DECA

Final Results

RNS Number : 3740G
Agriterra Ltd
20 November 2015
 

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.

 

PH Edmonds

Chairman

19 November 2015

 

 

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

 

Andrew Groves

Agriterra Ltd

Tel: +44 (0) 20 7408 9200

David Foreman

Cantor Fitzgerald Europe

Tel: +44 (0) 20 7894 7000

Michael Reynolds

Cantor Fitzgerald Europe

Tel: +44 (0) 20 7894 7000

John Beaumont

Peat & Co.

Tel: +44 (0) 20 3540 1723

Charlotte Heap

St Brides Partners Ltd

Tel: +44 (0) 20 7236 1177

Hugo de Salis

St Brides Partners Ltd

Tel: +44 (0) 20 7236 1177

 

 

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

 

 

 

2015

 

2014

 

Note

 

US$000

 

US$000

CONTINUING OPERATIONS

 

 

 

 

 

Revenue

6

 

11,787

 

13,797

Cost of sales

 

 

(10,662)

 

(12,475)

Gross profit

 

 

1,125

 

1,322

Increase in value of biological assets

23

 

1,910

 

290

Operating expenses

 

 

(10,643)

 

(8,338)

Impairment of current and non-current assets

12.1

 

(6,791)

 

-

Other income

 

 

  33

 

77

Profit on disposal of property, plant and equipment

 

 

76

 

149

Operating loss

8

 

(14,290)

 

(6,500)

 

 

 

 

 

 

Investment revenues

13

 

19

 

146

Other gains and losses

14

 

(849)

 

936

Finance costs

15

 

(683)

 

(209)

 

 

 

 

 

 

Loss before taxation

 

 

(15,803)

 

(5,627)

 

 

 

 

 

 

Taxation

16

 

(81)

 

(25)

Loss for the year from continuing operations

 

 

(15,884)

 

(5,652)

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

Profit / (loss) for the year from discontinued operations

17

 

2,497

 

(2,364)

 

 

 

 

 

 

Loss for the year attributable to owners of the Company

 

 

(13,387)

 

(8,016)

 

 

 

 

 

 

 

 

 

US cents

 

US cents

LOSS PER SHARE

 

 

 

 

 

Basic and diluted loss per share from continuing operations

18

 

(1.50)

 

(0.53)

Basic and diluted loss per share from continuing and discontinued operations

18

 

(1.26)

 

(0.76)

 

 

Consolidated statement of comprehensive income

For the year ended 31 May 2015

 

 

 

2015

 

2014

 

 

 

US$000

 

US$000

 

 

 

 

 

 

Loss for the year

 

 

(13,387)

 

(8,016)

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

Foreign exchange translation differences

 

 

(4,435)

 

(1,612)

Other comprehensive income for the year

 

 

(4,435)

 

(1,612)

Total comprehensive income for the year attributable to owners of the Company

 

 

(17,822)

 

(9,628)

 

 

 

Consolidated statement of financial position

As at 31 May 2015

 

 

 

 

2015

 

2014

 

Note

 

US$000

 

US$000

Non-current assets

 

 

 

 

 

Goodwill

19

 

-

 

576

Property, plant and equipment

20

 

19,746

 

36,268

Interests in associates

21

 

4

 

4

Investments in quoted companies

22

 

376

 

1,225

Biological assets

23

 

2,246

 

3,071

 

 

 

22,372

 

41,144

Current assets

 

 

 

 

 

Biological assets

23

 

1,019

 

1,201

Inventories

24

 

2,892

 

4,900

Trade and other receivables

25

 

1,594

 

1,148

Cash and cash equivalents

26

 

6,421

 

6,994

 

 

 

11,926

 

14,243

Total assets

 

 

34,298

 

55,387

Current liabilities

 

 

 

 

 

Borrowings

27

 

3,079

 

2,668

Trade and other payables

28

 

1,377

 

2,170

 

 

 

4,456

 

4,838

Net current assets

 

 

7,470

 

9,405

Net assets

 

 

29,842

 

50,549

 

 

 

 

 

 

Share capital

30

 

1,960

 

1,960

Share premium

 

 

148,622

 

148,622

Shares to be issued

31.1

 

-

 

2,940

Share based payment reserve

 

 

1,914

 

1,859

Translation reserve

31.2

 

(8,243)

 

(3,808)

Accumulated losses

 

 

(114,411)

 

(101,024)

Equity attributable to equity holders of the parent

 

 

29,842

 

50,549

 

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:

 

 

PH Edmonds

Chairman

19 November 2015

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY    

For the year ended 31 May 2015

 

 

 

 

 

 

Share

capital

 

Share premium

 

Shares to be issued

 

Share based payment reserve

 

Translation reserve

 

Accumulated
losses

 

 

Total

equity

 

Note

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 June 2013

 

 

1,960

 

148,622

 

2,940

 

1,710

 

(2,196)

 

(93,008)

 

 

60,028

Loss for the year

 

 

-

 

-

 

-

 

-

 

-

 

(8,016)

 

 

(8,016)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange translation loss on foreign operations

 

 

-

 

-

 

-

 

-

 

(1,612)

 

-

 

 

(1,612)

Total comprehensive income for the year

 

 

-

 

-

 

-

 

-

 

(1,612)

 

(8,016)

 

 

(9,628)

Share-based payments

32

 

-

 

-

 

-

 

149

 

-

 

-

 

 

149

Balance at 31 May 2014

 

 

1,960

 

148,622

 

2,940

 

1,859

 

(3,808)

 

(101,024)

 

 

50,549

Loss for the year

 

 

-

 

-

 

-

 

-

 

-

 

(13,387)

 

 

(13,387)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange translation loss on foreign operations

 

 

-

 

-

 

-

 

-

 

(4,435)

 

-

 

 

(4,435)

Total comprehensive income for the year

 

 

-

 

-

 

-

 

-

 

(4,435)

 

(13,387)

 

 

(17,822)

Share-based payments

32

 

-

 

-

 

-

 

55

 

-

 

-

 

 

55

Released to profit and loss

12.2

 

-

 

-

 

(2,940)

 

-

 

-

 

-

 

 

(2,940)

Balance at 31 May 2015

 

 

1,960

 

148,622

 

-

 

1,914

 

(8,243)

 

(114,411)

 

 

29,842

 

Consolidated cash flow statement

For the year ended 31 May 2015

 

 

 

 

 

 

 

 

 

2015

 

2014

 

 

 

 

 

(re-presented - note 4)

 

Note

 

US$000

 

US$000

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Loss before tax from continuing operations

 

 

(15,803)

 

(5,627)

Adjustments for:

 

 

 

 

 

Depreciation

20

 

2,211

 

1,766

Profit on disposal of property, plant and equipment

 

 

(76)

 

(149)

Share based payment expense

 

 

55

 

149

Foreign exchange loss / (gain)

 

 

177

 

(52)

Increase in value of biological assets

23

 

(1,910)

 

(290)

Finance costs

15

 

683

 

209

Investment revenues

13

 

(19)

 

(146)

Decrease / (increase) in fair value of quoted investments

22

 

849

 

(936)

Impairment of current and non-current assets

12.1

 

6,791

 

-

Operating cash flows before movements in working capital

 

 

(7,042)

 

(5,076)

Decrease in inventories

 

 

1,158

 

197

(Increase) / decrease in trade and other receivables

 

 

(848)

 

971

Decrease in trade and other payables

 

 

(719)

 

(173)

Net decrease / (increase) in biological assets held for slaughter purposes

23

 

2,281

 

(219)

Cash used in operating activities by continuing operations

 

 

(5,170)

 

(4,300)

Corporation tax paid

 

 

(9)

 

(25)

Finance costs

 

 

(683)

 

(209)

Interest received

 

 

19

 

146

Net cash used in operating activities by continuing operations

 

 

(5,843)

 

(4,388)

Net cash provided by / (used in) operating activities by discontinued operations

 

 

5,627

 

(879)

Net cash used in operating activities

 

 

(216)

 

(5,267)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Proceeds from disposal of property, plant and equipment

 

 

291

 

202

Acquisition of property, plant and equipment

20

 

(1,555)

 

(5,935)

Purchase of investment in quoted companies

22

 

-

 

(285)

Net cash used in investing activities by continuing operations

 

 

(1,264)

 

(6,018)

Net cash from investing activities by discontinued operations

 

 

-

 

-

Net cash used in investing activities

 

 

(1,264)

 

(6,018)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Net draw down of overdraft

 

 

1,376

 

1,129

Repayment of loans

27

 

(200)

 

(1,500)

Net cash from / (used in) financing activities from continuing operations

 

 

1,176

 

(371)

Net cash used in financing activities by discontinued operations

 

 

-

 

-

Net cash  from / (used in) financing activities

 

 

1,176

 

(371)

Net decrease in cash and cash equivalents

 

 

(304)

 

(11,656)

Effect of exchange rates on cash and cash equivalents

 

 

(269)

 

(98)

Cash and cash equivalents at beginning of the year

 

 

6,994

 

18,748

Cash and cash equivalents at end of the year

 

 

6,421

 

6,994

 

 

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.

 

IFRS 10

Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014)

IFRS 11

Joint Arrangements (effective for annual periods beginning on or after 1 January 2014)

IFRS 12

Disclosure of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014)

IAS 27

Separate Financial Statements (as amended 2011) (effective for annual periods beginning on or after 1 January 2014)

IAS 28

Investments in Associates and Joint Ventures (as amended 2011) (effective for annual periods beginning on or after 1 January 2014)

IAS 32

Financial Instruments: Presentation - Amendment; Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014)

IFRIC 21

Levies (effective for annual periods beginning on or after 1 January 2014)

 

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):

 

 

 

IFRS 9

Financial Instruments: Classification (effective for annual periods beginning on or after 1 January 2018)

IFRS 14

Regulatory deferral accounts (effective for annual periods beginning on or after 1 January 2016)

IFRS 15

Revenue from contracts with customers (effective for annual periods beginning on or after 1 January 2017)

IAS 16

Amendments bringing bearer plants into the scope of IAS 16 (effective for annual periods beginning on or after 1 January 2016)

IAS 41

Amendments bringing bearer plants into the scope of IAS 16 (effective for annual periods beginning on or after 1 January 2016)

 

September 2014 Annual Improvements to IFRSs

Effective for annual periods beginning on or after 1 January 2016

     

 

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:

 

 

Average Rate

 

Closing Rate

 

2015

2014

 

2015

2014

 

 

 

 

 

 

Mozambican Meticais: US$

32.45

30.23

 

36.90

31.00

Sierra Leone Leones: US$

4,301

4,284

 

4,295

4,290

 

 

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:

 

Land and buildings:

 

 

Land

Nil

 

Buildings and leasehold improvements

2%

-   33%

Plant and machinery

7%

-   25%

Motor vehicles

20%

-   25%

Aviation

20%

 

Other assets

10%

-   33%

Assets under construction

Nil

 

 

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:

 

 

2015

 

2014

 

 

US$000

 

US$000

Continuing operations

 

 

 

 

Sale of goods

 

10,839

 

13,797

Hire of equipment and machinery

 

948

 

-

 

 

11,787

 

13,797

Investment revenues (note 13)

 

19

 

146

 

 

11,806

 

13,943

Discontinued operations

 

 

 

 

Sales of goods (note 17.2)

 

-

 

1,907

 

 

11,806

 

15,850

 

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:

 

Year ending 31 May 2015

Grain

 

Beef

 

Cocoa(3)

 

Unallo-cated

 

Discon-

Tinued(4)

 

Elimina-tions

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales(2)

5,517

 

5,366

 

904

 

-

 

-

 

-

 

11,787

Inter-segment sales(1)

524

 

-

 

-

 

-

 

-

 

(524)

 

-

 

6,041

 

5,366

 

904

 

-

 

-

 

(524)

 

11,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment results

 

 

 

 

 

 

 

 

 

 

 

 

 

- Operating loss

(2,128)

 

(2,317)

 

(7,853)

 

(2,166)

 

174

 

-

 

(14,290)

- Interest (expense) / income

(680)

 

2

 

-

 

14

 

-

 

-

 

(664)

- Other gains and losses

-

 

-

 

-

 

(849)

 

-

 

-

 

(849)

Loss before tax

(2,808)

 

(2,315)

 

(7,853)

 

(3,001)

 

174

 

-

 

(15,803)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

(78)

 

(3)

 

-

 

-

 

-

 

-

 

(81)

Loss for the period from continuing operations

(2,886)

 

(2,318)

 

(7,853)

 

(3,001)

 

174

 

-

 

(15,884)

 

 

Year ending 31 May 2014

Grain

 

Beef

 

Cocoa

 

Unallo-cated

 

Discon-tinued(4)

 

Elimina-tions

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales(2)

9,716

 

4,081

 

1,907

 

-

 

(1,907)

 

-

 

13,797

Inter-segment sales(1)

412

 

-

 

-

 

-

 

-

 

(412)

 

-

 

10,128

 

4,081

 

1,907

 

-

 

(1,907)

 

(412)

 

13,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment results

 

 

 

 

 

 

 

 

 

 

 

 

 

- Operating loss

(421)

 

(3,436)

 

(1,028)

 

(2,456)

 

841

 

-

 

(6,500)

- Interest (expense) / income

(193)

 

2

 

(1)

 

128

 

1

 

-

 

(63)

- Other gains and losses

-

 

-

 

-

 

936

 

-

 

-

 

936

Loss before tax

(614)

 

(3,434)

 

(1,029)

 

(1,392)

 

842

 

-

 

(5,627)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

(16)

 

(9)

 

-

 

-

 

-

 

-

 

(25)

Loss for the period from continuing operations

(630)

 

(3,443)

 

(1,029)

 

(1,392)

 

842

 

-

 

(5,652)

 

(1)

Inter-segment sales are charged at prevailing market prices.

(2)

Revenue represents sales to external customers and is recorded in the country of domicile of the group company making the sale. Sales from the Grain and Beef divisions are principally for supply to the Mozambican market. Sales from the Cocoa division are supplied within Sierra Leone during the year (2014: supplied to the world market).

(3)

Revenue reported in the Cocoa segment for the 12 months ended 31 May 2015 arises on the rental of certain of the Cocoa division's assets in aid of the relief effort against the Ebola crisis in Sierra Leone.

(4)

Amounts reclassified to discontinued operations in both periods presented relate to the Cocoa segment - refer to note 17.2.

 

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

 

                                                                                                               

Year ending 31 May 2015

Grain

 

Beef

 

Cocoa

 

Unallo-cated

 

Discon-tinued(1)

 

Elimina-tions

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

386

 

1,122

 

628

 

136

 

(61)

 

-

 

2,211

Impairment of assets (note 12.1)

-

 

-

 

6,791

 

-

 

-

 

-

 

6,791

                                                                                                               

Year ending 31 May 2014

Grain

 

Beef

 

Cocoa

 

Unallo-cated

 

Discon-tinued(1)

 

Elimina-tions

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

504

 

1,124

 

133

 

138

 

(133)

 

-

 

1,766

 

 

(1)

Amounts reclassified to discontinued operations in both periods presented relate to the Cocoa segment - refer to note 17.2.

 

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:

 

 

Grain

 

Beef

 

Cocoa

 

Unallocated

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

Assets

9,603

 

16,057

 

1,656

 

6,982

 

34,298

Liabilities

(3,297)

 

(228)

 

(146)

 

(785)

 

(4,456)

Capital expenditure

49

 

1,168

 

484

 

-

 

1,701

 

 

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

 

 

Assets

 

Liabilities

 

US$000

 

US$000

Segment assets and liabilities

27,316

 

3,671

Unallocated:

 

 

 

Property, plant and equipment

78

 

-

Investments

380

 

-

Other receivables

495

 

-

Cash

6,029

 

-

Trade payables

-

 

627

Accruals and deferred income

-

 

158

Total

34,298

 

4,456

 

 

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

 

 

Grain

 

Beef

 

Cocoa

 

Unallocated

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

Assets

13,440

 

19,269

 

8,728

 

13,950

 

55,387

Liabilities

(2,775)

 

(442)

 

(334)

 

(1,287)

 

(4,838)

Capital expenditure

409

 

1,203

 

4,048

 

746

 

6,406

 

 

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

 

 

Assets

 

Liabilities

 

US$000

 

US$000

Segment assets and liabilities

41,437

 

3,551

Unallocated:

 

 

 

Property, plant and equipment

6,716

 

-

Investments

1,229

 

-

Other receivables

161

 

-

Cash

5,844

 

-

Trade payables

-

 

540

Accruals and deferred income

-

 

747

Total

55,387

 

4,838

 

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):

 

2015

 

2014

 

US000

 

US$000

 

 

 

 

Depreciation of property, plant and equipment

2,211

 

1,766

(Profit) / loss on disposal of property, plant and equipment

(76)

 

(149)

Net foreign exchange loss / (gain)

177

 

(52)

Impairment of assets (see note 12.1)

6,791

 

-

Staff costs (see note 10)

4,921

 

4,581

 

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:

 

 

 

2015

 

2014

 

 

US$000

 

US$000

 

 

 

 

 

Fees payable to the Company's auditor for the audit of the Company's accounts

 

153

 

132

Fees payable to the Company's auditor and their associates for other services to the Group:

 

 

 

 

The audit of the Company's subsidiaries

 

                     52

 

58

Total audit fees

 

205

 

190

 

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:

 

 

2015

 

2014

 

Number

 

Number

 

 

 

 

Office and Management

48

 

61

Operational

814

 

910

 

862

 

971

 

Of which relating to:

 

 

 

 

Continuing operations

 

849

 

900

Discontinued operations

 

13

 

71

 

 

862

 

971

 

Their aggregate remuneration comprised:

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Wages and salaries

5,008

 

5,429

Social security costs                                                                                                                                       

104

 

94

Share based payment charge

55

 

149

 

5,167

 

5,672

Less:  capitalised and included in assets under construction

(169)

 

(685)

Amount charged to profit and loss

4,998

 

4,987

 

Of which relating to:

 

 

 

 

Continuing operations

 

4,921

 

4,581

Discontinued operations

 

77

 

406

 

 

4,998

 

4,987

 

 

11.         REMUNERATION OF DIRECTORS

 

Year ended 31 May 2015

 

Salary

 

 

Bonus

 

Share based payment

 

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

PH Edmonds

159

 

-

 

-

 

159

AS Groves

159

 

-

 

-

 

159

DL Cassiano-Silva

215

 

-

 

11

 

226

EA Kay

47

 

-

 

15

 

62

MN Pelham

50

 

-

 

-

 

50

 

630

 

-

 

26

 

656

 

Year ended 31 May 2014

 

Salary

 

 

Bonus

 

Share based payment

 

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

PH Edmonds

165

 

-

 

-

 

165

AS Groves

162

 

-

 

-

 

162

DL Cassiano-Silva

134

 

42

 

-

 

176

EA Kay

154

 

-

 

24

 

178

MN Pelham

-

 

-

 

-

 

-

 

615

 

42

 

24

 

681

 

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:

 

 

 

2015

 

 

US$000

 

 

 

Cocoa division

 

6,791

Impairment against continuing operations

 

6,791

 

 

 

Palm activities

 

3,069

Impairment against discontinued operations

 

3,069

 

 

9,860

 

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:

 

 

 

2015

 

 

US$000

 

 

 

Impairment of goodwill

 

575

Impairment of property, plant and equipment

 

5,998

Impairment of non-current receivables

 

159

Impairment of inventory

 

59

 

 

6,791

 

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

 

 

2015

 

2014

 

US$000

 

US$000

Interest revenues:

 

 

 

Bank deposits

19

 

58

Other loans and receivables

-

 

88

Total interest revenues

19

 

146

 

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

 

Other gains and losses

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

(Decrease) / increase in fair value of quoted investments (note 22)

(849)

 

936

 

 

Finance costs

 

2015

 

2014

 

US$000

 

US$000

Interest expense:

 

 

 

Bank borrowings

683

 

197

Loan notes

-

 

12

Total finance expense

683

 

209

 

16.          Taxation

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Loss before tax from continuing activities

(15,803)

 

(5,627)

 

 

 

 

Tax credit at the Mozambican corporation tax rate of 32% (2014:32%)

(5,057)

 

(1,801)

Tax effect of expenses that are not deductible in determining taxable profit

67

 

73

Tax effect of losses not allowable

1,556

 

432

Tax effect of losses not recognised in overseas subsidiaries (net of effect of different rates)

3,434

 

1,296

Statutory taxation payments irrespective of income

9

 

25

Adjustment in respect of prior years

72

 

-

Tax expense

81

 

25

 

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:

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Oil and gas activities

5,740

 

(1,378)

Cocoa trading activities

(174)

 

(986)

Palm activities

(3,069)

 

-

Net profit / (loss) after tax attributable to discontinued operations

(attributable to owners of the Company)

2,497

 

(2,364)

 

 

17.1.     Oil and gas

 

On 6 January 2009, the Shareholders approved the adoption of the investing strategy to acquire or invest in businesses or projects operating in the agricultural and associated civil engineering industries in Southern Africa. At the same time the Group suspended all exploration activities and reduced expenditure to the minimum required in order to retain exploration licenses and extract potential value for Shareholders. Consequently the oil and gas activities were reclassified as a discontinued operation.

 

In the financial year ended 31 May 2013, on 17 January 2013, the Group completed the disposal of its oil and gas interests in Ethiopia, realising a gain before tax of $40,380,000. After deduction of tax due on this gain of $12,000,000 net of an expected tax rebate of $1,000,000, the after tax profit realised was $29,380,000. This gain was written back against the impairment provision made in prior years. During the year ended 31 May 2014 and due to uncertainties on the timing and amount of the tax rebate to be recovered, the Group provided against the $1,000,000 expected tax rebate.

 

During the year ended 31 May 2014 the Group incurred expenditure on formal arbitration proceedings to recover the compensation assessed by the National Petroleum Commission as being due to the Company for works undertaken by the Company in the Republic of South Sudan and acknowledged as being due by the Ministry of Petroleum and Mining of the Republic of South Sudan in April 2012. Expenditure of $378,000 was incurred in this matter during the year ended 31 May 2014. This matter was resolved in the current financial year through the payment to the Company of £3,412,000 (being $5,659,000) in cash which has been recognised in the current financial period within discontinued operations. A further net credit of $81,000 has been recorded with respect to the re-imbursement of expenditure incurred in pursuing this claim.

 

17.2.     Cocoa trading

 

Due to the serious and well-publicised Ebola outbreak and the associated precautionary restrictions on travelling in Sierra Leone, accompanied by the ongoing losses suffered by the Cocoa trading operations, the Group ceased its Cocoa trading operations in Sierra Leone in the financial year ended 31 May 2014. The Cocoa trading operations represented a significant component of a business segment of the Group and accordingly, as required by IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations', the results of the Cocoa trading operations are presented as discontinued operations within the consolidated income statement. Cash flows pertaining to the Cocoa trading operations are presented in the consolidated cash flow statement along with all cash flows relating to discontinued operations. The amounts recorded in the current financial year relate to the winding down of the Cocoa Trading operations between June and August 2014. From 1 September 2014, all expenditure in the Cocoa division has been included within continuing operations, relating either to the cocoa plantation activities, or the logistics activities undertaken to provide assistance in the Ebola relief efforts.

 

The results of the discontinued Cocoa trading operations, which have been included in the Consolidated income statement, were as follows:

 

 

 

 

2015

 

2014

 

 

 

US$000

 

US$000

Loss in the year from the Cocoa trading operations:

 

 

 

 

 

Revenue

 

 

-

 

1,907

Expenses

 

 

(174)

 

(2,748)

Finance expense

 

 

-

 

(1)

Loss before taxation

 

 

(174)

 

(842)

Taxation

 

 

-

 

-

Loss after tax from discontinued Cocoa trading operations in the period

 

 

(174)

 

(842)

Loss on cessation of the Cocoa trading operations:

 

 

 

 

 

Loss on impairment of goodwill

 

 

-

 

(144)

Net loss attributable to discontinued Cocoa trading operations (attributable to owners of the Company)

 

 

(174)

 

(986)

 

 

17.3.     Palm activities

 

The amount reported within discontinued operations for palm activities represents the impairment against the carrying value of the Group's 45,000 hectare lease in the Pujehun District of Sierra Leone, net of the release of amounts deferred consideration no longer expected to be due, as more fully described in note 12.2.

 

18.         (LOSS) / Earnings per share

 

The calculation of the basic and diluted (loss) / earnings per share is based on the following data:

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Loss for the purposes of basic and diluted earnings per share from continuing activities

(15,884)

 

(5,652)

Profit / (loss) for the purposes of basic and diluted earnings per share from discontinued activities

2,497

 

(2,364)

Loss for the purposes of basic and diluted earnings per share (loss for the year attributable to equity holders of the parent)

(13,387)

 

(8,016)

 

 

 

 

Weighted average number of Ordinary Shares for the purposes of basic and diluted (loss) / earnings per share

1,061,818,478

 

1,061,818,478

 

 

 

 

Basic and diluted loss per share

(1.26)

 

(0.76)

Basic and diluted loss per share from continuing activities

(1.50)

 

(0.53)

Basic and diluted earnings / (loss) per share from discontinued activities

0.24

 

(0.22)

 

 

19.          Goodwill

 

 

 

US$000

BOOK VALUE

 

 

At 1 June 2013

 

697

Eliminated in the period

 

(144)

Exchange rate adjustment

 

23

At 31 May 2014

 

576

Eliminated in the period

 

(575)

Exchange rate adjustment

 

(1)

At 31 May 2015

 

-

 

The Group's goodwill balance arose on the acquisition of the Cocoa operations, comprising the cocoa plantation and cocoa trading business in Sierra Leone. Due to the cessation of the Cocoa trading operations in the year ended 31 May 2014 (refer to note 17.2), the proportion of the goodwill attributed to that business was eliminated and is included in the computation of the net loss from discontinued operations for the year ended 31 May 2014. The remaining balance of $576,000 attributed to the cocoa plantation has been reviewed for impairment in accordance with the Group's accounting policy and written off in full in the current period as more fully described in note 12.1.

 

 

Property, plant and equipment

 

 

Land and buildings

 

Plant and machinery

 

Motor vehicles

 

Aviation

 

Other

assets

 

Assets under construction

 

Total

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 June 2013

22,747

 

11,117

 

5,211

 

573

 

546

 

-

 

40,194

Additions

1,880

 

1,039

 

285

 

739

 

68

 

2,395

 

6,406

Disposals

-

 

(20)

 

(195)

 

(62)

 

(4)

 

-

 

(281)

Transfers

307

 

(409)

 

93

 

-

 

9

 

-

 

-

Exchange rate adjustment

(557)

 

(1,158)

 

476

 

(72)

 

(24)

 

 

-

 

(1,335)

At 31 May 2014

24,377

 

10,569

 

5,870

 

1,178

 

595

 

2,395

 

44,984

Additions

1,039

 

529

 

38

 

10

 

85

 

-

 

1,701

Disposals

(1)

 

(291)

 

(241)

 

-

 

(18)

 

-

 

(551)

Transfers

2,195

 

200

 

-

 

-

 

-

 

(2,395)

 

-

Exchange rate adjustment

(2,425)

 

(1,483)

 

(735)

 

(202)

 

(87)

 

 

-

 

(4,932)

At 31 May 2015

25,185

 

9,524

 

4,932

 

986

 

575

 

-

 

41,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Depreciation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 June 2013

5

 

3,391

 

3,108

 

256

 

193

 

-

 

6,953

Charge for the year

312

 

1,067

 

775

 

142

 

74

 

-

 

2,370

Disposals

-

 

(8)

 

(160)

 

(37)

 

(1)

 

-

 

(206)

Exchange rate adjustment

547

 

(1,383)

 

464

 

(20)

 

(9)

 

 

-

 

(401)

At 31 May 2014

864

 

3,067

 

4,187

 

341

 

257

 

-

 

8,716

Charge for the year

421

 

1,101

 

645

 

174

 

77

 

-

 

2,418

Disposals

-

 

(112)

 

(219)

 

-

 

(5)

 

-

 

(336)

Impairment loss (note 12)

11,766

 

175

 

32

 

-

 

34

 

 

 

12,007

Exchange rate adjustment

(160)

 

(456)

 

(620)

 

(72)

 

(41)

 

 

-

 

(1,349)

At 31 May 2015

12,891

 

3,775

 

4,025

 

443

 

322

 

-

 

21,456

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

 

31 May 2015

12,294

 

5,749

 

907

 

543

 

253

 

-

 

19,746

31 May 2014

23,513

 

7,502

 

1,683

 

837

 

338

 

2,395

 

36,268

 

Additions to land and buildings include $399,000 (2014: $1,897,000) of acquisition and development costs of the Group's cocoa plantation in Sierra Leone, incurred between 1 June and 30 September 2014.  Included in this sum is $146,000 (2014: $471,000) of depreciation in respect of plant and equipment and $169,000 (2014: $558,808) of wages and salaries. Subsequent to 30 September 2014, all expenditure incurred in connection with the cocoa plantation has been expensed to profit and loss and included within continuing operations.

 

A depreciation charge of $2,211,000 (2014: $1,766,000) has been included in the consolidated income statement within operating expenses and $61,000 (2014: $133,000) has been included with discontinued operations.

 

Land and buildings with a carrying amount of $2,173,000 (2014: $2,694,000) have been pledged to secure the Group's bank overdraft (note 27). The Group is not allowed to pledge these assets as security for other borrowings or sell them to another entity. Details of additional assets pledged as security for new bank borrowings subsequent to the period end are provided in note 35.1

 

At 31 May 2015, the Group had no contractual commitments for the acquisition of property, plant and equipment (2014: commitments of $49,000).

 

21.         Interests in Associates

 

The Company and Group's interest in associates represents a 40% equity investment in African Management Services Limited ('AMS'). The Group's share of the result of AMS for all periods presented was $nil.  The share of the cumulative results and net assets of AMS is $4,000 (2014: $4,000). The Company's investment in AMS was $nil.   

 

22.         Investments in quoted companies

 

'Investments in quoted companies' held by the Company and Group comprise financial assets at FVTPL. Changes in market value are recorded in profit and loss within other gains and losses. As at 31 May 2015, these investments comprise 8,337,682 (31 May 2014: 8,337,682) ordinary shares in Atlas Development & Support Services Limited ('ADS') (formerly African Oilfield Logistics Limited), an AIM quoted company focussed on the logistics support industry in respect of oil and gas exploration and other development projects in sub-Saharan Africa. Movements in the value of the investment in ADS were as follows:

 

 

 

 

 

US$000

At 1 June 2013

 

 

 

4

Purchase of investments at cost

 

 

 

285

Increase in fair value (note 14)

 

 

 

936

At 31 May 2014

 

 

 

1,225

Decrease in fair value (note 14)

 

 

 

(849)

At 31 May 2015

 

 

 

376

 

The fair value has been determined based on quoted market prices in an active market and comprises a level 1 fair value in the IFRS 13 fair value hierarchy.

 

 

23.          Biological assets

 

 

 

 

US$000

Fair value

 

 

 

At 1 June 2013

 

 

4,007

Purchase of biological assets

 

 

2,195

Sale, slaughter or other disposal of biological assets

 

 

(1,976)

Change in fair value

 

 

290

Foreign exchange adjustment

 

 

(244)

At 31 May 2014

 

 

4,272

Purchase of biological assets

 

 

1,666

Sale, slaughter or other disposal of biological assets

 

 

(3,947)

Change in fair value

 

 

1,910

Foreign exchange adjustment

 

 

(636)

At 31 May 2015

 

 

3,265

 

Biological assets comprise cattle in Mozambique held for breeding purposes (the 'Breeding herd') or for slaughter (the 'Slaughter herd'). The Slaughter herd has been classified as a current asset. The Breeding herd is classified as a non-current asset. Biological assets are accordingly classified as current or non-current assets as follows:

 

2015

 

2014

 

2015

 

2014

 

Head

 

Head

 

US$000

 

US$000

 

 

 

 

 

 

 

 

Non-current asset

4,395

 

5,481

 

2,246

 

3,071

Current asset

2,772

 

2,749

 

1,019

 

1,201

 

7,167

 

8,230

 

3,265

 

4,272

 

For valuation purposes, cattle are grouped into classes of animal (e.g. bulls, cows, steers etc). A standard animal weight per breed and class is then multiplied by the number of animals in each class to determine the estimated total live weight of all animals in the herd. The herd is then valued by reference to market prices for meat in Mozambique, less estimated costs to sell. The valuation is accordingly a level 2 valuation in the IFRS 13 hierarchy whereby inputs other than quoted prices that are observable for the asset are used.

 

24.         Inventories

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Consumables and spares                   

120

 

127

Raw materials

2,452

 

4,438

Work in progress

27

 

34

Finished goods

293

 

301

 

2,892

 

4,900

 

During the year inventories amounting to $8,191,000 (2014: $8,084,000) were included in cost of sales and $nil (2014: $2,179,000) were included within discontinued operations.

 

Inventories with a carrying amount of $2,140,000 (2014: $4,237,000) have been pledged to secure the Group's bank overdraft (note 27).

 

 

25.           Trade and other receivables

               

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Trade receivables                                

1,018

 

459

Other receivables

492

 

393

Prepayments

84

 

296

 

1,594

 

1,148

 

'Trade receivables' and 'Other receivables' disclosed above are classified as loans and receivables and measured at amortised cost.

 

Included in 'Other receivables' are receivables which have been provided against. Movements in the allowance account against 'Other receivables', which principally relate to input IVA recoverable in Mozambique (refer to note 5.4) are as follows:

 

 

 

 US$000

 

 

 

At 1 June 2013

 

1,310

Charged to profit and loss

 

118

Foreign exchange gain

 

(83)

At 31 May 2014

 

1,345

Charged to profit and loss

 

224

Foreign exchange gain

 

(250)

At 31 May 2015

 

1,319

 

The increase in the allowance account during both periods presented reflects the increase in the underlying input IVA balance recorded by the Group and the effect of the devaluation of the Mozambique Metical against the United States Dollar.

 

Other receivables include $350,000 (2014: $122,000) due from related parties (see note 33).

 

The Directors consider that the carrying amount of financial assets approximates their fair value.  There are no significant amounts past due which have not been provided against (2014: $nil). Further details on the Group's financial assets are provided in note 29.

 

26.         Cash and cash equivalents

 

Included within the Company and Group's cash and cash equivalents is $nil (2014: $107,000) of restricted cash held on deposit as security for certain supplier guarantees.

 

 

27.         Borrowings

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Bank overdraft

3,079

 

2,468

Other

-

 

200

 

3,079

 

2,668

 

The Group has an overdraft facility of 179,000,000 Metical (approximately $4,850,000 at the 31 May 2015 Metical to US$ exchange rate) (2014: 179,000,000 Metical (approximately $6,000,000)) to provide funding for its Grain operations in Mozambique. It is secured against certain of the Group's property, plant and equipment (note 20) and all maize inventory and finished maize products (note 24). Interest is charged at the counterparty bank's prime lending rate less 3%, being a current rate of 13% (2014: 13%). Unless it is cancelled by either party, the facility renews annually on 31 May.

 

Other borrowings at 31 May 2014 represented customer pre-financing for the Group's Cocoa trading operations, was unsecured, bore no interest and was repaid during the year.

 

 

28.         Trade and other payables

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Trade payables

314

 

77

Other payables

623

 

666

Accrued liabilities

440

 

1,413

Corporation tax

-

 

14

 

1,377

 

2,170

 

'Trade payables', 'Other payables' and 'Accrued liabilities' principally comprise amounts outstanding for trade purchases and ongoing costs. No interest is charged on any balances.

 

The Directors consider that the carrying amount of financial liabilities approximates their fair value. 

 

 

29.         FINANCIAL INSTRUMENTS

 

29.1.     Capital risk management

 

The Group and Company manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to shareholders. The capital structure of the Group comprises its net debt (the borrowings disclosed in note 27 after deducting cash and bank balances) and equity of the Group as shown in the balance sheet. The Company and Group are not subject to any externally imposed capital requirements.

 

The ExCom reviews the capital structure on a regular basis and seeks to match new capital requirements of subsidiary companies to new sources of external debt funding denominated in the currency of operations of the relevant subsidiary. Where such additional funding is not available, the Group funds the subsidiary company by way of loans from the Company. The Group and Company place funds which are not required in the short term on deposit at the best interest rates it is able to secure from its bankers. In accordance with this policy, the Group has maintained its overdraft facility in Mozambique to finance its Grain operations of 179,000,000 Mozambique Metical (note 27). Further and subsequent to the period end, the Group has secured additional borrowing facilities in Mozambique for its Beef operations (refer to note 35.1).

 

29.2.     Categories of financial instruments

                                                                                                                                                                                                   

The following are the Group and Company financial instruments as at 31 May:

 

 

Group

 

Company

 

2015

 

2014

 

2015

 

2014

 

US$000

 

US$000

 

US$000

 

US$000

Financial assets

 

 

 

 

 

 

 

Cash and bank balances

6,421

 

6,994

 

6,027

 

5,747

Fair value through profit and loss:

 

 

 

 

 

 

 

Held for trading

376

 

1,225

 

376

 

1,225

Loans and receivables

1,510

 

852

 

22,052

 

41,752

 

8,307

 

9,071

 

28,455

 

48,724

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

Amortised cost

4,456

 

4,824

 

785

 

1,040

 

4,456

 

4,824

 

785

 

1,040

 

3,851

 

4,247

 

27,670

 

47,684

 

29.3.     Financial risk management objectives

 

The Group manages the risks arising from its operations, and financial instruments at ExCom and Board level. The Board has overall responsibility for the establishment and oversight of the Group's risk management framework and to ensure that the Group has adequate policies, procedures and controls to manage successfully the financial risks that the Group faces.

 

While the Group does not have a written policy relating to risk management of the risks arising from any financial instruments held, the close involvement of the ExCom in the day to day operations of the Group ensures that risks are monitored and controlled in an appropriate manner for the size and complexity of the Group. Financial instruments are not traded, nor are speculative positions taken. The Group and Company have not entered into any derivative or other hedging instruments.

 

The Group's key financial market risks arise from changes in foreign exchange rates ('currency risk'). To a lesser extent the Group is exposed to interest rate risk and other price risk (in respect of its investments in quoted companies). The Group is also exposed to credit risk and liquidity risk. The principal risks that the Group faces as at 31 May 2015 with an impact on financial instruments are summarised below.

 

29.4.     Market Risk

 

The Group and Company are exposed to currency risk, interest risk and other price risk (in respect of its investments in quoted companies).  These are discussed further below.

 

29.4.1. Currency risk

 

Certain of the Group companies have functional currencies other than US$ and the Group is therefore subject to fluctuations in exchange rates in translation of their results and financial position into US$ for the purposes of presenting consolidated accounts. The Group does not hedge against this translation risk. The Group's financial assets and liabilities by functional currency of the relevant Group company are as follows:

 

 

Assets

 

Liabilities

 

2015

 

2014

 

2015

 

2014

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

United States Dollar ('US$')(1)

6,880

 

7,202

 

786

 

1,510

Mozambique Metical ('MZN')

1,143

 

1,588

 

3,524

 

3,209

Sierra Leone Leones ('SLL')

284

 

169

 

146

 

95

Other

-

 

112

 

-

 

10

 

8,307

 

9,071

 

4,456

 

4,824

(1)

The Company's functional currency is US$ and accordingly, all amounts for the Company are included within this category.

 

                 

 

The Group and Company transact with suppliers and / or customers in currencies other than the functional currency of the relevant group company (foreign currencies), and hold investments in quoted companies which are traded in currencies other than US$. The Group does not hedge against this transactional risk. As at 31 May 2014 and 31 May 2015, the Group and Company's outstanding foreign currency denominated monetary items were principally exposed to changes in the US$ / GBP and US$ / MZN exchange rate. The following table details the Group and Company's exposure to a 5 per cent increase and decrease in the US$ against GBP and separately against MZN. The sensitivity analysis includes only outstanding foreign currency denominated items and excludes the translation of foreign subsidiaries and operations into the Group's presentation currency. The sensitivity also includes intra-group loans where the loan is in a currency other than the functional currency of the lender or borrower. A negative number indicates a decrease in profit and other equity when the US$ strengthens against the relevant currency by 5 per cent. For a 5 per weakening of the US$ against the relevant currency, there would be a comparable impact on the profit and other equity, and the balances would be positive.

 

Group

GBP Impact

 

MZN Impact

 

2015

 

2014

 

2015

 

2014

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

Profit or loss (1)

(10)

 

(61)

 

-

 

-

Other equity (2)

-

 

12

 

(2,910)

 

(2,755)

 

Company

GBP Impact

 

MZN Impact

 

2015

 

2014

 

2015

 

2014

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

Profit or loss (1)

(10)

 

(61)

 

-

 

-

Other equity

-

 

3

 

-

 

-

 

(1)

This is mainly due to the exposure arising from investments in quoted companies where the related company's equity securities are quoted in GBP.

(2)

This is mainly due to the exposure arising on the translation of US$ denominated intra-group loans provided to MZN functional currency entities which are included as part of the Company and Group's net investment in the related entities.

 

29.4.2. Interest rate risk

 

The Group and Company are exposed to interest rate risk because entities in the Group hold cash balances and borrow funds at floating interest rates The Company is further exposed to interest rate risk on loans provided to subsidiary companies at floating interest rates. As at 31 May 2015, the Group and Company have no interest bearing fixed rate instruments.

 

The Group and Company maintain cash deposits at variable rates of interest for a variety of short term periods, depending on cash requirements. The Grain operations in Mozambique are also financed through the overdraft facility. The rates obtained on cash deposits are reviewed regularly and the best rate obtained in the context of the Group's and Company's needs.  The weighted average interest rate on deposits was 0.59% (2014: 1.05%).  The weighted average interest on drawings under the overdraft facility was 14% (2014: 16%), on the customer advances was nil% (2014: nil%) and on the short term loan note was nil% (2014: 10%). The Group does not hedge interest rate risk.

 

The following table details the Group and Company's exposure to interest rate changes, all of which affect profit and loss only with a corresponding effect on accumulated losses. The sensitivity has been prepared assuming the liability outstanding at the balance sheet date was outstanding for the whole year. In all cases presented, a positive number in profit and loss represents an increase in interest income / decrease in finance expense. The sensitivity is presented assuming interest rates increase by either 20bp or 50bp. A 20bp or 50bp decrease in interest rates would have the opposite effect.

 

 

Group

 

Company

 

2015

 

2014

 

2015

 

2014

 

US$000

 

US$000

 

US$000

 

US$000

+ 20 bp increase in interest rates

(7)

 

(9)

 

115

 

110

+ 50 bp increase in interest rates

(17)

 

(23)

 

289

 

276

 

29.4.3. Other price risk

 

The Group and Company is exposed to equity price risk on its investments in quoted securities which are measured at fair value (refer to note 22). Investments in quoted companies comprise investments in one company, ADS. If ADS's share price increased / (decreased) by 10% and the US$ / GBP exchange rate remained unchanged, the Group and Company net profit would increase / (decrease) by $38,000.

 

29.5.     Credit risk

 

Credit risk arises from cash and cash equivalents, and deposits with banks and financial institutions, as well as outstanding receivables. The Group's and Company's principal deposits are held with various banks with a high credit rating to diversify from a concentration of credit risk. Receivables are regularly monitored and assessed for recoverability. 

 

The maximum exposure to credit risk is the carrying value of the Group and Company financial assets disclosed in note 29.2. Details of provisions against financial assets are provided in note 25.

 

29.6.     Liquidity risk

 

The Group and Company's policy throughout the year has been to ensure that it has adequate liquidity by careful management of its working capital. The ExCom continually monitors the Group and Company's actual and forecast cash flows and cash positions. The ExCom pays particular attention to ongoing expenditure, both for operating requirements and development activities, and matching of the maturity profile of the Group's overdraft to the processing and sale of the Group's maize products.

 

At 31 May 2015 the Group held cash deposits of $6,421,000 (2014: $6,994,000).  At 31 May 2015 the Company held cash deposits of $6,027,000 (2014: $5,747,000).  At 31 May 2015 the Group had an overdraft facility of approximately $4,850,000 (2014: approximately $6,000,000) of which $3,079,000 (2014: $2,468,000) was drawn. The Group had other borrowings / short term loan note outstanding of $nil (2014: $200,000) (see note 27). As at the date of this report the Group has adequate liquidity to meet its obligations as they fall due.

 

The following table details the Group and Company's remaining contractual maturity of its financial liabilities. The table is drawn up utilising undiscounted cash flows and based on the earliest date on which the Group and Company could be required to settle its obligations. The table includes both interest and principal cash flows. To the extent that interest cash flows are floating rate, the undiscounted amount is derived using the current interest rate, which is not expected to change significantly during the period to maturity.

 

 

 

Group

 

Company

 

2015

 

2014

 

2015

 

2014

 

US$000

 

US$000

 

US$000

 

US$000

 

 

 

 

 

 

 

 

1 month

1,410

 

2,389

 

785

 

1,040

2 to 3 months

67

 

65

 

                         -

 

-

12 months

3,379

 

2,764

 

-

 

-

 

4,856

 

5,218

 

785

 

1,040

 

29.7.     Fair values

 

The Directors have reviewed the financial statements and have concluded that there is no significant difference between the carrying values and the fair values of the financial assets and liabilities of the Group and of the Company as at 31 May 2015 and 31 May 2014.

 

30.           Share capital 

 

 

 

 

 

 

 

Group and company

 

 

 

 

 

 

 

 

Authorised

 

Allotted and fully paid

 

 

 

 

Number

 

Number

 

US$000

At 31 May 2014 and 31 May 2015:

 

 

 

 

 

 

Ordinary shares of 0.1p each

 

2,345,000,000

 

1,061,818,478

 

1,722

Deferred shares of 0.1p each

 

155,000,000

 

155,000,000

 

238

Total share capital

 

2,500,000,000

 

1,216,818,478

 

1,960

 

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

 

The deferred shares carry no right to any dividend; no right to receive notice, attend, speak or vote at any general meeting of the Company; and on a return of capital on liquidation or otherwise, the holders of the deferred shares are entitled to receive the nominal amount paid up after the repayment of £1,000,000 per ordinary share.  The deferred shares may be converted into ordinary shares by resolution of the Board.

 

31.         RESERVES

 

Movements in the Group and Company reserves are included in the Consolidated statement of changes in equity and the Company statement of changes in equity respectively. A description of each reserve is provided below.

 

31.1.     Shares to be issued reserve

 

In the financial year ended 31 May 2012 the Group acquired Red Bunch Ventures (SL) Limited ('Red Bunch') which holds a lease over approximately 45,000 hectares of agricultural land suitable for palm oil production in Sierra Leone. Following the development of 1,000 hectares of the leasehold land, deferred consideration of 37,800,000 Ordinary Shares would become payable under the purchase agreement. The 'Shares to be issued' reserve recorded the Group's potential obligation to issue such Ordinary Shares. The Group has impaired this leasehold land asset during the year as more fully described in note 12.2 and accordingly the balance included within this reserve has been released to profit and loss within discontinued operations.

 

31.2.     Translation reserve

 

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are taken to the translation reserve.

 

32.          Share based payments

 

32.1.     Charge in the period

 

The Group recorded a charge within other operating expenses for share based payments of $55,000 (2014: $149,000). The Company recorded a charge of $11,000 (2014: $55,000) and recorded an increase in its investments in subsidiary undertakings of $44,000 (2014: $94,000).

 

32.2.     Equity - settled share option plan

 

The Group, through the Company, has two unapproved share option schemes which were established to provide equity incentives to the Directors of, employees of and consultants to the Group. The schemes' rules provide that the Board shall determine the exercise price for each grant which shall be at least the average mid-market closing price for the three days immediately prior to the grant of the options. The minimum vesting period is generally one year. If options remain unexercised after a period of 4 or 5 years from the date of grant, or vesting, the options expire. Options are forfeited if the employee leaves the Group before the options vest.

 

The following table provides a reconciliation of share options outstanding during the period:

 

 

 

2015

Options

Number

 

Weighted average exercise price

 

 

2014

Options Number

 

Weighted average exercise price

 

 

 

 

 

 

 

 

 

 

At 1 June

 

42,249,998

 

4.6p

 

 

44,750,000

 

3.7p

Granted in the year

 

-

 

-

 

 

2,500,000

 

1.5p

Lapsed in the year

 

(5,750,000)

 

3.0p

 

 

(5,000,002)

 

5.5p

At 31 May

 

36,499,998

 

3.4p

 

 

42,249,998

 

4.6p

 

 

 

 

 

 

 

 

 

 

Exercisable at year end

 

27,500,004

 

3.3p

 

 

27,750,002

 

3.0p

 

The fair value of the options granted during the year ended 31 May 2014 was determined using the Black-Scholes option pricing model using the following assumptions:

 

- Share price at the date of grant was the average mid-market closing price for the three days immediately prior to grant, being 1.47p.

- The risk free rate ranged from 0.53% to 1.87% based on the gilt yield over the expected life of the options at the date of grant.

- The annual dividend yield was expected to be nil based on the Board's immediate intention to reinvest operating cash flows.

- The annual volatility ranged from 60% to 89% and was derived from the historic daily share prices of the Company over periods matching the expected life of the options at the date of grant.

- The options were granted on 15 May 2014 and vest at 20% per annum from the date of grant.  The options can be exercised within a five year period from the date they vest.

- The options have a fair value ranging between 0.4p and 1.0p with the total fair value of options granted during the year ended 31 May 2014 calculated at $30,000.

 

On 12 January 2010, options over 50,000,000 ordinary shares with an exercise price of 5.5p were issued to Ely Place Nominees Limited ('EPN') to be held on trust to be issued at the discretion of the Board as incentives to Directors, employees or consultants (the 'Incentive Options').  Between January 2010 and 15 May 2014, 14,999,999 Incentive Options were allocated. On 15 May 2014 and in light of the share price at that date, the Directors concluded that these Incentive Options would not provide an appropriate mechanism for incentivising Directors, employees and consultants. As such, and with the agreement of EPN, EPN waived their rights to the Incentive Options, which were cancelled and replaced by 35,000,001 new incentive options granted at the prevailing price on 15 May 2014 (rounded up to the nearest half penny) of 1.5p, otherwise to be held on the same terms as the Incentive Options.

 

32.3.     Share Options

 

At 31 May 2015, the following options over ordinary shares of 0.1p each have been granted and remain unexercised:

 

Date of grant

Total

options

 

Exercisable

options

Exercise price

 

Exercise period

 

 

 

 

 

 

 

13 July 2011

5,000,000

 

5,000,000

3.0p

 

13 July 2012 to 13 July 2017

1 December 2011

10,000,000

 

10,000,000

2.0p

 

1 December 2011 to 1 December 2016

29 July 2012

7,499,999

 

3,000,002

3.5p

 

29 July 2013 to 29 July 2023

29 July 2012

7,499,999

 

7,000,002

5.5p

 

29 July 2013 to 11 January 2020

01 May 2013

2,000,000

 

2,000,000

2.8p

 

01 May 2014 to 30 April 2019

01 May 2013

2,000,000

 

-

5.5p

 

01 May 2014 to 11 January 2020

15 May 2014

2,500,000

 

500,000

1.47p

 

15 May 2015 to 15 May 2024

 

36,499,998

 

27,500,004

 

 

 

 

32.4.     Warrants

 

Subsequent to the period end and as more fully described in note 35.2, the Company and Group issued 22,500,000 new warrants to subscribe for ordinary shares in the Company at 0.65p per new ordinary share.

 

33.          Related party disclosures

 

PH Edmonds and AS Groves, directors of the Company, are also directors of Sable Mining Africa Limited ('Sable'), Liberian Cocoa Corporation ('LCC') and African Management Services Limited ('AMS'). In addition and during the period, AS Groves is, or was, a Director of African Potash Limited ('African Potash'), Atlas Development and Support Services Limited ('ADS'), East Africa Packaging Limited ('EAPC') and African Property Corporation ('APC'). The Company and Group have transacted with these companies during the year.  Related party transactions are entered into on an arm's length basis.  No provisions have been made in respect of amounts owed by or to related parties.

 

During the year AMS provided accounting, treasury and administrative services to the Group for a management fee of $388,000 (2014: $587,000).  The Group also incurred certain expenditures on behalf of AMS, which was refunded in full during the year.  As at 31 May 2015 the Group and Company was owed $107,000 by AMS (2014: owed $33,000 by AMS).

 

At 31 May 2015 the Group and Company was due $89,000 from LCC (2014: $89,000). 

 

During the year the Group and Company and Sable incurred certain expenses on each other's behalf, which was refunded in full during the year.  At 31 May 2015, the amount due to Sable was $nil (2014: $nil).

 

During the year the Group and Company incurred certain expenses on behalf of African Potash, which was refunded in full during the year. At 31 May 2015, the amount due to African Potash was $nil (2014: $nil).  

 

During the year the Group and Company advanced $nil (2014: $500,000) to Ardan Risk and Support Services Limited ('Ardan'), a company controlled by MN Pelham.

 

During the year the Group and Company invested $nil (2014: $285,000) in the purchase of ordinary shares of ADS. 

 

During the year the Group and Company incurred certain expenses on behalf of, or advanced loan funding to, EAPC. At 31 May 2015, the amount due from EAPC was $151,000 (2014: $nil).  

 

During the year the Group and Company incurred certain expenses on behalf of, or advanced loan funding to, APC. At 31 May 2015, the amount due from APC was $3,000 (2014: $nil).  

 

The remuneration of the Directors, who are the key management personnel of the Group, is set out in note 11.

 

34.         Operating Leases

 

At 31 May the Group had commitments for future minimum lease payments under non-cancellable operating leases for land and buildings, which fall due as follows:

 

 

 

 

2015

 

2014

 

 

US$000

 

US$000

 

 

 

 

 

 

 

 

 

 

Within one year

 

138

 

79

In the second to fifth years inclusive

 

95

 

-

 

 

233

 

79

               

Operating lease rentals recognised as an expense in the Consolidated income statement were as follows:

Land and buildings

 

209

 

125

 

 

35.         Events subsequent to the balance sheet date

 

35.1.     Provision of new lending facilities to the Beef division

 

On 24 June 2015, the Group agreed new lending facilities totalling 105,000,000 Metical ($2,845,000 at the 31 May 2015 exchange rate) to finance its Beef division in Mozambique. The facilities comprise 75,000,000 Metical of term loans for the purchase of cattle, irrigation equipment, butchery equipment, refrigerated vehicles and general capital purposes, and a 30,000,000 Metical overdraft. The term loans can be drawn until 24 December 2015, carry interest at the bank's prime lending rate plus 0.25% (currently 13.75%), and have a five year term from draw down with a moratorium on capital repayments of 15 months. The overdraft renews annually and carries interest at the bank's prime lending rate (currently 13.50%). The lending facilities are secured against the Group's abattoir in Chimoio and all cattle and meat inventories.

 

35.2.     Allocation of warrants

 

On 1 June 2015 the Group created a warrant instrument (the 'Instrument') to provide suitable incentives to the Group's employees, consultants and agents, and in particular those based, or those spending considerable time, on site at the Group's operations. Up to 100,000,000 warrants (the 'Warrants') to subscribe for new Ordinary Shares in the Company (the 'Warrant Shares') may be issued pursuant to the Instrument. The exercise price of each Warrant is 0.65p (the share price of the Company being approximately 0.6p when the Instrument was created) and the subscription period during which time the Warrants may be exercised and Warrants Shares issued is the 5-year period from 1 June 2016 to 1 June 2021. Subject to various acceleration provisions, a holder of Warrants is not entitled to sell more than 100,000 Warrant Shares in any day nor more than 1m Warrant Shares (in aggregate) in any calendar month, without board consent. 22,500,000 Warrants have been issued subsequent to the period end to employees.

 

35.3.     Cocoa trading agreement

 

On 12 November 2015 the Group, through its Sierra Leone subsidiary company, Tropical Farms Limited ('Tropical Farms'), entered into a trading agreement with a leading global company focused on natural, organic and specialty foods.

 

Under the terms of the trading agreement, Tropical Farms will use its organic certification and buying networks to source and supply up to 500 Mt of Sierra Leonean cocoa beans to the Offtaker during the 2015/2016 buying season; the Offtaker will provide Tropical Farms with pre-financing for the purchase of beans.

 

The trading agreement will leverage Tropical Farms' extensive infrastructure in Sierra Leone, including a state-of-the-art warehouse in Kenema.  In addition to Tropical Farms sourcing and supplying cocoa, the Offtaker has expressed its interest in additional produce and both parties have committed to explore opportunities for organic coffee and other organic food crops.

 

Company statement of financial position

As at 31 May 2015

 

 

 

2015

 

2014

 

Note

 

US$000

 

US$000

Non-current assets

 

 

 

 

 

Property, plant and equipment

38

 

-

 

1

Investments in subsidiaries

39

 

21,714

 

47,591

Interests in associates

21

 

-

 

-

Investments in quoted companies

22

 

376

 

1,225

 

 

 

22,090

 

48,817

Current assets

 

 

 

 

 

Trade and other receivables

40

 

495

 

166

Cash and cash equivalents

 

 

6,027

 

5,747

 

 

 

6,522

 

5,913

Total assets

 

 

28,612

 

54,730

Current liabilities

 

 

 

 

 

Trade and other payables

41

 

785

 

1,040

 

 

 

785

 

1,040

Net current assets

 

 

5,737

 

4,873

Net assets

 

 

27,827

 

53,690

 

 

 

 

 

 

Share capital

30

 

1,960

 

1,960

Share premium

 

 

148,622

 

148,622

Shares to be issued

31.1

 

-

 

2,940

Share based payment reserve

 

 

1,914

 

1,859

Translation reserve

31.2

 

2,621

 

2,621

Accumulated losses

 

 

(127,290)

 

(104,312)

Total equity

 

 

27,827

 

53,690

 

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:

 

 

PH Edmonds

Chairman

19 November 2015

 

 

 

 

 

 

Company statement of changes in equity

For the year ended 31 May 2015

 

 

 

 

 

 

Share

capital

 

Share premium

 

Shares to be issued

 

Share based payment reserve

 

Translation reserve

 

Accumulated
losses

 

 

Total
equity

 

Note

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

US$000

 

 

US$000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 June 2013

 

 

1,960

 

148,622

 

2,940

 

1,710

 

2,621

 

(101,599)

 

 

56,254

Loss and total comprehensive income for the year

 

 

-

 

-

 

-

 

-

 

-

 

(2,713)

 

(2,713)

Share-based payments

32

 

-

 

-

 

-

 

149

 

-

 

-

 

149

Balance at 31 May 2014

 

 

1,960

 

148,622

 

2,940

 

1,859

 

2,621

 

(104,312)

 

53,690

Loss and total comprehensive income for the year

 

 

-

 

-

 

-

 

-

 

-

 

(22,978)

 

(22,978)

Share-based payments

32

 

-

 

-

 

-

 

55

 

-

 

-

 

55

Released to profit and loss

12.2

 

-

 

-

 

(2,940)

 

-

 

-

 

-

 

(2,940)

Balance at 31 May 2015

 

 

1,960

 

148,622

 

-

 

1,914

 

2,621

 

(127,290)

 

27,827

 

 

 

Company cash flow statement

For the year ended 31 May 2015

 

 

 

2015

 

2014

 

Note

 

US$000

 

US$000

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

Loss before tax from continuing operations

 

 

(25,777)

 

(1,336)

Adjustments for:

 

 

 

 

 

Depreciation

38

 

1

 

-

Profit on disposal of property, plant and equipment

 

 

-

 

(8)

Share based payment expense

32

 

11

 

55

Impairment of loans to subsidiary undertakings

39

 

23,680

 

1,038

Foreign exchange loss

 

 

177

 

37

Finance costs

 

 

-

 

12

Investment revenues

 

 

(1,100)

 

(1,186)

Decrease / (increase) in fair value of quoted investments

14

 

849

 

(936)

Operating cash flows before movements in working capital

 

 

(2,159)

 

(2,324)

(Increase) / decrease in trade and other receivables

 

 

(330)

 

1,026

Decrease in trade and other payables

 

 

(255)

 

(252)

Net cash used in operating activities by continuing operations

 

 

(2,744)

 

(1,550)

Finance costs

 

 

-

 

(12)

Interest received

 

 

14

 

140

Net cash used in operating activities by continuing operations

 

 

(2,730)

 

(1,422)

Net cash provided by / (used in) operating activities by discontinued operations

 

 

5,740

 

(378)

Net cash provided by / (used in) operating activities

 

 

3,010

 

(1,800)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Proceeds from disposal of property, plant and equipment

 

 

-

 

42

Purchase of investments in quoted companies

22

 

-

 

(285)

Loans to subsidiary undertakings

39

 

(2,569)

 

(8,449)

Net cash used in investing activities by continuing operations

 

 

(2,569)

 

(8,692)

Net cash from investing activities in discontinued operations

 

 

-

 

-

Net cash used in investing activities

 

 

(2,569)

 

(8,692)

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

Repayment of borrowings

 

 

-

 

(1,500)

Net cash outflow from financing activities from continuing operations

 

 

-

 

(1,500)

Net increase / (decrease) in cash and cash equivalents

 

 

441

 

(11,992)

Effect of exchange rates on cash and cash equivalents

 

 

(161)

 

(31)

Cash and cash equivalents at beginning of period

 

 

5,747

 

17,770

Cash and cash equivalents at end of period

 

 

6,027

 

5,747

 

 

Company ACCOUNTING POLICIES

 

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

 

The financial statements have been prepared on the historical cost basis except for the measurement of certain financial instruments, and share based payments. The principal accounting policies adopted are the same as those set out in note 3 to the consolidated financial statements, other than as noted below.

 

 

Investments are recorded at cost, less provision for impairment. The Company includes within the carrying value of investments in subsidiary undertakings the fair value of the consideration paid for the subsidiary. Additional investment in the subsidiary undertakings, in the form of capital subscriptions, capital contributions or share based payment obligations assumed on behalf of the subsidiary is added to the cost of the investment in the period in which it arises.

 

 

As permitted by Guernsey law, the Company has elected not to present its own income statement. The Company reported a loss for the year of $22,978,000 (2014: loss of $2,713,000).

 

 

 

 

Motor

Vehicles

 

Other

assets

 

Total

 

 

US$000

 

US$000

 

US$000

Cost

 

 

 

 

 

 

At 1 June 2013

 

42

 

16

 

58

Disposals

 

(42)

 

-

 

(42)

At 31 May 2014

 

-

 

16

 

16

Disposals

 

-

 

(16)

 

(16)

At 31 May 2015

 

-

 

-

 

-

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

At 1 June 2013

 

8

 

15

 

23

Eliminated on disposals

 

(8)

 

-

 

(8)

At 31 May 2014

 

-

 

15

 

15

Charge for the year

 

-

 

1

 

1

Eliminated on disposals

 

-

 

(16)

 

(16)

At 31 May 2015

 

-

 

-

 

-

 

Net book value

 

 

 

 

 

 

31 May 2015

 

-

 

-

 

-

31 May 2014

 

-

 

1

 

1

 

 

 

 

 

 

Investment

 

Loans

 

Total

 

 

US$000

 

US$000

 

US$000

Cost

 

 

 

 

 

 

At 1 June 2013

 

9,680

 

58,161

 

67,841

Loans advanced in the year

 

-

 

8,449

 

8,449

Interest accrued

 

-

 

1,046

 

1,046

Capital contribution

 

94

 

-

 

94

Foreign exchange gain

 

-

 

1,312

 

1,312

At 31 May 2014

 

9,774

 

68,968

 

78,742

Loans advanced in the year

 

-

 

2,569

 

2,569

Interest accrued

 

-

 

1,086

 

1,086

Capital contribution

 

44

 

-

 

44

Foreign exchange loss

 

-

 

(16)

 

(16)

At 31 May 2015

 

9,818

 

72,607

 

82,425

 

 

 

 

 

 

 

Provision for irrecoverable amounts

 

 

 

 

 

 

At 1 June 2013

 

3,801

 

25,000

 

28,801

Charge for the year

 

-

 

1,038

 

1,038

Foreign exchange loss

 

-

 

1,312

 

1,312

At 31 May 2014

 

3,801

 

27,350

 

31,151

Charge for the year

 

5,880

 

23,680

 

29,560

At 31 May 2015

 

9,681

 

51,030

 

60,711

 

Net book value

 

 

 

 

 

 

31 May 2015

 

137

 

21,577

 

21,714

31 May 2014

 

5,973

 

41,618

 

47,591

 

Capital contributions represent increases or decreases in investment arising from the grant, lapse or termination of share options or Ordinary Shares to employees of subsidiary undertakings.

 

Loans to subsidiaries fall due after more than one year. The provision against loans to subsidiaries in the year reflects the impairment of the Group's cocoa plantation operations during the period and reductions in the value of the underlying businesses as a result of movements in exchanges rates (2014: cessation of the Group's cocoa trading activities and reductions in the value of the underlying businesses as a result of movements in exchanges rates).

 

As set out in note 17.1, the Company and Group have suspended further expenditure on all oil and gas exploration and evaluation projects.  Accordingly the Company's investment and loans provided to subsidiary undertakings conducting such operations were fully provided against in prior periods.

 

As at 31 May 2015, the Company held equity interests in the following principal undertakings:

 

Direct investments

 

Subsidiary undertakings

Proportion held

Country of incorporation

Nature of business

 

 

 

 

Agriterra (Mozambique) Limited

100%

Guernsey

Holding Company

P A Energy Africa Limited

100%

British Virgin Islands

Inactive

Agriterra Aviation (Pty) Limited

100%

South Africa

Aviation services

Agriterra East Africa Limited

100%

Mauritius

Trading

Agriterra Guinea SA

100%

Guinea

Infrastructure

West Africa Cocoa Services Limited

100%

British Virgin Islands

Holding Company

Shawford Investments Inc

100%

British Virgin Islands

Holding Company

Branca Tide Limited

100%

British Virgin Islands

Holding Company

 

Indirect investments of Agriterra Mozambique Limited

 

Subsidiary undertakings

Proportion held

Country of incorporation

Nature of business

 

 

 

 

Desenvolvimento E Comercialização Agricola Limitada

100%

Mozambique

Grain

Compagri Limitada

100%

Mozambique

Grain

Mozbife Limitada

100%

Mozambique

Beef

Carnes de Manica Limitada

100%

Mozambique

Beef

Aviação Agriterra Limitada

100%

Mozambique

Aviation services

 

Indirect investments of West Africa Cocoa Services Limited

 

Subsidiary undertakings

Proportion held

Country of incorporation

Nature of business

 

 

 

 

Tropical Farms (SL) Limited

100%

Sierra Leone

Cocoa & Coffee

 

Indirect investments of Branca Tide Limited

 

Subsidiary undertakings

Proportion held

Country of incorporation

Nature of business

 

 

 

 

Tropical Farms Plantation (SL) Limited

100%

Sierra Leone

Cocoa Plantation

 

Indirect investments of Shawford Investments Inc.

 

Subsidiary undertakings

Proportion held

Country of incorporation

Nature of business

 

 

 

 

Red Bunch Ventures (SL) Limited

100%

Sierra Leone

Palm Oil

 

 

40.         Trade and other receivables

               

 

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Other receivables

475

 

134

Prepayments

20

 

32

 

495

 

166

 

 'Other receivables' disclosed above are classified as loans and receivables and measured at amortised cost. The Directors consider that the carrying amount of these financial assets approximates their fair value.  There are no significant amounts past due which have not been provided against (2014: $nil). Further details on the Company's financial assets are provided in note 29.

 

Other receivables include $350,000 (2014: $122,000) due from related parties (see note 33).

 

 

41.         Trade and other payables

 

2015

 

2014

 

US$000

 

US$000

 

 

 

 

Trade payables

101

 

78

Other payables

527

 

573

Accrued liabilities

157

 

389

 

785

 

1,040

 

The Directors consider that the carrying amount of financial liabilities approximates their fair value. Further details on the Company's financial liabilities are provided in note 29

 

42.         RELATED PARTIES

 

Transactions and balances due at the period end with related parties, other than with subsidiary undertakings, are disclosed in note 33.

 

Related party transactions are entered into on an arm's length basis. No provisions have been made in respect of amounts owed by or to related parties except where disclosed.

 

Subsidiary companies are financed by means of parent company loans which bare market rates of interest. Details on the Company's receivables from subsidiary undertakings, including advances in the period, interest receivable and provisions for irrecoverable amounts are provided in note 39.

 

43.         Ultimate controlling party

 

The Directors are of the opinion that there is no controlling party of the Company.

 

44.         EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

 

Details of events subsequent to the balance sheet date which relate to the Company, are included in note 35.2.

 

 

** ENDS**

 

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