Last checked at 26 Mar 2009 07:00
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Food Producer
26 March 2009
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 31 December 2008.
Overview
Changed focus to agricultural investment and development in southern Africa and Company renamed 'Agriterra Limited'
Acquired agricultural trading and processing companies DECA and Compagri, and prospective cattle ranching and feedlot production entity Mozbife, all located in Mozambique
DECA is a cash generative operation and is being replicated at Compagri and Maputo
Medium term aim to achieve processing and sales of over 100,000 tonnes per annum by 2011
Company remains supportive and in contact with the Government of Southern Sudan with regards to oil and gas assets, in particular Block Ba
Results reflect impairment of oil and gas assets on change of strategy
Chairman's Statement
Since my last report much has happened in the development of your Company. Following a strategic review, prompted by both political and economic considerations beyond the control of the Board, the Company has changed its focus away from the oil and gas sector to agricultural investment and development in Africa. This area, identified by the Board as having potential for rapid growth with the capability of generating significant returns on investment despite the current economic downturn, is anticipated to provide better near term returns for our shareholders.
In accordance with this strategy shift and highlighted in the final results announced in December 2008, we proposed to shareholders the acquisition of agricultural trading and processing companies Desenvolvimento E Comercialização Agricola Limitada ('DECA') and Compagri Limitada ('Compagri') and prospective cattle ranching and feedlot production entity Mozbife Limitada ('Mozbife'), all located in Mozambique. Following shareholder approval, these acquisitions were completed on 5 February.
DECA is a well established, cash generative business and represents an ideal model for replication in other areas. DECA was founded as a grain buying business based in Chimoio in the Manica Province of Mozambique in 2005. Since inception, DECA's operations have grown significantly with its headquarters currently being housed on a 20 hectare site and consisting of seventeen 1,000 tonne silos, seven warehouses each with capacity for 3,500 tonnes of maize, as well as two milling plants, one workshop and a fleet of over 80 vehicles. DECA has a strong brand and a loyal customer base which currently provides a market outlet for some 350,000 farmers. Its operations focus on the treatment and processing of grain purchased from local farmers, through its specialised buying system, delivering cash directly to the smallholder farmers and thereby stimulating economic growth in rural areas. The grain currently processed by DECA currently sustains thousands of people in the local province and the UN World Food Programme is one its largest customers. DECA's operations are intended to be mirrored at Compagri, based in the Tete area of Mozambique, which is currently being developed with infrastructure, machinery and logistics similar to those of DECA to the south. Once brought on line in 2009 Compagri will significantly increase group revenues and further strengthen our balance sheet. An additional site at Maputo, which is specifically a processing operation with an intended capacity of 50,000 tonnes, has also been initiated. The medium term aim for the Company is to achieve processing and sales of over 100,000 tonnes per annum by 2011 and also to explore opportunities in rice, cocoa and sorghum in countries including Mali, Tanzania and Sudan.
In addition to the grain businesses of DECA and Compagri, the board identified cattle ranching and feedlot production as a complementary business as there is a large and growing demand for beef in Mozambique. Mozbife was acquired to capitalise on this demand as it currently owns and operates one farm near Chimoio, close to DECA's operations. In addition to Mozbife's revenues from the sale of beef to the domestic market, the business also dovetails with the Company's other operations as the herd can be fed, at least in part, with the chop/bran produced as a by-product from the maize meal processing at DECA and Compagri.
Oil & Gas Exploration
The change in strategy that the Company implemented during the period, shifting focus from oil and gas exploration in Southern Sudan to agriculture in Mozambique, was due to certain situations beyond the control of the Board. The volatile political situation in Southern Sudan and the current global economic downturn and fluctuating oil price, have all contributed to undermine the perceived value of the Company's oil and gas portfolio. For this reason, the Board saw that shifting the Company's focus to the rapidly growing agriculture sector was in the best interest of shareholders, as the factors affecting the Company's early stage oil and gas exploration assets may not reach amelioration in the foreseeable future.
As previously reported, our oil and gas exploration operations at Block Ba in Southern Sudan were suspended pending clarification of title. The Company was assured by the Government of Southern Sudan ('GOSS') and its representatives that the original agreement signed for the development of Block Ba was valid. The Company was informed that if the Company was not going to be the sole developer of Block Ba, it would be included in a consortium and would subsequently receive a 22.5% interest in the group from the exploration and development of the enlarged Block B, which would include Block Ba as well as Blocks Bb and Bc. Despite these assurances, the confirmation of the consortium and the Company's participation therein remains outstanding. The Company has also retained its interests in Ethiopia through the Production Sharing Agreement with the Government of Ethiopia for a 29,000 sq km block in the Southern Rift Basin in south-western Ethiopia.
Whilst the climate for early stage oil and gas exploration remains inclement, the Board intends to utilise its cash balances to generate shareholder value without jeopardising any potential future value from its oil interests, by focussing on the buoyant agriculture sector in central and southern Africa.
Financial Results
For the period under review, the Company is reporting a pre-tax loss of £2.13 million which included the impairment of £1.36 million for the Company's oil and gas assets (2007: loss of £0.79 million). Cash balances at the period end were £4.9 million (2007: £6.5 million).
Outlook
Our focus is on capturing a larger share of the agricultural value chain in Africa, with a long term objective of becoming one of the largest agricultural operations in southern and central Africa. On an operational level, Agriterra will continue to strive to enhance the livelihoods of smallholder farmers by improving access to markets and ensuring sustainability. For our shareholders, the agricultural and associated engineering operations sector in Africa remains a significant investment opportunity, and we believe that DECA, Compagri and Mozbife are ideally positioned to capitalise on increased demand for maize and beef. We have an established cash generative business in DECA, which we intend to develop and replicate to other sites. Of upmost importance to the Company's future growth potential is the loyal customer base and support that we have secured through DECA; the UN World Food Programme remains one of our biggest customers, and we continue to receive strong support from the Mozambican Government.
With the clear understanding of the agriculture market that we have gained through the acquisition of DECA, I am confident that Agriterra will continue to grow its operations through Compagri and Mozbife, further strengthening our balance sheet and unlocking value for shareholders.
Phil Edmonds
Chairman
26 March 2009
** ENDS **
For further information please visit www.agriterra-ltd.com or contact:
| Andrew Groves | Agriterra Ltd | Tel: +44 (0) 845 108 6060 |
| Jeremy Gray | Agriterra Ltd | Tel: +44 (0) 20 3205 1469 |
| 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 Income Statement
For the six months ended 31 December 2008
| Six months ended 31.12.08 | Six months ended 31.12.07 | |||
| £'000 | £'000 | |||
| Revenue | - | - | ||
| Operating expenses | (1,099) | (1,144) | ||
| Other operating income | 251 | - | ||
| Operating loss | (848) | (1,144) | ||
| Finance income | 78 | 346 | ||
| Finance expenses | - | (1) | ||
| Net financing income | 78 | 345 | ||
| Impairment of intangible & tangible assets | (1,361) | - | ||
| Loss before taxation | (2,131) | (799) | ||
| Income tax expense | - | - | ||
| Loss for the period | (2,131) | (799) | ||
| ` | ||||
| Loss per share | ||||
| - Basic and diluted (pence) | (0.609) | (0.230) |
Unaudited Statement of Recognised Income and Expense
For the six months ended 31 December 2008
| Six months ended 31.12.08 | Six months ended 31.12.07 | |||
| £'000 | £'000 | |||
| Foreign exchange translation differences | (25) | - | ||
| Net income recognised directly in equity | (25) | - | ||
| Loss for the period | (2,131) | (799) | ||
| Total recognised income and expense for the period | (2,156) | (799) | ||
Unaudited Balance Sheet
As at 31 December 2008
| 31.12.08 | 30.06.08 | |||
| £'000 | £'000 | |||
|
| ||||
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | - | - | ||
| Exploration and evaluation costs | - | - | ||
| Total non-current assets | - | - | ||
| Current assets | ||||
| Trade and other receivables | 272 | 44 | ||
| Cash and cash equivalents | 4,937 | 6,539 | ||
| Total current assets | 5,209 | 6,583 | ||
| TOTAL ASSETS | 5,209 | 6,583 | ||
| LIABILITIES | ||||
| Current liabilities | ||||
| Trade and other payables | (1,122) | (340) | ||
| Total current liabilities | (1,122) | (340) | ||
| NET ASSETS | 4,087 | 6,243 | ||
| EQUITY | ||||
| Issued capital | 350 | 350 | ||
| Share premium | 53,219 | 53,219 | ||
| Share based payment reserve | 660 | 660 | ||
| Translation reserve | (32) | (7) | ||
| Accumulated losses | (50,110) | (47,979) | ||
| TOTAL EQUITY | 4,087 | 6,243 |
Unaudited Cash Flow Statement
For the six months ended 31 December 2008
| Six months ended 31.12.08 | Six months ended 31.12.07 | ||||
| £'000 | £'000 | ||||
| OPERATING ACTIVITIES | |||||
| Loss before tax | (2,131) | (799) | |||
| Adjustments for: | |||||
| - Impairment of Oil & Gas Interests | 1,361 | - | |||
| - Depreciation of property, plant and equipment | 6 | 182 | |||
| - Loss on foreign exchange | (25) | - | |||
| - Net financing income | (78) | (345) | |||
| Operating cash flow before movements in working capital | (867) | (962) | |||
| Working capital adjustments: | |||||
| - (Increase)/decrease in receivables | (228) | 2,022 | |||
| - Increase/(decrease) in payables | 782 | (1,488) | |||
| Cash used in operations | (313) | (428) | |||
| Interest paid | - | (1) | |||
| Interest received | 78 | 346 | |||
| Net cash used in operating activities | (235) | (83) | |||
| INVESTING ACTIVITIES | |||||
| Purchase of intangible assets | (792) | (5,311) | |||
| Purchase of property, plant and equipment | (280) | (80) | |||
| Net cash used in investing activities | (1,341) | (5,391) | |||
| FINANCING ACTIVITIES | |||||
| Proceeds from issue of share capital | - | (180) | |||
| Net cash flow used in financing activities | - | (180) | |||
| Net decrease in cash and cash equivalents | (1,576) | (5,654) | |||
| Cash and cash equivalents at start of the period | 6,539 | 16,729 | |||
| Exchange rate adjustments | (26) | - | |||
| Cash and cash equivalents at end of the period | 4,937 | 11,075 |
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
1. General information
Agriterra Limited (formerly known as 'White Nile Limited') and its subsidiaries (together the 'Group') is a limited company incorporated in Guernsey. The Company is listed on the Alternative Investment Market ('AIM') of the London Stock Exchange. The Company is involved in agricultural and associated civil engineering industries in Africa.
The address of its registered office is Elizabeth House, Les Ruettes Brayes, St Peter Port, Guernsey GY1 4LX.
This condensed consolidated financial information for the separate interim period ended 31 December 2008 was approved for issue on 25 March 2009.
These interim financial statements do not constitute statutory accounts of the Group for the purposes of The Companies (Guernsey) Law, 2008. They should be read in conjunction with the Group's annual financial statements for the year ended 30 June 2008, which were prepared under IFRS and upon which an unqualified auditors' report was given.
2. Basis of preparation
The consolidated financial results of the Group for the six months ended 31 December 2008 have been prepared in accordance with IFRS as adopted by the European Union, IFRIC interpretations and The Companies (Guernsey) Law, 2008, with the exception of IAS 34 'Interim financial reporting' which AIM quoted companies need not comply with.
The consolidated financial statements have been prepared under the historical cost convention.
3. Post balance sheet events
Change of company name and investing strategy
In December 2008, the Company announced a change in strategy of moving away from concentrating on oil and gas exploration. The Company obtained shareholder approval at the Extraordinary General Meeting held on 6 January 2009, for the name change to Agriterra Limited and the adoption of a new investing strategy to focus on agricultural and associated civil engineering industries in Africa. In view of the changes in strategy the oil and gas assets as at 31 December 2008 in this interim statement have been impaired similar to the Group financial statements for the year ended 30 June 2008 and approved for issue on 19 December 2008.
Existing share certificates in the name of White Nile Limited will remain valid, and any new share certificates issued by the Company will be issued in the name of Agriterra Limited. The Company's name change took effect on the London Stock Exchange on 8 January 2009.
Completion of the acquisition of DECA, Compagri and Mozbife
On February 5 2009, the Company completed the acquisition by its wholly owned subsidiary, Agriterra (Mozambique) Limited, of a 75% shareholding of the issued share capital of each of Desenvolvimento E Comercialização Agricola Limitada ('DECA'), Compagri Limitada ('Compagri') and Mozbife Limitada ('Mozbife') and for the novation of certain loans from Central African Mining & Exploration Company Plc. The aggregate consideration was US$17 million, which was satisfied by the issue of 200,000,000 Ordinary Shares and the payment of US$2 million in cash to the vendor.
Placing of new ordinary shares
On February 5 2009, and as announced on 30 January 2009 the Company completed a placing of 78,688,866 new Ordinary Shares at a price of 3 pence per new Ordinary Share ('Placing Shares'), raising £2,360,666 before expenses. The Placing Shares began trading on AIM on this same day.
Holdings in the Company
On 20 March 2009, the Company announced that OppenheimerFunds, Inc. purchased 40,000,000 ordinary shares in the Company from Central African Mining & Exploration Company Plc ('CAMEC') on 16 March 2009. Following this purchase OppenheimerFunds, Inc. has an interest of 40,000,000 ordinary shares representing approximately 8.44% of the Company's total voting right. CAMEC now holds 166,700,000 ordinary shares in the Company representing approximately 35.18% of the total voting rights.