Afriag Global Regulatory News (AFRI)

AfriAg Plc

("AfriAg" or the "Company")

Final results for the year ended 31 December 2013

Chairman's Statement

I am pleased to present the final results for the year ended 31 December 2013.

This has been a period of considerable change for the Group.

During the early part of year, the Company's name and investing policy was changed and I was appointed Executive Chairman. The Company also completed the purchase of a 40% equity interest in African agri-logistics company AfriAg Pty Ltd ("AfriAg SA") and acquired a portfolio of shares in various quoted agricultural companies in accordance with the Company's stated investing policy.

Following these investments being made the Company has now substantially implemented its investing policy in accordance with rule 15 of the AIM Rules for Companies.

The 40% investment in AfriAg SA was made in July 2013. Since then, AfriAg SA has gradually grown its fleet of AfriAg-branded special purpose refrigerated trucks that now transport perishable food and agricultural related produce around southern Africa and then transport these products to supermarkets in Europe, the Middle East and Asia by sea and air freight. Any revenue due to the Company will be by way of periodic dividends from AfriAg SA. The Company is not anticipating any dividends in the short term as any excess working capital from AfriAg SA is being retained to assist with growing that business.

On 17 June 2014, the Company announced its intention to establish a new wholly-owned food marketing and sales and distribution division called AfriAg Marketing, in South Africa with the prime focus of sourcing and then marketing African produce (fresh and frozen) within the southern African region as well as from southern Africa to global markets. 

My fellow director Donald Strang and I are in the process of being appointed as the initial directors of this new division. It is proposed that during the start-up phase of this new division that funding will be provided from the Company's current cash reserves. AfriAg Marketing is seeing multiple global opportunities to assist with sourcing and supplying African food produce; in particular in Asia and the Middle East. We will use this new wholly owned division to capitalise on these opportunities for the Company.

The board is confident that AfriAg Marketing will be fully operational by the end of July 2014.

Results for the period

The Group's net loss after taxation for the year was £0.31million (2012 - £4.775 million loss).

Current assets including cash at 31 December 2013 amounted to £244,000 (31 December 2012: £179,000). This has been subsequently boosted since year-end with the £400,000 share placement completed in June 2014.

Outlook

The current Board considers that adoption of the new Investing Policy is in the best interests of the Company and its Shareholders as a whole. The Board envisages an exciting growth period for the Company as it continues to implement its investment strategy of focusing on African related agri-business and agri-logistics and continues to evaluate new investment opportunities in these sectors as they arise.

Since the creation of AfriAg a year ago, the Company had only raised a net £600,000 to year end to rescue the previous business (previously 3D Resources plc, which had been scheduled for de-listing from AIM), pay out old outstanding creditors and invest in a number of agri related businesses. The recent £400,000 funding in June 2014 significantly improved the Company's balance sheet and will enable the Company to grow and continue with its stated investment policy.

The Board would like to take this opportunity to thank our shareholders for their continued support.

I look forward to reporting further progress over the next period and beyond.

David Lenigas

Executive Chairman

27 June 2014

For further information please contact:

Consolidated Statement of Comprehensive Income for the period to 31 December 2013

Consolidated Statement of financial position at 31 December 2013

The financial statements of AfriAg plc (registered number 002845V) were approved by the Board of Directors and authorised for issue on 27 June 2014 and were signed on its behalf by:

David Lenigas

Chairman

Company Statement of financial position at 31 December 2013

The financial statements of AfriAg plc (registered number 002845V) were approved by the Board of Directors and authorised for issue on 27 June 2014 and were signed on its behalf by:

David Lenigas

Chairman

Consolidated Statement of changes in equity for the period to 31 December 2013

Company Statement of changes in equity for the period to 31 December 2013

Consolidated Cash flow statement for the period ended 31 December 2013

Company Cash flow statement for the period ended 31 December 2013

Notes to the financial statements

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 of the London Stock Exchange. The Company changed its name from 3D Resources Plc by resolution on 24 April 2013.

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

Adoption of new or amended IFRS

In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.

IFRS 13 Fair Value Measurement

The Company has applied IFRS13 for the first time in the current year. IFRS13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. IFRS13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS13 includes extensive disclosure requirements.

IFRS13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard.

In accordance with these transitional provisions, the Company has not made any new disclosures required by IFRS13 for the 2012 comparative period. Other than the additional disclosures, the application of IFRS13 has not had any impact on the amounts recognised in the consolidated financial statements.

Amendments to IAS1 Presentation of Financial Statements

(as part of the Annual Improvements to IFRSs 2009; 2011 Cycle issued in May 2012)

The Annual Improvements to IFRSs 2009; 2011 have made a number of amendments to IFRSs. The amendments that are relevant to the Company are the amendments to IAS1 regarding when a statement of financial position as at the beginning of the preceding period (third statement of financial position) and the related notes are required to be presented. The amendments specify that a third statement of financial position is required when a) an entity applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items in its financial statements, and b) the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position. The amendments specify that related notes are not required to accompany the third statement of financial position.

This has no impact for the 2013 financial statements.

Amendments to IFRS7 Disclosures

The Company has applied the amendments to IFRS7 Disclosures-Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to IFRS7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

As the Company does not have any offsetting arrangements in place, the application of the amendments has had no impact on the disclosures or on the amounts recognised in the financial statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

IFRS9 Financial Instruments

IFRS10 Consolidated Financial Statements

IFRS12 Joint Arrangements#

IAS27 (revised) Investment Entities

IAS28 (revised) Investments in Associates and Joint Ventures

IAS32 (revised) Offsetting Financial Assets and Financial Liabilities

IAS36 (revised) Recoverable Amount Disclosures for Non Financial Assets

IAS39 (revised) Novation of Derivatives and Continuation of Hedge Accounting

IFRIC Interpretation21 Levies

The directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the financial statements of the Company in future periods, except as that IFRS9 will impact both the measurement and disclosures of Financial Instruments.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Company in future periods, however, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

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 Company's interests and cash resources, indicate that preparation of the 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 Company's balance sheet when the 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. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences, which are recognised in profit or loss. 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 profit or loss and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in profit or loss within finance 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.

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 Company'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 segment during the period is the agriculture and logistics sector.

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

The Group has not generated any revenues from external customers during the period, £2,000 (2012: £nil) revenue is from management fees to the associate company.

In respect of the total assets, £243,728 (2012: £178,991) arise in the UK, and £1,327,000 (2012: £nil) arise in South Africa.

#1 - resigned 17 May 2013.

#2 - appointed 24 April 2013.

#3 - resigned 24 October 2012.

Directors' interest in share options is set out in note 16.

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 loss of the company attributable to equity holders of the parent of £306,511 (Period ended 31 December 2012 - £4,774,584) and on weighted average number of ordinary shares of 893,299,984 (31 December 2012 - 820,974,824) in issue.

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

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

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.

Warrants in issue

As at 1 January 2013, shareholders had the option of up to 200,000,000 subscription warrants for each subscription share, exercisable at 0.1p per ordinary share. During the year, 4,400,000 warrants were exercised (2012: nil) at 0.1p per share. No warrants were cancelled or lapsed during the period (2012: nil).

As at 31 December 2013, 195,600,000 warrants (2012: 200,000,000) remain outstanding.

Share Options

The Company has as at 31 December 2013, 69,000,000 (2012: 82,000,000) share options issued through its share schemes. During the year no options were issued (2012: 82,000,000), 13,000,000 options were exercised (2012: nil), no options were cancelled or lapsed (2012: nil).