Afriag Global Regulatory News (AFRI)

AfriAg Plc

David Lenigas

Donald Strang

+44 (0) 20 7440 0640

Cairn Financial Advisers LLP

Nominated Adviser and Broker

James Caithie / Jo Turner / Rebecca Anderson

+44 (0) 20 7148 7900

Square Consulting

Public Relations

David Bick/Mark Longson

+44 (0) 20 7929 5599

Year ended

31 December

2014

Year ended

31 December

2013

Note

£'000

£'000

Revenue

4

391

2

Cost of sales

(335)

-

Gross Profit

56

2

Administration expenses

(436)

(310)

Share Based Payment Charge

(32)

-

Operating (loss)

4-5

(412)

(308)

Share of associate result

4

2

Investment income

11

3

-

Realised loss on equity swap

14

(430)

-

(Loss) before taxation

(835)

(306)

Taxation

7

-

-

(Loss) for the period attributable to equity holders of the parent

(835)

(306)

Other comprehensive income

(Loss)/gain on revaluation of available for sale investments

(25)

10

(Loss) on revaluation of derivative financial instrument

-

(300)

Transfer to income statement

300

-

Translation exchange (loss)

(21)

-

Other comprehensive income for the period net of taxation

254

(290)

Total comprehensive income for the year attributable to equity holders of the parent

(581)

(596)

Loss per share

Basic and diluted

8

(0.07)

(0.03)

31 December

31 December

2014

2013

Note

£'000

£'000

Non-current assets

Investments in associates

10

1,333

1,329

1,333

1,329

Current assets

Available for sale assets

11

186

211

Trade and other receivables

12

292

20

Derivative financial instrument

14

-

-

Cash and cash equivalents

467

12

945

243

Total assets

2,278

1,572

Current liabilities

Trade and other payables

13

(492)

(148)

(492)

(148)

Net current assets

453

95

Net assets

1,786

1,424

Equity

Share capital

15

1,381

1,055

Share premium account

8,548

7,963

Share based payment reserve

213

181

Revaluation reserves

(15)

(290)

Foreign currency reserve

(21)

-

Retained earnings

(8,320)

(7,485)

1,786

1,424

31 December

31 December

2014

2013

Note

£'000

£'000

Non-current assets

Investments in subsidiary undertakings

9

-

-

Trade and other receivables

12

1,836

1,327

1,836

1,327

Current assets

Available for sale assets

11

186

211

Trade and other receivables

12

26

20

Derivative financial instrument

14

-

-

Cash and cash equivalents

62

12

274

243

Total assets

2,110

1,570

Current liabilities

Trade and other payables

13

(323)

(148)

(323)

(148)

Net current (liabilities)/assets

(49)

95

Net assets

1,787

1,422

Equity

Share capital

15

1,381

1,055

Share premium account

8,548

7,963

Share based payment reserve

213

181

Revaluation reserves

(15)

(290)

Retained earnings

(8,340)

(7,487)

1,787

1,422

Share

capital

Share

premium

Share based

payment

reserve

Foreign currency reserve

Revaluation reserves

Retained

earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 31 December 2012

821

6,334

193

-

-

(7,191)

157

Loss for the period

-

-

-

-

-

(306)

(306)

Gain on revaluation of available for sale investments

-

-

-

-

10

-

10

(Loss) on revaluation of derivative financial instrument

-

-

-

-

(300)

-

(300)

Total Comprehensive Income

-

-

-

-

(290)

(306)

(596)

Shares issued (net of expenses)

234

1,629

-

-

-

-

1,863

Options and warrants exercised

-

-

(12)

-

-

12

-

Total contributions by and distributions to owners of the Company

234

1,629

(12)

-

-

12

1,863

At 31 December 2013

1,055

7,963

181

-

(290)

(7,485)

1,424

Loss for the period

-

-

-

-

-

(835)

(835)

Currency translation (loss)

-

-

-

(21)

-

-

(21)

(Loss) on revaluation of available for sale investments

-

-

-

-

(25)

-

(25)

(Loss) on revaluation of derivative financial instrument

-

-

-

-

300

-

300

Total Comprehensive Income

-

-

-

(21)

275

(835)

(581)

Shares issued (net of expenses)

326

585

-

-

-

-

911

Share based payment charge

-

-

32

-

-

-

32

Total contributions by and distributions to owners of the Company

326

585

32

-

-

-

843

At 31 December 2014

1,381

8,548

213

(21)

(15)

(8,320)

1,786

Share

capital

Share

premium

Share based

payment

reserve

Revaluation reserves

Retained

earnings

Total

£'000

£'000

£'000

£'000

£'000

£'000

At 31 December 2012

821

6,334

193

-

(7,191)

157

Loss for the period

-

-

-

-

(308)

(308)

Gain on revaluation of available for sale investments

-

-

-

10

-

10

(Loss) on revaluation of derivative financial instrument

-

-

-

(300)

-

(300)

Total Comprehensive Income

-

-

-

(290)

(308)

(598)

Shares issued (net of expenses)

234

1,629

-

-

-

1,863

Options and warrants exercised

-

-

(12)

-

12

-

Total contributions by and distributions to owners of the Company

234

1,629

(12)

-

12

1,863

At 31 December 2013

1,055

7,963

181

(290)

(7,487)

1,422

Loss for the period

-

-

-

-

(853)

(853)

(Loss) on revaluation of available for sale investments

-

-

-

(25)

-

(25)

Transfer to income statement

-

-

-

300

-

300

Total Comprehensive Income

-

-

-

275

(853)

(578)

Shares issued (net of expenses)

326

585

-

-

-

911

Share based payment charge

-

-

32

-

-

32

Total contributions by and distributions to owners of the Company

326

585

32

-

-

943

At 31 December 2014

1,381

8,548

213

(15)

(8,340)

1,787

Year ended

Year ended

31 Dec 2014

31 Dec 2013

£'000

£'000

Cash flows from operating activities

Operating (loss)

(412)

(308)

(Increase) in trade and other receivables

(272)

(13)

Increase in trade and other payables

344

127

Share option charge

32

-

Net cash outflow in operating activities

(308)

(194)

Investing activities

Investment income

3

-

Investment in assets held for sale

-

(201)

Investment in associate

-

(10)

Net cash outflow in investing activities

3

(211)

Financing activities

Issue of share capital

818

616

Issue costs

(37)

(70)

Payment for derivative financial instrument

-

(300)

Net cash inflow from financing activities

781

246

Net increase/(decrease) and cash and cash equivalents

476

(159)

Cash and cash equivalents at beginning of period

12

171

Effect of foreign exchange on cash and cash equivalents

(21)

-

Cash and cash equivalents at end of period

467

12

Year ended

Year ended

31 Dec 2014

31 Dec 2013

£'000

£'000

Cash flows from operating activities

Operating (loss)

(426)

(308)

(Increase)/decrease in trade and other receivables

(6)

(13)

Increase/(decrease) in trade and other payables

175

127

Share option charge

32

-

Net cash outflow in operating activities

(225)

(194)

Investing activities

Investment income

3

-

Investment in assets held for sale

-

(201)

Loans granted to subsidiaries

(509)

(10)

Net cash outflow in investing activities

(506)

(211)

Financing activities

Issue of share capital

818

616

Issue costs

(37)

(70)

Payment for derivative financial instrument

-

(300)

Net cash inflow from financing activities

781

246

Net increase/(decrease) and cash and cash equivalents

50

(159)

Cash and cash equivalents at beginning of period

12

171

Cash and cash equivalents at end of period

62

12

1

General information

AfriAg plc is a company incorporated in the Isle of Man under the Isle of Man Companies Act 2006. AfriAg plc's shares are listed on the AIM market of the London Stock Exchange.

These accounts have been prepared in Sterling because that is the currency of the primary economic environment in which the Company operates.

New standards and interpretations not applied

IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:

The following standards have been adopted by the group for the first time for the financial year beginning on or after 1 January 2014 and have a material impact on the Group and Company:

Amendment to IAS 32, 'Financial instruments: Presentation' on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment did not have a significant effect on the group financial statements.

Amendments to IAS 36, 'Impairment of assets', on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13.

Amendment to IAS 39, 'Financial instruments: Recognition and measurement' on the novation of derivatives and the continuation of hedge accounting. This amendment considers legislative changes to 'over-the-counter' derivatives and the establishment of central counterparties. Under IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge accounting. The amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument meets specified criteria. The Company has applied the amendment and there has been no significant impact on the Company financial statements as a result.

IFRIC 21, 'Levies', sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy and when a liability should be recognised. The Company is not currently subjected to significant levies so the impact on the Company is not material.

Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the Company.

 New standards, amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Company, except the following set out below:

IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The group is yet to assess IFRS 9's full impact.

IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The Company is assessing the impact of IFRS 15.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group and Company.

2

Significant accounting policies

Basis of preparation

The accounts have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted for the use in the European Union.

The accounts have been prepared under the historical cost convention. The principal accounting policies are set out below.

Basis of Consolidation

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are entities over which the Company has the power to control, directly or indirectly, the financial and operating policies so as to obtain benefits from their activities. The Company obtains and exercises control through voting rights. Subsidiaries are fully consolidated from the date at which control is transferred to the Company. They are deconsolidated from the date that control ceases.

Unrealised gains on transactions between the Company and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition costs are written off as incurred.

Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group's share in the associate is not recognised separately and is included in the amount recognised as investment in associate. The carrying amount of the investment in associates is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group's interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment

Going concern

Notwithstanding the loss incurred during the period under review, the Directors are of the opinion that ongoing evaluations of the Group and Company's interests and cash resources, indicate that preparation of the Group and Company's accounts on a going concern basis is appropriate.

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts from the sales of goods provided in the normal course of business, net of value added tax and discounts, and is recognised when the significant risks and rewards of ownership of the product have been transferred to a third party. In the case of sale or return transactions, revenue is only recognised when, and only to the level that, risks and rewards are transferred.

Revenue is the invoiced value of goods and services supplied and excludes VAT and other sales based taxes.

Financial instruments

Financial assets and financial liabilities are recognised on the Group and Company's statement of financial position when the Group or Company becomes a party to the contractual provisions of the instrument.

The Company's activities give rise to some exposure to the financial risks of changes in interest rates and foreign currency exchange rates. The Company has no borrowings and is principally funded by equity, maintaining all its funds in bank accounts.

Financial assets

Financial assets are classified into the following specified categories; financial assets "at fair value through profit or loss" (FVTPL), "held to maturity" investments, "available for sale" (AFS) financial assets and "loans and receivables". The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Available for sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group's available-for-sale financial assets include listed securities. These available-for-sale financial assets are measured at fair value. Realised Gains and losses are recognised in the income statement and unrealised gains and losses in other comprehensive income and reported within the available-for-sale reserve within equity, except for permanent impairment losses and foreign exchange differences, which are recognised in the income statement. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to the income statement and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in the income statement within investment income.

Reversals of impairment losses are recognised in other comprehensive income.

Equity

Share capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The share based payment reserve represents the cumulative amount which has been expensed in the income statement in connection with share based payments, less any amounts transferred to retained earnings on the exercise of share options.

Foreign currency reserve represents the exchange translation gains/(losses) on converting overseas subsidiaries.

Revaluation reserve represents the unrealised gain or loss on fair/market value movement on available for sale investments and other assets which are valued at their fair value at the balance sheet date.

Retained earnings include all current and prior period results as disclosed in the income statement.

Cash

Cash includes cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within current liabilities on the balance sheet.

Financial liabilities

Trade payables

Trade payables are non-interest-bearing and are initially measured at fair value and thereafter at amortised cost using the effective interest rate.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Provisions

Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation

Share based payments

The Company issues equity-settled share based benefits to employees. All equity-settled share-based payments are ultimately recognised as an expense in profit or loss with a corresponding credit to reserves.

Share-based payments relating to the subsidiary company increase the carrying value of the investment in the subsidiary and are included in the loss on disposal of the subsidiary.

If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.

Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

3

Critical accounting judgements and key sources of estimation uncertainty

In the process of applying the Group's accounting policies, as described in note 2, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements.

Valuation of share based payments to employees

The Company estimates the expected value of share based payments to employees and this is charged through the income statement over the vesting period. The fair value is estimated using the Black Scholes valuation model which requires a number of assumptions to be made such as level of share vesting, time of exercise, expected length of service and employee turnover and share price volatility. This method of estimating the value of share based payments is intended to ensure that the actual value transferred to employees is provided for by the time such payments are made.

4

Segmental information

An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

The chief operating decision maker has defined that the Group's only reportable operating segments during the period are the agriculture and logistics sector, and the parent company/investment.

Subject to further acquisitions the Group expects to further review its segmental information during the forthcoming financial year.

The Group has generated revenues from external customers during the period of £381,000 (2013: £nil), and £10,000 (2013: £2,000) revenue is from management fees to the associate company.

In respect of the total assets of £2,278,000 (2013: £1,572,000), £275,000 (2013: £243,000) arise in the parent company, and £2,003,000 (2013: £1,329,000) arise in South Africa.

5

Operating loss

Year to 31

Year to 31

Dec 2014

Dec 2013

£'000

£'000

Operating loss is stated after charging:

Share options

32

-

Audit

10

10

Included in share options is £nil (2013 - £nil) relating to directors.

In addition to auditors' remuneration shown above, the auditors received the following fees for non audit services.

2014

2013

£'000

£'000

Other financial advisory services

-

-

6

Directors' emoluments

Fees and benefits

180

135

The Company has no directly employed personnel.

Fees and

Share based

salaries

payments

Total

2014

£'000

£'000

£'000

D Lenigas

60

-

60

D Strang

60

-

60

H Harris

60

-

60

180

-

180

2013

D Lenigas (#2)

32

-

32

D Strang

48

-

48

H Harris

48

-

48

O Cooke (#1)

7

7

135

-

135

Directors' fees totalling £279,000 have been accrued and remain unpaid as at 31 December 2014 (2013: £99,000).

#1 - resigned 17 May 2013.

#2 - appointed 24 April 2013.

Directors' interest in share options is set out in the directors' report.

7

Taxation

Year to 31

Year to 31

Dec 2014

Dec 2013

£'000

£'000

Total current tax

-

-

The actual tax charges for the period differs from the standard rate applicable in the UK of 21/23% (2013 - 23/24%) for the reasons set out in the following reconciliation:

2014

2013

£'000

£'000

Loss on ordinary activities before tax

(835)

(306)

Tax thereon @ rates above

(180)

(71)

Factors affecting charge for the period:

Losses arising in territories where no tax is charged

180

71

Current tax charge for the period

-

-

8

Loss per share

IAS 33 "Earnings per share" requires presentation of diluted earnings / (loss) per share when a company could be called upon to issue shares that would decrease profit or increase loss per share. For a loss making company with outstanding share options, loss per share would only be increased by the exercise of out of money options. Since it seems inappropriate to assume that option holders would exercise out of money options, no adjustment has been made to calculate the diluted loss per share on out of money share options.

Basic and diluted loss per share are calculated on the retained loss attributable to equity holders of the parent of £835,000 (Period ended 31 December 2013 - £306,000) and on weighted average number of ordinary shares of 1,169,677,749 (31 December 2013 - 893,299,984) in issue.

9

Investments in subsidiaries - Company

31 December

31 December

2014

2013

£'000

£'000

Cost and net book value

At 1 January

-

-

Additions

-

-

Disposal

-

-

At 31 December

-

-

The following were subsidiary undertakings held directly or indirectly by the Company at the end of the year:

Name

Country of incorporation

Proportion of voting rights and ordinary share capital held voting right

Nature of business

AfriAg Limited

England

100%

Holding Company

AfriAg Limited

BVI

100%

Dormant Company

Afriag Holdings (Pty) Limited

South Africa

100%

Holding Company

Afriag Marketing (Pty) Limited

South Africa

100%

Marketing Company

10

Investment in associate - Group

31 December

31 December

2014

2013

£'000

£

At 1 January

1,329

-

Addition at cost

-

1,327

Share of associate result

4

2

Carrying value at 31 December

1,333

1,329

The Group's share of results of its associate, which is unlisted, and its aggregated assets and liabilities, is as follows:

Name

Country of incorporation

Assets

Liabilities

Revenues

Profit/(Loss)

% interest held

As at 31 December 2014

Year to 31 December 2014

AfriAg (Pty) Ltd

South Africa

£220,634

£206,336

£144,483

£9,870

40

AfriAg (Pty) Limited's year end is 31 December.

11

Available-for-sale investments - Group & Company

31 December

31 December

2014

2013

Current Assets - Listed investments

£'000

£'000

At 1 January

211

-

Acquired during the period

-

201

Movement in market value

(25)

10

At 31 December

186

211

Available-for-sale investments comprise investments in listed securities which are traded on stock markets throughout the world, and are held by the Group as a mix of strategic and short term investments.

Income from these investments was £3,000 for dividends received for the year to 31 December 2014. (2013: £nil)

12

Trade and other receivables

31 December 2014

31 December 2013

Group

£'000

Company

£'000

Group

£'000

Company

£'000

Current trade and other receivables

Trade receivables

218

-

-

-

Other debtors

57

9

18

18

Accrued income

17

17

2

2

Total

292

26

20

20

Non-Current trade and other receivables

Loans due from subsidiaries

-

1,836

-

1,327

Total

-

1,836

-

1,327

Loans outstanding and due from subsidiaries, are interest free and repayable on demand.

13

Trade and other payables

31 December 2014

31 December 2013

Group

£'000

Company

£'000

Group

£'000

Company

£'000

Current trade and other payables

Trade creditors

119

9

35

35

Other creditors

58

-

-

-

Accruals

315

314

113

113

Total

492

323

148

148

14

Derivative Financial Instrument - Group & Company

 31 December 2014

 31 December 2013

Shares in Group undertaking

£'000

£'000

Company

Cost

Fair value as at 1 January

-

-

Cost of equity swap arrangement

-

300

Shares issued on settlement

130

-

Realised (loss) on settlement

(430)

-

Transfer to income statement

300

-

Fair value adjustment

-

(300)

As at 31 December

-

-

On 12 September 2013 the Company announced that it had entered into an equity swap agreement with YAGM over 29,126,213 of the Company's shares. In return for a payment by the Company to YAGM of £300,000 ("the Initial Escrowed Funds"), twelve monthly settlement payments were to be made by YAGM to the Company, or by the Company to YAGM, based on a formula related to the difference between the prevailing market price of the Company's ordinary shares in any month and a 'benchmark price' that is 10% above the Subscription Price. Thus the funds received by the Company in respect of the Swap Shares are dependent on the future price performance of the Company's ordinary shares.

The Initial Escrowed Funds were deposited into an escrow account and the subsequent monthly settlement payments were to be managed through the Escrow Account under the terms of the Equity Swap Agreement.

YAGM were permitted to elect to terminate the Equity Swap Agreement and accelerate the payments due under it in certain circumstances. The Company were permitted to pause a monthly payment under the Equity Swap Agreement once in each six month period.

By 31 December 2013 nil shares had been closed out for net proceeds of £nil. The remaining balance has been fair valued at 31 December 2013, which had resulted in a fair value adjustment decrease based on the benchmark price and formula of the arrangement, with the unrealised loss debited to revaluation reserve and highlighted in other comprehensive income.

On 11 June 2014, the Equity Swap was settled in full, by way of the Company issuing 32.5million new ordinary shares to YAGM, valued at 0.4p per share. This resulted in a total realised loss on the Equity Swap of £430,000 debited to the income statement. There was no outstanding balance on the Equity Swap at 31 December 2014.

15

Share capital

31 December

31 December

2014

2013

£'000

£'000

Allotted, issued and fully paid

1,381,001,037 (2013 - 1,055,501,037) ordinary shares of £0.001 each

1,381

1,055

The Company has one class of ordinary shares which carries no right to fixed income.

Shares Issued during the year ended 31 December 2013:

On 21 August 2013, 4,400,000 shares were issued on the exercise of warrants at 0.1p per share.

On 6 September 2013, the Company issued 188,000,000 shares as part of the acquisition of the 40% share in AfriAg (Pty) Limited, at a price of 0.7p per share. Non-cash consideration.

On 12 September 2013, 29,126,213 shares were issued in a Placing and Equity Swap, at 2.06p per share.

On 30 October 2013, 13,000,000 shares were issued on exercise of share options at 0.1p per share.

Shares issued during the year ended 31 December 2014:

On 11 June 2014, 100,000,000 shares were issued in a Placing for cash at 0.4p per share.

On 11 June 2014, 32,500,000 shares were issued at 0.4p per share on settlement of the Equity Swap Arrangement for non-cash.

On 3 October 2014, 118,000,000 shares were issued for cash at par of 0.1p per share to the Employment Benefit Trust.

On 4 November 2014, 75,000,000 shares were issued in a Placing for cash at 0.4p per share.

During the year ended 31 December 2014, the Company issued a total of 325,500,000 ordinary shares (2012: 234,526,213 ordinary shares).

Warrants in issue

As at 1 January 2014, shareholders had the option of up to 195,600,000 subscription warrants for each subscription share, exercisable at 0.1p per ordinary share. During the year, no warrants were exercised (2013: 4,400,000) at 0.1p per share. No warrants were cancelled or lapsed during the period (2013: nil).

As at 31 December 2014, 195,600,000 warrants (2013: 195,600,000) remain outstanding. These warrants all expire on 31 December 2015.

Share Options

The Company has as at 31 December 2014, 79,000,000 (2013: 69,000,000) share options issued through its share schemes. During the year 10,000,000 options were issued (2013: nil), no options were exercised (2013: 13,000,000), no options were cancelled or lapsed (2013: nil).

15

Share capital (continued)

Employment Benefit Trust ("EBT")

The Company established on 3 October 2014 a share incentive plan ("SIP") and effective as of 3 October 2014. The purpose of the SIP is to incentivise officers, employees and consultants of the Company by the award of ordinary shares in the capital of the Company ("Ordinary Shares") for no cost. Ordinary Shares under this plan will not exceed 10 per cent of the Company's issued share capital from time to time without the prior approval of shareholders of the Company.

The Company also established on 3 October 2014, an employee benefit trust called the AfriAg Employee Benefit Trust ("EBT") to implement the use of the SIP. The EBT is a discretionary trust for the benefit of directors, employees and consultants of the Company and its subsidiaries. 

Accordingly, the trustees of the EBT subscribed for 118,000,000 new ordinary shares of 0.1p each in the Company, at par value per share at an aggregate cost to the Company of £118,000, such shares representing 9% of the so enlarged issued share capital of the Company. The shares held in the EBT are intended to be used to satisfy future awards made by the Company's Remuneration Committee under the SIP. It is intended that any individual awards under the scheme will be subject to vesting and performance conditions.

16

Share based payments

A modified Black-Scholes model has been used to determine the fair value of the share options on the date of grant. The fair value is expensed to the income statement on a straight line basis over the vesting period, which is determined annually. The model assesses a number of factors in calculating the fair value. These include the market price on the date of grant, the exercise price of the share options, the expected share price volatility of the Company's share price, the expected life of the options, the risk free rate of interest and the expected level of dividends in future periods.

As disclosed in note 5 the share option charge for the period was £32,000 (2013 - £nil)

The inputs into the model for the 3 October 2014 issue were as follows:

October 2014 Options

Number of options

10,000,000

Volatility

84.20%

Market price

£0.0058

Interest rate

2.30%

Dividend yield

Nil

Contractual life

2.25 years

The volatility assumption is based upon historic share price volatility of the Company.

Exercise

Price

Grant

Date

Expiry

Date

31 December 2013

Granted

Exercised

31 December

2014

Weighted

average

exercise

 price

Summary of options

£0.001

07/12/2012

31/12/2020

69,000,000

-

-

69,000,000

£0.001

£0.0045

03/10/2014

31/12/2016

-

10,000,000

-

10,000,000

£0.0045

69,000,000

10,000,000

-

79,000,000

£0.0015

Summary of warrants

£0.001

07/12/2012

31/12/2015

195,600,000

-

-

195,600,000

£0.001

195,600,000

-

-

195,600,000

£0.001

17

Financial instruments

The Group's financial instruments comprise cash at bank and payables which arise in the normal course of business. It is, and has been throughout the period under review, the Group's policy that no speculative trading in financial instruments shall be undertaken. The Group has been solely equity funded during the period. As a result the main risk arising from the Group's financial instruments is currency risk.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 of the accounts.

2014

2013

£'000

£'000

Financial assets (current)

Trade receivables

218

-

Cash and cash equivalents

467

12

Financial liabilities (current)

Trade payables

119

35

Interest rate risk and liquidity risk

The Group is funded by equity, maintaining all its funds in bank accounts. The Group's policy throughout the period has been to minimise the risk of placing available funds on short term deposit. The short term deposits are placed with banks for periods up to 1 month according to funding requirements.

The Group had no undrawn committed borrowing facilities at any time during the period.

Currency risk

The group is directly exposed to currency risk of its subsidiaries, as they are based in South Africa, and exposed to movement against the South African Rand as their assets, liabilities, revenue and expenditure are denominated therein. The parent company is denominated in pound sterling.

Market risk

The company's current exposure to market risk in relation to its AFS investments, which are listed on stock markets throughout the world.

Fair values

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash held by the company with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

The directors consider there to be no material difference between the book value of financial instruments and their values at the balance sheet date.

18

Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between other related parties are discussed below.

During the period, there were no related party transactions to disclose.

Remuneration of Key Management Personnel

The remuneration of the Directors and other key management personnel of the Group are set out below in aggregate for each of the categories specified in IAS24 Related party Disclosures.

2014

2013

£'000

£'000

Short-term employee benefits

211

135

Share-based payments

32

-

243

135

19

Capital Commitments & Contingent Liabilities

There are no non-cancellable capital commitments as at the balance sheet date. The Group has no contingent liabilities at the balance sheet date.

20

Ultimate control

The Company has no individual controlling party.

21

Events after the reporting period

There are no events after the end of the reporting period to disclose.

22

Profit and loss account of the parent company

As permitted by the Isle of Man Companies Act 2006, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the year was £853,000 (2013: £308,000).

23

Posting of accounts

The Report and Accounts for the year ended 31 December 2014 will be posted to shareholders on 30 June 2015 and will be available on the Company's website on the same date.