TIDMAGTA
RNS Number : 4518V
Agriterra Ltd
01 December 2023
1 December 2023
Agriterra Limited ('Agriterra' or the 'Company')
Agriterra Limited / Ticker: AGTA / Index: AIM / Sector:
Agriculture
2023 Annual Results and Trading Restoration
Agriterra Limited, the AIM-quoted African agricultural company,
is pleased to announce its audited annual results for the year
ended 31 March 2023 (the "2023 Annual Results"). Copies will be
posted to Shareholders where appropriate.
Restoration to trading on AIM
The Company's ordinary shares were suspended from trading on AIM
at 7.30 a.m. on 2 October 2023 as a result of the delay in the
publication of the 2023 Annual Results. Accordingly, the release of
this announcement facilitates lifting of the suspension, and
trading on AIM of the Company's shares is expected to recommence at
3.30 p.m. today.
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
For further information please visit www.agriterra-ltd.com or
contact:
Agriterra Limited Caroline Havers
caroline@agriterra-ltd.com
--------------------------- -------------------------------
Strand Hanson Limited Ritchie Balmer / James Spinney
Nominated & Financial +44 (0) 207 409 3494
Adviser
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Peterhouse Capital Limited Duncan Vasey / Eran Zucker
Broker +44 (0) 207 469 0930
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Chair's statement and strategic review
I am pleased to present the annual report of the Group for the
year ending 31 March 2023. During the year, the Group changed its
working capital funding strategy to support the existing operations
and evaluated opportunities for diversification and adding value to
agricultural produce.
The Company continues to observe the principles of the QCA
Corporate Governance Code (the "Code") to the extent that they
consider them to be applicable and appropriate for a Company of
Agriterra's size and stage of development, through the maintenance
of efficient and effective management frameworks accompanied by
good communication. Further details are available at:
http://www.agriterra-ltd.com/investor-relations/corporate-governance/
Strategy and Business Model
The Group's strategy is to operate efficient, profitable
businesses in Mozambique to create value for its shareholders and
other stakeholders by supplying beef and milled maize products to
the local market.
The Group continues to focus on adding value along the entire
maize and beef value chain, by developing and offering new products
to the market. It currently has three operating divisions which
have built strong brands in Mozambique:
-- Grain, which operates maize purchasing and processing
businesses through Desenvolvimento e Comercializa c a o Agri cola
Limitada ('DECA') and Compagri Limitada ('Compagri').
-- Beef, which sources cattle from local farmers and then
processes them through its own feedlot, abattoir operations and
retail units through Mozbife Limitada ('Mozbife')
-- Snax, which sources maize grits from DECA, processing them
into flavoured puffs and naks through DECA Snax Limitada, an
operating entity that was commissioned in December 2020 to add
value to Agriterra's grain milling operations.
During the year the Company secured a shareholder loan of
c.$7.6m in the form of a convertible loan and an equity injection
of c.$0.6m to replace local currency denominated bank debt to fund
working capital for grain and beef divisions. These new facilities
are expected to significantly reduce the interest burden.
The Group is aware of its environmental, social and governmental
responsibilities and the need to maintain effective working
relationships across a range of stakeholders. The Company's largest
shareholder is represented on the Board, ensuring their views are
incorporated into the Board's decision-making process. In addition
to the Group's staff and shareholders, the local community in
Mozambique is a primary stakeholder. In purchasing maize and cattle
directly from the local community, the Group plays an important
role in local economic development, supporting small scale farmers
and the evolving commercial sector.
Mozambique overview
The economy in Mozambique is recovering from a protracted
slowdown in recent years, with growth reaching 4.1% in 2022.
Mozambique is still dealing with the insurgency in parts of the
gas-rich province of Cabo-Delgado but the arrival of regional
troops has helped stabilise the situation. The government has
approved a reconstruction plan for the province. The instability in
Cabo Delgado has slowed the expected outcomes from the investment
in the Liquefied Natural Gas sector which will be delayed by two
years. The medium-term outlook is positive, with growth expected to
accelerate to 6% over 2023-2025 driven by:
-- Continued recovery in services
-- Increased LNG production; and
-- High commodity prices.
Tropical cyclone Freddy made landfall in Mozambique on 24
February 2023 and led to significant rainfall. Nearly 166,000
people were affected, more than 28,300 houses destroyed and over
18,700 hectares of crops were destroyed.
During this period the Metical remained steady against the US$
and, strengthened against the South African Rand from ZAR1:MZN3.8
to ZAR1:MZN3.6. Annual inflation was higher at 10.3%, against 6.41%
in the previous year. In response to the inflation, the Bank of
Mozambique increased its prime lending rate from 19% to 23.5%,
which negatively impacted business operations.
Operations review
Grain division
The Grain division generated revenue amounting to $8.6 million
(FY22: $7.3 million) after selling 17,819 tons (2022: 17,094 tons)
and the average meal selling price increased by 13% to $482 per ton
(2022: $427 per ton), indicating that the demand was strong.
The division secured a $1.5 million loan from its majority
shareholder to fund working capital in addition to $6.1 million
which was used to repay commercial bank debt. The division
purchased 18,022 tons of maize throughout the year and held 7,444
tons of maize in inventory at its peak. The division has had to
roll the working capital to be able to mill up to the end of the
year. However, the maize price increased by 36% to MZN20 000 per
ton ($313) as compared to a 13% increase in the price of mealie
meal, thereby eroding the margins in the last quarter of the
financial year.
On a positive note, the shareholder loans of $7.6 million
enabled the repayment of significant commercial debt amounting to
$6.1 million thereby relieving the heavy burden of finance cost,
the full benefit of which is expected to be reflected in FY24. The
division's borrowings increased slightly by $54,000 as compared to
prior year. The business was able to pay interest and some
principal repayments out of the business cash flows.
Operating costs decreased by $0.8m to $1.1m and EBITDA increased
to $0.6m (2022: EBITDA of $0.54m) due to an improvement in
extraction efficiencies net of a 20% increase in the cost of maize
milled compared to the previous year. Finance costs decreased to
$1.0m (2022: $1.6m) and depreciation cost amounted to $0.5m (2022:
$0.5m) resulting in a loss before tax of $0.86m (2022: loss
$1.52m).
Loss after tax amounted to $746,000 (FY22: Loss after tax
$1,404,000).
Beef division
The Beef division generated revenue amounting to $3.1 million
(FY22: $3.2 million) as compared to budget of $4.6 million (FY22:
$4.6 million). Low sales resulted from the tough macro-economic
environment in Mozambique which affected sales and consumer protein
choices. In addition, customers are more sensitive to price as
compared to quality and there was increased competition from
cheaper meat from the informal market. Sales volumes were 9.2%
below previous year (666 tons vs 734 tons in FY22). Working capital
constraints led to a fall in the numbers of days animals spent in
the feedlot. Consequently, the average daily weight gain of animals
decreased from 0.32% to 0.22% of body mass increasing feedlot
costs.
The division secured shareholder loan amounting to $0.3 million
which was used to ramp up animal production in the feedlot. The
funds were used to buy cattle weaners which has high average daily
gain when feeding in the feedlot. More than 900 animals were bought
from August to March using the shareholder loan. The division also
received an external capital injection amounting to GBP250 000 in
March 2023 to invest in "straight through" animals which will be
supplied into the informal market.
The decrease in sales has been mitigated by improved Gross
Margin of 24.06% (FY22: 23.87%) resulting from higher average
selling price of MZN 266 per kg (FY-2022: MZN 252 per kg) whilst
the average dress out rate was 49.2% (FY22: 51.5%).
The Company has embarked on a right sizing strategy, offering
voluntary retrenchments and a freeze on replacing staff. The
Company also has the cost of the three farms that remain in care
and maintenance whilst looking for potential buyers.
Loss after tax amounted to $651,000 (FY22: Loss after tax
$492,000).
Snax division
DECA Snax, a 50:50 joint venture with Snax for Africa Limited
has, in its third year of operations, grown sales revenue by 62% to
achieve $2.3 million (FY22: $1.4 million). DECA Snax is growing by
winning and retaining market share from competitors as a result of
consistently producing and supplying high quality products. DECA
Snax sold 1,111,538 bales during the year (FY22: 707,385
bales).
During the year, DECA Snax increased its production capacity by
buying a second extruder machine which gives the division the
ability to double its production capacity and improve its
profitability.
Production volume is exceeding 60% of the installed capacity
(Including a second extruder) and plans are in place to launch the
product in new geographical markets.
Profit after tax amounted to $74,976 (FY22: $109,889) after
payment of management fees to the joint venturers amounting to
$117,289 (FY22: Nil).
Key Performance Indicators
The Board monitors the Group's performance in delivery of
strategy by measuring progress against Key Performance Indicators
(KPIs). These KPIs comprise a number of operational, financial and
non-financial metrics.
For the year ended 31 March 2023 2022 2021
Grain division
------------- ------------- -------------
- Average milling yield 75.3% 78.0% 76.7%
------------- ------------- -------------
- Meal sold (tonnes) 17,819 17,094 25,389
------------- ------------- -------------
- Revenue $8,365,000 $7,118,000 $11,061,000
------------- ------------- -------------
- EBITDA (note 5) $611,000 $535,000 $510,000
------------- ------------- -------------
- Net debt ($9,753,000) ($9,521,266) ($5,856,106)
------------- ------------- -------------
Beef division
------------- ------------- -------------
- Slaughter herd size - number of head 4,099 4,575 5,667
------------- ------------- -------------
- Average daily weight gain in feedlot
(% of body mass) 0.22 0.35 0.35
------------- ------------- -------------
- Meat sold (tonnes) 666 734 890
------------- ------------- -------------
- Revenue $3,129,000 $3,159,000 $3,189,000
------------- ------------- -------------
- EBITDA (note 4) ($244,000) ($66,000) ($547,000)
------------- ------------- -------------
- Net debt ($110,000) ($184,283) ($406,244)
------------- ------------- -------------
Snax division (note 10)
------------- ------------- -------------
- Bales sold (units) 1,111,538 707,385 128,805
------------- ------------- -------------
- Revenue $2,345,779 $1,447,000 $117,000
------------- ------------- -------------
- EBITDA $170,000 $247,000 $10,000
------------- ------------- -------------
- Net debt $Nil $Nil $23
------------- ------------- -------------
Group
------------- ------------- -------------
- EPS (9.29) (10.7) (10.3)
------------- ------------- -------------
- Liquidity - cash plus available headroom
under facilities $174,000 $107,000 $1,139,000
------------- ------------- -------------
Financial Review
In FY 23 the Group's revenue increased by 12% to $11.49m (FY22:
US10.28m), primarily due to:
-- Improvement of grain sales volumes from 17,094 tons to 17,819
tons. Demand for maize meal was higher than the previous year.
However, the division did not have sufficient grain in stock due to
working capital constraints and had to roll the working capital in
the last quarter of the financial year. The cost of replacing maize
was high and eroded the Group's margins. The cost of maize
increased by 20% from FY22 to FY23.
-- Increase in average selling price of mealie meal by 13% as
compared to prior year due to increase in demand for the maize
meal.
-- The Beef division achieved similar revenue of $3.1 million,
selling lower volume at a higher average selling price.
AGTA Group gross margin decreased to 21.2% (FY22: 24.94%) due to
fair value loss of biological assets amounting to $288,000 and the
high cost of replacement maize. Gross profit decreased from $2.6
million to $2.4 million as compared to prior year.
Group operating expenses decreased by 3.1% to $3.4 million and
operating losses decreased to $0.8 million (FY22: $0 million). The
Group operational performance is expected to be profitable if
volumes improve by 25% in FY24.
Net Debt as of 31 March 2023 was $9.86 million (FY22:
$9.82million). The shareholder loan injection of $7.9 million has
greatly assisted in containing the adverse impact of high finance
cost on the group performance and cashflows. Finance cost remains
high at $1.46 million (FY22: $1.62 million. Subsequent to the year
end, a further restructuring exercise was undertaken and a further
shareholder loan of $2 million has been advanced to fund the
Group's working capital (see note 26).
Going concern
Details of the consideration of going concern are set out in
note 3. The Group has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities.
The Group reduced expensive commercial debt during the year by
$7.9 million thereby reducing finance cost significantly by $92,000
per month. Post year end, the Group has secured $3.7 million from
direct shareholder funding, $2m of which will be used to fund maize
purchasing and is secured by the maize in Silo with the balance
used to repay the remaining commercial bank debt of $1.1m and to
fund capital expenditure. In addition, the Group also embarked on
an aggressive restructuring exercise which will reduce operational
cost by $50,000 per month and reduce liquidity constrains. The
Group has retrenched 124 employees from 1 August 2023 as part of
the restructuring exercise and the cost savings have been included
in the forecasts. The impact of the restructuring exercise and
working capital constraints show that the Group needs to achieve
its operating targets to meet its cashflow requirements. These
conditions and events indicate the existence of a material
uncertainty that may cast significant doubt upon the Group's
ability to continue as a going concern and the Group companies may
therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. The auditors make
reference to going concern in their audit report by way of a
material uncertainty. These financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
Outlook
The Group had a difficult start to FY24 due to the lack of
adequate working capital which affected the current year maize
buying season. Even though the working capital was finally secured
in June 2023 from commercial banks In Mozambique, they were unable
to disburse the full funding due to constraints placed on them by
the Central Bank. The situation was further impacted by an increase
in interest rate in July 2023 to 24.10%. The Company's majority
shareholder agreed to provide a $2m working capital facility to
fund maize purchases for the current season in lieu of the
inability of the local commercial banks to provide the funding.
This will reduce the level of interest charges for the FY24
year.
The macro-economic environment is expected to improve in 2023/24
financial year. Exchange rate between Metical and major trading
currency are expected to be stable at $1: MZN 63.88 and inflation
is also expected to decrease and trend around 4-5%. Central Bank of
Mozambique was using interest rates to control inflation, and a
decrease in the inflation rate will also enable the Central Bank of
Mozambique to reduce the prime lending rates which is currently at
24.1%.
Grain: Competition is stiff as a number of new mills have opened
in the region. However, the region expects grain shortages, and
this will drive maize meal prices up. Few millers have secured
sufficient maize for the season, and this presents an opportunity
for Grain division to gain market share and improve sales revenue
as compared to the previous year.
Beef: Demand for beef in the southern market is low because the
Metical strengthened against the South African Rand during the
year. South African Rand is not expected to strengthen against the
Metical and therefore the southern market will continue being
affected by relatively cheap imports from South Africa. However,
the Beef division is experiencing a strong pull from the north and
is mitigating for the lost southern market. The division has also
started to serve the informal markets by supplying affordable
decent quality beef. On the supply side, the focus has been on
strengthening supply chain links with the small farmers who work
with us and on getting the efficiencies on the feed lot to
improve.
Snax: The Snax division products have been well received by the
market and have won more than 50% of the market share in the
central region because of superior quality and affordability. Snax
division is now introducing the products further into the new North
and South markets so as to continue increasing the sales volumes.
New bigger family size packets will be introduced into the market
during the year.
Board and senior management changes
Mr Gert Naude joined Agriterra in 2014 and led operations as the
General Manager. After the end of the current reporting period, Mr.
Gert Naude left the Group effective 1 August 2023 as part of the
Group restructuring process. I would like to thank him for the
significant contribution he has made to the development of the
Group over the years.
Consolidated income statement
For the year ended 31 March 2023
Year Year
ended ended
31 March 31 March
2023 2022
Note $'000 $'000
--------- ---------
Revenue 4 11,494 10,277
Cost of sales (8,758) (7,715)
(Decrease)/Increase in fair value of biological
assets (288) 1
--------- ---------
Gross profit 2,448 2,563
Operating expenses (3,381) (3,490)
Other income 122 86
Profit on disposal of property, plant and equipment - 20
Operating loss (811) (821)
Finance costs 5 (1,462) (1,627)
Share of profit in equity-accounted investees,
net of tax 10 37 55
Loss before taxation (2,236) (2,393)
Taxation 127 123
--------- ---------
Loss for the year attributable to owners of the
Company (2,109) (2,270)
US cents US cents
--------- ---------
Earnings per Share
Basic and diluted earnings per share 6 (9.29) (10.7)
--------- ---------
Consolidated statement of comprehensive income
For the year ended 31 March 2023
Year Year
ended ended
31 March 31 March
2023 2022
$'000 $'000
--------- ---------
Loss for the year (2,109) (2,270)
--------- ---------
Items that may be reclassified subsequently to
profit or loss:
Foreign exchange translation differences (161) 932
Other comprehensive (loss)/income for the year (161) 932
--------- ---------
Total comprehensive loss for the year attributable
to owners of the Company (2,270) (1,338)
--------- ---------
Consolidated statement of financial position
As at 31 March 2023
31 March 31 March
2023 2022
Note $'000 $'000
---------- ----------
Non-current assets
Property, plant and equipment 24,267 25,051
Intangible assets 3 18
Equity-accounted investees 10 93 56
----------
24,363 25,125
---------- ----------
Current assets
Biological assets 7 496 463
Inventories 550 2,176
Trade and other receivables 1,055 824
Cash and cash equivalents 174 107
---------- ----------
2,275 3,570
---------- ----------
Total assets 26,638 28,695
---------- ----------
Current liabilities
Borrowings 8 2,666 8,809
Trade and other payables 658 960
----------
3,324 9,769
---------- ----------
Net current liabilities (1,049) (6,199)
---------- ----------
Non-current liabilities
Borrowings 8 7,196 1,003
Deferred tax liability 6,111 6,243
13,307 7,246
---------- ----------
Total liabilities 16,631 17,015
---------- ----------
Net assets 10,007 11,680
---------- ----------
Share capital 9 3,993 3,373
Share premium 151,419 151,442
Share based payment reserve 67 67
Revaluation reserve 12,061 12,312
Translation reserve (16,169) (16,008)
Accumulated loss (141,364) (139,506)
----------
Equity attributable to equity holders of the parent 10,007 11,680
---------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31
March 2023
Share
based
Share Share payment Translation Revaluation Accumulated Total
capital premium reserve reserve reserve losses Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------- --------- --------- ------------ ------------ ------------ ----------
Balance at 1 April
2021 3,373 151,442 87 (16,940) 12,563 (137,507) 13,018
Loss for the year - - - - - (2,270) (2,270)
Other comprehensive
income:
Exchange translation
gain on foreign
operations - - - 932 - - 932
--------- --------- --------- ------------ ------------ ------------ --------
Total comprehensive
income/(loss) for the
year - - - 932 - (2,270) (1,338)
Transactions with
owners
Share based payments - - (20) - - 20 -
Revaluation surplus
realised - - - - (251) 251 -
--------- --------- --------- ------------ ------------ ------------ ----------
Total transactions
with owners for the
year - - (20) - (251) 271 -
--------- --------- --------- ------------ ------------ ------------ ----------
Balance at 31 March
2022 3,373 151,442 67 (16,008) 12,312 (139,506) 11,680
Loss for the year - - - - - (2,109) (2,109)
Other comprehensive
income:
Exchange translation
loss on foreign
operations - - - (161) - - (161)
------------
Total comprehensive
loss for the year - - - (161) - (2,109) (2,270)
Transactions with
owners
Issue of shares 620 (23) - - - - 597
Revaluation surplus
realised - - - - (251) 251 -
--------- --------- --------- ------------ ------------ ------------ ----------
Total transactions
with owners for the
year 620 (23) - - (251) 251 597
------------
Balance at 31 March
2023 3,993 151,419 67 (16,169) 12,061 (141,364) 10,007
--------- --------- --------- ------------ ------------ ------------ ----------
Consolidated cash flow statement For the year
ended 31 March 2023
Year ended Year
ended
31 March 31 March
2023 2022
Note $'000 $'000
------------- ---------
Cash flows from operating activities
Loss before tax (2,236) (2,393)
Adjustments for:
Amortisation and depreciation 13/14 870 874
Profit on disposal of property, plant and equipment - (20)
Foreign exchange gain (151) 162
Changes in value of biological assets 15 288 (1)
Share of profit in associate 23 (37) (55)
Net finance costs 10 1,462 1,627
Operating cash flows before movements in working
capital 196 194
Net increase in biological assets 15 (321) (12)
Decrease/(Increase) in inventories 1,626 (1,243)
Decrease in trade and other receivables 52 928
Decrease in trade and other payables (302) (1,086)
Net cash generated from / (used in) operating
activities 1,251 (1,219)
------------- ---------
Cash flows from investing activities
Proceeds from disposal of property, plant and
equipment net of expenses incurred - 20
Acquisition of property, plant and equipment 13 (90) (79)
Net cash used in investing activities (90) (59)
------------- ---------
Cash flows from financing activities
Net (repayment)/drawdown of overdrafts 18 (6,254) 2,236
Net (repayment)/drawdown of loans 18 (1,589) 644
Net drawdown of shareholder loans 18 7,900 -
Net repayment of leases (137) (99)
Finance costs (1,014) (1,627)
Net cash (used in) / generated from financing
activities (1,094) 1,154
------------- ---------
Net increase / (decrease) in cash and cash
equivalents 67 (124)
Effect of exchange rates on cash and cash equivalents - -
------------- ---------
Cash and cash equivalents at beginning of the
year 107 231
------------- ---------
Cash and cash equivalents at end of the year 174 107
------------- ---------
1. GeNERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel
Islands, with registered number 42643.
The reporting currency for the Group is the US Dollar ('$' or
'US$') as it most appropriately reflects the Group's business
activities in the agricultural sector in Africa and therefore the
Group's financial position and financial performance.
These financial statements are extracted from the audited
financial statements which have been posted on the Company's web
site and do not constitute statutory accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared on a historical cost
basis, except for certain financial instruments, biological assets,
property, plant and equipment and share based payments. Historical
cost is generally based on the fair value of the consideration
given in exchange for the assets acquired. The principal accounting
policies adopted are set out below in this note.
Going concern
The Group has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities.
These forecasts include the impact of the restructuring exercise
and working capital constraints show that the Group needs to
achieve its operating targets to have sufficient headroom under its
existing banking and shareholder loan facilities. Certain
facilities fall due for renewal in June 2024 and it has been
assumed that these will be renewed.
The divisional forecasts for FY-24 show a significant
improvement in operating performance as compared to that reported
for the year ended 31 March 2023. However, there can be no
certainty that these restructuring plans will be successful, and
the forecasts are sensitive to small adverse changes in the
operations of the divisions. As set out in notes 18 and 21 the
Group is funded by a combination of short and long-term borrowing
facilities. As set out in note 26, since the year end additional
finance has been secured and a shareholder loan maturing in July
2023 has been extended by a further year.
Based on the above, whilst there are no contractual guarantees,
the directors are confident that the existing financing facilities
will continue to be available to the Group. The directors, with the
operating initiatives already in place and funding options
available are confident that the Group will achieve its cash flow
forecasts. Therefore, the directors have prepared the financial
statements on a going concern basis.
The forecasts show that the Group needs to achieve its operating
targets in order to remain within its existing bank and shareholder
loan facilities and to meet its commitments as they fall due. These
conditions and events indicate the existence of a material
uncertainty that may cast significant doubt upon the Group's
ability to continue as a going concern and the Group companies may
therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. The auditors make
reference to going concern in their audit report by way of a
material uncertainty. These financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
Basis of consolidation
The Group accounts for business combinations using the
acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to
the Group. In determining whether a particular set of activities
and assets is a business, the Group assesses whether the set of
assets and activities acquired includes, at a minimum, an input and
substantive process and whether the acquired set has the ability to
produce outputs.
The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in profit
or loss immediately. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
'controls' an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through power over the entity. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which controls ceases.
Intra-Group transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
Interest in equity accounted investees
The Group's interest in equity accounted investees comprise
interest in a joint venture.
A joint venture is an arrangement in which the Group has joint
control, whereby the Group has rights to the net assets of the
arrangement rather than rights to its assets and obligations for
its liabilities.
Interest in Joint Ventures are accounted for using the equity
method. There are initially recognised at cost, which include
transaction cost. Subsequent to initial recognition, the
consolidated financial statements include the Group's share of the
profit or loss and OCI of the equity accounted investees, until the
date on which joint control ceases.
Foreign currency
The individual financial statements of each company in the Group
are prepared in Mozambican Metical, the currency of the primary
economic environment in which it operates (its 'functional
currency'). The consolidated financial statements are presented in
US Dollars.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the date of the transaction. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not
retranslated.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's operations are translated
at exchange rates prevailing at the balance sheet date. Income and
expense items are translated at the average exchange rates for the
year, unless exchange rates fluctuate significantly during the
year, in which case exchange rates at the date of transactions are
used. Exchange differences arising from the translation of the net
investment in foreign operations and overseas branches are
recognised in other comprehensive income and accumulated in equity
in the translation reserve. Such translation differences are
recognised as income or expense in the year in which the operation
or branch is disposed of.
The following are the material exchange rates applied by the
Group:
Average Rate Closing Rate
2023 2022 2023 2022
------- ------ ------- ------
Mozambican Metical: US$ 63.86 66.31 63.88 63.83
------- ------ ------- ------
Operating segments
The Chief Operating Decision Maker is the Board. The Board
reviews the Company's internal reporting in order to assess the
performance of the business. Management has determined the
operating segments based on the reports reviewed by the Board which
consider the activities by nature of business.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable for goods and services provided in the
normal course of business, net of discounts, value added taxes and
other sales related taxes.
Performance obligations and timing of revenue recognition:
All of the Group's revenue is derived from selling goods with
revenue recognised at a point in time when control of the goods has
transferred to the customer. This is generally when the goods are
collected by or delivered to the customer. There is limited
judgement needed in identifying the point control passes once
physical delivery of the products to the agreed location has
occurred, the Group no longer has physical possession, usually it
will have a present right to payment. Consideration is received in
accordance with agreed terms of sale.
Determining the contract price:
All of the Group's revenue is derived from fixed price lists and
therefore the amount of revenue to be earned from each transaction
is determined by reference to those fixed prices.
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product
sold. Therefore, there is no judgement involved in allocating the
price to each unit ordered.
There are no long-term contracts in place. Sales commissions are
expensed as incurred. No practical expedients are used.
Operating loss
Operating loss is stated before investment revenues, other gains
and losses, finance costs and taxation.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial year of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. The Group did not incur any borrowing costs
in respect of qualifying assets in any year presented.
All other borrowing costs are recognised in profit or loss in
the year in which they are incurred.
Share based payments
The Company issues equity-settled share-based payments to
certain employees of the Group and in settlement of certain
expenditure. These payments are measured at fair value (excluding
the effect of non-market based vesting conditions) at the date of
grant and the value is expensed on a straight-line basis over the
vesting period, based on the Company's estimate of the shares that
will eventually vest and adjusted for non-market based vesting
conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Employee benefits
Short-term employee benefits
Short-term employee benefits include salaries and wages,
short-term compensated absences and bonus payments. The Group
recognises a liability and corresponding expense for short-term
employee benefits when an employee has rendered services that
entitle him/her to the benefit.
Post-employment benefits
The Group does not contribute to any retirement plan for its
employees. Social security payments to state schemes are charged to
profit and loss as the employee's services are rendered.
Leases
The Group as a lessee.
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the lessee uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable;
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- The amount expected to be payable by the lessee under residual value guarantees;
-- The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
-- Payments of penalties for terminating the lease if the lease
term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate.
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used).
-- A lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods
presented.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment loss
as described in the 'Property, Plant and Equipment' policy.
Variable rents that do not depend on an index or rate are not
included in the measurement of the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in operating expenses in
profit or loss.
Taxation
The Company is resident for taxation purposes in Guernsey and
its income is subject to income tax, presently at a rate of zero
per cent per annum. The income of overseas subsidiaries is subject
to tax at the prevailing rate in each jurisdiction.
The income tax expense for the year comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity when tax is recognised
in other comprehensive income or directly in equity as appropriate.
Taxable profit differs from accounting profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
Current tax expense is the expected tax payable on the taxable
income for the year. It is calculated on the basis of the tax laws
and rates enacted or substantively enacted at the balance sheet
date and includes any adjustment to tax payable in respect of
previous years. Deferred tax is calculated using the balance sheet
liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised to the extent that it is probable that
taxable profit will be available against which the asset can be
utilised. This requires judgements to be made in respect of the
availability of future taxable income.
The Group's deferred tax assets and liabilities are calculated
using tax rates that are expected to apply in the year when the
liability is settled or the asset realised based on tax rates that
have been enacted or substantively enacted by the reporting
date.
Deferred income tax assets and liabilities are offset only when
there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax
assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances
on a net basis.
No deferred tax asset or liability is recognised in respect of
temporary differences associated with investments in subsidiaries,
branches and joint ventures where the Group is able to control the
timing of reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable
future.
Property, plant and equipment
Recognition
Items of property, plant and equipment are stated at historical
purchase cost. Cost includes expenditure that is directly
attributable to the acquisition. The cost of self-constructed
assets includes the cost of materials and direct labour, any other
costs directly attributable to bringing the assets to a working
condition for their intended use, the costs of dismantling and
removing the items and restoring the site on which they are located
and borrowing costs on qualifying assets.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable
that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably.
Subsequent measurement
Following initial recognition at cost, items of land and
buildings are subsequently measured using the revaluation model
being the fair value at the date of revaluation less any subsequent
depreciation and subsequent impairment losses. The revaluation
model is only used when fair value can be reliably measured.
Revaluations are made regularly enough to ensure that at any
reporting date the carrying amount does not differ materially from
the fair value. Revaluations are performed by independent sworn
valuators triennially. When an item of property, plant and
equipment is revalued, the entire class of property, plant, and
equipment to which the asset belongs is revalued. Only land and
buildings are subsequently valued using the revaluation model and
all others are valued at cost model.
Any revaluation surplus is credited to revaluation reserve as
part of other comprehensive income, except to the extent that it
reverses a revaluation decrease of the same asset previously
recognized in the profit or loss, in which case the increase is
recognized in the profit or loss. A revaluation deficit is
recognized in profit or loss, except to the extent that it offsets
an existing surplus on the same recognized in the asset revaluation
reserve. The revaluation reserve is realized over the period of the
useful life of the property by transferring the realized portion
from the revaluation reserve to retained earnings.
Depreciation
Depreciation is charged on a straight-line basis over the
estimated useful lives of each item, as follows:
Land and buildings:
Land Nil
Buildings and leasehold improvements 2% - 33%
Plant and machinery 5% - 25%
Motor vehicles 20% - 25%
Other assets 10% - 33%
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Gains and
losses on disposals are determined by comparing proceeds received
with the carrying amount of the asset immediately prior to disposal
and are included in profit and loss.
Intangible assets
Intangible assets comprise investment in management information
and financial software. This is amortised at 10% straight line.
Impairment of property, plant and equipment and intangible
assets
At each balance sheet date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised initially
against amounts included in the revaluation reserve in respect of
the asset and subsequently in profit and loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit and
loss.
Biological assets
Consumer biological assets, being the beef cattle herd, are
measured in accordance with IAS 41, 'Agriculture' at fair value
less costs to sell, with gains and losses in the measurement to
fair value recorded in profit and loss. Breeding cattle, comprising
bulls, cows and heifers are expected to be held for more than one
year, and are classified as non-current assets. The non-breeding
cattle comprise animals that will be grown and sold for slaughter
and are classified as current assets.
Cattle are recorded as assets at the year-end and the fair value
is determined by the size of the herd and market prices at the
reporting date.
Cattle ceases to be a biological asset from the point it is
slaughtered, after which it is accounted for in accordance with the
accounting policy below for inventories.
Forage crops are valued in accordance with IAS 41, 'Agriculture'
at fair value less costs to harvest. As there is no ready local
market for forage crops, fair value is calculated by reference to
the production costs of previous crops. The cost of forage is
charged to profit or loss over the year it is consumed.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses. The cost of inventories is based on the
weighted average principle and includes expenditure incurred in
acquiring the inventories and bringing them to their existing
location and condition.
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at
amortised cost, at fair value through other comprehensive income
("FVTOCI") or at fair value through profit or loss ("FVPL")
depending upon the business model for managing the financial assets
and the nature of the contractual cash flow characteristics of the
financial asset.
A loss allowance for expected credit losses is determined for
all financial assets, other than those at FVPL, at the end of each
reporting period. The Group applies a simplified approach to
measure the credit loss allowance for trade receivables using the
lifetime expected credit loss provision. The lifetime expected
credit loss is evaluated for each trade receivable taking into
account payment history, payments made subsequent to year-end and
prior to reporting, past default experience and the impact of any
other relevant and current observable data. The Group applies a
general approach on all other receivables classified as financial
assets. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk
since initial recognition.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. The Group
derecognises financial liabilities when the Group's obligations are
discharged, cancelled or have expired.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade
receivables do not carry any interest and are stated at their
nominal value as reduced by appropriate expected credit loss
allowances for estimated recoverable amounts as the interest that
would be recognised from discounting future cash payments over the
short payment period is not considered to be material. Other
receivables are accounted for at amortised cost and are stated at
their nominal value as reduced by appropriate expected credit loss
allowances.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group's financial
liabilities approximate to their fair values.
The Group's financial liabilities consist of financial
liabilities measured at amortised cost and financial liabilities at
fair value through profit or loss.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
statement of comprehensive income.
Borrowings
Borrowings are included as financial liabilities on the Group
balance sheet at the amounts drawn on the particular facilities net
of the unamortised cost of financing. Interest payable on those
facilities is expensed as finance cost in the period to which it
relates.
Trade and other payables
Trade and other payables are initially recorded at fair value
and subsequently carried at amortised cost.
Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability or, in
the absence of a principal market, in the most advantageous market
for the asset or liability. The principal or the most advantageous
market must be accessible to the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
For all other financial instruments not traded in an active
market, the fair value is determined by using valuation techniques
deemed to be appropriate in the circumstances. Valuation techniques
include the market approach (i.e., using recent arm's length market
transactions adjusted as necessary and reference to the current
market value of another instrument that is substantially the same)
and the income approach (i.e., discounted cash flow analysis and
option pricing models making as much use of available and
supportable market data as possible).
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between levels in the hierarchy by
re-assessing the categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting year.
3. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies which are
described in note 3, the directors are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. The effect on
the financial statements of changes in estimates in future years
could be material on property, plant and equipment (note 13), and
biological assets (note 15).
Going concern
Details of the directors' assessment of Going Concern are set
out in note 3. These financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
Impairment and revaluation of land and buildings
Impairment reviews for non-current assets are carried out at
each balance sheet date in accordance with IAS 36, Impairment of
Assets. Reported losses in the Beef and Grain divisions were
considered to be indications of impairment and a formal impairment
review was undertaken to review whether the carrying amounts of
non-current assets are greater than the recoverable amount.
The impairment reviews are sensitive to various assumptions,
including the expected sales forecasts, cost assumptions, rent per
square metre, capital requirements, and discount rates among others
depending on how the recoverable amount is determined. The
forecasts of future cash flows were derived from the operational
plans put in place following the restructuring exercise undertaken
since year end to address the requirement to increase both volumes
and margins across the two divisions. Real commodity prices were
assumed to remain constant at current levels.
As at 31 March 2021, the Group engaged an Independent real
estate valuer to compute the fair value of land and buildings which
also assisted in determining the recoverable amount whilst
revaluing non-current assets. The Independent valuer used Royal
Institute of Chartered Surveyors (RICS) and International Financial
Reporting Standards to determine the fair value of land and
buildings. Based on the assessment performed by the independent
real estate valuers at 31 March 2021, and the improved operational
outlook reflected in the operational plan in place, management have
concluded that, at 31 March 2023, non-current assets are not
impaired.
No impairments were recorded in the year ended 31 March 2023 or
the year ended 31 March 2022. The carrying amount of non-current
assets is $24.3 million (2022: $25.1 million).
Biological assets
Cattle are accounted for as biological assets and measured at
their fair value at each balance sheet date. Fair value is based on
the estimated market value for cattle in Mozambique of a similar
age and breed, less the estimated costs to bring them to market,
converted to $ at the exchange rate prevailing at the year end.
Changes in any estimates could lead to the recognition of
significant fair value changes in the consolidated income
statement, or significant changes in the foreign currency
translation reserve for changes in the Metical to $ exchange
rate.
The herd may be categorised as either the breeding herd or
slaughter herd, depending on whether it was principally held for
reproduction or slaughter. The value of the herd held for slaughter
disclosed as a current asset was $0.5m (2022: $0.5m).
4. Segment reporting
The Board considers that the Group's operating activities
comprise the segments of Grain, Beef and Snax and which are
undertaken in Africa. In addition, the Group has certain other
unallocated expenditure, assets and liabilities, either located in
Africa or held as support for the Africa operations.
Segment revenue and results
The following is an analysis of the Group's revenue and results
by operating segment:
Year ending 31 March 2023 Grain Beef Snax(*) Unallo-cated Elimina-tions Total
$'000 $'000 $'000 $'000 $'000 $'000
------ ------ -------- ------------- -------------- --------
Revenue
External sales (2) 8,365 3,129 - - - 11,494
Inter-segment sales (1) 225 - - - (225) -
------ ------ -------- ------------- -------------- --------
8,590 3,129 - - (225) 11,494
------ ------ -------- ------------- -------------- --------
Segment results
- Operating profit/(loss) 2 (659) - (308) - (965)
- Interest expense (958) (63) - (441) - (1,462)
- Other gains and losses 95 59 - - - 154
- Share of profit in equity-accounted
investees - - 37 - - 37
------ ------ -------- ------------- -------------- --------
(Loss)/Profit before tax (861) (663) 37 (749) - (2,236)
------ ------ -------- ------------- -------------- --------
Income tax 115 12 - - - 127
------ ------ -------- ------------- -------------- --------
(Loss)/Profit after tax (746) (651) 37 (749) - (2,109)
------ ------ -------- ------------- -------------- --------
(*) The Snax division is equity accounted for as a Joint
venture. Its income statement is set out in note 23.
Year ending 31 March 2022 Grain Beef Snax(*) Unallo-cated Elimina-tions Total
$'000 $'000 $'000 $'000 $'000 $'000
-------- ------ -------- ------------- -------------- --------
Revenue
External sales (2) 7,118 3,159 - - - 10,277
Inter-segment sales (1) 226 - - - (226) -
-------- ------ -------- ------------- -------------- --------
7,344 3,159 - - (226) 10,277
-------- ------ -------- ------------- -------------- --------
Segment results
- Operating loss (55) (444) - (429) - (928)
- Interest expense (1,548) (79) - - - (1,627)
- Other gains and losses 88 19 - - - 107
- Share of profit in equity-accounted
investees - - 55 - - 55
-------- ------ -------- ------------- -------------- --------
(Loss)/Profit before tax (1,515) (504) 55 (429) - (2,393)
-------- ------ -------- ------------- -------------- --------
Income tax 111 12 - - - 123
-------- ------ -------- ------------- -------------- --------
(Loss)/Profit after tax (1,404) (492) 55 (429) - (2,270)
-------- ------ -------- ------------- -------------- --------
(1) Inter-segment sales are charged at
prevailing market prices.
(2) Revenue represents sales to external
customers and is recorded in the country
of domicile of the Company making
the sale. Sales from the Grain and
Beef divisions are principally for
supply to the Mozambique market.
The segment items included in the consolidated income statement
for the year are as follows:
Year ending 31 March 2023 Grain Beef Snax Unallo-cated Elimina-tions Total
$'000 $'000 $'000 $'000 $'000 $'000
------ ------ ------ ------------- -------------- ------
Depreciation and amortisation 514 356 - - - 870
------ ------ ------ ------------- -------------- ------
Year ending 31 March 2022 Grain Beef Snax Unallo-cated Elimina-tions Total
$'000 $'000 $'000 $'000 $'000 $'000
------ ------ ------ ------------- -------------- ------
Depreciation and amortisation 502 359 - 13 - 874
------ ------ ------ ------------- -------------- ------
Segment assets, liabilities and capital expenditure
Segment assets consist primarily of property, plant and
equipment, biological assets, inventories, trade and other
receivables and cash and cash equivalents. Segment liabilities
comprise operating liabilities, including an overdraft financing
facility in the Grain segment, and bank loans and overdraft
financing facilities in the Beef segment.
Capital expenditure comprises additions to property, plant and
equipment.
The segment assets and liabilities at 31 March 2023 and capital
expenditure for the year then ended are as follows:
Grain Beef Snax Unallocated Total
$'000 $'000 $'000 $'000 $'000
-------- ------ ------ ------------ ---------
Assets 21,361 4,880 93 304 26,638
Liabilities (7,596) (770) - (8,265) (16,631)
Capital expenditure 31 59 - - 90
-------- ------ ------ ------------ ---------
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
$'000 $'000
------- ------------
Segment assets and liabilities 26,334 (8,366)
Unallocated:
Other receivables 304 -
Accrued liabilities - (232)
Borrowings - (8,033)
26,638 (16,631)
------- ------------
The segment assets and liabilities at 31 March 2022 and capital
expenditure for the year then ended are as follows:
Grain Beef Snax Unallocated Total
$'000 $'000 $'000 $'000 $'000
--------- ------ ------ ------------ ---------
Assets 23,496 5,133 56 10 28,695
Liabilities (15,838) (973) - (204) (17,015)
Capital expenditure 65 14 - - 79
--------- ------ ------ ------------ ---------
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
$'000 $'000
------- ------------
Segment assets and liabilities 28,685 (16,811)
Unallocated:
Other receivables 10 -
Accrued liabilities - (204)
28,695 (17,015)
------- ------------
Key performance Indicators
The Board considers that earnings before interest, tax,
depreciation and amortisation ("EBITDA") is a key performance
indicator in measuring operational performance. EBITDA is a non
IFRS measure and alternative performance measure for the Group
which is calculated as follows:
Year ending 31 March 2023 Grain Beef Snax Unallocated Total
$'000 $'000 $'000 $'000 $'000
------ ------ ------ ------------ --------
(Loss)/Profit before tax (861) (663) 37 (749) (2,236)
- Interest expense 958 63 - 441 1,462
- Depreciation and amortisation
charge 514 356 - - 870
- Share of profit in equity-accounted
investees - - (37) - (37)
------ ------ ------ ------------ --------
EBITDA 611 (244) - (308) 59
------ ------ ------ ------------ --------
Year ending 31 March 2022 Grain Beef Snax Unallocated Total
$'000 $'000 $'000 $'000 $'000
-------- ------ ------ ------------ --------
(Loss)/Profit before tax (1,515) (504) 55 (429) (2,393)
- Interest expense 1,548 79 - - 1,627
- Depreciation and amortisation
charge 502 359 - 13 874
- Share of profit in equity-accounted
investees - - (55) - (55)
-------- ------ ------ ------------ --------
EBITDA 535 (66) - (416) 53
-------- ------ ------ ------------ --------
5. Finance costs
Year Year
Ended Ended
31 March 31 March
2023 2022
$'000 $'000
--------- ---------
Interest expense on bank borrowings and overdrafts (913) (1,556)
Interest expense on shareholder loan (448) -
--------- ---------
Interest expense on leases (101) (71)
--------- ---------
Net finance costs (1,462) (1,627)
--------- ---------
6. earnings per share
Year ended Year ended
31 March 31 March
2023 2022
$'000 $'000
----------- -----------
The calculation of the basic and diluted earnings
per share is based on the following data:
Loss for the year for the purposes of basic and diluted
earnings per share attributable to equity holders
of the Company (2,109) (2,270)
----------- -----------
Weighted average number of Ordinary Shares for the
purposes of basic and diluted earnings per share 22,705,569 21,240,618
----------- -----------
Basic and diluted earnings per share - US cents (9.29) (10.7)
----------- -----------
Basic and diluted earnings per share from continuing
activities - US cents (9.29) (10.7)
----------- -----------
The Company has issued options over ordinary shares which could
potentially dilute basic loss per share in the future. There is no
difference between basic loss per share and diluted loss per share
as the potential ordinary shares are anti-dilutive. Details of
options are set out in note 24.
7. Biological assets
$'000
--------
Fair value
At 31 March 2021 451
Purchase of biological assets 1,606
Sale, slaughter or other disposal of biological assets (1,630)
Change in fair value of the herd 1
Foreign exchange adjustment 35
At 31 March 2022 463
Purchase of biological assets 1,812
Sale, slaughter or other disposal of biological assets (1,533)
Change in fair value of the herd (288)
Foreign exchange adjustment 42
--------
At 31 March 2023 496
--------
At 31 March 2023 and 2022, all cattle are held for slaughter.
The slaughter herd has been classified as a current asset. Forage
crops included in current assets are $42,547 (2022: $10,802).
At 31 March 2023 the slaughter herd comprised 4,099 head (2022:
4,575, with an average weight of 341kgs (2022: 283kgs) and average
value of $369 (2022: $339).
For valuation purposes, animals in the feedlot, their weight has
been estimated based on their individual weigh in data at the
closest weigh in date to the year end. Cattle are generally kept
for periods less than 3 months before slaughter.
8. Borrowings
31 March 31 March
2023 2022
$'000 $'000
--------- ---------
Non-current liabilities
Shareholder loans 6,534 -
Bank loans 574 783
Leases 88 220
--------- ---------
7,196 1,003
--------- ---------
Current liabilities
Shareholder loans 1,500 -
Bank loans 1,056 2,438
Leases 110 115
Overdraft - 6,256
--------- ---------
2,666 8,809
--------- ---------
9,862 9,812
--------- ---------
Bank Borrowings
Group
During the period, Agriterra Limited secured shareholder loans
amounting to $7.9 million from Magister Investments Limited at an
interest rate SOFR+6% to reduce the finance cost which has been
increasing over the years and has been used to repay commercial
borrowing in Mozambique which were charged interest above 18% per
annum. The Group is saving more than $792,000 per annum on interest
cost. The shareholder loans are made up of:
-- $6.1m convertible loan facility with a 3-year tenure maturing August 2025.
-- $1.8m convertible loan facility with a 12-month tenure
maturing in August 2023 and was renewed for the same period after
year end.
In the event of default or at the option of the lender, the
outstanding principal and interest may be converted into new
ordinary shares at the prevailing market price of the Company`s
shares at such time. The market price is determined by the 10-day
VWAP. The difference between the 10-day VWAP and the closing market
price is a derivative liability the value of which is not
considered to be material. Accordingly, the principal of the
convertible loans has been recorded in full as a financial
liability.
$ 0.3m of the $1.8m shareholder loan was converted in shares in
March 2023.
Beef division
Beef division does not have any finance facilities except
equipment leases as at 31 March 2023.
Grain division
At 31 March 2023, the Grain division has two outstanding
commercial bank loans amounting to $1.6 million secured by land and
buildings. As announced on 15 November 2023 $1m of these loans has
been repaid following the drawdown of a new shareholder loan of
$1.7 million (note 26).
In addition, Grain division has a finance lease for 6 vehicles
maturing on 05 December 2023 with an outstanding balance amounting
to MZN 3.2m ($50,031). Grain division incurs interest of 24.1% on
this facility. During the period MZN 3.0m ($47,414) of the
outstanding balance was repaid.
The bank facilities are secured as follows:
31 March 31 March
2023 2022
$'000 $'000
--------- ---------
Fixed Charge
Property, plant and equipment 20,401 20,833
Floating Charge
Maize and maize product inventories - 250
20,401 21,083
--------- ---------
As further security to the bank loans and overdrafts, Agriterra
Limited has issued a corporate guarantee in favour of the bank.
Under the terms of the guarantee, it may only be called upon once
the bank has exhausted all possible means of recovering the debt in
Mozambique.
Reconciliation to cash flow statement
At 31 Cash Interest Loan Foreign At 31
March flow accrued to equity Exchange March
2022 conversion 2023
$'000 $'000 $'000 $'000 $'000 $'000
Shareholder loan - 7,900 448 (314) - 8,034
Non-current bank
loan 783 (209) - - - 574
Non-current leases 220 (132) - - - 88
Current bank loan 2,438 (1,380) - - (2) 1,056
Current leases 115 (5) - - - 110
Overdrafts 6,256 (6,254) - - (2) -
------- -------- --------- ------------ ---------- -------
9,812 (80) 448 (314) (4) 9,862
------- -------- --------- ------------ ---------- -------
At 31 Cash flow Foreign At 31
March 2021 Exchange March 2022
$'000 $'000 $'000 $'000
Non-current bank loan 2,107 (1,431) 107 783
Non-current leases 302 (103) 21 220
Current bank loan 263 2,075 100 2,438
Current leases 102 4 9 115
Overdrafts 3,651 2,236 369 6,256
------------ ---------- ---------- ------------
6,425 2,781 606 9,812
------------ ---------- ---------- ------------
9. Share capital
Allotted and
Authorised fully paid
Number Number $'000
------------ ------------- ------
Ordinary Shares
At 31 March 2022 23,450,000 21,240,618 3,135
Issued during the year 50,588,389 50,588,389 620
------------ ------------- ------
At 31 March 2023 74,038,389 71,829,007 3,755
At 31 March 2022 and 31 March 2023
Deferred shares of 0.1p each 155,000,000 155,000,000 238
Total share capital 229,038,389 226,829,007 3,993
------------ ------------- ------
The Company has one class of ordinary share which carries no
right to fixed income.
The deferred shares carry no right to any dividend; no right to
receive notice, attend, speak or vote at any general meeting of the
Company; and on a return of capital on liquidation or otherwise,
the holders of the deferred shares are entitled to receive the
nominal amount paid up after the repayment of GBP1,000,000 per
ordinary share. The deferred shares may be converted into ordinary
shares by resolution of the Board.
Placing and Broker option
On 20 March 2023, the Company issued 20,000,000 new ordinary
shares for cash at a price of 1p per share and 20,000,000 new
ordinary shares on conversion of a loan from Magister Investments
Limited at a conversion price of 1p per share.
On 22 March 2023, the Company issued 5,000,000 new ordinary
shares for cash at a price of 1p per share and 5,000,000 new
ordinary shares on conversion of a loan from Magister Investments
Limited at a conversion price of 1p per share.
On 23 March 2023, the Company issued 588,389 new ordinary shares
on conversion of a loan from Magister Investments Limited at a
conversion price of 1p per share in order to maintain the Magister
Investments Limited shareholding at 50.58%.
Warrants
31 March 31 March
2023 2022
PILOW warrants 50,588,389 -
Broker warrants 1,250,000 -
51,838,389 -
----------- ---------
Participants in the Placing and Debt Conversion received one
Protected In-the-money Loyalty Warrant ("PILOW") for every Placing
Share or Conversion Share issued. The PILOW offers rights to the
Company to call the PILOW holder to exercise their options at a
price to be determined by the company or in the event of a future
fundraising or in certain other circumstances, the Company is
mandated to call the PILOW holder to exercise their options on
similar terms to the future placing. The PILOW expires 24 months
from the date of issue. The PILOW has no fixed price, no guaranteed
discount and are held over a variable number of securities. Given
these variables, in the opinion of the Company it is not possible
to calculate the expected value of a PILOW and that their fair
value is nil.
On 22 March 2023, the Company issued 1,250,000 Broker warrants
with a term of 24 months and an exercise price of 1p. Their value
is not material and has not been accounted for as a cost of the
placing.
10. Equity-ACCOUNTED INVESTEES
31 March 31 March
2023 2022
$'000 $'000
--------- ---------
Interest in joint venture 93 56
93 56
--------- ---------
DECA Snax Limitada is a joint venture in which the Group has
joint control and a 50% ownership interest. It is one of the
Group's strategic customers of grits and principally engaged in the
production of corn snacks in Mozambique. DECA Snax Limitada's
principal place of business is Chimoio in Mozambique and is not
listed.
DECA Snax Limitada is structured as a separate vehicle and the
Group has residual interest in the net assets of DECA Snax
Limitada. Accordingly, the Group has classified DECA Snax Limitada
as a joint venture. In accordance with the agreement under which
DECA Snax Limitada is established, the Group and the other investor
in the joint venture have agreed to make additional contributions
in proportion of their interest if additional investment is
required in DECA Snax Limitada.
The following table summarises the financial information of DECA
Snax Limitada as included in its own financial statements. The
table also reconciles the summary information to the carrying
amount of the Group's interest in DECA Snax Limitada.
31 March 31 March
2023 2022
$'000 $'000
--------- ---------
Percentage ownership interest 50% 50%
Non-current assets 447 466
Current assets (including cash and cash equivalents - 2023:
$73,000, 2022: $23,000) 550 337
Current liabilities (Trade and other payables) (75) (233)
Non-current liabilities (748) (458)
Net assets (100%) 174 112
--------- ---------
Net assets (Carrying amount of joint venture) 93 56
--------- ---------
Revenue 2,346 1,447
Cost of Sales (1,804) (1,008)
Depreciation and amortisation (77) (71)
Operating expenses (372) (192)
Interest expense - -
Income tax expense (18) (66)
Profit and other comprehensive income (100%) 75 110
--------- ---------
Profit and other comprehensive income (50%) 37 55
--------- ---------
11. Events subsequent to the balance sheet date
In July 2023, the Group decided to implement a restructuring
process with the goal to enable the business to break even at the
current activity business levels. The impact of the restructuring
exercise on the Group is as follows:
-- Group employees decreasing by 124 employees out of 312
employees of the Group thereby reducing payroll cost by $528,000
per year.
-- Reduction of other operation expenses by $228,000 per year.
In June 2023, Group secured working capital funding from
commercial banks in Mozambique, assisted by bank guarantees from
Magister. Due to challenges in the macro-economic environment, the
banks were unable to disburse the funds in full. The majority
shareholder assisted in August 2023 with a $2 million facility to
fund current year working capital. In addition, the shareholder
convertible loan amounting to $1.8 million which matured in July
2023 was extended by a further year. Interest on all shareholder
loans are at SOFR+6%.
On 15 November 2023, Magister Investments Limited advanced a
further $1.7 million to enable the Group to repay its remaining
Metical denominated bank borrowings. The loan has a coupon of
SOFR+6% and a term of 1 year, renewable at the lender's option.
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END
FR ZZMGZKMFGFZM
(END) Dow Jones Newswires
December 01, 2023 10:37 ET (15:37 GMT)
Agriterra (AQSE:AGTA.GB)
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