Agriterra : Annual Report and Accounts for the year ended 31 March 2023

AGRITERRA LIMITED

ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

FOR THE

YEAR ENDED

31 MARCH 2023

AGRITERRA LIMITED ANNUAL REPORT 2023

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AGRITERRA LIMITED ANNUAL REPORT 2023

CHAIR'S STATEMENT AND STRATEGIC REVIEW

I am pleased to present the annual report of the Group for the year ending 31 March 2023. During the year, the Group changed its working capital funding strategy to support the existing operations and evaluated opportunities for diversification and adding value to agricultural produce.

The Company continues to observe the principles of the QCA Corporate Governance Code (the "Code") to the extent that they consider them to be applicable and appropriate for a Company of Agriterra's size and stage of development, through the maintenance of efficient and effective management frameworks accompanied by good communication. Further details are available at: http://www.agriterra-ltd.com/investor-relations/corporate-governance/

Strategy and Business Model

The Group's strategy is to operate efficient, profitable businesses in Mozambique to create value for its shareholders and other stakeholders by supplying beef and milled maize products to the local market.

The Group continues to focus on adding value along the entire maize and beef value chain, by developing and offering new products to the market. It currently has three operating divisions which have built strong brands in Mozambique:

• Grain, which operates maize purchasing and processing businesses through Desenvolvimento e Comercialização Agrìcola Limitada ('DECA') and Compagri Limitada ('Compagri').
• Beef, which sources cattle from local farmers and then processes them through its own feedlot, abattoir operations and retail units through Mozbife Limitada ('Mozbife')
• Snax, which sources maize grits from DECA, processing them into flavoured puffs and naks through DECA Snax Limitada, an operating entity that was commissioned in December 2020 to add value to Agriterra's grain milling operations.

During the year the Company secured a shareholder loan of c.$7.6m in the form of a convertible loan and an equity injection of c.$0.6m to replace local currency denominated bank debt to fund working capital for grain and beef divisions. These new facilities are expected to significantly reduce the interest burden.

The Group is aware of its environmental, social and governmental responsibilities and the need to maintain effective working relationships across a range of stakeholders. The Company's largest shareholder is represented on the Board, ensuring their views are incorporated into the Board's decision-making process. In addition to the Group's staff and shareholders, the local community in Mozambique is a primary stakeholder. In purchasing maize and cattle directly from the local community, the Group plays an important role in local economic development, supporting small scale farmers and the evolving commercial sector.

Mozambique overview

The economy in Mozambique is recovering from a protracted slowdown in recent years, with growth reaching 4.1% in 2022. Mozambique is still dealing with the insurgency in parts of the gas-rich province of Cabo-Delgado but the arrival of regional troops has helped stabilise the situation. The government has approved a reconstruction plan for the province. The instability in Cabo Delgado has slowed the expected outcomes from the investment in the Liquefied Natural Gas sector which will be delayed by two years. The medium-term outlook is positive, with growth expected to accelerate to 6% over 2023-2025 driven by:

• Continued recovery in services
• Increased LNG production; and
• High commodity prices.

Tropical cyclone Freddy made landfall in Mozambique on 24 February 2023 and led to significant rainfall. Nearly 166,000 people were affected, more than 28,300 houses destroyed and over 18,700 hectares of crops were destroyed.

During this period the Metical remained steady against the US$ and, strengthened against the South African Rand from ZAR1:MZN3.8 to ZAR1:MZN3.6. Annual inflation was higher at 10.3%, against 6.41% in the previous year. In response to the inflation, the Bank of Mozambique increased its prime lending rate from 19% to 23.5%, which negatively impacted business operations.

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AGRITERRA LIMITED ANNUAL REPORT 2023

Operations review

Grain division

The Grain division generated revenue amounting to $8.6 million (FY22: $7.3 million) after selling 17,819 tons (2022: 17,094 tons) and the

average meal selling price increased by 13% to $482 per ton (2022: $427 per ton), indicating that the demand was strong.

The division secured a $1.5 million loan from its majority shareholder to fund working capital in addition to $6.1 million which was used to repay commercial bank debt. The division purchased 18,022 tons of maize throughout the year and held 7,444 tons of maize in inventory at its peak. The division has had to roll the working capital to be able to mill up to the end of the year. However, the maize price increased by 36% to MZN20 000 per ton ($313) as compared to a 13% increase in the price of mealie meal, thereby eroding the margins in the last quarter of the financial year.

On a positive note, the shareholder loans of $7.6 million enabled the repayment of significant commercial debt amounting to $6.1 million thereby relieving the heavy burden of finance cost, the full benefit of which is expected to be reflected in FY24. The division's borrowings increased slightly by $54,000 as compared to prior year. The business was able to pay interest and some principal repayments out of the business cash flows.

Operating costs decreased by $0.8m to $1.1m and EBITDA increased to $0.6m (2022: EBITDA of $0.54m) due to an improvement in extraction efficiencies net of a 20% increase in the cost of maize milled compared to the previous year. Finance costs decreased to $1.0m (2022: $1.6m) and depreciation cost amounted to $0.5m (2022: $0.5m) resulting in a loss before tax of $0.86m (2022: loss $1.52m).

Loss after tax amounted to $746,000 (FY22: Loss after tax $1,404,000).

Beef division

The Beef division generated revenue amounting to $3.1 million (FY22: $3.2 million) as compared to budget of $4.6 million (FY22: $4.6 million). Low sales resulted from the tough macro-economic environment in Mozambique which affected sales and consumer protein choices. In addition, customers are more sensitive to price as compared to quality and there was increased competition from cheaper meat from the informal market. Sales volumes were 9.2% below previous year (666 tons vs 734 tons in FY22). Working capital constraints led to a fall in the numbers of days animals spent in the feedlot. Consequently, the average daily weight gain of animals decreased from 0.32% to 0.22% of body mass increasing feedlot costs.

The division secured shareholder loan amounting to $0.3 million which was used to ramp up animal production in the feedlot. The funds were used to buy cattle weaners which has high average daily gain when feeding in the feedlot. More than 900 animals were bought from August to March using the shareholder loan. The division also received an external capital injection amounting to GBP250 000 in March 2023 to invest in "straight through" animals which will be supplied into the informal market.

The decrease in sales has been mitigated by improved Gross Margin of 24.06% (FY22: 23.87%) resulting from higher average selling price of

MZN 266 per kg (FY-2022: MZN 252 per kg) whilst the average dress out rate was 49.2% (FY22: 51.5%).

The Company has embarked on a right sizing strategy, offering voluntary retrenchments and a freeze on replacing staff. The Company also has the cost of the three farms that remain in care and maintenance whilst looking for potential buyers.

Loss after tax amounted to $651,000 (FY22: Loss after tax $492,000).

Snax division

DECA Snax, a 50:50 joint venture with Snax for Africa Limited has, in its third year of operations, grown sales revenue by 62% to achieve $2.3 million (FY22: $1.4 million). DECA Snax is growing by winning and retaining market share from competitors as a result of consistently producing and supplying high quality products. DECA Snax sold 1,111,538 bales during the year (FY22: 707,385 bales).

During the year, DECA Snax increased its production capacity by buying a second extruder machine which gives the division the ability to double its production capacity and improve its profitability.

Production volume is exceeding 60% of the installed capacity (Including a second extruder) and plans are in place to launch the product in new geographical markets.

Profit after tax amounted to $74,976 (FY22: $109,889) after payment of management fees to the joint venturers amounting to $117,289

(FY22: Nil).

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AGRITERRA LIMITED ANNUAL REPORT 2023

Key Performance Indicators

The Board monitors the Group's performance in delivery of strategy by measuring progress against Key Performance Indicators (KPIs). These KPIs comprise a number of operational, financial and non-financial metrics.

Financial Review

In FY 23 the Group's revenue increased by 12% to $11.49m (FY22: US10.28m), primarily due to:

• Improvement of grain sales volumes from 17,094 tons to 17,819 tons. Demand for maize meal was higher than the previous year. However, the division did not have sufficient grain in stock due to working capital constraints and had to roll the working capital in the last quarter of the financial year. The cost of replacing maize was high and eroded the Group's margins. The cost of maize increased by 20% from FY22 to FY23.
• Increase in average selling price of mealie meal by 13% as compared to prior year due to increase in demand for the maize meal.
• The Beef division achieved similar revenue of $3.1 million, selling lower volume at a higher average selling price.

AGTA Group gross margin decreased to 21.2% (FY22: 24.94%) due to fair value loss of biological assets amounting to $288,000 and the high cost of replacement maize. Gross profit decreased from $2.6 million to $2.4 million as compared to prior year.

Group operating expenses decreased by 3.1% to $3.4 million and operating losses decreased to $0.8 million (FY22: $0 million). The Group operational performance is expected to be profitable if volumes improve by 25% in FY24.

Net Debt as of 31 March 2023 was $9.86 million (FY22: $9.82million). The shareholder loan injection of $7.9 million has greatly assisted in containing

the adverse impact of high finance cost on the group performance and cashflows. Finance cost remains high at $1.46 million (FY22: $1.62 million. Subsequent to the year end, a further restructuring exercise was undertaken and a further shareholder loan of $2 million has been advanced to fund the Group's working capital (see note 26).

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AGRITERRA LIMITED ANNUAL REPORT 2023

Risk management

The Group is subject to various risks, and the future outlook for the Group and growth in shareholder value should be viewed with an understanding of these risks. According to the risk, the Board may decide to tolerate it, seek to mitigate it through controls and operating procedures, or transfer it to third parties. The following table shows the principal risks facing the Group and the actions taken to mitigate these:

The Board is also responsible for establishing and monitoring the Group's systems of internal controls. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group's systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately. The Board reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment on a regular basis. In light of this control environment the Board considers that there is no current requirement for a permanent separate internal audit function.

Going concern

Details of the consideration of going concern are set out in note 3. The Group has prepared forecasts for the Group's ongoing businesses covering the period of 12 months from the date of approval of these financial statements. These forecasts are based on assumptions including, inter alia, that there are no significant disruptions to the supply of maize or cattle to meet its projected sales volumes and that key inputs are achieved, such as forecast selling prices and volume, budgeted cost reductions, and projected weight gains of cattle in the feedlot. They further take into account working capital requirements and currently available borrowing facilities.

The Group reduced expensive commercial debt during the year by $7.9 million thereby reducing finance cost significantly by $92,000 per month. Post year end, the Group has secured $3.7 million from direct shareholder funding, $2m of which will be used to fund maize purchasing and is secured by the maize in Silo with the balance used to repay the remaining commercial bank debt of $1.1 million and to fund capital expenditure. In addition, the Group also embarked on an aggressive restructuring exercise which will reduce operational cost by $50,000 per month and reduce liquidity constrains.

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AGRITERRA LIMITED ANNUAL REPORT 2023

The Group has retrenched 124 employees from 1 August 2023 as part of the restructuring exercise and the cost savings have been included in the forecasts. The impact of the restructuring exercise and working capital constraints show that the Group needs to achieve its operating targets to meet its cashflow requirements. These conditions and events indicate the existence of a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern and the Group companies may therefore be unable to realise their assets and discharge their liabilities in the ordinary course of business. The auditors make reference to going concern in their audit report by way of a material uncertainty. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

Outlook

The Group had a difficult start to FY24 due to the lack of adequate working capital which affected the current year maize buying season. Even though the working capital was finally secured in June 2023 from commercial banks In Mozambique, they were unable to disburse the full funding due to constraints placed on them by the Central Bank. The situation was further impacted by an increase in interest rate in July 2023 to 24.10%. The Company's majority shareholder agreed to provide a $2m working capital facility to fund maize purchases for the current season in lieu of the inability of the local commercial banks to provide the funding. This will reduce the level of interest charges for the FY24 year.

The macro-economic environment is expected to improve in 2023/24 financial year. Exchange rate between Metical and major trading currency are expected to be stable at $1: MZN 63.88 and inflation is also expected to decrease and trend around 4-5%. Central Bank of Mozambique was using interest rates to control inflation, and a decrease in the inflation rate will also enable the Central Bank of Mozambique to reduce the prime lending rates which is currently at 24.1%.

Grain: Competition is stiff as a number of new mills have opened in the region. However, the region expects grain shortages, and this will drive maize meal prices up. Few millers have secured sufficient maize for the season, and this presents an opportunity for Grain division to gain market share and improve sales revenue as compared to the previous year.

Beef: Demand for beef in the southern market is low because the Metical strengthened against the South African Rand during the year. South African Rand is not expected to strengthen against the Metical and therefore the southern market will continue being affected by relatively cheap imports from South Africa. However, the Beef division is experiencing a strong pull from the north and is mitigating for the lost southern market. The division has also started to serve the informal markets by supplying affordable decent quality beef. On the supply side, the focus has been on strengthening supply chain links with the small farmers who work with us and on getting the efficiencies on the feed lot to improve.

Snax: The Snax division products have been well received by the market and have won more than 50% of the market share in the central region because of superior quality and affordability. Snax division is now introducing the products further into the new North and South markets so as to continue increasing the sales volumes. New bigger family size packets will be introduced into the market during the year.

Board and senior management changes

Mr Gert Naude joined Agriterra in 2014 and led operations as the General Manager. After the end of the current reporting period, Mr. Gert Naude left the Group effective 1 August 2023 as part of the Group restructuring process. I would like to thank him for the significant contribution he has made to the development of the Group over the years.

CSO Havers,

Non-Executive Chair

30 November 2023

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AGRITERRA LIMITED ANNUAL REPORT 2023

CORPORATE GOVERNANCE

The Company is quoted on AIM and is required to comply with the provisions of a recognised corporate governance code. The Board elected to adopt the Quoted Company Alliance Corporate Governance Code (the "QCA code"). Further details are available at http://www.agriterra-ltd.com/investor-relations/corporate-governance/

The Board is committed to applying a standard of corporate governance commensurate with its size and stage of growth and the nature of its activities.

The Board

The board structure continues to be organised to ensure it has the appropriate balance of skills and independence. At the year end the Board comprised the Non-Executive Chair, Interim Chief Executive Officer (CEO), one non-independentNon-Executive Director and two independent Non- Executive Directors. Within Senior Management, there is a Finance Director and General Manager who report to the Board. The Board is looking to further enhance its composition, skills and balance as the Company develops. The Board currently comprises:

Caroline Havers, Non-Executive Chair (AC; IC chair)

Ms. Havers is a highly experienced litigation/dispute resolution lawyer having spent over 30 years within international law firms working with clients operating in a variety of African jurisdictions and industry sectors. During her legal career, Ms. Havers has been both a partner and managing director of different law firms. She provides advice on compliance and governance and is a long qualified CEDR Mediator.

Hamish Rudland, Interim CEO from 1 August 2022 (IC)

Mr. Rudland has extensive experience across logistics, agriculture, agro-processing, distribution, and property. After graduating from Massey University, New Zealand, he returned to Zimbabwe to start a passenger transport business that soon diversified into fuel tank haulage. Thereafter Mr. Rudland structured acquisitions of foreign-owned asset rich companies to list on the Zimbabwe Stock Exchange where he has substantial investments which focus on his core competencies but also synergies where advantages can be made.

Mr. Hamish Rudland is the settlor of the Casa Trust which owns Magister Investments Limited and is also a Director of Magister investments Limited. As a result of Mr. Rudland's relationship to Magister Investments Limited, he is not considered to be an "independent" director for the purposes of the QCA Corporate Governance Code.

Gary Smith, Non-Executive Director (AC; RC)

Mr. Smith is an experienced finance professional and qualified Chartered Accountant. He is currently a non-executive director of several companies in Zimbabwe and Mauritius. Mr. Smith worked in the UK for several years where he was employed at Deutsche Bank, University of Surrey, and Foxhills Club & Resort. Upon returning to Africa, he worked for a large transport and logistics company in Mozambique for four years before returning home to Zimbabwe and the above positions.

As a result of Mr. Smith's relationship with Magister Investments Limited, he is not considered to be an "independent" director for the purposes of the QCA Corporate Governance Code.

Neil Clayton, Non-Executive Director (AC Chair; RC Chair)

Mr. Clayton is a Chartered Accountant and has over 30 years of experience in a variety of listed and unlisted companies. Specifically, Mr. Clayton brings significant experience and expertise as regards listed companies operating in Africa as well as particular knowledge of the Group's business and requirements, having held an interim finance role at the Company during 2020.

The Board considers Mr. Clayton to be an "independent" director for the purposes of the QCA Corporate Governance Code.

Sergio Zandamela, Non-Executive Director (appointed 30 April 2022) (IC)

Mr. Zandamela is a Mozambican national with over 20 years' experience in agriculture and business with a degree in Agronomy - Rural Engineering from the Eduardo Mondlane University and subsequently an MBA from the Montford University Southern Africa - Sandton Business School. From 2016 to 2021 Mr. Zandamela was responsible for all Mozambique commercial activities of Tongaat Hulett (agriculture and agri-processing business, focusing on the complementary feedstocks of sugarcane and maize).

The Board considers Mr. Zandamela to be an "independent" director for the purposes of the QCA Corporate Governance Code.

The Non-Executive Chair is expected to commit a minimum of a day a week and the Non-Executive Directors are expected to commit 2 days a month. In addition, all directors are expected to devote any additional time that might be required in order to discharge their duties. Since the outbreak of COVID-19, Board meetings are held quarterly via Zoom. The attendance record of directors who held office for the year is as follows:

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AGRITERRA LIMITED ANNUAL REPORT 2023

The Board has entrusted the day-to-day responsibility for the direction, supervision and management of the business to the CEO, who leads an Executive Committee (EXCO). For the financial year ended 31 March 2023 the EXCO was comprised of the Interim CEO, the General Manager, the Operations Director, the Financial Director and the Commercial Director in Mozambique.

The Interim CEO and General Manager have a call each week with the Chair to review strategy and discuss any matters arising.

Certain matters are specifically reserved to the Board for its decision making including, inter alia, the creation or issue of new shares and share options, acquisitions, investments and disposals, material contractual arrangements outside the ordinary course of business and the approval of all transactions with related parties.

There is no agreed formal procedure for the directors to take independent professional advice at the Company's expense. The Company's directors submit themselves for re-election at the Annual General Meeting at regular intervals in accordance with the Company's Articles of Incorporation.

The Company has adopted a share dealing code for directors' dealings which is appropriate for an AIM quoted company. The directors and the Company comply with the relevant provisions of the AIM Rules and the Market Abuse Regulation (EU) No. 596/2014 relating to share dealings and take all reasonable steps to ensure compliance by the Group's employees.

Board Committees

Due to the current size of the Board and the Company, there is no separate Nominations Committee, and any new directors are appointed by the whole Board.

The Audit Committee and the Investment Committees have met in the last financial year.

The Audit Committee was chaired by Neil Clayton. The Audit Committee has been actively engaged in the planning and conduct of the Audit of these financial statements. The Committee has met formally since the year end and the Chair has had independent conversations with the Audit partners both in Mozambique and London where executive management have not been present.

Terms and conditions for Directors

The Non-Executive Chair and Non-Executive Directors do not have service contracts but appointment letters setting out their terms of appointment. The appointments may be terminated on three (3) months' notice by either party. The Non-Executive Directors receive an annual base fee reflecting their respective time commitments and do not receive any benefits in addition to their fees, nor are they eligible to participate in any pension, bonus or share-based incentive arrangements.

Directors' remuneration

Remuneration details are set out in note 9 to the financial statements.

Evaluation of Board performance

Given the Company's size, no formal review of the effectiveness of its performance as a unit, as well as that of its committees and the individual directors, has been taken. Performance reviews are to be carried out internally from time to time. Reviews will endeavour to identify skills development or mentoring needs of directors and the wider senior management team.

The Board recognizes that the current procedures remain to be formally implemented and therefore do not accord with the QCA Guidelines. However, it is anticipated that these procedures will be augmented to a standard appropriate for the size and stage of development of the Company.

Communication with shareholders

The Company aims to ensure all communications concerning the Group's activities are clear, fair and accurate. The Board is however keen to improve its dialogue with shareholders. The Company's website is regularly updated, and announcements are posted onto the Company's website.

The results of voting on all resolutions in future general meetings will be posted to the Company's website, including any actions to be taken as a result of resolutions for which votes against have been received from at least 20 percent of independent shareholders.

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AGRITERRA LIMITED ANNUAL REPORT 2023

DIRECTORS' REPORT

The Directors the Company hereby present their annual report together with the audited financial statements for the year ended 31 March 2023 for the Group.

Except where otherwise noted, amounts are presented in this Directors' report in United States Dollars ('$' or 'US$').

1. LISTING DETAILS

Agriterra is a non-cellular Guernsey registered company limited by shares, whose ordinary shares ('Ordinary Shares') are quoted on the AIM Market of the London Stock Exchange ('AIM') under symbol AGTA.

2. PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENTS

The principal activity of the Company is the investment in, development of and operation of agricultural projects in Africa. The Group's current operations are focussed on maize and beef in Mozambique. A review of the Group's performance by business segment and future prospects are given in the Chair's statement and strategic review, together with a review of the risks and uncertainties impacting on the Group's long-term performance.

3. RESULTS AND DIVIDENDS

The Group results for the year ending 31 March 2023 show a loss after taxation of $2,109,000 (2022: loss of $2,270,000). The Directors do not

recommend the payment of a final dividend (2022: $ nil). No interim dividends were paid in the year (2022: $ nil).

Further details on the Group's performance in the year are included in the Chair's statement and strategic review.

4. DIRECTORS

4.1. Directors in office

The Directors who held office during the year and until the date of this report were:

4.2. Directors' interests

As at the date of this report, the interests of the Directors and their related entities in the Ordinary Shares of the Company were:

Ordinary Shares held

*Mr Rudland's interest is held through Magister Investments Limited ('Magister'). Magister is a private limited company incorporated in the Republic of Mauritius, controlled by Mauritius International Trust Company Limited, as trustee of the Casa Trust (a Mauritius registered trust). Mr. Hamish Rudland is the settlor of the Casa Trust and the beneficiaries of the Casa Trust are Mr. Rudland, his wife, and their three children.

4.3. Directors' emoluments

Details of the nature and amount of emoluments payable by the Company for the services of its Directors during the financial year are shown in note 9 to the financial statements.

4.4. Directors' indemnities

The Company has made qualifying third-party indemnity provisions for the benefit of its Directors which remain in force at the date of this report.

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