Agriterra Ld Regulatory News (AGTA)

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

20 November 2015

Agriterra Ltd ('Agriterra' or 'the Group')

Final Results

Agriterra Limited, the AIM listed pan-African agricultural company, announces its audited final results for the year ended 31 May 2015.

Chairman's statement

Agriterra continues to centre on building a sustainable agricultural business with its portfolio focussed on beef and maize in Mozambique and cocoa in Sierra Leone. As reflected in the results, the period has been mixed in terms of success. The beef division has emerged as a solid revenue generator and a stable base from which to pursue the Group's expansion objectives in the short to medium term, while the impact of external factors beyond our control in Sierra Leone, in particular the Ebola outbreak, caused the curtailment of investment in our operations, with our fleet and warehousing being used by the International Red Cross, World Health Organisation and World Food Programme.

Large scale agriculture projects require heavy investment in order to establish an effective operating platform that can deliver long-term and sustainable growth. We have invested significantly in building a base that the Board believes has the potential to increase our revenue generation capability and profitability moving forward. We continue to look at optimising our business and seek to maximise efficiencies across our divisions, to capitalise on revenue generation, to reduce operating expenditure and to improve margins so as to drive shareholder value.

With regards to our beef operations, we have invested in and built a valuable platform of ranches, feedlot, an abattoir, infrastructure, logistics and retail units. This division continues to show its potential to grow as a solid revenue generator, with a 31% increase in revenues to $5,366,000 from $4,081,000 in the 2014 financial year, in spite of a 6.5% fall in the average Metical to US$ exchange rate (in Metical terms, revenues increased by over 40%). This notable growth in revenue reflects the increasing volumes being moved through our feedlot and in particular the expansion of our retail units, which are the final link in Agriterra's beef value chain, from field to fork.

Of particular note during the year has been the establishment of our butchery and distribution centre in Nampula, Mozambique's third largest city and the central commercial hub for Northern Mozambique. We opened our doors to the public in April 2015 and, by October 2015, monthly sales (retail and wholesale) have already achieved in excess of $150,000 a month. We expect that this growth will continue, by optimising performance and utilising the full distribution capacity of our Nampula property as a staging post for the other northern retail sites, as we push on with our expansion strategy into the north of the country.

The success at Nampula has reinforced the Board's belief in our retail expansion strategy, to further leverage the increasing demand for quality beef products and the apparent increase in activity from the LNG sector, notwithstanding the macro oil and gas environment. We now have six outlets and for the 2016 calendar year, we are targeting new sites in the north of the country in Pemba and Nacala as well as opportunities in the capital, Maputo. We expect that the additional volumes supplied from these sites, along with growth in revenues from our existing sites, will provide a material contribution to revenue growth in FY2016.

The Vanduzi feedlot continues to grow in terms of capacity and is processing cattle sourced from our own ranches as well as locally purchased animals. Overall, we feel that the beef division has now established itself sufficiently to enable expansion both in terms of wholesale and retail sales in country, as well as by exploring the potential in the export market.

Elsewhere, our maize and cocoa divisions have been impacted by external factors beyond our control. In Mozambique, political instability leading up to the presidential elections in October 2014 made transport of maize meal to the South and North of the country difficult. Further, heavy rains affected both Mozambique and Malawi in the second half of the year, temporarily cutting off the road links between the Group's production and processing facilities in central Mozambique, and the Northern markets. These factors, in addition to a bumper maize harvest saturating the market and reducing the demand for our processed products resulted in lower revenues of $5,517,000 (2014: $9,716,000) for the year. Whilst this is disappointing, we are confident that this coming year will present a much more favourable market opportunity for the Group. In particular the current maize crop appears to have returned to more typical levels, with consequent higher sales prices of maize meal and higher absolute margins achievable per tonne of maize meal sold. Furthermore, and as a result of current exchange rates between the US$ and Metical, the price of rice - which is often seen as a substitute to maize meal - has increased significantly, further driving the demand of maize meal. With a more favourable sales and pricing environment this year, we expect to achieve a significant improvement in this division in FY2016.

The serious and prolonged Ebola crisis suffered in West Africa heavily impacted our Sierra Leone operations, which in addition to our cocoa division includes 45,000 hectares of brownfield agricultural land in an area suitable for palm oil production in the south of the country. Due to a combination of factors including the restrictions of movement imposed in the country, together with the imperative to protect our employees and the reduced international investment appetite, we have placed the further development of our Cocoa plantation on hold for the present time. During this period of "care and maintenance", our plantation assets in country are being maintained and operations are ready to recommence when and if feasible. In order to support the country in its fight against, and recovery from, Ebola, we have leased part of our vehicle fleet and some of our warehousing infrastructure to international aid organisations. In addition we have effected food distribution for the World Food Programme in our area of operations around the Kenema region. Seedlings from our nursery, together with fertiliser and rice, have also been distributed to local farmers in partnership with a major cocoa industry player to support the region's recovery.

Despite the slowdown in the development of our plantation, our current activities have allowed us to maintain a presence in the country during this challenging time in Sierra Leone's history and provide a revenue stream to the Group which currently offsets most of the cash costs of the cocoa division.

Despite the challenges facing our Cocoa operations, we are now encouraged by what appears to be the end of Sierra Leone's fight against Ebola, with the country declared Ebola free by the World Health Organisation in early November 2015. We hope that a start to Sierra Leone's regeneration will now be possible, which will require innovative solutions to the challenges the country faces. As a first step, our Sierra Leone subsidiary company, Tropical Farms Limited ('Tropical Farms'), has entered into a trading agreement to use its organic certification and buying networks to source and supply up to 500 Mt of Sierra Leonean cocoa beans to a leading global company focused on natural, organic and specialty foods (the 'Offtaker'). In exchange, the Offtaker will provide Tropical Farms with pre-financing for the purchase of beans and pay a fee per tonne of beans purchased on behalf of the Offtaker. While relatively modest in scale, we hope that this first step in post Ebola Sierra Leone may lead to future opportunities.

Corporate Update

During the period, in April 2015, Euan Kay and Michael Pelham stepped down from the Board as non-executive directors in order to focus on their other interests. I would like to thank both Euan and Mike for their support and hard work for Agriterra over the years, and wish them well for the future.

Financial Overview

While we continue to build our business towards profitability, ultimately we are still in the investment phase of the Group's development. Our results continue to reflect the significant investment and development in our infrastructure - in particular within our beef business through the development of our farms - as we expand to critical mass. In the beef division our revenues now cover all of the cash operating costs of our retail, abattoir and feedlot operations, with the increasing scale of our operations contributing to the ongoing costs of the farms. As we expand our herd numbers, we expect the farms themselves to move to profitability.

Despite the 31% increase in beef revenues to $5,366,000 (from $4,081,000 in 2014), the unfavourable market conditions in the maize division contributed to a decrease in overall revenue to $11,787,000 (from $13,797,000 in 2014).

As a result of Ebola's detrimental impact on Sierra Leone, the Board has adopted a conservative approach and taken the prudent decision to impair all of the palm oil operations and substantially all of the cocoa assets. The resulting impairment charges of $9,860,000 (2014: $nil) are a significant component of the Group's loss of $13,387,000 (2014: $8,016,000). Despite these impairments, we remain optimistic about the intrinsic value of these assets and remain hopeful that further value may be realised from the cocoa operations in future, through investment & development, joint venture, sale or a combination of these events.

In addition to our current operations, the Board has continued to actively pursue the realisation of value from its legacy oil and gas operations. In light of the continuing unrest in South Sudan, the Board took the view that it would be prudent to expedite settlement in respect of the claims arising from the Group's legacy oil interests and accordingly, as announced on 17 September 2014, a successful settlement was reached in respect of such interests resulting in income of US$5,659,000 to the Group. Following the settlement, the Company and Group has no further current economic interest in South Sudan.

Going forward, we are focussed on improving cost efficiency across all divisions, and expanding revenues, to build a profitable business. We believe that our cash balances of $6,421,000 at 31 May 2015, combined with our overdraft and other borrowing facilities of 179,000,000 Metical (approximately $4,850,000 at the 31 May 2015 Metical to US$ exchange rate) for our grain operations and a further 105,000,000 Metical ($2,845,000 at the 31 May 2015 Metical to US$ exchange rate) to fund our beef operations, are sufficient for the Group to continue its development programme.

In light of the Group's future prospects, available cash and banking facilities, and a Net Asset Value of $29,842,000, the Directors are of the opinion that the Company is currently significantly undervalued at a market cap of approximately $8,250,000.

Outlook

The African agriculture market remains an area of exceptional growth potential. While we are still in the development phase, the Board is confident that the progress we have made to date has created a strong and sustainable platform. We are now beginning to demonstrate the "proof of concept" in our beef operations and look forward to a transition into profitability.

I would like to conclude by thanking our team who have worked tirelessly in assisting us in the development of the business.

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

OPERATIONS REVIEW

In Mozambique, Agriterra has successfully built a vertically integrated, 'field to fork' beef operation, Mozbife Limitada ('Mozbife'), from which it now looks to achieve scalable growth. We now have in place three established ranches (totalling 20,350 hectares), a feedlot facility (with current capacity for up to 3,500 animals), an abattoir (with capacity for 4,000 head per month), and six retail units.

A major component in achieving growth in our beef operations is the roll-out of our retail units. Each new retail site adds sales volumes and revenues, which in turn increases the throughput at the abattoir and the feedlot. We have already reached net positive cash flows from these components of the business and additional volumes now translate to increasing profit at the bottom line. Identifying appropriate locations for new retail units is therefore a priority for the Group and will be a key aspect in making the beef division cash generative as a whole in the short to medium term.

During the roll-out planning, Nampula, in Northern Mozambique, was quickly identified as a priority target for retail expansion. Northern Mozambique is developing rapidly, and is anticipated to continue to develop, mainly due to significant international investment, principally in natural resources and is therefore a key growth market within Mozambique. Nampula is an ideal location from which to expand into this market not only because is it the central commercial hub for Northern Mozambique, but it also has a large domestic population (being the third largest city in the country, with a population of approximately 605,000 people in 2014), with an established, and rapidly growing, market for quality butchered beef products. For these reasons, during the period we opened a new ~600m2 distribution centre and retail unit in Nampula, to establish our sixth retail site, adding to existing retail units in Beira, Chimoio, Tete (two sites) and Manica.

It is our intention to leverage this established northern presence to further build on these revenues. Nacala and Pemba, located in the northern provinces of Nampula and Cabo Delegado respectively, have been identified as strategic locations in which to open new retail stores in the future (FY2016 and FY2017), which would be supplied from our Nampula distribution centre. In addition, we have identified two potential retail units in Maputo, which as the capital and largest city, offers significant revenue and growth potential. Furthermore, due to its southern location, our presence here would notably increase our supply reach, making Mozbife a Mozambique wide supplier. We also continue to assess the potential to open smaller satellite retail units in the major cities that we already supply, namely Beira and Nampula, which would utilise the Group's existing infrastructure and increase our reach to the significant, but disperse, populations in these cities. Export opportunities are being evaluated which, if successful, could scale up our beef business in the medium term.

In order to keep our retail units stocked with the highest quality beef products, and to ensure the full uplift in value is secured within the Group's own operations, all beef sold within Mozbife's retail units is sourced from the Group's state-of-the-art abattoir at Chimoio. 5,013 animals were processed through the abattoir during the period, an increase over the 4,285 animals processed during FY2014. With a current run rate of approximately 700 animals per month, the abattoir continues to perform well. With a monthly slaughter capacity of approximately 4,000 head, there remains considerable flexibility to increase slaughter rates as the beef operations expand.

In order to achieve the best price for our cattle when slaughtered, our animals spend time at our Vanduzi feedlot, which has a current carrying capacity of approximately 3,500 head to provide approximately 1,000 head for slaughter each month to the abattoir. At the period end there were 1,804 animals in the feedlot, sourced from Mozbife's own ranches or from cattle purchased from the surrounding areas. In addition to feeding pens, the feedlot also has 1,050 hectares of land used for feed production which provides the twin benefits of reducing costs and providing certainty of supply. Furthermore, the feedlot works strategically with other companies in the Group, by using bran, the by-product from the grain processing facilities, as a feed supplement for the cattle. By the end of October 2015, and due to the increasing demand for our products, we have approximately 3,350 animals in the feedlot. We are now expanding the feedlot pens and expect to add capacity for a further 1,000 animals during FY2016.

In order to supply our retail outlets and capitalise on potential export opportunities with high quality beef products, it is imperative that we have a strong supply of beef. Our ranches (the 2,350 hectare Mavonde ranch, the 2,500 hectare Inhazonia ranch and the 15,500 hectare Dombe ranch, all located in Central Mozambique) therefore remain central to the medium to long term revenue generative capacity of the beef division, delivering a very high quality animal, either pure Beefmaster, premium quality imported animals, or local breeds cross-bred with pedigrees to rear larger animals. The very best cuts can be obtained from these high quality animals which, in turn, command the highest retail prices in our retail units.

Our herd size at the ranches at the end of May 2015 stood at 5,363 head (2014: 6,400 head), bringing Mozbife's total head to 7,167 (2014: 8,230 head) including the feedlot animals at that date. Our focus for the ranches remains centred on increasing our herd size in order to utilise our land capacity, which will positively impact our operating efficiencies and profit margins. To support this on-going growth in herd size, additional pivot irrigation has been completed at Mavonde and Inhazonia, thereby increasing the irrigated land by 195 hectares to 368 hectares, and by 88 hectares to 118 hectares respectively. Different varieties of grass have now been planted on these lands to produce grass which is suitable both for grazing and for hay bailing. This diversification will provide important flexibility for Mozbife as it continues its expansion strategy to maximise stocking ratios across the ranches.

With our existing installed irrigation, we have a current capacity for approximately 10,000 head across our ranches, with scope for further expansion in capacity through expansion of irrigation and/or land bank. This established infrastructure and capacity potential mean that we are well placed for growth. As the pastures further establish and support an increasing herd, increased birth rates and herd sizes will positively impact the number of animals available for slaughter.

In summary, we are well advanced in implementing our strategy for the beef division. Our feedlot, abattoir and retail units are generating net positive cash flows and, with the current irrigation at our Mavonde and Inhazonia ranches (provided we continue to increase our herd size), we expect our farms to start contributing to the bottom line in the short to medium term. Our extensive infrastructure and the capacity to scale up our operations across all aspects of this division means that we are now poised to capitalise on the ever increasing demand for beef products, both domestically in Mozambique and overseas.

Agriterra's maize operations are focussed on its 35,000 tonne storage capacity facility in Chimoio in central Mozambique, and its 15,000 tonne storage capacity facility in Tete, in north-west Mozambique. The established maize buying and processing business purchases maize from local out-growers through a network of buying stations, which is then processed and stored before being sold to the retail market as maize meal, a key staple food in the region and country.

The Group purchases maize directly from over 250,000 local smallholder farmers at specific buying points, thereby supporting economic activity in the relevant rural areas. Having purchased the grain, it is transported back to purpose-built storage and processing facilities where it is dried, fumigated, prepared and processed into maize meal. Maize purchases during the season totalled approximately 28,700 tonnes (2013-2014 season: 32,000 tonnes).

Sales were slow during the period, with 18,100 tonnes of maize milled (2014: 24,500 tonnes) and 13,600 tonnes of maize meal sold (2014: 18,700 tonnes), producing total sales of $5,517,000 (2014: $9,716,000). The Board believes that the low sales volumes are due to a number of factors, though primarily reflect an exceptionally large harvest - estimated at around 2.3 million tonnes - which saturated the local market and reduced the demand for processed products from Desenvolvimento E Comercialização Agricola Limitada ('DECA') and Compagri Limitada ('Compagri'). This exceptionally large harvest also impacted the price achievable for the Group's products, with prices reducing from an average of US$496 per tonne of meal during 2014, to US$403 per tonne of meal for 2015.

Political instability leading up to the presidential elections in October 2014 made transport to the South and North of the country difficult and further compounded the disappointing sales achieved during the period. Further, heavy rains affected both Mozambique and Malawi in the second half of the year, temporarily cutting off the road links between the Group's production and processing facilities in central Mozambique, and the Northern markets, with a consequential adverse effect on sales volumes.

It is anticipated that the maize market will return to more typical figures in the 2015-2016 season. While this pushes buying prices up, it has impacted more favourably on the pricing environment, and demand, for milled products. This has been helped further by a significant increase in the price of competing imported products, such as rice, due to the recent depreciation of the Metical - the Metical is now trading at approximately 43 Metical per US$, compared to an average of 32.45 Metical per US$ in FY2015.

With approximately 11,200 tonnes of maize in inventory at 31 May 2015, purchased at lower prices during the plentiful 2013-2014 season, we have a relatively cheap maize supply for a significant proportion of our forecast sales in FY2016. With milling capacity in excess of 75,000 tonnes of maize per annum, a favourable sales environment, and steady supplies of raw maize, we are optimistic that FY2016 will be a more profitable, and cash generative year for the maize division.

Agriterra's cocoa division consists of a 3,200 hectare cocoa plantation, located 40km from Kenema in south-east Sierra Leone, which is supported by a 2.2 hectare nursery. Subject to the acquisition of an additional block of approximately 1,600 hectares of land adjacent to the existing plantation, the Group's initial plan for the cocoa plantation was to plant a total of 4,000 hectares, with the ultimate aim of producing a minimum of 8,000 tonnes of cocoa per annum. The Group also owns a 2,000m2 state of the art warehouse in Kenema.

As announced in September 2014 and as a result of the well-publicised Ebola outbreak affecting West Africa, including Sierra Leone, the Board made the decision to suspend current development activities at the plantation. In addition to the significant restrictions in movement in country causing a shortage of labour, the Board assessed that it was unsafe to pursue an expansion of the plantation at that stage, which could increase the risk of Ebola developing on the plantation site and place staff at risk.

Accordingly, activities at the plantation have been curtailed to a level sufficient to protect staff while maintaining the Group's assets in country. In accordance with this plan, the Group is operating with a reduced labour force to ensure that the hectares planted to date are maintained, as is the plantation infrastructure including warehousing, accommodation and equipment. The Group is also rigidly enforcing general hygiene protocols to ensure staff and visitors are not placed at unnecessary risk. Due to the restriction in the scope of operations in the year and the uncertainty regarding the region, the Board took the decision to write down the cocoa division's assets and recorded an impairment charge of $6,791,000 (2014: $nil).

However, in spite of the recent reduction in scale of operations in response to the Ebola outbreak, the Group believes there is potential for the cocoa division. With a projected cocoa bean deficit of up to one million metric tonnes by 2020 driving prices upwards, the fundamentals of the cocoa market remain strong and the Group, with its established plantation and supportive infrastructure, is well placed to capitalise on this, which will in turn also support the recovery of the country. Subject to an improvement in the investment conditions in Sierra Leone, the Directors believe that the Group has the opportunity to obtain the necessary financing to bring the cocoa assets into production in time to capitalise on this supply shortage.

In addition to maintaining the Group's infrastructure and fleet during the Ebola outbreak, the Group has deployed many of its vehicle and warehousing resources to assist several major NGOs working in the Ebola relief efforts. This support has provided the Group with a significant role to play during the Ebola outbreak at a time when many aid agencies were in critical need of in-country support. Through the utilisation of its warehousing, which has been used for storage of food and essential supplies, and vehicles utilised for distribution as well as medical and humanitarian services, the Group has supported the relief effort in Sierra Leone. Further, the income of $904,000 (2014: $nil) from these rentals has contributed to mitigating the cash requirements of this division while the development operations are curtailed.

In addition to the development of the plantation and until early 2014, the Group also operated a small cocoa trading business from Kenema where beans were purchased from local out-growers and processed ready for sale to the international market. This operation, whilst an important foothold in this area of Sierra Leone, was loss-making at the time and following a series of poor harvests and the Ebola outbreak, the decision was taken to discontinue these activities. No cocoa sales were made during the period and expenditure of US$174,000 (2014: net loss of $986,000) relating to the trading operations is presented as "discontinued" within the consolidated financial statements.

FINANCIAL STATEMENTS

Consolidated income statement

For the year ended 31 May 2015

Consolidated statement of comprehensive income

For the year ended 31 May 2015

Consolidated statement of financial position

As at 31 May 2015

The financial statements of Agriterra Limited were approved and authorised for issue by the Board of Directors on 19 November 2015. Signed on behalf of the Board of Directors by:

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 May 2015

Consolidated cash flow statement

For the year ended 31 May 2015

Notes to the consolidated financial statements

1. GeNERAL INFORMATION

Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 42643. Further details, including the address of the registered office, are available on the Company's website. The nature of the Group's operations and its principal activities are set out in the Directors' report. A list of the significant investments in subsidiaries and associate companies held directly and indirectly by the Company during the period and at the period end, including the name, country of incorporation, operation and ownership interest is given in note 39.

The reporting currency for the Company and Group is the US Dollar ('$' or 'US$') as it most appropriately reflects the Group's business activities in the agricultural sector in Africa and therefore the Group's financial position and financial performance.

The financial statements have been prepared in accordance with IFRSs as adopted by the EU.

2. ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

2.1. New Standards and Interpretations adopted with no significant effect on the financial statements

The following new and revised Standards and Interpretations have been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements, but may impact the accounting for future transactions and arrangements.

2.2. New Standards and Interpretations in issue but not yet effective

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

The Directors do not anticipate that the adoption of these Standards and Interpretations will have a material impact on the Group's financial statements in the period of initial application.

3. SIGNIFICANT ACCOUNTING POLICIES

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

3.1. Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is provided in note 5.1 to the consolidated financial statements.

3.2. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 May. Control is achieved when the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognised income and expenses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an associate, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has a binding obligation to make payments on behalf of an associate.

Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

3.3. Foreign currency

The individual financial statements of each company in the Group are prepared in the currency of the primary economic environment in which it operates (its 'functional currency'). The consolidated financial statements are presented in US Dollars which is also the functional currency of the Company.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the date of the transaction. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's operations are translated at exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rates for each month, unless exchange rates fluctuate significantly during the month, in which case exchange rates at the date of transactions are used. Exchange differences arising from the translation of the net investment in foreign operations and overseas branches are recognised in other comprehensive income and accumulated in equity in the translation reserve. Such translation differences are recognised as income or expense in the year in which the operation or branch is disposed of.

The following are the material exchange rates applied by the Group:

3.4. Operating segments

The Chief Operating Decision Maker is the Group Executive Committee (the 'ExCom'), comprising the Chairman, the Chief Executive and the Finance Director. The ExCom reviews the Group's internal reporting in order to assess performance of the business. Management has determined the operating segments based on the reports reviewed by the ExCom which consider the activities by nature of business.

3.5. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of discounts, value added taxes and other sales related taxes.

Sales of goods are recognised when goods are delivered and title has passed. Delivery occurs when the products have arrived at the specified location, and the risks and rewards of ownership have been transferred to the customer.

3.6. Operating loss

Operating loss is stated before investment revenues, other gains and losses, finance costs and taxation.

3.7. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The Group did not incur any borrowing costs in respect of qualifying assets in the period.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

3.8. Share based payments

The Company issues equity-settled share-based payments to certain employees of the Group. These payments are measured at fair value (excluding the effect of non market based vesting conditions) at the date of grant and the value is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest and adjusted for non market based vesting conditions.

Fair value is measured by use of the Black Scholes model. The expected life used in the model is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

3.9. Employee benefits

3.9.1. Short term employee benefits

Short-term employee benefits include salaries and wages, short-term compensated absences and bonus payments. The Group recognises a liability and corresponding expense for short-term employee benefits when an employee has rendered services that entitle him / her to the benefit.

3.9.2. Post-employment benefits

The Group does not contribute to any defined retirement plan for its employees, either defined contribution or defined benefit. Social security payments to state schemes are charged to profit and loss as the employee's services are rendered.

3.10. Leases

Leases that transfer substantially all the risks and reward of ownership are classified as finance leases. All other leases are classified as operating leases. As at 31 May 2014 and 31 May 2015 the Group does not have any finance leases. During the periods presented in these financial statements, the Group was counterparty to certain operating lease contracts. Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

3.11. Taxation

The Company is resident for taxation purposes in Guernsey and its income is subject to income tax, presently at a rate of zero per cent per annum. The income of overseas subsidiaries is subject to tax at the prevailing rate in each jurisdiction.

The income tax expense for the period comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity, when tax is recognised in other comprehensive income or directly in equity as appropriate. Taxable profit differs from accounting profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

Current tax expense is the expected tax payable on the taxable income for the year. It is calculated on the basis of the tax laws and rates enacted or substantively enacted at the balance sheet date, and includes any adjustment to tax payable in respect of previous years. Deferred tax is calculated using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the asset can be utilised. This requires judgements to be made in respect of the availability of future taxable income. 

The Group's deferred tax assets and liabilities are calculated using tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates that have been enacted or substantively enacted by the reporting date.

Deferred income tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

No deferred tax asset or liability is recognised in respect of temporary differences associated with investments in subsidiaries, branches and joint ventures where the Group is able to control the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

3.12. Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured at the aggregate of the fair values, at the date of acquisition, of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are recognised in profit and loss as incurred.

The assets, liabilities and contingent liabilities of the acquiree are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration paid over the fair value of the identifiable net assets acquired is recognised as goodwill. If the fair value of the consideration is less than the fair value of the identifiable net assets acquired, the difference is recognised directly in profit and loss.

3.13. Goodwill

Goodwill arising on the acquisition of subsidiaries is recognised as an asset.

Goodwill is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to cash generating units of the acquirer which represent the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. On disposal of a subsidiary, associate or joint venture, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

3.14. Property, plant and equipment

All items of property, plant and equipment are stated at historical cost less accumulated depreciation (see below) and impairment. Historical cost includes expenditure that is directly attributable to the acquisition. Subsequent costs are included in the asset's carrying value when it is considered probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Assets in the course of construction for production, rental or administrative purposes are carried at cost, less any identified impairment loss. Cost includes professional fees and associated expenses.

Depreciation is charged on a straight-line basis over the estimated useful lives of each item, as follows:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds received with the carrying amount of the asset immediately prior to disposal and are included in profit and loss.

3.15. Impairment of property, plant and equipment and intangible assets excluding goodwill.

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets (other than goodwill which is assessed in accordance with the policy described above) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit and loss because the Group does not record any assets at a revalued amount.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit and loss.

3.16. Biological assets

Consumer biological assets, being the beef cattle herd, are measured in accordance with IAS 41, 'Agriculture' at fair value less costs to sell, with gains and losses in the measurement to fair value recorded in profit and loss. The herd comprises breeding and non-breeding cattle. The breeding cattle comprise bulls, cows and heifers. As these are expected to be held for more than one year, breeding cattle are classified as non-current assets. The non breeding cattle comprise animals (principally steers) that will be grown and sold for slaughter and are classified as current assets.

Cattle are recorded as assets at the year end and the fair value is determined by the size of the herd and market prices at the reporting date.

The cost of forage is charged to the income statement over the period it is consumed.

3.17. Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

3.18. Financial instruments

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

3.18.1. Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit and loss ('FVTPL'), which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets at 'FVTPL', 'held-to-maturity' investments, 'available-for-sale' financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial asset and is determined at the time of initial recognition. The Company and Group currently have financial assets in the category of 'loans and receivables' and FVTPL.

3.18.1.1. Loans and receivables

Trade receivables, loans receivable, bank balances, cash in hand and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

3.18.1.2. Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or is designated as at FVTPL upon initial recognition. The Group holds certain investments in quoted companies which are designated as held for trading. Financial assets at FVTPL are stated at fair value, with any gains and losses arising on re-measurement recognised in profit or loss. The net gain or loss incorporates any dividends, interest earned, or foreign exchange gains and losses on the financial asset and is included within other gains and losses in the income statement. Fair value is determined in the manner described in note 22.

3.18.1.3. Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For loans and receivables carried at amortised cost, the amount of the impairment is the differences between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

The carrying amount of the financial asset is reduced through the use of an allowance account. When a financial asset is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit and loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

3.18.1.4. Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

3.18.2. Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

3.18.2.1. Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

3.18.2.2. Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'. The Group only has financial liabilities in the category of other financial liabilities.

3.18.2.2.1. Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

3.18.2.2.2. Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

4. REPRESENTATIONS TO THE CASH FLOW STATEMENT

In the financial year ended 31 May 2014, and consistent with preceding financial periods, the Group presented all cash flows for the purchase, sale, slaughter or disposal by other means of its cattle within a single line in the Consolidated cash flow statement entitled 'Increase in biological assets', a component of 'Cash flows from investing activities'. This reflected the fact that, historically, a significant portion of the Group's cash flows for the purchase of animals related to the purchase of the breeding herd.

 In the current and preceding financial year, the Group did not purchase cattle to increase its breeding herd - all cattle purchases were for slaughter herd animals, generally being animals taken directly into the feedlot. Cash flows of this nature are more appropriately reflected within cash flows from operating activities. Accordingly, the Group has altered its presentation for the purchase of slaughter herd animals, which are now included within the line item of the Consolidated cash flow statement entitled 'Net decrease / (increase) in biological assets held for slaughter purchases', within 'Net cash used in operating activities'. The comparative of $219,000 outflow has been reclassified from cash flows from investing activities resulting in an increase in 'Net cash used in operating activities by continuing operations' and 'Net cash used in operating activities' by $219,000 and a corresponding decrease in 'Net cash used in investing activities by continuing operations' and 'Net cash used in investing activities'. The representation has no effect on net cash flows for the year ended 31 May 2014, nor any effect on the Consolidated income statement or on the Consolidated statement of financial position.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The effect on the financial statements of changes in estimates in future periods could be material.

5.1. Going concern

The Group has prepared forecasts for the Group's ongoing businesses covering the period of at least 12 months from the date of approval of these financial statements. These forecasts are based on assumptions including, inter alia, that there are no significant disruptions to the supply of maize or cattle to meet its projected sales volumes and take into account the investment in the beef herd, working capital and additional property plant and equipment that are expected to be required.

The Directors believe that with existing resources, including available undrawn borrowing facilities, the Group and Company is able to manage its business risks and successfully grow its operating businesses. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing these financial statements.

5.2. Impairments

Impairment reviews for non-current assets are carried out at each balance sheet date in accordance with IAS 36, Impairment of Assets. Where there are indicators of impairment, the net book value of the asset or cash generating unit is compared with its fair value. The impairment review is sensitive to various assumptions, including the expected sales forecasts, cost assumptions, capital requirements, and discount rates among others. Details of impairments recorded in the period are included in note 12.

5.3. Biological assets

Cattle are accounted for as biological assets and measured at their fair value at each balance sheet date. Fair value is based on the estimated market value for cattle in Mozambique of a similar age and breed, less the estimated costs to bring them to market, converted to US$ at the exchange rate prevailing at the period end. Changes in any estimates could lead to the recognition of significant fair value changes in the consolidated income statement, or significant changes in the foreign currency translation reserve for changes in the Metical to US$ exchange rate. At 31 May 2015 the value of the breeding herd disclosed as a non-current asset was $2,246,000 (2014: $3,071,000). The value of the herd held for slaughter disclosed as a current asset was $1,019,000 (2014: $1,201,000).

5.4. Recoverability of input Value Added Tax

Mozambique Value Added Tax ('IVA') operates in a similar manner to UK Value Added Tax ('VAT'). The Group is exempt from IVA on its sales of Maize under the terms of Mozambique tax law. The Group is able to recover input sales tax on substantially all of the purchases of the Grain division. The Group is always therefore in a net recovery position of IVA in respect of its Grain operations. To date the Group has not succeeded in recovering IVA from the Mozambique Government. Due to the significant uncertainty over the recoverability of these IVA balances, the Group has provided in full against the assets as at 31 May 2014 and 31 May 2015. As at 31 May 2015, the gross and net IVA recoverable assets are respectively $1,319,000 (2014: $1,345,000) and $nil (2014: $nil) at the US$ to Metical exchange rate of 36.90 (2014: 31.00) at that date.

6. Revenue

An analysis of the Group's revenue is as follows:

7.  Segment reporting

The ExCom consider that the Group's operating activities comprise the segments of Grain, Beef and Cocoa, all undertaken in Africa. In addition, the Group has certain other unallocated expenditure, assets and liabilities, either located in Africa or held as support for the Africa operations.

7.1. Segment revenue and results

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

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

7.2. Segment assets, liabilities and capital expenditure

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

Capital expenditure comprises additions to property, plant and equipment and intangible assets, including capitalised depreciation and amortisation where applicable.

The segment assets and liabilities at 31 May 2015 and capital expenditure for the year then ended are as follows:

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

The segment assets and liabilities at 31 May 2014 and capital expenditure for the year then ended are as follows:

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

Unallocated property, plant and equipment includes $nil (2014: $5,880,000) in respect of the lease over 45,000 hectares of brownfield land suitable for Palm oil production and $76,000 (2014: $837,000) of Aviation assets. The Group's interest in the aforementioned lease was impaired in the period as more fully described in note 12.2.

7.3. Significant customers

In the year ended 31 May 2015 one of the Beef division's customers generated $1,515,000 of revenue being 13% of Group revenue. In the year ended 31 May 2014 one of the Cocoa division's customers generated $1,884,000 of revenue being 14% of Group revenue.

8. Operating loss

Operating loss has been arrived at after charging / (crediting):

9. Auditors Remuneration

Amounts payable to RSM UK Audit LLP (formerly Baker Tilly UK Audit LLP) and their associates in respect of audit services are as follows:

Other than as disclosed above, the Company's auditor and their associates have not provided additional services to the Group.

10. Staff costs

The average monthly number of employees (including executive Directors) employed by the Group for the year was as follows:

Their aggregate remuneration comprised:

11. REMUNERATION OF DIRECTORS

12. IMPAIRMENT OF CURRENT AND NON-CURRENT ASSETS

In accordance with IAS 36, Impairment of assets, the Group conducted an impairment review of its tangible and intangible assets as at 31 May 2015, resulting in an impairment against its cocoa division assets and palm lease assets, all held in Sierra Leone, as follows:

Further details are provided below.

12.1. Impairment of cocoa division current and non-current assets

As announced in September 2014 and as a result of the well-publicised Ebola outbreak affecting Western Africa, including Sierra Leone, the Board made the decision to suspend development activities at the cocoa plantation in Sierra Leone, having already ceased its cocoa trading activities by then. In addition to the significant restrictions in movement in country causing a shortage of labour, the Board assessed that it was unsafe to pursue an expansion of the plantation at that stage, which could increase the risk of Ebola developing on the plantation site and place staff at risk.

The Board continued to monitor the situation regarding Ebola in Sierra Leone and acknowledges that important strides have been made to control the virus and restore confidence in investing in the country. However, the investment landscape in Sierra Leone has not returned to the favourable environment that was present pre-Ebola, and, in the Board's opinion, significant further regeneration and international development support is needed in the short to medium term to facilitate further significant private sector investment.

In light of these developments, and following a review by the Board of its Group investment strategy and priorities, the Board has maintained the suspension in development funding for its Cocoa operations in Sierra Leone; activities at the plantation continue to be maintained at the level sufficient to protect staff while maintaining the Group's assets in country. The Group's primary focus is now on the development of the Beef business in Mozambique.

As required by IFRS, the Group conducted an impairment review of all of the Group's cocoa division assets in Sierra Leone, which principally comprise goodwill, property, plant and equipment, long term prepayments, and inventory. The impairment review resulted in an impairment against the cocoa division's assets in Sierra Leone of $6,791,000 (2014: $nil), analysed as follows:

Where assets are capable of generating cash flows that are largely independent from those generated by other assets, the impairment review compared the carrying value of individual assets to their recoverable amount. Examples of such assets are warehouses, vehicles, nurseries etc. Where the asset does not generate cash flows that are independent from other assets, the Group estimated the recoverable amount of the cash-generating unit to which the asset belongs. Examples of such assets are the plantation development assets, including the land itself, clearing costs, planting, maintenance and other expenditure related to the growing of cocoa plants at the plantation. Due to the suspension of funding for the cocoa operations, recoverable amount was generally determined for assets or cash generating units based on fair value less costs of disposal, where fair value was based on the Directors best estimates of the likely realisable value for individual assets within Sierra Leone. Where, given the current investment landscape in Sierra Leone there was no basis for making a reliable estimate of fair value less costs of disposal - such as for the plantation development assets - recoverable amount was measured by reference to value in use alone. This was estimated at $nil because the relevant assets, at their present stage of development, are not capable of generating positive cash returns without further development funding. The impairment review resulted in a write down of the cocoa divisions goodwill and non-current receivables (which represented long term land lease rental payments) to $nil, and its property, plant and equipment to $1,180,000.

In the medium to long term, the Board remains positive about the future development potential in Sierra Leone for the cocoa plantation, as well as the palm (refer below). With a projected cocoa bean deficit of up to one million metric tonnes by 2020/2021 driving prices upwards, the fundamentals of the cocoa market remain strong. The Board remains hopeful that further value may be realised from its Cocoa operations in future periods, through development or sale, and accordingly the operations continue to be presented as continuing operations.

12.2. Impairment of palm activities' non-current assets

The Group controls a lease of approximately 45,000 hectares of brownfield agricultural land suitable for palm oil production in the Pujehun District in the Southern Province in Sierra Leone. The lease was acquired in 2012 and the Board has continued to evaluate this property and its potential for commercialisation. Due to the factors described above which resulted in an impairment against the Group's cocoa division assets, the Group has decided to suspend any activity on this lease. The assets have accordingly been impaired to $nil and presented within discontinued operations.

The carrying value of these assets, included within Property, plant and equipment was $6,009,000, which includes the initial purchase price of the lease, deferred consideration (refer to note 31.1) and expenditure incurred on maintaining the lease (such as annual lease rental payments). The deferred consideration was to be settled in Ordinary Shares in the Company, following the initial development of 1,000 hectares of the leasehold land. Due to the impairment, the Group no longer intends to complete this initial development and accordingly the related obligation to issue shares (included within the 'Shares to be issued reserve', a component of the Group and Company equity, with a carrying value of $2,940,000) has been released to profit and loss, reducing the impairment arising on the palm activities to $3,069,000, which is included in the results of discontinued operations (refer to note 17.3).

13. Investment revenues

All investment revenues are earned on financial assets classified as loans and receivables (including cash and bank balances).

14. Other gains and losses

15. Finance costs

16.  Taxation

The tax reconciliation has been prepared using a 32% tax rate, the corporate income tax rate in Mozambique, as this is where the Group's principal assets of its continuing operations are located.

The Group has recognised a tax charge of $nil (2014: charge of $1,000,000) in respect of the disposal of its Ethiopian oil and gas interests, reported within discontinued operations.

The Group has operations in a number of overseas jurisdictions where it has incurred taxable losses which may be available for offset against future taxable profits amounting to approximately $17,500,000 (31 May 2014: $14,570,000). In addition, the Group has further deductible timing differences amounting to approximately $34,680,000 (31 May 2014: $21,047,000). No deferred tax asset has been recognised for these tax losses and other deductible timing differences as the requirements of IAS 12, 'Income taxes', have not been met.

The Company is resident for taxation purposes in Guernsey and its income is subject to Guernsey income tax, presently at a rate of zero percent. per annum (2014: zero percent. per annum). No tax is payable for the year due to losses incurred. Deferred tax has not been provided for, as brought forward tax losses are not recoverable under the Income Tax (Zero 10) (Guernsey) Law, 2007 (as amended).

17. Discontinued operations

The profit / (loss) after tax arising on discontinued operations during the period is analysed by business operation as follows: