Agriterra Ltd AGTA Operations Update and Notice of Final Results

  Agriterra Ltd (AGTA) - Operations Update and Notice of Final Results

RNS Number : 7161P
Agriterra Ltd
29 October 2012




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

29 October 2012

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

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

                                      

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



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



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



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



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



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



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



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





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

Andrew Groves   Agriterra Ltd                 Tel: +44 (0) 20 7408 9200
Jonathan Wright Seymour Pierce Ltd            Tel: +44 (0) 20 7107 8000
David Foreman   Seymour Pierce Ltd            Tel: +44 (0) 20 7107 8000
Andy Cuthill    MC Peat & Co LLP              Tel: +44 (0) 20 7104 2332
Susie Geliher   St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177



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





UNAUDITED CONSOLIDATED INCOME STATEMENT

For the year ended 31 May 2012



                                                               Year      Year

                                                              ended     ended

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

                                                       
Discontinued operations
Profit / (loss) for the year                                     721      (89)
Loss for the year attributable to owners of the                             
parent
                                                             (6,221)   (2,428)

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 May 2012



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

OWNERS OF THE PARENT                   38,456     24,832



UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 May 2012

                                                        Year ended  Year ended

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





1. Segment reporting



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



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



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



Year ending31May2011          Grain    Beef   Cocoa   Unallocated     Total
                                $’000   $’000   $’000         $’000     $’000
                                                                        
Revenue                         13,533      55       -             -    13,588
Segment results                                                          
- Operating profit / (loss)        270   (958)       -       (1,642)   (2,330)
- Interest income/(expense)        141       0       -            18       159
Profit / (loss) before tax         411   (958)       -       (1,624)         
                                                                        
Income tax                       (168)       -       -             -     (168)
Profit / (loss) after tax          243   (958)       -       (1,624)   (2,339)
                                                                        



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



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



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



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





                                   **ENDS**



Notes



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



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



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



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



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


MSCPGGPGUUPPPPR -0- Oct/29/2012 07:00 GMT