2023 Annual Results and Trading Restoration

Agriterra Ltd

01 December 2023

 

1 December 2023

Agriterra Limited ('Agriterra' or the 'Company')

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

2023 Annual Results and Trading Restoration

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce its audited annual results for the year ended 31 March 2023 (the "2023 Annual Results"). Copies will be posted to Shareholders where appropriate.

Restoration to trading on AIM

The Company's ordinary shares were suspended from trading on AIM at 7.30 a.m. on 2 October 2023 as a result of the delay in the publication of the 2023 Annual Results. Accordingly, the release of this announcement facilitates lifting of the suspension, and trading on AIM of the Company's shares is expected to recommence at 3.30 p.m. today.

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

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

Agriterra Limited	Caroline Havers [e-mail]
Strand Hanson Limited Nominated & Financial Adviser	Ritchie Balmer / James Spinney [phone]
Peterhouse Capital Limited Broker	Duncan Vasey / Eran Zucker [phone]

Chair's statement and strategic review

I am pleased to present the annual report of the Group for the year ending 31 March 2023. During the year, the Group changed its working capital funding strategy to support the existing operations and evaluated opportunities for diversification and adding value to agricultural produce.

The Company continues to observe the principles of the QCA Corporate Governance Code (the "Code") to the extent that they consider them to be applicable and appropriate for a Company of Agriterra's size and stage of development, through the maintenance of efficient and effective management frameworks accompanied by good communication. Further details are available at: http://www.agriterra-ltd.com/investor-relations/corporate-governance/

Strategy and Business Model

The Group's strategy is to operate efficient, profitable businesses in Mozambique to create value for its shareholders and other stakeholders by supplying beef and milled maize products to the local market.

The Group continues to focus on adding value along the entire maize and beef value chain, by developing and offering new products to the market. It currently has three operating divisions which have built strong brands in Mozambique:

·      Grain, which operates maize purchasing and processing businesses through Desenvolvimento e Comercialização Agrìcola Limitada ('DECA') and Compagri Limitada ('Compagri').

·      Beef, which sources cattle from local farmers and then processes them through its own feedlot, abattoir operations and retail units through Mozbife Limitada ('Mozbife')

·      Snax, which sources maize grits from DECA, processing them into flavoured puffs and naks through DECA Snax Limitada, an operating entity that was commissioned in December 2020 to add value to Agriterra's grain milling operations.

During the year the Company secured a shareholder loan of c.$7.6m in the form of a convertible loan and an equity injection of c.$0.6m to replace local currency denominated bank debt to fund working capital for grain and beef divisions. These new facilities are expected to significantly reduce the interest burden.

The Group is aware of its environmental, social and governmental responsibilities and the need to maintain effective working relationships across a range of stakeholders. The Company's largest shareholder is represented on the Board, ensuring their views are incorporated into the Board's decision-making process. In addition to the Group's staff and shareholders, the local community in Mozambique is a primary stakeholder. In purchasing maize and cattle directly from the local community, the Group plays an important role in local economic development, supporting small scale farmers and the evolving commercial sector.

Mozambique overview

The economy in Mozambique is recovering from a protracted slowdown in recent years, with growth reaching 4.1% in 2022. Mozambique is still dealing with the insurgency in parts of the gas-rich province of Cabo-Delgado but the arrival of regional troops has helped stabilise the situation. The government has approved a reconstruction plan for the province. The instability in Cabo Delgado has slowed the expected outcomes from the investment in the Liquefied Natural Gas sector which will be delayed by two years. The medium-term outlook is positive, with growth expected to accelerate to 6% over 2023-2025 driven by:

·    Continued recovery in services

·    Increased LNG production; and

·    High commodity prices.

Tropical cyclone Freddy made landfall in Mozambique on 24 February 2023 and led to significant rainfall. Nearly 166,000 people were affected, more than 28,300 houses destroyed and over 18,700 hectares of crops were destroyed.

During this period the Metical remained steady against the US$ and, strengthened against the South African Rand from ZAR1:MZN3.8 to ZAR1:MZN3.6. Annual inflation was higher at 10.3%, against 6.41% in the previous year. In response to the inflation, the Bank of Mozambique increased its prime lending rate from 19% to 23.5%, which negatively impacted business operations.

Operations review

Grain division

The Grain division generated revenue amounting to $8.6 million (FY22: $7.3 million) after selling 17,819 tons (2022: 17,094 tons) and the average meal selling price increased by 13% to $482 per ton (2022: $427 per ton), indicating  that the demand was strong.

The division secured a $1.5 million loan from its majority shareholder to fund working capital in addition to $6.1 million which was used to repay commercial bank debt. The division purchased 18,022 tons of maize throughout the year and held 7,444 tons of maize in inventory at its peak. The division has had to roll the working capital to be able to mill up to the end of the year. However, the maize price increased by 36% to MZN20 000 per ton ($313) as compared to a 13% increase in the price of mealie meal, thereby eroding the margins in the last quarter of the financial year.  

On a positive note, the shareholder loans of $7.6 million enabled the repayment of significant commercial debt amounting to $6.1 million thereby relieving the heavy burden of finance cost, the full benefit of which is expected to be reflected in FY24. The division's borrowings increased slightly by $54,000 as compared to prior year. The business was able to pay interest and some principal repayments out of the business cash flows.

Operating costs decreased by $0.8m to $1.1m and EBITDA increased to $0.6m (2022: EBITDA of $0.54m) due to an improvement in extraction efficiencies net of a 20% increase in the cost of maize milled compared to the previous year. Finance costs decreased to $1.0m (2022: $1.6m) and depreciation cost amounted to $0.5m (2022: $0.5m) resulting in a loss before tax of $0.86m (2022: loss $1.52m).

Loss after tax amounted to $746,000 (FY22: Loss after tax $1,404,000).

Beef division

The Beef division generated revenue amounting to $3.1 million (FY22: $3.2 million) as compared to budget of $4.6 million (FY22: $4.6 million). Low sales resulted from the tough macro-economic environment in Mozambique which affected sales and consumer protein choices. In addition, customers are more sensitive to price as compared to quality and there was increased competition from cheaper meat from the informal market. Sales volumes were 9.2% below previous year (666 tons vs 734 tons in FY22). Working capital constraints led to a fall in the numbers of days animals spent in the feedlot. Consequently, the average daily weight gain of animals decreased from 0.32% to 0.22% of body mass increasing feedlot costs.

The division secured shareholder loan amounting to $0.3 million which was used to ramp up animal production in the feedlot. The funds were used to buy cattle weaners which has high average daily gain when feeding in the feedlot. More than 900 animals were bought from August to March using the shareholder loan. The division also received an external capital injection amounting to GBP250 000 in March 2023 to invest in "straight through" animals which will be supplied into the informal market.

The decrease in sales has been mitigated by improved Gross Margin of 24.06% (FY22: 23.87%) resulting from higher average selling price of MZN 266 per kg (FY-2022: MZN 252 per kg) whilst the average dress out rate was 49.2% (FY22: 51.5%).

The Company has embarked on a right sizing strategy, offering voluntary retrenchments and a freeze on replacing staff. The Company also has the cost of the three farms that remain in care and maintenance whilst looking for potential buyers.

Loss after tax amounted to $651,000 (FY22: Loss after tax $492,000).

Snax division

DECA Snax, a 50:50 joint venture with Snax for Africa Limited has, in its third year of operations, grown sales revenue by 62% to achieve $2.3 million (FY22: $1.4 million). DECA Snax is growing by winning and retaining market share from competitors as a result of consistently producing and supplying high quality products. DECA Snax sold 1,111,538 bales during the year (FY22: 707,385 bales).

During the year, DECA Snax increased its production capacity by buying a second extruder machine which gives the division the ability to double its production capacity and improve its profitability.

Production volume is exceeding 60% of the installed capacity (Including a second extruder) and plans are in place to launch the product in new geographical markets.

Profit after tax amounted to $74,976 (FY22: $109,889) after payment of management fees to the joint venturers amounting to $117,289 (FY22: Nil).

Key Performance Indicators

The Board monitors the Group's performance in delivery of strategy by measuring progress against Key Performance Indicators (KPIs). These KPIs comprise a number of operational, financial and non-financial metrics. 

For the year ended 31 March	2023	2022	2021
Grain division
- Average milling yield	75.3%	78.0%	76.7%
- Meal sold (tonnes)	17,819	17,094	25,389
- Revenue	$8,365,000	$7,118,000	$11,061,000
- EBITDA (note 5)	$611,000	$535,000	$510,000
- Net debt	($9,753,000)	($9,521,266)	($5,856,106)
Beef division
- Slaughter herd size - number of head	4,099	4,575	5,667
- Average daily weight gain in feedlot (% of body mass)	0.22	0.35	0.35
- Meat sold (tonnes)	666	734	890
- Revenue	$3,129,000	$3,159,000	$3,189,000
- EBITDA (note 4)	($244,000)	($66,000)	($547,000)
- Net debt	($110,000)	($184,283)	($406,244)
Snax division (note 10)
- Bales sold (units)	1,111,538	707,385	128,805
- Revenue	$2,345,779	$1,447,000	$117,000
- EBITDA	$170,000	$247,000	$10,000
- Net debt	$Nil	$Nil	$23
Group
- EPS	(9.29)	(10.7)	(10.3)
- Liquidity - cash plus available headroom under facilities	$174,000	$107,000	$1,139,000

Financial Review

In FY 23 the Group's revenue increased by 12% to $11.49m (FY22: US10.28m), primarily due to:

·    Improvement of grain sales volumes from 17,094 tons to 17,819 tons. Demand for maize meal was higher than the previous year. However, the division did not have sufficient grain in stock due to working capital constraints and had to roll the working capital in the last quarter of the financial year. The cost of replacing maize was high and eroded the Group's margins. The cost of maize increased by 20% from FY22 to FY23.

·    Increase in average selling price of mealie meal by 13% as compared to prior year due to increase in demand for the maize meal.

·    The Beef division achieved similar revenue of $3.1 million, selling lower volume at a higher average selling price.

AGTA Group gross margin decreased to 21.2% (FY22: 24.94%) due to fair value loss of biological assets amounting to $288,000 and the high cost of replacement maize. Gross profit decreased from $2.6 million to $2.4 million as compared to prior year.

Group operating expenses decreased by 3.1% to $3.4 million and operating losses decreased to $0.8 million (FY22: $0 million). The Group operational performance is expected to be profitable if volumes improve by 25% in FY24.

Net Debt as of 31 March 2023 was $9.86 million (FY22: $9.82million). The shareholder loan injection of $7.9 million has greatly assisted in containing the adverse impact of high finance cost on the group performance and cashflows. Finance cost remains high at $1.46 million (FY22: $1.62 million. Subsequent to the year end, a further restructuring exercise was undertaken and a further shareholder loan of $2 million has been advanced to fund the Group's working capital (see note 26).

Going concern

Details of the consideration of going concern are set out in note 3. The Group has prepared forecasts for the Group's ongoing businesses covering the period of 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 that key inputs are achieved, such as forecast selling prices and volume, budgeted cost reductions, and projected weight gains of cattle in the feedlot. They further take into account working capital requirements and currently available borrowing facilities.

The Group reduced expensive commercial debt during the year by $7.9 million thereby reducing finance cost significantly by $92,000 per month. Post year end, the Group has secured $3.7 million from direct shareholder funding, $2m of which will be used to fund maize purchasing and is secured by the maize in Silo with the balance used to repay the remaining commercial bank debt of $1.1m and to fund capital expenditure. In addition, the Group also embarked on an aggressive restructuring exercise which will reduce operational cost by $50,000 per month and reduce liquidity constrains. The Group has retrenched 124 employees from 1 August 2023 as part of the restructuring exercise and the cost savings have been included in the forecasts. The impact of the restructuring exercise and working capital constraints show that the Group needs to achieve its operating targets to meet its cashflow requirements. These conditions and events indicate the existence of a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern and the Group companies may therefore be unable to realise their assets and discharge their liabilities in the ordinary course of business. The auditors make reference to going concern in their audit report by way of a material uncertainty. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

Outlook

The Group had a difficult start to FY24 due to the lack of adequate working capital which affected the current year maize buying season. Even though the working capital was finally secured in June 2023 from commercial banks In Mozambique, they were unable to disburse the full funding due to constraints placed on them by the Central Bank. The situation was further impacted by an increase in interest rate in July 2023 to 24.10%. The Company's majority shareholder agreed to provide a $2m working capital facility to fund maize purchases for the current season in lieu of the inability of the local commercial banks to provide the funding. This will reduce the level of interest charges for the FY24 year.

The macro-economic environment is expected to improve in 2023/24 financial year. Exchange rate between Metical and major trading currency are expected to be stable at $1: MZN 63.88 and inflation is also expected to decrease and trend around 4-5%. Central Bank of Mozambique was using interest rates to control inflation, and a decrease in the inflation rate will also enable the Central Bank of Mozambique to reduce the prime lending rates which is currently at 24.1%.

Grain: Competition is stiff as a number of new mills have opened in the region. However, the region expects grain shortages, and this will drive maize meal prices up. Few millers have secured sufficient maize for the season, and this presents an opportunity for Grain division to gain market share and improve sales revenue as compared to the previous year.

Beef: Demand for beef in the southern market is low because the Metical strengthened against the South African Rand during the year. South African Rand is not expected to strengthen against the Metical and therefore the southern market will continue being affected by relatively cheap imports from South Africa. However, the Beef division is experiencing a strong pull from the north and is mitigating for the lost southern market. The division has also started to serve the informal markets by supplying affordable decent quality beef. On the supply side, the focus has been on strengthening supply chain links with the small farmers who work with us and on getting the efficiencies on the feed lot to improve.

Snax: The Snax division products have been well received by the market and have won more than 50% of the market share in the central region because of superior quality and affordability. Snax division is now introducing the products further into the new North and South markets so as to continue increasing the sales volumes. New bigger family size packets will be introduced into the market during the year.

Board and senior management changes

Mr Gert Naude joined Agriterra in 2014 and led operations as the General Manager. After the end of the current reporting period, Mr. Gert Naude left the Group effective 1 August 2023 as part of the Group restructuring process. I would like to thank him for the significant contribution he has made to the development of the Group over the years.

Consolidated income statement

For the year ended 31 March 2023

			Year ended		Year ended
			31 March 2023		31 March 2022
	Note		$'000		$'000
Revenue	4		11,494		10,277
Cost of sales			(8,758)		(7,715)
(Decrease)/Increase in fair value of biological assets			(288)		1
Gross profit			2,448		2,563
Operating expenses			(3,381)		(3,490)
Other income			122		86
Profit on disposal of property, plant and equipment			-		20
Operating loss			(811)		(821)
Finance costs	5		(1,462)		(1,627)
Share of profit in equity-accounted investees, net of tax	10		37		55
Loss before taxation			(2,236)		(2,393)
Taxation			127		123
Loss for the year attributable to owners of the Company			(2,109)		(2,270)
			US cents		US cents
Earnings per Share
Basic and diluted earnings per share	6		(9.29)		(10.7)

Consolidated statement of comprehensive income

For the year ended 31 March 2023

			Year ended		Year ended
			31 March 2023		31 March 2022
			$'000		$'000
Loss for the year			(2,109)		(2,270)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation differences			(161)		932
Other comprehensive (loss)/income for the year			(161)		932
Total comprehensive loss for the year attributable to owners of the Company			(2,270)		(1,338)

Consolidated statement of financial position

As at 31 March 2023

			31 March	31 March
			2023	2022
	Note		$'000	$'000
Non-current assets
Property, plant and equipment			24,267	25,051
Intangible assets			3	18
Equity-accounted investees	10		93	56
			24,363	25,125
Current assets
Biological assets	7		496	463
Inventories			550	2,176
Trade and other receivables			1,055	824
Cash and cash equivalents			174	107
			2,275	3,570
Total assets			26,638	28,695
Current liabilities
Borrowings	8		2,666	8,809
Trade and other payables			658	960
			3,324	9,769
Net current liabilities			(1,049)	(6,199)
Non-current liabilities
Borrowings	8		7,196	1,003
Deferred tax liability			6,111	6,243
			13,307	7,246
Total liabilities			16,631	17,015
Net assets			10,007	11,680
Share capital	9		3,993	3,373
Share premium			151,419	151,442
Share based payment reserve			67	67
Revaluation reserve			12,061	12,312
Translation reserve			(16,169)	(16,008)
Accumulated loss			(141,364)	(139,506)
Equity attributable to equity holders of the parent			10,007	11,680

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY  

For the year ended 31 March 2023

			Share capital	Share premium	Share based payment reserve	Translation reserve	Revaluation reserve	Accumulated losses	Total Equity
			$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 1 April 2021			3,373	151,442	87	(16,940)	12,563	(137,507)	13,018
Loss for the year			-	-	-	-	-	(2,270)	(2,270)
Other comprehensive income:
Exchange translation gain on foreign operations			-	-	-	932	-	-	932
Total comprehensive income/(loss) for the year			-	-	-	932	-	(2,270)	(1,338)
Transactions with owners Share based payments			-	-	(20)	-	-	20	-
Revaluation surplus realised			-	-	-	-	(251)	251	-
Total transactions with owners for the year			-	-	(20)	-	(251)	271	-
Balance at 31 March 2022			3,373	151,442	67	(16,008)	12,312	(139,506)	11,680
Loss for the year			-	-	-	-	-	(2,109)	(2,109)
Other comprehensive income:
Exchange translation loss on foreign operations			-	-	-	(161)	-	-	(161)
Total comprehensive loss for the year			-	-	-	(161)	-	(2,109)	(2,270)
Transactions with owners
Issue of shares			620	(23)	-	-	-	-	597
Revaluation surplus realised			-	-	-	-	(251)	251	-
Total transactions with owners for the year			620	(23)	-	-	(251)	251	597
Balance at 31 March 2023			3,993	151,419	67	(16,169)	12,061	(141,364)	10,007

Consolidated cash flow statement For the year ended 31 March 2023
			Year ended		Year ended
			31 March 2023		31 March 2022
	Note		$'000		$'000
Cash flows from operating activities
Loss before tax			(2,236)		(2,393)
Adjustments for:
Amortisation and depreciation	13/14		870		874
Profit on disposal of property, plant and equipment			-		(20)
Foreign exchange gain			(151)		162
Changes in value of biological assets	15		288		(1)
Share of profit in associate	23		(37)		(55)
Net finance costs	10		1,462		1,627
Operating cash flows before movements in working capital			196		194
Net increase in biological assets	15		(321)		(12)
Decrease/(Increase) in inventories			1,626		(1,243)
Decrease in trade and other receivables			52		928
Decrease in trade and other payables			(302)		(1,086)
Net cash generated from / (used in) operating activities			1,251		(1,219)
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment net of expenses incurred			-		20
Acquisition of property, plant and equipment	13		(90)		(79)
Net cash used in investing activities			(90)		(59)
Cash flows from financing activities
Net (repayment)/drawdown of overdrafts	18		(6,254)		2,236
Net (repayment)/drawdown of loans	18		(1,589)		644
Net drawdown of shareholder loans	18		7,900		-
Net repayment of leases			(137)		(99)
Finance costs			(1,014)		(1,627)
Net cash (used in) / generated from financing activities			(1,094)		1,154
Net increase / (decrease) in cash and cash equivalents			67		(124)
Effect of exchange rates on cash and cash equivalents			-		-
Cash and cash equivalents at beginning of the year			107		231
Cash and cash equivalents at end of the year			174		107

1.    GeNERAL INFORMATION

Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 42643.

The reporting currency for the 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.

These financial statements are extracted from the audited financial statements which have been posted on the Company's web site and do not constitute statutory accounts.

2.    SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared on a historical cost basis, except for certain financial instruments, biological assets, property, plant and equipment 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.

Going concern

The Group has prepared forecasts for the Group's ongoing businesses covering the period of 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 that key inputs are achieved, such as forecast selling prices and volume, budgeted cost reductions, and projected weight gains of cattle in the feedlot. They further take into account working capital requirements and currently available borrowing facilities.

These forecasts include the impact of the restructuring exercise and working capital constraints show that the Group needs to achieve its operating targets to have sufficient headroom under its existing banking and shareholder loan facilities. Certain facilities fall due for renewal in June 2024 and it has been assumed that these will be renewed.

The divisional forecasts for FY-24 show a significant improvement in operating performance as compared to that reported for the year ended 31 March 2023. However, there can be no certainty that these restructuring plans will be successful, and the forecasts are sensitive to small adverse changes in the operations of the divisions. As set out in notes 18 and 21 the Group is funded by a combination of short and long-term borrowing facilities. As set out in note 26, since the year end additional finance has been secured and a shareholder loan maturing in July 2023 has been extended by a further year. 

Based on the above, whilst there are no contractual guarantees, the directors are confident that the existing financing facilities will continue to be available to the Group. The directors, with the operating initiatives already in place and funding options available are confident that the Group will achieve its cash flow forecasts. Therefore, the directors have prepared the financial statements on a going concern basis.

The forecasts show that the Group needs to achieve its operating targets in order to remain within its existing bank and shareholder loan facilities and to meet its commitments as they fall due. These conditions and events indicate the existence of a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern and the Group companies may therefore be unable to realise their assets and discharge their liabilities in the ordinary course of business. The auditors make reference to going concern in their audit report by way of a material uncertainty. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

Basis of consolidation

The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group 'controls' an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which controls ceases.

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.

Interest in equity accounted investees

The Group's interest in equity accounted investees comprise interest in a joint venture.

A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement rather than rights to its assets and obligations for its liabilities.

Interest in Joint Ventures are accounted for using the equity method. There are initially recognised at cost, which include transaction cost. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and OCI of the equity accounted investees, until the date on which joint control ceases.

Foreign currency

The individual financial statements of each company in the Group are prepared in Mozambican Metical, the currency of the primary economic environment in which it operates (its 'functional currency'). The consolidated financial statements are presented in US Dollars.

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 the year, unless exchange rates fluctuate significantly during the year, 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
	2023	2022		2023	2022
Mozambican Metical: US$	63.86	66.31		63.88	63.83

Operating segments

The Chief Operating Decision Maker is the Board. The Board reviews the Company's internal reporting in order to assess the performance of the business. Management has determined the operating segments based on the reports reviewed by the Board which consider the activities by nature of business.

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.

Performance obligations and timing of revenue recognition:

All of the Group's revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are collected by or delivered to the customer. There is limited judgement needed in identifying the point control passes once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession, usually it will have a present right to payment. Consideration is received in accordance with agreed terms of sale.

Determining the contract price:

All of the Group's revenue is derived from fixed price lists and therefore the amount of revenue to be earned from each transaction is determined by reference to those fixed prices.

Allocating amounts to performance obligations:

For most sales, there is a fixed unit price for each product sold. Therefore, there is no judgement involved in allocating the price to each unit ordered.

There are no long-term contracts in place. Sales commissions are expensed as incurred. No practical expedients are used.

Operating loss

Operating loss is stated before investment revenues, other gains and losses, finance costs and taxation.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial year 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 any year presented.

All other borrowing costs are recognised in profit or loss in the year in which they are incurred.

Share based payments

The Company issues equity-settled share-based payments to certain employees of the Group and in settlement of certain expenditure. 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 Company'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.

Employee benefits

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.

Post-employment benefits

The Group does not contribute to any retirement plan for its employees. Social security payments to state schemes are charged to profit and loss as the employee's services are rendered.

Leases

The Group as a lessee.

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

•        Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;

•        Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

•        The amount expected to be payable by the lessee under residual value guarantees;

•        The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

•        Payments of penalties for terminating the lease if the lease term reflects the exercise of an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

•        The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

•        The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

•        A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group did not make any such adjustments during the periods presented.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The right-of-use assets are presented as a separate line in the consolidated statement of financial position.

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'Property, Plant and Equipment' policy.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in operating expenses in profit or loss.

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 year 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 year 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.

Property, plant and equipment

Recognition

Items of property, plant and equipment are stated at historical purchase cost. Cost includes expenditure that is directly attributable to the acquisition. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on qualifying assets.

Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent measurement

Following initial recognition at cost, items of land and buildings are subsequently measured using the revaluation model being the fair value at the date of revaluation less any subsequent depreciation and subsequent impairment losses. The revaluation model is only used when fair value can be reliably measured. Revaluations are made regularly enough to ensure that at any reporting date the carrying amount does not differ materially from the fair value. Revaluations are performed by independent sworn valuators triennially. When an item of property, plant and equipment is revalued, the entire class of property, plant, and equipment to which the asset belongs is revalued. Only land and buildings are subsequently valued using the revaluation model and all others are valued at cost model.

Any revaluation surplus is credited to revaluation reserve as part of other comprehensive income, except to the extent that it reverses a revaluation decrease of the same asset previously recognized in the profit or loss, in which case the increase is recognized in the profit or loss. A revaluation deficit is recognized in profit or loss, except to the extent that it offsets an existing surplus on the same recognized in the asset revaluation reserve. The revaluation reserve is realized over the period of the useful life of the property by transferring the realized portion from the revaluation reserve to retained earnings.

Depreciation

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	5%	-   25%
Motor vehicles	20%	-   25%
Other assets	10%	-   33%

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.

Intangible assets

Intangible assets comprise investment in management information and financial software.  This is amortised at 10% straight line.

Impairment of property, plant and equipment and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets 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 initially against amounts included in the revaluation reserve in respect of the asset and subsequently in profit and loss.

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.

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. Breeding cattle, comprising bulls, cows and heifers are expected to be held for more than one year, and are classified as non-current assets. The non-breeding cattle comprise animals 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.

Cattle ceases to be a biological asset from the point it is slaughtered, after which it is accounted for in accordance with the accounting policy below for inventories.

Forage crops are valued in accordance with IAS 41, 'Agriculture' at fair value less costs to harvest. As there is no ready local market for forage crops, fair value is calculated by reference to the production costs of previous crops. The cost of forage is charged to profit or loss over the year it is consumed.

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.

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.

Financial assets

Financial assets are classified as either financial assets at amortised cost, at fair value through other comprehensive income ("FVTOCI") or at fair value through profit or loss ("FVPL") depending upon the business model for managing the financial assets and the nature of the contractual cash flow characteristics of the financial asset.

A loss allowance for expected credit losses is determined for all financial assets, other than those at FVPL, at the end of each reporting period. The Group applies a simplified approach to measure the credit loss allowance for trade receivables using the lifetime expected credit loss provision. The lifetime expected credit loss is evaluated for each trade receivable taking into account payment history, payments made subsequent to year-end and prior to reporting, past default experience and the impact of any other relevant and current observable data. The Group applies a general approach on all other receivables classified as financial assets. The general approach recognises lifetime expected credit losses when there has been a significant increase in credit risk since initial recognition.

The Group derecognises a financial asset 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 party. The Group derecognises financial liabilities when the Group's obligations are discharged, cancelled or have expired.

Trade and other receivables

Trade receivables are accounted for at amortised cost. Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate expected credit loss allowances for estimated recoverable amounts as the interest that would be recognised from discounting future cash payments over the short payment period is not considered to be material. Other receivables are accounted for at amortised cost and are stated at their nominal value as reduced by appropriate expected credit loss allowances.

Financial liabilities

The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics.

All purchases of financial liabilities are recorded on trade date, being the date on which the Group becomes party to the contractual requirements of the financial liability. Unless otherwise indicated the carrying amounts of the Group's financial liabilities approximate to their fair values.

The Group's financial liabilities consist of financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss.

A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the statement of comprehensive income.

Borrowings

Borrowings are included as financial liabilities on the Group balance sheet at the amounts drawn on the particular facilities net of the unamortised cost of financing. Interest payable on those facilities is expensed as finance cost in the period to which it relates.

Trade and other payables

Trade and other payables are initially recorded at fair value and subsequently carried at amortised cost.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

For all other financial instruments not traded in an active market, the fair value is determined by using valuation techniques deemed to be appropriate in the circumstances. Valuation techniques include the market approach (i.e., using recent arm's length market transactions adjusted as necessary and reference to the current market value of another instrument that is substantially the same) and the income approach (i.e., discounted cash flow analysis and option pricing models making as much use of available and supportable market data as possible).

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing the categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting year.

3.    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 judgments, 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 year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years. The effect on the financial statements of changes in estimates in future years could be material on property, plant and equipment (note 13), and biological assets (note 15).

Going concern

Details of the directors' assessment of Going Concern are set out in note 3. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

Impairment and revaluation of land and buildings

Impairment reviews for non-current assets are carried out at each balance sheet date in accordance with IAS 36, Impairment of Assets. Reported losses in the Beef and Grain divisions were considered to be indications of impairment and a formal impairment review was undertaken to review whether the carrying amounts of non-current assets are greater than the recoverable amount.

The impairment reviews are sensitive to various assumptions, including the expected sales forecasts, cost assumptions, rent per square metre, capital requirements, and discount rates among others depending on how the recoverable amount is determined. The forecasts of future cash flows were derived from the operational plans put in place following the restructuring exercise undertaken since year end to address the requirement to increase both volumes and margins across the two divisions. Real commodity prices were assumed to remain constant at current levels.

As at 31 March 2021, the Group engaged an Independent real estate valuer to compute the fair value of land and buildings which also assisted in determining the recoverable amount whilst revaluing non-current assets. The Independent valuer used Royal Institute of Chartered Surveyors (RICS) and International Financial Reporting Standards to determine the fair value of land and buildings. Based on the assessment performed by the independent real estate valuers at 31 March 2021, and the improved operational outlook reflected in the operational plan in place, management have concluded that, at 31 March 2023, non-current assets are not impaired.

No impairments were recorded in the year ended 31 March 2023 or the year ended 31 March 2022. The carrying amount of non-current assets is $24.3 million (2022: $25.1 million).

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 $ at the exchange rate prevailing at the year 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 $ exchange rate.

The herd may be categorised as either the breeding herd or slaughter herd, depending on whether it was principally held for reproduction or slaughter. The value of the herd held for slaughter disclosed as a current asset was $0.5m (2022: $0.5m).

4.    Segment reporting

The Board considers that the Group's operating activities comprise the segments of Grain, Beef and Snax and which are 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.

Segment revenue and results

The following is an analysis of the Group's revenue and results by operating segment:

Year ending 31 March 2023	Grain		Beef		Snax*		Unallo-cated		Elimina-tions		Total
	$'000		$'000		$'000		$'000		$'000		$'000
Revenue
External sales (2)	8,365		3,129		-		-		-		11,494
Inter-segment sales (1)	225		-		-		-		(225)		-
	8,590		3,129		-		-		(225)		11,494
Segment results
- Operating profit/(loss)	2		(659)		-		(308)		-		(965)
- Interest expense	(958)		(63)		-		(441)		-		(1,462)
- Other gains and losses	95		59		-		-		-		154
- Share of profit in equity-accounted investees	-		-		37		-		-		37
(Loss)/Profit before tax	(861)		(663)		37		(749)		-		(2,236)
Income tax	115		12		-		-		-		127
(Loss)/Profit after tax	(746)		(651)		37		(749)		-		(2,109)

^* The Snax division is equity accounted for as a Joint venture. Its income statement is set out in note 23.

Year ending 31 March 2022	Grain		Beef		Snax*		Unallo-cated		Elimina-tions		Total
	$'000		$'000		$'000		$'000		$'000		$'000
Revenue
External sales (2)	7,118		3,159		-		-		-		10,277
Inter-segment sales (1)	226		-		-		-		(226)		-
	7,344		3,159		-		-		(226)		10,277
Segment results
- Operating loss	(55)		(444)		-		(429)		-		(928)
- Interest expense	(1,548)		(79)		-		-		-		(1,627)
- Other gains and losses	88		19		-		-		-		107
- Share of profit in equity-accounted investees	-		-		55		-		-		55
(Loss)/Profit before tax	(1,515)		(504)		55		(429)		-		(2,393)
Income tax	111		12		-		-		-		123
(Loss)/Profit after tax	(1,404)		(492)		55		(429)		-		(2,270)

(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 Company making the sale. Sales from the Grain and Beef divisions are principally for supply to the Mozambique market.

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

Year ending 31 March 2023	Grain		Beef		Snax		Unallo-cated		Elimina-tions		Total
	$'000		$'000		$'000		$'000		$'000		$'000
Depreciation and amortisation	514		356		-		-		-		870

Year ending 31 March 2022	Grain		Beef		Snax		Unallo-cated		Elimina-tions		Total
	$'000		$'000		$'000		$'000		$'000		$'000
Depreciation and amortisation	502		359		-		13		-		874

Segment assets, liabilities and capital expenditure

Segment assets consist primarily of property, plant and equipment, biological assets, inventories, trade and other receivables and cash and cash equivalents. Segment liabilities comprise operating liabilities, including an overdraft financing facility in the Grain segment, and bank loans and overdraft financing facilities in the Beef segment.

Capital expenditure comprises additions to property, plant and equipment.

The segment assets and liabilities at 31 March 2023 and capital expenditure for the year then ended are as follows:

	Grain		Beef		Snax		Unallocated		Total
	$'000		$'000		$'000		$'000		$'000
Assets	21,361		4,880		93		304		26,638
Liabilities	(7,596)		(770)		-		(8,265)		(16,631)
Capital expenditure	31		59		-		-		90

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

	Assets		Liabilities
	$'000		$'000
Segment assets and liabilities	26,334		(8,366)
Unallocated:
Other receivables	304		-
Accrued liabilities	-		(232)
Borrowings	-		(8,033)
	26,638		(16,631)

The segment assets and liabilities at 31 March 2022 and capital expenditure for the year then ended are as follows:

	Grain		Beef		Snax		Unallocated		Total
	$'000		$'000		$'000		$'000		$'000
Assets	23,496		5,133		56		10		28,695
Liabilities	(15,838)		(973)		-		(204)		(17,015)
Capital expenditure	65		14		-		-		79

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

	Assets		Liabilities
	$'000		$'000
Segment assets and liabilities	28,685		(16,811)
Unallocated:
Other receivables	10		-
Accrued liabilities	-		(204)
	28,695		(17,015)

Key performance Indicators

The Board considers that earnings before interest, tax, depreciation and amortisation ("EBITDA") is a key performance indicator in measuring operational performance.  EBITDA is a non IFRS measure and alternative performance measure for the Group which is calculated as follows:

Year ending 31 March 2023	Grain		Beef		Snax		Unallocated		Total
	$'000		$'000		$'000		$'000		$'000
(Loss)/Profit before tax	(861)		(663)		37		(749)		(2,236)
- Interest expense	958		63		-		441		1,462
- Depreciation and amortisation charge	514		356		-		-		870
- Share of profit in equity-accounted investees	-		-		(37)		-		(37)
EBITDA	611		(244)		-		(308)		59

Year ending 31 March 2022	Grain		Beef		Snax		Unallocated		Total
	$'000		$'000		$'000		$'000		$'000
(Loss)/Profit before tax	(1,515)		(504)		55		(429)		(2,393)
- Interest expense	1,548		79		-		-		1,627
- Depreciation and amortisation charge	502		359		-		13		874
- Share of profit in equity-accounted investees	-		-		(55)		-		(55)
EBITDA	535		(66)		-		(416)		53

5.    Finance costs

	Year  Ended		Year Ended
	31 March 2023		31 March 2022
	$'000		$'000
Interest expense on bank borrowings and overdrafts	(913)		(1,556)
Interest expense on shareholder loan	(448)		-
Interest expense on leases	(101)		(71)
Net finance costs	(1,462)		(1,627)

6.    earnings per share

	Year ended		Year ended
	31 March 2023		31 March 2022
	$'000		$'000
The calculation of the basic and diluted earnings per share is based on the following data:
Loss for the year for the purposes of basic and diluted earnings per share attributable to equity holders of the Company	(2,109)		(2,270)
Weighted average number of Ordinary Shares for the purposes of basic and diluted earnings per share	22,705,569		21,240,618
Basic and diluted earnings per share - US cents	(9.29)		(10.7)
Basic and diluted earnings per share from continuing activities - US cents	(9.29)		(10.7)

The Company has issued options over ordinary shares which could potentially dilute basic loss per share in the future. There is no difference between basic loss per share and diluted loss per share as the potential ordinary shares are anti-dilutive. Details of options are set out in note 24.

7.    Biological assets

			$'000
Fair value
At 31 March 2021			451
Purchase of biological assets			1,606
Sale, slaughter or other disposal of biological assets			(1,630)
Change in fair value of the herd			1
Foreign exchange adjustment			35
At 31 March 2022			463
Purchase of biological assets			1,812
Sale, slaughter or other disposal of biological assets			(1,533)
Change in fair value of the herd			(288)
Foreign exchange adjustment			42
At 31 March 2023			496

At 31 March 2023 and 2022, all cattle are held for slaughter. The slaughter herd has been classified as a current asset. Forage crops included in current assets are $42,547 (2022: $10,802).

At 31 March 2023 the slaughter herd comprised 4,099 head (2022: 4,575, with an average weight of 341kgs (2022: 283kgs) and average value of $369 (2022: $339).

For valuation purposes, animals in the feedlot, their weight has been estimated based on their individual weigh in data at the closest weigh in date to the year end. Cattle are generally kept for periods less than 3 months before slaughter.

8.    Borrowings

	31 March 2023		31 March 2022
	$'000		$'000
Non-current liabilities
Shareholder loans	6,534		-
Bank loans	574		783
Leases	88		220
	7,196		1,003
Current liabilities
Shareholder loans	1,500		-
Bank loans	1,056		2,438
Leases	110		115
Overdraft	-		6,256
	2,666		8,809
	9,862		9,812

Bank Borrowings

Group

During the period, Agriterra Limited secured shareholder loans amounting to $7.9 million from Magister Investments Limited at an interest rate SOFR+6% to reduce the finance cost which has been increasing over the years and has been used to repay commercial borrowing in Mozambique which were charged interest above 18% per annum. The Group is saving more than $792,000 per annum on interest cost. The shareholder loans are made up of:

·    $6.1m convertible loan facility with a 3-year tenure maturing August 2025.

·    $1.8m convertible loan facility with a 12-month tenure maturing in August 2023 and was renewed for the same period after year end.

In the event of default or at the option of the lender, the outstanding principal and interest may be converted into new ordinary shares at the prevailing market price of the Company`s shares at such time. The market price is determined by the 10-day VWAP. The difference between the 10-day VWAP and the closing market price is a derivative liability the value of which is not considered to be material. Accordingly, the principal of the convertible loans has been recorded in full as a financial liability.

$ 0.3m of the $1.8m shareholder loan was converted in shares in March 2023.

Beef division

Beef division does not have any finance facilities except equipment leases as at 31 March 2023.

Grain division

At 31 March 2023, the Grain division has two outstanding commercial bank loans amounting to $1.6 million secured by land and buildings. As announced on 15 November 2023 $1m  of these loans has been repaid following the drawdown of a new shareholder loan of $1.7 million (note 26).

In addition, Grain division has a finance lease for 6 vehicles maturing on 05 December 2023 with an outstanding balance amounting to MZN 3.2m ($50,031). Grain division incurs interest of 24.1% on this facility. During the period MZN 3.0m ($47,414) of the outstanding balance was repaid.

The bank facilities are secured as follows:

	31 March 2023		31 March 2022
	$'000		$'000
Fixed Charge
Property, plant and equipment	20,401		20,833
Floating Charge
Maize and maize product inventories	-		250
	20,401		21,083

As further security to the bank loans and overdrafts, Agriterra Limited has issued a corporate guarantee in favour of the bank. Under the terms of the guarantee, it may only be called upon once the bank has exhausted all possible means of recovering the debt in Mozambique.

Reconciliation to cash flow statement

	At 31 March 2022		Cash flow		Interest accrued		Loan to equity conversion		Foreign Exchange		At 31 March 2023
	$'000		$'000		$'000		$'000		$'000		$'000
Shareholder loan	-		7,900		448		(314)		-		8,034
Non-current bank loan	783		(209)		-		-		-		574
Non-current leases	220		(132)		-		-		-		88
Current bank loan	2,438		(1,380)		-		-		(2)		1,056
Current leases	115		(5)		-		-		-		110
Overdrafts	6,256		(6,254)		-		-		(2)		-
	9,812		(80)		448		(314)		(4)		9,862

	At 31 March 2021		Cash flow		Foreign Exchange		At 31 March 2022
	$'000		$'000		$'000		$'000
Non-current bank loan	2,107		(1,431)		107		783
Non-current leases	302		(103)		21		220
Current bank loan	263		2,075		100		2,438
Current leases	102		4		9		115
Overdrafts	3,651		2,236		369		6,256
	6,425		2,781		606		9,812

9.    Share capital

		Authorised		Allotted and fully paid
		Number		Number		$'000
Ordinary Shares
At 31 March 2022		23,450,000		21,240,618		3,135
Issued during the year		50,588,389		50,588,389		620
At 31 March 2023		74,038,389		71,829,007		3,755
At 31 March 2022 and 31  March 2023
Deferred shares of 0.1p each		155,000,000		155,000,000		238
Total share capital		229,038,389		226,829,007		3,993

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.

Placing and Broker option

On 20 March 2023, the Company issued 20,000,000 new ordinary shares for cash at a price of 1p per share and 20,000,000 new ordinary shares on conversion of a loan from Magister Investments Limited at a conversion price of 1p per share.

On 22 March 2023, the Company issued 5,000,000 new ordinary shares for cash at a price of 1p per share and 5,000,000 new ordinary shares on conversion of a loan from Magister Investments Limited at a conversion price of 1p per share.

On 23 March 2023, the Company issued 588,389 new ordinary shares on conversion of a loan from Magister Investments Limited at a conversion price of 1p per share in order to maintain the Magister Investments Limited shareholding at 50.58%.

Warrants

	31 March 2023		31 March 2022
PILOW warrants	50,588,389		-
Broker warrants	1,250,000		-
	51,838,389		-

Participants in the Placing and Debt Conversion received one Protected In-the-money Loyalty Warrant ("PILOW") for every Placing Share or Conversion Share issued. The PILOW offers rights to the Company to call the PILOW holder to exercise their options at a price to be determined by the company or in the event of a future fundraising or in certain other circumstances, the Company is mandated to call the PILOW holder to exercise their options on similar terms to the future placing. The PILOW expires 24 months from the date of issue. The PILOW has no fixed price, no guaranteed discount and are held over a variable number of securities. Given these variables, in the opinion of the Company it is not possible to calculate the expected value of a PILOW and that their fair value is nil.

On 22 March 2023, the Company issued 1,250,000 Broker warrants with a term of 24 months and an exercise price of 1p. Their value is not material and has not been accounted for as a cost of the placing.

10.  Equity-ACCOUNTED INVESTEES

	31 March 2023		31 March 2022
	$'000		$'000
Interest in joint venture	93		56
	93		56

DECA Snax Limitada is a joint venture in which the Group has joint control and a 50% ownership interest. It is one of the Group's strategic customers of grits and principally engaged in the production of corn snacks in Mozambique. DECA Snax Limitada's principal place of business is Chimoio in Mozambique and is not listed.

DECA Snax Limitada is structured as a separate vehicle and the Group has residual interest in the net assets of DECA Snax Limitada. Accordingly, the Group has classified DECA Snax Limitada as a joint venture. In accordance with the agreement under which DECA Snax Limitada is established, the Group and the other investor in the joint venture have agreed to make additional contributions in proportion of their interest if additional investment is required in DECA Snax Limitada.

The following table summarises the financial information of DECA Snax Limitada as included in its own financial statements. The table also reconciles the summary information to the carrying amount of the Group's interest in DECA Snax Limitada.

	31 March 2023		31 March 2022
	$'000		$'000
Percentage ownership interest	50%		50%
Non-current assets	447		466
Current assets (including cash and cash equivalents - 2023: $73,000, 2022: $23,000)	550		337
Current liabilities (Trade and other payables)	(75)		(233)
Non-current liabilities	(748)		(458)
Net assets (100%)	174		112
Net assets (Carrying amount of joint venture)	93		56
Revenue	2,346		1,447
Cost of Sales	(1,804)		(1,008)
Depreciation and amortisation	(77)		(71)
Operating expenses	(372)		(192)
Interest expense	-		-
Income tax expense	(18)		(66)
Profit and other comprehensive income (100%)	75		110
Profit and other comprehensive income (50%)	37		55

11.  Events subsequent to the balance sheet date

In July 2023, the Group decided to implement a restructuring process with the goal to enable the business to break even at the current activity business levels. The impact of the restructuring exercise on the Group is as follows:

·    Group employees decreasing by 124 employees out of 312 employees of the Group thereby reducing payroll cost by $528,000 per year.

·    Reduction of other operation expenses by $228,000 per year.

In June 2023, Group secured working capital funding from commercial banks in Mozambique, assisted by bank guarantees from Magister. Due to challenges in the macro-economic environment, the banks were unable to disburse the funds in full. The majority shareholder assisted in August 2023 with a $2 million facility to fund current year working capital. In addition, the shareholder convertible loan amounting to $1.8 million which matured in July 2023 was extended by a further year. Interest on all shareholder loans are at SOFR+6%.

On 15 November 2023, Magister Investments Limited advanced a further $1.7 million to enable the Group to repay its remaining Metical denominated bank borrowings. The loan has a coupon of SOFR+6% and a term of 1 year, renewable at the lender's option.

 

END