TIDMAGTA
RNS Number : 0311G
Agriterra Ltd
27 February 2015
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
27 February 2015
Agriterra Ltd ('Agriterra' or 'the Group')
Interim Results
Agriterra Limited, the AIM listed pan-African agricultural
company, announces its results for the six months ended 30 November
2014.
Chairman's Statement
The Company continues to work towards its objective of becoming
an integrated pan-African agricultural business with a diversified
portfolio of products including beef, cocoa and maize. In line with
this objective, we remain focussed on enhancing the value of our
core businesses, and despite the detrimental impact of external
factors beyond our control in our countries of operations, during
the period the beef division in particular has emerged as a solid
revenue generator and a stable platform from which to develop
sustainable and scalable growth in the future. Agriterra has
invested in and built a valuable platform of infrastructure,
logistics and retail units which, with continued hard work, can be
translated into revenue generation and profitability moving
forward. This approach will continue to be a core pillar of our
investment strategy as we look to maximise efficiencies across our
individual divisions, capitalise on revenue generation and improve
margins to drive shareholder value. The Company is reporting a Net
Asset Value ('NAV') of US$50.2 million which is a significant
premium to our market capitalisation of US$11.0 million.
As mentioned above, during the period under review the beef
division further distinguished itself as being a primary revenue
contributor within the Group, as confirmed by a 28% increase in
revenues to US$2,657,000 against the comparative period (6 months
ended 30 November 2013 ('H1-2014'): US$2,068,000). This notable
improvement in revenue serves as a "proof of concept" and reflects
the increasing volumes moved through our retail units, which
represent the final link in Agriterra's beef value chain, from
field to fork. This is a pivotal aspect to our beef business model,
and in line with this we are actively pursuing new opportunities to
increase our sales presence and market penetration by building on
our current portfolio of retail units (which includes full
butcheries in the towns of Chimoio, Beira and Tete, together with
two satellite units in Manica and Moatize).
We have identified Northern Mozambique as an important area for
expansion, through a combination of the presence of major
population centres in the area and the increasing activities of
international resource development companies. To service this
growing market, we are in the process of establishing a butchery
and distribution centre in Nampula, Mozambique's third largest city
and capital of the northern province of Nampula. We have leased a
suitable site for this operation which is currently being
refurbished (a process which has unfortunately been delayed due to
flooding and the consequent damage caused to the bridge at Mocuba
over the river Licungo, which is hampering deliveries to site). We
expect to be in a position to open this new site during Q2 2015 and
we will provide updates to the market regarding this in due course.
We are also looking at retail possibilities in Nacala and Pemba,
both of which are thriving towns in the North, benefitting from
significant inward investment into the region.
Overall, we feel that the beef division has now established a
solid and demonstrable base from which to expand significantly both
in terms of wholesale and retail sales, as well as by exploring the
significant potential in the export market.
Elsewhere across our portfolio, our Sierra Leonean cocoa
division remains an important component of the Group's NAV. In line
with the Group's strategy to develop its 3,200 hectare landholding
in the south-east of Sierra Leone, 40km from the town of Kenema, we
have established many aspects of the critical infrastructure
(including roads, offices and a state-of-the-art irrigated nursery)
which will be required to support an operation which has the
potential to become one of West Africa's largest cocoa plantations.
The intended acceleration of development at the plantation has
however been curtailed at present as a precautionary measure to
protect staff in response to the outbreak of Ebola in the country.
During this time of reduced activity, our assets in the country are
being rigorously maintained and we are also leasing our fleet of
vehicles and some of our warehousing infrastructure to
international aid companies. Importantly, this provides the Company
with an opportunity to proactively participate in the relief
effort, maintain a presence in the country during this challenging
time in Sierra Leone's history and provides a revenue stream to the
Group which currently offsets the full cash costs of the cocoa
division.
Finally, I turn to our third division, the Group's maize
purchasing and processing business in Mozambique. As highlighted in
my statement to shareholders in October 2014, maize meal sales were
impacted by the political instability during 2014, as well as a
particularly plentiful harvest; this has reduced revenues to
US$2,043,000 (H1-2014: US$4,669,000 ). The Board is monitoring the
performance of this division to gauge opportunities to improve
efficiencies, revenues and margins and will report further on this
assessment in due course.
Financial results
The Group's profit for the period was US$0.94 million (H1-2014:
loss of US$2.26 million). The result reflects the final settlement
of claims arising from the Group's legacy oil interests in South
Sudan amounting to income of US$5.66 million (H1-2014: US$nil),
which is reported within discontinued operations along with the
results of the Group's discontinued cocoa trading operations.
The Group's operating loss for the period was US$4.03 million
(H1-2014: loss of US$2.31 million), the increase reflecting in the
main the decrease in contribution arising from the maize division
(loss of US$0.96 million compared to a profit of US$0.07 million in
H1-2014) arising from lower sales volumes, and the increase in
operating loss for the cocoa division from US$0.09 million to
US$0.46 million principally reflecting the temporary cessation of
capitalisation of expenditure incurred in respect of the cocoa
plantation while the activities on site remain curtailed as a
result of the Ebola crisis.
The beef division delivered a significant 28% increase in
revenues from US$2.07 million in H1-2014 to US$2.66 million, a very
encouraging rate of increase which underpins the Board's belief in
the significant future potential of this division.
In terms of the Group's balance sheet, net assets are reported
at US$50.2 million (being US$0.047 per share), which is a
significant premium to our market capitalisation of approximately
US$11.1 million (being US$0.010 per share).
In addition to our current operations, the Board has continued
to actively pursue the realisation of value from its legacy oil and
gas operations. In light of the continuing civil war in South
Sudan, the Board took the view that it would be prudent to expedite
settlement in respect of the claims arising from the Group's legacy
oil interests in South Sudan and accordingly, as announced on 17
September 2014, a successful settlement was reached in respect of
such interests resulting in income of US$5.66 million to the Group.
Following the settlement, the Company and Group has no further
current economic interest in South Sudan.
PH Edmonds
Chairman
27 February 2015
OPERATIONS REVIEW
Agriterra currently has three operational agricultural
divisions:
-- Beef, which comprises cattle ranching, feedlot, abattoir
operations and retail units through Mozbife Limitada
('Mozbife')
-- Cocoa, which manages the Group's cocoa farming activities
through the Tropical Farms group of companies ('TFL')
-- Grain, which operates maize purchasing and processing businesses through Desenvolvimento E Comercialização Agricola Limitada ('DECA') and Compagri Limitada ('Compagri')
Beef Operations (Mozambique)
Agriterra remains focussed on expanding its vertically
integrated "field to fork" beef operations which comprise three
ranches totalling 19,850 hectares, a feedlot facility with capacity
for up to 3,000 animals with an additional 1,050 hectares of land
available for cropping activities, a 4,000 head per month abattoir
and five retail units in Mozambique.
During the period under review the Group has worked to
strengthen the key revenue generating elements of our vertically
integrated beef business, namely the five retail units, the
abattoir and the feedlot. The Board is pleased to report that these
components are generating positive cash flows. The Board is also
pleased to announce increased revenues from the beef division of
US$2,657,000 compared to US$2,068,000 in H1-2014, reflecting an
increase in volumes sold through the retail outlets. Recognising
that the development of the Group's retail offering is critical to
the future expansion of the business, the Board has been evaluating
a number of potential new sites for retail developments.
Nampula, in Northern Mozambique, was quickly identified as a
priority target for retail expansion. Northern Mozambique is
developing rapidly, mainly due to significant international
investment, principally in natural resources (such as liquefied
natural gas) and is therefore a key market within Mozambique.
Nampula is an ideal location from which to expand into this market
not only because is it the central commercial hub for Northern
Mozambique, but it also has a large domestic population (being the
third largest city in the country), with an established, and
rapidly growing, market for quality butchered beef products.
Development of the Nampula site, which will comprise a full
butchery and distribution centre, is well advanced. The
refurbishment has however been hampered by recent heavy rains and
floods in the North and Centre of Mozambique and Malawi, which have
damaged the bridge at Mocuba over the river Licungo, hindering road
transport on the road linking the North to the South of Mozambique.
The Board continues to monitor progress with regards to the repair
of the bridge and is hopeful that it will be in a position to open
the new retail unit shortly after the bridge and roads are once
again open to the public.
In order to keep our retail units stocked with the highest
quality beef products, and to ensure the full uplift in value is
secured within the Group's own operations, all beef sold within
Mozbife's retail units is sourced from the Group's state-of-the-art
abattoir at Chimoio. 2,313 animals were processed through the
abattoir during the period, an increase over the 2,248 animals
processed during H1-2014. Importantly, the average slaughtered
weight increased by 22% to 217kg from 178kg, significantly
enhancing the sell-on price achievable for each animal. With a
current run rate of approximately 400 animals per month, the
abattoir continues to perform well. With a monthly slaughter
capacity of approximately 4,000 head, there remains considerable
flexibility to increase slaughter rates as the beef operations
expand.
The feedlot at Vanduzi continues to supply all of the throughput
for the abattoir and ensures that the Group captures the full
uplift in value through the chain from "field to fork". The Vanduzi
Feedlot can carry approximately 3,000 head, and provide
approximately 1,000 head for slaughter each month to the abattoir.
At the end of the period there were 1,352 animals in the feedlot,
sourced from Mozbife's own ranches or from cattle purchased from
the surrounding areas. The feedlot is critical to Mozbife's
business model, ensuring a well finished, high quality animal for
slaughter from which premium grade meat is available to supply our
retail units and wholesale operations.
In addition to the feeding pens, the feedlot has 1,050 hectares
of land used for feed production. This provides the twin benefits
of reducing costs and providing certainty of supply. Furthermore,
the feedlot works strategically with other companies in the Group,
by using bran, the by-product from the grain processing facilities,
as a feed supplement for the cattle.
Remaining central to the medium to long term revenue generative
capacity of the beef division is Mozbife's ranches (namely the
2,350 hectare Mavonde ranch, the 2,500 hectare Inhazonia ranch and
the 15,000 hectare Dombe ranch, all located in Central Mozambique).
The total herd across the ranches stood at 6,555 head as at 30
November 2014, bringing Mozbife's total head to 7,907 including the
feedlot animals.
The expansion of the herd remains an important aspect of the
Group's long term integrated vision for the beef division. In
addition to providing throughput for the abattoir, the expansion of
the herd also provides for the long term quality of Mozbife's
product - the ranches deliver a very high quality animal, either
pure Beefmaster, premium quality imported animals, or local breeds
cross-bred with pedigrees to rear larger animals. The very best
cuts can be obtained from these high quality animals which, in
turn, command the highest retail prices in our retail units.
To support this on-going growth in herd size, additional pivot
irrigation has been completed at Mavonde and Inhazonia which has
increased the irrigated land by 195 hectares to 368 hectares, and
by 88 hectares to 118 hectares respectively. Different varieties of
grass have now been planted on this land to produce both grass for
grazing and for hay bailing. This will provide important
flexibility for Mozbife as it continues its expansion strategy to
maximise stocking ratios across the ranches.
Cocoa Plantation & Trading (Sierra Leone)
The Group's cocoa division is focussed on its 3,200 hectare
plantation, located 40km from Kenema in south-east Sierra Leone. A
rapid clearing and planting schedule was initiated at the
plantation in 2013 aimed at quickly establishing one of West
Africa's largest cocoa plantations on this 3,200 hectare
landholding (with expansion potential to 4,800 hectares, subject to
the acquisition of an additional block of land adjacent to the
plantation). Once the development plan for the plantation is
complete, the Group's long term objective is to produce a minimum
of 8,000 tonnes of cocoa beans per annum.
As announced in September 2014 and as a result of the
well-publicised Ebola outbreak affecting Western Africa, including
Sierra Leone, the Board made the decision to suspend current
development activities at the plantation. In addition to the
significant restrictions in movement in country causing a shortage
of labour, the Board assessed that it was unsafe to pursue an
expansion of the plantation at that stage, which could increase the
risk of Ebola developing on the plantation site and place staff at
risk.
Accordingly, activities at the plantation have been curtailed to
a level sufficient to protect staff while maintaining the Group's
assets in country. In accordance with this plan, the Group is
operating with a reduced labour force to ensure that the hectares
planted to date are maintained, as is the plantation infrastructure
(including warehousing, accommodation and equipment). The Group is
also rigidly enforcing general hygiene protocols to ensure staff
and visitors are not placed at unnecessary risk.
The Board continues to monitor the situation regarding Ebola in
Sierra Leone and acknowledges that important strides have been made
to control the virus in recent months. In light of these
developments the Board is positive about its future development
plans regarding the plantation. With a projected cocoa bean deficit
of up to one million metric tonnes by 2020/2021 driving prices
upwards, the fundamentals of the cocoa market remain strong.
Subject to an effective internationally supported response to the
Ebola outbreak and subsequent regeneration, the Board remains of
the view that the Group is well positioned to obtain the necessary
financing to bring the cocoa assets into production in time to
capitalise on this supply shortage.
In addition to maintaining the Group's infrastructure and fleet
during the Ebola outbreak, the Group has deployed many of its
vehicle and warehousing resources to assist several major NGOs
working in the Ebola relief efforts. This support has provided the
Group with a significant role to play during the Ebola outbreak at
a time when many aid agencies were in critical need of in-country
support. Through the utilisation of the Group's warehousing, which
has been used for storage of food and essential supplies, and
vehicles utilised for distribution as well as medical and
humanitarian services, the Group has supported the relief effort in
Sierra Leone. Further, the income from these rentals now currently
covers the full cash requirements of this division.
In addition to the development of the plantation and until early
2014, the Group also operated a small cocoa trading business from
Kenema where beans were purchased from local out-growers and
processed ready for sale to the international market. This
operation, whilst an important foothold in this area of Sierra
Leone, was loss-making for the Group and following a series of poor
harvests and the Ebola outbreak, the decision was taken to
discontinue these activities. No cocoa sales were made during the
period and expenditure of US$174,000 relating to the trading
operations is presented as "discontinued" within the consolidated
financial statements.
Grain Processing (Mozambique)
The Group's maize operations are focussed on its 35,000 tonne
capacity facility in Chimoio in central Mozambique, and its 15,000
tonne capacity facility in Tete, in north-west Mozambique. The
established maize buying and processing business is focussed on
purchasing maize from local out-growers through a network of buying
stations, which is then processed and stored before being sold to
the retail market as maize meal, a key staple food in the region
and country.
The Group purchases maize directly from in excess of 350,000
local smallholder farmers at specific buying points, thereby
supporting economic activity in the relevant rural areas. Having
purchased the maize, it is transported back to purpose-built
storage and processing facilities where it is dried, fumigated,
prepared and processed into maize meal.
Sales were slow during the period, with 6,500 tonnes of maize
milled (H1-2014: 12,000 tonnes) and 4,600 tonnes of maize meal sold
(H1-2014: 9,100 tonnes), producing total sales of US$2,043,000
(H1-2014: US$4,669,000). The Board believes that the low sales
volumes are due to an exceptionally plentiful harvest - estimated
at around 2.3 million tonnes - which has created ample local market
supplies of maize and reduced the demand for processed products
from DECA and Compagri. This bountiful harvest has also impacted
the price achievable for the Group's products, with average prices
reducing from US$490 per tonne of meal during H1-2014, to US$442
per tonne of meal for this period. In addition, political
instability leading up to the elections made transport to the South
and North of the country difficult and further compounded the
disappointing sales achieved during the period.
Maize purchases during the 2014 season were strong with 28,700
tonnes of maize purchased at an average price of approximately
US$170 per tonne, compared to an average purchase price of US$255
for the previous corresponding period. This reduction in purchase
price is expected to benefit the maize division in the second half
of the current financial year.
Due principally to the lower volumes of maize meal sold, and the
adverse pricing environment, the grain division moved to an
operating loss of US$962,000 during the period (H1-2014:
US$66,000).
The second half of the year is normally a peak selling period
for maize meal. However the rains which have affected both
Mozambique and Malawi post period end have temporarily cut off the
road links between the Group's production and processing facilities
in central Mozambique, and the Northern markets, which is having an
adverse effect on sales volumes. The Group is currently evaluating
alternative shipping options and has sent eight containers by sea
from Beira to Nacala as a trial to gauge the efficiency of this as
a temporary logistics solution.
The rains post period end have also washed away significant
maize plantings which may lead to a shortage of maize next year. On
the one hand this may impact the Company's ability to source
adequate supply of maize. However, it may also improve the pricing
environment for its stored maize which currently totals
approximately 21,700 tonnes.
In addition to addressing the uncertainties noted above, the
Board is focussing its efforts on developing additional revenue
streams within the grain division in order to leverage its
infrastructure. Areas under review include additional maize based
products such as maize crisps, and additional agricultural
products. Further news regarding these appraisals and opportunities
will be made available as appropriate.
Palm Oil Operations (Sierra Leone)
The Group controls a lease of approximately 45,000 hectares of
brownfield agricultural land suitable for palm oil production in
the Pujehun District in the Southern Province in Sierra Leone. The
Board continues to evaluate this property and its potential for
commercialisation. Further updates will be provided when
appropriate.
For further information please visit www.agriterra-ltd.com or
contact:
Andrew Groves Agriterra Ltd Tel: +44 (0) 20
7408 9200
David Foreman Cantor Fitzgerald Tel: +44 (0) 20
Europe 7894 7684
Rick Thompson Cantor Fitzgerald Tel: +44 (0) 20
Europe 7894 7684
Andy Cuthill Peat & Co. Tel: +44 (0) 20
3540 1722
John Beaumont Peat & Co. Tel: +44 (0) 20
3540 1723
Susie Geliher St Brides Media & Tel: +44 (0) 20
Finance Ltd 7236 1177
Consolidated income statement
6 months 6 months 12 months
ended ended ended
30 30 31
November November May
2014 2013 2014
Unaudited Unaudited Audited
(represented
note
6)
Note $000 $000 $000
CONTINUING OPERATIONS
Revenue 4,700 6,737 13,797
Cost of sales (4,421) (5,826) (12,475)
----------- ------------- ----------
Gross profit 279 911 1,322
Increase in value of biological
assets 288 601 290
Operating expenses (4,847) (4,077) (8,338)
Other income 251 254 226
Operating loss (4,029) (2,311) (6,500)
Investment revenues 8 136 146
Other gains and losses 4 (158) 802 936
Finance costs 5 (364) (117) (209)
Loss before taxation (4,543) (1,490) (5,627)
Taxation (3) (52) (25)
----------- ------------- ----------
Loss for the period from continuing
operations 3 (4,546) (1,542) (5,652)
DISCONTINUED OPERATIONS
Profit / (loss) for the period
from discontinued operations 6 5,485 (722) (2,364)
Profit / (loss) for the period
attributable to owners of
the Company 939 (2,264) (8,016)
=========== ============= ==========
(LOSS) / EARNINGS PER SHARE
Basic and diluted loss per
share from continuing operations (0.43) (0.14) (0.53)
============== ============== ==============
Basic and diluted earnings
/ (loss) per share from continuing
and discontinued operations 0.09 (0.21) (0.76)
============== ============== ==============
No. No. No.
Weighted average number of
shares outstanding for the
purposes of calculating basic
and diluted (loss) / earnings
per share from continuing
operations, and from continuing
and discontinued operations 1,061,818,478 1,061,818,478 1,061,818,478
============== ============== ==============
Consolidated Statement of comprehensive income
6 months 6 months 12 months
ended ended ended
30 30 31
November November May
2014 2013 2014
Unaudited Unaudited Audited
$000 $000 $000
Profit / (loss) profit for
the period 939 (2,264) (8,016)
Items that may be reclassified
subsequently to profit or
loss:
Foreign exchange translation
differences (1,319) (325) (1,612)
----------- ----------- ----------
Other comprehensive income
for the period (1,319) (325) (1,612)
----------- ----------- ----------
Total comprehensive income
for the year attributable
to owners of the Company (380) (2,589) (9,628)
=========== =========== ==========
Consolidated statement of financial position
30 November 30 November 31 May
2014 2013 2014
Unaudited Unaudited Audited
Note $000 $000 $000
Non-current assets
Goodwill and other intangible assets 572 697 576
Property, plant and equipment 35,068 35,551 36,268
Interests in associates 4 4 4
Investments in quoted companies 7 1,067 1,091 1,225
Biological assets 2,689 3,370 3,071
------------
39,400 40,713 41,144
------------ ------------ ----------
Current assets
Biological assets 1,010 797 1,201
Inventories 6,298 6,590 4,900
Trade and other receivables 1,133 3,504 1,148
Cash and cash equivalents 8,852 8,739 6,994
17,293 19,630 14,243
------------ ------------ ----------
Total assets 56,693 60,343 55,387
------------ ------------ ----------
Current liabilities
Borrowings 8 (5,202) (1,138) (2,668)
Trade and other payables (1,294) (1,711) (2,170)
(6,496) (2,849) (4,838)
------------ ------------ ----------
Net current assets 10,797 16,781 9,405
------------ ------------ ----------
Net assets 50,197 57,494 50,549
============ ============ ==========
Share capital 9 1,960 1,960 1,960
Share premium 148,622 148,622 148,622
Shares to be issued 2,940 2,940 2,940
Share based payments reserve 1,887 1,765 1,859
Translation reserve (5,127) (2,521) (3,808)
Accumulated losses (100,085) (95,272) (101,024)
------------ ------------ ----------
Equity attributable to equity holders of the parent 50,197 57,494 50,549
============ ============ ==========
The unaudited condensed consolidated financial statements of
Agriterra Limited for the six months ended 30 November 2014 were
approved by the Board of Directors and authorised for issue on 27
February 2015. Signed on behalf of the Board of Directors:
P H Edmonds
Chairman
Consolidated cash flow statement
6 months
6 months ended 30 ended 30
November November 12 months ended 31 May
2014 2013 2014
Unaudited Unaudited Audited
(represented note 6)
$000 $000 $000
Loss before tax for the period from
continuing operations (4,546) (1,490) (5,627)
Adjustments for:
Depreciation 1,013 922 1,766
Profit on disposal of property, plant
and equipment - (180) (149)
Share based payment expense 28 54 149
Foreign exchange loss / (gain) 159 12 (52)
Increase in value of biological assets (288) (601) (290)
Finance costs 364 117 209
Investment revenues (8) (136) (146)
Decrease / (increase) in fair value of
quoted investments 158 (802) (936)
Operating cash flows before movements in
working capital (3,120) (2,104) (5,076)
(Increase) / decrease in inventories (16) (904) 197
(Increase) / decrease in trade and other
receivables (1,670) (134) 971
Decrease in trade and other payables (861) (637) (173)
------------------ --------------------- -----------------------
Net cash used in operating activities by
continuing operations (5,667) (3,779) (4,081)
Corporation tax paid (6) (18) (25)
Finance costs (364) (117) (209)
Interest received 8 136 146
Net cash used in operating activities by
continuing operations (6,029) (3,778) (4,169)
------------------ --------------------- -----------------------
Net cash from / (used in) operating
activities by discontinued operations 5,546 (875) (879)
------------------ --------------------- -----------------------
Net cash used in operating activities (483) (4,653) (5,048)
------------------ --------------------- -----------------------
Cash flows from investing activities
Proceeds from disposal of property, plant
and equipment 7 180 202
Acquisition of property, plant and
equipment (912) (3,644) (5,935)
Purchase of investment in quoted companies - (285) (285)
Decrease /(increase) in biological assets 677 409 (219)
---------------------
Net cash used in investing activities by
continuing operations (228) (3,340) (6,237)
------------------ --------------------- -----------------------
Net cash from investing activities in
discontinued operations - - -
------------------ --------------------- -----------------------
Net cash used in investing activities (228) (3,340) (6,237)
------------------ --------------------- -----------------------
Cash flow from financing activities
Net draw down / (repayment) of overdraft 2,973 (442) 1,129
Repayment of loans - (1,500) (1,500)
Net cash from / (used in) financing
activities from continuing operations 2,973 (1,942) (371)
------------------ --------------------- -----------------------
Net cash used in financing activities from
discontinued operations (200) - -
------------------ --------------------- -----------------------
Net cash from / (used in) financing
activities 2,773 (1,942) (371)
------------------ --------------------- -----------------------
Net increase / (decrease) in cash and cash
equivalents 2,062 (9,935) (11,656)
Effect of exchange rates on cash and cash
equivalents including discontinued
operations (204) (74) (98)
------------------ --------------------- -----------------------
Cash and cash equivalents at beginning of
period 6,994 18,748 18,748
------------------ --------------------- -----------------------
Cash and cash equivalents at end of period 8,852 8,739 6,994
================== ===================== =======================
1. General information
Agriterra Limited ('Agriterra' or the 'Company') and its
subsidiaries (together the 'Group') is focussed on the agricultural
sector in Africa. Agriterra is a non-cellular company limited by
shares incorporated and domiciled in Guernsey, Channel Islands. The
address of its registered office is Richmond House, St Julians
Avenue, St Peter Port, Guernsey GY1 1GZ.
The Company's Ordinary Shares are quoted on the AIM Market of
the London Stock Exchange ('AIM').
The unaudited condensed consolidated financial statements have
been prepared in US Dollars ('US$' or '$') as this is the currency
of the primary economic environment in which the Group
operates.
2. Basis of preparation
The condensed consolidated financial statements of the Group for
the six months ended 30 November 2014 (the 'H1-FY2015 financial
statements'), which are unaudited and have not been reviewed by the
Company's auditor, have been prepared in accordance with the
International Financial Reporting Standards ('IFRS'), as adopted by
the European Union, accounting policies adopted by the Group and
set out in the annual report for the year ended 31 May 2014
(available at www.agriterra-ltd.com). The Group does not anticipate
any significant change in these accounting policies for the year
ended 31 May 2015. References to 'IFRS' hereafter should be
construed as references to IFRSs as adopted by the EU.
This interim report has been prepared to comply with the
requirements of the AIM rules of the London Stock Exchange (the
'AIM Rules'). In preparing this report, the Group has adopted the
guidance in the AIM Rules for interim accounts which do not require
that the interim condensed consolidated financial statements are
prepared in accordance with IAS 34, 'Interim financial reporting'.
While the financial figures included in this report have been
computed in accordance with IFRSs applicable to interim periods,
this report does not contain sufficient information to constitute
an interim financial report as that term is defined in IFRSs.
The financial information contained in this report also does not
constitute statutory accounts under the Companies (Guernsey) Law
2008, as amended. The financial information for the year ended 31
May 2014 is based on the statutory accounts for the period then
ended. The auditors reported on those accounts. Their report was
unqualified and did not include any statements of emphasis of
matter.
The H1-FY2015 financial statements have been prepared in
accordance with the IFRS principles applicable to a going concern,
which contemplate the realisation of assets and liquidation of
liabilities during the normal course of operations. Having carried
out a going concern review in preparing the H1-FY2015 financial
statements, the Directors have concluded that there is a reasonable
basis to adopt the going concern principle.
3. Segment information
As set out in the Chairman's Statement and the Operations
review, the Directors consider that the Group's operating
activities comprise the segments of Grain, Beef and Cocoa, all
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.
The following is an analysis of the Group's revenue and results
by operating segment:
6 months ended 30 Grain Beef Cocoa Unallo-cated Reclassi- Elimina-tions Total
November 2014 - fications (3)
Unaudited
$000 $000 $000 $000 $000 $000 $000
-------- -------- ------ ------------- --------------- -------------- --------
Revenue
External sales(2) 2,043 2,657 241 - (241) - 4,700
Inter-segment
sales(1) 263 - - - - (263) -
-------- -------- ------ ------------- --------------- -------------- --------
2,306 2,657 241 - (241) (263) 4,700
-------- -------- ------ ------------- --------------- -------------- --------
Segment results
- Operating loss (962) (1,344) (606) (1,288) 171 - (4,029)
- Interest
(expense) / income (362) 1 - 5 - - (356)
- Other gains and
losses - - - (158) - - (158)
-------- -------- ------ ------------- --------------- -------------- --------
Loss before tax (1,324) (1,343) (606) (1,441) 171 - (4,543)
-------- -------- ------ ------------- --------------- -------------- --------
Income tax - (3) - - - - (3)
-------- -------- ------ ------------- --------------- -------------- --------
Loss for the period
from continuing
operations (1,324) (1,346) (606) (1,441) 171 - (4,546)
======== ======== ====== ============= =============== ============== ========
6 months ended 30 Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
November 2013 -
Unaudited (represented -
note 6)
$000 $000 $000 $000 $000 $000 $000
------ ------ ------ ------------- -------------- -------------- --------
Revenue
External sales(2) 4,669 2,068 451 - (451) - 6,737
Inter-segment sales(1) 219 - - - - (219) -
------ ------ ------ ------------- -------------- -------------- --------
4,888 2,068 451 - (451) (219) 6,737
------ ------ ------ ------------- -------------- -------------- --------
Segment results
- Operating profit /
(loss) 66 (990) (659) (1,302) 574 - (2,311)
- Interest (expense) /
income (104) 1 (1) 122 1 - 19
- Other gains and losses - - - 802 - 802
Loss before tax (38) (989) (660) (378) 575 - (1,490)
------ ------ ------ ------------- -------------- -------------- --------
Income tax (43) (9) - - - - (52)
------ ------ ------ ------------- -------------- -------------- --------
Loss for the period from
continuing operations (81) (998) (660) (378) 575 - (1,542)
====== ====== ====== ============= ============== ============== ========
12 months ended 30 Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
May 2014 - Audited
$000 $000 $000 $000 $000 $000 $000
------- -------- -------- ------------- -------------- -------------- --------
Revenue
External sales(2) 9,716 4,081 1,907 - (1,907) - 13,797
Inter-segment
sales(1) 412 - - - - (412) -
------- -------- -------- ------------- -------------- -------------- --------
10,128 4,081 1,907 - (1,907) (412) 13,797
------- -------- -------- ------------- -------------- -------------- --------
Segment results
- Operating loss (421) (3,436) (1,028) (2,456) 841 - (6,500)
- Interest
(expense) / income (193) 2 (1) 128 1 - (63)
- Other gains and
losses - - - 936 - - 936
Loss before tax (614) (3,434) (1,029) (1,392) 842 - (5,627)
------- -------- -------- ------------- -------------- -------------- --------
Income tax (16) (9) - - - - (25)
------- -------- -------- ------------- -------------- -------------- --------
Loss for the period
from continuing
operations (630) (3,443) (1,029) (1,392) 842 - (5,652)
======= ======== ======== ============= ============== ============== ========
(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 group company
making the sale. Sales from the Grain and Beef divisions
are principally for supply to the Mozambican market.
Sales from the Cocoa division are supplied to the world
market.
(3) Revenue reported in the Cocoa segment for the 6 months
ended 30 November 2014 arises on the rental of certain
of the Cocoa division's assets in aid of the relief
effort against the Ebola crisis in Sierra Leone. For
IFRS reporting purposes, the income is reported within
'Other income'.
The segment items included in the consolidated income statement
for the year are as follows:
6 months ended 30 November Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
2014 - Unaudited
$000 $000 $000 $000 $000 $000 $000
------ ----- ------ ------------- -------------- -------------- ------
Depreciation 186 571 235 82 (61) - 1,013
====== ===== ====== ============= ============== ============== ======
6 months ended 30 November Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
2013 - Unaudited
(represented - note 6)
$000 $000 $000 $000 $000 $000 $000
------ ----- ------ ------------- -------------- -------------- ------
Depreciation 246 561 195 115 (195) - 922
====== ===== ====== ============= ============== ============== ======
12 months ended 30 May Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
2014 - Audited
$000 $000 $000 $000 $000 $000 $000
------ ------ ------ ------------- -------------- -------------- ------
Depreciation 504 1,124 133 138 (133) - 1,766
====== ====== ====== ============= ============== ============== ======
4. Other gains and losses
6 months ended 30 6 months 12 months ended 31 May
November ended 30 2014
2014 November Audited
Unaudited 2013
Unaudited)
$000 $000 $000
Change in fair value of quoted investments
designated as at fair value through profit and
loss at initial recognition (158) 802 936
================== ============ =======================
5. Finance Costs
6 months ended 30 6 months 12 months ended 31 May
November ended 30 2014
2014 November Audited
Unaudited 2013
Unaudited (represented note 6)
$000 $000 $000
Interest expense:
Bank borrowings 364 105 197
Loan notes - 12 12
------------------ -------------------------------- -----------------------
364 117 209
================== ================================ =======================
6. Discontinued operations
The profit / (loss) after tax arising on discontinued operations
during the period is analysed by business operation as follows:
6 months ended 30 November 6 months 12 months ended 31
2014 ended 30 May
November 2014
2013
Unaudited Unaudited Audited
(represented note 6.2))
$000 $000 $000
Oil and gas activities 5,659 (147) (1,378)
Cocoa trading activities (174) (575) (986)
Net profit / (loss) after tax
attributable to discontinued
operations 5,485 (722) (2,364)
=========================== ======================== ===================
6.1. Oil and gas
On 6 January 2009, the Shareholders approved the adoption of the
investing strategy to acquire or invest in businesses or projects
operating in the agricultural and associated civil engineering
industries in Southern Africa. At the same time the Group suspended
all exploration activities and reduced expenditure to the minimum
required in order to retain exploration licenses and extract
potential value for Shareholders. Consequently the oil and gas
activities were reclassified as a discontinued operation.
In the financial year ended 31 May 2013, on 17 January 2013, the
Group completed the disposal of its oil and gas interests in
Ethiopia, realising a gain before tax of $40,380,000. After
deduction of tax due on this gain of $12,000,000 net of an expected
tax rebate of $1,000,000, the after tax profit realised was
$29,380,000. This gain was written back against the impairment
provision made in prior years. During the year ended 31 May 2014
and due to uncertainties on the timing and amount of the tax rebate
to be recovered, the Group provided against the $1,000,000 expected
tax rebate.
During the year ended 31 May 2014 the Group incurred expenditure
on formal arbitration proceedings to recover the compensation
assessed by the National Petroleum Commission as being due to the
Company for works undertaken by the Company in the Republic of
South Sudan and acknowledged as being due by the Ministry of
Petroleum and Mining of the Republic of South Sudan in April 2012.
Expenditure of $378,000 was incurred in this matter during the year
ended 31 May 2014 (6 months ended 30 November 2013: $147,000). This
matter was resolved in the current financial year through the
payment to the Company of GBP3,412,000 (being $5,659,000) in cash
which has been recognised in the current financial period within
discontinued operations.
6.2. Cocoa trading
Due to the serious and well-publicised Ebola outbreak and the
associated precautionary restrictions on travelling in Sierra
Leone, accompanied by the ongoing losses suffered by the Cocoa
trading operations, the Group ceased its Cocoa trading operations
in Sierra Leone. The Cocoa trading operation was focussed primarily
on building a presence in-country and providing a market entry
point for buyers as a precursor to the establishment of the Group's
own plantation, and the implementation of programmes involving the
upgrading of local growers plant quality through plant
distribution. The Group anticipates that the cessation of the Cocoa
trading operations will allow it to realise the value of certain
assets previously utilised by that operation, and to focus all of
the Cocoa division's efforts on the development of the Group's
cocoa plantation. The Company is confident that ceasing trading
will not have a materially adverse effect on its financial
performance.
The Cocoa trading operations represented a business segment of
the Group and accordingly, as required by IFRS 5, 'Non-current
Assets Held for Sale and Discontinued Operations', the results of
the Cocoa trading operations are presented as discontinued
operations within the consolidated income statement. Cash flows
pertaining to the Cocoa trading operations are presented in the
consolidated cash flow statement along with all cash flows relating
to discontinued operations. The results of operations and cash
flows reported for the period ended 30 November 2013 have been
re-presented for these discontinued operations as required by IFRS
5.
7. Investments in quoted companies
'Investments in quoted companies' comprise financial assets
classified as at 'fair value through profit and loss' ('FVTPL').
Changes in market value are recorded in profit and loss within
'Other gains and losses'. As at 30 November 2014, these investments
comprise 8,337,682 (30 November 2013 and 31 May 2014: 8,337,682)
ordinary shares in Atlas Development & Support Services Limited
(formerly African Oilfield Logistics Limited), an AIM quoted
company focussed on the logistics support industry in respect of
oil and gas exploration and other development projects in
sub-Saharan Africa.
Movements in the value of investments in quoted companies were
as follows:
$000
Market value as at 31 May 2013 - Audited 4
Purchase of investments at cost 285
Increase in fair value 802
------
Market value as at 30 November 2013 - Unaudited 1,091
Increase in fair value 134
------
Market value as at 31 May 2014 - Audited 1,225
Decrease in fair value (158)
------
Market value as at 30 November 2014 - Unaudited 1,067
------
8. Borrowings
30 November 2014 30 November 2013 31 May
2014
$000 $000 $000
Bank overdraft 5,202 1,138 2,468
Other - - 200
----------------- ----------------- -------
5,202 1,138 2,668
================= ================= =======
The Group has an overdraft facility of 179,000,000 (30 November
2013: 62,000,000; 31 May 2014: 179,000,000) Mozambique Metical
(being approximately $5,600,000 at the 30 November 2014 metical to
US$ exchange rate) to provide funding for its Grain operations in
Mozambique. It is secured against certain of the Group's property,
plant and equipment and all maize inventory and finished maize
products. Interest is charged at the Mozambique prime rate less 3%,
being a current rate of 13% (30 November 2013: Mozambique prime
rate less 0.5%, being a rate of 22%). The facility is renewable
annually on 31 May upon agreement of the parties.
9. Share capital
Authorised Allotted and fully paid
Number Number US$000
Ordinary shares of 0.1p each
At 30 November 2013, 31 May 2014 and 30 November 2014 2,345,000,000 1,061,818,478 1,722
Deferred shares of 0.1p each
At 30 November 2013, 31 May 2014 and 30 November 2014 155,000,000 155,000,000 238
-------------- ---------------- --------
Total share capital
-------------- ---------------- --------
At 30 November 2013, 31 May 2014 and 30 November 2014 2,500,000,000 1,216,818,478 1,960
============== ================ ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUQWPUPAGBQ
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