REG - Agriterra Ltd - 2023 Annual Results and Trading Restoration
01/12/2023 15:45
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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
(www.agriterra-ltd.com) or contact:
Agriterra Limited Caroline Havers
caroline@agriterra-ltd.com (mailto:caroline@agriterra-ltd.com)
Strand Hanson Limited Ritchie Balmer / James Spinney
Nominated & Financial Adviser
+44 (0) 207 409 3494
Peterhouse Capital Limited Duncan Vasey / Eran Zucker
Broker +44 (0) 207 469 0930
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/
(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 Comercialização Agrìcola 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 2022
2023
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 Share premium Share based payment reserve Translation reserve Revaluation reserve Accumulated Total
losses
capital 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 - - (20) - - 20 -
Share based payments
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 2023 31 March 2022
Note $'000 $'000
Cash flows from operating activities
Loss before tax (2,236) (2,393)
Adjustments for:
Amortisation and depreciation 13/14 870 874
Profit on disposal of property, plant and equipment - (20)
Foreign exchange gain (151) 162
Changes in value of biological assets 15 288 (1)
Share of profit in associate 23 (37) (55)
Net finance costs 10 1,462 1,627
Operating cash flows before movements in working capital 196 194
Net increase in biological assets 15 (321) (12)
Decrease/(Increase) in inventories 1,626 (1,243)
Decrease in trade and other receivables 52 928
Decrease in trade and other payables (302) (1,086)
Net cash generated from / (used in) operating activities 1,251 (1,219)
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment net of expenses - 20
incurred
Acquisition of property, plant and equipment 13 (90) (79)
Net cash used in investing activities (90) (59)
Cash flows from financing activities
Net (repayment)/drawdown of overdrafts 18 (6,254) 2,236
Net (repayment)/drawdown of loans 18 (1,589) 644
Net drawdown of shareholder loans 18 7,900 -
Net repayment of leases (137) (99)
Finance costs (1,014) (1,627)
Net cash (used in) / generated from financing activities (1,094) 1,154
Net increase / (decrease) in cash and cash equivalents 67 (124)
Effect of exchange rates on cash and cash equivalents - -
Cash and cash equivalents at beginning of the year 107 231
Cash and cash equivalents at end of the year 174 107
1. GeNERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with
registered number 42643.
The reporting currency for the Group is the US Dollar ('$' 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 2023 31 March 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 2023 31 March 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 (2,109) (2,270)
attributable to equity holders of the Company
Weighted average number of Ordinary Shares for the purposes of basic and 22,705,569 21,240,618
diluted earnings per share
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 2023 31 March 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 2023 31 March
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 March 2022 Cash flow Interest accrued Loan to equity conversion Foreign Exchange At 31 March 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 March 2021 Cash flow Foreign Exchange At 31 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
Authorised Allotted and 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 £1,000,000 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: 550 337
$23,000)
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
2,346 1,447
Revenue
Cost of Sales (1,804) (1,008)
Depreciation and amortisation (77) (71)
Operating expenses (372) (192)
Interest expense - -
Income tax expense (18) (66)
75 110
Profit and other comprehensive income (100%)
37 55
Profit and other comprehensive income (50%)
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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