Interim Results

RNS Number : 7323H

Agriterra Ltd

26 February 2010

 



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

26 February 2010

Agriterra Ltd ('Agriterra' or 'the Company')

Interim Results

Agriterra Ltd, the AIM listed company focussed on the agricultural sector in central and southern Africa, announces its results for the six months ended 30 November 2009.

Overview

·    Significant progress made towards building a major sub-Saharan African focussed agricultural business

·    Record buying season achieved at Chimoio maize processing facility - increased total purchase figure by 40% to 35,000 tonnes (2008 buying season: 25,000 tonnes)

·    Growing market presence - DECA commands major market share in key regions such as Beira and geographic reach is spreading countrywide

·    Tete facility - 8,000 tonnes of maize achieved during 2009 buying season and full commercial licences obtained

·    Breeding programme progressing well on Mozbife's Dombe and Mavonde ranches - total head of cattle now approximately 1,000

·    Heavily invested in development of both maize processing and beef business

·    In December acquired remaining interest in agricultural trading and processing companies and cattle ranching and feedlot production entity Mozbife

·    Interims coincide with buying season, full year results reflect sales

CHAIRMAN'S STATEMENT

We have made impressive progress in building our position as a significant agricultural company focussed on sub-Saharan Africa.  Our maize processing operation in Chimoio is growing from strength to strength recording a record buying season, while we have invested heavily in the development of the Compagri maize processing business in Tete, and laying the foundations for our cattle ranching business in Chimoio. 

DECA, Chimoio

2009 was a record buying season for DECA, with 35,000 tonnes purchased between June to September, a new record figure exceeding previous seasons by nearly 10,000 tonnes.  Importantly grain was purchased at improved prices compared to previous years.  Storage capacity was the only limiting factor and as a result the Company has initiated plans to increase capacity with the construction of a further six 1,000 tonne silos, taking the total storage capacity at Chimoio to just over 40,000 tonnes.  Sales of product are currently very strong and growing daily following the strong buying season.  The DECA product commands a major market share in the Beira area, which is the Company's biggest market and it is now being sold regularly as far south as Chokwe near Maputo, nearly 1,000km from Chimoio. 

Compagri, Tete

Following commencement of operations in 2009, Compagri purchased in excess of 8,000 tonnes of maize in its first buying season.  All commercial licences have now been acquired and milling is commencing in order to supply the local market.  It is expected that purchases of grain and other agricultural products could reach 20,000 tonnes in 2010 as the operations expand to keep up with the anticipated growing demand in the Tete area.  With the vast developments in the coal mining projects in the area, substantial inflows of workers are expected, many of whom consume maize meal as their staple diet, and therefore the project is well placed to satisfy this demand.  Importantly, new markets are also being opened up with strong export potential to neighbouring Malawi as well as to Zimbabwe being indicated.

Mozbife Cattle Ranching

We have invested heavily in our cattle ranching operations and we already have two ranches covering 15,000 hectares and a current stock of circa 1,000 head of cattle.

At the 1,000ha Mavonde ranch, following the recent import of 265 pedigree Beefmaster cattle, including 11 top quality bulls from South Africa, a concentrated breeding programme has been put in place.  Calves have already been born and the herd now exceeds 280 head.  Cattle are all tagged and numbered and an accurate recording system for each animal has been instituted. 

An area of 200ha of land has been cleared and is currently being planted with various pasture grasses.  All of this land is under irrigation following the installation of a new irrigation system.  Mozbife is currently looking at the feasibility of constructing a large dam with approx 8km of pushback to ensure water security for the irrigation scheme.  Additionally negotiations are also underway with local authorities for the acquisition of a further large tract of neighbouring land for project expansion.

The 15,000 ha Dombe ranch is still in the initial phase of development with boundaries having been defined and cleared and cattle numbers already exceed 700.  A boundary fencing scheme covering almost 50km has started and once final project approvals are obtained, the Company will begin the paddock fencing and installation of water reticulation systems.

The abattoir project remains on course with final negotiations and design criteria ongoing with the supplier in the Netherlands.  It is envisaged that initially the abattoir will have a capacity of 50 head per day, expandable to 100 per day through the addition of modern modular systems.  The abattoir is being designed to meet stringent Halal and export requirements from other countries in Africa and it is hoped to start construction this year once all planning is finalised and approvals obtained.

FINANCIAL RESULTS

The Company has invested heavily, primarily from internal cash flow, into its embryonic beef ranching business and establishing its second grain processing facility at Tete.  The cyclical nature of the agricultural buying and processing industry, whereby the raw commodity is bought during the May to September buying season and sales are at their lowest, building to the high sales months of November to May.  Therefore, the full year results, which will be announced by the end of November 2010, will provide a clearer indication of the growth and financial performance of the Company.

With all the above in mind we are reporting a pre-tax loss of $1,967,000 on turnover of $2,480,000 during the period.  Cash balances at the period end remained healthy at $2.5 million (2008: $8.5 million).  In addition we had circa 39,000 tonnes of maize in stock ready to be processed and sold.

OUTLOOK

I am confident that the progress that we have made with DECA, Compagri and Mozbife, has created an ideal platform for Agriterra's future growth into a major agricultural company focussed on sub-Saharan Africa.  Importantly, now that Agriterra wholly owns all three subsidiaries following our acquisition of the remaining 25% interests in DECA, Compagri and Mozbife in December 2009, we will now have maximum exposure to the uplift in value which I believe will come from our continued growth of our operations.

We see significant opportunities for growth in both our maize processing operations at the Chimoio and Tete facilities.   They are both state of the art facilities that are producing high quality product which is being delivered across Mozambique and to the World Food Programme.

The cattle ranching operations will also be an increasingly important facet of Agriterra's business moving forward.  We are still very much in a development stage at both of our ranches and the planning of our abattoir is progressing on schedule.  The Board is cognisant of the huge potential for a supplier of domestically reared beef to the Mozambican market, and we will continue to accelerate development of this element of our business in order to capitalise on this demand.

I would like to take this opportunity to thank our valued shareholders, and I look forward to reporting on the future progress that we make in achieving our objective and growing Agriterra into one of the largest African focussed agri-operators.

** ENDS **

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

Andrew Groves	Agriterra Ltd	Tel: [phone]
Jonathan Wright	Seymour Pierce Ltd	Tel: [phone]
Hugo de Salis	St Brides Media & Finance Ltd	Tel: [phone]
Susie Callear	St Brides Media & Finance Ltd	Tel: [phone]

Unaudited Group Income Statement

For the six month period to 30 November 2009

		Unaudited 6 months to 30 November 2009	Unaudited 6 months to 31 December 2008	Unaudited 11 months to 31 May 2009
	Note	$'000	$'000	$'000
Sales	4	2,480	-	4,855
Cost of sales		(1,965)	-	(3,483)
		515		1,372
Operating expenses		(2,494)	(707)	(1,875)
Operating loss		(1,979)	(707)	(503)
Net finance income		12	145	332
Loss before taxation		(1,967)	(562)	(171)
Income tax		-	-	-
Loss for the period from continuing operations		(1,967)	(562)	(171)
Discontinued operations :
Loss for the period		(83)	(2,886)	(3,519)
Loss for the period attributable to equity holders		(2,050)	(3,448)	(3,690)
Loss per share: basic & diluted	6	(0.43 cents)	(0.98 cents)	(1.05 cents)

Unaudited Statement of Other Comprehensive Income

For the six month period to 30 November 2009

		Unaudited 6 months to 30 November 2009	Unaudited 6 months to 31 December 2008	Unaudited 11 months to 31 May 2009
	Note	$'000	$'000	$'000
Loss for the period		(2,050)	(3,448)	(3,690)
Other comprehensive income net of foreign exchange translation loss		(2,988)	(46)	(3,999)
Total comprehensive loss for the period		(5,038)	(3,494)	(7,689)
Comprehensive loss attributable to equity holders		(5,038)	(3,494)	(7,689)

Unaudited Statement of Financial Position

As at 30 November 2009

		Unaudited 30 November 2009	Unaudited 31 December 2008	Unaudited 31 May 2009
	Note	$'000	$'000	$'000
Non current assets
Property, plant and equipment		11,507	-	13,397
Biological assets		264	-	207
Total non current assets		11,771	-	13,604
Current assets
Inventories		8,656	-	2,376
Trade and other receivables		1,874	393	1,492
Cash and cash equivalents		2,539	7,145	8,517
Total current assets		13,069	7,538	12,385
Total assets		24,840	7,538	25,989
Current liabilities
Trade and other payables		(2,685)	(1,623)	(3,009)
Net assets		22,155	5,915	22,980
Equity
Issued capital	7	1,145	641	1,039
Share premium		124,259	101,584	119,349
Share based payment reserve		1,281	1,231	1,281
Translation reserve		(2,967)	(46)	824
Retained earnings		(101,563)	(97,495)	(99,513)
Total equity attributable to equity holders of the parent		22,155	5,915	22,980

Unaudited Statement of Cash Flows

For the six months to 30 November 2009

		Unaudited 6 months to 30 November 2009	Unaudited 6 months to 31 December 2008	Unaudited 11 months to 31 May 2009
	Note	$'000	$'000	$'000
Operating activities
Loss before tax		(2,050)	(814)	(171)
Adjustments for:
Depreciation		291	-	164
Movements in exchange rates		(834)	-	-
Sharebased payment		-	-	50
Net interest income		(12)	-	(332)
Operating cash flow before movements in working capital		(2,605)	(814)	(289)
Working capital adjustments:
- Increase in inventory		(6,937)	-	(1,153)
- Increase in receivables		(393)	(6)	(137)
-(Decrease) / increase in payables		67	58	1,516
Cash used in operations		(9,868)	(762)	(63)
Finance charges
Interest received		12	145	332
Net cash (outflow) / inflow from continuing operating activities		(9,856)	(617)	269
Net cash inflow / (outflow) from discontinued operating activities		(425)	209	(1,255)
Net Cash outflow from operating activities		(10,281)	(408)	(986)
Investing activities
Purchase of property, plant and equipment		(532)	-	(4,692)
Purchase of biological assets		(57)	-	(169)
Purchase of subsidiaries net of cash acquired		-	-	2,162
Net cash used in continuing investing activities		(589)	-	(2,699)
Net cash used in discontinued investing activities		-	(2,329)	(1,918)
Net cash used in investing activities		(589)	(2,329)	(4,617)
Financing activities
Proceeds from issue of share capital		5,016	-	3,718
Loan from related party		-	-	127
Net cash flow from financing activities		5,016	-	3,845
Net decrease in cash and cash equivalents		(5,854)	(2,737)	(1,758)
Cash and cash equivalents at start of the year		8,517	13,047	13,047
Effect of FX rates		(124)	(3,165)	(2,772)
Cash and cash equivalents at end of the year		2,539	7,145	8,517

Notes to the Unaudited Interim Group Financial Statements

1.	General information

Agriterra Limited ('Agriterra or 'the Company') and its subsidiaries (together the 'Group') is focussed on the Agricultural sector in Africa.  Agriterra is a public limited company incorporated and domiciled in the Guernsey.  The address of its registered office is 22 Smith Street, St. Peter Port, Guernsey GY1 4LX.

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

The Unaudited Interim Group Financial Statements for the six months ended 30 November 2009 were approved for issue by the board on 25 February 2010.

The figures for the six months ended 30 November 2009 and the six months ended 31 December 2008 are unaudited and do not constitute full accounts. The comparative figures for the 11 month period ended 31 May 2009 are extracts from the annual report and do not constitute statutory accounts.

2.	Basis of preparation

The basis of preparation and accounting policies set out in the Annual Report and Accounts for the period ended 31 May 2009 have been applied in the preparation of these interim condensed consolidated financial statements, with the exceptions disclosed in note 3. These are in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and with those of the Standing Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the International Accounting Standards Board (IASB). References to 'IFRS' hereafter should be construed as references to IFRSs as adopted by the EU

3.	Accounting policies

The accounting policies and methods of calculation adopted are consistent with those of the financial statements for the period ended 31 May 2009, as described in those annual financial statements, except as discussed below.

The Group has applied IAS 1 Revised "Presentation of Financial Statements" and IFRS 8 "Operating Segments" as of 1 January 2009.  In accordance with IAS 1 the financial statements have been re-titled and a consolidated statement of other comprehensive income produced. IFRS 8 states that segment information should be based on management's internal reporting structure and accounting principles. 

As disclosed in the financial statements for the period ended 31 May 2009, the Group's  segment information has already been based on the management reporting structure and therefore the operating segments are the same as previously reported. 

See the Report and Accounts for the period ended 31 May 2009 for disclosures of new standards, amendments and interpretations which have been adopted, none of which have had a significant effect on the reported results or financial position of the Group for the period ended 30 November  2009.

4.	Segment information

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

	Continuing activities
6 months ending 30 November 2009	Agriculture	Other	Total
	$'000	$'000	$'000
Revenue	2,480	-	2,480
Operating loss	(978)	(1,001)	(1,979)
Interest (expense) / income	(336)	348	12
Loss before tax	(1,314)	(653)	(1,967)
Income tax			-
Loss for the period from continuing activities			(1,967)

	Continuing activities
Period ending 31 May 2009	Agriculture	Other	Total
	$'000	$'000	$'000
Revenue	4,855	-	4,855
Operating profit / (loss)	200	(703)	(503)
Interest (expense) / income	(67)	399	332
Profit /(loss) before tax	133	(304)	(171)
Income tax			-
Loss for the period from continuing activities			(171)

For the six months ended 31 December 2008, the directors considered that the Group's activities were all involved in oil and gas interests in Africa

5.	Discontinued operations

In December 2008 the company announced that it proposed to adopt a new investment strategy operating in the Agricultural sector. Consequently the oil and gas activities have been reclassified as a discontinued operation.

The results for the discontinued oil and gas operations are as follows:

	Period ending
	30 November 2009	31 December 2008	31 May 2009
	$'000	$'000	$'000
Operating loss	(83)	(774)	(685)
Finance income	-	1	1
Impairment of oil and gas interests	-	(2,113)	(2,835)
Loss before taxation	(83)	(2,886)	(3,519)
Income tax	-	-	-
Loss after taxation	(83)	(2,886)	(3,519)

6.	Loss per share

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

		Unaudited 6 months to 30 November 2009		Unaudited 6 months to 31 December 2008	Unaudited 11 months to 31 May 2009
		$'000		$'000	$'000
Loss for the purpose of calculating basic loss per share (loss attributable to equity holders)		(2,050)		(3,448)	(3,690)
Loss for the purpose of calculating basic loss per share from continuing activities		(1,967)		(562)	(171)
Number of shares
Weighted average number of ordinary shares for the purposes of calculating basic and diluted lo0ss per share		479,077,718		350,132,688	352,921,478
Basic and diluted loss per share (cents)		(0.43)		(0.98)	(1.05)
Loss per share from continuing activities (cents)			(0.41)	(0.16)	(0.04)

Due to the loss incurred in the period, there is no dilutive effect of share options.

7.	Share capital

		Ordinary shares of 0.1p each
		Authorised	Allotted and fully paid
		Number	Number	$'000
At 1 July 2008		1,000,000,000	350,132,688	641
Division of share capital		(155,000,000)	(155,000,000)	(238)
At 31 December 2008		845,000,000	195,132,688	403
Issue of share		-	278,688,866	398
At 31 May 2009		845,000,000	473,821,554	801
Issue of shares		-	318,821,554	106
At 30 November 2009		845,000,000	792,643,108	907
		Deferred shares of 0.1p each
		Authorised	Allotted and fully paid
		Number	Number	$'000
At 1 July 2008		-	-	-
Division of share capital		155,000,000	155,000,000	238
At period ends		155,000,000	155,000,000	238
Total share capital
At 31 December 2008		1,000,000,000	350,132,688	641
At 31 May 2009		1,000,000,000	628,821,554	1,039
At 30 November 2009		1,000,000,000	947,643,108	1,145

8.	Post balance sheet events

On 23 December the Company announced that it had agreed to acquire the remaining 25% of the issued share capital of Desenvolvimento E Comercializacao Agricola Limitada ('DECA'), Compagri Limitada ('Compagri') and Mozbife Limitada ('Mozsbife') from Goodworth Services Limited.

Under the terms of the acquisition, 10,000,000 new Ordinary shares were issued to Goodworth at 6p per share.

 

END

 

 

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