29 Jul 2016 07:00
ANGLO AFRICAN AGRICULTURE PLC - Half-year ReportANGLO AFRICAN AGRICULTURE PLC - Half-year Report
PR Newswire
London, July 28
Anglo African Agriculture plc (“AAA” or the “Company”)
Half yearly report for the six months ended 30 April 2016
The Chairman’s Report
I have been Non-Executive Chairman for 3 months in the current reporting period and what has become clear is that, although we have a high quality facility and a strong management team in place in our spice processing facility in Cape Town, which is the main part of Dynamic Intertrade, the business in itself is not really large enough to justify being a listed company. The group had an intention to make further acquisitions and to use its listing to fund quality acquisitions. However, such acquisitions that would have been of an appropriate size have been difficult to find.
During the last 6 months the group has been approached by various parties with an interest in having control of a listed African agricultural company. So far none of them have put forward proposals that the board believes would be acceptable or in the interests of shareholders. Given the current situation, the Board has decided to carry out a formal strategic review of the Company’s business and assets with a view to maximising the value for all stakeholders.
The board believes that there is a valuable opportunity as the listed vehicle has a good shareholder base and is listed on the main market of the LSE. The main operating facility is a high quality business than can be grown or potentially disposed of in order to generate funds.
I am delighted with the work that Mark Neilson has done as the new Managing Director, although it always takes time for new initiatives to come through to the bottom line. Our JV business, APV, has not had such an easy time and is under pressure due to the weak oil price and thus demand for Guar gum, along with a poor harvest. Along with our joint venture partner, we are currently considering the future of this business because, if the price of Guar remains weak, it is not a viable operation. It is a small part of our overall revenue as it has not been able to gain any critical mass.
Results for the period
The loss for the 6 month period 30 April 2016 was £130.4k and this includes an exchange gain of £9.4k (6 month period to 30 April 2015 – loss of £99.6k including an exchange loss of £27k). Despite the increased sales compared to the same period in 2015, the higher loss is primarily due to pressure on the sales margins. The business remains seasonal with higher turnover being generated in the second half of the year.
Neil HerbertNon-Executive Chairman29th July 2016FOR FURTHER INFORMATION PLEASE CONTACT:Anglo African Agriculture plcNeil Herbert, ChairmanVSA Capital LimitedAndrew RacaTel +44 (0) 20 3005 5004
Strategic Review
The Board believes that the Company’s current market capitalisation does not accurately reflect the potential of the Company and will therefore consider all available options including a possible offer for the Company or a strategic partnership. VSA Capital, the Company’s Financial Adviser, has been instructed by the Board to undergo the strategic review.
Takeover Code
Any discussions in relation to a merger with a third party or a sale of the Company will take place within the context of a "formal sale process" as defined in The City Code on Takeovers and Mergers (the "Code") in order to enable conversations with parties interested in making such a proposal to take place on a confidential basis.
The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement (subject to note 3 to Rule 2.2 of the Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a), for so long as it is participating in the formal sale process. Interested parties should note Rule 21.2 of the Code, which will prohibit any form of inducement fee or other offer-related arrangement, and that the Company, although it may do so in the future, has not at this stage requested any dispensation from this prohibition under Note 2 of Rule 21.2.
This announcement is not an announcement of a firm intention to make an offer under Rule 2.7 of the Code and there can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.
Following this announcement, the Company will be considered to be in an "offer period" as defined in the Code, and the dealing disclosure requirements listed below will apply.
VSA Capital Limited, which is regulated by the Financial Conduct Authority, is acting for AAA, and for no one else, as Rule 3 Adviser and will not be responsible to anyone other than AAA for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.
The following information is provided in accordance with Rule 2.10 of the City Code on Takeovers and Mergers (the "Code").
Relevant Securities in Issue
The Company confirms that it has 109,896,125 Ordinary Shares of 0.1 pence each in issue at the close of business on 28 July 2016 and the Ordinary Shares in the Company are admitted to trading on AIM under the UK ISIN code GB00B7V2GY97.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.
In accordance with Rule 26.1 of the Code, a copy of this announcement will be published, subject to certain restrictions relating to persons in any restricted jurisdiction at www.aaaplc.com.
Consolidated Statement of Comprehensive Income
| 6 months Ended 30 April 2016 | Year Ended 31 October 2015 | 6 months Ended 30 April 2015 | |
| £ | £ | £ | |
| Turnover | 821,425 | 1,249,811 | 684,985 |
| Cost of Sales | (613,229) | (883,666) | (468,162) |
| Gross Profit | 208,196 | 366,145 | 216,823 |
| Other Income / Expenditure | (12,587) | 12,066 | 607 |
| Finance Costs | (42,470) | (41,570) | - |
| Administrative expenses | (287,787) | (732,939) | (321,221) |
| Operating loss | (134,648) | (396,298) | (103,791) |
| Bank Interest Receivable | 4,210 | 6,745 | 4,156 |
| Loss before taxation | (130,438) | (389,553) | (99,635) |
| Tax on loss on ordinary activities | - | - | - |
| Loss and total comprehensive income for the period. | (130,438) | (389,553) | (99,635) |
| Basic and diluted earnings per share | (0.13p) | (0.41p) | (0.11p) |
Since there is no other comprehensive loss, the loss for the period is the same as the total comprehensive loss for the period attributable to the owners of the Group.
Consolidated Statement of Changes In Equity
For the 6 month period to 30 April 2016
| Share Capital | Share Premium | Retained Earnings | Share Based Payments Reserve | Total Equity | |
| £ | £ | £ | £ | £ | |
| Balance at 1 November 2015 | 94,896 | 1,107,373 | (864,254) | 11,586 | 349,601 |
| Share Issue | 15,000 | 60,000 | 75,000 | ||
| Loss for the period | (130,438) | (130,438) | |||
| Balance at 30 April 2016 | 109,896 | 1,167,373 | (994,692) | 11,586 | 294,163 |
Retained losses represent the cumulative loss of the Group attributable to equity shareholders.
Share-based payments reserve relate to the charge for share-based payments in accordance with IFRS 2.
Consolidated Statement of the Financial Position
| 30 April 2016 | 31 October 2015 | 30 April 2015 | |
| £ | £ | £ | |
| Assets | |||
| Non-Current Assets | |||
| Investment | 7,671 | 18,514 | 8,601 |
| Other Financial Assets | 1,704 | - | 2,675 |
| Loan to Joint Venture | 66,165 | 82,579 | 93,877 |
| Property, Plant and Equipment | 135,686 | 124,437 | 44,574 |
| Goodwill on Consolidation | 226,644 | 226,644 | 226,644 |
| 437,870 | 452,174 | 376,371 | |
| Current assets | |||
| Inventories | 188,965 | 331,506 | 387,996 |
| Trade and Other Receivables | 240,866 | 223,077 | 171,279 |
| Cash and Cash Equivalents | 73,683 | 63,893 | 73,838 |
| 503,514 | 618,476 | 633,113 | |
| Total Assets | 941,384 | 1,070,650 | 1,009,484 |
| Equity and Liabilities | |||
| Share Capital | 109,896 | 94,896 | 94,896 |
| Share Premium Account | 1,167,373 | 1,107,373 | 1,107,373 |
| Share-Based Payments Reserve | 11,586 | 11,586 | 16,369 |
| Retained Earnings | (994,692) | (864,254) | (574,336) |
| Total Equity | 294,163 | 349,601 | 644,302 |
| Current Liabilities | |||
| Trade and Other Payables | 647,221 | 721,049 | 365,182 |
| Total Liabilities | 647,221 | 721,049 | 365,182 |
| Total Equity and Liabilities | 941,384 | 1,070,650 | 1,009,484 |
Consolidated Cash Flow Statement
| 6 Months Ended 30 April 2016 | Year Ended 31 October 2015 | 6 Months Ended 30 April 2015 | |
| £ | £ | £ | |
| Cash flows from operating activities | |||
| Operating loss | (134,648) | (396,298) | (103,791) |
| Add: Depreciation | 18,631 | 19,054 | 6,832 |
| Add: Foreign exchange movements | - | 5,483 | - |
| Add: Movement Share Based Payments Reserve | - | (4,783) | - |
| Changes in working capital | |||
| (Increase) / decrease in inventories | 142,541 | 49,405 | (7,085) |
| (Increase) / decrease in receivables | (17,789) | 260,744 | 312,542 |
| Increase / (decrease) in payables | (73,828) | 130,225 | (225,642) |
| Interest received | 4,210 | 6,745 | 4,156 |
| Net cash flow from operating activities | (60,883) | 70,575 | (12,988) |
| Investing Activities | |||
| Decrease in Investments | 10,843 | - | 263 |
| Acquisition of fixed assets | (29,880) | (108,678) | (9,647) |
| Disposal of fixed assets | - | 1,463 | |
| (Increase) / decrease in financial assets | (1,704) | (1,775) | 5,200 |
| (Increase) / decrease in Loans | 16,414 | 11,852 | 554 |
| Net cash flow from investing activities | (4,327) | (97,138) | (3,630) |
| Cash flows from financing activities: | |||
| Net proceeds from issue of shares | 75,000 | - | - |
| Net cash flow from financing activities | 75,000 | - | - |
| Net cash flow | 9,790 | (26,563) | (16,618) |
| Opening Cash | 63,893 | 90,456 | 90,456 |
| Closing Cash | 73,683 | 63,893 | 73,838 |
Notes to the unaudited Interim Report
1. Basis of preparation
This announcement was approved by the Board of directors on 29 July 2016.
The financial information in this interim report has been prepared in accordance with the International Financial Reporting Standards. IFRS comprises standards issued by the International Accounting Standards Board (IASB) and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union (EU).
The financial information has been prepared under the historical cost convention, as modified by the accounting for financial instruments at fair value.
The Directors are of the opinion that the financial information should be prepared on a going concern basis, in the light of the Company's financial resources.
These condensed interim financial statements for the six months ended 30 April 2016 and 30 April 2015 are unaudited. The summary financial statements for the 12 months ended 31 October 2015 have been audited. The Auditors issued an unqualified audit report on these accounts and they have been filed with the Registrar of Companies.
No taxation charge has arisen for the period and the Directors have not declared an interim dividend.
2. Earnings per share
Earnings per share data is based on the Group result for the year and the weighted average number of shares in issue.
| 6 Months Ended 30 April 2016 | Year Ended 31 October 2015 | 6 Months Ended 30 April 2015 | |
| £ | £ | £ | |
| Loss after tax | (130,438) | (389,552) | (99,635) |
| Weighted average number of ordinary shares - basic | 96,791,730 | 94,896,125 | 94,896,125 |
| Diluting effect of warrants and options | 18,155,798 | 18,155,798 | 16,775,133 |
| Weighted average number of ordinary shares - diluted | 114,947,528 | 113,051,923 | 111,671,258 |
| Basic earnings per share | (0.13p) | (0.41p) | (0.11p) |
| Diluted earnings per share | (0.13p) | (0.41p) | (0.11p) |
Notes to the unaudited Interim Report (continued)
2. Earnings per share (continued)
Basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period:
Basic and diluted earnings per share are the same, since where a loss is incurred the effect of outstanding share options and warrants is considered anti-dilutive and is ignored for the purpose of the loss per share calculation.
As at 30 April 2016 there were 12,638,660 (30 April 2015 – 11,257,995) outstanding share warrants and 5,517,138 (30 April 2015 – 5,517,138) outstanding share options, both are potentially dilutive.
3. Reports
A copy of this announcement will be mailed to shareholders and copies will be available for members of the public at the Company's Head Office – New Liverpool House, 15-17 Eldon Street, London EC2M 7LD.