EVEREST GLOBAL PLC
19 February 2016 For Immediate Release
Anglo African Agriculture plc
("AAA" or the "Company")
Final Results
The Board is pleased to present the results for the Company for the year ended
31 October 2015.
Chairman's Statement
For The Year Ended 31 October 2015
2015 may well prove to have been a pivotal year for your Company as many key
decisions have been taken that we hope will give the group a positive future.
Acquisitions have been extremely difficult for a host of reasons not least
challenging market conditions for small cap companies and our falling share
price. The Board has therefore decided that it had to put the Company into a
position where it could grow substantially organically and for that reason also
we have withdrawn from spending too much time considering the sort of corporate
actions that were being presented to us.
To get to a position where we can achieve substantial organic growth we have
had to make some significant changes which have had an impact on 2015 but
should leave us in a better position.
We have moved our main operation, Dynamic Intertrade to a much larger facility
in Cape Town. We have achieved Food Safety System Certification (FSSC)
accreditation and installed a steam steriliser. This has incurred costs but
also gives us a fairly unique position in the region.
Craig Forbes, our former CEO stepped down from his position and left the
Company in December 2015. I would like to take this opportunity to thank Craig
for taking the Company this far and wish him well. We have recruited Mark
Neilson to be the new CEO of Dynamic Intertrade. Mark is well experienced in
the food industry having worked in roles ranging from quality control, product
development, product management, sales and marketing in companies involved with
spices, seasonings and functional ingredients.
I am delighted that Neil Herbert has agreed to re-join the board with effect
from 8 February 2016 and take on the role of Chairman. I stood down as your
Chairman on that date but I will remain as a Non-Executive Director and my
support and enthusiasm for the business remain as strong as ever.
We are now listed on the Main Market of the London Stock Exchange with a
standard listing, which should make us more attractive to institutional
investors.
Andrew Monk, Non-Executive Director
18 February 2016
For further information please contact:
Anglo African Agriculture plc +44 (0) 20 3005 5001
Andrew Monk, Non-Executive Director
VSA Capital Limited (Financial Adviser) +44 (0) 20 3005 5004
Andrew Raca / Richard Buckle
Blytheweigh Communications (PR Adviser) +44 (0) 20 7138 3204
Tim Blythe / Camilla Horsfall
Strategic Report
For The Year Ended 31 October 2015
Review of the Group's Business
Dynamic Intertrade was acquired by Anglo African Agriculture plc ("AAA") in a
reverse takeover that was completed in July 2014.
Dynamic is based in Cape Town, South Africa and is involved in the importation,
milling, blending and packaging of agricultural products that include herbs,
spices, seasonings and confectionary for both the domestic and export markets.
Dynamic's commercial activities fall into three principal categories: milling
and/or blending of herbs and spices; extraction of guar gum from guar beans;
and bulk trading of agricultural products. Dynamic recorded a decline in top
line growth in the year ended 31st October 2015. This decline was largely due
to the move of the operation from Brits to Cape Town, the depreciation of the
Rand and losing a major customer. As a result, Dynamic recorded an operating
loss (excluding losses from exchange differences) for the period of ZAR4m
against a loss of ZAR1.1m in 2014. This was offset to a limited degree by the
performance of our joint guar bean venture, African Projects & Ventures (Pty)
Ltd ("APV"), where we hold a 49.9% interest.
The APV operation has remained in Brits. It should be noted that the price of
Guar gum has been adversely affected by the falling oil price.
The Dynamic premises now have FSSC accreditation and also we have successfully
installed a Steam Sterilizing plant. The facility in Cape Town is significantly
larger than previously in Brits and so the operation now has the capability to
expand its volume of turnover significantly in the future.
Acquisition Strategy
The Directors' strategy is to develop the business of Dynamic both organically
and by acquisition. It is intended that future acquisitions made by the Company
will be complementary to Dynamic's business and relate to production,
transportation and trading of food products in sub-Saharan Africa, including
the acquisition of land for food production. The Company has access to a range
of prospects through the Directors' extensive contact network and actively
reviews other acquisition opportunities.
Key Performance Indicators
31 October 31 October
2015 2014
£ £
Cash at bank and in hand 63,892 90,456
Underlying operating loss (excluding listing costs of £ (276,840) (128,223)
118,750 (2014 - £225,572)
Strategic Report (Continued)
For The Year Ended 31 October 2015
Loan Facility
AAA lent Dynamic £500,000 repayable over a period of five years from the first
anniversary of drawdown. The loan bears interest at 2% above LIBOR. Under the
Loan Facility, AAA nominated a director to the board of Dynamic. The net amount
repaid by Dynamic to AAA is £185,000 of which £110,000 was repaid in the year.
Principal Risks and Uncertainties
The Directors consider the following risk factors are of particular relevance
to the Group's activities. It should be noted that the list is not exhaustive
and that other risk factors not presently known or currently deemed immaterial
may apply. The risk factors are summarised below:
i. Development Risk
The Group's development will be dependent on the ability of the Directors to
expand the current business and identify suitable investment opportunities and
to implement the Group's strategy. There is no assurance that the Group's
activities will be successful in acquiring a suitable investment.
ii. Sector Risk
The agriculture sector is a highly competitive market and many of the
competitors will have greater financial and other resources than the Company
and as a result may be in a better position to compete for opportunities.
The development of agricultural enterprises involves significant uncertainties
and risks including unusual climatic conditions such as drought, improper use
of pesticides, availability of labour and seasonality of produce, any one of
which could result in damage to, or destruction of crops, environmental damage
or pollution all of which could have a material adverse impact on the business,
operations and financial performance of the Group.
The market price of agricultural products and crops is volatile and is affected
by numerous factors which are beyond the Group's control. These include
international supply and demand, the level of consumer product demand,
international economic trends, currency exchange rate fluctuations, the level
of interest rates, the rate of inflation, global or regional political events
and international events as well as a range of other market forces. Sustained
downward movements in agricultural prices could render less economic, or
uneconomic, any development or investing activities to be undertaken by the
Group. Certain agricultural projects involve high capital costs and associated
risks. Unless such projects enjoy long term returns, their profitability will
be uncertain resulting in potentially high investment risk.
iii. Country Risk
African countries experience varying degrees of political instability. There
can be no assurance that political stability will continue in those countries
where the Group in the future may have operations. In the event of political
instability or changes in government policies in those countries where the
Group may operate, the operations and financial condition of the Group could be
adversely affected.
iv. Financing Risk
The development of the Group's business may depend upon the Group's ability to
obtain financing primarily through the raising of new equity capital or debt.
The Group's ability to raise further funds may be affected by the success of
existing and acquired investments. The Group may not be successful in procuring
the requisite funds on terms which are acceptable to it (or at all) and, if
such funding is unavailable, the Group may be required to reduce the scope of
its investments or the anticipated expansion. Further, Shareholders' holdings
of Ordinary Shares may be materially diluted if debt financing is not
available.
Strategic Report (Continued)
For The Year Ended 31 October 2015
v. Credit Risk
The directors have reviewed the forecasts prepared by both AAA and Dynamic and
believe that Dynamic has adequate resources available to meet its obligations
to make capital repayments of the loan to AAA.
In the event that Dynamics trading performance is below that forecast, AAA will
exercise a degree of flexibility on the repayment timetable. With the Dynamic
turnover increasing and the Group forecasting profitability there is no
requirement for any impairment charge.
vi. Liquidity Risk
The Directors have reviewed the working capital requirements of both AAA and
Dynamic and believe that, following stress tests and variance analysis on the
forecasts, there is sufficient working capital to fund the business while
expanding turnover and achieving sustainable profitability.
Going Concern
The day to day working capital requirements and investment objectives are met
by existing cash resources and the issue of equity. At 31 October 2015 the
Group had a cash balance of £63,893 (31 October 2014 - £90,456). The Group's
forecasts and projections, taking into account reasonably possible changes in
the level of overhead costs, show that the Group should be able to operate
within its available cash resources. The Directors have, at the time of
approving the financial statements, a reasonable expectation that the Group has
adequate resources to continue in existence for the foreseeable future. They
therefore continue to adopt the going concern basis of accounting in preparing
the financial statements.
On behalf of the Board
Andrew Monk, Non-Executive Director
18 February 2016
Directors' Report
For The Year Ended 31 October 2015
The Directors present their Report and Financial Statements for the year ended
31 October 2015.
Principal Activities
The principal activity of the Group in the period was investing and trading in
the agriculture sector in Africa.
Investing Policy
AAA was established as a means to invest in or acquire companies engaged in the
agriculture sector in Africa. The Directors intend to use their collective
experience to identify appropriate investment opportunities in the production,
transportation and trading of food products.
Directors
The following Directors have held office in the period:
Andrew Monk
Craig Anthony Forbes (resigned 31 December 2015)
Neil Herbert (resigned 30 March 2015)
George Roach (Appointed 31 October 2014)
Andrew Monk, Non-Executive Chairman
Andrew has a successful stock broking career spanning 30 years. In that time he
has built up strong relationships with many major UK institutions. He was
employed by Hoare Govett ABN AMRO for 11 years before founding Oriel Securities
as Joint CEO. Andrew later became CEO of Blue Oar Plc, and Chief Executive of
VSA Capital, an investment banking and institutional broking firm focussed on
natural resources, including agriculture.
Neil Herbert, Non-Executive Director
Neil is an entrepreneur and investor with a strong background of managing
African businesses and experience in the food processing industry. Neil has
worked in the resource sector since he joined Chilean copper miner Antofagasta
PLC in 1998, having previously been employed by PwC in Europe. Until May 2013,
he was Co-Chairman and Managing Director of Polo Resources Ltd. Neil has
managed companies through project acquisitions, disposals, mine development,
stock market listings and fund raising and has considerable experience as a
director.
George Roach, Non-Executive Director
George Roach is an experienced, senior business leader and entrepreneur who has
spent his career in the resources sector mainly in Sub-Saharan Africa. He is,
inter alia, currently Chief Executive Office of Premier African Minerals Inc.,
an AIM quoted, African resources group of companies.
The Directors have received no remuneration in the year ended 31 October 2015.
As at 31 October 2015, the Directors of the Company held the following shares:
Director Shareholding Percentage of the
Company's Ordinary Share
Capital
Andrew Monk 2,000,000 2.1%
Neil Herbert 6,000,000 6.3%
Craig Anthony Forbes 3,248,689 3.4%
George Roach 13,596,338 14.3%
Directors' Report (Continued)
For The Year Ended 31 October 2015
Andrew Monk's entire shareholding is held in his SIPP.
George Roach's shareholding is held through Corestar Holdings Limited. The
CocRoach and Corestar holdings were consolidated in the year. There have been
no other changes in the directors interests.
As at 31 October 2015 the Directors share options were:
Director Options at 1p Warrants @2.5p Warrants @2.75p
(expiring 5 September (expiring 31 January (expiring 31 January
2022) 2015) 2017)
Andrew Monk 1,839,046 - -
Neil Herbert 1,839,046 - 6,000,000
George Roach 1,839,046 - -
Substantial Interests
The Group has been informed of the following shareholdings that represent 3% or
more of the issued Ordinary Shares of the Company as at 31 October 2015:
Shareholder Shareholding Percentage of the
Company's Ordinary Share
Capital
Corestar 13,596,338 14.3%
VSA Capital Limited 10,126,761 10.7%
Zeus Capital 9,000,000 9.5%
Huntress (CI) Nominees Limited 6,000,000 6.3%
Rulegate Nominees Limited 5,500,000 5.8%
Pershing Nominees Limited 5,000,000 5.3%
Roger Allard 5,000,000 5.3%
WB Nominees Limited 3,500,000 3.7%
Christopher Donovan James Pearce 3,000,000 3.2%
Craig Anthony Forbes 3,248,689 3.4%
HSBC Global Custody Nominee (UK) 3,000,000 3.2%
Limited
The total warrants and options outstanding at 31 October 2015 were 18,155,798
(2014 - 39,494,844). Refer to note 25 for more detail.
Dividends
No dividends will be distributed for the current period (2014 - nil).
Directors' Report (Continued)
For The Year Ended 31 October 2015
Supplier Payment Policy
It is the Group's payment policy to pay its suppliers in conformance with
industry norms. Trade payables are paid in a timely manner within contractual
terms, which is generally 30 to 45 days from the date an invoice is received.
Auditors
Jeffreys Henry LLP has expressed its willingness to continue in office and a
resolution to reappoint them will be proposed at the Annual General Meeting.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations. Company
law requires the Directors to prepare financial statements for each financial
year. Under that law the Directors have elected to prepare the financial
statements in accordance with International Financial Reporting Standards
(IFRS) as adopted for use in the European Union. Under company law the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and of
the profit or loss of the Group for that period. In preparing these financial
statements, the Directors are required to:
· Select suitable accounting policies and then apply them
consistently;
· Make judgements and accounting estimates that are reasonable
and prudent;
· State whether the Company financial statements have been
prepared in accordance with IFRS as adopted by the European Union subject to
any material departures disclosed and explained in the Financial Statements;
· Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the financial statements comply with the Companies Act
2006.
The Directors are responsible for safeguarding the assets of the Group and
hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website.
Statement of Disclosure to Auditors
Each person who is a Director at the date of approval of this Annual Report
confirms that:
· So far as the Directors are aware, there is no relevant audit
information of which the Group's auditors are unaware; and
· Each Director has taken all the steps that he ought to have
taken as Director in order to make himself aware of any relevant audit
information and to establish that the Company's auditors are aware of that
information.
· Each Director is aware of and concurs with the information
included in the Strategic Report.
Directors' Report (Continued)
For The Year Ended 31 October 2015
Branches Outside the UK
The Group head office is in London and the Dynamic Intertrade Pty Limited
office is in South Africa.
Post Balance Sheet Events
Further information on events after the reporting date are set out in note 28.
The Directors' have chosen to produce a Strategic Report that discloses a fair
review of the Group's business, the key performances metrics that the Directors
review along with a review of the key risks to the business.
On Behalf of the Board
Andrew Monk, Non-Executive Director
18 February 2016
Directors' Remuneration Report
Introduction
The information included in this report is not subject to audit other than
where specifically indicated.
Remuneration Committee
The remuneration committee consists of Andrew Monk and George Roach. This
committee's primary function is to review the performance of executive
directors and senior employees and set their remuneration and other terms of
employment.
The company has only had one executive director and no senior employees.
The committee is also responsible for administering any share option scheme.
The only such scheme in place is the Executive Share Option Scheme, which has
been approved by HM Revenue & Customs. There are options in respect of
7,356,184 shares at an exercise price of 1p per share and these are held by
directors of the company and of Dynamic Intertrade (Pty).
The remuneration committee determines the company's policy for the remuneration
of executive directors, having regard to the UK Corporate Governance Code and
its provisions on directors' remuneration.
The remuneration policy
It is the aim of the committee to remunerate executive directors competitively
and to reward performance.
The following table includes a performance graph comparing the total
shareholder return of an ordinary share in AAA against the total shareholder
return of the FTSE All-Share Index. It covers the period from the date of the
listing. The remuneration committee considers the FTSE All-Share Index to be an
appropriate comparator for total shareholder return performance.
Service agreements and terms of appointment
The one executive director has a service contract with the company's subsidiary
company, Dynamic Intertrade (Pty) Limited. The non- executive directors do not
have service contracts with the Company.
Directors' Remuneration Report (continued)
Directors' interests
The directors' interests in the share capital of the company are set out in the
Directors' report.
Directors' emoluments
Details of the remuneration package of the one executive director are included
in note 7 - notes to the Consolidated Financial statements.
No pension contributions were made by the company on behalf of its directors.
Approval by shareholders
At the next annual general meeting of the company a resolution approving this
report is to be proposed as an ordinary resolution.
This report was approved by the board on 18 February 2016
On Behalf of the Board
Andrew Monk, Committee Chairman
18 February 2016
Corporate Governance
Policy
The policy of the board is to manage the affairs of the company with reference
to the UK Corporate Governance Code, which is publicly available from the
Financial Reporting Council. During the year the company changed from an ISDX
listing to a standard listing on the Main Market of the London Stock Exchange.
Application of principles of good governance by the board of directors
The board currently comprises the three non-executive directors: Neil Herbert,
Andrew Monk and George Roach.
The executive director, Craig Forbes resigned on 31 December 2015.
Andrew Monk acted as chairman throughout the year. Andrew Monk will stand down
as chairman on 8 February 2016 and will be replaced by Neil Herbert on the same
date.
The articles of association require a third, but not greater than a third, of
the directors to retire by rotation each year.
There are regular board meetings each year and other meetings are held as
required to direct the overall company strategy and operations. Board meetings
follow a formal agenda covering matters specifically reserved for decision by
the board. These cover key areas of the company's affairs including overall
strategy, acquisition policy, approval of budgets, major capital expenditure
and significant transactions and financing issues.
The board has delegated certain responsibilities, within defined terms of
reference, to the audit committee and the remuneration committee as described
below. The appointment of new directors is made by the board as a whole. During
the year ended 31 October 2015, there were 3 formal board meetings, 1 audit
committee meeting and 1 remuneration committee meeting. All meetings were fully
attended.
The board undertakes a formal annual evaluation of its own performance and that
of its committees and individual directors, through discussions and one-to-one
reviews with the Chairman and the senior independent director.
Audit committee
The audit committee is currently headed by Andrew Monk, the Chairman, and also
comprises George Roach. The committee's terms of reference are in accordance
with the UK Corporate Governance Code. The committee reviews the company's
financial and accounting policies, interim and final results and annual report
prior to their submission to the board, together with management reports on
accounting matters and internal control and risk management systems. It reviews
the auditors' management letter and considers any financial or other matters
raised by both the auditors and employees.
The committee considers the independence of the external auditors and ensures
that, before any non-audit services are
provided by the external auditors, they will not impair the auditors'
objectivity and independence. During the year non-audit services totalled £
20,000 (2014 - £45,000) and covered normal taxation and other related
compliance work, which did not impact on the auditors' objectivity or
independence.
There is currently no internal audit function within the Group. The directors
consider that this is appropriate of a Group of this size.
The committee has primary responsibility for making recommendations to the
board in respect of the appointment, re-appointment and removal of the external
auditors.
On Behalf of the Board
Andrew Monk, Non-Executive Director
18 February 2016
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc
We have audited the financial statements of Anglo African Agriculture PLC for
the year ended 31 October 2015 which comprise the statement of consolidated
comprehensive income, consolidated statement of changes in equity, consolidated
statement of financial position, consolidated statement of cash flows, company
statement of the financial position, the company statement of changes in
equity, the company statement of cash flows and the related notes. The
financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
This report is made solely to the Group's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Group's members those matters we are
required to state to them in an auditors' report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Group and the Group's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
As explained more fully in the statement of Directors' responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting estimates
made by the Directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the Chairman's Statement, the Strategic Report and the
Directors' Report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.
Opinion on Financial Statements
In our opinion:
· The financial statements give a true and fair view of the
state of the Group and the Parent Company's affairs as at 31 October 2015 and
of the Group's loss for the year then ended;
· The financial statements have been properly prepared in
accordance with IFRS as adopted by the European Union;
· Have been prepared in accordance with the requirements of the
Companies Act 2006.
Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not modified, we
have considered the adequacy of the disclosures made in Note 2.a which
describes the assumptions made in assessing the going concern basis that these
financial statements are prepared under. Specifically the note states that the
cash flow requirements of the Group for the foreseeable future are contingent
on the Group being able to increase sales and maintain its invoice financing
arrangements. The Group made a loss of £389,553 (2014: £353,509) and at the
statement of financial position date of 31 October 2015 the Group had net
current liabilities of £102,573 (2014: net current assets £364,364) and the
parent company had net current assets of £91,274 (2014: £139,874). These
conditions, along with other matters explained in note 2.a to the financial
statements, indicate the existence of material uncertainty which may cast doubt
about the Group's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Group was
unable to continue as a going concern.
Opinion on Other Matter Prescribed by the Companies Act 2006
In our opinion the information given in the Directors' report for the financial
period for which the financial statements are prepared is consistent with the
financial statements.
Independent Auditors' Report (Continued)
Matters for Which We are Required to Report by Exception
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
· Adequate accounting records have not been kept by the Group,
or returns adequate for our audit have not been received from branches not
visited by us; or
· The Group's financial statements are not in agreement with the
accounting records and returns; or
· Certain disclosures of Directors' remuneration specified by
law are not made; or
· We have not received all the information and explanations we
require for our audit.
Sanjay Parmar
Senior Statutory Auditor
18 February 2016
For and on behalf of Jeffreys Henry LLP, Statutory Auditor:
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Consolidated Statement of Comprehensive Income
For the Year Ended 31 October 2015
Notes Year Ended Year Ended
31 October 31 October
2015 2014
£ £
Turnover 4 1,249,811 865,985
Cost of Sales (883,666) (583,751)
Gross Profit 366,145 282,234
Other Income 5 12,066 15,856
Finance Costs 8 (41,570) (5,698)
Administrative expenses 9 (732,939) (646,187)
Operating loss (396,298) (353,795)
Bank Interest Receivable 6,745 286
Loss before taxation (389,553) (353,509)
Tax on loss on ordinary activities 10 - -
Loss and total comprehensive income for (389,553) (353,509)
the period.
Basic and diluted earnings per share 11 (0.41p) (0.44p)
Since there is no other comprehensive loss, the loss for the period is the same
as the total comprehensive loss for the period attributable to the owners of
the Group.
Consolidated Statement of Changes In Equity
For the Year Ended 31 October 2015
Share Share Retained Share Based Total
Capital Premium Earnings Payments Equity
Reserve
£ £ £ £ £
Balance at 1 November 94,896 1,107,373 (474,701) 16,369 743,937
2014
Share Based Payments
Reserve (4,783) (4,783)
Loss for the period (389,553) (389,553)
Balance at 31 October 94,896 1,107,373 (864,254) 11,586 349,601
2015
Share capital is the amount subscribed for shares at nominal value.
Retained losses represent the cumulative loss of the Group attributable to
equity shareholders.
The share premium has arisen on the issue of shares at a premium to their
nominal value.
Share-based payments reserve relate to the charge for share-based payments in
accordance with IFRS 2.
Consolidated Statement of the Financial Position
As at 31 October 2015
Notes 31 October 31 October
2015 2014
£ £
Assets
Non-Current Assets
Investment 14 18,514 8,864
Other Financial Assets 14 - 7,875
Loan to Joint Venture 15 82,579 94,431
Property, Plant and Equipment 17 124,437 41,759
Goodwill on Consolidation 16 226,644 226,644
452,174 379,573
Current assets
Inventories 18 331,506 380,911
Trade and Other Receivables 19 223,077 483,821
Cash and Cash Equivalents 20 63,893 90,456
618,476 955,188
Total Assets 1,070,650 1,334,761
Equity and Liabilities
Share Capital 22 94,896 94,896
Share Premium Account 22 1,107,373 1,107,373
Share-Based Payments Reserve 25 11,586 16,369
Retained Earnings 23 (864,254) (474,701)
Total Equity 24 349,601 743,937
Current Liabilities
Trade and Other Payables 21 721,049 590,824
Total Liabilities 721,049 590,824
Total Equity and Liabilities 1,070,650 1,334,761
The notes on pages 24 to 43 form part of these financial statements.
Approved by the Board and authorised for issue on 18 February 2016
Andrew Monk, Non-Executive Director
Company Registration No. 07913053
Consolidated Cash Flow Statement
For the year ended 31 October 2015
Notes Year Ended Year Ended
31 October 31 October
2015 2014
£ £
Cash flows from operating activities
Operating loss (396,298) (353,795)
Add: Depreciation 17 19,054 4,582
Add: Foreign exchange movements on fixed 17 5,483 101,580
assets
Add: Movement on share based payments (4,783) -
reserve
Changes in working capital
Increase / decrease in inventories 49,405 (117,606)
Increase / decrease in receivables 260,744 (101,258)
Increase in payables 130,225 195,222
Interest received 6,745 286
Net cash flow from operating activities 70,575 (270,989)
Investing Activities
Net cash on acquisition of subsidiary - 85,266
Acquisition of fixed assets 17 (108,678) -
Disposal of fixed assets 17 1,463 -
Increase in financial assets (1,775) (4,926)
Increase in loans to jointly controlled 11,852 (46,876)
entities
Repayments on loans receivable - 130,837
Net cash flow from investing activities (97,138) 164,301
Cash flows from financing activities:
Net proceeds from issue of shares - 172,000
Loan made to current asset investment - -
Net cash flow from financing activities - 172,000
Net cash flow (26,563) 65,312
Opening Cash 21 90,456 25,144
Closing Cash 21 63,893 90,456
The notes on pages 24 to 43 form part of these financial statements
Company Statement of the Financial Position
As at 31 October 2015
Notes 31 October 31 October
2015 2014
£ £
Assets
Non-Current Assets
Investment 14 297,915 297,915
Long Term Intercompany Loans 15 315,000 425,000
612,915 722,915
Current Assets
Trade and Other Receivables 19 109,772 118,683
Cash and Cash Equivalents 20 38,739 35,577
148,511 154,260
Total Assets 761,426 877,175
Equity and Liabilities
Share Capital 22 94,896 94,896
Share Premium Account 22 1,107,373 1,107,373
Share-Based Payments Reserve 25 11,586 16,369
Retained Earnings 23 (509,756) (355,849)
Total Equity 24 704,099 862,789
Current Liabilities
Trade and Other Payables 21 57,327 14,386
Total Liabilities 57,327 14,386
Total Equity and Liabilities 761,426 877,175
The notes on pages 24 to 43 form part of these financial statements.
Approved by the Board and authorised for issue on 18 February 2016.
Andrew Monk, Non-Executive Director
Company Registration No. 07913053
Company Cash Flow Statement
For the year ended 31 October 2015
Notes Year Ended Year Ended
31 October 31 October
2015 2014
£ £
Cash Flows from Operating Activities
Operating Loss 13 (153,907) (234,657)
Add: Movement on Share Based Payment (4,783) -
Reserve
Adjustments for:
Changes in working capital
Trade (Receivables)/Payables 51,852 (1,910)
Net Cash Outflows from operations (106,838) (236,567)
Investing Activities
Repayment of loan from subsidiary 110,000 75,000
Net Cash Inflows/(Outflows) from 110,000 75,000
investing activities
Cash Flows from Financing Activities:
Net Proceeds from Issue of Shares - 172,000
Net Cash Inflow from financing activities - 172,000
Net Cash flow 3,162 10,433
Opening Cash 20 35,577 25,144
Closing Cash 20 38,739 35,577
The notes on pages 24 to 43 form part of these financial statements.
Company Statement of Changes in Equity
For the Year Ended 31 October 2015
Share Share Retained Share Based Total
Capital Premium Earnings Payments Equity
Reserve
£ £ £ £ £
Balance at 1 November 94,896 1,107,373 (355,849) 16,369 862,789
2014
Share based payments
reserve (4,783) (4,783)
Loss for the period (153,907) (153,907)
Balance at 31 October 94,896 1,107,373 (509,756) 11,586 704.099
2015
Share capital is the amount subscribed for shares at nominal value.
Retained losses represent the cumulative loss of the Company attributable to
equity shareholders.
The share premium has arisen on the issue of shares at a premium to their
nominal value.
Share-based payments reserve relate to the charge for share-based payments in
accordance with IFRS 2.
Notes to the Consolidated Financial Statements
1. General Information
Anglo African Agriculture plc is a company incorporated in the United Kingdom.
Details of the registered office, the officers and advisers to the Company are
presented on the Directors and Advisers page at the beginning of this report.
The Company is listed on the London Stock Exchange main market. The information
within these financial statements and accompanying notes have been prepared for
year ended 31 October 2015 with comparatives for year ended 31 October 2015
2. Basis of Preparation and Significant Accounting Policies
The consolidated financial statements of Anglo African Agriculture plc have
been prepared in accordance with International Financial Reporting Standards as
adopted by the European Union (IFRS's as adopted by the EU), IFRS
Interpretations Committee and the Companies Act 2006 applicable to companies
reporting under IFRS.
The consolidated financial statements have been prepared under the historical
cost convention.
The preparation of financial statements in conformity with 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 areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3. The preparation of financial
statements in conformity with IFRSs requires management to make judgments,
estimates and assumptions that affect the application of accounting policies
and reported amounts of assets, liabilities, income and expenses. Although
these estimates are based on management's experience and knowledge of current
events and actions, actual results may ultimately differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
a. Going Concern
These financial statements have been prepared on the assumption that the Group
is a going concern. When assessing the foreseeable future, the Directors have
looked at a period of at least twelve months from the date of approval of this
report. The forecast cash-flow requirements of the business are contingent upon
the ability of the Group to generate future sales and to maintain its invoice
financing arrangements.
After making enquiries, the Directors firmly believe that the Group has
adequate resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
New and Amended Standards Adopted by the Company
There are no IFRSs or IFRIC interpretations that are effective for the first
time for the financial year beginning on or after 1 November 2014 that would be
expected to have a material impact on the Group.
Standards, Interpretations and Amendments to Published Standards which Are Not
Yet Effective
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year beginning 1 November
2014 and have not been early adopted:
Reference Title Summary Application date Application
of standard date of Group
IFRS 14 Regulatory deferral accounts Aims to enhance the Periods 1 November 2016
comparability of commencing on or
financial reporting after 1 January
by entities subject 2016
to rate-regulations
IFRS 11 Joint arrangements Amends the treatment Periods 1 November 2016
of accounting for commencing on or
acquisitions of after 1 January
interests in joint 2016
operations
IAS 41 Agriculture Amends the treatment Periods 1 November 2016
of bearer plants commencing on or
after 1 January
2016
IAS 16 Property, plant and equipment Clarifies acceptable Periods 1 November 2016
methods of commencing on or
depreciation after 1 January
2016
IAS 27 Separate financial statements Restores the option Periods 1 November 2016
to use the equity commencing on or
method for after 1 January
subsidiaries, 2016
associates and joint
ventures in an
entity's separate
financial statements
IFRS 10 Consolidated financial statements Clarifies the Periods 1 November 2016
consolidation commencing on or
exception for after 1 January
investment entities 2016
and the treatment of
sales or
contribution of
assets between an
investor and an
associate or joint
venture
IAS 28 Investments in associates Clarifies the Periods 1 November 2016
treatment of sales commencing on or
or contribution of after 1 January
assets between an 2016
investor and an
associate or joint
venture
IAS 38 Intangible assets Clarifies acceptable Periods 1 November 2016
methods of commencing on or
amortisation after 1 January
2016
IAS 1 Presentation of financial Clarifies Periods 1 November 2016
statements materiality and commencing on or
aggregation of after 1 January
disclosures in the 2016
accounts
IFRS 9 Financial instruments Specifies Periods 1 November 2016
classification and commencing on or
measurement criteria after 1 January
of financial assets 2016
and liabilities
IFRS 5 Non-current assets held for sale Clarifies the Periods 1 November 2016
and discontinued operations treatment of assets commencing on or
held for sale and after 1 January
held for 2016
distribution
Notes to the Consolidated Financial Statements (Continued)
Notes to the Consolidated Financial Statements (Continued)
Reference Title Summary Application date Application
of standard date of Group
IFRS 7 Financial Provides guidance on Periods 1 November 2016
instruments: derecognised commencing on or
disclosures financial assets for after 1 January
which there is a 2016
continuing
involvement and
clarifies disclosure
requirements for
interim financial
statements
IAS 19 Employee benefits Clarifies the Periods 1 November 2016
treatment of commencing on or
employee after 1 January
contributions to 2016
pension plans
IAS 34 Interim financial Amends the treatment Periods 1 November 2016
reporting of cross referencing commencing on or
in interim financial after 1 January
statements 2016
IFRS 15 Revenue from Specifies how and Periods 1 November 2017
contracts with when to recognise commencing on or
customers revenue from after 1 January
contracts as well as 2017
requiring more
informative and
relevant disclosures
IFRS 9 Financial The new financial Periods 1 November 2018
instruments reporting standard commencing on or
for financial after 1 January
instruments, 2018
replacing IAS 39
The Directors anticipate that the adoption of these standards and the
interpretations in future periods will have no material impact on the financial
statements of the Group.
Notes to the Consolidated Financial Statements (Continued)
b. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31st October each year. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated statement of comprehensive income from the
effective date of acquisition or up to the effective date of disposal, as
appropriate. Where necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with those used by
other members of the Group. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
Changes in the Group's ownership interests in subsidiaries that do not result
in the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries.
When the Group loses control of a subsidiary, the profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and liabilities of
the subsidiary and any non-controlling interests. Where certain assets of the
subsidiary are measured at revalued amounts or fair values and the related
cumulative gain or loss has been recognised in other comprehensive income and
accumulated in equity, the amounts previously recognised in other comprehensive
income and accumulated in equity are accounted for as if the Company had
directly disposed of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded
as the fair value on initial recognition for subsequent accounting under IAS 39
"Financial Instruments: Recognition and Measurement" or, when applicable, the
cost on initial recognition of an investment in an associate or a jointly
controlled entity.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the
assets transferred by the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interests issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are recognised
in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value at the acquisition date, except
that:
· Deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and measured in
accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
· Liabilities or equity instruments related to share-based
payment transactions of the acquiree or the replacement of an acquiree's
share-based payment transactions with share-based payment transactions of the
Group are measured in accordance with IFRS 2 Share-based Payment at the
acquisition date; and
· Assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that standard.
Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred,
the amount of any non-controlling interests in the acquiree, and the fair value
of the acquirer's previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed. If, after assessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the
sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Notes to the Consolidated Financial Statements (Continued)
Joint Ventures and Associates
A joint venture is a contractual agreement under which two or more parties
conduct an economic activity and unanimous approval is required for the
financial and operating policies. Associates are all entities over which the
Group has significant influence but not control, generally accompanying a
shareholding between 20% and 50% of the voting rights. Joint ventures and
associates are accounted for using the equity method, which involves
recognition in the consolidated income statement of AAA's share of the net
result of the joint ventures and associates for the year. Accounting policies
of joint ventures and associates have been changed where necessary to ensure
consistency with the policies adopted by the Group. AAA's interest in a joint
venture or associate is carried in the statement of financial position at its
share in the net assets of the joint venture or associate together with
goodwill paid on acquisition, less any impairment loss. When the share in the
losses exceeds the carrying amount of an equity-accounted company (including
any other receivables forming part of the net investment in the company), the
carrying amount is written down to nil and recognition of further losses is
discontinued, unless we have incurred legal or constructive obligations
relating to the company in question.
c. Property, Plant and Equipment
Property, plant and equipment are stated at historical cost less subsequent
accumulated depreciation and accumulated impairment losses, if any. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items. Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when 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. All other repairs and
maintenance are charged to profit or loss during the financial period in which
they are incurred. Depreciation on property, plant and equipment is calculated
using the straight-line method to write off their cost over their estimated
useful lives at the following annual rates:
Furniture, fixtures and 17%
equipment
Leasehold improvements 20%
Plant and machinery 20%
Computer equipment 33%
Useful lives and depreciation method are reviewed and adjusted if appropriate,
at the end of each reporting period.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset, and is recognised in
profit or loss in the year in which the asset is derecognised.
d. Investments in Subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate,
provisions for impairment.
e. Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is
determined using specific identification and in the case of work in progress
and finished goods, comprises the cost of purchase, cost of conversion and
other costs incurred in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and applicable selling
expenses.
When the inventories are sold, the carrying amount of those inventories is
recognised as an expense in the year in which the related revenue is
recognised. The amount of any write-down of inventories to net realisable value
and all losses of inventories are recognised as an expense in the year in which
the write-down or loss occurs. The amount of any reversal of any write-down of
inventories is recognised as an expense in the year in which the reversal
occurs.
Notes to the Consolidated Financial Statements (Continued)
f. Impairment of Non-Financial Assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when an annual
impairment assessment for an asset is required, the Group makes an estimate of
the asset's recoverable amount. An asset's recoverable amount is the higher of
an asset's or cash-generating unit's fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely dependent on those from other
assets. Where the carrying amount of an asset or cash generating unit exceeds
its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash
flows expected to be generated by the asset 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. In determining
fair value less costs to sell, recent market transactions are taken into
account, if available. If no such transactions can be identified, an
appropriate valuation model is used. These calculations are corroborated by
valuation multiples or other available fair value indicators.
Impairment losses are recognised in profit or loss in those expense categories
consistent with the function of the impaired asset, except for assets that are
previously revalued where the revaluation was taken to other comprehensive
income. In this case, the impairment is also recognised in other comprehensive
income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the Group estimates the asset's
or cash-generating unit's recoverable amount.
A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the recoverable amount of an asset
since the last impairment loss was recognised. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. This
increase cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised previously. Such
reversal is recognised in the profit and loss unless the asset is measured at
revalued amount, in which case the reversal is treated as a revaluation
increase.
g. Financial Instruments
Financial assets and financial liabilities are recognised on the statement of
financial position when an entity becomes a party to the contractual provisions
of the instruments. Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or
loss) are added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
the income statement.
i. Financial Assets
The Group's accounting policies for financial assets are set out below.
Management determine the classification of its financial assets at initial
recognition depending on the purpose for which the financial assets were
acquired and where allowed and appropriate, re-evaluate this designation at
every reporting date.
All financial assets are recognised on a trade date when, and only when, the
Group becomes a party to the contractual provisions of an instrument. When
financial assets are recognised initially, they are measured at fair value plus
transaction costs, except for those finance assets classified as at fair value
through profit or loss ('FVTPL'), which are initially measured at fair value.
Financial assets are classified into the following specified categories:
financial assets at FVTPL, 'held-to-maturity' investments, 'available for sale'
(AFS) financial assets and loans and receivables. The classification depends on
the nature and purpose of the financial assets and is determined at the time of
recognition.
Notes to the Consolidated Financial Statements (Continued)
i. Financial Assets
De-recognition of financial assets occurs when the rights to receive cash flows
from the investments expire or are transferred and substantially all of the
risks and rewards of ownership have been transferred.
At each reporting date, financial assets are reviewed to assess whether there
is objective evidence of impairment. If any such evidence exists, impairment
loss is determined and recognised based on the classification of the financial
asset.
Loans and receivables (including trade receivables, prepayments, deposits and
other receivables, cash and bank balances) are non-derivative financial assets
with fixed or determinable payments that are not quoted on an active market.
At each reporting date subsequent to initial recognition, loans and receivables
are carried at amortised cost using the effective interest method, less any
identified impairment losses. An impairment loss is recognised in the statement
of comprehensive income when there is objective evidence that the asset is
impaired, and is measured as the difference between the asset's carrying amount
and the present value of estimated future cash flows discounted at the original
effective interest rate. Impairment losses are reversed in subsequent periods
when an increase in the asset's recoverable amount can be related objectively
to an event occurring after the impairment was recognised, subject to a
restriction that the carrying amount of the asset at the date the impairment is
reversed does not exceed what the amortised cost would have been had the
impairment not been recognised.
ii. Financial Liabilities and Equity
Financial liabilities and equity are recognised on the Group's statement of
financial position when the Group becomes a party to a contractual provision of
an instrument. Financial liabilities and equity instruments issued by the Group
are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability and an equity
instrument.
An equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities. Equity instruments
issued by the Group are recognised at the proceeds received, net of transaction
costs.
The Group's financial liabilities include amounts due to a director, trade
payables and accrued liabilities. These financial liabilities are classified as
FVTPL are stated at fair value with any gains or losses arising on
re-measurement recognised in profit or loss. Other financial liabilities,
including borrowings are initially measured at fair value, net of transaction
costs.
Other financial liabilities, including borrowings, are subsequently measured at
amortised cost using the effective interest rate method, with interest expense
recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of
a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial
liability, or, where appropriate, a shorter period, to the net carrying amount
on initial recognition.
Financial liabilities are de-recognized when the obligation specified in the
relevant contract is discharged, cancelled or expires. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid is recognised in the statement of comprehensive income.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as a
de-recognition of the original liability and a recognition of a new liability,
and the difference in the respective carrying amounts is recognised in the
statement of comprehensive income.
iii. Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest method,
less provision for impairment losses for bad and doubtful debts, except where
the receivables are interest-free loans made to related parties without any
fixed repayment terms or the effect of
Notes to the Consolidated Financial Statements (Continued)
iii. Trade and Other Receivables (Continued)
discounting would be material. In such cases, the receivables are stated at
cost less impairment losses for bad and doubtful debts.
iv. Trade and Other Payables
Liabilities for trade and other payables which are recognised initially at
their fair value and subsequently measured at amortised cost using the
effective interest method, unless the effect of discounting would not be
material, in which case they are stated at cost.
v. Fair Values
The carrying amounts of the financial assets and liabilities such as cash and
cash equivalents, receivables and payables of the Group at the balance sheet
date approximated their fair values, due to the relatively short term nature of
these financial instruments.
h. Borrowings
Borrowings are presented as current liabilities unless the Group has an
unconditional right to defer settlement for at least 12 months after the
balance sheet date, in which case they are presented as non-current
liabilities.
Borrowings are initially recorded at fair value, net of transaction costs and
subsequently carried for at amortised costs using the effective interest
method. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the
borrowings using the effective interest method. Borrowings which are due to be
settled within twelve months after the balance sheet date are included in
current borrowings in the balance sheet even though the original term was for a
period longer than twelve months and an agreement to refinance, or to
reschedule payments, on a long-term basis is completed after the balance sheet
date and before the financial statements are authorised for issue.
i. Revenue Recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for the sales of goods and the use
by others of the Group's assets yielding interest, net of rebates and
discounts.
Revenue on sales of goods is recognised on the transfer of risks and rewards of
ownership, which generally coincides with the time when the goods are delivered
to customers and title has been passed.
Interest income from a financial asset, is recognised on an accrual basis using
the effective interest rate method by applying the rate that exactly discounts
the estimated future cash receipts through the expected life of the financial
instrument or a shorter period, when appropriate, to the net carrying amount of
the financial asset.
j. Cost of Sales
Cost of sales consists of all costs of purchase and other directly incurred
costs.
Cost of purchase comprises the purchase price, import duties and other taxes
(other than those subsequently recoverable by the Group from the taxing
authorities), if any, and transport, handling and other costs directly
attributable to the acquisition of goods. Trade discounts, rebates and other
similar items are deducted in determining the costs of purchase. Cost of
conversion primarily consists of hiring charges of subcontractors incurred
during the course of conversion.
k. Borrowing Costs
Borrowing costs are expensed in the period in which they occur. Borrowing costs
consist of interest and other costs that an entity incurs in connection with
the borrowing of funds.
Notes to the Consolidated Financial Statements (Continued)
l. Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the statement of comprehensive
income because it excludes items of income and expense that are taxable or
deductible in other years, and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the
reporting period.
Deferred tax is recognised on temporary differences between the carrying amount
of assets and liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition (other than in
a business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
associated with investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at the end of the each
reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the period in which the liability is settled or the asset
realised. The measurement of deferred tax assets and liabilities reflects the
tax consequences that would follow from the manner in which the Group expects,
at the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Current or deferred tax for the year is recognised in profit or loss, except
when it relates to items that are recognised in other comprehensive income or
directly in equity, in which case the current and deferred tax is also
recognised in other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the
business combination.
m. Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits
with banks and other financial institutions, and short-term, highly liquid
investments that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value, having been within
three months of maturity at acquisition. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are also
included as a component of cash and cash equivalents for the purpose of the
consolidated statement of cash flows.
n. Provisions and Contingencies
Provisions are recognised when the Group has a present obligation as a result
of a past event, and it is probable that the Group will be required to settle
that obligation. Provisions are measured at the Directors' best estimate of the
expenditure required to settle the obligation at the statement of financial
position date, and are discounted to present value where the effect is
material. Provisions are not recognised for future operating losses.
Notes to the Consolidated Financial Statements (Continued)
n. Provisions and Contingencies (Continued)
Where there are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations
may be small.
When the effect of discounting is material, the amount recognised for a
provision is the present value at the reporting date of the future expenditures
expected to be required to settle the obligation. The increase in the
discounted present value amount arising from the passage of time is included in
finance costs in the statement of comprehensive income.
Contingent liabilities are not recognised in the financial statements. They are
disclosed unless the possibility of an outflow of resources embodying economic
benefits is remote. A contingent asset is not recognised in the financial
statements but disclosed when an inflow of economic benefits is probable.
n. Share Capital
Ordinary shares are classified as equity. Proceeds from issuance of ordinary
shares are classified as equity. Incremental costs directly attributable to the
issuance of new ordinary shares are deducted against share capital.
o. Foreign Currencies
In preparing the financial statements of each individual group entity,
transactions in currencies other than the functional currency of that entity
(foreign currencies) are recorded in the respective functional currency (i.e.
the currency of the primary economic environment in which the entity operates)
at the rates of exchanges prevailing on the dates of the transactions. At the
end of the reporting period, monetary items denominated in foreign currencies
are retranslated at the rates prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was
determined. Non-monetary items that are measured in terms of historical costs
in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on
translation of monetary items, are recognised in profit or loss in the period
in which they arise. Exchange differences arising on the retranslation of
non-monetary items carried at fair value are included in profit or loss for the
period except for differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognised directly in other
comprehensive income, in which cases, the exchange differences are also
recognised directly in other comprehensive income.
For the purposes of presenting the consolidated financial statements, assets
and liabilities of the Group's foreign operations are translated into the
presentation currency of the Group (i.e. South African Rand) at the rate of
exchange prevailing at the end of the reporting period, and their income and
expenses are translated at the average exchange rates for the period, unless
exchange rates fluctuate significantly during that period, in which case, the
exchange rates prevailing at the dates of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive income and
accumulated in equity.
The principal exchange rates during the year are set out in the table below:
Rate compared to Year End Rate Year End Rate
£ 2015 2014
South African 21.15 17.36
Rand
US Dollar 1.53 1.60
p. Finance Leases
Assets held under finance leases are initially recognised as assets of the
Group at their fair value at the inception of the lease or, if lower, at the
present value of the minimum lease payments. The corresponding liability to the
lessor is included in the statement of financial position as a finance lease
obligation. Lease payments are treated as a reduction of the lease obligation
on the remaining balance of the liability.
Notes to the Consolidated Financial Statements (Continued)
p. Finance Leases (Continued)
Finance expenses are recognised immediately in profit or loss, unless they are
directly attributable to qualifying assets, in which case they are capitalised.
Contingent rentals are recognised as expenses in the periods in which they are
incurred.
q. Operating Leases
Where the Group has the use of assets held under operating leases, payment made
under the leases are charged to profit or loss over the accounting periods
covered by the lease term except where an alternative basis is more
representative of the pattern of benefits to be derived from the leased asset.
Lease incentives received are recognised in profit or loss as an integral part
of the aggregate net lease payments made. Contingent rentals are charged to
profit or loss in the accounting period in which they are incurred.
r. Employee Benefits
Salaries, annual bonuses, paid annual leave and the cost to the Group of
non-monetary benefits are accrued in the period in which employees of the Group
render the associated services. Where payment or settlement is deferred and the
effect would be material, these amounts are stated at their present values.
s. Segmental Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
Directors who make strategic decisions.
3. Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
In the application of the Group's accounting policies, which are described
above, management is required to make estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and assumptions that had a significant risk of
causing a material adjustment to the carrying amount of assets and liabilities
are discussed below.
a. Inventory Valuation
Inventory is valued at the lower of cost and net realisable value. Net
realisable value of inventories is the estimated selling price in the ordinary
course of business, less estimated costs of completion and selling expenses.
These estimates are based on the current market conditions and the historical
experience of selling products of a similar nature. It could change
significantly as a result of competitors' actions in response to severe
industry cycles. The Group reviews its inventories in order to identify
slow-moving merchandise and uses markdowns to clear merchandise. Inventory
value is reduced when the decision to markdown below cost is made.
b. Impairment of Receivables
The Group's management reviews receivables on a regular basis to determine if
any provision for impairment is necessary. The policy for the impairment of
receivables of the Group is based on, where appropriate, the evaluation of
collectability and ageing analysis of the receivables and on management's
judgement. A considerable amount of judgement is required in assessing the
ultimate realisation of these outstanding amounts, including the current
creditworthiness and the past collection history of each debtor. If the
financial conditions of debtors of the Group were to deteriorate, resulting in
an impairment of their ability to make payments, provision for impairment may
be required.
Notes to the Consolidated Financial Statements (Continued)
c. Income Taxes
The Group is subject to income taxes in South Africa and the UK. Significant
judgement is required in determining the provision for income taxes and the
timing of payment of the related tax. There are certain transactions and
calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for anticipated
tax based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax provision in the period
in which such determination is made.
d. Share Based Payments
The fair value of share-based payments recognised in the income statement is
measured by use of the Black Scholes model, which takes into account conditions
attached to the vesting and exercise of the equity instruments. 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. The share price volatility percentage factor used in the
calculation is based on management's best estimate of future share price
behaviour based on past experience, future expectations and benchmarked against
peer companies in the industry.
e. Depreciation and Amortisation
The Group depreciates property, plant and equipment and amortises the leasehold
land and land use rights on a straight-line method over the estimated useful
lives. The estimated useful lives reflect the Directors' estimate of the
periods that the Group intends to derive future economic benefits from the use
of the Group's property, plant and equipment.
4. Segmental Reporting
In the opinion of the Directors, the Group has one class of business, being the
trading of agricultural materials. The Group's primary reporting format is
determined by the geographical segment according to the location of its
establishments. There is currently only one geographic reporting segment, which
is South Africa. All revenues and costs are derived from the single segment.
5. Other Income
2015 2014
£ £
Other income 10,741 15,856
Other income includes an insurance claim received and profit on the sale of
non-current assets.
Notes to the Consolidated Financial Statements (Continued)
6. Personnel Expenses and Staff Numbers (Including Directors)
Number Group Company
2015 2014 2015 2014
The average number of employees in the
year were:
Management 3 4 - -
Accounts and 1 1 - -
Administration
Sales 2 1 - -
Manufacturing/ 20 20 - -
Warehouse
26 26 - -
£ £ £ £
The aggregate payroll costs for these 234,743 112,807 - -
persons were:
7. Directors' Remuneration
Salaries and Fees Group Company
2015 2014 2015 2014
£ £ £ £
Craig Anthony Forbes 52,899 50,270 - -
8. Finance Costs
Group Company
2015 2014 2015 2014
£ £ £ £
Interest 41,570 5,698 - -
41,570 5,698 - -
9. Expenses - Analysis by Nature
Group Company
2015 2014 2015 2014
£ £ £ £
Auditors' remuneration for audit 7,000 6,000 7,000 6,000
services: Parent
Auditors' remuneration for audit 2,349 11,104 - -
services: Subsidiary
Depreciation on property, plant and 19,054 4,582 - -
equipment
Loss on exchange 45,692 71,558 - -
Personnel expenses (Note 6) 234,743 112,807 - -
Other administrative expenses 302,351 214,564 28,157 14,502
Admission expenses 118,750 225,572 118,750 225,572
Total administrative expenses 732,939 646,187 153,907 246,074
Notes to the Consolidated Financial Statements (Continued)
10. Taxation
The charge for the year can be reconciled to the profit before taxation per the
consolidated statement of comprehensive income as follows:
Group Company
2015 2014 2015 2014
£ £ £ £
Tax Charge - - - -
Factors affecting the tax charge:
Loss on ordinary activities before (389,553) (353,509) (153,907) (234,657)
taxation
Loss on ordinary activities before (77,911) (70,702) (30,781) (46,931)
taxation multiplied by standard rate
of UK corporation tax of 20.0%
Tax effect of expense not deductible 25,546 41,530 - 41,530
for tax
Tax effect of utilisation of tax 52,365 38,680 30,781 5,401
losses
Difference - Actual and Parent tax - (9,508) - -
rate
Tax Charge - - - -
The Company has excess management expenses of £81,899 (2014 - £50,936)
available for carry forward against future trading profits. The deferred tax
asset in these tax losses at 20% of £16,380 (2014 - £10,187) has not been
recognised due to the uncertainty of recovery.
11. Earnings Per Share
Earnings per share data is based on the Group result for the year and the
weighted average number of shares in issue.
Basic loss per share is calculated by dividing the loss attributable to equity
shareholders by the weighted average number of ordinary shares in issue during
the period:
Group Company
2015 2014 2015 2014
£ £ £ £
Loss after tax (389,552) (353,509) (153,907) (234,657)
Weighted average. number of
ordinary shares in issue 94,896,125 80,358,407 94,896,125 80,358,407
Basic and diluted loss per (0.41p) (0.44p) (0.16p) (0.29p)
share (pence)
Basic and diluted earnings per share are the same, since where a loss is
incurred the effect of outstanding share options and warrants is considered
anti-dilutive and is ignored for the purpose of the loss per share calculation.
As at 31 October 2015 there were 12,638,660 (31 October 2014 - 32,138,660)
outstanding share warrants and 5,517,138 (2014 - 7,356,184) outstanding
options, both are potentially dilutive.
Notes to the Consolidated Financial Statements (Continued)
12. Dividends
Group Company
2015 2014 2015 2014
£ £ £ £
Dividends Paid - - - -
13. Company Result for the Year
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 not to present the parent Company income statement account.
The operating loss of the parent Company for the year ended 31 October 2015 was
£153,907 (2014:
loss of £234,657).
14. Non-Current Asset Investments
Group Company
2015 2014 2015 2014
£ £ £ £
Investment in Subsidiary - - 297,915 297,915
Investment in Joint Venture 18,514 8,864 - -
Other Financial Assets - 7,875 - -
18,514 16,739 297,915 297,915
As at 31 October 2015, the Company directly and indirectly held the following
subsidiaries:
Name of Principal Country of Proportion (%) Proportion (%)
companies activities incorporation and of equity of equity
place of business interest 2015 interest 2014
Dynamic Trading in South Africa 100% 100%
Intertrade (Pty) Agricultural
Limited Products
The group had a 49.9% interest in Africa Projects and Ventures, a joint venture
with Lamberti based in South Africa.
15. Long-Term Loan
Group Company
2015 2014 2015 2014
£ £ £ £
Loan to Joint Venture 82,579 94,431 - -
82,579 94,431 - -
This is an interest free long term loan made to Africa Projects and Ventures.
Notes to the Consolidated Financial Statements (Continued)
16. Goodwill
Goodwill has been calculated as £226,644 and is measured as the excess of the
sum of the consideration paid and the fair value of the acquirer's previously
held equity interest in the acquiree over the net of the acquisition-date
amounts of the identifiable assets acquired and the liabilities assumed.
Goodwill has been tested for impairment as at the balance sheet date. The
recoverable amount of goodwill at 31 October 2015 was assessed on the basis of
value in use. As this exceeded the carrying values no impairment loss was
recognised.
The key assumptions in the calculation to assess value in use are future
revenues and the ability to generate future cash flows. The most recent
financial results and forecasts for the next year were used, followed by an
extrapolation of future cash flows using a price earnings ratio. The projected
results were discounted at a rate which is a prudent evaluation of the pre-tax
rate that reflects current market assessments of the time value of money and
risks specific to the cash-generating unit.
The key assumptions used in the value in use calculations in 2015 were as
follows:
- A discount rate of 10%
- Weighting of probabilities assigned to potential earnings.
The Directors believe the significance of the earning potential identified mean
that the goodwill does not require impairment at this early stage.
17. Property, Plant and Equipment
Group Leasehold Furniture and Plant and Total
Property fixtures machinery
£ £ £ £
Cost
At 01 November 2014 33,243 2,587 261,107 296,937
Exchange difference (5,957) (463) (46,790) (53,210)
Additions 10,107 808 97,763 108,678
Disposals (22,954) - (3,350) (26,304)
As at 31 October 2015 14,439 2,932 308,730 326,101
Depreciation
At 01 November 2014 29,225 1,808 224,145 255,178
Exchange difference (5,527) (346) (41,854) (47,727)
Released on disposal (22,954) - (1,887) (24,841)
Charge for the year 2,760 210 16,084 19,054
As at 31 October 2015 3,504 1,672 196,488 201,664
Net Book Value
As at 31 October 2015 10,935 1,260 112,242 124,437
At 01 November 2014 4,018 779 36,962 41,759
Notes to the Consolidated Financial Statements (Continued)
The holding company held no tangible fixed assets at 31 October 2014 and 2015.
18. Inventories
Group Company
2015 2014 2015 2014
£ £ £ £
Inventories 331,506 380,911 - -
19. Trade and other receivables
Group Company
2015 2014 2015 2014
£ £ £ £
Intercompany Loans - - 105,606 118,683
Trade Receivables 219,447 454,566 1,281 -
Other Debtors 3,630 29,094 2,885 -
Loans to Employees - 161 - -
223,077 483,821 109,772 118,683
Group Trade receivables - These represent amounts receivable on the sale of
agricultural products and are included after provisions for doubtful debts.
Company Receivables - The intercompany loan was made to Dynamic Intertrade
(Pty) Limited in April 2013. Interest is being accrued at the rate of LIBOR +2%
on this loan and the terms of repayment are a £100,000 capital repayment which
falls due each year on the last business day in February starting with the
first payment in February 2014. In view of the current tough trading
conditions, an agreement to delay the repayment of the loan has been
implemented. The interest receivable for the year ended 31 October 2015 on this
loan is £9,821 (2014 - £11,416).
20. Cash and Cash Equivalents
Group Company
2015 2014 2015 2014
£ £ £ £
Cash and Cash Equivalents 63,893 90,456 38,739 35,577
21. Trade and Other Payables
Group Company
2015 2014 2015 2014
£ £ £ £
Trade Payables 525,924 526,301 51,327 8,386
Other Creditors 195,125 64,523 6,000 6,000
721,049 590,824 57,327 14,386
Trade payables represent amounts due for the purchase of agriculture materials
and administrative expenses. The Directors consider that the carrying amount of
trade payables approximates to their fair value.
Notes to the Consolidated Financial Statements (Continued)
22. Share Capital
Allotted, called up and fully paid Number Nominal Share Total
ordinary shares of 0.1p each Value Premium
£ £ £
Balance at 1 November 2014 94,896,125 94,896 1,107,373 1,202,269
Balance at 31 October 2015 94,896,125 94,896 1,107,373 1,202,269
23. Retained Earnings
Group Company
2015 2014 2015 2014
£ £ £ £
Opening Balance (474,701) (121,192) (355,849) (121,192)
Loss for the Period (389,553) (353,509) (153,907) (234,657)
Movement in the Share Based Reserve - - - -
Balance at 31 October (864,254) (474,701) (509,756) (355,849)
24. Reconciliation of Movements in Shareholders' Funds
Group Company
2015 2014 2015 2014
£ £ £ £
Opening Shareholders' Funds 743,937 611,108 862,789 611,108
Loss for the Period (389,553) (353,509) (153,907) (234,658)
Shares Issued - Nominal Value - 24,881 - 24,881
Shares Issued - Share Premium - 461,457 - 461,457
Movement in the Share Based Reserve (4,783) - (4,783) -
Movement in Profit and Loss - - - -
Balance at 31 October 349,601 743,937 704,099 862,789
25. Share Based Payments Reserve
The Company has a share-ownership compensation scheme for senior executives of
the Company whereby senior executives may be granted options to purchase
Ordinary Shares in the Company.
Warrants
There are 12,638,660 warrants to subscribe for ordinary shares at 31 October
2015 (32,138,660 at 31 October 2014). Of these:-
· 2,761,330 warrants are exercisable at a price of 1.5p and
were then issued as consideration to the joint financial advisers of the
Company, Zeus Capital Limited and VSA Capital Limited.
· 9,877,330 warrants are exercisable at a price of 2.75p.
Notes to the Consolidated Financial Statements (Continued)
25. Share Based Payments Reserve (Continued)
Options
At 1 November 2014 there were 7,356,184 share options issued to the directors
and a senior manager of the Company. Following the resignation of a Director,
1,839,046 were forfeited. As a result there were 5,517,138 options issued at 31
October 2015 and these expire on 5 September 2022.
The movement on the share based payment charge for the year was £4,783 (2014 -
£nil) in respect of the issued options. The details of options and warrants are
as follows:
Date of At 01/11/14 Granted/ Forfeits At 31/10/ Exercise Exercise/Vesting Date
Exercised 15
/
Grant Vested Price From To
Warrants
06/09/2012 2,761,330 - - 2,761,330 1p 06/09/2012 05/09/2022
06/12/2012 19,500,000 - (19,500,000) - 2.5p 06/12/2012 31/01/2015
11/08/2014 9,877,330 - - 9,877,330 2.75p 11/08/2014 31/01/2017
Options
06/09/2012 7,356,184 - (1,839,046) 5,517,138 1p 13/08/2014 05/09/2022
The total warrants and options outstanding at 31 October 2015 were 18,155,798
(31 October 2014 - 39,494,844).
The number of warrants and options outstanding to the Directors that served in
the period, as at 31 October 2015 were as follows:
Director Warrants Options Total
Andrew Monk - 1,839,046 1,839,046
Andrew Raca - 1,839,046 1,839,046
Neil Herbert 6,000,000 1,839,046 7,839,046
George Roach - 1,839,046 1,839,046
Totals 6,000,000 7,356,184 13,356,184
The 1,839,046 options held by Craig Forbes expired with the termination of his
employment on 31 December 2015.
The estimated fair value of the options in issue was calculated by applying the
Black-Scholes option pricing model. The assumptions used in the calculation
were as follows:
Share price at date of grant £0.0125/£0.1175
Exercise price £0.01
Expected volatility 50%
Expected dividend 0%
Contractual life 7 years
Risk free rate 2.5%
Estimated fair value of each £0.0022
option
The share options outstanding at the year-end had a weighted average remaining
contractual life of 6 years.
Notes to the Consolidated Financial Statements (Continued)
26. Related Party Transactions
The Chairman, Andrew Monk, is also a directors of VSA Capital Limited and that
company provided services amounting to £37,500 (2014 - £53,256) to the Company
during the period. The balance owed at the 31 October 2015 was £27,939 (2014 -
nil).
There were no other related party transactions during the period to 31 October
2015.
27. Controlling Party Note
There is no single controlling party. Significant shareholders are listed in
the Directors Report and Business Review.
28. Events Subsequent to 31 October 2015
Neil Herbert has agreed to re-join the board and this appointment will take
place on 8 February 2016.
There were no other material events following the 31 October 2015 year end.
29. Financial Instruments Risks
The risks posed to the Company are set out in the Strategic Report. The
Directors do not consider that there are any significant changes in the
Company's risk profile.
ANGLO AFRICAN AGRICULTURE : Final Results
February 19, 2016 at 02:01 am EST
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