Anglo African Ag PLC Half-year Report

 
TIDMAAAP 
 
Anglo African Agriculture plc ("AAA" or the "Company") 
 
Half yearly report for the six months ended 30 April 2017 
 
The Chairman's Report 
 
Since becoming Chairman in September 2016 I am pleased to report on the 
progress of the business over the six month period ended April 2017. 
 
The past six months of solid growth have been punctuated by the issue of an 
updated Company prospectus with the UKLA, the significant plant upgrades at our 
100% owned Dynamic Intertrade (Pty) Ltd ("DI") spices factory with the 
commissioning of new milling and packing equipment specifically designed to 
improve efficiency, reduce costs and dramatically increase production capacity 
to meet the Company's increasing order book, the proposed sale of our share in 
APV - the guar processing business and the acquisition of 46.8% of Dynamic 
Intertrade Agri (Pty) Ltd ("DIA"). 
 
Dynamic Intertrade 
 
Dynamic Intertrade (Pty) Ltd (DI) has had a good start to the year compared to 
the previous year. Sales started well but continue to fluctuate as the Company 
strives to increase base stocks of all important raw ingredients. That said 
sales are significantly better than the prior year. DI managed to secure two 
tenders to major food manufacturing companies in South Africa which have 
increased volume and have now created a stable production platform and base 
load for the business. Margins were up on the Company's internal expectations 
and expenses were in line with expectations. Turnover improved to GBP1145k 
(compared to GBP821k for the same period in 2016). 
 
One tender to supply cayenne pepper into the fishing industry equated to 300 
tons of product per annum. As a result of improved procurement we have been 
able to offer product at a slightly improved margin. A further 40 tons per 
annum was secured with another canned fish manufacturer. 
 
DI was once again certified FSSC22000 following a quality audit by SGS, a 
certification which is vital for the business when dealing with blue chip food 
manufacturing companies. 
 
From an operational perspective a highlight has been the commissioning of the 
new high capacity Pin Mill, which almost tripled the milling capacity of the 
operations, saved considerably on electricity costs as well as savings on 
valuable time when cleaning between spice batches compared to the old milling 
system. 
 
The company began importing a container of mixed product, which has increased 
our offering to customers and sales are slowly gaining momentum in this higher 
margin area. Extra material has been imported for our generic lines such as 
Paprika and Cayenne Pepper in order to regain lost customers and ensure 
continuity of supply. 
 
Batch Packs into the meat industry have grown from a zero base to around 10 to 
15 tons per month and are gaining momentum, and the management is striving to 
double this volume over the next 3 to 4 months. Once again these products 
command a higher gross margin than standard herbs and spices. 
 
We have brought our Research and Development function in house, where it was 
previously outsourced and this has already led to operational improvements and 
the generation of new ranges of products available to our customers. 
 
Dynamic Intertrade Agri (DIA) 
 
(46.8% owned by AAA) 
 
Whilst the South African economy undergoes significant challenges, DIA has 
continued to secure orders within the agricultural commodity trading 
environment not only within South Africa but also in the surrounding countries, 
and I look forward to sustained progress from this operation. Tonnages traded 
for the period totalled 1162 tonnes (comprising including sugar beans, popcorn, 
soya oil cake meal, cottonseed oil cake meal, meat and bone meal (carcass 
meal), blood meal, sun flower seed, soya beans, assorted fertilizers, maize, 
chillies, paprika, whole pepper, and other spices) with a revenue of GBP512.9k. 
 
Sale of APV 
 
The sale of the share in APV African Projects and Ventures (Pty) Ltd was 
announced on 22 November 2016 and we further announced the receipt of the first 
payment as envisioned on 8 December 2016. Further payments as per the agreement 
were received. However there has been a delay in PMR's funding and as a result 
the final payment has not been received as yet. We are actively engaging PMR 
and AAAP will support them in their endeavours in order to close this 
transaction. 
 
Results for the period 
 
The loss for the six month period 30 April 2017 was GBP285,7k which includes an 
exchange gain of GBP4.4k (6 month period to 30 April 2016 - loss of GBP130.4k, year 
ended 31 October 2016 loss of GBP433.0k). Whilst turnover has increased by 39% 
and the gross margin maintained, the current half-year loss is significantly 
attributable due to significant legal and admission expenses of GBP68.1k incurred 
on producing and publishing the Prospectus required in terms of the UK listing 
authority. 
 
Funding 
 
Subsequent to the period under review the company raised an additional GBP120,250 
to assist with working capital requirements. 
 
Board and management changes 
 
During the period under review Mr. Matthew Bonner joined the board. Matt is a 
native of South Africa but has worked in London and now resides in New York. 
 
Outlook 
 
This business is starting to see some traction, as we come out of the dismal 
position the company had found itself in over the past few years and now the 
outlook for AAAP looks strong and exciting. We are pushing the underlying 
business to increase sales and improve efficiency.  New bank funding 
arrangements are now being reviewed to enable the Company to increase raw 
ingredient stocks so that we can meet the increasing demand from our core 
customers. Importantly, the board is reviewing a number of new and exciting 
potential acquisitions to bolt on to our existing agri platform. 
 
David Lenigas 
Non-Executive Chairman 
28 July 2017 
 
FOR FURTHER INFORMATION PLEASE CONTACT: 
 
Anglo African Agriculture plc                                 Tel +44 (0) 20 
7440 0640 
David Lenigas, Non-Executive Chairman 
Rob Scott, Non-Executive Director 
 
VSA Capital Limited (Financial Adviser and Broker)                         Tel 
[phone] 
Andrew Raca 
 
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 or contact the 
following: 
 
Rob Scott           [e-mail]  Tel: [phone] 
 
Interim Condensed Consolidated Statement of Comprehensive Income 
 
                                             6 months        Year    6 months 
                                                Ended       Ended       Ended 
                                             30 April  31 October    30 April 
                               Notes             2017        2016        2016 
 
                                             GBP             GBP           GBP 
 
Turnover                                    1,144,889   1,605,219     821,425 
 
Cost of Sales                               (854,613) (1,282,140)   (613,229) 
 
Gross Profit                                  290,276     323,079     208,196 
 
Other Income / Expenditure                      2,148       2,767    (12,587) 
 
Administrative expenses                     (529,109)   (665,218)   (287,787) 
 
Operating loss                              (236,685)   (339,372)    (92,178) 
 
Loss from equity accounted                    (5,133)           -           - 
investment 
 
Bank Interest Receivable                            -       4,109       4,210 
 
Finance Costs                                (43,841)    (97,771)    (42,470) 
 
Loss before taxation                        (285,659)   (433,034)   (130,438) 
 
Tax on loss on ordinary                             -           -           - 
activities 
 
Loss after taxation                         (285,659)   (433,034)   (130,438) 
 
Loss and total comprehensive                (285,659)   (433,034) 
loss for the period                                                 (130,438) 
 
Basic and diluted earnings       5            (0.16p)     (0.38p)     (0.13p) 
per share 
 
Interim Condensed Consolidated Statement of Changes in Equity 
 
                         Share     Share Premium     Retained    Share Based     Total 
                         Capital                     Earnings      Payments     Equity 
                                                                   Reserve 
 

                            GBP            GBP               GBP            GBP            GBP 
 
Balance at 1 November     94,896          1,107,373   (864,254)         11,586   349,601 
2015 
 
Share Issue*              15,000             60,000           -              -    75,000 
 
Loss for the period            -                  -   (130,438)              - (130,438) 
 
Balance at 30 April 2016 109,896          1,167,373   (994,692)         11,586   294,163 
 
Issue of shares*                            404,105                          -   475,001 
                          70,896 
 
Share based payment 
                                                                       (3,714)   (3,714) 
 
Loss for the period                                   (302,596) 
                                                                               (302,596) 
 
Balance at 31 October                     1,571,478 (1,297,288) 
2016                     180,792                                         7,872   462,854 
 
Issue of shares*           7,692                             -              - 
                                           92,308                                100,000 
 
Loss for the period            -                 -                          - 
                                                      (285,659)                (285,659) 
 
Balance at 30 April 2017 188,484          1,663,786 (1,582,947) 
                                                                         7,872   277,195 
 
 
* During the year the company placed these shares and as the number of placing 
shares comprised more than 10% of the companies issued share capital, and 
although the placing shares has been allotted, admission of the placing shares 
required publication of a Prospectus within a twelve month period. On 22 March 
2017, the company announced that the Prospectus had been approved by the UK 
Listing Authority. The April 2016, September 2016 and March 2017 shares were 
admitted to the Standard Listing segment of the Official List of the UK Listing 
Authority and to trading on the London Stock Exchange Main Market. In total 
these shares amounted to 93,587,829 Ordinary Shares. 
 
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 
 
                                               30 April   31 October   30 April 
                                      Notes      2017        2016        2016 
 
                                                   GBP           GBP          GBP 
 
Assets 
 
Non-Current Assets 
 
Goodwill on Consolidation                         226,644     226,644    226,644 
 
Investment                                              -           -      7,671 
 
Property, Plant and Equipment           6         150,304     159,595    135,686 
 
Investment in Jointly Controlled        8          94,867           -          - 
Entities 
 
Other Financial Assets                                  -           -      1,704 
 
 Total Non-Current Assets                         471,815     386,239    371,705 
 
Current assets 
 
Inventories                                       211,916     166,393    188,965 
 
Loan to Jointly Controlled Entities                81,006      84,473     66,165 
 
Trade and Other Receivables                       431,385     440,455    240,866 
 
Cash and Cash Equivalents                          25,823     268,790     73,683 
 
 Total Current Assets                             750,130     960,111    569,679 
 
Total Assets                                    1,221,945   1,346,350    941,384 
 
Equity and Liabilities 
 
Share Capital                           9         188,484     180,792    109,896 
 
Share Premium Account                   9       1,663,786   1,571,477  1,167,373 
 
Share-Based Payments Reserve                        7,872       7,872     11,586 
 
Retained Earnings                             (1,582,947) (1,297,288)  (994,692) 
 
Total Equity                                      277,195     462,853    294,163 
 
Current Liabilities 
 
Trade and Other Payables                          944,750     883,497    647,221 
 
Total Liabilities                                 944,750     883,497    647,221 
 
Total Equity and Liabilities                    1,221,945   1,346,350    941,384 
 
Interim Condensed Consolidated Cash Flow Statement 
 
                                                6 Months   Year Ended    6 Months 
                                                  Ended    31 October     Ended 
                                                30 April      2016       30 April 
                                    Notes         2017                     2016 
 
                                                    GBP           GBP           GBP 
 
Cash flows from operating 
activities 
 
Operating loss                                   (236,685)   (339,372)     (92,178) 
 
Add: Depreciation                                   26,601      49,116       18,631 
 
Add: Foreign exchange                                5,402    (28,545)            - 
movements 
 
Add: Share Based Payments                                -     (3,714)            - 
Reserve 
 
Add: Loss from equity                                5,133           -            - 
accounted investment 
 
Changes in working capital 
 
(Increase) / decrease in                          (45,522)     165,113      142,541 
inventories 
 
(Increase) / decrease in                             9,070   (217,378)     (17,789) 
receivables 
 
Increase / (decrease) in                            61,253     162,448     (73,828) 
payables 
 
Interest received                                        -       4,109        4,210 
 
Finance Costs                                     (43,841)   (97, 771)     (42,470) 
 
Net cash flow from operating                     (218,589)   (305,994)     (60,883) 
activities 
 
Investing Activities 
 
Decrease in Investments                                  -      18,514      10,843 
 
Acquisition of fixed assets                       (24,377)    (55,729)    (29,880) 
 
Disposal of fixed assets                                 -           -           - 
 
Decrease  / (Increase) in financial assets               -           -     (1,704) 
 
Decrease  / (Increase) in Loans                          -     (1,894)      16,414 
 
Net cash flow from investing activities           (24,377)    (39,109)     (4,327) 
 
Cash flows from financing activities: 
 
Net proceeds from issue of shares           9            -     550,000      75,000 
 
Net cash flow from financing activities                  -     550,000      75,000 
 
Net cash flow for the period                     (242,967)     204,897       9,790 
 
Opening Cash and cash equivalents                  268,790      63,893      63,893 
 
Closing Cash and cash equivalents                   25,823     268,790      73,683 
 
 
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 
2016. 
 
2.         Basis of Preparation 
 
These unaudited condensed consolidated interim financial statements for the six 
months ended 30 April 2017 were approved by the board and authorised for issue 
on 28 July 2017. The basis of preparation and accounting policies set out in the Annual Report 
and Accounts for the year ended 31 October 2016 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 2017 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 2017 and 30 April 2016 are 
unaudited and do not constitute full accounts. The comparative figures for the 
year ended 31 October 2016 are extracts from the 2016 audited accounts.  The 
independent auditor's report on the 2016 accounts was not qualified but 
included an emphasis of matter in respect of going concern and carrying value 
of property, plant and equipment. 
 
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. Apart from the equity accounted investment in Dynamic 
Intertrade Agri (Pty) Ltd which is also South African based, all revenues and 
costs are derived from the single segment. 
 
 
 
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 parent Company for the six months ended 30 April 2017 
was GBP167,481 (2016: 
loss of GBP29,942, year ended 31 October 2016: GBP99,656). The current period 
operating loss incorporated the following main items: 
 
                                           30 April    31 October    30 April 

                                             2017         2016         2016 
 
                                          (Unaudited)   (Audited)   (Unaudited) 
 
                                               GBP            GBP            GBP 
 
Accounting and administration fees             27,750       111,906       5,413 
 
Admission expenses                             50,000             -           - 
 
Brokership fees                                13,992             -           - 
 
Legal and professional fees                    18,136             -      30,818 
 
Registrar fees                                 16,710             -           - 
 
Personnel expenses                             34,962        18,994           - 
 
 
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: 
 
                                                    30 April   31 October   30 April 
                                                      2017        2016        2016 
 
                                                        GBP           GBP          GBP 
 
Loss after tax                                     (285,659)   (433,034)   (130,438) 
 
Weighted average number of ordinary shares in      182,578,756 114,461,821 96,791,930 
issue 
 
Basic and diluted loss per share (pence)           (0.16p)     (0.38p)     (0.13p) 
 
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 2017 there were 12,638,660 (31 October 2016 and 30 April 2016 - 
12,638,660) outstanding share warrants and 17,356,184 (31 October 2016 and 30 
April 2016 - 5,517,138) 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, 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. 
 
Group                          Leasehold   Furniture   Plant and    Total 
                               Property       and      machinery 
                                           fixtures 
 
                                   GBP           GBP           GBP          GBP 
 
Cost 
 
As at 01 November 2015        14,439      2,932       308,730     326,101 
 
Exchange difference           -           -           49          49 
 
Additions                     1,103       397         25,752      27,252 
 
Disposals                     -           -           (239)       (239) 
 
As at 30 April 2016           15,452      3,329       334,292     353,163 
 
Exchange difference           3,980       808         85,096      89,884 
 
Additions                     5,485       435         22,747      28,667 
 
Disposals                     -           (67)        (5,686)     (5,753) 
 
As at 31 October 2016         25,007      4,505       436,449     465,961 
 
Exchange difference           (1,282)     (253)       (22,690)    (24,225) 
 
Additions                     1,016       437         22,924      24,377 
 
At 30 April 2017              24,741      4,689       436,683     466,113 
 
Depreciation 
 
As at 01 November 2015        3,504       1,672       196,488     201,664 
 
Exchange difference           (61)        (29)        (2,536)     (2,626) 
 
Released on disposal          -           -           (192)       (192) 
 
Charge for the year           2,584       162         15,885      18,631 
 
As at 30 April 2016           6,027       1,805       209,645     217,477 
 
Exchange difference           1,027       557         62,381      63,965 
 
Released on disposal          -           (67)        (5,686)     (5,753) 
 
Charge for the year           4,278       257         26,142      30,677 
 
As at 31 October 2016         11,332      2,552       292,482     306,366 
 
Exchange difference           (1,363)     (145)       (15,651)    (17,159) 
 
Released on disposal          3,919       229         22,454      26,602 
 
At 30 April 2017              13,888      2,636       299,285     315,809 
 
Net Book Value 
 
As at 31 October 2015         10,935      1,260       112,242     124,437 
 
As at 30 April 2016           9,515       1,524       124,647     135,686 
 
As at 31 October 2016         13,675      1,953       143,967     159,595 
 
At 30 April 2017              10,853      2,053       137,398     150,304 
 
The holding company held no tangible property, plant and equipment at 30 April 
2017, 31 October 2016 and 30 April 2016. 
 
7.         Subsidiaries 
 
AAA holds investments in the following subsidiary undertakings as at 30 April 
2017, which principally affected the losses and net assets of the group. 
 
Dynamic           Trading in Agricultural  South Africa 100%        100% 
Intertrade (Pty)  Products 
Limited 
 
Dynamic           Agricultural commodity   South Africa 46.8%       - 
Intertrade Agri   trading and distribution 
(Pty) Limited 
 
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. 
 
On 22 November 2016, the group agreed to sell its 49.9% interest in Africa 
Projects and Ventures, a joint venture with Lamberti based in South Africa. 
 
On 3 November 2016 the group acquired 46.8% in the fast growing South African 
based, Dynamic Intertrade Agri (Pty) Ltd ("DIA"), which investment has been 
equity accounted since acquisition. 
 
There were no material events following the 30 April 2017 half year. 
 
8.         Investment in jointly controlled entities 
 
                                             30 April   31 October   30 April 
                                               2017        2016        2016 
 
                                            (Unaudited) (Audited)  (Unaudited) 
 
                                                 GBP          GBP          GBP 
 
Investment in Dynamic Intertrade Agri (Pty)     100,000          -         - 
Ltd 
 
Equity accounted loss for the period            (5,133)          -         - 
 
Carrying value                                   94,867          -         - 
 
The acquisition will be for an initial non cash consideration of GBP100,000 in 
AAAP shares at a price of 1.3p per AAAP share. These shares were allotted but 
were only issued once the Company had published a prospectus approved by the 
UKLA. In addition there was also to be a deferred performance related payment 
in shares in AAAP provided DIA achieved certain profitability targets for the 
twelve month period ending February 2017. As DIA did not achieve these 
profitability targets for the twelve month period ending February 2017 the 
deferred performance related payment has been waived. 
 
For further details, see note 7. 
 
9.         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       Number of   Share      Share 
ordinary  shares of 0.1p each            shares      Capital    Premium 
 
                                                     GBP          GBP 
 
Balance at 1 November  2015              94,896,125  94,896     1,107,373 
 
Share issue - 11 April 2016              15,000,000  15,000     60,000 
 
Balance at 30 April 2016                 109,896,125 109,896    1,167,373 
 
Share issue - 3 September 2016           70,895,521  70,896     404,105 
 
Balance at 31 October 2016               180,791,646 180,792    1,571,478 
 
Share issue - 17 March 2017              7,692,308   7,692      92,308 
 
Balance at 30 April 2017                 188,483,954 188,484    1,663,786 
 
 
10        Events Subsequent to 30 April 2017 
 
10.1     Subscriptions 
 
On the 26 April 2017 the company announced that it raised approximately GBP 
120,250 by way of subscription of 18,500,000 new ordinary shares of 0.1p each 
at a price of 0.65p per Subscription Share. The subscription proceeds where 
only received in May and this subscription has not been reflected in the period 
under review. 
 
Following the issue of the Subscription Shares, the Company had 206,983,954 
shares in issue. 
 
10.2      Appointment 
 
On 02 May 2017 the company announced the appointment of Mr Matthew Bonner to 
the role of Non-Executive Director. 
 
10.3      Related Party Loan 
 
In order to fund growing customer orders, Mr. Bonner, a Director of the 

Company, will provide a loan to its 100% owned subsidiary Dynamic Intertrade 
(Pty) Ltd of ZAR500,000 at an interest rate of 1% above the South African prime 
interest rate. 
 
 
 
END 
 

(END) Dow Jones Newswires

July 31, 2017 02:00 ET (06:00 GMT)