2024 Annual Results

2024 Annual Results

RNS Number : 3368G
Agriterra Ltd
30 September 2024

Agriterra Limited (‘Agriterra’ or the ‘Company’)

Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture

2024 Annual Results

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce its audited annual results for the year ended 31 March 2024 (the “2024 Annual Results”). Copies will be posted to Shareholders where appropriate. The Company will be posting its notice of Annual General Meeting, and a further announcement will be made in due course.

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, and is disclosed in accordance with the Company’s obligations under Article 17 of those Regulations.

For further information please visit www.agriterra-ltd.com or contact:

Agriterra LimitedCaroline Haverscaroline@agriterra-ltd.com
Strand Hanson Limited
Nominated & Financial Adviser
Ritchie Balmer / James Spinney+44 (0) 207 409 3494
Peterhouse Capital LimitedBrokerDuncan Vasey / Eran Zucker+44 (0) 207 469 0930

CHAIR’S STATEMENT AND STRATEGIC REVIEW

I am pleased to present the annual report of the Group for the year ending 31 March 2024. During the year, the Group had a strategic review and formulated a 5-year plan to improve and expand the operational performance across all divisions to achieve profitability. The initial phase was to align the workforce with the business volumes and to revise the sales strategy.

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 group of Agriterra’s size and stage of development, through the maintenance of efficient and effective management frameworks accompanied by good communication. Further details are available at: http://www.agriterra-ltd.com/investor-relations/corporate-governance/

Strategy and Business Model

The Group continues to focus on adding value along the entire maize and beef value chain, by developing and offering new products to the market. It has three operating divisions:

·      Grain, which operates maize purchasing and processing businesses through Desenvolvimento e Comercialização Agrìcola Limitada (DECA) and Compagri Limitada (Compagri).

·      Beef, which sources cattle from local farmers and then processes them through its own feedlot, abattoir and retail units through Mozbife Limitada (Mozbife)

·      Snax, which sources maize grits from DECA, processing them into flavoured puffs through DECA Snax Limitada, a joint venture company in which DECA has a majority interest.

·      Biscuits, which was planned and developed during the year 2023/2024 and commissioned in June 2024, trading under the brand name of Doko Doko. Biscuits will remain under the Grain division until it is more established.

During the year the Company secured shareholder loans of, in aggregate, c.US$4.6m (2023: c.US$7.9m) to repay commercial bank debt and to fund working capital for the Grain and Beef divisions. This has resulted in a reduction in debt servicing costs.

The Group is aware of its environmental, social and governmental responsibilities and the need to maintain effective working relationships across a range of stakeholders. The major shareholder is represented on the Board, both at the Executive and Non-Executive level, 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

During the current period the Metical remained steady against the US$1; MZN63.90 (2023; US$1; MZN 63.88). Annual inflation decreased faster than anticipated to 7.1%, against 10.3% in the previous year. The Authorities are maintaining controls to ensure fiscal discipline, during the period the prime lending rate rose to 23.50% to contain inflation but has since started reducing (20.6% September 2024) and is expected to decrease further by the end of 2024. In addition, the Central Bank increased the Prudential Deposit Ratio from 10.5% to 39%.

The continuing instability and Islamist attacks in Cabo Delagado have restricted the production of Liquified Natural Gas (LNG) slowing the anticipated income in our Beef division from this sector as this sector contributed significant revenue to the Beef division in the past. However, the medium-term outlook is positive, with growth expected to accelerate to 4.6% over 2025 to 2026.

A report from the African Development Group: “The fiscal deficit improved from 5.1% of GDP in 2022 to about 2.8% in 2023, reflecting cuts in public spending and higher domestic revenue collection as the economy gradually recovered. Mozambique is in debt distress, but its debt is assessed as sustainable on a forward-looking basis.”

Operations review

Grain division

The division secured a US$2 million shareholder loan to fund grain working capital in August 2023 and purchased 14,494 tons of maize. In addition, 1,000 tons of mealie meal was imported from South Africa when the cost of maize in Mozambique increased to US$315 per ton, and hence it was more economic to import, in accordance with the sales strategy.

The Grain division generated revenue amounting to US$6.2 million (FY23: US$8.6 million) after selling 10,882 tons (2023: 17,819 tons) of mealie meal, the average meal selling price increased by 18% to US$570 per ton (2023: US$482).

The Grain division’s bank borrowings decreased by US$1.1 million due to repayment of bank borrowings of US$1 million and finance leases were fully repaid during the year. The Grain division has one outstanding commercial bank loan amounting to US$0.6 million.

Operating costs increased by US$0.1m to US$1.2m, EBITDA decreased to negative US$0.02m (2023: positive EBITDA of US$0.6m) due to low sales volumes and high cost of maize during the year. Finance costs decreased to US$0.3m (2023: US$1.0m) and depreciation cost amounted to US$0.5m (2023: US$0.5m) resulting in a loss before tax of US$0.78m (2023: loss US$0.86m).

Beef division

The Beef division generated revenue of US$3.0 million (FY23: US$3.13 million). The main customers are wholesale customers being the catering companies and supermarkets. Retail customers are more sensitive to price as compared to quality and there was increased competition from cheaper meat from the informal market. Although sales volumes were 9.4% higher than previous year (728 tons vs 666 tons in FY23) the price of beef per kg deceased by 10.2% to combat competition from the informal market and the Gross Margin decreased to 14.94% (FY23: 24.06%).

The average daily weight gain of animals increased from 0.22% to 0.26% of body mass and the average dress out rate was 47.2% (FY-2023: 49.2%) due to lower quality of animals which were purchased to service the retail business.

Beef division strategy shifted during the year from the more high-end market to a mix of quality product together with a lower quality product that could be priced more aggressively and aimed at the mass retail market.

Beef division is targeting areas much closer to the operational base for cattle buying and is incentivising farmers to deliver animals directly to the abattoir. 70% of all animals slaughtered in the last 6 months of the year were delivered directly to the abattoir. This has improved operational efficiencies by cutting out unnecessary transport costs.

The Maputo butchery was closed, as the proximity to South Africa and the fluctuating cheap imports were affecting sales.

The Beef division still carries the cost of the 3 farms that remain in care and maintenance whilst looking for potential buyers.

Loss after tax amounted to US$1,140,000 (FY23: Loss after tax US$651,000).

Snax division

At the beginning of the year, in order to be more responsive to changes in the market, the Group acquired operating control of DECA Snax Limitada through control over the board by an approved resolution. Consequently the Group is consolidating the performance of Snax division and recognising the non-controlling interest in the Group’s financial statements.

Sales revenue decreased by 9% to US$2.1 million (FY23: US$2.3 million). The Snax division was affected by the increasing cost of maize during the year, up by 27%. However there was resistance from the market to attempts to increase the selling price of the Snax to recover the cost of inputs.

During the year, Snax installed a large 100-gram packing machine to offer family pack size to customers. The division has not been able to utilise more than 60% of its production capacity due to maize cost and availability which affected the cost of production.

Snax sold 1,066,996 bales during the year (FY23: 1,111,538 bales). Profit after tax amounted to US$22,676 (FY23: US$74,976) after payment of management fees to the Grain division, amounting to US$103,601 (FY23: US$117,289). Low profitability resulted from high cost of raw materials.

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. 

202420232022
Grain division
– Average milling yield75.1%75.3%78.0%
– Meal sold (tonnes)10,88217,81917,094
– Revenue$6,186,000$8,590,000$7,118,000
– EBITDA (note 5)($21,000)$611,000$535,000
Beef division
– Slaughter herd – number of head sold in year5,3204,0994,575
– Average daily weight gain in feedlot (% of body mass)0.260.220.35
– Meat sold (tonnes)728666734
– Revenue$2,967,000$3,129,000$3,159,000
– EBITDA (note 5)($633,000)($244,000)($66,000)
Snax division (note 23)
– Bales sold (units)1,066,9961,111,538707,385
– Revenue$2,072,000$2,345,779$1,447,000
– EBITDA (note 5)$98,000$170,000$247,000
Group
– EPS(4.49)(9.29)(10.7)
– Liquidity – cash plus available headroom under facilities$439,000$174,000$107,000

Financial Review

In FY24 the Group revenue includes the revenue from the Snax division (US$2.1m) following the change of operating control. After taking the Snax revenue into account, revenue in the Grain and Beef divisions decreased by 28% to US$8.3m (FY23: US$11.49m) mainly due to:

·      The Grain division secured a pre-buying season facility from a commercial bank in Mozambique which the bank could not deliver due to an increase in the prudential deposit ratio with the Central Bank from 10.5% to 39%. The Company therefore obtained a shareholder loan in August 2023 as an alternative. This delay led to DECA purchasing 6,609 tons of maize initially and then rolling the generated working capital to purchase a total of 14,494 tons of maize. At an extraction of 75.1%, only 10,882 tons were produced and sold (FY23: 17,819).  

·      The Beef division sales volumes increased to 728 tons (FY23: 666 tons), however revenue saw a slight decrease to US$3.0 million (FY23: US$3.1 million) due to a reduction in the average selling price. The increased sales volumes reflect the strategy to be more aggressive in the retail market, but the revenue reflects the reduction in the sales to wholesale customers as a result of competition from South African beef due to Rand: MZN exchange rate.

The Group’s gross margin decreased to 17.6% (FY23: 21.2%) due to fair value reduction of biological assets amounting to US$437,000 (FY23: US$288,000) and cost of replacement maize. Gross profit was US$1.8 million (FY23: US$2.4 million).

The Group’s operating expenses increased by 18% to US$4 million with an increase in operating losses to US$1.85 million (FY23: US$0.81 million).

Net Debt as of 31 March 2024 was US$13.83 million (FY23: US$9.69 million). The shareholder loan injections of US$4.6 million funded maize purchases, various equipment to enhance production, the biscuit plant and raw materials. US$1.1 million was used to repay part of a long outstanding commercial bank loan. Finance costs were at US$1.49 million (FY23: US$1.46 million), of which US$1.003 million was accrued to shareholder loans which are at 6% above Secured Overnight Financing Rate (5.31%) as compared to Mozambique commercial bank loan rates of more than 22% per annum.

Subsequent to the year end, the Grain division secured US$4.2 million to fund working capital in the form of advance payments from a major customer amounting to US$1.2 million and US$3 million under a commodity trading agreement with a local Mozambican company (see note 27).

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. The following table shows the principal risks facing the Group and the actions taken to mitigate these:

Key risk factorDetailHow it is managedChange in the period
Foreign ExchangeThe Group’s operations are impacted by fluctuations in exchange rates and the volatility of the Metical.The Group adjusts its output volumes and prices in response to competition from imports.Increased. Although the Metical has been stable in the past 12 months, the Group’s borrowings are now denominated in USD and there is high risk of devaluation of the Metical due to shortage of foreign currency.
Political instabilityPresidential elections in October 2024 and changes to government policy and applicable laws could adversely affect operations or the financial condition of the Group.Contingency plans to protect assets and staff should political or military tensions escalate.No Change.
Land ownership in MozambiqueProperty rights and land are exclusive to the state. The state grants rights to use and develop land “DUATs”. The operations are dependent upon maintaining the relevant DUATs.Observance of any conditions attaching to a DUAT.No Change.
Maize growing seasonAdverse weather conditions, and anticipated drought for the next growing season nationally or regional may impact on the availability and pricing of grain.Diversify sources of supply and sign supply agreements. The business has taken the initiative to go directly to the farmer, rather than depending entirely on traders.Increased.
Cattle and cattle feedCattle are subject to diseases and infections. The availability and price of feed impacts profitability.Stringent Bio-security measures are in place at the Farms and Feedlot. The division is now self-sufficient in roughage crops and acquires most of its feed from the Grain division.No Change.
Access to working capitalThe Group is less reliant on local banking facilities in Mozambique and has the continued support from the majority shareholder.The Group has secured additional working capital facilities.No change.
ComplianceRisk of a breach of the Group’s business or ethical conduct standards and breach of anti-corruptions laws, resulting in investigations, fines and loss of reputation.The Board reinforces an ethical corporate culture. Anti-bribery policies are in place, with regular training throughout the organization.No Change.

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 Group has prepared forecasts for its ongoing operating 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 Group reduced commercial debt during the year by a further US$1.1 million (FY23: US$7.98 million). Post year end, the Grain division has sourced the equivalent of US$3 million under a commodity trading agreement with a local Mozambican company and has received an advance payment of the equivalent of U$1.2 million from one of its major customers. All the funding was used to purchase maize and will be repaid within the year ending 31 March 2025.

The Group prepared a 5-year strategy which defined the key performance indicators, identified the challenges it is likely to encounter and set direction and targets for the management teams in their respective divisions. These operating targets will need to be achieved for the Group to meet its cashflow requirements.

These conditions 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 operating 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 was unable to continue as a going concern.

Outlook

The Group plans, having implemented a retrenchment programme in the prior year, to align the costs to the business volumes in FY 2025. Operating costs remain under constant review. The majority shareholder continues to offer support to the Group in the form of extending existing loan facilities.

The macro-economic environment is expected to improve in 2024/25 financial year. The US$: MZN exchange rate is expected to remain at US$1: MZN 63.90, whilst inflation is expected to decrease to around 4-5%. The Central Bank of Mozambique is using interest rates to control inflation, and a decrease in the inflation rate will enable the Central Bank of Mozambique to reduce the prime lending rate which is currently at 22.4%.

Grain: The Grain division needs to secure maize at the right time and at the right price to ensure its success. Operational efficiency is also key to unlocking profit, extractions are expected at 75% and therefore regular maintenance and plant and machinery is required. The region expects grain shortages due to an El Nino induced drought, and this will drive maize meal prices up. The pressure on available maize has provided an opportunity for the Grain division to gain market share and improve sales revenue. The Grain division has bought 15,549 tons by 31 August 2024 and is actively procuring an additional 6,000 tons of maize to achieve production of 15,000 tons meal, plus having 1,000 tons to carry into the next season.

The biscuit brand which is included in the Grain division is anticipated to continue to grow and achieve a positive EBITDA in 2025.

Beef: The Beef division financial performance is dependent on successfully penetrating the retail market to achieve sales of 100 tons per month in addition to the existing wholesale market for prime product, whilst containing operational expenses. The Beef division is now securing more than 70% of its animals for slaughter at the abattoir directly from the farmers and this has reduced transport costs. The Beef division will look to diversify other protein products to the market, including chicken and fish.

Snax: The Snax division profitability was affected by high cost of maize, however the Grain division has sufficient maize to supply the requirements for the Snax division and options of importing grits from South Africa are being explored. The Snax division will be introducing new flavours during the year to increase customer choices and improve sales.

Board and senior management changes

There were no changes in the Board and Senior Management during the year.

CSO Havers,

Non-Executive Chair

30 September 2024

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2024

  YearendedYearended
  31 March202431 March 2023
NoteUS$000US$000
Revenue510,39311,494
Cost of sales(8,124)(8,758)
Decrease in fair value of biological assets(437)(288)
Gross profit1,8322,448
  
Operating expenses(3,988)(3,381)
Other income273122
Profit on disposal of property, plant and equipment30
Operating loss(1,853)(811)
  
Finance costs6(1,488)(1,462)
Share of profit in equity-accounted investees, net of tax1237
Loss before taxation(3,341)(2,236)
  
Taxation127127
Loss for the year attributable to owners of the Company(3,214)(2,109)
 

OTHER COMPREHENSIVE INCOME

Loss for the year(3,214)(2,109)
Items that will not be reclassified to profit or loss 
    Revaluation of property, plant and equipment(141)
     Related tax45
(96)
Items that may be reclassified subsequently to profit or loss: 
 Foreign exchange translation differences5(161)
 
Other comprehensive loss for the year(91)(161)
Total comprehensive loss for the year attributable to owners of the Company(3,305)(2,270)
Profit Attributable to: 
Owners of the company(3,225)(2,109)
Non-controlling interest11
(3,214)(2,109)
 
Total comprehensive income attributable to: 
Owners of the company(3,316)(2,270)
Non-controlling interest11
(3,305)(2,270)
US centsUS cents
Earnings per Share 
Basic and diluted earnings per share7(4.49)(9.29)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2024

31 March31 March
20242023
NoteUS$000US$000
Non-current assets  
Property, plant and equipment824,96824,267
Intangible assets3
Equity-accounted investees1293
24,96824,363
Current assets
Biological assets9245496
Inventories616550
Trade and other receivables1,9491,055
Cash and cash equivalents439174
3,2492,275
Total assets28,21726,638
Current liabilities
Borrowings101301,166
Trade and other payables1,217658
1,3471,824
Net current assets1,902451
Non-current liabilities
Borrowings1014,1388,696
Deferred tax liability5,9376,111
20,07514,807
Total liabilities21,42216,631
Net assets6,79510,007
  
Share capital1156,6943,993
Share premium151,419
Share based payment reserve6767
Revaluation reserve11,71412,061
Translation reserve(16,164)(16,169)
Accumulated loss   (45,620)(141,364)
Non-controlling interest104
Equity attributable to equity holders of the parent6,79510,007

The financial statements on pages 18 to 48 were approved and authorised for issue by the Board of Directors on 30 September 2024.

Signed on behalf of the Board of Directors by:

CSO Havers

Chair

30 September 2024

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY      

FOR THE YEAR ENDED 31 MARCH 2024

   SharecapitalShare premiumShare based payment reserveTranslation reserveRevaluation reserveAccumulated
losses
  Non-Controlling InterestTotalEquity
NoteUS$000US$000US$000US$000US$000US$000    US$000US$000
                  
Balance at 1 April 20223,373151,44267(16,008)12,312(139,506)11,680
Loss for the year(2,109)(2,109)
Other comprehensive loss(161)(161)
Total comprehensive loss for the year(161)(2,109)(2,270)
Transactions with ownersShare based payments620(23)597
Revaluation surplus realised(251)251
Total transactions with owners for the year620(23)(251)251597
Balance at 31 March 20233,993151,41967(16,169)12,061(141,364)10,007
Loss for the year  (3,225)11(3,214)
Other comprehensive income/(loss) for the year 5(96)(91)
Total comprehensive loss for the year 5(96)(3,225)11(3,305)
Transactions with owners  
Acquisition of subsidiary with NCI  9393
Reclassification11 52,701(151,419)98,718
Revaluation surplus realised  (251)251
Total transactions with owners for the year52,701(151,419)(251)98,9699393
Balance at 31 March 2024  56,69467(16,164)11,714(45,620)1046,795

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2024

  
  Year ended Year ended
  31 March 202431 March 2023
 NoteUS$000US$000
  
Cash flows from operating activities 
Loss before tax (3,341)(2,236)
Adjustments for:  
Amortisation and depreciation 871870
Profit on disposal of property, plant and equipment (30)
Impairment of goodwill on acquisition 12
Foreign exchange gain (48)(439)
Changes in value of biological assets 437288
Share of profit in associate (37)
Net finance costs 1,4881,462
Operating cash flows before movements in working capital (611)(92)
Net increase in biological assets (186)(33)
Decrease in inventories 3891,626
Increase in trade and other receivables (956)(231)
Decrease in trade and other payables (155)(302)
Net cash (used in) / generated from operating activities (1,519)968
  
Cash flows from investing activities  
Proceeds from disposal of property, plant and equipment net of expenses incurred 30
Acquisition of property, plant and equipment (1,271)(90)
Acquisition of subsidiary net of cash acquired 48
Net cash used in investing activities (1,193)(90)
  
Cash flows from financing activities  
Net repayment of overdrafts (6,254)
Net repayment of loans (940)(1,589)
Net drawdown of shareholder loans 4,6007,900
Net repayment of leases (198)(137)
Issue of shares 283
Finance costs (485)(1,014)
Net cash generated from / (used in) financing activities2,977(811)
Net increase in cash and cash equivalents26567
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at beginning of the year174107
Cash and cash equivalents at end of the year439174

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 47. 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 Accounting Standards as adopted by the United Kingdom.

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:

ItemsMeasurement basis
Biological assetsFair value
Property, plant and equipment – Land and buildingSubsequent measured at 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 2023. The revised standards and interpretations have 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 financial statements in the future, being FY 2025.

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants

Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements

3.             SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared on a historical cost basis, except for certain financial instruments, biological assets, property, plant and equipment 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 include the impact of the restructuring exercise and working capital constraints show that the Group needs to achieve its operating targets to have sufficient headroom under its existing banking and shareholder loan facilities. Certain facilities fall due for renewal in June 2025, and it has been assumed that these will be renewed.

The divisional forecasts for FY-25 show a significant improvement in operating performance as compared to that reported for the year ended 31 March 2024. However, there can be no certainty that these restructuring 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 21 the Group is funded by a combination of short and long-term borrowing facilities. As set out in note 27, since the year end additional finance has been secured and shareholder loans maturing in July and August 2024 have been extended by a further year. 

Based on the above, whilst there are no contractual guarantees, the directors are confident that the existing financing facilities will continue to be 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 in order to remain within its existing bank and shareholder loan facilities and to meet its commitments as they fall due. 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.

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 2024, the Company held equity interests in the following undertakings:

Direct investments

Proportion held of equity instrumentsCountry of incorporation and place of businessNature of business 
Subsidiary undertakings
Agriterra (Mozambique) Limited100%GuernseyHolding company

Indirect investments of Agriterra (Mozambique) Limited

Proportion held of equity instrumentsCountry of incorporation and place of businessNature of business
Subsidiary undertakings
DECA – Desenvolvimento E Comercialização Agrícola Limitada100%MozambiqueGrain
Compagri Limitada100%MozambiqueGrain
Mozbife Limitada100%MozambiqueBeef
Carnes de Manica Limitada100%MozambiqueDormant
Aviação Agriterra Limitada100%MozambiqueDormant
Deca Snax Limitada50%MozambiqueMaize based food products
 

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 the year, unless exchange rates fluctuate significantly during the year, 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 RateClosing Rate
2024202320242023
Mozambican Metical: US$63.8963.8663.9063.88

Operating segments

The Chief Operating Decision Maker is the Board. The Board reviews the Group’s internal reporting in order to assess the 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. These include the Grain, Beef and Snax divisions.

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 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 and in settlement of certain expenditure. These payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant and the value is expensed on a straight-line basis over the vesting period, based on the 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

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 expenditure

Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent measurement

Following initial recognition at cost, items of land and buildings 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 triennially. 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.

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:
LandNil
Buildings and leasehold improvements2%–   33%
Plant and machinery5%–   25%
Motor vehicles20%–   25%
Other assets10%–   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 and goodwill

Intangible assets comprise investment in management information and financial software.  This is amortised at 10% straight line. Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

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 instruments

Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of the instrument.

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.

Cash and cash equivalents

Cash and cash equivalents, comprise cash on hand, on demand deposits and cash equivalents , which are short term highly liquid investments that are readily convertible into a known amount of cash and which are subject to an insignificant risk of changes in value.

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 note 3, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years. The effect on the financial statements of changes in estimates in future years could be material on property, plant and equipment (note 13), and biological assets (note 15).

Going concern

Details of the directors’ assessment of Going Concern are set out in note 3. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

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 of non-current assets are greater than the recoverable amount.

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 put in place following the restructuring exercise undertaken since year end 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 2024, 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 Standards to determine the fair value of land and buildings. Based on the assessment performed by the independent real estate valuers at 31 March 2024, and the improved operational outlook reflected in the operational plan in place, management have concluded that, at 31 March 2024, non-current assets are not impaired.

No impairments were recorded in the year ended 31 March 2024 or the year ended 31 March 2023. The carrying amount of non-current assets is US$25.0 million (2022: $24.3million).

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. The value of the herd held for slaughter disclosed as a current asset was $0.2m (2023: $0.5m).

5.             SEGMENT REPORTING

The Board considers that the Group’s operating activities comprise the segments of Grain, Beef and Snax 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 2024 GrainBeefSnax*Unallo-catedElimina-tionsTotal
US$000US$000US$000US$000US$000US$000
Revenue           
External sales (2)5,354 2,967 2,072   10,393
Inter-segment sales (1)816    (816) 
6,170 2,967 2,072  (816) 10,393
Segment results           
– Operating (loss)/profit(728) (963) 5 (440)  (2,126)
– Interest expense(292) (193)  (1,003)  (1,488)
– Other gains and losses237 4 18 14  273
– Share of profit in equity-accounted investees     
(Loss)/Profit before tax(783) (1,152) 23 (1,429)  (3,341)
Income tax11512127
(Loss)/Profit after tax(668) (1,140) 23 (1,429)  (3,214)
Year ending 31 March 2023 GrainBeefSnax*Unallo-catedElimina-tionsTotal
US$000US$000US$000US$000US$000US$000
Revenue           
External sales (2)8,365 3,129    11,494
Inter-segment sales (1)225    (225) 
8,590 3,129   (225) 11,494
Segment results           
– Operating (loss)/profit2 (659)  (308)  (965)
– Interest expense(958) (63)  (441)  (1,462)
– Other gains and losses95 59    154
– Share of profit in equity-accounted investees  37   37
(Loss)/Profit before tax(861) (663) 37 (749)  (2,236)
Income tax11512127
(Loss)/Profit after tax(746) (651) 37 (749)  (2,109)

(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.

    *        Deca Snax was accounted as a subsidiary in 2024 due to acquisition of control and was accounted under equity method as a joint venture.

The segment items included in the consolidated income statement for the year are as follows:

Year ending 31 March 2024GrainBeefSnaxUnallo-catedElimina-tionsTotal
US$000US$000US$000US$000US$000US$000
Depreciation and amortisation47032675871
Year ending 31 March 2023GrainBeefSnaxUnallo-catedElimina-tionsTotal
US$000US$000US$000US$000US$000US$000
Depreciation and amortisation514356870

Segment assets, liabilities and capital expenditure

Segment assets consist primarily of property, plant and equipment, biological assets, inventories, trade and other receivables and cash and cash equivalents. Segment liabilities comprise operating liabilities, including an overdraft financing facility in the Grain segment, and bank loans and overdraft financing facilities in the Beef segment.

Capital expenditure comprises additions to property, plant and equipment.

The segment assets and liabilities at 31 March 2024 and capital expenditure for the year then ended are as follows:

GrainBeefSnaxUnallocatedTotal
US$000US$000US$000US$000US$000
Assets21,970 4,515 1,205 527 28,217
Liabilities(5,417) (731) (772) (14,502) (21,422)
Capital expenditure9931541241,271

Segment assets and liabilities are reconciled to Group assets and liabilities as follows:

AssetsLiabilities
US$000US$000
Segment assets and liabilities27,690(6,920)
Unallocated:
Other receivables527
Accrued liabilities(865)
Borrowings(13,637)
28,217(21,422)

The segment assets and liabilities at 31 March 2023 and capital expenditure for the year then ended are as follows:

GrainBeefSnaxUnallocatedTotal
US$000US$000US$000US$000US$000
Assets21,361 4,880 93 304 26,638
Liabilities(7,596) (770)  (8,265) (16,631)
Capital expenditure315990

Segment assets and liabilities are reconciled to Group assets and liabilities as follows:

AssetsLiabilities
US$000US$000
Segment assets and liabilities26,334(8,366)
Unallocated:
Intangible asset304
Accrued liabilities(232)
Borrowings(8,033)
26,638(16,631)

Key performance Indicators

The Board considers that earnings before interest, tax, depreciation and amortisation (“EBITDA”) is a key performance indicator in measuring operational performance. EBITDA is a non IFRS measure and alternative performance measure for the Group which is calculated as follows:

Year ending 31 March 2024 GrainBeefSnaxUnallocatedTotal
US$000US$000US$000US$000US$000
(Loss)/Profit before tax(783)(1,152)23(1,429)(3,341)
– Interest expense2921931,0031,488
– Depreciation and amortisation charge47032675871
– Share of profit in equity-accounted investees
EBITDA(21)(633)98(426)(982)
Year ending 31 March 2023 GrainBeefSnaxUnallocatedTotal
US$000US$000US$000US$000US$000
(Loss)/Profit before tax(861)(663)37(749)(2,236)
– Interest expense958634411,462
– Depreciation and amortisation charge514356870
– Share of profit in equity-accounted investees(37)(37)
EBITDA611(244)(308)59

Significant customers

In the year ended 31 March 2024, the two largest customers of the Grain segment generated revenue of $1.8 million (31 March 2023: $2.6m) constituting 29% (31 March 2023: 31%) of the Grain division’s revenue. The two largest customers of the Beef segment generated revenue of $0.7m (31 March 2023: $0.2m) amounting to 25% (31 March 2023: 6%) of the Beef division’s revenue.

6.             FINANCE COSTS

Year EndedYearEnded
31 March 202431 March 2023
US$000US$000
 
Interest expense on bank borrowings and overdrafts(444)(913)
Interest expense on shareholder loans(1,003)(448)
Interest expense on leases(41)(101)
Net finance costs(1,488)(1,462)

7.             EARNINGS PER SHARE

Year endedYear ended
31 March 202431 March 2023
US$000US$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(3,225)(2,109)
 
Weighted average number of Ordinary Shares for the purposes of basic and diluted earnings per share71,829,00722,705,569
 
Basic and diluted earnings per share – US cents(4.49)(9,29)
Basic and diluted earnings per share from continuing activities – US cents(4.49)(9,29)

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 25.

8.             PROPERTY, PLANT AND EQUIPMENT

Land and buildingsPlant and machineryMotor vehiclesOtherAssetsTotal
US$000US$000US$000US$000US$000
Cost
At 1 April 202225,2465,4091,19114231,988
Additions12562290
Disposals
Exchange rate adjustment(20)(5)(25)
At 31 March 202325,2385,4601,19116432,053
Acquisition through business combination55266618
Additions2662247811,271
Revaluation(2,013) (2,013)
Disposals(15)(25)(1)(41)
Exchange rate adjustment(8)(2)(1)(11)
At 31 March 202423,2176,2611,3891,01031,877
 
Accumulated depreciation and impairment
At 1 April 20226255,0491,1381256,937
Charge for the year6241545125854
Disposals
Exchange rate adjustment(1)(2)(1)(1)(5)
At 31 March 20231,2485,2011,1881497,786
Acquisition through business combination12447171
Charge for the year624205831868
Revaluation(1,872)(1,872)
Disposals(15)(25)(1)(41)
Exchange rate adjustment(2)(1)(3)
At 31 March 20245,5131,1702266,909
 Net book value
31 March 202423,21774821978424,968
31 March 202323,99025931524,267

The Group accounting policy for recognition and subsequent measurement of land and buildings is the 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.

At the triennial valuation of land and building at 31 March 2024 the Group revalued land and buildings down by $141,087 (31 March 2021: revalued up by $18,475,127) in total (DECA revalued down by $274,923, Compagri revalued down by $124,935 and Mozbife revalued up by $258,771). This valuation attributed a value of $nil to the farms, which are currently held for sale. The next revaluation exercise will be performed on 31 March 2027. The carrying value of land and buildings at 31 March 2024 under the cost model would have been $ 4,735,908 (2023: $4,893,000). The valuation of the land and building was carried out by a certified valuer. The valuation was based on replacement cost method wherein the valuer estimated the cost of building a similar infrastructure taking into account inflation, cost of constructions, land value and return on investments. These inputs are Level 3 inputs as per the fair value hierarchy as they are unobservable inputs. The fair value is sensitive to these inputs and changes to one or more inputs can significantly impact the fair value. 

Property, plant and equipment with a carrying amount of $6,085,415 (2023: $20,401,000) 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 2024, a depreciation charge of $868,000 (2023: $854,000) 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 $Nil (2023: $71,825) and $ nil (2023: nil) for machinery and motor vehicles respectively (note 20).

During the year ended 31 March 2024, the Group acquired plant and machinery, with the intention of constructing a new biscuit factory in Chimoio totalling to $0.8 million. Such plant and machinery were not ready for its intended use as at 31 March 2024. No depreciation was charged on such asset. It is included under other assets.

9.             BIOLOGICAL ASSETS

US$000
Fair value
At 31 March 2022463
Purchase of biological assets1,812
Sale, slaughter or other disposal of biological assets(1,533)
Change in fair value of the herd(288)
Foreign exchange adjustment42
At 31 March 2023496
Purchase of biological assets1,751
Sale, slaughter or other disposal of biological assets(1,565)
Change in fair value of the herd(437)
Foreign exchange adjustment
At 31 March 2024245

At 31 March 2024 and 2023, all cattle are held for slaughter. The slaughter herd has been classified as a current asset. Forage crops included in current assets are US$22,543 (2023: US$42,547).

At 31 March 2024 the number of the slaughter herd sold during the year was 5,320 head (2023: 4,099), with an average weight of 283kgs (2023: 341kgs) and average value of US$343.91 (2023: US$369).

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 of less than 3 months before slaughter.

10.           BORROWINGS

31 March 202431 March 2023
US$000US$000
 
Non-current liabilities 
Shareholder loans13,6378,034
Bank loans501574
Leases88
14,1388,696
 
Current liabilities 
Bank loans1301,056
Leases110
Overdrafts
1301,166
14,2689,862

Bank and Shareholder Borrowings

Group

During the period, Agriterra Limited secured shareholder loans amounting to US$4.6 million (2023; US$7.9 million) from Chepstow Investments Limited at an interest rate of SOFR+6% to reduce the finance cost which has been increasing over the years and has been used to repay commercial borrowing in Mozambique which were charged interest above 18% per annum. The shareholder loans are made up of:

·      US$6.1m convertible loan facility with a 3-year tenure maturing in July 2025.

·      US$1.8m convertible loan facility with a 12-month tenure maturing in July 2023, which was renewed for the same period in July 2024 and renewed again for the same period after year end to July 2025.

·      US$ 2.0m convertible loan facility with a 12-month tenure maturing in August 2024 and was renewed for the same period after year end to August 2025.

·      US$ 1.7m loan facility with a 12-month tenure maturing in November 2024, with the option to renew for a further 12-month period at that date.

·      US$ 0.9m loan facility maturing on 31 March 2026, with the option to extend for a further 12-month period at that date.

In the event of default or at the option of the lender, the outstanding principal and interest may be converted into new ordinary shares at the prevailing market price of the Company`s shares at such time. The market price is determined by the 10-day VWAP. The difference between the 10-day VWAP and the closing market price is a derivative liability the value of which is not considered to be material. Accordingly, the principal of the convertible loans has been recorded in full as a financial liability.

Beef division

Beef division does not have any finance facilities as at 31 March 2024.

Grain division

At 31 March 2024, the Grain division has one outstanding commercial bank loan amounting to US$0.6 million secured by land and buildings valued at US$6.1 million. The loan has an interest rate of 22.5% and matures on 24 November 2026.

In addition, Grain division fully repaid finance lease for 6 vehicles which matured on 05 December 2023. Grain division was incurring interest of 24.1% on this facility and during the period US$50,078 of the outstanding balance was repaid.

The bank facilities are secured as follows:

31 March 202431 March2023
US$000US$000
Fixed Charge 
Property, plant and equipment6,08520,401
Floating Charge 
Maize and maize product inventories
6,08520,401

Reconciliation to cash flow statement

 At 31 March 2023 Cash flow Interest accrued Loan to equity conversion Foreign Exchange At 31 March 2024
 US$000 US$000 US$000 US$000 US$000 US$000
Shareholder loans8,034 4,600 1,003   13,637
Non-current bank loans574  (72)    (1) 501
Non-current leases88  (88)     
Current bank loans1,056  (868)    (58) 130
Current leases110  (110)     
Overdrafts      
 9,862 3,462 1,003  (59) 14,268
 
At 31 March 2022Cash flowInterest accruedLoan to equity conversionForeign ExchangeAt 31 March 2023
US$000US$000US$000US$000US$000US$000
Shareholder loans7,900448(314)8,034
Non-current bank loans783(209)574
Non-current leases220(132)88
Current bank loans2,438(1,380)(2)1,056
Current leases115(5)110
Overdrafts6,256(6,254)(2)
9,812(80)448(314)(4)9,862
            

11.           SHARE CAPITAL

Authorised Allotted and fully paid  
 Number Number US$000
At 31 March 202223,450,000 21,240,618 3,135
Issue of shares50,588,383 50,588,389 620
At 31 March 202374,038,389 71,829,007 3,755
Transferred from share premium    52,701
At 31 March 2024    56,456
     
At 31 March 2023 and 31 March 2024     
Deferred shares of 0.1p each155,000,000 155,000,000 238
     
Total share capital229,038,389 226,829,007 56,694

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 £1,000,000 per ordinary share. The deferred shares may be converted into ordinary shares by resolution of the Board.

At 31 March 2024 the Company offset accumulated losses of US$98,718,000 attributable to its previous oil and gas businesses against share premium account and the balance of US$52,701,000 remaining on the share premium account has been combined with the share capital account to comply with Guernsey company law.

PLACING AND BROKER OPTION

On 20 March 2023, the Company issued 20,000,000 new ordinary shares for cash at a price of 1p per share and 20,000,000 new ordinary shares on conversion of a loan from Chepstow Investments Limited at a conversion price of 1p per share.

On 22 March 2023, the Company issued 5,000,000 new ordinary shares for cash at a price of 1p per share and 5,000,000 new ordinary shares on conversion of a loan from Chepstow Investments Limited at a conversion price of 1p per share.

On 23 March 2023, the Company issued 588,389 new ordinary shares on conversion of a loan from Chepstow Investments Limited at a conversion price of 1p per share in order to maintain the Chepstow Investments Limited shareholding at 50.58%.

WARRANTS

31 March202431 March2023
 
PILOW warrants50,588,38950,588,389
Broker warrants1,250,0001,250,000
51,838,38951,838,389

Participants in the Placing and Debt Conversion received one Protected In-the-money Loyalty Warrant (“PILOW”) for every Placing Share or Conversion Share issued. The PILOW offers rights to the Company to call the PILOW holder to exercise their options at a price to be determined by the company or in the event of a future fundraising or in certain other circumstances, the Company is mandated to call the PILOW holder to exercise their options on similar terms to the future placing. The PILOW expires 24 months from the date of issue. The PILOW has no fixed price, no guaranteed discount and are held over a variable number of securities. Given these variables, in the opinion of the Company it is not possible to calculate the expected value of a PILOW and that their fair value is nil.

On 22 March 2023, the Company issued 1,250,000 Broker warrants with a term of 24 months and an exercise price of 1p. Their value is not material and has not been accounted for as a cost of the placing.

12.           EQUITY-ACCOUNTED INVESTEES

31 March202431 March2023
US$000US$000
 
Interest in joint venture93
93

The Group acquired control in DECA Snax Limitada which was equity accounted investee on 1 April 2023. Interest in DECA Snax remains unchanged at 50% and is a strategic customer of grits produced by the Grain division. DECA Snax is principally engaged in the production of corn snack in Chimoio, Mozambique and is not listed.

DECA Snax Limitada is structured as a separate vehicle and the Group has controlling interest in the net assets of DECA Snax Limitada. Accordingly, the Group has classified DECA Snax Limitada as a subsidiary. In accordance with the agreement under which DECA Snax Limitada is established, the Group and the other investor have agreed to make additional contributions in proportion of their interest if additional investment is 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 March202431 March2023
US$000US$000
 
Percentage ownership interest50%50%
 
Non-current assets447
Current assets (including cash and cash equivalents – 2024: US$ Nil, 2023: US$48,000)550
Current liabilities (Trade and other payables)(75)
Non-current liabilities(748)
 
Net assets (100%)174
Net assets (Carrying amount of joint venture)93
 
 Revenue2,346
Cost of Sales(1,804)
Depreciation and amortisation(77)
Operating expenses(372)
Interest expense
Income tax expense(18)
 Profit and other comprehensive income (100%)75
 Profit and other comprehensive income (50%)37

13.           CONTROL OVER JOINT VENTURE

The Group acquired 50% of the shares in DECA Snax Limitada at incorporation and step acquired majority voting rights on 01 April 2023. The Group acquired control by gaining the right to make decisions over relevant activities including financing, disposal and capital expenditure by board resolution. The step acquisition granted the Group control of DECA Snax Limited.

Included in the identifiable assets and liabilities acquired at the date of acquisition of DECA Snax are inputs (patent technology, inventories and customer relationships), production processes and an organised workforce. The Group has determined that together the acquired inputs and processes significantly contribute to the ability to create revenue. The Group has concluded that the acquired set is a business.

Taking control of DECA Snax will enable the Group to improve its meal sales and diversify revenue streams by adding value to the meal produced by the Grain division. The Group also expects to reduce costs through economies of scale. For the 12 months to 31 March 2024, DECA Snax contributed revenue of US$2.1 million and a profit of US$23 000.

13.1.        Consideration transferred

The Group acquired control in DECA Snax Limitada through a step acquisition increasing voting rights thereby granting control. Consideration paid was the fair value of the previously held interest in Joint Venture value at US$ 93 000.

13.2.        Identifiable assets acquired and liabilities assumed.

The following table summarises the recognised amounts of assets acquired, and liabilities assumed at the date of acquisition.

US$000
Plant and equipment447
Inventories455
Trade receivables47
Cash and cash equivalent48
Loans and borrowings(748)
Trade and other payables(75)
Net identifiable assets174

Management performed a desktop valuation to determine the fair value of the net identifiable assets and assumed that the carrying amounts do not materially differ from the fair value of above identifiable assets.

13.3.        Goodwill

Goodwill arising from the acquisition has been recognised as follows.

US$000
Consideration transferred
NCI based on their proportionate interest in the recognised amount of assets and liabilities93
Fair value of pre-existing interest in DECA Snax93
Fair value of identifiable net assets(174)
Goodwill12

The goodwill is attributable mainly to the skills and technical talent of DECA Snax Limitada workforce. None of the goodwill is expected to be deductible for tax purposes.

At the end of the financial period, the Group tested goodwill for impairment at the end of the year and due to decrease in performance of Snax division, goodwill was impaired.

14.           RELATED PARTY DISCLOSURES

Chepstow Investments Limited (“Chepstow”), (formerly Magister Investments Limited), holds 50.58% of the ordinary share capital of the Company and is the ultimate controlling party. During the year Chepstow advanced shareholder loans to repay bank debt, purchase the biscuit plant and other productive assets and provide working capital (note 18). The balance outstanding at 31 March 2024 was $13,636,619 (2023: $8,033,782). During the year, the Group incurred expenses on behalf of Chepstow. Other receivables include receivable from shareholder for expenses incurred on behalf of the shareholders US$176,118 (2023: Nil).

The following Director of Agriterra is also a Director of Chepstow:

·      HBW Rudland

The remuneration of the Directors, who are the key management personnel of the Company, is set out in note 9.

15.           EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

In April 2024 the Grain division entered into a commodity trading agreement with a local Mozambican company to source MZN 195.5 million for the purchase of maize. In June 2024 the Grain division also agreed on advance funding by a major customer amounting to MZN76 million, which was used to purchase maize to be milled for that customer. In addition, shareholder loans maturing in July and August 2024 have been extended by a further year to July and August 2025. 

Half-year Report

Half-year Report

RNS Number : 2174Y
Agriterra Ltd
29 December 2023

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture

Agriterra Limited (‘Agriterra’ or the ‘Company’)

Interim Results

Agriterra Limited, the AIM listed African agricultural company, announces its unaudited results for the six months ended 30 September 2023.

CHAIR’S STATEMENT

I am pleased to provide an update on our performance in the first half of the 2024 financial year (‘HY-2024’). These results will be made available on the Company’s website.

Operational update

Grain division

The Grain division commenced the period without sufficient reserves of maize in silo to link to the new season. Accordingly, with no banking facilities in place, early season maize purchases were funded by customer prepayments and advances, securing 4,500 tons in the first 3 months of the period. The Grain division´s objective was to breakeven during this low milling period whilst securing sufficient stocks for the season.

The division secured a commercial overdraft in July 2023 amounting to US$2 million to finance further maize purchases. However it was unable to draw on the full facility as the bank was unable to disburse the full amount due to Central Bank monetary policy to restrict the money supply. The division secured a shareholder loan in August for US$2 million to fund maize purchases.

In August 2023, the Grain division undertook a restructuring exercise with the objective of breaking even at 900 tons per month by:

  • Revising the pricing strategy to achieve at least 25% gross margin on cost on maize.
  • Reducing fixed overheads from MZN 6 million (approximately US$ 93,000) per month to MZN 3 million (approximately US$ 47,000) by:
  • Retrenching 54 staff members thereby reducing personnel cost MZN 2 million (approximately US$ 31,000) per month.
  • Reducing other operations cost by MZN 1 million (approximately US$ 16,000) per month.

The cash flow constraints in the early part of the period adversely impacted Grain division sales volumes at 4,188 tons (HY-2023: 7,947 tonnes) generating revenue of US$ 2.2 million (HY-2023: US$ 3.6 million).

The business, as at 30 September 2023, has in silo a total stock of 6,609 tons of maize (HY-2023: 7,444 tons), which will be rolled over continuously to fund maize requirements through to April 2024. This will necessitate the purchase of a further 5,000 tons to meet the milling requirements until the next harvest. Due to late purchasing and general shortage of maize, average cost of maize increased from MZN 12.2 per kg (approximately US$ 0.19) to MZN 19.1 per kg (approximately US$ 0.30) for the current season. However the shortage of maise has increased the price of meal and the division expects to be able to meet its margin targets in the second half of the year as demand improves.

Operating costs increased by US$ 0.1 million to US$ 0.6 million due to retrenchment cost incurred in August 2023. EBITDA decreased to a loss of US$ 0.2 million (HY-2023: EBITDA profit of US$ 0.2 million) due to lower volumes and margins in the first quarter. Finance costs decreased to US$ 0.2 million (HY-2023: US$ 0.8 million) reflecting the full benefits of the refinancing of commercial debt with shareholder loans in the prior year. Depreciation cost remained constant at US$ 0.24 million. Grain incurred a loss of US$ 0.68 million for the 6 months period ending 30 September 2023 (HY-2023: Loss US$ 0.87 million).

Beef division

The strategy in the beef division shifted midway through the period. This change was driven by several factors:

  • Influx of cheap beef from South Africa due to the weakening of the South African Rand against the Metical which had an impact on the beef market in the Southern parts of Mozambique, especially Maputo, the Capital.
  • Rising transport costs which has impacted on the landed cost of cattle in the feedlot as well as costs of getting the finished product to market. These rising costs can be attributed to: 
  • Deteriorating transport network
  • Rising fuel costs
  • Ageing fleet

In response, decisions were made to start shifting the sales strategy of beef from the more formal high-end market to less formal mass market, and price the product aggressively, whilst also maintaining our current strategy of conditioning animals in the feedlot and maintaining a presence within the formal market.

To achieve this, we have implemented the following:

  • Start targeting areas much closer to our operational base for cattle buying.
  • Buying animals at the feedlot and abattoir for slaughter directly.
  • Start investing in new fleet of cattle trucks to improve transport efficiencies.

In addition to the above, a cost reduction exercise was undertaken at the end of July with a view of reducing our monthly operating expenses by 1,000,000 MZN per month (approximately US$ 16,000) as well as reducing our staff compliment by 45, in an effort to economise and streamline the operation. 

The number of animals in stock had reduced to 723 head by 30 Sept 23. This is partly as result of our shift in strategy to buy more animals for direct slaughter and reduce the amount and cost of keeping animals in the feedlot. Cashflow has had some challenges, primarily due to tough economic conditions as well as country wide municipal elections, with much funding from Government being diverted to campaigning rather than settling outstanding debts to their suppliers, which in turn impacts on primary producers like ourselves. Steps have been taken to rectify this and we are now seeing an improvement.

Beef division generated US$ 1.5 million revenue over the period, a reduction of US$ 145,000 against the same period last year. 430 tons of beef were sold during the period, compared to a budget of 652 tons. A gross profit of 20.67% was achieved, which is the third year whereby a GP of over 20% has been achieved.

Cash resources available at this time amounted to US$ 0.25 million which amounts to an additional 750 head of cattle at current prices. The cumulative for loss the period amounted to US$ 0. 4 million, an increase of US$ 0.1 million.

After some delays, we have started a new company Carnes de Manica and sales commenced  in October 2023. This is another field to Pork initiative and once it is fully established, we anticipate an additional US$ 0.13 million to be added to the revenue stream annually. Current number of pigs in stock is 299 head.

Two new cattle trucks and trailers have been purchased at a cost of US$ 0.12 million with funds raised from Peterhouse Capital. We anticipate the arrival of these trucks in late Nov. This will help in improving our efficiencies and reducing our transport costs within the beef division.

Snax Division

Snax division continues to supply the market with superior quality products of which we have launched a new chicken flavoured puff ring over this period. The new product has been well received as now constitutes about 15% of total sales. Onion rings remain the market favourite and a new 100g family size packet is being launched. The new packing machine has been ordered and we expect this to be on site late December 2023 and installed, ready for production in January 2024. In terms of production we have produced 515 00 bales of product over the period.

Snax division generated revenue amounting to US$ 1.03 million (HY-2023: US$ 1.27 million) over the period with a gross profit of 20.17% (HY-2023: 19.6%). Decrease in sales revenue is mainly attributable to the tough economic conditions and less disposable household incomes, with families spending less on non-essential food stuffs. Profit for the period was US$ 0.30 million (HY-2023: US$ 0.74 million).

DECA Snax is a joint venture and based on International Financial Reporting Standards, revenue is not consolidated but the profit portion attributable to the group is included as share of profit in equity accounted investee in the Consolidated Income Statement. Profits have been negatively impacted by the rising costs of raw materials, packaging and transport. Maize prices in particular have had a significant impact. Profit attributable to the group is US$ 0.15 million (HY-23: US$ 0.35 million).

Group Results

Group revenue for the half-year ended 30 September 2023 decreased by 28% to US$ 3.6 million (HY-2023: US$ 5.0 million). Decrease in sales revenue is mainly resulting from decrease in sales for Grain division.

Gross profit decreased to US$ 0.5 million (HY-2023: US$ 1.1 million) achieving a group gross margin of 15% (HY-2023: Gross margin of 22%). Decrease in gross margin is resulting from high cost of maize which reduced Grain division margins to 9%. Group operating expenses increased from US$ 1,603 to US$ 1,727 due to retrenchment cost as compared to prior period. Following the restructuring exercise, it is anticipated that operating expenses will fall significantly from October 2023.

Finance costs decreased by 40% to US$ 0.55 million (HY-2023: US$ 0.92 million) as a result of refinancing of commercial debt with shareholder loans incurring interest at SOFR+3%. Overall interest rate on shareholder loan is around 10% per annum as compared to the current commercial debt interest rate of 25% per annum.

During the period, inventories have increased by US$ 1.92 million to US$ 2.47 million as compared to 31 March 2023. Grain division is keeping low inventory levels as a result of the revised strategy to reduce stock holding cost and finance cost in Grain division. Net debt at 30 September 2023 was US$ 12.7 million (31 March 2023: US$ 10.9 million).

Outlook for H2-2024

The Grain business is entering H2-2024 with 6,609 tons of grain in silo which is not sufficient to take us to the next harvest. The division is supplementing by importing 4000 tons of maize from South Africa and rolling to the extent possible maize sold during the period. Beef division sales revenue is expected to increase by 20% as compared to the first half year. All divisions have been striving to be self-sustaining at low capacity utilisation and now are expanding into profitable operations as volumes increase after rightsizing. Management will continuously monitor operations for profitability and seize new market opportunities creating a group basket of products to effectively lower overheads per product in the medium to long term.

Grain remains the core group business and management will seek to add value by creating additional product lines building on the success of Deca Snax.  

CSO Havers
Chair29 December 2023 

FOR FURTHER INFORMATION PLEASE VISIT WWW.AGRITERRA-LTD.COM OR CONTACT:

Agriterra LimitedStrand Hanson Limited
Caroline Haverscaroline@agriterra-ltd.comRitchie Balmer / James Spinney / David AsquithTel: +44 (0) 207 409 3494
Peterhouse Capital Limited
Duncan Vasey / Eran ZuckerTel: +44 (0) 207 469 0930

Consolidated statement of profit or loss and other comprehensive income

Consolidated income statement

  6 monthsended30 September20236 monthsended30 September2022Year  ended31 March2023
  UnauditedUnauditedAudited
   
 NoteUS$000US$000US$000
CONTINUING OPERATIONS  
Revenue23,5754,96411,494
Cost of sales (3,054)(3,883)(8,758)
(Decrease)/Increase in fair value of biological assets (288)
Gross profit 5211,0812,448 
Operating expenses (1,727)(1,603)(3,381)  
Other income 14356122
Profit on disposal of property, plant and equipment 
Operating loss (1,063)(466)(811)
  
Net finance costs3(550)(918)(1,462)
Share of profit in equity-accounted investees, net of tax 153537
Loss before taxation (1,598)(1,349)(2,236)
  
Taxation 127
Loss for the period2(1,598)(1,349)(2,109)
     
Loss for the period attributable to owners of the Company  (1,598) (1,349)(2,109)
     
LOSS PER SHARE    
Basic and diluted loss per share – US Cents4 (2.22) (6.35)(9.29)

Consolidated Statement of comprehensive income

   6 monthsended30 September2023Unaudited 6 monthsended30 September2022UnauditedYear ended31 March2023Audited
     
   US$000 US$000US$000
    
Loss for the period  (1,598) (1,349)(2,109)
Items that may be reclassified subsequently to profit or loss:    
Foreign exchange translation differences  (705)(490)(161)
Other comprehensive (loss)/income for the period  (705)(490)(161)
/Total comprehensive (loss)/income for the period attributable to owners of the Company  (2,303) (1,839)(2,270)

Consolidated statement of financial position

   30 September2023Unaudited30 September2022Unaudited31 March2023Audited
    
 Note US$000US$000US$000
Non-current assets    
Property, plant and equipment  23,97324,68224,267
Intangible assets  1103
Equity-accounted investees  1089193
  24,08224,78324,363
Current assets   
Biological assets  292421496
Inventories  2,4722,125550
Trade and other receivables  1,6281,1901,055
Cash and cash equivalents  307350174
  4,6994,0862,275
Total assets  28,78128,86926,638
Current liabilities   
Borrowings5 1,1794,2872,666
Trade and other payables  1,9631,530658
  3,1425,8173,324
Net current assets  1,557(1,731)(1,049)
    
Non-current liabilities   
Borrowings5 11,8206,9687,196
Deferred tax liability  6,1156,2436,111
   17,93513,21113,307
Total liabilities  21,07719,02816,631
    
Net assets  7,7049,84110,007
   
Share capital6 63,3433,3733,993
Share premium6 151,442151,419
Share based payments reserve  676767
Revaluation reserve  11,93512,18612,061
Translation reserve  (16,874)(16,498)(16,169)
Accumulated losses  (50,767)(140,729)(141,364)
Equity attributable to equity holders of the parent  7,7049,84110,007
    

The unaudited condensed consolidated financial statements of Agriterra Limited for the six months ended 30 September 2023 were approved by the Board of Directors and authorised for issue on 29 December 2023.

Signed on behalf of the Board of Directors:

CSO Havers Chair 

Consolidated statement of changes in equity

   SharecapitalShare premiumShare based payment reserveTranslation reserveRevaluation reserveAccumulated
losses
TotalEquity
NoteUS$000US$000US$000US$000US$000US$000US$000
                
Balance at 1 April 20223,373151,44267(16,008)12,312(139,506)11,680
Loss for the period(1,349)(1,349)
Other comprehensive income:
Exchange translation gain on foreign operations restated(490)(490)
Total comprehensive loss for the period(490)(1,349)(1,839)
Transactions with owners
Revaluation surplus realised(126)126
Total transactions with owners for the period(126)126
Balance at 30 September 2022  3,373 151,442 67 (16,498) 12,186 (140,729) 9,841
Loss for the period  (760)(760)
Other comprehensive income:
Exchange translation gain on foreign operations 329329
Total comprehensive income for the period 329(760)(431)
Transactions with owners  
Issue of shares  620(23)597
Revaluation surplus realised  (125)125
Total transactions with owners for the period620(23)(125)125597
Balance at 31 March 20233,993 151,419 67 (16,169) 12,061 (141,364) 10,007
Loss for the period(1,598)(1,598)
Other comprehensive income:
Exchange translation (loss) on foreign operations(705)(705)
Total comprehensive loss for the period(705)(1,598)(2,303)
Transactions with owners
Reclassification59,350(151,419)92,069
Revaluation surplus realised(126)126
Total transactions with owners for the period59,350(151,419)(126)92,195
Balance at 30 September 202363,343  67 (16,874) 11,935 (50,767) 7,704

Consolidated cash flow statement

 Note 6 months ended30 September2023Unaudited6 months ended30 September2022UnauditedYear ended31 March2023Audited
    
   US$000US$000US$000
    
Loss before tax for the period  (1,598)(1,349)(2,236)
Adjustments for:   
Amortisation and depreciation2 396435870
Foreign exchange (gain)/loss  (315)(493)(151)
Decrease / (increase) in value of biological assets  288
Share of profit in associate  (15)(35)(37)
Net Finance costs  5509181,462
Operating cash flows before movements in working capital  (982)(524)196
Net decrease / (increase) in biological assets  20442(321)
(Increase) / decrease in inventories  (1,922)511,626
(Increase) / decrease in trade and other receivables  (573)(366)52
Increase / (decrease) in trade and other payables  924570(302)
Net Cash used in operating activities  (2,352)(227)1,251
   
Cash flows from investing activities   
Acquisition of property, plant and equipment  (102)(58)(90)
Net cash used in investing activities  (102)(58)(90)
   
Cash flow from financing activities   
Finance costs3 (167)(918)(1,014)
Net (repayment) / drawdown of overdrafts5 (6,255)(6,254)
Net (repayment) / drawdown of loans and finance leases5 (146)7,701(1,726)
Net drawdown of shareholder loans  2,9007,900
   
Net cash generated from/(used in) financing activities  2,587528 (1,094)
     
Net increase in cash and cash equivalents  13324367
Effect of exchange rates on cash and cash equivalents  
Cash and cash equivalents at beginning of period  174107107
Cash and cash equivalents at end of period  307350174
    

GENERAL INFORMATION

Agriterra Limited (‘Agriterra’ or the ‘Company’) and its subsidiaries (together the ‘Group’) is focussed on the agricultural sector in Africa. Agriterra is a non-cellular company limited by shares incorporated and domiciled in Guernsey, Channel Islands. The address of its registered office is Connaught House, St Julian’s Avenue, St Peter Port, Guernsey GY1 1GZ.

The Company’s Ordinary Shares are quoted on the AIM Market of the London Stock Exchange (‘AIM’).

The unaudited condensed consolidated financial statements have been prepared in US Dollars (‘US$’) as this is the currency of the primary economic environment in which the Group operates.

1.            BASIS OF PREPARATION

The condensed consolidated financial statements of the Group for the 6 months ended 30 September 2023 (the ‘H1-2024 financial statements’), which are unaudited and have not been reviewed by the Company’s Auditor, have been prepared in accordance with the International Financial Reporting Standards (‘IFRS’). The accounting policies adopted by the Group are set out in the annual report for the year ended 31 March 2023 (available at www.agriterra-ltd.com). The Group does not anticipate any significant change in these accounting policies for the year ended 31 March 2024.

This interim report has been prepared to comply with the requirements of the AIM Rules of the London Stock Exchange (the ‘AIM Rules’). In preparing this report, the Group has adopted the guidance in the AIM Rules for interim accounts which do not require that the interim condensed consolidated financial statements are prepared in accordance with IAS 34, ‘Interim financial reporting’. Whilst the financial figures included in this report have been computed in accordance with IFRSs applicable to interim periods, this report does not contain sufficient information to constitute an interim financial report as that term is defined in IFRSs.

The financial information contained in this report also does not constitute statutory accounts under the Companies (Guernsey) Law 2008, as amended. The financial information for the year ended 31 March 2023 is based on the statutory accounts for the year then ended. The Auditors reported on those accounts. Their report was unqualified and referred to going concern as a key audit matter. The Auditors drew attention to note 3 to the financial statements concerning the Group’s ability to continue as a going concern which shows that the Group will need to renew its overdraft facilities, maintain its current borrowings and raise further finance in order to continue as a going concern.

The H1-2024 financial statements have been prepared in accordance with the IFRS principles applicable to a going concern, which contemplate the realisation of assets and liquidation of liabilities during the normal course of operations. Having carried out a going concern review in preparing the H1-2024 financial statements, the Directors have concluded that there is a reasonable basis to adopt the going concern principle.

2.            SEGMENT INFORMATION

The Board considers that the Group’s operating activities during the period comprised the segments of Grain, Beef and Snax, undertaken in Mozambique. In addition, the Group has certain other unallocated expenditure, assets and liabilities.

The following is an analysis of the Group’s revenue and results by operating segment:

6 months ended 30 September 2023 – Unaudited Grain Beef Snax Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000 US$000
Revenue           
External sales(2)2,066 1,509    3,575
Inter-segment sales(1)117    (117) 
2,183 1,509   (117) 3,575
           
Segment results           
– Operating loss(620) (316)  (256)  (1,192)
– Interest expense(184) (70)  (296)  (550)
– Share of profit in equity accounted investees  15   15
– Other gains and losses128 1    129
(Loss)/Profit before tax(676) (385) 15 (552)  (1,598)
           
Income tax     
(Loss)/Profit for the period(676) (385) 15 (552)  (1,598)
6 months ended 30 September 2022 – Unaudited GrainBeefSnaxUnallo-catedElimina-tionsTotal
US$000US$000US$000US$000US$000US$000
Revenue
External sales(2)3,3091,6554,964
Inter-segment sales(1)245(245)
3,5541,655(245)4,964
Segment results
– Operating loss(141)(264)(127)(532)
– Interest expense(776)(27)(115)(918)
– Share of profit in equity accounted investees3535
– Other gains and losses471966
(Loss)/Profit before tax(870)(272)35(242)(1,349)
Income tax
(Loss)/Profit for the period(870)(272)35(242)(1,349)
Year ended 31 March 2023 – Audited GrainBeefSnax1Unallo-catedElimina-tionsTotal
US$000US$000US$000US$000US$000US$000
Revenue           
External sales(2)8,365 3,129    11,494
Inter-segment sales(1)225    (225) 
8,590 3,129   (225) 11,494
Segment results           
– Operating loss2 (659)  (308)  (965)
– Interest expense(958) (63)  (441)  (1,462)
– Other gains and losses95 59    154
-Share of profit in equity-accounted investees  37   37
(Loss)/Profit before tax(861) (663) 37 (749)  (2,236)
Income tax11512  127
(Loss)/Profit after tax(746)(651)37(749)(2,109)

(1)        Inter-segment sales are charged at prevailing market prices

(2)        Revenue represents sales to external customer and is recorded in the country of domicile of the Company making the sales. Sales from the Grain and the Beef divisions are principally for supply to the Mozambique market.

The segment items included within continuing operations in the consolidated income statement for the periods are as follows:

 Grain Beef Unallo-cated Elimina-tions Total
US$000 US$000 US$000 US$000 US$000
6 months ended 30 September 2023 – Unaudited         
Depreciation and amortisation236 160   396
6 months ended 30 September 2022 – Unaudited
Depreciation and amortisation257178435
Year ended 31 March 2023 – Audited
Depreciation and amortisation514356870

3.      NET FINANCE COSTS

 6 months ended30 September2023Unaudited6 months ended30 September2022UnauditedYear ended31 March2023Audited
US$000US$000US$000
Interest expense:  
Bank loans, overdrafts and finance leases5509181,462
Interest income:  
Bank deposits
5509181,462
 
  

4.      LOSS PER SHARE

The calculation of the basic and diluted loss per share is based on the following data:
 6 months ended 6 months endedYear ended
 30 September 30 September31 March
 2023 20222023
 Unaudited UnauditedAudited
 US$000 US$000US$000
   
Loss for the period/year for the purposes of basic and diluted earnings per share attributable to equity holders of the Company (1,598) (1,349)(2,109)
   
Weighted average number of Ordinary Shares for the purposes of basic and diluted loss per share  71,829,007 21,240,61822,240,618
   
Basic and diluted loss per share – US cents (2.22) (6.35)(9.29)

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.

5.      BORROWINGS

30 September 2023 30 September 202231 March2023
Unaudited UnauditedAudited
US$000 US$000US$000
   
Non-current  
Shareholder loan11,3176,2156,534
Bank loans503595574
Leases15888
 11,8206,9687,196
Current 
Shareholder loan1,8001,500
Bank loans1,0582,3771,056
Leases121110110
1,1794,2872,666
 
12,99911,2559,862

Group

During the period, Agriterra Limited secured shareholder loans amounting to US$ 2.9 million from Magister Investments Limited at an interest rate of SOFR+6% to reduce the finance grain working capital as well acquisition of the biscuit plant. The new shareholder loans were issued during the period to add to the following existing shareholder loan;

  • US$ 6.1 million convertible loan facility with a 3 year tenure maturing August 2024.
  • US$ 1.8 million convertible loan facility with a 12 month tenure maturing in August 2023, loan has been rolled over with an option to automatically rollover for more periods.

Grain division

Grain division has two outstanding commercial bank loans amounting to US$ 1.6 million. Bank loan with an outstanding balance of US$ 0.9 million was issued in May 2019. The loan facility which was originally issued as an overdraft facility has been restructured several times and now is a term loan incurring an interest rate of Bank’s prime lending rate less 1.75% and matures in July 2023. The group subsequently repaid the outstanding loan in October 2023 using a shareholder loan. The second debt facility with an outstanding balance of US$ 0.7 million is a 5 year term loan maturing on 31 December 2025. The facility was restructured into a term loan on 1 December 2021 with an interest of prime lending rate plus 1.5%. These facilities are secured by land and buildings.

In addition, Grain division has a finance lease for 6 vehicles maturing on 05 December 2023 with an outstanding balance amounting to MZN 1.6 million (approximately US$ 25,000). Grain division incurs interest of 18.6% on this facility. During the period MZN 1.6 million (approximately US$ 25,000) of the outstanding balance was repaid.

Beef division

The outstanding balance on agricultural equipment finance lease is MZN 6.1 million (approximately US$ 0.1 million). During the period, MZN 3.3 million (approximately US$ 51,000) of the principal balance was repaid. The finance lease is repayable over 5 years maturing in July 2024 and is secured against certain agricultural equipment.

Reconciliation to cash flow statement

 At 31 March2023 Cash flow Interest accrued Foreign Exchange At 30 September 2023
 US$000US$000US$000 US$000US$000
Non-current shareholder loan8,0342,900384(1)11,317
Non-current bank loans574(71)503
Non-current finance leases88(88)
Current bank loans1,05621,058
Current finance leases11011121
  
 9,8622,754384(1)12,999
 

6.      SHARE CAPITAL

Authorised Allotted and fully paid  
 Number Number US$000
Ordinary Shares     
 At 30 September 202223,450,000 21,240,618 3,135
Issued during the period50,588,389 50,588,389 620
At 31 March 202374,038,389 71,829,007 3,755
Reclassification  59,350
At 30 September 202374,038,389 71,829,007 63,105
At 31 March 2023 and September 2023  
Deferred shares of 0.1p each155,000,000 155,000,000 238
     
Total share capital229,038,389 226,829,007 63,343

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 £1,000,000 per ordinary share. The deferred shares may be converted into ordinary shares by resolution of the Board.

At 30 September 2023, the Company offset accumulated losses of US$ 92,069,000 against the share premium account and the balance of US$ 59,350,000 remaining on the share premium account has been combined with the share capital account to comply with Guernsey company law.

7.      POST BALANCE SHEET EVENTS

On 15 November 2023, Magister Investments Limited advanced a further $1.7 million to enable the Group to repay its remaining Metical denominated bank borrowings. The loan has a coupon of SOFR+6% and a term of 1 year, renewable at the lender’s option

2023 Annual Results and Trading Restoration

2023 Annual Results and Trading Restoration

RNS Number : 4518V
Agriterra Ltd
01 December 2023

Agriterra Limited (‘Agriterra’ or the ‘Company’)

Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture

2023 Annual Results and Trading Restoration

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce its audited annual results for the year ended 31 March 2023 (the “2023 Annual Results”). Copies will be posted to Shareholders where appropriate.

Restoration to trading on AIM

The Company’s ordinary shares were suspended from trading on AIM at 7.30 a.m. on 2 October 2023 as a result of the delay in the publication of the 2023 Annual Results. Accordingly, the release of this announcement facilitates lifting of the suspension, and trading on AIM of the Company’s shares is expected to recommence at 3.30 p.m. today.

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, and is disclosed in accordance with the Company’s obligations under Article 17 of those Regulations.

For further information please visit www.agriterra-ltd.com or contact:

Agriterra LimitedCaroline Haverscaroline@agriterra-ltd.com
Strand Hanson Limited
Nominated & Financial Adviser
Ritchie Balmer / James Spinney+44 (0) 207 409 3494
Peterhouse Capital Limited BrokerDuncan Vasey / Eran Zucker+44 (0) 207 469 0930

Chair’s statement and strategic review

I am pleased to present the annual report of the Group for the year ending 31 March 2023. During the year, the Group changed its working capital funding strategy to support the existing operations and evaluated opportunities for diversification and adding value to agricultural produce.

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/investor-relations/corporate-governance/

Strategy and Business Model

The Group’s strategy is 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 Group continues to focus on adding value along the entire maize and beef value chain, by developing and offering new products to the market. It currently has three operating divisions which have built strong brands in Mozambique:

·      Grain, which operates maize purchasing and processing businesses through Desenvolvimento e Comercialização Agrìcola Limitada (‘DECA’) and Compagri Limitada (‘Compagri’).

·      Beef, which sources cattle from local farmers and then processes them through its own feedlot, abattoir operations and retail units through Mozbife Limitada (‘Mozbife’)

·      Snax, which sources maize grits from DECA, processing them into flavoured puffs and naks through DECA Snax Limitada, an operating entity that was commissioned in December 2020 to add value to Agriterra’s grain milling operations.

During the year the Company secured a shareholder loan of c.$7.6m in the form of a convertible loan and an equity injection of c.$0.6m to replace local currency denominated bank debt to fund working capital for grain and beef divisions. These new facilities are expected to significantly reduce the interest burden.

The Group is aware of its environmental, social and governmental responsibilities and the need to maintain effective working relationships across a range of stakeholders. The Company’s largest 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 evolving commercial sector.

Mozambique overview

The economy in Mozambique is recovering from a protracted slowdown in recent years, with growth reaching 4.1% in 2022. Mozambique is still dealing with the insurgency in parts of the gas-rich province of Cabo-Delgado but the arrival of regional troops has helped stabilise the situation. The government has approved a reconstruction plan for the province. The instability in Cabo Delgado has slowed the expected outcomes from the investment in the Liquefied Natural Gas sector which will be delayed by two years. The medium-term outlook is positive, with growth expected to accelerate to 6% over 2023-2025 driven by:

·    Continued recovery in services

·    Increased LNG production; and

·    High commodity prices.

Tropical cyclone Freddy made landfall in Mozambique on 24 February 2023 and led to significant rainfall. Nearly 166,000 people were affected, more than 28,300 houses destroyed and over 18,700 hectares of crops were destroyed.

During this period the Metical remained steady against the US$ and, strengthened against the South African Rand from ZAR1:MZN3.8 to ZAR1:MZN3.6. Annual inflation was higher at 10.3%, against 6.41% in the previous year. In response to the inflation, the Bank of Mozambique increased its prime lending rate from 19% to 23.5%, which negatively impacted business operations.

Operations review

Grain division

The Grain division generated revenue amounting to $8.6 million (FY22: $7.3 million) after selling 17,819 tons (2022: 17,094 tons) and the average meal selling price increased by 13% to $482 per ton (2022: $427 per ton), indicating  that the demand was strong.

The division secured a $1.5 million loan from its majority shareholder to fund working capital in addition to $6.1 million which was used to repay commercial bank debt. The division purchased 18,022 tons of maize throughout the year and held 7,444 tons of maize in inventory at its peak. The division has had to roll the working capital to be able to mill up to the end of the year. However, the maize price increased by 36% to MZN20 000 per ton ($313) as compared to a 13% increase in the price of mealie meal, thereby eroding the margins in the last quarter of the financial year.  

On a positive note, the shareholder loans of $7.6 million enabled the repayment of significant commercial debt amounting to $6.1 million thereby relieving the heavy burden of finance cost, the full benefit of which is expected to be reflected in FY24. The division’s borrowings increased slightly by $54,000 as compared to prior year. The business was able to pay interest and some principal repayments out of the business cash flows.

Operating costs decreased by $0.8m to $1.1m and EBITDA increased to $0.6m (2022: EBITDA of $0.54m) due to an improvement in extraction efficiencies net of a 20% increase in the cost of maize milled compared to the previous year. Finance costs decreased to $1.0m (2022: $1.6m) and depreciation cost amounted to $0.5m (2022: $0.5m) resulting in a loss before tax of $0.86m (2022: loss $1.52m).

Loss after tax amounted to $746,000 (FY22: Loss after tax $1,404,000).

Beef division

The Beef division generated revenue amounting to $3.1 million (FY22: $3.2 million) as compared to budget of $4.6 million (FY22: $4.6 million). Low sales resulted from the tough macro-economic environment in Mozambique which affected sales and consumer protein choices. In addition, customers are more sensitive to price as compared to quality and there was increased competition from cheaper meat from the informal market. Sales volumes were 9.2% below previous year (666 tons vs 734 tons in FY22). Working capital constraints led to a fall in the numbers of days animals spent in the feedlot. Consequently, the average daily weight gain of animals decreased from 0.32% to 0.22% of body mass increasing feedlot costs.

The division secured shareholder loan amounting to $0.3 million which was used to ramp up animal production in the feedlot. The funds were used to buy cattle weaners which has high average daily gain when feeding in the feedlot. More than 900 animals were bought from August to March using the shareholder loan. The division also received an external capital injection amounting to GBP250 000 in March 2023 to invest in “straight through” animals which will be supplied into the informal market.

The decrease in sales has been mitigated by improved Gross Margin of 24.06% (FY22: 23.87%) resulting from higher average selling price of MZN 266 per kg (FY-2022: MZN 252 per kg) whilst the average dress out rate was 49.2% (FY22: 51.5%).

The Company has embarked on a right sizing strategy, offering voluntary retrenchments and a freeze on replacing staff. The Company also has the cost of the three farms that remain in care and maintenance whilst looking for potential buyers.

Loss after tax amounted to $651,000 (FY22: Loss after tax $492,000).

Snax division

DECA Snax, a 50:50 joint venture with Snax for Africa Limited has, in its third year of operations, grown sales revenue by 62% to achieve $2.3 million (FY22: $1.4 million). DECA Snax is growing by winning and retaining market share from competitors as a result of consistently producing and supplying high quality products. DECA Snax sold 1,111,538 bales during the year (FY22: 707,385 bales).

During the year, DECA Snax increased its production capacity by buying a second extruder machine which gives the division the ability to double its production capacity and improve its profitability.

Production volume is exceeding 60% of the installed capacity (Including a second extruder) and plans are in place to launch the product in new geographical markets.

Profit after tax amounted to $74,976 (FY22: $109,889) after payment of management fees to the joint venturers amounting to $117,289 (FY22: Nil).

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. 

For the year ended 31 March202320222021
Grain division
– Average milling yield75.3%78.0%76.7%
– Meal sold (tonnes)17,81917,09425,389
– Revenue$8,365,000$7,118,000$11,061,000
– EBITDA (note 5)$611,000$535,000$510,000
– Net debt($9,753,000)($9,521,266)($5,856,106)
Beef division
– Slaughter herd size – number of head4,0994,5755,667
– Average daily weight gain in feedlot (% of body mass)0.220.350.35
– Meat sold (tonnes)666734890
– Revenue$3,129,000$3,159,000$3,189,000
– EBITDA (note 4)($244,000)($66,000)($547,000)
– Net debt($110,000)($184,283)($406,244)
Snax division (note 10)
– Bales sold (units)1,111,538707,385128,805
– Revenue$2,345,779$1,447,000$117,000
– EBITDA$170,000$247,000$10,000
– Net debt$Nil$Nil$23
Group
– EPS(9.29)(10.7)(10.3)
– Liquidity – cash plus available headroom under facilities$174,000$107,000$1,139,000

Financial Review

In FY 23 the Group’s revenue increased by 12% to $11.49m (FY22: US10.28m), primarily due to:

·    Improvement of grain sales volumes from 17,094 tons to 17,819 tons. Demand for maize meal was higher than the previous year. However, the division did not have sufficient grain in stock due to working capital constraints and had to roll the working capital in the last quarter of the financial year. The cost of replacing maize was high and eroded the Group’s margins. The cost of maize increased by 20% from FY22 to FY23.

·    Increase in average selling price of mealie meal by 13% as compared to prior year due to increase in demand for the maize meal.

·    The Beef division achieved similar revenue of $3.1 million, selling lower volume at a higher average selling price.

AGTA Group gross margin decreased to 21.2% (FY22: 24.94%) due to fair value loss of biological assets amounting to $288,000 and the high cost of replacement maize. Gross profit decreased from $2.6 million to $2.4 million as compared to prior year.

Group operating expenses decreased by 3.1% to $3.4 million and operating losses decreased to $0.8 million (FY22: $0 million). The Group operational performance is expected to be profitable if volumes improve by 25% in FY24.

Net Debt as of 31 March 2023 was $9.86 million (FY22: $9.82million). The shareholder loan injection of $7.9 million has greatly assisted in containing the adverse impact of high finance cost on the group performance and cashflows. Finance cost remains high at $1.46 million (FY22: $1.62 million. Subsequent to the year end, a further restructuring exercise was undertaken and a further shareholder loan of $2 million has been advanced to fund the Group’s working capital (see note 26).

Going concern

Details of the consideration of going concern are set out in note 3. The Group has prepared forecasts for the Group’s ongoing businesses covering the period of 12 months from the date of approval of these financial statements. These forecasts are based on assumptions including, inter alia, that there are no significant disruptions to the supply of maize or cattle to meet its projected sales volumes and that key inputs are achieved, such as forecast selling prices and volume, budgeted cost reductions, and projected weight gains of cattle in the feedlot. They further take into account working capital requirements and currently available borrowing facilities.

The Group reduced expensive commercial debt during the year by $7.9 million thereby reducing finance cost significantly by $92,000 per month. Post year end, the Group has secured $3.7 million from direct shareholder funding, $2m of which will be used to fund maize purchasing and is secured by the maize in Silo with the balance used to repay the remaining commercial bank debt of $1.1m and to fund capital expenditure. In addition, the Group also embarked on an aggressive restructuring exercise which will reduce operational cost by $50,000 per month and reduce liquidity constrains. The Group has retrenched 124 employees from 1 August 2023 as part of the restructuring exercise and the cost savings have been included in the forecasts. The impact of the restructuring exercise and working capital constraints show that the Group needs to achieve its operating targets to meet its cashflow requirements. 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.

Outlook

The Group had a difficult start to FY24 due to the lack of adequate working capital which affected the current year maize buying season. Even though the working capital was finally secured in June 2023 from commercial banks In Mozambique, they were unable to disburse the full funding due to constraints placed on them by the Central Bank. The situation was further impacted by an increase in interest rate in July 2023 to 24.10%. The Company’s majority shareholder agreed to provide a $2m working capital facility to fund maize purchases for the current season in lieu of the inability of the local commercial banks to provide the funding. This will reduce the level of interest charges for the FY24 year.

The macro-economic environment is expected to improve in 2023/24 financial year. Exchange rate between Metical and major trading currency are expected to be stable at $1: MZN 63.88 and inflation is also expected to decrease and trend around 4-5%. Central Bank of Mozambique was using interest rates to control inflation, and a decrease in the inflation rate will also enable the Central Bank of Mozambique to reduce the prime lending rates which is currently at 24.1%.

Grain: Competition is stiff as a number of new mills have opened in the region. However, the region expects grain shortages, and this will drive maize meal prices up. Few millers have secured sufficient maize for the season, and this presents an opportunity for Grain division to gain market share and improve sales revenue as compared to the previous year.

Beef: Demand for beef in the southern market is low because the Metical strengthened against the South African Rand during the year. South African Rand is not expected to strengthen against the Metical and therefore the southern market will continue being affected by relatively cheap imports from South Africa. However, the Beef division is experiencing a strong pull from the north and is mitigating for the lost southern market. The division has also started to serve the informal markets by supplying affordable decent quality beef. On the supply side, the focus has been on strengthening supply chain links with the small farmers who work with us and on getting the efficiencies on the feed lot to improve.

Snax: The Snax division products have been well received by the market and have won more than 50% of the market share in the central region because of superior quality and affordability. Snax division is now introducing the products further into the new North and South markets so as to continue increasing the sales volumes. New bigger family size packets will be introduced into the market during the year.

Board and senior management changes

Mr Gert Naude joined Agriterra in 2014 and led operations as the General Manager. After the end of the current reporting period, Mr. Gert Naude left the Group effective 1 August 2023 as part of the Group restructuring process. I would like to thank him for the significant contribution he has made to the development of the Group over the years.

Consolidated income statement

For the year ended 31 March 2023

  YearendedYearended
  31 March202331 March 2022
Note$’000$’000
Revenue411,49410,277
Cost of sales(8,758)(7,715)
(Decrease)/Increase in fair value of biological assets(288)1
Gross profit2,4482,563
  
Operating expenses(3,381)(3,490)
Other income12286
Profit on disposal of property, plant and equipment20
Operating loss(811)(821)
  
Finance costs5(1,462)(1,627)
Share of profit in equity-accounted investees, net of tax103755
Loss before taxation(2,236)(2,393)
  
Taxation127123
Loss for the year attributable to owners of the Company(2,109)(2,270)
 
US centsUS cents
Earnings per Share 
Basic and diluted earnings per share6(9.29)(10.7)

Consolidated statement of comprehensive income

For the year ended 31 March 2023

YearendedYearended
31 March202331 March2022
$’000$’000
Loss for the year(2,109)(2,270)
Items that may be reclassified subsequently to profit or loss: 
Foreign exchange translation differences(161) 932 
Other comprehensive (loss)/income for the year(161)932
Total comprehensive loss for the year attributable to owners of the Company(2,270)(1,338)

Consolidated statement of financial position

As at 31 March 2023

31 March31 March
20232022
Note$’000$’000
Non-current assets  
Property, plant and equipment24,26725,051
Intangible assets318
Equity-accounted investees109356
24,36325,125
Current assets
Biological assets7496463
Inventories5502,176
Trade and other receivables1,055824
Cash and cash equivalents174107
2,2753,570
Total assets26,63828,695
Current liabilities
Borrowings82,6668,809
Trade and other payables658960
3,3249,769
Net current liabilities(1,049)(6,199)
Non-current liabilities
Borrowings87,1961,003
Deferred tax liability 6,1116,243
13,3077,246
Total liabilities16,63117,015
Net assets10,00711,680
   
Share capital93,9933,373
Share premium151,419151,442
Share based payment reserve6767
Revaluation reserve12,06112,312
Translation reserve(16,169)(16,008)
Accumulated loss(141,364)(139,506)
Equity attributable to equity holders of the parent10,00711,680

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY  

For the year ended 31 March 2023 
   SharecapitalShare premiumShare based payment reserveTranslation reserveRevaluation reserveAccumulated
losses
TotalEquity
$’000$’000$’000$’000$’000$’000$’000
          
Balance at 1 April 20213,373151,44287(16,940)12,563(137,507)13,018
Loss for the year(2,270)(2,270) 
Other comprehensive income:
Exchange translation gain on foreign operations932932 
Total comprehensive income/(loss) for the year932(2,270)(1,338) 
Transactions with ownersShare based payments(20)20
Revaluation surplus realised(251)251
Total transactions with owners for the year(20)(251)271
Balance at 31 March 20223,373151,44267(16,008)12,312(139,506)11,680
Loss for the year  (2,109)(2,109)
Other comprehensive income: 
Exchange translation loss on foreign operations (161)(161) 
Total comprehensive loss for the year (161)(2,109)(2,270) 
Transactions with owners  
Issue of shares  620(23)597
Revaluation surplus realised  (251)251
Total transactions with owners for the year620(23)(251)251597 
Balance at 31 March 2023  3,993151,41967(16,169)12,061(141,364)10,007
Consolidated cash flow statement For the year ended 31 March 2023  
  Year ended Year ended
  31 March 202331 March 2022
 Note$’000$’000
  
Cash flows from operating activities 
Loss before tax (2,236)(2,393)
Adjustments for:  
Amortisation and depreciation13/14870874
Profit on disposal of property, plant and equipment (20)
Foreign exchange gain (151)162
Changes in value of biological assets15288(1)
Share of profit in associate23(37)(55)
Net finance costs101,4621,627
Operating cash flows before movements in working capital 196194
Net increase in biological assets15(321)(12)
Decrease/(Increase) in inventories 1,626(1,243)
Decrease in trade and other receivables 52928
Decrease in trade and other payables (302)(1,086)
Net cash generated from / (used in) operating activities 1,251(1,219)
  
Cash flows from investing activities  
Proceeds from disposal of property, plant and equipment net of expenses incurred 20
Acquisition of property, plant and equipment13(90)(79)
Net cash used in investing activities (90)(59)
  
Cash flows from financing activities  
Net (repayment)/drawdown of overdrafts18(6,254)2,236
Net (repayment)/drawdown of loans18(1,589)644
Net drawdown of shareholder loans187,900
Net repayment of leases (137)(99)
Finance costs (1,014)(1,627)
Net cash (used in) / generated from financing activities(1,094)1,154
Net increase / (decrease) in cash and cash equivalents67(124)
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at beginning of the year107231
Cash and cash equivalents at end of the year174107

1.    GENERAL INFORMATION

Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 42643.

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.

These financial statements are extracted from the audited financial statements which have been posted on the Company’s web site and do not constitute statutory accounts.

2.    SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared on a historical cost basis, except for certain financial instruments, biological assets, property, plant and equipment and share based payments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets acquired. The principal accounting policies adopted are set out below in this note.

Going concern

The Group has prepared forecasts for the Group’s ongoing businesses covering the period of 12 months from the date of approval of these financial statements. These forecasts are based on assumptions including, inter alia, that there are no significant disruptions to the supply of maize or cattle to meet its projected sales volumes and that key inputs are achieved, such as forecast selling prices and volume, budgeted cost reductions, and projected weight gains of cattle in the feedlot. They further take into account working capital requirements and currently available borrowing facilities.

These forecasts include the impact of the restructuring exercise and working capital constraints show that the Group needs to achieve its operating targets to have sufficient headroom under its existing banking and shareholder loan facilities. Certain facilities fall due for renewal in June 2024 and it has been assumed that these will be renewed.

The divisional forecasts for FY-24 show a significant improvement in operating performance as compared to that reported for the year ended 31 March 2023. However, there can be no certainty that these restructuring 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 21 the Group is funded by a combination of short and long-term borrowing facilities. As set out in note 26, since the year end additional finance has been secured and a shareholder loan maturing in July 2023 has been extended by a further year. 

Based on the above, whilst there are no contractual guarantees, the directors are confident that the existing financing facilities will continue to be 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 in order to remain within its existing bank and shareholder loan facilities and to meet its commitments as they fall due. 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.

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.

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 the year, unless exchange rates fluctuate significantly during the year, 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 RateClosing Rate
2023202220232022
Mozambican Metical: US$63.8666.3163.8863.83

Operating segments

The Chief Operating Decision Maker is the Board. The Board reviews the Company’s internal reporting in order to assess the 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 and in settlement of certain expenditure. These payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant and the value is expensed on a straight-line basis over the vesting period, based on the 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

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 expenditure

Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent measurement

Following initial recognition at cost, items of land and buildings 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 triennially. 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.

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:
LandNil
Buildings and leasehold improvements2%–   33%
Plant and machinery5%–   25%
Motor vehicles20%–   25%
Other assets10%–   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 Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised 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 Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

For all other financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm’s length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (i.e., discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible).

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing the categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year.

3.    CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies which are described in note 3, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years. The effect on the financial statements of changes in estimates in future years could be material on property, plant and equipment (note 13), and biological assets (note 15).

Going concern

Details of the directors’ assessment of Going Concern are set out in note 3. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

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 of non-current assets are greater than the recoverable amount.

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 put in place following the restructuring exercise undertaken since year end 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 Standards to determine the fair value of land and buildings. Based on the assessment performed by the independent real estate valuers at 31 March 2021, and the improved operational outlook reflected in the operational plan in place, management have concluded that, at 31 March 2023, non-current assets are not impaired.

No impairments were recorded in the year ended 31 March 2023 or the year ended 31 March 2022. The carrying amount of non-current assets is $24.3 million (2022: $25.1 million).

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 $ 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 $ 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. The value of the herd held for slaughter disclosed as a current asset was $0.5m (2022: $0.5m).

4.    SEGMENT REPORTING

The Board considers that the Group’s operating activities comprise the segments of Grain, Beef and Snax 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 2023 GrainBeefSnax*Unallo-catedElimina-tionsTotal
$’000$’000$’000$’000$’000$’000
Revenue           
External sales (2)8,365 3,129    11,494
Inter-segment sales (1)225    (225) 
8,590 3,129   (225) 11,494
Segment results           
– Operating profit/(loss)2 (659)  (308)  (965)
– Interest expense(958) (63)  (441)  (1,462)
– Other gains and losses95 59    154
– Share of profit in equity-accounted investees  37   37
(Loss)/Profit before tax(861) (663) 37 (749)  (2,236)
Income tax11512127
(Loss)/Profit after tax(746) (651) 37 (749)  (2,109)

* The Snax division is equity accounted for as a Joint venture. Its income statement is set out in note 23.

Year ending 31 March 2022 GrainBeefSnax*Unallo-catedElimina-tionsTotal
$’000$’000$’000$’000$’000$’000
Revenue           
External sales (2)7,118 3,159    10,277
Inter-segment sales (1)226    (226) 
7,344 3,159   (226) 10,277
Segment results           
– Operating loss(55) (444)  (429)  (928)
– Interest expense(1,548) (79)    (1,627)
– Other gains and losses88 19    107
– Share of profit in equity-accounted investees  55   55
(Loss)/Profit before tax(1,515) (504) 55 (429)  (2,393)
Income tax11112123
(Loss)/Profit after tax(1,404) (492) 55 (429)  (2,270)
(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 2023GrainBeefSnaxUnallo-catedElimina-tionsTotal
$’000$’000$’000$’000$’000$’000
Depreciation and amortisation514356870
Year ending 31 March 2022GrainBeefSnaxUnallo-catedElimina-tionsTotal
$’000$’000$’000$’000$’000$’000
Depreciation and amortisation50235913874

Segment assets, liabilities and capital expenditure

Segment assets consist primarily of property, plant and equipment, biological assets, inventories, trade and other receivables and cash and cash equivalents. Segment liabilities comprise operating liabilities, including an overdraft financing facility in the Grain segment, and bank loans and overdraft financing facilities in the Beef segment.

Capital expenditure comprises additions to property, plant and equipment.

The segment assets and liabilities at 31 March 2023 and capital expenditure for the year then ended are as follows:

GrainBeefSnaxUnallocatedTotal
$’000$’000$’000$’000$’000
Assets21,361 4,880 93 304 26,638
Liabilities(7,596) (770)  (8,265) (16,631)
Capital expenditure315990

Segment assets and liabilities are reconciled to Group assets and liabilities as follows:

AssetsLiabilities
$’000$’000
Segment assets and liabilities26,334(8,366)
Unallocated:
Other receivables304
Accrued liabilities(232)
Borrowings(8,033)
26,638(16,631)

The segment assets and liabilities at 31 March 2022 and capital expenditure for the year then ended are as follows:

GrainBeefSnaxUnallocatedTotal
$’000$’000$’000$’000$’000
Assets23,496 5,133 56 10 28,695
Liabilities(15,838) (973)  (204) (17,015)
Capital expenditure651479

Segment assets and liabilities are reconciled to Group assets and liabilities as follows:

AssetsLiabilities
$’000$’000
Segment assets and liabilities28,685(16,811)
Unallocated:
Other receivables10
Accrued liabilities(204)
28,695(17,015)

Key performance Indicators

The Board considers that earnings before interest, tax, depreciation and amortisation (“EBITDA”) is a key performance indicator in measuring operational performance.  EBITDA is a non IFRS measure and alternative performance measure for the Group which is calculated as follows:

Year ending 31 March 2023 GrainBeefSnaxUnallocatedTotal
$’000$’000$’000$’000$’000
(Loss)/Profit before tax(861)(663)37(749)(2,236)
– Interest expense958634411,462
– Depreciation and amortisation charge514356870
– Share of profit in equity-accounted investees(37)(37)
EBITDA611(244)(308)59
Year ending 31 March 2022 GrainBeefSnaxUnallocatedTotal
$’000$’000$’000$’000$’000
(Loss)/Profit before tax(1,515)(504)55(429)(2,393)
– Interest expense1,548791,627
– Depreciation and amortisation charge50235913874
– Share of profit in equity-accounted investees(55)(55)
EBITDA535(66)(416)53

5.    FINANCE COSTS

Year EndedYearEnded
31 March 202331 March 2022
$’000$’000
 
Interest expense on bank borrowings and overdrafts(913)(1,556)
Interest expense on shareholder loan(448)
Interest expense on leases(101)(71)
Net finance costs(1,462)(1,627)

6.    EARNINGS PER SHARE

Year endedYear ended
31 March 202331 March 2022
$’000$’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(2,109)(2,270)
 
Weighted average number of Ordinary Shares for the purposes of basic and diluted earnings per share22,705,56921,240,618
 
Basic and diluted earnings per share – US cents(9.29)(10.7)
Basic and diluted earnings per share from continuing activities – US cents(9.29)(10.7)

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.

7.    BIOLOGICAL ASSETS

$’000
Fair value
At 31 March 2021451
Purchase of biological assets1,606
Sale, slaughter or other disposal of biological assets(1,630)
Change in fair value of the herd1
Foreign exchange adjustment35
At 31 March 2022463
Purchase of biological assets1,812
Sale, slaughter or other disposal of biological assets(1,533)
Change in fair value of the herd(288)
Foreign exchange adjustment42
At 31 March 2023496

At 31 March 2023 and 2022, all cattle are held for slaughter. The slaughter herd has been classified as a current asset. Forage crops included in current assets are $42,547 (2022: $10,802).

At 31 March 2023 the slaughter herd comprised 4,099 head (2022: 4,575, with an average weight of 341kgs (2022: 283kgs) and average value of $369 (2022: $339).

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.

8.    BORROWINGS

31 March 202331 March 2022
$’000$’000
 
Non-current liabilities 
Shareholder loans6,534
Bank loans574783
Leases88220
7,1961,003
 
Current liabilities 
Shareholder loans1,500
Bank loans1,0562,438
Leases110115
Overdraft6,256
2,6668,809
9,8629,812

Bank Borrowings

Group

During the period, Agriterra Limited secured shareholder loans amounting to $7.9 million from Magister Investments Limited at an interest rate SOFR+6% to reduce the finance cost which has been increasing over the years and has been used to repay commercial borrowing in Mozambique which were charged interest above 18% per annum. The Group is saving more than $792,000 per annum on interest cost. The shareholder loans are made up of:

·    $6.1m convertible loan facility with a 3-year tenure maturing August 2025.

·    $1.8m convertible loan facility with a 12-month tenure maturing in August 2023 and was renewed for the same period after year end.

In the event of default or at the option of the lender, the outstanding principal and interest may be converted into new ordinary shares at the prevailing market price of the Company`s shares at such time. The market price is determined by the 10-day VWAP. The difference between the 10-day VWAP and the closing market price is a derivative liability the value of which is not considered to be material. Accordingly, the principal of the convertible loans has been recorded in full as a financial liability.

$ 0.3m of the $1.8m shareholder loan was converted in shares in March 2023.

Beef division

Beef division does not have any finance facilities except equipment leases as at 31 March 2023.

Grain division

At 31 March 2023, the Grain division has two outstanding commercial bank loans amounting to $1.6 million secured by land and buildings. As announced on 15 November 2023 $1m  of these loans has been repaid following the drawdown of a new shareholder loan of $1.7 million (note 26).

In addition, Grain division has a finance lease for 6 vehicles maturing on 05 December 2023 with an outstanding balance amounting to MZN 3.2m ($50,031). Grain division incurs interest of 24.1% on this facility. During the period MZN 3.0m ($47,414) of the outstanding balance was repaid.

The bank facilities are secured as follows:

31 March 202331 March2022
$’000$’000
Fixed Charge 
Property, plant and equipment20,40120,833
Floating Charge 
Maize and maize product inventories250
20,40121,083

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 March 2022 Cash flow Interest accrued Loan to equity conversion Foreign Exchange At 31 March 2023
 $’000 $’000 $’000 $’000 $’000 $’000
Shareholder loan 7,900 448 (314)  8,034
Non-current bank loan783 (209)    574
Non-current leases220 (132)    88
Current bank loan2,438 (1,380)   (2) 1,056
Current leases115 (5)    110
Overdrafts6,256 (6,254)   (2) 
 9,812 (80) 448 (314) (4) 9,862
 
 At 31 March 2021 Cash flow Foreign Exchange At 31 March 2022
 $’000 $’000 $’000 $’000
Non-current bank loan2,107 (1,431) 107 783
Non-current leases302 (103) 21 220
Current bank loan263 2,075 100 2,438
Current leases102 4 9 115
Overdrafts3,651 2,236 369 6,256
 6,425 2,781 606 9,812
 

9.    SHARE CAPITAL

Authorised Allotted and fully paid  
 Number Number $’000
Ordinary Shares     
At 31 March 202223,450,000 21,240,618 3,135
Issued during the year50,588,389 50,588,389 620
At 31 March 202374,038,389 71,829,007 3,755
     
At 31 March 2022 and 31  March 2023     
Deferred shares of 0.1p each155,000,000 155,000,000 238
     
Total share capital229,038,389 226,829,007 3,993

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 £1,000,000 per ordinary share. The deferred shares may be converted into ordinary shares by resolution of the Board.

PLACING AND BROKER OPTION

On 20 March 2023, the Company issued 20,000,000 new ordinary shares for cash at a price of 1p per share and 20,000,000 new ordinary shares on conversion of a loan from Magister Investments Limited at a conversion price of 1p per share.

On 22 March 2023, the Company issued 5,000,000 new ordinary shares for cash at a price of 1p per share and 5,000,000 new ordinary shares on conversion of a loan from Magister Investments Limited at a conversion price of 1p per share.

On 23 March 2023, the Company issued 588,389 new ordinary shares on conversion of a loan from Magister Investments Limited at a conversion price of 1p per share in order to maintain the Magister Investments Limited shareholding at 50.58%.

WARRANTS

31 March202331 March2022
 
PILOW warrants50,588,389
Broker warrants1,250,000
51,838,389

Participants in the Placing and Debt Conversion received one Protected In-the-money Loyalty Warrant (“PILOW”) for every Placing Share or Conversion Share issued. The PILOW offers rights to the Company to call the PILOW holder to exercise their options at a price to be determined by the company or in the event of a future fundraising or in certain other circumstances, the Company is mandated to call the PILOW holder to exercise their options on similar terms to the future placing. The PILOW expires 24 months from the date of issue. The PILOW has no fixed price, no guaranteed discount and are held over a variable number of securities. Given these variables, in the opinion of the Company it is not possible to calculate the expected value of a PILOW and that their fair value is nil.

On 22 March 2023, the Company issued 1,250,000 Broker warrants with a term of 24 months and an exercise price of 1p. Their value is not material and has not been accounted for as a cost of the placing.

10.  EQUITY-ACCOUNTED INVESTEES

31 March202331 March2022
$’000$’000
 
Interest in joint venture9356
9356

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 is 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 March202331 March2022
$’000$’000
 
Percentage ownership interest50%50%
 
Non-current assets447466
Current assets (including cash and cash equivalents – 2023: $73,000, 2022: $23,000)550337
Current liabilities (Trade and other payables)(75)(233)
Non-current liabilities(748)(458)
 
Net assets (100%)174112
Net assets (Carrying amount of joint venture)9356
 
 Revenue2,3461,447
Cost of Sales(1,804)(1,008)
Depreciation and amortisation(77)(71)
Operating expenses(372)(192)
Interest expense
Income tax expense(18)(66)
 Profit and other comprehensive income (100%)75110
 Profit and other comprehensive income (50%)3755

11.  EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

In July 2023, the Group decided to implement a restructuring process with the goal to enable the business to break even at the current activity business levels. The impact of the restructuring exercise on the Group is as follows:

·    Group employees decreasing by 124 employees out of 312 employees of the Group thereby reducing payroll cost by $528,000 per year.

·    Reduction of other operation expenses by $228,000 per year.

In June 2023, Group secured working capital funding from commercial banks in Mozambique, assisted by bank guarantees from Magister. Due to challenges in the macro-economic environment, the banks were unable to disburse the funds in full. The majority shareholder assisted in August 2023 with a $2 million facility to fund current year working capital. In addition, the shareholder convertible loan amounting to $1.8 million which matured in July 2023 was extended by a further year. Interest on all shareholder loans are at SOFR+6%.

On 15 November 2023, Magister Investments Limited advanced a further $1.7 million to enable the Group to repay its remaining Metical denominated bank borrowings. The loan has a coupon of SOFR+6% and a term of 1 year, renewable at the lender’s option.

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