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AfriAg – annual report shows what a spoof Lenigas director buying was

By Nigel Somerville | Tuesday 31 May 2016


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Delisted from AIM and so now only listed on the ISDX lobster-pot AfriAg (AFRI) published its FY15 Annual Report the other day. You can read it HERE. There remain plenty of unanswered questions (see HERE) but on one point the Annual Report reveals an extraordinary cynicism in the boardroom as it was before former Exec Chairman David Lenigas departed the scene.

On 25 September 2015 two after-hours RNSs were released detailing director buys on the part of then Chairman David Lenigas: 5 million at 0.45p per share and 10 million at 0.4p a pop. That works out at £62,500 which under normal circumstances would be taken as a positive sign of management confidence in the business. But this failed to halt a share price slide from a peak of about 0.5p all the way down to less than 0.1p by the time the shares were delisted from the Casino.

This is all very well, and it is always good to see company directors putting their hands in their pockets, provided it is not just an attempt to spoof the market.

According to the FY14 Annual Report, Mr Lenigas held 40 million warrants, exercisable at just 0.1p at period end, but which were due to expire at the end of FY15 (unless, of course, previously exercised).

Now let us take a look at the FY15 Annual Report. We see in Note 15:

As at 1 January 2015, shareholders had the option of up to 195,600,000 subscription warrants for each subscription share, exercisable at 0.1p per ordinary share. During the year, no warrants were exercised (2014: nil) at 0.1p per share. No warrants were cancelled during the period (2014: nil). These warrants all expired on 31 December 2015 (2014: nil).

 As at 31 December 2015, nil warrants (2014: 195,600,000) remain outstanding.

What this means, then, is that rather than cash in on his warrants and getting shares at a cost of 0.1p a pop, Mr Lenigas ponied up between 0.4p and 0.45p per share to buy them in the market. He appears therefore to have chosen to pay four times (and more) the amount he could have to increase his holding. There is also a small point that rather than buy them from the market he could have, by exercising warrants, put a few quid into the company to help it along its way.

But he did not – and, indeed, allowed the warrants to expire.

Now it may be that he intended to exercise those warrants just before the year-end, but when he stepped down on 21 Dec he decided not to. If that is the case it perhaps suggests that his exit was rather hastily arranged.

On the other hand it simply could be that his two buys in September 2015 were indeed just a spoof – a cynical one at that.

With the shares now trading on the lobster-pot at just 0.25p (mid) there has been a bit of a recovery since the company’s departure stage left from AIM. Part of that seems to have been sparked by the release of the FY15 numbers which showed a loss (natch) of £169,000 – and a net cash outflow of £116,000 along with a forex loss of a further £103,000.

Meanwhile revenue weighed in at £1.977 million but after costs of sales of £1.927 million and Administrative expenses of £313,000 the operating loss was £263,000 – in part offset by a £143,000 share in the profits of 40%-owned associate company Afriag Pty (Afriag SA). AfriAg SA itself appears to have turned over £6.2 million (40% of which rather outstrips that of Afriag plc).

As for that 40% of Afriag SA, which involves by Mr Paul de Robillard and Mr Yusuf Kajee (see here), that 40% was bought when Afriag issued a whole pile of confetti for its stake. But it looks as though the holding is via Afriag plc’s UK-registered subsidiary, Afriag Limited. Anyone who thinks Mr Lenigas has fully departed the scene might note that Companies House still records him as the sole director of Afriag Limited.

Of course, if one looks at the plc balance sheet we see net current assets of just £119,000. Bearing in mind the FY total comprehensive loss of £169,000 it would appear that the company will need to pass the hat around again at some point.

Plus ca change….

Not a share for me.


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