A second and final Price Monitoring Extension has been activated in this security. The auction call period is extended in this security for a further 5 minutes.
Following the first price monitoring extension this security would still have executed more than a pre-determined percentage above or below the price of the most recent automated execution today. London Stock Exchange electronic order book users have a final opportunity to review the prices and sizes of orders entered in this security prior to the auction execution.
The applicable percentage is set by reference to a security’s Millennium Exchange sector. This is set out in the Sector Breakdown tab of the Parameters document at www.londonstockexchange.com/tradingservices
The auction call period has been extended in this security by 5 minutes.
Auction call extensions give London Stock Exchange electronic order book users a further opportunity to review the prices and sizes of orders entered in an individual security’s auction call before the execution occurs. A price monitoring extension is activated when the matching process would have otherwise resulted in an execution price that is a pre-determined percentage above or below the price of the most recent automated execution today.
The applicable percentage is set by reference to a security’s Millennium Exchange sector. This is set out in the Sector Breakdown tab of the Parameters document at www.londonstockexchange.com/tradingservices
Agriterra Limited, the AIM-quoted African agricultural company, is pleased to provide the following trading update and an update on its 2021 Annual Accounts Timetable, together with selected unaudited 2021 financial information:
Trading Update
The Company’s operations were subject to several unanticipated external factors which have affected performance during H2 2021 and H1 2022. These include a significant strengthening of the Metical against US dollars to USD1:MZN 55 from a forecast of USD1:MZN 75, a third wave of COVID-19 in July 2021, delays to the local maize crop as compared to prior year, and escalated conflicts in the north of Mozambique.
The significant appreciation of the Metical against the USD affected funding arrangements for the purchase of maize, as the Metical equivalent to USD 6.1 million bank guaranteed funding was significantly reduced and the Company was required to offer additional collateral in the form of maize and property plant and equipment to obtain an additional MZN 90 million from commercial banks in Mozambique. Furthermore, the appreciation of the Metical against the USD made imports cheaper, and thereby increased competition for all the divisions of the Company.
The third wave of the COVID-19 significantly affected senior managers and employees for more than a month, and the Company had to implement aggressive COVID-19 preventive measures such as working from home, strict temperature checking and monitoring of social distancing. The Company successfully vaccinated all employees above 40 years based on recommendation from the Mozambique health authorities.
The Company’s Grain, Beef and Snax sales have however been encouraging during H1 2022 despite the challenges mentioned above.
Grain Division Update:
The key drivers of the division’s strategy for the current year are:
· Purchasing local maize early in the season to secure inventory at lower prices.
· Drive volumes of higher margin products such as the 1kg meal bag in the informal sector.
As result of the appreciation of the metical against the USD, the budgeted funds were not able to purchase the budgeted quantity of maize and reduced our grain budgeted milling volumes from 40,000 tons to 30,000 tons. Nonetheless, on lower volumes, margins have been improved and the division has more than 20,000 tons of maize in inventory, sufficient for the remaining 6 months of the year.
Beef Division Update:
Management is focussed on continuing to optimising the efficiency of our beef operations. The appreciation of the Metical has made imports of beef from South Africa cheaper and the conflict in the north of Mozambique halted gas operations, which together with COVID-19, have reduced demand for the Company’s beef.
Snax division update:
The Snax division commenced operations in the last quarter of prior financial year. The division produces maize puff and maize naks by baking maize grits. Demand for Snax is strong and the division is already contributing to Group cash flow.
2021 Annual Accounts Timetable
The Company also announces that following the grant by AIM Regulation of an extension to its 2021 annual reporting deadline (further to guidance provided in “Inside AIM” released in January 2021), it now expects to report its 2021 Annual Results for the year ended 31 March 2021 in October 2021. The delay in publishing the 2021 Accounts is due to the impact of the COVID-19 lockdown in Mozambique on the ability of the Company’s auditors and other key financial personnel to access all required information on a timely basis.
Despite the logistical challenges presented by COVID-19, the Company is pleased to confirm that the audit process is currently being finalised.
The Company expects to report the following information, noting that the figures presented for 31 March 2021 are currently unaudited:
31 March 2021 (Unaudited)
31 March 2020 (Audited)
Revenue
US$ 14,367,000
US$ 12,910,000
Net asset position
US$ 13,018,000
US$ 1,216,000
Cash and cash equivalents
US$ 254 000
US$ 1,034,000
Total debt
US$ 6,425,000
US$ 5,383,000
An independent real estate appraiser was engaged to revalue land and building as at 31 March 2021 and this resulted in the majority of the increase in net assets to US$ 13,018,000 net of current year financial performance.
Caroline Havers, Non-Executive Chair, commented: “We are not alone in having been impacted by the significant events in Mozambique and the rest of the world over the past six months. However, our team have nonetheless demonstrated great tenacity in maximising sales during H1 2022. We expect further ongoing difficult trading conditions in H2 2022 but as a Company are well positioned to come through this period in a strong position.”
Agriterra Limited (‘Agriterra’ or the ‘Company’) Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture
US$6.1 million refinancing and Related Party Transaction
Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce that its wholly-owned subsidiary, Desenvolvemento E Comercializacao Agricola Limitada (“DECA“) has secured a renewal, and extension in quantum to US$6.1m, of its working capital facility (the “Facility“) from First Capital Bank, S.A. (the “Bank“) to enable it to finance and secure the purchase of up to 39,000 tonnes of raw maize during the period July 2021 to April 2022 (the “FinancedMaize“). The Financed Maize will then be processed and sold by DECA from its facilities in Chimoio, Mozambique into the local wholesale, retail and NGO markets.
The material terms of the Facility from the Bank are as follows:
· Revolving overdraft facility equivalent to US$6.1 million (in Mozambican Metical) until 31 May 2022;
· Interest rate set at the prime lending rate (Mozambique Central Bank) less 3.75%. Prime lending rate is currently at 17.90%. The Bank has the right to revise the interest rate if the prime lending rate decreases to 16% in consultation with DECA;
· Arrangement fees of 0.5% of the approved limit.
As a condition to providing the Facility, and following the same procedure as announced on 26 May 2020, the Bank required that the Company provide a cash backed guarantee as security (the “Bank Security“). In order to satisfy this condition, the Company has entered into an agreement with Magister Investments Limited (“Magister“), the Company’s 50.01 per cent. shareholder, pursuant to which Magister has agreed to provide the necessary security (the “Magister Guarantee“).
The material terms of the Magister Guarantee are as follows:
· Agriterra will be liable to pay Magister a fee of 1.75% of the amount drawn under the Facility (the “Guarantee Fee“), being a maximum amount of US$106,750, which will be invoiced by Magister as the Facility is drawn down.
· Provision of the Magister Guarantee is subject to the prior and ongoing satisfaction of the certain revenue account segregation and reporting conditions with which DECA and AGTA agree to comply.
· In the event that the Bank take action to enforce the Bank Security or in the event of a breach of the Magister Guarantee by Agriterra or by DECA (as applicable), in order to recover the equivalent amount called upon by the Bank plus interest calculated at 8% per annum (the “Restitution Amount“), Magister shall be entitled by notice in writing to exercise one of the following rights in the following order:
Ø to require Agriterra to issue new ordinary shares in the capital of AGTA to Magister, equal in value to the Restitution Amount (at the par value of Agriterra’s ordinary shares, provided that the prevailing Agriterra share price at such time is no less than the par value per share);
Ø if compliance with the foregoing is not possible, to require Agriterra to create and issue to Magister new “8% preference convertible” shares in the capital of Agriterra (convertible into ordinary shares in Agriterra at a price equal to the par value per share), equal in value to the Restitution Amount;
Ø if compliance with the foregoing is not possible, to require the Agriterra group to dispose of fixed asset(s) owned with a value equal to the Restitution Amount (after transaction costs), determined by independent valuation, to a 3rd party and to then pay such sale proceeds to Magister; and
Ø if compliance with the foregoing is not possible, to the extent legally permitted, to require AGTA to take such steps as are necessary to require the transfer by a subsidiary of Agriterra of asset(s) with a value equal to the Restitution Amount, determined by independent valuation, to Magister;
· subject to certain conditions, the Magister Guarantee shall be renewed and/or extended automatically to reflect any future renewals, amendments and/or extensions to the terms of the Facility (assuming a guarantee remains required).
Related Party Transaction
Entering into the Magister Guarantee constitutes a related party transaction under Rule 13 of AIM Rules. In this context, Caroline Havers, Neil Clayton, Rui Sant’ana Afonso and Sergio Zandamela (being the Directors on the Board who are considered to be independent of Magister) consider, having consulted with the Company’s nominated adviser, Strand Hanson Limited, that the terms of the Magister Guarantee are fair and reasonable insofar as its shareholders are concerned.
Caroline Havers, Executive Chair, said: “We are delighted to have refinanced and extended this significant facility which should enable us to benefit from a strengthened purchasing position and set up our maize operations for a successful trading, processing and sales season. Again, we thank our majority shareholder, Magister Investments Limited, for their support in providing the cash backed guarantee which secures the facility, which demonstrates their ongoing commitment to and faith in our operational plans and management team.”
Agriterra Limited (‘Agriterra’ or the ‘Company’) Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture
Trading update
Agriterra Limited, the AIM listed African agricultural company, provides the following unaudited trading update for the period up to March 2021.
This update is provided in advance of the financial statements for the year ended 31 March 2021 which will be issued in due course in accordance with the AIM Rules for Companies. The information and commentary provided is based on unaudited management accounts and other internal performance measures and is subject to concluding the routine annual accounting adjustments as well as any adjustments that arise as a result of the external audit process. The Company expects to release FY21 results in early September.
Highlights
· Grain division sales volume increased 25% on FY 2020 to 25,389 tonnes
· Despite reduced demand (see below), new sales strategies and cost cutting measures implemented by Mozbife are anticipated to produce an expected reduction the reported loss of up to 33% over FY 2020
· Business strategy for FY 2022 aiming to minimise the long-term impacts of the COVID-19 pandemic on business, and improve margins and overall business performance
Grain division
The Company’s Grain division has performed better than the previous financial year, with meal sales exceeding FY2020 volumes by more than 5,000 tons (25,389 tons in FY2021 vs. 20,240 tons in FY2020). This has been driven by the ability to maintain our stronghold in the central region of Mozambique and the continued commitment to cater to our clients’ needs. The recommissioned 1kg bag packaging line and shift to delivery directly to retailers has begun paying off, as monthly sales increased from a mere 1 ton per month in FY2020 to a high of 20 tons in February 2021. We will continue to develop this offering and expect to realise higher margins during FY2022.
In early 2020 the Company entered into “pre-paid” contracts which were necessary to resolve our short-term cash flow challenges; we completed these as required, but at a lower price than we would have ordinarily achieved on the open market, which resulted in a lower sales margin. Delays in receiving funds in August 2020, forced us to continue buying maize late into 2020, when prices were as much as 30% higher than budgeted, thus negatively impacted sales margins.
The DECA SNAX initiative (production and manufacture of puffed corn snacks for sale into the Mozambican market) began in December 2020, being a joint venture with a Zimbabwean snacks producer. Sales and demand have been increasing steadily to date and the production team is looking to double production, by introducing a second shift, to meet demand.
Beef division
COVID-19 restrictions and a slowdown in the Oil & Gas sector, caused by the pandemic and security issues in the Cabo Delgado province, have negatively impacted the Mozbife performance. Sales volumes were 19% below the previous year with 1,331 tons in FY2021 (FY2020 1,652 tons), but the bottom-line results are expected to be 33% better than 2020. The overall improvement is driven by the aggressive cost cutting and efficiency improvements that management implemented in mid-2020. These initiatives resulted in an 18% reduction in the cost of goods sold per ton of meat sold and an increase in the dress out percentage from 50% to 51.7% (equating to an increase in average meat price by 12%).
Mozbife had implemented three new sales strategies in early 2020, which have continued to pay off and increase the demand for our meat products:
· The Maputo depot opened in October 2020 and sales here have increased to an average of 16 tons per month of mostly carcasses, whilst larger supermarkets and restaurants are now ordering and collecting weekly from this facility;
· Sale of prime cuts to large processors in Maputo, who in the past relied on South African sourced supplies for their meat. This action has resulted in an additional 10 tons of meat sales per month being processed and sold in the local restaurants and supermarkets; and
· Upgrading the factory shop in Chimoio has built a greater awareness of our processed meat products, such as sausages and burgers. This facility has doubled in size and sales now average US$3,000 per day, an increase from US$1,000 in the past.
At the farm level operations, we introduced a new cropping programme to improve our silage production and to increase the use of our existing production assets (land, water and infrastructure). The production of silage from Bana grass is now paying off, with yields exceeding 40 tons per hectare.
A re-branding exercise was initiated in early 2021, which will be fully implemented during FY 2022.
Impact of COVID-19 and the recent surge in violence in Northern Mozambique
COVID-19 has had a significant negative impact globally, both economically and socially. The virus infection rate escalated in Mozambique, following the Christmas holidays and the influx of tourists (local and international). Mozambique saw the number of infected persons quadruple in January 2021 and the government reacted by implementing several restrictions (curfews, limited use of beaches, and stopping any form of grouping of persons). The actions have paid off, as daily infections are now significantly reduced. Our operating companies continue with the training and awareness programmes implemented at the start of the pandemic. The training and practical measures taken to protect staff health have resulted in no significant cases amongst the staff. We remain alert to the fast-changing environment and are prepared to put in place mitigating actions as events develop.
Beef sales have been negatively affected by the pandemic, as most tourist, restaurant and MICE (Meetings, Incentives, Conferences and Events) facilities remain closed or restricted.
Recent news coverage has highlighted the escalation and spread of the four-year conflict taking place in Mozambique’s northernmost province, Cabo Delgado (1,500km north of Chimoio). The situation has recently deteriorated, with over 500,000 internally displaced refugees fleeing the affected areas and Oil & Gas projects in the area having been suspended until the Government is able to ensure security for the companies operating in those areas. As such, TOTAL has cancelled all supplier contracts, including the catering support for at least 7,000 staff. This has in turn heavily impacted the Company’s beef sales by removing 20 tons of monthly sales.
Outlook for FY 2022
Grain division
Management is looking to buy c.40,000 tons of maize and process this into c.27,000 tons of meal in the new season. FY 2021 has confirmed that our margins remain lower than expected and as such we continued to struggle meeting financial targets. The board and management have agreed to implement three new strategies aimed at improving the margin and overall performance in FY 2022:
· The negotiations are well advanced to secure all working capital finance needed before the end of May 2021 in order to be able to buy maize early in the season, when it is abundant and competitively priced;
· Sourcing more affordable maize by returning to the rural centres, where we will buy maize directly from the farmers, rather than through traders; and
· Drive the sales of the 1kg meal packs, through activations and promotions.
Beef division
The restricted Oil & Gas business in northern Mozambique and the continued COVID-19 measures will continue to negatively impact the business. Management needs to identify new business opportunities to replace these losses. Four strategies are being implemented to address this:
· Introducing stricter cattle buying practises, that will secure better quality animals from farmers and as such reduce the time and costs related to preparing the cattle for the abattoir;
· Beef cuts and preferences are very personal in this market, so we will employ an experienced sales manager to focus on quality and individual needs of the higher income clients;
· Drive more value-added sales in Maputo and Beira, where we will be able to increase the margins earned per ton of meat sold; and
· Re-branding exercise to encourage consumers to seek out our product and demand a local Mozambican product.
Caroline Havers, Non-Executive Chair, commented:
“Recent months have posed numerous challenges to our businesses operating in Mozambique. Despite the significant and broad ranging difficulties, taking all factors into account, I believe that our whole team has performed fantastically to address these challenges. Moreover, the management team have now laid the foundations for positive results in FY2022 and have adopted a strategy which gives every opportunity for successful trading over the next financial year.”
Agriterra Limited (‘Agriterra’ or the ‘Company’) Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture
Agriterra Limited, the AIM listed African agricultural company is pleased to announce the appointment of Mr. Rui Sant’ana Afonso to the position of Chief Executive Officer, and a member of the Board of the Company, with immediate effect.
Mr. Sant’ana Afonso is a Mozambican citizen, who resides in Mozambique, and has been working with the Company since March 2020 as CEO designate. Previously he was Executive Director for Mozambique of AgDevCo for 6 years and, prior to that, worked as Director of Operations for G4S in Mozambique. In addition, he gained significant supply chain and logistics experience through his role as Bulk Cargo Manager at the Port of Maputo, where he worked for 6 years.
Mr. Sant’ana Afonso has a BSc in Agriculture and an MSC in Agricultural Economics and has held non-executive directorships in various companies in the food commodity sector in Mozambique.
Mr. Sant’ana Afonso brings to the role significant experience in the management and development of companies in the agricultural sector in Mozambique and, having worked with the Company for the last year, it expects to continue to benefit from his strong management skills.
Caroline Havers, the current Executive Chair, will move to the role of Non-Executive Chair as a result of the appointment of Mr. Sant’ana Afonso.
Caroline Havers commented:
“I, and the whole Board, are delighted to formally welcome Mr. Sant’ana Afonso to the position of Chief Executive Officer and also as a member of the Board. We have worked well together over the last year and I know that living in Mozambique, with his strong skill set, he will bring much to the Company.”
Additional Information on the Directorate Appointment
The following additional information is provided in accordance with AIM Rule 17 and paragraph (g) of Schedule Two of the AIM Rules for Companies.
Rui Carlos Singh Sant’ana Afonso, aged 47
Current Directorships/Partnerships
Directorships/Partnerships held within the past five (5) years
Santanarcs Advisory and Consulting Services Mozambique Kiteboarding Association Associação Comercio, Industria e Servios
Montesco SA Fundação Clarisse Muchanguana Eco Farm Mauritius Ltd Westfalia Mauritius Empresa de Comercializa‹o Agricola Limitada Citrinos do Umbeluzi SA Transurban Africa Limited Associa‹o Comercio, Industria e Serviços* Africa Agricultural Development Company Moçambique, Limitada**
Notes:
* Mr. Sant’ana Afonso was previously a Non-Executive Director of Associa‹o Comercio, Industria e Servios between 2017 and 2019, before being re-appointed as a Non-Executive Director in January 2021.
** UK Companies House records indicate that Mr. Sant’ana Afonso is an active director of Africa Agricultural Development Company Moambique, Limitada, however he resigned from such directorship in September 2019 and, accordingly, steps are being taken to make/update the relevant filings.
Mr. Sant’ana Afonso has no direct or indirect interest in the Company’s issued share capital.
Other than the information contained within this announcement, there is no further information required to be disclosed under Rule 17 and Schedule Two paragraph (g) of the AIM Rules.
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