financial information was
unqualified but included an emphasis of matter on the Group's
ability to continue as a Going Concern.
The condensed consolidated financial information has been
prepared on the Going Concern basis. This basis is dependent upon
the ability of the Group to produce a successful 2011 harvest,
continue to receive supplier trade credit and the refinancing in
March 2012 of the US$9m debt facility. At the date of publication
of this financial information revenues are being received from the
sale of the 2011 harvest and the Directors consider that the
un-harvested crop is in a good condition. After making enquiries
and considering the remaining uncertainties the Directors consider
that the Group will have sufficient cash to continue as a Going
Concern for the foreseeable future.
The condensed consolidated interim financial information has
been prepared on the same basis and using the same accounting
policies as were applied in drawing up the Group's statutory
financial information for the period ended 31 October 2010 and
using those which will be applied for the period ending 31 October
2011. They have not been prepared in accordance with IAS 34 Interim
Financial Reporting. They do not include all of the information
required for full annual financial information, and should be read
in conjunction with the consolidated financial information for the
period ended 31 October 2010. The financial information is
presented in United States Dollars.
The financial information for the six months ended 30 April 2011
and 30 April 2010 is unaudited. In the opinion of the Directors the
financial information for this period presents fairly the financial
position, results of operations and cash flows for the period in
accordance with the recognition and measurement principles of the
International Financial Reporting Standards ('IFRS') as adopted by
the EU.
2. Earnings per ordinary share
Adjusted basic and fully diluted earnings per share have been
calculated on the profit or loss after taxation for the period and
the weighted average number of ordinary shares in issue during the
period.
Adjusted earnings per share before exceptional items, net
foreign exchange gains and losses and share based payments charge
has been presented in addition to the basic earnings per share
since, in the opinion of the Directors, this provides shareholders
with more appropriate representation of the underlying earnings
derived from the Group's businesses.
30 April 30 April 31 October
2011 2010 2010
Number of shares
------------------------------------ ----------------------------------------
Weighted average number of
ordinary shares in issue for
basic earnings per share 435,008,935 409,152,585 422,187,021
------------------------------------ ------------ ------------ ------------
- effect of share options 24,857,562 - -
------------------------------------ ------------ ------------ ------------
Weighted average number of
ordinary shares adjusted for
dilutive effects 459,866,501 409,152,585 422,187,021
------------------------------------ ------------ ------------ ------------
$000 $000 $000
------------------------------------ ------------ ------------ ------------
Profit / (loss) after tax on
ordinary activities 1,294 (4,397) (11,418)
Adjustments:
- Exceptional items - - 103
- Net foreign exchange (gain)
/ loss 401 (1,898) (423)
- Share based payments charge (117) 297 580
Adjusted profit / (loss) 1,578 (5,998) (11,158)
------------------------------------ ------------ ------------ ------------
Basic profit / (loss) per ordinary
share (cents per share) 0.3 (1.1) (2.7)
Fully diluted profit / (loss)
per ordinary share (cents per
share) 0.3 (1.1) (2.7)
Adjusted basic profit / (loss)
per ordinary share (cents per
share) 0.4 (1.5) (2.6)
Adjusted fully diluted profit
/ (loss) per ordinary share
(cents per share) 0.3 (1.5) (2.6)
------------------------------------ ------------ ------------ ------------
Restated in pence per share:
Basic profit / (loss) per ordinary
share (pence per share) 0.2 (0.7) (1.7)
Fully diluted profit / (loss)
per ordinary share (pence per
share) 0.2 (0.7) (1.7)
Adjusted basic profit / (loss)
per ordinary share (pence per
share) 0.2 (1.0) (1.6)
Adjusted fully diluted profit
/ (loss) per ordinary share
(cents per share) 0.2 (1.0) (1.6)
------------------------------------ ------------ ------------ ------------
This information is provided by RNS
The company news service from the London Stock Exchange
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