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AGRITERRA LIMITED
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2018
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Chair’s statement
Directors’ report
Corporate governance
Statement of Directors’ responsibilities
Independent auditor’s report to the members of Agriterra Limited
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Company information and advisers
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Chair’s statement
I am pleased to present the annual report of the Group for the year ending 31 March 2018 (‘FY-2018’).
During the year, the Group has focussed on the restructuring of the business to concentrate on the core revenue
generative branches of the business, being the Grain and Beef divisions based in Mozambique, and disposal
of non-core assets, namely the Sierra Leonean cocoa activities. This, coupled with the strategic investment from
Magister Investments Limited (‘Magister’) in September 2017, is intended to provide a solid platform for future
growth and profitability.
As shareholders are aware, the Company changed its accounting reference date to 31 March (from 31 May,
with effect from 31 March 2017), to more effectively co-ordinate the Group’s annual report and accounts with
the business cycle of the Group’s underlying operations. Accordingly, the comparative periods presented in this
report are for the 10 month period ended 31 March 2017 (‘FY-2017’).
Mozambique overview
The board believe that, following several years of political and economic instability, the outlook for the
Mozambique economy in the short to medium term is encouraging. The continued development of the liquefied
natural gas (‘LNG’) industry in the north of the country will underpin this economic growth and is expected in
the future to generate additional demand for the Group’s products (in particular our beef).
During FY-2018, there was a strengthening of the Metical against both the US$ and South African Rand
experienced early in the period, followed by a period of relative stability in the exchange rate at c.60
Metical/US$ and c.4.5 Metical/ZAR. Being a net importer of most goods, the effect of this has been to
continue to put downward pressure on inflation in Mozambique – the annualised rate to 31 December 2017
was c.11% which compares to c.25% for the 12 months ended 31 December 2016. Despite the fall in inflation
to current annualised rates of c. 5%, interest rates remain high, with Standard Bank’s prime Metical lending
rate remaining at 24% at 31 March 2018 (31 March 2017: 28%). This persistently high lending rate has led
the board to take actions to decrease our outstanding loan and overdraft balances in the period as more fully
described below.
New investment and use of funds
During the year the Group secured new investment of c.US$4.3m from Magister Investments Limited in exchange
for a 50.01% shareholding in the Company. Full details regarding Magister were provided to shareholders in
the Circular to Shareholders and Notice of General Meeting dated 14 August 2017. As a result, Magister is
the ultimate controlling party of the Company.
This new funding is being deployed to strengthen the Group’s position in Mozambique, with an initial investment
of US$0.75m and US$0.25m into the Grain and Beef divisions respectively to reduce their outstanding bank
financing. This repayment is in addition to an earlier repayment of US$0.4m in the Beef division following the
Group’s disposal of its cocoa assets in Sierra Leone. The related saving in interest costs is expected to amount
to approximately US$0.3m per annum, assuming interest rates remain at the current levels.
Review
Grain
Agriterra operates an established Maize buying and processing business with its Desenvolvimento
E Comercialização Agrícola Limitada (“DECA”) facility in Chimoio, which has a 35,000 tonne storage capacity
and its 15,000 tonne capacity Compagri Limitada (“Compagri”) facility in Tete, north west Mozambique.
Maize is purchased from local out-growers through a network of buying stations, which is then stored and
processed before being sold to the wholesale market.
FY-2018 saw a bumper harvest season in Mozambique which resulted in subdued demand for our maize flour.
The relative weakness in demand has resulted in a fall in sales volume to 16,472 tonnes of maize flour in FY-
2018 (10 months to 31 March 2017: c.18,944 tonnes) and c.23,135 tonnes of all maize products (10
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
months to 31 March 2017: c.24,705), with revenue decreasing in Metical terms from Metical 636.1m to
Metical 323.1m and US$ terms from US$8.9m to US$5.1m. Cost reduction measures restricted the fall in
EBITDA to a loss of US$0.67m (10 months to 31 March 2017: loss of US$0.20m). The cost base is now
more aligned to the level of business and the division is looking to expand its product range and consequently
improve margins.
The natural cycle of maize purchases following the harvest leads to a significant working capital requirement
for the Grain division in the first half of the year which unwinds in the second half. During the year c.21,800
tonnes of maize were purchased (10 months to 31 March 2017: 27,000 tonnes). Inventory levels at the year
end were reduced to 1,686 tonnes (31 March 2017: 4,954 tonnes). The Grain division’s working capital is
financed by bank facilities provided by Standard Bank. The high interest rates continue to erode the overall
profitability of the division. After an interest charge of US$0.95m (10 months to 31 March-2017: US$0.69m),
loss before tax for the Grain division was US$1.6m (10 months to 31 March 2017: US$0.89m). In order to
mitigate against this high interest cost, the Group has invested US$0.75m during the period in the working
capital requirements of the Grain division to reduce its reliance on overdraft financing. With inflation now stable
at around 5% per annum, interest rates are expected to fall further. In addition, the division is reviewing its
purchasing practices and sales channels in order to smooth out the peak in the working capital cycle.
Beef
Agriterra operates its Beef division through Mozbife Limitada (“Mozbife”). The Group has a feedlot facility,
abattoir and its own branded retail units.
In respect of the Beef division, demand remains strong. However, a limiting factor to the ability to expand
throughput was an outbreak of foot and mouth in February 2018. Although the slaughter herd at the Dombe
ranch and feedlot remained disease free, the country-wide disease outbreak severely curtailed the movement
of cattle which limited the division’s ability to increase the pipeline of cattle in the feedlot, and throughput to the
abattoir. Strict Bio security measures are in force at the feedlot and in addition, all cattle movements are currently
cleared by Government vets.
Notwithstanding this setback, revenue for the year was US$4.7m (10 months to 31 March 2017: US$4.3m).
The operating loss however increased to US$1.59m (10 months to 31 March 2017: US$1.35m). After a fall
in finance costs to US$0.14m (10 months to 31 March 2017: US$0.24m), the loss before tax increased
slightly to US$1.73m (10 months to 31 March 2017: US$1.59m).
Restrictions on the movement of cattle continue, limiting the division’s ability to increase throughput. However
new sources of quality cattle have been identified and will be brought into the feedlot as soon as conditions
allow. Significant improvements have been made to feed cropping at the Vanduzi farm and feedlot during the
year, which together with the pelletised animal feed sourced from the Grain division, has been reflected in
improved feedlot performance. This is expected to be reflected in improved margins once volumes increase.
Cocoa
On 1 June 2017 the Group completed the disposal of its Cocoa division operating subsidiaries in Sierra Leone
for US$0.5m. The disposal proceeds were applied to reduce the Group’s Beef division borrowing facilities in
Mozambique and for general working capital purposes. The Group recorded a profit on the disposal of the
Cocoa division of US$0.15m, which was reduced by US$0.13m to US$0.02m following the recycling of
translation differences previously reflected in the translation reserve.
Board and senior management changes
As a result of the investment by Magister on 14 September 2017, the Group re-structured the Board with the
appointments of Mr. H Rudland, Mr. G Smith and Mr. B Scott. Mr. A Groves stepped down from the Board to
focus on his other business interests. On 31 December 2017 Mr. D Cassiano-Silva stepped down from his
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Chair’s statement
executive role as Finance Director but remained a Non-Executive director. Mr B Scott stepped down on
28 February 2018 and Ms C Havers took on the role of Executive Chair.
Following the disposal of the Group’s cocoa activities, the London office has been closed. On 15 January
2018 Mr A Fernandes was appointed Group Finance Director (Mozambique) and is based in Chimoio,
Mozambique, the Company’s main operational centre.
I would like to once again take this opportunity to thank Dan and Andrew for their considerable input into the
development of the Company and wish Brendan the best in his new role.
Results
Revenue for the year ended 31 March 2018 fell to US$9.2m (10 months to 31 March 2017: US$12.8m).
The operating loss for the year increased to US$4.0m (10 months to 31 March 2017: US$2.7m). After finance
charges of US$1.1m (10 months to 31 March 2017: US$0.9m) the loss for the year from continuing activities
increased to US$5.1m (10 months to 31 March 2017: US$3.6m). The loss from discontinued activities for
the year fell to US$ 0.03m (10 months to 31 March 2017: US$0.1m). The loss for the year attributable to
owners of the company was US$5.1m (10 months to 31 March 2017: US$3.8m). At 31 March 2018, net
cash balances were US$3.5m (2017: US$2.4m) and bank borrowings were US$4.2m (2017: US$3.5m).
The banking facilities were renewed on 25 May 2018. At the date these facilities were agreed, the Group
was in breach of the interest covenant and remains in breach of the covenant. To date the Group has continued
to make all repayments of interest and principal and has received no correspondence from the Bank suggesting
that the loan might go into default.
Outlook
The recent investment from Magister marks a new period for the Group and we are already benefitting from
the experience and connections of our new Board members. With senior executive management now based
in Mozambique, supported by regular board meetings in Chimoio, the Group is focussing on addressing the
operational issues to move towards profitability and to capitalise on the expected growth from the development
of the LNG industry in Mozambique.
CSO Havers
Chair
21 September 2018
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Directors’ report
The directors of the Company hereby present their annual report together with the audited financial statements
for the year ended 31 March 2018 for the Group. During the comparative period the Company changed its
accounting reference date to 31 March from 31 May, effective from 31 March 2017 in order to more
effectively co-ordinate the Group’s annual report and accounts with the business cycle of the Group’s underlying
business operations. Accordingly, the financial statements present the results and cash flows of the Group for
the year ended 31 March 2018, with the comparative period being the 10 months ended 31 March 2017.
At the Annual General Meeting held on 30 November 2017, the shareholders approved a resolution to
consolidate 100 existing ordinary shares of 0.1p each ("Existing Ordinary Share") into one new ordinary share
of 10p each ("New Ordinary Share"). All references to the number of shares in issue at 31 March 2018 and
in the comparative period relate to New Ordinary Shares.
Except where otherwise noted, amounts are presented in this Directors’ report in United States Dollars (‘$’ or
‘US$’).
Listing details
1.
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 Group is the investment in, development of and operation of agricultural and
associated civil engineering projects in Africa. The Group’s current operations are focussed on maize and beef
in Mozambique. During the year the Group disposed of its cocoa interests in Sierra Leone. Details of the
disposal are set out in note 13. A review of the Group’s performance by business segment and future prospects
are given in the Chair’s statement. A review of the risks and uncertainties impacting on the Group’s long term
performance is included in the Corporate Governance report.
3. Results and dividends
The Group results for the year ending 31 March 2018 show a loss after taxation and discontinued operations
of $5,084,000 (10 month period ending 31 March 2017: loss $3,774,000). The Directors do not
recommend the payment of a final dividend (10 month period ending 31 March 2017: $nil). No interim
dividends were paid in the period (10 month period ended 31 March 2017: $nil).
Further details on the Group’s performance in the period are included in the Chair’s statement.
4. Directors
4.1. Directors in office
The Directors who held office during the period and until the date of this report were:
Director
CSO Havers
DL Cassiano-Silva
AS Groves (resigned 14 September 2017)
HBW Rudland (appointed 14 September 2017)
B Scott (appointed 14 September 2017, resigned
28 February 2018)
GR Smith (appointed 14 September 2017)
Position
Executive Chair
Non-Executive Director
Chief Executive Officer
Non-Executive Director
Chief Operating officer – Mozambique
Non-Executive Director
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Directors’ report
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:
HBW Rudland *
Ordinary Shares held
10,622,433
* Mr Rudland’s interest is held through Magister Investments Limited (‘Magister’). Magister is a private limited company incorporated
in the Republic of Mauritius, wholly owned 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,
Mrs. Bridgette Rudland and their three children (all of whom are under 18 years old).
4.3. Directors emoluments
Details of the nature and amount of emoluments payable by the Group for the services of its Directors during
the financial period are shown in note 10 to the financial statements.
Directors’ share options
Details of the Director’s interests in share options of the Company during the financial period are as follows:
Director
DL Cassiano-Silva
At
31 March 2017
and 2018
Exercise Date from which
exercisable
price GBP
Expiry date
25,000
£1.47
(1)
(2)
(1)
(2)
These options were granted on 15 March 2014 and vest 20% per annum on the first to fifth anniversary from the date of grant.
These options expire five years after the date they vest.
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 14 September 2018, 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.
Magister Investments Limited
Gersec Trust Reg.
Mr. William Philip Seymour Richards
Global Resources Fund
Peter Gyllenhammar AB
Number of Ordinary Shares
% Holding
10,622,433
2,279,592
982,500
678,886
647,500
50.01%
10.73%
4.63%
3.20%
3.05%
6. Employee involvement policies
The Group 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.
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7. Supplier payment policy and practice
The Group’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 2018 was 4 days (31 March 2017: 4 days).
8. Political and charitable donations
During the period no political and charitable donations were made (10 month period ending 31 March 2017:
$nil).
9. Social and community issues
As a Group, we strongly believe that it is part of our wider responsibility to promote the development of the
countries in which we operate. Central to this development and continued economic growth is employment
and training. Wherever possible, the Group continues to ensure that its expertise and specialist skills and
facilities are made available to the broader community.
Particular activities undertaken during the year have focussed 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 (3) provision of health and medical assistance.
With respect to educational activities, these have included a four month internship for three students of animal
husbandry. In addition, various animal and veterinary science students visited our abattoir for practical aspects
of their university courses (these visits are guided by our in-house vet who has more than 30 years’ experience
in the field of animal health in Mozambique). We have employed a Veterinary Technician student to help with
our small staging feedlot in Tete. As part of our Management development program, we have sponsored a
student on a three year economics course. Now in his final year, he is managing our Tete milling facility.
With respect to the promotion of health and medical assistance, a contracted doctor visits our sites and facilities
on a regular basis to deal with day to day ailments and concerns. He also coordinates and monitors progress
on mid to long term treatments ensuring employees are supported through whatever treatments are required.
We have undertaken further work on the clinic in the district of Dombe to provide a service base for this very
rural community.
Community relations initiatives have included the provision of roofing materials to repair a school roof in
Inhazonia. At Mavonde, additional maintenance work was undertaken to the local school built by the Company.
At Vanduzi, manure from the feedlot is given to surrounding small scale farming associations, being out growers
for Companhia de Vanduzi, who commercially export to the European market. Both DECA and Mozbife
sponsored the annual Christmas party for three orphanages in Msika district, and food was distributed to certain
communities during the planting season to ensure local seed stocks were planted.
Wherever possible, the Group is also committed to the promotion of food security in Mozambique. We are
particularly proud to be working with a leading international food donor programme, providing high quality
maize flour products to both alleviate national hunger and support the education of the younger population –
the majority of the maize flour we have provided to this food programme has been distributed to school children.
We believe that the partner relationship we have built over the year will remain strong in future years, and we
hope to continue working extensively with food donor programmes in the future.
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Directors’ report
10. Independent auditor and statement of provision of information to the
independent auditor
BDO 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
Chair
21 September 2018
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Corporate governance
The Board is accountable to the Company’s shareholders for good corporate governance. The Company is
quoted on AIM and is therefore required to comply with the provisions of a recognised corporate governance
code from the 28th September 2018. The board are reviewing the Company’s corporate governance policies
and disclosures and have decided to adopt the Quoted Company Alliance Corporate Governance Code (the
“QCA code”). Set out below is a summary of how, at the date of this report, the Group was dealing with
corporate governance issues.
1. The Board of Directors and the Executive Committee
The Group is led and controlled by a Board comprising the executive Chair, and three Non-Executive directors.
Whilst the Group consolidates its operations in Mozambique, the board appointed Caroline Havers as
Executive-Chair. It is intended to appoint a Chief Executive Officer, based in Mozambique in due course.
Both Hamish Rudland and Gary Smith are not considered to be independent directors by virtue of their relations
with Magister Investments Limited. Daniel Cassiano-Silva is the former executive finance director of the Group
and therefore is also not considered to be independent.
The board are seeking to appoint two independent Non-Executive directors with the experience and skill base
to complement those of the existing board.
The Executive Chair is expected to commit a minimum of 2 weeks per month 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.
Board meetings are held quarterly in Mozambique. Since the reconstitution of the board following the investment
by Magister Investments Limited in September 2017, four board meetings have been held, the first in London
and the remainder in Mozambique. The attendance record of directors is as follows:
Caroline Havers
Daniel Cassiano-Silva
Hamish Rudland
Brendan Scott (resigned 28 February 2018)
Gary Smith
Meetings
Held
Meetings
Attended
4
4
4
2
4
4
2
4
2
4
The Board has entrusted the day-to-day responsibility for the direction, supervision and management of the
business to the Group Executive Committee (the ‘ExCom’). The ExCom is currently comprised of the Executive
Chair, the Operations Director and Chief Financial Officer in Mozambique.
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.
Due to the current size of the Board and the Company, there is no separate Nomination Committee and any
new Directors are appointed by the whole Board.
There is no agreed formal procedure for the Directors to take independent professional advice at the Group’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 Group 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.
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Corporate governance
The Company has remuneration and audit committees as more fully described below.
2. Directors’ remuneration
The remuneration committee reviews the performance of the Directors and makes recommendations to the Board
on matters relating to the Directors’ remuneration and other terms of employment. The committee makes
recommendations to the Board on the granting of share options and other equity incentives and administers
any equity incentive schemes. The remuneration committee is constituted on an ad hoc basis and comprises at
least two members.
Details of the remuneration of each Director are set out in note 10 to the financial statements.
3. Accountability and audit
The audit committee is responsible for ensuring that the Group’s financial performance and position is properly
monitored, controlled and reported. The committee meets at least once a year and has unrestricted access to
the auditor. In addition to meeting with the auditor and reviewing the report from the auditor relating to the
accounts and internal control, the committee is also responsible for reviewing the scope and results of the audit,
its cost effectiveness and the independence and objectivity of the auditor. A formal statement of independence
has been received from the external auditor for the period. Hamish Rudland and Gary Smith comprise the audit
committee which is chaired by Gary Smith. The Executive Chair and Chief Financial Officer are invited to
attend meetings with the auditor.
4. Relations with shareholders
The Executive Chair is the Company’s principal spokesperson with investors, fund managers, the press and
other interested parties. At the Annual General Meeting, investors are given the opportunity to question the
Board.
Internal audit
5.
The Board acknowledges its responsibility for establishing and monitoring the Group’s systems of internal control.
Although no system of internal control can provide absolute assurance against material misstatement or loss,
the Group’s systems are designed to provide the Directors with reasonable assurance that problems are identified
on a timely basis and dealt with appropriately.
The Board reviews the effectiveness of the systems of internal control and considers the major business risks
and the control environment. No significant control deficiencies have come to light during the year and no
weakness in internal financial control has resulted in material losses, contingencies or uncertainties which would
require disclosure as recommended by the guidance for directors on reporting on internal financial control.
In light of this control environment the Board periodically reviews the requirement for an internal audit function.
It currently considers that there is no such requirement.
6. Compliance with relevant legislation
All Directors are kept informed of changes in relevant legislation and changing commercial risks with the
assistance of the Company’s legal advisers and auditors where appropriate. The Directors have taken appropriate
legal advice and implemented internal training and reporting procedures to ensure compliance with the UK
Bribery Act 2010 (the ‘Bribery Act’) and the Prevention of Corruption (Bailiwick of Guernsey) Law, 2003 which
contains broadly similar restrictions. Notwithstanding the fact that the Company is not UK–resident, the Directors
have formed a view that it is appropriate for the Company to maintain compliance with the Bribery Act.
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7. Going concern
The Board has detailed its considerations relating to Going Concern in note 3.1 to the financial statements.
8. Risks and uncertainties
There are a number of risks and uncertainties facing the Group, principally the following:
8.1. Foreign exchange
The Group’s operations are impacted by fluctuations in exchange rates, in particular between the Metical and
South African Rand and the Metical and United States Dollar. Fluctuations in exchange rates may affect the
underlying amounts that the Group will pay for goods or services, or impact the price competitiveness of the
Group’s products in certain markets. This risk was particularly noticeable in the previous financial period – the
Mozambique to US$ exchange rate has moved from 59.61 Metical/US$ at 31 May 2016 to 66.51
Metical/US$ at 31 March 2017, having reached as high as approximately 80 Metical/US$ in the period;
rates for the year ended 31 March 2018 have stabilised. On the one hand, a devaluation in the Metical
increases the cost of those areas of the Group’s cost base denominated in currencies other than the Metical.
On the other hand, a devaluation in the Metical increases the cost of imported beef products, which become
relatively more expensive than produce of Mozambique origin. On a net basis, a devaluation in the Metical
has been favourable for sales and net income. Future fluctuations in exchange rates could have a net positive
or adverse effect on the Group’s business. Further details of the Group’s foreign currency exposures are set out
in note 24.4.1
8.2. Regulatory risk
While the Group believes that its operations are currently in substantial compliance with all relevant material
environmental and health and safety laws and regulations, there can be no assurance that new laws and
regulations, or amendments to, or stringent enforcement of, existing laws and regulations will not be introduced,
which could have a material adverse impact on the Group.
8.3. General risks associated with operating in Africa
Changes in government, monetary policies, taxation, exchange control and other laws can have a significant
impact on the Group’s assets and operations. Several countries in Africa have experienced periods of political
instability, including more recently Mozambique, and there can be no guarantees as to the level of future
political stability. Changes to government policies and applicable laws could adversely affect the operations
and/or financial condition of the Group. The jurisdictions in which the Group might operate in the future may
have less developed legal systems than more established economies, which could result in risks such as (i)
effective legal redress in the courts being more difficult to obtain; (ii) a higher degree of discretion on the part
of governmental authorities; (iii) the lack of judicial or administrative guidance on interpreting applicable rules
and regulations. In certain jurisdictions, the commitment of local business people, government officials and
agencies and the judicial system to abide by legal requirements and negotiated agreements may be more
uncertain, creating particular concerns with respect to the Group’s licenses and agreements for business. These
may be susceptible to revision or cancellation and legal redress may be uncertain or delayed.
This risk increased significantly during the period ending 31 March 2017 in Mozambique, which experienced
a complex economic crisis (arising through a combination of factors including the decline in commodity prices,
strong devaluation of the Metical, a rise in inflation and natural disasters) and military conflict focussed in the
central regions of the country. During the year ended 31 March 2018 there has been a relative improvement
in Mozambique; in particular, there has been no repeat of political and military unrest. In addition, inflation is
slowing down and agricultural commodity prices have stabilised. Combined with a general improvement in
the international sentiment towards Mozambique in response to the positive actions undertaken by the
Government to address the debt crisis, there is hope that donor funding and private investment (particularly in
the natural gas and coal sectors) will contribute to a general economic uplift.
However, in the event that political and military tensions escalate again, the Group will be obligated to assess
the risks to staff and re-consider risk mitigation so as to protect staff and assets, so far as practicable.
10
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Corporate governance
8.4. Land ownership in Mozambique
Under the laws of Mozambique, proprietary rights in land are exclusive to the state. The Mozambique
constitution prescribes the state’s rights of ownership and the power and ability to determine the conditions for
the use and development of land by individual or corporate persons. The land cannot be sold, mortgaged or
encumbered in any way or by any means. The state grants the right to use and develop the land which is
evidenced by a Use and Development of Land License (‘DUAT’) which allows for the title holder to build and
register any infrastructure under its name on such land. Our Mozambique operations are dependent on
maintaining the relevant DUATs and, whilst there is currently no indication that the relevant DUATs are invalid,
there can be no guarantees that this will not change in future.
8.5. Maize growing season
The Group anticipates a six month buying/growing season for maize. However matters outside the control of
the Group, such as adverse weather conditions, could impact upon the amount of production achieved by
local farmers in any year, which could consequently have adverse effects on the Group’s business and profit
margins.
8.6. Cattle ranching and feedlots
The Group has significant cattle ranching and feedlot assets in Mozambique, with approximately 4,000 head
as at 31 March 2018 (31 March 2017: 3,500). While all necessary measures are taken to ensure the cattle
remain disease and infection free, there is a risk that the animals may be affected by unforeseen illnesses which
could impact on the future profitability of these operations. Mozambique is also subject to significant temperature
and precipitation changes during and between years. In some years, particularly ‘El Nino’ years such as
calendar year 2016, the country may be subject to drought conditions which impact on the availability of
grazing feed for cattle (thereby necessitating the implementation of supplementary feeding programmes to
maintain the condition of the animals). Any unexpected supplementary feeding programmes, or increases in
the price of purchased feed (such as maize, bran, sunflower cake etc) resulting from lower than anticipated
local supplies, may impact on the profitability of the ranching operations.
8.7. Health risks
The Group operates in countries that are, or may be, subject to significant health risks. For example, due to the
Ebola epidemic in Sierra Leone in 2014 and 2015, the Group suspended the development of its Cocoa
plantation and has subsequently disposed of this asset. In the event of other unforeseen epidemics in the future,
there is a risk that the Group’s operations may be further temporarily disrupted, or require additional
precautionary measures. Accordingly, in such circumstances, the Group may be unable to develop its projects
in the timeframe and budget initially projected, which may impact on the cash requirements or profitability of
these projects.
11
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Director’ 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 period in accordance with generally accepted accounting principles.
The Directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements
in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union
(‘EU’).
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 EU to present fairly the financial position and financial performance of the Group.
In preparing the Group financial statements, the Directors are required to:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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 EU; 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 Group and Company transactions and disclose with reasonable accuracy at any time the financial position
of the Group and 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 Group and 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 Group’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.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Independent auditor’s report to the members of Agriterra Limited
Opinion
We have audited the financial statements of Agriterra Limited and its subsidiaries (the ‘group’) for the year
ended 31 March 2018 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 financial statements, including a summary of
significant accounting policies. The financial reporting framework that has been applied in the preparation of
the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
In our opinion:
(cid:129)
(cid:129)
(cid:129)
the financial statements give a true and fair view of the state of the group’s affairs as at 31 March 2018
and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union; and
the financial statements 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 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 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 3.1 to the financial statements concerning the group’s ability to continue as a going
concern which shows that the group will need to meet its cash flow forecasts, renew its overdraft facility and
maintain its current borrowings or raise further finance in order to continue as a going concern. As disclosed
in note 22, the Group’s overdraft facilities require renewal in May 2019 and its loan is currently in breach of
its covenants.
The matters explained in note 3.1 indicate that a material uncertainty exists that may cast significant doubt on
the group’s ability to continue as a going concern. The financial statements do not include the adjustments that
would result if the group was unable to continue as a going concern. Our opinion is not modified in respect of
this matter.
Given the conditions and uncertainties noted above, we considered going concern to be a Key audit matter.
We critically assessed management’s financial forecast over their period of going concern assessment to
December 2019. This included consideration of the key underlying assumptions and involved reviewing actual
performance against budget. We noted that the forecast is dependent upon the successful execution of the
new business plans in both the beef and grain divisions, and the forecasts show a significant increase in
revenues and a reduction in costs, as disclosed in note 3.1. We reviewed the recent renewal of the overdraft
facility and obtained representations from the Board that there has been no correspondence from the bank in
respect of the breach of covenants. We reviewed the letter of support provided by the parent company to the
Mozambique subsidiaries of the Group. We discussed these matters with management and the Audit Committee
and obtained representations from the Board in respect of the future plans of the group. We evaluated the
adequacy of disclosures made in the financial statements. We found that the disclosure of this matter was
adequately described.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Key Audit Matter
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Impairment assessment of the beef and grain divisions
As detailed in note 4.1, the Group’s principal non-current assets relate to the beef and grain divisions.
Management must assess at each reporting date whether there is any objective evidence of impairment of the
Group’s assets. Management noted that indicators of impairment exist, such as the losses incurred during the
year. Management undertook impairment tests using the value in use (VIU) method to determine if as at
31 March 2018 the recoverable amount of each of the divisions was greater than its carrying value. This
assessment involved significant Management judgement and estimates, as detailed in the significant accounting
policies and estimates note and note 4.1. We therefore considered the impairment assessment and the
appropriateness of the estimates and disclosures to be a key audit matter.
Our Response Impairment assessment of the beef and grain divisions
We evaluated management’s value in use impairment models for the grain and beef divisions and critically
challenged the key estimates and assumptions used by management. In doing so, we confirmed that the
forecasts were formally reviewed and approved by the Board and were consistent with operational budgets.
We reviewed the discount rate used and involved our specialist valuations department. We reviewed the
sensitivity analysis over individual key inputs, together with a combination of sensitivities over such inputs. We
reviewed the disclosures in the financial statements, particularly the disclosures of key estimates and assumptions
which impact the fair values, and the sensitivity analysis thereon.
Our application of materiality
Group materiality $200,000 (2017 – $200,000). Basis for determining materiality 1.5% of total assets.
Group performance materiality $100,000 (2017 – $100,000). Basis for performance materiality 50% of
group materiality.
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole. We have determined an assets based measure
is appropriate as the group is currently loss making and has recently raised significant equity financing. Whilst
materiality for the financial statements as a whole was $200,000, each significant component of the group
was audited to a lower level of materiality of $120,000. Performance materiality has been set at 50% of
materiality, which is used to determine the financial statement areas that are included within the scope of our
audit and the extent of sample sizes during the audit. We agreed with the Audit Committee that we would
report to the Committee all individual audit differences identified during the course of our audit in excess of
$4,000. We also agreed to report differences below these thresholds that, in our view warranted reporting
on qualitative grounds.
An overview of the scope of our audit
Our group audit was scoped by obtaining an understanding of the group and its environment, including the
group’s system of internal control, and assessing the risks of material misstatement in the financial statements at
the group level. Our group audit scope focused on the group’s principal operating businesses being the grain
and beef divisions, which were subject to a full scope audit. Together with the parent company and its group
14
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Independent auditor’s report to the members of Agriterra Limited
consolidation, which was also subject to a full scope audit, these represent the significant components of the
group. The remaining components of the group were considered non-significant and these components were
principally subject to analytical review procedures. 100% of the group’s revenue and 100% of the group’s total
assets were subject to full audit procedures. The audits of each of the components were principally performed
in the United Kingdom and Mozambique. All of the audits were conducted by BDO LLP and BDO Mozambique.
As part of our audit strategy, the senior members of the BDO LLP audit team visited each of the principal
operating locations in the year.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the
financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Matters on which we are required to report by exception
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:
(cid:129)
(cid:129)
proper accounting records have not been kept by the Company; or
the financial statements are not in agreement with the accounting records; or
(cid:129) we have failed to obtain all the information and explanations which, to the best of our knowledge and
belief, are necessary for the purposes of our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, within the Directors’ report, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. In preparing the financial
statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements. A further
description of our responsibilities for the audit of the 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.
The engagement director on the audit resulting in this independent auditor’s report is Jack Draycott.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Section 262 of the
Companies (Guernsey) Law, 2008. 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.
Jack Draycott (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
21 September 2018
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
16
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Consolidated income statement
For the year ended 31 March 2018
Continuing operations
Revenue
Cost of sales
Gross profit
Increase in value of biological assets
Operating expenses
Other income
Profit on disposal of property, plant and equipment and
adjustments to the carrying value of assets classified as held for sale
Operating loss
Investment revenues
Other gains and losses
Finance costs
Loss before taxation
Taxation
Loss for the year/period from continuing operations
Discontinued operations
Loss for the year/period from discontinued operations
Loss for the year/period attributable to owners of the Company
LOSS PER SHARE
Basic and diluted loss per share from continuing operations
Basic and diluted loss per share from continuing
and discontinued operations
Year
ended
31 March 2018
US$000
10 months
ended
31 March 2017
US$000
9,222
(8,184)
1,038
510
(5,619)
25
88
(3,958)
13
–
(1,097)
(5,042)
(4)
(5,046)
(38)
(5,084)
12,807
(11,915)
892
487
(4,532)
29
439
(2,685)
12
(16)
(927)
(3,616)
(22)
(3,638)
(136)
(3,774)
US cents
US cents
(30.9)
(34.2)
(31.1)
(35.5)
Note
5
18
7
11
12
13
14
14
17
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Consolidated statement of comprehensive income
For the year ended 31 March 2018
Loss for the year/period
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences
Other comprehensive income for the year/period
Total comprehensive income for the year/period attributable to owners
of the Company
Year
ended
31 March 2018
US$000
10 months
ended
31 March 2017
US$000
(5,084)
(3,774)
764
764
(1,119)
(1,119)
(4,320)
(4,893)
18
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Consolidated statement of financial position
As at 31 March 2018
Non-current assets
Property, plant and equipment
Interests in associates
Current assets
Biological assets
Inventories
Trade and other receivables
Assets classified as held for sale
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Trade and other payables
Liabilities directly associated with assets classified as held for sale
Net current assets
Non-current liabilities
Borrowings
Total liabilities
Net assets
Share capital
Share premium
Share based payment reserve
Translation reserve
Accumulated losses
Equity attributable to equity holders of the parent
Note
15
16
18
19
20
21
22
23
21
22
25
31 March
2018
US$000
6,315
–
6,315
1,137
938
1,096
19
3,541
6,731
13,046
4,235
469
–
4,704
2,027
–
–
4,704
8,342
31 March
2017
US$000
6,094
4
6,098
746
1,253
1,557
573
2,425
6,554
12,652
2,730
634
128
3,492
3,062
734
734
4,226
8,426
3,373
151,442
1,988
(16,737)
(131,724)
8,342
1,960
148,622
1,985
(17,501)
(126,640)
8,426
The financial statements on pages 17 to 54 were approved and authorised for issue by the Board of Directors
on 21 September 2018. Signed on behalf of the Board of Directors by:
CSO Havers
Chair
21 September 2018
19
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Consolidated statement of changes in equity
For the year ended 31 March 2018
Balance at
1 June 2016
Loss for the period
Other comprehensive income:
Exchange translation loss on
foreign operations
Total comprehensive
income for the period
Transactions with owners
Share-based payments
Total transactions
with owners for the period
Balance at
31 March 2017
Loss for the year
Other comprehensive income:
Exchange translation gain on
foreign operations
Total comprehensive
income for the year
Transactions with owners
Issue of shares net of expenses
Share-based payments
Total transactions with owners
for the year
Balance at 31 March 2018
Share
capital
US$000
Share
premium
US$000
Note
Share based
payment
reserve
US$000
Translation Accumulated
losses
US$000
reserve
US$000
Total
equity
US$000
1,960
–
148,622
–
1,980
–
(16,382)
–
(122,866)
(3,774)
13,314
(3,774)
26
26
–
–
–
–
–
–
–
–
–
–
5
5
(1,119)
–
(1,119)
(1,119)
(3,774)
(4,893)
–
–
–
–
5
5
1,960
–
148,622
–
1,985
–
(17,501)
–
(126,640)
(5,084)
8,426
(5,084)
–
–
1,413
–
1,413
3,373
–
–
2,820
–
2,820
–
–
–
3
3
764
–
764
764
(5,084)
(4,320)
–
–
–
–
–
–
151,442
1,988
(16,737)
(131,724)
4,233
3
4,236
8,342
20
251721 Agriterra pp17-pp21.qxp 27/09/2018 13:30 Page 21
Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Consolidated cash flow statement
For the year ended 31 March 2018
Cash flows from operating activities
Loss before tax from continuing operations
Adjustments for:
Depreciation
Profit on disposal of property, plant and equipment
Adjustments to the carrying value of assets classified as held for sale
Share-based payment expense
Foreign exchange (gain)/loss
Net decrease in biological assets
Increase in value of biological assets
Finance costs
Investment revenues
Decrease in fair value of investments
Impairment of current and non-current assets
Operating cash flows before movements in working capital
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
Decrease in trade and other payables
Cash used in operating activities by continuing operations
Corporation tax paid
Interest received
Net cash used in operating activities by continuing operations
Net cash used in operating activities by discontinued operations
Net cash used in operating activities
Cash flows from investing activities
Proceeds from disposal of subsidiary net of costs and cash
balances disposed of
Proceeds from disposal of property, plant and equipment
net of expenses incurred
Acquisition of property, plant and equipment
Net cash from investing activities by continuing operations
Net cash from investing activities by discontinued operations
Net cash from investing activities
Cash flows from financing activities
Issue of shares (net of expenses)
Net draw down of overdrafts
Net repayment of loans
Finance costs
Net cash from financing activities from continuing operations
Net increase/(decrease) in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at beginning of the year/period
Cash and cash equivalents at end of the year/period
Year
ended
31 March 2018
US$000
10 months
ended
31 March 2017
US$000
Note
(5,042)
(3,616)
15
26
18
18
11
17
16
13
13
15
22
22
490
(87)
–
3
(181)
194
(510)
1,097
(13)
–
4
(4,045)
481
772
(297)
(3,089)
(4)
13
(3,080)
(38)
(3,118)
476
232
(116)
592
–
592
4,233
1,506
(1,035)
(1,097)
3,607
1,081
35
2,425
3,541
445
(460)
21
5
104
1,454
(487)
927
(12)
16
–
(1,603)
(151)
(729)
(13)
(2,496)
(22)
12
(2,506)
(48)
(2,554)
–
927
(204)
723
33
756
–
1,145
(110)
(927)
108
(1,690)
60
4,055
2,425
21
251721 Agriterra pp22-pp45.qxp 27/09/2018 14:18 Page 22
Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
1. General information
Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 42643.
Further details, including the address of the registered office, are given on page 55. The nature of the Group’s
operations and its principal activities are set out in the Directors’ report. A list of the investments in subsidiaries
and associate companies held directly and indirectly by the Company during the year and at the year end,
including the name, country of incorporation, operation and ownership interest is given in note 3.2.
The reporting currency for the Group is the US Dollar (‘$’ 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 IFRSs as adopted by the EU.
The Company changed its accounting reference date to 31 March from 31 May, effective from 31 March
2017 in order to more effectively co-ordinate the Group’s annual report and accounts with the business cycle
of the Group’s underlying business operations. Accordingly, these financial statements present the results and
cash flows of the Group for the year ended 31 March 2018, with the comparative period being the 10 months
ended 31 March 2017.
22
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
2. Adoption of new and revised standards and interpretations to be updated
2.1. New Standards and Interpretations adopted with no significant effect on the financial statements
The following new and revised Standards and Interpretations have been adopted in these financial statements.
Their adoption has not had any significant impact on the amounts reported in these financial statements, but
may impact the accounting for future transactions and arrangements.
regarding
the accounting
Amendments regarding the application of the
consolidation exception (effective for annual periods
beginning on or after 1 January 2017)
Amendments
for
acquisitions of an interest in a joint operation (effective
for annual periods beginning on or after 1 January
2017)
Amendments regarding the application of the
consolidation exception (effective for annual periods
beginning on or after 1 January 2017)
Regulatory Deferral Accounts (effective for annual
periods beginning on or after 1 January 2017)
Amendments reinstating the equity method as an
accounting option for investments in in subsidiaries,
joint ventures and associates in an entity’s separate
financial statements (effective for annual periods
beginning on or after 1 January 2017)
Amendments regarding the application of the
consolidation exception (effective for annual periods
beginning on or after 1 January 2017)
Amendments regarding the clarification of acceptable
methods of depreciation and amortisation (effective
for annual periods beginning on or after 1 January
2017)
Amendments bringing bearer plants into the scope of
IAS 16 (effective for annual periods beginning on or
after 1 January 2017)
Effective for annual periods beginning on or after
1 January 2017
IFRS 10
Amendments 2014
IFRS 11
Amendments 2014
IFRS 12
Amendments 2014
IFRS 14
IAS 27
New 2014
Amendments 2014
IAS 28
Amendments 2014
IAS 38
Amendments 2014
IAS 41
Amendments 2014
September 2014
Annual Improvements
to IFRSs
Amendments 2014
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Instruments
2.2. New Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the following Standards and Interpretations are in
issue but not yet effective (and in some cases had not yet been adopted by the EU).
The following standards are will impact the Group in future periods:
(Hedge Accounting and
Financial
New 2009, Amendment
IFRS 9 (2014)
amendments to IFRS 9, IFRS 7 and IAS 39) (effective
2010, 2011, 2013 and 2014
for annual periods beginning on or after 1 January
2018). IFRS 9 establishes three primary measurement
categories for financial assets: amortised cost, fair
value through other comprehensive income and fair
value through profit and loss. IFRS 9 also changes the
method of assessing impairment losses on financial
assets. There are not expected to be any changes that
will materially affect the Group.
Revenue from contracts with customers (effective for
annual periods beginning on or after 1 January
2018). The accounting policy currently applied by
the Group in respect of revenue recognition is not
expected to change once this new standard becomes
effective.
Leases (effective for annual periods beginning on or
after 1 January 2019). A lessee is required to
recognise all assets and liabilities on the balance
sheet, amortise the assets and charge interest over the
term and separately represent the principal amount of
cash paid in the cash flow statement.
New 2014, Amendments 2015
and 2017
New 2017
IFRS 15
IFRS 16
The directors do not expect there to be a material impact to the financial statements from the adoption of these
standards.
The following standards are also not expected to have a material impact on the Group’s financial statements:
IFRS 2
Amendments 2017
to clarify
IFRS 4 & IFRS 9
Amendments 2017
IFRS 10
Amendments 2014
IAS 28
Amendments 2014
IAS 40
Amendments 2017
December 2017
Annual Improvements
to IFRSs
Amendments 2017
Amendments
the classification and
measurement of share-based payment transactions
(effective for annual periods beginning on or after 1
January 2018)
Amendments regarding the interaction of IFRS 4 and
IFRS 9 (An entity choosing to apply the overlay
approach retrospectively to qualifying financial assets
does so when it first applies IFRS 9. An entity
choosing to apply the deferral approach does so for
annual periods beginning on or after 1 January
2018)
Amendments regarding the sale or contribution of
assets between an investor and its associate or joint
venture (effective date deferred indefinitely)
Amendments regarding the sale or contribution of
assets between an investor and its associate or joint
venture (effective date deferred indefinitely)
Amendments to clarify transfers or property to, or from,
investment property (effective for annual periods
beginning on or after 1 January 2018)
Effective for annual periods beginning on or after
1 January 2018
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
Significant accounting policies
3.
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.
3.1. Going concern
The Group has prepared forecasts for the Group’s ongoing businesses covering the period of at least 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 planned disposals of property
plant and equipment, general working capital requirements and available borrowing facilities.
With senior executive management now based in Mozambique, the Group’s focus is on improving operational
performance of the Grain and Beef divisions.
Grain division: Plans show volumes increasing to 24,000 tonnes in the year ending 31 March 2019 (“FY19”),
(Year ended 31 March 2018: 16,500 tonnes) supported by a new commercial strategy introducing new
product lines and distribution channels. Steps to improve quality have already been well received in the market.
In addition, cost savings are budgeted to be realised from reorganising the logistics function in the second half
of FY19.
Beef division: The rationalisation of the farms over the last couple of years has already realised significant cost
reductions, which together with improved performance in the feedlot are budgeted to show lower costs of
production. As well as increasing throughput in our existing retail network, focus will be on expanding our
direct sales to larger clients. Margins are expected to improve as demand for our beef continues to be strong,
with annualised volumes expected to increase to 2,000 tonnes in FY19 (Year ended 31 March 2018: 1,538
tonnes).
The foot and mouth outbreak in the region, has unfortunately restricted the movement of cattle. This has impacted
the ability to secure a reliable and consistent supply into the feedlot. Should these restrictions remain in place
throughout the forecast period, these volumes may not be achieved.
These forecasts show a significant improvement in operating performance as compared to that reported for the
year ended 31 March 2018. However, there can be no certainty that the turnaround plans will be successful.
As set out in note 29, the Group has reorganised its banking facilities with Standard Bank. The Grain division’s
Metical 300m (US$ 4.9m) overdraft has been replaced by an amortising term loan of Metical 240m (US$
3.9m) repayable over 5 years and a Metical 60m (US$ 1m) revolving overdraft facility. The Beef division has
a Metical 30m (US$0.5m) revolving overdraft facility. At the date of this report approximately Metical 5m (US$
0.08m) and Metical 10m (US$ 0.16m) respectively remain undrawn.
These facilities have an interest covenant in place. As disclosed in note 29, at the date these facilities were
agreed, the Group was in breach of the interest covenant and remains in breach of the covenant. As a result
of the breach of covenant, the bank could make the loans immediately repayable. To date the Group has
continued to make all repayments of interest and principal and has received no correspondence from the Bank
suggesting that the loan might go into default. Consequently the forecasts assume that both the term loan and
overdraft facilities will continue to be available and will be renewed for a further year when they are reviewed
in May 2019. Negotiations with other banks in Mozambique are well advanced but have not yet been
finalised.
Based on the above, whilst there are no contractual guarantees, the directors are confident that the existing
financing will remain available to the Group. The directors, with the operating initiatives already in place, are
also confident that the Group will achieve its cash flow forecasts.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notwithstanding the confidence that the board has, the directors, in accordance with financial reporting council
guidance in this area, agree that at this time there is a material uncertainty that both the current debt and
overdraft facilities will remain in place and the Group’s losses will reduce such that the Group has sufficient
finances to be able to discharge its liabilities in the normal course of business. Failure to achieve these might
cast significant doubt upon the Group’s ability to continue as a going concern and that the Group may therefore
be unable to realise their assets and discharge their liabilities in the normal course of business. These Financial
Statements do not include the adjustments that would result if the Group was unable to continue as a going
concern.
3.2. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries) made up to 31 March 2018. Control is achieved when the Company has
the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its
activities.
Associates are those entities in which the Group has significant influence, but not control, over the financial
and operating policies. The consolidated financial statements include the Group’s share of the total recognised
income and expenses of associates on an equity accounted basis, from the date that significant influence
commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest
in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued
except to the extent that the Group has a binding obligation to make payments on behalf of an associate.
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.
As at 31 March 2018, the Company held equity interests in the following undertakings:
Direct investments
Subsidiary undertakings
Agriterra (Mozambique) Limited
Shawford Investments Inc.
Proportion held of
equity instruments
Country of
incorporation
and place of business
Nature of business
100%
100%
Guernsey
British Virgin Islands
Holding company
Holding company
Indirect investments of Agriterra (Mozambique) Limited
Proportion held of
equity instruments
Country of
incorporation
and place of business
Nature of business
Subsidiary undertakings
DECA – Desenvolvimento E Comercialização
Agrícola Limitada
Compagri Limitada
Mozbife Limitada
Carnes de Manica Limitada
Aviação Agriterra Limitada
100%
100%
100%
100%
100%
Mozambique
Mozambique
Mozambique
Mozambique
Mozambique
Grain
Grain
Beef
Beef
Dormant
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
3.3. Foreign currency
The individual financial statements of each company in the Group are prepared in 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 each month, unless exchange rates fluctuate significantly during
the month, 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 period in which the operation or branch is disposed of.
The following are the material exchange rates applied by the Group:
Mozambican Metical: US$
Sierra Leone Leones: US$
Average Rate
Closing Rate
2018
61.15
n/a
2017
71.36
7,025
2018
61.31
n/a
2017
66.51
7,400
3.4. Operating segments
The Chief Operating Decision Maker is the ExCom. The ExCom reviews the Group’s internal reporting in order
to assess performance of the business. Management has determined the operating segments based on the
reports reviewed by the ExCom which consider the activities by nature of business.
3.5. 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.
Sales of goods are recognised when goods are delivered and title has passed. Delivery occurs when the
products have arrived at the specified location, and the risks and rewards of ownership have been transferred
to the customer.
Income arising from the rental of surplus plant and machinery, or the rental of land and buildings, is stated on
an accruals basis at the amount due for rental until the relevant financial period end.
3.6. Operating loss
Operating loss is stated before investment revenues, other gains and losses, finance costs and taxation.
3.7. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period 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 period presented.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
3.8. 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 period, based on the Group’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.
3.9. Employee benefits
3.9.1. 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.
3.9.2. 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.
3.10. Leases
Leases that transfer substantially all the risks and rewards of ownership are classified as finance leases. All other
leases are classified as operating leases. As at 31 March 2018 and 31 March 2017 the Group does not
have any finance leases. During the periods presented in these financial statements, the Group was counterparty
to certain operating lease contracts. Rentals payable under operating leases are charged to income on a
straight-line basis over the term of the relevant lease.
3.11. 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 period 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 period. 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 periods. 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
period when the liability is settled or the asset realised based on tax rates that have been enacted or substantively
enacted by the reporting date.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
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.
3.12. Property, plant and equipment
All items of property, plant and equipment are stated at historical cost less accumulated depreciation (see below)
and impairment. Historical cost includes expenditure that is directly attributable to the acquisition. Subsequent
costs are included in the asset’s carrying value when it is considered probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
Depreciation is charged on a straight-line basis over the estimated useful lives of each item, as follows:
Land and buildings:
Land
Buildings and leasehold improvements
Plant and machinery
Motor vehicles
Other assets
Nil
– 33%
– 25%
2%
5%
20% – 25%
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.
3.13. Impairment of property, plant and equipment
At each balance sheet date, the Group 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 Group 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 immediately in profit and loss because the Group does not record any assets at a revalued
amount.
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.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
3.14. 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 period 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. The cost
of forage is charged to profit or loss over the period it is consumed.
3.15. 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.
3.16. Non-current assets held for sale
Non-current assets (and disposal groups) held for sale are measured at the lower of carrying amount and fair
value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
through a sale transaction rather than through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale which should be expected to qualify for recognition as a completed
sale within one year from the date of classification.
When the Group is committed to a sale plan involving the loss of control of a subsidiary, all of the assets and
liabilities of that subsidiary are classified as held for sale when the criteria above are met.
A non-current asset is not depreciated (or amortised) while it is classified as held for sale, or while it is part of
a disposal group classified as held for sale.
Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are
recognised in profit or loss.
3.17. Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes
a party to the contractual provisions of the instrument.
3.17.1. Financial assets
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial
asset is under a contract whose terms require delivery of the financial asset within the timeframe established by
the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial
assets classified as at fair value through profit and loss (‘FVTPL’), which are initially measured at fair value.
Financial assets are classified into the following specified categories: financial assets at ‘FVTPL’, ‘held-to-maturity’
investments, ‘available-for-sale’ financial assets and ‘loans and receivables’. The classification depends on the
nature and purpose of the financial asset and is determined at the time of initial recognition. The Company
and Group currently have financial assets in the category of ‘loans and receivables’ and FVTPL.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
3.17.1.1. Loans and receivables
Trade receivables, loans receivable, bank balances, cash in hand and other receivables that have fixed or
determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans
and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest
income is recognised by applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.
3.17.1.2. Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or is designated as
at FVTPL upon initial recognition. The Group holds certain investments in companies which were previously
quoted on AIM and were designated as held for trading. Financial assets at FVTPL are stated at fair value, with
any gains and losses arising on re-measurement recognised in profit or loss. The net gain or loss incorporates
any dividends, interest earned, or foreign exchange gains and losses on the financial asset and is included
within other gains and losses in the income statement. Fair value is determined in the manner described in
note 17.
3.17.1.3. Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows of the asset have
been affected.
For loans and receivables carried at amortised cost, the amount of the impairment is the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial
asset’s original effective interest rate.
The carrying amount of the financial asset is reduced through the use of an allowance account. When a
financial asset is considered uncollectible, it is written off against the allowance account. Subsequent recoveries
of amounts previously written off are credited against the allowance account. Changes in the carrying amount
of the allowance account are recognised in profit or loss.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through profit and loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortised cost would have been had the impairment not
been recognised.
3.17.1.4. De-recognition of financial assets
The Group de-recognises a financial asset only 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 entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership
and continues to control the transferred asset, the Group recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
3.17.2. Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received,
net of direct issue costs.
3.17.2.1. Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. The Group
only has financial liabilities in the category of other financial liabilities.
3.17.2.1.1. Other financial liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with
interest expense recognised on an effective yield basis.
3.17.2.1.2. De-recognition of financial liabilities
The Group de-recognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or they expire.
3.18. 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 Group.
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.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group
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 period.
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 period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods. The effect on the
financial statements of changes in estimates in future periods could be material.
4.1. Impairment
Impairment reviews for non-current assets are carried out at each balance sheet date in accordance with IAS 36,
Impairment of Assets. Continued losses in both the Beef and Grain divisions were considered to be indications
of impairment and formal impairment reviews were undertaken.
The impairment reviews are sensitive to various assumptions, including the expected sales forecasts, cost
assumptions, capital requirements, and discount rates among others. 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.
Discount rate: Current central bank prime MIMO benchmark rate is 15% and with inflation at around 5%, the
benchmark real interest rate is around 10%. The real rate assumed in these forecasts is 12.5%, consistent with
prior years. A 5% risk premium has been added to give a discount real rate of interest of 17.5%. Current
nominal bank borrowing rates are 22.5%, but these are expected to fall further as the economy returns to
growth and inflation remains stable. Neither the Grain nor Beef divisions are sensitive to an increase in the
discount rate to 30%.
Grain division: The forecasts for the Grain division show a return to the 10 year moving average with meal
sales increasing to 24,000 tonnes in FY-19 (Year ending 31 March 2018: 16,500). A shortfall in the projected
volumes of 50% or a reduction in the gross margin of more than 11% would lead to an indication of impairment.
Beef division: The forecasts for the Beef division show volumes improving to 2,000 tonnes (Year ending 31
March 2018:1,538 tonnes) in FY-19 and to 2,100 tonnes in FY-20. A fall in forecasted sales volumes of 10%
or a reduction in the average daily weight gains in the feedlot of 9% would be required to trigger the need for
a further impairment. The assets of the Beef division were impaired by $3.1m in the year ended May 2016
following the decision to destock the ranches. The board continues to evaluate the development of these assets,
however it is too early to consider whether or not the previous impairment charge should be reversed.
No impairments were recorded in the year ended 31 March 2018 or the 10 month period ended 31 March
2017.
33
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
4.2. Biological assets
Cattle are accounted for as biological assets and measured at their fair value at each balance sheet date. Fair
value is based on the estimated market value for cattle in Mozambique of a similar age and breed, less the
estimated costs to bring them to market, converted to US$ at the exchange rate prevailing at the period 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 of slaughter herd, depending on whether it was
principally held for reproduction or slaughter. At 31 March 2018 the value of the breeding herd disclosed as
a non-current asset was $nil (31 March 2017: $nil). The value of the herd held for slaughter disclosed as a
current asset was $1,109,000 (31 March 2017: $746,000).
During the year, the Group has increased its capacity to produce sufficient forage to meet its requirements in
the feedlot. Accordingly forage crops have been valued at 31 March 2018 at $28,000 (31 March 2017
$nil), bringing the total biological assets to $1,137,000 (31 March 2017: $746,000).
4.3. Recoverability of input Value Added Tax
Mozambique Value Added Tax (‘IVA’) operates in a similar manner to UK Value Added Tax (‘VAT’). The Group
is exempt from IVA on its sales of maize products under the terms of Mozambique tax law. The Group is able
to recover input sales tax on substantially all of the purchases of the Grain division. The Group is always
therefore in a net recovery position of IVA in respect of its Grain operations. To date the Group has not
succeeded in recovering IVA from the Mozambique Government. Due to the significant uncertainty over the
recoverability of these IVA balances, the Group has provided in full against the assets as at 31 March 2017
and 31 March 2018. As at 31 March 2018, the gross and net IVA recoverable assets are respectively
$1,057,000 (31 March 2017: $857,000) and $nil (31 March 2017: $nil) at the US$ to Metical exchange
rate of 61.31 (31 March 2017: 66.51) at that date.
5. Revenue
An analysis of the Group’s revenue is as follows:
Continuing operations
Sale of goods
Hire of equipment and machinery
Interest received
Discontinued operations
Hire of equipment and machinery
All revenue from continuing activities is generated in Mozambique
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
9,222
–
9,222
13
9,225
–
–
9,225
12,759
48
12,807
12
12,819
25
25
12,844
34
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
Segment reporting
6.
The ExCom consider that the Group’s operating activities comprise the segments of Grain, Beef and Cocoa,
all 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.
6.1. Segment revenue and results
The following is an analysis of the Group’s revenue and results by operating segment:
Year ending
31 March 2018
Grain
US$000
Beef
US$000
Cocoa
US$000
Unallo-
cated
US$000
Discon-
tinued(4)
US$000
Elimi-
nations
US$000
Revenue
External sales(2)
Inter-segment sales(1)
Segment results
– Operating (loss)/
4,519
680
5,199
4,703
–
4,703
–
–
–
–
–
–
profit
(747)
(1,588)
(31)
(1,630)
– Interest (expense)/
income
(951)
(140)
(1,698)
(2)
(1,728)
(2)
–
(31)
–
7
(1623)
–
–
–
–
38
–
38
–
(Loss)/profit before
tax
Income tax
(Loss)/profit for
the year from
continuing
operations
(1,700)
(1,730)
(31)
(1,623)
38
Grain
10 month period
ending 31 March 2017 US$000
Beef
US$000
Cocoa(3)
US$000
Unallo-
cated
US$000
Discon-
tinued(4)
US$000
Elimi-
nations
US$000
Revenue
External sales(2)
Inter-segment sales(1)
Segment results
– Operating (loss)/
8,468
446
8,914
4,339
–
4,339
25
–
25
–
–
–
(25)
–
(25)
–
(446)
(446)
profit
(204)
(1,346)
(136)
(1,135)
136
– Interest (expense)/
income
(686)
(241)
–
(890)
(6)
–
(1,587)
(1)
–
–
12
(16)
(136)
–
(1,139)
(15)
–
–
136
–
–
(680)
(680)
–
–
–
–
–
–
–
–
–
–
–
(896)
(1,588)
(136)
(1,154)
136
– Other gains and
losses
(Loss)/profit before
tax
Income tax
(Loss)/profit for
the period from
continuing
operations
35
Total
US$000
9,222
–
9,222
(3,958)
(1,084)
(5,042)
(4)
(5,046)
Total
US$000
12,807
–
12,807
(2,685)
(915)
(16)
(3,616)
(22)
(3,638)
251721 Agriterra pp22-pp45.qxp 27/09/2018 14:18 Page 36
Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
(1)
(2)
(3)
(4)
Inter-segment sales are charged at prevailing market prices.
Revenue represents sales to external customers and is recorded in the country of domicile of the group company making the
sale. Sales from the Grain and Beef divisions are principally for supply to the Mozambique market.
$25,000 revenue reported in the Cocoa segment for the period ended 31 March 2017 arises on the rental of certain of the
Cocoa division’s assets.
Amounts reclassified to discontinued operations– refer to note 13.
The segment items included in the consolidated income statement for the year are as follows:
Year ending
31 March 2018
Depreciation
Grain
US$000
152
10 month period
Grain
ending 31 March 2017 US$000
Depreciation
123
Beef
US$000
338
Beef
US$000
322
Cocoa
US$000
–
Cocoa
US$000
–
Unallo-
cated
US$000
–
Unallo-
cated
US$000
–
Discon-
tinued
US$000
–
Discon-
tinued
US$000
–
Elimi-
nations
US$000
–
Elimi-
nations
US$000
–
Total
US$000
490
Total
US$000
445
6.2. 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 2018 and capital expenditure for the year then ended are as
follows:
Assets
Liabilities
Capital expenditure
Grain
US$000
4,984
(3,981)
(9)
Beef
US$000
4,918
(528)
(107)
Cocoa
US$000
Unallocated
US$000
–
–
–
3,144
(195)
–
Total
US$000
13,046
(4,704)
(116)
Segment assets and liabilities are reconciled to Group assets and liabilities as follows:
Segment assets and liabilities
Unallocated:
Other receivables
Cash and cash equivalents
Trade payables
Accrued liabilities
Assets
US$000
9,902
22
3,122
–
–
13,046
Liabilities
US$000
4,509
–
–
72
123
4,704
36
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
The segment assets and liabilities at 31 March 2017 and capital expenditure for the period then ended are
as follows:
Assets
Liabilities
Capital expenditure
Grain
US$000
5,456
(2,806)
(130)
Beef
US$000
4,713
(1,178)
(74)
Cocoa
US$000
Unallocated
US$000
–
–
–
2,483
(242)
–
Total
US$000
12,652
(4,226)
(204)
Segment assets and liabilities are reconciled to Group assets and liabilities as follows:
Segment assets and liabilities
Unallocated:
Investments and interests in associates
Other receivables
Assets classified as held for sale
Cash and cash equivalents
Liabilities directly associated with assets classified as held for sale
Trade payables
Accrued liabilities
Assets
US$000
10,169
4
13
453
2,013
–
–
–
12,652
Liabilities
US$000
3,984
–
–
–
–
128
11
103
4,226
6.3. Significant customers
In the year ended 31 March 2018, one customer of the Grain division generated revenue of $1,150,000
amounting to 12.5% of Group revenue (10 month period ended 31 March 2017: one customer of the Grain
division generated revenue of $2,484,000 amounting to 19.4% of Group revenue).
7. Operating loss
Operating loss has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment (see note 15)
Profit on disposal of property, plant and equipment
Loss on re-measurement of assets classified as held for sale
Net foreign exchange (gain)/loss
Impairment of investment in associate (see note 16)
Impairment of inventory
Staff costs (see note 9)
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
490
(87)
–
(162)
4
–
2,095
445
(460)
21
104
–
769
1,838
37
251721 Agriterra pp22-pp45.qxp 27/09/2018 14:18 Page 38
Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
8. Auditors remuneration
Amounts payable to the auditors and their associates in respect of audit services are as follows:
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
Fees payable to the Company’s auditor for the audit of the Company’s accounts
Fees payable to the Company’s auditor and their associates for other services
to the Group:
The audit of the Company’s subsidiaries
Total audit fees
56
26
82
94
31
125
Other than as disclosed above, the Company’s auditor and their associates have not provided additional
services to the Group.
9. Staff costs
The average monthly number of employees (including executive Directors) employed by the Group for the period
was as follows:
Office and Management
Operational
Of which relating to:
Continuing operations
Discontinued operations
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Share based payment charge
Of which relating to:
Continuing operations
Discontinued operations
Year ended 10 months ended
31 March 2017
Number
31 March 2018
Number
38
443
481
481
–
481
50
492
542
519
23
542
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
2,036
56
3
2,095
2,095
–
2,095
1,828
40
5
1,873
1,838
35
1,873
38
251721 Agriterra pp22-pp45.qxp 27/09/2018 14:18 Page 39
Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
10. Remuneration of Directors
Year ended 31 March 2018
CS Havers
DL Cassiano-Silva
AS Groves
HWB Rudland
B Scott
GR Smith
10 months ended 31 March 2017
CS Havers
AS Groves
DL Cassiano-Silva
11. Finance costs
Salary
US$000
Bonus
US$000
Share based
payment
US$000
Total
US$000
46
136
65
5
68
5
325
–
82
49
–
–
–
131
–
2
–
–
–
–
2
Salary
US$000
Bonus
US$000
Share based
payment
US$000
32
106
145
283
–
–
–
–
–
–
5
5
46
220
114
5
68
5
458
Total
US$000
32
106
150
288
Interest expense on bank borrowings and overdraft
12. Taxation
Loss before tax from continuing activities
Tax credit at the Mozambican corporation tax rate of 32% (2017: 32%)
Tax effect of expenses that are not deductible in determining taxable profit
Tax effect of (income not taxable) or losses not allowable
Tax effect of net losses not recognised in overseas subsidiaries
(net of effect of different rates)
Statutory taxation payments irrespective of income
Tax expense
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
1,097
927
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
(5,042)
(1,613)
18
(66)
1,661
4
4
(3,616)
(1,157)
39
499
634
7
22
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.
The Group has not recognised any tax credits for the year ended 31 March 2018 (10 month period ended
31 March 2017: $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 $14,168,000
(31 March 2017: $9,324,000). In addition, the Group has further deductible timing differences relating to
property, plant and equipment, and foreign exchange gains and losses on intercompany loans, amounting to
approximately $28,876,000 (31 March 2017: $33,926,000). 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.
39
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
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 (2017: zero percent. per annum). No tax is payable for the
period. 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).
13. Discontinued operations
The loss after tax arising on discontinued operations during the year is analysed by business operation as
follows:
Cocoa activities
Group rationalisation
Net loss after tax attributable to discontinued operations
(attributable to owners of the Company)
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
(8)
(30)
(38)
(136)
–
(136)
Cocoa activities
As more fully described in the Chair’s statement, the Cocoa division’s operating companies were sold on 1 June
2017.
The Cocoa activities represented a business segment of the Group and accordingly the results of the Cocoa
activities are presented as discontinued operations within the consolidated income statement. This presentation
was already adopted by the Group in the 10 month financial period ended 31 March 2017.
The amounts recorded in the consolidated income statement related to the other cocoa activities were as follows:
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
Revenue
Cost of sales
Gross profit
Operating expenses
Profit on disposal of property, plant and equipment
Loss before taxation
Taxation
Loss after tax from discontinued Cocoa activities in the year/period
Profit on disposal of the Cocoa subsidiaries
Loss from discontinued Cocoa activities attributable to owners of the Company
–
–
–
(45)
15
(30)
–
(30)
22
(8)
25
(3)
22
(188)
30
(136)
–
(136)
–
(136)
40
251721 Agriterra pp22-pp45.qxp 27/09/2018 14:18 Page 41
Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
The profit on disposal of the cocoa operations was as follows:
Proceeds from disposal of subsidiaries
Costs of disposal
Cash held by subsidiaries at disposal
Net cash inflow from disposal of the Cocoa activities
Other net assets disposed of:
Property, plant and equipment
Other receivables less other payables
Foreign exchange differences recycled from the foreign currency translation reserve
Profit on disposal of Cocoa activities
14. Loss per share
The calculation of the basic and diluted loss per share is based on the following data:
Year ended
31 March 2018
US$000
500
(20)
(4)
476
(363)
38
151
(129)
22
Loss for the year/period for the purposes of basic and diluted earnings
per share from continuing activities
Loss for the year/period for the purposes of basic and diluted earnings
per share from discontinued activities
Loss for the year/period for the purposes of basic and diluted earnings
per share attributable to equity holders of the Company
Year ended 10 months ended
31 March 2017
US$000
31 March 2018
US$000
(5,046)
(3,638)
(38)
(136)
(5,084)
(3,774)
Weighted average number of Ordinary Shares for the purposes of basic
and diluted loss per share
16,351,388
10,618,185
Basic and diluted loss per share – US cents
Basic and diluted loss per share from continuing activities – US cents
Basic and diluted loss per share from discontinued activities – US cents
(31.1)
(30.9)
(0.2)
(35.5)
(34.2)
(1.3)
At the Annual General Meeting held on 30 November 2017, the shareholders approved a resolution to
consolidate 100 existing ordinary shares of 0.1p each ("Existing Ordinary Share") into one new ordinary share
of 10p each ("New Ordinary Share"). The weighted average number of ordinary shares used for the purposes
of calculating loss per share for the year ending 31 March 2018 and period ending 31 March 2017 refer
to New Ordinary Shares.
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.
41
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
15. Property, plant and equipment
Land and
buildings
US$000
Plant and
machinery
US$000
Motor
vehicles
US$000
Other
assets
US$000
Cost
At 1 June 2016
Additions
Disposals
Transfer to assets classified as held for sale
Exchange rate adjustment
At 31 March 2017
Additions
Disposals
Disposal of subsidiary
Exchange rate adjustment
At 31 March 2018
Accumulated depreciation and impairment
At 1 June 2016
Charge for the period
Disposals
Transfer to assets classified as held for sale
Exchange rate adjustment
At 31 March 2017
Charge for the year
Disposals
Disposal of subsidiary
Exchange rate adjustment
At 31 March 2018
Net book value
31 March 2018
31 March 2017
13,936
23
(170)
–
(837)
12,952
12
–
(5,950)
645
7,659
9,244
101
(15)
–
(335)
8,995
124
(2)
(5,950)
157
3,326
4,333
3,957
4,887
149
(201)
(378)
(513)
3,944
95
(17)
–
340
4,362
2,387
235
(144)
(238)
(241)
1,999
260
(162)
–
266
2,523
1,841
1,945
2,252
9
(168)
(74)
(240)
1,779
1
(168)
–
244
1,856
2,078
85
(167)
(74)
(216)
1,706
78
(15)
–
200
1,822
33
73
329
23
(12)
(1)
(33)
306
8
(15)
–
26
325
190
24
(9)
–
(18)
187
28
(179)
–
16
216
108
119
Total
US$000
21,404
204
(551)
(453)
(1,623)
18,981
116
(200)
(5,950)
1,255
14,202
13,899
445
(335)
(312)
(810)
12,887
490
(5,950)
639
7,887
6,315
6,094
For the year ended 31 March 2018, a depreciation charge of $490,000 (10 month period ending 31
March 2017: $445,000) has been included in the consolidated income statement within operating expenses
and $nil (10 month period ending 31 March 2017: $nil) has been included within discontinued operations.
Property, plant and equipment with a carrying amount of $4,674,000 (31 March 2017: $4,479,000) have
been pledged to secure the Group’s bank overdrafts and loans (note 22). The Group is not allowed to pledge
these assets as security for other borrowings or sell them to another entity.
At 31 March 2018 and 31 March 2017, the Group had no contractual commitments for the acquisition of
property, plant and equipment.
16. Interests in associates
The Group’s interest in associates represented a 40% equity investment in African Management Services Limited
(‘AMS’). The Group’s share of the result of AMS for all periods presented was $nil. During the year the Company
terminated its service agreement with AMS and accordingly has fully impaired its carrying value. On
19 October 2017, the Company disposed of its entire shareholding in AMS to Consolidated Growth Holdings
Limited for a nominal consideration (see note 27). The share of the cumulative results and net assets of AMS is
$nil (31 March 2017: $4,000). The Group’s initial investment in AMS was $nil.
42
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
17. Investments
‘Investments’ comprise financial assets at FVTPL. Changes in market value are recorded in profit and loss within
other gains and losses. As at 31 March 2018 and 31 March 2017, these investments comprise 8,337,682
ordinary shares in Atlas African Industries Limited (‘AAI’), a company quoted on AIM until 18 November 2016,
when its listing was cancelled. Movements in the value of the investment in AAI were as follows:
At 1 June 2016
Decrease in fair value
At 31 March 2017 and 2018
US$000
16
(16)
–
The fair value as at 1 June 2016 was determined based on quoted market prices in an active market and
comprised a level 1 fair value in the IFRS 13 fair value hierarchy. As at 31 March 2017 and 2018, AAI is no
longer quoted and the fair value has been determined at the Directors best estimate and comprised a level 3
fair value in the IFRS 13 fair value hierarchy.
18. Biological assets
Fair value
At 1 June 2016
Purchase of biological assets
Sale, slaughter or other disposal of biological assets
Change in fair value of the herd
Foreign exchange adjustment
At 31 March 2017
Purchase of biological assets
Sale, slaughter or other disposal of biological assets
Change in fair value of the herd
Foreign exchange adjustment
At 31 March 2018
US$000
1,994
1,667
(3,121)
487
(281)
746
2,913
(3,107)
510
75
1,137
Biological assets comprise cattle in Mozambique held for breeding purposes (the ‘Breeding herd’) or for
slaughter (the ‘Slaughter herd’). At 31 March 2018 and 2017, all cattle are held for slaughter. The Slaughter
herd has been classified as a current asset. The Breeding herd is classified as a non-current asset. Forage crops
included in current assets are US$ 28,000 (31 March 2017 US$ nil ). Biological assets are accordingly
classified as current or non-current assets as follows:
Non-current asset
Current asset
31 March
2018
Head
–
4,190
4,190
31 March
2017
Head
–
3,475
3,475
31 March
2018
US$000
–
1,137
1,137
31 March
2017
US$000
–
746
746
For valuation purposes, cattle that are not in the feedlot are grouped into classes of animal (e.g. bulls, cows,
steers etc) and a standard animal weight per breed and class was then multiplied by the number of animals in
each class to determine the estimated total live weight of all animals in the herd. For animals in the feedlot, their
weight has been estimated based on their individual weigh in data at the closest weigh in date to the period end.
The herd is then valued by reference to market prices for meat in Mozambique, less estimated costs to sell. The
valuation is accordingly a level 2 valuation in the IFRS 13 hierarchy whereby inputs other than quoted prices
that are observable for the asset are used.
43
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
The Group’s slaughter herd have been pledged in full to secure the Beef division’s bank overdraft and loans
(see note 22).
19. Inventories
Consumables and spares
Raw materials
Work in progress
Finished goods
31 March
2018
US$000
304
301
4
329
938
31 March
2017
US$000
156
907
12
178
1,253
During the year inventories amounting to $7,077,000 (10 months ended 31 March 2017: $10,925,000)
were included in cost of sales and $nil (10 months ended 31 March 2017: $nil) were included within
discontinued operations.
Raw materials include a provision against the carrying value of maize inventories amounting to $nil (31 March
2017: $769,000). The provision at 31 March 2017 was recorded to adjust the carrying value of this class
of inventory to its expected recoverable amount, being the higher of net realisable value and resale value.
Inventories with a carrying amount of $452,000 (31 March 2017: $917,000) have been pledged to secure
the Grain division’s bank overdraft and inventories with a carrying value of $166,000 (31 March 2017:
$126,000) have been pledged to secure the Beef division bank overdraft and loans (see note 22).
20. Trade and other receivables
Trade receivables
Other receivables
Prepayments
31 March
2018
US$000
1,048
11
37
1,096
31 March
2017
US$000
1,459
72
26
1,557
‘Trade receivables’ and ‘Other receivables’ disclosed above are classified as loans and receivables and
measured at amortised cost. These are stated net of the following balances that have been provided against.
Movements in the provision against these receivables are as follows:
At 1 June 2016
Credited to profit and loss
Written off in the period
Foreign exchange gain
At 31 March 2017
Charged to profit and loss
Written off in the period
Foreign exchange loss
At 31 March 2018
US$000
910
(1)
(6)
9
912
136
(8)
55
1,095
As at 31 March 2018, $1,057,000 (31 March 2017: $857,000) of the allowance account relates to input IVA
recoverable in Mozambique (refer to note 4.3). The movement in the allowance account against the IVA recoverable
during both periods presented principally reflects the increase in the underlying input IVA balance recorded by the
Group and the effect movements in the exchange rate of the Mozambique Metical against the United States Dollar.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
Trade receivables with a carrying amount of $799,000 (31 March 2017: $1,078,000) have been pledged
to secure the Grain division’s bank overdraft and trade receivables with a carrying value of $249,000
(31 March 2017: $381,000) have been pledged to secure the Beef division’s bank overdraft and loans (see
note 22).
The Directors consider that the carrying amount of financial assets approximates their fair value. Included within
‘Trade receivables’ and ‘Other receivables’ are receivables which are past due but not impaired as follows:
60-90 days
90-120 days
Greater than 120 days
31 March
2018
US$000
18
42
–
60
31 March
2017
US$000
101
57
38
196
There has been no significant change in credit quality of those receivables that are neither past due nor impaired.
Further details on the Group’s financial assets are provided in note 24.
21. Disposal groups held for sale
The major classes of assets and liabilities comprising the operations classified as held for sale as at 31 March
2018 are as follows:
Assets classified as held for sale:
Property, plant and equipment
Total assets classified as held for sale
Other assets
disposal group
US$000
19
19
The major classes of assets and liabilities comprising the operations classified as held for sale as at 31 March
2017 are as follows:
Cocoa
disposal group
US$000
Other assets
disposal group
US$000
Total
US$000
Assets classified as held for sale:
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Total assets classified as held for sale
Liabilities associated with assets classified as held for sale:
Trade and other payables
Total liabilities associated with assets classified as held for sale
Net assets of the disposal group
Losses recognised on assets classified as held for sale
363
88
2
453
(128)
(128)
325
–
120
–
–
120
–
–
120
(21)
483
88
2
573
(128)
(128)
445
(21)
Assets and associated liabilities within the ‘Cocoa disposal group’ represent the net assets of the Group’s Cocoa
division. This division was sold on 1 June 2017 realising gross proceeds of $500,000 (refer to note 13). No
impairments were recorded against the assets in the Cocoa division during the year.
Assets classified as held for sale within the ‘Other assets disposal group’ comprise various assets identified for
disposal as part of the Group’s rationalisation programme, being primarily vehicles, heavy plant and machinery,
butchery equipment and fixtures and fittings.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
22. Borrowings
Non-current liabilities
Bank loans
Current liabilities
Bank loans
Overdraft
31 March 2018
US$000
31 March 2017
US$000
–
734
50
4,185
4,235
4,235
264
2,466
2,730
3,464
Beef division
On 27 April 2017, the Group agreed revised lending facilities with Standard Bank to finance the Beef division
in Mozambique. The existing term loans were consolidated into one loan repayable in twelve monthly
instalments commencing May 2017. At 31 March 2018, the remaining balance was $0.05m (2017:
$1.0m). The renewal date of the overdraft facility of 30 million Metical ($0.49m) was extended to 25 March
2018 and further extended to 25 May 2018. The amount drawn down at 31 March 2018 was $0.34m
(2017: $nil).
On 25 May 2018, the overdraft facility has been renewed for a further 12 months and carries an interest rate
at the Bank’s prime lending rate (24%) at 31 March 2018.
The facilities are secured as follows:
Fixed Charge
Property, plant and equipment
Floating Charge
Cattle
Meat Inventories
Trade receivables
31 March 2018
US$000
31 March 2017
US$000
1,913
1,109
166
249
3,437
1,848
746
126
381
3,101
Grain division
On 27 April 2017, the Group formally completed the renewal of the Grain division’s 300 million Metical
overdraft facility to provide working capital funding, principally for the purchase of maize and related operating
expenditure. The amount drawn down at 31 March 2018 was $3.84m (2017: $2.47m).
On 25 May 2018 the facility was restructured into a 240 million Metical ($3.91m) 5 year term loan with an
interest rate of the Bank’s prime lending rate +0.25% and a 12 month 60 million Metical ($0.98m) overdraft
facility at the Bank’s prime lending rate less 1.75%.
The facilities are secured as follows:
Fixed Charge
Property, plant and equipment
Floating Charge
Maize and Maize product inventories
Trade receivables
31 March 2018
US$000
31 March 2017
US$000
2,761
452
799
4,012
2,631
917
1,078
4,626
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
As further security to these borrowings, 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
Non-current bank loan
Current bank loan
Overdrafts
23. Trade and other payables
Trade payables
Other payables
Accrued liabilities
At 31 March 2017
US$000
Cash flow Foreign Exchange At 31 March 2018
US$000
US$000
US$000
734
264
2,466
3,464
(798)
(237)
1,506
471
64
23
213
300
–
50
4,185
4,235
31 March 2018
US$000
31 March 2017
US$000
123
50
296
469
156
189
289
634
‘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.
24. Financial instruments
24.1. Capital risk management
The Group 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 22 after deducting cash and bank balances) and equity of the Group as shown
in the statement of financial position. The Group is not subject to any externally imposed capital requirements.
The ExCom reviews the capital structure on a regular basis and seeks to match new capital requirements of
subsidiary companies to new sources of external debt funding denominated in the currency of operations of
the relevant subsidiary. Where such additional funding is not available, the Group funds the subsidiary company
by way of loans from the Company. The Group 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 24% at 31
March 2018. In light of this, the Group has been rationalising its operations, with particular focus on disposing
of surplus assets to reduce external debt levels in the Beef division. The Group has continued to maintain its
overdraft facility in Mozambique to finance its Grain operations (note 22 and 29).
As set out in note 29, the Group renewed and reorganised its banking facilities after the year end. The new
term loan facility for the Grain division and the overdraft facilities for both the Grain and Beef divisions have
an interest covenant in place. At the date these facilities were agreed, the Group was in breach of these
covenants. To date the Group has continued to make all repayments of interest and principal and has received
no correspondence from the Bank suggesting that the loan might go into default.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
24.2. Categories of financial instruments
The following are the Group financial instruments as at the period end:
Financial assets
Cash and bank balances
Other loans and receivables
Financial liabilities
Amortised cost
31 March 2018
US$000
31 March 2017
US$000
3,541
1,059
4,600
4,637
4,637
(37)
2,425
1,531
3,956
4,033
4,033
(77)
24.3. Financial risk management objectives
The Group manages the risks arising from its operations, and financial instruments at ExCom and Board level.
The Board has overall responsibility for the establishment and oversight of the Group’s risk management
framework and to ensure that the Group has adequate policies, procedures and controls to manage successfully
the financial risks that the Group faces.
While the Group does not have a written policy relating to risk management of the risks arising from any
financial instruments held, the close involvement of the ExCom in the day to day operations of the Group ensures
that risks are monitored and controlled in an appropriate manner for the size and complexity of the Group.
Financial instruments are not traded, nor are speculative positions taken. The Group has not entered into any
derivative or other hedging instruments.
The Group’s key financial market risks arise from changes in foreign exchange rates (‘currency risk’) and changes
in interest rates (‘interest risk’). The Group is also exposed to credit risk and liquidity risk. The principal risks that
the Group faces as at 31 March 2018 with an impact on financial instruments are summarised below.
24.4. Market Risk
The Group is exposed to currency risk and interest risk. These are discussed further below.
24.4.1. Currency risk
Certain of the Group companies have functional currencies other than US$ and the Group is therefore subject
to fluctuations in exchange rates in translation of their results and financial position into US$ for the purposes
of presenting consolidated accounts. The Group does not hedge against this translation risk. The Group’s
financial assets and liabilities by functional currency of the relevant Group company are as follows:
United States Dollar (‘US$’)
Mozambique Metical (‘MZN’)
Other
Assets
Liabilities
31 March 2018
US$000
31 March 2017
US$000
31 March 2018
US$000
31 March 2017
US$000
3,120
1,480
–
4,600
2,013
1,942
1
3,956
175
4,462
–
4,637
103
3,930
–
4,033
The Group transacts with suppliers and/or customers in currencies other than the functional currency of the
relevant group company (foreign currencies). The Group does not hedge against this transactional risk. As at
31 March 2018 and 31 March 2017, the Group’s outstanding foreign currency denominated monetary items
were principally exposed to changes in the US$/GBP and US$/MZN exchange rate.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
The following tables detail the Group’s exposure to a 5, 10 and 15 per cent increase in the US$ against GBP
and separately to a 10, 20 and 30 per cent increase against the Metical. For a weakening of the US$ against
the relevant currency, there would be a comparable impact on the profit and other equity, and the balances
would be 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-group loans where the loan is in a currency other than the functional currency
of the lender or borrower. A negative number indicates a decrease in profit and other equity.
GBP Impact
Profit or loss
5% Increase in US$
10% Increase in US$
15% Increase in US$
Other equity
5% Increase in US$
10% Increase in US$
15% Increase in US$
MZN Impact
Profit or loss
10% Increase in US$
20% Increase in US$
30% Increase in US$
Other equity(1)
10% Increase in US$
20% Increase in US$
30% Increase in US$
31 March 2018
US$000
31 March 2017
US$000
(7)
(13)
(20)
(73)
(146)
(219)
50
100
149
6
12
18
(59)
(118)
(177)
39
77
116
(6,434)
(12,868)
(19,302)
(3,069)
(6,138)
(9,207)
(1)
This is mainly due to the exposure arising on the translation of US$ denominated intra-group loans provided to Metical functional
currency entities which are included as part of the Group’s net investment in the related entities.
24.4.2. 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 2018 and 31 March 2017, 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 0.25% (10 month period ending 31 March
2017: 0.50%). The weighted average interest on drawings under the overdraft facilities and bank loans was
26.06% (10 month period ending 31 March 2017: 25.23%). The Group does not hedge interest rate risk.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
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 period. 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 2018 and 31 March 2017 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.
The recent macroeconomic circumstances in Mozambique, particularly due to the significant weakening of the
Metical, led to a rapid increase in interest rates during the period ending 31 March 2017 with a prime rate
peaking at 28.0% which was 850 bp increase compared to 31 May 2016. The macroeconomic scenario
in Mozambique is now improving and interest rates are starting to fall with prime rates 24% at 31 March
2018. As at the date of this report they are 22%.
+ 20 bp increase in interest rates
+ 50 bp increase in interest rates
+100 bp increase in interest rates
+200 bp increase in interest rates
+500 bp increase in interest rates
+800 bp increase in interest rates
+1000 bp increase in interest rates
31 March 2018(1) 31 March 2017(1)
US$000
US$000
(1)
(3)
(7)
(14)
(35)
(55)
(69)
(7)
(17)
(35)
(69)
(173)
(277)
(346)
(1)
The table above is prepared on the basis of an increase in rates. A decrease in rates would have the opposite effect.
24.5. Credit risk
Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as
outstanding receivables. The Group’s principal deposits are held with various banks with a high credit rating
to diversify from a concentration of credit risk. Receivables are regularly monitored and assessed for
recoverability.
The maximum exposure to credit risk is the carrying value of the Group financial assets disclosed in note 24.2.
Details of provisions against financial assets are provided in note 20.
24.6. Liquidity risk
The Group policy throughout the period has been to ensure that it has adequate liquidity by careful management
of its working capital. The ExCom continually monitors the Group’s actual and forecast cash flows and cash
positions. The ExCom pays particular attention to ongoing expenditure, both for operating requirements and
development activities, and matching of the maturity profile of the Group’s overdrafts to the processing and
sale of the Group’s maize and beef products.
At 31 March 2018 the Group held cash deposits of $3,541,000 (2017: $2,425,000). At 31 March 2018
the Group had overdraft and bank loans facilities of approximately $5,432,000 (2017: $5,638,000) of
which $4,235,000 (2017: $3,464,000) was drawn. Certain of these facilities have been restructured
subsequent to the year end as more fully described in note29. As at the date of this report the Group has
adequate liquidity to meet its obligations as they fall due.
The following table details the Group’s remaining contractual maturity of its financial liabilities. The table is
drawn up utilising undiscounted cash flows and based on the earliest date on which the Group could be
required to settle its obligations. The table includes both interest and principal cash flows.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
1 month
2 to 3 months
4 to 12 months
1 to 2 years
3 to 5 years
31 March 2018
US$000
31 March 2017
US$000
4,612
25
–
–
–
4,637
653
193
3,215
433
485
4,979
24.7. Fair values
The Directors have reviewed the financial statements and have concluded that there is no significant difference
between the carrying values and the fair values of the financial assets and liabilities of the Group as at 31
March 2018 and 31 March 2017.
25. Share capital
At 31 March 2017 and 31 May 2016
Ordinary shares of 0.1p each
Issue of shares
At 30 November 2017
Consolidation 1 new ordinary share of 10p each
for 100 ordinary shares of 0.1p each
At 31 March 2018
Authorised
Number
Allotted and
fully paid
Number
2,345,000,000
–
2,345,000,000
1,061,818,478
1,062,243,291
2,124,061,769
(2,321,550,000) (2,102,821,151)
21,240,618
23,450,000
At 31 March 2018 and 31 March 2017
Deferred shares of 0.1p each
Total share capital
155,000,000
178,450,000
155,000,000
176,240,618
The Company has one class of ordinary share which carries no right to fixed income.
US$000
1,722
1,413
3,135
–
3,135
238
3,373
On 30 November 2017, the shareholders approved a resolution to consolidate 100 existing ordinary shares
of 0.1p each (“Existing Ordinary Share”) into one new ordinary share of 10p each (“New Ordinary Share”).
All references to the number of shares in issue at 31 March 2018 and in the comparative period relate to
New Ordinary Shares.
The deferred shares carry no right to any dividend; no right to receive notice, attend, speak or vote at any
general meeting of the Company; and on a return of capital on liquidation or otherwise, the holders of the
deferred shares are entitled to receive the nominal amount paid up after the repayment of £1,000,000 per
ordinary share. The deferred shares may be converted into ordinary shares by resolution of the Board.
26. Share-based payments
26.1. Charge in the period
The Group recorded a charge within Operating expenses for share-based payments of $3,000 (10 months
ended 31 March 2017: $5,000) in respect of options issued in previous years vesting during the year. No
options were issued during the year (10 months ended 31 March 2017: $nil).
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
26.2. Outstanding options and warrants
The Group, through the Company, has two unapproved share option schemes which were established to
provide equity incentives to the Directors of, employees of and consultants to the Group. The schemes’ rules
provide that the Board shall determine the exercise price for each grant which shall be at least the average
mid-market closing price for the three days immediately prior to the grant of the options. The minimum vesting
period is generally one year. If options remain unexercised after a period of 4 or 5 years from the date of
grant, or vesting, the options expire. Options are forfeited if the employee leaves the Group before the options
vest.
In addition to share options issued under the unapproved share option schemes, on 1 June 2015, the Group
created a warrant instrument (the ‘Instrument’) to provide suitable incentives to the Group’s employees, consultants
and agents, and in particular those based, or those spending considerable time, on site at the Group’s
operations. Up to 1,000,000 warrants (the ‘Warrants’) to subscribe for new Ordinary Shares in the Company
(the ‘Warrant Shares’) may be issued pursuant to the Instrument. The exercise price of each Warrant is £0.65
(the share price of the Company being approximately 0.6p when the Instrument was created) and the
subscription period during which time the Warrants may be exercised and Warrants Shares issued is the 5-
year period from 1 June 2016 to 1 June 2021. Subject to various acceleration provisions, a holder of Warrants
is not entitled to sell more than 1,000 Warrant Shares in any day nor more than 10,000 Warrant Shares (in
aggregate) in any calendar month, without board consent. 225,000 Warrants are in issue.
The following table provides a reconciliation of share options and warrants outstanding during the period. The
number of shares or warrants and their respective exercise prices has been adjusted to reflect the consolidation
(see note 25):
At beginning of period
Granted in the period
Terminated in the period
Lapsed in the period
At end of period
Exercisable at period end
10 months
Year
ended
31 March 2018
Number
335,850
–
–
–
335,850
325,850
Weighted
Weighted
average
exercise
price (p)
12 months
10 months
ended
31 March 2017
Number
160
–
–
–
160
160
510,040
–
(51,660)
(122,530)
335,850
302,510
Weighted
Weighted
average
exercise
price (p)
200
–
310
250
160
150
At 31 March 2018, the following options and warrants over ordinary shares of 10p each have been granted
and remain unexercised:
Date of grant
29 July 2012
29 July 2012
01 March 2013
01 March 2013
15 March 2014
1 June 2015
Total
options
25,000
20,850
20,000
20,000
25,000
225,000
335,850
Exercisable
options
25,000
20,850
20,000
20,000
15,000
225,000
325,850
Exercise
price (p)
350p
550p
550p
275p
150p
65p
Expiry
date
29 July 2023
11 January 2020
30 April 2019
11 January 2020
15 March 2024
1 June 2021
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Notes to the consolidated financial statements
27. Related party disclosures
Magister Investments Limited (“Magister”), holds 50.01% of the ordinary share capital of the Company and is
the ultimate controlling party.
AS Groves, a director of the Company during the year, is also a director of Liberian Cocoa Corporation (‘LCC’),
African Management Services Limited (‘AMS’), Consolidated Growth Holdings Limited (formerly Sable Mining
Africa Limited, ‘CGH’), Atlas African Industries Limited (‘AAI’) and East Africa Packaging Limited (‘EAPC’). The
Group has transacted with these companies during the year.
On 14 September 2017, shareholders approved the subscription by Magister for 10,622,433 ordinary shares
at a price of 31.26p per share.
During the year ending 31 March 2018, AMS provided accounting, office, treasury and administrative services
to the Group for fees of $289,500 (10 month period ending 31 March 2017: $305,000). As at 31 March
2018 the Group owed $nil to AMS (31 March 2017: $8,000). On 19th October 2017, the Group disposed
of its shareholding in AMS to CGH for a nominal consideration. During the period ending 31 March 2017
the Group provided against $129,000 of amounts due from AMS which were no longer deemed recoverable.
As at 31 March 2018 the Group was owed $nil from LCC (31 March 2017: $89,000 which was included
within the Cocoa disposal group).
During the period the Group and CGH incurred certain expenses on each other’s behalf, which were refunded
in full during the period. At 31 March 2018, the amount due to CGH was $nil (31 March 2017: $nil).
At 31 March 2018 the carrying value of amounts due from AAI was $nil (2017: $nil). During the period
ended 31 March 2017, the Group provided $150,000 against amounts receivable from AAI.
The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 10.
28. Operating leases outstanding
At 31 March 2018 the Group had commitments for future minimum lease payments under non-cancellable
operating leases for land and buildings, which fall due as follows:
Within one year
In the second to fifth years inclusive
31 March 2018
US$000
31 March 2017
US$000
78
–
78
89
–
89
Operating lease rentals recognised as an expense in the consolidated income statement were as follows:
Land and buildings
96
140
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
29. Events subsequent to the balance sheet date
29.1. Re-structuring of the Company’s borrowing facilities with Standard Bank
On 25 May 2018, the Group and Standard Bank agreed to modify the terms of the Group’s borrowing
facilities as follows:
Beef Division: On 25 May 2018, the overdraft facility has been renewed for a further 12 months and carries
an interest rate at the Bank’s prime lending rate (24%) at 31 March 2018.
Grain Division: On 25 May 2018, the 300 million Metical overdraft facility was restructured into a 240
million Metical 5 year term loan with an interest rate of the Bank’s prime lending rate +0.25% and a 12 month
60 million Metical overdraft facility at the Bank’s prime lending rate less 1.75%.
The Term loan and overdraft facilities have an interest covenant in place. At the date these facilities were
agreed, the Group was in breach of the interest covenant. To date the Group has continued to make all
repayments of interest and principal and has received no correspondence from the Bank suggesting that the
loan might go into default.
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Agriterra Limited – Annual Report and Consolidated Financial Statements for the year ended 31 March 2018
Company information and advisers
Country of incorporation
Registered address
Directors
Auditor
Solicitors
Nominated adviser and broker
Registrars
Guernsey, Channel Islands
Richmond House
St Julian’s Avenue
St Peter Port
Guernsey, GY1 1GZ
Caroline Havers (Executive Chair)
Daniel Cassiano-Silva (Non-executive)
Hamish Rudland (Non-executive)
Gary Smith (Non-executive)
BDO LLP
55 Baker Street
London W1U 7EU
Carey Olsen
8-10 Throgmorton Avenue
London, EC2N 2DL
Cantor Fitzgerald Europe
One Churchill Place
London, E14 5RB
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen, B63 3DA
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Perivan Financial Print 251721