REG - Agriterra Ltd - Final Results <Origin Href="QuoteRef">AGTAR.L</Origin> - Part 4
18/11/2016 07:05
- Part 4: For the preceding part double click ID:nRSR5118Pc
3 months 100 67
12 months 2,224 3,379
1 to 2 years 501 -
2 to 5 years 892 -
4,406 4,856
28.7. 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 as at 31 May 2016 and 31 May
2015.
29. SHARE CAPITAL
Authorised Allotted and fully paid
Number Number US$000
At 31 May 2015 and 31 May 2016:
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.
30. RESERVES
Movements in the Group reserves are included in the consolidated statement of changes in equity. A description of each
reserve is provided below.
30.1. 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.
31. SHARE BASED PAYMENTS
31.1. Charge in the period
The Group recorded a charge within Operating expenses for share based payments of $66,000 (2015: $55,000).
31.2. Outstanding options and warrants
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.
In addition to share options issued under the unapproved share option schemes, 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 during the period to employees.
The following table provides a reconciliation of share options and warrants outstanding during the period:
2016 Number Weighted average exercise price 2015 Number Weighted average exercise price
At 1 June 36,499,998 3.4 42,249,998 4.6p
Granted in the year 22,500,000 0.7 - -
Terminated in the year (5,166,000) 4.5
Lapsed in the year (2,830,000) 4.5 (5,750,000) 3.0p
At 31 May 51,003,998 2.0 36,499,998 3.4p
Exercisable at year end 47,504,006 1.9 27,500,004 3.3p
The fair value of the 22,500,000 Warrants granted during the year ended 31 May 2016 was determined using the Black-Scholes
option pricing model using the following assumptions:
- Share price at the date of grant was the closing price on that date, being 0.54p.
- The risk free rate was 0.91% based on the gilt yield over the expected life of the Warrants at the date of grant.
- The annual dividend yield was expected to be nil based on the Board's intention to reinvest operating cash flows.
- The annual volatility was 83.82% and was derived from the historic daily share prices of the Company over the period
matching the expected life of the Warrants at the date of grant.
- The Warrants have a fair value of 0.27p with the total fair value of the Warrants granted during the year ended 31 May
2016 calculated at $92,000.
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. No further Incentive Options have been allocated.
At 31 May 2016, the following options and warrants over ordinary shares of 0.1p each have been granted and remain
unexercised:
Date of grant Total options Exercisableoptions Exercise price Expiry date
13 July 2011 5,000,000 5,000,000 3.0p 13 July 2017
1 December 2011 10,000,000 10,000,000 2.0p 1 December 2016
29 July 2012 3,501,999 2,502,003 3.5p 29 July 2023
29 July 2012 3,501,999 2,502,003 5.5p 11 January 2020
01 May 2013 2,000,000 2,000,000 2.8p 30 April 2019
01 May 2013 2,000,000 2,000,000 5.5p 11 January 2020
15 May 2014 2,500,000 1,000,000 1.5p 15 May 2024
1 June 2015 22,500,000 22,500,000 0.7p 1 June 2021
51,003,998 47,504,006
32. RELATED PARTY DISCLOSURES
AS Groves and PH Edmonds, current or former directors of the Company, are also directors of Liberian Cocoa Corporation
('LCC') and African Management Services Limited ('AMS'). In addition, AS Groves is, or was during the period, a Director of
Consolidated Growth Holdings Limited (formerly Sable Mining Africa Limited, 'CGH'), Atlas African Industries Limited
(formerly Atlas Development & Support Services Limited, 'AAI'), East Africa Packaging Limited ('EAPC') and African Property
Corporation ('APC'). The Group has 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, office, treasury and administrative services to the Group for fees of $510,000
(2015: $388,000). As at 31 May 2016 the Group was owed $116,000 by AMS (2015: $107,000).
At 31 May 2016 the Group was owed $89,000 from LCC (2015: $89,000).
During the year the Group and CGH incurred certain expenses on each other's behalf, which were refunded in full during the
year. At 31 May 2016, the amount due to CGH was $nil (2015: $nil).
During the year the Group and AAI incurred certain expenses on each other's behalf. In addition, AAI acquired EAPC, and
assumed EAPC's outstanding debt to the Group of $150,000 (2015: $150,000). At 31 May 2016, the amount due from AAI to the
Group was $156,000 (2015: $nil).
During the year ended 31 May 2015, the Group incurred certain expenses on behalf of, or advanced loan funding to, APC. At
31 May 2015 APC owed the Group $3,000, which was settled in the current financial year. No amounts are due from APC at 31
May 2016.
PH Edmonds resigned as a Director of the Company on 22 April 2016 and has subsequently been retained as a consultant to the
Group. Consultancy fees charged in the year ended 31 May 2016 were $9,000 (2015: $nil). No amounts were outstanding at the
period end.
The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 10.
33. 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:
2016 2015
US$000 US$000
Within one year 152 138
In the second to fifth years inclusive 190 95
342 233
Operating lease rentals recognised as an expense in the consolidated income statement were as follows:
Land and buildings 187 209
34. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
34.1. Destocking of the cattle ranches
As announced on 21 April 2016, the political and economic environment in Mozambique has deteriorated during the course of
2016 and militias are entrenched in some rural areas in the Manica province, where the Group's three farms are located. As
announced on 23 June 2016, due to the well documented political unrest in the area around its cattle ranching operations in
Central Mozambique, the Group began destocking its cattle in order to safeguard and crystallise its considerable livestock
capital. The decision was made to destock these farms in order to protect the value of the herd during a period in which
there is an increased possibility of livestock theft and an increased risk in the movement of people and goods in the
country.
The Group's three farms, at Mavonde, Dombe and Inhazonia, held approximately 4,200 head of cattle at 31 May 2016. Over the
forthcoming months, the cattle will continue to be delivered to the Vanduzi feedlot for fattening and subsequent slaughter.
The feedlot, which continues to operate as normal, enables the Group to produce a well finished, high quality animal for
slaughter ensuring premium grade meat is available to supply its butcheries and wholesale operations.
Once the farms have been completely destocked, which is anticipated to be by the end of April 2017, the Vanduzi feedlot
will exclusively process locally reared animals. The Board is confident that suitable quality animals are available in the
local market for these purposes, having seen a growth in local commercial cattle farming in recent times, in part as a
result of the market generated by the Company's feedlot and abattoir infrastructure.
The decision to destock the ranches was the outcome of a lengthy internal deliberation and risk assessment. This process
was completed subsequent to the period end when the final decision was made, although factors leading to that decision were
present at 31 May 2016. The decision to destock the farms has accordingly been taken into consideration for the purposes of
the Group's impairment review of its tangible assets in the Beef division for the year ended 31 May 2016. Further details
of the impairment review are included in note 11.1.
34.2. Disposal of the Cocoa division
On 5 October 2016, the Group completed the sale of its Sierra Leone Cocoa division in a management buy-out transaction (the
'MBO') for cash consideration of $750,000 (the 'Consideration'). The net assets of the Cocoa division had a carrying value
as at 31 May 2016 of $433,000 (refer to note 25). The Cocoa division principally comprised the 3,200 hectare cocoa
plantation in the Kenema district of Sierra Leone, a 2,000 m2 warehouse, and related support infrastructure and vehicles.
Under the terms of the MBO, the Group disposed of its interests in Baranca Tide Limited and West Africa Cocoa Services
Limited (the intermediate holdings companies which hold the assets comprising the Group's cocoa business in Sierra Leone,
the 'Target Companies') with immediate effect; payment of the Consideration is deferred for a period of 65 business days
from completion of the MBO (i.e. until 9 January 2017); in the event that the Consideration is not paid on the due date,
the ownership of the Target Companies will immediately revert to the Group.
The sale of these assets pursuant to the MBO is part of the Group's ongoing rationalisation programme. The proceeds of the
sale of these assets will be applied towards the Group's general working capital requirements.
34.3. Repayment of ABC Bank overdraft, discharge of mortgages and creation of new mortgages in favour of Standard
Bank
As more fully described in note 26, the Group has an overdraft facility of 300,000,000 Metical with Standard Bank to
provide working capital funding, principally for the purchase of maize and related operating expenditure. Inter alia, the
Facility is secured against certain of the Group's property, plant and equipment. These items of property, plant and
equipment were previously mortgaged to ABC Bank. Subsequent to the period end, and following the repayment in full of the
ABC Bank overdraft facility, the deeds discharging the ABC Bank mortgage and perfecting this security in the name of
Standard Bank were completed. Standard Bank's final mortgage was registered on 29 June 2016.
34.4. Disposal of the Group's aircraft
Subsequent to the period end and as more fully described in note 25, the Group sold its aircraft assets, realising gross
proceeds of $570,000 and net proceeds after expenses of approximately $526,000. The sale of these assets is part of the
Group's ongoing rationalisation programme.
**ENDS**
The information contained within this announcement is considered to be inside information, for the purposes of Article 7 of
EU Regulation 596/2014, prior to its release.
This information is provided by RNS
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