ANGLO AFRICAN
AGRICULTURE PLC
DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 OCTOBER 2017
Company Registration No. 07913053
(England and Wales)
Chairman’s Statement
For The Year Ended 31 October 2017
Overview
The 2017 financial year has seen the positive results of the
significant restructuring of the business announced last year.
Revenues have grown 33% to £2.1 million (2016: 29% growth to £1.6
million) This revenue growth was exclusively delivered from Anglo
African Agriculture’s (“AAA”) 100% owned Dynamic Intertrade Ltd
(Dynamic Intertrade).
The Company has consolidated its production capacity to around
250 tonnes per month at its modern 3,000m² FSSC compliant facility
in Cape Town, South Africa.
Dynamic Intertrade manufactures, imports and distributes
herbs, spices and seasonings for the food manufacturing sector. The
upgrades to the spice milling machines and associated
infrastructure were completed and fully operational by the end of
February 2017. These upgrades,
coupled with operational efficiencies, assisted in the increase of
gross profits by 60% to £517,747, and a gross margin of 24.3%
(2016: decreased 11% to £323,079, gross margin 20.1%)
Administrative expenses increased to £1,050,929 from £665,228
mainly as a result of increased operational salary expenses, the
impairment of the loan to the now disposed joint venture and
admission expenses related to issuing equity for working capital,
expansion and the acquisition of a 46.8% investment in an
associate.
- In the prior year the Company expected to complete the sale of
the loss making Guar Bean joint venture company, African Projects
and Ventures (“APV”), for circa.£80,000, however the purchasers
were unable to finance the purchase and net £73,656 has been
impaired in the current year.
- In line with the Group strategy, an acquisition of 46.8% in the
South African based Dynamic Intertrade Agri (Pty) Ltd was concluded
during the year. In the period since acquisition the share of loss
from associates was £9,954 (2016: £ nil).
The consolidated loss for the year reflects the steps taken to
re-position the Company for continued growth into the future.
Prospects
Our core business continues to look strong into the 2018 year.
The Company continues to add new customers as it further develops
the Company’s specialty spice blends, new ranges of BBQ spices,
curry blends and beef jerky blends for those markets.
The board has reviewed, and continues to focus on reviewing, a
number of new and exciting potential acquisitions to add value to
AAA and its shareholders.
Thanks
The directors would like to take this opportunity to thank our
shareholders, staff and consultants and customers for their
continued support, and I look forward to chairing this exciting
company as it grows and moves forward in 2018.
David Lenigas
Non-Executive Chairman
Strategic Report
For The Year Ended 31 October 2017
Overview
The primary objective of the strategic report is to provide
information for the shareholders and help them to assess how the
directors have performed their duty, under section 172 of the Act,
to promote the success of the company and to provide context for
the related financial statements.
The duty of a director, as set out in section 172 of the Act, is
to act in the way he considers, in good faith, would be most likely
to promote the success of the company for the benefit of its
members as a whole, and in doing so have regard (amongst other
matters) to:
(a) the likely consequences of any decision in the long
term;
(b) the interests of the company's employees;
(c) the need to foster the company's business relationships with
suppliers, customers and others;
(d) the impact of the company's operations on the community and
the environment;
(e) the desirability of the company maintaining a reputation for
high standards of business conduct; and
(f) the need to act fairly as between members of the
company'.
Review of the Group’s Business
Dynamic Intertrade (Pty) Ltd (“Dynamic”) is based in a modern
3,000m² FSSC compliant facility in Cape
Town, South Africa and is involved in the importation,
milling, blending and packaging of agricultural products that
include herbs, spices, seasonings and confectionary for both the
domestic and export markets. Dynamic’s commercial activities fall
into two principal categories: milling and/or blending of herbs and
spices and bulk trading of agricultural products.
Dynamic recorded an increase in top line revenue of 33% to £2.1
million in the year ended 31st October
2017 (2016: Increase of 29% to £1.6 million). This increase
was largely due to stronger orders from customers for our core
spice lines of paprika and chilli based products, but also the
ability of the company to source substantially more raw products
thanks to the money raised by the Company during the year and the
move towards introducing new batch blended spice ranges for the
fish and meat food manufacturing sector.
Gross Profits increased 60% to £517,747 (2016: decreased 11% to
£323,079) and represents a 24.4% gross margin (2016: 20.1%) mainly
as a result of the positive changes in product mix.
Underlying losses for the year increased to £532,509 (2016:
£339,372) due to higher administrative expenses. Administration
expenses increased significantly due to admission expenses of
£89,895 (2016: £ nil), the impairment of the loan to African
projects £73,566 (2016: £ nil) and operational salaries increasing
to £329,058 (2016: £236,879).
As announced in the prior year, the AAA board had decided on the
disposal of the Guar bean venture, African Projects & Ventures
(Pty) Ltd (“APV”), which resulted in a loss on disposal of
£73,566 (2016: £ 18,853) taken to income and expense.
In line with the Group strategy, an acquisition of 46.8% in the
South African based Dynamic Intertrade Agri (Pty) Ltd was concluded
during the year. In the current year since acquisition the loss
from associates was £9,954 (2016: £ nil).
Our core business continues to look strong into 2018. The
Company continues to add new customers as it further develops the
Company’s specialty spice blends, new ranges of BBQ spices, curry
blends and beef jerky blends for those markets.
Strategic Report (Continued)
For The Year Ended 31 October
2017
Financing
On 17 March 2017, AAA raised
£100,000, through the placing of 7,692,308 new ordinary shares of
0.1p each in the Company at a price of 0.5p per placing Share. The
proceeds from this placing were used to support working capital
requirements at the Company’s subsidiary, Dynamic Intertrade,
during a period of expansion in this business through
diversification of both its product range, a move to higher margin
products and the expansion of its client base.
On 26 April 2017, the Company
successfully completed a placing of 18,500,000 new ordinary shares
at a placing price of 0.65 pence per
share to raise gross proceeds of £120,250. The proceeds of
this placing were used to satisfy the Company’s creditors and
provide the necessary working capital to continue growing Dynamic
Intertrade’s core business.
Although the placing Shares have been allotted, because the
combined number of shares placed in 2016 and 2017 comprises more
than 10% of the Company’s issued share capital, Admission of the
placing shares requires the publication of a prospectus in
accordance with Prospectus Rule 1.2.1. This Prospectus was
published on 22 March 2017.
Acquisition Strategy
The Directors’ strategy is to develop the business of the Group
both organically and by acquisition. It is intended that future
acquisitions may be made by the Company that will be complementary
to the Group’s businesses and relate to production, transportation
and trading of food products in sub-Saharan Africa, including the
acquisition of land for food production. The Company has access to
a range of prospects through the Directors’ extensive contact
network and actively reviews acquisition opportunities on an
ongoing basis.
In line with the strategy, on
3 November 2016 the group acquired
46.8% in the South African based, Dynamic Intertrade Agri (Pty) Ltd
(“DIA”), which, since acquisition has been reflected as an
investment in associate.
Similarly, on 22 November 2016,
the group agreed to dispose of its 49.9% interest in Africa
Projects and Ventures, a joint venture with Lamberti based in
South Africa. On 31 October 2017 the company’s wholly owned
subsidiary Dynamic Intertrade (Pty) Limited ("Dynamic") entered
into the Sale and Purchase Agreement in terms of which Dynamic will
sell the 49.9% of the allotted and issued share capital of APV
African Projects and Ventures (Pty) Limited to Misty Rose
Properties 11 CC, a company owned by Mr G Roach for the total sum
of ZAR1.00.
Key Performance Indicators
|
31 October
2017 |
31 October
2016 |
|
£ |
£ |
Turnover
Gross Profit
Cash at bank and in hand |
2,126,797
517,747
75,952 |
1,605,219
323,079
268,790 |
Underlying operating
loss |
(369,700) |
(339,372) |
|
|
|
Strategic Report (Continued)
For The Year Ended 31 October
2017
Loan Facility
Following acquisition, AAA lent Dynamic £500,000 repayable over
a period of five years from the first anniversary of drawdown.
During the current year AAA advanced Dynamic £147,902 (2016:
£100,000). The loan bears interest at 2% above LIBOR. Under the
Loan Facility, AAA nominated a director to the board of
Dynamic.
Principal Risks and Uncertainties
The Directors consider the following risk factors to be of
particular relevance to the Group’s activities. It should be noted
that the list is not exhaustive and that other risk factors not
presently known or currently deemed immaterial may apply. The risk
factors are summarised below:
i.
Development Risk
The Group’s development will be, in part, dependent on the
ability of the Directors to continue to expand the current business
and identify suitable investment opportunities and to implement the
Group’s strategy. There is no assurance that the Group will be
successful in acquiring suitable investments.
ii. Sector
Risk
The agriculture sector is a highly competitive market and many
of the competitors will have greater financial and other resources
than the Company and as a result may be in a better position to
compete for opportunities.
The development of agricultural enterprises involves significant
uncertainties and risks including unusual climatic conditions such
as drought, improper use of pesticides, availability of labour and
seasonality of produce, any one of which could result in damage to,
or destruction of crops, environmental damage or pollution. Each of
these could have a material adverse impact on the business,
operations and financial performance of the Group.
The market price of agricultural products and crops is volatile
and affected by numerous factors which are beyond the Group’s
control.
These include international supply and demand, the level of
consumer product demand, international economic trends, currency
exchange rate fluctuations, the level of interest rates, the rate
of inflation, global or regional political events, as well as a
range of other market forces. Sustained downward movements in
agricultural prices could render less economic, or un-economic, any
development or investing activities to be undertaken by the Group.
Certain agricultural projects involve high capital costs and
associated risks. Unless such projects enjoy long term returns,
their profitability will be uncertain resulting in potentially high
investment risk.
iii. Political and
Regulatory Risk
African countries experience varying degrees of political
instability. There can be no assurance that political stability
will persist in those countries where the Group may have operations
going forward. In the event of political instability or changes in
government policies in those countries where the Group may operate,
the operations and financial condition of the Group could be
adversely affected.
iv. Environmental
Risks and Hazards
All phases of the Group’s operations are subject to
environmental regulation in the areas in which it operates.
Environmental legislation is evolving in a manner that may require
stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees.
Strategic Report (Continued)
For The Year Ended 31 October
2017
There is no assurance that existing or future environmental
regulation will not materially adversely affect the Group’s
business, financial condition and results of operations.
Environmental hazards may exist on the properties on which the
Group holds interests that are unknown to the Group at present. The
Board manages this risk by working with environmental consultants
and by engaging with the relevant governmental departments and
other concerned stakeholders.
v.
Internal Control and Financial Risk Management
The Board has overall responsibility for the Group’s systems of
internal control and for reviewing their effectiveness. The Group
maintains systems which are designed to provide reasonable but not
absolute assurance against material loss and to manage rather than
eliminate risk.
- The key features of the Group’s systems of internal control are
as follows:
- Management structure with clearly identified
responsibilities;
- Production of timely and comprehensive historical management
information presented to the Board;
- Detailed budgeting and forecasting;
- Day to day hands on involvement of the Executive Directors and
Senior Management; and
- Regular board and meetings and discussions with the
Non-executive directors.
The Group’s activities expose it to a number of financial risks
including cash flow risk, liquidity risk and foreign currency
risk.
vi. Environmental
Policy
The Group is aware of the potential impact that its subsidiary
and associate companies may have on the environment. The Group
ensures that it complies with all local regulatory requirements and
seeks to implement a best practice approach to managing
environmental aspects.
The wholly owned subsidiary, Dynamic Intertrade operates a Food
Safety System Certification (“FSSC”) compliant facility in
Cape Town. The FSSC provides a
framework for effectively managing the organization's food safety
responsibilities and. is fully recognized by the Global Food Safety
Initiative (GFSI) and is based on existing ISO Standards.
vii. Health
and Safety
The Group’s aim is to achieve and maintain a high standard of
workplace safety. In order to achieve this objective the Group
provides ongoing training and support to employees and sets
demanding standards for workplace safety.
viii. Financing Risk
The development of the Group’s business may depend upon the
Group’s ability to obtain financing primarily through the raising
of new equity capital or debt. The Group’s ability to raise further
funds may be affected by the success of existing and acquired
investments. The Group may not be successful in procuring the
requisite funds on terms which are acceptable to it (or at all)
and, if such funding is unavailable, the Group may be required to
reduce the scope of its investments or the anticipated expansion.
Further, Shareholders’ holdings of Ordinary Shares may be
materially diluted if debt financing is not available.
Strategic Report (Continued)
For The Year Ended 31 October
2017
ix. Credit Risk
The directors' have reviewed the forecasts prepared by both AAA
and Dynamic and believe that Dynamic has adequate resources
available to meet its obligations to make capital repayments of the
loan to AAA.
In the event that Dynamics’ trading performance is below that
forecast, AAA will exercise a degree of flexibility on the
repayment timetable. With the Dynamic turnover increasing and the
Group forecasting profitability there is no requirement for any
impairment charge.
x.
Liquidity Risk
The Directors have reviewed the working capital requirements of
both AAA and Dynamic Intertrade and DIA and believe that, following
stress tests and variance analysis on the forecasts, there is
sufficient working capital to fund the business while expanding
turnover and achieving sustainable profitability.
xi. Market Risk
The group’s investments in an associate company comprise a
non-controlling shareholding in an unlisted company. The shares are
not readily tradable and any monetisation of the shares is
dependent on finding a willing buyer.
xii. Capital
Risk
The Group manages its capital resources to ensure that entities
in the Group will be able to continue as a going concern, while
maximising shareholder return.
The capital structure of the Group consists of equity
attributable to shareholders, comprising issued share capital and
reserves. The availability of new capital will depend on many
factors including a positive operating environment, positive stock
market conditions, the Group’s track record, and the experience of
management. There are no externally imposed capital
requirements. The Directors are confident that adequate cash
resources exist or will be made available to finance operations but
controls over expenditure are carefully managed.
Going Concern
These consolidated financial statements are prepared on the
going concern basis. The going concern basis assumes that the Group
will continue in operation for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of business. The Group has
incurred significant operating losses and negative cash flows from
operations as the Group continued to expand its operations during
the year under review.
During the year, the Group raised £113,035 in net funding
through share subscriptions to fund further investment in Dynamic
Intertrade in order to improve production efficiencies and to fund
working capital.
Immediately subsequent to the year-end, the Group raised a
further £150,000 through the further issue of shares. There remains
an active and very liquid market for the Group’s shares.
The Directors have prepared cash flow forecasts for the period
ended 31 October 2018, taking into
account forecast operating cash flows and capital expenditure
requirements for Dynamic Intertrade, available working capital and
forecast expenditure for the rest of the Group including overheads
and other costs. The forecasts include additional funding
requirements which the directors believe will be met.
Strategic Report (Continued)
For The Year Ended 31 October
2017
In the event that Dynamic Intertrade fails to meet revenue
predictions and any other relevant risk factors arise, the Group
will need to obtain additional debt finance or equity to fund its
operations for the period to 31 October
2018. The cash flow forecast is dependent on production
targets being met at Dynamic Intertrade, maintaining the invoice
financing arrangements, generating future sales and the selling
prices remaining stable during the period to 31 October 2018.
After careful consideration of the matters set out above, the
Directors are of the opinion that the Group will be able to
undertake its planned activities for the period to 31 October 2018 from production and from
additional fund raising and have prepared the consolidated
financial statements on the going concern basis. Nevertheless due
to the uncertainties inherent in meeting its revenue predictions
and obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any
adjustments that would result if the Group was unable to continue
as a going concern.
On behalf of the Board
David Lenigas, Chairman
23 February 2018
Directors’ Report
For The Year Ended 31 October 2017
The Directors present their Report and Financial Statements for
the year ended 31 October 2017.
Principal Activities
The principal activity of the Group in the year was investing
and trading in the agriculture and ancillary sectors in
Africa.
Investing Policy
AAA was established as a means to invest in or acquire companies
engaged in the agriculture and ancillary sectors in Africa. The Directors intend to use their
collective experience to identify appropriate investment
opportunities in the production, transportation and trading of food
products.
Directors
The following Directors have held office in the year:
Andrew
Monk
George Roach
David Lenigas
Robert Scott
Matthew Bonner (Appointed
1 May 2017)
Andrew
Monk, Non- Executive Director
Andrew has a successful stock broking career spanning 30 years.
In that time he has built up strong relationships with many major
UK institutions. He was employed by Hoare Govett ABN AMRO for 11
years before founding Oriel Securities as Joint CEO. Andrew later
became CEO of Blue Oar Plc, and Chief Executive of VSA Capital, an
investment banking and institutional broking firm focussed on
natural resources, including agriculture.
George
Roach, Non-Executive Director
George Roach is an experienced,
senior business leader and entrepreneur who has spent his career in
the resources sector mainly in Sub-Saharan Africa. He is, inter
alia, currently Chief Executive Office of Premier African Minerals
Inc., an AIM quoted, African resources group of companies.
David Lenigas, Non-Executive
Chairman
David Lenigas is an experienced executive and entrepreneur with
a wide range of board experience in both public and private
companies. He has an extensive knowledge of the African food
manufacturing, processing and marketing sector having previously
served as the Executive Chairman of Lonrho Plc and is currently the
Executive Chairman of food logistics and marketing group AfriAg
Global Plc.
Robert
Scott, Executive Director
Rob has over 20 years of finance experience, with the last ten
years specifically focused in Africa within the mining industry and general
investments. He has held executive and senior positions with a
number of companies, as well as having served on both public and
private company boards. He has been involved in companies with
locations in South Africa,
Angola, Mozambique, Zimbabwe, DRC, CAR, Tanzania, Kenya and Namibia amongst others. Rob has also
previously been involved in mining, hotels, agriculture and
construction industries.
Matthew
Bonner, Non-Executive Director
Matthew Bonner has significant
financial leadership experience within the mining, energy and
agriculture sectors. He is currently Chief Operating Officer at EAS
Advisors LLC, a New York based
corporate advisory firm focused on supporting public and private
companies operating in the natural resource and commodity sectors
in emerging markets.
Directors’ Report (Continued)
For The Year Ended 31 October 2017
Directors’ remuneration, shareholding
and options
The Directors’ remuneration in the year ended 31 October 2017 is set out in note 7 of the
accounts.
Shareholding
As at 31 October 2017, the
Directors of the Company held the following shares:
|
2017 |
2017 |
2016 |
2016 |
Director |
Shareholding |
Percentage of the
Company’s Ordinary Share Capital |
Shareholding |
Percentage of the
Company’s Ordinary Share Capital |
George Roach* |
33,751,333 |
16.31% |
26,059,025 |
14,4% |
David Lenigas |
22,388,000 |
10.82% |
22,388,000 |
12,4% |
Andrew Monk** |
12,126,761 |
5.86% |
2,000,000 |
1,1% |
Robert Scott |
1,693,078 |
0.82% |
- |
- |
Matthew Bonner |
746,269 |
0.36% |
- |
- |
Neil Herbert*** |
- |
- |
11,000,000 |
6,1% |
* 16,288,646 of these shares are held by or on behalf
of Corestar Holdings Ltd and 5,000,000 of these shares are held by
or on behalf of Coc’Roach Limited. Corestar Holdings Ltd is a BVI
company which is wholly-owned by the Corestar STAR Trust, a trust
established for the furtherance of certain purposes which could
include the provision of benefits to George
Roach and his family, at the discretion of the trustees of
the trust. Coc’roach Limited is owned by the Coc’roach Trust. The
Coc’roach Trust is a partial discretionary trust pursuant to the
terms of which George Roach and his
family may fall within the class of potential
beneficiaries.
**Andrew Monk’s entire shareholding is held within his SIPP
(Fitel Nominees Limited) and Hargreave Hale Nominees Limited
*** Neil Herbert resigned as a
Director on 05 September 2016.
Share options
As at 31 October 2017 the
Directors share options were:
|
2017 |
2017 |
2016 |
2016 |
Director |
Options at 1p
(expiring 5 September 2022) |
Options @0.55p
(expiring 5 September 2022) |
Options at 1p
(expiring 5 September 2022) |
Options @0.55p
(expiring 5 September 2022) |
George Roach |
1,839,046 |
2,000,000 |
1,839,046 |
2,000,000 |
Andrew Monk |
1,839,046 |
2,000,000 |
1,839,046 |
2,000,000 |
Robert Scott |
1,000,000 |
- |
1,000,000 |
- |
Matthew Bonner |
3,600,000 |
- |
- |
- |
Sub-total |
8,278,092 |
4,000,000 |
4,678,092 |
4,000,000 |
Neil Herbert* |
1,839,046 |
2,000,000 |
1,839,046 |
2,000,000 |
Total |
10,117,138 |
6,000,000 |
5,517,138 |
6,000,000 |
The total warrants and share options outstanding at 31 October 2017 were 23,717,514 (2016 –
29,994,844). Refer to note 22 for more detail.
* Neil Herbert resigned as a
Director on 05 September 2016.
Directors’ Report (Continued)
For The Year Ended 31 October 2017
Dividends
No dividends will be distributed for the current year (2016 -
nil).
Supplier Payment Policy
It is the Group’s payment policy to pay its suppliers in
conformance with industry norms. Trade payables are paid in a
timely manner within contractual terms, which is generally 30 to 45
days from the date an invoice is received.
Substantial Interests
The Group has been informed of the following shareholdings that
represent 3% or more of the issued Ordinary Shares of the Company
as at 21 February 2018:
|
2017 |
2017 |
2016 |
2016 |
Shareholder |
Shareholding |
Percentage of the
Company’s Ordinary Share Capital |
Shareholding |
Percentage of the
Company’s Ordinary Share Capital |
HSBC Global Custody Nominee |
22,388,060 |
9.9% |
22,388,060 |
12.4% |
Vidacos Nominees Limited |
13,462,687 |
5.9% |
13,462,687 |
7.5% |
SVS (Nominees) Limited |
11,735,541 |
5.2% |
- |
- |
Huntress (Ci) Nominees Limited |
11,000,000 |
4.9% |
11,000,000 |
6.1% |
Hargreaves Lansdown
(Nominees) Limited |
10,597,855 |
4.7% |
- |
- |
Hargreave Hale Nominees
Limited |
10,126,761 |
4.5% |
- |
- |
Barclays Direct
Investing Nominees Limited |
9,801,136 |
4.3% |
- |
- |
Lynchwood Nominees Limited |
9,371,343 |
4.1% |
- |
- |
Vidacos Nominees Limited |
8,596,338 |
3.8% |
8,596,338 |
4.7% |
JIM Nominees
Limited |
8,575,072 |
3.8% |
|
|
Platform Securities Nominees
Limited |
8,500,000 |
3.7% |
9,000,000 |
5.0% |
ZRH Nominees (0105)
LTD |
7,692,308 |
3.4% |
- |
- |
Rulegale Nominees Limited |
7,500,000 |
3.3% |
7,500,000 |
4.1% |
Auditors
Jeffreys Henry LLP has expressed its willingness to continue in
office and a resolution to reappoint them will be proposed at the
Annual General Meeting.
Directors’ Report (Continued)
For The Year Ended 31 October 2017
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the Directors’
Report and the financial statements in accordance with applicable
law and regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted for use in the European Union. Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and the Group and of the profit or loss of
the Company and the Group for that year. In preparing these
financial statements, the Directors are required to:
- Select suitable accounting policies and then apply them
consistently;
- Make judgements and accounting estimates that are reasonable
and prudent;
- State whether the Company financial statements have been
prepared in accordance with IFRS as adopted by the European Union
subject to any material departures disclosed and explained in the
Financial Statements;
- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions, disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to
ensure that the financial statements comply with the Companies Act
2006.
The Directors are responsible for safeguarding the assets of the
Company and Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group’s
website.
Statement of Disclosure to
Auditors
Each person who is a Director at the date of approval of this
Annual Report confirms that:
- So far as the Directors are aware, there is no relevant audit
information of which the Company’s auditors are unaware; and
- Each Director has taken all the steps he ought as Director, in
order to make himself aware of any relevant audit information and
to establish that the Company’s auditors are aware of that
information.
- Each Director is aware of and concurs with the information
included in the Strategic Report.
Branches Outside the UK
The Group head office is in London and both the Dynamic Intertrade Pty
Limited and Dynamic Intertrade Agri (Pty) Ltd offices are located
in South Africa.
Directors’ Report (Continued)
For The Year Ended 31 October 2017
Post Balance Sheet Events
Further information on events after the reporting date is set
out in note 25.
The Directors’ have chosen to produce a Strategic Report that
discloses a fair review of the Group’s business, the key
performances metrics that the Directors review along with a review
of the key risks to the business.
In accordance with Section 414C (1) of the Companies Act 2006,
the group chooses to report the review of the business, the future
outlook and the risks and uncertainties faced by the Company in The
Strategic Report on page 5.
Strategic Report
In accordance with Section 414C (1) of
the Companies Act 2006, the group chooses to report the review of
the business, the future outlook and the risk and uncertainties
faced by the Company in The Strategic report on page 5 to 10.
On Behalf of the Board
David Lenigas, Chairman
23 February 2018
Directors’ Remuneration Report
For The Year Ended 31 October 2017
Introduction
The information included in this report is not subject to audit
other than where specifically indicated.
Remuneration Committee
The remuneration committee consists of Andrew Monk and George
Roach. This committee's primary function is to review the
performance of executive directors and senior employees and set
their remuneration and other terms of employment.
The committee is also responsible for administering any share
option scheme. The table indicates share options held by the
current directors, directors of the subsidiary and former directors
of the company.
|
2017 |
2017 |
2016 |
2016 |
Director |
Warrants |
Options |
Warrants |
Options |
George Roach |
- |
3,839,046 |
- |
3,839,046 |
Andrew Monk |
- |
3,839,046 |
- |
3,839,046 |
Robert Scott |
- |
1,000,000 |
- |
1,000,000 |
Matthew Bonner |
- |
3,600,000 |
- |
- |
Mark Nielson |
- |
3,000,000 |
- |
3,000,000 |
Totals |
- |
15,278,092 |
- |
11,678,092 |
The Company has one executive director .
The remuneration policy
It is the aim of the committee to remunerate executive directors
competitively and to reward performance. The remuneration committee
determines the company's policy for the remuneration of executive
directors, having regard to the UK Corporate Governance Code and
its provisions on directors' remuneration.
Service agreements and terms of
appointment
The directors have service contracts with the company.
Directors' interests
The directors' interests in the share capital of the company are
set out in the Directors’ report.
Directors' emoluments
Details of the remuneration packages are included in note 7 –
notes to the Consolidated Financial statements.
No pension contributions were made by the company on behalf of
its directors.
Directors’ Remuneration Report
For The Year Ended 31 October 2017 (Continued)
Approval by shareholders
At the next annual general meeting of the company a resolution
approving this report is to be proposed as an ordinary
resolution.
This report was approved by the board on 23 February 2018.
On Behalf of the Board
Andrew Monk - Committee Chairman
23 February 2018
Corporate Governance
For The Year Ended 31 October 2017
Policy
The policy of the board is to manage the affairs of the Company
with reference to the UK Corporate Governance Code, which is
publicly available from the Financial Reporting Council.
Application of principles of good
governance by the board of directors
The board currently comprises of four non-executive directors
and one executive director (2016: four non-executive
directors).
David Lenigas was appointed chairman on 5
September 2016.
The articles of association require a third, but not greater
than a third, of the directors to retire by rotation each year.
There are regular board meetings each year and other meetings
are held as required to direct the overall company strategy and
operations. Board meetings follow a formal agenda covering matters
specifically reserved for decision by the board. These cover key
areas of the company's affairs including overall strategy,
acquisition policy, approval of budgets, major capital expenditure
and significant transactions and financing issues.
The board has delegated certain responsibilities, within defined
terms of reference, to the audit committee and the remuneration
committee as described below. The appointment of new directors is
made by the board as a whole. During the year ended 31 October 2017, there were three formal board
meetings, one audit committee meeting and one remuneration
committee meeting. All meetings were fully attended.
The board undertakes a formal annual evaluation of its own
performance and that of its committees and individual directors,
through discussions and one-to-one reviews with the Chairman and
the Senior Independent Director.
Audit committee
The audit committee is currently headed by David Lenigas, the
Chairman, and also comprises George
Roach and Robert Scott. The
committee's terms of reference are in accordance with the UK
Corporate Governance Code. The committee reviews the company's
financial and accounting policies, interim and final results and
annual report prior to their submission to the board, together with
management reports on accounting matters and internal control and
risk management systems. It reviews the auditors' management letter
and considers any financial or other matters raised by both the
auditors and employees.
The committee considers the independence of the external
auditors and ensures that, before any non-audit services are
provided by the external auditors, they will not impair the
auditor’s objectivity and independence. During the year, non-audit
services totalled £750 (2016 – £nil) and covered normal taxation
and other related compliance work, which did not impact on the
auditors' objectivity or independence.
There is currently no internal audit function within the Group.
The directors consider that this is appropriate of a Group of this
size.
The committee has primary responsibility for making
recommendations to the board in respect of the appointment,
re-appointment and removal of the external auditors.
On Behalf of the Board
David Lenigas, Chairman
23 February 2018
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc
Independent auditor’s report to the
members of Anglo African Agriculture Plc
Opinion
We have audited the financial statements of Anglo African
Agriculture Plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 31 October
2017 which comprise the consolidated income statement,
consolidated statement of comprehensive income, consolidated
statement of changes in equity, company statement of changes in
equity, consolidated statement of financial position, company
statement of financial position, consolidated statement of cash
flows, company statement of cash flows and notes to the
financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied
in the preparation of the group financial statements is applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The financial reporting framework
that has been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom
Accounting Standards.
In our opinion:
- the financial statements give a true and fair view of the state
of the group’s and of the parent company’s affairs as at
31 October 2017 and of the group’s
loss for the year then ended;
- the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
- the parent company financial statements have been properly
prepared in accordance with IFRS’s as adopted by the European
Union; and
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going
concern
We draw attention to note 2 a. in the financial statements,
which explains that the Group has incurred significant operating
losses and negative cash flows from operations. The Group forecasts
include additional funding requirements upon which the Group is
dependent. The directors are satisfied that these funding
requirements will be met. Additionally, in the event that Dynamic
Intertrade fails to meet its revenue predictions, the Group will
need to obtain additional debt or equity financing in order to fund
its operations for at least the next twelve months. The directors
are satisfied that this can be achieved. These events or
conditions, along with other matters as set out in note 2 a.
indicate that a material uncertainty exists that may cast doubt on
the Group’s ability to continue as a going concern. Our opinion is
modified in respect of this matter.
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc (Continued)
Our audit approach
Overview
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
- Possible impairment of Goodwill and the Long term
investment
- Recoverability of long term loans
- Going concern assumption
- Accounting treatment of acquisition of associate
These are explained in more detail below
Materiality:
Group financial statements:
• £51,000 (31 October 2016:
£42,000)
• Based on the average of the following:
- 2% of Revenue
- 2.5% of Gross Assets
- 10% of Net Profit
Company financial statements:
• £26,000 (31 October 2016:
£20,000)
• Based on the average of the following:
- 2.5% of Gross Assets
- 10% of Net Profit
Audit scope
- We conducted audits of the complete financial information of
Anglo African Agriculture plc, Dynamic Intertrade Pty Limited,
Dynamic Intertrade Agri Pty Limited and APV Joint Venture.
- We performed specified procedures over certain account balances
and transaction classes at other Group companies.
- Taken together, the Group companies over which we performed our
audit procedures accounted for 100% of the absolute profit before
tax (i.e. the sum of the numerical values without regard to whether
they were profits or losses for the relevant reporting units) and
100% of revenue.
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc (Continued)
Key audit matters
Key audit matter |
How our audit addressed the key
audit matter |
Possible impairment of goodwill and long term investment
During the year the Group carried goodwill of £226,644 (31 October
2016: £226,644) in relation to the excess sum of consideration paid
and the fair value of the acquirer’s previously held equity
interest in the acquiree over the net of the acquisition date
amounts of the identifiable assets acquired and the liabilities
assumed.
The directors have assessed whether the goodwill shows any
indicators of impairment.
The adjusted company profit before tax, which is considered by
management to be a key metric and is discussed in their discussion
of KPIs, is directly impacted by the amount of costs capitalised
and the amounts included in the reconciliation of the adjusted
income measures.
We focused on whether impairment was required and if the
unallocated goodwill should be allocated to an individual
investment. |
We considered whether the component of the Group was still profit
making and had an ability to trade successfully into the
future.
We reviewed the component auditor’s working papers and carried out
additional testing on high risk areas.
We tested management’s assumption that no impairment existed by
carrying out sensitivity analysis through changing the assumptions
used and re- running the cash flow forecast.
We reviewed the latest management accounts to gauge how trading was
carrying on in the 2018 financial year.
The net assets of the main subsidiary exceeds that of the
investment carrying value, supported by robust performance with no
going concern issues.
We found no material exceptions in our testing. |
Recoverability of long term loans
The Company had long term loans owed of £802,789 at the year ended
31 October 2017. (31 October 2016: £637,798)
The Directors have confirmed the loans are all treated as long
term, with flexible repayment terms, with interest all rolled up
and included in any repayment due.
The Company had a long term loan to Dynamic Intertrade Limited of
£415,000 (31 October 2016: £415,000) at the year ended 31 October
2017.
The Company had an intercompany loan to Dynamic Intertrade Limited
of £387,789 (31 October 2016: £222,798) at the year ended 31
October 2017. |
The analysis work undertaken by the directors shows that the
subsidiary is expected to remain cash generative and profitable
based on their business. We have understood and assessed the
methodology used by the directors in this analysis and determined
it to be reasonable.
We reviewed the component auditor’s working papers and carried out
additional testing on high risk areas.
We tested management’s assumption that no impairment existed by
carrying out sensitivity analysis through changing the assumptions
used and re- running the cash flow forecast. |
Going
concern assumption
The Group is dependent upon its ability to generate sufficient cash
flows to meet continued operational costs and hence continue
trading. Foreign exchange risk continues to be a key risk in South
Africa, which can affect results annually.
The going concern assumption is dependent on future growth of the
current business along with future acquisitions to grow the scale
of the business and future capital raises. |
Management’s going concern forecasts include a number of
assumptions related to future cash flows and associated risks. Our
audit work has focused on evaluating and challenging the
reasonableness of these assumptions and their impact on the
forecast period.
Specifically we obtained, challenged and assessed managements going
concern forecast and performed procedures including: |
Accounting treatment adopted on acquisition of associate
The Company purchased a 46.81% equity interest in Dynamic
Intertrade Agri Pty Limited (“the Associate”) in November 2016 for
a share for share consideration of £100,000 plus a deferred
consideration of £50,000 if certain performance target were
met.
The value of the associate at 31 October 2017 was £90,046 (31
October 2016 : £nil)
The investment is treated under IAS 28 by management as its deemed
to meet the definition of an associate as it has between 20% - 50%
equity holding and has an elected member to the board.
The investment has been treated at cost minus the percentage loss
of net assets at year end. |
We reviewed the final agreement and transaction which took place,
to unsure all elements of the transaction were treated
correctly.
We reviewed the associate’s financial statements to see if it met
the additional requirements for the additional consideration.
We reviewed the net assets of the Associate and recalculated the
net assets figure and multiplied it by the percentage equity
interest held. |
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc (Continued)
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
|
Group financial statements |
Company financial statements |
Overall materiality |
£51,000 (31 October 2016:
£42,000). |
£24,000 (31 October 2016:
£20,000). |
How we determined it |
Based on the average of 10% of
profit before tax, 2.5% of gross assets and 2% of Revenue. |
Based on the average of 10% of loss
before tax and 2.5% of gross assets. |
Rationale for
benchmark applied |
We believe that profit
before tax is a primary measure used by shareholders in assessing
the performance of the Group whilst gross asset values and revenue
are a representation of the size of the Group; both are generally
accepted auditing benchmarks.
|
We believe that profit before tax is
a primary measure used by shareholders in assessing the performance
of the Company whilst gross asset values are a representation of
the size of the Company; both are generally accepted auditing
benchmarks. |
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
£10,000 and £35,000.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above £2,550 (Group
audit) (31 October 2016: £1,800) and
£1,300 (Company audit) (31 October
2016: £1,000) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
An overview of the scope of our
audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of 4
reporting units, comprising the Group’s operating businesses and
holding companies.
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc (Continued)
We performed audits of the complete financial information of
Anglo African Agriculture plc, Dynamic Intertrade Pty Limited,
Dynamic Intertrade Agri Pty Limited and APV Joint Venture reporting
units, which were individually financially significant and
accounted for 100% of the Group’s revenue and 100% of the Group’s
absolute profit before tax (i.e. the sum of the numerical values
without regard to whether they were profits or losses for the
relevant reporting units). We also performed specified audit
procedures over goodwill and other intangible assets, as well as
certain account balances and transaction classes that we regarded
as material to the Group at the 4 reporting units, one based in the
United Kingdom and 3 more in
South Africa.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, based on the work undertaken in the course of
the audit:
- the information given in the strategic report and the
directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
- the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the group and
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
- the parent company financial statements are not in agreement
with the accounting records and returns; or
- certain disclosures of directors’ remuneration specified by law
are not made; or
- we have not received all the information and explanations we
require for our audit.
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc (Continued)
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 30, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and parent company’s ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
- Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the group’s internal control.
- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the directors.
- Conclude on the appropriateness of the directors’ use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the group’s or the
parent company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the group or the parent
company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Independent Auditors’ Report
To the Members of Anglo African
Agriculture Plc (Continued)
- Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Use of this report
This report, including the opinions, has been prepared for and
only for the parent company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other matters which we are required to
address
We were appointed as auditors by the Company at the Annual
General Meeting on 24 April 2017. Our
total uninterrupted period of engagement is 4 years, covering the
periods ending 31 March 2013 to
31 October 2017.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Sanjay Parmar (Senior Statutory
Auditor)
For and on behalf of Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
23 February 2018
Statement of Comprehensive Income
For the Year Ended 31 October 2017
|
|
Group |
Group |
Company |
Company |
|
|
Year
Ended |
Year
Ended |
Year
Ended |
Year
Ended |
Notes |
31
October 2017 |
31
October 2016 |
31
October 2017 |
31
October 2016 |
|
|
£ |
£ |
£ |
£ |
Turnover |
|
2,126,797 |
1,605,219 |
- |
- |
Cost of
Sales |
|
(1,609,050) |
(1,282,140) |
- |
- |
Gross
Profit |
|
517,747 |
323,079 |
- |
- |
Other
Income |
5 |
673 |
2,767 |
- |
- |
Administrative expenses |
8 |
(860,417) |
(665,218) |
(161,405) |
(103,765) |
Share of
loss of associate |
8 |
(9,954) |
- |
(9,954) |
- |
Impairment of loan to Joint Venture |
8 |
(73,566) |
- |
- |
- |
Admission
expenses |
8 |
(106,992) |
- |
(106,992) |
- |
Operating
loss |
|
(532,509) |
(339,372) |
(278,351) |
(103,765) |
Bank
Interest Receivable |
|
- |
4,109 |
- |
4,109 |
Finance
Costs |
9 |
(17,748) |
(97,771) |
- |
- |
Loss
before taxation |
|
(550,257) |
(433,034) |
(278,351) |
(99,656) |
Tax on
loss on ordinary activities |
10 |
- |
- |
- |
- |
Loss and
total comprehensive income for the year |
|
(550,257) |
(433,034) |
(278,351) |
(99,656) |
Basic and
diluted loss per share |
11 |
(0.28p) |
(0.38p) |
|
|
Since there is no other comprehensive loss, the loss for the
year is the same as the total comprehensive loss for the year
attributable to the owners of the Group.
Statement of Changes in Equity
For the Year Ended 31 October 2017
|
Group |
Group |
Group |
Group |
Group |
|
|
Share Capital |
Share Premium |
Share Based Payments Reserve |
Retained Earnings |
Total Equity |
|
|
|
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
Balance at
1 November 2015 |
94,896 |
1,107,373 |
11,586 |
(864,254) |
349,601 |
|
Share
Based Payments Reserve |
- |
- |
(3,714) |
- |
(3,714) |
|
Issue of
Shares |
85,896 |
464,104 |
- |
- |
550,000 |
|
Loss for
the year |
- |
- |
- |
(433,034) |
(433,034) |
|
Balance
at 31 October 2016 |
180,792 |
1,571,477 |
7,872 |
(1,297,288) |
462,853 |
|
Share
Based Payments Reserve |
- |
- |
8,573 |
- |
8,573 |
|
Issue of
Shares |
26,192 |
194,058 |
- |
- |
220,250 |
|
Loss for
the year |
- |
- |
- |
(550,257) |
(550,257) |
|
Balance at 31 October 2017 |
206,984 |
1,765,535 |
16,445 |
(1,847,545) |
141,419 |
|
Share capital is the amount subscribed for shares at
nominal value.
The share premium has arisen on the issue of shares at a
premium to their nominal value.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS 2.
Retained earnings represent the cumulative loss of the Group
attributable to equity shareholders.
Company Statement of Changes in Equity
For the Year Ended 31 October 2017
|
Company |
Company |
Company |
Company |
Company |
|
|
|
Share Capital |
Share Premium |
Share Based Payments Reserve |
Retained Earnings |
Total Equity |
|
|
|
|
|
£ |
£ |
£ |
£ |
£ |
|
|
Balance
at 1 November 2015 |
94,896 |
1,107,373 |
11,586 |
(509,756) |
704,099 |
|
|
Share Based Payments Reserve |
- |
- |
(3,714) |
- |
(3,714) |
|
Issue of Shares |
85,896 |
464,104 |
- |
- |
550,000 |
|
Loss for the year |
- |
- |
- |
(99,656) |
(99,656) |
|
Balance at 31 October 2016 |
180,792 |
1,571,477 |
7,872 |
(609,412) |
1,150,729 |
|
Share Based Payments Reserve |
- |
- |
8,573 |
- |
8,573 |
|
Issue of Shares |
26,192 |
194,058 |
- |
- |
220,250 |
|
Loss for the year |
- |
- |
- |
(278,351) |
(278,351) |
|
Balance at 31 October 2017 |
206,984 |
1,765,535 |
16,445 |
(887,763) |
1,101,201 |
|
|
|
|
|
|
|
|
|
|
Statement of the Financial Position
As at 31
October 2017
|
|
Group |
Group |
Company |
Company |
|
Notes |
31
October 2017 |
31
October 2016 |
31
October 2017 |
31
October 2016 |
|
|
£ |
£ |
£ |
£ |
Assets |
|
|
|
|
|
Non-Current Assets |
|
|
|
|
|
Investment in Subsidiaries |
13 |
- |
- |
297,915 |
297,915 |
Investment in Associate |
13 |
90,046 |
- |
90,046 |
- |
Loan to
Joint Venture |
14 |
- |
84,473 |
- |
- |
Long Term
Intercompany Loans |
|
- |
- |
794,839 |
637,798 |
Property,
Plant and Equipment |
15 |
121,322 |
159,595 |
- |
- |
Goodwill
on Consolidation |
16 |
226,644 |
226,644 |
- |
- |
|
|
438,012 |
470,712 |
1,182,800 |
935,713 |
Current assets |
|
|
|
|
|
Inventories |
17 |
203,782 |
166,393 |
- |
- |
Trade and
Other Receivables |
18 |
380,414 |
440,455 |
18,470 |
8,134 |
Cash and
Cash Equivalents |
19 |
75,952 |
268,790 |
43,299 |
240,337 |
|
|
660,148 |
875,638 |
61,769 |
248,471 |
Total
Assets |
|
1,098,160 |
1,346,350 |
1,244,569 |
1,184,184 |
|
|
|
|
|
|
Equity
and Liabilities |
|
|
|
|
|
Share
Capital |
21 |
206,984 |
180,792 |
206,984 |
180,792 |
Share
Premium Account |
21 |
1,765,535 |
1,571,477 |
1,765,535 |
1,571,477 |
Share-Based Payments Reserve |
22 |
16,445 |
7,872 |
16,445 |
7,872 |
Accumulated Deficit |
|
(1,847,545) |
(1,297,288) |
(887,763) |
(609,412) |
Total
Equity |
|
141,419 |
462,853 |
1,101,201 |
1,150,729 |
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
Trade and
Other Payables |
20 |
956,741 |
883,497 |
143,368 |
33,455 |
Total
Liabilities |
|
956,741 |
883,497 |
143,368 |
33,455 |
Total
Equity and Liabilities |
|
1,098,160 |
1,346,350 |
1,244,569 |
1,184,184 |
Cash Flow Statements
For the year ended 31 October 2017
|
|
Group |
Group |
Company |
Company |
|
|
Year
Ended |
Year
Ended |
Year
Ended |
Year
Ended |
Notes |
31
October 2017 |
31
October 2016 |
31
October 2017 |
31
October 2016 |
|
|
£ |
£ |
£ |
£ |
Cash
flows from operating activities |
|
|
|
|
|
Operating
loss |
|
(532,509) |
(339,372) |
(278,351) |
(99,656) |
Add:
Depreciation |
15 |
52,400 |
49,116 |
- |
- |
Add:
Foreign exchange movements on fixed assets |
15 |
38,316 |
(28,545) |
- |
- |
Add:
Movement on share based payments reserve |
|
8,573 |
(3,714) |
8,573 |
(3,714) |
Professional fees on raising |
|
7,215 |
- |
7,215 |
- |
Share of
loss of associate |
13.1 |
9,954 |
- |
9,954 |
- |
Loss on
disposal of jointly controlled entity |
|
73,566 |
- |
- |
- |
|
|
|
|
|
|
Changes in working capital |
|
|
|
|
|
(Increase) / decrease in inventories |
|
(37,389) |
165,113 |
- |
- |
(Increase) / decrease in receivables |
|
60,041 |
(217,378) |
(10,336) |
101,638 |
Increase
/ (decrease) in payables |
|
73,244 |
162,448 |
109,913 |
(23,872) |
Interest
received |
|
- |
4,109 |
- |
- |
Finance
Costs |
(17,748) |
(97,771) |
- |
- |
Net
cash flow from operating activities |
|
(264,337) |
(305,994) |
(153,032) |
(25,604) |
Investing Activities |
|
|
|
|
|
Acquisition of fixed assets |
15 |
(30,629) |
(55,729) |
- |
- |
Disposal
of fixed assets |
15 |
- |
- |
- |
- |
Increase
/ (decrease) in loans - jointly controlled entities |
|
(10,907) |
(1,894) |
- |
(322,798) |
Long term
intercompany loan advanced |
|
- |
- |
(157,041) |
- |
Sale of
investments |
|
- |
18,514 |
- |
- |
Net
cash flow from investing activities |
|
(41,536) |
(39,109) |
(157,041) |
(322,798) |
Cash
flows from financing activities: |
|
|
|
|
|
Net
proceeds from issue of shares |
21 |
113,035 |
550,000 |
113,035 |
550,000 |
Net
cash flow from financing activities |
|
113,035 |
550,000 |
113,035 |
550,000 |
|
|
|
|
|
|
Net
cash flow |
|
(192,838) |
204,897 |
(197,038) |
201,598 |
Opening
Cash and cash equivalents |
19 |
268,790 |
63,893 |
240,337 |
38,739 |
Closing Cash and cash equivalents |
19 |
75,952 |
268,790 |
43,299 |
240,337 |
The notes on pages 31 to 56 form part
of these financial statements
Approved by the Board and authorised
for issue on 23 February 2018.
David Lenigas, Chairman
Company Registration No. 07913053
Notes to the Consolidated Financial Statements
1. General Information
Anglo African Agriculture plc is a company incorporated in the
United Kingdom. Details of the
registered office, the officers and advisers to the Company are
presented on the Directors and Advisers page at the beginning of
this report. The Company has a standard listing on the London Stock
Exchange main market. The information within these financial
statements and accompanying notes have been prepared for year ended
31 October 2017 with comparatives for
year ended 31 October 2016.
2. Basis of Preparation
and Significant Accounting Policies
The consolidated financial statements of Anglo African
Agriculture plc have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union
(IFRS as adopted by the EU), IFRS Interpretations Committee and the
Companies Act 2006 applicable to companies reporting under
IFRS.
The consolidated financial statements have been prepared under
the historical cost convention.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements are disclosed in Note 3. The preparation of financial
statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities,
income and expenses. Although these estimates are based on
management’s experience and knowledge of current events and
actions, actual results may ultimately differ from these
estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimates are revised if the revision affects
only that year or in the year of the revision and future year if
the revision affects both current and future year.
a. Going Concern
These consolidated financial statements are prepared on the
going concern basis. The going concern basis assumes that the Group
will continue in operation for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of business. The Group has
incurred significant operating losses and negative cash flows from
operations as the Group continued to expand its operations during
the year under review.
During the year, the Group raised £113,035 in net funding
through share subscriptions to fund further investment in Dynamic
Intertrade in order to improve production efficiencies and to fund
working capital.
Immediately subsequent to the year-end, the Group raised a
further £150,000 through the further issue of shares. There remains
an active and very liquid market for the Group’s shares. The Group
is currently finalising a loan agreement facility of R2
million.
The Directors have prepared cash flow forecasts for the period
ended 31 October 2018, taking into
account forecast operating cash flows and capital expenditure
requirements for Dynamic Intertrade, available working capital and
forecast expenditure for the rest of the Group including overheads
and other costs. The forecasts include additional funding
requirements which the directors believe will be met.
Notes to the Consolidated Financial
Statements
In the event that Dynamic Intertrade fails to meet revenue
predictions and any other relevant risk factors arise, the Group
will need to obtain additional debt finance or equity to fund its
operations for the period to 31 October
2018. The cash flow forecast is dependent on production
targets being met at Dynamic Intertrade, maintaining the invoice
financing arrangements, generating future sales and the selling
prices remaining stable during the period to 31 October 2018.
After careful consideration of the matters set out above, the
Directors are of the opinion that the Group will be able to
undertake its planned activities for the period to 31 October 2018 from production and from
additional fund raising and have prepared the consolidated
financial statements on the going concern basis. Nevertheless due
to the uncertainties inherent in meeting its revenue predictions
and obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any
adjustments that would result if the Group was unable to continue
as a going concern.
New and Amended Standards Adopted by
the Company
There are no IFRS and IFRIC
interpretations that are effective for the first time for the
financial year beginning on or after 1
November 2017 that would be expected to have a material
impact on the Group.
Standards, Interpretations and
Amendments to Published Standards which Are Not
Yet Effective
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 November
2017 and have not been early adopted:
Reference |
Title |
Summary |
Application date of standard (Periods commencing on or
after) |
Amendments to IFRS 1 |
First-time adoption of International Financial Reports
Standards |
Amendments resulting from Annual Improvements 2014-2016 Cycle
(removing short-term exemptions) |
1
November 2018 |
Amendments to IFRS 2 |
Share-based payments |
Amendments to clarify the classification and measurement of share
based payment transactions |
1
November 2018 |
Amendment
to IFRS 4 |
Insurance
Contracts |
Amendments regarding the interaction of IFRS 4 and IFRS 9 |
1
November 2018 |
IFRS
9 |
Financial
Instruments |
Requirements on the classification and measurement of financial
assets and liabilities and includes an expected credit losses model
which replaces the current loss impairment model. Also includes the
hedging amendment that was issued in 2013 |
1
November 2018 |
Amendments to IFRS 12 |
Disclosure of interests in other entities |
Amendments resulting from Annual Improvements 2014-2016 (Clarifying
Scope) |
1
November 2017 |
IFRS
15 |
Revenue
from contracts with customers |
Specifies
how and when to recognize revenue from contracts as well as
requiring more information and relevant disclosures. |
1
November 2018 |
IFRS
16 |
Leases |
Original
Issue |
1
November 2019 |
IFRS
17 |
Insurance
Contracts |
Establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts issued. |
1 November 2021 |
Amendments to IAS 7 |
Statement
of Cash Flows |
Amendments as a result of the disclosure initiative |
1
November 2017 |
Amendments to IAS 12 |
Income
Taxes |
Amendments regarding the recognition of deferred tax assets for
unreleased losses |
1
November 2017 |
Amendments to IAS 28 |
Investments in Associates and Joint Ventures |
Amendments resulting from Annual improvements 2014-2016 cycle
(Clarifying certain fair value measurements |
1
November 2018 |
Amendments to IAS 39 |
Financial Instruments: Recognition and measurement |
Amendments to permit entity to elect to continue to apply the hedge
accounting requirements in IAS 39 for a fair value hedge of the
interest rate exposure of a portion of a portfolio of financial
assets or financial liabilities when IFRS 9 is applied and to
extend the fair value option to certain contracts that meet the
‘own use’ scope exception |
1
November 2018 |
Amendments to IAS 40 |
Investment Property |
Amendments to clarify transfers or property to or from investment
property |
1
November 2018 |
Amendments to IFRIC 22 |
Foreign
Currency transactions and advance consideration |
Amendments to clarify the accounting for transactions that include
the receipt or payment of advance consideration in a foreign
currency. |
1
November 2018 |
Amendments to IFRIC 23 |
Uncertainty over income tax treatments |
Addresses
how to reflect uncertainty in accounting for income taxes. |
1
November 2018 |
The Directors anticipate that the adoption of these standards
and the interpretations in future periods will have no material
impact on the financial statements of the Group.
b. Basis of
Consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31st October each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by other
members of the Group. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Changes in the Group’s ownership interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the
subsidiaries.
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Where certain assets
of the subsidiary are measured at revalued amounts or fair values
and the related cumulative gain or loss has been recognised in
other comprehensive income and accumulated in equity, the amounts
previously recognised in other comprehensive income and accumulated
in equity are accounted for as if the Company had directly disposed
of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings). The fair value of any
investment retained in the former subsidiary at the date when
control is lost is regarded as the fair value on initial
recognition for subsequent accounting under IAS 39 “Financial
Instruments: Recognition and Measurement” or, when applicable, the
cost on initial recognition of an investment in an associate or a
jointly controlled entity.
Notes to the Consolidated Financial
Statements (Continued)
Business Combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interests issued by the Group
in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
- Deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
- Liabilities or equity instruments related to share-based
payment transactions of the acquiree or the replacement of an
acquiree’s share-based payment transactions with share-based
payment transactions of the Group are measured in accordance with
IFRS 2 Share-based Payment at the acquisition date; and
- Assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
Goodwill
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after assessment, the net
of the acquisition-date amounts of the identifiable assets acquired
and liabilities assumed exceeds
the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree and the fair value of the
acquirer’s previously held interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain
purchase gain.
Joint Ventures and Associates
A joint venture is a contractual agreement under which two or
more parties conduct an economic activity and unanimous approval is
required for the financial and operating policies. Associates are
all entities over which the Group has significant influence but not
control, generally accompanying a shareholding between 20% and 50%
of the voting rights. Joint ventures and associates are accounted
for using the equity method, which involves recognition in the
consolidated income statement of AAA’s share of the net result of
the joint ventures and associates for the year. Accounting policies
of joint ventures and associates have been changed where necessary
to ensure consistency with the policies adopted by the Group. AAA’s
interest in a joint venture or associate is carried in the
statement of financial position at its share in the net assets of
the joint venture or associate together with goodwill paid on
acquisition, less any impairment loss. When the share in the losses
exceeds the carrying amount of an equity-accounted company
(including any other receivables forming part of the net investment
in the company), the carrying amount is written down to nil and
recognition of further losses is discontinued, unless we have
incurred legal or constructive obligations relating to the company
in question.
Notes to the Consolidated Financial
Statements (Continued)
c. Property, Plant
and Equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Subsequent
costs are included in the asset’s carrying amount or recognised as
a separate asset, as appropriate, only when 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. All other
repairs and maintenance are charged to profit or loss during the
financial year in which they are incurred. Depreciation on
property, plant and equipment is calculated using the straight-line
method to write off their cost over their estimated useful lives at
the following annual rates:
Leasehold
improvements |
33.3% |
Furniture, fixtures and
equipment |
17% |
Plant and
machinery |
20% |
Computer equipment |
33.3% |
Useful lives and depreciation method are reviewed and adjusted
if appropriate, at the end of each reporting year.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset, and is
recognised in profit or loss in the year in which the asset is
derecognised.
d. Investments in
Subsidiaries
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
e. Inventories
Inventories are carried at the lower of cost and net realisable
value. Cost is determined using specific identification and in the
case of work in progress and finished goods, comprises the cost of
purchase, cost of conversion and other costs incurred in bringing
the inventories to their present location and condition. Net
realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and
applicable selling expenses.
When the inventories are sold, the carrying amount of those
inventories is recognised as an expense in the year in which the
related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
are recognised as an expense in the year in which the write-down or
loss occurs. The amount of any reversal of any write-down of
inventories is recognised as an expense in the year in which the
reversal occurs.
Notes to the Consolidated Financial
Statements (Continued)
f. Impairment
of Non-Financial Assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when an annual impairment assessment for an asset is
required, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of an asset’s
or cash-generating unit’s fair value less costs to sell and its
value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely dependent on
those from other assets. Where the carrying amount of an asset or
cash generating unit exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows expected
to be generated by the asset 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. In determining fair value less costs to sell, recent
market transactions are taken into account, if available. If no
such transactions can be identified, an appropriate valuation model
is used. These calculations are corroborated by valuation multiples
or other available fair value indicators.
Impairment losses are recognised in profit or loss in those
expense categories consistent with the function of the impaired
asset, except for assets that are previously revalued where the
revaluation was taken to other comprehensive income. In this case,
the impairment is also recognised in other comprehensive income up
to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses may
no longer exist or may have decreased. If such indication exists,
the Group estimates the asset’s or cash-generating unit’s
recoverable amount.
A previously recognised impairment loss is reversed only if
there has been a change in the estimates used to determine the
recoverable amount of an asset since the last impairment loss was
recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. This increase cannot exceed
the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised previously.
Such reversal is recognised in the profit and loss unless the asset
is measured at revalued amount, in which case the reversal is
treated as a revaluation increase.
g. Financial
Instruments
Financial assets and financial liabilities are recognised on the
statement of financial position when an entity becomes a party to
the contractual provisions of the instruments. Financial assets and
financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition
or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognised immediately in the
income statement.
i.
Financial Assets
The Group’s accounting policies for financial assets are set out
below.
Management determine the classification of its financial assets
at initial recognition depending on the purpose for which the
financial assets were acquired and where allowed and appropriate,
re-evaluate this designation at every reporting date.
Notes to the Consolidated Financial
Statements (Continued)
All financial assets are recognised on a trade date when, and
only when, the Group becomes a party to the contractual provisions
of an instrument. When financial assets are recognised initially,
they are measured at fair value plus transaction costs, except for
those finance assets classified as at fair value through profit or
loss (‘FVTPL’), which are initially measured at fair value.
Financial assets are classified into the following specified
categories: financial assets at FVTPL, ‘held-to-maturity’
investments, ‘available for sale’ (AFS) financial assets and loans
and receivables. The classification depends on the nature and
purpose of the financial assets and is determined at the time of
recognition.
Derecognition of financial assets occurs when the rights to
receive cash flows from the investments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred.
At each reporting date, financial assets are reviewed to assess
whether there is objective evidence of impairment. If any such
evidence exists, impairment loss is determined and recognised based
on the classification of the financial asset.
Loans and receivables (including trade receivables, prepayments,
deposits and other receivables, cash and bank balances) are
non-derivative financial assets with fixed or determinable payments
that are not quoted on an active market.
At each reporting date subsequent to initial recognition, loans
and receivables are carried at amortised cost using the effective
interest method, less any identified impairment losses. An
impairment loss is recognised in the statement of comprehensive
income when there is objective evidence that the asset is impaired,
and is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows
discounted at the original effective interest rate. Impairment
losses are reversed in subsequent periods when an increase in the
asset’s recoverable amount can be related objectively to an event
occurring after the impairment was recognised, subject to a
restriction that the carrying amount of the asset at the date the
impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
ii.
Financial Liabilities and Equity
Financial liabilities and equity are recognised on the Group’s
statement of financial position when the Group becomes a party to a
contractual provision of an instrument. Financial liabilities and
equity instruments issued by the Group are classified according to
the substance of the contractual arrangements entered into and the
definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
at the proceeds received, net of transaction costs.
The Group’s financial liabilities include amounts due to a
director, trade payables and accrued liabilities. These financial
liabilities are classified as FVTPL are stated at fair value with
any gains or losses arising on re-measurement recognised in profit
or loss. Other financial liabilities, including borrowings are
initially measured at fair value, net of transaction costs.
Other financial liabilities, including borrowings, are
subsequently measured at amortised cost using the effective
interest rate method, with interest expense recognised on an
effective yield basis.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant year. The effective interest rate is the
rate that exactly discounts estimated future cash payments through
the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying amount on
initial recognition.
Notes to the Consolidated Financial
Statements (Continued)
Financial liabilities are de-recognized when the obligation
specified in the relevant contract is discharged, cancelled or
expires. The difference between the carrying amount of the
financial liability derecognised and the consideration paid is
recognised in the statement of comprehensive income.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original
liability and a recognition of a new liability, and the difference
in the respective carrying amounts is recognised in the statement
of comprehensive income.
iii. Trade and
Other Receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment losses for
bad and doubtful debts, except where the receivables are
interest-free loans made to related parties without any fixed
repayment terms or the effect of discounting would be material. In
such cases, the receivables are stated at cost less impairment
losses for bad and doubtful debts.
iv. Trade and
Other Payables
Liabilities for trade and other payables which are recognised
initially at their fair value and subsequently measured at
amortised cost using the effective interest method, unless the
effect of discounting would not be material, in which case they are
stated at cost.
v. Fair
Values
The carrying amounts of the financial assets and liabilities
such as cash and cash equivalents, receivables and payables of the
Group at the balance sheet date approximated their fair values, due
to the relatively short term nature of these financial
instruments.
h. Borrowings
Borrowings are presented as current liabilities unless the Group
has an unconditional right to defer settlement for at least 12
months after the balance sheet date, in which case they are
presented as non-current liabilities.
Borrowings are initially recorded at fair value, net of
transaction costs and subsequently carried for at amortised costs
using the effective interest method. Any difference between the
proceeds (net of transaction costs) and the redemption value is
recognised in profit or loss over the year of the borrowings using
the effective interest method. Borrowings which are due to be
settled within twelve months after the balance sheet date are
included in current borrowings in the balance sheet even though the
original term was for a period longer than twelve months and an
agreement to refinance, or to reschedule payments, on a long-term
basis is completed after the balance sheet date and before the
financial statements are authorised for issue.
i. Revenue
Recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for the
sales of goods and the use by others of the Group’s assets yielding
interest, net of rebates and discounts.
Revenue on sales of goods is recognised on the transfer of risks
and rewards of ownership, which generally coincides with the time
when the goods are delivered to customers and title has been
passed.
Interest income from a financial asset, is recognised on an
accrual basis using the effective interest rate method by applying
the rate that exactly discounts the estimated future cash receipts
through the expected life of the financial instrument or a shorter
period, when appropriate, to the net carrying amount of the
financial asset.
Notes to the Consolidated Financial
Statements (Continued)
j. Cost of
Sales
Cost of sales consists of all costs of purchase and other
directly incurred costs.
Cost of purchase comprises the purchase price, import duties and
other taxes (other than those subsequently recoverable by the Group
from the taxing authorities), if any, and transport, handling and
other costs directly attributable to the acquisition of goods.
Trade discounts, rebates and other similar items are deducted in
determining the costs of purchase. Cost of conversion primarily
consists of hiring charges of subcontractors incurred during the
course of conversion.
k. Borrowing
Costs
Borrowing costs are expensed in the year in which they occur.
Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds.
l.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years,
and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the
reporting year.
Deferred tax is recognised on temporary differences between the
carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary differences arise
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries, except
where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of the each reporting year and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year in which the liability
is settled or the asset realised. The measurement of deferred tax
assets and liabilities reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of
the reporting year, to recover or settle the carrying amount of its
assets and liabilities.
Notes to the Consolidated Financial
Statements (Continued)
Current or deferred tax for the year is recognised in profit or
loss, except when it relates to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax is also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
m. Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and on hand,
demand deposits with banks and other financial institutions, and
short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three
months of maturity at acquisition. Bank overdrafts that are
repayable on demand and form an integral part of the Group’s cash
management are also included as a component of cash and cash
equivalents for the purpose of the consolidated statement of cash
flows.
n. Provisions and
Contingencies
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors’ best estimate of the expenditure
required to settle the obligation at the statement of financial
position date, and are discounted to present value where the effect
is material. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be
small.
When the effect of discounting is material, the amount
recognised for a provision is the present value at the reporting
date of the future expenditures expected to be required to settle
the obligation. The increase in the discounted present value amount
arising from the passage of time is included in finance costs in
the statement of comprehensive income.
Contingent liabilities are not recognised in the financial
statements. They are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. A contingent
asset is not recognised in the financial statements but disclosed
when an inflow of economic benefits is probable.
o. Share Capital
Ordinary shares are classified as equity. Proceeds from issuance
of ordinary shares are classified as equity. Incremental costs
directly attributable to the issuance of new ordinary shares are
deducted against share capital.
p. Foreign
Currencies
In preparing the financial statements of each individual group
entity, transactions in currencies other than the functional
currency of that entity (foreign currencies) are recorded in the
respective functional currency (i.e. the currency of the primary
economic environment in which the entity operates) at the rates of
exchanges prevailing on the dates of the transactions. At the end
of the reporting year, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical costs in a foreign currency are
not retranslated.
Notes to the Consolidated Financial
Statements (Continued)
Exchange differences arising on the settlement of monetary
items, and on translation of monetary items, are recognised in
profit or loss in the year in which they arise. Exchange
differences arising on the retranslation of non-monetary items
carried at fair value are included in profit or loss for the year
except for differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognised directly
in other comprehensive income, in which cases, the exchange
differences are also recognised directly in other comprehensive
income.
For the purposes of presenting the consolidated financial
statements, assets and liabilities of the Group’s foreign
operations are translated into the presentation currency of the
Group (i.e. South African Rand) at the rate of exchange prevailing
at the end of the reporting year, and their income and expenses are
translated at the average exchange rates for the year, unless
exchange rates fluctuate significantly during that year, in which
case, the exchange rates prevailing at the dates of transactions
are used. Exchange differences arising, if any, are recognised in
other comprehensive income and accumulated in equity.
The principal exchange rates during the year are set out in the
table below:
Rate compared to £ |
Year End Rate
2017 |
Year End Rate
2016 |
South African Rand |
18.75 |
16.58 |
US Dollar |
1.32 |
1.23 |
q. Finance
Leases
Assets held under finance leases are initially recognised as
assets of the Group at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in
the statement of financial position as a finance lease obligation.
Lease payments are treated as a reduction of the lease obligation
on the remaining balance of the liability.
Finance expenses are recognised immediately in profit or loss,
unless they are directly attributable to qualifying assets, in
which case they are capitalised. Contingent rentals are recognised
as expenses in the years in which they are incurred.
r. Operating
Leases
Where the Group has the use of assets held under operating
leases, payment made under the leases are charged to profit or loss
over the accounting years covered by the lease term except where an
alternative basis is more representative of the pattern of benefits
to be derived from the leased asset. Lease incentives received are
recognised in profit or loss as an integral part of the aggregate
net lease payments made. Contingent rentals are charged to profit
or loss in the accounting years in which they are incurred.
s. Employee
Benefits
Salaries, annual bonuses, paid annual leave and the cost to the
Group of non-monetary benefits are accrued in the year in which
employees of the Group render the associated services. Where
payment or settlement is deferred and the effect would be material,
these amounts are stated at their present values.
t. Segmental
Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the executive Directors who make
strategic decisions.
Notes to the Consolidated Financial
Statements (Continued)
3. Critical Accounting
Estimates and Judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
In the application of the Group’s accounting policies, which are
described above, management is required to make estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
assumptions that had a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities are
discussed below.
a. Inventory
Valuation
Inventory is valued at the lower of cost and net realisable
value. Net realisable value of inventories is the estimated selling
price in the ordinary course of business, less estimated costs of
completion and selling expenses. These estimates are based on the
current market conditions and the historical experience of selling
products of a similar nature. It could change significantly as a
result of competitors’ actions in response to severe industry
cycles. The Group reviews its inventories in order to identify
slow-moving merchandise and uses markdowns to clear merchandise.
Inventory value is reduced when the decision to markdown below cost
is made.
b. Impairment of
Receivables
The Group’s management reviews receivables on a regular basis to
determine if any provision for impairment is necessary. The policy
for the impairment of receivables of the Group is based on, where
appropriate, the evaluation of collectability and ageing analysis
of the receivables and on management’s judgement. A considerable
amount of judgement is required in assessing the ultimate
realisation of these outstanding amounts, including the current
creditworthiness and the past collection history of each debtor. If
the financial conditions of debtors of the Group were to
deteriorate, resulting in an impairment of their ability to make
payments, provision for impairment may be required.
c. Income Taxes
The Group is subject to income taxes in South Africa and the UK. Significant judgement
is required in determining the provision for income taxes and the
timing of payment of the related tax. There are certain
transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business.
The Group recognises liabilities for anticipated tax based on
estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the income
tax provision in the year in which such determination is made.
d. Share Based
Payments
The fair value of share-based payments recognised in the income
statement is measured by use of the Black Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. 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. The share price volatility percentage factor used
in the calculation is based on management’s best estimate of future
share price behaviour based on past experience, future expectations
and benchmarked against peer companies in the industry.
Notes to the Consolidated Financial
Statements (Continued)
e. Depreciation and
Amortisation
The Group depreciates property, plant and equipment and
amortises the leasehold land and land use rights on a straight-line
method over the estimated useful lives. The estimated useful lives
reflect the Directors’ estimate of the years that the Group intends
to derive future economic benefits from the use of the Group’s
property, plant and equipment.
4. Segmental Reporting
In the opinion of the Directors, the Group has one class of
business, being the trading of agricultural materials. The Group’s
primary reporting format is determined by the geographical segment
according to the location of its establishments. There is currently
only one geographic reporting segment, which is South Africa. All revenues and costs are
derived from the single segment.
5. Other Income
|
2017 |
2016 |
|
£ |
£ |
Other income |
673 |
2,767 |
Other Income represents the bad debts
recovered and sundry income.
6. Personnel Expenses and
Staff Numbers (Including Directors)
Number |
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
The average number of
employees in the year were: |
|
|
|
|
Directors
Management |
5
3 |
4
3 |
5 |
4 |
Accounts and
Administration |
2 |
1 |
- |
- |
Sales |
2 |
2 |
- |
- |
Manufacturing/Warehouse |
16 |
15 |
- |
- |
Total |
28 |
25 |
5 |
4 |
|
|
|
|
|
|
£ |
£ |
£ |
£ |
The aggregate payroll
costs for these persons were: |
383,121 |
255,873 |
55,656 |
18,994 |
Average ratio of
executive pay verse average employee pay |
0.78 |
0.74 |
|
|
Notes to the Consolidated Financial
Statements (Continued)
7. Directors’
Remuneration
Salaries and Fees |
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
David Lenigas |
12,000 |
1,000 |
12,000 |
1,000 |
George Roach |
12,000 |
6,000 |
12,000 |
6,000 |
Robert Scott |
12,000 |
1,000 |
12,000 |
1,000 |
Andrew Monk * |
13,656 |
6,828 |
13,656 |
6,828 |
Matt Bonner |
6,000 |
- |
6,000 |
- |
Neil Herbert |
- |
4,166 |
- |
4,166 |
Craig Anthony Forbes |
- |
16,357 |
- |
- |
|
55,656 |
35,351 |
55,656 |
18,994 |
* Included in Andrew Monks remuneration is £ 1,656 for
National Insurance
8. Expenses - Analysis by
Nature
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Auditors’ remuneration
for audit services: Parent |
10,500 |
6,000 |
10,500 |
6,000 |
Auditors’ remuneration
for other services: Parent |
750 |
- |
750 |
- |
Auditors’ remuneration
for audit services: Subsidiary |
4,331 |
2,865 |
- |
- |
Depreciation on
property, plant and equipment |
52,400 |
49,116 |
- |
- |
(Gain) / loss on
exchange |
(13,779) |
7,657 |
- |
- |
Personnel expenses
(Note 6) |
383,121 |
255,873 |
55,656 |
18,994 |
Other administrative
expenses |
423,094 |
343,707 |
94,499 |
78,801 |
Sub-total |
860,417 |
665,218 |
161,405 |
103,795 |
Impairment of loan to
Joint Venture |
73,566 |
- |
- |
- |
Admission expenses |
106,992 |
- |
106,992 |
- |
Loss from Associated
entity |
9,954 |
- |
9,954 |
- |
Total administrative
expenses |
1,050,929 |
665,218 |
278,351 |
103,765 |
9. Finance Costs
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Interest |
17,748 |
97,771 |
- |
- |
Notes to the Consolidated Financial
Statements (Continued)
Finance costs represent interest and charges in respect of the
discounting of invoices.
10. Taxation
The charge for the year can be reconciled to the profit before
taxation per the consolidated statement of comprehensive income as
follows:
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Tax
Charge |
- |
- |
- |
- |
Factors affecting the
tax charge: |
|
|
|
|
Loss on ordinary
activities before taxation |
(550,257) |
(433,034) |
(278,351) |
(99,656) |
Loss on ordinary
activities before taxation multiplied by standard rate of UK
corporation tax of 19.75% (2016: 20%) |
(108,676) |
(86,609) |
(54,974) |
(19,931) |
Tax effect of expense
not deductible for tax |
1,522 |
2,000 |
1,522 |
2,000 |
Tax effect of
utilisation of tax losses |
107,154 |
84,609 |
53,452 |
17,931 |
Difference – Actual and
Parent tax rate |
- |
- |
- |
- |
Tax Charge |
- |
- |
- |
- |
|
|
|
|
|
|
|
The Company has excess management expenses of £187,346 (2016 -
£184,548) available for carry forward against future trading
profits. The deferred tax asset in these tax losses at 19.75% of
£37,001 (2016 - £36,910) has not been recognised due to the
uncertainty of recovery.
11. Loss Per Share
Loss per share data is based on the Group result for the year
and the weighted average number of shares in issue.
Basic loss per share is calculated by dividing the loss
attributable to equity shareholders by the weighted average number
of ordinary shares in issue during the year:
|
Group |
|
2017 |
2016 |
|
£ |
£ |
Loss after tax |
(550,257) |
(433,034) |
Weighted average.
number of ordinary shares in issue |
194,791,752 |
114,461,821 |
Basic and diluted
loss per share (pence) |
(0.28p) |
(0.38p) |
Basic and diluted earnings per share are the same, since where a
loss is incurred the effect of outstanding share options and
warrants is considered anti-dilutive and is ignored for the purpose
of the loss per share calculation. As at 31
October 2017 there were 2,761,330 (31
October 2016 - 12,638,660) outstanding share warrants and
20,956,184 (2016 – 17,356,184) outstanding options, both are
potentially dilutive.
Notes to the Consolidated Financial
Statements (Continued)
12. Dividends
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Dividends Paid |
- |
- |
- |
- |
13. Investments
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Investment in Subsidiary |
- |
- |
297,915 |
297,915 |
Investment
in Associate |
90,046 |
- |
90,046 |
- |
13.1. Investment in Associate
|
Group |
Group |
Company |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Investment in Dynamic Intertrade Agri (Pty) Ltd |
100,000 |
- |
100,000 |
- |
Share of
loss of Associate |
(9,954) |
- |
(9,954) |
- |
Carrying
value |
90,046 |
- |
90,046 |
- |
As at 31 October 2017, the Company
directly and indirectly held the following subsidiary and
associate:
Name of company |
Principal
activities |
Country of
incorporation and place of business |
Proportion (%) of
equity interest
2017 |
Proportion (%) of
equity interest
2016 |
Dynamic
Intertrade (Pty) Limited |
Trading
in Agricultural Products |
South
Africa |
100% |
100% |
Dynamic Intertrade Agri
(Pty) Limited |
Agricultural commodity
trading and distribution |
South Africa |
46.8% |
- |
On 3 November 2016 the group
acquired 46.8% in Dynamic Intertrade Agri (Pty) Ltd (“DIA”), which
investment has been equity accounted since acquisition.
Notes to the Consolidated Financial
Statements (Continued)
Summarised financial information of the associate company
|
2017 |
2016 |
Non-current assets |
5,793 |
- |
Current
assets |
134,466 |
- |
Cash and
cash equivalents |
1,819 |
|
Total
assets |
144,094 |
- |
Non-current liabilities |
48,137 |
- |
Current
liabilities |
62,909 |
- |
Total
Liabilities |
111,045 |
- |
|
|
|
Turnover |
1,226,678 |
- |
Loss
before taxation |
(28,470) |
- |
Total
comprehensive income |
(28,470) |
- |
Depreciation |
2,482 |
- |
Interest
Income |
267 |
- |
Interest
Expensed |
- |
- |
Income
tax expense |
- |
- |
14. Loan to Joint Venture
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Loan to Joint
Venture |
- |
84,473 |
- |
- |
On 22 November 2016 the Group
agreed to sell its 49.9% interest in Africa Projects and Ventures,
a joint venture with Lamberti based in South Africa.
In the prior year the loan represented an interest free long
term loan made to Africa Projects and Ventures. During the year
under review this loan was impaired in full and a charge of £73,566
(2016: £ nil) was taken to Income and expense.
On 31 October 2017 the company’s
wholly owned subsidiary Dynamic Intertrade (Pty) Limited
("Dynamic") entered into the Sale and Purchase Agreement in terms
of which Dynamic will sell the 49.9% of the allotted and issued
share capital of APV African Projects and Ventures (Pty) Limited to
Misty Rose Properties 11 CC, a company owned by Mr G Roach for the
total sum of ZAR1.00.
Notes to the Consolidated Financial
Statements (Continued)
15. Property, Plant and Equipment
Group |
Leasehold
Property |
Furniture and
fixtures |
Plant and
machinery |
Total |
|
£ |
£ |
£ |
£ |
Cost |
|
|
|
|
At 01 November
2016 |
25,007 |
4,505 |
436,449 |
465,961 |
Additions |
2,918 |
733 |
26,978 |
30,629 |
Disposals |
(4,650) |
- |
- |
(4,650) |
Exchange
differences |
(2,959) |
(640) |
(56,335) |
(59,934) |
As at 31 October
2017 |
20,316 |
4,598 |
407,092 |
432,006 |
Depreciation |
|
|
|
|
At 01 November
2016 |
11,332 |
2,552 |
292,482 |
306,366 |
Charge for the
year |
7,574 |
485 |
44,341 |
52,400 |
Released on
disposal |
(4,635) |
- |
- |
(4,635) |
Exchange
differences |
(2,320) |
(392) |
(40,735) |
(43,447) |
As at 31 October
2017 |
11,951 |
2,645 |
296,088 |
310,684 |
Net Book
Value |
|
|
|
|
As at 31 October
2017 |
8,365 |
1,953 |
111,004 |
121,322 |
At 01 November
2016 |
13,675 |
1,953 |
143,967 |
159,595 |
The holding company held no tangible fixed assets at
31 October 2017 and 2016.
16. Goodwill
Goodwill has been calculated as £226,644 (2016: £226,644) and is
measured as the excess of the sum of the consideration paid and the
fair value of the acquirer’s previously held equity interest in the
acquiree over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed.
Goodwill has been tested for impairment as at the balance sheet
date. The recoverable amount of goodwill at 31 October 2016 and 2017 was assessed on the
basis of value in use. As this exceeded the carrying values no
impairment loss was recognised. The key assumptions in the
calculation to assess value in use are future revenues and the
ability to generate future cash flows.
The most recent financial results and forecasts for the next
year were used, followed by an extrapolation of future cash flows
using a price earnings ratio. The projected results were discounted
at a rate which is a prudent evaluation of the pre-tax rate that
reflects current market assessments of the time value of money and
risks specific to the cash-generating unit.
The key assumptions used in the value in use calculations in
2016 and 2017 were as follows:
- A discount rate of 10%
- Sales growth of 18%
- Weighting of probabilities assigned to potential earnings.
Notes to the Consolidated Financial
Statements (Continued)
The Directors believe the significance of the earning potential
identified mean that the goodwill does not require impairment at
this early stage.
17. Inventories
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Raw materials |
115,114 |
152,976 |
- |
- |
Work-in-progress |
14,497 |
4,344 |
- |
- |
Finished goods |
74,171 |
9,073 |
- |
- |
|
203,782 |
166,393 |
- |
- |
18. Trade and other receivables
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Trade Receivables |
344,389 |
432,321 |
- |
- |
Other Receivables |
36,025 |
8,134 |
18,470 |
8,134 |
|
380,414 |
440,455 |
18,470 |
8,134 |
Group Trade receivables represent amounts receivable on the sale
of agricultural products and are included after provisions for
doubtful debts.
The Directors consider that the carrying amount of trade
receivables and other receivables approximates their fair
value.
19. Cash and Cash Equivalents
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Cash on hand |
75,952 |
268,790 |
43,299 |
240,337 |
20. Trade and Other Payables
|
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Trade payables |
859,717 |
842,782 |
143,368 |
33,455 |
Other payables |
46,477 |
14,554 |
- |
- |
Related party
payables |
50,547 |
26,161 |
- |
- |
|
956,741 |
883,497 |
143,368 |
33,455 |
Notes to the Consolidated Financial
Statements (Continued)
Trade payables represent amounts due for the purchase of
agriculture materials and administrative expenses. The Directors
consider that the carrying amount of trade payables approximates to
their fair value.
Included in other payables are the following related party
financial liabilities:
G Roach |
23,131 |
26,161 |
|
M Bonner |
27,416 |
- |
|
Terms:
G Roach: The loan bears interest at the
South African prime overdraft rate. The interest will be calculated
and paid when the loan is repaid. The loan is repayable as decided
upon from time to time.
M Bonner: The loan bears interest at
the South African prime overdraft rate. The interest is calculated
and paid quarterly. The loan is repayable as decided upon from time
to time.
21. Share Capital and Share
Premium
Allotted, called up and
fully paid share capital and share premium |
Number |
Nominal Value |
Share Premium |
Total |
|
|
£ |
£ |
£ |
Balance at 1
November 2015 |
94,896,125 |
94,896 |
1,107,373 |
1,202,269 |
Issued during the
year |
85,895,321 |
85,896 |
464,104 |
550,000 |
Balance at 31 October
2016 |
180,791,446 |
180,792 |
1,571,477 |
1,752,269 |
Issued during the
year |
26,192,308 |
26,192 |
194,058 |
220,250 |
Balance at 31 October
2017 |
206,983,754 |
206,984 |
1,765,535 |
1,972,519 |
Share capital is the amount subscribed for shares at nominal
value.
Retained losses represent the cumulative loss of the Group
attributable to equity shareholders.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS 2.
During the year the company placed these shares and as the
number of placing shares comprised more than 10% of the companies
issued share capital, and although the placing shares has been
allotted, admission of the placing shares required publication of a
Prospectus within a twelve month period. On 22 March 2017, the company announced that the
Prospectus had been approved by the UK Listing Authority. The
April 2016, September 2016 and March
2017 shares were admitted to the Standard Listing segment of
the Official List of the UK Listing Authority and to trading on the
London Stock Exchange Main Market. In total these shares amounted
to 93,587,829 Ordinary Shares.
22. Share Based Payments Reserve
The Company has a share-ownership compensation scheme for senior
executives of the Company whereby senior executives may be granted
options to purchase Ordinary Shares in the Company.
Notes to the Consolidated Financial
Statements (Continued)
Warrants
There are 2,761,330 warrants to subscribe for ordinary shares at
31 October 2017 (31 October 2016: 12,638,660). Of these:-
- 2,761,330 warrants are exercisable at a price of 1.5p and
were issued as consideration to the joint financial advisers of the
Company, Zeus Capital Limited and VSA Capital Limited.
- In the prior year 9,877,330 warrants were exercisable at a
price of 2.75p, all of which expired during the current year.
Options
At 1 November 2016 there were
17,356,184 share options issued to the directors and a senior
manager of the Company. During the year a further 3,600,000 share
options were granted to a Director (2016: 11,839,046).
The movement on the share based payment charge for the year was
£8,572 (2016 - £-3,714) in respect of the issued options. The
details of warrants and options are as follows:
Date of
Grant |
At 01 November
2016 |
Granted/
Exercised/
Vested |
Forfeits |
At 31 October 2017 |
Exercise
Price |
Exercise/Vesting Date
From
To |
Warrants |
|
|
|
|
|
|
|
06/09/2012 |
2,761,330 |
- |
- |
2,761,330 |
1p |
06/09/2012 |
05/09/2022 |
11/08/2014 |
9,877,330 |
- |
9,877,330 |
- |
2.75p |
11/08/2014 |
31/01/2017 |
Options |
|
|
|
|
|
|
|
06/09/2012 |
17,356,184 |
3,600,000 |
- |
20,956,184 |
1p |
13/08/2014 |
05/09/2022 |
|
29,994,844 |
3,600,000 |
9,877,330 |
23,717,514 |
|
|
|
The remuneration committee’s aim is to remunerate executive
directors competitively and to reward performance. The remuneration
committee determines the company's policy for the remuneration of
executive directors, having regard to the UK Corporate Governance
Code and its provisions on directors' remuneration.
The number of warrants and options outstanding to the Directors
that served in the year, as at 31 October
2017 were as follows:
|
2017 |
2017 |
2016 |
2016 |
Director |
Warrants |
Options |
Warrants |
Options |
Andrew Monk |
- |
3,839,046 |
- |
3,839,046 |
George Roach |
- |
3,839,046 |
- |
3,839,046 |
Robert Scott |
- |
1,000,000 |
- |
1,000,000 |
Matthew Bonner |
- |
3,600,000 |
- |
- |
Sub-total |
- |
12,278,092 |
- |
12,517,138 |
Neil Herbert * |
- |
3,839,046 |
6,000,000 |
3,839,046 |
Total |
- |
16,117,138 |
6,000,000 |
15,090.784 |
* Neil Herbert resigned as a
Director on 5 September 2016 and his
warrant options expired on 31 January
2017.
Notes to the Consolidated Financial
Statements (Continued)
The estimated fair value of the options in issue was calculated
by applying the Black-Scholes option pricing model. The assumptions
used in the calculation were as follows:
Share price at date of
grant |
£0.001- £0.225 /
£0.025 |
Exercise price |
£0.0055 |
Expected
volatility |
30% |
Expected dividend |
0% |
Contractual life |
5 years |
Risk free rate |
1.25% |
Estimated fair value of
each option |
£0.0045 |
The share options outstanding at the year-end had a weighted
average remaining contractual life of 4.5 years (2016: 6
years).
23. Operating lease
Operating lease
charges |
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Premises |
94.001 |
71,605 |
- |
- |
Equipment |
5,019 |
3,977 |
- |
- |
|
99,020 |
75,582 |
- |
- |
Minimum lease
payments |
Group |
Company |
|
2017 |
2016 |
2017 |
2016 |
|
£ |
£ |
£ |
£ |
Not later than one
year |
105,132 |
75,582 |
- |
- |
Between one year and
five years |
196,635 |
301,767 |
- |
- |
Later than five
years |
- |
- |
- |
- |
|
301,767 |
377,349 |
- |
- |
24. Financial instruments
The Group uses financial instruments comprising cash, trade and
other receivables and trade and other payables. Cash balances are
held in Sterling, US Dollars and South African Rand.
The Group has a policy of not hedging and therefore takes market
rates in respect of foreign exchange risk. However, rates are
monitored closely by management.
Notes to the Consolidated Financial
Statements (Continued)
Financial assets and liabilities
2017 |
Cash and
receivables
£ |
Financial liabilities
at amortised cost
£ |
Total
£ |
Trade and other
receivables |
344,389 |
- |
344,389 |
Other receivables |
36,025 |
- |
36,025 |
Cash and cash
equivalents |
75,952 |
- |
75,952 |
|
456,366 |
- |
456,366 |
Trade payables |
- |
859,718 |
859,718 |
Other payables |
- |
46,477 |
46,477 |
Related party
payables |
- |
50,547 |
50,547 |
|
- |
956,742 |
956,742 |
|
|
2016 |
Cash and
receivables
£ |
Financial liabilities
at amortised cost
£ |
Total
£ |
Trade and other
receivables |
432,321 |
- |
432,321 |
Other receivables |
8,134 |
- |
8,134 |
Cash and cash
equivalents |
268,790 |
- |
268,790 |
|
709,245 |
- |
709,245 |
Trade payables |
- |
842,782 |
842,782 |
Other payables |
- |
34,554 |
34,554 |
Related party
payables |
- |
26,161 |
26,161 |
|
|
883,497 |
883,497 |
|
|
|
|
|
Valuation techniques and assumptions
applied for the purposes of measuring fair value
The fair value of cash and receivables
and liabilities approximates the carrying values disclosed in the
financial statements.
Capital management
The Group manages its capital
resources to ensure that entities in the Group will be able to
continue as a going concern, while maximising shareholder
return.
The capital structure of the Group
consists of equity attributable to shareholders, comprising issued
share capital and reserves. The availability of new capital will
depend on many factors including a positive operating environment,
positive stock market conditions, the Group’s track record, and the
experience of management. There are no externally imposed capital
requirements. The Directors are confident that adequate cash
resources exist or will be made available to finance operations but
controls over expenditure are carefully managed.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations
arise.
The carrying amounts of the Group’s foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows:
Notes to the Consolidated Financial
Statements (Continued)
|
Liabilities |
|
Assets |
|
|
2017
£ |
2016
£ |
2017
£ |
2016
£ |
United States dollar (USD$) |
- |
- |
177 |
177 |
South African Rand (ZAR) |
813,376 |
823,880 |
598,379 |
627,168 |
|
813,376 |
823,880 |
598,556 |
627,345 |
Cash and cash equivalents
|
Liabilities |
|
Assets |
|
|
2017
£ |
2016
£ |
2017
£ |
2016
£ |
Sterling |
- |
- |
43,122 |
240,337 |
United States dollar (USD$) |
- |
- |
177 |
- |
South African Rand (ZAR) |
- |
- |
32,653 |
28,453 |
|
- |
- |
75,952 |
268,790 |
The presentation currency of the Group is UK Pounds
sterling.
The Group is exposed primarily to movements in Sterling and
South African Rand, the former currency in which the Group receives
most of its funding, against other currencies in which the Group
incurs liabilities and expenditure.
Sensitivity analysis
Financial instruments affected by
foreign currency risk include cash and cash equivalents, trade
other receivables and trade and other payables. The following
analysis, required by IFRS 7 Financial Instruments: Disclosures, is
intended to illustrate the sensitivity of the Group’s financial
instruments (at year end) to changes in market variables, being
exchange rates.
The following assumptions were made in calculating the
sensitivity analysis:
- All income statement sensitivities also impact equity
- Translation of foreign subsidiaries and operations into the
Group’s presentation currency have been excluded from this
sensitivity as they have no monetary effect on the results
Income Statement / Equity
|
2017
£ |
2016
£ |
Exchange
rates: |
|
|
+10% US$
Sterling (GBP) |
18 |
17 |
-10% US$
Sterling (GBP) |
(18) |
(17) |
+10%
South African Rand (ZAR) Sterling (GBP) |
3,265 |
2,845 |
-10%
South African Rand (ZAR) Sterling (GBP) |
(3,265) |
(2,845) |
The above sensitivities are calculated with reference to a
single moment in time and will change due to a number of factors
including:
- Fluctuating other receivable and trade payable balances
- Fluctuating cash balances
- Changes in currency mix
Notes to the Consolidated Financial
Statements (Continued)
Credit risk
Financial instruments that potentially subject the Group to a
significant concentration of credit risk consist primarily of trade
receivables and cash and cash equivalents. The Group limits its
exposure to credit loss from trade receivables by reviewing credit
exposures to all customers and discounting of trade receivables.
The Group limits its exposure to credit loss by placing its
cash with major financial institutions. As at 31 October 2017, the Group held £75,952 in cash
and cash equivalents (2016: £268,790).
Liquidity risk
All of the Group’s financial liabilities are classified as
current. The Group intends to settle these liabilities from revenue
generated from sales production and working capital.
Market risk
The group’s investments in an associate company comprise a
non-controlling shareholding in an unlisted company. The shares are
not readily tradable and any monetisation of the shares is
dependent on finding a willing buyer.
25. Related Party Transactions
Director’s
fees
The previous Chairman, Andrew
Monk, is a director of VSA Capital Limited and that company
provided services amounting to £79,433 (2016 - £40,000) to the
Company during the year.
During the year ended 1 October
2017 £15,104 was paid to Directors of the company (2016:
£14,856) As at 31 October 2017
£39,000 remained unpaid to the directors of the company (2016:
£4,138).
Other related
party transactions
1. Included in
trade and other payables are the following related party financial
liabilities:
|
2017
£ |
2016
£ |
G Roach |
23,131 |
26,161 |
M Bonner |
27,416 |
- |
Terms:
G Roach: The loan bears interest at prime overdraft rate. The
interest will be calculated and paid when the loan is repaid. The
loan is repayable as decided upon from time to time.
M Bonner: The loan bears interest at prime overdraft rate. The
interest will be calculated and paid when the loan is repaid. The
loan is repayable as decided upon from time to time.
2. African
Projects and Ventures (“APV”).
On 31 October 2017 the company’s
wholly owned subsidiary Dynamic Intertrade (Pty) Limited
("Dynamic") entered into the Sale and Purchase Agreement in terms
of which Dynamic will sell the 49.9% of the allotted and issued
share capital of APV African Projects and Ventures (Pty) Limited to
Misty Rose Properties 11 CC, a company owned by Mr G Roach for the
total sum of ZAR1.00.
Notes to the Consolidated Financial
Statements (Continued)
26. Controlling Party Note
There is no single controlling party. Significant shareholders
are listed in the Directors Report and Business Review.
27. Events Subsequent to 31 October 2017
On 23 November 2017 Mr
Rob Scott, an existing Non-Executive
Director of the Company, took on the role of Executive Director. Mr
Scott will be responsible for driving growth and seeking
acquisitions.
On 1 November 2017 AAA raised
£113,035 by way of subscription of 20,000,000 new ordinary shares
of 0.1p each at a price of 0.7p per Subscription Share. The
Subscription proceeds will be used to provide additional working
capital.
28. Financial Instruments Risks
The risks posed to the Company are set out in the Strategic
Report. The Directors do not consider that there are any
significant changes in the Company’s risk profile.