Description of the Business

Landkom International Plc, which is incorporated in the Isle of Man, was established in 2007 with the intention of becoming a large-scale producer of high-value agricultural feedstocks including rape seed for supply to the European biodiesel market and wheat for the food industry.

The Group currently operates in western Ukraine in prime, fertile lands within close proximity to the border with Poland and the EU. The region was previously a supplier of agricultural produce to the former Soviet Union.

The executive members of the Board and the senior management team have strong local knowledge, commitment to the region and over time, have developed relationships with authorities on a local and regional basis which has been important in establishing the Group's business.

The management have implemented western style agronomy practices using modern agricultural equipment to carry out large-scale farming techniques that are more efficient than those used previously and which, they believe, will result in generating more attractive returns from the land located in the region. In the process, the Group expects to increase levels of employment in the region and investment into the local economy. The land bank comprises agricultural land which was typically used as farm land but has, in many instances, been left to pasture since Ukraine gained independence in 1991.

The principal crops grown are rape seed and wheat. Rape seed is a brassica crop grown primarily for its seed and which yields about 40 per cent oil with much of the balance of the crop being used as high-protein animal feed. Rape seed is the vegetable oil feedstock forming the basis of the EU biodiesel standard EN14214, owing to its cold climate suitability and has become a primary feedstock for biodiesel production in Europe. The EU has set a target of 5.75 per cent biofuel content for transport fuels to be achieved by 2010, rising to 10 per cent by 2020.

In order to maintain the fertility of the land and to help to prevent disease, the Group also grows other crops in rotation in keeping with best agronomic practice. These crops will be sold to both the Ukrainian domestic and European export market.