Operations Update and Notice of Final Results

RNS Number : 7161P

Agriterra Ltd

29 October 2012

 



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

29 October 2012

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

Operations Update, Unaudited financial results for the year ended 31 May 2012 and Notice of Final Results

Agriterra Ltd, the AIM listed pan African agricultural company, is pleased to announce that the Company's results for the year ended 31 May 2012 will be released on 12 November 2012.

Agriterra continues to build its African focussed agricultural and food production businesses in Mozambique and Sierra Leone, and now has three revenue streams from beef, grain and cocoa.  Revenues are generated from Mozbife Limitada ('Mozbife') which conducts cattle ranching, feedlot and abattoir operations, Desenvolvimento E Comercialização Agricola Limitada ('DECA') and Compagri Limitada ('Compagri'), which operate maize farming and processing businesses, and Tropical Farms Limited ('TFL'), which manages the Group's cocoa sales, trading and farming activities.

During the year, the Group has invested heavily in expansion of activities in line with its long term growth strategy.  Mozbife's current herd exceeds 4,800 cattle with 16,000 hectares of land providing room for expansion.  The herd is targeted to reach 6,000 by the end of 2012.  The 48 billion litre dam at the Mavonde Stud Ranch has been completed which has the capacity to irrigate 4,000 hectares and increases the head per hectare ration from 1.5 to 6.  The Group now has an 18 pen feedlot at Vanduzi with rolling capacity of up to 3,000 head every 90 days, and over 700 hectares planted for feed.  The abattoir, with a 4,000 head per month processing rate, has been completed and butchers shops are being established to increase margin and complete the field to fork model.  DECA continues to operate at Chimoio and Tete with storage capacity of 50,000 tonnes and processing of 60,000 tonnes per annum.   DECA and Compagri sold 21,717 tonnes of maize meal during the year (2011: 28,822 tonnes), with lower volumes due to a very strong harvest in 2011, which subsequently reduced demand for the mealie meal product made by DECA and Compagri.  However initial contributions from the beef and cocoa operations resulted in turnover for the Group increasing marginally to US$13.8 million (2011: US$13.6 million).  TFL's operations have expanded rapidly, and there are now three main hubs and 41 satellite stores servicing a direct buying register of 3,500 farmers.  The company traded approximately 1,250 tonnes of cocoa and 75 tonnes of coffee during the year ended 31 May 2012.  A 15 acre collateral management facility is being developed in Freetown and plantations are being secured.  The on-ground team has been expanded significantly to cater from the anticipated rise in revenues, which already exceed US$3 million. 

As a result of the progress and developments which reflect the Company's investment strategy, the Company's will report an approximate 55% increase in net asset value to US$38.5 million (2011: US$24.8 million).  During the period, investment in the capital and operating infrastructure has been significant and the Board believes it now has the foundation in place from which to raise profitability and further enhance shareholder value.  In particular, after three years of developing its Mozambique ranching operations, and the rapid implementation of an infrastructure for TFL to enable higher volumes for trading and plantation development, the Board believes that Agriterra is approaching the point where it will soon be profitable on a sustainable basis. With this in mind, the Company is reporting a pre-tax loss of approximately US$6.9 million (2011: US$2.1 million) and turnover of US$13.8 million (2011: US$13.5 million.).  Importantly, and reflecting the progress being made, trading for the first quarter of the current financial year has been significantly higher than the previous corresponding period.  

With regards to cash, the Company recently announced that it had signed an agreement to sell its legacy interest in the South Omo Block to Marathon Oil Corp ('Marathon Oil').  Under the terms of the agreement, the Company's 20% legacy interest in the South Omo Block will be sold to Marathon Oil for a cash consideration of US$40 million on completion and a further US$10 million on Marathon Oil's participation in a "Commercial Discovery".  Additionally, the Company is due payment of GBP£11.3 million, being partial recompense for work already undertaken and the substantial investment made by the Company on the Block Ba oil concession area in South Sudan, during its previous incarnation as White Nile Limited.

With such significant inflows of cash, the Company will be in a strong position to accelerate its development programme, achieve critical mass, invest in new projects and jurisdictions in order to achieve its objective of becoming a significant pan-African agricultural company. 

Andrew Groves, Agriterra Chief Executive Officer said, "We continue to make excellent progress building a long term sustainable agricultural and food production business, and now have three revenue streams from beef, grain and cocoa sales.  Our investment programme and expansion objectives will increase and diversify these revenue streams significantly and improve margins as we target profitability on a corporate level in the mid-term. 

"We also anticipate two significant cash injections in the near future, firstly on completion of our agreement with Marathon Oil which will provide the group with an additional US$40 million before tax, followed by a compensation payment of £11.3 million in relation to work completed at the Block Ba oil concession.  The dramatic cash injections will provide Agriterra with a very healthy cash position which already underpins the valuation of the Company, but will also enable the execution of our rapid growth initiatives."

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]
Andy Cuthill	MC Peat & Co LLP	Tel: [phone]
Susie Geliher	St Brides Media & Finance Ltd	Tel: [phone]

The financial information for the year ended 31 May 2012 set out below is unaudited and does not constitute the Company's statutory accounts for the year ended 31 May 2012.

UNAUDITED CONSOLIDATED INCOME STATEMENT

For the year ended 31 May 2012

			Year ended 31 May		Year ended 31 May
			2012		2011
Continuing Operations	Note		$'000		$'000
Revenue	1		13,826		13,588
Cost of sales			(11,913)		(10,372)
Gross profit			1,913		3,216
Increase in value of biological assets			400		214
Operating expenses			(8,851)		(6,109)
Other (expenses) / income			(262)		349
Operating loss			(6,800)		(2,330)
Finance income			48		159
Finance costs			(164)		-
Loss before taxation			(6,916)		(2,171)
Income tax expense			(26)		(168)
Loss after  tax			(6,942)		(2,339)
Discontinued operations
Profit / (loss) for the year			721		(89)
Loss for the year attributable to owners of the parent			(6,221)		(2,428)

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 May 2012

			2012		2011
	Note		$'000		$'000
ASSETS
Non-current assets
Intangible assets			963		271
Property, plant and equipment			26,243		13,264
Investments			9		-
Biological assets			1,642		631
Total non-current assets			28,857		14,166
Current assets
Biological assets			1,018		157
Inventories			6,701		2,976
Trade and other receivables			3,628		2,039
Cash and cash equivalents			3,553		8,172
Total current assets			14,900		13,344
TOTAL ASSETS			43,757		27,510
LIABILITIES
Current liabilities
Trade and other payables			(5,301)		(2,678)
NET ASSETS			38,456		24,832
EQUITY
Issued capital			1,957		1,387
Share premium			148,530		131,593
Share based payment reserve			1,620		1,360
Translation reserve			296		(1,782)
Retained earnings			(113,947)		(107,726)
TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT			38,456		24,832

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 May 2012

			Year ended 31 May		Year ended 31 May
			2012		2011
			$'000		$'000
Operating activities
Loss before tax			(6,916)		(2,171)
Adjustments for:
- Depreciation of property, plant and equipment			1,877		1,228
- Loss on disposal of property, plant and equipment			12		5
- Share based payment charge			100		-
- Increase in Biological assets			(400)		(214)
- Foreign exchange			150		(141)
- Net interest expense / (income)			116		(159)
Operating cash flow before movements in working capital			(5,061)		(1,452)
Working capital adjustments:
- (Increase) / decrease in inventory			(3,505)		1,973
- Increase in receivables			(1,545)		(547)
- (Decrease / increase in payables			(690)		261
Cash (used in) / from operations			(10,801)		235
Finance charges			(164)		-
Interest received			48		159
Net cash (used in) / from continuing operating activities			(10,917)		394
Net cash from / (used in) discontinued activities			721		(198)
Net cash (used in) / from operating activities			(10,196)		196
Taxation
Corporate tax paid			(60)		(38)
Net cash outflow from taxation			(60)		(38)
Investing activities
Purchase of intangible asset			-		(250)
Purchase of subsidiary net of debt acquired			(283)		-
Purchase of property, plant and equipment			(7,575)		(2,568)
Proceeds on sale of property, plant and equipment			96		38
Purchase of biological assets			(1,428)		(255)
Proceeds on sale of investment in financial assets			-		128
Net cash used in investing activities			(9,190)		(2,907)
Financing activities
Proceeds from issue of share capital			15,000		6,883
Share issue costs			(610)		(161)
Draw down of bank loan			123		-
Net cash from financing activities			14,513		6,722
Net (decrease) / increase in cash and cash equivalents			(4,933)		3,973
Cash and cash equivalents at start of the year			8,172		3,442
Exchange rate adjustment			314		757
Cash and cash equivalents at end of the year			3,553		8,172

1.    Segment reporting

The directors consider that the Group's continuing activities comprise the segments of grain processing, beef production and cocoa businesses, and other unallocated expenditure in one geographical segment, Africa. 

Revenue represents sales to external customers in the country of domicile of the group company making the sale.

Year ending 31 May 2012	Grain	Beef	Cocoa	Unallocated	Total
	$'000	$'000	$'000	$'000	$'000
Revenue	9,681	895	3,250	-	13,826
Segment results
- Operating loss	(1,203)	(2,310)	(578)	(2,709)	(6,800)
- Interest (expense) / income	(138)	-	-	22	(116)
Loss before tax	(1,341)	(2,310)	(578)	(2,687)	(6,916)
Income tax	(26)	-	-	-	(26)
Loss after tax	(1,367)	(2,310)	(578)	(2,687)	(6,942)

Year ending 31 May 2011	Grain	Beef	Cocoa	Unallocated	Total
	$’000	$’000	$’000	$’000	$’000
Revenue	13,533	55	-	-	13,588
Segment results
- Operating profit / (loss)	270	(958)	-	(1,642)	(2,330)
- Interest income/(expense)	141	0	-	18	159
Profit / (loss) before tax	411	(958)	-	(1,624)
Income tax	(168)	-	-	-	(168)
Profit / (loss) after tax	243	(958)	-	(1,624)	(2,339)

 

The segment assets and liabilities at 31 May 2012 are as follows:

	Grain	Beef	Cocoa	Unallocated	Total
	$'000	$'000	$'000	$'000	$'000
Assets	17,934	12,410	2,633	10,780	43,757
Liabilities	595	35	154	4,517	5,301

The segment assets and liabilities at 31 May 2011 are as follows:

	Grain	Beef	Cocoa	Unallocated	Total
	$'000	$'000	$'000	$'000	$'000
Assets	17,648	5,112	-	4,750	27,510
Liabilities	532	124	-	2,022	2,678

**ENDS**

Notes

Agriterra Ltd is an AIM listed agricultural company with four divisions: beef, maize, cocoa and palm oil.  Its cattle ranching business, Mozbife, has a herd in excess of 4,600 head, a land holding of over 16,250 hectares, a feedlot and a 4,000 head per month capacity abattoir.  In addition to selling meat from its own herds, throughput for the feedlot and abattoir will be supplemented using cattle bought in from local communities.

The Company's maize buying and milling operations, DECA and Compagri, are located in Chimoio and Tete in central and north-western Mozambique respectively.  These collect maize from circa 350,000 farmers using the Company's own vehicle fleet, process it into mealie meal, the African staple, and then sell it back to the local market, into supermarkets and to the World Food Programme.

Agriterra's cocoa business is based in Sierra Leone, through its 100% subsidiary Tropical Farms Limited, which is currently a buying and trading operation, but provides an ideal conduit to branch out into cocoa production in West Africa.  Its strategy is to establish itself as a secure, sustainable and traceable source of supply to meet the requirements of the major cocoa consumers who are placing increased emphasis in this area.

The Company has expanded its portfolio of agricultural products through the addition of palm oil, and holds a lease over approximately 45,000 hectares of brownfield agricultural land in an area suitable for palm oil production in the Pujehun District in the Southern Province of Sierra Leone.  This area of Sierra Leone, which is close to the Liberian border, receives one the highest levels of rainfall in Sierra Leone, which in itself, receives some of the highest rainfall globally.  In addition, the lease area is located on the equatorial belt, which is the most favourable geographical location for palm oil production. 

 

END

 

 

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