TIDMAGTA
RNS Number : 2490B
Agriterra Ltd
30 September 2022
30 September 2022
Agriterra Limited ('Agriterra' or the 'Company')
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
Audited Annual Results for Year Ended 31 March 2022
Agriterra Limited, the AIM-quoted African agricultural company,
announces its audited annual results for the year ended 31 March
2022 (the "2022 Annual Accounts").
The 2022 Annual Accounts are now available on the Company's
website and an extract of selected information from the 2022 Annual
Accounts is set out below. The 2022 Annual Accounts will be posted
to Shareholders with the Notice of Annual General Meeting to
approve the 2022 Annual Accounts by 28 October 2022.
**S **
For further information please visit www.agriterra-ltd.com or
contact:
Agriterra Limited Strand Hanson Limited
(Nominated & Financial Adviser and
Broker)
============================ ======================================
Caroline Havers Ritchie Balmer/ James Spinney / David
Asquith
caroline@agriterra-ltd.com +44 (0) 207 409 3494
Chair's statement and strategic review
I am pleased to present the annual report of the Company for the
year ending 31 March 2022. During the year, the Company focused on
improving the existing operating systems, improving sales and
building the DECA Snax brand in the local market.
The Company continues to observe the principles of the QCA
Corporate Governance Code (the "Code") to the extent that they
consider them to be applicable and appropriate for a Company of
Agriterra's size and stage of development, through the maintenance
of efficient and effective management frameworks accompanied by
good communication. Further details are available at:
http://www.agriterra-ltd.com/investor-relations/corporate-governance/
Strategy and Business Model
The Company's strategy is to operate efficient, profitable
businesses in Mozambique to create value for its shareholders and
other stakeholders by supplying beef and milled maize products to
the local market.
The Company continues to focus on adding value along the entire
maize and beef value chain, by developing and offering new products
to the market. It currently has three operating divisions:
-- Beef, which sources cattle from local farmers and then
processes them through its own feedlot, abattoir operations and
retail units through Mozbife Limitada ('Mozbife')
-- Grain, which operates maize purchasing and processing
businesses through Desenvolvimento e Comercializac a o Agri cola
Limitada ('DECA') and Compagri Limitada ('Compagri').
-- Snax, which sources maize grits from DECA, processing them
into flavoured puffs and naks through DECA Snax, an operating
entity that was commissioned in December 2020 to add value to our
grain meal and sell as a snack.
These three divisions have built strong brands in Mozambique.
During the year the Company secured additional debt funding of
c.US$2.4m to secure the necessary maize quantities needed to meet
the projected meal sales for this financial year.
The Company is aware of its environmental, social and
governmental responsibilities and the need to maintain effective
working relationships across a range of stakeholders. The major
shareholder is represented on the Board ensuring their views are
incorporated into the Board's decision-making process. In addition
to the Company's staff and shareholders, the local community in
Mozambique is a primary stakeholder. In purchasing maize and cattle
directly from the local community, the Company plays an important
role in local economic development, supporting small scale farmers
and the developing commercial sector.
Mozambique overview
FY2022 has proven to be a very challenging year, with the
continued impact of COVID-19 restrictions and the security
situation in the North of the country.
The Central region was hit by a tropical storm in December 2021;
Tropical Storm Anna, passed through destroying crops and flooding
fields in the main maize producing belt. Farmers were forced to
replant, which in turn caused delays in the harvest and supply of
grain to the market. The harvest period moved from April to June
and as a result the yields were lower. The impact of the tropical
cyclone will affect maize availability and prices for the 31 March
2023 financial year.
Mozambique continued with the COVID-19 lockdown until September
2021, but a further lock down was required from December 2021 to
March 2022, as a response to the then new Omnicrom variant. The
lockdown affected the economy generally, but in particular the
hospitality industry which impacted the operating companies in both
direct and wholesale sales.
National infection numbers appear to be under control and the
vaccination rates are improving. Beaches, restaurants and general
day to day life began to normalise in April 2022. The operating
companies were affected in Q1-2022, when at least 10 Management and
60 general staff were infected, but everyone recovered. The
companies continued with the training and awareness programmes
implemented at the start of the pandemic.
The insurgency in Northern Mozambique (1,500km north of Chimoio)
intensified, with SADC and Rwandan security forces assisting the
Mozambican army since September 2021. They have had a positive
impact in reducing the number of attacks around the O&G fields,
but the war has moved further south, towards the town of Pemba.
This continues to be a threat, but Total and ENI have indicated
that they would be prepared to return in Q4-2022, if the situation
improves. This will certainly offer the economy a boost and help
move Mozambique forward.
During this same period the Metical remained steady against the
US$, but strengthened vs the Rand. This meant that South African
imports were slightly cheaper in the Maputo market. Annual
inflation was higher at 5.7%, against 3.19% in 2020, in response to
the increase in fuel and food prices, due to the Ukrainian war. In
response to the inflation, the Bank of Mozambique increased its
prime lending rate from 16% to 19%, forcing many business to slow
down their growth plans.
Operations review
Grain division
The Grain division has become more efficient over these last 12
months: the mill upgrades have improved the overall extraction rate
from 76.7% in FY21 to 78.0%; and cheaper maize purchases have
improved the overall gross margin to 26.7% vs the 15.41% achieved
in prior period. These efficiencies have enabled the division to
improve its overall performance per ton sold. However, volumes sold
declined to 17,094 tons (2021: 25,389 tonnes) and average selling
price decreased to MZN 26,983 per ton (2021: MZN 27,467).
The drop in sales is mainly due to the excessive volume of maize
produced in and being informally imported from Malawi and Zambia,
where favourable climatic conditions and government subsidised
fertiliser schemes have resulted in exceptionally high maize
production for that year. The supply was far greater than the local
demand and hence the maize entering Mozambique and eventually
making its way south to Chimoio, Beira and Maputo, thus requiring a
reduction in price to compete with the cheaper maize available in
the informal markets.
A total of $6.1m borrowings were secured from commercial banks,
contributing towards the purchase of 29,264 tons of maize needed
for this season. The business has in silo a total stock of 7,690
tons of maize at year end (2021: 2,044 tons), which has enabled
grain division operations to mill through to June 2022, new crop
was available to purchase in mid-June 2022.
Revenue for the year decreased to $7.1m (2021: $11.1m).
Operating costs increased by $0.3m to $1.9m resulting from the
appointment of senior management and additional bush buying
administrative and transport expenses. EBITDA increased to $0.54m
(2021: EBITDA of $0.51m) due to extraction efficiencies and reduced
maize cost as compared to the prior year. However, finance costs
increased to $1.55m (2021: $1.07m) and the assets revaluation led
to an increase in depreciation cost to $0.5m from $0.18m in 2021
resulting in a loss before tax of $1.41m (2021: loss $ 0.74m).
Loss after tax amounted to $1,515,000 (FY21: Loss after tax
$742,000.
Beef division
The Beef division suffered a loss of business between March and
April 2021, following the suspension of all oil and gas related
activities by Total Energy and ENI, a response to the terrorist
attacks in the north. The division has focussed on identifying new
customers, improving operating margins and cutting overheads. Sales
volumes were 24% below previous year (1,015 tons vs 1,331 tons in
FY21).
The decrease in sales has been mitigated by improved Gross
Margin of 23.87% (FY-2021: 9.62%) resulting from higher average
selling price of MZN 252 per kg (FY-2021: MZN 221) whilst the
average dress out rate of 51.2% (FY-2021: 51.7%) remained the same
for the year, improved cattle buying practises and training of
small farmers (average quarter weight is now 50kg vs the historical
average weight of 40kg) has allowed the business to improve quality
and increase unit prices.
The Company has embarked on a right sizing strategy, we offered
voluntary retrenchments and agreed not to replace staff that either
resigned or whose contract came to an end. We still have the cost
of the 3 farms that remain in care and maintenance whilst farming
investment opportunities are being evaluated to maximise the
utilisation of these farms.
Loss after tax amounted to $504,000 (FY21: Loss after tax
$1,063,000).
Snax Division
DECA Snax, a 50:50 joint venture with Snax for Africa Limited
has, in its second year of operations, managed to grow sales
volumes by 500% to $1.5 million (FY21: $0.2 million) due to the
successful launch of new products and creation of an efficient
sales distribution network. DECA Snax sold 707,385 bales during the
current year (FY21: 128,805 bales).
Production volume is exceeding 80% of the installed capacity and
plans are in place to increase the production capacity of the Snax
division in the next financial year by utilising internally
generated funds. Management is encouraged by the positive demand
for the products which is more than the production capacity.
Profit after tax amounted to $109,889 (FY21: Loss after tax -
Nil)
Key Performance Indicators
The Board monitors the Company's performance in delivery of
strategy by measuring progress against Key Performance Indicators
(KPIs). These KPIs comprise a number of operational, financial and
non-financial metrics.
2022 2021 2020
Grain division
------------- ------------- -------------
- Average milling yield 78.0% 76.7% 77%
------------- ------------- -------------
- Meal sold (tonnes) 17,094 25,389 19,926
------------- ------------- -------------
- Revenue $7,118,000 $11,061,000 $8,955,000
------------- ------------- -------------
- EBITDA (note 5) $535,000 $510,000 $86,000
------------- ------------- -------------
- Net debt ($9,521,266) ($5,856,106) ($4,001,000)
------------- ------------- -------------
- Available headroom under banking
facilities - $884,669 $746,000
------------- ------------- -------------
Beef division
------------- ------------- -------------
- Slaughter herd size - number of head 4,575 5,667 2,100
------------- ------------- -------------
- Average daily weight gain in feedlot
(% of body mass) 0.35 0.35 0.34
------------- ------------- -------------
- Meat sold (tonnes) 734 890 1,094
------------- ------------- -------------
- Revenue $3,159,000 $3,189,000 $3,955,000
------------- ------------- -------------
- EBITDA (note 5) ($66,000) ($547,000) ($905,000)
------------- ------------- -------------
- Net debt ($184,283) ($406,244) ($665,000)
------------- ------------- -------------
- Available headroom under banking
facilities - - $99,000
------------- ------------- -------------
Snax division (note 23)
------------- ------------- -------------
- Bales sold (units) 707,385 128,805
------------- ------------- -------------
- Revenue $1,447,000 $117,000
------------- ------------- -------------
- EBITDA $247,000 $10,000
------------- ------------- -------------
- Net debt $Nil $23
------------- ------------- -------------
- Available headroom under banking N/A N/A
facilities
------------- ------------- -------------
Group
------------- ------------- -------------
- EPS (10.7) (10.3) (14.1)
------------- ------------- -------------
- Liquidity - cash plus available headroom
under facilities $107,000 $1,139,000 $1,162,000
------------- ------------- -------------
Financial Review
In FY 22 Group revenue decreased by 28% to US$10.28m (FY21:
US$14.25m) mainly due to:
-- Influx of maize from Malawi and Zambia which saturated the
Mozambique market and maize meal sales volumes decreased by 33% to
17,094 tons (FY21: 25,389 tons). The strengthening of the Metical
against other currencies offered Mozambique as an attractive market
in Southern Africa. Grain division purchased 30,000 tons, milled
out 23,000 tons and carried forward 7,000 tons into the next
financial year.
-- Reduction in beef demand during the peak of the pandemic and
the loss of key contracts due to the conflict in the north,
resulting in lower than budgeted beef sales by 17.5% to 734 tons
(FY21: 890 tons). The decline in sales volumes was mitigated by
14.06% improvement in selling price.
Even though sales volumes decreased, the Group's gross profit
improved by 25% to $2.6 million (FY21: Gross profit - $2.1 million)
as a result operational efficiencies in all divisions which
included but are not limited to:
-- Improved maize meal extraction rate and low cost of maize in the Grain division.
-- Low animal travel mass loss from buying points to the
feedlot, management of farm cost and efficient slaughtering process
in the Beef division.
Despite the operating expenses increasing by 11% to $3.5 million
(FY21: $3.2 million), the operating loss decreased by 17% to $821
000 (FY21: $987,000) even though low sales volumes were realised
for the year. The Group operational performance is expected to be
profitable if volumes improve by 25%.
Net Debt at 31 March 2022 was US$9.7m (FY21: US$4.3m). Poor
group performance has resulted in the increase in debt due to high
interest cost amounting to $1.6 million eroding the significant
portion of the Group earnings and ultimately shareholder equity.
Subsequent to the year end, the Group's debt has been refinanced by
means of a shareholder loan from Magister Investments Limited (see
note 26).
Risk management
The Company is subject to various risks and the future outlook
for the Company, and growth in shareholder value should be viewed
with an understanding of these risks. According to the risk, the
Board may decide to tolerate it, seek to mitigate it through
controls and operating procedures, or transfer it to third parties.
The following table shows the principal risks facing the Company
and the actions taken to mitigate these:
Key risk Detail How it is managed Change in the period
factor
Foreign Exchange The Company's operations The Company's borrowing Decreased . The Metical
are impacted by fluctuations facilities are denominated has been stable in
in exchange rates in Metical. the past 12 months,
and the volatility while inflation has
of the Metical. increased, and interest
rates increased. IMF
and WB have begun lending
to the government of
Mozambique (GoM), so
we expect rates to
remain steady.
-------------------------------- -------------------------------- -------------------------------
Political Changes to government Contingency plans to No Change. Following
instability policy and applicable protect assets and staff the peace accords signed
laws could adversely should political or with RENAMO, while
affect operations military tensions escalate. military tension in
or the financial condition Northern Mozambique
of the Company. is slowly being resolved
under a SADC military
conflict resolution
assistance.
-------------------------------- -------------------------------- -------------------------------
Land ownership Property rights and Observance of any conditions No change .
in Mozambique land are exclusive attaching to a DUAT.
to the state. The
state grants rights
to use and develop
land "DUATs". The
operations are dependent
upon maintaining the
relevant DUATs.
-------------------------------- -------------------------------- -------------------------------
Maize growing Adverse weather conditions, Diversify sources of Increased. Cyclones
season national or regional supply and sign supply and flooding have severely
could impact on the agreements. The business affected the farmer
availability and pricing has taken the initiative yields in central Mozambique.
of grain. to go directly to the
farmer, rather than
depending entirely on
traders.
-------------------------------- -------------------------------- -------------------------------
Cattle and Cattle are subject Stringent Bio-security No Change.
cattle feed to diseases and infections. measures are in place
The availability and at the Farms and Feedlot.
price of feed impacts The division is now
profitability. self-sufficient in roughage
crops and acquires most
of its feed from the
Grain division.
-------------------------------- -------------------------------- -------------------------------
Access to The Company is reliant During the year, the Increased. The exposure
working capital on local banking facilities Company secured additional to reliance on the
in Mozambique. overdraft facilities. renewal of short-term
facilities has increased.
-------------------------------- -------------------------------- -------------------------------
Compliance There is a risk of The Board reinforces No change .
a breach of the Company's an ethical corporate
business or ethical culture. Anti-bribery
conduct standards policies are in place,
and breach of anti-corruptions with regular training
laws, resulting in throughout the organization.
investigations, fines
and loss of reputation.
-------------------------------- -------------------------------- -------------------------------
COVID-19 COVID-19 has had a Plans are in place to No Change. Staff are
significant negative protect our staff and being vaccinated and
impact globally, both production capabilities. working practises have
economically and socially. The Company remains changed to accommodate
There is a risk that alert to the fast-changing the new normal.
there will be a significant environment and is prepared
outbreak of the COVID-19 to put in place mitigating
virus in Mozambique actions as events develop.
which could potentially Our products, meal and
impact the population beef, are key staples
through contraction in the domestic Mozambican
of COVID-19 and Government market and demand is
enforced measures, not expected to be
and in turn impact significantly
the Company's operations. affected should the
pandemic take hold.
The impact on future
liquidity has been discussed
further in the Going
Concern section below.
-------------------------------- -------------------------------- -------------------------------
The Board is also responsible for establishing and monitoring
the Company's systems of internal controls. Although no system of
internal control can provide absolute assurance against material
misstatement or loss, the Company's systems are designed to provide
the directors with reasonable assurance that problems are
identified on a timely basis and dealt with appropriately. The
Board reviews the effectiveness of the systems of internal control
and considers the major business risks and the control environment
on a regular basis. In light of this control environment the Board
considers that there is no current requirement for a permanent
separate internal audit function.
Going concern
Details of the consideration of going concern are set out in
note 3. The Company has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities and future renewals.
The forecasts show that the Group needs to achieve its operating
targets and secure working capital funding in addition to reducing
the borrowing levels by securing other forms of cheaper financing
to meet its commitments as they fall due, none of which are
certain. Post year end, the Group has secured US$7.9 million from
direct shareholder funding which will be used to repay the
commercial borrowings and the Group is expected to save at least
US$0.7 million by repaying the US$6.1 million overdraft facility
and US$1.8 million bank loan after securing maize for the current
year. In addition, the Group also secured a US$1.4 million short
term loan from Commercial Banks to fund maize purchasing for the
FY23 financial year. The group expect further short term funding to
be required to fund the current year working capital. These
conditions and events indicate the existence of a material
uncertainty that may cast significant doubt upon the Group's
ability to continue as a going concern and the Group Companies may
therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. The auditors make
reference to going concern in their audit report by way of a
material uncertainty. These financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
COVID-19
The Mozambican Government continues to implement policies to
minimise the spread of COVID-19, but these are now very relaxed,
and business is back to normal. The beef and snax sales have been
encouraging, but growth is being restricted by the high inflation
rates that are affecting the amount of disposable income available
in the region. The Grain division has suffered the most with low
volume of sales and there is a need to reduce overheads, improve
efficiencies and to identify new markets, where the division can
increase product up take.
Outlook
The Group had a difficult start to FY-23 as the COVID-19 lock
down was re-instated and remained in force until Q3-2022. This has
made the overall operation challenging, but management are
protecting the gross margins and ensuring that the business does
not lose potential advantages in the market.
Grain: In order to improve margins, the division secured an
additional working capital facility, enabling it to purchase maize
in the period when the market is saturated, and prices are lowest.
In addition, some of the larger clients were encouraged to pre-pay
for their meal, so as to secure the maize needed at the same time.
There has also been renewed focus on the commercial strategy to
better align our pricing with the market, to introduce a rebranding
program to drive the sales of the 1kg packs which offers better
margins, and to incentivise clients to buy more and pay
quickly.
Beef: With demand under pressure from lockdown, the focus has
been on realigning the cost base with lower projected volumes and
refocussing the retail strategy. The depot, opened in 2020 in
Maputo in now accounting for 40% of all sales, with demand for our
product increasing quickly. On the supply side, the focus has been
on strengthening supply chain links with the small farmers who work
with us and on getting the efficiencies on the feed lot to improve.
A new manager has been contracted and he is having a positive
impact on the bottom line.
Snax: The demand for the brand is growing quickly and
penetrating new market easily. The division will be introducing new
flavours to widen customer choices and further strengthen the brand
presence in the market. Snax division is targeting to generate USD
0.5 million revenue per month supported by investment in a new
extruder which will improve the production capacity.
Board and senior management changes
In March 2021 Mr. Sant'ana Afonso joined the board as an
executive Director and Chief Executive Officer. Mr. Sant'ana Afonso
is a Mozambican citizen and has worked with the company since March
2020 before being formally appointed to the role of CEO in April
2021. He was Executive Director for Mozambique of AgDevCo for 6
years and, prior to that, worked for 6 years as the Bulk Cargo
Manager at the Port of Maputo, where he gained significant supply
chain and logistics experience.Mr. Sant'ana Afonso has a BSc in
Agriculture and an MSC in Agricultural Economics and has held
non-executive directorships in various companies in the food
commodity sector in Mozambique.
After the end of the current reporting period, Mr. Sant'ana
Afonso resigned from the Company effective 31 July 2022. Mr Hamish
Rudland has assumed the role of Interim Chief Executive
Officer.
CSO Havers,
Non-Executive Chair
29 September 2022
Corporate Governance
The Company is quoted on AIM and is required to comply with the
provisions of a recognised corporate governance code. The Board
elected to adopt the Quoted Company Alliance Corporate Governance
Code (the "QCA code"). Further details are available at
http://www.agriterra-ltd.com/corporategovernance.aspx.
The Board is committed to applying a standard of corporate
governance commensurate with its size and stage of growth and the
nature of its activities.
The Board
The board structure continues to be organised to ensure it has
the appropriate balance of skills and independence. At the year end
the Board comprised the Non-Executive Chair, Chief Executive, two
non-independent Non-Executive Directors and two independent
Non-Executive Directors. Within Senior Management, there is a
Finance Director and General Manager who report to the Board. The
Board is looking to further enhance its composition, skills and
balance as the Company develops. The Board currently comprises:
Caroline Havers , Non-Executive Chair (AC; IC chair)
Ms. Havers is a highly experienced litigation/dispute resolution
lawyer having spent over 30 years within international law firms
working with clients operating in a variety of African
jurisdictions and industry sectors. During her legal career, Ms.
Havers has been both a partner and managing director of different
law firms. She provides advice on compliance and governance and is
a long qualified CEDR Mediator.
Rui Sant'ana Afonso CEO, (Resigned 31 July 2022)
Mr. Sant'ana Afonso is a Mozambican citizen, who resides in
Mozambique. Previously he was Executive Director for Mozambique of
AgDevCo for 6 years and, prior to that, worked as Director of
Operations for G4S in Mozambique. In addition, he gained
significant supply chain and logistics experience through his role
as Bulk Cargo Manager at the Port of Maputo, where he worked for 6
years.
Mr. Sant'ana Afonso has a BSc in Agriculture and an MSC in
Agricultural Economics and has held non-executive directorships in
various companies in the food commodity sector in Mozambique.
Hamish Rudland , Non-Executive Director (IC) (Acting CEO from 1
August 2022)
Mr. Rudland has extensive experience across logistics,
agriculture, agro-processing, distribution, and property. After
graduating from Massey University, New Zealand, he returned to
Zimbabwe to start a passenger transport business that soon
diversified into fuel tank haulage. Thereafter Mr. Rudland
structured acquisitions of foreign-owned asset rich companies to
list on the Zimbabwe Stock Exchange where he has substantial
investments which focus on his core competencies but also synergise
where advantages can be made.
Mr. Hamish Rudland is the settlor of the Casa Trust which has
interest in Magister Investments and is also a Director of Magister
investment. As a result of Mr. Rudland's relationship to Magister
Investments Limited, he is not considered to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Gary Smith , Non-Executive Director (AC; RC)
Mr. Smith is an experienced finance professional and qualified
Chartered Accountant. He is currently a non-executive director of
several companies in Zimbabwe and Mauritius. Mr. Smith worked in
the UK for several years where he was employed at Deutsche Bank,
University of Surrey, and Foxhills Club & Resort. Upon
returning to Africa, he worked for a large transport and logistics
company in Mozambique for four years before returning home to
Zimbabwe and the above positions.
As a result of Mr. Smith's relationship with Magister
Investments Limited, he is not considered to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Neil Clayton , Non-Executive Director (AC Chair; RC Chair)
Mr. Clayton is a Chartered Accountant and has over 30 years of
experience in a variety of listed and un-listed companies.
Specifically, Mr. Clayton brings significant experience and
expertise as regards listed companies operating in Africa as well
as particular knowledge of the Company's business and requirements,
having held an interim finance role at the Company during 2019.
The Board considers Mr. Clayton to be an "independent" director
for the purposes of the QCA Corporate Governance Code.
Sergio Zandamela , Non-Executive Director (appointed 30 April
2021) (IC)
Mr. Zandamela is a Mozambican national with over 20 years'
experience in agriculture and business with a degree in Agronomy -
Rural Engineering from the Eduardo Mondlane University and
subsequently an MBA from the Montford University Southern Africa -
Sandton Business School. From 2016 to 2020 Mr. Zandamela was
responsible from for all Mozambique commercial activities of
Tongaat Hulett (agriculture and agri-processing business, focusing
on the complementary feedstocks of sugarcane and maize).
The Board considers Mr. Zandamela to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Following the appointment of the CEO, the Non-Executive Chair is
expected to commit a minimum of a day a week and the Non-Executive
Directors are expected to commit 2 days a month. In addition, all
directors are expected to devote any additional time that might be
required in order to discharge their duties. Since the outbreak of
COVID-19, Board meetings were held quarterly via Zoom. The
attendance record of directors who held office for the year is as
follows:
Meetings held Meetings attended
Caroline Havers 4 4
-------------- ------------------
Neil Clayton 4 4
-------------- ------------------
Hamish Rudland 4 4
-------------- ------------------
Gary Smith 4 4
-------------- ------------------
Sergio Zandamela 4 3
-------------- ------------------
Rui Sant'ana Afonso 4 4
-------------- ------------------
The Board has entrusted the day-to-day responsibility for the
direction, supervision and management of the business to the Chief
Executive Officer (CEO), who leads an Executive Committee (EXCO).
For the financial year ended 31 March 2022 the EXCO was comprised
of the CEO, the General Manager, the Operations Director, the
Financial Director and the Commercial Director in Mozambique.
The CEO and General Manager have a call each week with the Chair
to review strategy and discuss any matters arising.
Certain matters are specifically reserved to the Board for its
decision including, inter alia, the creation or issue of new shares
and share options, acquisitions, investments and disposals,
material contractual arrangements outside the ordinary course of
business and the approval of all transactions with related
parties.
There is no agreed formal procedure for the directors to take
independent professional advice at the Company's expense. The
Company's directors submit themselves for re-election at the Annual
General Meeting at regular intervals in accordance with the
Company's Articles of Incorporation.
The Company has adopted a share dealing code for directors'
dealings which is appropriate for an AIM quoted company. The
directors and the Company comply with the relevant provisions of
the AIM Rules and the Market Abuse Regulation (EU) No. 596/2014
relating to share dealings and take all reasonable steps to ensure
compliance by the Group's employees.
Board Committees
Due to the current size of the Board and the Company, there is
no separate Nominations Committee, and any new directors are
appointed by the whole Board.
At the Board meeting held in March 2020 the new Audit ("AC"),
Investment ("IC") and Remuneration Committees ("RC") were
established. The Audit Committee and the Investment Committees have
met in the last financial year.
The Audit Committee was chaired by Neil Clayton. The Audit
Committee has been actively engaged in the planning and conduct of
the Audit of these financial statements. The Committee has met
formally since the year end and the Chair has had independent
conversations with the Audit partners both in Mozambique and London
where executive management have not been present.
Terms and conditions for Directors
The Non-Executive Chair and Non-Executive Directors do not have
service contracts but appointment letters setting out their terms
of appointment. The appointments may be terminated on three (3)
months' notice by either party. The Non-Executive Directors receive
an annual base fee reflecting their respective time commitments and
do not receive any benefits in addition to their fees, nor are they
eligible to participate in any pension, bonus or share-based
incentive arrangements.
Directors' remuneration
Remuneration details are set out in note 9 to the financial
statements.
Evaluation of Board performance
Given the Company's size, no formal review of the effectiveness
of its performance as a unit, as well as that of its committees and
the individual directors has been taken. Performance reviews are to
be carried out internally from time to time. Reviews will endeavour
to identify skills development or mentoring needs of directors and
the wider senior management team.
The Board recognizes that the current procedures remain to be
formally implemented and therefore do not accord with the QCA
Guidelines. However, it is anticipated that these procedures will
be augmented to a standard appropriate for the size and stage of
development of the Company.
Communication with shareholders
The Company aims to ensure all communications concerning the
Group's activities are clear, fair and accurate. The Board is
however keen to improve its dialogue with shareholders. The
Company's website is regularly updated, and announcements are
posted onto the Company's website.
The results of voting on all resolutions in future general
meetings will be posted to the Company's website, including any
actions to be taken as a result of resolutions for which votes
against have been received from at least 20 percent of independent
shareholders.
Directors' report
The Directors the Company hereby present their annual report
together with the audited financial statements for the year ended
31 March 2022 for the Group.
Except where otherwise noted, amounts are presented in this
Directors' report in United States Dollars ('$' or 'US$').
1. Listing details
Agriterra is a non-cellular Guernsey registered company limited
by shares, whose ordinary shares ('Ordinary Shares') are quoted on
the AIM Market of the London Stock Exchange ('AIM') under symbol
AGTA.
2. PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The principal activity of the Company is the investment in,
development of and operation of agricultural projects in Africa.
The Group's current operations are focussed on maize and beef in
Mozambique. A review of the Group's performance by business segment
and future prospects are given in the Chair's statement and
strategic review, together with a review of the risks and
uncertainties impacting on the Group's long-term performance.
3. Results and Dividends
The Group results for the year ending 31 March 2022 show a loss
after taxation of US$ 2,270,000 (2021: loss of $ 2,194,000). The
Directors do not recommend the payment of a final dividend (2021:
US$ nil). No interim dividends were paid in the year (2021: US$
nil).
Further details on the Group's performance in the year are
included in the Chair's statement and strategic review.
4. DIRECTORS
4.1. Directors in office
The Directors who held office during the year and until the date
of this report were:
Director Position
CSO Havers Non-Executive Chair
R Sant'ana Afonso (appointed 1 April 2021, Resigned 31 July 2022 ) Chief Executive Officer
NWH Clayton Non-Executive Director
HBW Rudland Non-Executive Director
GR Smith Non-Executive Director
S Zandamela Non-Executive Director
4.2. Directors' interests
As at the date of this report, the interests of the Directors
and their related entities in the Ordinary Shares of the Company
were:
Ordinary Shares held
HBW Rudland* 10,743,833
*Mr Rudland's interest is held through Magister Investments
Limited ('Magister'). Magister is a private limited company
incorporated in the Republic of Mauritius, controlled by Mauritius
International Trust Company Limited, as trustee of the Casa Trust
(a Mauritius registered trust). Mr. Hamish Rudland is the settlor
of the Casa Trust and the beneficiaries of the Casa Trust are Mr.
Rudland, his wife, and their three children.
4.3. Directors' emoluments
Details of the nature and amount of emoluments payable by the
Company for the services of its Directors during the financial year
are shown in note 9 to the financial statements.
4.4. Directors' indemnities
The Company has made qualifying third-party indemnity provisions
for the benefit of its Directors which remain in force at the date
of this report.
5. Substantial Shareholdings
To the best of the knowledge of the Directors, except as set out
in the table below, there are no persons who, as of 20 September
2022, are the direct or indirect beneficial owners of, or exercise
control or direction over 3% or more of the Ordinary Shares in
issue of the Company.
Number of Ordinary Shares % Holding
------------------------------------- -------------------------- ----------
Magister Investments Limited 10,743,833 50.58%
Gersec Trust Reg. 2,779,656 13.90%
Mr. William Philip Seymour Richards 982,500 4.63%
Global Resources Fund 678,886 3.20%
Peter Gyllenhammar AB 647,500 3.05%
6. EMPLOYEE INVOLVEMENT POLICIES
The Company places considerable value on the awareness and
involvement of its employees in the Group's performance. Within
bounds of commercial confidentiality, information is disseminated
to all levels of staff about matters that affect the progress of
the Group and that are of interest and concern to them as
employees.
7. SUPPLIER PAYMENT POLICY AND PRACTICE
The Company's policy is to ensure that, in the absence of
dispute, all suppliers are dealt with in accordance with its
standard payment policy which is to abide by the terms of payment
agreed with suppliers for each transaction. Suppliers are made
aware of the terms of payment. The number of days of average daily
purchases included in trade payables at 31 March 2022 was 58 days
(2021: 32 days).
8. POLITICAL AND CHARITABLE DONATIONS
During the year no political and charitable donations were made
in cash.
The most significant event for the year was the continuation of
the COVID-19 pandemic as new variants were being discovered and in
circulation. Despite that the Country was struck again by 2
cyclones which had made landfall in the Central and Northern parts
of Mozambique region in December 2021 and March 2022. Although not
as strong as Cyclone Idai these cyclones brought heavy rains with
localised flooding and destruction of crops, roads and
infrastructure especially in Tete province. Coupled to this was the
conflict in the north of Mozambique affecting the oil and gas
sector. As a result of the above many programs and initiatives were
affected by the pandemic resulting in little or no visits taking
place for safety reasons and compliance. However, we did assist in
the following areas:
-- DECA donated 10 tons of meal and 1 ton of beans to the
displaced families in Tete when cyclone Ana struck the region. This
was co-ordinated through the Ministry of Agriculture who was
distributing the food into rural areas
-- A MOU was signed between the group of companies and CHORC, an
association of motorcyclists who through their own efforts support
many initiatives in the communities in need within the province.
CHORC visited the district hospital in Dombe where they assisted in
food and perishables for the children. They also visited 2
orphanages in the province donating food and clothing. In all cases
DECA contributed dry goods in the form of mealie meal and snax
-- DECA participated in World Children's Day where we donated
Mealie meal and Snax for over 600 children in conjunction with Save
the Children for the days event
9. SOCIAL AND COMMUNITY ISSUES
Due to the ongoing pandemic and the fact that most institutes
were closed or working online the Group did its best to facilitate
and accommodate programs with minimal risk. These programs involved
working in smaller groups, in open air and where the risk of
spreading COVID-19 was minimal.
The Group continued its policies of spreading out shifts,
reducing transport numbers and opening up working spaces all went
hand in hand with community programs. We also worked closely and in
line with legislative requirements ensuring we were compliant at
all times. This certainly introduced a new way of operating in and
out of the business.
Particular activities undertaken during the year have focused on
(1) practical, 'on the ground' training for students from various
universities in Mozambique studying, inter alia, production
practices in beef and cattle, milling practices (including mill
engineering), veterinary sciences and animal sciences; (2)
dissemination of agricultural management knowledge and practices;
and medical assistance for employees during the pandemic.
One specific partnership to mention is that with Save the
Children. DECA has added the details of the national helpline to
its 1kg packages, for children needing assistance and in 1 year the
organization has registered a 7% increase in calls for Manica
Province alone. This is attributed to the campaign and partnership
undertaken with Deca in registering call centre details on its
packaging.
Grain Division
Despite the difficulties of the pandemic, DECA did host small
groups of students coordinated through Vale de Zambeze. These
students were from various Universities and were spread out through
the various operations in line with the Companies Covid policy and
protocols.
The following students attended the various operations as
follows
- 2 students were allocated to DECA on a 3 month attachment in Food Production and Engineering
- 2 students were also allocated to DECA Snax as Food Technologists
Beef Division
During the FY Mozbife hosted the following students in the
following sectors of the business
- 2 students were attached to the Abattoir studying Food Technology and Processing
- 1 student attached was studying Environmental Science
- 1 student was allocated to the feedlot studying Agricultural Engineering
- 3 students were attached to the feedlot studying Animal Science
A 2 day workshop was also held with the 9 associations in
Mozbife where all the CSCs are registered and in operation. This
workshop focused on husbandry practices, communication and
processes associated to cattle breeding and condition.
10. INDEPENT AUDITOR AND STATEMENT OF PROVISION OF INFORMATION
TO THE INDEPENT AUDITOR
PKF Littlejohn LLP have expressed their willingness to continue
in office as independent auditor of the Company and a resolution to
re-appoint them will be proposed at the forthcoming Annual General
Meeting.
The Directors who held office at the date of approval of this
Directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is not aware and each Director has taken all the steps that
he ought to have taken as a Director to make himself aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
11. ADDITIONAL INFORMATION AND ELECTRONIC COMMUNICATIONS
Additional information on the Company can be found on the
Company's website at www.agriterra-ltd.com.
The maintenance and integrity of the Company's website is the
responsibility of the Directors; the work carried out by the
auditor does not involve consideration of these matters and
accordingly, the auditor accepts no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
The Company's website is maintained in compliance with AIM Rule
26.
By Order of the Board.
CSO Havers
Non-Executive Chair
29 September 2022
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law, 2008, as amended (the '2008 Law')
requires the Directors to prepare Group financial statements for
each financial year in accordance with generally accepted
accounting principles.
The Directors are required by the AIM Rules for Companies of the
London Stock Exchange to prepare Group financial statements in
accordance with International Accounting Standards as adopted by
the United Kingdom ('UK').
The financial statements of the Group are required by law to
give a true and fair view and are required by IFRS as adopted by
the UK to present fairly the financial position and financial
performance of the Group.
In preparing the Group 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 they have been prepared in accordance with IFRSs as adopted by the UK; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements are properly prepared in accordance with
the Companies (Guernsey) Law, 2008. They are also responsible for
safeguarding the assets of the Company 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
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Directors confirm they have discharged their
responsibilities as noted above.
Independent auditor's report to the members of Agriterra
Limited
Opinion
We have audited the group financial statements of Agriterra
Limited (the 'group') for the year ended 31 March 2022 which
comprise the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Cash Flow Statement and notes to the group
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards.
In our opinion, the group financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2022 and of its loss for the year then ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
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 group financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the group 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 3 in the group financial statements,
which indicates that the group is reliant upon achieving sales
volumes, selling prices, cost reductions and renewal of its bank
facility in order for the group to meet committed expenditure
requirements. There is currently uncertainty regarding the renewal
of the bank facility which is required to meet the working capital
requirement. As stated in note 3, these events or conditions
indicate that a material uncertainty exists that may cast
significant doubt on the group's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the group financial statements, we have concluded
that the director's use of the going concern basis of accounting in
the preparation of the group financial statements is appropriate.
Our evaluation of the directors' assessment of the group's ability
to continue to adopt the going concern basis of accounting
included:
-- consideration of the group's objectives, policies and
processes in managing its working capital as well as exposure to
financial, credit and liquidity risks;
-- reviewing the cash flow forecasts for the ensuing twelve
months from the date of approval of these group financial
statements and assessment thereof;
-- performing sensitivity analysis on the cash flow forecast
prepared by management, and challenging the assumptions included
thereto;
-- reviewing the management's going concern memorandum
assessment and discussing with management regarding the future
plans and availability of funding; and
-- reviewing the adequacy and completeness of disclosures in the group financial statements.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements
are free from material misstatement, we define materiality as the
magnitude of misstatement that makes it probable that the economic
decisions of a reasonably knowledgeable person, relying on the
financial statements, would be changed or influenced. We also
determine a level of performance materiality which we use to assess
the extent of testing needed to reduce an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a
whole.
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. Materiality is used to determine the group financial
statement areas that are included within the scope of our audit and
the extent of sample sizes during the audit. No significant changes
have come to light during the course of the audit which required a
revision to our group materiality for the group financial
statements as a whole.
Materiality for the group financial statements was set at
$205,000 (2021: $254,000). This was calculated based on 1.75% of
gross revenue for the year. Using our professional judgement, we
have determined this to be the principal benchmark within the group
financial statements as it will be most relevant to stakeholders in
assessing the financial performance of the group as the key focus
of the group is to grow its business to meet its working capital
needs by increasing revenue from operations.
Materiality for the significant components of the group ranged
from $44,000 (2021: $41,000) to $108,000 (2021: $150,000) based on
1.75% of turnover for each component.
Performance materiality for the group financial statements was
set at $143,000 (2021: $178,000) being 70% of materiality for the
group financial statements as a whole respectively. The performance
materiality for the significant components is calculated on the
same basis as group materiality. In determining performance
materiality, we considered the following factors:
-- our cumulative knowledge of the group and its environment,
including industry specific trends;
-- the change in the level of judgement required in respect of the key accounting estimates;
-- the stability in key management personnel; and
-- the level of misstatements identified in prior periods
We agreed to report to those charged with governance all
corrected and uncorrected misstatements we identified through our
audit with a value in excess of $10,000 (2021: $12,000). We also
agreed to report any other audit misstatements below that threshold
that we believe warranted reporting on qualitative grounds.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on
the areas at greatest risk of material misstatement, together with
areas subject to significant management judgement.
In designing our audit, we determined materiality and assessed
the risks of material misstatement in the group financial
statements. In particular we looked at areas involving significant
accounting estimates and judgements by the directors and considered
future events that are inherently uncertain. These included, but
were not limited to the valuation of biological assets and the
impairment of the underlying assets of the beef and grain
divisions. We also addressed the risk of management override of
internal controls, including among other matters consideration of
whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
The scope of our audit focused on the principal area of
operation, being Mozambique, where subsidiaries of the ultimate
parent company trade. Each component was assessed as to whether
they were significant or not to the group by either their size or
risk. The ultimate parent company and the three operating
subsidiaries were considered to be significant due to identified
risk and size. A joint venture was set up within the group was
considered to be material but not significant. We have performed
the full scope audit of the ultimate parent company that is
registered in Guernsey. The four remaining components located in
Mozambique have been subject to full scope audits by component
auditor. As group auditor, we maintained oversight and regular
contact with the component auditor throughout all stages of the
audit and we were responsible for the scope and direction of their
work.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the group
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
group financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty
related to going concern section we have determined the matters
described below to be the key audit matters to be communicated in
our report.
Key Audit Matter How the scope of our audit responded
to the key audit matter
======================================= ===============================================================
Valuation of Biological Assets
(see Note 15)
===============================================================
The group has a material biological Our work in this area included reviewing
asset in respect of livestock the work performed by the component auditor
within the beef division. In in relation to the:
accordance with IAS 41- Agriculture Ø documents prepared by the board
, this is held at fair value detailing the basis of the valuation of
and there are significant estimates the biological assets, including the key
and assumptions required to assumptions and estimation factors therein;
determine the fair value. As Ø reasonableness of the underlying
such, there is a risk that inputs of the fair value calculation;
the biological asset is misstated Ø physical verification of the assets
in the group financial statements as at the reporting date; and
and the valuation is not appropriate. Ø consideration of whether there
were any indicators of impairment
We reviewed the financial presentation
and disclosures in the group financial
statements to ensure it is in accordance
with requirements of IAS 41.
===============================================================
Impairment of the underlying
assets of the beef and grain
division (see Note 4)
===============================================================
The group's assets relate Our work in this area included reviewing
to beef and grain divisions the work performed by the component auditor
and the continuing losses incurred in relation to:
by the group may indicate that
there is a risk these assets Ø ownership and good title to the
are impaired. group's assets;
Management is required to
assess whether there are potential Ø understanding of the internal control
indicators of impairment at environment in operation surrounding the
each reporting date and, if impairment review of fixed assets; and
potential indicators of impairment
are identified, management Ø review of assets for any indicators
are required to perform a full of impairment;
assessment of the recoverable
value of the assets.
Given the uncertainty in the We further performed the below procedures:
future production and sales
profiles and the volatility Ø the review of managements considerations
in cost, there is a risk that of impairment, including challenging the
management may not adequately key assumptions made;
identify all impairment indicators.
Ø the sensitivity analysis performed
on the cash flow forecast prepared by
management, and
Ø ensuring the presentation and disclosures
in the group financial statements are
sufficient and in accordance with requirements
of IAS 36- Impairment of assets.
===============================================================
Other information
The other information comprises the information included in the
annual report, other than the group financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the group financial statements or our knowledge
obtained in the course of 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 this gives rise to a material misstatement in the group
financial statements themselves. 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group 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 (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the group 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.
Responsibilities of directors
As explained more fully in the statement of director's
responsibilities, the directors are responsible for the preparation
of the group 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 group
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the group financial statements, the directors are
responsible for assessing the group'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 to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the group financial
statements
Our objectives are to obtain reasonable assurance about whether
the group 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 group
financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and the industry in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the group
financial statements. We obtained our understanding in this regard
through discussions with management and the application of our
cumulative audit knowledge and experience of the industry.
-- We determined the principal laws and regulations relevant to
the group in this regard to be those arising from AIM Listing
Rules, Companies (Guernsey) Law 2008, UK-adopted international
accounting standards, Employment Laws, Health and Safety
Regulations and License requirements and local laws and regulations
in Mozambique. The team remained alert to instances of
non-compliance with laws and regulations throughout the audit.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group with those laws and regulations. These procedures
included, but were not limited to: enquiries of management and
legal counsel; discussion with component auditor about compliance
with laws and regulations in Mozambique; review of minutes of
meetings; review of the Regulatory News Service announcements and
correspondence.
-- We have also discussed among the engagement how and where
fraud might occur and any potential indicators of fraud. We then
challenged the key assumptions made by management in respect of
their significant accounting estimates (see key audit matter).
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
-- The component auditors designed audit procedures for each of
the components. This included reviewing journal entries for
evidence of material misstatement due to fraud; reviewing
accounting estimates, judgements and assumptions for evidence of
management bias; and performing a review of the bank transactions
to ensure appropriate authorisation.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the group financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the group financial statements, as we
will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the group financial statements is located on the Financial
Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with our engagement letter dated 1 August 2022. Our
audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Joseph Archer (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Registered Auditor London E14 4HD
29 September 2022
Consolidated income statement
For the year ended 31 March 2022
Year Year
ended ended
31 March 31 March 2021
2022
Note US$000 US$000
--------- --------------
Revenue 5 10,277 14,250
Cost of sales (7,715) (11,581)
Increase/(Decrease) in fair value of biological assets 1 (615)
--------- --------------
Gross profit 2,563 2,054
Operating expenses (3,490) (3,156)
Other income 86 78
Profit on disposal of property, plant and equipment 20 37
Operating loss 6 (821) (987)
Finance costs 10 (1,627) (1,207)
Share of profit in equity-accounted investees, net of tax 23 55 -
Loss before taxation (2,393) (2,194)
Taxation 11 123 -
--------- --------------
Loss for the year attributable to owners of the Company (2,270) (2,194)
US cents US cents
--------- --------------
Earnings per Share
Basic and diluted earnings per share 12 (10.7) (10.3)
========= ==============
Consolidated statement of comprehensive income
For the year ended 31 March 2022
Year Year
ended ended
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Loss for the year (2,270) (2,194)
--------- ---------
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences 932 1,433
Items that will not be reclassified to profit or loss
Revaluation of Property, plant and equipment 13 - 12,563
--------- ---------
Other comprehensive income for the year 932 13,996
--------- ---------
Total comprehensive income for the year attributable to owners of the Company (1,338) 11,802
========= =========
Consolidated statement of financial position
As at 31 March 2022
31 March 31 March
2022 2021
Note US$000 US$000
---------- ----------
Non-current assets
Property, plant and equipment 13 25,051 23,974
Intangible assets 14 18 59
Equity-accounted investees 23 56 1
----------
25,125 24,034
---------- ----------
Current assets
Biological assets 15 463 451
Inventories 16 2,176 933
Trade and other receivables 17 824 1,752
Cash and cash equivalents 107 231
---------- ----------
3,570 3,367
---------- ----------
Total assets 28,695 27,401
---------- ----------
Current liabilities
Borrowings 18 8,809 4,016
Trade and other payables 19 960 2,046
----------
9,769 6,062
---------- ----------
Net current liabilities (6,199) (2,695)
---------- ----------
Non-current liabilities
Borrowings 18 1,003 2,409
Deferred tax liability 11 6,243 5,912
7,246 8,321
---------- ----------
Total liabilities 17,015 14,383
---------- ----------
Net assets 11,680 13,018
========== ==========
Share capital 22 3,373 3,373
Share premium 151,442 151,442
Share based payment reserve 67 87
Revaluation reserve 12,312 12,563
Translation reserve (16,008) (16,940)
Accumulated loss (139,506) (137,507)
----------
Equity attributable to equity holders of the parent 11,680 13,018
========== ==========
The financial statements on pages 18 to 46 were approved and
authorised for issue by the Board of Directors on 29 September
2022.
Signed on behalf of the Board of Directors by:
CSO Havers
Chair
29 September 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Share
based
Share Share payment Translation Revaluation Accumulated Total
capital premium reserve reserve reserve losses Equity
Note US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------- -------- -------- ------------ ------------ ------------ --------
Balance at 1
April 2020 3,373 151,442 87 (18,373) - (135,313) 1,216
Loss for the year - - - - - (2,194) (2,194)
Other
comprehensive
income:
Revaluation of land
and buildings - - - - 12,563 - 12,563
Exchange translation
gain on foreign
operations
restated - - - 1,433 - - 1,433
-------- -------- -------- ------------ ------------ ------------ --------
Total comprehensive
income for the year - - - 1,433 12,563 (2,194) 11,802
Transactions
with owners
Balance at 31
March 2021 3,373 151,442 87 (16,940) 12,563 (137,507) 13,018
Loss for the
year - - - - - (2,270) (2,270)
Other
comprehensive
income:
Exchange translation
gain on foreign
operations - - - 932 - - 932
------------
Total comprehensive
income for the
year - - - 932 - (2,270) (1,338)
Transactions
with owners
Share based
payments 24 - - (20) - - 20 -
Revaluation
surplus
realised - - - - (251) 251
-------- -------- -------- ------------ ------------ ------------ --------
Total transactions
with owners for the
year - - (20) - (251) 271 -
------------
Balance at
31 March 2022 3,373 151,442 67 (16,008) 12,312 (139,506) 11,680
======== ======== ======== ============ ============ ============ ========
Consolidated cash flow statement
For the year ended 31 March 2022
Year ended Year ended
31 March 2022 31 March 2021
Note US$000 US$000
-------------- --------------
Cash flows from operating activities
Loss before tax (2,393) (2,194)
Adjustments for:
Amortisation and depreciation 13/14 874 574
Profit on disposal of property, plant and equipment (20) (47)
Foreign exchange gain 162 1,411
Net decrease in biological assets 15 (12) (401)
Decrease in value of biological assets 15 (1) 615
Share of profit in associate 23 (55) -
Net finance costs 10 1,627 1,207
Operating cash flows before movements in working capital 182 1,165
Increase in inventories (1,243) (108)
Decrease/(Increase) in trade and other receivables 928 (503)
Decrease in trade and other payables (1,086) (1,269)
Net cash used in operating activities (1,219) (715)
-------------- --------------
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment net of expenses
incurred 20 47
Acquisition of property, plant and equipment 13 (79) (77)
Acquisition of intangible assets 14 - (9)
Net cash used in investing activities (59) (39)
-------------- --------------
Cash flows from financing activities
Net draw down of overdrafts 18 2,236 1,170
Net draw down of loans 18 644 43
Net repayment of leases (99) (55)
Finance costs (1,627) (1,207)
Net cash generated from / (used in) financing activities 1,154 (49)
-------------- --------------
Net decrease in cash and cash equivalents (124) (803)
Effect of exchange rates on cash and cash equivalents - -
-------------- --------------
Cash and cash equivalents at beginning of the year 231 1,034
-------------- --------------
Cash and cash equivalents at end of the year 107 231
============== ==============
Notes to the consolidated financial statements
1. GeNERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel
Islands, with registered number 42643. Further details, including
the address of the registered office, are given on page 46. The
nature of the Group's operations and its principal activities are
set out in the Directors' report. A list of the investments in
subsidiaries and associate companies held directly and indirectly
by the Company during the year and at the year-end, including the
name, country of incorporation, operation and ownership interest is
given in note 3.
The reporting currency for the Group is the US Dollar ('$' or
'US$') as it most appropriately reflects the Group's business
activities in the agricultural sector in Africa and therefore the
Group's financial position and financial performance.
The financial statements have been prepared in accordance with
International Accounting Standards as adopted by United
Kingdom.
The financial statements have been prepared on the historical
cost basis, except for the following items, which are measured at
on alternative basis on each reporting date:
Items Measurement basis
------------------------------------------------- -------------------------------------------------------------------
Biological assets Fair value
-------------------------------------------------------------------
Property, plant and equipment - Land and building Subsequent measured at revalued amount- i.e. fair value at the date
of revaluation less subsequent
depreciation and impairment losses.
-------------------------------------------------------------------
2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
Adoption of new and revised Standards
During the current year, the Group has adopted all of the new
and revised standards and interpretations issued by the IASB and
the IFRS-IC that are relevant to its operations and effective for
annual reporting periods beginning on 1 April 2021. The revised
standards and interpretations has not resulted in material changes
to the Group's accounting policies.
The following new and amended standards are not expected to have
a significant impact on the Group's separate financial statements
in the future being FY 2023.
-- Onerous Contracts: Cost of Fulfilling a Contract (Amendments to IAS 37).
-- COVID-19: Related Rent Concessions (Amendment to IFRS 16).
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
-- Reference to Conceptual Framework (Amendments to IFRS 3).
-- Classification of Liabilities as Current or Non-current (Amendments to IAS 1).
-- Insurance Contracts and amendments to Insurance Contracts (Amendment to IFRS 17)
-- Disclosure of Accounting policies (Amendment to IAS 1 and IFRS Practice Statement 2).
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared on a historical cost
basis, except for certain financial instruments, biological assets
and share based payments. Historical cost is generally based on the
fair value of the consideration given in exchange for the assets
acquired. The principal accounting policies adopted are set out
below in this note.
Going concern
The Company has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities.
These forecasts show that, following the debt restructuring
after the period end (note 26), with active management of working
capital and the timing of capital expenditure, there is sufficient
headroom under the banking facilities currently available to the
Group. Certain short-term facilities fall due for renewal in June
2023. The group expect to renew this financing facilities. The
shareholder loan facility amounts to USD 7.9 million and was
utilised to repay commercial debt and secure grain for the current
year financial year.
The Company's focus remains on continuing to improve operational
performance of the Grain and Beef divisions with emphasis on
volume, cost reduction and pricing to increase gross margins.
Over the last 12 months, the Grain division has made significant
progress in resolving the operating challenges to improve operating
margins by controlling the cost of maize and improving mealie meal
extraction, but was unable to achieve budgeted sales volumes which
affected the overall performance of the Grain division. A low
positive EBIDTA of US$5355,000 was achieved and the division was
burdened with high finance costs. A loss of US$1.4 million was
incurred in the Grain division. With the divisions debt
restructured after the year end, the current year Grain division
strategy is based on continuing the improved operational
performance achieved in prior year.
The Beef division has shown resilient performance even though it
was operating at less than 40% capacity. Most of the costs are
fixed in nature and efficiencies can only be improved by ramping up
volume. The Beef division will be supported with US$0.3 million to
ramp up feedlot processing in the next financial year. Beef
division is expected to at least break even by 31 March 2023,
processing at least 800 animals per month.
Snax division is expected to continue to penetrate the market.
Sales revenue increased to US$1.4 million and demand is strong in
the market. A new extruder will be installed to increase the
production capacity of Snax division. After the installation of the
new extruder, Snax division will have the capability to generate
US$0.5 million in sales per month.
Corporate overheads are forecast to be consistent with the
current run rate.
These divisional forecasts for FY-23 show a significant
improvement in operating performance as compared to that reported
for the year ended 31 March 2022. However, there can be no
certainty that these plans will be successful, and the forecasts
are sensitive to small adverse changes in the operations of the
divisions. As set out in notes 18 and 21 the Group is funded by a
combination of short and long-term borrowing facilities. The group
has repaid $6.3m of overdraft facilities after year end and the
Group is required to make $2.4m of repayments in respect of the
bank loan instalments amount together with principal on finance
leases of $115,000. As set out in note 26, the Group debt has been
refinanced since the year end.
Based on the above, whilst there are no contractual guarantees,
the directors are confident that the existing and new financing
will be available to the Group. The directors, with the operating
initiatives already in place and funding options available are
confident that the Group will achieve its cash flow forecasts.
Therefore, the directors have prepared the financial statements on
a going concern basis.
The forecasts show that the Group needs to achieve its operating
targets in order to remain within its existing bank and shareholder
loan facilities and to meet its commitments as they fall due. These
conditions and events indicate the existence of material
uncertainties that may cast significant doubt upon the Group's
ability to continue as a going concern and the Group companies may
therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. The auditors make
reference to going concern in their audit report by way of a
material uncertainty. These financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
Basis of consolidation
The Group accounts for business combinations using the
acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to
the Group. In determining whether a particular set of activities
and assets is a business, the Group assesses whether the set of
assets and activities acquired includes, at a minimum, an input and
substantive process and whether the acquired set has the ability to
produce outputs.
The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in profit
or loss immediately. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
'controls' an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through power over the entity. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which controls ceases.
Intra-Group transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
Interest in equity accounted investees
The Group's interest in equity accounted investees comprise
interest in a joint venture.
A joint venture is an arrangement in which the Group has joint
control, whereby the Group has rights to the net assets of the
arrangement rather than rights to its assets and obligations for
its liabilities.
Interest in Joint Ventures are accounted for using the equity
method. There are initially recognised at cost, which include
transaction cost. Subsequent to initial recognition, the
consolidated financial statements include the Group's share of the
profit or loss and OCI of the equity accounted investees, until the
date on which joint control ceases.
As at 31 March 2022, the Company held equity interests in the
following undertakings:
Direct investments
Proportion held of equity Country of incorporation and
instruments place of business Nature of business
Subsidiary undertakings
Agriterra (Mozambique) Limited 100% Guernsey Holding company
Indirect investments of Agriterra (Mozambique) Limited
Proportion held of equity Country of incorporation and
instruments place of business Nature of business
Subsidiary undertakings
DECA - Desenvolvimento E
Comercialização
Agrícola Limitada 100% Mozambique Grain
Compagri Limitada 100% Mozambique Grain
Mozbife Limitada 100% Mozambique Beef
Carnes de Manica Limitada 100% Mozambique Dormant
Aviação Agriterra
Limitada 100% Mozambique Dormant
Joint venture
DECA Snax Limitada 50% Mozambique Snax
Foreign currency
The individual financial statements of each company in the Group
are prepared in Mozambican Metical, the currency of the primary
economic environment in which it operates (its 'functional
currency'). The consolidated financial statements are presented in
US Dollars.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the date of the transaction. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not
retranslated.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's operations are translated
at exchange rates prevailing at the balance sheet date. Income and
expense items are translated at the average exchange rates for the
year, unless exchange rates fluctuate significantly during the
year, in which case exchange rates at the date of transactions are
used. Exchange differences arising from the translation of the net
investment in foreign operations and overseas branches are
recognised in other comprehensive income and accumulated in equity
in the translation reserve. Such translation differences are
recognised as income or expense in the year in which the operation
or branch is disposed of.
The following are the material exchange rates applied by the
Group:
Average Rate Closing Rate
2022 2021 2022 2021
------- ------ ------- ------
Mozambican Metical: US$ 66.31 68.12 63.83 68.78
======= ====== ======= ======
Operating segments
The Chief Operating Decision Maker is the Board. The Board
reviews the Company's internal reporting in order to assess
performance of the business. Management has determined the
operating segments based on the reports reviewed by the Board which
consider the activities by nature of business.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable for goods and services provided in the
normal course of business, net of discounts, value added taxes and
other sales related taxes.
Performance obligations and timing of revenue recognition:
All of the Group's revenue is derived from selling goods with
revenue recognised at a point in time when control of the goods has
transferred to the customer. This is generally when the goods are
collected by or delivered to the customer. There is limited
judgement needed in identifying the point control passes once
physical delivery of the products to the agreed location has
occurred, the Group no longer has physical possession, usually it
will have a present right to payment. Consideration is received in
accordance with agreed terms of sale.
Determining the contract price:
All of the Group's revenue is derived from fixed price lists and
therefore the amount of revenue to be earned from each transaction
is determined by reference to those fixed prices.
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product
sold. Therefore, there is no judgement involved in allocating the
price to each unit ordered.
There are no long-term contracts in place. Sales commissions are
expensed as incurred. No practical expedients are used.
Operating loss
Operating loss is stated before investment revenues, other gains
and losses, finance costs and taxation.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial year of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. The Group did not incur any borrowing costs
in respect of qualifying assets in any year presented.
All other borrowing costs are recognised in profit or loss in
the year in which they are incurred.
Share based payments
The Company issues equity-settled share-based payments to
certain employees of the Group. These payments are measured at fair
value (excluding the effect of non-market based vesting conditions)
at the date of grant and the value is expensed on a straight-line
basis over the vesting year, based on the Company's estimate of the
shares that will eventually vest and adjusted for non-market based
vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Employee benefits
Short-term employee benefits
Short-term employee benefits include salaries and wages,
short-term compensated absences and bonus payments. The Group
recognises a liability and corresponding expense for short-term
employee benefits when an employee has rendered services that
entitle him/her to the benefit.
Post-employment benefits
The Group does not contribute to any retirement plan for its
employees. Social security payments to state schemes are charged to
profit and loss as the employee's services are rendered.
Leases
The Group as a lessee.
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the lessee uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable;
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- The amount expected to be payable by the lessee under residual value guarantees;
-- The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
-- Payments of penalties for terminating the lease if the lease
term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever :
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate.
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used).
-- A lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods
presented.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment loss
as described in the 'Property, Plant and Equipment' policy.
Variable rents that do not depend on an index or rate are not
included in the measurement of the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in operating expenses in
profit or loss.
Taxation
The Company is resident for taxation purposes in Guernsey and
its income is subject to income tax, presently at a rate of zero
per cent per annum. The income of overseas subsidiaries is subject
to tax at the prevailing rate in each jurisdiction.
The income tax expense for the year comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity when tax is recognised
in other comprehensive income or directly in equity as appropriate.
Taxable profit differs from accounting profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
Current tax expense is the expected tax payable on the taxable
income for the year. It is calculated on the basis of the tax laws
and rates enacted or substantively enacted at the balance sheet
date and includes any adjustment to tax payable in respect of
previous years. Deferred tax is calculated using the balance sheet
liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised to the extent that it is probable that
taxable profit will be available against which the asset can be
utilised. This requires judgements to be made in respect of the
availability of future taxable income.
The Group's deferred tax assets and liabilities are calculated
using tax rates that are expected to apply in the year when the
liability is settled or the asset realised based on tax rates that
have been enacted or substantively enacted by the reporting
date.
Deferred income tax assets and liabilities are offset only when
there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax
assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances
on a net basis.
No deferred tax asset or liability is recognised in respect of
temporary differences associated with investments in subsidiaries,
branches and joint ventures where the Group is able to control the
timing of reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable
future.
Property, plant and equipment
Recognition
Items of property, plant and equipment are stated at historical
purchase cost. Cost includes expenditure that is directly
attributable to the acquisition. The cost of self-constructed
assets includes the cost of materials and direct labour, any other
costs directly attributable to bringing the assets to a working
condition for their intended use, the costs of dismantling and
removing the items and restoring the site on which they are located
and borrowing costs on qualifying assets.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable
that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably.
Subsequent measurement
Following initial recognition at cost, items of land and
buildings are subsequently measured using the revaluation model
being the fair value at the date of revaluation less any subsequent
depreciation and subsequent impairment losses. The revaluation
model is only used when fair value can be reliably measured.
Revaluations are made regularly enough to ensure that at any
reporting date the carrying amount does not differ materially from
the fair value. Revaluations are performed by independent sworn
valuators. When an item of property, plant and equipment is
revalued, the entire class of property, plant, and equipment to
which the asset belongs is revalued. Only land and buildings are
subsequently valued using the revaluation model and all others are
valued at cost model.
Any revaluation surplus is credited to revaluation reserve as
part of other comprehensive income, except to the extent that it
reverses a revaluation decrease of the same asset previously
recognized in the profit or loss, in which case the increase is
recognized in the profit or loss. A revaluation deficit is
recognized in profit or loss, except to the extent that it offsets
an existing surplus on the same recognized in the asset revaluation
reserve. The revaluation reserve is realized over the period of the
useful life of the property by transferring the realized portion
from the revaluation reserve to retained earnings.
Depreciation
Depreciation is charged on a straight-line basis over the
estimated useful lives of each item, as follows:
Land and buildings:
Land Nil
Buildings and leasehold improvements 2% - 33%
Plant and machinery 5% - 25%
Motor vehicles 20% - 25%
Other assets 10% - 33%
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Gains and
losses on disposals are determined by comparing proceeds received
with the carrying amount of the asset immediately prior to disposal
and are included in profit and loss.
Intangible assets
Intangible assets comprise investment in management information
and financial software. This is amortised at 10% straight line.
Impairment of property, plant and equipment and intangible
assets
At each balance sheet date, the Company reviews the carrying
amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Company estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised initially
against amounts included in the revaluation reserve in respect of
the asset and subsequently in profit and loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit and
loss.
Biological assets
Consumer biological assets, being the beef cattle herd, are
measured in accordance with IAS 41, 'Agriculture' at fair value
less costs to sell, with gains and losses in the measurement to
fair value recorded in profit and loss. Breeding cattle, comprising
bulls, cows and heifers are expected to be held for more than one
year, and are classified as non-current assets. The non-breeding
cattle comprise animals that will be grown and sold for slaughter
and are classified as current assets.
Cattle are recorded as assets at the year-end and the fair value
is determined by the size of the herd and market prices at the
reporting date.
Cattle ceases to be a biological asset from the point it is
slaughtered, after which it is accounted for in accordance with the
accounting policy below for inventories.
Forage crops are valued in accordance with IAS 41, 'Agriculture'
at fair value less costs to harvest. As there is no ready local
market for forage crops, fair value is calculated by reference to
the production costs of previous crops. The cost of forage is
charged to profit or loss over the year it is consumed.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses. The cost of inventories is based on the
weighted average principle and includes expenditure incurred in
acquiring the inventories and bringing them to their existing
location and condition.
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at
amortised cost, at fair value through other comprehensive income
("FVTOCI") or at fair value through profit or loss ("FVPL")
depending upon the business model for managing the financial assets
and the nature of the contractual cash flow characteristics of the
financial asset.
A loss allowance for expected credit losses is determined for
all financial assets, other than those at FVPL, at the end of each
reporting period. The Group applies a simplified approach to
measure the credit loss allowance for trade receivables using the
lifetime expected credit loss provision. The lifetime expected
credit loss is evaluated for each trade receivable taking into
account payment history, payments made subsequent to year-end and
prior to reporting, past default experience and the impact of any
other relevant and current observable data. The Group applies a
general approach on all other receivables classified as financial
assets. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk
since initial recognition.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. The Group
derecognises financial liabilities when the Group's obligations are
discharged, cancelled or have expired.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade
receivables do not carry any interest and are stated at their
nominal value as reduced by appropriate expected credit loss
allowances for estimated recoverable amounts as the interest that
would be recognised from discounting future cash payments over the
short payment period is not considered to be material. Other
receivables are accounted for at amortised cost and are stated at
their nominal value as reduced by appropriate expected credit loss
allowances.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group's financial
liabilities approximate to their fair values.
The Group's financial liabilities consist of financial
liabilities measured at amortised cost and financial liabilities at
fair value through profit or loss.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
statement of comprehensive income.
Borrowings
Borrowings are included as financial liabilities on the Group
balance sheet at the amounts drawn on the particular facilities net
of the unamortised cost of financing. Interest payable on those
facilities is expensed as finance cost in the period to which it
relates.
Trade and other payables
Trade and other payables are initially recorded at fair value
and subsequently carried at amortised cost.
Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability or, in
the absence of a principal market, in the most advantageous market
for the asset or liability. The principal or the most advantageous
market must be accessible to the Company.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
For all other financial instruments not traded in an active
market, the fair value is determined by using valuation techniques
deemed to be appropriate in the circumstances. Valuation techniques
include the market approach (i.e. using recent arm's length market
transactions adjusted as necessary and reference to the current
market value of another instrument that is substantially the same)
and the income approach (i.e. discounted cash flow analysis and
option pricing models making as much use of available and
supportable market data as possible).
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
re-assessing the categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting year.
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies which are
described in note 3, the directors are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. The effect on
the financial statements of changes in estimates in future years
could be material on property plant and equipment (Note 13), and
biological assets (Note15).
Impairment and revaluation of land and buildings
Impairment reviews for non-current assets are carried out at
each balance sheet date in accordance with IAS 36, Impairment of
Assets. Reported losses in the Beef and Grain divisions were
considered to be indications of impairment and a formal impairment
review was undertaken to review whether the carrying amounts of
non-current assets are greater than the recoverable amount.
The impairment reviews are sensitive to various assumptions,
including the expected sales forecasts, cost assumptions, rent per
square metre, capital requirements, and discount rates among others
depending on how the recoverable amount is determined. The
forecasts of future cash flows were derived from the operational
plans in place to address the requirement to increase both volumes
and margins across the two divisions. Real commodity prices were
assumed to remain constant at current levels.
As at 31 March 2021, the Group engaged an Independent real
estate valuer to compute the fair value of land and buildings which
also assisted in determining the recoverable amount whilst
revaluing non-current assets. The Independent valuer used Royal
Institute of Chartered Surveyors (RICS) and International Financial
Reporting Standards to determine the fair value of land and
buildings. Non-current assets fair value was increased to $23.4
million from a carrying amount of $4.9 million. Based on the
assessment performed by the independent real estate valuers at 31
March 2021, and the improved operational outlook, management have
concluded that, at 31 March 2022, non-current assets are not
impaired as the recoverable value of non-current assets is higher
than and or equivalent to the carrying amount of the assets.
No impairments were recorded in the year ended 31 March 2022 or
the year ended 31 March 2021. The carrying amount of non-current
assets is US$25.1million (2021: $24.0 million).
Biological assets
Cattle are accounted for as biological assets and measured at
their fair value at each balance sheet date. Fair value is based on
the estimated market value for cattle in Mozambique of a similar
age and breed, less the estimated costs to bring them to market,
converted to US$ at the exchange rate prevailing at the year end.
Changes in any estimates could lead to the recognition of
significant fair value changes in the consolidated income
statement, or significant changes in the foreign currency
translation reserve for changes in the Metical to US$ exchange
rate.
The herd may be categorised as either the breeding herd or
slaughter herd, depending on whether it was principally held for
reproduction or slaughter. The value of the herd held for slaughter
disclosed as a current asset was $0.5m (31 March 2021: $0.5m).
5. Segment reporting
The Board considers that the Group's operating activities
comprise the segments of Grain, Snax and Beef and which are
undertaken in Africa. In addition, the Group has certain other
unallocated expenditure, assets and liabilities, either located in
Africa or held as support for the Africa operations.
Segment revenue and results
The following is an analysis of the Group's revenue and results
by operating segment:
Year ending 31 March 2022 Grain Beef Snax(*) Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
-------- ------- -------- ------------- -------------- --------
Revenue
External sales(2) 7,118 3,159 - - - 10,277
Inter-segment sales(1) 226 - - - (226) -
-------- ------- -------- ------------- -------------- --------
7,344 3,159 - - (226) 10,277
-------- ------- -------- ------------- -------------- --------
Segment results
- Operating loss (55) (444) - (429) - (928)
- Interest expense (1,548) (79) - - - (1,627)
- Other gains and losses 88 19 - - - 107
- Share of profit in equity-accounted
investees - - 55 - - 55
-------- ------- -------- ------------- -------------- --------
Loss before tax (1,515) (504) 55 (429) - (2,393)
-------- ------- -------- ------------- -------------- --------
Income tax 111 12 - - - 123
-------- ------- -------- ------------- -------------- --------
Loss after tax (1,404) (492) 55 (429) - (2,270)
======== ======= ======== ============= ============== ========
(*) The Snax division is equity accounted for as a Joint
venture. Its income statement is set out in note 23.
Year ending 31 March 2021 Grain Beef Snax(1) Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
-------- -------- -------- ------------- -------------- --------
Revenue
External sales(2) 11,061 3,189 - - - 14,250
Inter-segment sales(1) 309 - - - (309) -
-------- -------- -------- ------------- -------------- --------
11,370 3,189 - - (309) 14,250
-------- -------- -------- ------------- -------------- --------
Segment results
- Operating profit / (loss) 275 (970) - (389) - (1,084)
- Interest expense (1,071) (136) - - - (1,207)
- Other gains and losses 54 43 - - - 97
-------- -------- -------- ------------- -------------- --------
Loss before tax (742) (1,063) - (389) - (2,194)
-------- -------- -------- ------------- -------------- --------
Income tax - - - - - -
-------- -------- -------- ------------- -------------- --------
Loss after tax (742) (1,063) - (389) - (2,194)
======== ======== ======== ============= ============== ========
(1) Inter-segment sales are charged at prevailing market prices.
(2) Revenue represents sales to external customers and is recorded in the country of domicile
of the Company making the sale. Sales from the Grain and Beef divisions are principally for
supply to the Mozambique market.
The segment items included in the consolidated income statement
for the year are as follows:
Year ending 31 March 2022 Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
------- ------- ------- ------------- -------------- -------
Depreciation and amortisation 502 359 - 13 - 874
======= ======= ======= ============= ============== =======
Year ending 31 March 2021 Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
------- ------- ------- ------------- -------------- -------
Depreciation and amortisation 181 380 - 13 - 574
======= ======= ======= ============= ============== =======
Segment assets, liabilities and capital expenditure
Segment assets consist primarily of property, plant and
equipment, biological assets, inventories, trade and other
receivables and cash and cash equivalents. Segment liabilities
comprise operating liabilities, including an overdraft financing
facility in the Grain segment, and bank loans and overdraft
financing facilities in the Beef segment.
Capital expenditure comprises additions to property, plant and
equipment.
The segment assets and liabilities at 31 March 2022 and capital
expenditure for the year then ended are as follows:
Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
--------- ------- ------- ------------ ---------
Assets 23,496 5,133 56 10 28,695
Liabilities (15,838) (973) - (204) (17,015)
Capital expenditure 65 14 - - 79
========= ======= ======= ============ =========
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
US$000 US$000
------- ------------
Segment assets and liabilities 28,685 (16,811)
Unallocated:
Intangible asset - -
Other receivables 10 -
Cash and cash equivalents - -
Accrued liabilities - (204)
28,695 (17,015)
======= ============
The segment assets and liabilities at 31 March 2021 and capital
expenditure for the year then ended are as follows:
Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
--------- -------- ------- ------------ ---------
Assets 21,495 5,883 1 22 27,401
Liabilities (12,518) (1,729) - (136) (14,383)
Capital expenditure 48 29 - - 77
========= ======== ======= ============ =========
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
US$000 US$000
------- ------------
Segment assets and liabilities 27,379 (14,246)
Unallocated:
Intangible asset 14 -
Other receivables 8 -
Cash and cash equivalents - -
Accrued liabilities - (137)
27,401 (14,383)
======= ============
Key performance Indicators
The Board considers that earnings before interest, tax,
depreciation and amortisation ("EBITDA") is a key performance
indicator in measuring operational performance. EBITDA is a non
IFRS measure and alternative performance measure for the group
which is calculated as follows:
Year ending 31 March 2022 Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
-------- ------- ------- ------------ --------
(Loss) / profit before tax (1,515) (504) 55 (429) (2,393)
- Interest expense 1,548 79 - - 1,627
- Depreciation and amortisation charge 502 359 - 13 874
- Share of profit in equity-accounted investees - - (55) - (55)
-------- ------- ------- ------------ --------
EBITDA 535 (66) - (416) 53
-------- ------- ------- ------------ --------
Year ending 31 March 2021 Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
------- -------- ------- ------------ --------
Loss before tax (742) (1,063) - (389) (2,194)
- Interest expense 1,071 136 - - 1,207
- Depreciation and amortisation charge 181 380 - 13 574
------- -------- ------- ------------ --------
EBITDA 510 (547) - (376) (413)
------- -------- ------- ------------ --------
Significant customers
In the year ended 31 March 2022, two largest customers of the
Grain segment generated revenue of $3.2 million (31 March 2021:
$3.1m) constituting 44% (31 March 2021: 28%) of the Grain
division's revenue. The two largest customers of the Beef segment
generated revenue of $0.2m (31 March 2021: $1 million) amounting to
9% (31 March 2021:30%) of the Beef division's revenue.
6. Operating loss
Operating loss has been arrived at after charging /
(crediting):
Year Year
ended ended
31 March 2022 31 March 2021
US$000 US$000
-------------- --------------
Depreciation of property, plant and equipment (see note 13) 831 534
Amortisation of intangible asset (see note 14) 43 40
Profit on disposal of property, plant and equipment (20) (47)
Net foreign exchange (gain)/loss (1) 615
Staff costs (see note 8) 865 743
============== ==============
7. Auditors Remuneration
Amounts payable to the auditors and their associates in respect
of audit services are as follows:
Year Year
Ended Ended
31 March 2022 31 March 2021
US$000 US$000
------------- -------------
Fees payable to the Company's previous auditor and their associates
Overruns in respect of prior years 14 -
------------- -------------
14 -
Fees payable to the Company's auditor and their associates
For the audit of the Company's accounts 56 53
For the audit of the Company's subsidiaries 37 44
------------- -------------
Total audit fees 93 97
============= =============
Other than as disclosed above, the Company's auditor and their
associates have not provided additional services to the
Company.
8. Staff costs
The average monthly number of employees (including executive
Directors) employed by the Group for the year was as follows:
Year Year
ended ended
31 March 2022 31 March 2021
Number Number
-------------- --------------
Office and Management 27 27
Operational 347 432
-------------- --------------
374 459
============== ==============
Their aggregate remuneration comprised:
Year Year
ended ended
31 March 2022 31 March 2021
US$000 US$000
-------------- --------------
Wages and salaries 775 683
Social security costs 90 60
865 743
============== ==============
9. REMUNERATION OF DIRECTORS
Year Year
ended ended
31 March 2022 31 March 2021
US$000 US$000
--------------- ---------------
CSO Havers 27 25
NWH Clayton 8 8
HBW Rudland 8 8
GR Smith 8 8
SML Zandamela 8 8
59 57
=============== ===============
In addition, N Clayton received $Nil (2021: $4,239) in respect
of consultancy services to the Company. All remuneration relates to
short term benefits. Directors are considered to be key management
personnel.
10. Finance costs
Year Year
Ended Ended
31 March 2022 31 March 2021
US$000 US$000
-------------- --------------
Interest expense on bank borrowings and overdrafts (1,556) (1,128)
Interest expense on leases (71) (79)
-------------- --------------
Net finance costs (1,627) (1,207)
============== ==============
11. Taxation
Year Year
Ended Ended
31 March 2022 31 March 2021
US$000 US$000
Current tax expense
Current tax - -
Deferred tax 123 -
-------------- --------------
123 -
============== ==============
Effective tax reconciliation
Loss before tax from continuing activities (2,393) (2,194)
Tax credit at the Mozambican corporation tax rate of 32% (765) (702)
Tax effect of expenses that are not deductible in determining taxable profit 42 578
Tax effect of (income not taxable) or losses not allowable 18 -
Tax effect of net losses not recognised in overseas subsidiaries (net of effect of
different
rates) 582 124
Tax expense (123) -
============== ==============
The tax reconciliation has been prepared using a 32% tax rate,
the corporate income tax rate in Mozambique, as this is where the
Group's principal assets of its continuing operations are located.
Losses amounting to US$ 4 million have been carried forward (2021:
US$ 3.5 million).
The Company is resident for taxation purposes in Guernsey and
its income is subject to Guernsey income tax, presently at a rate
of zero percent per annum (2021: zero percent per annum). No tax is
payable for the year. Deferred tax has not been provided for, as
brought forward tax losses are not recoverable under the Income Tax
(Zero 10) (Guernsey) Law, 2007 (as amended).
Deferred tax
Movement in deferred tax balances
Foreign exchange Net balance as
Net balance as Recognised in Recognised in gain or loss at 31 March
at 1 April 2021 OCI P/L 2022
US$000 US$000 US$000 US$000 US$000
Property, plant
and equipment (5,912) - 123 (454) (6,243)
Tax losses -
carried forward - - - -
---------------- ----------------- ----------------- ----------------- ----------------
Total (5,912) - 123 (454) (6,243)
================ ================= ================= ================= ================
Foreign Net balance as
Net balance as Recognised in Recognised in exchange gain at 31 March
at 1 April 2020 OCI P/L or loss 2021
US$000 US$000 US$000 US$000 US$000
Property, plant
and equipment - (5,912) - - (5,912)
Tax losses -
carried forward - - - -
----------------- ---------------- ----------------- ---------------- ----------------
Total - (5,912) - - (5,912)
================== ================ ================= ================ ================
Deferred tax liability is resulting from revaluation gain on
land and buildings amounting to $18,475,127 recognised using an
income tax rate of 32% which is prevailing in Mozambique. $123,000
of the deferred tax has been realised during the year.
The Group has not recognised any tax credits for the year ended
31 March 2022 (2021: $nil). The Group has operations in overseas
jurisdictions where it has incurred taxable losses which may be
available for offset against future taxable profits amounting to
approximately $12,621,884 (2021: $10,803,610). No deferred tax
asset has been recognised for these tax losses and other deductible
timing differences as the requirements of IAS 12, 'Income taxes',
have not been met.
12. earnings per share
Year ended Year ended
31 March 2022 31 March 2021
US$000 US$000
-------------- --------------
The calculation of the basic and diluted earnings per share is based on the
following data:
Loss for the year for the purposes of basic and diluted earnings per share
attributable to
equity holders of the Company (2,270) (2,194)
============== ==============
Weighted average number of Ordinary Shares for the purposes of basic and diluted
earnings
per share 21,240,618 21,240,618
============== ==============
Basic and diluted earnings per share - US cents (10.7) (10.3)
-------------- --------------
Basic and diluted earnings per share from continuing activities - US cents (10.7) (10.3)
-------------- --------------
The Company has issued options over ordinary shares which could
potentially dilute basic loss per share in the future. There is no
difference between basic loss per share and diluted loss per share
as the potential ordinary shares are anti-dilutive. Details of
options are set out in note 24.
13. Property, plant and equipment
Other
Land and buildings Plant and machinery Motor vehicles Assets Total
US$000 US$000 US$000 US$000 US$000
Cost
At 1 April 2020 8,135 5,153 1,302 66 14,656
Additions - 38 6 33 77
Revaluation 15,451 - - - 15,451
Disposals - (134) (40) - (174)
Exchange rate adjustment (158) (73) (25) (7) (263)
------------------- -------------------- --------------- -------- --------
At 31 March 2021 23,428 4,984 1,243 92 29,747
Additions - 58 - 21 79
Disposals - - (142) - (142)
Exchange rate adjustment 1,818 367 90 29 2,304
At 31 March 2022 25,246 5,409 1,191 142 31,988
------------------- -------------------- --------------- -------- --------
Accumulated depreciation and
impairment
At 1 April 2020 2,801 4,617 1,142 47 8,607
Charge for the year 280 168 58 28 534
Revaluation (3,024) - - - (3,024)
Disposals - (134) (40) - (174)
Exchange rate adjustment (57) (85) (23) (5) (170)
------------------- -------------------- --------------- -------- --------
At 31 March 2021 - 4,566 1,137 70 5,773
Charge for the year 601 144 57 29 831
Disposals - - (142) - (142)
Exchange rate adjustment 24 339 86 26 475
At 31 March 2022 625 5,049 1,138 125 6,937
------------------- -------------------- --------------- -------- --------
Net book value
31 March 2022 24,621 360 53 17 25,051
=================== ==================== =============== ======== ========
31 March 2021 23,428 418 106 22 23,974
=================== ==================== =============== ======== ========
In prior year, the Group revised the accounting policy for land
and buildings from cost model to revaluation model. In accordance
with the International Financial Reporting Standards, such
revaluation exercises should be performed regularly. The Group
adopted a policy to revalue land and buildings after every 3
years.
The Group revalued the land and buildings by $18,475,127
recognised on land and buildings in Mozambique value for DECA,
Compagri and Mozbife amounting to $12,094,969, $4,531,025 and
$1,849,133 respectively. Land and buildings accumulated
depreciation amounting to $3,024,058 was offset as a result of the
revaluation. Property, plant and equipment with a carrying amount
of $20,832,740 (2021: $21,153,034) have been pledged to secure the
Group's bank overdrafts and loans (note 18). The Group is not
allowed to pledge these assets as security for other borrowings or
sell them to another entity.
For the year ended 31 March 2022, a depreciation charge of
$831,000 (2021: $534,000) has been included in the consolidated
income statement within operating expenses. Certain motor vehicles
and equipment have been purchased with finance leases. Included in
property plant and equipment are right-of-use-assets with a
carrying value of $244,282 (2022: $386,719) and $49,883 (2021:
$92,585) for machinery and motor vehicles respectively.
14. Intangible Assets
US$000
Cost
At 1 April 2020 126
Additions 9
Exchange rate adjustment (2)
-------
At 31 March 2021 133
Additions -
Exchange rate adjustment 7
At 31 March 2022 140
-------
Accumulated amortisation
At 1 April 2020 34
Charge for the year 40
Exchange rate adjustment -
-------
At 31 March 2021 74
Charge for the year 43
Exchange rate adjustment 5
At 31 March 2022 122
-------
Net book value
31 March 2022 18
=======
31 March 2021 59
=======
Intangible assets comprise investment in management information
and financial software.
At 31 March 2022 and 31 March 2021, the Group had no contractual
commitments for the acquisition of intangible assets.
15. Biological assets
US$000
--------
Fair value
At 31 March 2020 665
Purchase of biological assets 1,924
Sale, slaughter or other disposal of biological assets (1,514)
Change in fair value of the herd (615)
Foreign exchange adjustment (9)
At 31 March 2021 451
Purchase of biological assets 1,606
Sale, slaughter or other disposal of biological assets (1,630)
Change in fair value of the herd 1
Foreign exchange adjustment 35
--------
At 31 March 2022 463
========
At 31 March 2022 and 2021, all cattle are held for slaughter.
The slaughter herd has been classified as a current asset. Forage
crops included in current assets are US$ 10,802 (2021: US$
Nil).
At 31 March 2022 the slaughter herd comprised 1,334 head (2021:
1,745), with an average weight of 283kgs (2021: 221kgs) and average
value of US$339 (2021: US$259).
For valuation purposes, animals in the feedlot, their weight has
been estimated based on their individual weigh in data at the
closest weigh in date to the year end. Cattle are generally kept
for periods less than 3 months before slaughter.
16. Inventories
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Consumables and spares 310 189
Raw materials 1,611 428
Finished goods 255 316
2,176 933
========= =========
During the year inventories amounting to US$6,158,016 (2021:
US$10,017,225) were included in cost of sales.
17. Trade and other receivables
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Trade receivables 302 298
Other receivables 522 1,454
Prepayments - -
824 1,752
========= =========
Trade receivables
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Trade receivables - gross 321 354
Loss allowance (19) (56)
--------- ---------
302 298
========= =========
Trade receivables are amounts due from customers for goods sold
in the ordinary course of business. They are generally due for
settlement within 30 days and therefore are all classified as
current. Trade receivables are recognised initially at the amount
of consideration that is unconditional. The Group holds the trade
receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost
using the effective interest method.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on the days past
due.
At 31 March 2022 Current More than More than More than Total
30 days 60 Days 90 days
US$000 US$000 US$000 US$000 US$000
-------- ---------- ---------- ---------- -------
Expected loss rate 0% 0% 0% 83% 6%
-------- ---------- ---------- ---------- -------
Gross trade receivables 239 41 18 23 321
-------- ---------- ---------- ---------- -------
Loss allowance - - - 19 19
-------- ---------- ---------- ---------- -------
At 31 March 2021 Current More than More than More than Total
30 days 60 Days 90 days
US$000 US$000 US$000 US$000 US$000
-------- ---------- ---------- ---------- -------
Expected loss rate 0% 0% 0% 84% 16%
-------- ---------- ---------- ---------- -------
Gross trade receivables 79 208 - 67 354
-------- ---------- ---------- ---------- -------
Loss allowance - - - 56 56
-------- ---------- ---------- ---------- -------
The closing loss allowances for trade receivables as at 31 March
reconcile to the opening loss allowances as follows:
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Loss allowances at 1 April 56 350
(Decrease)/Increase in loan loss allowance recognised in profit or loss during the year (37) 20
Receivables written off during the year as uncollectable - (311)
Exchange rate adjustment - (3)
Loss allowances at 31 March 19 56
========= =========
Trade receivables are provided for when there is no reasonable
expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a
debtor to engage in a repayment plan with the Group, and a failure
to make contractual payments for a period of greater than 120 days
past due. This is used as the basis of the ECL provision disclosed
above. The Group determines the percentage based on historic
trends. Impairment losses on trade receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line
item.
Further details on the Group's financial assets are provided in
note 21.
18. Borrowings
31 March 2022 31 March 2021
US$000 US$000
-------------- ---------------
Non-current liabilities
Bank loans 783 2,107
Leases 220 302
-------------- ---------------
1,003 2,409
-------------- ---------------
Current liabilities
Bank loans 2,438 263
Leases 115 102
Overdraft 6,256 3,651
-------------- --------------
8,809 4,016
-------------- --------------
9,812 6,425
============== ==============
Bank Borrowings
Beef division
Beef division does not have any finance facilities except
equipment leases as at 31 March 2022.
Grain division
In May 2019 the division's overdraft facility was restructured
into a 240 million Metical ($3.77m) 5 year term loan with an
interest rate of the Bank's prime lending rate +0.25% and a 12
month 60 million Metical ($0.94m) overdraft facility at the Bank's
prime lending rate less 1.75%. On 30 September 2020, the
outstanding overdraft facility was subsequently restructured into a
60 million Metical ($0.9m) 33 month term loan at the Bank's prime
lending rate less 1.75%. The above mentioned facilities are from
one financial institution and mature in July 2023 and are secured
by land and buildings.
Grain division also restructured another overdraft facility
amounting to 60 million Metical into a 5 year loan at Prime lending
rate plus 1.5%. The facility is secured by Grain division land and
buildings. At 31 March 2022, the principal outstanding on the term
loans were 206 million Metical ($3.22m).
As at 31 March 2022, Grain division had contracted 399 million
Meticals ($6.3 million) overdraft facility at Prime Lending rate
less 3.75% for working capital funding maturing on 30 July 2022.
The overdraft facility was secured by a Bank guarantee from
Magister amounting to US$6.1 million and maize pledged value at
$0.25 million. The overdraft facility was extended by 3 months and
subsequently repaid 31 July 2022.
The facilities are secured as follows:
31 March 2022 31 March
2021
US$000 US$000
-------------- ---------
Fixed Charge
Property, plant and equipment 20,833 21,153
Floating Charge
Maize and maize product inventories 250 -
Trade receivables - -
-------------- ---------
21,083 21,153
============== =========
As further security to the bank loans and overdrafts, Agriterra
Limited has issued a corporate guarantee in favour of the bank.
Under the terms of the guarantee, it may only be called upon once
the bank has exhausted all possible means of recovering the debt in
Mozambique.
Reconciliation to cash flow statement
At 31 Cash flow Foreign At 31
March 2021 Exchange March 2022
US$000 US$000 US$000 US$000
Non-current bank loan 2,107 (1,431) 107 783
Non-current leases 302 (103) 21 220
Current bank loan 263 2,075 100 2,438
Current leases 102 4 9 115
Overdrafts 3,651 2,236 369 6,256
------------ ---------- ---------- ------------
6,425 2,781 606 9,812
============ ========== ========== ============
At 31 March Cash flow Foreign At 31 March
2020 Exchange 2021
US$000 US$000 US$000 US$000
Non-current bank loan 1,661 484 (37) 2,107
Non-current leases 383 (72) (7) 302
Current bank loan 711 (441) (10) 263
Current leases 87 17 (2) 102
Overdrafts 2,541 1,170 (60) 3,651
------------ ---------- ---------- ------------
5,383 1,158 (116) 6,425
============ ========== ========== ============
Leases
At 31 March 2022, the Group is committed to $335 000 (2021
$404,000) for leases. The total cash outflow for leases (principal
and interest) amounts to $335,000 (2021: $531,000).
31 March 31 March
Maturity Analysis 2022 2021
$'000 $'000
Year 1 123 102
Year 2 201 115
Year 3 11 187
Year 4 -
Year 5 - -
--------
335 404
======== =========
Analysed as:
Current 115 102
Non-current 220 302
-------- ---------
335 404
======== =========
The Group does not face a significant liquidity risk with regard
to its lease liabilities.
19. Trade and other payables
31 March 2022 31 March
2021
US$000 US$000
-------------- ---------
Trade payables 597 1,018
Other payables 44 1,006
Accrued liabilities 319 22
960 2,046
============== =========
'Trade payables', 'Other payables' and 'Accrued liabilities'
principally comprise amounts outstanding for trade purchases and
ongoing costs. No interest is charged on any balances.
The Directors consider that the carrying amount of financial
liabilities approximates their fair value.
20. Leases
Right of use assets
Right of use assets relate to equipment and motor vehicle
acquired under finance leases. These are presented as property
plant and equipment.
Machinery Motor vehicles Total
US$000 US$000 US$000
Cost
At 1 April 2020 721 189 910
Exchange rate adjustment (14) (4) (18)
---------- --------------- -------
At 31 March 2021 707 185 892
Exchange rate adjustment 55 15 70
At 31 March 2022 762 200 962
---------- --------------- -------
Accumulated depreciation and impairment
At 1 April 2020 163 47 210
Charge for the year 162 47 209
Exchange rate adjustment (5) (1) (6)
---------- --------------- -------
At 31 March 2021 320 93 413
Charge for the year 166 48 214
Exchange rate adjustment 31 9 40
At 31 March 2022 517 150 667
---------- --------------- -------
Net book value
31 March 2022 245 50 295
========== =============== =======
31 March 2021 387 92 479
========== =============== =======
Average lease term for motor vehicles and equipment is 5 years.
The maturity analysis of lease liability is presented in note
18.
Amounts recognised in profit or loss
31 March 2022 31 March 2021
US$000 US$000
-------------- --------------
Depreciation expense on right-of-use assets 214 209
Interest expense on lease liabilities 71 137
Expenses relating to short term leases and low value assets 45 50
330 396
============== ==============
21. FINANCIAL INSTRUMENTS
21.1. Capital risk management
The Company manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to shareholders. The capital structure of the Group
comprises its net debt (the borrowings disclosed in note 18 after
deducting cash and bank balances) and equity of the Company as
shown in the statement of financial position. The Company is not
subject to any externally imposed capital requirements.
The Board reviews the capital structure on a regular basis and
seeks to match new capital requirements of subsidiary companies to
new sources of external debt funding denominated in the currency of
operations of the relevant subsidiary. Where such additional
funding is not available, the Company funds the subsidiary company
by way of loans from the Company. The Company places funds which
are not required in the short term on deposit at the best interest
rates it is able to secure from its bankers.
Current interest rates on borrowings in Mozambique are very
high, with the prime lending rate at 18.60% at 31 March 2022 (2021:
15.5%). In light of this, the Group has been rationalising its
operations, with particular focus on disposing of surplus assets to
reduce external debt levels. The Group has restructured its loan
facilities in Mozambique to finance its Grain operations (note
18).
21.2. Categories of financial instruments
The following are the Group financial instruments as at the
year-end held at amortised cost:
31 March 2022 31 March 2021
US$000 US$000
-------------- --------------
Financial assets
Cash and bank balances 107 231
Other loans and receivables 321 354
-------------- --------------
428 585
-------------- --------------
Financial liabilities
Trade and other payables 960 2,046
Borrowings - current 8,809 4,016
Borrowings - non-current 1,003 2,409
-------------- --------------
10,772 8,471
(10,344) (7,886)
============== ==============
21.3. Financial risk management objectives
The Group manages the risks arising from its operations, and
financial instruments at Executive operating and Board level. The
Board has overall responsibility for the establishment and
oversight of the Group's risk management framework and to ensure
that the Group has adequate policies, procedures and controls to
manage successfully the financial risks that the Group faces.
While the Group does not have a written policy relating to risk
management of the risks arising from any financial instruments
held, the close involvement of the senior executives in the day to
day operations of the Group ensures that risks are monitored and
controlled in an appropriate manner for the size and complexity of
the Group. Financial instruments are not traded, nor are
speculative positions taken. The Group has not entered into any
derivative or other hedging instruments.
The Group's key financial market risks arise from changes in
foreign exchange rates ('currency risk') and changes in interest
rates ('interest risk'). The Group is also exposed to credit risk
and liquidity risk. The principal risks that the Group faces as at
31 March 2022 with an impact on financial instruments are
summarised below.
21.4. Market Risk
The Group is exposed to currency risk and interest risk. These
are discussed further below on note 21.5 and note 21.6.
21.5. Currency risk
Certain of the Group companies have functional currencies other
than US$ and the Group is therefore subject to fluctuations in
exchange rates in translation of their results and financial
position into US$ for the purposes of presenting consolidated
accounts. The Company does not hedge against this translation risk.
The Group's financial assets and liabilities by functional currency
of the relevant company are as follows:
Assets Liabilities
31 March 31 March 31 March 31 March
2022 2021 2022 2021
US$000 US$000 US$000 US$000
--------- --------- --------- ---------
United States Dollar ('US$') - - - -
Great British Pound ('GBP') - - 109 136
Mozambique Metical ('MZN') 922 1,711 10,447 12,007
922 1,711 10,556 12,143
========= ========= ========= =========
The Group transacts with suppliers and/or customers in
currencies other than the functional currency of the relevant
Company (foreign currencies). The Group does not hedge against this
transactional risk. As at 31 March 2022 and 31 March 2021, the
Group's outstanding foreign currency denominated monetary items
were principally exposed to changes in the US$ / GBP and US$ / MZN
exchange rate.
The following tables detail the Group's exposure to a 5, 10 and
15 per cent depreciation in the US$ against GBP and separately to a
10, 20 and 30 per cent depreciation of the US$ against the Metical.
For a strengthening of the US$ against the relevant currency, there
would be a comparable impact on the profit and other equity, and
the balances would be of opposite sign. The sensitivity analysis
includes only outstanding foreign currency denominated items and
excludes the translation of foreign subsidiaries and operations
into the Group's presentation currency. The sensitivity also
includes intra-Company loans where the loan is in a currency other
than the functional currency of the lender or borrower. A negative
number indicates a decrease in profit and other equity.
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
GBP Impact
Profit or loss
5% Increase in US$ (5) (7)
10% Increase in US$ (11) (13)
15% Increase in US$ (16) (18)
Other equity
5% Increase in US$ (5) (7)
10% Increase in US$ (11) (13)
15% Increase in US$ (16) (18)
MZN Impact
Profit or loss
10% Increase in US$ - -
20% Increase in US$ - -
30% Increase in US$ - -
Other equity(1)
10% Increase in US$ (1,561) (94)
20% Increase in US$ (3,122) (2,103)
30% Increase in US$ (4,683) (7,542)
========= =========
(1) This is mainly due to the exposure arising on the translation of US$
denominated intra-Company loans provided to Metical functional currency
entities which are included as part of the Company's net investment
in the related entities.
21.6. Interest rate risk
The Group is exposed to interest rate risk because entities in
the Group hold cash balances and borrow funds at floating interest
rates. As at 31 March 2022 and 31 March 2021, the Group has no
interest-bearing fixed rate instruments.
The Group maintains cash deposits at variable rates of interest
for a variety of short-term periods, depending on cash
requirements. The Grain and Beef operations in Mozambique are also
financed through bank facilities. The rates obtained on cash
deposits are reviewed regularly and the best rate obtained in the
context of the Group's needs. The weighted average interest rate on
deposits was nil% (2021: nil). The weighted average interest on
drawings under the overdraft facilities and bank loans was 18.9%
(2021: 18.68%). The Group does not hedge interest rate risk.
The following table details the Group's exposure to interest
rate changes, all of which affect profit and loss only with a
corresponding effect on accumulated losses. The sensitivity has
been prepared assuming the liability outstanding at the balance
sheet date was outstanding for the whole year. In all cases
presented, a negative number in profit and loss represents an
increase in finance expense/decrease in interest income. The
sensitivity as at 31 March 2022 and 31 March 2021 is presented
assuming interest rates on cash balances remain constant, with
increases of between 20bp and 1000bp on outstanding overdraft and
bank loans. This sensitivity to interest rate rises is deemed
appropriate because the Group interest bearing liabilities are
Metical based. Although the macroeconomic scenario in Mozambique is
now improving the prime lending rate remain high with prime rates
of 18.6% at 31 March 2022 (2021: 15.5%). The Prime lending rate
increased to 20.6% in June 2022.
31 March 31 March
2022(1) 2021 (1)
US$000 US$000
--------- ----------
+ 20 bp increase in interest rates (19) (18)
+ 50 bp increase in interest rates (48) (44)
+100 bp increase in interest rates (97) (88)
+200 bp increase in interest rates (194) (176)
+500 bp increase in interest rates (484) (441)
+800 bp increase in interest rates (775) (707)
+1000 bp increase in interest rates (969) (884)
========= ==========
(1) The table above is prepared on the basis of an increase in rates. A
decrease in rates would have the opposite effect.
21.7. Credit risk
Credit risk arises from cash and cash equivalents, and deposits
with banks and financial institutions, as well as outstanding
receivables. The Group's principal deposits are held with various
banks with a high credit rating to diversify from a concentration
of credit risk. Receivables are regularly monitored and assessed
for recoverability. The impact of COVID-19 on the credit risk of
the Group has been considered in the Going Concern disclosures in
note 3.
The maximum exposure to credit risk is the carrying value of the
Group financial assets disclosed in note 21.2. Details of
provisions against financial assets are provided in note 17.
21.8. Liquidity risk
The Company policy throughout the year has been to ensure that
it has adequate liquidity by careful management of its working
capital. The operating executives continually monitor the Group's
actual and forecast cash flows and cash positions. They pay
particular attention to ongoing expenditure, both for operating
requirements and development activities, and matching of the
maturity profile of the Group's overdrafts to the processing and
sale of the Group's maize and beef products. The impact of COVID-19
on the liquidity risk of the Group has been considered in the going
concern disclosures in note 3.
At 31 March 2022 the Group held cash deposits of $107,000 (2021:
$231,000). As at 31 March 2022 the Group had overdraft and bank
loans facilities of approximately $9,812,558 (2021: $9,464,961) of
which $9,812,558 (2021: $6,425,531) were drawn.
The following table details the Group's remaining contractual
maturity of its financial liabilities. The table is drawn up
utilising undiscounted cash flows and based on the earliest date on
which the Company could be required to settle its obligations and
assuming business conditions at 31 March 2022. The table includes
both interest and principal cash flows.
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
1 month 358 977
2 to 3 months 716 212
4 to 12 months 9,481 3,731
1 to 2 years 434 1,325
3 to 5 years 1,131 1,402
--------- ---------
12,120 7,647
========= =========
22. Share capital
Authorised Allotted and fully paid
Number Number US$000
------------ ------------------------ -------
At 31 March 2020 and 31 March 2021 and 31 March 2022 23,450,000 21,240,618 3,135
At 31 March 2020 and 31 March 2021 and 31 March 2022
Deferred shares of 0.1p each 155,000,000 155,000,000 238
Total share capital 178,450,000 176,240,618 3,373
============ ======================== =======
The Company has one class of ordinary share which carries no
right to fixed income.
The deferred shares carry no right to any dividend; no right to
receive notice, attend, speak or vote at any general meeting of the
Company; and on a return of capital on liquidation or otherwise,
the holders of the deferred shares are entitled to receive the
nominal amount paid up after the repayment of GBP1,000,000 per
ordinary share. The deferred shares may be converted into ordinary
shares by resolution of the Board.
23. Equity-ACCOUNTED INVESTEES
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Interest in joint venture 56 1
56 1
========= =========
DECA Snax Limitada is a joint venture in which the Group has
joint control and a 50% ownership interest. It is one of the
Group's strategic customers of grits and principally engaged in the
production of corn snacks in Mozambique. DECA Snax Limitada's
principal place of business is Chimoio in Mozambique and is not
listed.
DECA Snax Limitada is structured as a separate vehicle and the
Group has residual interest in the net assets of DECA Snax
Limitada. Accordingly, the Group has classified DECA Snax Limitada
as a joint venture. In accordance with the agreement under which
DECA Snax Limitada is established, the Group and the other investor
in the joint venture have agreed to make additional contributions
in proportion of their interest if additional investment is
required in DECA Snax Limitada.
The following table summarises the financial information of DECA
Snax Limitada as included in its own financial statements. The
table also reconciles the summary information to the carrying
amount of the Group's interest in DECA Snax Limitada.
31 March 31 March
2022 2021
US$000 US$000
--------- ---------
Percentage ownership interest 50% 50%
Non-current assets 466 252
Current assets (including cash and cash equivalents - 2022: US$73,000, 2021: US$23,000) 337 108
Current liabilities (Trade and other payables) (233) (49)
Non-current liabilities (458) (310)
Net assets (100%) 112 1
--------- ---------
Net assets (Carrying amount of joint venture) 56 1
--------- ---------
Revenue 1,447 117
Cost of Sales (1,008) (79)
Depreciation and amortisation (71) (10)
Operating expenses (192) (28)
Interest expense - -
Income tax expense (66) -
Profit and other comprehensive income (100%) 110 -
--------- ---------
Profit and other comprehensive income (50%) 55 -
Elimination of unrealised profit - -
--------- ---------
Group's share of total comprehensive income - -
--------- ---------
Dividends received by the Group - -
========= =========
24. Share based payments
24.1. Charge in the year
The Company recorded a charge within Operating expenses for
share based payments of $ Nil (2021: $ Nil) in respect of options
issued in previous years vesting during the year. No options were
issued during the year (2021: $ Nil).
24.2. Outstanding options and warrants
The Group, through the Company, have two unapproved share option
schemes which were established to provide equity incentives to the
Directors of, employees of and consultants to the Company. The
schemes' rules provide that the Board shall determine the exercise
price for each grant which shall be at least the average mid-market
closing price for the three days immediately prior to the grant of
the options. The minimum vesting year is generally one year. If
options remain unexercised after vesting period from the date of
grant, the options expire. Options are forfeited if the employee
leaves the Group before the options vest.
In addition to share options issued under the unapproved share
option schemes, on 1 June 2015, the Company created a warrant
instrument (the 'Instrument') to provide suitable incentives to the
Group's employees, consultants and agents, and in particular those
based, or those spending considerable time, on site at the Group's
operations. Up to 1,000,000 warrants (the 'Warrants') to subscribe
for new Ordinary Shares in the Company (the 'Warrant Shares') maybe
issued pursuant to the Instrument. The exercise price of each
Warrant is GBP0.65 (the share price of the Company being
approximately 60p when the Instrument was created) and the
subscription year during which time the Warrants may be exercised
and Warrants Shares issued is the 5-year period from 1 June 2016 to
1 June 2022. Subject to various acceleration provisions, a holder
of Warrants is not entitled to sell more than 1,000 Warrant Shares
in any day nor more than 10,000 Warrant Shares (in aggregate) in
any calendar month, without Board consent. 50,000 Warrants are in
issue.
The following table provides a reconciliation of share options
and warrants outstanding during the year. The number of shares or
warrants and their respective exercise prices have been adjusted to
reflect the share consolidation (see note 24):
Year
ended Year ended
31 March 2022 Weighted average 31 March 2021 Weighted average
Number exercise price (p) Number exercise price (p)
At beginning of year 93,080 142 93,080 142
Granted in the year - - - -
Terminated in the year - - - -
Lapsed in the year (50,000) 65 - -
At end of year 43,080 232 93,080 142
=============== ======================= =============== =======================
Exercisable at year end 43,080 232 93,080 142
=============== ======================= =============== =======================
At 31 March 2022, the following options and warrants over
ordinary shares of 10p each have been granted and remain
unexercised:
Date of grant Total Exercisable Exercise price
options Options P Expiry date
--------------- --------- ------------ --------------- --------------
29 July 2012 18,080 18,080 350p 29 July 2023
15 March 2014 25,000 25,000 150p 15 March 2024
43,080 43,080
========= ============
25. Related party disclosures
Magister Investments Limited ("Magister"), holds 50.58% of the
ordinary share capital of the Company and is the ultimate
controlling party. In addition, Magister has also assisted the
Group with bank guarantees for the group to secure Commercial
loans. Bank guarantee fees of 1.75% are payable to Magister
amounting to US$74,725. The following Director of Agriterra is also
a Director of Magister:
-- Hamish Rudland
The remuneration of the Directors, who are the key management
personnel of the Company, is set out in note 9.
26. Events subsequent to the balance sheet date
At the end of June 2022, the Group commenced the implementation
of a business turnaround strategy which resulted in the
announcement of:
-- Significant injection of US$7.9 million from Magister
Investments Limited at interest rate of SOFR (SOFR is currently
1.53%)+6% to reduce of the finance cost which has been increasing
over the years and will be used to pay commercial borrowings in
Mozambique which attract interest rates above 18% per annum. The
Group will save at least US$ 792,000). The shareholder loan is made
up of:
o US$6.1 million convertible facility which has a 3 year
tenure
o US$1.8 million convertible facility which has a 12 months
tenure.
-- Operating expenses cost reduction amounting US$47,000 per
month (US$564,000 per annum) by rightsizing the business. All
expenditure to be incurred is evaluated to improve the Group
financial performance and cash flow of the Group.
In August 2022, Grain division successfully repaid a US$6.1
million overdraft facility owed to First Capital Bank thereby
reducing the finance costs by US$82 000 per month. The Group is
planning to repay the Standard Bank loan amounting to US$2.4
million by February 2023 utilising US$1.8 million injected by
Magister Investments Limited and internally generated funds
amounting to US$0.6 million.
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