RNS Number : 3822N
29 September 2021
Agriterra Limited (‘Agriterra’ or the ‘Company’)
Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture
Trading Update and 2021 Annual Accounts Timetable
Agriterra Limited, the AIM-quoted African agricultural company, is pleased to provide the following trading update and an update on its 2021 Annual Accounts Timetable, together with selected unaudited 2021 financial information:
The Company’s operations were subject to several unanticipated external factors which have affected performance during H2 2021 and H1 2022. These include a significant strengthening of the Metical against US dollars to USD1:MZN 55 from a forecast of USD1:MZN 75, a third wave of COVID-19 in July 2021, delays to the local maize crop as compared to prior year, and escalated conflicts in the north of Mozambique.
The significant appreciation of the Metical against the USD affected funding arrangements for the purchase of maize, as the Metical equivalent to USD 6.1 million bank guaranteed funding was significantly reduced and the Company was required to offer additional collateral in the form of maize and property plant and equipment to obtain an additional MZN 90 million from commercial banks in Mozambique. Furthermore, the appreciation of the Metical against the USD made imports cheaper, and thereby increased competition for all the divisions of the Company.
The third wave of the COVID-19 significantly affected senior managers and employees for more than a month, and the Company had to implement aggressive COVID-19 preventive measures such as working from home, strict temperature checking and monitoring of social distancing. The Company successfully vaccinated all employees above 40 years based on recommendation from the Mozambique health authorities.
The Company’s Grain, Beef and Snax sales have however been encouraging during H1 2022 despite the challenges mentioned above.
Grain Division Update:
The key drivers of the division’s strategy for the current year are:
· Purchasing local maize early in the season to secure inventory at lower prices.
· Drive volumes of higher margin products such as the 1kg meal bag in the informal sector.
As result of the appreciation of the metical against the USD, the budgeted funds were not able to purchase the budgeted quantity of maize and reduced our grain budgeted milling volumes from 40,000 tons to 30,000 tons. Nonetheless, on lower volumes, margins have been improved and the division has more than 20,000 tons of maize in inventory, sufficient for the remaining 6 months of the year.
Beef Division Update:
Management is focussed on continuing to optimising the efficiency of our beef operations. The appreciation of the Metical has made imports of beef from South Africa cheaper and the conflict in the north of Mozambique halted gas operations, which together with COVID-19, have reduced demand for the Company’s beef.
Snax division update:
The Snax division commenced operations in the last quarter of prior financial year. The division produces maize puff and maize naks by baking maize grits. Demand for Snax is strong and the division is already contributing to Group cash flow.
2021 Annual Accounts Timetable
The Company also announces that following the grant by AIM Regulation of an extension to its 2021 annual reporting deadline (further to guidance provided in “Inside AIM” released in January 2021), it now expects to report its 2021 Annual Results for the year ended 31 March 2021 in October 2021. The delay in publishing the 2021 Accounts is due to the impact of the COVID-19 lockdown in Mozambique on the ability of the Company’s auditors and other key financial personnel to access all required information on a timely basis.
Despite the logistical challenges presented by COVID-19, the Company is pleased to confirm that the audit process is currently being finalised.
The Company expects to report the following information, noting that the figures presented for 31 March 2021 are currently unaudited:
|31 March 2021 (Unaudited)||31 March 2020 (Audited)|
|Revenue||US$ 14,367,000||US$ 12,910,000|
|Net asset position||US$ 13,018,000||US$ 1,216,000|
|Cash and cash equivalents||US$ 254 000||US$ 1,034,000|
|Total debt||US$ 6,425,000||US$ 5,383,000|
An independent real estate appraiser was engaged to revalue land and building as at 31 March 2021 and this resulted in the majority of the increase in net assets to US$ 13,018,000 net of current year financial performance.
Caroline Havers, Non-Executive Chair, commented: “We are not alone in having been impacted by the significant events in Mozambique and the rest of the world over the past six months. However, our team have nonetheless demonstrated great tenacity in maximising sales during H1 2022. We expect further ongoing difficult trading conditions in H2 2022 but as a Company are well positioned to come through this period in a strong position.”