The information contained within this announcement is deemed to
constitute inside information pursuant to the EU (Withdrawal) Act
and amended pursuant to Market Abuse (Amended) (EU Exit)
Regulations 2019. Upon the publication of this announcement, this
inside information is now considered to be in the public
domain.
31 March 2022
Anglo African Agriculture plc
(“AAAP” or the “Company”)
DIRECTORS’ REPORT AND FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2021
Company Registration No. 07913053
(England and Wales)
Overview
The most recent financial period was a
very disappointing year in that after 30 months of trying to
reverse the Comarco port and marine operations into AAA (“the
Company”) the vendors decided in September
2021 to withdraw from the transaction. AAA made a
$1m loan available to Comarco in
November 2018 for an initial period
of 24 months (the “Loan”). The Loan was subsequently extended and
was due for repayment on 30 September
2021. The Loan, together with accrued interest, amounting in
aggregate to $1.5m, has now been
repaid although no full and final settlement was signed by
Comarco.
As mentioned previously the Company’s
100% subsidiary, Dynamic Intertrade, on its own cannot sustain an
LSE listing. As a result of the aborted Comarco transaction the
board is looking at various alternative transactions to increase
the size of the Company and thus secure its future prospects. The
Board recognises that it needs to find a transaction with certainty
to prevent a repeat of the failed Comarco transaction and it is
also aware of the recent FCA rule changes to Standard listing
requirements. As such, the Board is also looking to complete a
transaction as soon as practicably possible.
AAA’s primary operations and source of
revenue remains Dynamic Intertrade (“Dynamic”), our Cape Town based spice blender and trader. The
Company’s operations have been negatively affected by COVID-19 with
sales in local currency falling 23.2% and 20.8% in reporting
currency. This was primarily driven by the South African economy
being impacted by COVID-19. In addition, fish stocks for Dynamic’s
largest customers dwindled and the clients in effect had no
production for a number of months during the year under review.
Lastly, the product mix requested by Dynamic’s material customers
changed and price increases could not be passed on to the company’s
customers, which reduced the gross margin. Group turnover reduced
by 20.8% (2020: a reduction of 2.5%). Group operating losses
decreased to £515,660(increased to £1,079,505 in 2020) for the
current year. Included in the prior year’s group operating losses
is the impairment of the investment in AAA’s subsidiary, Dynamic,
amounting to £226,644, being a once off write off. Excluding the
impairment, normal operating losses for the year were £515,660
(2020: £852,861).
COVID-19 has had a devasting effect on
the world economy and social fabric. Although the company has been
affected by the pandemic, the effects have been minimised. There is
a concern however that the long term effects may be more than what
is currently being experienced.
As announced on 15 December 2021,
since the year end we have reached agreement with all of AAA’s
creditors. This has left the group with a cash balance currently in
excess of £0.4 million.
Andrew
Monk
Non-Executive Chairman
31st March
2022
Directors and Advisors
Directors: Robert
Scott
Andrew Monk
Matthew Bonner
Secretary:
Stephen Clow
Company
Number:
07913053
Registered
Address:
Park House
16-18 Finsbury Circus
London
EC2M 7EB
Head
Office
Park House
16-18 Finsbury Circus
London
EC2M 7EB
Financial Advisor and
Broker VSA Capital
Limited
Park House
16-18 Finsbury Circus
London
EC2M 7EB
Auditors
Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Solicitors to the
Company
Keystone Law
48
Chancery Lane
London
WC2A
1JF
Registrars
Neville Registrars Limited
Neville
House
Steelpark
Road
Halesowen
West Midlands
B63 3DA
Strategic Report
Overview
The primary objective of the strategic report is to provide
information for the shareholders and help them to assess how the
directors have performed their duty, under section 172 of the Act,
to promote the success of the Company and to provide context for
the related financial statements as well as assist them in their
decision making.
The duty of a director, as set out in section 172 of the Act, is
to act in the way he considers, in good faith, would be most likely
to promote the success of the company for the benefit of its
members, and in doing so have regard (amongst other matters)
to:
(a) the likely consequences of any decision in the long
term;
(b) the interests of the company's employees;
(c) the need to foster the company's business relationships with
suppliers, customers and others;
(d) the impact of the company's operations on the community and
the environment;
(e) the desirability of the company maintaining a reputation for
high standards of business conduct; and
(f) the need to act fairly as between members of the
company.
As a Board, we must always seek and be open to feedback from
anyone affected by our activities. This enables the Board to
understand the impact of its decisions on key stakeholders, but
also ensures that we are aware of any significant changes in the
market or the external environment, including the identification of
emerging risks, which can be fed into our strategy discussions and
our risk management process. The Board considers our strategic
stakeholders as follows:
Customers
We listened to our customers and endeavoured to supply them with
relevant product – this was particularly true throughout the crisis
where not only did we supply relevant products but also in line
with safety protocols as recommended by the Government Health
Department.
Suppliers
We have worked with a number of our suppliers for many years,
and any loss of our sales or product mix impacts their business. We
communicated to them where possible to reduce the impact on their
businesses.
Shareholders and Lenders
We have a clear responsibility to engage with shareholders and
lenders of our business and their views are an important driver of
our strategy. We keep our shareholders regularly informed while
lenders receive quarterly updates on the performance of the
organisation.
Staff
During the year under review and in particular during the
pandemic, Dynamic Intertrade endeavoured to keep its staff fully
employed although operating times were erratic due to supply chain
disruptions. We managed to do this, however in order to ensure we
are competitive we underwent a s189 review of staffing efficiencies
at our subsidiary during the year. This is now completed.
During the year under review the group had 20 staff and
directors. The company had 3 male directors. The subsidiary had 2
female and 2 male directors of which 1 male director was a director
of both. The subsidiary had 7 female and 6 male staff.
Social, community and human rights
issues
The company and its subsidiary comply with all national and
international laws and regulations pertaining to human rights and
social interaction. Additionally, the South African subsidiary is
ensuring, where possible, with BBBEE which aims to address the
social, community and economic issues within the South African
context.
Review of the Group’s Business
Dynamic Intertrade (Pty) Ltd (“Dynamic”) is based in
Cape Town, South Africa and is
involved in the importation, milling, blending and packaging of
products that include herbs, spices, seasonings and confectionary
for the domestic market.
Dynamic recorded a 20.8% reduction in top line revenue to £1.4
million (2020: a decrease of 2.5% to £1.77 million). The required
product mix changed and lower margin commodities saw general price
increases which could not be passed on to customers for our core
spice lines of commodity paprika and chilli-based products as well
as our value-added blended products. In addition, our major
customers had a reduction in their fish supplies which affected
production, and hence purchases, negatively for a number of months
during the year under review.
Gross profits decreased by 10.3% to £379,804 (ZAR7.7 million) for the current year (2020: a
decrease of 29.3% to £423,509 (ZAR8.8
million)) and represents a 27.05% gross margin (2020:
23.9%).
Operating losses for the year decreased to £515,660 from
£1,079,505 in 2020.
Basic and diluted loss per share from continuing operations for
the year was 2.66p (2020: 5.16p).
Financing
During the year under review, the Company issued no new ordinary
shares (2020: Nil).
Acquisition Strategy
The Directors continue to evaluate potential acquisition targets
and mergers that would create a sustainable platform for the
Group.
Key Performance Indicators
|
31
October |
31
October |
|
2021 |
2020 |
|
£ |
£ |
|
Turnover |
1,404,234 |
1,773,710 |
| Gross
Profit |
379,804 |
423,509 |
| Cash on
hand and in bank |
1,109,774 |
45,251 |
|
Underlying operating loss |
(515,660) |
(1,079,505) |
|
|
|
Principal Risks and Uncertainties
The Directors consider the following risk factors to be of
relevance to the Group’s activities. It should be noted that the
list is not exhaustive and that other risk factors not presently
known or currently deemed immaterial may apply. The risk factors
are summarised below:
i.
Development Risk
The Group’s development will be, in part, dependent on the
ability of the Directors to continue to improve the current
business, to identify suitable investment opportunities and to
implement the Group’s strategy. There is no assurance that the
Group will be successful in acquiring suitable investments.
ii. Sector
Risk
The agriculture and agri-processing sectors are highly
competitive markets and many of the competitors will have greater
financial and other resources than the Company and as a result may
be in a better position to compete for opportunities.
The development of these enterprises involves significant
uncertainties and risks including unusual climatic conditions such
as drought, improper use of pesticides, availability of labour and
seasonality of produce, any one of which could result in security
of supply, damage to, or destruction of crops, environmental damage
or pollution. Each of these could have a material adverse impact on
the business, operations and financial performance of the
Group.
The market price of agricultural products and crops is volatile
and affected by numerous factors which are beyond the Group’s
control. These include international supply and demand, the
level of consumer product demand, international economic trends,
currency exchange rate fluctuations, the level of interest rates,
the rate of inflation, global or regional political events, as well
as a range of other market forces. Sustained downward movements in
agricultural prices could render less economic, or un-economic, any
development or investing activities to be undertaken by the Group.
Certain agricultural projects involve high capital costs and
associated risks. Unless such projects enjoy long term returns,
their profitability will be uncertain resulting in potentially high
investment risk.
iii. Political and
Regulatory Risk
African countries experience varying degrees of political
instability. There can be no assurance that political stability
will persist in those countries where the Group may have operations
going forward. In the event of political instability or changes in
government policies in those countries where the Group may operate,
the operations and financial condition of the Group could be
adversely affected.
iv. Environmental
Risks and Hazards
All phases of the Group’s operations are subject to
environmental regulation in the areas in which it operates.
Environmental legislation is evolving in a manner that may require
stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for
companies and their officers, directors and employees.
There is no assurance that existing or future environmental
regulation will not materially adversely affect the Group’s
business, financial condition and results of operations.
Environmental hazards may exist on the properties on which the
Group holds interests that are unknown to the Group at present. The
Board manages this risk by working with environmental consultants
and by engaging with the relevant governmental departments and
other concerned stakeholders.
v.
Internal Control and Financial Risk Management
The Board has overall responsibility for the Group’s systems of
internal control and for reviewing their effectiveness. The Group
maintains systems which are designed to provide reasonable but not
absolute assurance against material loss and to manage rather than
eliminate risk.
- The key features of the Group’s systems of internal control are
as follows:
- Management structure with clearly identified
responsibilities;
- Production of timely and comprehensive historical management
information presented to the Board;
- Detailed budgeting and forecasting;
- Day to day hands on involvement of the Executive Director and
Senior Management; and
- Regular board meetings and discussions with the Non-executive
directors.
The Group’s activities expose it to several financial risks
including cash flow risk, liquidity risk and foreign currency
risk.
vi. Environmental
Policy
The Group is aware of the potential impact that its subsidiary
and associate companies may have on the environment. The Group
ensures that it complies with all local regulatory requirements and
seeks to implement a best practice approach to managing
environmental aspects.
The wholly owned subsidiary, Dynamic Intertrade operates a Food
Safety System Certification (“FSSC”) compliant facility in
Cape Town. The FSSC provides a
framework for effectively managing the organization's food safety
responsibilities and is fully recognized by the Global Food Safety
Initiative (GFSI) and is based on existing ISO Standards.
vii.Health and Safety
The Group’s aim is to achieve and maintain a high standard of
workplace safety. In order to achieve this objective, the Group
provides ongoing training and support to employees and sets
demanding standards for workplace safety.
viii. Financing Risk
The development of the Group’s business may depend upon the
Group’s ability to obtain financing primarily through the raising
of new equity capital or debt. The Group’s ability to raise further
funds may be affected by the success of existing and acquired
investments. The Group may not be successful in procuring the
requisite funds on terms which are acceptable to it (or at all)
and, if such funding is unavailable, the Group may be required to
reduce the scope of its investments or the anticipated expansion.
Further, Shareholders’ holdings of Ordinary Shares may be
materially diluted if debt financing is not available.
ix. Credit Risk
The directors have reviewed the forecasts prepared by both AAA
and Dynamic and believe that Dynamic has adequate resources
available to meet its obligations to make capital repayments of the
loan to AAA.
If Dynamics’ trading performance is below that forecast, AAA
will exercise a degree of flexibility on the repayment timetable.
With the Dynamic turnover increasing and the Group forecasting
profitability there is no requirement for any impairment
charge.
x.
Liquidity Risk
The Directors have reviewed the working capital requirements of
AAA and Dynamic Intertrade and believe that, following stress tests
and variance analysis on the forecasts, there is sufficient working
capital to fund the business while expanding turnover and achieving
sustainable profitability. The directors further highlight the
inherent uncertainties involved in making the assessment that the
entity is a going concern.
xi.Capital Risk
The Group manages its capital resources to ensure that entities
in the Group will be able to continue as a going concern, while
maximising shareholder return.
The capital structure of the Group consists of equity
attributable to shareholders, comprising issued share capital and
reserves. The availability of new capital will depend on many
factors including a positive operating environment, positive stock
market conditions, the Group’s track record, and the experience of
management. There are no externally imposed capital requirements.
The Directors are confident that adequate cash resources exist or
will be made available to finance operations and controls over
expenditure are carefully managed.
xii.COVID-19 Risk
The group has assessed the impact that the global COVID-19
pandemic has had on its operations. As stated above, the group
supplies spices and spice blends to the food industry. The factory
complies with FSSC requirements and as a result staff wear, as a
matter of course, masks and sanitise regularly, and hence the
COVID-19 preventative measures have been adhered to. The
majority of its customers supply their products to the lower end of
the consumer spectrum. Based on the directors’ assessment, the
products that it supplies form an essential component of the
flavour profile that the end consumers prefer to consume. Based on
the group’s assessment of the associated risks, the risks
associated with the pandemic are as follows: 1) the risk that the
gross margin will be squeezed, due to our customers’ inability to
pass on or absorb price increases; and 2) the risk that the end
consumer will not be able to afford the prepacked flavoured food
which could lead to our customers having an over-supply of our
spices and spice blends.
To manage the above risks, management are in regular contact
with our customers and are actively exploring new markets and
customers in order to diversify these risks.
Going Concern
These consolidated financial statements are prepared on the
going concern basis. The going concern basis assumes that the Group
will continue in operation for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of business. The Group has
incurred significant operating losses and negative cash flows from
operations during the year under review.
During the year, the Group raised additional equity funding of
Nil (2020: £102,676) in gross funding through share subscriptions
to fund working capital.
The directors have agreed to defer the payment of their
directors fees until such time that the company is in a position to
pay such fees without affecting its ability to pay current
liabilities as they become due and without affecting its ability to
support Dynamic Intertrade (Pty) Ltd, given the potential for
future cashflow deficits. The Directors have prepared cash flow
forecasts, which include several cost saving initiatives undertaken
and the appointment of a chief executive officer, for the period
ended 31 March 2023. These forecasts
consider operating cash flows and capital expenditure requirements
for the Company and Dynamic Intertrade, available working capital
and forecast expenditure, including overheads and other costs. As
in prior years, in the event that additional funding is required,
the directors have agreed to participate in any fund raises that
may be necessary at the time. Based upon the company’s forecast, it
has sufficient cash for the foreseeable future.
If Dynamic Intertrade fails to meet revenue predictions and any
other relevant risk factors arise, the Group will need to obtain
additional debt finance or equity to fund its operations for the
period to 31 March 2023. The cash
flow forecast is dependent on production targets being met at
Dynamic Intertrade, maintaining the invoice financing arrangements,
generating future sales and the selling prices remaining stable
during the period to 31 March
2023.
After careful consideration of the matters set out above, the
Directors are of the opinion that the Group will be able to
undertake its planned activities for the period to 31 March 2023 from production and from additional
fund raising and have prepared the consolidated financial
statements on the going concern basis. Nevertheless, due to the
uncertainties inherent in meeting its revenue predictions and
obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any
adjustments that would result if the Group was unable to continue
as a going concern. For this reason, the directors believe that
there is a material uncertainty relating to the group’s going
concern.
As at year end, the transaction to acquire the port and marine
assets of the Comarco Group had been terminated and the loan
advanced to the Comarco Group and the interest charged thereon had
been repaid by in full. It the intention of the directors to look
for acquisitions to make the company more sustainable.
On behalf of the Board
Andrew Monk, Chairman
31st March 2022
The Directors present their Report and Financial Statements for
the year ended 31 October 2021.
Principal Activities
The principal activity of the Group in the year was investing
and trading in the agriculture and ancillary sectors in
Africa.
Emissions
The group is not an intensive user of fossil fuels or
electricity. During the year Dynamic Intertrade consumed an average
of 8,418 kwh (2020: 19,432kwh) per month based on using actual
charges levied by the Cape Town City Council. As per the University
of Cape Town’s assessment of the South African average of
1.015kg/kwh, the group contributed 102,539kg (2020: 236,682kg) of
carbon emissions during the financial year. Due to the nature of
the business, there is limited scope to reduce emissions materially
as all power is sourced from the Cape Town City Council. There were
no operations in the UK and as such no emissions in the UK.
Investing Policy
AAA was established to invest in or acquire companies engaged in
the agriculture and ancillary sectors in Africa. The Directors intend to use their
collective experience to identify appropriate investment
opportunities in the production, transportation and trading of food
products as well as ports and ancillary industries.
Directors
The following Directors have held office in the year:
David Lenigas (Resigned 31 July 2021)
Andrew
Monk
Robert
Scott
Matthew
Bonner
Andrew
Monk, Non-Executive Chairman
Andrew has a successful stock broking career spanning 38 years.
In that time, he has built up strong relationships with many major
UK institutions. He was employed by Hoare Govett ABN AMRO for 12
years before founding Oriel Securities as Joint CEO. Andrew later
became CEO of Blue Oar Plc, and Chief Executive of VSA Capital, an
investment banking and institutional broking firm.
Robert
Scott, Executive Director
Rob has over 20 years of finance experience, with the last
eleven years specifically focused in Africa within the mining industry and general
investments. He has held executive and senior positions with
several companies, as well as having served on both public and
private company boards. He has been involved in companies with
locations in South Africa,
Angola, Mozambique, Zimbabwe, DRC, CAR, Tanzania, Kenya and Namibia amongst others. Rob has also
previously been involved in mining, hotels, agriculture and
construction industries.
Matthew
Bonner, Non-Executive Director
Matthew Bonner has significant
financial leadership experience within the mining, energy and
agriculture sectors. He is currently Chief Operating Officer at EAS
Advisors LLC, a New York based
corporate advisory firm focused on supporting public and private
companies operating in the natural resource and commodity sectors
in emerging markets.
Directors’ remuneration, shareholding
and options
The Directors’ remuneration in the year ended 31 October 2021 is set out in note 8 of the
accounts. None of the directors receive share options, long term
incentives, bonus or the like as part of their remuneration
packages. Remuneration for all directors, both executive and
non-executive, is £1,000 per month. UK based directors have
statutory National Health Insurance and Pension contributions added
to their remuneration. There are no contracts in place for any of
the company directors.
Shareholding
As at 31st March 2022, the
Directors of the Company held the following shares:
|
2021 |
2021 |
2020 |
2020 |
|
Director |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
| David
Lenigas (resigned) |
1,119,403 |
5.77% |
1,119,403 |
5.77% |
| Andrew
Monk** |
1,106,338 |
5.04% |
1,106,338 |
5.04% |
| Robert
Scott |
213,231 |
0.97% |
213,231 |
0.97% |
| Matthew
Bonner |
165,891 |
0.76% |
165,891 |
0.76% |
** Andrew Monk’s entire shareholding is held within his SIPP
(Fitel Nominees Limited) and Hargreaves Hale Limited.
Share options and warrants
As at 31 October 2021 the
Directors share options and warrants were:
|
|
|
|
2021 |
|
|
|
|
Warrants @ 5p |
| Director |
|
|
|
(expiring
23 March 2023) |
| Andrew Monk |
|
|
|
4,240,000 |
| Robert Scott |
|
|
|
820,000 |
| Matthew Bonner |
|
|
|
840,000 |
|
|
|
|
5,900,000 |
|
|
|
|
|
|
2021 |
2021 |
2021 |
2021 |
|
Options
at 20p |
Options
@ 11p |
Warrants @ 20p |
Warrants @ 5p |
| Director |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
(expiring
24 July 2022) |
| Andrew Monk |
91,952 |
100,000 |
69,033 |
622,233 |
| Robert Scott |
50,000 |
- |
|
128,578 |
| Matthew Bonner |
180,000 |
- |
- |
128,578 |
|
321,952 |
100,000 |
69,033 |
879,389 |
|
|
|
|
|
|
2020 |
2020 |
2020 |
2020 |
|
Options
at 20p |
Options
@ 11p |
Warrants @ 20p |
Warrants @ 5p |
| Director |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
(expiring
5 September 2022) |
(expiring
24 July 2022) |
| Andrew Monk |
91,952 |
100,000 |
69,033 |
622,233 |
| Robert Scott |
50,000 |
- |
|
128,578 |
| Matthew Bonner |
180,000 |
- |
- |
128,578 |
|
321,952 |
100,000 |
69,033 |
879,389 |
The total warrants and share options outstanding at 31 October 2021 were 25,379,430 (2020:
13,319,430). Refer to note 24 for more detail.
Dividends
No dividends will be distributed for the current year (2020 -
nil).
Supplier Payment Policy
It is the Group’s payment policy to pay its suppliers in
conformance with industry norms. Trade payables are paid in a
timely manner within contractual terms, which is generally 30 to 45
days from the date an invoice is received.
Substantial Interests
The Group has been informed of the
following shareholdings that represent 3% or more of the issued
Ordinary Shares of the Company as at 31
October 2021:
|
2021 |
2021 |
2020 |
2020 |
|
Shareholder |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
|
|
|
|
|
| Barclays
Direct Investing Nominees Limited |
726,113 |
3.3% |
1,073,634 |
4.9% |
| CGWL
Nominees Limited |
1,256,338 |
5.7% |
1,256,338 |
5.7% |
|
Hargreaves Lansdown (Nominees) Limited |
1,121,892 |
5.1% |
726,935 |
3.3% |
| HSBC
Global Custody Nominee (Uk) Limited |
1,591,847 |
7.2% |
1,591,636 |
7.2% |
|
Interactive Investor Services Nominees Limited |
2,943,459 |
13.4% |
1,693,574 |
7.7% |
| JIM
Nominees Limited |
1,625,041 |
7.4% |
981,309 |
4.5% |
| Lynchwood
Nominees Limited |
5,150,000 |
23.4% |
5,150,000 |
23.4% |
| Mike
Joseph |
- |
0.0% |
750,000 |
3.4% |
| Pershing
Nominees Limited |
1,026,172 |
4.7% |
1,026,172 |
4.7% |
| Vidacos
Nominees Limited |
1,701,856 |
7.7% |
2,413,845 |
11.0% |
|
|
|
|
|
The Group has been informed of the
following shareholdings that represent 3% or more of the issued
Ordinary Shares of the Company as at 18th of
March 2022:
|
Substantial Interests as at 18 March 2022 |
|
|
|
Shareholder |
Shareholding |
Percentage of the Company’s Ordinary Share Capital |
| Barclays
Direct Investing Nominees Limited |
726,247 |
3.31% |
| CGWL
Nominees Limited |
1,356,338 |
6.17% |
|
Hargreaves Lansdown (Nominees) Limited |
1,167,851 |
5.32% |
| HSBC
Global Custody Nominee (Uk) Limited |
1,491,847 |
6.79% |
|
Interactive Investor Services Nominees Limited |
2,975,078 |
13.54% |
| JIM
Nominees Limited |
1,625,041 |
7.40% |
| Lynchwood
Nominees Limited |
5,150,000 |
23.45% |
| Pershing
Nominees Limited |
1,026,172 |
4.67% |
| Vidacos
Nominees Limited |
1,901,856 |
8.66% |
Auditors
Jeffreys Henry LLP has expressed its willingness to continue in
office and a resolution to reappoint them will be proposed at the
Annual General Meeting.
Statement of Directors’
Responsibilities
The Directors are responsible for preparing the Directors’
Report and the financial statements in accordance with applicable
law and regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards (IFRS)
as adopted for use in the United
Kingdom. Under company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the Company and the Group and of the profit
or loss of the Company and the Group for that year. In preparing
these financial statements, the Directors are required to:
- Select suitable accounting policies and then apply them
consistently;
- Make judgements and accounting estimates that are reasonable
and prudent;
- State whether the Group and Parent Company financial statements
have been prepared in accordance with IFRS as adopted by the
United Kingdom, subject to any
material departures disclosed and explained in the Financial
Statements;
- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are enough to show and explain the Group and Parent
Company's transactions, disclose with reasonable accuracy at any
time the financial position of the Company and the Group and enable
them to ensure that the financial statements comply with the
Companies Act 2006.
The Directors are responsible for safeguarding the assets of the
Group and Parent 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.
Statement of Disclosure to
Auditors
Each person who is a Director at the date of approval of this
Annual Report confirms that:
- So far as the Directors are aware, there is no relevant audit
information of which the Group and Parent Company’s auditors are
unaware;
- Each Director has taken all the steps he ought as Director, in
order to make himself aware of any relevant audit information and
to establish that the Group and Parent Company’s auditors are aware
of that information, and
- Each Director is aware of and concurs with the information
included in the Strategic Report.
Branches Outside the UK
The Group head office is in London and Dynamic Intertrade (Pty) Limited’s
office is located in South
Africa.
Events after the Reporting Period
Further information on events after the reporting date is set
out in note 33.
Strategic Report
In accordance with Section 414C (11) of
the Companies Act 2006, the group chooses to report the review of
the business, the outlook and the risk and uncertainties faced by
the Company in the Strategic Report on pages 5 to 10. The
directors’ assessment of the risks faced by the Group are set out
in the Strategic Report and in Note 30 to the financial
statements.
On Behalf of the Board
Andrew Monk, Chairman
31st March 2022
Directors’ Remuneration Report
Introduction
The information included in this report is not subject to audit
other than where specifically indicated.
Remuneration Committee
The remuneration committee consists of Andrew Monk and Matt
Bonner. This committee's primary function is to review the
performance of executive directors and senior employees and set
their remuneration and other terms of employment.
The committee is also responsible for administering any share
option schemes. The table indicates share options held by the
current directors, directors of the subsidiary and former directors
of the company.
|
2021 |
2021 |
2020 |
2020 |
|
Director |
Warrants |
Options |
Warrants |
Options |
| Andrew
Monk |
4,931,266 |
191,952 |
691,266 |
191,952 |
| Robert
Scott |
820,000 |
50,000 |
128,578 |
50,000 |
| Matthew
Bonner |
968,578 |
180,000 |
128,578 |
180,000 |
| David
Lenigas (resigned) |
1,060,000 |
- |
- |
- |
|
Totals |
7,779,844 |
421,952 |
948,422 |
421,952 |
The Company has one executive director.
The remuneration policy
It is the aim of the committee to remunerate executive directors
competitively and to reward performance. The remuneration committee
determines the company's policy for the remuneration of executive
directors, having regard to the UK Corporate Governance Code
2018.
Service agreements and terms of
appointment
The directors have service contracts with the company.
Directors' interests
The directors' interests in the share capital of the company are
set out in the Directors’ report.
Directors'
emoluments (Audited)
|
Salaries and Fees |
Group |
Group |
|
2021 |
2020 |
|
£ |
£ |
| David
Lenigas |
9,000 |
12,000 |
| Robert
Scott |
12,000 |
12,000 |
| Andrew Monk * |
13,966 |
13,896 |
| Matt Bonner |
12,000 |
12,000 |
|
46,966 |
49,896 |
* Included in Andrew Monk’s
remuneration is £1,966 (2020: £1,896) for National Insurance.
No pension contributions were made by the company on behalf of
its directors other than for Andrew
Monk.
At the year-end a total of £70,232 (2020: £194,266) was
outstanding in respect of directors’ emoluments.
Approval by shareholders
At the next annual general meeting of the company a resolution
approving this report is to be proposed as an ordinary
resolution.
This report was approved by the board on 31st March 2022.
On Behalf of the Board
Andrew Monk - Committee
Chairman
31st March 2022
Chairman’s Corporate Governance
Statement
The Directors recognise the importance of sound corporate
governance while taking into account the Group’s size and stage of
development. We recognise that we require the company to:
- provide details of a recognised corporate governance code that
the board of directors has decided to apply
- explain how the Company complies with that code, and where it
departs from its chosen corporate governance code provide an
explanation of the reasons for doing so.
The corporate governance disclosures need to be reviewed
annually, and the company is also required to state the date on
which these disclosures were last reviewed. This Chairman’s
Corporate Governance Statement sets out how Anglo African
Agriculture Plc seeks to comply with these requirements. The
Directors acknowledge that they have overall responsibility for the
Company’s system of internal control and for reviewing its
effectiveness. Such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives and
even the most effective system can provide only reasonable, and not
absolute, assurance with respect to the preparation of financial
information and the safeguarding of assets. The close involvement
of the Directors in all decisions and actions undertaken by the
Company is intended to ensure that the risks to the Company are
minimised.
Overview
As Chairman of the Board of Directors it is my responsibility to
ensure that the company has both sound corporate governance and an
effective Board. The company is listed on the main board of the
London Stock Exchange and its principal activity is as an investor
in the African continent. The Group is currently focused on
companies located in South
Africa.
The company’s Board has adopted the principles of the Quoted
Companies Alliance Corporate Governance Code 2018 Edition (QCA
Code) in accordance with the London Stock Exchange. The QCA Code
identifies ten principles to be followed in order for companies to
deliver growth in long term shareholder value, encompassing an
efficient, effective and dynamic management framework accompanied
by communication to promote confidence and trust. This report
follows the structure of these guidelines and explains how we have
applied the guidance as well as disclosing any areas of
non-compliance. We will provide annual updates on our compliance
with the QCA Code. The Board considers that the Group complies with
the QCA Code so far as it is practicable having regard to the size,
nature and current stage of development of the Company, and will
disclose any areas of noncompliance in the text below.
The sections below set out the ways in which the Group applies
the ten principles of the QCA Code in support of the Group’s medium
to long-term success.
Key governance changes during the year include the formal
adoption of the QCA Code.
QCA Principles
1) Establish a strategy and business
model which promotes long-term value for shareholders
Anglo African Agriculture Plc is an investment company focused
on opportunities principally in the African continent. The Company
currently has an investment in the food sector in South Africa.
The Company may exploit a wide range of investment opportunities
within the target Sectors as they arise and, to this end, the
Company has complete flexibility in selecting the specific
investment and trading strategies that it sees fit in order to
achieve its investment objective. In this regard, the Company may
seek to gain Board representation and/or managerial control in its
underlying investments if it deems to be the best way of generating
value for Shareholders. Opportunities will be chosen through a
careful selection process which will appraise both the fundamental
factors specific to the opportunity as well as wider economic
considerations. Typical factors that will be considered are the
strength of management, the quality of the asset base, the
investment’s scale and growth potential, the commodity price
outlook, any geopolitical concerns, the underlying financial
position, future working capital requirements as well as potential
exit routes. Investments may be in the form of buy-outs,
controlling positions (whether initially or as a result of
additional or follow-on investments) or strategic minority
investments. There is no fixed limit on the number of projects or
companies into which the Company may invest, nor the proportion of
the Company’s gross assets that any investment may represent at any
time. No material change will be made to the Company’s investing
policy without the approval of Shareholders.
Challenges to delivering strategy, long-term goals and capital
appreciation are uncertain in relation to organisational,
operational, financial and strategic risks, all of which are
outlined in the Strategic Report on pages 7 - 9, as well as steps
the Board takes to protect the Company by mitigating these risks
and secure a long-term future for the Company.
2) Seek to understand and meet
shareholder needs and expectations
The Board recognises the importance of communication with its
stakeholders and is committed to establishing constructive
relationships with investors and potential investors in order to
assist it in developing an understanding of the views of its
shareholders. The Company also maintains a dialogue with
shareholders through formal meetings such as the AGM, which
provides an opportunity to meet, listen and present to
shareholders, and shareholders are encouraged to attend in order to
express their views on the Company’s business activities and
performance. Members who have queries regarding the Company’s AGM
can contact the Company’s Registrars, Neville Registrars or the
Company Secretary. The Board welcomes feedback from key
stakeholders and the Chairman of the Board is the shareholder
liaison, who meets shareholders regularly, and informs other
directors of their views and suggestions. Analysts provide the
Board with updates on the Company’s business and how strategy is
being implemented, as well as to hear views and expectations from
shareholders. The views of the shareholders expressed during these
meetings are reported to the Board, ensuring that all members of
the Board are fully aware of the thoughts and opinions of
shareholders. The Company maintains effective contact with its
principal shareholders and welcomes communications from its private
investors. Information on the Investor Relations section of the
Company’s website is kept updated and contains details of relevant
developments, Annual and Interim Results, Regulatory News Service
announcements, presentations and other key information.
3) Take into account wider stakeholder
and social responsibilities and their implications for long-term
success
The Board recognises that the long-term success of the Company
is reliant upon the efforts of employees, regulators and many other
stakeholders. The Board has put in place a range of processes and
systems to ensure that there is close oversight and contact with
its key resources and relationships. The Company prepares and
updates its strategic plan regularly together with a detailed
rolling budget and financial projections which consider a wide
range of key resources including staffing, consultants and utility
providers. The Board is kept updated on questions / issues raised
by stakeholders and incorporates information and feedback into
future decision making. Anglo African Agriculture Plc fully abides
by the provisions of the 2015 Modern Slavery Act. In accordance
with its Code of Business Conduct and Ethics, the Company opposes
the crime of slavery in all of its forms, including child labour,
servitude, forced or compulsory labour and human trafficking.
All employees within the Group are valued members of the team,
and the Board seeks to implement provisions to retain and
incentivise all its employees. The Group offers equal opportunities
regardless of race, gender, gender identity or reassignment, age,
disability, religion or sexual orientation. The directors are in
constant contact with employees and seek to provide continual
opportunities in which issues can be raised allowing for the
provision of feedback. This feedback process helps to ensure that
new issues and opportunities that arise may be used to further the
success of the Company. Share options and other equity incentives
are offered to employees. The Company complies fully with all
employment legislation where it has operations.
4) Embedded effective risk management,
considering both opportunities and threats, throughout the
organisation
The Board recognises the need for an effective and well-defined
risk management process and it oversees and regularly reviews the
current risk management and internal control mechanisms. The Board
regularly reviews the risks facing the Company as detailed in the
Strategic Report and seeks to exploit, avoid or mitigate those
risks as appropriate. The Board is responsible for the monitoring
of financial performance against budget and forecast and the
formulation of the Company’s risk appetite including the
identification, assessment and monitoring of the Company’s
principal risks. Additionally, the Board reviews the mechanisms of
internal control and risk management it has implemented on an
annual basis and assesses both for effectiveness. On the wider
aspects of internal control, relating to operational and compliance
controls and risk management, the Board, in setting the control
environment, identifies, reviews, and regularly reports on the key
areas of business risk facing the Group.
The Group Board and subsidiary Boards maintain close day to day
involvement in all of the Group’s activities which enables control
to be achieved and maintained. This includes the comprehensive
review of both management and technical reports, the monitoring of
interest rates, environmental considerations, government and fiscal
policy issues, employment and information technology requirements
and cash control procedures. In this way, the key risk areas can be
monitored effectively, and specialist expertise applied in a timely
and productive manner.
The effectiveness of the Group’s system of internal financial
controls, for the year to 31 October
2021 and for the period to the date of approval of the
financial statements, has been reviewed by the Directors. Whilst
they are aware that although no system can provide for absolute
assurance against material misstatement or loss, they are satisfied
that effective controls are in place.
5) Maintain the Board as a
well-functioning, balanced team led by the Chair
The Board recognises the QCA recommendation for a balance
between Executive and Non-Executive Directors and the
recommendation that there be at least two Independent
Non-Executives. The Board currently comprises of one Executive
Director, two Non-Executive Directors and one Non-Executive
Chairman. The Board will take this into account when considering
future appointments. However, all Directors are encouraged to use
their judgement and to challenge matters, whether strategic or
operational, enabling the Board to discharge its duties and
responsibilities effectively. The Board maintains that the Board’s
composition will be frequently reviewed as the Company develops.
The Company is small and as a result has an audit and risk
committee and a remuneration and nominations committee. It is not
deemed appropriate to have more committees.
The Group is controlled and led by the Board of Directors with
an established schedule of matters reserved for their specific
approval. The Board meets regularly throughout the year and is
responsible for the overall Group strategy, acquisition and
divestment policy, approval of major capital expenditure and
consideration of significant financial matters. It reviews the
strategic direction of the Company and its individual subsidiaries,
their annual budgets, their progress towards achievement of these
budgets and their capital expenditure programmes. The role of the
Chairman is to supervise the Board and to ensure its effective
control of the business, and that of the Executive Director is to
manage the Group on the Board’s behalf. All Board members have
access, at all times, to sufficient information about the business,
to enable them to fully discharge their duties. Also, procedures
exist covering the circumstances under which the Directors may need
to obtain independent professional advice. The Board meets
regularly and is responsible for formulating, reviewing and
approving the Group’s strategy, budgets, performance, major capital
expenditure and corporate actions. Detailed biographies of the
Board members can be found on the website and summaries can be
found on page 11.
Throughout the year, there have been four Board meetings, with
all meetings being quorate. The Directors of the Company are
committed to sound governance of the business and each devotes
enough time to ensure this happens.
Directors’ conflict of interest
The Board is aware of the other commitments and interests of its
Directors, and changes to these commitments and interests are
reported to and, where appropriate, agreed with the rest of the
Board.
6) Ensure that between them the
Directors have the necessary up-to-date experience, skills and
capabilities
The Company believes that the current balance of skills in the
Board as a whole reflects a very broad range of personal,
commercial and professional skills, and notes the range of
financial and managerial skills. The Non-Executive Directors
maintain ongoing communications with the Executive between formal
Board meetings. Biographical details of the Directors can be found
on the Company’s website and in the Directors’ Report of this
report.
Stephen Clow is the Company
Secretary and helps the Company comply with all applicable rules,
regulations and obligations governing its operation. The
company can also draw on the advice of its solicitors and corporate
and financial advisors – VSA Capital. The Directors have access to
all advisors, Company Secretary, lawyers and auditors as and when
required and are able to obtain advice from other external bodies
when necessary. If required, the Directors are entitled to take
independent legal advice and if the Board is informed in advance,
the cost of the advice will be reimbursed by the Company. Board
composition is always a factor for consideration in relation to
succession planning. The Board will seek to consider any Board
imbalances for future nominations, with areas considered including
board independence and gender balance. The Group considers however
that at this stage of its development and given the current size of
its Board, it is not necessary to establish a formal Nominations
Committee. Instead, the appointments to the Board are made by the
Board as a whole and this position is reviewed on a regular basis
by the Board.
7) Evaluate Board performance based on
clear and relevant objectives, seeking continuous improvement
The Directors consider that the Company and Board are not yet of
a sufficient size for a full Board evaluation to make commercial
and practical sense. In the frequent Board meetings/calls, the
Directors can discuss any areas where they feel a change would
benefit the Company, and the Company Secretary remains on hand to
provide impartial advice. As the Company grows, it expects to
expand the Board and with the Board expansion, re-consider the need
for Board evaluation. The Board continues to conduct internal and
external Board evaluations which consider the balance of skills,
experience, independence and knowledge of the Company. The
evaluation process, the Board refreshment, use of third-party
search companies and succession planning elements are discussed.
The Board evaluation of the Executives’ performance is carried out
on a regular basis. Given the level of activity and size of the
Company, no other evaluation is seen as appropriate. In view of the
size of the Board, the responsibility for proposing and considering
candidates for appointment to the Board as well as succession
planning is retained by the Board. All Directors submit themselves
for re-election at the AGM at regular intervals.
8) Promote a corporate culture that is
based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and
risk will impact the corporate culture of the Company as a whole
and that this will impact the performance of the Company. The Board
is aware that the tone and culture set by the Board will greatly
impact all aspects of the Company as a whole and the way that
employees behave. The corporate governance arrangements that the
Board has adopted are designed to ensure that the Company delivers
long term value to its shareholders, and that shareholders have the
opportunity to express their views and expectations for the Company
in a manner that encourages open dialogue with the Board.
Therefore, the importance of sound ethical values and behaviours is
crucial to the ability of the Company to successfully achieve its
corporate objectives. The Board places great importance on their
responsibility for producing accurate financial statements. The
Board also places great importance on accuracy and honesty and
seeks to ensure that this aspect of corporate life flows through
all that the Company does. A large part of the Company’s activities
is centred upon an open and respectful dialogue with employees,
clients and other stakeholders. Therefore, the importance of sound
ethical values and behaviours is crucial to the ability of the
Company to successfully achieve its corporate objectives. The
Directors consider that the Company has an open culture
facilitating comprehensive dialogue and feedback and enabling
positive and constructive challenge. Whilst the Company has a small
number of employees, the Board maintains that as the company grows
it intends to maintain and develop strong processes which promote
ethical values and behaviours across all hierarchies.
The Board has adopted an anti-corruption and bribery policy
(Bribery Policy). The Bribery Policy applies to all Directors and
employees of the Group, and sets out their responsibilities in
observing and upholding a zero-tolerance position on bribery and
corruption, as well as providing guidance to those working for the
Company on how to recognise and deal with bribery and corruption
issues and the potential consequences.
The Board complies with Rules relating to dealings in the
Company’s securities by the Directors and other Applicable
Employees. To this end, the Company has adopted a code for
Directors’ dealings appropriate for a company whose shares are
admitted to trading on LSE and takes all reasonable steps to ensure
compliance by the Directors and any relevant employees.
9) Maintain governance structures and
processes that are fit for purpose and support good decision-making
by the Board
The Board is committed to, and ultimately responsible for, high
standards of corporate governance. The Board reviews the Company’s
corporate governance arrangements regularly and expect to evolve
this over time, in line with the Company’s growth.
The Board delegates responsibilities to Committees and
individuals as it sees fit.
The Chairman’s principal responsibilities are to ensure that the
Company and its Board are acting in the best interests of
shareholders.
His leadership of the Board is undertaken in a manner which
ensures that the Board retains integrity and effectiveness and
includes creating the right Board dynamic and ensuring that all
important matters, in particular strategic decisions, receive
adequate time and attention at Board meetings.
The Chairman of Anglo African Agriculture is the key contact for
shareholder liaison and all other stakeholders.
The Executive Director is responsible for the general day-to-day
running of the business and developing corporate strategy.
The Executive Director has, through powers delegated by the
Board, the responsibility for leadership of the management team in
the execution of the Group’s strategies and policies and for the
day-to-day management of the business. He is responsible for the
general day-to-day running of the business and developing corporate
strategy while the Non-Executive Directors are tasked with
constructively challenging the decisions of executive management
and satisfying themselves that the systems of business risk
management and internal financial controls are robust.
All Directors participate in the key areas of decision-making,
including the following matters:
- Strategy
- Budgets
- Performance
- Major Capital Expenditure
- Corporate Actions
The Board would normally delegate authority to a number of
specific Committees to assist in meeting its business objectives,
and the Committees, comprising of at least two independent
Non-Executive Directors, would meet independently of Board
meetings.
However, the current Board structure does not permit this, and
the Directors will seek to take this into account when considering
future appointments. As a result, matters that would normally be
referred to the Nominations Committee are dealt with by the
Remuneration Committee.
The Chairman and the Board continue to monitor and evolve the
Company’s corporate governance structures and processes, and
maintain that these will evolve over time, in line with the
Company’s growth and development.
10) Communicate how the company is
governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Board is committed to maintaining effective communication
and having constructive dialogue with its stakeholders. The Company
intends to have ongoing relationships with both its private and
institutional shareholders (through meetings and presentations),
and for them to have the opportunity to discuss issues and provide
feedback at meetings with the Company. In addition, all
shareholders are encouraged to attend the Company’s Annual General
Meeting. The Board already discloses the result of General Meetings
by way of announcement and discloses the proxy voting numbers to
those attending the meetings. In order to improve transparency, the
Board has committed to publishing proxy voting results on its
website in the future.
The Company communicates with shareholders through the Annual
Report and Accounts, full-year and half-year results announcements
and the Annual General Meeting (AGM). Information on the Investor
Relations section of the Group’s website is kept updated and
contains details of relevant developments, regulatory
announcements, financial reports and shareholder circulars. A range
of corporate information (including all Company announcements and
presentations) is also available to shareholders, investors and the
public on the Company’s corporate website.
Shareholders with a specific enquiry can contact us on the
website contact page. The Company uses electronic communications
with shareholders in order to maximise efficiency.
On behalf of the Board
Andrew Monk, Chairman
31st March 2022
Corporate Governance Report
Introduction
The Board continues to recognise that an effective governance
framework is fundamental in ensuring that the Group’s ability to
deliver long term shareholder value. The Group continues to apply
the principles and is compliant with the provisions of the UK
Corporate Governance 2018.
Board composition
It is critical that the Board has the right composition, so it
can provide the best possible leadership for the Group and
discharge its duties to shareholders. This includes the right
balance of skills and experience, ensuring that all directors have
a good working knowledge of the Group’s business and that the Board
retains its independence and objectivity.
The board currently comprises of two non-executive directors and
one executive director. Andrew Monk
was appointed chairman on 31 July
2021.
The articles of association require a third, but not greater
than a third, of the directors to retire by rotation each year.
There are regular board meetings each year and other meetings
are held as required to direct the overall company strategy and
operations. Board meetings follow a formal agenda covering matters
specifically reserved for decision by the board. These cover key
areas of the company's affairs including overall strategy,
acquisition policy, approval of budgets, major capital expenditure
and significant transactions and financing issues.
During the year there were four Board meetings that were held.
The previous Chairman excused himself for three meetings and other
than this all meetings were attended by the full Board. All
meetings were quorate
The Board has delegated certain responsibilities, within defined
terms of reference, to the audit committee and the remuneration
committee as described below. The appointment of new directors is
made by the board as a whole. During the year ended 31 October 2021, there were four Board meetings,
two audit committee meeting and one remuneration committee meeting.
Not all meetings were fully attended however each was quorate.
The Board undertakes a formal annual evaluation of its own
performance and that of its committees and individual directors,
through discussions and one-to-one reviews.
Board effectiveness
The Board is unanimous in its view that the Board appointments
have a range of experience, skills and strength of leadership. The
Company’s procedures for new directors include undergoing a full
induction process, and will continue with ongoing training,
tailored to their knowledge and previous experience. A short
biography of all Directors can be found in the Directors’ Report
herein.
Shareholder engagement
As Chairman, I am responsible for the effective communication
between shareholders and the Company and for ensuring the Board
understands the views of major shareholders.
I look forward to listening to the views of our shareholders at
the Company’s 2021 AGM. Directors regularly meet with a cross
section of the Company shareholders to ensure an ongoing dialogue
is maintained and report to the Board on feedback received from
shareholders. I also make myself available to meet any of our
shareholders who wish to discuss matters regarding the Company.
An investor relations report is part of our regular Board
meetings.
Audit committee
The audit committee is currently headed by Andrew Monk, the Chairman, and comprises
Robert Scott and Matthew Bonner. The committee's terms of
reference are in accordance with the UK Corporate Governance Code.
The committee reviews the company's financial and accounting
policies, interim and final results and annual report prior to
their submission to the board, together with management reports on
accounting matters and internal control and risk management
systems. It reviews the auditor’s management letter and considers
any financial or other matters raised by both the auditors and
employees.
The committee considers the independence of the external
auditors and ensures that, before any non-audit services are
provided by the external auditors, they will not impair the
auditor’s objectivity and independence. During the year, non-audit
services totalled £Nil (2020: £800).
There is currently no internal audit function within the Group.
The directors consider that this is appropriate of a Group of this
size.
The committee has primary responsibility for making
recommendations to the board in respect of the appointment,
re-appointment and removal of the external auditors.
On Behalf of the Board
Andrew Monk, Chairman
31st March 2022
Independent Auditor’s Report
Independent auditor’s report to the
members of Anglo African Agriculture Plc
Opinion
We have audited the financial statements of Anglo African
Agriculture Plc (the ‘parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 October
2021 which comprise the Group and Company statements of
comprehensive income, statements of changes in equity, statements
of financial position, statements of cash flows and notes to the
financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied
in the preparation of the Group and Parent Company financial
statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the United Kingdom.
In our opinion:
- the financial statements give a true and fair view of the state
of the Group’s and of the parent Company’s affairs as at
31 October 2021 and of the Group’s
and parent Company’s loss for the year then ended;
- the Group and Parent Company financial statements have been
properly prepared in accordance with IFRSs as adopted by the
United Kingdom;
- the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going
concern
We draw attention to note 2a in the financial statements, which
explains that the Group has incurred significant operating losses
and negative cash flows from operations. The Group forecasts
indicate that no additional funding will be required and that
sufficient cash should be available for the following 12 months to
settle all working capital requirements. In the event that Dynamic
Intertrade fails to meet its revenue predictions, the Group will
need to obtain additional debt or equity financing in order to fund
its operations for at least the next twelve months. Furthermore,
the directors have agreed to defer the payment of their fees until
such time that the company is in a position to pay such fees
without affecting its ability to pay current liabilities as become
due and without affecting its ability to support its subsidiary,
Dynamic Intertrade (Pty) Ltd, given the potential for future
cashflow deficits. These events or conditions, along with other
matters as set out in note 2a indicate that a material uncertainty
exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Our opinion is not modified in respect
of this matter.
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the entity’s ability to
continue to adopt the going concern basis of accounting
included:
- a review of management’s budgets and cashflow forecasts for the
12 months from proposed sign off date;
- a review of the inputs and assumptions utilised in the budgets
and cashflow forecasts taking into account our knowledge of the
group and its levels of operating cashflows;
- obtaining signed salary deferral letters from the directors of
the Company to ensure the Group maintains a positive cashflow
balance;
- stress testing of the forecasted cashflows and comparison to
actual result post year-end to date;
- a review of the cash balances held by the group at year end
date and at sign-off date.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our audit approach
Overview
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit:
- Recoverability of the long-term loans
- Carrying value of the long-term investment
These are explained in more detail below.
Audit scope
- We conducted audits of the complete financial information of
Anglo African Agriculture Plc, Dynamic Intertrade (Pty) Limited and
Dynamic Intertrade Agri (Pty) Limited;
- We performed specified procedures over certain account balances
and transaction classes at other Group companies.
- Taken together, the Group companies over which we performed our
audit procedures accounted for 100% of the absolute profit before
tax (i.e. the sum of the numerical values without regard to whether
they were profits or losses for the relevant reporting units) and
100% of revenue.
Key audit matters
| Key audit matter |
How our audit addressed the key audit
matter |
Carrying value of the long-term loans (Group &
Parent)
The Company had long term loans owed of £1,002,918 at the year
ended 31 October 2021. (31 October 2020: £884,651).
The Directors have confirmed the loans are all treated as long
term, with flexible repayment terms, with interest all rolled up
and included in any repayment due.
The Company had a long-term loan to Dynamic Intertrade (Pty)
Limited of £504,820 and interest of accrued of £137,541 (31 October
2020: £415,000 and interest accrued of £109,094) at the year ended
31 October 2021.
The Company had a short-term loan to Dynamic Intertrade Limited of
£360,557 (31 October 2020: £360,557) at the year ended 31 October
2021.
Upon review, both intercompany loans and interest have been
impaired, and a corresponding provision has been made against these
balances.
The Group and Company had a loan to Touchwood Investments Limited
of £nil (31 October 2020: £994,729) at the year ended 31 October
2021 – this loan was fully repaid during the year. |
The analysis work undertaken by the directors shows that the
subsidiary is not expected to remain cash generative and profitable
based on their current business, thus a full impairment was
considered appropriate. We have understood and assessed the
methodology used by the directors in this analysis and determined
it to be reasonable.
We reviewed the component auditor’s working papers and carried out
additional testing on high-risk areas.
Touchwood Investments Limited, also known as the Comarco Group,
operates a port in Mombasa. The Comarco Group has fully repaid the
loan to The Company before the year end.
We have confirmed the interest has been accrued correctly and
agreed the loan to the signed agreement. |
Carrying value of the long-term investment (Parent)
During the year the Company had Investment in subsidiary of £nil
(31 October 2020: £71,271).
The directors have assessed whether the investment shows any
indicators of impairment – the investment has been fully impaired
in the current year. |
We have reviewed the financials of the subsidiary and having
reviewed the performance to date alongside previously forecasted
profits, the subsidiary is not performing as expected and is loss
making.
We reviewed the latest management accounts post-year end for the
subsidiary and agree with management’s decision to fully impair
this investment. |
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
|
Group financial statements |
Company financial statements |
| Overall materiality |
£24,600 (31 October 2020:
£83,000). |
£22,200 (31 October 2020:
£56,000). |
| How we determined it |
Based on 10% of loss before tax |
Based on 10% of loss before
tax. |
Rationale for
benchmark applied |
We believe that loss before tax is a
primary measure used by shareholders in assessing the performance
of the Group. |
We believe that loss before tax is a
primary measure used by shareholders in assessing the performance
of the Company. |
For each component in the scope of our Group audit, we allocated
a materiality that is less than our overall Group materiality. The
range of materiality allocated across components was between
£14,000 and £22,200.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above £1,230 (Group
audit) (31 October 2020: £4,150) and
£1,110 (Company audit) (31 October
2020: £2,800) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
An overview of the scope of our
audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group and the Company, the accounting processes and controls, and
the industry in which they operate.
The Group financial statements are a consolidation of 3
reporting units, comprising the Group’s operating businesses and
holding companies.
We performed audits of the complete financial information of
Anglo African Agriculture Plc and Dynamic Intertrade (Pty) Limited
reporting units, which were individually financially significant
and accounted for 100% of the Group’s revenue and 100% of the
Group’s absolute profit before tax (i.e. the sum of the numerical
values without regard to whether they were profits or losses for
the relevant reporting units). We also performed specified audit
procedures over certain account balances and transaction classes
that we regarded as material to the Group at the 3 reporting units,
one based in the United Kingdom
and 2 more in South Africa.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
- the information given in the strategic report and the
directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
- the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements; and
- the Directors’ Remuneration report has been properly prepared
in accordance with the Companies Act 2006.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding of the Group and
parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
- adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
- the parent Company financial statements are not in agreement
with the accounting records and returns; or
- certain disclosures of directors’ remuneration specified by law
are not made; or
- we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 14, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the
audit was considered capable of detecting irregularities, including
fraud
Our approach to identifying and assessing the risks of material
misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, was as follows:
- the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and
skills to identify or recognise non-compliance with applicable laws
and regulations.
- we identified the laws and regulations applicable to the group
through discussions with directors and other management.
- we focused on specific laws and regulations which we considered
may have a direct material effect on the financial statements or
the operations of the company, including taxation legislation, data
protection, anti-bribery, employment, environmental, health and
safety legislation and anti-money laundering regulations.
- we assessed the extent of compliance with the laws and
regulations identified above through making enquiries of management
and inspecting legal correspondence.
- identified laws and regulations were communicated within the
audit team regularly and the team remained alert to instances of
non-compliance throughout the audit; and
- we assessed the susceptibility of the group’s financial
statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
- making enquiries of management as to where they considered
there was susceptibility to fraud, their knowledge of actual,
suspected and alleged fraud;
- considering the internal controls in place to mitigate risks of
fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and
override of controls, we:
- performed analytical procedures to identify any unusual or
unexpected relationships;
- tested journal entries to identify unusual transactions;
- assessed whether judgements and assumptions made in determining
the accounting estimates set out in note 3 of the group financial
statements were indicative of potential bias;
- investigated the rationale behind significant or unusual
transactions.
In response to the risk of irregularities and non-compliance
with laws and regulations, we designed procedures which included,
but were not limited to:
- agreeing financial statement disclosures to underlying
supporting documentation;
- reading the minutes of meetings of those charged with
governance;
- enquiring of management as to actual and potential litigation
and claims;
- reviewing correspondence with HMRC and the group’s legal
advisors.
There are inherent limitations in our audit procedures described
above. The more removed those laws and regulations are from
financial transactions, the less likely it is that we would become
aware of noncompliance. Auditing standards also limit the audit
procedures required to identify non-compliance with laws and
regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to
detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at:
http://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Other matters which we are required to
address
We were appointed by the shareholders on 10 July 2013 to audit the financial statements
for the period ending 31 March 2013.
Our total uninterrupted period of engagement is 8 years, covering
the periods ending 31 March 2013 to
31 October 2021.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Group or the parent Company and we remain
independent of the Group and the parent Company in conducting our
audit.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of this report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Sudhir Rawal (Senior Statutory
Auditor)
For and on behalf of Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
31st March 2022
Statement of Comprehensive Income
For the Year Ended 31 October 2021
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
Notes |
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
Revenue from Contracts with Customers |
5 |
1,404,234 |
1,773,710 |
- |
- |
|
|
|
|
|
|
| Cost of
Sales |
|
(1,024,430) |
(1,350,201) |
- |
- |
|
|
|
|
|
|
| Gross
Profit |
|
379,804 |
423,509 |
- |
- |
|
|
|
|
|
|
| Other
Income |
6 |
- |
3,000 |
- |
3,000 |
|
Administrative expenses |
9 |
(895,464) |
(1,139,219) |
(345,735) |
(524,165) |
| Admission
expenses |
9 |
- |
(140,151) |
- |
(140,151) |
|
Impairments |
10 |
- |
(226,644) |
(161,091) |
(1,111,295) |
|
|
|
|
|
|
|
Operating loss |
|
(515,660) |
(1,079,505) |
(506,826) |
(1,772,611) |
|
|
|
|
|
|
| Finance
costs |
11 |
(224,631) |
(96,943) |
(99,785) |
(30,082) |
| Finance
income |
12 |
155,658 |
140,963 |
158,568 |
182,685 |
|
|
|
|
|
|
| Loss for
the year from continuing operations |
|
(584,633) |
(1,035,485) |
(448,043) |
(1,620,008) |
| Tax on
loss on ordinary activities |
13 |
|
- |
|
- |
|
|
|
|
|
|
| Loss
for the year from continuing operations |
|
(584,633) |
(1,035,485) |
(448,043) |
(1,620,008) |
|
|
|
|
|
|
| Total
comprehensive loss for the year from continuing operations |
|
(584,633) |
(1,035,485) |
(448,043) |
(1,620,008) |
|
|
|
|
|
|
| Loss
attributable to ordinary shareholders |
|
(584,633) |
(1,035,485) |
(448,043) |
(1,620,008) |
|
|
|
|
|
|
| Total
comprehensive loss attributable to ordinary shareholders |
|
(584,633) |
(1,035,485) |
(448,043) |
(1,620,008) |
|
|
|
|
|
|
| Basic and
diluted earnings per share |
14 |
(2.66p) |
(5.16p) |
|
|
All amounts relate to continuing operations.
Group Statement of Changes in Equity
|
Group |
Share
Capital |
Share
Premium |
Share
Based Payments Reserve |
Equity Portion of Convertible Loan Notes |
Retained Earnings |
Total
Equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
|
Balance at 31 October 2019 |
387,984 |
2,519,909 |
83,377 |
- |
(2,796,409) |
194,861 |
| Share
Issue |
51,338 |
51,338 |
- |
- |
- |
102,676 |
| Loss for
the year |
- |
- |
- |
- |
(1,035,485) |
(1,035,485) |
|
Balance at 31 October 2020 |
439,322 |
2,571,247 |
83,377 |
- |
(3,831,894) |
(737,948) |
| Equity
portion of Convertible Loan Notes issued during the year |
- |
- |
- |
74,935 |
- |
74,935 |
| Loss for
the year |
- |
- |
- |
- |
(584,633) |
(584,633) |
|
Balance at 31 October 2021 |
439,322 |
2,571,247 |
83,377 |
74,935 |
(4,416,527) |
(1,247,646) |
Share capital is the amount subscribed for shares at nominal
value.
The share premium has arisen on the issue of shares at a premium
to their nominal value.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS 2.
Retained earnings represent the cumulative loss of the Group
attributable to equity shareholders.
Company Statement of Changes in
Equity
|
Company |
Share
Capital |
Share
Premium |
Share
Based Payments Reserve |
Equity Portion of Convertible Loan Notes |
Retained Earnings |
Total
Equity |
|
£ |
£ |
£ |
£ |
£ |
£ |
|
Balance at 31 October 2019 |
387,984 |
2,519,909 |
83,377 |
- |
(1,849,222) |
1,142,048 |
| Share
Issue |
51,338 |
51,338 |
- |
- |
- |
102,676 |
| Loss for
the year |
- |
- |
- |
- |
(1,620,008) |
(1,620,008) |
|
Balance at 31 October 2020 |
439,322 |
2,571,247 |
83,377 |
- |
(3,469,230) |
(375,284) |
| Equity
portion of Convertible Loan Notes issued during the year |
- |
- |
- |
74,935 |
- |
74,935 |
| Loss for
the year |
- |
- |
- |
- |
(448,043) |
(448,043) |
|
Balance at 31 October 2021 |
439,322 |
2,571,247 |
83,377 |
74,935 |
(3,917,273) |
(748,392) |
Statement of the Financial
Position
|
|
Group |
Group |
Company |
Company |
|
Notes |
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
Assets |
|
|
|
|
|
|
Non-Current Assets |
|
|
|
|
|
|
Investment in Subsidiaries |
15 |
- |
- |
- |
71,271 |
| Long Term
Intercompany Loans |
16 |
- |
- |
- |
- |
| Property,
Plant and Equipment |
17 |
13,769 |
15,298 |
- |
- |
| Right of
Use Asset |
28 |
341,905 |
409,424 |
- |
- |
| Loan
receivable |
18 |
- |
994,729 |
- |
994,729 |
|
Total Non-Current Assets |
|
355,674 |
1,419,451 |
- |
1,066,000 |
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
Investment in Associate
(held for sale) |
15 |
6,154 |
6,154 |
6,154 |
6,154 |
|
Inventories |
19 |
42,682 |
181,708 |
- |
- |
| Trade and
Other Receivables |
20 |
297,800 |
291,939 |
28,737 |
12,163 |
| Cash and
Cash Equivalents |
21 |
1,109,774 |
45,251 |
1,108,476 |
25,624 |
|
Total Current Assets |
|
1,456,410 |
525,052 |
1,143,367 |
43,941 |
|
|
|
|
|
|
| Total
Assets |
|
1,812,084 |
1,944,503 |
1,143,367 |
1,109,941 |
|
|
|
|
|
|
| Equity
and Liabilities |
|
|
|
|
|
| Share
Capital |
23 |
439,322 |
439,322 |
439,322 |
439,322 |
| Share
Premium Account |
23 |
2,571,247 |
2,571,247 |
2,571,247 |
2,571,247 |
|
Share-Based Payments Reserve |
24 |
83,377 |
83,377 |
83,377 |
83,377 |
| Equity
Portion of Convertible Loan Notes |
25 |
74,935 |
- |
74,935 |
- |
| Retained
Earnings |
|
(4,416,527) |
(3,831,894) |
(3,917,273) |
(3,469,230) |
| Total
Equity |
|
(1,247,646) |
(737,948) |
(748,392) |
(375,284) |
|
|
|
|
|
|
|
Non-Current Liabilities |
|
|
|
|
|
|
Non-Current Lease Liabilities |
28 |
269,215 |
344,025 |
- |
- |
|
Borrowings |
27 |
466,064 |
428,719 |
- |
- |
|
Convertible Loan Notes |
26 |
778,065 |
250,000 |
778,065 |
250,000 |
| Total
Non-Current Liabilities |
|
1,513,344 |
1,022,744 |
778,065 |
250,000 |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
| Current
Lease Liabilities |
28 |
77,887 |
66,477 |
- |
- |
| Trade and
Other Payables |
22 |
1,468,499 |
1,593,230 |
1,113,694 |
1,235,225 |
| Total
Current Liabilities |
|
1,546,386 |
1,659,707 |
1,113,694 |
1,235,225 |
|
|
|
|
|
|
| Total
Equity and Liabilities |
|
1,812,084 |
1,944,503 |
1,143,367 |
1,109,941 |
The notes on pages 36 to 83 form part
of these financial statements
Approved by the Board and authorised
for issue on 31st March
2022.
Andrew
Monk, Non-Executive Chairman
Company Registration No. 07913053
Statement of Cash Flow
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
Notes |
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
| Cash
flows from operating activities |
|
|
|
|
|
| Operating
loss |
|
(515,660) |
(1,079,505) |
(506,826) |
(1,772,611) |
|
Adjustments for: |
|
|
|
|
|
| Add:
Depreciation |
17,28 |
78,109 |
38,322 |
- |
- |
| Add:
Impairment of investment |
10 |
- |
226,644 |
161,091 |
1,111,295 |
| Add:
Settlement discounts received |
|
- |
- |
- |
- |
| Add:
(Profit)/loss on disposal of property, plant and equipment |
17 |
139 |
- |
- |
- |
| Add:
unrealised foreign exchange loss |
|
(65,301) |
74,572 |
- |
17,321 |
| Finance
costs paid |
11 |
(93,378) |
(69,853) |
- |
(2,992) |
| Interest
received |
12 |
155,658 |
492 |
149,359 |
- |
|
Changes in working capital |
|
|
|
|
|
| Decrease
in inventories |
|
137,401 |
(119,133) |
- |
- |
|
(Increase) / decrease in receivables |
|
(8,363) |
102,640 |
(16,574) |
13,499 |
| Increase
/ (decrease) in payables |
|
262,565 |
719,314 |
212,409 |
562,053 |
| Net
cash flow from operating activities |
|
(48,830) |
(106,507) |
(541) |
(71,435) |
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
Acquisition of property, plant and equipment |
17 |
(8,767) |
(3,423) |
- |
- |
| Foreign
exchange movements |
17 |
433 |
2,190 |
- |
- |
| Increase
in Intercompany Loans Receivable |
|
- |
- |
(80,611) |
- |
| Loans
Receivable repaid |
18 |
944,004 |
- |
944,004 |
- |
| Net
cash flow from investing activities |
|
935,670 |
(1,233) |
863,393 |
- |
|
|
|
|
|
|
| Cash
flows from financing activities: |
|
|
|
|
|
| Net
proceeds from issue of shares |
23 |
- |
102,676 |
- |
102,676 |
|
Convertible loan notes issued |
26 |
220,000 |
- |
220,000 |
- |
| Increase
/ (Decrease) in borrowings |
29 |
32,973 |
38,687 |
- |
(10,000) |
| Foreign
exchange movements |
29 |
(8,043) |
26,941 |
- |
- |
| Capital
repayments of lease liability |
|
(67,071) |
(20,471) |
- |
- |
| Net
cash flow from financing activities |
|
177,859 |
147,833 |
220,000 |
92,676 |
|
|
|
|
|
|
| Net
cash flow for the period |
29 |
1,064,699 |
40,093 |
1,082,852 |
21,241 |
| Opening
Cash and cash equivalents |
|
45,251 |
5,218 |
25,624 |
4,383 |
| Foreign
exchange movements |
29 |
(176) |
(60) |
- |
- |
|
Closing Cash and cash equivalents |
21/29 |
1,109,774 |
45,251 |
1,108,476 |
25,624 |
Notes to Group Annual Financial
Statements
1. General Information
Anglo African Agriculture plc is a company incorporated in the
United Kingdom. Details of the
registered office, the officers and advisors to the Company are
presented on the Directors and Advisors page at the beginning of
this report. The Company has a standard listing on the London Stock
Exchange main market. The information within these financial
statements and accompanying notes have been prepared for the year
ended 31 October 2021 with
comparatives for the year ended 31 October
2020.
2. Basis of Preparation and
Significant Accounting Policies
The consolidated financial statements of Anglo African
Agriculture plc have been prepared in accordance with International
Financial Reporting Standards as adopted by the United Kingdom (IFRS as adopted by the UK),
IFRS Interpretations Committee and the Companies Act 2006
applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared under
the historical cost convention in the Group’s reporting currency of
Pound Sterling.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements are disclosed in Note 3. The preparation of financial
statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities,
income and expenses. Although these estimates are based on
management’s experience and knowledge of current events and
actions, actual results may ultimately differ from these
estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimates are revised if the revision affects
only that year or in the year of the revision and future year if
the revision affects both current and future year.
a. Going Concern
These consolidated financial statements are prepared on the
going concern basis. The going concern basis assumes that the Group
will continue in operation for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of business. The Group has
incurred significant operating losses and negative cash flows from
operations as the Group continued to expand its operations during
the year under review.
There remains an active and liquid market for the Group’s
shares.
As at 31 October 2021 the Group
held £1,109,774 (2020: £45,251) in cash and cash equivalents.
The directors have agreed to defer the payment of their
directors fees until such time that the company is in a position to
pay such fees without affecting its ability to pay current
liabilities as they become due and without affecting its ability to
support Dynamic Intertrade (Pty) Ltd, given the potential for
future cashflow deficits. The Directors have prepared cash flow
forecasts, which include several cost saving initiatives undertaken
and the appointment of a chief executive officer, for the period
ended 31 March 2023. These forecasts
consider operating cash flows and capital expenditure requirements
for the Company and Dynamic Intertrade, available working capital
and forecast expenditure, including overheads and other costs. The
forecasts include additional funding requirements, which the
directors believe will be met. As in prior years, in the event that
additional funding is required, the directors have agreed to
participate in any fund raises that may be necessary at the time.
Based upon the company’s forecast, it has sufficient cash for the
foreseeable future.
In the event that Dynamic Intertrade fails to meet revenue
predictions and any other relevant risk factors arise, the Group
will need to obtain additional debt finance or equity to fund its
operations for the period to 31 March
2023. The cash flow forecast is dependent on production
targets being met at Dynamic Intertrade, maintaining the invoice
financing arrangements, generating future sales and the selling
prices remaining stable during the period to
31 March 2023.
After careful consideration of the matters set out above, the
Directors are of the opinion that the Group will be able to
undertake its planned activities for the period to 31 March 2023 from production and from additional
fund raising and have prepared the consolidated financial
statements on the going concern basis. Nevertheless, due to the
uncertainties inherent in meeting its revenue predictions and
obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any
adjustments that would result if the Group was unable to continue
as a going concern. For this reason, the directors believe that
there is a material uncertainty relating to the group’s going
concern.
b. New and Amended Standards Adopted
by the Company
The group have implemented IFRS as adopted by UK. At the point
of transition from IFRS as adopted by EU the underlying
requirements were identical. The following standards, amendments
and interpretations are new and effective for the year ended
31 October 2021 and have been
adopted. None of the IFRS standards below had a material impact on
the financial statements.
| Reference |
Title |
Summary |
Application date of standard
(Periods commencing on or after) |
| IFRS 3 |
Business combinations |
Amends the definition of a business
and whether a transaction is accounted for a business combination
or an asset acquisition. |
1 October 2020 |
| IAS 1 and IAS 8 |
‘Presentation of Financial
Statements’ and ‘Accounting policies, changes in accounting
estimates and errors’ |
i) Use a consistent
definition of materiality throughout IFRSs and the Conceptual
Framework for Financial Reporting;
ii) Clarify the explanation of the definition of material; and
iii) Incorporate some of the guidance in IAS 1 about immaterial
information. |
1 October 2020 |
IFRS 9,
IAS 39 and
IFRS 7 |
|
Interest rate benchmark reform –
Phase 1.
The phase 1 amendments provide certain reliefs in connection with
interest rate benchmark. The reliefs relate to hedge accounting and
have the effect that IBOR reform should not generally cause hedge
accounting to terminate. |
1 October 2020 |
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial year beginning 1 November
2021 and have not been early adopted:
| Reference |
Title |
Summary |
Application date of standard
(Periods commencing on or after) |
| IFRS 16 |
Leases |
COVID-19 related rent concessions
Extension of the practical expedient |
1 April 2021 |
IFRS 4,
IAS 7 and
IFRS 16 |
|
Interest rate benchmark reform –
Phase 2.
The Phase 2 amendments address issues that arise from the
implementation of the reforms, including the replacement of one
benchmark with an alternative one. The Phase 2 amendments provide
additional temporary reliefs from applying specific IAS 39 and IFRS
9 hedge accounting requirements to hedging relationships directly
affected by IBOR reform. |
1 January 2021 |
| IFRS 3 |
Business Combinations |
Updating a reference in IFRS 3 to
the Conceptual Framework for Financial Reporting without changing
the accounting requirements for business combinations. |
1 January 2022 |
| IAS 16 |
Property, Plant and Equipment |
Prohibits a company from deducting
from the cost of property, plant and equipment amounts received
from selling items produced while the company is preparing the
asset for its intended use. Instead, a company will recognise such
sales proceeds and related cost in profit or loss. |
1 January 2022 |
| IAS 37 |
Provisions, contingent liabilities
and contingent assets |
Specifies which costs a company
includes when assessing whether a contract will be
loss-making. |
1 January 2022 |
| IAS 1 |
Presentation of Financial
Statements |
Clarifies that liabilities are
classified as either current or noncurrent, depending on the rights
that exist at the end of the reporting period. Classification is
unaffected by the expectations of the entity or events after the
reporting date (for example, the receipt of a waiver or a breach of
covenant). The amendment also clarifies what IAS 1 means when it
refers to the ‘settlement’ of a liability. |
1 January 2023 |
| IAS 1 and IAS 8 |
‘Presentation of Financial
Statements’ and ‘Accounting policies, changes in accounting
estimates and errors’ |
Amendments to improve accounting
policy disclosures and to help users of the financial statements to
distinguish between changes in accounting estimates and changes in
accounting policies. |
1 January 2023 |
| IAS 12 |
Deferred Taxation |
These amendments require companies
to recognise deferred tax on transactions that, on initial
recognition give rise to equal amounts of taxable and deductable
temporary differences. |
1 January 2023 |
| IFRS17 |
Insurance contracts |
This standard replaces IFRS 4, which
currently permits a wide variety of practices in accounting for
insurance contracts. IFRS 17 will fundamentally change the
accounting by all entities that issue insurance contracts and
investment contracts with discretionary participation
features. |
1 January 2023 |
The Directors anticipate that the adoption of these standards
and the interpretations in future periods will not have a material
impact on the financial statements of the Group.
c. 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 October each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated statement of comprehensive
income from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by other
members of the Group. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Changes in the Group’s ownership interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the
subsidiaries.
When the Group loses control of a subsidiary, the profit or loss
on disposal is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the
fair value of any retained interest and (ii) the previous carrying
amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. Where certain assets
of the subsidiary are measured at revalued amounts or fair values
and the related cumulative gain or loss has been recognised in
other comprehensive income and accumulated in equity, the amounts
previously recognised in other comprehensive income and accumulated
in equity are accounted for as if the Company had directly disposed
of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings). The fair value of any
investment retained in the former subsidiary at the date when
control is lost is regarded as the fair value on initial
recognition for subsequent accounting under IFRS 9 “Financial
Instruments: Recognition and Measurement” or, when applicable, the
cost on initial recognition of an investment in an associate or a
jointly controlled entity.
Business Combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition-date fair values of the assets transferred
by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interests issued by the Group
in exchange for control of the acquiree. Acquisition-related costs
are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired, and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
- Deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
- Liabilities or equity instruments related to share-based
payment transactions of the acquiree or the replacement of an
acquiree’s share-based payment transactions with share-based
payment transactions of the Group are measured in accordance with
IFRS 2 Share-based Payment at the acquisition date; and
- Assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
Goodwill
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after assessment, the net
of the acquisition-date amounts of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held
interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain.
Joint Ventures and Associates
A joint venture is a contractual agreement under which two or
more parties conduct an economic activity and unanimous approval is
required for the financial and operating policies. Associates are
all entities over which the Group has significant influence but not
control, generally accompanying a shareholding between 20% and 50%
of the voting rights. Joint ventures and associates are accounted
for using the equity method, which involves recognition in the
consolidated income statement of AAA’s share of the net result of
the joint ventures and associates for the year. Accounting policies
of joint ventures and associates have been changed where necessary
to ensure consistency with the policies adopted by the Group. AAA’s
interest in a joint venture or associate is carried in the
statement of financial position at its share in the net assets of
the joint venture or associate together with goodwill paid on
acquisition, less any impairment loss. When the share in the losses
exceeds the carrying amount of an equity-accounted company
(including any other receivables forming part of the net investment
in the company), the carrying amount is written down to nil and
recognition of further losses is discontinued, unless we have
incurred legal or constructive obligations relating to the company
in question.
d. Property, Plant
and Equipment
Property, plant and equipment are stated at historical cost less
subsequent accumulated depreciation and accumulated impairment
losses, if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items. Subsequent
costs are included in the asset’s carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to profit or loss during the
financial year in which they are incurred. Depreciation on
property, plant and equipment is calculated using the straight-line
method to write off their cost over their estimated useful lives at
the following annual rates:
| Leasehold
improvements |
33.3% |
| Furniture, fixtures and
equipment |
17% |
| Plant and
machinery |
20% and 33.3% |
Useful lives and depreciation method are reviewed and adjusted
if appropriate, at the end of each reporting year.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset and is
recognised in profit or loss in the year in which the asset is
derecognised.
e. Leased assets
The group leases various offices and equipment. Rental contracts
are typically made for fixed periods of 3 years but may have
extension options for an additional 2 years. Lease terms are
negotiated on an individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose
any covenants, but leased assets may not be used as security for
borrowing purposes.
The right-of use asset is depreciated over the shorter of the
asset's useful life and the lease term as per the table below:
| 1st year of
the lease |
15% |
| 2nd year of
the lease |
17% |
| 3rd year of
the lease |
20% |
| 4th year of
the lease |
22% |
| 5th year of
the lease |
26% |
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
- fixed payments (including in-substance fixed payments), less
any lease incentives receivable.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
- the amount of the initial measurement of lease liability
- any lease payments made at or before the commencement date less
any lease incentives received any initial direct costs, and
- restoration costs.
Payments associated with short term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise moving
equipment rented on a day to day basis.
f. Investments
in Subsidiaries
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
g. Inventories
Inventories are carried at the lower of cost and net realisable
value. Cost is determined using specific identification and in the
case of work in progress and finished goods, comprises the cost of
purchase, cost of conversion and other costs incurred in bringing
the inventories to their present location and condition. Net
realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and
applicable selling expenses.
When the inventories are sold, the carrying amount of those
inventories is recognised as an expense in the year in which the
related revenue is recognised. The amount of any write-down of
inventories to net realisable value and all losses of inventories
are recognised as an expense in the year in which the write-down or
loss occurs. The amount of any reversal of any write-down of
inventories is recognised as an expense in the year in which the
reversal occurs.
h. Impairment
Non-derivative financial assets
Credit-impaired
financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost and debt securities at FVOCI are
credit-impaired. A financial asset is “credit-impaired” when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial assets have occurred.
Evidence that a financial asset is credit-impaired includes the
following observable data:
• significant financial
difficulty of the borrower or issuer;
• a breach of contract such
as a default or being more than 90 days past due;
• the restructuring of a
loan or advance by the Group on terms that the Group would not
consider otherwise;
• it is probable that the
borrower will enter bankruptcy or other financial reorganisation;
or
• the disappearance of an
active market for a security because of financial difficulties.
A 12 months approach is followed in determining the Expected
Credit Loss (“ECL”).
Presentation of allowance for ECL in
the statement of financial position
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is charged to
profit or loss and is recognised in OCI.
Write-off
The gross carrying amount of a financial asset is written off
when the Group has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof. For corporate
customers, the Group individually makes an assessment with respect
to the timing and amount of write-off based on whether there is a
reasonable expectation of recovery from the amount written off.
However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the
Group’s procedures of recovery of the amounts due.
i. Financial
Instruments
The Group classifies non-derivative financial assets into the
following categories: loans and receivables and FVTPL and FVTOCI
financial assets.
The Group classifies non-derivative financial liabilities into
the following category: other financial liabilities.
i.
Non-derivative financial assets and financial liabilities –
Recognition and derecognition
The Group initially recognises loans and receivables on the date
when they are originated. All other financial assets and financial
liabilities are initially recognised on the trade date when the
entity becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of
the financial asset are transferred, or it neither transfers nor
retains substantially all of the risks and rewards of ownership and
does not retain control over the transferred asset. Any interest in
such derecognised financial assets that is created or retained by
the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or expire.
Gains or losses on derecognition of financial liabilities are
recognised in profit or loss as a finance charge.
Financial assets and financial liabilities are offset, and the
net amount presented in the statement of financial position when,
and only when, the Group currently has a legally enforceable right
to offset the amounts and intends either to settle them on a net
basis or to realise the asset and settle the liability
simultaneously.
ii.
Loans and receivables- Measurement
These assets are initially measured at fair value plus any
directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the
effective interest method.
iii. Assets at
FVOCI - Measurement
These assets are initially measured at fair value plus any
directly attributable transaction costs. Subsequent to initial
recognition, they are measured at fair value and changes therein,
other than impairment losses, are recognised in OCI and accumulated
in the revaluation reserve.
When these assets are derecognised, the gain or loss accumulated
in equity is reclassified to profit or loss.
iv.
Non-derivative financial liabilities – Measurement
Other non-derivative financial liabilities are initially
measured at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these liabilities are
measured at amortised cost using the effective interest method.
v.
Convertible loan notes and derivative financial instruments
The presentation and measurement of loan notes for accounting
purposes is governed by IAS 32 and IFRS 9. These standards require
the loan notes to be separated into two components:
• A derivative liability,
and
• A debt host liability.
This is because the loan notes are convertible into an unknown
number of shares, therefore failing the ‘fixed-for-fixed’ criterion
under IAS 32. This requires the ‘underlying option component’ of
the loan note to be valued first (as an embedded derivative), with
the residual of the face value being allocated to the debt host
liability (refer financial liabilities policy above).
Compound financial instruments issued by the Group comprise
convertible notes denominated in British pounds that can be
converted to ordinary shares at the option of the holder, when the
number of shares to be issued is fixed and does not vary with
changes in fair value.
The liability component of compound financial instruments is
initially recognised at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
initially recognised at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost using
the effective interest method. The equity component of a compound
financial instrument is not remeasured.
Interest related to the financial liability is recognised in
profit or loss. On conversion at maturity, the financial liability
is reclassified to equity and no gain or loss is recognised.
The Group’s financial liabilities include amounts due to a
director, trade payables and accrued liabilities. These financial
liabilities are classified as FVTPL are stated at fair value with
any gains or losses arising on re-measurement recognised in profit
or loss. Other financial liabilities, including borrowings are
initially measured at fair value, net of transaction costs.
j.
Borrowings
Borrowings are presented as current liabilities unless the Group
has an unconditional right to defer settlement for at least 12
months after the reporting period, in which case they are presented
as non-current liabilities.
Borrowings are initially recorded at fair value, net of
transaction costs and subsequently carried for at amortised costs
using the effective interest method. Any difference between the
proceeds (net of transaction costs) and the redemption value is
recognised in profit or loss over the year of the borrowings using
the effective interest method. Borrowings which are due to be
settled within twelve months after the reporting period are
included in current borrowings in the statement of financial
position even though the original term was for a period longer than
twelve months and an agreement to refinance, or to reschedule
payments, on a long-term basis is completed after the reporting
period and before the financial statements are authorised for
issue.
k. Revenue
Recognition
Performance obligations and service recognition policies
Revenue is measured based on the consideration specified in a
contract with a customer. The Group recognises revenue when it
transfers control over of goods or services to a customer.
The following table provides information about the nature and
timing of the satisfaction of performance obligations in contracts
with customers, including significant payment terms, and the
related revenue recognition policies.
| Type of product/ service |
Nature and timing of satisfaction
of performance obligations, including significant payment
terms |
Revenue recognition under IFRS
15 |
| Sale of
goods |
Customers obtain
control of the goods when the goods have been delivered to them and
have been accepted at their premises or the agreed point of
delivery. Invoices are generated at that point in time net of
rebates and discounts. Invoices are generally payable within 30
days. No settlement discounts are provided for.
The sale of the goods are not subject to a return policy. |
Revenue is recognised
when the goods are delivered and have been accepted by the
customers at their premises or the agreed point of delivery. |
| Interest
revenue |
Interest income is
recognised in the income statement for all interest-bearing
instruments (whether classified as held-to-maturity, FVTOCI, FVTPL,
derivatives or other assets) on an accrual basis using the
effective interest method based on
the actual purchase price including
direct transaction costs. |
Once a financial asset
has been written down to its estimated recoverable amount, interest
income is thereafter recognised based on the effective interest
rate that was used to discount the future cash flows for the
purpose of measuring the recoverable amount. |
l. Cost of
Sales
Cost of sales consists of all costs of purchase and other
directly incurred costs.
Cost of purchase comprises the purchase price, import duties and
other taxes (other than those subsequently recoverable by the Group
from the taxing authorities), if any, and transport, handling and
other costs directly attributable to the acquisition of goods.
Trade discounts, rebates and other similar items are deducted in
determining the costs of purchase. Cost of conversion primarily
consists of hiring charges of subcontractors incurred during
conversion.
m. Finance Income and Finance
Costs
The Group’s finance income and finance costs include:
• Interest income;
• Interest expense;
• Dividend income;
Interest income and expense is recognised using the effective
interest method. Dividend income is recognised in profit or loss on
the date on which the Group’s right to receive payment is
established.
The “effective interest rate” is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument to:
• the gross carrying amount
of the financial asset; or
• the amortised cost of the
financial liability.
In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of the asset
(when the asset is not credit-impaired) or to the amortised cost of
the liability. However, for financial assets that have become
credit-impaired subsequent to initial recognition, interest income
is calculated by applying the effective interest rate to the
amortised cost of the financial asset, if the asset is no-longer
credit-impaired, then the calculation of interest income reverts to
the gross basis.
n. Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years,
and it further excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the end of the
reporting year.
Deferred tax is recognised on temporary differences between the
carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary differences arise
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries, except
where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting year and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year in which the liability
is settled or the asset realised. The measurement of deferred tax
assets and liabilities reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of
the reporting year, to recover or settle the carrying amount of its
assets and liabilities.
Current or deferred tax for the year is recognised in profit or
loss, except when it relates to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax is also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
o. Cash and Cash
Equivalents
Cash and cash equivalents comprise cash at bank and on hand,
demand deposits with banks and other financial institutions, and
short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three
months of maturity at acquisition. Bank overdrafts that are
repayable on demand and form an integral part of the Group’s cash
management are also included as a component of cash and cash
equivalents for the purpose of the consolidated statement of cash
flows.
p. Provisions and
Contingencies
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors’ best estimate of the expenditure
required to settle the obligation at the statement of financial
position date and are discounted to present value where the effect
is material. Provisions are not recognised for future operating
losses.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be
small.
When the effect of discounting is material, the amount
recognised for a provision is the present value at the reporting
date of the future expenditures expected to be required to settle
the obligation. The increase in the discounted present value amount
arising from the passage of time is included in finance costs in
the statement of comprehensive income.
Contingent liabilities are not recognised in the financial
statements. They are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. A contingent
asset is not recognised in the financial statements but disclosed
when an inflow of economic benefits is probable.
q. Share Capital
Ordinary shares are classified as equity. Proceeds from issuance
of ordinary shares are classified as equity. Incremental costs
directly attributable to the issuance of new ordinary shares are
deducted against share capital and share premium.
r. Foreign
Currencies
In preparing the financial statements of each individual group
entity, transactions in currencies other than the functional
currency of that entity (foreign currencies) are recorded in the
respective functional currency (i.e. the currency of the primary
economic environment in which the entity operates) at the rates of
exchanges prevailing on the dates of the transactions. At the end
of the reporting year, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical costs in a foreign currency are
not retranslated.
Exchange differences arising on the settlement of monetary
items, and on translation of monetary items, are recognised in
profit or loss in the year in which they arise. Exchange
differences arising on the retranslation of non-monetary items
carried at fair value are included in profit or loss for the year
except for differences arising on the retranslation of non-monetary
items in respect of which gains, and losses are recognised directly
in other comprehensive income, in which cases, the exchange
differences are also recognised directly in other comprehensive
income.
For the purposes of presenting the consolidated financial
statements, assets and liabilities of the Group’s foreign
operations are translated from South African Rand into the
presentation currency of the Group of Pound Sterling at the rate of
exchange prevailing at the end of the reporting year, and their
income and expenses are translated at the average exchange rates
for the year, unless exchange rates fluctuate significantly during
that year, in which case, the exchange rates prevailing at the
dates of transactions are used. Exchange differences arising, if
any, are recognised in other comprehensive income and accumulated
in equity.
The principal exchange rates during the year are set out in the
table below:
| Rate compared to
£ |
Year End Rate
2021 |
Year End Rate
2020 |
| South African Rand |
20.83 |
21.02 |
| US Dollar |
1.37 |
1.31 |
s. Employee
Benefits
Salaries, annual bonuses, paid annual leave and the cost to the
Group of non-monetary benefits are accrued in the year in which
employees of the Group render the associated services. Where
payment or settlement is deferred and the effect would be material,
these amounts are stated at their present values.
t. Segmental
Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the executive Director who makes
strategic decisions.
3. Critical Accounting Estimates and
Judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
In the application of the Group’s accounting policies, which are
described above, management is required to make estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
assumptions that had a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities are
discussed below.
a. COVID-19 Pandemic
and "lockdowns"
With the declaration that COVID-19 was a pandemic on
13 March 2020 and the South African
"lockdown" being announced on 23 March
2020 falling before 31 October
2021, the Directors have adopted that the COVID-19 pandemic
as a current period event for both the current and prior financial
years. As a result the Directors have considered the impact of the
COVID-19 pandemic on all areas of Judgment that impact the current
accounting period including all the areas of Judgment included in
note 3. Where appropriate to do so the Directors have made
adjustments to estimates as a result of COVID-19 as a current
period adjusting event and considered this in all areas requiring
review of impairment including property, plant and equipment,
intangible assets, trade receivables and inventory carrying values.
The impact of the pandemic has also been considered in the
preparation of the forecast for the review of the going concern
assumptions.
b. Inventory
Valuation
Inventory is valued at the lower of cost and net realisable
value. Net realisable value of inventories is the estimated selling
price in the ordinary course of business, less estimated costs of
completion and selling expenses. These estimates are based on the
current market conditions and the historical experience of selling
products of a similar nature. It could change significantly as a
result of competitors’ actions in response to severe industry
cycles. The Group reviews its inventories in order to identify
slow-moving merchandise and uses markdowns to clear merchandise.
Inventory value is reduced when the decision to markdown below cost
is made.
c. Impairment of
long term Inter-company Receivables
The Group’s management reviews long-term inter-company
receivables on a regular basis to determine if any provision for
impairment is necessary. The policy for the impairment of long-term
inter-company receivables of the Group is based on, where
appropriate, the evaluation of collectability, the trading
performance of the relevant subsidiary and on management’s
judgement. A considerable amount of judgement is required in
assessing the ultimate realisation of these outstanding amounts,
including the current and estimated future trading performance of
the relevant subsidiary. If the financial conditions of
inter-company debtors of the Group were to deteriorate, resulting
in an impairment of their ability to make payments, a provision for
impairment may be required.
d. Impairment of
Receivables
The Group’s management reviews receivables on a regular basis to
determine if any provision for impairment is necessary. The policy
for the impairment of receivables of the Group is based on, where
appropriate, the evaluation of collectability and ageing analysis
of the receivables and on management’s judgement. A considerable
amount of judgement is required in assessing the ultimate
realisation of these outstanding amounts, including the current
creditworthiness and the past collection history of each debtor. If
the financial conditions of debtors of the Group were to
deteriorate, resulting in an impairment of their ability to make
payments, provision for impairment may be required.
e Incremental
borrowing cost of Right of Use Assets and Lease Liabilities
In assessing the Group’s right of use assets and lease
liabilities, the Group has to assess its incremental borrowing
costs. As an approximation of the Group’s incremental long term
borrowing costs, the Group estimated the borrowing costs associated
with similar long term, asset based financing arrangements. The
Group based the implied incremental borrowing costs on the South
African prime lending rate applicable at the date of commencement
of the agreement and added an appropriate lending premium that
would be typically applied by lenders. At the year end the
estimated incremental borrowing costs used amounted to 8.5% (2020:
8.5%).
f. Income
Taxes
The Group is subject to income taxes in South Africa and the UK. The South African
income taxes are administered by South African accountants.
Significant judgement is required in determining the provision for
income taxes and the timing of payment of the related tax. There
are certain transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of
business. The Group recognises liabilities for anticipated tax
based on estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact
the income tax provision in the year in which such determination is
made.
g. Share Based
Payments
The fair value of share-based payments recognised in the income
statement is measured by use of the Black Scholes model, which
considers conditions attached to the vesting and exercise of the
equity instruments. The expected life used in the model is
adjusted; based on management’s best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management’s best estimate of future
share price behaviour based on past experience, future expectations
and benchmarked against peer companies in the industry.
h. Equity portion of
Convertible Loan Notes
The Group provides for the equity portion of convertible loan
notes by applying an estimated interest rate in determining the
present values of the convertible loan notes and the interest
payable thereon over the life of the convertible loan notes.
i.
Depreciation and Amortisation
The Group depreciates property, plant and equipment and
amortises the leasehold buildings and land use rights on a
straight-line method over the estimated useful lives. The estimated
useful lives reflect the Directors’ estimate of the years that the
Group intends to derive future economic benefits from the use of
the Group’s property, plant and equipment.
4. Segmental Reporting
In the opinion of the Directors, the Group has one class of
business, being the trading of agricultural materials. The Group’s
primary reporting format is determined by the geographical segment
according to the location of its establishments. There is currently
only one geographic reporting segment, which is South Africa. All revenues and costs are
derived from the single segment.
5. Revenue
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
| Major
product/service lines |
|
|
|
|
|
| Sale of
agricultural materials |
|
1,404,234 |
1,773,710 |
- |
- |
|
|
|
|
|
|
|
Primary geographic markets |
|
|
|
|
|
| South
Africa |
|
1,404,234 |
1,773,710 |
- |
- |
|
|
|
|
|
|
| Timing
of revenue recognition |
|
|
|
|
|
| Products
transferred at a point in time |
|
1,404,234 |
1,773,710 |
- |
- |
6.Other Income
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
Settlement discounts received |
|
- |
3,000 |
- |
3,000 |
|
|
- |
3,000 |
- |
3,000 |
7.Personnel Expenses and Staff Numbers
(Including Directors)
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
Number |
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
| The average number of employees in the year were: |
|
|
|
|
Directors |
|
4 |
4 |
4 |
4 |
|
Management |
|
2 |
2 |
- |
- |
|
Accounts and Administration |
|
2 |
2 |
- |
- |
|
Sales |
|
3 |
3 |
- |
- |
|
Manufacturing/Warehouse |
|
13 |
13 |
- |
- |
|
Total |
|
24 |
24 |
4 |
4 |
|
|
£ |
£ |
£ |
£ |
| The
aggregate payroll costs for these |
|
|
|
|
|
| persons
were: |
|
278,499 |
285,288 |
68,681 |
49,896 |
| Average
ratio of executive pay verses average employee pay |
|
1.01 |
1.06 |
|
|
|
|
|
|
|
|
| Average
Directors |
|
11,742 |
12,474 |
|
|
| Average
of all employees |
|
11,604 |
11,887 |
|
|
| Average
of non-director employees |
|
11,577 |
11,770 |
|
|
8.Directors’ Remuneration
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
Salaries and Fees |
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
| David
Lenigas |
|
9,000 |
12,000 |
9,000 |
12,000 |
| Robert
Scott |
|
12,000 |
12,000 |
12,000 |
12,000 |
| Andrew Monk * |
|
13,966 |
13,896 |
13,966 |
13,896 |
| Matt Bonner |
|
12,000 |
12,000 |
12,000 |
12,000 |
|
|
46,966 |
49,896 |
46,966 |
49,896 |
* Included in Andrew Monk’s
remuneration is £1,966 for National Insurance.
No pension contributions were made by the Company on behalf of
its directors other than for Andrew
Monk.
At the year-end a total of £70,232 (2020: £194,266) was
outstanding in respect of directors’ emoluments.
9.Expenses - Analysis by Nature
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
| Auditor's remuneration for audit services: Parent |
27,256 |
27,070 |
27,256 |
27,070 |
| Auditor's
remuneration for audit related services |
|
1,500 |
1,500 |
1,500 |
1,500 |
| Auditor's remuneration for audit services: Subsidiary |
3,536 |
3,065 |
- |
- |
| Brokership fees |
|
39,724 |
66,494 |
39,724 |
66,494 |
| Legal and professional
fees |
|
36,089 |
320,999 |
34,261 |
318,938 |
| Registrar fees |
|
5,138 |
1,783 |
5,138 |
1,783 |
|
Depreciation on property, plant and equipment (Note 17) |
|
10,590 |
16,893 |
- |
- |
|
Depreciation on IFRS 16 Right of Use Asset (Note 28) |
|
67,519 |
21,549 |
- |
- |
| (Gain)
/loss on exchange |
|
145,055 |
123,962 |
50,725 |
17,320 |
| Personnel
expenses (Note 7) |
|
278,499 |
285,288 |
68,681 |
49,896 |
| Other
administrative expenses |
|
280,558 |
270,616 |
118,450 |
41,164 |
|
Subtotal |
|
895,464 |
1,139,219 |
345,735 |
524,165 |
| Admission
and regulatory expenses |
|
- |
140,151 |
- |
140,151 |
| Total
administrative expenses |
|
895,464 |
1,279,370 |
345,735 |
664,316 |
10.Impairments
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
Impairment of goodwill |
|
- |
226,644 |
- |
- |
|
Impairment of investment in subsidiary |
|
- |
- |
- |
226,644 |
| Impairment of inter-company loans receivable |
- |
- |
161,091 |
884,651 |
|
|
- |
226,644 |
161,091 |
1,111,295 |
During the financial year, the recoverability of the investment
was evaluated and in management’s estimation, it was considered
necessary to impair the goodwill on consolidation, the investment
in the subsidiary and the intercompany loans receivable.
11.Finance Costs
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
| Interest
paid on borrowings |
|
93,378 |
55,309 |
- |
- |
| Interest accrued on Convertible Loan Notes |
99,785 |
30,082 |
99,785 |
30,082 |
| Lease
Liability |
|
31,468 |
11,552 |
- |
- |
|
|
224,631 |
96,943 |
99,785 |
30,082 |
Finance costs represent interest and charges in respect of the
discounting of invoices, the interest accrual for the Convertible
Loan Notes issued and the interest charged on capitalised right-of
use lease liability.
12.Finance Income
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
| Interest
earned on loan receivable |
|
149,359 |
140,471 |
149,359 |
140,471 |
| Interest
earned on intercompany loan receivable |
|
- |
- |
9,209 |
42,214 |
| Interest
earned on favourable bank balances |
|
6,299 |
492 |
- |
- |
|
|
155,658 |
140,963 |
158,568 |
182,685 |
13.Taxation
The charge for the year can be reconciled to the profit before
taxation per the consolidated statement of comprehensive income as
follows:
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
| Tax
Charge |
|
- |
- |
- |
- |
| Factors
affecting the tax charge |
|
|
|
|
|
| Loss on
ordinary activities before taxation |
|
(584,633) |
(1,035,485) |
(389,553) |
(1,620,008) |
| Loss on ordinary activities before taxation multiplied by
standard rate of UK corporation tax of 19,00% (2019: 19,00%) |
(111,080) |
(196,742) |
(74,015) |
(307,802) |
| Tax effect of expenses not deductible for tax |
1,934 |
- |
- |
- |
| Overseas tax rate differences from the UK rate (26%) |
16,296 |
42,927 |
- |
- |
| Tax
effect of utilisation of tax losses |
|
92,850 |
153,815 |
74,015 |
307,802 |
| Tax
Charge |
|
- |
- |
- |
- |
The Company has excess management expenses of £1,043,509 (2020:
£868,259) available for carry forward against future trading
profits. The deferred tax asset in these tax losses at 19.0% of
£193,369 (2020: 19.0% of £164,969) has not been recognised due to
the uncertainty of recovery.
14.Loss Per Share
Loss per share data is based on the Group result for the year
and the weighted average number of shares in issue.
Basic loss per share is calculated by
dividing the loss attributable to equity shareholders by the
weighted average number of ordinary shares in issue during the
year:
|
Year
ended |
Year
ended |
|
31
October |
31
October |
|
2021 |
2020 |
|
£ |
£ |
| Loss
after tax |
(584,633) |
(1,035,485) |
| Weighted
average number of ordinary shares in issue |
21,966,087 |
20,074,325 |
| Basic and
diluted loss per share (pence) |
(2.66p) |
(5.16p) |
Basic and diluted loss per share are the same, since where a
loss is incurred the effect of outstanding share options and
warrants is considered anti-dilutive and is ignored for the purpose
of the loss per share calculation. As at 31
October 2021 there were 21,966,087 (2020: 21,966,087) shares
in issue, 26,148,289 (2020: 12,421,622) outstanding share warrants
and 897,809 (2020: 897,809) outstanding options, both are
potentially dilutive.
15.Investments
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Investment in
Subsidiary |
|
|
|
|
| - Cost of
investment |
- |
- |
297,915 |
297,915 |
| - Impairment of
investment |
- |
- |
(297,915) |
(226,644) |
| Carrying value |
- |
- |
- |
71,271 |
14.1. Investment in Associate
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
|
Investment in Dynamic Intertrade Agri (Pty) Ltd (held for
sale) |
6,154 |
6,154 |
6,154 |
6,154 |
| Equity accounted
profit for the period |
- |
- |
- |
- |
| Impairment of
investment |
- |
- |
- |
- |
| Carrying value |
6,154 |
6,154 |
6,154 |
6,154 |
Management have committed to selling its investment in the
associate, Dynamic Intertrade Agri (Pty) Ltd. The asset is
available for immediate sale to a willing buyer. A buyer for the
asset has been identified and a preliminary price of £6,154 has
been discussed. It was anticipated that the sale will be concluded
within the last financial year ending 31
October 2021, however COVID-19 delayed the process. The
investment is still being held for sale to the existing buyer.
Accordingly, for the current year the investment is reflected under
current assets as held for sale. As part of the process of selling
the group’s investment in the associate a fair value exercise was
undertaken. Management considered the financial performance of the
company, the price that a willing buyer was prepared to pay for the
investment as well as the prevailing market conditions. Based on
the above, the directors are of the opinion that the fair value of
the company is £6,154.
As at 31 October 2021, the Company
directly and indirectly held the following subsidiary and
associate:
| Name of
company |
Principal activities |
Country
of incorporation and place of business |
Proportion (%) of equity interest
2021 |
Proportion (%) of equity interest
2020 |
| Dynamic
Intertrade (Pty) Limited |
Trading
in Agricultural Products |
South
Africa |
100% |
100% |
| Dynamic
Intertrade Agri (Pty) Limited |
Agricultural commodity trading and distribution |
South
Africa |
46.8%
Designated as
Held for Sale |
46.8%
Designated as
Held for Sale |
16.Long Term Intercompany Loans
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Loan to Dynamic
Intertrade (Pty) Ltd |
|
|
|
|
| - Amount
receivable |
- |
- |
1,002,918 |
884,651 |
| - Impairment of
loan |
- |
- |
(1,002,918) |
(884,651) |
| Carrying value |
- |
- |
- |
- |
The loan is unsecured and bears interest at rates linked to
LIBOR +2% p.a. As indicated in Note 10, both the capital and the
interest elements of the above loan have been fully impaired during
the year ended 31 October 2020. The
additional loan provided to the subsidiary was impaired during the
current year.
17.Property, Plant and Equipment
|
Group |
Leasehold Improve-ments |
Furniture, fixtures and equipment |
Plant
and machinery |
Total |
|
£ |
£ |
£ |
£ |
|
Cost |
|
|
|
|
| As at
31 October 2020 |
19,571 |
4,317 |
268,512 |
292,400 |
|
Additions |
- |
- |
8,767 |
8,767 |
|
Disposals |
- |
- |
(298) |
(298) |
| Exchange
difference |
175 |
39 |
2,401 |
2,615 |
| As at
31 October 2021 |
19,746 |
4,356 |
279,382 |
303,484 |
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
| As at
31 October 2020 |
19,085 |
3,674 |
254,343 |
277,102 |
| Charge
for the year |
477 |
363 |
9,750 |
10,590 |
| Released
on disposal |
- |
- |
(159) |
(159) |
| Exchange
difference |
158 |
23 |
2,001 |
2,182 |
| As at
31 October 2021 |
19,720 |
4,060 |
265,935 |
289,715 |
|
|
|
|
|
| Net
Book Value |
|
|
|
|
| As at 31
October 2020 |
486 |
643 |
14,169 |
15,298 |
| As at
31 October 2021 |
26 |
296 |
13,447 |
13,769 |
The holding company held no tangible fixed assets at
31 October 2021 and 2020.
18.Loan Receivable
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Loan to Touchwood
Investments Ltd |
- |
994,729 |
- |
994,729 |
|
|
|
|
|
| Carrying value |
- |
994,729 |
- |
994,729 |
The loan was advanced to Touchwood Investments Ltd, a company
that is part of the Comarco Group, which operates a port in
Mombasa. This loan bears interest at 12% for the first 9 months,
where after the rate increased to 15%. The loan was initially for a
period 24 months and was initially repayable in full on
12 November 2020, however due to the
COVID-19 pandemic the repayment of the loan has been extended to
30 April 2021, and then once again to
30 September 2021. The loan was
repaid in full on 26 October
2021.
19.Inventories
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Raw materials |
40,116 |
171,943 |
- |
- |
| Finished goods |
2,566 |
9,765 |
- |
- |
| Carrying value |
42,682 |
181,708 |
- |
- |
20.Trade and other receivables
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Financial
instruments |
|
|
|
|
| Trade receivables |
257,332 |
272,130 |
- |
- |
| Deposits |
2,028 |
5,963 |
- |
- |
| Other receivables |
28,737 |
12,163 |
28,737 |
12,163 |
|
|
|
|
|
| Non-financial
instruments |
|
|
|
|
| Prepayments |
9,703 |
1,683 |
- |
- |
|
|
|
|
|
| Carrying value |
297,800 |
291,939 |
28,737 |
12,163 |
|
|
|
|
|
|
Current |
297,800 |
291,939 |
28,737 |
12,163 |
|
Non-Current |
- |
- |
- |
- |
|
297,800 |
291,939 |
28,737 |
12,163 |
The receivables are considered to be held within a
held-to-collect business model consistent with the Group’s
continuing recognition of the receivables.
As at 31 October 2021 the Group
does not have any contract assets nor any contract liabilities
arising out of contracts with customers relating to the Group’s
right to receive consideration for agricultural products sold but
not billed. Group Trade receivables represent amounts receivable on
the sale of agricultural products and are included after provisions
for doubtful debts.
Credit and market risks, and impairment losses
The Group did not impair any of its trade receivables as at
31 October 2021, as all trade
receivables generated during the financial year, and outstanding at
31 October 2021 are considered to be
recoverable during the ordinary course of business.
Information about the Group’s exposure to credit and market
risks and impairment losses for trade receivables is included in
Note 30.
The Directors consider that the carrying amount of trade
receivables and other receivables approximates their fair
value.
21.Cash and Cash Equivalents
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2020 |
2020 |
2020 |
2020 |
|
£ |
£ |
£ |
£ |
| Cash on
hand |
1,109,774 |
45,251 |
1,108,476 |
25,624 |
|
1,109,774 |
45,251 |
1,108,476 |
25,624 |
22.Trade and Other Payables
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Trade Payables |
1,274,105 |
1,500,098 |
981,000 |
1,202,316 |
| Other Payables |
153,515 |
53,546 |
132,694 |
32,909 |
| Related Party
Payables |
40,879 |
39,586 |
- |
- |
|
1,468,499 |
1,593,230 |
1,113,694 |
1,235,225 |
Trade payables represent amounts due for the purchase of
agriculture materials and administrative expenses. The Directors
consider that the carrying amount of trade payables approximates to
their fair value.
Included in Other payables is a loan
from G Roach: The loan bears interest at the South African prime
overdraft rate. The interest will be calculated and paid when the
loan is repaid. The loan is repayable as decided upon from time to
time.
The related party financial liabilities comprise:
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| M Bonner |
24,562 |
24,052 |
- |
- |
| R Scott |
16,317 |
15,534 |
- |
- |
|
40,879 |
39,586 |
- |
- |
Terms:
M Bonner: The loan bears interest at
the South African prime overdraft rate. The interest is calculated
and paid quarterly. The loan is repayable as decided upon from time
to time.
R Scott: The loan bears interest at the
South African prime overdraft rate. The interest is calculated and
paid quarterly. The loan is repayable as decided upon from time to
time.
23.Share Capital and Share Premium
|
Allotted, called up and fully paid share capital and share
premium |
Number of shares |
Nominal Value |
Share
Premium |
Total |
|
|
£ |
£ |
£ |
| Balance
at 31 October 2019 |
19,399,198 |
387,984 |
2,519,909 |
2,907,893 |
| Share
issue - 27 July 2020 |
2,566,889 |
51,338 |
51,338 |
102,676 |
| Balance
at 31 October 2020 |
21,966,087 |
439,322 |
2,571,247 |
3,010,569 |
| Share issue |
- |
- |
- |
- |
| Balance
at 31 October 2021 |
21,966,087 |
439,322 |
2,571,247 |
3,010,569 |
Share capital is the amount subscribed for shares at nominal
value.
During the 2019 financial year the company consolidated all
existing and issued shares and share options on the basis of 20
existing shares/options for 1 new share/option.
Retained losses represent the cumulative loss of the Group
attributable to equity shareholders.
Share-based payments reserve relate to the charge for
share-based payments in accordance with IFRS 2.
During the prior year the company placed these shares and as the
number of placing shares comprised more than 10% of the companies
issued share capital, and although the placing shares has been
allotted, admission of the placing shares required publication of a
Prospectus within a twelve-month period.
24.Share Based Payments Reserve
The Company has a share-ownership compensation scheme for senior
executives of the Company whereby senior executives may be granted
options to purchase Ordinary Shares in the Company.
Warrants
During the 2019 financial year the company consolidated all
existing and issued shares and share options on the basis of 20
existing shares/options for 1 new share/option.
There are 26,148,289 warrants to subscribe for ordinary shares
at 31 October 2021 (2020:
12,421,622).
|
As at 1 |
Exercised / |
As at 31 |
|
|
|
| Date
of Grant |
November |
Vested / |
October |
Exercise |
Exercise/Vesting Date |
|
2020 |
Issued |
2021 |
Price |
From |
To |
|
Warrants |
|
|
|
|
|
|
|
09/05/2012 |
138,066 |
- |
138,066 |
20p |
09/05/2012 |
05/09/2022 |
|
27/11/2018 |
8,050,000 |
- |
8,050,000 |
20p |
27/11/2018 |
30/09/2022 |
|
24/07/2020 |
4,233,556 |
- |
4,233,556 |
5p |
24/07/2020 |
27/07/2022 |
|
23/03/2021 |
- |
13,726,667 |
13,726,667 |
5p |
23/3/2021 |
23/03/2023 |
|
12,421,622 |
13,726,667 |
26,148,289 |
|
|
|
Warrants were attached to the Convertible Loan Notes issued on
23 March 2021, with an exercise price
of 5.0p per ordinary share and expire 12 months from allotment of
the Subscription Shares. These warrants will only be issued once
the convertible loan notes are converted into shares.
Warrants were attached to the Subscription Shares on
24 July 2020 a 1-for-1 basis, with an
exercise price of 5.0p per ordinary share and expire 12 months from
allotment of the Subscription Shares. Further warrants were
attached to any new ordinary shares that are issued as a result of
conversion of any Loan Notes, on a 1-for-1 basis on the same terms
as the Subscription Warrants.
Warrants were attached to the Subscription Shares on
14 September 2018 a 1-for-1 basis,
with an exercise price of 20.0p per ordinary share and expire 12
months from allotment of the Subscription Shares. Further warrants
were attached to any new ordinary shares that are issued as a
result of conversion of any Loan Notes, on a 1-for-1 basis on the
same terms as the Subscription Warrants. A maximum of 20,450,222
new ordinary shares could potentially be issued in the event that
all Subscription Warrants and Loan Note warrants are exercised.
Options
At 31 October 2021 there were
897,809 share options issued to the directors and past directors of
the Company. During the current year nil share options were granted
(2020: Nil). During the financial year the Company consolidated all
existing and issued shares and share options on the basis of 20
existing shares/options for 1 new share/option.
The movement on the share-based payment charge for the year was
£nil (2020 - £nil) in respect of the issued options. The details of
warrants and options are as follows:
|
As at 1 |
Exercised / |
As at 31 |
|
|
|
| Date
of Grant |
November |
Vested / |
October |
Exercise |
Exercise/Vesting Date |
|
2020 |
(Forfeited) |
2021 |
Price |
From |
To |
|
Options |
|
|
|
|
|
|
|
09/05/2012 |
897,809 |
- |
897,809 |
20p |
09/05/2012 |
05/09/2022 |
|
897,809 |
- |
897,809 |
|
|
|
The remuneration committee’s aim is to remunerate executive
directors competitively and to reward performance. The remuneration
committee determines the company's policy for the remuneration of
executive directors, having regard to the UK Corporate Governance
Code and its provisions on directors' remuneration.
The number of options outstanding to the Directors that served
in the year, as at 31 October 2021
were as follows:
|
|
|
2021 |
2020 |
|
Director |
|
|
Options |
Options |
| Andrew
Monk |
|
|
191,952 |
191,952 |
| Robert
Scott |
|
|
50,000 |
50,000 |
| Matthew
Bonner |
|
|
180,000 |
180,000 |
|
Total |
|
|
421,952 |
421,952 |
|
|
|
|
|
The estimated fair value of the options in issue was calculated
by applying the Black-Scholes option pricing model.
The assumptions used in the calculation were as follows:
| Share price at date of
grant |
£0.0050 |
| Exercise price |
£0.0075 to £0.01 |
| Expected
volatility |
65% |
| Expected dividend |
0% |
| Contractual life |
1.1 years |
| Risk free rate |
1.63% |
| Estimated fair value of
each option |
£0.003764 –
£0.0378 |
The share options outstanding at the year-end had a weighted
average remaining contractual life of 0.5 years (2020: 1.5
years).
25.Equity portion of convertible loan
notes
As per note 24, during the 2021 financial year, on the
23rd of March 2021, the
company converted £383,000 owed to the directors and a company
owned by a director for 7,660,000 convertible loan notes and,
simultaneously, issued 4,400,000 convertible loan notes to the
value of £220,000 for cash. The equity portion of the convertible
loan notes is presented below.
|
|
Group |
|
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Equity
portion of convertible loan notes |
|
|
|
|
|
issued during the year (per note 26) |
74,935 |
- |
74,935 |
- |
| Carrying
value |
74,935 |
- |
74,935 |
- |
26.Convertible loan notes
|
|
Group |
|
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Convertible loan
notes |
778,065 |
250,000 |
778,065 |
250,000 |
| Carrying value |
778,065 |
250,000 |
778,065 |
250,000 |
The Loan Notes holder will be paid an annual interest rate of 12
per cent in cash, semi-annually, with a term of 24 months. The Loan
Notes will not be admitted to trading on any exchange.
As per note 24, during the 2021 financial year, on the
23rd of March 2021, the
company converted £383,000 owed to the directors and a company
owned by a director for 7,660,000 convertible loan notes and,
simultaneously, issued 4,400,000 convertible loan notes to the
value of £220,000 for cash.
As per note 24, during the 2020 financial year, as part of the
subscription dated 24 July 2020,
3,333,333 additional share warrants were allocated to the capital
portion of the convertible loan notes and 750,000 additional share
warrants were allocated to the outstanding interest portion of the
convertible loan notes, which at the subscription date was
£37,500.
The new ordinary shares issued as a result of conversion of all
Loan Notes would represent 17,060,000 (2020: 5,000,000) ordinary
shares, or 43.71 (2020: 18.54) per cent of the issued share capital
of the Company, as enlarged by the 2018 Fundraising. On
14 September 2018 issued £250,000 of
convertible loan notes for 50,000,000 loan notes of 0.50p (the
“Loan Notes”) with a conversion price of 0.75p (the “Conversion
Price”). The Subscription Price was at the last closing price of
0.50p per ordinary share as at 13 September
2018. Further, the Conversion Price represents a premium of
50.0 per cent to this same closing price. The Subscription included
the issue of 50,000,000 Convertible Loan Notes of 0.50p with a
conversion price of 0.75p which after the 20:1 share consolidation
of 2018 resulted in there being 2,500,000 Convertible Loan Notes of
10.0p with a conversion price of 15.0p.
If the Convertible Loan Notes were converted, up to 17,810,000
(2020: 5,750,000) new Ordinary Shares will be issued (“Loan
Conversion Shares”). Further, Warrants will be attached to any Loan
Conversion Shares that are issued on a 1-for-1 basis on the same
terms as the Warrants attached to the New Ordinary Shares (“Loan
Conversion Warrants”). A maximum of 32,510,222 (2020: 20,450,222)
New Ordinary Shares could potentially be issued in the event that
all New Ordinary Shares Warrants and Loan Conversion Warrants are
exercised.
However, under the terms of the Loan Note Instrument, the
maximum number of Loan Notes that can be converted into ordinary
shares at any one time will be restricted such that Mike Joseph’s
total voting rights cannot exceed 29.9 per cent. of the shares in
issue of the Company.
The fair value of the liability component, included in
non-current liabilities, is calculated using a market interest rate
for an equivalent non-convertible loan note at the date of issue.
The residual amount, representing the value of the equity
conversion component, is included in shareholder’s equity in Equity
portion of convertible loan notes (Note 25).
The carrying amount of the liability component of the
convertible loan notes at the balance sheet date are derived as
follows:
|
|
Group |
|
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Liability
component at the beginning |
|
|
|
|
| of
the financial year |
282,909 |
255,819 |
250,000 |
255,819 |
| Face
value of the convertible loan notes |
|
|
|
|
|
issued on 23 March 2021 |
603,000 |
- |
603,000 |
- |
| Equity
conversion component |
(74,935) |
- |
(74,935) |
- |
Liability
component on initial
recognition |
810,974 |
255,819 |
778,065 |
255,819 |
|
Accumulated amortisation of interest |
|
|
|
|
|
expense |
99,785 |
30,082 |
99,785 |
30,082 |
|
Accumulated payments of interest |
- |
(2,992) |
- |
(2,992) |
| Liability
component at the end of the |
|
|
|
|
|
financial year |
910,759 |
282,909 |
877,850 |
282,909 |
| Current
portion included in current |
|
|
|
|
|
liabilities |
132,694 |
32,909 |
132,694 |
32,909 |
| Long term
portion included in long term |
|
|
|
|
|
liabilities |
778,065 |
250,000 |
778,065 |
250,000 |
| Liability
component at the end of the |
|
|
|
|
|
financial year |
910,759 |
282,909 |
910,759 |
282,909 |
27.Borrowings
|
Group |
Group |
Company |
Company |
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| Euro 2 Afrisko
Ltd |
|
|
|
|
| - Inventory
Financing |
401,696 |
256,400 |
- |
- |
| Onga Wari CRS (PTY)
LTD |
|
|
|
|
| - Inventory
Financing |
16,560 |
52,808 |
- |
- |
| Working Capital
Partners |
|
|
|
|
| - Accounts
receivable financing |
47,808 |
119,511 |
- |
- |
| Carrying value |
466,064 |
428,719 |
- |
- |
The Group’s wholly owned subsidiary Dynamic Intertrade has
entered into a funding agreements with Euro
2 Afrisko Ltd and Onga Wari CRS (Pty) Ltd whereby
Euro 2 Afrisko pay the suppliers
directly and this is then repaid by Dynamic Intertrade to purchase
stock from suppliers where deposits are required.
The borrowings are secured by a Security Agreement from the
Company. The loans bear interest at 14% per annum.
28.Leases
Right of use assets and lease
liability
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
| Operating
lease commitments |
|
|
|
|
|
| disclosed
as at 31 October |
|
410,502 |
- |
- |
- |
|
Discounted using the incremental |
|
|
|
|
|
| borrowing rate at date of initial application |
- |
- |
- |
- |
| Additions
to leases during the year |
|
- |
430,973 |
- |
- |
| Lease
payments |
|
(67,072) |
(20,471) |
- |
- |
| Exchange
difference |
|
3,672 |
|
|
|
| Lease
liability recognised in the |
|
|
|
|
|
|
statement of financial position |
|
347,102 |
410,502 |
- |
- |
|
|
|
|
|
|
| Of
which: |
|
|
|
|
|
| Current
lease liabilities |
|
77,887 |
66,477 |
- |
- |
|
Non-current lease liabilities |
|
269,215 |
344,025 |
- |
- |
|
|
347,102 |
410,502 |
- |
- |
Right-of use assets were measured at the amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the statement
of financial position as at 31 October
2019. There were no onerous lease contracts that would have
required an adjustment to the right-of-use assets at the date of
initial application. The recognised right of-use assets relate to
the following types of assets:
|
|
Group |
Group |
Company |
Company |
|
|
Year
ended |
Year
ended |
Year
ended |
Year
ended |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
Properties |
|
341,905 |
409,424 |
- |
- |
On the 3rd of March
2020 a new lease was signed for the Group’s main trading
address, 104 Bofors Circle, Epping Industrial 2, Cape Town, South Africa with commencement date
of 1 July 2020. On the commencement
date, the Group recognised a lease liability and right-of-use asset
of £430,973.
Impact on earnings per share
Depreciation on the right-of-use asset amounting to £67,519
(2020: £21,549) and interest on the right-of-use lease liability of
£31,468 (2020: £11,552) were charged to the statement of profit and
loss for the current year. As a result, the earnings per share
decreased by 0.005p.
29.Notes to the Statement of Cash
Flows
|
|
Group |
Group |
Company |
Company |
|
|
For
the year |
For
the year |
For
the year |
For
the year |
|
|
ending |
ending |
ending |
ending |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
| Cash and
cash equivalents |
|
1,109,774 |
45,251 |
1,108,476 |
25,624 |
|
Borrowings |
|
(466,064) |
(428,719) |
- |
- |
|
Convertible loan notes |
|
(778,065) |
(250,000) |
(778,065) |
(250,000) |
| Right of
use lease liability |
|
(347,102) |
(410,502) |
- |
- |
| Net
Debt |
|
(481,457) |
(1,043,970) |
330,411 |
(224,376) |
|
|
|
|
|
|
| Cash and
liquid investments |
|
1,109,774 |
45,251 |
1,108,476 |
25,624 |
| Fixed
rate instruments |
|
(1,591,231) |
(1,089,221) |
(778,065) |
(250,000) |
| Net
Debt |
|
(481,457) |
(1,043,970) |
330,411 |
(224,376) |
Net Debt Reconciliation for the
Group
|
Cash
and |
|
|
Right
of use |
|
|
|
cash |
|
Convertible |
lease |
Total |
|
|
equivalents |
Borrowings |
loan
notes |
liability |
debt |
Net
debt |
|
£ |
£ |
£ |
£ |
£ |
£ |
| Net debt
as at 31 October 2019 |
5,218 |
(363,091) |
(250,000) |
- |
(613,091) |
(607,873) |
| Cash
flows |
40,093 |
(38,687) |
- |
20,471 |
(18,216) |
21,877 |
| New lease
agreements |
- |
- |
- |
(430,973) |
(430,973) |
(430,973) |
| Foreign
exchange adjustments |
(60) |
(26,941) |
- |
- |
(26,941) |
(27,001) |
| Net debt
as at 31 October 2020 |
45,251 |
(428,719) |
(250,000) |
(410,502) |
(1,089,221) |
(1,043,970) |
| Cash
flows |
1,064,699 |
(32,973) |
(220,000) |
67,071 |
(185,902) |
878,797 |
| Non-cash
transactions |
|
|
(383,000) |
|
(383,000) |
(383,000) |
| Equity
Portion of Convertible Loan Notes |
|
|
74,935 |
|
74,935 |
74,935 |
| Foreign
exchange adjustments |
(176) |
(4,372) |
- |
(3,671) |
(8,043) |
(8,219) |
| Net debt
as at 31 October 2021 |
1,109,774 |
(466,064) |
(778,065) |
(347,102) |
(1,591,231) |
(481,457) |
Net Debt Reconciliation for the
Company
|
Cash
and |
|
|
Right
of use |
|
|
|
cash |
|
Convertible |
lease |
Total |
|
|
equivalents |
Borrowings |
loan
notes |
liability |
debt |
Net
debt |
|
£ |
£ |
£ |
£ |
£ |
£ |
| Net debt
as at 31 October 2019 |
4,383 |
(10,000) |
(250,000) |
- |
(260,000) |
(255,617) |
| Cash
flows |
21,241 |
10,000 |
- |
- |
10,000 |
31,241 |
| New lease
agreements |
- |
- |
- |
- |
- |
- |
| Foreign
exchange adjustments |
- |
- |
- |
- |
- |
- |
| Net debt
as at 31 October 2020 |
25,624 |
- |
(250,000) |
- |
(250,000) |
(224,376) |
| Cash
flows |
1,082,852 |
- |
(220,000) |
- |
(220,000) |
862,852 |
| Non-cash
transactions |
- |
|
(383,000) |
|
(383,000) |
(383,000) |
| Equity
Portion of Convertible Loan Notes |
|
|
74,935 |
|
74,935 |
74,935 |
| Foreign
exchange adjustments |
- |
- |
- |
- |
- |
- |
| Net debt
as at 31 October 2021 |
1,108,476 |
- |
(778,065) |
- |
(778,065) |
330,411 |
30. Financial Instruments – Fair
values and risk management
The following table shows the carrying amounts and fair values
of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value
information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable
approximation of fair value.
Trade and other receivables and trade and other payables
classified as held-for-sale are not included in the table below. As
at 31 October 2021 the Group did not
have any trade and other receivables nor any trade and other
payables that were classified as held-for-sale.
The Group has not disclosed the fair values of financial
instruments such as short-term trade receivables and payables,
because their carrying amounts are a reasonable approximation of
their fair value.
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
| Group
as at 31 October 2021 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
| Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
Investment in associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
| Loan
receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
6,154 |
- |
- |
6,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
| Trade and
other receivables |
|
- |
259,360 |
- |
259,360 |
|
|
|
|
|
| Cash and
cash equivalents |
|
- |
1,109,774 |
- |
1,109,774 |
|
|
|
|
|
|
|
- |
1,369,134 |
- |
1,369,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
| Lease
Liability |
|
- |
- |
(347,102) |
(347,102) |
|
|
|
|
|
| Unsecured
borrowings |
|
- |
- |
(466,064) |
(466,064) |
|
|
|
|
|
|
Convertible loan notes |
|
- |
- |
(778,065) |
(778,065) |
|
|
|
|
|
| Trade and
other payables |
|
- |
- |
(1,468,499) |
(1,468,499) |
|
|
|
|
|
|
|
- |
- |
(3,059,730) |
(3,059,730) |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
| Group
as at 31 October 2020 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
| Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
Investment in associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
| Loan
receivable |
|
994,729 |
- |
- |
994,729 |
|
- |
- |
994,729 |
994,729 |
|
|
1,000,883 |
- |
- |
1,000,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
| Trade and
other receivables |
|
- |
290,256 |
- |
290,256 |
|
|
|
|
|
| Cash and
cash equivalents |
|
- |
45,251 |
- |
45,251 |
|
|
|
|
|
|
|
- |
335,507 |
- |
335,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
| Lease
Liability |
|
- |
- |
(410,502) |
(410,502) |
|
|
|
|
|
| Unsecured
borrowings |
|
- |
- |
(428,719) |
(428,719) |
|
|
|
|
|
|
Convertible loan notes |
|
- |
- |
(250,000) |
(250,000) |
|
|
|
|
|
| Trade and
other payables |
|
- |
- |
(1,593,230) |
(1,593,230) |
|
|
|
|
|
|
|
- |
- |
(2,682,451) |
(2,682,451) |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
|
Company as at 31 October 2021 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
| Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
Investment in associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
| Loan
receivable |
|
- |
- |
- |
- |
|
- |
- |
- |
- |
|
|
6,154 |
- |
- |
6,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
|
Intercompany loans receivable |
|
- |
- |
- |
- |
|
|
|
|
|
| Trade and
other receivables |
|
- |
- |
- |
- |
|
|
|
|
|
| Cash and
cash equivalents |
|
- |
1,108,476 |
- |
1,108,476 |
|
|
|
|
|
|
|
- |
1,108,476 |
- |
1,108,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
| Lease
Liability |
|
- |
- |
- |
- |
|
|
|
|
|
| Unsecured
borrowings |
|
- |
- |
- |
- |
|
|
|
|
|
|
Convertible loan notes |
|
- |
- |
(778,065) |
(778,065) |
|
|
|
|
|
| Trade and
other payables |
|
- |
- |
(1,113,694) |
(1,113,694) |
|
|
|
|
|
|
|
- |
- |
(1,891,759) |
(1,891,759) |
|
|
|
|
|
|
|
Carrying value |
|
|
|
|
Fair value |
|
|
|
Company as at 31 October 2020 |
Note |
FVOCI
- equity instruments |
Financial assets at amortised cost |
Other
financial liabilities |
Total |
|
Level
1 |
Level
2 |
Level
3 |
Total |
|
|
£ |
£ |
£ |
£ |
|
£ |
£ |
£ |
£ |
| Financial assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
Investment in associate |
|
6,154 |
- |
- |
6,154 |
|
- |
- |
6,154 |
6,154 |
| Loan
receivable |
|
994,729 |
- |
- |
994,729 |
|
- |
- |
994,729 |
994,729 |
|
|
1,000,883 |
- |
- |
1,000,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial assets not measured at fair value |
|
|
|
|
|
|
|
|
|
|
Intercompany loans receivable |
|
- |
- |
- |
- |
|
|
|
|
|
| Trade and
other receivables |
|
- |
12,163 |
- |
12,163 |
|
|
|
|
|
| Cash and
cash equivalents |
|
- |
25,624 |
- |
25,624 |
|
|
|
|
|
|
|
- |
37,787 |
- |
37,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial liabilities not measured at fair value |
|
|
|
|
|
|
|
|
|
| Lease
Liability |
|
- |
- |
- |
- |
|
|
|
|
|
| Unsecured
borrowings |
|
- |
- |
- |
- |
|
|
|
|
|
|
Convertible loan notes |
|
- |
- |
250,000 |
250,000 |
|
|
|
|
|
| Trade and
other payables |
|
- |
- |
1,235,225 |
1,235,225 |
|
|
|
|
|
|
|
- |
- |
1,485,225 |
1,485,225 |
|
|
|
|
|
Financial instruments – Fair values
and risk management
B. Measurement of fair
values
i. Valuation techniques and
significant unobservable inputs
The following tables show the valuation techniques used in
measuring Level 3 fair values for financial instruments measured at
fair value in the statement of financial position, as well as the
significant unobservable inputs used. Related valuation processes
are described in Note 3.
Financial instruments measured at fair value
| Type |
Valuation
technique |
Significant
unobservable inputs |
Inter-relationship
between significant unobservable inputs and fair value
measurement |
| Investment in
Associate |
The value of the
investment is adjusted annually based upon the group’s share of the
associates profit or loss. |
None |
None |
ii. Transfers between Levels 1 and
2
There were no transfers between Levels 1 and 2 in either the
current financial year or in the prior financial year.
C. Financial Risk
Management
The Group has exposure to the following risks arising from
financial instruments:
- credit risk;
- liquidity risk; and
- market risk.
Risk management framework
The Company’s board of directors has overall responsibility for
the establishment and oversight of the Group’s risk management
framework.
The Group’s risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s
activities.
The Group’s audit committee oversees how management monitors
compliance with the Group’s risk management policies and procedures
and reviews the adequacy of the risk management framework in
relation to the risks faced by the Group. The Group’s audit
committee undertake ad hoc reviews of risk management controls and
procedures, the results of which are reported to the audit
committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group’s
receivables from customers and investments in debt securities.
The carrying amounts of financial assets represent the maximum
credit exposure. There was no impairment loss in the current year
nor in the prior year.
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of
its customer base, including the default risk associated with the
industry and country in which its customers operate. Details of
concentration of revenue are included in Note 6.
The Group has established a credit policy under which each new
customer is analysed individually for creditworthiness before the
Group’s standard payment terms and conditions are offered. The
Group’s review includes external ratings, if they are available,
financial statements, credit agency information, industry
information and in some cases bank references. Sales limits are
established for each customer and are reviewed regularly.
The Group limits its exposure to credit risk from trade
receivables by establishing a maximum payment period of one
month.
The Group does not require collateral in respect of trade and
other receivables. The Group does not have trade receivables for
which a no allowance is recognised because of collateral.
|
Group |
Group |
Company |
Company |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| As at
31 October the exposure to credit |
|
|
|
|
| risk
for trade receivables by geographic |
|
|
|
|
| region
was follows: |
|
|
|
|
| South
Africa |
257,332 |
272,130 |
- |
- |
|
Other |
- |
- |
- |
- |
|
257,332 |
272,130 |
- |
- |
| As at
31 October the exposure to credit |
|
|
|
|
| risk
for trade receivables by |
|
|
|
|
|
counterparty was follows: |
|
|
|
|
|
Other |
- |
- |
- |
- |
|
- |
- |
- |
- |
| As at
31 October the exposure to credit |
|
|
|
|
| risk
for trade receivables by credit |
|
|
|
|
| rating
was follows: |
|
|
|
|
| External
credit ratings |
- |
- |
- |
- |
|
Other |
257,332 |
272,130 |
- |
- |
|
257,332 |
272,130 |
- |
- |
Expected credit loss assessment for
corporate customers as at 31 October
2020 and 31 October 2021
The Group allocates each exposure to a credit risk grade based
on data that is determined to be predictive of the risk of loss
(including but not limited to external ratings, audited financial
statements, management accounts and cash flow projections and
available press information about customers) and applying
experienced credit judgement. Credit risk grades are defined using
qualitative and quantitative factors that are indicative of the
risk of default.
The company had no exposure to credit risk for the year ended
31 October 2021.
Movements in the allowance for
impairment in respect of trade receivables
The movement in the allowance for impairment in respect of trade
receivables during the year amounted to nil.
Cash and cash equivalents
As at 31 October 2021, the Group
held £1,109,774 in cash and cash equivalents (2020: £45,251) and
had a bank overdraft of £nil. The cash and cash equivalents are
held with bank and financial institution counterparties which are
rated Baa3 to A1+ by Moody’s.
Impairment on cash and cash equivalents has been measured on a
12-month expected loss basis and reflects the short maturities of
the exposures. The Group considers that its cash and cash
equivalents have low credit risk based on the external credit
ratings of the counterparties. On the implementation of IFRS 9 the
Group did not impair any of its cash and cash equivalents.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group’s approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
Exposure to liquidity risk
The following tables present the remaining contractual
maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted and include contractual interest
payments and exclude the impact of netting agreements.
|
|
|
|
Contractual cash flows |
|
|
Group
as at
31 October 2021 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
| Non- derivative financial |
|
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
| Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
| Unsecured shareholders' |
|
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
| Convertible loan |
|
|
|
|
|
|
|
notes |
(778,065) |
(778,065) |
- |
- |
(778,065) |
- |
- |
| Secured
loans |
- |
- |
- |
- |
- |
- |
- |
| Right-of-Use Finance |
|
|
|
|
|
|
|
Lease |
(347,102) |
(347,102) |
(12,268) |
(65,619) |
(89,877) |
(179,338) |
- |
| Trade Payables |
(1,274,105) |
(1,274,105) |
(1,274,105) |
- |
- |
- |
- |
| Other Payables |
(153,515) |
(153,515) |
- |
(153,515) |
- |
- |
- |
| Related Party |
|
|
|
|
|
|
|
|
Payables |
(40,879) |
(40,879) |
- |
(40,879) |
- |
- |
- |
|
(2,593,666) |
(2,593,666) |
(1,286,373) |
(260,013) |
(867,942) |
(179,338) |
- |
|
|
|
|
|
|
|
|
| Derivative financial |
|
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash flows |
|
|
Group
as at
31 October 2020 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
| Non- derivative financial |
|
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
| Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
| Unsecured shareholders' |
|
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
| Convertible loan |
|
|
|
|
|
|
|
notes |
(250,000) |
(250,000) |
- |
- |
(250,000) |
- |
- |
| Secured
loans |
- |
- |
- |
- |
- |
- |
- |
| Right-of-Use Finance |
|
|
|
|
|
|
|
Lease |
(410,502) |
(410,502) |
(10,446) |
(56,031) |
(77,196) |
(266,829) |
- |
| Trade Payables |
(1,500,098) |
(1,500,098) |
(1,500,098) |
- |
- |
- |
- |
| Other Payables |
(53,546) |
(53,546) |
- |
(53,546) |
- |
- |
- |
| Related Party |
|
|
|
|
|
|
|
|
Payables |
(39,586) |
(39,586) |
- |
(39,586) |
- |
- |
- |
|
(2,253,732) |
(2,253,732) |
(1,510,544) |
(149,163) |
(327,196) |
(266,829) |
- |
|
|
|
|
|
|
|
|
| Derivative financial |
|
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash flows |
|
|
Company as at
31 October 2021 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
| Non- derivative financial |
|
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
| Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
| Unsecured shareholders' |
|
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
| Convertible loan |
|
|
|
|
|
|
|
notes |
(778,065) |
(778,065) |
- |
- |
(778,065) |
- |
- |
| Secured
loans |
- |
- |
- |
- |
- |
- |
- |
| Right-of-Use Finance |
|
|
|
|
|
|
|
Lease |
- |
- |
- |
- |
- |
- |
- |
| Trade Payables |
(981,000) |
(981,000) |
(981,000) |
- |
- |
- |
- |
| Other Payables |
(132,694) |
(132,694) |
- |
(132,694) |
- |
- |
- |
| Related Party |
|
|
|
|
|
|
|
|
Payables |
- |
- |
- |
- |
- |
- |
- |
|
(1,891,759) |
(1,891,759) |
(981,000) |
(132,694) |
(778,065) |
- |
- |
|
|
|
|
|
|
|
|
| Derivative financial |
|
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
|
|
|
|
Contractual cash flows |
|
|
Company as at
31 October 2020 |
Carrying value |
Total |
2
Months or less |
2 to
12 Months |
1 to 2
Years |
2 to 5
Years |
More
than 5 years |
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
| Non- derivative financial |
|
|
|
|
|
|
|
liabilities |
|
|
|
|
|
|
|
| Bank
overdrafts |
- |
- |
- |
- |
- |
- |
- |
| Unsecured shareholders' |
|
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
- |
| Convertible loan |
|
|
|
|
|
|
|
notes |
(250,000) |
(250,000) |
- |
- |
(250,000) |
- |
- |
| Secured
loans |
- |
- |
- |
- |
- |
- |
- |
| Right-of-Use Finance |
|
|
|
|
|
|
|
Lease |
- |
- |
- |
- |
- |
- |
- |
| Trade Payables |
(1,202,316) |
(1,202,316) |
(1,202,316) |
- |
- |
- |
- |
| Other Payables |
(32,909) |
(32,909) |
- |
(32,909) |
- |
- |
- |
| Related Party |
|
|
|
|
|
|
|
|
Payables |
- |
- |
- |
- |
- |
- |
- |
|
(1,485,225) |
(1,485,225) |
(1,202,316) |
(32,909) |
(250,000) |
- |
- |
|
|
|
|
|
|
|
|
| Derivative financial |
|
|
|
|
|
|
|
liabilities |
- |
- |
- |
- |
- |
- |
- |
|
- |
- |
- |
- |
- |
- |
- |
The interest payments on the financial liabilities represent the
fixed interest rates as per the respective contracts.
The Group aims to maintain the level of its cash and cash
equivalents and other highly marketable debt investments at an
amount in excess of expected cash outflows on financial liabilities
other than trade payables. The Group also monitors the level of
expected cash inflows on trade and other receivables together with
expected cash outflows on trade and other payables.
Market risk
Market risk is the risk that changes in market prices – such as
foreign exchange rates, interest rates and equity prices – will
affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations
arise.
The carrying amounts of the Group’s foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows:
Exposure to currency risk
The summary quantitative data about the Group’s exposure to
currency risk as reported to the management of the Group is as
follows:
| Group
Foreign exchange |
|
31
October |
2021 |
|
31
October |
2020 |
|
risk |
GBP |
USD |
ZAR |
GBP |
USD |
ZAR |
|
|
|
|
|
|
|
| Loan
receivable |
- |
- |
- |
- |
1,307,472 |
- |
| Trade and
other |
|
|
|
|
|
|
|
receivables |
- |
- |
5,605,406 |
12,163 |
- |
5,880,723 |
| Cash and
cash equivalents |
1,108,476 |
- |
27,042 |
25,624 |
- |
412,539 |
| Unsecured
shareholders' |
|
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
| Secured
loans |
- |
- |
(9,709,568) |
- |
- |
(6,933,134) |
|
Convertible loan notes |
(778,065) |
- |
- |
(250,000) |
- |
- |
|
Right-of-Use Finance |
|
|
|
|
|
|
|
Lease |
- |
- |
(7,231,199) |
- |
- |
(9,058,788) |
| Trade
payables |
(1,113,694) |
- |
(8,771,247) |
(1,202,316) |
- |
(8,771,247) |
| Net
statement of financial |
|
|
|
|
|
|
|
position exposure |
(783,283) |
- |
(20,079,566) |
(1,414,529) |
1,307,472 |
(18,469,907) |
|
|
|
|
|
|
|
| Next 6
months sales |
|
|
|
|
|
|
|
forecast |
- |
- |
14,750,700 |
- |
- |
24,584,495 |
| Next 6
months purchases |
|
|
|
|
|
|
|
forecast |
(131,337) |
- |
(10,763,660) |
(85,642) |
- |
(19,570,291) |
| Net
forecast transaction |
|
|
|
|
|
|
|
exposure |
(131,337) |
- |
3,987,040 |
(85,642) |
- |
5,014,204 |
|
|
|
|
|
|
|
| Net
exposure |
(914,620) |
- |
(16,092,526) |
(1,500,171) |
1,307,472 |
(13,455,703) |
|
Company Foreign |
|
31
October |
2021 |
|
31
October |
2020 |
|
exchange risk |
GBP |
USD |
ZAR |
GBP |
USD |
ZAR |
|
|
|
|
|
|
|
| Loan
receivable |
- |
- |
- |
- |
1,307,472 |
- |
| Trade and
other |
|
|
|
|
|
|
|
receivables |
- |
- |
- |
12,163 |
- |
- |
| Cash and
cash equivalents |
1,108,476 |
- |
- |
25,624 |
- |
- |
| Unsecured
shareholders' |
|
|
|
|
|
|
|
loans |
- |
- |
- |
- |
- |
- |
| Secured
loans |
- |
- |
- |
- |
- |
- |
|
Convertible loan notes |
(778,065) |
- |
- |
(250,000) |
- |
- |
|
Right-of-Use Finance |
|
|
|
|
|
|
|
Lease |
- |
- |
- |
- |
- |
- |
| Trade
payables |
(1,113,694) |
- |
- |
(1,202,316) |
- |
- |
| Net
statement of financial |
|
|
|
|
|
|
|
position exposure |
(783,283) |
- |
- |
(1,414,529) |
1,307,472 |
- |
|
|
|
|
|
|
|
| Next 6
months sales |
|
|
|
|
|
|
|
forecast |
- |
- |
- |
- |
- |
- |
| Next 6
months purchases |
|
|
|
|
|
|
|
forecast |
(85,642) |
- |
- |
(85,642) |
- |
- |
| Net
forecast transaction |
|
|
|
|
|
|
|
exposure |
(85,642) |
- |
- |
(85,642) |
- |
- |
|
|
|
|
|
|
|
| Net
exposure |
(868,925) |
- |
- |
(1,500,171) |
1,307,472 |
- |
The following significant exchange rates in relation to
the reporting currency are applicable:
|
Average for the year |
Year end spot rate |
|
2021 |
2020 |
2021 |
2020 |
|
|
|
|
|
| United
States Dollar ($) |
1.3747 |
1.2818 |
1.3683 |
1.3144 |
| South
African Rand (ZAR) |
20.2550 |
20.8703 |
20.8331 |
21.0194 |
The presentation currency of the Group is British Pound
Sterling.
The Group is exposed primarily to movements in USD and ZAR, the
currency in which the Group receives most of its funding, against
other currencies in which the Group incurs liabilities and
expenditure.
Sensitivity analysis
Financial instruments affected by
foreign currency risk include cash and cash equivalents, trade
other receivables and trade and other payables. The following
analysis, required by IFRS 7 Financial Instruments: Disclosures, is
intended to illustrate the sensitivity of the Group’s financial
instruments (at year end) to changes in market variables, being
exchange rates.
The following assumptions were made in calculating the
sensitivity analysis:
- All income statement sensitivities also impact equity
- Translation of foreign subsidiaries and operations into the
Group’s presentation currency have been excluded from this
sensitivity as they have no monetary effect on the results
Income Statement / Equity
|
2021 |
2021 |
2020 |
2020 |
|
+10% |
-10% |
+10% |
-10% |
|
|
|
|
|
| Base
currency of British pound Sterling: |
|
|
|
|
|
- United States Dollar ($) |
0.1368 |
(0.1368) |
0.1314 |
(0.1314) |
|
- South African Rand (ZAR) |
2.0833 |
(2.0833) |
2.1019 |
(2.1019) |
The above sensitivities are calculated with reference to a
single moment in time and will change due to a number of factors
including:
- Fluctuating other receivable and trade payable balances
- Fluctuating cash balances
- Changes in currency mix
Interest rate risk
The Group has entered into fixed rate agreements for its finance
leases and shareholders loans. The Group does not hedge its
interest rate exposure by entering into variable interest rate
swaps.
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing
financial instruments as reported to the management of the Group is
as per the table below.
|
Group |
Group |
Company |
Company |
|
2021 |
2020 |
2021 |
2020 |
| Fixed
rate instruments |
|
|
|
|
| Financial
assets |
- |
994,729 |
- |
994,729 |
| Financial
liabilities |
(1,513,344) |
(1,022,744) |
(778,065) |
(250,000) |
Fair value sensitivity analysis for
fixed-rate instruments
The Group does not account for any fixed-rate financial assets
of financial liabilities at FVTPL. Therefore, a change in interest
rates at the reporting date would not affect profit or loss.
Other market price risk
The Group is exposed to equity price risk, which arises from
equity securities at FVOCI are held as a long-term investment.
The Group’s investments in equity securities comprise small
shareholdings in unlisted companies. The shares are not readily
tradable and any monetisation of the shares is dependent on finding
a willing buyer.
Valuation techniques and assumptions applied for the purposes of
measuring fair value
The fair value of cash and receivables and liabilities
approximates the carrying values disclosed in the financial
statements.
Capital management
The Group manages its capital resources to ensure that entities
in the Group will be able to continue as a going concern, while
maximising shareholder return.
The capital structure of the Group consists of equity
attributable to shareholders, comprising issued share capital and
reserves. The availability of new capital will depend on many
factors including a positive operating environment, positive stock
market conditions, the Group’s track record, and the experience of
management. There are no externally imposed capital
requirements. The Directors are confident that adequate cash
resources exist or will be made available to finance operations but
controls over expenditure are carefully managed.
31.Related Party Transactions
Directors’
fees
Andrew Monk, a non-executive
director of the company, is a director of VSA Capital Limited and
that company provided services amounting to £57,384 (2020:
£113,575) to the Company during the year.
During the year ended 31 October
2021 £46,966 was paid to Directors of the company (2020:
£49,896). At the year-end a total of £62,126 (2020: £194,266) was
outstanding in respect of directors’ emoluments.
Other related
party transactions
Included in trade and other payables are the following related
party financial liabilities:
|
Group |
Group |
Company |
Company |
|
As
at |
As
at |
As
at |
As
at |
|
31
October |
31
October |
31
October |
31
October |
|
2021 |
2020 |
2021 |
2020 |
|
£ |
£ |
£ |
£ |
| M Bonner |
24,562 |
24,052 |
- |
- |
| R Scott |
16,317 |
15,534 |
- |
- |
|
40,879 |
39,586 |
- |
- |
Terms:
M Bonner and R Scott: The loan bears interest at the South
African prime overdraft rate. The interest will be calculated and
paid when the loan is repaid. The loan is repayable as decided upon
from time to time.
Outstanding
director’s salaries and related party transactions
Included in trade and other payables are the following
outstanding directors’ salaries and fees payable to related parties
for other services:
|
Group |
Group |
Company |
Company |
|
|
As
at |
As
at |
As
at |
As
at |
|
|
31
October |
31
October |
31
October |
31
October |
|
|
2021 |
2020 |
2021 |
2020 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
| Company
controlled by a director: |
|
|
|
|
|
| VSA
Capital |
227,082 |
356,934 |
356,934 |
356,934 |
|
|
|
|
|
|
|
| Included in the amount due to VSA Capital are director's
salaries owed to A. Monk |
|
|
|
|
|
|
|
|
|
Directors' salaries outstanding |
|
|
|
|
|
|
| -
A. Monk |
37,126 |
31,266 |
31,266 |
31,266 |
|
|
| -
M. Bonner |
12,000 |
42,000 |
42,000 |
42,000 |
|
|
| -
D. Lenigas |
5,000 |
49,000 |
49,000 |
49,000 |
|
|
| -
R. Scott |
8,000 |
37,000 |
37,000 |
37,000 |
|
|
|
62,126 |
159,266 |
159,266 |
159,266 |
|
|
32.Controlling Party Note
There is no single controlling party. Significant shareholders
are listed in the Directors Report and Business Review.
33.Events Subsequent to 31 October 2021
Subsequent to 31 October 2021, the
company entered into settlement agreements with several of its
trade creditors for work done on the Comarco transaction. This
resulted in settlement discounts totalling £273,677 being
realised.
For further information please
contact:
Anglo African Agriculture plc |
|
| Andrew Monk, Non-Executive
Chairman |
+44 (0)20 7440 0640 |
| Rob Scott, Executive Director |
+27 (0)84 6006 001 |
|
|
|
|
| VSA Capital Limited
(Financial Adviser and Corporate Broker) |
+44 (0)20 3005 5000 |
| Andrew Raca, Maciek
Szymanski (Corporate Finance) |
|