Agriterra Ltd AGTA Final Results

  Agriterra Ltd (AGTA) - Final Results

RNS Number : 8304Q
Agriterra Ltd
12 November 2012

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

12 November 2012

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

                                Final Results


Agriterra Ltd, the AIM listed pan-African agricultural company, announces  its 
results for the year ended 31 May 2012.


· Increase  in Group  revenue  to US$13.8  million  and creation  of  three 
revenue streams - beef herding, cocoa buying and trading, and maize buying and

· Investment  programme accelerated  to create  foundation for  sustainable 
growth and  profitability  - focussing  on  expansion of  beef  operations  in 
Mozambique and cocoa operations in Sierra Leone

Beef Operations

· Beef  herd in  Mozambique enlarged  to over  4,800 head  and increase  in 
capacity of Vanduzi Feedlot to 3,000 head

· Completion  of  dam  at  1,350  hectare  Mavonde  Stud  Ranch  to  enable 
irrigation of 4,000 hectares and continued growth of breeding herd

· Acquisition  of  additional  1,300 hectare  land  package  contiguous  to 
Mavonde Stud Ranch under negotiation to  support an enlarged breeding herd  of 
up to 13,000 head

· Completion of 4,000 head per month capacity Chimoio Abattoir post  period 
end and imminent opening  of two retail  units to provide  the full uplift  in 
value for slaughtered and butchered products

Cocoa Operations

· Rapid expansion of cocoa buying  infrastructure in Sierra Leone -  buying 
points increased from  four to 41  satellite stores and  three main hub  sites 
during the period

· 100% increase in annual cocoa trading volume from pre-acquisition  levels 
- volumes forecast to double again during 2012/2013 financial year

· Negotiations underway  to acquire a  4,400 acre former  cocoa and  coffee 
plantation for rehabilitation to enable Group to capitalise on the  compelling 
economics for cocoa farming

Maize Operations

· Strong harvest in 2011 reduced demand for mealie meal product during  the 

· Encouraging  indications  for 2012/2013  sales  season following  a  poor 
harvest -  anticipation of  increased  demand and  a more  favourable  pricing 


· 67%  increase  in net  asset  value  to US$41.4  million  (2011:  US$24.8 

· In  addition  two significant  cash  injections are  awaited  which  will 
further strengthen balance sheet and underpin Group value:

o Sale of 20% legacy interest in Ethiopian oil asset for a cash  consideration 
of US$40 million  on completion  and a  further US$10  million on  "Commercial 

o Acknowledgment of Agriterra's entitlement to receive a compensation  payment 
of £11,372,682 as  partial recompense  for work undertaken  and investment  on 
Southern Sudanese oil asset


Our focus  during  the year  has  been  on the  consolidation,  expansion  and 
diversification of our businesses in order to create the platform to become  a 
leading African  based  agricultural  company. As  a  result  of  significant 
investment, the creation of three revenue streams, being beef, grain and cocoa
and the implementation  of a  capital and operational  structure suitable  for 
development, we  believe we  now have  the foundation  for future  sustainable 
growth and profitability.

Africa is a dynamic and rapidly developing continent, with unique requirements
for food production  over the coming  decades. With a  current population  of 
over 1 billion and forecasts indicating an increase of more than 20% over  the 
next ten years, and  seven out of the  world's ten fastest growing  economies, 
food volumes  and  dietary  requirements throughout  Africa  are  expected  to 
continue to  change quickly.  These  rapidly evolving  consumer  requirements 
underline  the   need  for   greater  agricultural   independence  and   major 
improvements in productivity. In line  with this, through our operations,  we 
are helping  to facilitate  the commercialisation  of small-scale  arable  and 
livestock agricultural  practices. Our  maize and  cocoa out-growers  schemes 
have helped to improve the lifestyles of thousands of people by raising  rural 
incomes, boosting local economic growth, and creating business opportunities.
In addition,  our  beef operations,  which  capitalise on  traditionally  high 
levels of beef imports into Mozambique from South Africa, have created a  new, 
high quality  source of  domestic beef  for which  there is  extremely  strong 

This  is  a  defining  period   in  Agriterra's  development  and  we   remain 
concentrated on  further  expanding  our  operations,  particularly  our  beef 
ranching and  cocoa  plantations,  in  order  to  achieve  critical  mass  and 
sustainable profitability. With this in  mind, our attention during the  year 
has been  on  the  development  of the  necessary  infrastructure  to  support 
continued growth across our asset portfolio. Significant investment has  been 
made during the period, including the construction of the abattoir and the  48 
billion litre dam at the Mavonde Stud  Ranch, the rapid expansion of our  beef 
breeding herd and the considerable increase in cocoa buying infrastructure  in 
Sierra Leone.

As a result of  these advances and developments  in Mozambique, the Group  has 
established a fully vertically integrated  beef operation. The components  of 
this "field to fork" operation are:

· established dry and irrigated ranches supporting a growing breeding herd;

· an expanding feedlot operation;

· a  recently  commissioned state  of  the  art abattoir  with  an  ultimate 
capacity of 4,000 head per month; and

· an embryonic retail operation with two shops opening shortly.

In Sierra Leone, we  have expanded our  buying infrastructure and  out-growers 
operations  considerably  and  are  now  in  the  process  of  concluding  the 
absorption  of  a  former  cocoa  and  coffee  plantation  (with   appropriate 
rehabilitation works to re-establish  the plantation) together with  adjoining 
land to enable  us to meet  the growing demand  for sustainable and  traceable 

Our impressive investment  programme has  now laid the  foundations to  enable 
accelerated growth for Agriterra. Initial indications for trading during  the 
first half of the 2012/2013 financial year are looking extremely  encouraging, 
and I am  confident in our  ability to  create further value  during the  year 

The positive  expansion  objectives for  Agriterra  will be  underpinned  upon 
receipt of the  funds from the  sale of its  legacy oil asset  in Ethiopia  to 
Marathon Oil Corp. ('Marathon  Oil'). Under the terms  of the agreement,  the 
Group'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". 
Also in respect of  Agriterra's legacy oil interests,  as announced on 25  May 
2012, the Ministry  of Petroleum  and Mining of  the Republic  of South  Sudan 
('MPM') has acknowledged  in writing  the Company's entitlement  to receive  a 
compensation payment of £11,372,682. This compensation payment is as  partial 
recompense for the work undertaken and the substantial investment made by  the 
Company on the  Block Ba  oil concession area  in Southern  Sudan, during  its 
previous  incarnation  as  White  Nile  Limited.  The  MPM  acknowledged  the 
compensation should have been paid much earlier and confirmed that it will  be 
paid to the Company within  one year. The board  are seeking to expedite  this 
timeline for  payment but  remain cognisant  of the  challenges faced  by  the 
world's newest country in its early development.

Following these  dramatic  cash injections,  Agriterra  will be  in  a  strong 
position to accelerate its  ambitious development programme, achieve  critical 
mass and invest in new projects and  geographic areas in order to achieve  its 
objective  of  becoming  a  significant  profitable  pan-African  agricultural 


Despite a fall in demand in the grain business, initial revenues from the beef
and cocoa operations resulted in turnover for the Group increasing to US$13.8m
(2011: US$13.6m).  Investment  in  building the  beef  and  cocoa  operations 
resulted in an increase  in the reported loss  on continuing activities  after 
tax of US$6.9m (2011: US$2.3m)


Following periods of intensive investment over the past four years, the  Group 
has built a solid agricultural footprint in both Mozambique and Sierra  Leone, 
and will benefit from a strong balance sheet moving forward, ensuring that  we 
have all of  the necessary resources  to deliver on  our growth objectives  of 
building a significant pan-African agriculture business.

I would like to take  this opportunity to thank  my fellow board members,  the 
members of  the  Agriterra team  based  in  Mozambique and  Sierra  Leone,  in 
addition to  our valued  shareholders. I  look forward  to providing  further 
updates regarding our expansion strategy and operational achievements over the
coming weeks and months.

Phil Edmonds


12 November 2012


Agriterra currently has four agricultural divisions:

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

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

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

· Red  Bunch  Ventures  (SL)  Limited  which  houses  Agriterra's  palm  oil 

Beef Operations

Following three years of intensive  investment and expansion at the  Company's 
beef operations in Mozambique,  Mozbife now boasts a  total herd in excess  of 
4,800 head across  two ranches  covering over  16,000 hectares,  a 48  billion 
litre irrigation dam, a 3,000 head capacity feedlot and a 4,000 head per month
capacity abattoir. Completing the Group's "field to fork" beef business,  two 
retail units in Chimoio and Tete are due to open in the coming weeks.

Mozbife remains on  track to achieve  its expansion objectives  of building  a 
total herd of 6,000 head by the end of 2012 and 10,000 by 2015.

The Mavonde Stud Ranch

The primary objectives  at the  Mavonde Stud Ranch  have been  to enlarge  the 
Mozbife breeding herd, and increase capacity to accommodate future expansion.
With this in mind, the pedigree breeding  herd at Mavonde had grown to 978  by 
the year end, up from 492 in 2011. An additional 350 hectare package of  land 
was acquired during the period, enlarging the total Mavonde Stud Ranch to over
1,350 hectares. In addition the acquisition of a further and much larger land
package of 1,300 hectares is currently being negotiated. Once this additional
land is acquired, the Mavonde Stud Ranch  would be able to support a  breeding 
herd of 13,000. The ultimate aim for Mavonde is to expand the ranch to  4,500 
hectares, which, if properly irrigated, would be able to support approximately
27,000 head of cattle.

A key development during the year was the construction and completion of a  48 
billion litre dam with capacity to irrigate in excess of 4,000 hectares.  The 
construction of  the  Group's  dam,  which was  delivered  on  budget  and  on 
schedule, is a demonstration of the  Company's ability to execute large  scale 
infrastructure projects to facilitate rapid  expansion. In addition, as  part 
of the  Company's  Social Responsibility  and  Uplift Programme,  two  million 
tilapia fingerlings have been released into  the reservoir by the Governor  of 
the Manica Province. A further 1.75 million fingerlings are planned over  the 
next six months and  a fishing co-operative with  the local community will  be 
established. The Group will provide the local community with a small boat and
gill nets to catch fish for themselves in addition to catching additional fish
for sale back to the Group for inclusion in animal feed.

With full irrigation from the reservoir, the head to hectare ratio at  Mavonde 
is expected  to increase  from 1.5  to 6  head per  hectare. In  addition  to 
increasing the  head to  hectare capacity,  irrigation is  also of  particular 
importance on  the stud  ranch,  as with  good  quality and  plentiful  grass, 
pregnancy rates in excess of 80% should be achievable. At present, Mozbife is
operating a once  a year  bulling season,  taking place  between December  and 
February, with calves born nine months  later. 2012 breeding has been  highly 
successful with over 200 calves born to date this calving season.

The expansion of  the herd  at Mavonde will  continue through  the rearing  of 
Mozbife born cattle,  in addition  to purchasing premium  quality F1  imported 
animals, and  top quality  pedigree Beefmaster  cows from  South Africa.  The 
imported animals are prized for their  top weight gaining ability and  quality 
of meat, in addition to their adaptability to hot climates.

The Dombe Ranch

The focus at  the 15,000 hectare  Dombe Ranch  during the period  has been  on 
investment into central farm infrastructure, including housing for  employees, 
spray dipping,  borehole  and kraal  installations.  The significant  job  of 
fencing the  entire  ranch  was  also  completed,  with  over  96km  of  fence 

In tandem with  the infrastructure  improvements, the expansion  of the  Dombe 
herd has also continued at a fast  pace, with the ranch supporting 2,752  head 
at the end of  the period, up from  832 in 2011. This  ranch, which does  not 
have irrigation, can support 1 animal  for every 5 hectares. To increase  the 
capacity, the Group is negotiating the acquisition of a further 6,000 adjacent
hectares, which would support a further  1,200 head. In the longer term,  the 
Company will  actively look  to substantially  increase the  total ranch  size 
through land acquisitions to accommodate a much larger herd.

The herd, which comprises principally local and F1 commercial cattle, will  be 
augmented as  part of  a cross-breeding  programme with  Beefmaster cattle  to 
create a bloodline with good meat yields and high disease resistance.

The Vanduzi Feedlot

As a  crucial component  in Mozbife's  "field to  fork" business,  significant 
investment has been made in the Vanduzi Feedlot, both to increase the  rolling 
capacity of the feedlot pens, and also through development of the  surrounding 
land for growing crops for use in animal feed.

Following the construction of additional pens, the Vanduzi Feedlot now has  an 
18 pen line with rolling capacity of approximately 3,000 head every 90  days. 
An additional six  pen lines may  be constructed  in H2 2013  to increase  the 
total capacity to 4,000 head to provide further throughput for the  abattoir. 
In order to support the increasing number of cattle at the feedlot, additional
investment will be made in a new silo on site to store animal feed, which will
be made, in  part, from  the bran by-product  from the  Group's maize  milling 
operation at DECA. The animal feed will be augmented with locally grown crops
including soy beans and sunflowers, in addition to roughage, such as grass and
hay, which will be grown on the Group's 1,000 hectare land holding surrounding

During the animals' 90 day stay in the feedlot, they are provided with a  high 
quality diet enabling them to put on  around 1.5kg per day. On completion  of 
the period in the feedlot, the animals  will typically weigh up to 500kg  with 
the carcass fetching in excess of  US$1,100. As the Mozbife herds at  Mavonde 
and Dombe mature  and expand, and  additional throughput can  be sourced  from 
Mozbife reared animals, margins will be further enhanced; however the Group is
already achieving  strong  economic benefits  through  the purchase  of  local 
animals for use in the feedlot.

The Chimoio Abattoir & Retail Units

The construction of  the Group's 4,000  head per month  capacity abattoir  was 
completed post period  end, with  commissioning and training  taking place  in 
October 2012. Commercial production is anticipated to commence by the end  of 
November 2012, slaughtering animals from the feedlot (both Mozbife reared  and 
locally sourced), in addition to animals  from third parties. As the  largest 
facility of its kind in Mozambique, the abattoir will be capable of  servicing 
the needs of the country, and will dramatically reduce the current requirement
for the  country to  import meat  from  South Africa.  As a  Halal  certified 
facility, in addition to providing meat for domestic requirements, the Company
would also be able to export beef to markets in the Middle East.

The abattoir is a key value trigger  in the full "field to fork" value  chain, 
with a standard 450kg  steer fetching in the  region of US$1,100. Whilst  the 
highest margins are achieved from Mozbife reared animals, where margins  could 
be in excess of 50%, followed by locally sourced animals, where margins  would 
be approximately 25%, the Group will  also cover all costs associated  through 
the slaughter of  third party animals  from the value  of the "5^th  quarter", 
i.e. the skin, offal, hooves and head.

To obtain the maximum sale price for  the meat sourced from the abattoir,  the 
Group is currently in  the process of establishing  a chain of retail  units. 
The initial two units, located in  Chimoio and Tete, are expected to  commence 
business by the  end of  November 2012,  and a third  unit, in  Beira, may  be 
opened in H2 2013.  The economics of the  butchery business are compelling  - 
the value of  the dressed meat  when it leaves  the abattoir is  approximately 
US$4.48/kg,  however  the  retail  price  in  a  butcher  shop  would  average 
US$8.40/kg, and could be up to US$16/kg for selected cuts.

Cocoa Sales & Trading

Agriterra's cocoa division has rapidly expanded during the period.  Following 
TFL's acquisition by Agriterra in July  2011, when the business operated  four 
buying points,  considerable  investment has  been  made into  the  business's 
infrastructure and TFL now has three  main hub stores and 41 satellite  stores 
with a direct buying register of more than 3,500 farmers across the  country. 
This rapid ramp  up of  buying infrastructure has  enabled TFL  to double  its 
pre-acquisition annual trading  volume during  the period.  This increase  is 
expected to continue,  with total  trading volumes for  the current  financial 
year forecasted to  double the volume  of the 2011/2012  financial year.  TFL 
continues to develop relationships with blue chip groups as off takers for its
cocoa sales, in addition to initial coffee sales from its recently established
coffee operation. Although  coffee volumes are  currently small, the  Company 
expects sales to increase during the  2012/2013 financial year as TFL  focuses 
on diversifying its product range and expanding its trading operations.

Whilst cocoa trading and  sales have proved lucrative  for the Company  during 
the period, the longer term goal for TFL is to develop independent plantations
in order to capitalise on the  compelling economics for cocoa growing.  Cocoa 
prices currently stand  at approximately US$2,300/tonne,  and with  plantation 
costs being estimated at  around US$800/tonne, the high  margin nature of  the 
business is clearly evident.

In order  to establish  independent cocoa  farms, the  Group is  currently  in 
negotiations to acquire a  4,400 acre former cocoa  and coffee plantation  for 
rehabilitation; however  the Board  will remain  proactive in  evaluating  and 
leasing significantly more land in the longer term. In tandem with this,  the 
Group  continues  to  invest  in  supporting  infrastructure,  including   the 
construction of a 2,000m^2 processing facility in Kenema, which is anticipated
to be completed before the cocoa buying season in August 2013. Development of
a larger collateral management  warehousing facility, located  on the 15  acre 
site acquired  by  TFL  in Freetown,  will  commence  thereafter,  effectively 
linking up-country cocoa growing and buying infrastructure at Kenema with  the 
export markets through the port at Freetown.

Maize Processing & Farming

The Group's maize buying and processing  operations are centred on the  35,000 
tonne capacity DECA facility and the 15,000 tonne capacity Compagri  facility, 
located in Chimoio  in central  Mozambique and Tete  in north-west  Mozambique 

At the larger DECA facility,  the Group has built  a mature business based  on 
buying maize  from local  out-growers through  a network  of buying  stations, 
which is transported  back using  DECA's 100  strong fleet  of trucks,  before 
processing and storing the product and selling it to the retail market. Based
on the successes experienced at DECA,  the Group opened the Compagri  facility 
in Tete to capitalise on the rapid influx of people to the area, driven by the
mining boom experienced in the province in recent years.

The Group's maize operations  during the year were  affected by a very  strong 
harvest in 2011, which subsequently reduced demand for the mealie meal product
made by DECA and Compagri. This situation resulted in both companies  selling 
reduced volumes at reduced prices. Indications  for this year have been  much 
more positive for the  Company - in anticipation  of a difficult harvest  this 
season, the Company  began buying  early and  stockpiles now  stand at  25,000 
tonnes. Because  of the  poor  harvest, the  grain  operations should  see  a 
substantial increase  in demand  this year,  combined with  a more  favourable 
pricing environment during its next  milling season, which runs from  December 
until February.

Palm Oil Operations

Building on the Group's growing  range of agricultural commodities, the  Group 
acquired control of  a lease  of approximately 45,000  hectares of  brownfield 
agricultural land in an area suitable for palm oil production in Sierra  Leone 
in December 2011.

The land is located in the Pujehun District in the Southern Province of Sierra
Leone. This area, which is close to the Liberian border, is suitable for palm
oil production. The region receives one of 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. 
The Board believes that as the  most important and widely produced edible  oil 
in the world, demand for palm oil is projected to continue to grow, driven  by 
demand in Africa, India, China and the  US, making it an important new  target 
of for Agriterra's investment strategy.

For further information please visit 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
Hugo de Salis   St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177
Susie Geliher   St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177



For the year ended 31 May 2012

                                                               Year      Year

                                                              ended     ended

                                                              31 May    31 May
                                                                2012      2011
Continuing Operations                                 Note     $'000     $'000
Revenue                                                3      13,826    13,588
Cost of sales                                               (11,913)  (10,372)
Gross profit                                                   1,913     3,216
Increase in value of biological assets                 6         400       214
Operating expenses                                           (8,851)   (6,109)
Other expenses                                                 (318)     (233)
Other income                                                      47       582
Share of profit from associate                                     9         -
Operating loss                                               (6,800)   (2,330)
Finance income                                                    48       159
Finance costs                                                  (164)         -
Loss before taxation                                         (6,916)   (2,171)
Income tax expense                                     4        (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                            
                                                            (6,221)   (2,428)
Loss per share
- Basic and diluted (cents)                            5      (0.7c)    (0.4c)
Loss per share from continuing operations
- Basic and diluted (cents)                            5      (0.8c)    (0.4c)


For the year ended 31 May 2012

                                                 Year     Year

                                               ended   ended 

                                               31 May   31 May
                                                 2012     2011 
                                                $'000    $'000 
Loss for the year                             (6,221)  (2,428)
Foreign exchange translation differences        2,078    3,399 
Other comprehensive income for the year         2,078    3,399 
Total comprehensive income for the year                     
attributable to owners of the parent company  (4,143)      971


As at 31 May 2012

                                         2012       2011
                              Note      $'000      $'000
Non-current assets
Intangible assets                         963        271
Property, plant and equipment          26,243     13,264
Investment in associate                     9          -
Biological assets              6        1,642        631
Total non-current assets               28,857     14,166
Current assets
Biological assets              6        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
Current liabilities
Trade and other payables              (2,361)    (2,678)
NET ASSETS                             41,396     24,832
Issued capital                          1,957      1,387
Share premium                         148,530    131,593
Shares to be issued                     2,940          -
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                   41,396     24,832

                             Attributable to equity holders of the parent
CONSOLIDATED  Ordinary Deferred   Share Shares Sharebased                           
STATEMENT OF     share    share premium            payment
CHANGES IN     capital  capital         to be     reserve Translation  Retained   Total
EQUITY                            $'000 issued                          earnings
                 $'000    $'000                      $'000    reserve                 
                                         $'000                             $'000
                                                                 $'000             $'000
Balances at 1      923      238 125,184      -       1,360     (5,181) (105,298)  17,226
June 2010
Loss for the         -        -       -      -           -           -   (2,428) (2,428)
Exchange             -        -       -      -           -       3,399         -   3,399
on foreign
Total                -        -       -      -           -       3,399   (2,428)     971
income for
the year

with owners
Share issues       226        -   6,570      -           -           -         -   6,796
Issue costs          -        -   (161)      -           -           -         -   (161)
Total              226        -   6,409      -           -           -         -   6,635
with owners

Balances at 1    1,149      238 131,593      -       1,360     (1,782) (107,726)  24,832
June 2011
Loss for the         -        -       -      -           -           -   (6,221) (6,221)
Exchange             -        -       -      -           -       2,078         -   2,078
on foreign
Total                -        -       -      -           -       2,078   (6,221) (4,143)
income for
the year

with owners
Share issues       570        -  17,707      -           -           -         -  18,277
Shares to be         -                -  2,940                                     2,940
Issue costs          -        -   (770)      -         160           -         -   (610)
Share based          -        -       -                100           -         -     100
Total              629        -  19,818  2,940         260           -         -  20,707
with owners
Balances at      1,719      238 148,530  2,940       1,620         296 (113,947)  41,396
31 May 2012


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              1,878       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                                             149       (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
Net cash from / (used in) discontinued activities              721       (198)
Net cash (used in) / from operating activities            (10,196)         196
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


For the year ended 31 May 2012

1. General Information

Agriterra Limited is incorporated  and domiciled in  Guernsey. The nature  of 
the Group's  operations  and its  principal  activities  are set  out  in  the 
Chairman's Statement and Operations Overview above.

The reporting currency for  the Group is  the U.S. Dollar  (USD) as it  better 
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 
Financial Reporting Standards ("IFRS") as adopted by the European Union.

The financial statements for the year ended 31 May 2012 have been reported  on 
by the Group's auditors and contain an unmodified opinion.

The full audit report is contained in the Company's Annual Report, which  will 
be available on the Company's website by 30 November 2012.

2. Critical accounting estimates and judgments

The preparation of  financial statements  in conformity with  EU adopted  IFRS 
requires the use of certain  critical accounting estimates. It also  requires 
management to exercise its  judgement in the process  of applying the  Group's 
accounting policies. The  estimates and assumptions  that have a  significant 
risk of causing a  material adjustment to the  carrying amounts of assets  and 
liabilities within the next financial year are discussed below.

Going concern

The board 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 that  there  are  no 
significant disruptions to the supply of maize or cocoa to meet its  projected 
sales volumes and  take into account  the investment in  the beef herd,  other 
working capital and additional property plant and equipment that are  expected 
to be required.

As outlined in the  chairman's statement, agreements  have been reached  which 
will monetise the Group's legacy oil and gas assets. The agreement to  assign 
the remaining interest in South Omo is contingent upon the receipt of approval
for the transaction from the Government of Ethiopia. An application has  been 
filed with the Ministry of Mines and Energy. The directors have met with  the 
minister and expect  approval to  be forthcoming; however  its timing  remains 
uncertain. The agreement requires that the Group be reimbursed for its  share 
of  any  expenditure   on  the  South   Omo  block  from   17  August   2012. 
Notwithstanding this,  the directors  are  confident that  in the  event  that 
additional payments  fall due  under  the joint  operating agreement  for  the 
block, they will be able to secure any bridging finance required. Furthermore
in reviewing the working capital requirements of the Group, the directors have
identified planned items of expenditure which can be deferred without having a
detrimental impact on the ongoing operations of the Group.

The directors believe that, with the receipt of funds from the disposal of the
legacy oil and  gas assets, together  with existing resources,  the Group  and 
Company is well placed to manage  its business risks successfully despite  the 
current  uncertain  economic  outlook.   The  directors  have  a   reasonable 
expectation that the Group and Company have adequate resources to continue  in 
operational existence for the foreseeable future. Thus they continue to  adopt 
the going  concern  basis of  accounting  in preparing  the  annual  financial 


Impairment  reviews   on  non-current   assets  are   carried  out   on   each 
cash-generating unit  identified  in accordance  with  IAS 36  "Impairment  of 
Assets". At each reporting  date, where there  are indicators of  impairment, 
the net book value of the cash generating unit is compared with the associated
fair value.

On 6 January  2009, the shareholders  approved the adoption  of the  investing 
strategy to  acquire or  invest in  businesses or  projects operating  in  the 
agricultural and associated civil engineering industries in Southern  Africa. 
The directors decided to suspend exploration activities and reduce expenditure
to the minimum required in order to retain exploration licenses. Consequently
the directors consider that the value of exploration and evaluation and  other 
related  assets  of  $79,580,000  is  fully  impaired.  As  outlined   above, 
agreements have been reached  which will monetise the  Group's legacy oil  and 
gas assets. The provisions for impairment will be written back as appropriate
as gains from discontinued activities upon receipt of funds.

Biological assets

Biological assets (cattle) are  measured at their fair  value at each  balance 
sheet date. The fair value  of cattle is based  on the estimated market  value 
for cattle of a similar age and breed, less the estimated costs to bring  them 
to market. Changes in any estimates could lead to recognition of  significant 
fair value changes in the income statement.  At 31 May 2012 the value of  the 
breeding  herd  disclosed  as  a  non-current  asset  was  $1,641,000   (2011: 
$631,000). The value  of the herd  held for slaughter  disclosed as a  current 
asset was $1,018,000 (2011:$157,000).

3. Segment reporting

As set out in  the operating review, 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.

Unallocated expenditure relates to central costs and any items of  expenditure 
that can not be directly attributed to an individual segment.

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

Year ending 31 May 2011      Grain  Beef Cocoa Unallocated   Total
                             $'000 $'000 $'000       $'000   $'000
Revenue                     13,533    55     -           -  13,588
Segment results
- Operating profit / (loss)    270 (958)     -     (1,642) (2,330)
- Interest income              141     0     -          18     159
Profit / (loss) before tax     411 (958)     -     (1,624) (2,171)
Income tax                   (168)     -     -           -   (168)
Profit / (loss) after tax      243 (958)     -     (1,624) (2,339)

4. Income tax expense

                                                                 2012     2011
                                                                $'000    $'000
Loss before tax from continuing activities:                   (6,916)  (2,171)
Tax at the Mozambican corporation tax rate 32% (2011: 32%)    (2,214)    (695)
Tax effect of expenses that are not deductible in determining
taxable profit                                                     78       21
Tax effect of utilisation of losses                              (57)     (90)
Tax effect of losses not allowable                                768      341
Tax effect of losses not recognised in overseas subsidiaries
(net of effect of different rates)                              1,533      503
(Credit) / charge in respect of prior years                      (82)       88
Tax expense for the year                                           26      168

The tax reconciliation has been prepared  using a 32% tax rate, the  corporate 
income tax rate in Mozambique, as  this is where the Group's principal  assets 
of its continuing operations are located.

5. Earnings per share

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

                                                             2012         2011
                                                            $'000        $'000
Loss for the purposes of basic earnings per share
(loss for the year attributable to equity holders of
the parent)                                                 6,221        2,428
Loss for the purposes of basic earnings per share
from continuing activities                                  6,942        2,339
Profit / (loss) for the purposes of basic earnings
per share from discontinued activities                        721         (89)
Number of shares
Weighted average number of ordinary shares for the
purposes of basic and diluted loss per share          874,483,042  625,894,111
Loss per share                                             (0.7c)       (0.4c)
Loss per share from continuing activities                  (0.8c)       (0.4c)
Earnings / (loss) per share from discontinued                0.1c       (0.0c)


Due to the loss incurred in both years, there is no dilutive effect of share

6. Biological assets
At 1 June 2010                    236
Purchase of biological assets     289
Sale of biological assets        (34)
Change in fair value              214
Foreign exchange                   83
At 1 June 2011                    788
Purchase of biological assets   1,428
Sale of biological assets         (5)
Change in fair value              400
Foreign exchange                   49
At 31 May 2012                  2,660

Biological assets comprise a  breeding herd of  cattle. Certain livestock  is 
held for slaughter and has been classified as a current asset. The  remainder 
is expected to be  held for more than  one year and has  been classified as  a 
non-current asset, as follows:

                    2012  2011  2012  2011
                    Head  Head $'000 $'000
Non-current asset  2,704 1,153 1,642   631
Current asset      1,897   292 1,018   157
                   4,601 1,445 2,660   788

7. Events after the reporting period

On 3 October 2012, the Company announced that it had entered into an agreement
to sell  its remaining  interest  in its  oil and  gas  asset in  Ethiopia  to 
Marathon Ethiopia Limited BV (Marathon). Consideration of $40m is  receivable 
on completion  of  the  sale  and $10m  upon  Marathon's  participation  in  a 
commercial discovery. Completion  is contingent  upon the  receipt of  formal 
approval of the agreement from the Government of Ethiopia.

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


FR BGBDBISBBGDB -0- Nov/12/2012 07:00 GMT
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