Annual Financial Report
30/09/2024 18:17
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RNS Number : 3368G Agriterra Ltd 30 September 2024
30 September 2024
Agriterra Limited ('Agriterra' or the 'Company')
Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture
2024 Annual Results
Agriterra Limited, the AIM-quoted African agricultural company, is pleased to
announce its audited annual results for the year ended 31 March 2024 (the
"2024 Annual Results"). Copies will be posted to Shareholders where
appropriate. The Company will be posting its notice of Annual General Meeting,
and a further announcement will be made in due course.
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 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 2024. During the year, the Group had a strategic review and formulated a
5-year plan to improve and expand the operational performance across all
divisions to achieve profitability. The initial phase was to align the
workforce with the business volumes and to revise the sales strategy.
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 group 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/
Strategy and Business Model
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 has
three operating divisions:
· 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 and retail units through Mozbife
Limitada (Mozbife)
· Snax, which sources maize grits from DECA, processing them into
flavoured puffs through DECA Snax Limitada, a joint venture company in which
DECA has a majority interest.
· Biscuits, which was planned and developed during the year
2023/2024 and commissioned in June 2024, trading under the brand name of Doko
Doko. Biscuits will remain under the Grain division until it is more
established.
During the year the Company secured shareholder loans of, in aggregate,
c.US$4.6m (2023: c.US$7.9m) to repay commercial bank debt and to fund working
capital for the Grain and Beef divisions. This has resulted in a reduction in
debt servicing costs.
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 major shareholder is represented on the
Board, both at the Executive and Non-Executive level, 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 developing commercial sector.
Mozambique overview
During the current period the Metical remained steady against the US$1;
MZN63.90 (2023; US$1; MZN 63.88). Annual inflation decreased faster than
anticipated to 7.1%, against 10.3% in the previous year. The Authorities are
maintaining controls to ensure fiscal discipline, during the period the prime
lending rate rose to 23.50% to contain inflation but has since started
reducing (20.6% September 2024) and is expected to decrease further by the end
of 2024. In addition, the Central Bank increased the Prudential Deposit Ratio
from 10.5% to 39%.
The continuing instability and Islamist attacks in Cabo Delagado have
restricted the production of Liquified Natural Gas (LNG) slowing the
anticipated income in our Beef division from this sector as this sector
contributed significant revenue to the Beef division in the past. However, the
medium-term outlook is positive, with growth expected to accelerate to 4.6%
over 2025 to 2026.
A report from the African Development Group: "The fiscal deficit improved from
5.1% of GDP in 2022 to about 2.8% in 2023, reflecting cuts in public spending
and higher domestic revenue collection as the economy gradually recovered.
Mozambique is in debt distress, but its debt is assessed as sustainable on a
forward-looking basis."
Operations review
Grain division
The division secured a US$2 million shareholder loan to fund grain working
capital in August 2023 and purchased 14,494 tons of maize. In addition, 1,000
tons of mealie meal was imported from South Africa when the cost of maize in
Mozambique increased to US$315 per ton, and hence it was more economic to
import, in accordance with the sales strategy.
The Grain division generated revenue amounting to US$6.2 million (FY23: US$8.6
million) after selling 10,882 tons (2023: 17,819 tons) of mealie meal, the
average meal selling price increased by 18% to US$570 per ton (2023: US$482).
The Grain division's bank borrowings decreased by US$1.1 million due to
repayment of bank borrowings of US$1 million and finance leases were fully
repaid during the year. The Grain division has one outstanding commercial bank
loan amounting to US$0.6 million.
Operating costs increased by US$0.1m to US$1.2m, EBITDA decreased to negative
US$0.02m (2023: positive EBITDA of US$0.6m) due to low sales volumes and high
cost of maize during the year. Finance costs decreased to US$0.3m (2023:
US$1.0m) and depreciation cost amounted to US$0.5m (2023: US$0.5m) resulting
in a loss before tax of US$0.78m (2023: loss US$0.86m).
Beef division
The Beef division generated revenue of US$3.0 million (FY23: US$3.13 million).
The main customers are wholesale customers being the catering companies and
supermarkets. Retail customers are more sensitive to price as compared to
quality and there was increased competition from cheaper meat from the
informal market. Although sales volumes were 9.4% higher than previous year
(728 tons vs 666 tons in FY23) the price of beef per kg deceased by 10.2% to
combat competition from the informal market and the Gross Margin decreased to
14.94% (FY23: 24.06%).
The average daily weight gain of animals increased from 0.22% to 0.26% of body
mass and the average dress out rate was 47.2% (FY-2023: 49.2%) due to lower
quality of animals which were purchased to service the retail business.
Beef division strategy shifted during the year from the more high-end market
to a mix of quality product together with a lower quality product that could
be priced more aggressively and aimed at the mass retail market.
Beef division is targeting areas much closer to the operational base for
cattle buying and is incentivising farmers to deliver animals directly to the
abattoir. 70% of all animals slaughtered in the last 6 months of the year were
delivered directly to the abattoir. This has improved operational efficiencies
by cutting out unnecessary transport costs.
The Maputo butchery was closed, as the proximity to South Africa and the
fluctuating cheap imports were affecting sales.
The Beef division still carries the cost of the 3 farms that remain in care
and maintenance whilst looking for potential buyers.
Loss after tax amounted to US$1,140,000 (FY23: Loss after tax US$651,000).
Snax division
At the beginning of the year, in order to be more responsive to changes in the
market, the Group acquired operating control of DECA Snax Limitada through
control over the board by an approved resolution. Consequently the Group is
consolidating the performance of Snax division and recognising the
non-controlling interest in the Group's financial statements.
Sales revenue decreased by 9% to US$2.1 million (FY23: US$2.3 million). The
Snax division was affected by the increasing cost of maize during the year, up
by 27%. However there was resistance from the market to attempts to increase
the selling price of the Snax to recover the cost of inputs.
During the year, Snax installed a large 100-gram packing machine to offer
family pack size to customers. The division has not been able to utilise more
than 60% of its production capacity due to maize cost and availability which
affected the cost of production.
Snax sold 1,066,996 bales during the year (FY23: 1,111,538 bales). Profit
after tax amounted to US$22,676 (FY23: US$74,976) after payment of management
fees to the Grain division, amounting to US$103,601 (FY23: US$117,289). Low
profitability resulted from high cost of raw materials.
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.
2024 2023 2022
Grain division
- Average milling yield 75.1% 75.3% 78.0%
- Meal sold (tonnes) 10,882 17,819 17,094
- Revenue $6,186,000 $8,590,000 $7,118,000
- EBITDA (note 5) ($21,000) $611,000 $535,000
Beef division
- Slaughter herd - number of head sold in year 5,320 4,099 4,575
- Average daily weight gain in feedlot (% of body mass) 0.26 0.22 0.35
- Meat sold (tonnes) 728 666 734
- Revenue $2,967,000 $3,129,000 $3,159,000
- EBITDA (note 5) ($633,000) ($244,000) ($66,000)
Snax division (note 23)
- Bales sold (units) 1,066,996 1,111,538 707,385
- Revenue $2,072,000 $2,345,779 $1,447,000
- EBITDA (note 5) $98,000 $170,000 $247,000
Group
- EPS (4.49) (9.29) (10.7)
- Liquidity - cash plus available headroom under facilities $439,000 $174,000 $107,000
Financial Review
In FY24 the Group revenue includes the revenue from the Snax division
(US$2.1m) following the change of operating control. After taking the Snax
revenue into account, revenue in the Grain and Beef divisions decreased by 28%
to US$8.3m (FY23: US$11.49m) mainly due to:
· The Grain division secured a pre-buying season facility from a
commercial bank in Mozambique which the bank could not deliver due to an
increase in the prudential deposit ratio with the Central Bank from 10.5% to
39%. The Company therefore obtained a shareholder loan in August 2023 as an
alternative. This delay led to DECA purchasing 6,609 tons of maize initially
and then rolling the generated working capital to purchase a total of 14,494
tons of maize. At an extraction of 75.1%, only 10,882 tons were produced and
sold (FY23: 17,819).
· The Beef division sales volumes increased to 728 tons (FY23: 666
tons), however revenue saw a slight decrease to US$3.0 million (FY23: US$3.1
million) due to a reduction in the average selling price. The increased sales
volumes reflect the strategy to be more aggressive in the retail market, but
the revenue reflects the reduction in the sales to wholesale customers as a
result of competition from South African beef due to Rand: MZN exchange rate.
The Group's gross margin decreased to 17.6% (FY23: 21.2%) due to fair value
reduction of biological assets amounting to US$437,000 (FY23: US$288,000) and
cost of replacement maize. Gross profit was US$1.8 million (FY23: US$2.4
million).
The Group's operating expenses increased by 18% to US$4 million with an
increase in operating losses to US$1.85 million (FY23: US$0.81 million).
Net Debt as of 31 March 2024 was US$13.83 million (FY23: US$9.69 million). The
shareholder loan injections of US$4.6 million funded maize purchases, various
equipment to enhance production, the biscuit plant and raw materials. US$1.1
million was used to repay part of a long outstanding commercial bank loan.
Finance costs were at US$1.49 million (FY23: US$1.46 million), of which
US$1.003 million was accrued to shareholder loans which are at 6% above
Secured Overnight Financing Rate (5.31%) as compared to Mozambique commercial
bank loan rates of more than 22% per annum.
Subsequent to the year end, the Grain division secured US$4.2 million to fund
working capital in the form of advance payments from a major customer
amounting to US$1.2 million and US$3 million under a commodity trading
agreement with a local Mozambican company (see note 27).
Risk management
The Group is subject to various risks, and the future outlook for the Group
and growth in shareholder value should be viewed with an understanding of
these risks. The following table shows the principal risks facing the Group
and the actions taken to mitigate these:
Key risk factor Detail How it is managed Change in the period
Foreign Exchange The Group's operations are impacted by fluctuations in exchange rates and the The Group adjusts its output volumes and prices in response to competition Increased. Although the Metical has been stable in the past 12 months, the
volatility of the Metical. from imports. Group's borrowings are now denominated in USD and there is high risk of
devaluation of the Metical due to shortage of foreign currency.
Political instability Presidential elections in October 2024 and changes to government policy and Contingency plans to protect assets and staff should political or military No Change.
applicable laws could adversely affect operations or the financial condition tensions escalate.
of the Group.
Land ownership in Mozambique Property rights and land are exclusive to the state. The state grants rights Observance of any conditions attaching to a DUAT. No Change.
to use and develop land "DUATs". The operations are dependent upon maintaining
the relevant DUATs.
Maize growing season Adverse weather conditions, and anticipated drought for the next growing Diversify sources of supply and sign supply agreements. The business has taken Increased.
season nationally or regional may impact on the availability and pricing of the initiative to go directly to the farmer, rather than depending entirely on
grain. traders.
Cattle and cattle feed Cattle are subject to diseases and infections. The availability and price of Stringent Bio-security measures are in place at the Farms and Feedlot. The No Change.
feed impacts profitability. division is now self-sufficient in roughage crops and acquires most of its
feed from the Grain division.
Access to working capital The Group is less reliant on local banking facilities in Mozambique and has The Group has secured additional working capital facilities. No change.
the continued support from the majority shareholder.
Compliance Risk of a breach of the Group's business or ethical conduct standards and The Board reinforces an ethical corporate culture. Anti-bribery policies are No Change.
breach of anti-corruptions laws, resulting in investigations, fines and loss in place, with regular training throughout the organization.
of reputation.
The Board is also responsible for establishing and monitoring the Group's
systems of internal controls. Although no system of internal control can
provide absolute assurance against material misstatement or loss, the Group's
systems are designed to provide the directors with reasonable assurance that
problems are identified on a timely basis and dealt with appropriately. The
Board reviews the effectiveness of the systems of internal control and
considers the major business risks and the control environment on a regular
basis. In light of this control environment the Board considers that there is
no current requirement for a permanent separate internal audit function.
Going concern
Details of the consideration of going concern are set out in note 3. The Group
has prepared forecasts for its ongoing operating 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 commercial debt during the year by a further US$1.1 million
(FY23: US$7.98 million). Post year end, the Grain division has sourced the
equivalent of US$3 million under a commodity trading agreement with a local
Mozambican company and has received an advance payment of the equivalent of
U$1.2 million from one of its major customers. All the funding was used to
purchase maize and will be repaid within the year ending 31 March 2025.
The Group prepared a 5-year strategy which defined the key performance
indicators, identified the challenges it is likely to encounter and set
direction and targets for the management teams in their respective divisions.
These operating targets will need to be achieved for the Group to meet its
cashflow requirements.
These conditions indicate the existence of a material uncertainty that may
cast significant doubt upon the Group's ability to continue as a going concern
and the operating companies may therefore be unable to realise their assets
and discharge their liabilities in the ordinary course of business. The
auditors make reference to going concern in their audit report by way of a
material uncertainty. These financial statements do not include the
adjustments that would result if the Group was unable to continue as a going
concern.
Outlook
The Group plans, having implemented a retrenchment programme in the prior
year, to align the costs to the business volumes in FY 2025. Operating costs
remain under constant review. The majority shareholder continues to offer
support to the Group in the form of extending existing loan facilities.
The macro-economic environment is expected to improve in 2024/25 financial
year. The US$: MZN exchange rate is expected to remain at US$1: MZN 63.90,
whilst inflation is expected to decrease to around 4-5%. The Central Bank of
Mozambique is using interest rates to control inflation, and a decrease in the
inflation rate will enable the Central Bank of Mozambique to reduce the prime
lending rate which is currently at 22.4%.
Grain: The Grain division needs to secure maize at the right time and at the
right price to ensure its success. Operational efficiency is also key to
unlocking profit, extractions are expected at 75% and therefore regular
maintenance and plant and machinery is required. The region expects grain
shortages due to an El Nino induced drought, and this will drive maize meal
prices up. The pressure on available maize has provided an opportunity for the
Grain division to gain market share and improve sales revenue. The Grain
division has bought 15,549 tons by 31 August 2024 and is actively procuring an
additional 6,000 tons of maize to achieve production of 15,000 tons meal, plus
having 1,000 tons to carry into the next season.
The biscuit brand which is included in the Grain division is anticipated to
continue to grow and achieve a positive EBITDA in 2025.
Beef: The Beef division financial performance is dependent on successfully
penetrating the retail market to achieve sales of 100 tons per month in
addition to the existing wholesale market for prime product, whilst containing
operational expenses. The Beef division is now securing more than 70% of its
animals for slaughter at the abattoir directly from the farmers and this has
reduced transport costs. The Beef division will look to diversify other
protein products to the market, including chicken and fish.
Snax: The Snax division profitability was affected by high cost of maize,
however the Grain division has sufficient maize to supply the requirements for
the Snax division and options of importing grits from South Africa are being
explored. The Snax division will be introducing new flavours during the year
to increase customer choices and improve sales.
Board and senior management changes
There were no changes in the Board and Senior Management during the year.
CSO Havers,
Non-Executive Chair
30 September 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
Year Year
ended ended
31 March 31 March 2023
2024
Note US$000 US$000
Revenue 5 10,393 11,494
Cost of sales (8,124) (8,758)
Decrease in fair value of biological assets (437) (288)
Gross profit 1,832 2,448
Operating expenses (3,988) (3,381)
Other income 273 122
Profit on disposal of property, plant and equipment 30 -
Operating loss (1,853) (811)
Finance costs 6 (1,488) (1,462)
Share of profit in equity-accounted investees, net of tax 12 - 37
Loss before taxation (3,341) (2,236)
Taxation 127 127
Loss for the year attributable to owners of the Company (3,214) (2,109)
OTHER COMPREHENSIVE INCOME
Loss for the year (3,214) (2,109)
Items that will not be reclassified to profit or loss
Revaluation of property, plant and equipment (141) -
Related tax 45 -
(96) -
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 5 (161)
Other comprehensive loss for the year (91) (161)
Total comprehensive loss for the year attributable to owners of the Company (3,305) (2,270)
Profit Attributable to:
Owners of the company (3,225) (2,109)
Non-controlling interest 11 -
(3,214) (2,109)
Total comprehensive income attributable to:
Owners of the company (3,316) (2,270)
Non-controlling interest 11 -
(3,305) (2,270)
US cents US cents
Earnings per Share
Basic and diluted earnings per share 7 (4.49) (9.29)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2024
31 March 31 March
2024 2023
Note US$000 US$000
Non-current assets
Property, plant and equipment 8 24,968 24,267
Intangible assets - 3
Equity-accounted investees 12 - 93
24,968 24,363
Current assets
Biological assets 9 245 496
Inventories 616 550
Trade and other receivables 1,949 1,055
Cash and cash equivalents 439 174
3,249 2,275
Total assets 28,217 26,638
Current liabilities
Borrowings 10 130 1,166
Trade and other payables 1,217 658
1,347 1,824
Net current assets 1,902 451
Non-current liabilities
Borrowings 10 14,138 8,696
Deferred tax liability 5,937 6,111
20,075 14,807
Total liabilities 21,422 16,631
Net assets 6,795 10,007
Share capital 11 56,694 3,993
Share premium - 151,419
Share based payment reserve 67 67
Revaluation reserve 11,714 12,061
Translation reserve (16,164) (16,169)
Accumulated loss (45,620) (141,364)
Non-controlling interest 104 -
Equity attributable to equity holders of the parent 6,795 10,007
The financial statements on pages 18 to 48 were approved and authorised for
issue by the Board of Directors on 30 September 2024.
Signed on behalf of the Board of Directors by:
CSO Havers
Chair
30 September 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
Share Share premium Share based payment reserve Translation reserve Revaluation reserve Accumulated Total
losses
capital Equity
Non-Controlling Interest
Note US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1 April 2022 3,373 151,442 67 (16,008) 12,312 (139,506) - 11,680
Loss for the year - - - - - (2,109) - (2,109)
Other comprehensive loss - - - (161) - - - (161)
Total comprehensive loss for the year - - - (161) - (2,109) - (2,270)
Transactions with owners 620 (23) - - - - - 597
Share based payments
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
Loss for the year - - - - - (3,225) 11 (3,214)
Other comprehensive income/(loss) for the year - - - 5 (96) - - (91)
Total comprehensive loss for the year - - - 5 (96) (3,225) 11 (3,305)
Transactions with owners
Acquisition of subsidiary with NCI - - - - - - 93 93
Reclassification 11 52,701 (151,419) - - - 98,718 - -
Revaluation surplus realised - - - - (251) 251 - -
Total transactions with owners for the year 52,701 (151,419) - - (251) 98,969 93 93
Balance at 31 March 2024 56,694 - 67 (16,164) 11,714 (45,620) 104 6,795
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2024
Year ended Year ended
31 March 2024 31 March 2023
Note US$000 US$000
Cash flows from operating activities
Loss before tax (3,341) (2,236)
Adjustments for:
Amortisation and depreciation 871 870
Profit on disposal of property, plant and equipment (30) -
Impairment of goodwill on acquisition 12
Foreign exchange gain (48) (439)
Changes in value of biological assets 437 288
Share of profit in associate - (37)
Net finance costs 1,488 1,462
Operating cash flows before movements in working capital (611) (92)
Net increase in biological assets (186) (33)
Decrease in inventories 389 1,626
Increase in trade and other receivables (956) (231)
Decrease in trade and other payables (155) (302)
Net cash (used in) / generated from operating activities (1,519) 968
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment net of expenses 30 -
incurred
Acquisition of property, plant and equipment (1,271) (90)
Acquisition of subsidiary net of cash acquired 48 -
Net cash used in investing activities (1,193) (90)
Cash flows from financing activities
Net repayment of overdrafts - (6,254)
Net repayment of loans (940) (1,589)
Net drawdown of shareholder loans 4,600 7,900
Net repayment of leases (198) (137)
Issue of shares - 283
Finance costs (485) (1,014)
Net cash generated from / (used in) financing activities 2,977 (811)
Net increase in cash and cash equivalents 265 67
Effect of exchange rates on cash and cash equivalents - -
Cash and cash equivalents at beginning of the year 174 107
Cash and cash equivalents at end of the year 439 174
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with
registered number 42643. Further details, including the address of the
registered office, are given on page 47. The nature of the Group's operations
and its principal activities are set out in the Directors' report. A list of
the investments in subsidiaries and associate companies held directly and
indirectly by the Company during the year and at the year-end, including the
name, country of incorporation, operation and ownership interest is given in
note 3.
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.
The financial statements have been prepared in accordance with International
Accounting Standards as adopted by the United Kingdom.
The financial statements have been prepared on the historical cost basis,
except for the following items, which are measured at on alternative basis on
each reporting date:
Items Measurement basis
Biological assets Fair value
Property, plant and equipment - Land and building Subsequent measured at revalued amount - i.e., fair value at the date of
revaluation less subsequent depreciation and impairment losses.
2. ADOPTION OF NEW AND REVISED STANDARDS AND
INTERPRETATIONS
Adoption of new and revised Standards
During the current year, the Group has adopted all of the new and revised
standards and interpretations issued by the IASB and the IFRS-IC that are
relevant to its operations and effective for annual reporting periods
beginning on 1 April 2023. The revised standards and interpretations have not
resulted in material changes to the Group's accounting policies.
The following new and amended standards are not expected to have a significant
impact on the Group's financial statements in the future, being FY 2025.
Amendments to IAS 1 Presentation of Financial Statements: Classification of
Liabilities as Current or Non-current
Amendments to IAS 1 Presentation of Financial Statements: Non-current
Liabilities with Covenants
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments:
Disclosures: Supplier Finance Arrangements
3. 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 Company 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 2025, and it has
been assumed that these will be renewed.
The divisional forecasts for FY-25 show a significant improvement in operating
performance as compared to that reported for the year ended 31 March 2024.
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 27, since the year end additional finance has been secured and
shareholder loans maturing in July and August 2024 have 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.
As at 31 March 2024, the Company held equity interests in the following
undertakings:
Direct investments
Proportion held of equity instruments Country of incorporation and place of business Nature of business
Subsidiary undertakings
Agriterra (Mozambique) Limited 100% Guernsey Holding company
Indirect investments of Agriterra (Mozambique) Limited
Proportion held of equity instruments Country of incorporation and place of business Nature of business
Subsidiary undertakings
DECA - Desenvolvimento E Comercialização Agrícola Limitada 100% Mozambique Grain
Compagri Limitada 100% Mozambique Grain
Mozbife Limitada 100% Mozambique Beef
Carnes de Manica Limitada 100% Mozambique Dormant
Aviação Agriterra Limitada 100% Mozambique Dormant
Deca Snax Limitada 50% Mozambique Maize based food products
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
2024 2023 2024 2023
Mozambican Metical: US$ 63.89 63.86 63.90 63.88
Operating segments
The Chief Operating Decision Maker is the Board. The Board reviews the Group'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. These
include the Grain, Beef and Snax divisions.
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 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 and goodwill
Intangible assets comprise investment in management information and financial
software. This is amortised at 10% straight line. Goodwill arising on the
acquisition of subsidiaries is measured at cost less accumulated impairment
losses.
Impairment of property, plant and equipment and intangible assets
At each balance sheet date, the Company 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 Company 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 instruments
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.
Cash and cash equivalents
Cash and cash equivalents, comprise cash on hand, on demand deposits and cash
equivalents , which are short term highly liquid investments that are readily
convertible into a known amount of cash and which are subject to an
insignificant risk of changes in value.
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 Company.
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 Company 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.
4. 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 2024, 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 2024, and the improved operational outlook
reflected in the operational plan in place, management have concluded that, at
31 March 2024, non-current assets are not impaired.
No impairments were recorded in the year ended 31 March 2024 or the year ended
31 March 2023. The carrying amount of non-current assets is US$25.0 million
(2022: $24.3million).
Biological assets
Cattle are accounted for as biological assets and measured at their fair value
at each balance sheet date. Fair value is based on the estimated market value
for cattle in Mozambique of a similar age and breed, less the estimated costs
to bring them to market, converted to US$ 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 US$ 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
$0.2m (2023: $0.5m).
5. 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 2024 Grain Beef Snax(*) Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
Revenue
External sales ((2)) 5,354 2,967 2,072 - - 10,393
Inter-segment sales ((1)) 816 - - - (816) -
6,170 2,967 2,072 - (816) 10,393
Segment results
- Operating (loss)/profit (728) (963) 5 (440) - (2,126)
- Interest expense (292) (193) - (1,003) - (1,488)
- Other gains and losses 237 4 18 14 - 273
- Share of profit in equity-accounted investees - - - - -
(Loss)/Profit before tax (783) (1,152) 23 (1,429) - (3,341)
Income tax 115 12 - - - 127
(Loss)/Profit after tax (668) (1,140) 23 (1,429) - (3,214)
Year ending 31 March 2023 Grain Beef Snax(*) Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$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 (loss)/profit 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)
(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.
* Deca Snax was accounted as a subsidiary in 2024 due to
acquisition of control and was accounted under equity method as a joint
venture.
The segment items included in the consolidated income statement for the year
are as follows:
Year ending 31 March 2024 Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
Depreciation and amortisation 470 326 75 - - 871
Year ending 31 March 2023 Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
Depreciation and amortisation 514 356 - - - 870
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 2024 and capital expenditure
for the year then ended are as follows:
Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
Assets 21,970 4,515 1,205 527 28,217
Liabilities (5,417) (731) (772) (14,502) (21,422)
Capital expenditure 993 154 124 - 1,271
Segment assets and liabilities are reconciled to Group assets and liabilities
as follows:
Assets Liabilities
US$000 US$000
Segment assets and liabilities 27,690 (6,920)
Unallocated:
Other receivables 527 -
Accrued liabilities - (865)
Borrowings - (13,637)
28,217 (21,422)
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
US$000 US$000 US$000 US$000 US$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
US$000 US$000
Segment assets and liabilities 26,334 (8,366)
Unallocated:
Intangible asset 304 -
Accrued liabilities - (232)
Borrowings - (8,033)
26,638 (16,631)
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 2024 Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
(Loss)/Profit before tax (783) (1,152) 23 (1,429) (3,341)
- Interest expense 292 193 - 1,003 1,488
- Depreciation and amortisation charge 470 326 75 - 871
- Share of profit in equity-accounted investees - - - - -
EBITDA (21) (633) 98 (426) (982)
Year ending 31 March 2023 Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$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
Significant customers
In the year ended 31 March 2024, the two largest customers of the Grain
segment generated revenue of $1.8 million (31 March 2023: $2.6m) constituting
29% (31 March 2023: 31%) of the Grain division's revenue. The two largest
customers of the Beef segment generated revenue of $0.7m (31 March 2023:
$0.2m) amounting to 25% (31 March 2023: 6%) of the Beef division's revenue.
6. FINANCE COSTS
Year Year
Ended Ended
31 March 2024 31 March 2023
US$000 US$000
Interest expense on bank borrowings and overdrafts (444) (913)
Interest expense on shareholder loans (1,003) (448)
Interest expense on leases (41) (101)
Net finance costs (1,488) (1,462)
7. EARNINGS PER SHARE
Year ended Year ended
31 March 2024 31 March 2023
US$000 US$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 (3,225) (2,109)
attributable to equity holders of the Company
Weighted average number of Ordinary Shares for the purposes of basic and 71,829,007 22,705,569
diluted earnings per share
Basic and diluted earnings per share - US cents (4.49) (9,29)
Basic and diluted earnings per share from continuing activities - US cents (4.49) (9,29)
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 25.
8. PROPERTY, PLANT AND EQUIPMENT
Land and buildings Plant and machinery Motor vehicles Other Total
Assets
US$000 US$000 US$000 US$000 US$000
Cost
At 1 April 2022 25,246 5,409 1,191 142 31,988
Additions 12 56 - 22 90
Disposals - - - - -
Exchange rate adjustment (20) (5) - - (25)
At 31 March 2023 25,238 5,460 1,191 164 32,053
Acquisition through business combination - 552 - 66 618
Additions - 266 224 781 1,271
Revaluation (2,013) - - - (2,013)
Disposals - (15) (25) (1) (41)
Exchange rate adjustment (8) (2) (1) - (11)
At 31 March 2024 23,217 6,261 1,389 1,010 31,877
Accumulated depreciation and impairment
At 1 April 2022 625 5,049 1,138 125 6,937
Charge for the year 624 154 51 25 854
Disposals - - - - -
Exchange rate adjustment (1) (2) (1) (1) (5)
At 31 March 2023 1,248 5,201 1,188 149 7,786
Acquisition through business combination - 124 - 47 171
Charge for the year 624 205 8 31 868
Revaluation (1,872) - - - (1,872)
Disposals - (15) (25) (1) (41)
Exchange rate adjustment - (2) (1) - (3)
At 31 March 2024 - 5,513 1,170 226 6,909
Net book value
31 March 2024 23,217 748 219 784 24,968
31 March 2023 23,990 259 3 15 24,267
The Group accounting policy for recognition and subsequent measurement of land
and buildings is the revaluation model. In accordance with the International
Financial Reporting Standards, such revaluation exercises should be performed
regularly. The Group adopted a policy to revalue land and buildings after
every 3 years.
At the triennial valuation of land and building at 31 March 2024 the Group
revalued land and buildings down by $141,087 (31 March 2021: revalued up by
$18,475,127) in total (DECA revalued down by $274,923, Compagri revalued down
by $124,935 and Mozbife revalued up by $258,771). This valuation attributed a
value of $nil to the farms, which are currently held for sale. The next
revaluation exercise will be performed on 31 March 2027. The carrying value of
land and buildings at 31 March 2024 under the cost model would have been $
4,735,908 (2023: $4,893,000). The valuation of the land and building was
carried out by a certified valuer. The valuation was based on replacement cost
method wherein the valuer estimated the cost of building a similar
infrastructure taking into account inflation, cost of constructions, land
value and return on investments. These inputs are Level 3 inputs as per the
fair value hierarchy as they are unobservable inputs. The fair value is
sensitive to these inputs and changes to one or more inputs can significantly
impact the fair value.
Property, plant and equipment with a carrying amount of $6,085,415 (2023:
$20,401,000) have been pledged to secure the Group's bank overdrafts and loans
(note 18). The Group is not allowed to pledge these assets as security for
other borrowings or sell them to another entity.
For the year ended 31 March 2024, a depreciation charge of $868,000 (2023:
$854,000) has been included in the consolidated income statement within
operating expenses. Certain motor vehicles and equipment have been purchased
with finance leases. Included in property, plant and equipment are
right-of-use-assets with a carrying value of $Nil (2023: $71,825) and $ nil
(2023: nil) for machinery and motor vehicles respectively (note 20).
During the year ended 31 March 2024, the Group acquired plant and machinery,
with the intention of constructing a new biscuit factory in Chimoio totalling
to $0.8 million. Such plant and machinery were not ready for its intended use
as at 31 March 2024. No depreciation was charged on such asset. It is included
under other assets.
9. BIOLOGICAL ASSETS
US$000
Fair value
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
Purchase of biological assets 1,751
Sale, slaughter or other disposal of biological assets (1,565)
Change in fair value of the herd (437)
Foreign exchange adjustment -
At 31 March 2024 245
At 31 March 2024 and 2023, all cattle are held for slaughter. The slaughter
herd has been classified as a current asset. Forage crops included in current
assets are US$22,543 (2023: US$42,547).
At 31 March 2024 the number of the slaughter herd sold during the year was
5,320 head (2023: 4,099), with an average weight of 283kgs (2023: 341kgs) and
average value of US$343.91 (2023: US$369).
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 of less than 3 months
before slaughter.
10. BORROWINGS
31 March 2024 31 March 2023
US$000 US$000
Non-current liabilities
Shareholder loans 13,637 8,034
Bank loans 501 574
Leases - 88
14,138 8,696
Current liabilities
Bank loans 130 1,056
Leases - 110
Overdrafts - -
130 1,166
14,268 9,862
Bank and Shareholder Borrowings
Group
During the period, Agriterra Limited secured shareholder loans amounting to
US$4.6 million (2023; US$7.9 million) from Chepstow Investments Limited at an
interest rate of 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 shareholder loans are
made up of:
· US$6.1m convertible loan facility with a 3-year tenure maturing
in July 2025.
· US$1.8m convertible loan facility with a 12-month tenure maturing
in July 2023, which was renewed for the same period in July 2024 and renewed
again for the same period after year end to July 2025.
· US$ 2.0m convertible loan facility with a 12-month tenure
maturing in August 2024 and was renewed for the same period after year end to
August 2025.
· US$ 1.7m loan facility with a 12-month tenure maturing in
November 2024, with the option to renew for a further 12-month period at that
date.
· US$ 0.9m loan facility maturing on 31 March 2026, with the option
to extend for a further 12-month period at that date.
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.
Beef division
Beef division does not have any finance facilities as at 31 March 2024.
Grain division
At 31 March 2024, the Grain division has one outstanding commercial bank loan
amounting to US$0.6 million secured by land and buildings valued at US$6.1
million. The loan has an interest rate of 22.5% and matures on 24 November
2026.
In addition, Grain division fully repaid finance lease for 6 vehicles which
matured on 05 December 2023. Grain division was incurring interest of 24.1% on
this facility and during the period US$50,078 of the outstanding balance was
repaid.
The bank facilities are secured as follows:
31 March 2024 31 March
2023
US$000 US$000
Fixed Charge
Property, plant and equipment 6,085 20,401
Floating Charge
Maize and maize product inventories - -
6,085 20,401
Reconciliation to cash flow statement
At 31 March 2023 Cash flow Interest accrued Loan to equity conversion Foreign Exchange At 31 March 2024
US$000 US$000 US$000 US$000 US$000 US$000
Shareholder loans 8,034 4,600 1,003 - - 13,637
Non-current bank loans 574 (72) - (1) 501
Non-current leases 88 (88) - - -
Current bank loans 1,056 (868) - (58) 130
Current leases 110 (110) - - -
Overdrafts - - - - -
9,862 3,462 1,003 - (59) 14,268
At 31 March 2022 Cash flow Interest accrued Loan to equity conversion Foreign Exchange At 31 March 2023
US$000 US$000 US$000 US$000 US$000 US$000
Shareholder loans - 7,900 448 (314) - 8,034
Non-current bank loans 783 (209) - - 574
Non-current leases 220 (132) - - 88
Current bank loans 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
11. SHARE CAPITAL
Authorised Allotted and fully paid
Number Number US$000
At 31 March 2022 23,450,000 21,240,618 3,135
Issue of shares 50,588,383 50,588,389 620
At 31 March 2023 74,038,389 71,829,007 3,755
Transferred from share premium 52,701
At 31 March 2024 56,456
At 31 March 2023 and 31 March 2024
Deferred shares of 0.1p each 155,000,000 155,000,000 238
Total share capital 229,038,389 226,829,007 56,694
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.
At 31 March 2024 the Company offset accumulated losses of US$98,718,000
attributable to its previous oil and gas businesses against share premium
account and the balance of US$52,701,000 remaining on the share premium
account has been combined with the share capital account to comply with
Guernsey company law.
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 Chepstow 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 Chepstow 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 Chepstow Investments Limited at a conversion price of 1p per
share in order to maintain the Chepstow Investments Limited shareholding at
50.58%.
WARRANTS
31 March 31 March
2024 2023
PILOW warrants 50,588,389 50,588,389
Broker warrants 1,250,000 1,250,000
51,838,389 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.
12. EQUITY-ACCOUNTED INVESTEES
31 March 31 March
2024 2023
US$000 US$000
Interest in joint venture - 93
- 93
The Group acquired control in DECA Snax Limitada which was equity accounted
investee on 1 April 2023. Interest in DECA Snax remains unchanged at 50% and
is a strategic customer of grits produced by the Grain division. DECA Snax is
principally engaged in the production of corn snack in Chimoio, Mozambique and
is not listed.
DECA Snax Limitada is structured as a separate vehicle and the Group has
controlling interest in the net assets of DECA Snax Limitada. Accordingly, the
Group has classified DECA Snax Limitada as a subsidiary. In accordance with
the agreement under which DECA Snax Limitada is established, the Group and the
other investor 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
2024 2023
US$000 US$000
Percentage ownership interest 50% 50%
Non-current assets - 447
Current assets (including cash and cash equivalents - 2024: US$ Nil, 2023: - 550
US$48,000)
Current liabilities (Trade and other payables) - (75)
Non-current liabilities - (748)
Net assets (100%) - 174
Net assets (Carrying amount of joint venture) - 93
- 2,346
Revenue
Cost of Sales - (1,804)
Depreciation and amortisation - (77)
Operating expenses - (372)
Interest expense - -
Income tax expense - (18)
- 75
Profit and other comprehensive income (100%)
- 37
Profit and other comprehensive income (50%)
13. CONTROL OVER JOINT VENTURE
The Group acquired 50% of the shares in DECA Snax Limitada at incorporation
and step acquired majority voting rights on 01 April 2023. The Group acquired
control by gaining the right to make decisions over relevant activities
including financing, disposal and capital expenditure by board resolution. The
step acquisition granted the Group control of DECA Snax Limited.
Included in the identifiable assets and liabilities acquired at the date of
acquisition of DECA Snax are inputs (patent technology, inventories and
customer relationships), production processes and an organised workforce. The
Group has determined that together the acquired inputs and processes
significantly contribute to the ability to create revenue. The Group has
concluded that the acquired set is a business.
Taking control of DECA Snax will enable the Group to improve its meal sales
and diversify revenue streams by adding value to the meal produced by the
Grain division. The Group also expects to reduce costs through economies of
scale. For the 12 months to 31 March 2024, DECA Snax contributed revenue of
US$2.1 million and a profit of US$23 000.
13.1. Consideration transferred
The Group acquired control in DECA Snax Limitada through a step acquisition
increasing voting rights thereby granting control. Consideration paid was the
fair value of the previously held interest in Joint Venture value at US$ 93
000.
13.2. Identifiable assets acquired and liabilities assumed.
The following table summarises the recognised amounts of assets acquired, and
liabilities assumed at the date of acquisition.
US$000
Plant and equipment 447
Inventories 455
Trade receivables 47
Cash and cash equivalent 48
Loans and borrowings (748)
Trade and other payables (75)
Net identifiable assets 174
Management performed a desktop valuation to determine the fair value of the
net identifiable assets and assumed that the carrying amounts do not
materially differ from the fair value of above identifiable assets.
13.3. Goodwill
Goodwill arising from the acquisition has been recognised as follows.
US$000
Consideration transferred -
NCI based on their proportionate interest in the recognised amount of assets 93
and liabilities
Fair value of pre-existing interest in DECA Snax 93
Fair value of identifiable net assets (174)
Goodwill 12
The goodwill is attributable mainly to the skills and technical talent of DECA
Snax Limitada workforce. None of the goodwill is expected to be deductible for
tax purposes.
At the end of the financial period, the Group tested goodwill for impairment
at the end of the year and due to decrease in performance of Snax division,
goodwill was impaired.
14. RELATED PARTY DISCLOSURES
Chepstow Investments Limited ("Chepstow"), (formerly Magister Investments
Limited), holds 50.58% of the ordinary share capital of the Company and is the
ultimate controlling party. During the year Chepstow advanced shareholder
loans to repay bank debt, purchase the biscuit plant and other productive
assets and provide working capital (note 18). The balance outstanding at 31
March 2024 was $13,636,619 (2023: $8,033,782). During the year, the Group
incurred expenses on behalf of Chepstow. Other receivables include receivable
from shareholder for expenses incurred on behalf of the shareholders
US$176,118 (2023: Nil).
The following Director of Agriterra is also a Director of Chepstow:
· HBW Rudland
The remuneration of the Directors, who are the key management personnel of the
Company, is set out in note 9.
15. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
In April 2024 the Grain division entered into a commodity trading agreement
with a local Mozambican company to source MZN 195.5 million for the purchase
of maize. In June 2024 the Grain division also agreed on advance funding by a
major customer amounting to MZN76 million, which was used to purchase maize to
be milled for that customer. In addition, shareholder loans maturing in July
and August 2024 have been extended by a further year to July and August
2025.
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