TIDMAGTA
RNS Number : 7707W
Agriterra Ltd
17 November 2017
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
17 November 2017
Agriterra Ltd ('Agriterra' or the 'Company')
Interim Results
Agriterra Limited, the AIM listed African agricultural company,
announces its results for the six months ended 30 September
2017.
Chair's Statement
I am pleased to provide an update on our performance in the
first half of the 2018 financial year ('H1-2018'). As shareholders
will be aware, the Company recently changed its accounting
reference date to 31 March (from 31 May, with effect from 31 March
2017), to more effectively co-ordinate the Group's annual report
and accounts with the business cycle of the Group's underlying
operations. Accordingly, the comparative periods presented in this
report are for the six month period ended 30 November 2016
('H1-2017') and the 10 month period ended 31 March 2017
('FY-2017').
Mozambique overview
As previously reported, during FY-2017 we focussed our efforts
on our Grain and Beef operations in Mozambique, following the
decision to dispose of our interests in the Cocoa operations in
Sierra Leone, which was completed in June 2017 (as more fully
described below). This focus reflects our assessment of the high
growth potential of the Mozambican economy which, in the short to
medium term, is expected to be supported by the development of the
liquefied natural gas ('LNG') industry in the north of the country.
Steps towards the development of the LNG industry have now been
taken by the two major consortiums of companies (each of which
intend to build their own LNG terminal), led on the one hand by ENI
S.p.A and on the other by Anadarko Petroleum Corporation. More than
US$30 billion is now expected to be invested in Mozambique's LNG
sector to build capacity to produce 20 million tonnes per year of
LNG, with the first exports, which are destined for Asian markets,
due to start in 2021/22. This important development has already
started to generate positive economic effects within Mozambique,
both on a macro-economic level in terms of positive sentiment
regarding the country's return to higher growth rates, as well as
at the more granular level of anticipated demand for our products
(in particular our beef).
In conjunction with these favourable market dynamics, economic
conditions have also improved, with a strengthening of the Metical
against both the US$ and South African Rand experienced early in
the period, followed by a period of relative stability in the
exchange rate at c.60 Metical / US$ and c.4.5 Metical / ZAR. Being
a net importer of most goods, the effect of this has been to
continue to put downward pressure on inflation in Mozambique - the
annualised rate to 30 September 2017 was c.11% which compares to
c.25% for the 12 months ended 31 December 2016, and 21% for the 12
months ended 31 March 2017. Despite the fall in inflation, interest
rates remain high, with Standard Bank's prime metical lending rate
remaining at 27.75% (28% at 31 March 2017). This persistently high
lending rate has led us to take actions to decrease our outstanding
loan and overdraft balances in the period as more fully described
below.
The political environment has also continued to remain stable
during the period, with the cease-fire agreement between FRELIMO
and RENAMO remaining in place and an apparent willingness by these
parties to arrive at resolutions to their primary discussion points
in advance of the municipal elections to be held in October 2018
and the Presidential elections in 2019. Further, with a plentiful
agricultural harvest in most agricultural commodities in 2017
(including maize), which is expected to repeat in 2018, poorer
households are likely to see an improvement in living
conditions.
New investment and use of funds
During the period the Group secured new investment of c.US$4.3m
from Magister Investments Limited ('Magister') in exchange for a
50.01% shareholding in the Company. Full details regarding Magister
were provided to shareholders in the Circular to Shareholders and
Notice of General Meeting dated 14 August 2017.
This new funding is being deployed to strengthen the Group's
position in Mozambique, with an initial investment of US$0.75m and
US$0.25m into the Grain and Beef divisions respectively to reduce
their outstanding bank financing. This repayment is in addition to
an earlier repayment of US$0.4m in the Beef division following the
Group's disposal of its Cocoa assets in Sierra Leone. The related
saving in interest costs is expected to amount to approximately
US$0.38m per annum, assuming interest rates remain at the current
level.
Review
Grain
H1-2018 has seen subdued demand for our maize flour, reflecting
the relative abundance of maize during this bumper harvest season.
The relative weakness in demand has resulted in a fall in sales
volume to c.4,800 tonnes of maize flour in H1-2018 (H1-2017:
c.12,600 tonnes) and c.7,700 tonnes of all maize products (H1-2017:
c.16,500), with revenue decreasing in metical terms from Metical
421.5m to Metical 111.5m and US$ terms from US$5.76m to US$1.81m.
EBITDA has therefore fallen to a loss of US$0.15m (H1-2017: profit
of US$0.50m). The normal sales pattern is for demand to increase
following the harvest, with peak maize flour sales between December
and March; our operational team are closely monitoring market
developments to ensure we are pricing our products correctly to
maximise sales, and we hope to increase sales in the second half of
the year.
In common with many agricultural products, the working capital
requirements in the Grain division are significant, principally due
to the natural cycle of maize purchases peaking between April and
August, with peak maize flour sales in the latter half of the
financial year. During H1-2018 we purchased c.19,900 tonnes of
maize (H1-2017: c 24,700 tonnes), with a further c.1,900 tonnes
purchased after the period end (H1-2017: c.2,300 tonnes) completing
our maize purchasing requirements for the season. The Grain
division's working capital is financed by bank facilities provided
by Standard Bank which, with a current interest rate of 26.00%,
continues to erode the overall profitability of the division. After
an interest charge of US$0.40m (H1-2017: US$0.41m), loss before tax
for the Grain division was US$0.6m compared to a profit of US$0.09m
in H1-2017. In order to mitigate against this high interest cost,
the Group has invested US$0.75m during the period in the working
capital requirements of the Grain division to reduce its reliance
on overdraft financing.
A key area for future improvements to the profitability of the
Grain division is the commercial sale of animal feed products
produced by our animal feed pelletiser (using maize bran, a
by-product of the maize milling process). We have developed our own
animal feed products which we will shortly begin to sell on a
commercial basis to third party customers.
Beef
In respect of our Beef division, demand remains strong. This is
in part supported by the Metical which, despite having strengthened
during the period, remains relatively weak, particularly against
the South African Rand. Despite this strong demand, we have
continued to maintain supply at c.178 tonnes a month of beef
products, principally due to our ongoing efforts to improve the
productivity in our feedlot where we are focussing on increasing
the average stay of our animals to increase their weight. These
efforts to improve feedlot productivity are in response to the
reduction in internal animal stocks and the fact that traditional
sources of supply from the rural community have not fully returned
following the cessation of military activity in the country. Once
the average stay of animals in the feedlot is increased, we expect
to return to supplying approximately 230 tonnes a month of beef
products from our existing operations. Due to this reduced supply,
revenue has fallen slightly from US$2.64m in H1-2017 to US$2.26m in
H1-2018 and operating loss has remained constant at US$0.78m
(H1-2017: US$0.78m). After reduced finance costs of US$0.095m
(H1-2017: US$0.14m), loss before tax for the Beef division was
US$0.87m (H1-2017: US$0.92m).
Cocoa
On 1 June 2017 the Group completed the disposal of its Cocoa
division operating subsidiaries in Sierra Leone for US$0.5m. The
Cocoa division principally comprised a 3,200 hectare cocoa
plantation in the Kenema district of Sierra Leone, a 2,000m(2)
warehouse, and related support infrastructure and vehicles. The
purchasers were local Sierra Leone businessmen who have existing
cocoa production, purchasing and distribution operations in
country. The disposal proceeds were applied to reduce the Group's
Beef division borrowing facilities in Mozambique and for general
working capital purposes.
The Group recorded a profit on the disposal of the Cocoa
division of US$0.15m, which was reduced by US$0.13m to US$0.02m
following the recycling of translation differences previously
reflected in the translation reserve.
Board and senior management changes
As a result of the investment by Magister, the Group
re-structured the Board with the appointments of Mr. H Rudland, Mr.
G Smith and Mr. B Scott. Mr. A Groves stepped down from the Board
to focus on his other business interests.
Subsequent to the period end, Mr. D Cassiano-Silva announced his
intention to step down from his position as Finance Director with
effect from 31 December 2017. Mr. Cassiano-Silva will remain a
Non-Executive Director of the Company thereafter. In order to
ensure a period of smooth transition, the Company is in the final
stages of agreeing terms with a candidate to assume responsibility
for the Company's financial function during an interim period
whilst the Company looks to hire a full time Mozambique based group
finance director. In addition, in November 2017 Mr. B Scott took on
the position of acting Chief Executive Officer ('CEO') to support
the local management team as they seek to implement the Company's
development strategies; the Company intends to hire a permanent CEO
(also based in Mozambique) in the coming months, at which point Mr.
Scott will revert to his current position of Chief Operating
Officer, Mozambique.
I would like to once again take this opportunity to thank Dan
and Andrew for their considerable input into the development of the
Company and wish Brendan the best in his new role.
Conclusion
The recent investment from Magister marks a new period for the
Group during which we hope to benefit from the experience and
connections of our new Board members in the wider Sub-Saharan
Africa region. As we look to capitalise on the growth that will
inevitably come from the development of the LNG industry in
Mozambique, we hope to see improvements in the profitability of the
Group and its ability to provide a positive return to
shareholders.
CSO Havers
Chair
17 November 2017
For further information please VISIT www.agriterra-ltd.com or
contact:
Daniel Cassiano-Silva Agriterra Ltd Tel: +44 (0) 20 7408 9200
David Foreman Cantor Fitzgerald Europe Tel: +44 (0) 20 7894 7000
Callum Butterfield Cantor Fitzgerald Europe Tel: +44 (0) 20 7894 7000
Susie Geliher St Brides Partners (Financial PR) Tel: +44 (0) 20 7236 1177
Consolidated income statement
6 months 6 months 10 months
ended ended ended
30 September 30 November 31 March
2017 2016 ` 2017
Unaudited Unaudited Audited
Note $000 $000 $000
CONTINUING OPERATIONS
Revenue 3 3,781 8,106 12,807
Cost of sales (3,194) (7,290) (11,915)
-------------- ------------- ----------
Gross profit 587 816 892
Increase in value of biological
assets 306 417 487
Operating expenses (3,105) (2,315) (4,532)
Other income 9 26 29
Profit on disposal of property,
plant and equipment and adjustments
to the carrying value of assets
classified as held for sale 79 288 439
Operating loss (2,124) (768) (2,685)
Investment revenues 6 7 12
Other gains and losses - (16) (16)
Finance costs 4 (501) (548) (927)
Loss before taxation (2,619) (1,325) (3,616)
Taxation (4) (22) (22)
-------------- ------------- ----------
Loss for the period from continuing
operations 3 (2,623) (1,347) (3,638)
DISCONTINUED OPERATIONS
Loss for the period from discontinued
operations 5 (35) (20) (136)
Loss for the period attributable
to owners of the Company (2,658) (1,367) (3,774)
============== ============= ==========
LOSS PER SHARE
Basic and diluted loss per share from continuing operations (0.23) (0.13) (0.35)
============== ============== ==============
Basic and diluted loss per share from continuing and
discontinued operations (0.23) (0.13) (0.36)
============== ============== ==============
No. No. No.
Weighted average number of shares outstanding for the
purposes of calculating basic and diluted
loss per share from continuing operations, and basic and
diluted loss from continuing and
discontinued operations 1,148,887,600 1,061,818,478 1,061,818,478
============== ============== ==============
Consolidated Statement of comprehensive income
6 months 6 months 10 months
ended ended ended
30 September 30 November 31 March
2017 2016 2017
Unaudited Unaudited Audited
$000 $000 $000
Loss for the period (2,658) (1,367) (3,774)
Items that may be reclassified
subsequently to profit or
loss:
Foreign exchange translation
differences 543 (1,778) (1,119)
Items reclassified to profit
or loss in the period:
Foreign exchange differences
on disposal, liquidation or
winding-up of subsidiary companies 158 - -
-------------- ------------- ----------
Other comprehensive income
for the period 701 (1,778) (1,119)
-------------- ------------- ----------
Total comprehensive income
for the period attributable
to owners of the Company (1,957) (3,145) (4,893)
============== ============= ==========
Consolidated statement of financial position
30 September 30 November 31 March
2017 2016 2017
Unaudited Unaudited Audited
Note $000 $000 $000
Non-current assets
Property, plant and equipment 6,381 6,009 6,094
Interests in associates 4 4 4
6,385 6,013 6,098
------------- ------------ ----------
Current assets
Biological assets 1,048 1,066 746
Inventories 3,187 3,381 1,253
Trade and other receivables 828 1,319 1,557
Assets classified as held for sale 19 477 573
Cash and cash equivalents 4,447 3,371 2,425
9,529 9,614 6,554
------------- ------------ ----------
Total assets 15,914 15,627 12,652
------------- ------------ ----------
Current liabilities
Borrowings 6 4,673 3,754 2,730
Trade and other payables 536 774 634
Liabilities directly associated with assets classified as
held for sale - 127 128
5,209 4,655 3,492
------------- ------------ ----------
Net current assets 4,320 4,959 3,062
------------- ------------ ----------
Non-current liabilities
Borrowings 6 - 798 734
------------- ------------ ----------
Total liabilities 5,209 5,453 4,226
------------- ------------ ----------
Net assets 10,705 10,174 8,426
============= ============ ==========
Share capital 8 3,373 1,960 1,960
Share premium 151,442 148,622 148,622
Share based payments reserve 1,988 1,985 1,985
Translation reserve (16,800) (18,160) (17,501)
Accumulated losses (129,298) (124,233) (126,640)
------------- ------------ ----------
Equity attributable to equity holders of the parent 10,705 10,174 8,426
============= ============ ==========
The unaudited condensed consolidated financial statements of
Agriterra Limited for the 6 months ended 30 September 2017 were
approved by the Board of Directors and authorised for issue on 17
November 2017. Signed on behalf of the Board of Directors:
CSO Havers
Chair
Consolidated cash flow statement
6 months ended 6 months ended 10 months ended
30 September 30 November 31 March
2017 2016 2017
Note Unaudited Unaudited Audited
$000 $000 $000
Loss before tax for the period from continuing
operations (2,619) (1,325) (3,616)
Adjustments for:
Depreciation 247 265 445
Profit on disposal of property, plant and
equipment (79) (288) (460)
Adjustments to the carrying value of assets
classified as held for sale - - 21
Share based payment expense 3 5 5
Foreign exchange loss 79 54 104
Increase in value of biological assets (306) (417) (487)
Finance costs 501 548 927
Investment revenues (6) (7) (12)
Decrease in fair value of quoted investments - 16 16
Operating cash flows before movements in working
capital (2,180) (1,149) (3,057)
Increase in inventories (1,829) (2,526) (151)
Decrease / (increase) in trade and other receivables 824 (175) (729)
(Decrease) / increase in trade and other payables (180) 143 (13)
Net decrease in biological assets held for slaughter
purposes 53 982 1,454
--------------- --------------- ----------------
Net cash used in operating activities by continuing
operations (3,312) (2,725) (2,496)
Corporation tax paid (4) (22) (22)
Finance costs 4 (501) (548) (927)
Interest received 6 7 12
Net cash used in operating activities by continuing
operations (3,811) (3,288) (3,433)
--------------- --------------- ----------------
Net cash used in operating activities by
discontinued operations (47) - (48)
--------------- --------------- ----------------
Net cash used by operating activities (3,858) (3,288) (3,481)
--------------- --------------- ----------------
Cash flows from investing activities
Disposal of subsidiaries 7 474 - -
Proceeds from disposal of property, plant and
equipment, net of expenses incurred 202 538 927
Acquisition of property, plant and equipment (11) (182) (204)
Net cash from investing activities by continuing
operations 665 356 723
--------------- --------------- ----------------
Net cash from investing activities in discontinued
operations 21 - 33
--------------- --------------- ----------------
Net cash from investing activities 686 356 756
--------------- --------------- ----------------
Cash flow from financing activities
Proceeds from the issue of new Ordinary Shares 8 4,317 - -
Expenses incurred in the issue of new Ordinary
Shares (85) - -
Net draw down of overdraft 1,766 2,513 1,145
Net repayment of loans (851) (1) (110)
Net cash from financing activities from continuing
operations 5,147 2,512 1,035
--------------- --------------- ----------------
Net cash from financing activities from discontinued
operations - - -
--------------- --------------- ----------------
Net cash from financing activities 5,147 2,512 1,035
--------------- --------------- ----------------
Net increase / (decrease) in cash and cash
equivalents 1,975 (420) (1,690)
Effect of exchange rates on cash and cash
equivalents including discontinued operations 47 (264) 60
--------------- --------------- ----------------
Cash and cash equivalents at beginning of period 2,425 4,055 4,055
--------------- --------------- ----------------
Cash and cash equivalents at end of period 4,447 3,371 2,425
=============== =============== ================
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 6 months ended 30 September 2017 (the 'H1-2018 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 report for the 10 month period ended 31 March 2017
(available at www.agriterra-ltd.com). The Group does not anticipate
any significant change in these accounting policies for the year
ended 31 March 2018. 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 10 month period
ended 31 March 2017 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 H1-2018 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 H1-2018 financial
statements, the Directors have concluded that there is a reasonable
basis to adopt the going concern principle.
3. Segment information
The Executive Committee of the Group consider that the Group's
operating activities during the period comprised 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 Discon-tinued(3) Elimina-tions Total
September 2017 -
Unaudited
$000 $000 $000 $000 $000 $000 $000
------ ------ ------ ------------- ----------------- -------------- --------
Revenue
External sales(2) 1,520 2,261 9 - (9) - 3,781
Inter-segment
sales(1) 289 - - - - (289) -
------ ------ ------ ------------- ----------------- -------------- --------
1,809 2,261 9 - (9) (289) 3,781
------ ------ ------ ------------- ----------------- -------------- --------
Segment results
- Operating (loss) /
profit (194) (777) 13 (1,153) (13) - (2,124)
- Interest (expense)
/ income (404) (95) - 4 - - (495)
(Loss) / profit
before tax (598) (872) 13 (1,149) (13) - (2,619)
Income tax (2) (2) - - - - (4)
------ ------ ------ ------------- ----------------- -------------- --------
(Loss) / profit for
the period from
continuing
operations (600) (874) 13 (1,149) (13) - (2,623)
====== ====== ====== ============= ================= ============== ========
6 months ended 30 Grain Beef Cocoa Unallo-cated Discon-tinued(3) Elimina-tions Total
November 2016 -
Unaudited
$000 $000 $000 $000 $000 $000 $000
------ ------ ------ ------------- ----------------- -------------- --------
Revenue
External sales(2) 5,470 2,636 21 - (21) - 8,106
Inter-segment
sales(1) 287 - - - - (287) -
------ ------ ------ ------------- ----------------- -------------- --------
5,757 2,636 21 - (21) (287) 8,106
------ ------ ------ ------------- ----------------- -------------- --------
Segment results
- Operating profit /
(loss) 494 (784) (20) (478) 20 - (768)
- Interest (expense)
/ income (409) (139) - 7 - - (541)
- Other gains and
losses - - - (16) - - (16)
------ ------ ------ ------------- ----------------- -------------- --------
Profit / (loss)
before tax 85 (923) (20) (487) 20 - (1,325)
Income tax (6) (1) - (15) - - (22)
------ ------ ------ ------------- ----------------- -------------- --------
Profit / (loss) for
the period from
continuing
operations 79 (924) (20) (502) 20 - (1,347)
====== ====== ====== ============= ================= ============== ========
10 months ended 31 Grain Beef Cocoa Unallo-cated Discon-tinued(3) Elimina-tions Total
March 2017 -
Audited
$000 $000 $000 $000 $000 $000 $000
------ -------- ------ ------------- ----------------- -------------- --------
Revenue
External sales(2) 8,468 4,339 25 - (25) - 12,807
Inter-segment
sales(1) 446 - - - - (446) -
------ -------- ------ ------------- ----------------- -------------- --------
8,914 4,339 25 - (25) (446) 12,807
------ -------- ------ ------------- ----------------- -------------- --------
Segment results
- Operating (loss)
/ profit (204) (1,346) (136) (1,135) 136 - (2,685)
- Interest
(expense) / income (686) (241) - 12 - - (915)
- Other gains and
losses - - - (16) - - (16)
(Loss) / profit
before tax (890) (1,587) (136) (1,139) 136 - (3,616)
Income tax (6) (1) - (15) - - (22)
------ -------- ------ ------------- ----------------- -------------- --------
(Loss) / profit for
the period from
continuing
operations (896) (1,588) (136) (1,154) 136 - (3,638)
====== ======== ====== ============= ================= ============== ========
(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.
There were no sales from the Cocoa division in the 6
month period ending 30 September 2017. Sales from the
Cocoa division in the 6 month period ending 30 November
2016 and the 10 month period ending 31 March 2017 were
supplied within Sierra Leone.
(3) Amounts reclassified to discontinued operations in all
periods presented relate to the Cocoa division activities
- refer to note 5.1.
The segment items included within continuing operations in the
consolidated income statement for the periods are as follows:
6 months ended 30 September Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
2017 - Unaudited
$000 $000 $000 $000 $000 $000 $000
------ ----- ------ ------------- -------------- -------------- ------
Depreciation 79 168 - - - - 247
====== ===== ====== ============= ============== ============== ======
6 months ended 30 November Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
2016 - Unaudited
$000 $000 $000 $000 $000 $000 $000
------ ----- ------ ------------- -------------- -------------- ------
Depreciation 70 195 - - - - 265
====== ===== ====== ============= ============== ============== ======
10 months ended 31 March Grain Beef Cocoa Unallo-cated Discon-tinued Elimina-tions Total
2017 - Audited
$000 $000 $000 $000 $000 $000 $000
------ ----- ------ ------------- -------------- -------------- ------
Depreciation 123 322 - - - - 445
====== ===== ====== ============= ============== ============== ======
4. Finance Costs
6 months ended 6 months ended 10 months ended
30 September 30 November 31 March
2017 2016 2017
Unaudited Unaudited Audited
$000 $000 $000
Interest expense:
Bank borrowings 501 548 927
=============== =============== ================
5. Discontinued operations
The loss after tax arising on discontinued operations during the
period is analysed by business operation as follows:
6 months ended 6 months 10 months ended
30 September ended 31 March
2017 30 November 2017
2016
Unaudited Unaudited Audited
$000 $000 $000
Cocoa activities (5) (20) (136)
Group re-organisation (30) - -
Net loss after tax attributable to discontinued operations (35) (20) (136)
=============== ============= ================
5.1. Cocoa activities
Since September 2014, the Group's Cocoa division in Sierra Leone
focussed its efforts on maintaining its cocoa plantation assets,
while undertaking revenue generating logistics activities,
principally providing assistance in the Ebola relief efforts.
Sierra Leone was declared Ebola free in the year ended 31 May 2016;
consequently, the logistics activities which were being undertaken
to provide cash support for the Cocoa division reduced in scale
such that the available income from these activities no longer
substantially covered the costs of the Cocoa division.
Given the impact of Ebola on the West African region as a whole
and the lack of investment appetite from traditional finance
sources, the Board formed the view, after due investigations and
careful consideration that the Group would be unlikely to be able
to raise the finance to continue with the development of the cocoa
plantation in the foreseeable future. In this context, the Board
therefore believed that it was in the best interests of the Group
to sell the Cocoa division to bolster the Group's cash reserves and
to enable the Cocoa division to access other finance sources, such
as dedicated development and sustainability funds.
As more fully described in the Chair's statement, the Cocoa
division's operating companies were sold on 1 June 2017. Further
details on the disposal of these subsidiaries are provided in note
7.
The Cocoa activities represented a business segment of the Group
and accordingly the results of the Cocoa activities are presented
as discontinued operations within the consolidated income
statement. The amounts recorded in the consolidated income
statement related to the Cocoa activities were as follows:
6 months ended 6 months 10 months ended
30 September ended 31 March
2017 30 November 2017
2016
Unaudited Unaudited Audited
$000 $000 $000
Revenue 9 21 25
Cost of sales - (3) (3)
--------------- ------------- ----------------
Gross profit 9 18 22
Operating expenses (51) (38) (188)
Profit on disposal of property, plant and equipment 15 - 30
--------------- ------------- ----------------
Loss before taxation (27) (20) (136)
Taxation - - -
--------------- ------------- ----------------
Loss after tax and net loss attributable to the discontinued
Cocoa activities in the period
(attributable to owners of the Company) (27) (20) (136)
Profit on disposal of the Cocoa activities (Note 7) 22 - -
(5) (20) (136)
=============== ============= ================
5.2. Group re-organisation
During the period, the Group initiated a group rationalisation
programme; companies which are no longer necessary in the Group
structure are being liquidated or wound up. As a result, the
balance included within the Translation reserve relating to those
Group companies of $30,000 (6 month period ended 30 November 2016
and 10 month period ended 31 March 2017: $nil) has been
reclassified to the result from discontinued operations in the
period.
6. Borrowings
30 September 2017 30 November 2016 31 March
2017
Unaudited Unaudited Audited
$000 $000 $000
Non-current
Bank loans - 798 734
------------------ ----------------- ---------
Current
Bank loans 208 210 264
Bank overdraft 4,465 3,544 2,466
4,673 3,754 2,730
------------------ ----------------- ---------
4,673 4,552 3,464
================== ================= =========
Grain division
At the end of all periods presented, the Group had an overdraft
facility of 300,000,000 Metical (being approximately $4,909,000 at
the 30 September 2017 Metical to US$ exchange rate) to provide
working capital funding for its grain operations in Mozambique,
principally for the purchase of maize and related operating
expenditure. It is secured by a fixed charge against certain of the
Group's property, plant and equipment, and a floating charge
against all of the maize inventory and finished maize products, and
trade receivables. Interest is charged at the counterparty bank's
Mozambique prime rate less 1.75%. As at the date of this report,
the interest rate on these borrowings is 26.00%. Unless it is
cancelled by either party, the facility renews annually on 25
March. On 30 March 2017, the Facility was renewed on a short term
basis until 5 May 2017 in order for the formal renewal process to
be completed. This process was completed on 27 April 2017 and the
Facility was renewed on the terms described above.
As at the period end the Group had undrawn overdraft borrowing
facilities for the Grain division of $560,000 at the 30 September
2017 Metical to US$ exchange rate.
Beef division
As at 31 March 2017 and 30 November 2016, the Group had lending
facilities totalling 105,000,000 Metical to continue financing its
beef operations in Mozambique. The facilities comprised 75,000,000
Metical of term loans and a 30,000,000 Metical overdraft. The term
loans, which had been fully drawn as at 30 November 2016, carried
interest at the bank's prime lending rate plus 0.25% (currently
28.00%). Capital repayments on these loans commenced during H1-2017
in accordance with their terms. The overdraft renewed annually and
carried interest at the bank's prime lending rate (being 27.75% at
the date of this report). The lending facilities were secured by a
fixed charge against the Group's abattoir in Chimoio and, by a
floating change over all cattle and meat inventories, and trade
receivables.
On 27 April 2017, the Group and Standard Bank agreed to modify
the terms of these borrowing facilities as follows:
1. a new overdraft facility was provided on the same terms as
the previous overdraft facility, other than for its renewal date,
which was revised to 25 March 2018; and
2. the term loans were replaced by a single loan, with a twelve
month term, repayable in equal monthly instalments commencing in
May 2017. The balance outstanding on the term loans at that date
was 39,133,000 Metical.
All other terms remained unchanged. The restructuring was
required due to the change in the nature of the Company's business
following the decision to close and de-stock the cattle farms.
As at the period end, the Group had undrawn overdraft borrowing
facilities for the Beef division of $375,000 at the 30 September
2017 Metical to US$ exchange rate under the overdraft facility.
7. Disposal of SUBSIDIARIES
On 1 June 2017, the Group completed the disposal of Tropical
Farms Limited and Tropical Farms Plantation (SL) Limited, the
Sierra Leone companies which comprised the operating companies in
the Group's Cocoa division. The purchasers were local Sierra Leone
businessmen who have existing cocoa production, purchasing and
distribution operations in country. The disposal was effected in
order to generate cash flow for the repayment of borrowing
facilities in the Group's Beef division and for general working
capital purposes.
The net assets of these subsidiaries at the date of disposal,
and the calculation of the profit on disposal were as follows:
1 June
2017
Unaudited
$000
Property, plant and equipment 362
Trade and other receivables 89
Cash at bank and in hand 6
Trade and other payables (127)
----------
330
Foreign exchange gains and
losses recycled to profit and
loss on disposal 128
Expenses incurred in connection
with the disposal 20
----------
478
Gain on disposal (included
within loss from discontinued
operations - refer to note
5.1) 22
----------
Total consideration 500
==========
The net cash inflow on disposal was:
Consideration received 500
Less:
Expenses incurred in connection
with the disposal (20)
Cash and cash equivalents disposed
of (6)
-----
Total consideration 474
=====
There were no disposals of subsidiaries in the comparative
periods.
8. Share capital
30 September 2017 30 November 2016 30 March
2017
Unaudited Unaudited Audited
Allotted and fully paid
2,124,061,769 (31 March 2017 and 30 November 2016:
1,061,818,478) Ordinary Shares of GBP0.001
each 3,135 1,722 1,722
155,000,000 Deferred Shares of GBP0.001 each 238 238 238
------------------ ----------------- ---------
3,373 1,960 1,960
------------------ ----------------- ---------
On 15 September 2017, the Company issued 1,062,243,291 new
Ordinary Shares at the issue price of 0.4064 US cents per Ordinary
Share (the 'Magister Subscription price') to Magister Investments
Limited pursuant to a share subscription agreement dated 14 August
2017, raising gross proceeds of $4,317,000 and net proceeds, after
expenses, of $4,232,000. The transaction was subject to shareholder
approval, which was granted at the general meeting of the Company
held on 14 September 2017. The Magister Subscription price was
fixed in US$. No other ordinary shares were issued in the current
or preceding periods.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGGQPGUPMPUQ
(END) Dow Jones Newswires
November 17, 2017 02:00 ET (07:00 GMT)
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