DIRECTORS’ REPORT AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 APRIL 2018
Anglo African Agriculture plc (“AAA” or the “Company”)
Half yearly report for the six months ended 30 April 2018
The Chairman’s Report
I am pleased to report on the progress of the business over the six-month period ended 30 April 2018
The past six months have seen the underlying businesses settling down and getting into a steady state of growth. The period has also seen the board actively looking at opportunities to accelerate the growth and size of the Company.
Dynamic Intertrade (“DI”)
DI had a challenging start to the financial year but, through the streamlining of costs and the generation of consistent business, will produce its first net profit in the 3rd quarter. Cost savings at DI were generated by, amongst others, changes at the DI management level where the financial manager and sales manager were promoted to director level, with the DI managing director leaving DI. The year on year numbers were disappointing, however, post April the necessary cost saving actions and consistent revenue generating business began to bear fruit. DI maintained the tender business won the previous year, due to superior product and service, and the DI staff are now targeting new customers to supplement the current customer base. Two new sales people have been employed with commission incentivised contracts with similar future hires targeted. Positive margin improvement 33% (2017 – 25%) is because of better procurement and a better mix of product sales. Expenses were in line with expectations, although, as stated, have been reduced during the 3rd quarter.
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)
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.
With the application of sound credit control and the accessing of further credit facilities due to the relationships of the Company’s directors, the Company’s 46.8% interest in DIA has moved from a net loss in the period ending 31 October 2017 of ZAR 10,000k and into a net profit of ZAR 68,000 for the half year ending 30 April 2018.
The directors of the Company are pleased with the consistent improvement of DIA’s results and look forward to further progress in the future.
Results for the period
The loss for the 6-month period 30 April 2018 was £147.8k which includes an exchange gain of £44.4k (6-month period to 30 April 2017 – loss of £285.7k, year ended 31 October 2017 – loss of £550.3k). Whilst turnover has decreased by 45%, the gross margin has increased materially from 25% in the comparative period to almost 33% in the current year (Year to 31 October 2017: 24%). Attributable costs have been contained and are almost flat compared to the prior period comparative, which has resulted in the reduced loss.
During the period under review the company raised an additional £138.9k to assist with working capital requirements. In addition, DI managed to secure a R3m stock funding facility as well as an unlimited invoice discounting facility.
As detailed above, after streamlining certain aspects of the business and arranging for further access to funding facilities, the current subsidiaries of the Company have both begun moving to a net profit in the 3rdquarter.
Although this is undoubtedly positive, the Directors of the Company recognise that the existing operational businesses of the Company are not of a sufficient scale, in and of themselves, to justify the existence of a publicly listed Company. The board has spent considerable time and effort over the past few months in examining potential acquisitions and opportunities to increase the size and growth of the Company and hope to announce some positive news in this regard in the near future.
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