Annual Financial Report

30 September 2024

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

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

2024 Annual Results

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce its audited annual results for the year ended 31 March 2024 (the "2024 Annual Results"). Copies will be posted to Shareholders where appropriate. The Company will be posting its notice of Annual General Meeting, and a further announcement will be made in due course.

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:

CHAIR'S STATEMENT AND STRATEGIC REVIEW

I am pleased to present the annual report of the Group for the year ending 31 March 2024. During the year, the Group had a strategic review and formulated a 5-year plan to improve and expand the operational performance across all divisions to achieve profitability. The initial phase was to align the workforce with the business volumes and to revise the sales strategy.

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 group 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 continues to focus on adding value along the entire maize and beef value chain, by developing and offering new products to the market. It has three operating divisions:

·      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 and retail units through Mozbife Limitada (Mozbife)

·      Snax, which sources maize grits from DECA, processing them into flavoured puffs through DECA Snax Limitada, a joint venture company in which DECA has a majority interest.

·      Biscuits, which was planned and developed during the year 2023/2024 and commissioned in June 2024, trading under the brand name of Doko Doko. Biscuits will remain under the Grain division until it is more established.

During the year the Company secured shareholder loans of, in aggregate, c.US$4.6m (2023: c.US$7.9m) to repay commercial bank debt and to fund working capital for the Grain and Beef divisions. This has resulted in a reduction in debt servicing costs.

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 major shareholder is represented on the Board, both at the Executive and Non-Executive level, 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 developing commercial sector.

Mozambique overview

During the current period the Metical remained steady against the US$1; MZN63.90 (2023; US$1; MZN 63.88). Annual inflation decreased faster than anticipated to 7.1%, against 10.3% in the previous year. The Authorities are maintaining controls to ensure fiscal discipline, during the period the prime lending rate rose to 23.50% to contain inflation but has since started reducing (20.6% September 2024) and is expected to decrease further by the end of 2024. In addition, the Central Bank increased the Prudential Deposit Ratio from 10.5% to 39%.

The continuing instability and Islamist attacks in Cabo Delagado have restricted the production of Liquified Natural Gas (LNG) slowing the anticipated income in our Beef division from this sector as this sector contributed significant revenue to the Beef division in the past. However, the medium-term outlook is positive, with growth expected to accelerate to 4.6% over 2025 to 2026.

A report from the African Development Group: "The fiscal deficit improved from 5.1% of GDP in 2022 to about 2.8% in 2023, reflecting cuts in public spending and higher domestic revenue collection as the economy gradually recovered. Mozambique is in debt distress, but its debt is assessed as sustainable on a forward-looking basis."

Operations review

Grain division

The division secured a US$2 million shareholder loan to fund grain working capital in August 2023 and purchased 14,494 tons of maize. In addition, 1,000 tons of mealie meal was imported from South Africa when the cost of maize in Mozambique increased to US$315 per ton, and hence it was more economic to import, in accordance with the sales strategy.

The Grain division generated revenue amounting to US$6.2 million (FY23: US$8.6 million) after selling 10,882 tons (2023: 17,819 tons) of mealie meal, the average meal selling price increased by 18% to US$570 per ton (2023: US$482).

The Grain division's bank borrowings decreased by US$1.1 million due to repayment of bank borrowings of US$1 million and finance leases were fully repaid during the year. The Grain division has one outstanding commercial bank loan amounting to US$0.6 million.

Operating costs increased by US$0.1m to US$1.2m, EBITDA decreased to negative US$0.02m (2023: positive EBITDA of US$0.6m) due to low sales volumes and high cost of maize during the year. Finance costs decreased to US$0.3m (2023: US$1.0m) and depreciation cost amounted to US$0.5m (2023: US$0.5m) resulting in a loss before tax of US$0.78m (2023: loss US$0.86m).

Beef division

The Beef division generated revenue of US$3.0 million (FY23: US$3.13 million). The main customers are wholesale customers being the catering companies and supermarkets. Retail customers are more sensitive to price as compared to quality and there was increased competition from cheaper meat from the informal market. Although sales volumes were 9.4% higher than previous year (728 tons vs 666 tons in FY23) the price of beef per kg deceased by 10.2% to combat competition from the informal market and the Gross Margin decreased to 14.94% (FY23: 24.06%).

The average daily weight gain of animals increased from 0.22% to 0.26% of body mass and the average dress out rate was 47.2% (FY-2023: 49.2%) due to lower quality of animals which were purchased to service the retail business.

Beef division strategy shifted during the year from the more high-end market to a mix of quality product together with a lower quality product that could be priced more aggressively and aimed at the mass retail market.

Beef division is targeting areas much closer to the operational base for cattle buying and is incentivising farmers to deliver animals directly to the abattoir. 70% of all animals slaughtered in the last 6 months of the year were delivered directly to the abattoir. This has improved operational efficiencies by cutting out unnecessary transport costs.

The Maputo butchery was closed, as the proximity to South Africa and the fluctuating cheap imports were affecting sales.

The Beef division still carries the cost of the 3 farms that remain in care and maintenance whilst looking for potential buyers.

Loss after tax amounted to US$1,140,000 (FY23: Loss after tax US$651,000).

Snax division

At the beginning of the year, in order to be more responsive to changes in the market, the Group acquired operating control of DECA Snax Limitada through control over the board by an approved resolution. Consequently the Group is consolidating the performance of Snax division and recognising the non-controlling interest in the Group's financial statements.

Sales revenue decreased by 9% to US$2.1 million (FY23: US$2.3 million). The Snax division was affected by the increasing cost of maize during the year, up by 27%. However there was resistance from the market to attempts to increase the selling price of the Snax to recover the cost of inputs.

During the year, Snax installed a large 100-gram packing machine to offer family pack size to customers. The division has not been able to utilise more than 60% of its production capacity due to maize cost and availability which affected the cost of production.

Snax sold 1,066,996 bales during the year (FY23: 1,111,538 bales). Profit after tax amounted to US$22,676 (FY23: US$74,976) after payment of management fees to the Grain division, amounting to US$103,601 (FY23: US$117,289). Low profitability resulted from high cost of raw materials.

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. 

Financial Review

In FY24 the Group revenue includes the revenue from the Snax division (US$2.1m) following the change of operating control. After taking the Snax revenue into account, revenue in the Grain and Beef divisions decreased by 28% to US$8.3m (FY23: US$11.49m) mainly due to:

·      The Grain division secured a pre-buying season facility from a commercial bank in Mozambique which the bank could not deliver due to an increase in the prudential deposit ratio with the Central Bank from 10.5% to 39%. The Company therefore obtained a shareholder loan in August 2023 as an alternative. This delay led to DECA purchasing 6,609 tons of maize initially and then rolling the generated working capital to purchase a total of 14,494 tons of maize. At an extraction of 75.1%, only 10,882 tons were produced and sold (FY23: 17,819).  

·      The Beef division sales volumes increased to 728 tons (FY23: 666 tons), however revenue saw a slight decrease to US$3.0 million (FY23: US$3.1 million) due to a reduction in the average selling price. The increased sales volumes reflect the strategy to be more aggressive in the retail market, but the revenue reflects the reduction in the sales to wholesale customers as a result of competition from South African beef due to Rand: MZN exchange rate.

The Group's gross margin decreased to 17.6% (FY23: 21.2%) due to fair value reduction of biological assets amounting to US$437,000 (FY23: US$288,000) and cost of replacement maize. Gross profit was US$1.8 million (FY23: US$2.4 million).

The Group's operating expenses increased by 18% to US$4 million with an increase in operating losses to US$1.85 million (FY23: US$0.81 million).

Net Debt as of 31 March 2024 was US$13.83 million (FY23: US$9.69 million). The shareholder loan injections of US$4.6 million funded maize purchases, various equipment to enhance production, the biscuit plant and raw materials. US$1.1 million was used to repay part of a long outstanding commercial bank loan. Finance costs were at US$1.49 million (FY23: US$1.46 million), of which US$1.003 million was accrued to shareholder loans which are at 6% above Secured Overnight Financing Rate (5.31%) as compared to Mozambique commercial bank loan rates of more than 22% per annum.

Subsequent to the year end, the Grain division secured US$4.2 million to fund working capital in the form of advance payments from a major customer amounting to US$1.2 million and US$3 million under a commodity trading agreement with a local Mozambican company (see note 27).

Risk management

The Group is subject to various risks, and the future outlook for the Group and growth in shareholder value should be viewed with an understanding of these risks. The following table shows the principal risks facing the Group and the actions taken to mitigate these:

The Board is also responsible for establishing and monitoring the Group's systems of internal controls. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group's systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately. The Board reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment on a regular basis. In light of this control environment the Board considers that there is no current requirement for a permanent separate internal audit function.

Going concern

Details of the consideration of going concern are set out in note 3. The Group has prepared forecasts for its ongoing operating 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 commercial debt during the year by a further US$1.1 million (FY23: US$7.98 million). Post year end, the Grain division has sourced the equivalent of US$3 million under a commodity trading agreement with a local Mozambican company and has received an advance payment of the equivalent of U$1.2 million from one of its major customers. All the funding was used to purchase maize and will be repaid within the year ending 31 March 2025.

The Group prepared a 5-year strategy which defined the key performance indicators, identified the challenges it is likely to encounter and set direction and targets for the management teams in their respective divisions. These operating targets will need to be achieved for the Group to meet its cashflow requirements.

These conditions 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 operating 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 was unable to continue as a going concern.

Outlook

The Group plans, having implemented a retrenchment programme in the prior year, to align the costs to the business volumes in FY 2025. Operating costs remain under constant review. The majority shareholder continues to offer support to the Group in the form of extending existing loan facilities.

The macro-economic environment is expected to improve in 2024/25 financial year. The US$: MZN exchange rate is expected to remain at US$1: MZN 63.90, whilst inflation is expected to decrease to around 4-5%. The Central Bank of Mozambique is using interest rates to control inflation, and a decrease in the inflation rate will enable the Central Bank of Mozambique to reduce the prime lending rate which is currently at 22.4%.

Grain: The Grain division needs to secure maize at the right time and at the right price to ensure its success. Operational efficiency is also key to unlocking profit, extractions are expected at 75% and therefore regular maintenance and plant and machinery is required. The region expects grain shortages due to an El Nino induced drought, and this will drive maize meal prices up. The pressure on available maize has provided an opportunity for the Grain division to gain market share and improve sales revenue. The Grain division has bought 15,549 tons by 31 August 2024 and is actively procuring an additional 6,000 tons of maize to achieve production of 15,000 tons meal, plus having 1,000 tons to carry into the next season.

The biscuit brand which is included in the Grain division is anticipated to continue to grow and achieve a positive EBITDA in 2025.

Beef: The Beef division financial performance is dependent on successfully penetrating the retail market to achieve sales of 100 tons per month in addition to the existing wholesale market for prime product, whilst containing operational expenses. The Beef division is now securing more than 70% of its animals for slaughter at the abattoir directly from the farmers and this has reduced transport costs. The Beef division will look to diversify other protein products to the market, including chicken and fish.

Snax: The Snax division profitability was affected by high cost of maize, however the Grain division has sufficient maize to supply the requirements for the Snax division and options of importing grits from South Africa are being explored. The Snax division will be introducing new flavours during the year to increase customer choices and improve sales.

Board and senior management changes

There were no changes in the Board and Senior Management during the year.

CSO Havers,

Non-Executive Chair

30 September 2024

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2024

OTHER COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2024

The financial statements on pages 18 to 48 were approved and authorised for issue by the Board of Directors on 30 September 2024.

Signed on behalf of the Board of Directors by:

CSO Havers

Chair

30 September 2024

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY      

FOR THE YEAR ENDED 31 MARCH 2024

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2024

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.             GENERAL INFORMATION

Agriterra is incorporated and domiciled in Guernsey, the Channel Islands, with registered number 42643. Further details, including the address of the registered office, are given on page 47. The nature of the Group's operations and its principal activities are set out in the Directors' report. A list of the investments in subsidiaries and associate companies held directly and indirectly by the Company during the year and at the year-end, including the name, country of incorporation, operation and ownership interest is given in note 3.

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.

The financial statements have been prepared in accordance with International Accounting Standards as adopted by the United Kingdom.

The financial statements have been prepared on the historical cost basis, except for the following items, which are measured at on alternative basis on each reporting date:

2.             ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

Adoption of new and revised Standards

During the current year, the Group has adopted all of the new and revised standards and interpretations issued by the IASB and the IFRS-IC that are relevant to its operations and effective for annual reporting periods beginning on 1 April 2023. The revised standards and interpretations have not resulted in material changes to the Group's accounting policies.

The following new and amended standards are not expected to have a significant impact on the Group's financial statements in the future, being FY 2025.

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants

Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback

Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements

3.             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 Company 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 2025, and it has been assumed that these will be renewed.

The divisional forecasts for FY-25 show a significant improvement in operating performance as compared to that reported for the year ended 31 March 2024. 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 27, since the year end additional finance has been secured and shareholder loans maturing in July and August 2024 have 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.

As at 31 March 2024, the Company held equity interests in the following undertakings:

Direct investments

Indirect investments of Agriterra (Mozambique) Limited

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:

Operating segments

The Chief Operating Decision Maker is the Board. The Board reviews the Group'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. These include the Grain, Beef and Snax divisions.

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 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:

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 and goodwill

Intangible assets comprise investment in management information and financial software.  This is amortised at 10% straight line. Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

Impairment of property, plant and equipment and intangible assets

At each balance sheet date, the Company 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 Company 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 instruments

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.

Cash and cash equivalents

Cash and cash equivalents, comprise cash on hand, on demand deposits and cash equivalents , which are short term highly liquid investments that are readily convertible into a known amount of cash and which are subject to an insignificant risk of changes in value.

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 Company.

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 Company 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.

4.             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 2024, 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 2024, and the improved operational outlook reflected in the operational plan in place, management have concluded that, at 31 March 2024, non-current assets are not impaired.

No impairments were recorded in the year ended 31 March 2024 or the year ended 31 March 2023. The carrying amount of non-current assets is US$25.0 million (2022: $24.3million).

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 US$ 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 US$ 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 $0.2m (2023: $0.5m).

5.             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:

(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.

    *        Deca Snax was accounted as a subsidiary in 2024 due to acquisition of control and was accounted under equity method as a joint venture.

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

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 2024 and capital expenditure for the year then ended are as follows:

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