Last checked at 26 Feb 2010 09:00
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture
26 February 2010
Agriterra Ltd ('Agriterra' or 'the Company')
Interim Results
Agriterra Ltd, the AIM listed company focussed on the agricultural sector in central and southern Africa, announces its results for the six months ended 30 November 2009.
Overview
·; Significant progress made towards building a major sub-Saharan African focussed agricultural business
·; Record buying season achieved at Chimoio maize processing facility - increased total purchase figure by 40% to 35,000 tonnes (2008 buying season: 25,000 tonnes)
·; Growing market presence - DECA commands major market share in key regions such as Beira and geographic reach is spreading countrywide
·; Tete facility - 8,000 tonnes of maize achieved during 2009 buying season and full commercial licences obtained
·; Breeding programme progressing well on Mozbife's Dombe and Mavonde ranches - total head of cattle now approximately 1,000
·; Heavily invested in development of both maize processing and beef business
·; In December acquired remaining interest in agricultural trading and processing companies and cattle ranching and feedlot production entity Mozbife
·; Interims coincide with buying season, full year results reflect sales
CHAIRMAN'S STATEMENT
We have made impressive progress in building our position as a significant agricultural company focussed on sub-Saharan Africa. Our maize processing operation in Chimoio is growing from strength to strength recording a record buying season, while we have invested heavily in the development of the Compagri maize processing business in Tete, and laying the foundations for our cattle ranching business in Chimoio.
DECA, Chimoio
2009 was a record buying season for DECA, with 35,000 tonnes purchased between June to September, a new record figure exceeding previous seasons by nearly 10,000 tonnes. Importantly grain was purchased at improved prices compared to previous years. Storage capacity was the only limiting factor and as a result the Company has initiated plans to increase capacity with the construction of a further six 1,000 tonne silos, taking the total storage capacity at Chimoio to just over 40,000 tonnes. Sales of product are currently very strong and growing daily following the strong buying season. The DECA product commands a major market share in the Beira area, which is the Company's biggest market and it is now being sold regularly as far south as Chokwe near Maputo, nearly 1,000km from Chimoio.
Compagri, Tete
Following commencement of operations in 2009, Compagri purchased in excess of 8,000 tonnes of maize in its first buying season. All commercial licences have now been acquired and milling is commencing in order to supply the local market. It is expected that purchases of grain and other agricultural products could reach 20,000 tonnes in 2010 as the operations expand to keep up with the anticipated growing demand in the Tete area. With the vast developments in the coal mining projects in the area, substantial inflows of workers are expected, many of whom consume maize meal as their staple diet, and therefore the project is well placed to satisfy this demand. Importantly, new markets are also being opened up with strong export potential to neighbouring Malawi as well as to Zimbabwe being indicated.
Mozbife Cattle Ranching
We have invested heavily in our cattle ranching operations and we already have two ranches covering 15,000 hectares and a current stock of circa 1,000 head of cattle.
At the 1,000ha Mavonde ranch, following the recent import of 265 pedigree Beefmaster cattle, including 11 top quality bulls from South Africa, a concentrated breeding programme has been put in place. Calves have already been born and the herd now exceeds 280 head. Cattle are all tagged and numbered and an accurate recording system for each animal has been instituted.
An area of 200ha of land has been cleared and is currently being planted with various pasture grasses. All of this land is under irrigation following the installation of a new irrigation system. Mozbife is currently looking at the feasibility of constructing a large dam with approx 8km of pushback to ensure water security for the irrigation scheme. Additionally negotiations are also underway with local authorities for the acquisition of a further large tract of neighbouring land for project expansion.
The 15,000 ha Dombe ranch is still in the initial phase of development with boundaries having been defined and cleared and cattle numbers already exceed 700. A boundary fencing scheme covering almost 50km has started and once final project approvals are obtained, the Company will begin the paddock fencing and installation of water reticulation systems.
The abattoir project remains on course with final negotiations and design criteria ongoing with the supplier in the Netherlands. It is envisaged that initially the abattoir will have a capacity of 50 head per day, expandable to 100 per day through the addition of modern modular systems. The abattoir is being designed to meet stringent Halal and export requirements from other countries in Africa and it is hoped to start construction this year once all planning is finalised and approvals obtained.
FINANCIAL RESULTS
The Company has invested heavily, primarily from internal cash flow, into its embryonic beef ranching business and establishing its second grain processing facility at Tete. The cyclical nature of the agricultural buying and processing industry, whereby the raw commodity is bought during the May to September buying season and sales are at their lowest, building to the high sales months of November to May. Therefore, the full year results, which will be announced by the end of November 2010, will provide a clearer indication of the growth and financial performance of the Company.
With all the above in mind we are reporting a pre-tax loss of $1,967,000 on turnover of $2,480,000 during the period. Cash balances at the period end remained healthy at $2.5 million (2008: $8.5 million). In addition we had circa 39,000 tonnes of maize in stock ready to be processed and sold.
OUTLOOK
I am confident that the progress that we have made with DECA, Compagri and Mozbife, has created an ideal platform for Agriterra's future growth into a major agricultural company focussed on sub-Saharan Africa. Importantly, now that Agriterra wholly owns all three subsidiaries following our acquisition of the remaining 25% interests in DECA, Compagri and Mozbife in December 2009, we will now have maximum exposure to the uplift in value which I believe will come from our continued growth of our operations.
We see significant opportunities for growth in both our maize processing operations at the Chimoio and Tete facilities. They are both state of the art facilities that are producing high quality product which is being delivered across Mozambique and to the World Food Programme.
The cattle ranching operations will also be an increasingly important facet of Agriterra's business moving forward. We are still very much in a development stage at both of our ranches and the planning of our abattoir is progressing on schedule. The Board is cognisant of the huge potential for a supplier of domestically reared beef to the Mozambican market, and we will continue to accelerate development of this element of our business in order to capitalise on this demand.
I would like to take this opportunity to thank our valued shareholders, and I look forward to reporting on the future progress that we make in achieving our objective and growing Agriterra into one of the largest African focussed agri-operators.
** ENDS **
For further information please visit www.agriterra-ltd.com or contact:
| Andrew Groves | Agriterra Ltd | Tel: +44 (0) 20 7408 9200 |
| Jonathan Wright | Seymour Pierce Ltd | Tel: +44 (0) 20 7107 8000 |
| Hugo de Salis | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
| Susie Callear | St Brides Media & Finance Ltd | Tel: +44 (0) 20 7236 1177 |
Unaudited Group Income Statement
For the six month period to 30 November 2009
|
|
| Unaudited 6 months to 30 November 2009 | Unaudited 6 months to 31 December 2008 | Unaudited 11 months to 31 May 2009 |
|
| Note | $'000 | $'000 | $'000 |
| Sales | 4 | 2,480 | - | 4,855 |
| Cost of sales |
| (1,965) | - | (3,483) |
|
|
| 515 |
| 1,372 |
| Operating expenses |
| (2,494) | (707) | (1,875) |
| Operating loss |
| (1,979) | (707) | (503) |
| Net finance income |
| 12 | 145 | 332 |
| Loss before taxation |
| (1,967) | (562) | (171) |
| Income tax |
| - | - | - |
| Loss for the period from continuing operations |
|
(1,967) |
(562) |
(171) |
| Discontinued operations : |
|
|
|
|
| Loss for the period |
| (83) | (2,886) | (3,519) |
| Loss for the period attributable to equity holders |
|
(2,050) |
(3,448) |
(3,690) |
|
|
|
|
|
|
| Loss per share: basic & diluted | 6 | (0.43 cents) | (0.98 cents) | (1.05 cents) |
|
|
|
|
|
|
Unaudited Statement of Other Comprehensive Income
For the six month period to 30 November 2009
|
|
| Unaudited 6 months to 30 November 2009 | Unaudited 6 months to 31 December 2008 | Unaudited 11 months to 31 May 2009 |
|
| Note | $'000 | $'000 | $'000 |
| Loss for the period |
| (2,050) | (3,448) | (3,690) |
| Other comprehensive income net of foreign exchange translation loss |
|
(2,988) |
(46) |
(3,999) |
| Total comprehensive loss for the period | (5,038) | (3,494) | (7,689) | |
|
|
|
|
|
|
| Comprehensive loss attributable to equity holders |
|
(5,038) |
(3,494) |
(7,689) |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Statement of Financial Position
As at 30 November 2009
|
|
| Unaudited 30 November 2009 | Unaudited 31 December 2008 | Unaudited 31 May 2009 |
|
| Note | $'000 | $'000 | $'000 |
| Non current assets |
|
|
|
|
| Property, plant and equipment |
| 11,507 | - | 13,397 |
| Biological assets |
| 264 | - | 207 |
| Total non current assets |
| 11,771 | - | 13,604 |
|
|
|
|
|
|
| Current assets |
|
|
|
|
| Inventories |
| 8,656 | - | 2,376 |
| Trade and other receivables |
| 1,874 | 393 | 1,492 |
| Cash and cash equivalents |
| 2,539 | 7,145 | 8,517 |
| Total current assets |
| 13,069 | 7,538 | 12,385 |
|
|
|
|
|
|
| Total assets |
| 24,840 | 7,538 | 25,989 |
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables |
| (2,685) | (1,623) | (3,009) |
|
|
|
|
|
|
| Net assets |
| 22,155 | 5,915 | 22,980 |
|
|
|
|
|
|
| Equity |
|
|
|
|
| Issued capital | 7 | 1,145 | 641 | 1,039 |
| Share premium |
| 124,259 | 101,584 | 119,349 |
| Share based payment reserve |
| 1,281 | 1,231 | 1,281 |
| Translation reserve |
| (2,967) | (46) | 824 |
| Retained earnings |
| (101,563) | (97,495) | (99,513) |
| Total equity attributable to equity holders of the parent |
|
22,155 |
5,915 |
22,980 |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Statement of Cash Flows
For the six months to 30 November 2009
|
|
| Unaudited 6 months to 30 November 2009 | Unaudited 6 months to 31 December 2008 | Unaudited 11 months to 31 May 2009 |
|
| Note | $'000 | $'000 | $'000 |
| Operating activities |
|
|
|
|
| Loss before tax |
| (2,050) | (814) | (171) |
| Adjustments for: |
|
|
|
|
| Depreciation |
| 291 | - | 164 |
| Movements in exchange rates |
| (834) | - | - |
| Sharebased payment |
| - | - | 50 |
| Net interest income |
| (12) | - | (332) |
| Operating cash flow before movements in working capital |
| (2,605) | (814) | (289) |
| Working capital adjustments: |
|
|
|
|
| - Increase in inventory |
| (6,937) | - | (1,153) |
| - Increase in receivables |
| (393) | (6) | (137) |
| -(Decrease) / increase in payables |
| 67 | 58 | 1,516 |
| Cash used in operations |
| (9,868) | (762) | (63) |
| Finance charges |
|
|
|
|
| Interest received |
| 12 | 145 | 332 |
| Net cash (outflow) / inflow from continuing operating activities |
| (9,856) | (617) | 269 |
| Net cash inflow / (outflow) from discontinued operating activities |
| (425) | 209 | (1,255) |
| Net Cash outflow from operating activities | (10,281) | (408) | (986) | |
| Investing activities |
|
|
|
|
| Purchase of property, plant and equipment | (532) | - | (4,692) | |
| Purchase of biological assets |
| (57) | - | (169) |
| Purchase of subsidiaries net of cash acquired | - | - | 2,162 | |
| Net cash used in continuing investing activities |
| (589) | - | (2,699) |
| Net cash used in discontinued investing activities |
| - | (2,329) | (1,918) |
| Net cash used in investing activities | (589) | (2,329) | (4,617) | |
| Financing activities |
|
|
|
|
| Proceeds from issue of share capital | 5,016 | - | 3,718 | |
| Loan from related party |
| - | - | 127 |
| Net cash flow from financing activities | 5,016 | - | 3,845 | |
| Net decrease in cash and cash equivalents | (5,854) | (2,737) | (1,758) | |
| Cash and cash equivalents at start of the year | 8,517 | 13,047 | 13,047 | |
| Effect of FX rates |
| (124) | (3,165) | (2,772) |
| Cash and cash equivalents at end of the year |
| 2,539 | 7,145 | 8,517 |
Notes to the Unaudited Interim Group Financial Statements
| 1. | General information |
Agriterra Limited ('Agriterra or 'the Company') and its subsidiaries (together the 'Group') is focussed on the Agricultural sector in Africa. Agriterra is a public limited company incorporated and domiciled in the Guernsey. The address of its registered office is 22 Smith Street, St. Peter Port, Guernsey GY1 4LX.
The Company is listed on the AIM Market of London Stock Exchange plc.
The Unaudited Interim Group Financial Statements for the six months ended 30 November 2009 were approved for issue by the board on 25 February 2010.
The figures for the six months ended 30 November 2009 and the six months ended 31 December 2008 are unaudited and do not constitute full accounts. The comparative figures for the 11 month period ended 31 May 2009 are extracts from the annual report and do not constitute statutory accounts.
| 2. | Basis of preparation |
The basis of preparation and accounting policies set out in the Annual Report and Accounts for the period ended 31 May 2009 have been applied in the preparation of these interim condensed consolidated financial statements, with the exceptions disclosed in note 3. These are in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and with those of the Standing Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the International Accounting Standards Board (IASB). References to 'IFRS' hereafter should be construed as references to IFRSs as adopted by the EU
| 3. | Accounting policies |
The accounting policies and methods of calculation adopted are consistent with those of the financial statements for the period ended 31 May 2009, as described in those annual financial statements, except as discussed below.
The Group has applied IAS 1 Revised "Presentation of Financial Statements" and IFRS 8 "Operating Segments" as of 1 January 2009. In accordance with IAS 1 the financial statements have been re-titled and a consolidated statement of other comprehensive income produced. IFRS 8 states that segment information should be based on management's internal reporting structure and accounting principles.
As disclosed in the financial statements for the period ended 31 May 2009, the Group's segment information has already been based on the management reporting structure and therefore the operating segments are the same as previously reported.
See the Report and Accounts for the period ended 31 May 2009 for disclosures of new standards, amendments and interpretations which have been adopted, none of which have had a significant effect on the reported results or financial position of the Group for the period ended 30 November 2009.
| 4. | Segment information |
The directors consider that the Group's activities comprise one business segment, agriculture and other unallocated expenditure in one geographical segment, Africa.
|
| Continuing activities | ||
| 6 months ending 30 November 2009 | Agriculture | Other | Total |
|
| $'000 | $'000 | $'000 |
| Revenue | 2,480 | - | 2,480 |
| Operating loss | (978) | (1,001) | (1,979) |
| Interest (expense) / income | (336) | 348 | 12 |
| Loss before tax | (1,314) | (653) | (1,967) |
| Income tax |
|
| - |
| Loss for the period from continuing activities |
|
| (1,967) |
|
|
|
|
|
|
| Continuing activities | ||
| Period ending 31 May 2009 | Agriculture | Other | Total |
|
| $'000 | $'000 | $'000 |
| Revenue | 4,855 | - | 4,855 |
| Operating profit / (loss) | 200 | (703) | (503) |
| Interest (expense) / income | (67) | 399 | 332 |
| Profit /(loss) before tax | 133 | (304) | (171) |
| Income tax |
|
| - |
| Loss for the period from continuing activities |
|
| (171) |
|
|
|
|
|
For the six months ended 31 December 2008, the directors considered that the Group's activities were all involved in oil and gas interests in Africa
| 5. | Discontinued operations |
In December 2008 the company announced that it proposed to adopt a new investment strategy operating in the Agricultural sector. Consequently the oil and gas activities have been reclassified as a discontinued operation.
The results for the discontinued oil and gas operations are as follows:
|
| Period ending | ||
|
| 30 November 2009 | 31 December 2008 | 31 May 2009 |
|
| $'000 | $'000 | $'000 |
| Operating loss | (83) | (774) | (685) |
| Finance income | - | 1 | 1 |
| Impairment of oil and gas interests | - | (2,113) | (2,835) |
| Loss before taxation | (83) | (2,886) | (3,519) |
| Income tax | - | - | - |
| Loss after taxation | (83) | (2,886) | (3,519) |
|
|
|
|
|
| 6. | Loss per share |
The calculation of basic and diluted loss per share is based on the following data:
|
|
| Unaudited 6 months to 30 November 2009 | Unaudited 6 months to 31 December 2008 | Unaudited 11 months to 31 May 2009 | |
|
|
| $'000 | $'000 | $'000 | |
| Loss for the purpose of calculating basic loss per share (loss attributable to equity holders) |
(2,050) |
(3,448) |
(3,690) | ||
| Loss for the purpose of calculating basic loss per share from continuing activities |
(1,967) |
(562) |
(171) | ||
| Number of shares |
|
|
|
| |
| Weighted average number of ordinary shares for the purposes of calculating basic and diluted lo0ss per share |
479,077,718 |
350,132,688 |
352,921,478 | ||
|
|
|
|
| ||
| Basic and diluted loss per share (cents) | (0.43) | (0.98) | (1.05) | ||
| Loss per share from continuing activities (cents) | (0.41) | (0.16) | (0.04) | ||
Due to the loss incurred in the period, there is no dilutive effect of share options.
| 7. | Share capital |
|
|
| Ordinary shares of 0.1p each | ||
|
|
| Authorised | Allotted and fully paid | |
|
|
| Number | Number | $'000 |
| At 1 July 2008 |
| 1,000,000,000 | 350,132,688 | 641 |
| Division of share capital |
| (155,000,000) | (155,000,000) | (238) |
| At 31 December 2008 |
| 845,000,000 | 195,132,688 | 403 |
| Issue of share |
| - | 278,688,866 | 398 |
| At 31 May 2009 |
| 845,000,000 | 473,821,554 | 801 |
| Issue of shares |
| - | 318,821,554 | 106 |
| At 30 November 2009 |
| 845,000,000 | 792,643,108 | 907 |
|
|
|
|
|
|
|
|
| Deferred shares of 0.1p each | ||
|
|
| Authorised | Allotted and fully paid | |
|
|
| Number | Number | $'000 |
| At 1 July 2008 |
| - | - | - |
| Division of share capital |
| 155,000,000 | 155,000,000 | 238 |
| At period ends |
| 155,000,000 | 155,000,000 | 238 |
|
|
|
|
|
|
| Total share capital |
|
|
|
|
| At 31 December 2008 |
| 1,000,000,000 | 350,132,688 | 641 |
| At 31 May 2009 |
| 1,000,000,000 | 628,821,554 | 1,039 |
| At 30 November 2009 |
| 1,000,000,000 | 947,643,108 | 1,145 |
| 8. | Post balance sheet events |
On 23 December the Company announced that it had agreed to acquire the remaining 25% of the issued share capital of Desenvolvimento E Comercializacao Agricola Limitada ('DECA'), Compagri Limitada ('Compagri') and Mozbife Limitada ('Mozsbife') from Goodworth Services Limited.
Under the terms of the acquisition, 10,000,000 new Ordinary shares were issued to Goodworth at 6p per share.