Interim Results

RNS Number : 6053B

Agriterra Ltd

22 February 2011

 



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

22 February 2011

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

Interim Results

Agriterra Ltd, the AIM listed group focussed on the agricultural sector in central and southern Africa, announces its results for the six months ended 30 November 2010.

Chairman's Statement

The economic fundamentals for the agricultural sector are extremely positive.  The increasing focus on global food security means that there are significant opportunities for the Group given our personnel and experience.  Africa offers huge development potential and our ability to identify opportunities and build substantial operations is proven through each of Desenvolvimento E Comercialização Agricola Limitada ('DECA'), Compagri Limitada ('Compagri') and Mozbife Limitada ('Mozbife').  These businesses provide us with a solid platform to expand the Group in order to capitalise on this rapidly growing sector and accordingly we are actively evaluating additional opportunities in agriculture and associated logistics businesses across the continent. 

Our efforts during the period have remained centred on consolidating our maize processing operation at our DECA facility in Chimoio and expanding the Compagri facility in Tete, which recommenced operations during the period and is now beginning to contribute revenues to the Group.  The expansion of our beef ranching operations is continuing apace following a successful calving season and development of our Vanduzi feedlot project.

Maize Processing - DECA and Compagri

Our grain processing facilities, which include the 40,000 tonne capacity DECA facility at Chimoio, and the 12,600 tonne capacity Compagri facility in the Tete Province of Mozambique, have achieved notable successes during the period, with record sales made at both operations.

We started the period with a strong maize stock pile, following a record buying year in 2009, which enabled us to manage the processing and sales of the product in-line with the recent favourable pricing environment.  The sale of 17,250 tonnes of maize meal and bran, from both the DECA and Compagri facilities during the period, resulted in record turnover for the maize businesses, with revenue totalling US$5.2 million, more than double that of the corresponding period in 2009.  This increase in revenue, coupled with the completion of construction and bedding down of the Tete facility, has enabled the grain processing branch of the Agriterra business to swing into profit at an operational level. 

As buying and processing operations are ramped up, particularly at the Compagri facility which caters for the booming mining area of Tete and its surroundings, I believe that our maize processing facilities will continue to provide a solid foundation and internal cash flow for the continued expansion of the Group.

Mozbife

Beef ranching offers a material value opportunity in Africa.  Our rapidly growing ranching business in Mozambique remains an area of significant expansion and investment for the Group, with total head exceeding 1,100 across the 1,000ha Mavonde and 15,000ha Dombe ranches by the end of the period.  

The period under review encompassed the calving season, where we experienced an 82% pregnancy rate and 100% survival rate of all calves.  This was a tremendous achievement for Mozbife, and underpins the quality of our beef stock and high veterinarian standards which we enforce across both ranches.  This successful breeding programme is critical both to the continued growth of the herd and the improvement of animal quality as imported South African Beefmaster stock is cross bred with native cattle to develop a herd with excellent meat yield potential coupled with high local disease resistance.

The Vanduzi abattoir/feedlot project is also advancing rapidly, with the first feed pens and boundary fencing completed in the period.  Post period end saw the first delivery of animals ahead of slaughter at the Beira abattoir, with dress out weight percentages between 58% and 63%, which was more than 10% above management expectations and an average sale price per animal in excess of US$900.  The attractive sale price for the animals highlights the financial returns possible for an established beef ranching operation in Mozambique and underpins the huge potential of Mozbife. 

Our extensive land clearing and preparation programme at Vanduzi is also progressing encouragingly, with 170 hectares planted with maize crop to ensure security of feedlot and a further 270 hectares now cleared for additional planting.  This, coupled with the planned development of an abattoir by the Group, will provide Mozbife with the foundations required to develop into one of southern Africa's largest producers of beef.  We have also recruited three highly experienced ranching professionals, who have proven track records in developing major beef operations, to manage the onward development and growth of our herds and feedlot/abattoir project.

Financial Results

For the period, the Group is reporting a pre-tax profit of US$97,000 (H12009: loss of US$1,967,000) on turnover of US$5,284,000 (H1 2009: US$2,480,000).  Cash balances at the period end remained healthy at $7,080,000, following a placing of 145,483,334 new ordinary shares at a price of 3 pence per placing share, raising US$7 million before expenses.  In addition the Group had circa 29,500 tonnes of maize in stock at the end of the period, ready to be processed and sold.

Outlook

We have a solid foundation and believe we are positioned to take advantage of opportunities in the rapidly expanding agricultural and logistics sector.  The outlook for the maize processing operations in the second half is positive with high current stock levels and a ramp up in activity at Compagri, which we believe will be underpinned by the current positive pricing environment for meal and bran.  With regards to our beef operations, with the business progressing well, we look forward to a first revenue contribution in H2 2011.  Our objective is to build a breeding herd in excess of 10,000 with an initial target for 2012 of over 4,000 head.  Throughput in the feedlot will be augmented by bought in local cattle, which will further contribute to revenues.  On acquisitions, as previously stated we are actively evaluating additional opportunities in agriculture and associated logistics businesses across the continent.

Finally, I would like to take this opportunity to thank our shareholders for their continued support over the period, and to my fellow board members and management teams for their unwavering dedication to the future growth and success of the Group.

Phil Edmonds

Chairman

21 February 2011

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

Andrew Groves	Agriterra Ltd	Tel: [phone]
Jonathan Wright	Seymour Pierce Ltd	Tel: [phone]
David Foreman	Seymour Pierce Ltd	Tel: [phone]
Robin Henshall	Matrix Corporate Capital LLP	Tel: [phone]
Nick Stone	Matrix Corporate Capital LLP	Tel: [phone]
Hugo de Salis	St Brides Media & Finance Ltd	Tel: [phone]
Susie Geliher	St Brides Media & Finance Ltd	Tel: [phone]

Unaudited Consolidated Income Statement

For the six month period to 30 November 2010

		Unaudited 6 months to 30 November 2010	Unaudited 6 months to 31 December 2009	Audited year to 31 May 2010
Continuing Operations	Note	$'000	$'000	$'000
Revenue	4	5,284	2,480	8,791
Increase in value of biological assets		63	-	22
Cost of sales		(3,660)	(1,965)	(7,371)
Gross profit		1,687	515	1,442
Operating expenses		(2,248)	(2,939)	(5,686)
Other income		612	445	386
Operating profit / (loss)		51	(1,979)	(3,858)
Net finance income / (expense)		46	12	(46)
Profit / (loss) before taxation		97	(1,967)	(3,904)
Income tax expense		-	-	-
Profit / (loss) for the period from continuing operations		97	(1,967)	(3,904)
Discontinued operations :
Loss for the period		(10)	(83)	(920)
Profit / (loss) for the period attributable to equity holders		87	(2,050)	(4,824)
Earnings / (loss) per share: Basic & diluted	5	0.02 cents	(0.43 cents)	(0.9 cents)
Earnings / (loss) per share from continuing operations: Basic & diluted		0.02 cents	(0.43 cents)	(0.8 cents)

Unaudited Consolidated Statement of Comprehensive Income

For the six month period to 30 November 2010

		Unaudited 6 months to 30 November 2010	Unaudited 6 months to 31 December 2009	Audited year to 31 May 2010
	Note	$'000	$'000	$'000
Profit / (loss) for the period		87	(2,050)	(4,824)
Other comprehensive income net of tax Foreign exchange translation loss		(1,337)	(3,791)	(6,005)
Total comprehensive loss for the period		(1,250)	(5,841)	(10,829)
Comprehensive loss attributable to equity holders		(1,250)	(5,841)	(10,829)

Unaudited Consolidated Balance Sheet

As at 30 November 2010

		Unaudited 30 November 2010	Unaudited 31 December 2009	Audited 31 May 2010
	Note	$'000	$'000	$'000
Non current assets
Property, plant and equipment		8,891	11,507	9,986
Investments		-	-	114
Biological assets		312	264	236
Total non current assets		9,203	11,771	10,336
Current assets
Inventories		6,550	8,656	4,605
Trade and other receivables		2,140	1,874	1,019
Cash and cash equivalents		7,080	2,539	3,442
Total current assets		15,770	13,069	9,066
Total assets		24,973	24,840	19,402
Current liabilities
Trade and other payables		(2,407)	(2,685)	(2,176)
Net assets		22,566	22,155	17,226
Equity
Issued capital	6	1,387	1,145	1,161
Share premium		131,548	124,259	125,184
Share based payment reserve		1,360	1,281	1,360
Translation reserve		(6,518)	(2,967)	(5,181)
Retained earnings		(105,211)	(101,563)	(105,298)
Total equity attributable to equity holders of the parent		22,566	22,155	17,226

Consolidated Statement of Changes in Equity

	Ordinary share capital $'000	Deferred share capital $'000	Share premium $'000	Share based payment reserve $'000	Translation reserve $'000	Retained earnings $'000	Total $'000
Balances at 1 June 2009	801	238	119,349	1,281	824	(99,513)	22,980
Loss for the period	-	-	-	-	-	(2,050)	(2,050)
Other comprehensive income
Exchange translation differences on foreign operations	-	-	-	-	(3,791)	-	(3,791)
Total comprehensive income for the period Transactions with owners	-	-	-	-	(3,791)	(2,050)	(5,841)
Share issues	106	-	4,910	-	-	-	5,016
Total transactions with owners	106	-	4,910	-	-	-	5,016
Balances at 30 November 2009	907	238	124,259	1,281	(2,967)	(101,563)	22,155
Loss for the period	-	-	-	-	-	(2,774)	(2,774)
Other comprehensive income
Exchange translation differences on foreign operations	-	-	-	-	(2,214)	-	(2,214)
Total comprehensive income for the period	-	-	-	-	(2,214)	(2,774)	(4,988)
Transactions with owners
Share based payment charge	-	-	-	79	-	-	79
Acquisition of minority	-	-	-	-	-	(961)	(961)
Share issues	16	-	925	-	-	-	941
Total transactions with owners	16	-	925	79	-	(961)	59
Balances at 31 May 2010	923	238	125,184	1,360	(5,181)	(105,298)	17,226
Profit for the period	-	-	-	-	-	87	87
Other comprehensive income
Exchange translation differences on foreign operations	-	-	-	-	(1,337)	-	(1,337)
Total comprehensive income for the period	-	-	-	-	(1,337)	87	(1,250)
Transactions with owners
Share issue	226	-	6,364	-	-	-	6,590
Total transactions with owners	226	-	6,364	-	-	-	6,590
Balances at 30 November 2010	1,149	238	131,548	1,360	(6,518)	(105,211)	22,566

Unaudited Consolidated Statement of Cash Flows

For the six months to 30 November 2010		Unaudited 6 months to 30 November 2010	Unaudited 6 months to 31 December 2009	Audited year to 31 May 2010
Operating activities	Note	$'000	$'000	$'000
Profit / (loss) before tax		97	(2,050)	(3,904)
Adjustments for:
Depreciation		499	291	1,359
Increase in value of biological assets		(63)	-	(22)
Profit on disposal of assets		(3)	-	(20)
Movements in exchange rates		(101)	(834)	(42)
Share based payment		-	-	79
Net interest (income)/expense		(46)	(12)	46
Operating cash flow before movements in working capital		383	(2,605)	(2,504)
Working capital adjustments:
- Increase in inventory		(2,205)	(6,937)	(3,182)
- Increase in receivables		(4)	(393)	(523)
- Increase / (decrease) in payables		21	67	(506)
Cash used in operations		(1,805)	(9,868)	(6,715)
Net interest received / (paid)		46	12	(46)
Net cash used in continuing operating activities		(1,759)	(9,856)	(6,761)
Net cash used in discontinued operating activities		(520)	(425)	(783))
Net cash outflow from operating activities		(2,279)	(10,281)	(7,544)
Investing activities
Purchase of property, plant and equipment		(196)	(532)	(1,346)
Proceeds of sale of property, plant and equipment		-	-	135
Purchase of biological assets		-	(57)	(42)
Purchase / (sale) of financial assets		125	-	(125)
Net cash used in continuing investing activities		(71)	(589)	(1,378)
Net cash from discontinued investing activities		100	-	3
Net cash from / (used) in investing activities		29	(589)	(1,375)
Financing activities
Proceeds from issue of share capital		6,031	5,016	4,810
Net cash flow from financing activities		6,031	5,016	4,810
Net increase / (decrease) in cash and cash equivalents		3,781	(5,484)	(4,109)
Cash and cash equivalents at start of the year		3,442	8,517	8,517
Effect of foreign exchange rates		(143)	(124)	(966)
Cash and cash equivalents at end of the period		7,080	2,539	3,442

Notes to the Unaudited Interim Group Financial Statements

1.	General information

Agriterra Limited ('Agriterra' or 'the Company') and its subsidiaries (together the 'Group') is focussed on the Agricultural sector in Africa.  Agriterra is a public limited company incorporated and domiciled in the Guernsey.  The address of its registered office is Richmond House, St Julians Avenue, St Peter Port, Guernsey GY1 1GZ

The Company is listed on the AIM Market of London Stock Exchange plc.

The unaudited interim consolidated financial statements for the six months ended 30 November 2010 were approved for issue by the board on 18 February 2010.

The figures for the six months ended 30 November 2010 and the six months ended 31 December 2009 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 May 2010 are extracts from the annual report and do not constitute statutory accounts.

The unaudited interim consolidated financial statements have been prepared in US Dollars as this is the currency of the primary economic environment in which the Group operates.

2.	Basis of preparation

The basis of preparation and accounting policies set out in the Annual Report and Accounts for the period ended 31 May 2010 have been applied in the preparation of these interim condensed consolidated financial statements. These are in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and with those of the Standing Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the International Accounting Standards Board (IASB). References to 'IFRS' hereafter should be construed as references to IFRSs as adopted by the EU

3.	Accounting policies

The accounting policies and methods of calculation adopted are consistent with those of the financial statements for the period ended 31 May 2010.

4.	Segment information

The directors consider that the Group's activities comprise one business segment, agriculture and other unallocated expenditure in one geographical segment, Africa.

	Continuing activities
6 months ending 30 November 2010	Agriculture	Other	Total
	$'000	$'000	$'000
Revenue	5,284	-	5,284
Operating profit	213	(162)	51
Interest income	46	-	46
Profit / (loss) before tax	259	(162)	97
Income tax			-
Profit for the period from continuing activities			97

	Continuing activities
6 months ending 30 November 2009	Agriculture	Other	Total
	$'000	$'000	$'000
Revenue	2,480	-	2,480
Operating loss	(978)	(1,001)	(1,979)
Interest income	9	3	12
Loss before tax	(969)	(998)	(1,967)
Income tax			-
Loss for the period from continuing activities			(1,967)

	Continuing activities
Period ending 31 May 2010	Agriculture	Other	Total
	$'000	$'000	$'000
Revenue	8,791	-	8,791
Operating loss	(2,170)	(1,688)	(3,858)
Interest income / (expense)	4	(50)	(46)
Loss before tax	(2,166)	(1,738)	(3,904)
Income tax			-
Loss for the period from continuing activities			(3,904))

5.	Earnings per share

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

		Unaudited 6 months to 30 November 2010		Unaudited 6 months to 31 December 2009	Unaudited 11 months to 31 May 2010
		$'000		$'000	$'000
Profit / (loss) the purpose of calculating basic earnings per share (profit / (loss) attributable to equity holders)		87		(2,050)	(3,690)
Profit / (loss) for the purpose of calculating basic earnings per share from continuing activities		97		(1,967)	(4,824)
Number of shares
Weighted average number of ordinary shares for the purposes of calculating basic and diluted loss per share		548,901,427		479,077,718	515,129,499
Basic and diluted loss per share (cents)		0.02		(0.43)	(0.94)
Loss per share from continuing activities (cents)			0.02	(0.41)	(0.76)

6.	Share Capital

		Ordinary shares of 0.1p each
		Authorised	Allotted and fully paid
		Number	Number	$'000
At 1 July 2009		845,000,000	473,821,554	801
Issue of shares		-	63,950,000	106
At 30 November 2009		845,000,000	537,771,554	907
Issue of shares		-	10,000,000	16
At 31 May 2010		845,000,000	547,771,554	923
Issue of shares		-	145,483,334	226
At 30 November 2010		845,000,000	693,254,888	1,149
		Deferred shares of 0.1p each
		Authorised	Allotted and fully paid
		Number	Number	$'000
At period ends		155,000,000	155,000,000	238
Total share capital
At 30 November 2009		1,000,000,000	692,771,554	1,145
At 31 May 2010		1,000,000,000	702,771,554	1,161
At 30 November 2010		1,000,000,000	848,254,888	1,387

 

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