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Anglo African Agriculture PLC - Half yearly Report for the period ended 30 April 2022

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29 July 2022

ANGLO AFRICAN AGRICULTURE PLC

DIRECTORS’ REPORT AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 April 2022

Anglo African Agriculture plc (“AAA” or the “Company”)

Half yearly report for the six months ended 30 April 2022

The Chairman’s Report

I am pleased to report our results to the end of 30 April 2022. As disclosed in the 2021 annual report the unexpected collapse of the Comarco transaction adversely affected shareholders and we remain exceptionally disappointed by the behaviour of the management at Comarco. The aborted transaction has resulted in the board reviewing the ongoing purpose and importantly direction of the company. The Board will inform shareholders in due course of the results of this review and path forward.

The last six months of trading have been challenging globally. COVID-19 continues to disrupt global economies and business operations. The war in Ukraine unexpectedly cast another layer of uncertainty and has weighed adversely on global economic conditions. AAA has not been spared from these global events, the Company and management have had to adapt to the challenging environment. We believe the Company is strongly positioned to navigate this uncertain period and importantly take advantage of opportunities caused by the economic downturn.

Our South African operations brought in a new CEO Serge Pavlovic. Under a difficult operating environment, the team in South Africa have done a commendable job to steer the ship in the right direction. The Company had to provide additional funding to stabilise Dynamic Intertrade during the period under review and will continue to support its operations now consider what is best for the future.

Dynamic Intertrade (“DI”)

For the period under review DI had a tough period caused by a general economic slowdown. For the 6-month period ending 30 April 2022, the group recorded a decrease in revenue from R16.07 million to R14.04 million representing a 14,5% decrease. This was the result of ongoing efforts to pass on various cost increases to the Group’s customers. DI imports the majority of its inventory and this is reflected in the costs of revenue increasing due to the worsening exchange rates, going from R11.8 million for the comparative period for 2021 to R11.2 million for the current period. Operating expenses have been contained to R4.4 million for the six months ended April 2021 from R4.5 million in 2021, however finance charges have increased by 92.8% as DI made increasing use of financing facilities.

DI has maintained its FSSC22000 certification which is important when dealing with blue chip food manufacturing companies.

Dynamic Intertrade Agri (“DIA”)

(46.8% owned by AAA)

As mentioned previously, DIA is in the process of being disposed of and as a result no equity accounting of its results have been reported.

Group Results for the period

The loss for the period has decreased from £318,920 for April 2021 to £136,579 for the current year. This is as a result of DI having experienced a disappointing first six months emanating from decreased demand from our customers. coupled to the holding company reaching agreements with several of it major suppliers following the abandonment of the Comarco transaction.

Outlook

The global financial recession will present some future headwinds in the short to medium term. The Company and its advisors have been working tirelessly on various initiatives aimed at creating shareholder value. As at the 25th of July the Company had £350,000 in cash, and the board believes that the Company is well positioned to take advantage of any opportunities that may arise due to the current economic turmoil.

Responsibility Statement

We confirm that to the best of our knowledge:

  • the condensed set of financial statements has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’;

  • the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year; and

  • the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties’ transactions and changes therein).

Andrew Monk

Non-Executive Chairman

27 July 2022

FOR FURTHER INFORMATION PLEASE CONTACT:

Anglo African Agriculture plc

Andrew Monk, Non-Executive Chairman Tel +44 (0) 20 7440 0640

Rob Scott, Executive Director Tel +27 (0) 84 600 6001

VSA Capital Limited (Financial Adviser and Broker)

Andrew Raca Tel +44 (0) 20 3005 5000

Simba Khatai Tel +44 (0) 20 3005 5000

Forward looking statement

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identi?ed by their use of terms and phrases such as ‘‘believe’’, ‘‘could’’, “should” ‘‘envisage’’, ‘‘estimate’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘will’’ or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements re?ect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements.

For further information please visit http://www.aaaplc.com.

Interim Condensed Consolidated Statement of Comprehensive Income

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

Notes

2022

2021

2021

£

£

£

Turnover

681,761

1,404,234

788,096

Cost of Sales

(545,163)

(1,024,430)

(579,056)

Gross Profit

136,598

379,804

209,040

Other Income

315,495

-

-

Administrative expenses

4

(463,269)

(895,464)

(515,478)

Admission expenses

4

-

-

(8,350)

Impairments

-

-

-

Operating loss

(11,176)

(515,660)

(314,788)

Finance costs

(125,403)

(224,631)

(76,152)

Finance income

-

155,658

72,020

Loss before taxation

(136,579)

(584,633)

(318,920)

Tax on loss on ordinary activities

-

-

-

Loss after taxation

(136,579)

(584,633)

(318,920)

Other Comprehensive Income impairment of investment in associate

-

-

-

Total comprehensive loss for the year from continuing operations

(136,579)

(584,633)

(318,920)

Loss attributable to ordinary shareholders

(136,579)

(584,633)

(318,920)

Total comprehensive loss for the period

(136,579)

(584,633)

(318,920)

Basic and diluted earnings per share

5

(0.62p)

(2.66p)

(1.45p)

Interim Condensed Consolidated Statement of Changes in Equity

Share Capital

Share Premium

Share Based Payments Reserve

Equity Portion of Convertible Loan Notes

Retained Earnings

Total Equity

£

£

£

£

£

Balance at 31 October 2020

439,322

2,571,247

83,377

-

(3,831,894)

(737,948)

Share Issue

-

-

-

-

-

-

Loss for the period

-

-

-

-

(318,920)

(318,920)

Balance at 30 April 2021

439,322

2,571,247

83,377

-

(4,150,814)

(1,056,868)

Equity portion of Convertible Loan Notes issued during the year

-

-

-

74,935

-

74,935

Share Issue

-

-

-

-

-

-

Loss for the year

-

-

-

-

(265,713)

(265,713)

Balance at 31 October 2021

439,322

2,571,247

83,377

74,935

(4,416,527)

(1,247,646)

Share Issue

76,247

76,248

-

-

-

152,495

Loss for the period

-

-

-

-

(136,579)

(136,579)

Balance at 30 April 2022

515,569

2,647,495

83,377

74,935

(4,553,106)

(1,231,730)

Share capital is the amount subscribed for shares at nominal value.

Retained losses represent the cumulative loss of the Group attributable to equity shareholders.

Share-based payments reserve relate to the charge for share-based payments in accordance with IFRS 2.

Interim Condensed Consolidated Statement of the Financial Position

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

Notes

2022

2021

2021

£

£

£

Assets

Non-Current Assets

Property, Plant and Equipment

6

11,266

13,769

19,041

Right of Use Asset

11

327,829

341,905

395,608

Loan receivable

7

-

-

1,017,964

Total Non-Current Assets

339,095

355,674

1,432,613

Current assets

Investment in Associate - (held for sale)

9

6,154

6,154

6,154

Inventories

34,847

42,683

74,585

Trade and Other Receivables

327,299

297,799

222,030

Cash and Cash Equivalents

503,399

1,109,774

111,332

Total Current Assets

871,699

1,456,410

414,101

Total Assets

1,210,794

1,812,084

1,846,714

Equity and Liabilities

Share Capital

10

515,569

439,322

439,322

Share Premium Account

10

2,647,495

2,571,247

2,571,247

Share-Based Payments Reserve

83,377

83,377

83,377

Equity portion of convertible loan notes

74,935

74,935

-

Retained Earnings

(4,553,107)

(4,416,527)

(4,150,814)

Total Equity

(1,231,731)

(1,247,646)

(1,056,868)

Non-Current Liabilities

Non-Current Lease Liabilities

11

242,796

269,215

322,114

Borrowings

791,472

466,064

532,980

Convertible Loan Notes

778,065

778,065

853,000

Total Non-Current Liabilities

1,812,333

1,513,344

1,708,094

Current Liabilities

Current Lease Liabilities

11

87,866

77,887

75,206

Trade and Other Payables

542,326

1,468,499

1,120,282

Total Current Liabilities

630,192

1,546,386

1,195,488

Total Equity and Liabilities

1,210,794

1,812,084

1,846,714


Interim Condensed Consolidated Statement of Cash Flows

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

Notes

2022

2021

2021

£

£

£

Cash flows from operating activities

Operating loss

(11,176)

(515,660)

(314,788)

Add: Depreciation

37,547

78,109

39,550

Add: unrealised foreign exchange (gain) / loss

(26,727)

(65,301)

(572,203)

Add: (Profit)/loss on disposal of property, plant and equipment

1,256

139

-

Finance costs

(185,777)

(93,378)

(76,152)

Interest received

-

155,658

72,021

Changes in working capital

Decrease in inventories

(5,720)

137,401

107,123

Decrease / (increase) in receivables

44,257

(8,363)

69,909

(Decrease) / increase in payables

(715,968)

262,565

513,052

Net cash flow from operating activities

(862,309)

(48,830)

(161,488)

Investing Activities

Acquisition of property, plant and equipment

(257)

(8,767)

(8,657)

Disposal of property, plant and equipment

1,303

-

-

Foreign exchange movements

(19,593)

433

-

Loan Receivable repaid

-

944,004

-

Net cash flow from investing activities

(18,547)

935,670

(8,657)

Cash flows from financing activities:

Net proceeds from issue of shares

9

-

-

-

Convertible loan notes issued

-

220,000

220,000

Increase in borrowings

348,503

32,973

104,261

Foreign exchange movements

(23,095)

(8,043)

(38,608)

Capital repayments of lease liability

(50,863)

(67,071)

(50,390)

Net cash flow from financing activities

274,545

177,859

235,263

Net cash flow for the period

(606,311)

1,064,699

65,118

Opening Cash and cash equivalents

1,109,774

45,251

45,251

Foreign exchange movements

(64)

(176)

963

Closing Cash and cash equivalents

503,399

1,109,774

111,332


Notes to the Interim Condensed 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 end of this report. The Company has a standard listing on the London Stock Exchange main market. The information within these Interim condensed consolidated financial statements and accompanying notes must be read in conjunction with the Audited annual financial statements that have been prepared for the year ended 31 October 2021.

2. Basis of Preparation

These unaudited condensed consolidated interim financial statements for the six months ended 30 April 2022 have been prepared in accordance with International Accounting Standard No34, Interim Financial Reporting, were approved by the board and authorised for issue on 25 July 2022.

The basis of preparation and accounting policies set out in the Annual Report and Accounts for the year ended 31 October 2021 have been applied in the preparation of these condensed consolidated interim financial statements. These interim financial statements have been prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards (“IFRS”) as endorsed by the EU that are expected to be applicable to the consolidated financial statements for the year ending 31 October 2022 and on the basis of the accounting policies expected to be used in those financial statements.

The figures for the six months ended 30 April 2022 and 30 April 2021 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 October 2021 are extracts from the 2021 audited accounts. The independent auditor’s report on the 2021 accounts was not qualified but included a material uncertainty in respect of going concern.

3. 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. Historically this segment has experienced a high demand for its products in the months of July to December with a lower-than-average demand in the months of January to March.

4. Company Result for the period

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 group for the six-month period ended 30 April 2022 was £11,176 (30 April 2021: £314,788, year ended 31 October 2021: loss of £515,660). The operating loss incorporated the following main items:

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

2022

2021

2021

£

£

£

Accounting and administration fees

24,413

20,153

14,786

Admission expenses

-

-

8,350

Brokership fees

-

39,724

17,224

Legal and professional fees

32,164

36,089

-

Registrar fees

1,767

5,138

2,509

Personnel expenses

105,709

278,499

141,045

5. Earnings per Share

Earnings per share data is based on the Group result for the six months 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:

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

2022

2021

2021

(Unaudited)

(Audited)

(Unaudited)

£

£

£

Loss after tax

(136,579)

(584,633)

(318,920)

Weighted average number of ordinary shares in issue

21,966,077

21,966,087

21,966,077

Basic and diluted loss per share (pence)

(0.62p)

(2.66p)

(1.45p)

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 30 April 2022 there were 26,148,289 (31 October 2021 – 26,148,289 and 30 April 2021
13,024,622) outstanding share warrants and 897,809 (31 October 2021 – 897,809 and 30 April 2021
1,047,809) outstanding options, both are potentially dilutive.

6. Property, Plant and Equipment

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 and fixtures

17%

Leasehold improvements

33%

Plant and equipment

20% and 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.

Group

Leasehold Property

Furniture and fixtures

Plant and equipment

Total

£

£

£

£

Cost

As at 31 October 2020

19,571

4,317

268,512

292,400

Exchange difference

961

212

13,176

14,349

Additions

-

-

8,657

8,657

Disposals

-

-

-

-

As at 30 April 2021

20,532

4,529

290,345

315,406

Exchange difference

( 786)

(173)

(10 775)

(11 734)

Additions

-

-

110

110

Disposals

-

-

( 298)

( 298)

As at 31 October 2021

19,746

4,356

279,382

303,484

Exchange difference

979

216

13,844

15,039

Additions

-

-

257

257

Disposals

-

-

(5 088)

(5 088)

As at 30 April 2022

20,725

4,572

288,395

313,692

Accumulated depreciation

As at 31 October 2020

19,085

3,674

254,343

277,102

Charge for the year

353

196

5,092

5,641

Released on disposal

-

-

-

-

Exchange difference

943

183

12,496

13,622

As at 30 April 2021

20,381

4,053

271,931

296,365

Charge for the year

124

167

4,658

4,949

Released on disposal

( 159)

( 159)

Exchange difference

( 785)

( 160)

(10 495)

(11 440)

As at 31 October 2021

19,720

4,060

265,935

289,715

Charge for the year

25

98

3,196

3,319

Released on disposal

-

-

(5 088)

(5 088)

Exchange difference

977

205

13,298

14,480

As at 30 April 2022

20,722

4,363

277,341

302,426

Net Book Value

As at 30 April 2021

151

476

18,414

19,041

As at 31 October 2021

26

296

13,447

13,769

As at 30 April 2022

3

209

11,054

11,266

The holding company held no tangible fixed assets at 30 April 2022, 31 October 2021 and 30 April 2021.

7. Loan receivable

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

2022

2021

2021

(Unaudited)

(Audited)

(Unaudited)

£

£

£

Loan to Touchwood Investments Ltd

-

-

1,017,964

Carrying value

-

-

1,017,964

The loan advanced to Touchwood Investments Ltd, a company that is part of the Comarco Group, which operates a port in Mombasa was settled during the 2021 financial year.

8. Subsidiaries

AAA holds investments in the following subsidiary undertakings as at 30 April 2022, which principally affected the losses and net assets of the group.





Name of companies





Principal activities


Country of incorporation and place of business



Proportion (%) of equity interest 2020



Proportion (%) of equity interest 2019

Dynamic Intertrade (Pty) Limited

Value Added Agricultural Products

South Africa

100%

100%

Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated, using the acquisition method, from the date that control is gained and are stated at cost less, where appropriate, provisions for impairment. Entities that do not comply with this policy, but over which the group has a shareholding of between 20 and 50 percent of the voting rights are equity accounted from the date of acquisition and are stated at cost and adjusted for the results of these entities for the accounting period.

9. Investment in Associate

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

2022

2021

2021

(Unaudited)

(Audited)

(Unaudited)

£

£

£

Investment in Dynamic Intertrade Agri (Pty) Ltd

6,154

6,154

6,154

Equity accounted profit/ (loss) for the period

-

-

-

Impairment of investment

-

-

-

Carrying value

6,154

6,154

6,154

10. 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.

Allotted, called up and fully paid ordinary shares

Number of

of 2.0p (April 2019 - 0.1p) each

shares

Share Capital

Share Premium

£

£

Balance at 31 October 2020

21,966,077

439,322

2,571,247

Share issue

-

-

-

Balance at 30 April 2021

21,966,077

439,322

2,571,247

Share issue

-

-

-

Balance at 31 October 2021

21,966,077

439,322

2,571,247

Share issue

3,823,627

76,247

76,248

Balance at 30 April 2022

25,789,704

515,569

2,647,495

11 Leases

Right of Use Asset and Liability

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate for comparable assets as of 1 November 2019. The weighted average lessee's incremental borrowing rate for comparable mortgage bonds applied to the lease liabilities on 1 November 2019 was 8.5%, being the discount rate on the Group's borrowings. In the Directors opinion this is the discount rate that the Group would obtain should it be purchasing land and buildings. Without further security available the Group would be unlikely to secure funding from other sources and therefore the Directors believe the 8.5% rate applied is the most appropriate basis on which to base the IFRS 16 calculations.

For leases previously classified as finance leases the entity recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial application. The measurement principles of IFRS 16 are only applied after that date.

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

2022

2021

2021

£

£

£

Lease liability recognised in the

statement of financial position at 31 October 2021

347,102

410,502

410,502

Foreign exchange movements

17,200

3,672

20,146

Discounted using the incremental

borrowing rate at date of initial application

17,223

-

17,062

Additions to leases during the year

-

-

-

Lease payments

(50,863)

(67,072)

(50,390)

Lease liability recognised in the

statement of financial position

330,662

347,102

397,320

Of which:

Current lease liabilities

87,866

77,887

75,206

Non-current lease liabilities

242,796

269,215

322,114

330,662

347,102

397,320

Right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position as at 31 October 2021. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application. The recognised right of-use assets relate to the following types of assets:

6 months Ended

Year ended

6 months Ended

30 April

31 October

30 April

2022

2021

2021

£

£

£

Properties

327,829

341,905

395,608

12 Events Subsequent to 30 April 2022

There were no material events subsequent to April 2022 other than what has been disclosed.

Directors and Advisers

Directors:

Robert Scott
Andrew Monk
Matthew Bonner

Company Number:

07913053

Registered Address:

Park House
16–18 Finsbury Circus
London
EC2M 7EB

Head Office:

Park House
16–18 Finsbury Circus
London
EC2M 7EB

Financial Adviser & Broker:

VSA Capital Limited
Park House
16–18 Finsbury Circus
London
EC2M 7EB

Auditors:

Jeffreys Henry LLP
Finsgate
5-7 Cranwood Street
London
EC1V 9EE

Solicitors to the Company:

Keystone Law
48 Chancery Lane
London
WC2A 1JF

Registrars:

Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA

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