AfriAg Global Plc - Audited Results to 31 December 2018
PR Newswire
London, May 12
AfriAg Global plc
("AfriAg Global" or the "Company")
Audited Final Results for the Year Ended 31 December 2018
Chairman's report (incorporating the strategic report)
AfriAg Global PLC (NEX: AFRI), the London listed global agri-logistics specialists, today presents its Annual Report for year ended 31 December 2018.
In a very significant move this financial year, the Company became one of the very few listed in London that was authorised by its shareholders to invest in the exciting global medicinal cannabis sector.
David Lenigas, Executive Chairman of AfriAg Global, commented:
"I am particularly excited about the shareholder approval gained in 2018 to allow the Company to invest in the fast-growing globally expanding legal medical cannabis space. There are very few companies listed in London and indeed in Europe that are actually allowed to pursue investments in this sector, and we plan to leverage this unique ability. We as a board have a number of near-term initiatives that we are pursuing that will hopefully, if closed, add significant value to the Company."
Investment policy change to include Medical Cannabis investments:
On 12 September 2018, shareholder approval was obtained at a general meeting for the expansion of the Company's investment strategy to include medicinal cannabis. The Company has now expanded its existing investment strategy to also include investments in companies, projects or products that are progressing research in and development of medicinal cannabis and its derivatives, producing or cultivating medicinal cannabis, producing or supplying products derived from or related to cannabis (including, but not limited to, hemp and cannabidiol products); and/or commercialising or marketing medicinal cannabis and its derivatives. The Company sees tremendous opportunities in the sector.
Going forward, the Company is likely to be an active investor within this legal medical cannabis sector and look to acquire control of certain target companies, although it may also consider acquiring non-controlling shareholdings in legal medical cannabis companies. The proposed investments to be made by the Company may be in either quoted or unquoted securities and made by direct acquisition of an interest in companies, partnerships or joint ventures, or direct interests in projects and these investments can be at any stage of development. Accordingly, the Company's proposed future equity interests in proposed investments may range from a minority position all the way up to 100 percent ownership. The Directors primary objective is to achieve the best possible value over time for Shareholders, primarily through capital growth.
Agriculture Investments:
Sadly, the market has not considered what has been achieved with our investments in the agricultural sector well, even though these investments continue to perform in a difficult global environment. We, as a Company, will assess whether further or continued investments in the sector is warranted, as we move towards the medical cannabis focus.
Our investment in AfriAg Marketing Pty Ltd (100% owned by AfriAg Global Plc):
AfriAg Marketing had revenues during the period of £2.24 million (2017: £3.12 million). During this year, the business has been focusing on consolidating our core activities of exporting, distribution and trading of a wide range of fruit and vegetable perishable food lines, including blueberry, passion fruit, pineapple, apple, strawberry, butternut, peas, fine beans, mange tout, sugar snap, baby corn, chillies, baby veg, and herbs to name our top product lines. Foreign exchange management, with the wild fluctuations in global currency rates, always proves challenging and contributed to the loss during the period of ZAR 2.628million (£149,000) (2017 profit: ZAR 0.343 million (£20,000)).
Our investment in AfriAg (Pty) Limited (40% owned by AfriAg Global Plc):
AfriAg (Pty) Limited, the South African registered agri-logistics and trading company, reported revenues during the 10-month period to 31 December 2018 of £9.016 million (12 months to 31 December 2017: £14.746 million); and a net profit for the 10 months to 31 December 2018 of £227,000 (12 months to 3 December 2017: £179,000). The Company has equity-accounted for its 40% share of this profit for 2018, being £97,000 (2017: £72,000).
Financial Results:
During the period, the Group had revenues of £2.24 m (2017: £3.12 m) and made a gross profit of £66,000 (2017: £280,000). The total comprehensive loss for the period attributable to equity holders of the parent was £347,000 (2017: £27 000)
There was a weighted loss per share of 0.017 p (2017: loss per share of 0.003 p).
Current assets at 31 December 2018 amounted to £1,056,000 (2017: £1,293,000).
Outlook:
We have a very unique ability, being one of the few companies listed in London and indeed Europe, to actually undertake investments in the fast-growing legal medical cannabis sector. It has taken a great deal of management and legal work to achieve this, and this will be a big focus for the management over the coming year.
The Board would like to take this opportunity to thank our shareholders, staff and consultants for their continued support and I look forward to reporting further significant progress over the next period and beyond.
The directors of the Company accept responsibility for the contents of this announcement.
David Lenigas
Executive Chairman
10 May 2019
For further information on AfriAg Global please visit the www.afriagglobal.com or please contact;
AfriAg Global Plc:
David Lenigas (Executive Chairman) +44 (0)20 7440 0640
Peterhouse Capital Limited +44 (0)20 7469 0930
Guy Miller
Fungai Ndoro
Consolidated statement of comprehensive income for the period to 31 December 2018
__________________________________________________________________________________________
| Year ended 31 December 2018 | Year ended 31 December 2017 | ||
| Note | £'000 | £'000 | |
| Revenue | 4 | 2,236 | 3,122 |
| Cost of sales | (2,170) | (2,842) | |
| Gross Profit | 66 | 280 | |
| Administration expenses | (430) | (378) | |
| Share Based Payment Charge | - | - | |
| Operating (loss) | 5 | (364) | (98) |
| Share of associate result | 13 | 97 | 72 |
| Investment income | 7 | (51) | (11) |
| Finance costs | 8 | - | (1) |
| (Loss) before taxation | (318) | (38) | |
| Taxation | 9 | - | - |
| (Loss) for the period attributable to equity holders of the parent | (318) | (38) | |
| Other comprehensive income | |||
| Transfer to income statement | 22 | 14 | |
| Translation exchange (loss) | (51) | (3) | |
| Other comprehensive income for the period net of taxation | (29) | 11 | |
| Total comprehensive income for the year attributable to equity holders of the parent | (347) | (27) | |
| Loss per share | |||
| Basic and diluted (pence) | 10 | (0.017) | (0.003) |
The accompanying accounting policies and notes form part of these financial statements.
Consolidated statement of financial position at 31 December 2018
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| 31 December | 31 December | ||
| 2018 | 2017 | ||
| Note | £'000 | £'000 | |
| Non-current assets | |||
| Property, plant & equipment | 11 | 5 | 5 |
| Investments in associates | 13 | 1,687 | 1,590 |
| 1,692 | 1,595 | ||
| Current assets | |||
| Inventory | 15 | - | 3 |
| Trade and other receivables | 16 | 925 | 846 |
| Available for sale assets | 14 | 30 | 1 |
| Cash and cash equivalents | 101 | 443 | |
| 1,056 | 1,293 | ||
| Total assets | 2,748 | 2,888 | |
| Current liabilities | |||
| Trade and other payables | 17 | (844) | (919) |
| (844) | (919) | ||
| Net current assets | 213 | 374 | |
| Net assets | 1,904 | 1,969 | |
| Equity | |||
| Share capital | 18 | 1,761 | 1,461 |
| Share premium account | 8,630 | 8,648 | |
| Share based payment reserve | 279 | 279 | |
| Revaluation reserves | - | (22) | |
| Foreign currency reserve | (17) | 34 | |
| Retained earnings | (8,749 | (8,431) | |
| 1,904 | 1,969 |
The financial statements of AfriAg Global plc (registered number 002845V) were approved by the Board of Directors and authorised for issue on 10 May 2019 and were signed on its behalf by:
David LenigasDonald Strang
Chairman Director
The accompanying accounting policies and notes form part of these financial statements.
Company statement of financial position at 31 December 2018
__________________________________________________________________________________________
| 31 December | 31 December | ||
| 2018 | 2017 | ||
| Note | £'000 | £'000 | |
| Non-current assets | |||
| Investments in subsidiary undertakings | 12 | - | - |
| Trade and other receivables | 16 | 1,836 | 1,836 |
| 1,836 | 1,836 | ||
| Current assets | |||
| Trade and other receivables | 16 | 134 | 8 |
| Available for sale assets | 14 | 30 | 1 |
| Cash and cash equivalents | 81 | 123 | |
| 245 | 132 | ||
| Total assets | 2,081 | 1,968 | |
| Current liabilities | |||
| Trade and other payables | 17 | (458) | (385) |
| (458) | (385) | ||
| Net current (liabilities) | (213) | (253) | |
| Net assets | 1,623 | 1,583 | |
| Equity | |||
| Share capital | 18 | 1,761 | 1,461 |
| Share premium account | 8,630 | 8,648 | |
| Share based payment reserve | 279 | 279 | |
| Revaluation reserves | - | (22) | |
| Retained earnings | (9,047) | (8,783) | |
| 1,623 | 1,583 |
The financial statements of AfriAg Global plc (registered number 002845V) were approved by the Board of Directors and authorised for issue on 10 May 2019 and were signed on its behalf by:
David LenigasDonald Strang
Chairman Director
The accompanying accounting policies and notes form part of these financial statements.
Consolidated statement of changes in equity for the period to 31 December 2018
_______________________________________________________________________________________________________________________________________________________
| Share capital | Share premium | Share based payment reserve | Foreign currency reserve | Revaluation reserves | Retained earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 31 December 2016 | 1,381 | 8,528 | 279 | 37 | (36) | (8,393) | 1,796 |
| (Loss) for the period | - | - | - | - | - | (38) | (38) |
| Currency translation gain | - | - | - | (3) | - | - | (3) |
| Gain on revaluation of available for sale investments | - | - | - | - | - | - | - |
| Transfer to income statement | - | - | - | - | 14 | - | 14 |
| Total Comprehensive Income | - | - | - | (3) | 14 | (38) | (27) |
| Shares issued | 80 | 120 | - | - | - | - | 200 |
| Share based payment charge | - | - | - | - | - | - | - |
| Total contributions by and distributions to owners of the Company | 80 | 120 | - | - | - | - | 200 |
| At 31 December 2017 | 1,461 | 8,648 | 279 | 34 | (22) | (8,431) | 1,969 |
| (Loss) for the period | - | - | - | - | - | (318) | (318) |
| Currency translation gain | - | - | - | (51) | - | - | (51) |
| Transfer to income statement | - | - | - | - | 22 | - | 22 |
| Total Comprehensive Income | - | - | - | (51) | 22 | (318) | (347) |
| Shares issued | 300 | - | - | - | - | - | 300 |
| Share Issue cost | - | (18) | - | - | - | - | (18) |
| Share based payment charge | - | - | - | - | - | - | - |
| Total contributions by and distributions to owners of the Company | 300 | (18) | - | - | - | - | 282 |
| At 31 December 2018 | 1,761 | 8,630 | 279 | (17) | - | (8,749) | 1,904 |
The accompanying accounting policies and notes form part of these financial statements.
Company statement of changes in equity for the period to 31 December 2018
_______________________________________________________________________________________________________________________________________________________
| Share capital | Share premium | Share based payment reserve | Revaluation reserves | Retained earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 31 December 2016 | 1,381 | 8,528 | 279 | (36) | (8,675) | 1,477 |
| (Loss) for the period | - | - | - | - | (108) | (108) |
| Transfer to income statement | - | - | - | 14 | - | 14 |
| Total Comprehensive Income | - | - | - | 14 | (108) | 94 |
| Shares issued | 80 | 120 | - | - | - | 200 |
| Share issue costs | - | - | - | - | - | - |
| Total contributions by and distributions to owners of the Company | 80 | 120 | - | - | - | 200 |
| At 31 December 2017 | 1,461 | 8,648 | 279 | (22) | (8,783) | 1,583 |
| (Loss) for the period | - | - | - | - | (264) | (264) |
| Transfer to income statement | - | - | - | 22 | - | 22 |
| Total Comprehensive Income | - | - | - | 22 | (264) | (242) |
| Shares issued | 300 | - | - | - | - | 300 |
| Share issue costs | - | (18) | - | - | - | (18) |
| Total contributions by and distributions to owners of the Company | 300 | (18) | - | - | - | 282 |
| At 31 December 2018 | 1,761 | 8,630 | 279 | - | (9,047) | 1,623 |
The accompanying accounting policies and notes form part of these financial statements.
Consolidated statement of cash flows for the period ended 31 December 2018
__________________________________________________________________________________________
| Year ended | Year ended | ||
| 31 Dec 2018 | 31 Dec 2017 | ||
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Operating (loss) | (364) | (98) | |
| Decrease in inventory | 3 | 6 | |
| Decrease in trade and other receivables | 38 | 130 | |
| (Decrease) in trade and other payables | (75) | (68) | |
| Depreciation | 3 | 4 | |
| Share option charge | - | - | |
| Net cash outflow in operating activities | (395) | (26) | |
| Investing activities | |||
| Investment income | 3 | 2 | |
| Finance costs | - | (1) | |
| Loan advanced to related party company | (117) | - | |
| Receipts on sale of AFS investments | 1 | 35 | |
| Payments on purchase of AFS investments | (62) | - | |
| Payments for PPE assets | (3) | (4) | |
| Net cash (out)/inflow in investing activities | (178) | 32 | |
| Financing activities | |||
| Issue of share capital | 300 | 200 | |
| Issue costs | (18) | - | |
| Net cash inflow from financing activities | 282 | 200 | |
| Net (decrease)/increase in cash and cash equivalents | (291) | 206 | |
| Cash and cash equivalents at beginning of period | 443 | 240 | |
| Effect of foreign exchange on cash and cash equivalents | (51) | (3) | |
| Cash and cash equivalents at end of period | 101 | 443 | |
The accompanying accounting policies and notes form part of these financial statements.
Company statement of cash flows for the period ended 31 December 2018
__________________________________________________________________________________________
| Year ended | Year ended | ||
| 31 Dec 2018 | 31 Dec 2017 | ||
| £'000 | £'000 | ||
| Cash flows from operating activities | |||
| Operating (loss) | (210) | (95) | |
| (Increase) in trade and other receivables | (9) | (1) | |
| Increase/(decrease) in trade and other payables | 73 | (59) | |
| Share option charge | - | - | |
| Net cash outflow in operating activities | (146) | (155) | |
| Investing activities | |||
| Investment income | - | - | |
| Loan advanced to related party company | (117) | - | |
| Receipts on sale of AFS investments | 1 | 35 | |
| Payments on purchase of AFS investments | (62) | - | |
| Net cash (out)/inflow in investing activities | (178) | 35 | |
| Financing activities | |||
| Issue of share capital | 300 | 200 | |
| Issue costs | (18) | - | |
| Net cash inflow from financing activities | 282 | 200 | |
| Net (decrease)/increase in cash and cash equivalents | (42) | 80 | |
| Cash and cash equivalents at beginning of period | 123 | 43 | |
| Cash and cash equivalents at end of period | 81 | 123 | |
The accompanying accounting policies and notes form part of these financial statements.
Notes to the financial statements
__________________________________________________________________________________________
| 1 | General information |
| AfriAg Global plc is a company incorporated in the Isle of Man under the Isle of Man Companies Act 2006. The address of its registered office is 34 North Quay, Douglas, Isle of Man, IM1 4LB. The Company's ordinary shares are traded on the NEX Exchange Growth Market as operated by NEX Exchange Ltd ("NEX"). The financial statements of Afriag Global plc for the year ended 31 December 2018 were authorised for issue by the Board on 10 May 2019 and the statements of financial position signed on the Board's behalf by Mr. David Lenigas and Mr Donald Strang. | |
| Investing policy The Company's investment strategy focuses on acquisitions of direct and/or indirect interests in the agricultural and medicinal cannabis sectors. Agriculture The Board intend to seek acquisitions of direct and/or indirect interests in businesses involved in agriculture generally and the production, processing, logistics and distribution of agricultural produce. The Company will focus on opportunities in this sector in Europe, Africa and the Middle East, but will consider possible opportunities anywhere in the world. Medicinal Cannabis The Board intend to seek investments in companies, projects or products that are: The Company will seek investments in companies and projects in jurisdictions which have well-developed and reputable laws and regulations for the research and production of medicinal cannabis and in jurisdictions that are signatories to the United Nation's conventions on narcotics. Types of Investments The Company is likely to be an active investor within these sectors and acquire control of certain target companies although it may also consider acquiring non-controlling shareholdings. The proposed investments to be made by the Company may be in either quoted or unquoted securities and made by direct acquisition of an interest in companies, partnerships or joint ventures, or direct interests in projects and can be at any stage of development. Accordingly, the Company's equity interest in a proposed investment may range from a minority position to 100 per cent. ownership and a controlling interest. The Directors' primary objective is to achieve the best possible value over time for Shareholders, primarily through capital growth. If the Company takes a controlling stake, the acquisition could trigger a Reverse Takeover under Rule 58 of the NEX Exchange Rules. The Board intend to acquire one or more investments in quoted or unquoted businesses or companies (in whole or in part) thereby creating a platform for further investments. There is no limit on the number of companies, projects or products that the Company may invest in with the agricultural and medicinal cannabis sectors. The Company may need to raise additional funds for these purposes and may use both debt and/or equity. |
Notes to the financial statements (continued)
__________________________________________________________________________________________
| Investing policy (continued) | |
| The Board believes that their collective experience, together with their extensive network of contacts and the Company's Technical Committee, will assist them in the identification, evaluation and funding of appropriate investment opportunities within the medicinal cannabis sector. When necessary, other external professionals will be engaged to assist in the due diligence on prospective targets and their management teams. The Directors will also consider appointing additional directors and/or advisors with relevant experience if the need arises. It is anticipated that there may be opportunities to spin out businesses privately or by initial public offerings where Shareholders may be able to be benefit through distributions of cash and/or shares and/or rights to subscribe in listings. Given the nature of the investment strategy, the Company does not intend to make additional regular and periodic disclosures or calculations of net asset value outside of the requirements for a NEX Exchange Growth Market traded company. It is anticipated that the Company will hold investments for the medium to long term, although where opportunities exist for shorter term investments, the Company may undertake advantage of such opportunities. The Directors intend to review the investment strategy on an annual basis and, subject to their review and in the absence of unforeseen circumstances, the Directors intend to adhere to the investment strategy. Changes to the investment strategy may be prompted, inter alia, by changes in government policies or economic conditions which alter or introduce additional investment opportunities. It is the intention of the Directors to invest the Company's cash resources, as far as practicable, in accordance with the investment strategy. However, due to market and other investment considerations, it may take some time before the cash resources of the Company are fully invested. It is intended that the funds currently available to the Company will be used to meet general working capital requirements, to undertake due diligence on potential target acquisitions and to make investments in accordance with the investment guidelines described above. | |
| Statement of compliance with IFRS | |
| The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Company are set out below. |
Notes to the financial statements (continued)
__________________________________________________________________________________________
| New standards, amendments and interpretations adopted by the Company No new and/or revised Standards and Interpretations have been required to be adopted, and/or are applicable in the current year by/to the Company, as standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2017 are not material to the Company. New standards, amendments and interpretations not yet adopted At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements, were in issue but not yet effective for the year presented: - IFRS 16 in respect of Leases which will be effective for accounting periods beginning on or after 1 January 2019. - IFRS 17 in respect of Insurance Contracts will be effective for accounting periods beginning on or after 1 January 2021 There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company. | ||
| Going Concern | ||
| The Directors noted the losses that the Group has made for the Year Ended 31 December 2018. The Directors have prepared cash flow forecasts for the period ending 31 May 2020 which take account of the current cost and operational structure of the Group. The cost structure of the Group and Parent Company comprises a high proportion of discretionary spend and therefore in the event that cash flows become constrained, costs can be quickly reduced to enable the Group and Parent Company to operate within its available funding. These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis. It is the prime responsibility of the Board to ensure the Group and Parent Company remains as going concerns. At 31 December 2017, the Group had cash and cash equivalents of £101,000 and borrowings of £nil. The Group and Parent Company has minimal contractual expenditure commitments and the Board considers the present funds sufficient to maintain the working capital of the Group and Parent Company for a period of at least 12 months from the date of signing the Annual Report and Financial Statements. For these reasons the Directors adopt the going concern basis in the preparation of the Financial Statements. | ||
| Basis of preparation | ||
| The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis. | ||
| The financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated. | ||
Notes to the financial statements (continued)
_________________________________________________________________________________________
| 2 | Significant accounting policies | |
| Basis of Consolidation | ||
| The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are entities over which the Company has the power to control, directly or indirectly, the financial and operating policies so as to obtain benefits from their activities. The Company obtains and exercises control through voting rights. Subsidiaries are fully consolidated from the date at which control is transferred to the Company. They are deconsolidated from the date that control ceases. | ||
| Unrealised gains on transactions between the Company and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. | ||
| Acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition costs are written off as incurred. | ||
| Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group's share in the associate is not recognised separately and is included in the amount recognised as investment in associate. The carrying amount of the investment in associates is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group's interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment | ||
| Revenue recognition | ||
| Revenue is measured at the fair value of the consideration received or receivable and represents amounts from the sales of goods provided in the normal course of business, net of value added tax and discounts, and is recognised when the significant risks and rewards of ownership of the product have been transferred to a third party. In the case of sale or return transactions, revenue is only recognised when, and only to the level that, risks and rewards are transferred. | ||
| Revenue is the invoiced value of goods and services supplied and excludes VAT and other sales-based taxes. | ||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 2 | Significant accounting policies (continued) |
| Finance costs / investment revenue | |
| Borrowing costs are recognised as an expense when incurred. | |
| Investment revenue is recognised as the Group becomes entitled to such revenue. Dividends are accounted for on receipt thereof. | |
| Property, plant and equipment - General | |
| Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all tangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates: All assets are subject to annual impairment reviews. | |
| Inventories | |
| Inventories are stated at the lower of cost and net realisable value. | |
| Financial instruments | |
| Financial assets and financial liabilities are recognised on the Group and Company's statement of financial position when the Group or Company becomes a party to the contractual provisions of the instrument. | |
| The Company's activities give rise to some exposure to the financial risks of changes in interest rates and foreign currency exchange rates. The Company has no borrowings and is principally funded by equity, maintaining all its funds in bank accounts. | |
| Financial assets | |
| Financial assets are classified into the following specified categories; financial assets "at fair value through profit or loss" (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 initial recognition. | |
| Available for sale financial assets | |
| Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group's available-for-sale financial assets include listed securities. These available-for-sale financial assets are measured at fair value. Realised Gains and losses are recognised in the income statement and unrealised gains and losses in other comprehensive income and reported within the available-for-sale reserve within equity, except for permanent impairment losses and foreign exchange differences, which are recognised in the income statement. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to the income statement and presented as a reclassification adjustment within other comprehensive income. Interest calculated using the effective interest method and dividends are recognised in the income statement within investment income. | |
| Reversals of impairment losses are recognised in other comprehensive income. | |
Notes to the financial statements (continued)
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| 2 | Significant accounting policies (continued) |
| Equity | |
| Share capital is determined using the nominal value of shares that have been issued. | |
| The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. | |
| The share-based payment reserve represents the cumulative amount which has been expensed in the income statement in connection with share based payments, less any amounts transferred to retained earnings on the exercise of share options. | |
| Foreign currency reserve represents the exchange translation gains/(losses) on converting overseas subsidiaries. | |
| Revaluation reserve represents the unrealised gain or loss on fair/market value movement on available for sale investments and other assets which are valued at their fair value at the balance sheet date. | |
| Retained earnings include all current and prior period results as disclosed in the income statement. | |
| Cash and cash equivalents | |
| Cash and cash equivalents includes cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within current liabilities on the balance sheet. | |
| Financial liabilities | |
| Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities initially recognised at fair value less transaction costs and thereafter carried at amortised cost using the effective interest method, with interest-related charges recognised as an expense in finance cost in the income statement. A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires. | |
| Trade payables | |
| Trade payables are non-interest-bearing and are initially measured at fair value and thereafter at amortised cost using the effective interest rate. | |
| Taxation | |
| The tax expense represents the sum of the tax currently payable and deferred tax. | |
| The tax currently payable is based on taxable profit for the period. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods 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 balance sheet date. | |
Notes to the financial statements (continued)
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| 2 | Significant accounting policies (continued) |
| Provisions | |
| Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation | |
| Share based payments | |
| The Company issues equity-settled share-based benefits to employees. All equity-settled share-based payments are ultimately recognised as an expense in profit or loss with a corresponding credit to reserves. | |
| Share-based payments relating to the subsidiary company increase the carrying value of the investment in the subsidiary and are included in the loss on disposal of the subsidiary. | |
| If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. | |
| Upon exercise of any share options the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium. | |
| 3 | Critical accounting judgements and key sources of estimation uncertainty |
| In the process of applying the Group's accounting policies, as described in note 2, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements. | |
| Valuation of share-based payments to employees | |
| The Company estimates the expected value of share-based payments to employees and this is charged through the income statement over the vesting period. The fair value is estimated using the Black Scholes valuation model which requires a number of assumptions to be made such as level of share vesting, time of exercise, expected length of service and employee turnover and share price volatility. This method of estimating the value of share-based payments is intended to ensure that the actual value transferred to employees is provided for by the time such payments are made. | |
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 4 | Segmental information | ||||
| An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available. The chief operating decision maker has defined that the Group's only reportable operating segments during the period are the agriculture and logistics sector, and the parent company/investment. Subject to further acquisitions the Group expects to further review its segmental information during the forthcoming financial year. The Group has generated revenues from external customers during the period of £2,236,000 (2017: £3,122,000), and £nil (2017: £nil) revenue is from management fees to the associate company. In respect of the total assets of £2,748,000 (2017: £2,888,000), £128,000 (2017: £132,000) arise in the parent company, and £2,620,000 (2017: £2,756,000) arise in South Africa. | |||||
| 5 | Operating loss | Year to 31 | Year to 31 | ||
| Dec 2018 | Dec 2017 | ||||
| £'000 | £'000 | ||||
| Operating loss is stated after charging: | |||||
| Wages and salaries | 27 | 20 | |||
| Depreciation | 3 | 4 | |||
| Currency losses | 1 | 26 | |||
| Audit fees | 12 | 12 | |||
| Included in share options is £nil (2017 - £nil) relating to directors. | |||||
| In addition to auditors' remuneration shown above, the auditors received the following fees for non-audit services. | |||||
| 2018 | 2017 | ||||
| £'000 | £'000 | ||||
| Other financial advisory services | - | - | |||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 6 | Directors' emoluments | 2018 | 2017 | |||||
| £'000 | £'000 | |||||||
| Fees and benefits | 114 | 24 | ||||||
| The Parent Company has no other directly employed personnel. | ||||||||
| Fees and | Share based | |||||||
| salaries | payments | Total | ||||||
| 2018 | £'000 | £'000 | £'000 | |||||
| D Lenigas | 36 | - | 36 | |||||
| A Samaha | 6 | - | 6 | |||||
| D Strang | 36 | - | 36 | |||||
| H Harris | 36 | - | 36 | |||||
| 114 | - | 114 | ||||||
| 2017 | £'000 | £'000 | £'000 | |||||
| D Lenigas | 6 | - | 6 | |||||
| A Samaha | 6 | - | 6 | |||||
| D Strang | 6 | - | 6 | |||||
| H Harris | 6 | - | 6 | |||||
| 24 | - | 24 | ||||||
| The Directors' fees totalling £428,000 that have been accrued and remain unpaid as at 31 December 2018 all relate to the current and previous years unpaid fees. (2017: £337,000). | ||||||||
| 7 | Investment income | Year to 31 | Year to 31 | |||||
| Dec 2018 | Dec 2017 | |||||||
| £'000 | £'000 | |||||||
| Interest received | 3 | 2 | ||||||
| (Loss) on sale of AFS investments | (22) | (13) | ||||||
| (Loss) on market value revaluation at 31 December | (32) | - | ||||||
| Total investment income | (51) | (11) | ||||||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 8 | Finance costs | Year to 31 | Year to 31 |
| Dec 2018 | Dec 2017 | ||
| Interest paid | - | 1 | |
| 9 | Taxation | Year to 31 | Year to 31 |
| Dec 2018 | Dec 2017 | ||
| £'000 | £'000 | ||
| Total current tax | - | - | |
| The actual tax charges for the period differs from the standard rate applicable in the UK of 19% (2017 - 19/20%) for the reasons set out in the following reconciliation: | |||
| 2018 | 2017 | ||
| £'000 | £'000 | ||
| Loss on ordinary activities before tax | (318) | (38) | |
| Tax thereon @ rates above | (60) | (7) | |
| Factors affecting charge for the period: | |||
| Losses arising in territories where no tax is charged | 60 | 7 | |
| Current tax charge for the period | - | - | |
| 10 | Loss per share | ||
| 2018 | 2017 | ||
| The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the period: | £'000 | £'000 | |
Net loss after taxation (£000's) | (318) | (38) | |
| Number of shares | |||
| Weighted average number of ordinary shares for the purposes of basic loss per share (millions) | 1,592.51 | 1,405.11 | |
| Basic and diluted loss per share (expressed in pence) | (0.017) | (0.003) | |
| As inclusion of the potential ordinary shares would result in a decrease in the earnings per share they are considered to be anti-dilutive, as such, a diluted earnings per share is not included. | |||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 11 | Property, plant & equipment - Group | Total PPE | |
| £'000 | |||
| Costs | |||
| At 1 January 2017 | 5 | ||
| Additions | 4 | ||
| At 31 December 2017 | 9 | ||
| At 1 January 2018 | 9 | ||
| Additions | 3 | ||
| At 31 December 2018 | 12 | ||
| Depreciation & impairment | |||
| At 1 January 2017 | - | ||
| Additions | 4 | ||
| At 31 December 2017 | 4 | ||
| At 1 January 2018 | 4 | ||
| Additions | 3 | ||
| At 31 December 2018 | 7 | ||
| Net Book Values | |||
| At 31 December 2017 | 5 | ||
| At 31 December 2018 | 5 | ||
| Impairment Review At 31 December 2018, the directors have carried out an impairment review and have considered that no impairment is required. The depreciation charge is immaterial currently in respect of disclosure within the table above, and therefore not disclosed. | |||
| 12 | Investments in subsidiaries - Company | |||||
| 31 December | 31 December | |||||
| 2018 | 2017 | |||||
| £'000 | £'000 | |||||
| Cost and net book value | ||||||
| At 1 January | - | - | ||||
| Additions | - | - | ||||
| Disposal | - | - | ||||
| At 31 December | - | - | ||||
| The following were subsidiary undertakings held directly or indirectly by the Company at the end of the year: | ||||||
| Name | Country of incorporation | Proportion of voting rights and ordinary share capital held voting right | Nature of business | |||
| AfriAg Limited | England | 100% | Holding Company | |||
| Afriag International Limited | England | 100% | Dormant Company | |||
| AfriAg Limited | BVI | 100% | Dormant Company | |||
| Afriag Holdings (Pty) Limited | South Africa | 100% | Holding Company | |||
| Afriag Marketing (Pty) Limited | South Africa | 100% | Marketing Company | |||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 13 | Investment in associate - Group | 31 December | 31 December | |||||||
| 2018 | 2017 | |||||||||
| £'000 | £'000 | |||||||||
| At 1 January | 1,590 | 1,518 | ||||||||
| Addition at cost | - | - | ||||||||
| Share of associate result | 97 | 72 | ||||||||
| Carrying value at 31 December | 1,687 | 1,590 | ||||||||
| The Group's share of results of its associate, which is unlisted, and its aggregated assets and liabilities, is as follows: | ||||||||||
| Name | Country of incorporation | Assets | Liabilities | Revenues | Profit/(Loss) | % interest held | ||||
| As at 31 December 2018 | 10 months to 31 December 2018 | |||||||||
| AfriAg (Pty) Ltd | South Africa | £3,488,000 | £1,273,000 | £9,016,000 | £227,000 | 40 | ||||
| AfriAg (Pty) Limited's year end is 28 February. | ||||||||||
| 14 | Available-for-sale investments - Group & Company | 31 December | 31 December |
| 2018 | 2017 | ||
| Current Assets - Listed investments | £'000 | £'000 | |
| At 1 January - market value | 1 | 35 | |
| Disposals during the period | (1) | (35) | |
| Purchases during the period | 62 | - | |
| (Loss) on disposal of investments | (22) | (13) | |
| Transfers to income statement | 22 | 14 | |
| Movement in market value | (32) | - | |
| At 31 December - market value | 30 | 1 | |
| Available-for-sale investments comprise investments in listed securities which are traded on stock markets throughout the world, and are held by the Group as a mix of strategic and short term investments. Income from these investments was £nil for dividends received for the year to 31 December 2018. (2017: £nil) | |||
| 15 | Inventories - Group | 31 December | 31 December |
| 2018 | 2017 | ||
| £'000 | £'000 | ||
| Goods & Packaging | - | 3 | |
| Total | - | 3 | |
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 16 | Trade and other receivables | 31 December 2018 | 31 December 2017 | ||
| Group £'000 | Company £'000 | Group £'000 | Company £'000 | ||
| Current trade and other receivables | |||||
| Trade receivables | 219 | 3 | 280 | 3 | |
| Other debtors | 585 | 10 | 562 | 1 | |
| Loan to related party company | 117 | 117 | - | - | |
| Prepayments & accrued income | 4 | 4 | 4 | 4 | |
| Total | 925 | 134 | 846 | 8 | |
Non-Current trade and other receivables | |||||
| Loans due from subsidiaries | - | 1,836 | - | 1,836 | |
| Total | - | 1,836 | - | 1,836 | |
Loans outstanding and due from subsidiaries, are interest free and repayable on demand. | |||||
| 17 | Trade and other payables | ||||
| 31 December 2018 | 31 December 2017 | ||||
| Group £'000 | Company £'000 | Group £'000 | Company £'000 | ||
| Current trade and other payables | |||||
| Trade creditors | 215 | 9 | 309 | 5 | |
| Other creditors | 152 | 3 | 188 | 26 | |
| Accruals | 477 | 446 | 422 | 354 | |
| Total | 844 | 458 | 919 | 385 | |
| 18 | Share capital | 31 December | 31 December |
| 2018 | 2017 | ||
| £'000 | £'000 | ||
| Allotted, issued and fully paid | |||
| 1,761,001,037 (2017 - 1,461,001,037) ordinary shares of £0.001 each | 1,761 | 1,461 | |
| Shares issued during the year ended 31 December 2017: 300 million shares were issued by the Company, by way of a placing on 12 July 2018 for cash at a price of 0.1p per share during the year to 31 December 2018 (2017: 80 million for cash at 0.25p per share on 12 September 2017). | |||
| Warrants in issue | |||
| As at 31 December 2018, nil warrants (2017: nil) remain outstanding. No warrants were issued, exercised, or lapsed during the year ended 31 December 2018 (2017: nil). | |||
| Share Options | |||
| The Company has as at 31 December 2018, 129,000,000 (2017: 129,000,000) share options issued through its share schemes. During the year nil options were issued (2017: nil), no options were exercised (2017: nil) and nil options were cancelled or lapsed (2017: nil). | |||
Notes to the financial statements (continued)
_________________________________________________________________________________________
| 18 | Share capital (continued) | ||
| Employment Benefit Trust ("EBT") | |||
| The Company established on 3 October 2014 a share incentive plan ("SIP") and effective as of 3 October 2014. The purpose of the SIP is to incentivise officers, employees and consultants of the Company by the award of ordinary shares in the capital of the Company ("Ordinary Shares") for no cost. Ordinary Shares under this plan will not exceed 10 per cent of the Company's issued share capital from time to time without the prior approval of shareholders of the Company. The Company also established on 3 October 2014, an employee benefit trust called the AfriAg Employee Benefit Trust ("EBT") to implement the use of the SIP. The EBT is a discretionary trust for the benefit of directors, employees and consultants of the Company and its subsidiaries. Accordingly, the trustees of the EBT subscribed for 118,000,000 new ordinary shares of 0.1p each in the Company, at par value per share at an aggregate cost to the Company of £118,000, such shares representing 9% of the so enlarged issued share capital of the Company at the time. The shares held in the EBT are intended to be used to satisfy future awards made by the Company's Remuneration Committee under the SIP. It is intended that any individual awards under the scheme will be subject to vesting and performance conditions. There have been no further subscriptions during the year ended 31 December 2018(2017: nil). On 1 August 2017, the Company awarded the remaining 18 million EBT shares to various consultants (2017:18 million), leaving nil shares held by the EBT which was wound up during the year ended 31 December 2017. | |||
| 19 | Share based payments | |||||||||
| A modified Black-Scholes model has been used to determine the fair value of the share options on the date of grant. The fair value is expensed to the income statement on a straight-line basis over the vesting period, which is determined annually. The model assesses a number of factors in calculating the fair value. These include the market price on the date of grant, the exercise price of the share options, the expected share price volatility of the Company's share price, the expected life of the options, the risk- free rate of interest and the expected level of dividends in future periods. As disclosed in note 5 the share option charge for the period was £nil (2017- £nil) The options currently in issue are detailed below: | ||||||||||
| Exercise Price | Grant Date | Expiry Date | 31 December 2017 | Granted | Expired | 31 December 2018 | Weighted average exercise price | |||
| Summary of options | ||||||||||
| £0.001 | 07/12/2012 | 31/12/2020 | 69,000,000 | - | - | 69,000,000 | £0.0010 | |||
| £0.0025 | 01/07/2016 | 31/12/2020 | 50,000,000 | - | - | 50,000,000 | £0.0025 | |||
| £0.0030 | 12/08/2016 | 31/12/2019 | 10,000,000 | - | - | 10,000,000 | £0.0030 | |||
| 129,000,000 | - | - | 129,000,000 | £0.0021 | ||||||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 20 | Financial instruments | ||||
| The Group's financial instruments comprise cash at bank and payables which arise in the normal course of business. It is, and has been throughout the period under review, the Group's policy that no speculative trading in financial instruments shall be undertaken. The Group has been solely equity funded during the period. As a result, the main risk arising from the Group's financial instruments is currency risk. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 of the accounts. | |||||
| 2018 | 2017 | ||||
| £'000 | £'000 | ||||
| Financial assets (current) | |||||
| Trade receivables | 219 | 280 | |||
| Cash and cash equivalents | 101 | 443 | |||
| Financial liabilities (current) | |||||
| Trade payables | 215 | 309 | |||
| Interest rate risk and liquidity risk The Group is funded by equity, maintaining all its funds in bank accounts. The Group's policy throughout the period has been to minimise the risk of placing available funds on short term deposit. The short-term deposits are placed with banks for periods up to 1 month according to funding requirements. The Group had no undrawn committed borrowing facilities at any time during the period. Currency risk The group is directly exposed to currency risk of its subsidiaries, as they are based in South Africa, and exposed to movement against the South African Rand as their assets, liabilities, revenue and expenditure are denominated therein. The parent company is denominated in pound sterling. Market risk The group and company's current exposure to market risk in relation to its AFS investments, which are listed on stock markets throughout the world. Fair values Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash held by the company with an original maturity of three months or less. The carrying amount of these assets approximates their fair value. The directors consider there to be no material difference between the book value of financial instruments and their values at the balance sheet date. | |||||
Notes to the financial statements (continued)
__________________________________________________________________________________________
| 21 | Related party transactions | |||
| Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between other related parties are discussed below. | ||||
| During the period, the parent company granted an interest free, repayable on demand loan of £117,00 to Afriag Global (Pty) Ltd, a South African company related to the parent by virtue of common Directors' (with the group's subsidiaries) in South Africa. This loan remains outstanding at 31 December 2018. (2017: no transactions to disclose) | ||||
| Remuneration of Key Management Personnel | ||||
| The remuneration of the Directors and other key management personnel of the Group are set out below in aggregate for each of the categories specified in IAS24 Related party Disclosures. | ||||
| 2018 | 2017 | |||
| £'000 | £'000 | |||
| Short-term employee benefits | 114 | 24 | ||
| Share-based payments | - | - | ||
| 114 | 24 | |||
| 22 | Capital Commitments & Contingent Liabilities | |||
There are no non-cancellable capital commitments as at the balance sheet date. The Group has no contingent liabilities at the balance sheet date. | ||||
| 23 | Ultimate control | |||
The Company has no individual controlling party. | ||||
| 24 | Events after the end of reporting period | |||
There are no events after the end of the reporting period to disclose. | ||||
| 25 | Profit and loss account of the parent company | |||
As permitted by s408 of the Companies Act 2006, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the year was £264,000 (2017: £108,000). | ||||
