AGRITERRA LIMITED
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED
31 MARCH 2019
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Table of Contents
Chair’s statement and strategic review ......................................................................................................................... 1
Corporate governance .................................................................................................................................................. 5
Directors’ report ........................................................................................................................................................... 7
Statement of directors' responsibilities ...................................................................................................................... 10
Independent auditor's report to the members of Agriterra Limited ............................................................................ 11
Consolidated income statement ................................................................................................................................. 15
Consolidated statement of comprehensive income .................................................................................................... 15
Consolidated statement of financial position .............................................................................................................. 16
Consolidated statement of changes in equity ............................................................................................................. 17
Consolidated cash flow statement .............................................................................................................................. 18
Notes to the consolidated financial statements .......................................................................................................... 19
Company information and advisers ....................................................................................................................................... 41
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C h a i r ’ s s t a t e m e n t
CHAIR’S STATEMENT AND STRATEGIC REVIEW
I am pleased to present the annual report of the Group for the year ending 31 March 2019 (’FY -19’). As shareholders are aware, the
Company’s shares have been suspended from trading on AIM since 1 October 2019, pending further investigation into a theft uncovered by
management in June 2019. Further details are included below and in note 27 to the financial statements.
During the year, the Group has focussed its efforts on its core revenue generating businesses, the Grain and Beef divisions based in
Mozambique. The London office was closed in the final quarter of the previous year (’FY -18’) and the executive operational management are
now entirely based in Chimoio, Mozambique. This is intended to provide a solid platf orm for future growth and profitability.
During the year the Company elected to observe the principles of the QCA Corporate Governance Code (the “Code”) to the extent that they
consider them to be applicable and appropriate for a Group of Agriterra’s size and stage of development, through the maintenance of
efficient and effective management frameworks accompanied by good communication. Further details are available at http://www.agriterra-
ltd.com/corporategovernance.aspx.
Strategy and Business Model
The Company’s strategy is to operate efficient, profitable businesses in Mozambique so as to create value for its shareholder s and other
stakeholders by supplying beef and milled maize products to the local market.
The Company currently has two operational agricultural divisions:
•
Beef, which sources cattle from local farmers and then processes them through its own feedlot, abattoir operations and retail units
through Mozbife Limitada ('Mozbife')
• Grain, which operates maize purchasing and processing businesses through Desenvolvimento e Comercialização Agrìcola Limitada
('DECA') and Compagri Limitada ('Compagri').
These two divisions have built strong brands in Mozambique. The Board intends to use these foundations to further grow and diversify its
product range in order to gain further market share of the agricultural sector in Mozambique and explore export and investment
opportunities in surrounding countries.
Once the operations in Mozambique are profitable, the Company’s longer term strategy is to become a leading agri-operator and food
provider in Sub-Saharan Africa.
The Company is aware of its environmental, social and governmental responsibilities and the need to maintain effective working
relationships across a range of stakeholder groups. The major shareholder is represented on the Board ensuring their views are incorporated
into AGTA’s decision-making process. The Company also engages on a regular basis with the minority shareholders . In addition to the Group’s
staff and shareholders, the local community in Mozambique is a primary stakeholder. In purchasing maize and cattle directly from the local
community, the Group plays an important role in local economic development, supporting s mall scale farmers and the developing
commercial sector. Further details of some of the social and community initiatives undertaken during the year are set out in the directors’
report.
Operations review
Grain division
Following a good harvest, the first half of the year saw subdued demand and pricing for the division’s maize flour, reflecting the relative
abundance of maize in the informal sector. However steps taken during the period to improve the yield and quality of maize meal were well
received in the market and, together with a traditional seasonal increase in volumes in the second half of the year, meal sales volumes for
the year rose 2% to 16,791 tonnes (FY-18: 16,472 tonnes). Sales of all maize products including animal feed to Mozbife fell to 5, 271 tonnes
(FY-18: 6,663 tonnes). Nonetheless a favourable pricing environment generated increased revenue in Metical terms to MZN 391.5m (FY-18:
MZN 323.1m) and in US$ terms to US$ 6.5m (FY-18: US$ 5.2m).
During the period, a series of rationalisation measures were also taken to realign the division’s cost base with the lower levels of demand.
The benefits of these started to come through in the second half of the period. The division is reporting an EBITDA loss of US$ 485,000 (FY-
18: loss of US$ 597,000). EBITDA has been reconciled and defined in note 5.
Historically the cycle of maize purchases following the harvest leads to a significant working capital requirement for the Gr ain division in the
first half of the year which unwinds in the second half. The division finances this requirement using local borrowing facilities. The interest
charge for the year remains high at US$ 916,000 (FY-18: US$ 951,000). The division is reporting a loss after tax of US$ 1.8m (FY-18: US$
1.7m). As the local maize market develops, the division has successfully adjusted its purchasing strategy to smooth out the peaks in demand for
working capital. This is reflected in lower inventory levels in comparison to previous years. The steps taken to improve quality has allowed the division
to expand its product range. New distribution channels are being developed with a view to increasing the brand’s national exposure and to
enter the informal market during FY-20. These measures are expected to improve margins and smooth the demand cycle.
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Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Beef division
The outbreak of foot and mouth in Mozambique in February 2018 severely curtailed the movement in cattle and limited the division’s a bility
to increase the pipeline of cattle in the feedlot, and throughput to the abattoir. Although res trictions have been removed in some areas,
access to the main buying areas remains limited. New sources of commercial cattle have been identified. These cattle go straight to slaughter
and help meet short term changes in demand. Strict bio-security measures are in force at the feedlot and the Dombe ranch and the operation
has remained disease free as at the year end and to date.
Following the recent announcement of the award of a grant from Fundo Catalitico Para Inovacao E Demonstracao ("FCID") of US$ 823,000,
the division will be rolling out nine "centres of cattle sales" in the Mozambique Province of Manica. This will help improve the availability and
quality of local cattle in future years. The first of these is expected to be operational in the near future.
The division is reporting meat sales for the year of 1,260 tonnes (FY-18: 1,453 tonnes). A change in pricing policy enabled revenues to
increase 7% in Metical terms to MTN 307m (FY-18: MTN 288m) and in US dollar terms to US$ 5.0m (FY-18: US$ 4.7m).
The measures taken to improve efficiencies of forage cropping and the introduction of pelletised animal feed sourced from the Grain
division, has led to significantly improved performance in the feedlot. Together with the full benefit from the rationalisat ion of the division’s
ranching operations in the previous year, the division reported a significant reduction in its EBITDA loss to US$ 485,000 (FY-18: US$
1,252,000). EBITDA has been reconciled and defined in note 5. After a fall in the interest charge to US$ 100,000 (FY-18: US$ 140,000), the
division is reporting a loss after tax of US$ 0.6m (FY-18: US$ 1.7m).
Key Performance Indicators
The Board monitors the Group’s performance in delivery of strategy by measuring progress against Key Performance Indicators (KPIs). These KPIs
comprise a number of operational, financial and non-financial metrics.
Grain division
- Average milling yield
- Meal sold (tonnes)
- EBITDA (note 5)
- Net debt
- Available headroom under banking facilities
Beef division
- Slaughter herd size – number of head
- Average daily weight gain in feedlot (% of body mass)
- Meat sold (tonnes)
- EBITDA (note 5)
- Net debt
- Available headroom under banking facilities
Group
- EPS
- Liquidity - cash plus available headroom under facilities
2019
2018
76.2%
16,791
(485,000)
(3,670,000)
537,000
2,468
0.32
1,260
(485,000)
663,000
195,000
72.6%
16,472
(597,000)
(3,625,000)
1,709,000
3,956
0.25
1,453
(1,252,000)
180,000
309,000
(14.6)
2,702,000
(31.1)
4,769,000
These indicators have been budgeted for the first time for FY-20 and are used to monitor progress on a monthly basis. Further strategic KPIs
will be introduced once the immediate key goal of moving the existing businesses into profitability has been achieved .
Fraud Investigation
Following the report to the Auditors of the incidence of theft which occurred on 17 June 2019, the Auditors requested a detailed investigation of the
circumstances. An initial management review brought to light a further incident concerning a fictitious purchase of grain in January 2019.
Consequently, the Audit Committee commissioned an external team of internal auditors to conduct a detailed review of the procurement cycle. This
review brought to light a further incidence in December 2018, together with a potential theft of petty cash which could not be accounted for. The
gross loss to the Group of all incidences was US$ 21,000 with a net loss of US$ 9,000. The Auditors questioned the independence of the internal audit
team and therefore could not conclude that the frauds did not have a material impact on the financial statements without the need for a forensic
audit. The Company commissioned PKF Littlejohn LLP to perform the forensic audit, the scope of which was agreed with the Auditors. The forensic
audit concluded that there was no evidence that further incidences of fraud had occurred and that there was no material impact on the financial
statements of those incidences which had come to light. The additional costs incurred by the Auditors in respect of the frauds were approximately
US$55,000 and by the forensic auditor approximately US$ 155,000.
Financial Review
Towards the end of FY-18, the corporate office in London was closed and all senior operational management are now based in Chimoio.
Central costs have therefore fallen significantly to US$ 0.5m (FY-18: US$ 1.6m). Together with the reduced loss at the Beef division, the
Group is reporting a reduction of 39% in the loss after taxation of US$ 3.1m (FY-18 US$ 5.1m).
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Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Net Debt at 31 March 2019 was US$ 2.4m (FY-18: US$ 0.7m). Details of the Group’s banking facilities are set out in note 19 to the financial
statements. Since the year-end, additional facilities have been agreed, to enable the Grain division to invest in the working capital required
to secure sufficient grain to meet its operational targets.
Risk management
The Company is subject to various risks and the future outlook for the Group, and growth in shareholder value should be viewe d with an
understanding of these risks. According to the risk, the Board may decide to tolerate it, seek to mitigate it through controls and operating
procedures, or transfer it to third parties. The following table shows the principal risks facing the Group and the actions taken to mitigate
these:
Key risk factor
Foreign Exchange
Political instability
Land ownership in
Mozambique
Maize
season
growing
Group’s
by
operations
fluctuations
Detail
The
are
in
impacted
exchange rates and the volatility of
the Metical
Changes to government policy and
laws could adversely
applicable
affect operations or the financial
condition of the Group
Property
land are
rights and
exclusive to the state. The state
grants rights to use and develop
land “DUATs”. The operations are
dependent upon maintaining the
relevant DUATs
conditions,
Adverse
national or regional could impact
on the availability and pricing of
grain
weather
Cattle and cattle
feed
Cattle are subject to diseases and
infections. The availability and price
of feed impacts profitability
Access to working
capital
Compliance
COVID-19
The Group
banking facilities in Mozambique
reliant on
is
local
resulting
There is a risk of a breach of the
Group's business or ethical conduct
standards and breach of anti-
in
corruptions
laws,
loss of
investigations, fines and
reputation
significant
COVID-19 has had a
negative
both
economically and socially. There is a
risk that there will be a significant
outbreak of the COVID-19 virus in
Mozambique which could potentially
through
impact
the population
and
contraction
Government enforced measures, and
in turn impact the Group’s operations.
COVID-19
globally,
impact
of
How it is managed
The Group’s borrowing facilities are
denominated in Metical
Contingency plans to protect assets and
should political or military
staff
tensions escalate
Change in the period
No change. The Metical has been
relatively stable over the last couple
of years as inflation falls and interest
rates come down
Increase with Presidential elections
in October 2019
Observance of any conditions attaching
to a DUAT
No change
restored
change. Operations were
No
disrupted for a few days until regular
power was
following
Cyclone Idai in March 2019. Only
superficial damage
facilities
occurred and all personnel were safe
Reduced – Improved farming and
silage storage facilities. Some Foot
and Mouth restrictions have been
lifted
to
Reduced – the term loan reduces the
exposure to reliance on the renewal
of short-term facilities
No change
The outbreak of COVID-19 occurred
post period end. The outbreak has not
yet spread significantly to Mozambique
with only limited cases reported to
date.
Diversify sources of supply and supply
agreements
is now
self-sufficient
Stringent Bio-security measures are in
place at the Farms and Feedlot. The
division
in
roughage crops and acquires a majority
of its feed from the Grain division
During the year, the Group swapped a
MTN 240m overdraft facility into a 5
year amortizing term loan
an ethical
reinforces
The Board
corporate culture. Anti-bribery policies
are
in place, with regular training
throughout the organisation
Plans are being put in place to protect our
staff and production capabilities. The
Group remains alert to the fast changing
environment and is prepared to put in
place mitigating actions as events develop.
Our products, meal and beef, are key
staples
in the domestic Mozambican
market and demand is not expected to be
significantly affected should the pandemic
take hold. The impact on future liquidity
has been discussed further in the Going
Concern section below.
The Board is also responsible for establishing and monitoring the Group’s systems of internal controls. Although no system of internal control
can provide absolute assurance against material misstatement or loss, the Group’s systems are designed to provide the directors with
reasonable assurance that problems are identified on a timely basis and dealt with appropriately. The Board reviews the effectiveness of the
systems of internal control and considers the major business risks and the control environment on a reg ular basis. In light of this control
environment the Board considers that there is no current requirement for a permanent separate internal audit function.
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Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Going concern
The Group’s business activities together with the factors likely to affect its futur e performance are set out in this strategic review. Note 21 to
the financial statements refers to the Group’s objectives, policies and procedures for managing its capital, its financial risk management
objectives, its financial instruments and exposures to credit, interest rate and liquidity risk.
As set out in note 19, the Group is funded by a combination of short and long -term borrowing facilities. Subsequent to the year-end,
additional banking facilities have been agreed as set out in note 26. The Group has received correspondence from the banks providing
overdraft facilities indicating that they do not presently see any reason why the current overdraft facilities would not be e xtended at their
respective renewal dates (with certain facilities becoming due for renewal in April and June 2020).
The Group has prepared forecasts for the Group’s ongoing businesses covering the period of at least 12 months from the date o f approval of
these financial statements. These forecasts are based on assumptions includ ing, 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 pric es and volume,
budgeted cost reductions, and projected weight gains of cattle in the feedlot. They further take into account working capital requirements
and currently available borrowing facilities. These forecasts show that the Group is projected, in the short term, to continue to experience
net cash outflows rather than inflows. Based on a base case forecast (inclusive of remedial action such as deferral of planned capital
expenditure and reduction in working capital balances), the Group anticipates a shortfall in available cash against its pre -existing facilities
within the next 12 months and is contingent on securing additional funding, either through additional loan and overdraft facilities or through
raising cash through capital transactions to remain a going concern. The Group’s key products, meal and beef are imp ortant basic
consumables in the domestic market in Mozambique and the demand for which is expected to remain high should COVID-19 take hold in
Mozambique. However, the impacts of COVID-19 are not currently known and therefore a sensitised version of the Gr oup’s forecasts have
been prepared which both increases the shortfall against pre-existing facilities and shortens the timing before a shortfall arises.
The Group is in negotiations with a number of lenders regarding additional funding to address the shor tfall and to support the growth that
the business anticipates after the resolution of the funding shortfall. Further details of the directors’ considerations are set out in note 3 to
the financial statements.
The directors note that COVID-19 has had a significant negative impact on the global economy, which may mean it is harder to secure
additional funding than it has historically been. Nonetheless, based on the factors described above, whilst there are no cont ractual
guarantees, the directors are confident that the existing financing will remain available to the Group and additional sources of finance will be
available. The directors, with the operating initiatives already in place, are also confident that the Group will achieve its cash flow forecasts.
Therefore, the directors have prepared the financial statements on a going concern basis.
The forecasts show that the Group requires further funding to meet its commitments as they fall due and in addition to this t he Group is
reliant on maintaining its existing borrowings. If the Group’s forecasts are adversely impacted by COVID-19 or other factors, then the Group
may require further funding earlier than expected. These conditions and events indicate the existence of material uncertainti es that may cast
significant doubt upon the Group’s ability to continue as a going concern and the Group may therefore be unable to realise their assets and
discharge their liabilities in the ordinary course of business. These financial statements do not include the adjustme nts that would result if
the Group were unable to continue as a going concern.
Outlook
The Group as a whole had a good start to FY-20. Sales to relief agencies after Cyclone Idai, underpinned sales in the Grain division in our traditionally
quiet first quarter, however inventory overhang in the market as a result of the aid programmes slowed continued sales progress in the second
quarter. The Beef division has seen a fall in volumes as the South African Rand depreciated to less than 4 Metical during Q1/early Q2 FY-20, which lead
to tough trading conditions in the south of the country where our beef product has to compete with imports from South Africa. Plans are being made
and finance sought to develop a sustainable presence in the Maputo market. This will provide a platform for growth in the Beef division. Elections
were held in October 2019 and led to variable demand in Q3 FY-20 for both divisions. The outbreak of COVID-19 has not yet spread significantly to
Mozambique with only limited cases reported to date. Plans are being put in place to protect our staff and production capabilities. Our
products, meal and beef, are key staples in the domestic Mozambican market and although demand is not expected to be signific antly
affected should the pandemic take hold, there are potential short term risks which are disclosed further in the key risks section above.
Board changes
On 28 December 2018 Mr. Daniel Cassiano-Silva stepped down from his non-executive role. I would like to thank Dan for his valuable
contribution to the development of the Group during his previous executive role as Group Finance Director.
The Board has been strengthened with the appointment of Mr. Neil Clayton on 9th January 2019 and Ms. Amanda Thorburn on 1st March 2019
as independent non-executive directors. Further appointments will be made as the Group’s requirements develop including the appointment
of a further independent non-executive director, which the Company hopes to announce shortly. Details of the directors and the committees
they serve on are set out in the Corporate Governance report.
CSO Havers,
Executive Chair
30 March 2020
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Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
D i r e c t o r s ’ r e p o r t
CORPORATE GOVERNANCE
The Company is quoted on AIM and from 28th September 2018 was required to comply with the provisions of a recognised corporate governance
code. The board elected to adopt the Quoted Company Alliance Corporate Governance Code (the “QCA code”). Further details are available at
http://www.agriterra-ltd.com/corporategovernance.aspx.
The Board is committed to applying a standard of corporate governance commensurate with its size and stage of growth and the nature of its
activities.
The Board
Following the investment by Magister Investments Limited in September 2017, the board structure has been re-organised to ensure it has the
appropriate balance of skills and independence. The Board currently comprises the Executive Chair, two non-independent Non-Executive Directors
and two independent Non-Executive Directors who were appointed during the year. The Board is looking to further enhance its composition, skills and
balance as the company develops. The Board currently comprises:
Caroline Havers, Executive Chair (AC; IC chair)
Ms. Havers is a highly experienced litigation/dispute resolution lawyer having spent over 30 years within international law firms working with clients
operating in a variety of African jurisdictions and industry sectors. During her legal career, Ms. Havers has been both a partner and managing director
of different law firms. She provides advice on compliance and governance and is a long qualified CEDR Mediator
Whilst the Group consolidates its operations in Mozambique, the Board appointed Ms. Havers as Executive Chair. It is intending to appoint a Chief
Executive Officer, based in Mozambique in due course.
Hamish Rudland, Non-Executive Director (IC)
Mr. Rudland has extensive experience across logistics, agriculture, agro-processing, distribution and property. After graduating from Massey
University, New Zealand, he returned to Zimbabwe in 1997 to start a passenger transport business that he soon diversified into fuel tank haulage in
the early 2000s. Thereafter Mr. Rudland structured acquisitions of foreign-owned asset rich companies to list on the Zimbabwe Stock Exchange. Mr.
Rudland has substantial investments in Zimbabwe Stock Exchange listed companies which focus on his core competencies but also synergise where
advantages can be made.
As a result of Mr. Rudland’s relationship to Magister Investments Limited, he is not considered to be an “independent” director for the purposes of
the QCA Corporate Governance Code.
Gary Smith, Non-Executive Director (AC; RC)
Mr. Smith is an experienced finance professional and is currently a non-executive director of several companies in Zimbabwe and Mauritius. Mr. Smith
worked in the UK for several years where he was employed at Deutsche Bank, University of Surrey and Foxhills Club & Resort. Upon returning to Africa
he worked for a large transport and logistics company in Mozambique for four years before returning home to Zimbabwe and the above positions.
Mr. Smith is a Chartered Accountant and a resident and citizen of Zimbabwe. As a result of Mr. Smith’s relationship with Magister Investments
Limited, he is not considered to be an “independent” director for the purposes of the QCA Corporate Governance Code.
Neil Clayton, Non-Executive Director (AC; RC Chair)
Mr. Clayton is a Chartered Accountant and has over 30 years of experience in a variety of listed and un-listed companies. Specifically, Mr. Clayton
brings significant experience and expertise as regards listed companies operating in Africa as well as particular knowledge of the Company's business
and requirements, having held an interim finance role at the Company during 2018.
Despite his recent work with the Company the Board considers Mr. Clayton to be an “independent” director for the purposes of the QCA Corporate
Governance Code.
Amanda Thorburn, Non-Executive Director (AC Chair; RC)
Ms. Thorburn is an associate chartered management accountant and has 25 years’ experience of working in Southern Africa across a variety of
financial and advisory roles focused on the telecoms and agribusiness sectors. Ms. Thorburn has also established and run her own baby linen
manufacturing company. Since June 2011, she has focused her attention on the agricultural sector, and has consulted and advised on various aspects
of many agriculture projects in the region with a strong focus on value chain development in the livestock sector.
The Board considers Ms. Thorburn to be an “independent” director for the purposes of the QCA Corporate Governance Code.
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.
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Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Board meetings are held quarterly in Mozambique. The attendance record of directors, since appointment, for the year is as follows:
Caroline Havers
Dan Cassiano-Silva (resigned 28 December 2018)
Neil Clayton (appointed 9 January 2019)
Hamish Rudland
Gary Smith
Amanda Thorburn (appointed 1 March 2019)
Meetings held
4
3
1
4
4
1
Meetings attended
4
0
1
4
4
0
The Board has entrusted the day-to-day responsibility for the direction, supervision and management of the business to the Senior Management
Committee (the ‘SMT’). The SMT 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.
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 Company has adopted a share dealing code for directors’ dealings which is appropriate for an AIM quoted company. The directors and the
Company comply with the relevant provisions of the AIM Rules and the Market Abuse Regulation (EU) No. 596/2014 relating to share dealings and
take all reasonable steps to ensure compliance by the Group’s employees.
Board committees
Due to the current size of the Board and the Company, there is no separate Nominations Committee and any new directors are appointed by the
whole Board.
At the Board meeting held in March 2019 the new Audit (“AC”), Investment (“IC”) and Remuneration Committees (“RC”) were established. Terms of
reference have been agreed subsequent to the year end and full committee reports will be published in the next annual report.
The Audit Committee is chaired by Amanda Thorburn and has been actively engaged in the planning and conduct of the Audit of these financial
statements. The Committee has formally met twice since the year end and the Chair has had independent conversations with the Audit partners both
in Mozambique and London where executive management have not been present.
Terms and conditions for Directors
The Executive Chair and Non-Executive Directors do not have service contracts but appointment letters setting out their terms of appointment. The
appointments may be terminated on three months’ notice by either party. The Non-Executive Directors receive an annual base fee reflecting their
respective time commitments and do not receive any benefits in addition to their fees, nor are they eligible to participate in any pension, bonus or
share-based incentive arrangements.
Directors' remuneration
Remuneration details are set out in note 9 to the financial statements.
Evaluation of Board performance
As the Board has been reconstituted over the last 18 months, no formal review of the effectiveness of its performance as a unit, as well as that of its
committees and the individual directors has been taken. Given the Company’s size, performance reviews are to be carried out internally from time to
time. Reviews will endeavour to identify skills development or mentoring needs of directors and the wider senior management team.
The Board recognises that the current procedures remain to be formally implemented and therefore do not accord with the QCA Guidelines. However
it is anticipated that these procedures will be augmented to a standard appropriate for the size and stage of development of the Company.
Communication with shareholders
The Group aims to ensure all communications concerning the Group’s activities are clear, fair and accurate. The Board is however keen to improve its
dialogue with shareholders. The Group’s website is regularly updated and announcements are posted onto the Company’s website.
The results of voting on all resolutions in future general meetings will be posted to the Company’s website, including any actions to be taken as a
result of resolutions for which votes against have been received from at least 20 per cent of independent shareholders.
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Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
DIRECTORS’ REPORT
The directors the Company hereby present their annual report together with the audited financial statements for the year ended 31 March 2019 for
the Group. 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 2019 and in the comparative year relate to New Ordinary Shares.
Except where otherwise noted, amounts are presented in this Directors’ report in United States Dollars (‘$’ or ‘US$’).
1.
LISTING DETAILS
Agriterra is a non-cellular Guernsey registered company limited by shares, whose ordinary shares (‘Ordinary Shares’) are quoted on the AIM Market of
the London Stock Exchange (’AIM’) under symbol AGTA.
2.
PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The principal activity of the Group is the investment in, development of and operation of agricultural projects in Africa. The Group’s current
operations are focussed on maize and beef in Mozambique. A review of the Group’s performance by business segment and future prospects are given
in the Chair’s statement and strategic review, together with a review of the risks and uncertainties impacting on the Group’s long-term performance.
3.
RESULTS AND DIVIDENDS
The Group results for the year ending 31 March 2019 show a loss after taxation of $3,095,000 (2018: loss $5,084,000). The Directors do not
recommend the payment of a final dividend (2018: $nil). No interim dividends were paid in the year (2018: $nil).
Further details on the Group’s performance in the year are included in the Chair’s statement and strategic review.
4.
DIRECTORS
4.1.
DIRECTORS IN OFFICE
The Directors who held office during the year and until the date of this report were:
Director
Position
CSO Havers
DL Cassiano-Silva (resigned 28 December 2018)
NWH Clayton (appointed 9 January 2019)
HBW Rudland
GR Smith
A Thorburn (appointed 1 March 2019)
4.2.
DIRECTORS’ INTERESTS
Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
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).
7
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
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 year are shown in note 9 to
the financial statements.
DIRECTORS’ SHARE OPTIONS
Details of the Director’s interests in share options of the Company during the financial year are as follows:
Director
DL Cassiano-Silva
At
31 March
2018 and 2019
Exercise
price GBP
Date from which
Exercisable
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.
These options lapsed on 28 June 2019.
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 30 March 2020, 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
6.
EMPLOYEE INVOLVEMENT POLICIES
Number of Ordinary
Shares
10,622,433
2,779,656
982,500
678,886
647,500
% Holding
50.01%
13.90%
4.63%
3.20%
3.05%
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.
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 2019 was 20 days (2018: 4 days).
8.
POLITICAL AND CHARITABLE DONATIONS
During the year no political and charitable donations were made (2018: $nil).
9.
SOCIAL AND COMMUNITY ISSUES
The mission of the Group in Mozambique is to work with and support the local producers by creating an efficient route to market of a top quality
national product. We strongly believe in the “field to fork” process and will continue to develop this concept as the group of companies grow. We
have recently created a slogan called “Do campo para mesa” meaning “From the field to the table” which simply cements our beliefs in the business.
We respect 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 focused on (1) practical, ‘on the ground’ training for students from various universities in
Mozambique studying, inter alia, production practices in beef and cattle, milling practices (including mill engineering), veterinary sciences and animal
sciences; (2) dissemination of agricultural management knowledge and practices; and (3) provision of health and medical assistance.
8
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Milling
With respect to educational activities, this year DECA hosted two 6 month post-graduation internship for students in HR and IT technology in the
Administration department. Then we recruited 2 post graduate students in Finance who are currently under an internship and if successful will be
taken on permanently in the finance department as cost accountants. We have also hosted one position for 3 months in the Technical department in
the milling section in food technology. Our Manager in Tete has recently graduated in business and economics and continues to run our facility in Tete
as the senior Manager in charge.
Beef
The Mozbife Vanduzi feedlot hosted 38 animal and veterinary science students and 17 students in the Abattoir throughout the year for practical
aspects of their university courses. We have recently employed a post graduate food technologist in the Abattoir to support the quality control
system. We recently trained 60 employees in the Abattoir and butcheries on meat processing and quality control practices to ensure our product is
always of a high standard. Mozbife is currently working to become Global Gap accredited from the farm to the feedlot in ensuring traceability and
quality standard of products at all times.
With respect to the promotion of health and medical assistance, DECA recently donated its ambulance to Dr Abrantes' clinic in Chimoio which is the
first port of call for the operations in case of any emergency. 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 recently received a major boost this year in that Mozbife was awarded a US$ 823,000 grant from the Catalytic
fund to construct 9 community buying points in the various areas we operate in. These cattle buying centres (or known as CBC’s) will formalize the
buying process by having state of the art equipment and infrastructure in place to support the activities. This investment has also brought about the
creation of 9 associations who have all been registered and have received training in functioning as an association. The CBC will certainly go a long
way in cementing our support within these communities. We envisage bolting on other activities like maize buying and the selling of the finished
goods of which they supply into. At Vanduzi, manure from the feedlot is given to surrounding small scale farming associations, being out growers for
Companhia de Vanduzi and Westfalia who commercially export fruit and vegetables to the European market. Both DECA and Mozbife sponsored the
annual Christmas party for three orphanages with over 200 children in Msika district, and meal was distributed to certain communities during the
planting season to ensure local seed stocks were planted.
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
Executive Chair
30 March 2020
9
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C o r p o r a t e g o v e r n a n c e
S t a t e m e n t o f D i r e c t o r s ’ r e s p o n s i b i l i t i e s
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.
The Companies (Guernsey) Law, 2008, as amended (the ‘2008 Law’) requires the Directors to prepare group financial statements for each financial
year in accordance with generally accepted accounting principles.
The Directors are required by the AIM Rules 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:
-
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.
10
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
I n d e p e n d e n t a u d i t o r ’ s r e p o r t t o t h e m e m b e r s o f A g r i t e r r a L i m i t e d
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AGRITERRA LIMITED
Opinion
We have audited the financial statements of Agriterra Limited (“the Parent Company”) and its subsidiaries (the ‘Group’) for the year ended 31 March
2019 which comprises 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 consolidated 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 the financial statements:
•
•
•
give a true and fair view of the state of the Group’s affairs as at 31 March 2019 and of the Group’s loss for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been properly 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 to the financial statements concerning the Group’s ability to continue as a going concern which shows that the Group
will need to renew its overdraft facilities and maintain its current borrowings and raise further finance in order to continue as a going concern. As
disclosed in note 3, the Group’s overdraft facilities require renewal within the going concern period. In addition to this the Group have noted further
uncertainty created by the COVID-19 pandemic which could impact the ability to raise further financing.
The matters explained in note 3 indicate that material uncertainties exist 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. Our audit procedures in response to this
key audit matter included the following:
- 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 in respect of the term loan.
We requested and have obtained, assurance from the banks that overdraft facilities are likely to be extended beyond the current expiry
date.
- We critically assessed management’s financial forecast over their period of going concern assessment to March 2021. This included
consideration of the key underlying assumptions and involved reviewing actual performance against budget.
- We have undertaken sensitivity analysis on management’s forecasts based on the achieved run rate in FY-20.
- 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 reviewed the Group’s assessment of the impact of COVID-19 using our knowledge of the business and the industry that the Group
operates in.
- We evaluated the adequacy of disclosures made in the financial statements. We found that the disclosure of this matter was adequately
described.
11
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
In addition to the key audit matter on going concern above we note the following key audit matters:
Impairment assessment of the Beef and Grain divisions
As detailed in note 14, 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 2019,
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. We therefore considered the impairment assessment and
the appropriateness of the estimates and disclosures to be a key audit matter.
How we addressed the matter. 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 by comparing forecast revenue and costs to historic actual performance, comparing inflation
and discount rate assumptions to third party independent sources and confirming that the forecasts were formally reviewed and approved by the
Board and were consistent with operational budgets. We performed sensitivity analysis over individual key inputs, together with a combination of
sensitivities over such inputs including pricing, sales volumes and operation costs and assessed the level of cash under such sensitivities. 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.
Key Observations: We found management’s assessment of the carrying value of the Beef and Grain divisions to be acceptable and appropriately
disclosed.
Valuation of Biological assets
As detailed in note 16, as at 31 March 2019 the Group holds $830,000 of biological assets (2018: $1,137,000) which are principally comprised of
livestock in the Beef division. The valuation of these assets requires management estimation to derive the fair value of livestock assets in accordance
with IAS 41 ‘Biological Assets’. Management have determined the valuation of these assets with reference to input assumptions including the average
price of cattle purchased (per KG) in the period preceding year-end, the size of the livestock herd as at 31 March 2019, the daily growth rate of cattle
(and the impact on the herd value over time) and the expected costs to sell. This valuation involved significant management judgement and
estimates, as detailed in the significant accounting policies and estimates note and note 4. We therefore considered the impairment assessment and
the appropriateness of the estimates and disclosures to be a key audit matter.
How we addressed the matter. We evaluated management’s fair value model for the valuation of livestock and critically challenged the key estimates
and assumptions used by management being selling prices, foreign exchange rates and costs to bring them to market. In doing so, corroborated the
estimates to actual selling prices, market data and actual costs respectively. We also confirmed that inputs were appropriate under relevant
accounting standards and were derived from information materially consistent with the financial statements and third party independent sources. We
reviewed the disclosures in the financial statements, particularly the disclosures of key estimates and assumptions.
Key Observations: We found management’s assessment of the valuation of Biological assets to be acceptable and appropriately disclosed.
Fraud
As disclosed in note 27, fraudulent payments totalling $21,000 were discovered by Management. There was a risk that further frauds were not
detected. A forensic investigation was undertaken by an independent expert which did not identify any further frauds.
How we addressed the matter. We involved forensic specialists from BDO who reviewed management’s assessments of the identified frauds and
reviewed management’s assessment and conclusion that no further frauds had occurred. As disclosed in note 27, we determined that a forensic
investigation undertaken by an independent expert was required. We considered whether we could rely on the work of the independent expert who
carried out the forensic investigation. Our consideration involved making an assessment of the expert’s competence, capabilities and their
independence. At the planning stage of their work we reviewed their scope, and we also reviewed their final report and conclusions. Throughout our
review of the forensic investigation, we involved forensic specialists from BDO.
Key Observations: We found the scope of the forensic investigation to be appropriate, and the frauds to be appropriately disclosed.
12
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Our application of 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.
Group materiality was determined to be $160,000 (2018 – $200,000). The basis for determining materiality was 1.5% of total assets. Total assets was
selected as the basis for determining materiality because the business is loss-making, cash consumptive and recently raised significant financing and
therefore it was concluded that the most relevant metric to users of the financial statements was an asset-based measure, reflecting stakeholders’
desire to understand the closing asset position and liquidity of the Group.
Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Performance
materiality was set at $120,000 (2018 – $100,000) for the Group. The basis for performance materiality was 75% (2018 – 50%) of the above
materiality levels. We selected the level of performance materiality based on an assessment of the history of errors and the number of significant
components.
Each significant component of the Group was audited to a lower level of materiality ranging from $52,500 to $105,000 (2018 – $76,000 to $110,000).
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 $3,500. 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 for Group reporting purposes by BDO Mozambique.
Together with the parent company and its Group consolidation, which was also subject to a full scope audit by BDO LLP, these represent the
significant components of the Group.
The remaining components of the Group were considered non-significant holding companies 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
in addition to holding frequent calls and meetings with the BDO Mozambique component team.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report and
consolidated financial statements, 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.
13
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
proper accounting records have not been kept by the Parent Company; or
the Parent financial statements are not in agreement with the accounting records; or
•
•
• 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 Statement of Directors’ responsibilities, 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 ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the 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.
Use of our report
This report is made solely to the Parent 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 Parent 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
Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
BDO LLP
Chartered Accountants
London
30 March 2020
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
14
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C o n s o l i d a t e d i n c o m e s t a t e m e n t
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2019
Continuing operations
Revenue
Cost of sales
Increase in fair value of biological assets
Gross profit
Operating expenses
Other income
Profit on disposal of property, plant and equipment
Operating loss
Finance costs
Loss before taxation
Taxation
Loss for the year from continuing operations
Discontinued operations
Loss for the year from discontinued operations
Loss for the year 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
Consolidated statement of comprehensive income
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2019
Loss for the year
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences
Other comprehensive (loss)/income for the year
Total comprehensive loss for the year attributable to owners of the Company
Note
5
6
10
11
12
13
13
Year
ended
31 March
2019
US$000
10,629
(9,891)
478
1,216
(3,860)
225
340
(2,079)
(1,016)
(3,095)
-
(3,095)
Year
ended
31 March 2018
US$000
9,222
(8,184)
510
1,548
(5,619)
25
88
(3,958)
(1,084)
(5,042)
(4)
(5,046)
-
(38)
(3,095)
(5,084)
US cents
US cents
(14.6)
(14.6)
(30.9)
(31.1)
Year
ended
31 March
2019
US$000
Year
ended
31 March
2018
US$000
(3,095)
(5,084)
(133)
(133)
(3,228)
764
764
(4,320)
15
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C o n s o l i d a t e d s t a t e m e n t o f f i n a n c i a l p o s i t i o n
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2019
Non-current assets
Property, plant and equipment
Intangible assets
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
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
31 March
2019
US$000
31 March
2018
US$000
14
15
16
17
18
19
20
19
22
6,292
166
6,458
830
675
698
-
2,197
4,400
6,315
-
6,315
1,137
938
1,096
19
3,541
6,731
10,858
13,046
1,708
1,186
2,894
1,506
2,850
2,850
5,744
5,114
3,373
151,442
172
(16,870)
(133,003)
5,114
4,235
469
4,704
2,027
-
-
4,704
8,342
3,373
151,442
1,988
(16,737)
(131,724)
8,342
The financial statements on pages 15 to 40 were approved and authorised for issue by the Board of Directors on 30 March 2020.
Signed on behalf of the Board of Directors by:
CSO Havers
Chair
30 March 2020
16
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C o n s o l i d a t e d s t a t e m e n t o f c h a n g e s i n e q u i t y
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2019
Share
capital
Share
premium
Share
based
payment
reserve
Translation
reserve
Accumulated
losses
Total
Equity
Note
US$000
US$000
US$000
US$000
US$000
US$000
Balance at 1 April 2017
Loss for the year
Other comprehensive income:
Exchange translation gain on foreign operations
Total comprehensive loss for the year
Transactions with owners
Issue of shares net of expenses
Share based payments
23
Total transactions with owners for the year
Balance at 31 March 2018
Loss for the year
Other comprehensive income:
Exchange translation loss on foreign operations
Total comprehensive loss for the year
Transactions with owners
Share based payments
23
Total transactions with owners for the year
Balance at 31 March 2019
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
151,442
-
-
-
-
-
3,373
151,442
-
-
-
3
3
1,988
-
-
-
(1,816)
(1,816)
172
764
764
-
-
-
(16,737)
-
(133)
(133)
-
-
-
764
(5,084)
(4,320)
-
-
-
(131,724)
(3,095)
4,233
3
4,236
8,342
(3,095)
-
(133)
(3,095)
(3,228)
1,816
1,816
-
-
(16,870)
(133,003)
5,114
17
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C o n s o l i d a t e d c a s h f l o w s t a t e m e n t
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2019
Cash flows from operating activities
Loss before tax from continuing operations
Adjustments for:
Amortisation and depreciation
Profit on disposal of property, plant and equipment
Share based payment expense
Foreign exchange loss/(gain)
Net decrease in biological assets
Increase in value of biological assets
Finance costs
Investment revenues
Impairment of current and non-current assets
Operating cash flows before movements in working capital
Decrease in inventories
Decrease in trade and other receivables
Increase/(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
Acquisition of intangible assets
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Issue of shares, net of expenses incurred
Net (repayment)/draw down of overdrafts
Net draw down/(repayment) of loans
Finance costs
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Note
14/15
23
16
16
10
14
15
19
19
Year ended
31 March
2019
US$000
Year ended
31 March
2018
US$000
(3,095)
(5,042)
620
(340)
-
80
754
(478)
1,016
-
-
(1,443)
238
392
744
(69)
-
-
(69)
-
(69)
-
346
(920)
(193)
(767)
-
(3,258)
3,773
(1,016)
(501)
(1,337)
(7)
3,541
2,197
490
(87)
3
(181)
194
(510)
1,097
(13)
4
(4,045)
481
772
(297)
(3,089)
(4)
13
(3,080)
(38)
(3,118)
476
232
(116)
-
592
4,233
1,506
(1,035)
(1,097)
3,607
1,081
35
2,425
3,541
18
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
GENERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 42643. Further details, including the address of the
registered office, are given on page 41. The nature of the Group’s operations and its principal activities are set out in the Directors’ report. A list of the
investments in subsidiaries and associate companies held directly and indirectly by the Company during the year and at the year-end, including the
name, country of incorporation, operation and ownership interest is given in note 3.
The reporting currency for the Group is the US Dollar (‘$’ or ‘US$’) as it most appropriately reflects the Group’s business activities in the agricultural
sector in Africa and therefore the Group’s financial position and financial performance.
The financial statements have been prepared in accordance with IFRSs as adopted by the EU.
2.
2.1
ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
In the current year, the Group has adopted all new and revised IFRSs that are relevant to its operations and effective for annual reporting
periods beginning on or after 1 January 2018. At the date of authorisation of these financial statements for the year ended 31 March 2019,
the following IFRSs were adopted:
2.1.1
IFRS 9 FINANCIAL INSTRUMENTS
IFRS 9 has replaced IAS 39 Financial Instruments:
•
•
•
•
Recognition and measurement: Financial assets are classified by reference to the business model within which they are held and their
contractual cash flow characteristics. IFRS 9 introduces a 'fair value through other comprehensive income' category for certain debt
instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements
applying to the measurement of an entity's own credit risk.
Impairment: IFRS 9 introduces an 'expected credit loss' model for the measurement of the impairment of financial assets, so it is no
longer necessary for a credit event to have occurred before a credit loss is recognised.
Hedge accounting: Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake
risk management activities when hedging financial and non-financial risk exposures. The Group does not hedge account for these
accounts.
Derecognition: The requirements for derecognition of financial assets and liabilities are carried forward from IAS 39. Following an
assessment of the classification of each financial asset no changes to classification were required. Management have performed an
assessment of expected credit losses for the Group receivables (note 18).
The Group applied the modified retrospective transition method.
2.1.2
IFRS 15 Revenue from Contracts with Customers
IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.
The five steps in the model are as follows:
•
•
•
•
•
Identify the contract with the customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contracts
Recognise revenue when (or as) the entity satisfies a performance obligation.
Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of fulfilling and
obtaining a contract and various related matters. New disclosures about revenue are also introduced.
Management has assessed the core principle of IFRS 15, that the Company will recognise revenue to depict the transfer of promised goods
to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods. Group
revenue comprises the sale of processed agricultural produce in the retail and wholesale markets. Revenue is recognised when goods are
collected or delivered to the customer in line with published or contracted terms and conditions. The Company has reviewed the terms and
conditions of the Company and is satisfied that there is no change to the timing of revenue recognition under IFRS 15.
19
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
2.2
The Group has not applied the following new, revised or amended pronouncements that have been issued by the IASB as they are not yet
effective for the annual financial year beginning 1 April 2018.
2.2.1
IFRS 16 Leases
IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting
model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has
a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged
from its predecessor, IAS 17.
The mandatory implementation required by the standard is for years beginning on or after 1 January 2019. This change in accounting policy
will be implemented for the first time for the financial year ending 31 March 2020 with the relevant analysis completed for the interim
results to 30 September 2019.
The directors do not expect there to be a material impact to the financial statements from the adoption of this standard.
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.
Going concern
The Group has prepared forecasts for the Group’s ongoing businesses covering the period of 12 months from the date of approval of these financial
statements. These forecasts are based on assumptions including, inter alia, that there are no significant disruptions to the supply of maize or cattle to
meet its projected sales volumes and that key inputs are achieved, such as forecast selling prices and volume, budgeted cost reductions, and
projected weight gains of cattle in the feedlot. They further take into account working capital requirements and currently available borrowing
facilities.
These forecasts show that the Group is projected, in the short term, to continue to experience net cash outflows rather than inflows. As disclosed in
the Chair’s statement, based on a base case forecast (inclusive of remedial action such as deferral of planned capital expenditure and reduction in
working capital balances), the Group anticipates a shortfall in available cash against its pre-existing facilities within the next 12 months and is
contingent on securing additional funding either through additional loan and overdraft facilities or through raising cash through capital transactions to
remain a going concern.
The Group’s focus remains on continuing to improve operational performance of the Grain and Beef divisions with emphasis on volume and pricing
growth to increase gross margins.
Grain division: Plans show volumes of 32,000 tonnes in the year ending 31 March 2021 (“FY-21”), (Year ended 31 March 2019: 16,791 tonnes)
supported by new customer orders resulting from the new product ranges and improved quality of product as set out in the Strategic Report. In
September 2019, the division secured additional overdraft financing facilities ($ 0.9m). In addition, the division is planning to introduce further new
consumer product lines. These initiatives and increased volume will require additional investment in capital expenditure and working capital and
additional banking facilities are being sought to support this growth.
Beef division: The FY-21 forecast shows significant revenue growth against FY-19 with projected monthly revenues averaging $ 0.51m (FY-19: $
0.42m). The forecast is supported by the initiatives put in place during FY-19 and FY-20. In particular it is planned to build an increased presence in the
Maputo region over the coming year.
COVID-19: The Group is developing plans to deal with COVID-19. The key focus will be on maintaining the health of our workforce. Intercontinental
travel by senior management has been suspended and the regional travel policy will respond to regional advice as it evolves. The Group’s key
products, meal and beef are important basic consumables in the domestic market in Mozambique, demand for which is expected to remain high
should COVID-19 take hold in Mozambique. The Group therefore does not anticipate any planned closures of sites or cessation of revenues. However,
the impacts of COVID-19 are not currently known and therefore a sensitised version of the Group’s forecasts have been prepared which both
increases the shortfall against pre-existing facilities and shortens the timing before a shortfall arises.
Corporate overheads are forecast to be consistent with the current run rate. Certain one-off expenditure to address the matters described in note 26
were incurred during FY-20.
The divisional forecasts for FY-21 show a significant improvement in operating performance as compared to that reported for the year ended 31
March 2019 (and those achieved in the year ending 31 March 2020). However, there can be no certainty that the turnaround plans will be successful,
and the forecasts are sensitive to small adverse changes in the operations of the divisions. The forecasts show that the Group will require additional
funding in the going concern period to meet the anticipated growth. Our sensitised forecasts, in which remedial action is taking which restricts growth
in favour of short-term cash benefit, also forecasts the need for further funding in the going concern period. Discussions are ongoing with the banks to
arrange additional facilities and the Group is evaluating further disposals of non-core assets.
20
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
As set out in notes 19 and 26, the Group is funded by a combination of short and long-term borrowing facilities. $ 2.3m of overdraft facilities are due
for renewal within the next 12 months and the Group is required to make $ 0.8m of repayments in respect of the bank loan principal amount together
with principal on finance leases of $ 0.1m.
To date the Group has continued to make all repayments of interest and principal on the term loan. The Group has also received correspondence from
the banks providing overdraft facilities indicating that they do not presently see any reason why the current overdraft facilities would not be extended
at their respective renewal dates (with certain facilities becoming due for renewal in April 2020). Consequently, the forecasts include all contractual
interest and capital repayments and 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 2020.
Based on the above, whilst there are no contractual guarantees, the directors are confident that the existing financing will remain available to the
Group and additional sources of finance will be available. The directors, with the operating initiatives already in place and funding options available
are confident that the Group will achieve its cash flow forecasts. Therefore, the directors have prepared the financial statements on a going concern
basis.
The forecasts show that the Group requires further funding to meet its commitments as they fall due and in addition to this the Group is reliant on
maintaining its existing borrowings. If the Group’s forecasts are adversely impacted by COVID 19 or other factors then the Group may require further
funding earlier than expected. COVID-19 has had a significant negative impact on the global economy which may mean it is harder to secure
additional funding than it has historically been. These conditions and events indicate the existence of material uncertainties that may cast significant
doubt upon the Group’s ability to continue as a going concern and the Group may therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. These financial statements do not include the adjustments that would result if the Group were unable to
continue as a going concern.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 31 March 2019. The company controls an investee if all three of the following elements are present: power over the investee, exposure to
variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever
facts and circumstances indicate that there may be a change in any of these elements of control.
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 2019, the Company held equity interests in the following undertakings:
Direct investments
Subsidiary undertakings
Agriterra (Mozambique) Limited
Indirect investments of Agriterra (Mozambique) Limited
Proportion held of
equity instruments
Country of incorporation
and place of business
Nature of business
100%
Guernsey
Holding company
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%
Foreign currency
Mozambique
Mozambique
Mozambique
Mozambique
Mozambique
Grain
Grain
Beef
Beef
Dormant
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
21
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
equity in the translation reserve. Such translation differences are recognised as income or expense in the year in which the operation or branch is
disposed of.
The following are the material exchange rates applied by the Group:
Mozambican Metical: US$
Operating segments
Average Rate
Closing Rate
2019
2018
2019
2018
60.82
61.15
63.73
61.31
The Chief Operating Decision Maker is the Board. The Board 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 Board which consider the activities by nature of business.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business,
net of discounts, value added taxes and other sales related taxes.
Performance obligations and timing of revenue recognition:
All of the Group’s revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the
customer. This is generally when the goods are collected or delivered to the customer. There is limited judgement needed in identifying the point
control passes: once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession, usually it will
have a present right to payment. Consideration is received in accordance with agreed terms of sale.
Determining the contract price:
All of the Group’s revenue is derived from fixed price lists and therefore the amount of revenue to be earned from each transaction is determined by
reference to those fixed prices.
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product sold. Therefore, there is no judgement involved in allocating the price to each unit ordered.
There are no long-term contracts in place. Sales commissions are expensed as incurred. No practical expedients are used.
Operating loss
Operating loss is stated before investment revenues, other gains and losses, finance costs and taxation.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a
substantial year of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially
ready for their intended use or sale. The Group did not incur any borrowing costs in respect of qualifying assets in any year presented.
All other borrowing costs are recognised in profit or loss in the year in which they are incurred.
Share based payments
The Company issues equity-settled share based payments to certain employees of the Group. These payments are measured at fair value (excluding
the effect of non-market based vesting conditions) at the date of grant and the value is expensed on a straight-line basis over the vesting year, based
on the 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.
Employee benefits
Short-term employee benefits
Short-term employee benefits include salaries and wages, short-term compensated absences and bonus payments. The Group recognises a liability
and corresponding expense for short-term employee benefits when an employee has rendered services that entitle him/her to the benefit.
Post-employment benefits
The Group does not contribute to any retirement plan for its employees. Social security payments to state schemes are charged to profit and loss as
the employee’s services are rendered.
22
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Leases
Leases that transfer substantially all the risks and rewards of ownership are classified as finance leases. During the years presented in these financial
statements, the Group was counterparty to certain operating lease contracts. Rentals payable under operating leases are charged to profit and loss on
a straight-line basis over the term of the relevant lease.
Taxation
The Company is resident for taxation purposes in Guernsey and its income is subject to income tax, presently at a rate of zero per cent per annum.
The income of overseas subsidiaries is subject to tax at the prevailing rate in each jurisdiction.
The income tax expense for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised in other comprehensive income or directly in equity, when tax is recognised in other comprehensive income or directly
in equity as appropriate. Taxable profit differs from accounting profit as reported in the income statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Current tax expense is the expected tax payable on the taxable income for the year. It is calculated on the basis of the tax laws and rates enacted or
substantively enacted at the balance sheet date and includes any adjustment to tax payable in respect of previous years. Deferred tax is calculated
using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable that taxable profit
will be available against which the asset can be utilised. This requires judgements to be made in respect of the availability of future taxable income.
The Group's deferred tax assets and liabilities are calculated using tax rates that are expected to apply in the year when the liability is settled or the
asset realised based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred income tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
No deferred tax asset or liability is recognised in respect of temporary differences associated with investments in subsidiaries, branches and joint
ventures where the Group is able to control the timing of reversal of the temporary differences and it is probable that the temporary differences will
not reverse in the foreseeable future.
Property, plant and equipment
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
2% – 33%
5% – 25%
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.
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
23
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in
profit and loss.
Biological assets
Consumer biological assets, being the beef cattle herd, are measured in accordance with IAS 41, ‘Agriculture’ at fair value less costs to sell, with gains
and losses in the measurement to fair value recorded in profit and loss. Breeding cattle, comprising bulls, cows and heifers are expected to be held for
more than one year, and are classified as non-current assets. The non-breeding cattle comprise animals that will be grown and sold for slaughter and
are classified as current assets.
Cattle are recorded as assets at the year-end and the fair value is determined by the size of the herd and market prices at the reporting date.
Cattle ceases to be a biological asset from the point it is slaughtered, after which it is accounted for in accordance with the accounting policy below for
inventories.
Forage crops are valued in accordance with IAS 41, ‘Agriculture’ at fair value less costs to harvest. As there is no ready local market for forage crops,
fair value is calculated by reference to the production costs of previous crops. The cost of forage is charged to profit or loss over the year it is
consumed.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the weighted average principle and includes
expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Financial assets
Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income (“FVTOCI”) or at fair value
through profit or loss (“FVPL”) depending upon the business model for managing the financial assets and the nature of the contractual cash flow
characteristics of the financial asset.
A loss allowance for expected credit losses is determined for all financial assets, other than those at FVPL, at the end of each reporting period. The
Group applies a simplified approach to measure the credit loss allowance for trade receivables using the lifetime expected credit loss provision. The
lifetime expected credit loss is evaluated for each trade receivable taking into account payment history, payments made subsequent to year-end and
prior to reporting, past default experience and the impact of any other relevant and current observable data. The Group applies a general approach
on all other receivables classified as financial assets. The general approach recognises lifetime expected credit losses when there has been a significant
increase in credit risk since initial recognition.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership of the asset to another party. The Group derecognises financial liabilities when the Group’s
obligations are discharged, cancelled or have expired.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade receivables do not carry any interest and are stated at their nominal value as reduced by
appropriate expected credit loss allowances for estimated recoverable amounts as the interest that would be recognised from discounting future cash
payments over the short payment period is not considered to be material. Other receivables are accounted for at amortised cost and are stated at
their nominal value as reduced by appropriate expected credit loss allowances.
Financial liabilities
The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics.
All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of
the financial liability. Unless otherwise indicated the carrying amounts of the Group’s financial liabilities approximate to their fair values.
The Group’s financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss.
A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain
or loss on derecognition is taken to the statement of comprehensive income.
24
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Borrowings
Borrowings are included as financial liabilities on the Group balance sheet at the amounts drawn on the particular facilities net of the unamortised
cost of financing. Interest payable on those facilities is expensed as finance cost in the period to which it relates.
Trade and other payables
Trade and other payables are initially recorded at fair value and subsequently carried at amortised cost.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal
market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the
most advantageous market must be accessible to the 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.
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 year.
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies which are described in note 3, the directors are required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which
the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future
years. The effect on the financial statements of changes in estimates in future years could be material.
Impairment
Impairment reviews for non-current assets are carried out at each balance sheet date in accordance with IAS 36, Impairment of Assets. Reported
losses in the Beef and Grain divisions were considered to be indications of impairment and a formal impairment review was undertaken.
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 3.5%, the benchmark real interest rate is around
11.5%. The real rate assumed in these forecasts is 12.5%, consistent with prior years. Current nominal bank borrowing rates are 19%, but these are
expected to fall further as the economy returns to growth and inflation remains stable. The Beef division is not sensitive to an increase in the discount
rate to 15.5%.
Grain division: The forecasts for the Grain division show a return towards the 10 year moving average with meal sales increasing to 27,000 tonnes in
FY-20 (Year ending 31 March 2019: 16,791). A shortfall in the projected volumes of 10% or a reduction in the gross margin of more than 20% would
lead to an indication of impairment.
Beef division: The forecasts for the Beef division show volumes of all meat products improving to 1,600 tonnes in FY-20 (Year ending 31 March 2019:
1,260 tonnes) and to 1,800 tonnes in FY-21. A fall in forecasted sales volumes of 3% or a reduction in budgeted gross margin of 3% 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 31 May 2016 following the
25
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
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 2019 or the year ended 31 March 2018.
Biological assets
Cattle are accounted for as biological assets and measured at their fair value at each balance sheet date. Fair value is based on the estimated market
value for cattle in Mozambique of a similar age and breed, less the estimated costs to bring them to market, converted to US$ at the exchange rate
prevailing at the year end. Changes in any estimates could lead to the recognition of significant fair value changes in the consolidated income
statement, or significant changes in the foreign currency translation reserve for changes in the Metical to US$ exchange rate.
The herd may be categorised as either the breeding herd or slaughter herd, depending on whether it was principally held for reproduction or
slaughter. At 31 March 2019 the value of the breeding herd disclosed as a non-current asset was $nil (31 March 2018: $nil). The value of the herd held
for slaughter disclosed as a current asset was $ 0.8m (31 March 2018: $ 1.1m).
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 2019 at $ 5,000 (31 March 2018: $ 28,000).
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 2018 and 31 March 2019. As at 31 March 2019, the gross and net IVA recoverable assets are
respectively $ 1,046,000 (31 March 2018: $1,057,000) and $nil (31 March 2018: $nil) at the US$ to Metical exchange rate of 63.73 (31 March 2018:
61.31) at that date.
5.
SEGMENT REPORTING
The Board considers that the Group’s operating activities comprise the segments of Grain and Beef and which are undertaken in Africa. In addition,
the Group has certain other unallocated expenditure, assets and liabilities, either located in Africa or held as support for the Africa operations.
Segment revenue and results
The following is an analysis of the Group’s revenue and results by operating segment:
Year ending 31 March 2019
Revenue
External sales(2)
Inter-segment sales(1)
Segment results
- Operating loss
- Interest expense
- Other gains and losses
Loss before tax
Income tax
Loss after tax
Grain
Beef
US$000
US$000
Unallo-
cated
US$000
5,586
873
6,459
(1,168)
(916)
309
(1,775)
-
(1,775)
5,043
-
5,043
(973)
(100)
252
(821)
-
(821)
-
-
-
(503)
-
4
(499)
-
(499)
Elimina-
tions
US$000
-
(873)
(873)
-
-
-
-
-
-
Total
US$000
10,629
-
10,629
(2,644)
(1,016)
565
(3,095)
-
(3,095)
26
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Year ending 31 March 2018
Grain
Beef
Cocoa(3)
US$000
US$000
US$000
Unallo-
cated
US$000
Discon-
tinued(4)
US$000
Elimina-
tions
US$000
Total
US$000
Revenue
External sales(2)
Inter-segment sales(1)
Segment results
- Operating (loss) / profit
- Interest (expense) / income
(Loss) / profit before tax
Income tax
4,519
680
5,199
(747)
(951)
(1,698)
(2)
4,703
-
4,703
(1,588)
(140)
(1,728)
(2)
(Loss) / profit for the year after tax
(1,700)
(1,730)
-
-
-
(31)
-
(31)
-
(31)
-
-
-
(1,630)
7
(1623)
-
(1,623)
-
-
-
38
-
38
-
38
-
(680)
(680)
-
-
-
-
-
9,222
-
9,222
(3,958)
(1,084)
(5,042)
(4)
(5,046)
(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.
Expenses incurred prior to the disposal of the Cocoa division.
Amounts reclassified to discontinued operations – refer to note 12.
The segment items included in the consolidated income statement for the year are as follows:
Year ending 31 March 2019
Grain
Beef
US$000
US$000
Unallo-
cated
US$000
Elimina-
tions
US$000
Depreciation and amortisation
374
236
10
-
Year ending 31 March 2018
Grain
Beef
Cocoa
US$000
US$000
US$000
Unallo-
cated
US$000
Discon-
tinued
US$000
Elimina-
tions
US$000
Total
US$000
620
Total
US$000
Depreciation
152
338
-
-
-
-
490
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 2019 and capital expenditure for the year then ended are as follows:
Assets
Liabilities
Capital expenditure
Grain
US$000
3,964
(4,742)
355
Segment assets and liabilities are reconciled to Group assets and liabilities as follows:
Segment assets and liabilities
Unallocated:
Intangible asset
Other receivables
Cash and cash equivalents
Accrued liabilities
Beef
US$000
Unallocated
US$000
4,885
(861)
727
2,009
(141)
31
Assets
US$000
8,849
21
16
1,972
-
10,858
Total
US$000
10,858
(5,744)
1,113
Liabilities
US$000
(5,603)
-
-
-
(141)
(5,744)
27
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
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
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
Key performance Indicator
Cocoa
US$000
Unallocated
US$000
-
-
-
3,144
(195)
-
Assets
US$000
9,902
22
3,122
-
-
13,046
Total
US$000
13,046
(4,704)
116
Liabilities
US$000
(4,509)
-
-
(72)
(123)
(4,704)
The Board considers that earnings before interest, tax, depreciation and amortisation (“EBITDA”) is a key performance indicator in measuring
operational performance. It is calculated as follows:
Year ending 31 March 2019
Loss before tax
- Interest expense
- Depreciation and amortisation charge
EBITDA
Grain
Beef
US$000
US$000
(1,775)
916
374
(485)
(821)
100
236
(485)
Unallo-
cated
US$000
(499)
-
10
(489)
Year ending 31 March 2018
Grain
Beef
Cocoa(3)
US$000
US$000
US$000
Unallo-
cated
US$000
Discon-
tinued(4)
US$000
Loss before tax
- Interest expense
- Depreciation and amortisation charge
EBITDA
Significant customers
(1,700)
951
152
(597)
(1,730)
140
338
(1,252)
(31)
-
-
(31)
(1,623)
(7)
-
(1,630)
38
-
-
38
Total
US$000
(3,095)
1,016
620
(1,459)
Total
US$000
(5,046)
1,084
490
(3,472)
In the year ended 31 March 2019, 2 customers of the Grain segment generated revenue of $ 2.3m amounting to 11.4% of Group revenue for one
customer and 10.6% for the other. One customer of the Beef segment generated revenue of $ 1.3m amounting to 12.5% of Group revenue (Year
ended 31 March 2018: one customer of the Grain division generated revenue of $ 1,2m amounting to 12.5% of Group revenue).
6.
OPERATING LOSS
Operating loss has been arrived at after charging / (crediting):
Depreciation of property, plant and equipment (see note 14)
Amortisation of intangible asset (see note 15)
Profit on disposal of property, plant and equipment
Net foreign exchange gain
Impairment of investment in associate
Staff costs (see note 8)
Year
ended
31 March 2019
US$000
Year
ended
31 March 2018
US$000
600
20
(340)
(11)
-
1,971
490
-
(87)
(162)
4
2,095
28
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
7.
AUDITORS REMUNERATION
Amounts payable to the auditors and their associates in respect of audit services are as follows:
Fees payable to the Company’s auditor for the audit of the Company’s accounts
Fees payable to the Company’s auditor for the forensic audit of the Company’s subsidiaries
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
Year
Ended
31 March 2019
US$000
Year
ended
31 March 2018
US$000
130
55
79
264
56
26
82
Other than as disclosed above, the Company’s auditor and their associates have not provided additional services to the Group.
8.
STAFF COSTS
The average monthly number of employees (including executive Directors) employed by the Group for the year was as follows:
Office and Management
Operational
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Share based payment charge
9. REMUNERATION OF DIRECTORS
Year ended 31 March 2019
CS Havers
DL Cassiano-Silva
NWH Clayton
HWB Rudland
GR Smith
A Thorburn
Year ended 31 March 2018
CS Havers
DL Cassiano-Silva
AS Groves
HWB Rudland
B Scott
GR Smith
Year
ended
31 March 2019
Number
Year
ended
31 March 2018
Number
60
497
557
72
536
608
Year
ended
31 March 2019
US$000
Year
ended
31 March 2018
US$000
1,904
67
-
1,971
Salary
US$000
Bonus
US$000
Share based
payment
US$000
41
-
2
10
10
1
64
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Salary
US$000
Bonus
US$000
Share based
payment
US$000
46
136
65
5
68
5
325
-
82
49
-
-
-
131
-
2
-
-
-
-
2
2,036
56
3
2,095
Total
US$000
41
-
2
10
10
1
64
Total
US$000
46
220
114
5
68
5
458
29
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
10. FINANCE COSTS
Interest receivable on bank deposits
Interest expense on bank borrowings and overdrafts
Net finance costs
11. TAXATION
Loss before tax from continuing activities
Tax credit at the Mozambican corporation tax rate of 32% (2018: 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
31 March 2019
US$000
Year
ended
31 March 2018
US$000
-
(1,016)
(1,016)
13
(1,097)
(1,084)
Year
Ended
31 March 2019
US$000
(3,095)
(990)
107
125
758
-
Year
ended
31 March 2018
US$000
(5,042)
(1,613)
18
(66)
1,661
4
-
4
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 2019 (2018: $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 $ 11,386,000 (2018: $
14,168,000). 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 $ 25,660,000 (2018: $ 28,876,000). 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.
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 (2018: zero percent per annum). No tax is payable for the year. Deferred tax has not been provided for, as brought forward tax losses are not
recoverable under the Income Tax (Zero 10) (Guernsey) Law, 2007 (as amended).
12.
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)
The Cocoa division’s operating companies were sold on 1 June 2017.
Year
ended
31 March 2019
US$000
-
-
Year
ended
31 March 2018
US$000
(8)
(30)
-
(38)
30
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
13.
LOSS PER SHARE
The calculation of the basic and diluted loss per share is based on the following data:
Year ended
31 March 2019
US$000
Year ended
31 March 2018
US$000
Loss for the year for the purposes of basic and diluted earnings per share from continuing activities
Loss for the year for the purposes of basic and diluted earnings per share from discontinued activities
Loss for the year for the purposes of basic and diluted earnings per share attributable to equity holders
of the Company
(3,095)
-
(3,095)
(5,046)
(38)
(5,084)
Weighted average number of Ordinary Shares for the purposes of basic and diluted loss per share
21,240,618
16,351,388
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
(14.6)
(14.6)
-
(31.1)
(30.9)
(0.2)
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 2019 and year ending 31 March 2018 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.
14.
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 April 2017
Additions
Disposals
Disposal of subsidiary
Exchange rate adjustment
At 31 March 2018
Additions
Disposals
Reclassification
Exchange rate adjustment
At 31 March 2019
12,952
12
-
(5,950)
645
7,659
67
(35)
41
(338)
7,394
Accumulated depreciation and impairment
At 1 April 2017
Charge for the year
Disposals
Disposal of subsidiary
Exchange rate adjustment
At 31 March 2018
Charge for the year
Disposals
Reclassification
Exchange rate adjustment
8,995
124
-
(5,950)
157
3,326
(5)
(35)
41
(138)
At 31 March 2019
Net book value
31 March 2019
31 March 2018
3,189
4,205
4,333
3,944
95
(17)
-
340
4,362
685
(134)
(41)
(189)
4,683
1,999
260
(2)
-
266
2,523
852
(134)
(41)
(120)
3,080
1,603
1,839
1,779
1
(168)
-
244
1,856
131
(90)
-
(73)
1,824
1,706
78
(162)
-
200
1,822
(323)
(89)
-
(54)
1,356
468
34
306
8
(15)
-
26
325
37
(106)
-
(9)
247
187
28
(15)
-
16
216
76
(53)
-
(8)
231
16
109
Total
US$000
18,981
116
(200)
(5,950)
1,255
14,202
920
(365)
-
(609)
14,148
12,887
490
(179)
(5,950)
639
7,887
600
(311)
-
(320)
7,856
6,292
6,315
For the year ended 31 March 2019, a depreciation charge of $ 600,000 (2018: $ 490,000) has been included in the consolidated income statement
within operating expenses and $ nil (2018: $ nil) has been included within discontinued operations.
Property, plant and equipment with a carrying amount of $ 4,719,000 (2018: $ 4,674,000) have been pledged to secure the Group’s bank overdrafts
and loans (note 19). The Group is not allowed to pledge these assets as security for other borrowings or sell them to another entity.
31
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
15.
INTANGIBLE ASSETS
Cost
At 31 March 2018
Additions
Exchange rate adjustment
At 31 March 2019
Accumulated amortisation
At 31 March 2018
Charge for the year
Exchange rate adjustment
At 31 March 2019
Net book value
31 March 2019
31 March 2018
Intangible assets comprise investment in management information and financial software.
At 31 March 2019 and 31 March 2018, the Group had no contractual commitments for the acquisition of property, plant and equipment.
16.
BIOLOGICAL ASSETS
Fair value
At 1 April 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
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 2019
US$000
-
193
(7)
186
-
20
-
20
166
-
US$000
746
2,913
(3,107)
510
75
1,137
1,608
(2,362)
478
(31)
830
At 31 March 2019 and 2018, all cattle are held for slaughter. The slaughter herd has been classified as a current asset. Forage crops included in current
assets are US$ 5,000 (2018: US$ 28,000).
At 31 March 2019 the slaughter herd comprised 2,468 head (2018: 3,956), with an average weight of 270kgs (2018: 260 kgs) and average value of US$
335 (2018: US$ 281).
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 year end. Cattle
are generally kept for periods less than 3 months before slaughter.
The Group’s slaughter herd have been pledged in full to secure the Beef division’s bank overdraft and loans (see note 19).
17.
INVENTORIES
Consumables and spares
Raw materials
Work in progress
Finished goods
31 March
2019
US$000
31 March
2018
US$000
297
48
-
330
675
304
301
4
329
938
32
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
During the year inventories amounting to US$ 7,690,000 (2018: US$ 7,077,000) were included in cost of sales.
Inventories with a carrying amount of $ 331,000 (2018: $ 452,000) have been pledged to secure the Grain division’s bank overdraft and inventories
with a carrying value of $ 168,000 (2018: $ 166,000) having been pledged to secure the Beef division's bank overdraft and loans (see note 19).
18.
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments
Trade receivables
Trade receivables - gross
Loss allowance
31 March
2019
US$000
542
138
18
698
31 March
2019
US$000
865
(323)
542
31 March
2018
US$000
1,048
11
37
1,096
31 March
2018
US$000
1,087
(39)
1,048
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. They are generally due for settlement within 30
days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional. The
Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised
cost using the effective interest method.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables have been grouped based on the days past due.
At 31 March 2019
Expected loss rate
Gross trade receivables
Loss allowance
At 31 March 2018
Expected loss rate
Gross trade receivables
Loss allowance
Current
than
More
30 days
than
More
60 Days
More
90 days
than
Total
US$000
0%
384
-
US$000
0%
124
-
US$000
0%
25
-
US$000
97%
332
323
Current
More
30 days
than
More
60 Days
than
More
90 days
than
Total
US$000
0%
669
-
US$000
0%
319
-
US$000
0%
18
-
US$000
48%
81
39
US$000
37%
865
323
US$000
4%
1,087
39
The closing loss allowances for trade receivables as at 31 March 2019 reconcile to the opening loss allowances as follows:
Loss allowances at 1 April previously calculated under IAS 39
Increase in loan loss allowance recognised in profit or loss during the year
Receivables written off during the year as uncollectible
Exchange rate adjustment
Loss allowances at 31 March
31 March
2019
US$000
31 March
2018
US$000
39
297
-
(13)
323
36
8
(8)
3
39
Trade receivables are provided for when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery
include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a
period of greater than 120 days past due. This is used as the basis of the ECL provision disclosed above. The Group determines the percentage based
on historic trends. Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line item.
33
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
In the prior year, the impairment of trade receivables was assessed based on the incurred loss model. Individual receivables which were known to be
uncollectable were written off by reducing the carrying amount directly. The other receivables were assessed collectively to determine whether there
was objective evidence that an impairment had been incurred but not yet been identified. For these receivables the estimated impairment losses
were recognised in a separate provision for impairment. Receivables for which an impairment provision was recognised were written off against the
provision when there was no expectation of recovering additional cash.
Trade receivables with a carrying amount of $ 134,000 (2018: $ 799,000) have been pledged to secure the Grain division’s bank overdraft and trade
receivables with a carrying value of $ 324,000 (2018: $ 249,000) have been pledged to secure the Beef division's bank overdraft and loans (see note
19).
Further details on the Group’s financial assets are provided in note 21.
19.
BORROWINGS
Non-current liabilities
Bank loans
Finance leases
Current liabilities
Bank loans
Finance leases
Overdraft
31 March
2019
US$000
31 March
2018
US$000
2,510
340
2,850
753
48
907
1,708
4,558
-
-
-
50
-
4,185
4,235
4,235
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. This was settled in May 2018.
On 18 February 2019, the Group entered into a finance lease for MTN 27.6m ($ 0.43m) repayable over 5 years, secured on certain agricultural
equipment.
The Beef division has an overdraft facility of 30 million Metical ($ 0.47m). The amount drawn down at 31 March 2019 was $ 0.32m (2018: $ 0.34m).
On 25 May 2019, the overdraft facility has been renewed for a further 12 months and carries an interest rate at the Bank’s prime lending rate (19.5%)
at 31 March 2019.
The facilities are secured as follows:
Fixed Charge
Property, plant and equipment
Floating Charge
Cattle
Meat Inventories
Trade receivables
31 March
2019
US$000
31 March
2018
US$000
2,913
825
168
324
4,230
1,913
1,109
166
249
3,437
34
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
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.
On 25 May 2018 the facility was restructured into a 240 million Metical ($ 3.77m) 5 year term loan with an interest rate of the Bank’s prime lending
rate +0.25% and a 12 month 60 million Metical ($ 0.94m) overdraft facility at the Bank’s prime lending rate less 1.75%. At 31 March 2019, the principal
outstanding on the term loan was 208 million Metical ($ 3.26m) and the amount drawn on the overdraft facility was 37.2 million Metical ($ 0.58m). On
25th May 2019, the overdraft facility was renewed for a further 12 months.
The facilities are secured as follows:
Fixed Charge
Property, plant and equipment
Floating Charge
Maize and maize product inventories
Trade receivables
31 March
2019
US$000
31 March
2018
US$000
1,806
331
134
2,271
2,761
452
799
4,012
As further security to the bank loans and overdrafts, Agriterra Limited has issued a Corporate guarantee in favour of the bank. Under the terms of the
guarantee, it may only be called upon once the bank has exhausted all possible means of recovering the debt in Mozambique.
Reconciliation to cash flow statement
Non-current bank loan
Current bank loan
Overdrafts
Non-current bank loan
Current bank loan
Overdrafts
20.
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued liabilities
At 31 March
2018
US$000
-
50
4,185
4,235
At 31 March
2017
US$000
734
264
2,466
3,464
Cash flow
US$000
2,987
786
(3,258)
515
Cash flow
US$000
(798)
(237)
1,506
471
Foreign
Exchange
US$000
(137)
(35)
(20)
(192)
Foreign
Exchange
US$000
64
23
213
300
31 March
2019
US$000
622
294
270
1,186
At 31 March
2019
US$000
2,850
801
907
4,558
At 31 March
2018
US$000
-
50
4,185
4,235
31 March
2018
US$000
123
50
296
469
‘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.
35
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
21.
FINANCIAL INSTRUMENTS
21.1.
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 19 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 Board reviews the capital structure on a regular basis and seeks to match new capital requirements of subsidiary companies to new sources of
external debt funding denominated in the currency of operations of the relevant subsidiary. Where such additional funding is not available, the 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 19.5% at 31 March 2019 (2018: 24%). In light of this,
the Group has been rationalising its operations, with particular focus on disposing of surplus assets to reduce external debt levels. The Group has
restructured its loan facilities in Mozambique to finance its Grain operations (note 19).
21.2.
Categories of financial instruments
The following are the Group financial instruments as at the year-end:
Financial assets
Cash and bank balances
Other loans and receivables
Financial liabilities
Amortised cost
31 March
2019
US$000
31 March
2018
US$000
2,197
681
2,878
5,744
5,744
(2,866)
3,541
1,059
4,600
4,637
4,637
(37)
Financial risk management objectives
21.3.
The Group manages the risks arising from its operations, and financial instruments at Executive operating and Board level. The Board has overall
responsibility for the establishment and oversight of the Group’s risk management framework and to ensure that the Group has adequate policies,
procedures and controls to manage successfully the financial risks that the Group faces.
While the Group does not have a written policy relating to risk management of the risks arising from any financial instruments held, the close
involvement of the senior executives in the day to day operations of the Group ensures that risks are monitored and controlled in an appropriate
manner for the size and complexity of the Group. Financial instruments are not traded, nor are speculative positions taken. The Group has not
entered into any derivative or other hedging instruments.
The Group’s key financial market risks arise from changes in foreign exchange rates (‘currency risk’) and changes in interest rates (‘interest risk’). The
Group is also exposed to credit risk and liquidity risk. The principal risks that the Group faces as at 31 March 2019 with an impact on financial
instruments are summarised below.
21.4. Market Risk
The Group is exposed to currency risk and interest risk. These are discussed further below.
21.4.1. Currency risk
Certain of the Group companies have functional currencies other than US$ 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’)
Assets
Liabilities
31 March
2019
US$000
1,972
906
2,878
31 March
2018
US$000
3,120
1,480
4,600
31 March
2019
US$000
141
5,603
5,744
31 March
2018
US$000
175
4,462
4,637
36
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
The Group transacts with suppliers and/or customers in currencies other than the functional currency of the relevant Group Company (foreign
currencies). The Group does not hedge against this transactional risk. As at 31 March 2019 and 31 March 2018, the Group’s outstanding foreign
currency denominated monetary items were principally exposed to changes in the US$ / GBP and US$ / MZN exchange rate.
The following tables detail the Group’s exposure to a 5, 10 and 15 per cent 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
2019
US$000
31 March
2018
US$000
(7)
(14)
(21)
(7)
(14)
(21)
-
-
-
(7)
(13)
(20)
(73)
(146)
(219)
50
100
149
(6,407)
(12,815)
(19,222)
(6,434)
(12,868)
(19,302)
(1)
This is mainly due to the exposure arising on the translation of US$ 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.
21.4.2.
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
2019 and 31 March 2018, the Group has no interest bearing fixed rate instruments.
The Group maintains cash deposits at variable rates of interest for a variety of short term periods, depending on cash requirements. The Grain and
Beef operations in Mozambique are also financed through bank facilities. The rates obtained on cash deposits are reviewed regularly and the best rate
obtained in the context of the Group’s needs. The weighted average interest rate on deposits was nil % (2018: 0.25%). The weighted average interest
on drawings under the overdraft facilities and bank loans was 20.14% (2018: 26.05%). The Group does not hedge interest rate risk.
The following table details the Group’s exposure to interest rate changes, all of which affect profit and loss only with a corresponding effect on
accumulated losses. The sensitivity has been prepared assuming the liability outstanding at the balance sheet date was outstanding for the whole
year. In all cases presented, a negative number in profit and loss represents an increase in finance expense/decrease in interest income. The
sensitivity as at 31 March 2019 and 31 March 2018 is presented assuming interest rates on cash balances remain constant, with increases of between
20bp and 1000bp on outstanding overdraft and bank loans. This sensitivity to interest rate rises is deemed appropriate because the Group interest
bearing liabilities are Metical based. Although the macroeconomic scenario in Mozambique is now improving and interest rates are falling, they
remain high with prime rates of 19.5% at 31 March 2019 (2018: 24%). Any further depreciation in the Metical could see this trend reverse.
+ 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
(1)
The table above is prepared on the basis of an increase in rates. A decrease in rates would have the opposite effect.
31 March
2019(1)
US$000
(5)
(12)
(24)
(47)
(118)
(189)
(236)
31 March
2018(1)
US$000
(1)
(3)
(7)
(14)
(35)
(55)
(69)
37
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
21.5.
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 impact of COVID-19 on the credit risk of the Group has been considered in the Going Concern
disclosures in note 3.
The maximum exposure to credit risk is the carrying value of the Group financial assets disclosed in note 21.2. Details of provisions against financial
assets are provided in note 18.
21.6.
Liquidity risk
The Group policy throughout the year has been to ensure that it has adequate liquidity by careful management of its working capital. The operating
executives continually monitor the Group’s actual and forecast cash flows and cash positions. They pay particular attention to ongoing expenditure,
both for operating requirements and development activities, and matching of the maturity profile of the Group’s overdrafts to the processing and sale
of the Group’s maize and beef products. The impact of COVID-19 on the liquidity risk of the Group has been considered in the Going Concern
disclosures in note 3.
At 31 March 2019 the Group held cash deposits of $ 2,197,000 (2018: $ 3,541,000). At 31 March 2019 the Group had overdraft and bank loans
facilities of approximately $ 5,063,000 (2018: $ 5,452,000) of which $ 4,558,000 (2018: $ 4,224,000) were drawn. 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.
1 month
2 to 3 months
4 to 12 months
1 to 2 years
3 to 5 years
22.
SHARE CAPITAL
At 1 April 2017
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 and 31 March 2019
At 31 March 2018 and 31 March 2019
Deferred shares of 0.1p each
31 March
2019
US$000
2,159
134
601
1,634
1,216
5,744
31 March
2018
US$000
4,612
25
-
-
-
4,637
Authorised
Number
Allotted and fully
paid
Number
US$000
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)
1,722
1,413
3,135
-
23,450,000
21,240,618
3,135
155,000,000
155,000,000
238
Total share capital
178,450,000
176,240,618
3,373
The Company has one class of ordinary share which carries no right to fixed income.
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 2019 and in the
comparative year 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.
38
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
23.
SHARE BASED PAYMENTS
23.1.
Charge in the year
The Group recorded a charge within Operating expenses for share based payments of $ nil (2018: $ 3,000) in respect of options issued in previous
years vesting during the year. No options were issued during the year (2018: $nil).
23.2.
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 year is generally
one year. If options remain unexercised after a year 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’) maybe 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 year during which time the Warrants may be exercised and Warrants
Shares issued is the 5-year year 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.
50,000 Warrants are in issue.
The following table provides a reconciliation of share options and warrants outstanding during the year. The number of shares or warrants and their
respective exercise prices have been adjusted to reflect the share consolidation (see note 22):
Year
ended
31 March
2019
Number
Year ended
31 March
2018
Number
Weighted
average
exercise
price (p)
Weighted
average
exercise
price (p)
At beginning of year
Granted in the year
Terminated in the year
Lapsed in the year
At end of year
Exercisable at year end
335,850
-
-
(184,690)
151,160
151,160
160
-
-
83
263
263
335,850
-
-
-
335,850
325,850
160
-
-
-
160
160
A transfer of $ 1,816,000 was made from the share based payments reserve to the accumulated losses reserve in respect of the options that lapsed
during the year.
At 31 March 2019, 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
18,080
18,080
20,000
20,000
25,000
50,000
151,160
Exercisable
Options
Exercise price
P
18,080
18,080
20,000
20,000
25,000
50,000
151,160
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
24.
RELATED PARTY DISCLOSURES
Magister Investments Limited (“Magister”), holds 50.01% of the ordinary share capital of the Company and is the ultimate controlling party.
On 14 September 2017, shareholders approved the subscription by Magister for 10,622,433 ordinary shares at a price of 31.26p per share.
AS Groves, a director of the Company during the year ended 31 March 2018, 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
39
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
Limited (‘AAI’) and East Africa Packaging Limited (‘EAPC’). The Group transacted with these companies during the prior year to 31 March 2018. No
such transactions have occurred during the year ended 31 March 2019.
During the year ending 31 March 2018, AMS provided accounting, office, treasury and administrative services to the Group for fees of $ 289,500. As at
31 March 2018 the Group owed $ nil to AMS. On 19th October 2017, the Group disposed of its shareholding in AMS to CGH for a nominal
consideration.
As at 31 March 2018 the Group was owed $ nil from LCC.
During the year ended 31 March 2018 the Group and CGH incurred certain expenses on each other’s behalf, which were refunded in full during the
year. At 31 March 2018, the amount due to CGH was $ nil.
At 31 March 2018 the carrying value of amounts due from AAI was $ nil.
The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 9.
25.
OPERATING LEASES OUTSTANDING
At 31 March 2019 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
Operating lease rentals recognised as an expense in the consolidated income statement were as follows:
Land and buildings
26.
EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
On 25 May 2019, Standard Bank renewed its overdraft facilities for a further year (see note 19)
31 March
2019
US$000
31 March
2018
US$000
51
31
82
67
78
-
78
96
On 17 June 2019, an incident of theft occurred which was picked up by local operational management, whereby a payment was made for a fictitious
purchase of grain amounting to US$ 5,000, of which US$ 4,000 was subsequently recovered. This was not brought to the Auditor’s attention until the
closing stages of the audit in September 2019. The Company’s shares were suspended from trading on AIM on 1 October 2019 pending a requirement
from the Auditors for the Company to undertake further investigation (see note 27).
On 8 July 2019, Mozbife received the first tranche of a grant award totalling MTN 52.45m (US$ 823,000) from the Fundo Catalitico Para Inovacao E
Demonstracao ("FCID"). The funds will be used to establish 9 community association Cattle Sales Centres around Manica province.
On 30 August 2019 Banco Unico made available to DECA an additional overdraft facility of MTN 30m (US$ 471,000). The facility bears interest at
Prime. The facility is secured on a USD cash deposit funded by Agriterra Limited. The facility was renewed on 28 February 2020 for a further 6 months.
On 10 September 2019 Mozabanco made available to DECA a further overdraft facility of MTN 60m (US$ 942,000). Interest is at prime plus 0.5%. The
facility is unsecured and is due for renewal on 9 June 2020.
The impact of COVID-19 is a non-adjusting event after the reporting period. The impact of COVID-19 on the estimates and judgements of the financial
statements has been considered by the Group and although there are inherent risks and uncertainties as disclosed on page 3 in the Chair's statement,
as at the date of signing, COVID-19 has not had a material impact on the financial statements. Further details in relation to Going Concern are
disclosed in note 3.
27.
FRAUD INVESTIGATION
Following the report to the Auditors of the incidence of theft which occurred on 17 June 2019, the Auditors requested a detailed investigation of the
circumstances. An initial management review brought to light a further incident concerning a fictitious purchase of grain in January 2019.
Consequently, the Audit Committee commissioned an external team of internal auditors to conduct a detailed review of the procurement cycle. This
review brought to light a further incidence in December 2018, together with a potential theft of petty cash which could not be accounted for. The
gross loss to the Group of all incidences was US$ 21,000 with a net loss of US$ 9,000. The Auditors questioned the independence of the internal audit
team and therefore could not conclude that the frauds did not have a material impact on the financial statements without the need for a forensic
audit. The Company commissioned PKF Littlejohn LLP to perform the forensic audit, the scope of which was agreed with the Auditors. The forensic
audit concluded that there was no evidence that further incidences of fraud had occurred and that there was no material impact on the financial
statements of those incidences which had come to light. The additional costs incurred by the Auditors in respect of the frauds were approximately
US$ 55,000 and by the forensic auditor approximately US$ 155,000.
40
Agriterra Limited – Annual Report and Financial Statements for the year ended 31 March 2019
C o m p a n y s t a t e m e n t o f f i n a n c i a l p o s i t i o n
C o m p a n y i n f o r m a t i o n a n d a d v i s e r s
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)
Neil Clayton (Non-executive)
Hamish Rudland (Non-executive)
Gary Smith (Non-executive)
Amanda Thorburn (Non-executive)
BDO LLP
55 Baker Street
London W1U 7EU
Carey Olsen
8-10 Throgmorton Avenue
London EC2N 2DL
Strand Hanson
26 Mount Row
London W1K 3SQ
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen B63 3DA
41