REG - Agriterra Ltd - Final Results <Origin Href="QuoteRef">AGTAR.L</Origin> - Part 3
20/11/2015 07:01
- Part 3: For the preceding part double click ID:nRST3740Gb
(1,383) 464 (20) (9) - (401)
At 31 May 2014 864 3,067 4,187 341 257 - 8,716
Charge for the year 421 1,101 645 174 77 - 2,418
Disposals - (112) (219) - (5) - (336)
Impairment loss (note 12) 11,766 175 32 - 34 12,007
Exchange rate adjustment (160) (456) (620) (72) (41) - (1,349)
At 31 May 2015 12,891 3,775 4,025 443 322 - 21,456
Net book value
31 May 2015 12,294 5,749 907 543 253 - 19,746
31 May 2014 23,513 7,502 1,683 837 338 2,395 36,268
Additions to land and buildings include $399,000 (2014: $1,897,000) of acquisition and development costs of the Group's
cocoa plantation in Sierra Leone, incurred between 1 June and 30 September 2014. Included in this sum is $146,000 (2014:
$471,000) of depreciation in respect of plant and equipment and $169,000 (2014: $558,808) of wages and salaries. Subsequent
to 30 September 2014, all expenditure incurred in connection with the cocoa plantation has been expensed to profit and loss
and included within continuing operations.
A depreciation charge of $2,211,000 (2014: $1,766,000) has been included in the consolidated income statement within
operating expenses and $61,000 (2014: $133,000) has been included with discontinued operations.
Land and buildings with a carrying amount of $2,173,000 (2014: $2,694,000) have been pledged to secure the Group's bank
overdraft (note 27). The Group is not allowed to pledge these assets as security for other borrowings or sell them to
another entity. Details of additional assets pledged as security for new bank borrowings subsequent to the period end are
provided in note 35.1
At 31 May 2015, the Group had no contractual commitments for the acquisition of property, plant and equipment (2014:
commitments of $49,000).
21. Interests in Associates
The Company and Group's interest in associates represents a 40% equity investment in African Management Services Limited
('AMS'). The Group's share of the result of AMS for all periods presented was $nil. The share of the cumulative results
and net assets of AMS is $4,000 (2014: $4,000). The Company's investment in AMS was $nil.
22. Investments in quoted companies
'Investments in quoted companies' held by the Company and Group comprise financial assets at FVTPL. Changes in market value
are recorded in profit and loss within other gains and losses. As at 31 May 2015, these investments comprise 8,337,682 (31
May 2014: 8,337,682) ordinary shares in Atlas Development & Support Services Limited ('ADS') (formerly African Oilfield
Logistics Limited), an AIM quoted company focussed on the logistics support industry in respect of oil and gas exploration
and other development projects in sub-Saharan Africa. Movements in the value of the investment in ADS were as follows:
US$000
At 1 June 2013 4
Purchase of investments at cost 285
Increase in fair value (note 14) 936
At 31 May 2014 1,225
Decrease in fair value (note 14) (849)
At 31 May 2015 376
The fair value has been determined based on quoted market prices in an active market and comprises a level 1 fair value in
the IFRS 13 fair value hierarchy.
23. Biological assets
US$000
Fair value
At 1 June 2013 4,007
Purchase of biological assets 2,195
Sale, slaughter or other disposal of biological assets (1,976)
Change in fair value 290
Foreign exchange adjustment (244)
At 31 May 2014 4,272
Purchase of biological assets 1,666
Sale, slaughter or other disposal of biological assets (3,947)
Change in fair value 1,910
Foreign exchange adjustment (636)
At 31 May 2015 3,265
Biological assets comprise cattle in Mozambique held for breeding purposes (the 'Breeding herd') or for slaughter (the
'Slaughter herd'). The Slaughter herd has been classified as a current asset. The Breeding herd is classified as a
non-current asset. Biological assets are accordingly classified as current or non-current assets as follows:
2015 2014 2015 2014
Head Head US$000 US$000
Non-current asset 4,395 5,481 2,246 3,071
Current asset 2,772 2,749 1,019 1,201
7,167 8,230 3,265 4,272
For valuation purposes, cattle are grouped into classes of animal (e.g. bulls, cows, steers etc). A standard animal weight
per breed and class is then multiplied by the number of animals in each class to determine the estimated total live weight
of all animals in the herd. The herd is then valued by reference to market prices for meat in Mozambique, less estimated
costs to sell. The valuation is accordingly a level 2 valuation in the IFRS 13 hierarchy whereby inputs other than quoted
prices that are observable for the asset are used.
24. Inventories
2015 2014
US$000 US$000
Consumables and spares 120 127
Raw materials 2,452 4,438
Work in progress 27 34
Finished goods 293 301
2,892 4,900
During the year inventories amounting to $8,191,000 (2014: $8,084,000) were included in cost of sales and $nil (2014:
$2,179,000) were included within discontinued operations.
Inventories with a carrying amount of $2,140,000 (2014: $4,237,000) have been pledged to secure the Group's bank overdraft
(note 27).
25. Trade and other receivables
2015 2014
US$000 US$000
Trade receivables 1,018 459
Other receivables 492 393
Prepayments 84 296
1,594 1,148
'Trade receivables' and 'Other receivables' disclosed above are classified as loans and receivables and measured at
amortised cost.
Included in 'Other receivables' are receivables which have been provided against. Movements in the allowance account
against 'Other receivables', which principally relate to input IVA recoverable in Mozambique (refer to note 5.4) are as
follows:
US$000
At 1 June 2013 1,310
Charged to profit and loss 118
Foreign exchange gain (83)
At 31 May 2014 1,345
Charged to profit and loss 224
Foreign exchange gain (250)
At 31 May 2015 1,319
The increase in the allowance account during both periods presented reflects the increase in the underlying input IVA
balance recorded by the Group and the effect of the devaluation of the Mozambique Metical against the United States
Dollar.
Other receivables include $350,000 (2014: $122,000) due from related parties (see note 33).
The Directors consider that the carrying amount of financial assets approximates their fair value. There are no
significant amounts past due which have not been provided against (2014: $nil). Further details on the Group's financial
assets are provided in note 29.
26. Cash and cash equivalents
Included within the Company and Group's cash and cash equivalents is $nil (2014: $107,000) of restricted cash held on
deposit as security for certain supplier guarantees.
27. Borrowings
2015 2014
US$000 US$000
Bank overdraft 3,079 2,468
Other - 200
3,079 2,668
The Group has an overdraft facility of 179,000,000 Metical (approximately $4,850,000 at the 31 May 2015 Metical to US$
exchange rate) (2014: 179,000,000 Metical (approximately $6,000,000)) to provide funding for its Grain operations in
Mozambique. It is secured against certain of the Group's property, plant and equipment (note 20) and all maize inventory
and finished maize products (note 24). Interest is charged at the counterparty bank's prime lending rate less 3%, being a
current rate of 13% (2014: 13%). Unless it is cancelled by either party, the facility renews annually on 31 May.
Other borrowings at 31 May 2014 represented customer pre-financing for the Group's Cocoa trading operations, was unsecured,
bore no interest and was repaid during the year.
28. Trade and other payables
2015 2014
US$000 US$000
Trade payables 314 77
Other payables 623 666
Accrued liabilities 440 1,413
Corporation tax - 14
1,377 2,170
'Trade payables', 'Other payables' and 'Accrued liabilities' principally comprise amounts outstanding for trade purchases
and ongoing costs. No interest is charged on any balances.
The Directors consider that the carrying amount of financial liabilities approximates their fair value.
29. FINANCIAL INSTRUMENTS
29.1. Capital risk management
The Group and Company manages its capital to ensure that entities in the Group will be able to continue as going concerns
while maximising the return to shareholders. The capital structure of the Group comprises its net debt (the borrowings
disclosed in note 27 after deducting cash and bank balances) and equity of the Group as shown in the balance sheet. The
Company and Group are not subject to any externally imposed capital requirements.
The ExCom reviews the capital structure on a regular basis and seeks to match new capital requirements of subsidiary
companies to new sources of external debt funding denominated in the currency of operations of the relevant subsidiary.
Where such additional funding is not available, the Group funds the subsidiary company by way of loans from the Company.
The Group and Company place funds which are not required in the short term on deposit at the best interest rates it is able
to secure from its bankers. In accordance with this policy, the Group has maintained its overdraft facility in Mozambique
to finance its Grain operations of 179,000,000 Mozambique Metical (note 27). Further and subsequent to the period end, the
Group has secured additional borrowing facilities in Mozambique for its Beef operations (refer to note 35.1).
29.2. Categories of financial instruments
The following are the Group and Company financial instruments as at 31 May:
Group Company
2015 2014 2015 2014
US$000 US$000 US$000 US$000
Financial assets
Cash and bank balances 6,421 6,994 6,027 5,747
Fair value through profit and loss:
Held for trading 376 1,225 376 1,225
Loans and receivables 1,510 852 22,052 41,752
8,307 9,071 28,455 48,724
Financial liabilities
Amortised cost 4,456 4,824 785 1,040
4,456 4,824 785 1,040
3,851 4,247 27,670 47,684
29.3. Financial risk management objectives
The Group manages the risks arising from its operations, and financial instruments at ExCom and Board level. The Board has
overall responsibility for the establishment and oversight of the Group's risk management framework and to ensure that the
Group has adequate policies, procedures and controls to manage successfully the financial risks that the Group faces.
While the Group does not have a written policy relating to risk management of the risks arising from any financial
instruments held, the close involvement of the ExCom in the day to day operations of the Group ensures that risks are
monitored and controlled in an appropriate manner for the size and complexity of the Group. Financial instruments are not
traded, nor are speculative positions taken. The Group and Company have not entered into any derivative or other hedging
instruments.
The Group's key financial market risks arise from changes in foreign exchange rates ('currency risk'). To a lesser extent
the Group is exposed to interest rate risk and other price risk (in respect of its investments in quoted companies). The
Group is also exposed to credit risk and liquidity risk. The principal risks that the Group faces as at 31 May 2015 with an
impact on financial instruments are summarised below.
29.4. Market Risk
The Group and Company are exposed to currency risk, interest risk and other price risk (in respect of its investments in
quoted companies). These are discussed further below.
29.4.1. Currency risk
Certain of the Group companies have functional currencies other than US$ and the Group is therefore subject to fluctuations
in exchange rates in translation of their results and financial position into US$ for the purposes of presenting
consolidated accounts. The Group does not hedge against this translation risk. The Group's financial assets and liabilities
by functional currency of the relevant Group company are as follows:
Assets Liabilities
2015 2014 2015 2014
US$000 US$000 US$000 US$000
United States Dollar ('US$')(1) 6,880 7,202 786 1,510
Mozambique Metical ('MZN') 1,143 1,588 3,524 3,209
Sierra Leone Leones ('SLL') 284 169 146 95
Other - 112 - 10
8,307 9,071 4,456 4,824
(1) The Company's functional currency is US$ and accordingly, all amounts for the Company are included within this category.
The Group and Company transact with suppliers and / or customers in currencies other than the functional currency of the
relevant group company (foreign currencies), and hold investments in quoted companies which are traded in currencies other
than US$. The Group does not hedge against this transactional risk. As at 31 May 2014 and 31 May 2015, the Group and
Company's outstanding foreign currency denominated monetary items were principally exposed to changes in the US$ / GBP and
US$ / MZN exchange rate. The following table details the Group and Company's exposure to a 5 per cent increase and decrease
in the US$ against GBP and separately against MZN. The sensitivity analysis includes only outstanding foreign currency
denominated items and excludes the translation of foreign subsidiaries and operations into the Group's presentation
currency. The sensitivity also includes intra-group loans where the loan is in a currency other than the functional
currency of the lender or borrower. A negative number indicates a decrease in profit and other equity when the US$
strengthens against the relevant currency by 5 per cent. For a 5 per weakening of the US$ against the relevant currency,
there would be a comparable impact on the profit and other equity, and the balances would be positive.
Group GBP Impact MZN Impact
2015 2014 2015 2014
US$000 US$000 US$000 US$000
Profit or loss (1) (10) (61) - -
Other equity (2) - 12 (2,910) (2,755)
Company GBP Impact MZN Impact
2015 2014 2015 2014
US$000 US$000 US$000 US$000
Profit or loss (1) (10) (61) - -
Other equity - 3 - -
(1) This is mainly due to the exposure arising from investments in quoted companies where the related company's equity securities are quoted in GBP.
(2) This is mainly due to the exposure arising on the translation of US$ denominated intra-group loans provided to MZN functional currency entities which are included as part of the Company and Group's net investment in the related entities.
29.4.2. Interest rate risk
The Group and Company are exposed to interest rate risk because entities in the Group hold cash balances and borrow funds
at floating interest rates The Company is further exposed to interest rate risk on loans provided to subsidiary companies
at floating interest rates. As at 31 May 2015, the Group and Company have no interest bearing fixed rate instruments.
The Group and Company maintain cash deposits at variable rates of interest for a variety of short term periods, depending
on cash requirements. The Grain operations in Mozambique are also financed through the overdraft facility. The rates
obtained on cash deposits are reviewed regularly and the best rate obtained in the context of the Group's and Company's
needs. The weighted average interest rate on deposits was 0.59% (2014: 1.05%). The weighted average interest on drawings
under the overdraft facility was 14% (2014: 16%), on the customer advances was nil% (2014: nil%) and on the short term loan
note was nil% (2014: 10%). The Group does not hedge interest rate risk.
The following table details the Group and Company's exposure to interest rate changes, all of which affect profit and loss
only with a corresponding effect on accumulated losses. The sensitivity has been prepared assuming the liability
outstanding at the balance sheet date was outstanding for the whole year. In all cases presented, a positive number in
profit and loss represents an increase in interest income / decrease in finance expense. The sensitivity is presented
assuming interest rates increase by either 20bp or 50bp. A 20bp or 50bp decrease in interest rates would have the opposite
effect.
Group Company
2015 2014 2015 2014
US$000 US$000 US$000 US$000
+ 20 bp increase in interest rates (7) (9) 115 110
+ 50 bp increase in interest rates (17) (23) 289 276
29.4.3. Other price risk
The Group and Company is exposed to equity price risk on its investments in quoted securities which are measured at fair
value (refer to note 22). Investments in quoted companies comprise investments in one company, ADS. If ADS's share price
increased / (decreased) by 10% and the US$ / GBP exchange rate remained unchanged, the Group and Company net profit would
increase / (decrease) by $38,000.
29.5. Credit risk
Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as
outstanding receivables. The Group's and Company's principal deposits are held with various banks with a high credit rating
to diversify from a concentration of credit risk. Receivables are regularly monitored and assessed for recoverability.
The maximum exposure to credit risk is the carrying value of the Group and Company financial assets disclosed in note 29.2.
Details of provisions against financial assets are provided in note 25.
29.6. Liquidity risk
The Group and Company's policy throughout the year has been to ensure that it has adequate liquidity by careful management
of its working capital. The ExCom continually monitors the Group and Company's actual and forecast cash flows and cash
positions. The ExCom pays particular attention to ongoing expenditure, both for operating requirements and development
activities, and matching of the maturity profile of the Group's overdraft to the processing and sale of the Group's maize
products.
At 31 May 2015 the Group held cash deposits of $6,421,000 (2014: $6,994,000). At 31 May 2015 the Company held cash
deposits of $6,027,000 (2014: $5,747,000). At 31 May 2015 the Group had an overdraft facility of approximately $4,850,000
(2014: approximately $6,000,000) of which $3,079,000 (2014: $2,468,000) was drawn. The Group had other borrowings / short
term loan note outstanding of $nil (2014: $200,000) (see note 27). As at the date of this report the Group has adequate
liquidity to meet its obligations as they fall due.
The following table details the Group and Company's remaining contractual maturity of its financial liabilities. The table
is drawn up utilising undiscounted cash flows and based on the earliest date on which the Group and Company could be
required to settle its obligations. The table includes both interest and principal cash flows. To the extent that interest
cash flows are floating rate, the undiscounted amount is derived using the current interest rate, which is not expected to
change significantly during the period to maturity.
Group Company
2015 2014 2015 2014
US$000 US$000 US$000 US$000
1 month 1,410 2,389 785 1,040
2 to 3 months 67 65 - -
12 months 3,379 2,764 - -
4,856 5,218 785 1,040
29.7. Fair values
The Directors have reviewed the financial statements and have concluded that there is no significant difference between the
carrying values and the fair values of the financial assets and liabilities of the Group and of the Company as at 31 May
2015 and 31 May 2014.
30. Share capital
Group and company
Authorised Allotted and fully paid
Number Number US$000
At 31 May 2014 and 31 May 2015:
Ordinary shares of 0.1p each 2,345,000,000 1,061,818,478 1,722
Deferred shares of 0.1p each 155,000,000 155,000,000 238
Total share capital 2,500,000,000 1,216,818,478 1,960
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.
31. RESERVES
Movements in the Group and Company reserves are included in the Consolidated statement of changes in equity and the Company
statement of changes in equity respectively. A description of each reserve is provided below.
31.1. Shares to be issued reserve
In the financial year ended 31 May 2012 the Group acquired Red Bunch Ventures (SL) Limited ('Red Bunch') which holds a
lease over approximately 45,000 hectares of agricultural land suitable for palm oil production in Sierra Leone. Following
the development of 1,000 hectares of the leasehold land, deferred consideration of 37,800,000 Ordinary Shares would become
payable under the purchase agreement. The 'Shares to be issued' reserve recorded the Group's potential obligation to issue
such Ordinary Shares. The Group has impaired this leasehold land asset during the year as more fully described in note 12.2
and accordingly the balance included within this reserve has been released to profit and loss within discontinued
operations.
31.2. Translation reserve
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign
operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which
case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are taken to the
translation reserve.
32. Share based payments
32.1. Charge in the period
The Group recorded a charge within other operating expenses for share based payments of $55,000 (2014: $149,000). The
Company recorded a charge of $11,000 (2014: $55,000) and recorded an increase in its investments in subsidiary undertakings
of $44,000 (2014: $94,000).
32.2. Equity - settled share option plan
The Group, through the Company, has two unapproved share option schemes which were established to provide equity incentives
to the Directors of, employees of and consultants to the Group. The schemes' rules provide that the Board shall determine
the exercise price for each grant which shall be at least the average mid-market closing price for the three days
immediately prior to the grant of the options. The minimum vesting period is generally one year. If options remain
unexercised after a period of 4 or 5 years from the date of grant, or vesting, the options expire. Options are forfeited if
the employee leaves the Group before the options vest.
The following table provides a reconciliation of share options outstanding during the period:
2015 Options Number Weighted average exercise price 2014 Options Number Weighted average exercise price
At 1 June 42,249,998 4.6p 44,750,000 3.7p
Granted in the year - - 2,500,000 1.5p
Lapsed in the year (5,750,000) 3.0p (5,000,002) 5.5p
At 31 May 36,499,998 3.4p 42,249,998 4.6p
Exercisable at year end 27,500,004 3.3p 27,750,002 3.0p
The fair value of the options granted during the year ended 31 May 2014 was determined using the Black-Scholes option
pricing model using the following assumptions:
- Share price at the date of grant was the average mid-market closing price for the three days immediately prior to grant,
being 1.47p.
- The risk free rate ranged from 0.53% to 1.87% based on the gilt yield over the expected life of the options at the date
of grant.
- The annual dividend yield was expected to be nil based on the Board's immediate intention to reinvest operating cash
flows.
- The annual volatility ranged from 60% to 89% and was derived from the historic daily share prices of the Company over
periods matching the expected life of the options at the date of grant.
- The options were granted on 15 May 2014 and vest at 20% per annum from the date of grant. The options can be exercised
within a five year period from the date they vest.
- The options have a fair value ranging between 0.4p and 1.0p with the total fair value of options granted during the year
ended 31 May 2014 calculated at $30,000.
On 12 January 2010, options over 50,000,000 ordinary shares with an exercise price of 5.5p were issued to Ely Place
Nominees Limited ('EPN') to be held on trust to be issued at the discretion of the Board as incentives to Directors,
employees or consultants (the 'Incentive Options'). Between January 2010 and 15 May 2014, 14,999,999 Incentive Options
were allocated. On 15 May 2014 and in light of the share price at that date, the Directors concluded that these Incentive
Options would not provide an appropriate mechanism for incentivising Directors, employees and consultants. As such, and
with the agreement of EPN, EPN waived their rights to the Incentive Options, which were cancelled and replaced by
35,000,001 new incentive options granted at the prevailing price on 15 May 2014 (rounded up to the nearest half penny) of
1.5p, otherwise to be held on the same terms as the Incentive Options.
32.3. Share Options
At 31 May 2015, the following options over ordinary shares of 0.1p each have been granted and remain unexercised:
Date of grant Total options Exercisableoptions Exercise price Exercise period
13 July 2011 5,000,000 5,000,000 3.0p 13 July 2012 to 13 July 2017
1 December 2011 10,000,000 10,000,000 2.0p 1 December 2011 to 1 December 2016
29 July 2012 7,499,999 3,000,002 3.5p 29 July 2013 to 29 July 2023
29 July 2012 7,499,999 7,000,002 5.5p 29 July 2013 to 11 January 2020
01 May 2013 2,000,000 2,000,000 2.8p 01 May 2014 to 30 April 2019
01 May 2013 2,000,000 - 5.5p 01 May 2014 to 11 January 2020
15 May 2014 2,500,000 500,000 1.47p 15 May 2015 to 15 May 2024
36,499,998 27,500,004
32.4. Warrants
Subsequent to the period end and as more fully described in note 35.2, the Company and Group issued 22,500,000 new warrants
to subscribe for ordinary shares in the Company at 0.65p per new ordinary share.
33. Related party disclosures
PH Edmonds and AS Groves, directors of the Company, are also directors of Sable Mining Africa Limited ('Sable'), Liberian
Cocoa Corporation ('LCC') and African Management Services Limited ('AMS'). In addition and during the period, AS Groves is,
or was, a Director of African Potash Limited ('African Potash'), Atlas Development and Support Services Limited ('ADS'),
East Africa Packaging Limited ('EAPC') and African Property Corporation ('APC'). The Company and Group have transacted with
these companies during the year. Related party transactions are entered into on an arm's length basis. No provisions have
been made in respect of amounts owed by or to related parties.
During the year AMS provided accounting, treasury and administrative services to the Group for a management fee of $388,000
(2014: $587,000). The Group also incurred certain expenditures on behalf of AMS, which was refunded in full during the
year. As at 31 May 2015 the Group and Company was owed $107,000 by AMS (2014: owed $33,000 by AMS).
At 31 May 2015 the Group and Company was due $89,000 from LCC (2014: $89,000).
During the year the Group and Company and Sable incurred certain expenses on each other's behalf, which was refunded in
full during the year. At 31 May 2015, the amount due to Sable was $nil (2014: $nil).
During the year the Group and Company incurred certain expenses on behalf of African Potash, which was refunded in full
during the year. At 31 May 2015, the amount due to African Potash was $nil (2014: $nil).
During the year the Group and Company advanced $nil (2014: $500,000) to Ardan Risk and Support Services Limited ('Ardan'),
a company controlled by MN Pelham.
During the year the Group and Company invested $nil (2014: $285,000) in the purchase of ordinary shares of ADS.
During the year the Group and Company incurred certain expenses on behalf of, or advanced loan funding to, EAPC. At 31 May
2015, the amount due from EAPC was $151,000 (2014: $nil).
During the year the Group and Company incurred certain expenses on behalf of, or advanced loan funding to, APC. At 31 May
2015, the amount due from APC was $3,000 (2014: $nil).
The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 11.
34. Operating Leases
At 31 May the Group had commitments for future minimum lease payments under non-cancellable operating leases for land and
buildings, which fall due as follows:
2015 2014
US$000 US$000
Within one year 138 79
In the second to fifth years inclusive 95 -
233 79
Operating lease rentals recognised as an expense in the Consolidated income statement were as follows:
Land and buildings 209 125
35. Events subsequent to the balance sheet date
35.1. Provision of new lending facilities to the Beef division
On 24 June 2015, the Group agreed new lending facilities totalling 105,000,000 Metical ($2,845,000 at the 31 May 2015
exchange rate) to finance its Beef division in Mozambique. The facilities comprise 75,000,000 Metical of term loans for the
purchase of cattle, irrigation equipment, butchery equipment, refrigerated vehicles and general capital purposes, and a
30,000,000 Metical overdraft. The term loans can be drawn until 24 December 2015, carry interest at the bank's prime
lending rate plus 0.25% (currently 13.75%), and have a five year term from draw down with a moratorium on capital
repayments of 15 months. The overdraft renews annually and carries interest at the bank's prime lending rate (currently
13.50%). The lending facilities are secured against the Group's abattoir in Chimoio and all cattle and meat inventories.
35.2. Allocation of warrants
On 1 June 2015 the Group created a warrant instrument (the 'Instrument') to provide suitable incentives to the Group's
employees, consultants and agents, and in particular those based, or those spending considerable time, on site at the
Group's operations. Up to 100,000,000 warrants (the 'Warrants') to subscribe for new Ordinary Shares in the Company (the
'Warrant Shares') may be issued pursuant to the Instrument. The exercise price of each Warrant is 0.65p (the share price of
the Company being approximately 0.6p when the Instrument was created) and the subscription period during which time the
Warrants may be exercised and Warrants Shares issued is the 5-year period from 1 June 2016 to 1 June 2021. Subject to
various acceleration provisions, a holder of Warrants is not entitled to sell more than 100,000 Warrant Shares in any day
nor more than 1m Warrant Shares (in aggregate) in any calendar month, without board consent. 22,500,000 Warrants have been
issued subsequent to the period end to employees.
35.3. Cocoa trading agreement
On 12 November 2015 the Group, through its Sierra Leone subsidiary company, Tropical Farms Limited ('Tropical Farms'),
entered into a trading agreement with a leading global company focused on natural, organic and specialty foods.
Under the terms of the trading agreement, Tropical Farms will use its organic certification and buying networks to source
and supply up to 500 Mt of Sierra Leonean cocoa beans to the Offtaker during the 2015/2016 buying season; the Offtaker will
provide Tropical Farms with pre-financing for the purchase of beans.
The trading agreement will leverage Tropical Farms' extensive infrastructure in Sierra Leone, including a state-of-the-art
warehouse in Kenema. In addition to Tropical Farms sourcing and supplying cocoa, the Offtaker has expressed its interest
in additional produce and both parties have committed to explore opportunities for organic coffee and other organic food
crops.
Company statement of financial position
As at 31 May 2015
2015 2014
Note US$000 US$000
Non-current assets
Property, plant and equipment 38 - 1
Investments in subsidiaries 39 21,714 47,591
Interests in associates 21 - -
Investments in quoted companies 22 376 1,225
22,090 48,817
Current assets
Trade and other receivables 40 495 166
Cash and cash equivalents 6,027 5,747
6,522 5,913
Total assets 28,612 54,730
Current liabilities
Trade and other payables 41 785 1,040
785 1,040
Net current assets 5,737 4,873
Net assets 27,827 53,690
Share capital 30 1,960 1,960
Share premium 148,622 148,622
Shares to be issued 31.1 - 2,940
Share based payment reserve 1,914 1,859
Translation reserve 31.2 2,621 2,621
Accumulated losses (127,290) (104,312)
Total equity 27,827 53,690
The financial statements of Agriterra Limited were approved and authorised for issue by the Board of Directors on 19
November 2015. Signed on behalf of the Board of Directors by:
PH Edmonds Chairman 19 November 2015
PH Edmonds
Chairman 19 November 2015
Company statement of changes in equity
For the year ended 31 May 2015
Sharecapital Share premium Shares to be issued Share based payment reserve Translation reserve Accumulated Total
losses equity
Note US$000 US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 June 2013 1,960 148,622 2,940 1,710 2,621 (101,599) 56,254
Loss and total comprehensive income for the year - - - - - (2,713) (2,713)
Share-based payments 32 - - - 149 - - 149
Balance at 31 May 2014 1,960 148,622 2,940 1,859 2,621 (104,312) 53,690
Loss and total comprehensive income for the year - - - - - (22,978) (22,978)
Share-based payments 32 - - - 55 - - 55
Released to profit and loss 12.2 - - (2,940) - - - (2,940)
Balance at 31 May 2015 1,960 148,622 - 1,914 2,621 (127,290) 27,827
Company cash flow statement
For the year ended 31 May 2015
2015 2014
Note US$000 US$000
Cash flows from operating activities
Loss before tax from continuing operations (25,777) (1,336)
Adjustments for:
Depreciation 38 1 -
Profit on disposal of property, plant and equipment - (8)
Share based payment expense 32 11 55
Impairment of loans to subsidiary undertakings 39 23,680 1,038
Foreign exchange loss 177 37
Finance costs - 12
Investment revenues (1,100) (1,186)
Decrease / (increase) in fair value of quoted investments 14 849 (936)
Operating cash flows before movements in working capital (2,159) (2,324)
(Increase) / decrease in trade and other receivables (330) 1,026
Decrease in trade and other payables (255) (252)
Net cash used in operating activities by continuing operations (2,744) (1,550)
Finance costs - (12)
Interest received 14 140
Net cash used in operating activities by continuing operations (2,730) (1,422)
Net cash provided by / (used in) operating activities by discontinued operations 5,740 (378)
Net cash provided by / (used in) operating activities 3,010 (1,800)
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment - 42
Purchase of investments in quoted companies 22 - (285)
Loans to subsidiary undertakings 39 (2,569) (8,449)
Net cash used in investing activities by continuing operations (2,569) (8,692)
Net cash from investing activities in discontinued operations - -
Net cash used in investing activities (2,569) (8,692)
Cash flow from financing activities
Repayment of borrowings - (1,500)
Net cash outflow from financing activities from continuing operations - (1,500)
Net increase / (decrease) in cash and cash equivalents 441 (11,992)
Effect of exchange rates on cash and cash equivalents (161) (31)
Cash and cash equivalents at beginning of period 5,747 17,770
Cash and cash equivalents at end of period 6,027 5,747
36. Company ACCOUNTING POLICIES
The financial statements have been prepared in accordance with IFRS as adopted by the EU.
The financial statements have been prepared on the historical cost basis except for the measurement of certain financial
instruments, and share based payments. The principal accounting policies adopted are the same as those set out in note 3 to
the consolidated financial statements, other than as noted below.
36.1. Investments in subsidiary undertakings
Investments are recorded at cost, less provision for impairment. The Company includes within the carrying value of
investments in subsidiary undertakings the fair value of the consideration paid for the subsidiary. Additional investment
in the subsidiary undertakings, in the form of capital subscriptions, capital contributions or share based payment
obligations assumed on behalf of the subsidiary is added to the cost of the investment in the period in which it arises.
37. RESULT FOR THE YEAR
As permitted by Guernsey law, the Company has elected not to present its own income statement. The Company reported a loss
for the year of $22,978,000 (2014: loss of $2,713,000).
38. PROPERTY, PLANT AND EQUIPMENT
MotorVehicles Otherassets Total
US$000 US$000 US$000
Cost
At 1 June 2013 42 16 58
Disposals (42) - (42)
At 31 May 2014 - 16 16
Disposals - (16) (16)
At 31 May 2015 - - -
Accumulated depreciation
At 1 June 2013 8 15 23
Eliminated on disposals (8) - (8)
At 31 May 2014 - 15 15
Charge for the year - 1 1
Eliminated on disposals - (16) (16)
At 31 May 2015 - - -
Net book value
31 May 2015 - - -
31 May 2014 - 1 1
39. INVESTMENT IN SUBSIDIARIES
Investment Loans Total
US$000 US$000 US$000
Cost
At 1 June 2013 9,680 58,161 67,841
Loans advanced in the year - 8,449 8,449
Interest accrued - 1,046 1,046
Capital contribution 94 - 94
Foreign exchange gain - 1,312 1,312
At 31 May 2014 9,774 68,968 78,742
Loans advanced in the year - 2,569 2,569
Interest accrued - 1,086 1,086
Capital contribution 44 - 44
Foreign exchange loss - (16) (16)
At 31 May 2015 9,818 72,607 82,425
Provision for irrecoverable amounts
At 1 June 2013 3,801 25,000 28,801
Charge for the year - 1,038 1,038
Foreign exchange loss - 1,312 1,312
At 31 May 2014 3,801 27,350 31,151
Charge for the year 5,880 23,680 29,560
At 31 May 2015 9,681 51,030 60,711
Net book value
31 May 2015 137 21,577 21,714
31 May 2014 5,973 41,618 47,591
Capital contributions represent increases or decreases in investment arising from the grant, lapse or termination of share
options or Ordinary Shares to employees of subsidiary undertakings.
Loans to subsidiaries fall due after more than one year. The provision against loans to subsidiaries in the year reflects
the impairment of the Group's cocoa plantation operations during the period and reductions in the value of the underlying
businesses as a result of movements in exchanges rates (2014: cessation of the Group's cocoa trading activities and
reductions in the value of the underlying businesses as a result of movements in exchanges rates).
As set out in note 17.1, the Company and Group have suspended further expenditure on all oil and gas exploration and
evaluation projects. Accordingly the Company's investment and loans provided to subsidiary undertakings conducting such
operations were fully provided against in prior periods.
As at 31 May 2015, the Company held equity interests in the following principal undertakings:
Direct investments
Subsidiary undertakings Proportion held Country of incorporation Nature of business
Agriterra (Mozambique) Limited 100% Guernsey Holding Company
P A Energy Africa Limited 100% British Virgin Islands Inactive
Agriterra Aviation (Pty) Limited 100% South Africa Aviation services
Agriterra East Africa Limited 100% Mauritius Trading
Agriterra Guinea SA 100% Guinea Infrastructure
West Africa Cocoa Services Limited 100% British Virgin Islands Holding Company
Shawford Investments Inc 100% British Virgin Islands Holding Company
Branca Tide Limited 100% British Virgin Islands Holding Company
Indirect investments of Agriterra Mozambique Limited
Subsidiary undertakings Proportion held Country of incorporation Nature of business
Desenvolvimento E Comercialização Agricola Limitada 100% Mozambique Grain
Compagri Limitada 100% Mozambique Grain
Mozbife Limitada 100% Mozambique Beef
Carnes de Manica Limitada 100% Mozambique Beef
Aviação Agriterra Limitada 100% Mozambique Aviation services
Indirect investments of West Africa Cocoa Services Limited
Subsidiary undertakings Proportion held Country of incorporation Nature of business
Tropical Farms (SL) Limited 100% Sierra Leone Cocoa & Coffee
Indirect investments of Branca Tide Limited
Subsidiary undertakings Proportion held Country of incorporation Nature of business
Tropical Farms Plantation (SL) Limited 100% Sierra Leone Cocoa Plantation
Indirect investments of Shawford Investments Inc.
Subsidiary undertakings Proportion held Country of incorporation Nature of business
Red Bunch Ventures (SL) Limited 100% Sierra Leone Palm Oil
40. Trade and other receivables
2015 2014
US$000 US$000
Other receivables 475 134
Prepayments 20 32
495 166
'Other receivables' disclosed above are classified as loans and receivables and measured at amortised cost. The Directors
consider that the carrying amount of these financial assets approximates their fair value. There are no significant
amounts past due which have not been provided against (2014: $nil). Further details on the Company's financial assets are
provided in note 29.
Other receivables include $350,000 (2014: $122,000) due from related parties (see note 33).
41. Trade and other payables
2015 2014
US$000 US$000
Trade payables 101 78
Other payables 527 573
Accrued liabilities 157 389
785 1,040
The Directors consider that the carrying amount of financial liabilities approximates their fair value. Further details on
the Company's financial liabilities are provided in note 29.
42. RELATED PARTIES
Transactions and balances due at the period end with related parties, other than with subsidiary undertakings, are
disclosed in note 33.
Related party transactions are entered into on an arm's length basis. No provisions have been made in respect of amounts
owed by or to related parties except where disclosed.
Subsidiary companies are financed by means of parent company loans which bare market rates of interest. Details on the
Company's receivables from subsidiary undertakings, including advances in the period, interest receivable and provisions
for irrecoverable amounts are provided in note 39.
43. Ultimate controlling party
The Directors are of the opinion that there is no controlling party of the Company.
44.
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