TIDMAGTA
RNS Number : 8177Q
Agriterra Ltd
01 November 2021
Information communicated within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ('MAR'). Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
1 November 2021
Agriterra Limited ('Agriterra' or the 'Company')
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector:
Agriculture
Audited Annual Results for Year Ended 31 March 2021
Agriterra Limited, the AIM-quoted African agricultural company,
announces its audited annual results for the year ended 31 March
2021 (the "2021 Annual Accounts").
The 2021 Annual Accounts are now available on the Company's
website and are copied below. The 2021 Annual Accounts will be
posted to Shareholders with the Notice of Annual General Meeting to
approve the 2021 Annual Accounts by 5 November 2021.
**S **
For further information please visit www.agriterra-ltd.com or
contact:
Agriterra Limited Strand Hanson Limited
(Nominated & Financial Adviser and
Broker)
---------------------------- ------------------------------------
Caroline Havers James Spinney / Ritchie Balmer/ Rob
Patrick
caroline@agriterra-ltd.com +44 (0) 207 409 3494
Chair's statement and strategic review
I am pleased to present the annual report of the Company for the
year ending 31 March 2021. During the year, following the
appointment of Rui Sant'ana Afonso as Chief Executive Officer
designate in April 2020, the Company focused on a review of all
operations and improvement of the existing systems and controls. Mr
Sant'ana Afonso was appointed as CEO and to the Board in April
2021.
The Group also had to navigate the downturn in the Mozambique
economy caused by the COVID-19 pandemic.
The Company continues to observe the principles of the QCA
Corporate Governance Code (the "Code") to the extent that they
consider them to be applicable and appropriate for a Company of
Agriterra's size and stage of development, through the maintenance
of efficient and effective management frameworks accompanied by
good communication. Further details are available at:
http://www.agriterra-ltd.com/corporategovernance.aspx .
Strategy and Business Model
The Company's strategy remains to operate efficient, profitable
businesses in Mozambique to create value for its shareholders and
other stakeholders by supplying beef and milled maize products to
the local market.
The Company continues to focus on adding value along the entire
maize and beef chain, by developing and offering new products to
the market. It now has three operational agricultural
divisions:
-- Beef, which sources cattle from local farmers and then
processes them through its own feedlot, abattoir operation, retail
units and to the wholesale market through Mozbife Limitada
('Mozbife')
-- Grain, which operates maize purchasing and processing
businesses through Desenvolvime nto e Comercializa c a o Agri cola
Limitada ('DECA') and Compagri Limitada ('Compagri') for sale to
the retail and wholesale markets.
-- Snax, which sources maize grits from DECA, processing this
into flavoured puffs and naks for sale to the wholesale market
through DECA Snax Limitada, an operating entity that was
incorporated in December 2020. As set out in note 23, DECA has
joint control and a 50% ownership interest in DECA Snax which has
been accounted for as a joint venture in the consolidated financial
statements.
These three divisions have built strong brands in Mozambique.
During the period the Group secured new credit facility of US$3.7m
to secure the necessary maize quantities needed to meet the
projected meal sales for this financial year.
COVID-19 related issues in China resulted in a delay in the
supply of the necessary equipment and commencement of operations at
DECA Snax from March to December 2020. The production line has been
commissioned and the first quarter has gone well with the products
being well received by the consumer and DECA Snax sold 128 805
bales generating more than US$0.23 million revenue in that
period.
The Company is aware of its environmental, social and
governmental responsibilities and the need to maintain effective
working relationships across a range of stakeholder companies. The
major shareholder is represented on the Board ensuring their views
are incorporated into the Board's decision-making process. In
addition to the Group's staff and shareholders, the local community
in Mozambique is a primary stakeholder. In purchasing maize and
cattle directly from the local community, the Group plays an
important role in local economic development, supporting small
scale farmers and the developing commercial sector.
Mozambique overview
FY2021 was a challenging year for Mozambique.
Following on from the cyclones Idai and Kenneth in March 2019,
the Central region of Mozambique was hit by 2 further significant
cyclones in December 2020, and again in January 2021. Crop losses
were high, and farmers were forced to replant, which in turn caused
delays to the harvest and supply of grain in the market.
Mozambique went into COVID-19 lockdown in April 2020 and
restrictions remained in force until September 2020, when the
national infection numbers appeared to be under control and general
day to day life began to normalise. Following the Christmas
holidays, movement of families for the holidays and an influx of
tourists, the number of infections quadrupled in January 2021 and
the Government implemented new restrictions including a curfew.
Although these actions reduced the infection rate, Mozambique
entered its third wave in May 2021, which has seen numbers again
increase, with restrictions again imposed. Currently, the
government of Mozambique has eased many of the COVID-19 restrictive
measures because of significant progress in the national
vaccination campaign and the great improvement in all COVID-19
indicators such as daily number of new cases, and of deaths.
The operating companies promptly put in place effective
bio-security procedures from the outbreak of COVID-19 and did not
have any infections in YE March 21. We have had a small number of
infections during the third wave in August 2021, but everyone has
recovered. The companies continue with the training and awareness
programmes implemented at the start of the pandemic and we remain
alert to the challenges of COVID-19 and are prepared to take
mitigating actions as events develop.
The insurgency in northern Mozambique (1,500km north of Chimoio)
has intensified and in February 2021 the engineering camps in Palma
were attacked, displacing over 500,000 people and forcing TOTAL to
cancel all supplier contracts, including the catering support for
at least 7,000 staff. The oil and gas programs have been suspended
until the Government is able to ensure security for the companies
operating in those areas.
During this same period the Metical depreciated against the US$
going from 67.5 MZN in April 2020 to 75MZN in January 2021, ending
at 68.78MZN to the US$ in March 2021. The Metical depreciated
against the Rand, which contributed towards increasing the annual
inflation to 3.14%, compared to 2.8% in 2019. The Central Bank had
dropped the prime Metical lending rate by 3% in June 2020, but
later returned it to the present rate of 18.9% in Q1-2021 in
response to COVID-19 lockdown and other macro-economic
pressures.
Operations review
Grain division
The division has performed better than the previous financial
year, with sales exceeding the FY20 volumes by over 5,000 tons
(25,389 tons vs. 19,926 tons in FY20). This has been driven by the
ability to maintain our strong hold in the central region of
Mozambique and the continued focus on efficiencies and service
delivery to our customers. The re-commissioned 1kg bag packaging
line and delivery directly to the retailers has begun paying off,
as the monthly sales for this unit have increased from 1 ton per
month ($538) in 2020 to a high of 20 tons per month ($10,769) in
February 2021.
In early 2020, the division accepted pre-paid contracts to ease
our short-term challenges of cash flow. This had an opportunity
cost of selling the product to fulfil these contracts at a lower
price than we would have ordinarily achieved in the last quarter of
FY21 which resulted in bringing down the margin in this period.
Milling yields have remained relatively constant and have not
impacted margins compared to the prior year.
Total maize purchased for the year was 36,538 tons, which was
processed into 28,025 tons of meal. Maize prices later in the
season were driven up by a shortage in production caused by the
cyclone in 2019.
Beef division
COVID-19 restrictions and a slowdown in the oil and gas sector
has negatively impacted the Mozbife performance. Beef division sold
more than 30 tons of beef per month to oil and gas companies in
northern Mozambique which decreased to less than 10 tons per month
by 31 March 2021. Sales volumes were 19% below the previous year
(1,331 tons vs. 1,652 tons in FY20), however the bottom-line has
improved 33% on FY20. The overall improvement is driven by the
aggressive cost cutting and efficiency improvements that management
implemented in mid-2020. These initiatives resulted in an 18%
reduction in the cost of goods per ton of meat sold and an increase
in the dress out % from 50% to 51.7% (equating to an increase in
average meat price by 12%).
Mozbife implemented 3 new sales strategies in early 2020, which
opened new markets and compensated for the negative impact of
COVID-19 and the slowdown in the oil and gas sector on the demand
for our meat products:
-- The Maputo depot opened in October 2020 and sales here have
increased to an average of 16 tons per month of mainly carcasses,
and larger supermarkets and restaurants are now ordering and
collecting weekly from this facility.
-- Sale of primal cuts to large processors in Maputo, who in the
past relied on imports from South Africa for their meat. This
action has resulted in an additional 10 tons of meat sales per
month being processed and sold in the local restaurants and
supermarkets.
-- Upgrading the factory shop in Chimoio has built a greater
awareness of our processed meat products, such as sausages and
burgers. This facility has doubled in size and sales now average
US$3,000 per day, an increase from US$1,000 in the past.
At the farm level operations, new cropping programs improved our
silage production from Banar grass, with yields exceeding 40 tons
per hectare. This helped improve the performance of the
feedlot.
Total animals bought for the year was 6,045 head resulting in
1,200 tons of beef being produced for sale into the local
market.
Mozbife has completed the 9 Cattle Service Centres that were
being built with the World Bank grant received in 2019. The centres
are run in partnership with 9 different farmer associations that
were created and received training through this initiative.
Snax Division
DECA Snax, sources maize grits from DECA and processes them into
flavoured puffs and naks for sale to the wholesale market. DECA
Snax began operating in December 2020 and has already gained
traction in the market. Overall, the reaction has been very
positive where demand is currently outstripping production. We are
encouraged by the results to date and the feedback from consumers.
We are confident with the growth envisaged going forward. Over the
4-month period December 20 to March 21, the operation sold a total
of 128,805 bales and earned US$234 228 in revenue.
The Company is looking forward to developing this opportunity
further and building a well-recognised brand in the coming
years.
Key Performance Indicators
The Board monitors the Group's performance in delivery of
strategy by measuring progress against Key Performance Indicators
(KPIs). These KPIs comprise a number of operational, financial and
non-financial metrics and there is no explicit IFRS standard used
in calculating the KPIs
2021 2020 2019
Grain division
-------------- -------------- --------------
- Average milling yield 76.7% 77% 76.2%
-------------- -------------- --------------
- Meal sold (tonnes) 25,389 19,926 16,791
-------------- -------------- --------------
- EBITDA (note 5) $ 485,000 $ 86,000 $ (273,000)
-------------- -------------- --------------
- Net debt $ (5,856,106) $ (4,001,000) $ (3,670,000)
-------------- -------------- --------------
- Available headroom under banking
facilities $ 884,669 $ 746,000 $ 537,000
-------------- -------------- --------------
Beef division
-------------- -------------- --------------
- Slaughter herd size - number
of head 5,667 2,100 2,468
-------------- -------------- --------------
- Average daily weight gain in
feedlot (% of body mass) 0.35 0.34 0.32
-------------- -------------- --------------
- Meat sold (tonnes) 890 1,094 1,260
-------------- -------------- --------------
- EBITDA (note 5) $ (550,000) $ (905,000) $ (892,000)
-------------- -------------- --------------
- Net debt $ (406,244) $ (665,000) $ (663,000)
-------------- -------------- --------------
- Available headroom under banking
facilities - $ 99,000 $ 195,000
-------------- -------------- --------------
Snax division (3 months)
-------------- -------------- --------------
- Bales sold (units) 128,805 - -
-------------- -------------- --------------
- EBITDA (note 5) Nil( As - -
a JV)
-------------- -------------- --------------
- Net debt $ 23 - -
-------------- -------------- --------------
- Available headroom under banking N/A - -
facilities
-------------- -------------- --------------
- -
-------------- -------------- --------------
Group
-------------- -------------- --------------
- EPS (10.3) (14.1) (14.6)
-------------- -------------- --------------
- Liquidity - cash plus available
headroom under facilities $ 1,139,000 $ 1,162,000 $ 2,702,000
-------------- -------------- --------------
Financial Review
In FY 21 Group revenue increased 11% to US$14.25m (FY20:
US$12.9m). Despite the cyclones, the insecurity in northern
Mozambique and the COVID-19 pandemic sales were above budgeted
revenue of US$14.1m. The Gross Margin of US$2.1m (FY20: US$1.8m)
and EBITDA loss of US$(0.4m) vs. FY20 loss of US$(1.4m), reflects a
marked improvement against FY20.These results were driven by two
main challenges:
-- the shortage of maize in the buying season, (a result of the
cyclones and delayed disbursements) which forced us to buy the last
6,000 tons of maize in Q1-2021 at an average price of 20,000MZN vs.
the budget of 15,000MZN per ton, effectively increasing the cost of
maize by US$440,431; and
-- The loss of US$440,000 of expected meat sales because of the
lock down, which limited activities in tourism, the Oil and Gas
sector, restaurants and general catering sectors.
In response to the general operating environment and the
improvement in efficiencies, management have reduced the Company
overheads by US$1.5m (US$3.2m in FY21 from US$4.7m in FY20). These
savings were carried out through the following actions:
-- Closure of non-performing meat retail centres
-- Retrenchment and retirement of staff
-- Improved milling and feed lot efficiencies to get more
product out of each unit of grain or animal inputs
Finance costs remain high, reflecting the level of historical
debt and local interest rates. In FY21 the total was US$1.2m (FY20:
US$1.0m). Depreciation charges were US$0.5m (FY20: US$0.6m)
bringing the Loss attributable to Shareholders to US$2.2m (FY20:
US$3.0m), an improvement ofUS$0.8m. The grain division accounted
for 77.7% of the revenue and 35% of the overall loss, while the
beef accounted for 65% of the overall loss.
Management realise that success will require the businesses to
achieve a better balance between protecting the Gross Margin and
achieving a sale, so in FY22 management will look to do so, whilst
still improving efficiencies, securing finance to buy the maize
earlier and to align the feed lot and abattoir operations with
demand for meat.
As at 31 March 2021, an external real estate valuer was engaged
to revalue property plant and equipment and this resulted in a
revaluation gain of US$18,475,127. The Company revised its PPE
accounting policy from a cost model to a revaluation model and
these revaluations will be performed regularly every 3 years.
Net Debt at 31 March 2021 was US$ 6.2m (FY20: US$4.3m). Since
the year-end, additional working capital facilities have been
agreed, to enable the Grain division to secure sufficient grain to
meet its operational targets in the 2022 season.
Risk management
The Group is subject to various risks and the future outlook for
the Group, and growth in shareholder value should be viewed with an
understanding of these risks. According to the risk, the Board may
decide to tolerate it, seek to mitigate it through controls and
operating procedures, or transfer it to third parties. The
following table shows the principal risks facing the Group and the
actions taken to mitigate these:
Key risk Detail How it is managed Change in the
factor period
Foreign The Group's operations The Group's borrowing Increased -
Exchange are impacted by fluctuations facilities are denominated The Metical
in exchange rates and in Metical as far has been unstable
the volatility of the as possible. in the past
Metical. 18 months, and
inflation has
increased, and
interest rates
have fluctuated
during the period.
Prices for production
inputs have
increased.
------------------------------------ ------------------------------ -----------------------
Political Changes to government Contingency plans No change
instability policy and applicable to protect assets
laws could adversely and staff should
affect operations or political or military
the financial condition tensions escalate.
of the Group.
------------------------------------ ------------------------------ -----------------------
Insurgent Insurgent activity in The area where this Increased -
Activity this region impacting activity is taking Heightened tensions
on Cabo the operation of oil place is 1,500 kilometres and COVID-19
Delgardo and gas companies and away from the Group's has resulted
region therefore reducing demand operations, so there in TOTAL pulling
for the Group's products is no direct threat staff out of
to people or assets. the region and
Continued efforts development
to find new markets works being
for beef products put on hold.
to replace the demand
that is currently
on hold for this
sector.
------------------------------------ ------------------------------ -----------------------
Land ownership Property rights and Observance of any No change .
in Mozambique land are exclusive to conditions attaching
the state. The state to a DUAT.
grants rights to use
and develop land "DUATs".
The operations are dependent
upon maintaining the
relevant DUATs.
------------------------------------ ------------------------------ -----------------------
Maize Adverse weather conditions, Diversify sources Increased -
growing national or regional of supply and sign Cyclones and
season could impact on the supply agreements. flooding have
availability and pricing The business has severely affected
of grain. taken the initiative the farmer yields
to go directly to in central Mozambique
the farmer, rather
than depending entirely
on traders.
------------------------------------ ------------------------------ -----------------------
Cattle Cattle are subject to Stringent Bio-security No change
and cattle diseases and infections. measures are in place
feed The availability and at the Farms and
price of feed impacts Feedlot. The division
profitability. is now self-sufficient
in roughage crops
and acquires most
of its feed from
the Grain division.
------------------------------------ ------------------------------ -----------------------
Access The Group is reliant During the year, Increased -
to working on local banking facilities the Group secured T he exposure
capital in Mozambique. additional facilities. to reliance
on the renewal
of short-term
facilities has
increased.
------------------------------------ ------------------------------ -----------------------
Compliance There is a risk of a The Board reinforces No change
breach of the Group's an ethical corporate
business or ethical culture. Anti-bribery
conduct standards and policies are in place,
breach of anti-corruptions with regular training
laws, resulting in investigations, throughout the organization.
fines and loss of reputation.
------------------------------------ ------------------------------ -----------------------
COVID-19 COVID-19 has had a significant Plans are in place No change
negative impact globally, to protect our staff
both economically and and production capabilities.
socially. There is a There were no outbreaks
risk that there will of COVID-19 amongst
be a significant outbreak the staff in YE21.
of the COVID-19 virus The Group remains
in Mozambique which alert to the threats
could potentially impact caused by COVID-19
the population through and is prepared to
contraction of COVID-19 put in place mitigating
and Government enforced actions as events
measures, and in turn develop. Our products,
impact the Group's operations. meal and beef, are
key staples in the
domestic Mozambican
market and new strategies
for marketing directly
to the consumer are
being implemented.
------------------------------------ ------------------------------ -----------------------
The Board is also responsible for establishing and monitoring
the Group's systems of internal controls. Although no system of
internal control can provide absolute assurance against material
misstatement or loss, the Group's systems are designed to provide
the directors with reasonable assurance that problems are
identified on a timely basis and dealt with appropriately. The
Board reviews the effectiveness of the systems of internal control
and considers the major business risks and the control environment
on a regular basis. In light of this control environment the Board
considers that there is no current requirement for a permanent
separate internal audit function.
Going concern
Details of the consideration of going concern are set out in
note 3. The Company has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities.
The forecasts show that the Group needs to achieve its operating
targets and renew its existing overdraft facilities or secure other
forms of financing to meet its commitments as they fall due, none
of which are certain. These conditions and events indicate the
existence of a material uncertainty that may cast significant doubt
upon the Group's ability to continue as a going concern and the
Group Companies may therefore be unable to realise their assets and
discharge their liabilities in the ordinary course of business. The
auditors make reference to going concern in their audit report by
way of a material uncertainty. These financial statements do not
include the adjustments that would result if the Group were unable
to continue as a going concern.
COVID-19
The Mozambican Government continues to implement policies to
minimise the spread of COVID-19, with the likelihood that it will
continue into 2022. The closure of the borders, industries and the
logistics sectors continue to have a negative impact on the overall
economy in Mozambique. The grain and snax sales have been
encouraging, but growth is being restricted by the curfews
affecting the informal retail sector. The beef division has been
hardest hit by both the pandemic and oil and gas sector being
closed. The Company is taking measures to reduce overheads, improve
efficiencies and to identify new markets, where the divisions can
increase product uptake.
Outlook
The Group has had a difficult start to FY-22 as the COVID-19
lock down was reinstated in April 2021. This has made the overall
operation challenging, but management are protecting the gross
margins and ensuring that the businesses do not lose potential
advantages in the market. The COVID-19 restrictive measures have
been relaxed and expect the business environment to improvement and
therefore result in high sales volumes by Q4 of 2021.
Grain
The 2 cyclones and heavy rains have resulted in a delay in the
maize harvesting and buying season by over 3 months. This resulted
in high raw material costs, more intense efforts to secure the
maize and an adjustment of the initial forecast from 42,000 tons of
maize to 30,000 tons. To date we have purchased at total of 23,000
tons and we are confident that we will successfully secure the
balance of 7,000 tons in the coming 2 months. The Metical
appreciating to 55MZN: US$1 in April has encouraged the importation
of meal alternatives, such as rice and wheat in Q2-2021. This had
an initial negative impact, while consumers had a cheaper
alternative to local meal, but demand is recovering as the Metical
has recently depreciated towards 70MZN:US$. Over the last 6 months,
the Grain division has continued to make significant progress in
meeting the operating challenges to increase volumes and improve
margins to move into profitability.
Beef
The beef operation has had a negative impact due to the lock
down. We have encountered difficulties in accessing the cattle
production areas and the market has shrunk significantly, since the
oil and gas projects have slowed down due to a global contraction
related to COVID-19. Our largest clients (accounting for 60% of
monthly sales) were those supplying these companies in northern
Mozambique. The result is lower sales than projected. In response
to this change, the organisation has implemented a massive drive to
cut overheads and to identify efficiencies (for example, the travel
loss mass for cattle bought has dropped from 20% to 8%, adding a
further US$500,000 to the bottom line). The overall operating
performance is only slightly behind budget as a result of these
improvements and an increased unit value per tonne of meat.
Snax
The demand for the brand is growing quickly and sales are
closely related to schools being open or not, in that, demand is
high when open, because the children enjoy these products at their
break time or on the way home. The operation is exceeding budget
and is expected to yield favourable results for the Company as a
whole.
Board and senior management changes
On 30 April 2020 Mr. Zandamela joined the Board as a
non-executive director and in April 2020 Mr. Sant'ana Afonso
appointed as CEO designate. He subsequently joined the Board and
was formerly appointed as CEO in April 2021. See below for further
information.
CSO Havers,
Non-Executive Chair
29 October 2021
Corporate Governance
The Company is quoted on AIM and is required to comply with the
provisions of a recognised corporate governance code. The Board
elected to adopt the Quoted Company Alliance Corporate Governance
Code (the "QCA code"). Further details are available at
http://www.agriterra-ltd.com/corporategovernance.aspx .
The Board is committed to applying a standard of corporate
governance commensurate with its size and stage of growth and the
nature of its activities.
The Board
The board structure continues to be organised to ensure it has
the appropriate balance of skills and independence. The Board
currently comprises the Non-Executive Chair, Chief Executive, two
non-independent Non-Executive Directors and two independent
Non-Executive Directors. Within Senior Management, there is a Chief
Financial Officer and General Manager who reports to the Board. The
Board is looking to further enhance its composition, skills and
balance as the Company develops. The Board currently comprises:
Caroline Havers , Non-Executive Chair (AC; IC chair)
Ms. Havers is a highly experienced litigation/dispute resolution
lawyer having spent over 30 years within international law firms
working with clients operating in a variety of African
jurisdictions and industry sectors. During her legal career, Ms.
Havers has been both a partner and managing director of different
law firms. She provides advice on compliance and governance and is
a long qualified CEDR Mediator.
Rui Sant'ana Afonso (CEO)
Mr. Sant'ana Afonso is a Mozambican citizen, who resides in
Mozambique. Previously he was Executive Director for Mozambique of
AgDevCo for 6 years and, prior to that, worked as Director of
Operations for G4S in Mozambique. In addition, he gained
significant supply chain and logistics experience through his role
as Bulk Cargo Manager at the Port of Maputo, where he worked for 6
years.
Mr. Sant'ana Afonso has a BSc in Agriculture and an MSC in
Agricultural Economics and has held non-executive directorships in
various companies in the food commodity sector in Mozambique.
Hamish Rudland , Non-Executive Director (IC)
Mr. Rudland has extensive experience across logistics,
agriculture, agro-processing, distribution, and property. After
graduating from Massey University, New Zealand, he returned to
Zimbabwe to start a passenger transport business that soon
diversified into fuel tank haulage. Thereafter Mr. Rudland
structured acquisitions of foreign-owned asset rich companies to
list on the Zimbabwe Stock Exchange where he has substantial
investments which focus on his core competencies but also synergise
where advantages can be made.
As a result of Mr. Rudland's relationship to Magister
Investments Limited, he is not considered to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Gary Smith , Non-Executive Director (AC; RC)
Mr. Smith is an experienced finance professional and qualified
Chartered Accountant. He is currently a non-executive director of
several companies in Zimbabwe and Mauritius. Mr. Smith worked in
the UK for several years where he was employed at Deutsche Bank,
University of Surrey, and Foxhills Club & Resort. Upon
returning to Africa, he worked for a large transport and logistics
company in Mozambique for four years before returning home to
Zimbabwe and the above positions.
As a result of Mr. Smith's relationship with Magister
Investments Limited, he is not considered to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Neil Clayton , Non-Executive Director (AC Chair; RC Chair)
Mr. Clayton is a Chartered Accountant and has over 30 years of
experience in a variety of listed and un-listed companies.
Specifically, Mr. Clayton brings significant experience and
expertise as regards listed companies operating in Africa as well
as particular knowledge of the Company's business and requirements,
having held an interim finance role at the Company during 2018. The
Board considers Mr. Clayton to be an "independent" director for the
purposes of the QCA Corporate Governance Code.
Sergio Zandamela , Non-Executive Director (appointed 30 April
2020) (IC)
Mr. Zandamela is a Mozambican national with over 20 years'
experience in agriculture and business with a degree in Agronomy -
Rural Engineering from the Eduardo Mondlane University and
subsequently an MBA from the Montford University Southern Africa -
Sandton Business School. From 2016 to 2019 Mr. Zandamela was
responsible from for all Mozambique commercial activities of
Tongaat Hulett (agriculture and agri-processing business, focusing
on the complementary feedstocks of sugarcane and maize). Mr.
Zandamela is currently Chairman of the Board of Directors of the
Association of Sugar Producers of Moçambique and acted as Chairman
of the National Sugar Distributors of Moçambique.
The Board considers Mr. Zandamela to be an "independent"
director for the purposes of the QCA Corporate Governance Code.
Following the appointment of the CEO, the Non-Executive Chair is
expected to commit a minimum of a day a week and the Non-Executive
Directors are expected to commit 2 days a month. In addition, all
directors are expected to devote any additional time that might be
required in order to discharge their duties. Since the outbreak of
COVID-19, Board meetings were held quarterly via Zoom. The
attendance record of directors who held office for the year is as
follows:
Meetings held Meetings attended
Caroline Havers 4 4
-------------- ------------------
Neil Clayton 4 4
-------------- ------------------
Hamish Rudland 4 4
-------------- ------------------
Gary Smith 4 4
-------------- ------------------
Sergio Zandamela 4 3
-------------- ------------------
Rui Sant'ana Afonso 4 4
-------------- ------------------
The Board has entrusted the day-to-day responsibility for the
direction, supervision and management of the business to the Chief
Executive Officer (CEO), who leads an Executive Committee (EXCO).
For the financial year ended 31 March 2021 the EXCO was comprised
of the CEO Designate, the General Manager, the Operations Director,
the Financial Director and the Commercial Director in
Mozambique.
The CEO and General Manager have a call each week with the Chair
to review strategy and discuss any matters arising.
Certain matters are specifically reserved to the Board for its
decision including, inter alia, the creation or issue of new shares
and share options, acquisitions, investments and disposals,
material contractual arrangements outside the ordinary course of
business and the approval of all transactions with related
parties.
There is no agreed formal procedure for the directors to take
independent professional advice at the Company's expense. The
Company's directors submit themselves for re-election at the Annual
General Meeting at regular intervals in accordance with the
Company's Articles of Incorporation.
The Company has adopted a share dealing code for directors'
dealings which is appropriate for an AIM quoted company. The
directors and the Company comply with the relevant provisions of
the AIM Rules and the Market Abuse Regulation (EU) No. 596/2014
relating to share dealings and take all reasonable steps to ensure
compliance by the Group's employees.
Board Committees
Due to the current size of the Board and the Company, there is
no separate Nominations Committee, and any new directors are
appointed by the whole Board.
At the Board meeting held in March 2019 the new Audit ("AC"),
Investment ("IC") and Remuneration Committees ("RC") were
established. The Audit Committee and the Investment Committees have
met in the last financial year.
The Audit Committee was chaired by Neil Clayton. The Audit
Committee has been actively engaged in the planning and conduct of
the Audit of these financial statements. The Committee has met
formally since the year end and the Chair has had independent
conversations with the Audit partners both in Mozambique and London
where executive management have not been present.
Terms and conditions for Directors
The Non-Executive Chair and Non-Executive Directors do not have
service contracts but appointment letters setting out their terms
of appointment. The appointments may be terminated on three (3)
months' notice by either party. The Non-Executive Directors receive
an annual base fee reflecting their respective time commitments and
do not receive any benefits in addition to their fees, nor are they
eligible to participate in any pension, bonus or share-based
incentive arrangements.
Directors' remuneration
Remuneration details are set out in note 9 to the financial
statements.
Evaluation of Board performance
Given the Company's size, no formal review of the effectiveness
of its performance as a unit, as well as that of its committees and
the individual directors has been taken. Performance reviews are to
be carried out internally from time to time. Reviews will endeavour
to identify skills development or mentoring needs of directors and
the wider senior management team.
The Board recognizes that the current procedures remain to be
formally implemented and therefore do not accord with the QCA
Guidelines. However, it is anticipated that these procedures will
be augmented to a standard appropriate for the size and stage of
development of the Company.
Communication with shareholders
The Company aims to ensure all communications concerning the
Group's activities are clear, fair and accurate. The Board is
however keen to improve its dialogue with shareholders. The
Company's website is regularly updated, and announcements are
posted onto the Company's website.
The results of voting on all resolutions in future general
meetings will be posted to the Company's website, including any
actions to be taken as a result of resolutions for which votes
against have been received from at least 20 percent of independent
shareholders.
Directors' report
The Directors the Company hereby present their annual report
together with the audited financial statements for the year ended
31 March 2021 for the Group.
Except where otherwise noted, amounts are presented in this
Directors' report in United States Dollars ('$' or 'US$').
1. Listing details
Agriterra is a non-cellular Guernsey registered company limited
by shares, whose ordinary shares ('Ordinary Shares') are quoted on
the AIM Market of the London Stock Exchange ('AIM') under symbol
AGTA.
2. PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS
The principal activity of the Company is the investment in,
development of and operation of agricultural projects in Africa.
The Group's current operations are focussed on maize and beef in
Mozambique. A review of the Group's performance by business segment
and future prospects are given in the Chair's statement and
strategic review, together with a review of the risks and
uncertainties impacting on the Group's long-term performance.
3. Results and Dividends
The Group results for the year ending 31 March 2021 show a loss
after taxation of US$ 2,194,000 (2020: loss of $ 2,993,000). The
Directors do not recommend the payment of a final dividend (2020:
US$ nil). No interim dividends were paid in the year (2020: US$
nil).
Further details on the Group's performance in the year are
included in the Chair's statement and strategic review.
4. DIRECTORS
4.1. Directors in office
The Directors who held office during the year and until the date
of this report were:
Director Position
-------------------------------- -----------------------
CSO Havers Non-Executive Chair
R Sant'ana Afonso (appointed CEO
1 April 2021 )
-------------------------------- -----------------------
NWH Clayton Non-Executive Director
HBW Rudland Non-Executive Director
GR Smith Non-Executive Director
S Zandamela (appointed 30 April Non-Executive Director
2020)
4.2. Directors' interests
As at the date of this report, the interests of the Directors
and their related entities in the Ordinary Shares of the Company
were:
Ordinary
Shares held
-------------- -------------
HBW Rudland* 10,622,433
Mr. Rudland's interest is held through Magister Investments
Limited ('Magister'). Magister is a private limited company
incorporated in the Republic of Mauritius, wholly owned by
Mauritius International Trust Company Limited, as trustee of the
Casa Trust (a Mauritius registered trust). Mr. Hamish Rudland is
the Settlor of the Casa Trust and the beneficiaries of the Casa
Trust are Mr. Rudland, his wife, Mrs. Bridgette Rudland and their
three children (all of whom are under 18 years old).
4.3. Directors' emoluments
Details of the nature and amount of emoluments payable by the
Company for the services of its Directors during the financial year
are shown in note 9 to the financial statements.
4.4. Directors' indemnities
The Company has made qualifying third-party indemnity provisions
for the benefit of its Directors which remain in force at the date
of this report.
5. Substantial Shareholdings
To the best of the knowledge of the Directors, except as set out
in the table below, there are no persons who, as of 20 October
2021, are the direct or indirect beneficial owners of, or exercise
control or direction over 3% or more of the Ordinary Shares in
issue of the Company.
Number of
Ordinary
Shares % Holding
------------------------------------- ----------- ----------
Magister Investments Limited 10,622,433 50.01%
13. 90
Gersec Trust Reg. 2,779,656 %
Mr. William Philip Seymour Richards 982,500 4.63%
Global Resources Fund 678,886 3.20%
Peter Gyllenhammar AB 647,500 3.05%
6. EMPLOYEE INVOLVEMENT POLICIES
The Company places considerable value on the awareness and
involvement of its employees in the Group's performance. Within
bounds of commercial confidentiality, information is disseminated
to all levels of staff about matters that affect the progress of
the Group and that are of interest and concern to them as
employees.
7. SUPPLIER PAYMENT POLICY AND PRACTICE
The Company's policy is to ensure that, in the absence of
dispute, all suppliers are dealt with in accordance with its
standard payment policy which is to abide by the terms of payment
agreed with suppliers for each transaction. Suppliers are made
aware of the terms of payment. The number of days of average daily
purchases included in trade payables at 31 March 2021 was 32 days
(2020: 39 days).
8. POLITICAL AND CHARITABLE DONATIONS
During the year no political and charitable donations were made
in cash.
The most significant event for the year was the onset of the
COVID-19 pandemic. The pandemic was in full effect when the region
was struck by 2 cyclones which had made landfall in the Central
Mozambique region in December 2020 and March 2021. Although not as
strong as Cyclone Idai these cyclones brought heavy rains with
localised flooding and destruction of crops in low lying areas.
Coupled to this was the conflict in the north of Mozambique
affecting the oil and gas sector. As a result of the above many
programs and initiatives were affected by the pandemic resulting in
little or no visits taking place for safety reasons and compliance.
However, we did assist in the following areas:
-- 15 tons of mealie meal and 1 ton of beans were donated to
Platforma Makobo who were distributing food in Cabo Delgado for
families displaced due to the armed conflict taking place. As with
many other donors in the region we were part of a combined
humanitarian program to help those families in need.
-- 5 tons of maize was toll milled on behalf of local Government
for the support of families displaced in the north sponsored by the
Provincial Government of Manica.
-- Supported the plight of the 30 employees who were isolated
and trapped for 3 weeks on Dombe farm after the cyclone where
access was completely cut off. We managed to deliver dry goods and
medication to the employees and their families by boat during that
period. The bulk of this flooding emanated from heavy rains in
Zimbabwe flooding the southern river systems and thus impacting on
low lying areas like Dombe.
9. SOCIAL AND COMMUNITY ISSUES
Due to the pandemic and the fact that most institutes were
closed or working online the Group did its best to facilitate and
accommodate programs with minimal risk. These programs involved
working in small groups, in open air and where the risk of
spreading COVID-19 was minimal.
The Group policies of spreading out shifts, reducing transport
numbers and opening up working spaces all went hand in hand with
community programs. We also worked closely and in line with
legislative requirements ensuring we were compliant at all times.
This certainly introduced a new way of operating in and out of the
business.
The mission of the Group in Mozambique is to work with and
support the local producers by creating an efficient route to
market of a top-quality national product. We still strongly believe
in the "field to fork" process and will continue to develop this
concept as the Group continues to grow and expand. We have recently
created a slogan called "Do campo para mesa" meaning "From the
field to the table" which simply cements our beliefs in the
business. We respect that it is part of our wider responsibility to
promote the development of the countries in which we operate.
Central to this development and continued economic growth is
employment and training. Wherever possible, the Group continues to
ensure that its expertise and specialist skills and facilities are
made available to the broader community.
Particular activities undertaken during the year have focused on
(1) practical, 'on the ground' training for students from various
universities in Mozambique studying, inter alia, production
practices in beef and cattle, milling practices (including mill
engineering), veterinary sciences and animal sciences; (2)
dissemination of agricultural management knowledge and practices;
and (3) provision of health and medical assistance.
Grain Division
With respect to educational activities, this year DECA employed
permanently 1 post-graduate student who had in the previous year
completed an internship with us in HR as an HR clerk. In the
Finance division we recruited 3 of the 4 post graduate students who
completed their internships with us the previous year. In the
maintenance department we have hosted a post graduate student in
metal work and fabrication, basically offering the student an
opportunity to learn his trade in a practical field. In the
production team 2 of our milling technicians attended a 1 week
course on quality systems and standards being facilitated by the
Industry of Trade and Commerce. During the year we also had our HR
clerk attend a Health and Safety course hosted by the Ministry of
Labour.
Beef Division
The Mozbife Vanduzi feedlot hosted 6 visits during the year
mainly pertaining to technical issues related to the feedlot
operation and breeding of cattle. These visits were mainly
technical personnel of various Government departments who were
simply making courtesy calls and updates on the operations.
However, we did host a student during their vacation who was
studying Veterinary Sciences at the AIC in Chimoio. This allowed
the student to practice practical aspects of the subjects being
studied at the institute.
At the Abattoir we hosted 2 visits. First visit was for 20
students from the Marera School of Agriculture and the second visit
was from the Polytechnic Institute of Agriculture. Agenda for both
visits was for students' familiarisation regarding the slaughtering
process of animals. In addition, we hosted 3 students who were
undertaking a Post Graduate case study on the management of
effluent water in a slaughter house which also include the impact
of effluent water on fauna and flora.
As regards occupational health and safety the Group invested
heavily in controls and system related to COVID-19. This entailed
sterilization points at all entrances, transport, and work zones,
including the issue of PPE and disinfectant required for this
program. We also offered free COVID-19 tests to any employee
suspected to have contracted COVID-19 and allowed them to work from
home. This took centre stage of all activities for the year as the
various waves of infection came into effect.
Most of the Cattle Service Centres (CSC's) were completed and
commissioned this year despite further delays caused by the 2
cyclones that hit the region. The main issue was access and roads
getting to site to construct the facilities and introduce boreholes
with heavy machinery. We are happy to announce that all 9 sites
have been commissioned with only dip tanks outstanding and that
they are now fully operational. By the end of FY21 9 associations
had been formed and are now in the process of being established,
trained and prepared for operation.
10. INDEPENT AUDITOR AND STATEMENT OF PROVISION OF INFORMATION
TO THE INDEPENT AUDITOR
PKF Littlejohn LLP have expressed their willingness to continue
in office as independent auditor of the Company and a resolution to
re-appoint them will be proposed at the forthcoming Annual General
Meeting.
The Directors who held office at the date of approval of this
Directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditor is not aware and each Director has taken all the steps that
he ought to have taken as a Director to make himself aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
11. ADDITIONAL INFORMATION AND ELECTRONIC COMMUNICATIONS
Additional information on the Company can be found on the
Company's website at www.agriterra-ltd.com .
The maintenance and integrity of the Company's website is the
responsibility of the Directors; the work carried out by the
auditor does not involve consideration of these matters and
accordingly, the auditor accepts no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
The Company's website is maintained in compliance with AIM Rule
26.
By Order of the Board.
CSO Havers
Non-Executive Chair
29 October 2021
Statement of Directors' responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law, 2008, as amended (the '2008 Law')
requires the Directors to prepare Group financial statements for
each financial year in accordance with generally accepted
accounting principles.
The Directors are required by the AIM Rules for Companies of the
London Stock Exchange to prepare Group financial statements in
accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union ('EU').
The financial statements of the Group are required by law to
give a true and fair view and are required by IFRS as adopted by
the EU to present fairly the financial position and financial
performance of the Group.
In preparing the Group financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements are properly prepared in accordance with
the Companies (Guernsey) Law, 2008. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Directors confirm they have discharged their
responsibilities as noted above.
Independent auditor's report to the members of Agriterra
Limited
Opinion
We have audited the group financial statements of Agriterra
Limited (the 'group') for the year ended 31 March 2021 which
comprise the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Cash Flow Statement and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs).
In our opinion, the group financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 March 2021 and of its loss for the year then ended;
-- have been properly prepared in accordance with IFRSs; and
-- have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 3 in the financial statements, which
indicates that the group is reliant upon the sales volume, prices
and renewal of its bank facility in order for the group to meet
committed expenditure requirements and working capital needs. There
is currently uncertainty regarding the renewal of the facility. As
stated in note 3, these events or conditions indicate that a
material uncertainty exists that may cast significant doubt on the
company'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
director's 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 group's ability to
continue to adopt the going concern basis of accounting included
reviewing the management prepared cash flow forecast, challenging
the corresponding assumptions used, discussing with management
future plans in respect of funding and performing stress testing to
consider the options available to management. Based on the
assessment, the group has the ability to report under the going
concern assumption for 12 months from 31 October 2021.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. At the planning stage, materiality is used to
determine the financial statement areas that are included within
the scope of our audit and the extent of sample sizes during the
audit. No significant changes have come to light through the audit
fieldwork which has required a revision our materiality figure.
We used 1.75% (2020: 1.25%) of turnover as a basis for
determining group materiality as the group's key driver is revenue
and there is volatility in revenue. We have determined our overall
financial statement materiality to be $254,000 (2020: $148,000).
Materiality for the significant components of the group ranged from
$41,000 (2020: $29,000) to $150,000 (2020: $120,000) based on 1.75%
(2020: 1.25%) of turnover for each component.
Group performance materiality was set at $178,000 (2020:
$89,000).
We agreed to report to those charged with governance all
corrected and uncorrected misstatements we identified through our
audit with a value in excess of $12,000 (2020: $7,400). We also
agreed to report any other audit misstatements below that threshold
that we believe warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular we looked at areas involving significant accounting
estimates and judgements by the Directors and considered future
events that are inherently uncertain. These included, but were not
limited to the valuation of biological assets and the impairment of
the underlying assets of the beef and grain divisions. We also
addressed the risk of management override of internal controls,
including among other matters consideration of whether there was
evidence of bias that represented a risk of material misstatement
due to fraud.
Our group audit scope focused on the principal area of
operation, being Mozambique, where subsidiaries of the Parent
Company trade. Each component was assessed as to whether they were
significant or not significant to the group by either their size or
risk. The parent Company and the three operating subsidiaries were
considered to be significant due to identified risk and size. A
joint venture was set up within the group during the year and this
was considered to be significant but not material. We have
performed the audit of the Parent Company that is registered in
Guernsey. However, the four remaining components located in
Mozambique have been subject to full scope audits by component
auditor (a PKF network firm). As group auditors we maintained
oversight and regular contact with the component auditor throughout
all stages of the audit and we were responsible for the scope and
direction of their work.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter How the scope of our audit responded
to the key audit matter
==================================== ==========================================================
Valuation of Biological Assets
(see Note 15)
==========================================================
The group has a material biological Our work in this area included reviewing
asset in respect of livestock and challenging the work performed
within the beef division. Under by the component auditor in relation
IAS41, this is held at fair to the following:
value and there are significant Ø documents prepared by the
estimates and assumptions required board detailing the basis of valuation
to determine the fair value. of the biological assets, including
As such, there is a risk that the key assumptions and estimation
the biological asset is overstated factors therein;
in the financial statements Ø the discounted cash flow
and the fair value valuation valuation prepared by management
is not appropriate. and verifying their mathematical
accuracy;
Ø the key assumptions and judgements
used in the estimation by management;
Ø the reasonableness of the
underlying inputs of the fair value
calculation;
Ø a sensitivity analysis to
ensure any major fluctuations in
the subjective elements of the FV
calculation of the biological assets
would not result in material misstatement
and if they do, that they are appropriately
disclosed; and
Ø consideration of whether
there were any other indicators
of impairment.
==========================================================
Impairment of the underlying
assets of the Beef and Grain
Division (see Note 4)
==========================================================
The group's principal assets Our work in this area included reviewing
relate to property, plant and and challenging the work performed
equipment held within the beef by the component auditor in relation
and grain divisions and the to the following:
continuing losses incurred Ø indications of impairment
by the group may indicate that (e.g. adverse business changes,
there is a risk these assets decrease in value, change in use,
are impaired. physical damage, operating losses,
Management must assess whether planned disposal, etc.);
there is any objective evidence Ø Work performed by the independent
of impairment of the group's valuer; and
assets at the reporting date. Ø review and challenge of the
management's budgets, cash flow
forecasts and projections of the
beef and grain division to ensure
that the assets are recoverable.
==========================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the
directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of director's
responsibilities, the directors are responsible for the preparation
of the group financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the group financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and the industry in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management, application of cumulative audit
knowledge and experience of the industry sector.
-- We determined the principal laws and regulations relevant to
the company in this regard to be those arising from AIM Rules for
Companies July 2016, Companies (Guernsey) Law 2008, IFRSs, Health
and Safety Regulations and License requirements and local
regulations. The team remained alert to instances of non-compliance
with laws and regulations throughout the audit.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group with those laws and regulations. These procedures
included, but were not limited to: enquiries of management; review
of minutes of meetings; review of Regulatory News Service
announcements and correspondence.
-- We have also discussed among the audit team how and where
fraud might occur and any potential indicators of fraud. We then
challenged the key assumptions made by management in respect of
their significant accounting estimates (see key audit matter).
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
-- The component auditors designed audit procedures for each of
the components. This included reviewing journal entries for
evidence of material misstatement due to fraud; reviewing
accounting estimates, judgements and assumptions for evidence of
management bias; and performing a review of the bank transactions
to ensure appropriate authorisation.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with our engagement letter dated 19 May 2020. Our
audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Joseph Archer (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
29 October 2021
Consolidated income statement
For the year ended 31 March 2021
Year Year
ended ended
31 March 31 March
2021 2020
Note US$000 US$000
--------- ---------
Continuing operations
Revenue 5 14,250 12,910
Cost of sales (11,581) (10,643)
Decrease in fair value of biological assets (615) (489)
--------- ---------
Gross profit 2,054 1,778
Operating expenses (3,156) (4,700)
Other income 78 842
Profit on disposal of property, plant and
equipment 37 80
Operating loss 6 (987) (2,000)
Finance costs 10 (1,207) (964)
Share of profit in equity-accounted investees,
net of tax 23 - -
Loss before taxation (2,194) (2,964)
Taxation 11 - (29)
--------- ---------
Loss for the year attributable to owners
of the Company (2,194) (2,993)
US cents US cents
--------- ---------
Earnings per Share
Basic and diluted earnings per share 12 (10.3) (14.1)
--------- ---------
Consolidated statement of comprehensive income
For the year ended 31 March 2021
Year Year
ended ended
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Loss for the year (2,194) (2,993)
--------- ---------
Items that may be reclassified subsequently
to profit or loss:
Foreign exchange translation differences 1,433 (1,517)
Items that will not be reclassified to profit
or loss
Revaluation of Property, plant and equipment 13 12,563 -
--------- ---------
Other comprehensive income for the year 13,996 (1,517)
--------- ---------
Total comprehensive income for the year
attributable to owners of the Company 11,802 (4,510)
--------- ---------
The notes on pages 20 to 43 form an integral part of the
financial statements.
Consolidated statement of financial position
As at 31 March 2021
31 March 31 March
2021 2020
Note US$000 US$000
---------- ----------
Non-current assets
Property, plant and equipment 13 23,974 6,049
Intangible assets 14 59 92
Equity-accounted investees 23 1 -
----------
24,034 6,141
---------- ----------
Current assets
Biological assets 15 451 665
Inventories 16 933 825
Trade and other receivables 17 1,752 1,249
Cash and cash equivalents 231 1,034
---------- ----------
3,367 3,773
---------- ----------
Total assets 27,401 9,914
---------- ----------
Current liabilities
Borrowings 18 4,016 3,339
Trade and other payables 19 2,046 3,315
----------
6,062 6,654
---------- ----------
Net current liabilities (2,695) (2,881)
---------- ----------
Non-current liabilities
Borrowings 18 2,409 2,044
Deferred tax liability 11 5,912 -
8,321 2,044
---------- ----------
Total liabilities 14,383 8,698
---------- ----------
Net assets 13,018 1,216
---------- ----------
Share capital 22 3,373 3,373
Share premium 151,442 151,442
Share based payment reserve 87 87
Revaluation reserve 12,563 -
Translation reserve (16,940) (18,373)
Accumulated loss (137,507) (135,313)
----------
Equity attributable to equity holders of the
parent 13,018 1,216
---------- ----------
The financial statements on pages 16 to 43 were approved and
authorised for issue by the Board of Directors on 29 October
2021.
Signed on behalf of the Board of Directors by:
CSO Havers
Chair
29 October 2021
The notes on pages 20 to 43 form an integral
part of the financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended
31 March 2021
Share
based
Share Share payment Translation Revaluation Accumulated Total
capital premium reserve reserve reserve losses Equity
Note US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------- -------- -------- ------------ ------------ ------------ --------
Balance at
1 April 2019 3,373 151,442 172 (16,856) - (132,405) 5,726
Loss for the year - - - - - (2,993) (2,993)
Other
comprehensive
income:
Exchange translation
gain on foreign
operations restated - - - (1,517) - - (1,517)
-------- -------- -------- ------------ ------------ ------------ --------
Total comprehensive
loss for the year - - - (1,517) - (2,993) (4,510)
Transactions
with owners
Share based
payments - - (85) - - 85 -
------------
Total transactions
with owners for
the year - - (85) - - 85 -
------------
Balance at
31 March 2020 3,373 151,442 87 (18,373) - (135,313) 1,216
Loss for the
year - - - - - (2,194) (2,194)
Other
comprehensive
income:
Revaluation of
land and buildings - - - - 12,563 - 12,563
Exchange translation
loss on foreign
operations - - - 1,433 - - 1,433
------------
Total comprehensive
loss for the year - - - 1,433 12,563 (2,194) 11,802
Transactions
with owners
Share based
payments 24 - - - - - - -
-------- -------- -------- ------------ ------------ ------------ --------
Total transactions
with owners for
the year - - - - - - -
------------
Balance at
31 March 2021 3,373 151,442 87 (16,940) 12,563 (137,507) 13,018
-------- -------- -------- ------------ ------------ ------------ --------
The notes on pages 20 to 43 form an integral part of the
financial statements.
Consolidated cash flow statement
For the year ended 31 March 2021
Year Year
ended ended
31 March 31 March
2021 2020
Note US$000 US$000
--------- ---------
Cash flows from operating activities
Loss before tax (2,194) (2,964)
Adjustments for:
Amortisation and depreciation 13/14 574 619
Profit on disposal of property, plant
and equipment (47) (80)
Foreign exchange loss /(gain) 1,411 (1,383)
Net decrease in biological assets 15 (401) (163)
Decrease in value of biological assets 15 615 286
Net finance costs 10 1,207 964
Operating cash flows before movements
in working capital 1,165 (2,721)
Increase in inventories (108) (192)
Increase in trade and other receivables (503) (579)
(Decrease)/ increase in trade and other
payables (1,269) 2,207
Cash used in operating activities (715) (1,285)
Corporation tax paid - (14)
Interest received - 14
Net cash used in operating activities (715) (1,285)
--------- ---------
Cash flows from investing activities
Proceeds from disposal of property, plant
and equipment net of expenses incurred 47 80
Acquisition of property, plant and equipment 13 (77) (46)
Acquisition of intangible assets 14 (9) (15)
Net cash (used in) / generated from investing
activities (39) 19
--------- ---------
Cash flows from financing activities
Net drawdown of overdrafts 18 1,170 1,732
Net draw down / (repayment) of loans 18 43 (732)
Net (repayment) / draw down of leases (55) 108
Finance costs (1,207) (978)
Net cash (used in) / generated from financing
activities (49) 130
--------- ---------
Net decrease in cash and cash equivalents (803) (1,136)
Effect of exchange rates on cash and
cash equivalents - (27)
--------- ---------
Cash and cash equivalents at beginning
of the year 1,034 2,197
--------- ---------
Cash and cash equivalents at end of the
year 231 1,034
--------- ---------
The notes on pages 20 to 43 form an integral part of the
financial statements.
Notes to the consolidated financial statements
1. GeNERAL INFORMATION
Agriterra is incorporated and domiciled in Guernsey, the Channel
Islands, with registered number 42643. Further details, including
the address of the registered office, are given on page 44. The
nature of the Group's operations and its principal activities are
set out in the Directors' report. A list of the investments in
subsidiaries and associate companies held directly and indirectly
by the Company during the year and at the year-end, including the
name, country of incorporation, operation and ownership interest is
given in note 3.
The reporting currency for the Group is the US Dollar ('$' or
'US$') as it most appropriately reflects the Group's business
activities in the agricultural sector in Africa and therefore the
Group's financial position and financial performance.
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs).
The financial statements have been prepared on the historical
cost basis, except for the following items, which are measured at
on alternative basis on each reporting date:
Items Measurement basis
---------------------------------------- ---------------------------------
Biological assets Fair value
---------------------------------
Property, plant and equipment - Land and Subsequent measured at
building revalued amount- i.e. fair
value at the date of revaluation
less subsequent depreciation
and impairment losses.
---------------------------------
2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS
Adoption of new and revised Standards
During the current year, the Group has adopted all of the new
and revised standards and interpretations issued by the IASB and
the IFRS-IC that are relevant to its operations and effective for
annual reporting periods beginning on 1 April 2020. The revised
standards and interpretations has not resulted in material changes
to the Group's accounting policies.
The following new and amended standards are not expected to have
a significant impact on the Group's separate financial statements
in the future being FY 2022.
-- Onerous Contracts: Cost of Fulfilling a Contract (Amendments to IAS 37).
-- COVID-19: Related Rent Concessions (Amendment to IFRS 16).
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
-- Reference to Conceptual Framework (Amendments to IFRS 3).
-- Classification of Liabilities as Current or Non-current (Amendments to IAS 1).
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared on a historical cost
basis, except for certain financial instruments, biological assets
and share based payments. Historical cost is generally based on the
fair value of the consideration given in exchange for the assets
acquired. The principal accounting policies adopted are set out
below in this note.
Going concern
The Company has prepared forecasts for the Group's ongoing
businesses covering the period of 12 months from the date of
approval of these financial statements. These forecasts are based
on assumptions including, inter alia, that there are no significant
disruptions to the supply of maize or cattle to meet its projected
sales volumes and that key inputs are achieved, such as forecast
selling prices and volume, budgeted cost reductions, and projected
weight gains of cattle in the feedlot. They further take into
account working capital requirements and currently available
borrowing facilities.
These forecasts show that with active management of working
capital and the timing of capital expenditure, there is sufficient
headroom under the banking facilities currently available to the
Group. Certain short-term overdraft facilities fall due for renewal
in May 2022. Whilst there are no contractual obligations, the Group
will continue to rely on the bank guarantee currently provided by
its majority shareholder.
The Company's focus remains on continuing to improve operational
performance of the Grain and Beef divisions with emphasis on volume
and pricing growth to increase gross margins.
Over the last 12 months, the Grain division has made significant
progress in meeting the operating challenges to increase volumes
and margins in order to move into profitability. More importantly
this has been achieved whilst having to live within its means. New
products and improved quality have been a significant factor in
this performance and underpin the continued improvement in volumes
in the FY22 forecast, together with the start-up phase of the DECA
Snax project.
The Beef division is starting to show a recovery in
profitability as a result of the actions taken by management over
the last 12 months and is expected to generate positive operational
cash flows over the next 18 months.
COVID-19: As set out in the strategic report, the actions taken
by the Government of Mozambique to limit the spread of COVID-19,
has impacted the availability of local maize and demand for beef
from the Oil and Gas sector. The key focus of the Group has been to
maintain the health of its workforce with stringent hygiene
measures implemented at all our operations. To date there has been
no site closures or cessation of operations. However, the future
evolution of COVID-19 is not currently known and therefore a
sensitised version of the Company's forecasts has been
prepared.
Corporate overheads are forecast to be consistent with the
current run rate.
The divisional forecasts for FY-22 show a significant
improvement in operating performance as compared to that reported
for the year ended 31 March 2021. However, there can be no
certainty that these plans will be successful, and the forecasts
are sensitive to small adverse changes in the operations of the
divisions. As set out in notes 18 and 20 the Group is funded by a
combination of short and long-term borrowing facilities. $2.7m of
overdraft facilities are due for renewal within the next 12 months
and the Group is required to make $0.7m of repayments in respect of
the bank loan instalments amount together with principal on finance
leases of $167,000. The forecasts show that the Group will require
the renewal of its overdraft facilities in the review period, which
are not guaranteed
The Group has also received correspondence from the banks
providing overdraft facilities indicating that they do not
presently see any reason why the current overdraft facilities would
not be extended at their respective renewal dates. Consequently,
the forecasts include all contractual interest and capital
repayments and assume that both the term loan and overdraft
facilities will continue to be available and will be renewed for a
further year when they are reviewed in 2022.
Based on the above, whilst there are no contractual guarantees,
the directors are confident that the existing financing will remain
available to the Group. The directors, with the operating
initiatives already in place and funding options available are
confident that the Group will achieve its cash flow forecasts.
Therefore, the directors have prepared the financial statements on
a going concern basis.
The forecasts show that the Group needs to achieve its operating
targets and renew its existing overdraft facilities to meet its
commitments as they fall due neither of which are certain. These
conditions and events indicate the existence of material
uncertainties that may cast significant doubt upon the Group's
ability to continue as a going concern and the Group companies may
therefore be unable to realise their assets and discharge their
liabilities in the ordinary course of business. The auditors make
reference to going concern in their audit report by way of a
material uncertainty. These financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
Basis of consolidation
The Group accounts for business combinations using the
acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to
the Group. In determining whether a particular set of activities
and assets is a business, the Group assesses whether the set of
assets and activities acquired includes, at a minimum, an input and
substantive process and whether the acquired set has the ability to
produce outputs.
The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in profit
or loss immediately. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
'controls' an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through power over the entity. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which controls ceases.
Intra-Group transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are eliminated in the same way as unrealised gains, but only
to the extent that there is no evidence of impairment.
Interest in equity accounted investees
The Group's interest in equity accounted investees comprise
interest in a joint venture.
A joint venture is an arrangement in which the Group has joint
control, whereby the Group has rights to the net assets of the
arrangement rather than rights to its assets and obligations for
its liabilities.
Interest in Joint Ventures are accounted for using the equity
method. There are initially recognised at cost, which include
transaction cost. Subsequent to initial recognition, the
consolidated financial statements include the Group's share of the
profit or loss and OCI of the equity accounted investees, until the
date on which joint control ceases.
As at 31 March 2021, the Company held equity interests in the
following undertakings:
Direct investments
Proportion Country of incorporation
held of and place of
equity instruments business Nature of business
Subsidiary undertakings
Agriterra (Mozambique)
Limited 100% Guernsey Holding company
Indirect investments of Agriterra (Mozambique) Limited
Proportion Country of incorporation
held of and place of
equity instruments business Nature of business
Subsidiary undertakings
DECA - Desenvolvimento E
Comercialização
Agrícola Limitada 100% Mozambique Grain
Compagri Limitada 100% Mozambique Grain
Mozbife Limitada 100% Mozambique Beef
Carnes de Manica Limitada 100% Mozambique Beef
Aviação Agriterra
Limitada 100% Mozambique Dormant
Joint venture
DECA Snax Limitada 50% Mozambique Snax
Foreign currency
The individual financial statements of each company in the Group
are prepared in Mozambican Metical, the currency of the primary
economic environment in which it operates (its 'functional
currency'). The consolidated financial statements are presented in
US Dollars.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing on the date of the transaction. At
each balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not
retranslated.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's operations are translated
at exchange rates prevailing at the balance sheet date. Income and
expense items are translated at the average exchange rates for each
month, unless exchange rates fluctuate significantly during the
month, in which case exchange rates at the date of transactions are
used. Exchange differences arising from the translation of the net
investment in foreign operations and overseas branches are
recognised in other comprehensive income and accumulated in equity
in the translation reserve. Such translation differences are
recognised as income or expense in the year in which the operation
or branch is disposed of.
The following are the material exchange rates applied by the
Group:
Average Rate Closing Rate
2021 2020 2021 2020
------- ------ ------- ------
Mozambican Metical: US$ 68.12 65.59 68.78 67.45
------- ------ ------- ------
Operating segments
The Chief Operating Decision Maker is the Board. The Board
reviews the Company's internal reporting in order to assess
performance of the business. Management has determined the
operating segments based on the reports reviewed by the Board which
consider the activities by nature of business.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable for goods and services provided in the
normal course of business, net of discounts, value added taxes and
other sales related taxes.
Performance obligations and timing of revenue recognition:
All of the Group's revenue is derived from selling goods with
revenue recognised at a point in time when control of the goods has
transferred to the customer. This is generally when the goods are
collected by or delivered to the customer. There is limited
judgement needed in identifying the point control passes once
physical delivery of the products to the agreed location has
occurred, the Group no longer has physical possession, usually it
will have a present right to payment. Consideration is received in
accordance with agreed terms of sale.
Determining the contract price:
All of the Group's revenue is derived from fixed price lists and
therefore the amount of revenue to be earned from each transaction
is determined by reference to those fixed prices.
Allocating amounts to performance obligations:
For most sales, there is a fixed unit price for each product
sold. Therefore, there is no judgement involved in allocating the
price to each unit ordered.
There are no long-term contracts in place. Sales commissions are
expensed as incurred. No practical expedients are used.
Operating loss
Operating loss is stated before investment revenues, other gains
and losses, finance costs and taxation.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial year of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. The Group did not incur any borrowing costs
in respect of qualifying assets in any year presented.
All other borrowing costs are recognised in profit or loss in
the year in which they are incurred.
Share based payments
The Company issues equity-settled share-based payments to
certain employees of the Group. These payments are measured at fair
value (excluding the effect of non-market based vesting conditions)
at the date of grant and the value is expensed on a straight-line
basis over the vesting year, based on the Company's estimate of the
shares that will eventually vest and adjusted for non-market based
vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model is adjusted, based on management's
best estimate, for the effects of non-transferability, exercise
restrictions and behavioural considerations.
Employee benefits
Short-term employee benefits
Short-term employee benefits include salaries and wages,
short-term compensated absences and bonus payments. The Group
recognises a liability and corresponding expense for short-term
employee benefits when an employee has rendered services that
entitle him/her to the benefit.
Post-employment benefits
The Group does not contribute to any retirement plan for its
employees. Social security payments to state schemes are charged to
profit and loss as the employee's services are rendered.
Leases
The Group as a lessee.
The Group assesses whether a contract is or contains a lease, at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are
consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the lessee uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable;
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- The amount expected to be payable by the lessee under residual value guarantees;
-- The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
-- Payments of penalties for terminating the lease if the lease
term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever :
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate.
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used).
-- A lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods
presented.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment loss
as described in the 'Property, Plant and Equipment' policy.
Variable rents that do not depend on an index or rate are not
included in the measurement of the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in operating expenses in
profit or loss.
Taxation
The Company is resident for taxation purposes in Guernsey and
its income is subject to income tax, presently at a rate of zero
per cent per annum. The income of overseas subsidiaries is subject
to tax at the prevailing rate in each jurisdiction.
The income tax expense for the year comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity when tax is recognised
in other comprehensive income or directly in equity as appropriate.
Taxable profit differs from accounting profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
Current tax expense is the expected tax payable on the taxable
income for the year. It is calculated on the basis of the tax laws
and rates enacted or substantively enacted at the balance sheet
date and includes any adjustment to tax payable in respect of
previous years. Deferred tax is calculated using the balance sheet
liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised to the extent that it is probable that
taxable profit will be available against which the asset can be
utilised. This requires judgements to be made in respect of the
availability of future taxable income.
The Group's deferred tax assets and liabilities are calculated
using tax rates that are expected to apply in the year when the
liability is settled or the asset realised based on tax rates that
have been enacted or substantively enacted by the reporting
date.
Deferred income tax assets and liabilities are offset only when
there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax
assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances
on a net basis.
No deferred tax asset or liability is recognised in respect of
temporary differences associated with investments in subsidiaries,
branches and joint ventures where the Group is able to control the
timing of reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable
future.
Property, plant and equipment
Initial recognition
Items of property, plant and equipment are stated at historical
purchase cost. Cost includes expenditure that is directly
attributable to the acquisition. The cost of self-constructed
assets includes the cost of materials and direct labour, any other
costs directly attributable to bringing the assets to a working
condition for their intended use, the costs of dismantling and
removing the items and restoring the site on which they are located
and borrowing costs on qualifying assets.
Subsequent cost
Subsequent costs are included in the asset's carrying value when
it is considered probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably.
Subsequent measurement
Following initial recognition at cost, items of land and
buildings which were previously carried under cost model are
subsequently measured using the revaluation model being the fair
value at the date of revaluation less any subsequent depreciation
and subsequent impairment losses. The revaluation model is only
used when fair value can be reliably measured. Revaluations are
made regularly enough to ensure that at any reporting date the
carrying amount does not differ materially from the fair value.
Revaluations are performed by independent sworn valuators. When an
item of property, plant and equipment is revalued, the entire class
of property, plant, and equipment to which the asset belongs is
revalued. Only land and buildings are subsequently valued using the
revaluation model and all others are valued at cost model.
Accounting policy for land and building was changed as a result of
significant variation between the carrying amount and fair value.
Impact of the change in accounting estimate is shown below:
2022 2023 2024 2025 2026 Later
Increase in depreciation
expense $764 000 $764 000 $764 000 $764 000 $764 000 $14,651,750
-------- -------------- -------------- -------------- -------------- -----------
Any revaluation surplus is credited to revaluation reserve as
part of other comprehensive income, except to the extent that it
reverses a revaluation decrease of the same asset previously
recognized in the profit or loss, in which case the increase is
recognized in the profit or loss. A revaluation deficit is
recognized in profit or loss, except to the extent that it offsets
an existing surplus on the same recognized in the asset revaluation
reserve. The revaluation reserve is realized over the period of the
useful life of the property by transferring the realized portion
from the revaluation reserve to retained earnings.
Depreciation
Depreciation is charged on a straight-line basis over the
estimated useful lives of each item, as follows:
Land and buildings:
Land Nil
Buildings and leasehold improvements 2% - 33%
Plant and machinery 5% - 25%
Motor vehicles 20% - 25%
Other assets 10% - 33%
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. Gains and
losses on disposals are determined by comparing proceeds received
with the carrying amount of the asset immediately prior to disposal
and are included in profit and loss.
Intangible assets
Intangible assets comprise investment in management information
and financial software. This is amortised at 10% straight line.
Impairment of property, plant and equipment and intangible
assets
At each balance sheet date, the Company reviews the carrying
amounts of its tangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows that are
independent from other assets, the Company estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised initially
against amounts included in the revaluation reserve in respect of
the asset and subsequently in profit and loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit and
loss.
Biological assets
Consumer biological assets, being the beef cattle herd, are
measured in accordance with IAS 41, 'Agriculture' at fair value
less costs to sell, with gains and losses in the measurement to
fair value recorded in profit and loss. Breeding cattle, comprising
bulls, cows and heifers are expected to be held for more than one
year, and are classified as non-current assets. The non-breeding
cattle comprise animals that will be grown and sold for slaughter
and are classified as current assets.
Cattle are recorded as assets at the year-end and the fair value
is determined by the size of the herd and market prices at the
reporting date.
Cattle ceases to be a biological asset from the point it is
slaughtered, after which it is accounted for in accordance with the
accounting policy below for inventories.
Forage crops are valued in accordance with IAS 41, 'Agriculture'
at fair value less costs to harvest. As there is no ready local
market for forage crops, fair value is calculated by reference to
the production costs of previous crops. The cost of forage is
charged to profit or loss over the year it is consumed.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses. The cost of inventories is based on the
weighted average principle and includes expenditure incurred in
acquiring the inventories and bringing them to their existing
location and condition.
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified as either financial assets at
amortised cost, at fair value through other comprehensive income
("FVTOCI") or at fair value through profit or loss ("FVPL")
depending upon the business model for managing the financial assets
and the nature of the contractual cash flow characteristics of the
financial asset.
A loss allowance for expected credit losses is determined for
all financial assets, other than those at FVPL, at the end of each
reporting period. The Group applies a simplified approach to
measure the credit loss allowance for trade receivables using the
lifetime expected credit loss provision. The lifetime expected
credit loss is evaluated for each trade receivable taking into
account payment history, payments made subsequent to year-end and
prior to reporting, past default experience and the impact of any
other relevant and current observable data. The Group applies a
general approach on all other receivables classified as financial
assets. The general approach recognises lifetime expected credit
losses when there has been a significant increase in credit risk
since initial recognition.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. The Group
derecognises financial liabilities when the Group's obligations are
discharged, cancelled or have expired.
Trade and other receivables
Trade receivables are accounted for at amortised cost. Trade
receivables do not carry any interest and are stated at their
nominal value as reduced by appropriate expected credit loss
allowances for estimated recoverable amounts as the interest that
would be recognised from discounting future cash payments over the
short payment period is not considered to be material. Other
receivables are accounted for at amortised cost and are stated at
their nominal value as reduced by appropriate expected credit loss
allowances.
Financial liabilities
The classification of financial liabilities at initial
recognition depends on the purpose for which the financial
liability was issued and its characteristics.
All purchases of financial liabilities are recorded on trade
date, being the date on which the Group becomes party to the
contractual requirements of the financial liability. Unless
otherwise indicated the carrying amounts of the Group's financial
liabilities approximate to their fair values.
The Group's financial liabilities consist of financial
liabilities measured at amortised cost and financial liabilities at
fair value through profit or loss.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to the
statement of comprehensive income.
Borrowings
Borrowings are included as financial liabilities on the Group
balance sheet at the amounts drawn on the particular facilities net
of the unamortised cost of financing. Interest payable on those
facilities is expensed as finance cost in the period to which it
relates.
Trade and other payables
Trade and other payables are initially recorded at fair value
and subsequently carried at amortised cost.
Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place
either in the principal market for the asset or liability or, in
the absence of a principal market, in the most advantageous market
for the asset or liability. The principal or the most advantageous
market must be accessible to the Company.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
For all other financial instruments not traded in an active
market, the fair value is determined by using valuation techniques
deemed to be appropriate in the circumstances. Valuation techniques
include the market approach (i.e. using recent arm's length market
transactions adjusted as necessary and reference to the current
market value of another instrument that is substantially the same)
and the income approach (i.e. discounted cash flow analysis and
option pricing models making as much use of available and
supportable market data as possible).
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
re-assessing the categorisation (based on the lowest level input
that is significant to the fair value measurement as a whole) at
the end of each reporting year.
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies which are
described in note3, the directors are required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year or in the year of the revision and future years if
the revision affects both current and future years. The effect on
the financial statements of changes in estimates in future years
could be material.
Impairment and revaluation of land and buildings
Impairment reviews for non-current assets are carried out at
each balance sheet date in accordance with IAS 36, Impairment of
Assets. Reported losses in the Beef and Grain divisions were
considered to be indications of impairment and a formal impairment
review was undertaken to review whether the carrying amounts on
non-current assets are greater than the recoverable amount.
Determination of recoverable exercise leveraged on the fair
valuation of non-current assets performed by an independent real
estate valuer who computed the market fair value.
The impairment reviews are sensitive to various assumptions,
including the expected sales forecasts, cost assumptions, rent per
square metre, capital requirements, and discount rates among others
depending on how the recoverable amount is determined. The
forecasts of future cash flows were derived from the operational
plans in place to address the requirement to increase both volumes
and margins across the two divisions. Real commodity prices were
assumed to remain constant at current levels.
As at 31 March 2021, the Group engaged an Independent real
estate valuer to compute the fair value of land and buildings which
also assisted in determining the recoverable amount whilst
revaluing non-current assets. The Independent valuer used Royal
Institute of Chartered Surveyors (RICS) and International Financial
Reporting Standard to determine the fair value of land and
buildings. Non-current assets fair value was increased to $23.4
million from a carrying amount of $4.9 million. Based on the
assessment performed by the independent real estate valuers,
management have concluded that non-current assets are not impaired
as the recoverable value of non-current assets is higher and or
equivalent to carrying amount of the assets.
No impairments were recorded in the year ended 31 March 2021 or
the year ended 31 March 2020. Carrying amount of non-current assets
is US$24 million and non-current assets valued at US$23.4 million
were revalued as at 31 March 2021 by an independent real estate
valuer.
Biological assets
Cattle are accounted for as biological assets and measured at
their fair value at each balance sheet date. Fair value is based on
the estimated market value for cattle in Mozambique of a similar
age and breed, less the estimated costs to bring them to market,
converted to US$ at the exchange rate prevailing at the year end.
Changes in any estimates could lead to the recognition of
significant fair value changes in the consolidated income
statement, or significant changes in the foreign currency
translation reserve for changes in the Metical to US$ exchange
rate.
The herd may be categorised as either the breeding herd or
slaughter herd, depending on whether it was principally held for
reproduction or slaughter. As at 31 March 2021 the value of the
breeding herd disclosed as a non-current asset was $nil (31
March2020: $nil). The value of the herd held for slaughter
disclosed as a current asset was $0.5m (31 March2020: $0.7m).
5. Segment reporting
The Board considers that the Group's operating activities
comprise the segments of Grain, Snax and Beef and which are
undertaken in Africa. In addition, the Group has certain other
unallocated expenditure, assets and liabilities, either located in
Africa or held as support for the Africa operations.
Segment revenue and results
The following is an analysis of the Group's revenue and results
by operating segment:
Year ending 31 March 2021 Grain Beef Snax(1) Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
-------- -------- -------- ------------- -------------- --------
Revenue
External sales(2) 11,061 3,189 - - - 14,250
Inter-segment sales(1) 309 - - - (309) -
-------- -------- -------- ------------- -------------- --------
11,370 3,189 - - (309) 14,250
-------- -------- -------- ------------- -------------- --------
Segment results
- Operating profit / (loss) 275 (970) (0) (389) - (1,084)
- Interest expense (1,071) (136) - - - (1,207)
- Other gains and losses 54 43 - - - 97
-------- -------- -------- ------------- -------------- --------
Loss before tax (742) (1,063) (0) (389) - (2,194)
-------- -------- -------- ------------- -------------- --------
Income tax - - - - - -
-------- -------- -------- ------------- -------------- --------
Loss after tax (742) (1,063) (0) (389) - (2,194)
-------- -------- -------- ------------- -------------- --------
(1) The Snax division is equity accounted for as a Joint
venture. Its income statement is set out in note 23.
Year ended 31 March Grain Beef Unallo-cated Elimina-tions Total
2020
US$000 US$000 US$000 US$000 US$000
---------------- ------------------ ------------------- ------------------- --------
Revenue
External sales(2) 8,955 3,955 - - 12,910
Inter-segment
sales(1) 453 - - (453) -
---------------- ------------------ ------------------- ------------------- --------
9,408 3,955 - (453) 12,910
---------------- ------------------ ------------------- ------------------- --------
Segment results
- Operating loss (964) (1452) (562) - (2,978)
- Interest expense (805) (155) (4) - (964)
- Other gains and
losses 883 95 - - 978
---------------- ------------------ ------------------- ------------------- --------
Loss before tax (886) (1,512) (566) - (2,964)
---------------- ------------------ ------------------- ------------------- --------
Income tax (29) - - - (29)
---------------- ------------------ ------------------- ------------------- --------
Loss after tax (915) (1,512) (566) - (2,993)
---------------- ------------------ ------------------- ------------------- --------
(1) Inter-segment sales are charged at prevailing market prices.
(2) Revenue represents sales to external customers and is recorded in the country
of domicile
of the Company making the sale. Sales from the Grain and Beef divisions are
principally for
supply to the Mozambique market.
The segment items included in the consolidated income statement
for the year are as follows:
Year ending 31 March 2021 Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
------- ------- ------- ------------- -------------- -------
Depreciation and amortisation 181 380 - 13 - 574
------- ------- ------- ------------- -------------- -------
Year ending 31 March 2020 Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
------- ------- ------- ------------- -------------- -------
Depreciation and amortisation 167 452 - - - 619
------- ------- ------- ------------- -------------- -------
Segment assets, liabilities and capital expenditure
Segment assets consist primarily of property, plant and
equipment, biological assets, inventories, trade and other
receivables and cash and cash equivalents. Segment liabilities
comprise operating liabilities, including an overdraft financing
facility in the Grain segment, and bank loans and overdraft
financing facilities in the Beef segment.
Capital expenditure comprises additions to property, plant and
equipment.
The segment assets and liabilities at 31 March2021 and capital
expenditure for the year then ended are as follows:
Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
--------- -------- ------- ------------ ---------
Assets 21,495 5,883 1 22 27,401
Liabilities (12,518) (1,729) - (136) (14,383)
Capital expenditure 8 29 - - 37
--------- -------- ------- ------------ ---------
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
US$000 US$000
------- ------------
Segment assets and liabilities 27,379 (14,247)
Unallocated:
Intangible asset 14 -
Other receivables 8 -
Cash and cash equivalents - -
Accrued liabilities - (136)
27,401 (14,383)
------- ------------
The segment assets and liabilities at 31 March2020 and capital
expenditure for the year then ended are as follows:
Grain Beef Unallocated Total
US$000 US$000 US$000 US$000
-------- -------- ------------ --------
Assets 5,223 4,332 359 9,914
Liabilities (7,250) (1,299) (149) (8,698)
Capital expenditure 9 45 - 54
-------- -------- ------------ --------
Segment assets and liabilities are reconciled to Group assets
and liabilities as follows:
Assets Liabilities
US$000 US$000
------- ------------
Segment assets and liabilities 9,555 (8,549)
Unallocated:
Intangible asset 27 -
Other receivables 16 -
Cash and cash equivalents 316 -
Accrued liabilities - (149)
9,914 (8,698)
------- ------------
Key performance Indicators
The Board considers that earnings before interest, tax,
depreciation and amortisation ("EBITDA") is a key performance
indicator in measuring operational performance. It is calculated as
follows:
Year ending 31 March 2021 Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
------- -------- ------- ------------ --------
Loss before tax (742) (1,063) - (389) (2,194)
- Interest expense 1,071 136 - - 1,207
- Depreciation and amortisation
charge 181 380 - 13 574
------- -------- ------- ------------ --------
EBITDA 510 (547) - (376) (413)
------- -------- ------- ------------ --------
Year ending 31 March 2020 Grain Beef Snax Unallocated Total
US$000 US$000 US$000 US$000 US$000
------- -------- ------- ------------ --------
Loss before tax (886) (1,512) - (566) (2,964)
- Interest expense 805 155 - 4 964
- Depreciation and amortisation
charge 167 452 - - 619
------- -------- ------- ------------ --------
EBITDA 86 (905) - (562) (1,381)
------- -------- ------- ------------ --------
Significant customers
In the year ended 31 March 2021, two customers of the Grain
segment generated revenue of $3.1 million (31 March 2020: $3.5m)
constituting 28% (31 March 2020:27.2%) of the Grain division's
revenue. The two largest customers of the Beef segment generated
revenue of $1m (31 March 2020: $1.5 million) amounting to 30% (31
March 2020:11.8%) of the Beef division's revenue.
6. Operating loss
Operating loss has been arrived at after charging /
(crediting):
Year Year
ended ended
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Recovery of historic VAT claim - (804)
Depreciation of property, plant and equipment
(see note 13) 534 594
Amortisation of intangible asset (see note 14) 40 24
Profit on disposal of property, plant and equipment (47) (80)
Net foreign exchange gain 17 56
Staff costs (see note 8) 743 1,915
--------- ---------
7. Auditors Remuneration
Amounts payable to the auditors and their associates in respect
of audit services are as follows:
Year Year
Ended Ended
31 March 31 March
2021 2020
US$000 US$000
-------- --------
Fees payable to the Company's previous auditor
and their associates
Overruns in respect of prior years - 68
-------- --------
- 68
Fees payable to the Company's auditor and their
associates
For the audit of the Company's accounts 53 58
For the audit of the Company's subsidiaries 44 37
-------- --------
Total audit fees 97 163
-------- --------
Other than as disclosed above, the Company's auditor and their
associates have not provided additional services to the
Company.
8. Staff costs
The average monthly number of employees (including executive
Directors) employed by the Group for the year was as follows:
Year Year
ended ended
31 March 31 March
2021 2020
Number Number
--------- ---------
Office and Management 27 31
Operational 432 488
--------- ---------
459 519
--------- ---------
Their aggregate remuneration comprised:
Year Year
ended ended
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Wages and salaries 683 1,808
Social security costs 60 60
Correction of prior period social security costs - 47
743 1,915
--------- ---------
9. REMUNERATION OF DIRECTORS
Year Year
ended ended
31 March 31 March
2021 2020
US$000 US$000
---------- ----------
CS Havers 25 31
NWH Clayton 8 10
HWB Rudland 8 12
GR Smith 8 12
A Thorburn - 11
SML Zandamela 8 -
57 76
---------- ----------
In addition N Clayton received $4,239(2020: $55,000) and A
Thorburn received $nil (2020: $27 000) in respect of consultancy
services to the Company. All remuneration relates to short term
benefits.
10. Finance costs
Year Year
Ended Ended
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Interest receivable on bank deposits - 14
Interest expense on bank borrowings and overdrafts (1,128) (890)
Interest expense on leases (79) (88)
--------- ---------
Net finance costs (1,207) (964)
--------- ---------
11. Taxation
Year Year
Ended Ended
31 March 31 March
2021 2020
US$000 US$000
Current tax expense
Current tax - 29
Deferred tax - -
--------- ---------
- 29
--------- ---------
Effective tax reconciliation
Loss before tax from continuing activities (2,194) (2,964)
Tax credit at the Mozambican corporation tax
rate of 32% (702) (949)
Tax effect of expenses that are not deductible
in determining taxable profit 578 66
Tax effect of (income not taxable) or losses
not allowable - 264
Tax effect of net losses not recognised in
overseas subsidiaries (net of effect of different
rates) 124 619
Statutory taxation payments irrespective of
income - 29
Tax expense - 29
--------- ---------
The tax reconciliation has been prepared using a 32% tax rate,
the corporate income tax rate in Mozambique, as this is where the
Group's principal assets of its continuing operations are
located.
The Company is resident for taxation purposes in Guernsey and
its income is subject to Guernsey income tax, presently at a rate
of zero percent per annum (2020: zero percent per annum). No tax is
payable for the year. Deferred tax has not been provided for, as
brought forward tax losses are not recoverable under the Income Tax
(Zero 10) (Guernsey) Law, 2007 (as amended).
Deferred tax
Movement in deferred tax balances
Net balance
as at 1 Recognised Recognised Net deferred
April 2020 in OCI in P/L tax
US$000 US$000 US$000 US$000
Property, plant and equipment - (5,912) - (5,912)
Tax losses carried forward - - - -
------------- ----------- ----------- -------------
Total - (5,912) - (5,912)
-------------- ----------- ----------- -------------
Deferred tax liability is resulting from revaluation gain on
land and buildings amounting to $18,475,127 recognised using income
tax rate of 32% which is prevailing in Mozambique.
The Group has not recognised any tax credits for the year ended
31 March 2021 (2020: $nil). The Group has operations in overseas
jurisdictions where it has incurred taxable losses which may be
available for offset against future taxable profits amounting to
approximately $10,803,610 (2020: $9,049,000). No deferred tax asset
has been recognised for these tax losses and other deductible
timing differences as the requirements of IAS 12, 'Income taxes',
have not been met.
12. earnings per share
Year ended Year ended
31 March 31 March
2021 2020
US$000 US$000
----------- -----------
The calculation of the basic and diluted
earnings per share is based on the following
data:
Loss for the year for the purposes of basic
and diluted earnings per share attributable
to equity holders of the Company (2,194) (2,993)
----------- -----------
Weighted average number of Ordinary Shares
for the purposes of basic and diluted earnings
per share 21,240,618 21,240,618
----------- -----------
Basic and diluted earnings per share - US
cents (10.3) (14.1)
----------- -----------
Basic and diluted earnings per share from
continuing activities - US cents (10.3) (14.1)
----------- -----------
The Company has issued options over ordinary shares which could
potentially dilute basic loss per share in the future. There is no
difference between basic loss per share and diluted loss per share
as the potential ordinary shares are anti-dilutive. Details of
options are set out in note 24.
13. Property, plant and equipment
Land and Plant Motor Other
buildings and machinery vehicles Assets Total
US$000 US$000 US$000 US$000 US$000
Cost
At 1 April 2019 8,610 5,429 1,385 66 15,490
Additions - 42 - 4 46
Disposals - (17) (7) - (24)
Exchange rate adjustment (475) (301) (76) (4) (856)
----------- --------------- ---------- -------- --------
At 31 March 2020 8,135 5,153 1,302 66 14,656
Additions - 38 6 33 77
Revaluation 15,451 - - - 15,451
Disposals - (134) (40) - (174)
Exchange rate adjustment (158) (73) (25) (7) (263)
At 31 March 2021 23,428 4,984 1,243 92 29,747
----------- --------------- ---------- -------- --------
Accumulated depreciation
and impairment
At 1 April 2019 2,667 4,697 1,123 40 8,527
Charge for the year 290 204 90 10 594
Disposals - (17) (7) - (24)
Exchange rate adjustment (156) (267) (64) (3) (490)
----------- --------------- ---------- -------- --------
At 31 March 2020 2,801 4,617 1,142 47 8,607
Charge for the year 280 168 58 28 534
Revaluation (3,024) - - - (3,024)
Disposals - (134) (40) - (174)
Exchange rate adjustment (57) (85) (23) (5) (170)
At 31 March 2021 - 4,566 1,137 70 5,773
----------- --------------- ---------- -------- --------
Net book value
31 March 2021 23,428 418 106 22 23,974
----------- --------------- ---------- -------- --------
31 March 2020 5,334 536 160 19 6,049
----------- --------------- ---------- -------- --------
As at 31 March 2021, the Group revised the accounting policy for
land and buildings from cost model to revaluation model. In
accordance with the International Financial Reporting Standards,
such revaluation exercises should be performed regularly. The Group
adopted a policy to revalue land and buildings after every 3
years.
The Group revalued the land and buildings by $18,475,127
recognised on land and buildings in Mozambique value for DECA,
Compagri and Mozbife amounting to $12,094,969, $4,531,025 and
$1,849,133 respectively. Land and buildings accumulated
depreciation amounting to $3,024,058 was offset as a result of the
revaluation.
Property, plant and equipment with a carrying amount of
$21,153,034 (2020: $4,359,000) have been pledged to secure the
Group's bank overdrafts and loans (note 18). The Group is not
allowed to pledge these assets as security for other borrowings or
sell them to another entity.
For the year ended 31 March 2021, a depreciation charge of
$534,000 (2020: $594,000) has been included in the consolidated
income statement within operating expenses.
Certain motor vehicles and equipment have been purchased with
finance leases. Included in property plant and equipment are
right-of-use-assets with a carrying value of $386,719 (2021:
$599,557) and $92,585 (2020: $152 638) for machinery and motor
vehicles respectively.
14. Intangible Assets
US$000
Cost
At 1 April 2019 186
Prior year adjustment (69)
-------
At 1 April 2019
restated 117
Additions 15
Exchange rate adjustment (6)
-------
At 31 March 2020 126
Additions 9
Exchange rate adjustment (2)
At 31 March 2021 133
-------
Accumulated amortisation
At 1 April 2019 20
Prior year adjustment (10)
-------
At 1 April 2019
restated 10
Charge for the
year 24
Exchange rate adjustment -
-------
At 31 March 2020 34
Charge for the
year 40
Exchange rate adjustment -
At 31 March 2021 74
-------
Net book value
31 March 2021 59
-------
31 March 2020 92
-------
Intangible assets comprise investment in management information
and financial software.
At 31 March2021 and 31 March2020, the Group had no contractual
commitments for the acquisition of intangible assets.
15. Biological assets
US$000
--------
Fair value
At 31 March 2019 830
Purchase of biological assets 2,395
Sale, slaughter or other disposal of biological
assets (2,232)
Change in fair value of the herd (286)
Foreign exchange adjustment (42)
At 31 March 2020 665
Purchase of biological assets 1,924
Sale, slaughter or other disposal of biological
assets (1,514)
Change in fair value of the herd (615)
Foreign exchange adjustment (9)
--------
At 31 March2021 451
--------
At 31 March 2021 and 2020, all cattle are held for slaughter.
The slaughter herd has been classified as a current asset. Forage
crops included in current assets are US$ Nil (2020: US$5,978).
At 31 March 2021 the slaughter herd comprised 1,745 head (2020:
2,100), with an average weight of 221kgs (2020: 250kgs) and average
value of US$259 (2020: US$314).
For valuation purposes, animals in the feedlot, their weight has
been estimated based on their individual weigh in data at the
closest weigh in date to the year end. Cattle are generally kept
for periods less than 3 months before slaughter.
16. Inventories
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Consumables and spares 189 157
Raw materials 428 189
Finished goods 316 479
933 825
--------- ---------
During the year inventories amounting to US$10,017,225 (2020:
US$9,174,000) were included in cost of sales.
17. Trade and other receivables
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Trade receivables 298 522
Other receivables 1,454 712
Prepayments - 15
1,752 1,249
--------- ---------
Trade receivables
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Trade receivables - gross 354 872
Loss allowance (56) (350)
--------- ---------
298 522
--------- ---------
Trade receivables are amounts due from customers for goods sold
in the ordinary course of business. They are generally due for
settlement within 30 days and therefore are all classified as
current. Trade receivables are recognised initially at the amount
of consideration that is unconditional. The Group holds the trade
receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost
using the effective interest method.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on the days past
due.
At 31 March 2021 Current More More More Total
than than than
30 days 60 Days 90 days
US$000 US$000 US$000 US$000 US$000
-------- --------- --------- --------- -------
Expected loss rate 0% 0% 0% 82% 16%
-------- --------- --------- --------- -------
Gross trade receivables 79 208 - 67 354
-------- --------- --------- --------- -------
Loss allowance - - - 56 56
-------- --------- --------- --------- -------
At 31 March 2020 Current More More More Total
than than than
30 days 60 Days 90 days
US$000 US$000 US$000 US$000 US$000
-------- --------- --------- --------- -------
Expected loss rate 0% 0% 0% 91% 40%
-------- --------- --------- --------- -------
Gross trade receivables 209 184 93 386 872
-------- --------- --------- --------- -------
Loss allowance - - - 350 350
-------- --------- --------- --------- -------
The closing loss allowances for trade receivables as at 31 March
reconcile to the opening loss allowances as follows:
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Loss allowances at 1 April 350 323
Increase in loan loss allowance recognised in
profit or loss during the year 20 32
Receivables written off during the year as uncollectible (311) -
Exchange rate adjustment (3) (5)
Loss allowances at 31 March 56 350
--------- ---------
Trade receivables are provided for when there is no reasonable
expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a
debtor to engage in a repayment plan with the Group, and a failure
to make contractual payments for a period of greater than 120 days
past due. This is used as the basis of the ECL provision disclosed
above. The Group determines the percentage based on historic
trends. Impairment losses on trade receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of
amounts previously written off are credited against the same line
item.
Further details on the Group's financial assets are provided in
note 21.
18. Borrowings
31 March 31 March
2021 2020
US$000 US$000
--------- ---------
Non-current liabilities
Bank loans 2,107 1,661
Leases 302 383
--------- ---------
2,409 2,044
--------- ---------
Current liabilities
Bank loans 263 711
Leases 102 87
Overdraft 3,651 2,541
--------- ---------
4,016 3,339
--------- ---------
6,425 5,383
--------- ---------
Bank Borrowings
Beef division
The Beef division had an overdraft facility of 30 million
Metical ($0.44m) in prior year. The facility was repaid in October
2020. The facility carried an interest rate at the Bank's prime
lending rate (15.2%) at 31 March 2020.
The facilities are secured as follows: 31 March 31 March
2021 2020
US$000 US$000
Fixed Charge
Property, plant and equipment - 2,676
Floating Charge
Cattle - 659
Meat Inventories - 179
Trade receivables - 229
- 3,743
Grain division
In May 2019 the division's overdraft facility was restructured
into a 240 million Metical ($3.77m) 5 year term loan with an
interest rate of the Bank's prime lending rate +0.25% and a 12
month 60 million Metical ($0.94m) overdraft facility at the Bank's
prime lending rate less 1.75%. At 31 March 2021, the principal
outstanding on the term loan was 160 million Metical ($2.37m) and
the amount drawn on the overdraft facility was 53.8 million Metical
($0.80m).On 30 September 2021, the overdraft facility was
restructured into a60 million Metical ($0.9m) 33 month term loan at
the Bank's prime lending rate less 1.75%.
The facilities are secured as follows:
31 March 31 March
2021 2020
US$000 US$000
Fixed Charge
Property, plant and equipment 21,153 1,690
Floating Charge
Maize and maize product inventories - 442
Trade receivables - 98
21,153 2,230
As further security to the bank loans and overdrafts, Agriterra
Limited has issued a corporate guarantee in favour of the bank.
Under the terms of the guarantee, it may only be called upon once
the bank has exhausted all possible means of recovering the debt in
Mozambique.
Reconciliation to cash flow statement
At 31 Cash flow Foreign At 31
March Exchange March
2020 2021
US$000 US$000 US$000 US$000
Non-current bank loan 1,661 484 (37) 2,107
Non-current leases 383 (72) (7) 302
Current bank loan 711 (441) (10) 263
Current leases 87 17 (2) 102
Overdrafts 2,541 1,170 (60) 3,651
5,383 1,158 (116) 6,425
At 31 Cash flow Foreign At 31
March Exchange March
2019 2020
US$000 US$000 US$000 US$000
Non-current bank loan 2,510 (732) (117) 1,661
Non-current leases 340 64 (21) 383
Current bank loan 753 - (42) 711
Current leases 48 44 (5) 87
Overdrafts 907 1,732 (98) 2,541
4,558 1,108 (283) 5,383
Leases
At 31 March 2021, the Group is committed to $404 000 (2020
$470,000) for leases. The total cash outflow for leases (principal
and interest) amounts to $531 000 (2020: $582,238).
31 March 31 March
Maturity Analysis 2021 2020
$'000 $'000
Year 1 - -
Year 2 - -
Year 3 - -
Year 4 404 470
Year 5 - -
404 470
Analysed as:
Current 102 87
Non-current 302 383
404 470
The Group does not face a significant liquidity risk with regard
to its lease liabilities.
19. Trade and other payables
31 March 31 March
2021 2020
US$000 US$000
Trade payables 1,018 1,386
Other payables 1,006 1,775
Accrued liabilities 22 154
2,046 3,315
'Trade payables', 'Other payables' and 'Accrued liabilities'
principally comprise amounts outstanding for trade purchases and
ongoing costs. No interest is charged on any balances.
The Directors consider that the carrying amount of financial
liabilities approximates their fair value.
20. Leases
Right of use assets
Right of use assets relate to equipment and motor vehicle
acquired under finance leases. These are presented as property
plant and equipment.
Machinery Motor vehicles Total
US$000 US$000 US$000
Cost
At 1 April 2019 763 200 963
Additions - - -
Disposals - - -
Exchange rate adjustment (42) (11) (53)
At 31 March 2020 721 189 910
Additions - - -
Disposals - - -
Exchange rate adjustment (14) (4) (18)
At 31 March 2021 707 185 892
Accumulated depreciation and
impairment
At 1 April 2019
Charge for the year 168 49 217
Disposals - - -
Exchange rate adjustment (5) (2) (7)
At 31 March 2020 163 47 210
Charge for the year 162 47 209
Disposals - - -
Exchange rate adjustment (5) (1) (6)
At 31 March 2021 320 93 413
Net book value
31 March 2021 387 92 479
31 March 2020 558 142 700
Average lease term for motor vehicles and equipment is 5 years.
The maturity analysis of lease liability is presented in note
18.
Amounts recognised in profit or loss
31 March 31 March
2021 2020
US$000 US$000
Depreciation expense on right-of-use assets 209 217
Interest expense on lease liabilities 137 88
Expenses relating to short term leases and low
value assets 50 50
396 355
21. FINANCIAL INSTRUMENTS
21.1. Capital risk management
The Company manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to shareholders. The capital structure of the Group
comprises its net debt (the borrowings disclosed in note18after
deducting cash and bank balances) and equity of the Company as
shown in the statement of financial position. The Company is not
subject to any externally imposed capital requirements.
The Board reviews the capital structure on a regular basis and
seeks to match new capital requirements of subsidiary companies to
new sources of external debt funding denominated in the currency of
operations of the relevant subsidiary. Where such additional
funding is not available, the Company funds the subsidiary company
by way of loans from the Company. The Company places funds which
are not required in the short term on deposit at the best interest
rates it is able to secure from its bankers.
Current interest rates on borrowings in Mozambique are very
high, with the prime lending rate at 15.5% at 31 March 2021 (2020:
18.4%). In light of this, the Group has been rationalising its
operations, with particular focus on disposing of surplus assets to
reduce external debt levels. The Group has restructured its loan
facilities in Mozambique to finance its Grain operations (note
18).
21.2. Categories of financial instruments
The following are the Group financial instruments as at the
year-end held at amortised cost:
31 March 31 March
2021 2020
US$000 US$000
Financial assets
Cash and bank balances 254 1,034
Other loans and receivables 354 872
608 1,906
Financial liabilities
Trade and other payables 2,095 3,315
Borrowings - current 1,267 3,339
Borrowings - non-current 5,161 2,044
8,523 8,698
(7,915) (6,792)
21.3. Financial risk management objectives
The Group manages the risks arising from its operations, and
financial instruments at Executive operating and Board level. The
Board has overall responsibility for the establishment and
oversight of the Group's risk management framework and to ensure
that the Group has adequate policies, procedures and controls to
manage successfully the financial risks that the Group faces.
While the Group does not have a written policy relating to risk
management of the risks arising from any financial instruments
held, the close involvement of the senior executives in the day to
day operations of the Group ensures that risks are monitored and
controlled in an appropriate manner for the size and complexity of
the Group. Financial instruments are not traded, nor are
speculative positions taken. The Group has not entered into any
derivative or other hedging instruments.
The Group's key financial market risks arise from changes in
foreign exchange rates ('currency risk') and changes in interest
rates ('interest risk'). The Group is also exposed to credit risk
and liquidity risk. The principal risks that the Group faces as at
31 March 2021 with an impact on financial instruments are
summarised below.
21.4. Market Risk
The Group is exposed to currency risk and interest risk. These
are discussed further below on note 21.5 and note 21.6.
21.5. Currency risk
Certain of the Group companies have functional currencies other
than US$ and the Group is therefore subject to fluctuations in
exchange rates in translation of their results and financial
position into US$ for the purposes of presenting consolidated
accounts. The Company does not hedge against this translation risk.
The Group's financial assets and liabilities by functional currency
of the relevant company are as follows:
Assets Liabilities
31 March 31 March 31 March 31 March
2021 2020 2021 2020
US$000 US$000 US$000 US$000
United States Dollar
('US$') - 321 - -
Great British Pound ('GBP') - 10 136 149
Mozambique Metical ('MZN') 1,711 1,530 12,007 8,538
1,711 1,861 12,143 8,687
The Group transacts with suppliers and/or customers in
currencies other than the functional currency of the relevant
Company (foreign currencies). The Group does not hedge against this
transactional risk. As at 31 March 2021 and 31 March2020, the
Group's outstanding foreign currency denominated monetary items
were principally exposed to changes in the US$ / GBP and US$ / MZN
exchange rate.
The following tables detail the Group's exposure to a 5, 10 and
15 per cent depreciation in the US$ against GBP and separately to a
10, 20 and 30 per cent depreciation of the US$ against the Metical.
For a strengthening of the US$ against the relevant currency, there
would be a comparable impact on the profit and other equity, and
the balances would be of opposite sign. The sensitivity analysis
includes only outstanding foreign currency denominated items and
excludes the translation of foreign subsidiaries and operations
into the Group's presentation currency. The sensitivity also
includes intra-Company loans where the loan is in a currency other
than the functional currency of the lender or borrower. A negative
number indicates a decrease in profit and other equity.
31 March 31 March
2021 2020
US$000 US$000
GBP Impact
Profit or loss
5% Increase in US$ (7) (7)
10% Increase in US$ (13)- (14)
15% Increase in US$ (18) (21)
Other equity
5% Increase in US$ (7)- (7)
10% Increase in US$ (13)- (14)
15% Increase in US$ (18)- (21)
MZN Impact
Profit or loss
10% Increase in US$ - -
20% Increase in US$ - -
30% Increase in US$ - -
Other equity(1)
10% Increase in US$ (94) (84)
20% Increase in US$ (2,103) (1,883)
30% Increase in US$ (7,542) (6,989)
This is mainly due to the exposure arising on the translation
(1) of US$ denominated intra-Company loans provided to Metical
functional currency entities which are included as part of
the Company's net investment in the related entities.
21.6. Interest rate risk
The Group is exposed to interest rate risk because entities in
the Group hold cash balances and borrow funds at floating interest
rates. As at 31 March 2021 and 31 March2020, the Group has no
interest-bearing fixed rate instruments.
The Group maintains cash deposits at variable rates of interest
for a variety of short-term periods, depending on cash
requirements. The Grain and Beef operations in Mozambique are also
financed through bank facilities. The rates obtained on cash
deposits are reviewed regularly and the best rate obtained in the
context of the Group's needs. The weighted average interest rate on
deposits was nil% (2020: nil). The weighted average interest on
drawings under the overdraft facilities and bank loans was 18.9%
(2020: 18.68%). The Group does not hedge interest rate risk.
The following table details the Group's exposure to interest
rate changes, all of which affect profit and loss only with a
corresponding effect on accumulated losses. The sensitivity has
been prepared assuming the liability outstanding at the balance
sheet date was outstanding for the whole year. In all cases
presented, a negative number in profit and loss represents an
increase in finance expense/decrease in interest income. The
sensitivity as at 31 March 2021 and 31 March2020is presented
assuming interest rates on cash balances remain constant, with
increases of between 20bp and1000bp on outstanding overdraft and
bank loans. This sensitivity to interest rate rises is deemed
appropriate because the Group interest bearing liabilities are
Metical based. Although the macroeconomic scenario in Mozambique is
now improving and interest rates are falling, they remain high with
prime rates of 15.5% at 31 March 2021 (2020:18%). The Prime lending
rate increased to 18.9% in April 2021 and any further depreciation
in the Metical could see this trend reversing.
31 March 31 March
2021(1) 2020
(1)
US$000 US$000
--------
+ 20 bp increase in interest rates (18) (9)
+ 50 bp increase in interest rates (44) (22)
+100 bp increase in interest rates (88) (43)
+200 bp increase in interest rates (176) (87)
+500 bp increase in interest rates (441) (217)
+800 bp increase in interest rates (707) (348)
+1000 bp increase in interest rates (884) (435)
The table above is prepared on the basis of an increase in rates. A
(1) decrease in rates would have the opposite effect.
21.7. Credit risk
Credit risk arises from cash and cash equivalents, and deposits
with banks and financial institutions, as well as outstanding
receivables. The Group's principal deposits are held with various
banks with a high credit rating to diversify from a concentration
of credit risk. Receivables are regularly monitored and assessed
for recoverability. The impact of COVID-19 on the credit risk of
the Group has been considered in the Going Concern disclosures in
note 3.
The maximum exposure to credit risk is the carrying value of the
Group financial assets disclosed in note20.2. Details of provisions
against financial assets are provided in note 17.
21.8. Liquidity risk
The Company policy throughout the year has been to ensure that
it has adequate liquidity by careful management of its working
capital. The operating executives continually monitor the Group's
actual and forecast cash flows and cash positions. They pay
particular attention to ongoing expenditure, both for operating
requirements and development activities, and matching of the
maturity profile of the Group's overdrafts to the processing and
sale of the Group's maize and beef products. The impact of COVID-19
on the liquidity risk of the Group has been considered in the Going
Concern disclosures in note 3.
At 31 March2021 the Group held cash deposits of $254,000(2020:
$1,034,000). As at 31 March2021the Group had overdraft and bank
loans facilities of approximately $9,464,961(2020: $6,805,041) of
which $6,425,531(2020: $5,383,107) were drawn. As at the date of
this report the Group has adequate liquidity to meet its
obligations as they fall due.
The following table details the Group's remaining contractual
maturity of its financial liabilities. The table is drawn up
utilising undiscounted cash flows and based on the earliest date on
which the Company could be required to settle its obligations and
assuming business conditions at 31 March 2021. The table includes
both interest and principal cash flows.
31 March 31 March
2021 2020
US$000 US$000
1 month 977 2,650
2 to 3 months 212 218
4 to 12 months 3,731 982
1 to 2 years 1,325 2,619
3 to 5 years 1,402 437
7,647 6,906
22. Share capital
Allotted
and fully
Authorised paid
Number Number US$000
At 31 March 2019 and 31 March 2020
and 31 March 2021 23,450,000 21,240,618 3,135
At 31 March 2019 and 31 March 2020
and 31 March 2021
Deferred shares of 0.1p each 155,000,000 155,000,000 238
Total share capital 178,450,000 176,240,618 3,373
The Company has one class of ordinary share which carries no
right to fixed income.
The deferred shares carry no right to any dividend; no right to
receive notice, attend, speak or vote at any general meeting of the
Company; and on a return of capital on liquidation or otherwise,
the holders of the deferred shares are entitled to receive the
nominal amount paid up after the repayment of GBP1,000,000 per
ordinary share. The deferred shares may be converted into ordinary
shares by resolution of the Board.
23. Equity-ACCOUNTED INVESTEES
31 March 31 March
2021 2020
US$000 US$000
Interest in joint venture 1 -
1 -
DECA Snax Limitada is a joint venture in which the Group has
joint control and a 50% ownership interest. It is one of the
Group's strategic customers of grits and principally engaged in the
production of corn snacks in Mozambique. DECA Snax Limitada's
principal place of business is Chimoio in Mozambique and is not
listed.
DECA Snax Limitada is structured as a separate vehicle and the
Group has residual interest in the net assets of DECA Snax
Limitada. Accordingly, the Group has classified DECA Snax Limitada
as a joint venture. In accordance with the agreement under which
DECA Snax Limitada is established, the Group and the other investor
in the joint venture have agreed to make additional contributions
in proportion of their interest if additional investment in
required in DECA Snax Limitada.
The following table summarises the financial information of DECA
Snax Limitada as included in its own financial statements. The
table also reconciles the summary information to the carrying
amount of the Group's interest in DECA Snax Limitada.
31 March 31 March
2021 2020
US$000 US$000
Percentage ownership interest 50% -
Non-current assets 252 -
Current assets (including cash and cash equivalents-
2021: US$23 000, 2020: US$ NIL) 108 -
Current liabilities (Trade and other payables) (49) -
Non-current liabilities (310) -
Net assets (Carrying amount of joint venture)
1 -
Revenue 117 -
Cost of Sales (79)
Depreciation and amortisation (10) -
Operating expenses (28)
Interest expense - -
Income tax expense - -
Profit and other comprehensive income (100%) - -
Profit and other comprehensive income (50%) - -
Elimination of unrealised profit - -
Group's share of total comprehensive income - -
Dividends received by the Group - -
24. Sharebased payments
24.1. Charge in the year
The Company recorded a charge within Operating expenses for
share based payments of $nil (2020: $nil) in respect of options
issued in previous years vesting during the year. No options were
issued during the year (2020: $nil).
24.2. Outstanding options and warrants
The Group, through the Company, has two unapproved share option
schemes which were established to provide equity incentives to the
Directors of, employees of and consultants to the Company. The
schemes' rules provide that the Board shall determine the exercise
price for each grant which shall be at least the average mid-market
closing price for the three days immediately prior to the grant of
the options. The minimum vesting year is generally one year. If
options remain unexercised after a year of 4 or 5 years from the
date of grant, or vesting, the options expire. Options are
forfeited if the employee leaves the Group before the options
vest.
In addition to share options issued under the unapproved share
option schemes, on 1 June 2015, the Company created a warrant
instrument (the 'Instrument') to provide suitable incentives to the
Group's employees, consultants and agents, and in particular those
based, or those spending considerable time, on site at the Group's
operations. Up to 1,000,000 warrants (the 'Warrants') to subscribe
for new Ordinary Shares in the Company (the 'Warrant Shares') maybe
issued pursuant to the Instrument. The exercise price of each
Warrant is GBP0.65 (the share price of the Company being
approximately 0.6p when the Instrument was created) and the
subscription year during which time the Warrants may be exercised
and Warrants Shares issued is the 5-year year from 1 June 2016 to 1
June 2021. Subject to various acceleration provisions, a holder of
Warrants is not entitled to sell more than 1,000 Warrant Shares in
any day nor more than 10,000 Warrant Shares (in aggregate) in any
calendar month, without Board consent. 50,000 Warrants are in
issue.
The following table provides a reconciliation of share options
and warrants outstanding during the year. The number of shares or
warrants and their respective exercise prices have been adjusted to
reflect the share consolidation (see note 24):
Year Weighted Weighted
ended average Year average
31 March exercise ended exercise
2021 price 31 March2020 price
Number (p) Number (p)
At beginning of year 93,080 142 151,160 263
Granted in the year - - - -
Terminated in the year - - - -
Lapsed in the year - - (58,080) 455
At end of year 93,080 142 93,080 142
Exercisable at year end 93,080 142 93,080 142
At 31 March 2021, the following options and warrants over
ordinary shares of 10p each have been granted and remain
unexercised:
Date of grant Total Exercisable Exercise
options Options price
P Expiry date
29 July 2012 18,080 18,080 350p 29 July 2023
15 March 2014 25,000 25,000 150p 15 March 2024
1 June 2015 50,000 50,000 65p 1 June 2021
93,080 93,080
25. Related party disclosures
Magister Investments Limited ("Magister"), holds 50.01% of the
ordinary share capital of the Company and is the ultimate
controlling party. The following Director of Agriterra is also a
Director of Magister:
-- Hamish Rudland
The remuneration of the Directors, who are the key management
personnel of the Company, is set out in note 9.
26. Events subsequent to the balance sheet date
The impact of COVID-19 is a non-adjusting event after the
reporting period. The impact of COVID-19 on the estimates and
judgements of the financial statements has been considered by the
Group and although there are inherent risks and uncertainties as
disclosed on page 3 in the Chair's statement, as at the date of
signing, COVID-19 has not had a material impact on the financial
statements. Further details in relation to Going Concern are
disclosed in note 3.
On 15 July 2021, the Company announced that the Grain division
has renewed the revolving overdraft facility of US$6.1m Metical
equivalent with an interest rate of Prime lending rate minus four
percent (PLR-4%). This facility has been secured by a guarantee
from Magister Investments Limited, the Company's majority
shareholder.
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END
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