Interim Results

RNS Number : 8443Y

Agriterra Ltd

28 February 2013

 



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

28 February 2013

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

Interim Results

Agriterra Ltd, the AIM listed pan-African agricultural company, announces its results for the six months ended 30 November 2012.

Highlights

·    Strengthened position as debt free vertically integrated pan-African agricultural company with three established revenue streams

·    US$28 million received from sale of legacy oil asset, plus additional US$10 million on commercial discovery

·    Strong progress made across beef, cocoa and maize divisions as investment phase continues

·    Net asset value increased to US$64.5 million

·    Additional ranching land acquired in Mozambique to meet target herd carrying capacity of 10,000 head by 2015

·    Feedlot expanded, abattoir commissioned and retail units opened, providing fully integrated beef operation

·    Previously producing 1,208 hectare coffee and cocoa plantation acquired in Sierra Leone - 250,000 cocoa seedlings being cultivated in modern nursery

·    Record volumes in grain operations

Andrew Groves, Agriterra Chief Executive said, "We are succeeding in our strategy to build a vertically integrated pan-African agricultural business, investing in our revenue generating divisions and infrastructure to ensure scalability and a foundation for rapid growth in the future.  Our beef business margins going forward will rapidly widen as we roll out our distribution hub and retail units, maximising the potential of our newly established integrated beef operation.   Furthermore, with a solid foundation in place for long term growth at our cocoa operations in Sierra Leone, and record milling at our grain facilities in Mozambique, Agriterra looks set for strong and sustainable growth.  With a net asset value of US$64.5 million and a strong cash position, I am confident that we have all of the components to build a significant debt free agricultural business."

CHAIRMAN'S STATEMENT

We remain centred on consolidating and expanding our position as a leading pan-African agricultural company, building on our three primary revenue streams, beef, grain and cocoa.  We continue to invest in each of our divisions to ensure business scalability, whilst simultaneously diversifying our operations to bolster growth, productivity and revenues, and maximise margins through a vertically integrated approach.   Accordingly, I am confident that with a solid foundation, strong balance sheet, focussed strategy and proven technical team we are well positioned to build a highly profitable and sustainable future.

The Group is at the investment phase of its development and consequently our focus is on expansion, a strategy that has been heavily re-enforced by the US$28 million cash injection (post tax) from Marathon Oil Corporation ('Marathon Oil') in January 2013 following the sale of our 20% legacy interest in the South Omo Block ('the Block') in Ethiopia.  This capital injection has dramatically strengthened our balance sheet on a non dilutive basis, negating the need for any equity financing.  The cash will fund the implementation of our rapid development, focussed primarily on Mozambique and Sierra Leone.   The Company expects a rebate on the 30% withholding tax deducted to date upon agreement of tax returns with the Ethiopian Revenues and Customs Authority.  A further US$10 million is payable on Marathon Oil's participation in a commercial discovery in the Block. 

Mozbife, our beef operation in Mozambique, has made significant progress in its strategy of becoming a vertically integrated beef provider, which we are confident will enable us to significantly increase operating margin.  We have completed the construction of our abattoir in Chimoio and opened two retail units in Chimoio and Tete, enabling Mozbife to raise, slaughter, butcher and sell beef.  Importantly, the abattoir is supplied with cattle from our Vanduzi Feedlot, which is in turn part supplied by our Mavonde and Dombe ranches, thus ensuring a vertically integrated offering.  In line with our expansion efforts, we are increasing herd sizes at our Mavonde and Dombe ranches as well as augmenting our cattle buying infrastructure from the local communities.

In order to maximise the value potential of our fully integrated Mozbife framework, we plan to continue with the rapid development of our beef operations.  We are intending to open a distribution centre in Maputo to help service our planned countrywide retail units, as well as hotels, restaurants and wholesalers in the region.  We hope to have at least two retail units operational in the capital by the end of the calendar year, in addition to a further unit at a site already identified by us in Beira, an area where we anticipate a significant demand for beef.  The booming mining town of Tete, where we already have one unit, is an area where we are keen to increase our exposure, and in line with this we anticipate the opening of an additional unit here in 2013.    

In tandem with our Mozbife development efforts we are investing significantly in our cocoa division, Tropical Farms Limited ('TFL'), in order to expand its trading operations in Sierra Leone.  Although the harvest this year was poor and the prices achieved internationally were soft, we have a positive long-term view of the cocoa market, which is underlined by our acquisition of a previously producing 1,208 hectare coffee and cocoa plantation, originally owned and operated by Beresford prior to the civil war.  A nursery with 250,000 seedlings has already been built and we are in the process of clearing land for planting our first 200 hectares. The Group intends to plant an additional 500 hectares each year to establish the largest in-country plantation.  We believe the brand awareness created from this plantation will allow us to consolidate our position as a leading cocoa trader in Sierra Leone.  To prepare for this we are constructing a new enlarged warehouse and trading centre near Kenema. 

In addition to the revenues generated from our expanding cocoa operations, we are actively evaluating the potential of producing vegetable cash crops at our plantation in Sierra Leone.  This would help to further diversify our revenue stream and create early cash flow for the Group.  The market in Sierra Leone is driven by local demand and the increasing presence of international companies.  The Group plans to target this growing consumer market, competing against the current import of vegetables.  We have a skilled and experienced team in place to implement the vegetable project; having previously established other successful vegetable farms in Mozambique.

Our third key revenue stream comes from our maize operations in Mozambique, where I am pleased to report that revenues have improved significantly after the previous period's reduced sales, which were impacted by a strong harvest in 2011 limiting demand for our maize meal product.  We anticipate strong demand continuing throughout the rest of this financial year for maize meal.  The bran by-product of the milling operation forms an important constituent of feed in the Vanduzi Feedlot operation, further highlighting the integrated relationship between our Mozambican operations.

Financial Results

We remain at the investment stage of our genesis and as such, are focussed on establishing a solid structure and foundation for growth.  For the period, as a result of the disposal of the legacy oil asset, the Group is reporting a profit attributable to shareholders of US$25.2 million (2011: loss of US$2.8 million).  Turnover increased by 116% to US$11.5 million (2011: US$5.3 million) and the pre-tax loss on continuing operations was US$4.2 million (2011: US$3.5 million).  At the period end cash balances were US$3.2 million (2011: US$1.0 million).  The US$28 million proceeds from the sale of our remaining interest in the oil and gas asset in Ethiopia through Marathon Ethiopia Limited B.V. on 3 October 2012 were received on 31 January 2013.

Outlook

Your Board is focussed on headline growth and margins of the Group. To reiterate, we are currently in the investment stage of our development and as a result focussed on establishing a strong foundation for scalability.  Our investment programme is aimed at creating a vertically integrated agriculture business which when mature, will generate significant revenue and profits.  Our strong cash position will allow us to fund our growth strategy without dilution which I believe marks us out amongst our peers.  With the world's expanding population and evolving dietary needs, the rising African demand for meat and the long term pricing fundamentals for most commodities, Agriterra, with its multiple revenue streams, is well positioned for future growth.

Phil Edmonds

Chairman

27 February 2013

OPERATIONS REVIEW

Agriterra currently has three operational agricultural divisions:

·    Mozbife Limitada ('Mozbife') which conducts cattle ranching, feedlot and abattoir operations, and retail units

·    Tropical Farms Limited ('TFL') which manages the Group's cocoa trading and farming activities

·    Desenvolvimento E Comercialização Agricola Limitada ('DECA') and Compagri Limitada ('Compagri') which operate maize farming and processing businesses

Beef Operations (Mozambique)

Agriterra's beef operations in Mozambique continue to expand; Mozbife has a total herd in excess of 5,450 head, which is set to increase as the Group continues to ramp up operations, targeting a total herd of 10,000 head by 2015.

The Group's strategy is to become a vertically integrated beef producer.  Agriterra rear and breed the beef cattle at the Mavonde and Dombe ranches, fatten at the Vanduzi feedlot, and slaughter and butcher at the Chimoio Abattoir, which in turn supplies the newly opened retail units in Chimoio and Tete.  This integrated business approach enables the Group to maximise revenues and margins from the entire value chain.

The Mavonde Stud Ranch

Agriterra remains focussed on expanding operations at the 2,350 hectare Mavonde Stud Ranch in Central Mozambique.  The breeding herd currently stands at 900 head, and this is set to expand significantly with a target of 2,500 head by the end of 2013. 

In line with these expansion activities, Agriterra purchased a 1,000 hectare farm, which adjoins the original ranch, in January 2013.  Land clearing is underway to allow for the head holding capacity to be increased by 100% at the ranch.  Furthermore, the 48 billion litre dam, which was completed in May 2012, is now full, with capacity to irrigate the ranch for four years without rain, and support head to hectare growth.  With full irrigation, the head to hectare ratio at Mavonde will be able to be increased from 1.5 to 7 head per hectare.  The dam will also provide 132kV of hydroelectric power for the Mavonde project, which will reduce costs significantly by providing power for the irrigation pumps.

The breeding herd continues to achieve pregnancy rates of over 80%, and the herd is to be further supplemented with additional Beefmasters already purchased from South Africa. 

The Dombe Ranch

The 15,000 hectare Dombe ranch located in Central Mozambique continues to perform strongly for the Group.  Agriterra remains focussed on expanding the ranch by investing in the ranch's infrastructure, particularly through the construction of paddocks, staff housing, roads and fencing, in addition to water boreholes for irrigation during particularly dry periods.

To supplement the current breeding herd, native cattle, such as Brahman, are being bought in from local communities.  In addition to this buying programme, which will help increase the Group's total herd size, the cross-breeding of Beefmaster and native breeds creates a bloodline with good meat yields and high disease resistance.

The Vanduzi Feedlot

In line with Agriterra's strategy to become a vertically integrated beef producer, Agriterra has focussed on developing the Vanduzi Feedlot, located near to Chimoio.

The Vanduzi Feedlot has a 20 pen line with a potential rolling capacity of approximately 3,000 head every 90 days.  Animals are sourced from the Agriterra's Mavonde and Dombe ranches, and also from the local community, helping to ensure a strong supply of animals, which can then be fattened at the feedlot to generate revenues for the Group.  Animals will typically weigh between 500kg and 700kg following their time in the feedlot, typically three months, achieving slaughter dress out weight percentages of between 51% and 56%.  The carcass will typically fetch in excess of US$1,150 and sales have to date reached over 240 carcasses per month. 

In conjunction with the feeding pens, Vanduzi has 1,050 hectares of land for pasture and production of feed.  This helps to keep feed costs down and maintains an integrated business.  Furthermore, the Vanduzi Feedlot works dynamically with other companies in the Group, such as using bran, the by-product from the nearby DECA maize processing facility, as a feed supplement for the cattle.

The Chimoio Abattoir and Retail Units

In October 2012 the Group completed the construction of its 4,000 head per month capacity abattoir, which commenced operations in December 2012.  This represented a significant step in the Group's efforts to establish a "field to fork" value chain, as the abattoir is supplied with animals for slaughtering from the Group's Vanduzi Feedlot, in addition to other animals bought from the local community.

Production slaughter rates are currently operating at 240 head per month, and the Group remains focussed on increasing this to 4,000 head, to fully utilise the abattoir's capacity.  Significant value can be generated from the abattoir and retail units, where a standard 600kg steer can generate approximately US$1,600.  Although margins are generally less favourable for locally sourced animals in comparison to the prime Mozbife reared animals, the Group is able to ensure the financial success of the business by recouping abattoir running costs from the "5^th quarter": the skin, offal, hooves and head.

The abattoir is the largest facility of its kind in Mozambique, and is capable of helping to reduce Mozambique's dependence on meat imports, thus creating an opportunity for the Group to capitalise on a strong domestic market.  Furthermore, the abattoir is also Halal certified, meaning Agriterra is able to export beef to markets in the Middle East.  

To maximise the sale price of meat sourced from the abattoir, and to help satisfy the Group's strategy to become a vertically integrated beef producer, Agriterra established two retail units in Chimoio and Tete in December 2012 and February 2013 respectively.  Initial trading at the retail units has been strong, with sales of over US$1,500 per day being generated.  The Group intends to roll out a further four retail units in 2013.

 Cocoa Trading & Production (Sierra Leone)

TFL operates a successful cocoa buying division comprising three main hub stores and 41 satellite stores, with a direct buying register of more than 3,500 farmers across Sierra Leone.  Despite greater operating losses because of TFL's investment in expanding operations, the Group reports improved revenues of US$1.7 million (2011: US$1.4 million) for the past period.  TFL intends to further expand the buying division in order to increase the total buying capacity, guarantee cocoa supplies, and bolster sales for the Group.

To complement the Group's cocoa buying operations, and to help develop the business to generate increased revenues, TFL has moved into a second phase of development, progressing from a successful cocoa trading business into a profitable cocoa trader and producer.  In February 2013 TFL completed the acquisition of a 50 year lease, with a 21 year extension option, over a previously producing cocoa and coffee plantation covering 1,208 hectares ('the Plantation').  Work is underway at the Plantation which is located 40km from Kenema in south-east Sierra Leone, to rehabilitate and redevelop the land in order to recommence the production of cocoa, coffee and additional cash crops.  The Group has now cleared 50 hectares of the 200 hectares required for the initial cocoa planting season, and has planted approximately 250,000 cocoa seedlings, sourced internally from TFL's trading business, to plant the area.  The seedlings, which are currently housed in a modern irrigated nursery covering 1.7 hectares, will be cultivated over the next 4-5 months ahead of planting in Q2 2013.

TFL intends to use this modular planting system to cultivate and plant up to 500 hectares every year.  Each hectare of land can support up to 1,100 trees, which can yield up to 2.5 tonnes of cocoa per annum.  TFL is initially targeting production of 1,200kg per hectare with revenues from cocoa harvesting expected to commence within the next 18 months, ahead of full commercial production from the trees during their fourth to fifth years. 

An additional 546 hectares, located contiguously to the north of the Plantation was also purchased by TFL in February 2013, on the same terms as the new Plantation.  Furthermore, the Group is in the process of negotiating to secure a further 1,200 hectares, contiguously to the north of the existing Plantation, and 800 hectares to the south. 

Grain Processing & Farming (Mozambique)

Agriterra's maize operations are focussed on the 35,000 tonne capacity DECA facility in Chimoio in central Mozambique, and the 15,000 tonne capacity Compagri facility in Tete, in north-west Mozambique.

The Group has built a maize buying and processing business, focussed on purchasing maize from local out-growers through a network of buying stations, which is then processed and stored before being sold to the retail market.  The Group purchases maize directly from thousands of local smallholder farmers through a specialised, proprietary, buying system, where Agriterra provides and installs the necessary infrastructure 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, a key staple food in the region and country as a whole.

Maize and milling operations at Compagri have been strong during the past period, with the facility operating near full capacity and generating improved revenues of US$275,000 per month.  Similarly, milling operations at the larger DECA facility have been running at full capacity since July 2012, producing an average monthly sales figure of US$1.3 million to date.  These revenues mark a strong improvement for the Group, which had previously reported reduced sales due to a strong harvest in 2011 reducing demand for the maize meal product (see Final Results, 12 November 2012).  Nonetheless, the Group successfully weathered these difficulties and has since generated record monthly sales, highlighting the strength of the business.

Fruit & Nut Production (Mozambique)

Agriterra has further diversified its product offering and revenue stream through the acquisition of a 2,500 hectare farm with a producing banana plantation, macadamia orchard and land capacity for cattle in January 2013.  The farm is located approximately 25km north of the Group's Mavonde Stud Ranch, and has permanent irrigation potential from the bordering Nyadzonya River. 

The Group is focussed on expanding these to maximise revenue generation.  The 20 hectare banana plantation currently produces initial weekly yields of approximately 7 tonnes, and the Board plans to significantly ramp up production with the development of the plantation.  Commercial production of the macadamia orchard is a slightly longer term focus, with fruition expected in January 2015. 

Palm Oil Operations (Sierra Leone)

As shareholders will be aware, the Group also 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 Board will evaluate potential work programmes to develop this landholding over the coming months.

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

Andrew Groves	Agriterra Ltd	Tel: [phone]
David Foreman	Seymour Pierce	Tel: [phone]
Rick Thompson	Seymour Pierce	Tel: [phone]
Andy Cuthill	MC Peat & Co LLP	Tel: [phone]
Susie Geliher	St Brides Media & Finance Ltd	Tel: [phone]

Unaudited Interim Group Financial Statements

Unaudited Consolidated Income Statement

For the six month period to 30 November 2012

				Unaudited 6 months to 30 November 2012	Unaudited 6 months to 30 November 2011	Audited year to 31 May 2012
Continuing Operations			Note	$'000	$'000	$'000
Revenue			4	11,486	5,288	13,826
Cost of sales				(9,901)	(5,080)	(11,913)
Gross profit				1,585	208	1,913
Increase in value of biological assets				77	228	400
Operating expenses				(5,707)	(3,577)	(8,851)
Other income / (expense) Share of profit from associate				125 -	(254) -	(271) 9
Operating (loss) / profit				(3,920)	(3,395)	(6,800)
Net finance (expense)/ income				(231)	(82)	(116)
(Loss) / profit before taxation				(4,151)	(3,477)	(6,916)
Income tax expense				(42)	-	(26)
(Loss) / profit for the period from continuing operations				(4,193)	(3,477)	(6,942)
Discontinued operations:
Profit for the period                            5				29,364	726	721
Profit / (loss) for the period attributable to equity holders of the parent				25,171	(2,751)	(6,221)
Earnings / (loss) per share: Basic & diluted		6		2.4 cents	(0.4 cents)	(0.7 cents)
Loss per share from continuing operations: Basic & diluted				(0.4 cents)	(0.5 cents)	(0.8 cents)

Unaudited Consolidated Statement of Comprehensive Income

For the six month period to 30 November 2012

		Unaudited 6 months to 30 November 2012	Unaudited 6 months to 30 November 2011	Audited year to 31 May 2012
		$'000	$'000	$'000
Profit / (loss) for the period		25,171	(2,751)	(6,221)
Other comprehensive income net of tax Foreign exchange translation differences		(2,129)	2,962	2,078
Other comprehensive income for the period		(2,129)	2,962	2,078
Total comprehensive profit / (loss) attributable to equity holders		23,042	211	(4,143)

Unaudited Consolidated Balance Sheet

As at 30 November 2012

		Unaudited 30 November 2012	Unaudited 30 November 2011	Audited 31 May 2012
	Note	$'000	$'000	$'000
Non current assets
Intangible assets		966	964	963
Property, plant and equipment Investment in associates		27,381 9	17,282 -	26,243 9
Biological assets		1,491	988	1,642
Total non current assets		29,847	19,234	28,857
Current assets
Biological assets		963	456	1,018
Inventories		5,234	7,578	6,701
Trade and other receivables Cash and cash equivalents		45,350	2,247	3,628
		3,189	990	3,553
Total current assets		54,736	11,271	14,900
Total assets		84,583	30,505	43,757
Current liabilities
Bank loan	7	(1,853)	(1,551)	-
Trade and other payables		(18,269)	(3,911)	(2,361)
Total current liabilities		(20,122)	(5,462)	(2,361)
Net assets		64,461	25,043	41,396
Equity
Issued capital	8	1,957	1,387	1,957
Share premium		148,530	131,593	148,530
Shares to be issued		2,940	-	2,940
Share based payment reserve		1,643	1,360	1,620
Translation reserve		(1,833)	1,180	296
Retained earnings		(88,776)	(110,477)	(113,947)
Total equity attributable to equity holders of the parent		64,461	25,043	41,396

Consolidated Statement of Changes in Equity
Attributable to equity holders of the parent company
	Ordinary share capital $'000	Deferred share capital     $'000	Share premium $'000	Shares To be Issued $'000	Share based payment reserve $'000	Translation reserve $'000	Retained earnings $'000	Total $'000
Balances at 1 June 2011	1,149	238	131,593	-	1,360	(1,782)	(107,726)		24,832
Loss for the period	-	-	-	-	-	-	(2,751)		(2,751)
Other comprehensive income
Exchange translation differences on foreign operations	-	-	-	-	-	2,962	-		2,962
Total comprehensive income for the period	-	-	-	-	-	2,962	(2,751)		(211)
Balances at 30 November 2011	1,149	238	131,593	-	1,360	1,180	(110,477)		25,043
Loss for the period	-	-	-	-	-	-	(3,470)		(3,470)
Other comprehensive income
Exchange translation differences on foreign operations	-	-	-	-	-	(884)	-		(884)
Total comprehensive income for the period	-	-	-	-	-	(884)	(3,470)		(4,354)
Transactions with owners
Share issues	570	-	17,707	-	-	-	-		18,277
Shares to be issued	-	-	-	2,940	-	-	-		2,940
Issue costs	-	-	(770)	-	160	-	-		(610)
Share based payment charge	-	-	-	-	100	-	-		100
Total transactions with owners	570	-	16,937	2,940	260	-	-		20,707
Balances at 31 May 2012	1,719	238	148,530	2,940	1,620	296	(113,947)		41,396
Profit for the period	-	-	-	-	-	-	25,171		25,171
Other comprehensive income
Exchange translation differences on foreign operations	-	-	-	-	-	(2,129)	-		(2,129)
Total comprehensive income for the period	-	-	-	-	-	(2,129)	25,171		23,042
Transactions with owners
Share based payment charge	-	-	-	-	23	-	-		23
Total transactions with owners	-	-	-	-	23	-	-		23
Balances at 30 November 2012	1,719	238	148,530	2,940	1,643	(1,833)	(88,776)		64,461

Unaudited Consolidated Statement of Cash Flows

For the six months to 30 November 2012		Unaudited 6 months to 30 November 2012	Unaudited 6 months to 30 November 2011	Audited year to 31 May 2012
Operating activities	Note	$'000	$'000	$'000
Loss before tax		(4,151)	(3,477)	(6,916)
Adjustments for:
Depreciation		1,101	947	1,878
Profit on disposal of assets			-	12
Share based payment charge		23		100
Foreign exchange		181	53	149
Increase in biological assets		(77)	(228)	(400)
Net interest expense		231	82	116
Operating cash flow before movements in working capital		(2,692)	(2,623)	(5,061)
Working capital adjustments:
- Decrease / (increase) in inventory		1,104	(4,196)	(3,505)
- Increase in receivables		(1,860)	(50)	(1,545)
- Increase / (decrease) in payables		5,430	771	(690)
Cash used in operations		1,982	(6,098)	(10,801)
Net interest paid		(231)	(82)	(116)
Net cash used in continuing operating activities		1,751	(6,180)	(10,917)
Net cash (used in) / from discontinued operating activities		(56)	726	721
Net cash outflow from operating activities		1,695	(5,454)	(10,196)
Taxation
Corporation tax paid		(12)	-	(60)
Net cash outflow from taxation		(12)	-	(60)
Investing activities
Purchase of subsidiary net of debt acquired		-	(530)	(283)
Purchase of property, plant and equipment		(3,559)	(2,872)	(7,575)
Proceeds of sale of property, plant and equipment		-	51	96
Purchase of biological assets		(203)	(332)	(1,428)
Net cash used in investing activities		(3,762)	(3,683)	(9,190)
Financing activities
Proceeds from issue of share capital		-	-	15,000
Share issue costs		-	-	(610)
Drawdown of bank loan		1,769	1,551	123
Net cash flow from financing activities		1,769	1,551	14,513
Net increase / (decrease) in cash and cash equivalents		(310)	(7,586)	(4,933)
Cash and cash equivalents at start of the year		3,553	8,172	8,172
Effect of foreign exchange rates		(54)	404	314
Cash and cash equivalents at end of the period		3,189	990	3,553

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 2012 were approved for issue by the board on 26 February 2013.

The figures for the six months ended 30 November 2012 and the six months ended 30 November 2011 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 May 2012 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 2012 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 2012.

4.	Segment information

The directors consider that the Group's activities comprise three business segments, grain, beef and cocoa and other unallocated expenditure in one geographical segment, Africa. 

6 months ending			Continuing activities
30 November 2012			Grain	Beef		Cocoa		Unallocated		Total
			$'000	$'000		$'000		$'000		$'000
Revenue			9,045	776		1,665		-		11,486
Operating loss			(229)	(1,469)		(799)		(1,423)		(3,920)
Interest expense			(156)	-		-		(75)		(231)
Loss before tax			(385)	(1,469)		(799)		(1,498)		(4,151)
Income tax										(42)
Loss for the period from continuing activities										(4,193)
6 months ending			Continuing activities
30 November 2011			Grain	Beef		Cocoa		Unallocated		Total
			$'000	$'000		$'000		$'000		$'000
Revenue			3,591	298		1,399		-		5,288
Operating loss			(1,225)	(919)		(9)		(1,242)		(3,395)
Interest expense			(82)	-		-		-		(82)
Loss before tax			(1,307)	(919)		(9)		(1,242)		(3,477)
Income tax										-
Loss for the period from continuing activities										(3,477)
			Continuing activities
Year ending 31 May 2012			Grain	Beef		Cocoa		Unallocated		Total
			$'000	$'000		$'000		$'000		$'000
Revenue			9,681	895		3,250		-		13,826
Operating loss			(1,203)	(2,310)		(578)		(2,709)		(6,800)
Interest income			(138)	-		-		22		(116)
Loss before tax			(1,341)	(2,310)		(578)		(2,687)		(6,916)
Income tax										(26)
Loss for the period from continuing activities										(6,942)
5.	Discontinued operations
Legacy oil and gas assets are classified as discontinued operations and the trading results are included in the income statement as a single line below the loss after taxation from continuing operations.  On 3 October 2012, the Company announced that it had entered into an agreement to sell its remaining interest in its oil and gas asset in Ethiopia to Marathon Ethiopia Limited BV.
					Unaudited 6 months to 30 November 2012		Unaudited 6 months to 30 November 2011		Unaudited 12 months to 31 May 2012
					$'000		$'000		$'000
Sale of legacy oil assets					40,000		-		-
Costs of disposal					(436)		-		-
Other operating expenses					-		-		(5)
Other income					-		726		726
Profit before taxation					39,564		726		721
Taxation					(10,200)		-		-
Profit after taxation					29,364		726		721
Cash flows from discontinued operations included in the consolidated statement of cash flows are as follows:
					Unaudited 6 months to 30 November 2012		Unaudited 6 months to 30 November 2011		Unaudited 12 months to 31 May 2012
					$'000		$'000		$'000
Net cash flows from operating activities					(56)		726		721

6.	Earnings per share

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

		Unaudited 6 months to 30 November 2012	Unaudited 6 months to 30 November 2011	Unaudited 12 months to 31 May 2012
		$'000	$'000	$'000
Profit / (loss) the purpose of calculating basic earnings per share (profit / (loss) attributable to equity holders)		25,171	(2,751)	(6,221)
(Loss) / profit for the purpose of calculating basic earnings per share from continuing activities		(4,193)	(3,477)	(6,942)
Number of shares
Weighted average number of ordinary shares for the purposes of calculating basic and diluted earnings / (loss) per share		1,059,716,238	693,254,888	874,483,042
Basic and diluted loss per share (cents)		2.4	(0.4)	(0.7)
Loss per share from continuing activities (cents)		(0.4)	(0.5)	(0.8)

7.	Bank loan
				Unaudited 6 months to 30 November 2012	Unaudited 6 months to 30 November 2011	Unaudited 12 months to 31 May 2012
				$'000	$'000	$'000
Bank overdraft				1,853	1,551	123

The group has a $2m revolving credit facility secured upon its grain inventories in Mozambique.

8.	Share Capital
				Ordinary shares of 0.1p each
				Authorised		Allotted and fully paid
				Number		Number	$'000
At 1 June 2010				2,345,000,000		547,771,554	923
Issue of shares				-		145,483,334	226
At 31 May 2011 and at 30 November 2011				2,345,000,000		693,254,888	1,149
Issue of shares				-		366,461,350	570
At 31 May 2012 and at 30 November 2012				2,345,000,000		1,059,716,238	1,719
				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 2011				2,5000,000,000	848,254,888		1,387
At 31 May 2012				2,5000,000,000	1,214,716,238		1,957
At 30 November 2012				2,5000,000,000	1,214,716,238		1,957

 

END

 

 

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