REG - Emmerson PLC - Interim Results for the six months to 30 June 2023
26/09/2023 07:00
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RNS Number : 5838N Emmerson PLC 26 September 2023
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
26 September 2023
Emmerson PLC ("Emmerson" or the "Company")
Interim Results for the six months ended 30 June 2023
Emmerson, which is developing the world class Khemisset Potash Project in
Morocco ("Khemisset" or the "Project"), is pleased to announce its Interim
Results for the six month period ended 30 June 2023 (the "Period").
Highlights
· Update on environmental permit and financing set out in Q3 update
announcement on 21 September 2023
(https://otp.tools.investis.com/clients/uk/emmerson_plc/rns/regulatory-story.aspx?cid=2839&newsid=1716585)
· Financial results for the six months to 30 June 2023 reflect
expenditure on technical workstreams and administrative/corporate support
costs
· Loss for the period of US$1.6 million
· Cash balance at 30 June 2023 was US$4.2 million, after total
expenditure of US$2.5 million in the period. Cash reserves of US$3.5 million
as at the time of this report.
Activities During the Period
The Company's priority during the Period was advancing discussions with
government officials towards obtaining environmental approval for the
Khemisset Project in Morocco. Currently, Emmerson is awaiting a session of the
Ministerial Committee to consider the matter, and although management remains
confident of a favourable outcome based on discussions to date, the timing of
the meeting is not certain, particularly following the devastating earthquake
in Morocco, which has, understandably, been the main focus of government
attention.
Financial Review
As the Company continues in its phase of exploration and development, the
results are relatively straightforward, and reflect a loss for the period of
US$1.6 million (30 June 2022: US$1.5 million), primarily as a result of
administration and corporate costs.
Net cash of US$2.5 million was spent in the period (30 June 2022: US$5.3
million), consisting of the net impact of the administration costs and working
capital movements of US$2.2 million, capitalised development costs of US$0.5
million, and US$0.2 million net proceeds of employee share option exercises.
Financing and Cash Position
At the time of this report, the Company has cash reserves of US$3.5 million,
sufficient to cover the remaining Basic Engineering costs and working capital
commitments for at least the next 12 months.
Outlook for 2023
For the balance of the year, the Company's focus will remain on obtaining the
environmental approval for the Project, putting in place a new funding
agreement with its Strategic Investors, and finalising optimisation work ahead
of a Bankable Feasibility Study.
For further information, please visit www.emmersonplc.com
(http://www.emmersonplc.com/) , follow us on Twitter (@emmerson_plc), or
contact:
Emmerson PLC +44 (0) 207 138 3204
Graham Clarke / Jim Wynn / Charles Vaughan
Liberum Capital Limited (Nominated Advisor and Joint Broker) +44 (0)20 3100 2000
Scott Mathieson / Matthew Hogg / Kane Collings
Shard Capital (Joint Broker) +44 (0)20 7186 9927
Damon Heath / Isabella Pierre
BlytheRay (Financial PR and IR) +44 (0) 207 138 3204
Tim Blythe / Megan Ray / Said Izagaren
Notes to Editors
Emmerson is focused on advancing the Khemisset project ("Khemisset" or the
"Project") in Morocco into a low cost, high margin supplier of potash, and the
first primary producer on the African continent. With an initial 19-year life
of mine, the development of Khemisset is expected to deliver long-term
investment and financial contributions to Morocco including the creation of
permanent employment, taxation, and a plethora of ancillary benefits. As a
UK-Moroccan partnership, the Company is committed to bringing in significant
international investment over the life of the mine.
Morocco is widely recognised as one of the leading phosphate producers
globally, ranking third in the world in terms of tonnes produced annually, and
the development of this mine is set to consolidate its position as the most
important fertiliser producer in Africa. The Project has a large JORC Resource
Estimate (2012) of 537Mt @ 9.24% K2O, with significant exploration potential,
and is perfectly located to support the expected growth of African fertiliser
consumption whilst also being located on the doorstep of European markets. The
need to feed the world's rapidly increasing population is driving demand for
potash and Khemisset is well placed to benefit from the opportunities this
presents. The Feasibility Study released in June 2020 indicated the Project
has the potential to be among the lowest capital cost development stage potash
projects in the world and also, as a result of its location, one of the
highest margin projects. This delivered outstanding economics, including a
post-tax NPV(8) of approximately US$1.4 billion using industry expert Argus'
price forecasts.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2023
US$'000 6 months to 6 months to 12 months to
30 Jun 2023 30 Jun 2022 31 Dec 2022
Notes (Unaudited) (Unaudited) (Audited)
Administrative expenses 3 (1,386) (1,244) (2,581)
Share-based payment expense (199) (53) (256)
Net foreign exchange loss (43) (81) (356)
Operating loss (1,628) (1,378) (3,193)
Finance cost (6) - -
Loss before tax (1,634) (1,378) (3,193)
Income tax (1) - (5)
Loss for the period attributable to equity owners (1,635) (1,378) (3,198)
Other comprehensive income
Exchange gain/(loss) on translating foreign operations 146 (84) (45)
Total comprehensive loss attributable to equity owners (1,489) (1,462) (3,243)
Loss per share (cents) 4 (0.16) (0.15) (0.34)
Condensed Consolidated Statement of Financial Position at 30 June 2023
US$'000 30 June 2023 30 June 2022 31 Dec 2022
Notes (Unaudited) (Unaudited) (Audited)
Non-current assets
Intangible assets 5 19,239 16,489 18,607
Property, plant and equipment 38 39 43
Total non-current assets 19,277 18,650
16,528
Current assets
Trade and other receivables 1,304 1,126 1,181
Cash and cash equivalents 4,179 4,535 6,670
Total current assets 5,483 5,661 7,851
Total assets 24,760 22,189 26,501
Current liabilities
Trade and other payables (351) (1,005) (1,032)
Total current liabilities (351) (1,005) (1,032)
Net assets 24,409 21,184 25,469
Shareholders equity attributable to equity owners
Share capital 35,145 29,025 34,733
Share-based payment reserve 2,427 2,163 2,470
Reverse acquisition reserve 2,234 2,234 2,234
Retained earnings (15,211) (11,867) (13,636)
Translation reserve (186) (371) (332)
Total equity 24,409 21,184 25,469
Condensed Consolidated Statement of Changes in Equity for the six months ended 30 June 2023
US$'000 Share Share-based payment reserve Reverse acquisition reserve Retained earnings Translation reserve Total equity
Capital
Balance at 1 January 2022 28,993 2,113 2,234 (10,489) (287) 22,564
Loss for the period - - - (1,378) - (1,378)
Other comprehensive loss:
FX on translating foreign operations - - - - (84) (84)
Total comprehensive loss - - - (1,378) (84) (1,462)
Fair value of share options - 53 - - - 53
Share options and warrants exercised 3 (3) - - - -
Issue of shares for cash 29 - - - - 29
Balance at 30 June 2022 29,025 2,163 2,234 (11,867) (371) 21,184
Balance at 1 January 2022 28,993 2,113 2,234 (10,489) (287) 22,564
Loss for the year - - - (3,198) - (3,198)
Other comprehensive loss:
FX on translating foreign operations - - - - (45) (45)
Total comprehensive income - - - (3,198) (45) (3,243)
Fair value of share options - 256 - - - 256
Share issued to settle obligations 25 - - - - 25
Share issued for cash 6,106 - - - - 6,106
Cost of issuing shares - cash (267) - - - - (267)
Cost of issuing shares - warrants (283) 283 - - - -
Options exercised for cash 28 - - - - 28
Options exercised cashless 131 (131) - - - -
Transfer for options expired in 2021 - (51) - 51 - -
Balance at 31 December 2022 34,733 2,470 2,234 (13,636) (332) 25,469
Balance at 1 January 2023 34,733 2,470 2,234 (13,636) (332) 25,469
Loss for the period - - - (1,635) - (1,635)
Other comprehensive gain:
FX on translating foreign operations - - - - 146 146
Total comprehensive loss - - - (1,635) 146 (1,489)
Fair value of share options - 206 - - - 206
Options exercised for cash 225 (62) - 60 - 223
Options exercised cashless 187 (187) - - - -
Balance at 30 June 2023 35,145 2,427 2,234 (15,211) (186) 24,409
Condensed Consolidated Statement of Cash Flows for the six month period ended 30 June 2023
6 months to 6 months to 12 months to
30 June 2023 30 June 2022 31 Dec 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Cash flows from operating activities
Loss before tax (1,634) (1,378) (3,193)
Adjustments:
Foreign exchange 43 81 (205)
Taxation (1) - (5)
Share-based payment 199 53 256
Directors' remuneration settled in shares - - 25
Depreciation 5 2 (2)
Changes in working capital:
Increase in trade and other receivables (123) (355) (410)
Decrease in trade and other payables (681) (821) (803)
Net cash flows used in operating activities (2,192) (2,418) (4,337)
Cash flows from investing activities
Exploration expenditure (520) (2,934) (5,052)
Net cash flows used in investing activities (520) (2,934) (5,052)
Cash flows from financing activities
Proceeds from issuing shares and warrants - - 6,106
Cost of issuing shares - - (267)
Proceeds from exercise of share options & warrants 230 29 28
Net cash flows generated from financing activities 230 29 5,867
Decrease in cash and cash equivalents (2,482) (5,323) (3,522)
Cash and cash equivalents at beginning of period 6,670 10,032 10,032
Foreign exchange on cash and cash equivalents (9) (174) 160
Cash and cash equivalents at end of period 4,179 4,535 6,670
Notes to the Condensed Consolidated Financial Statements for the six months ended 30 June 2023
1. General information
Emmerson PLC (the "Company") is a company incorporated and domiciled in the
Isle of Man, whose shares were admitted to the Standard Listing segment of the
Main market of the London Stock Exchange on 15 February 2017. On 27 April
2021, the Ordinary Shares of the Company were admitted to trading on AIM and
the listing of the Company's ordinary shares on the Official List and their
trading on the Main Market were cancelled.
The principal activity of the Company and its subsidiaries (together "the
Group") is the exploration, development and exploitation of a potash
development project in Morocco.
2. Basis of preparation
2.1 General
The Condensed Consolidated Financial Statements have been prepared in
accordance with the valuation and recognition principles of UK-adopted
International Accounting Standards. The Condensed Consolidated Financial
Statements for the six months ended 30 June 2023 are unaudited and have not
been reviewed by the Group's auditor, and do not include all of the
information required for full annual financial statements.
They should be read in conjunction with the Company's annual financial
statements for the year ended 31 December 2022. The principal accounting
policies applied in the preparation of the Condensed Consolidated Financial
Statements are unchanged from those disclosed in those statements. These
policies have been consistently applied to each of the periods presented.
The financial information of the Group is presented in US Dollars, which is
also the functional currency of the parent Company and has been prepared under
the historical cost convention. The individual financial statements of each of
the Company's wholly owned subsidiaries are prepared in the currency of the
primary economic environment in which it operates (its functional currency).
2.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company, Moroccan Salts Limited, Moroccan Salts Limited's subsidiaries (the
"MSL Group") and Khemisset UK Ltd ("KUK"). KUK, a wholly-owned subsidiary of
the Company, was incorporated in England and Wales under the Companies Act
2006 on 8 February 2023.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over
the investee.
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and profits and
losses resulting from intra-group transactions that are recognised in assets,
are eliminated in full.
All the Group's companies have 31 December as their year-end. Consolidated
financial statements are prepared using uniform accounting policies for like
transactions.
2.3 Functional and presentational currency
The financial information of the Group is presented in US Dollars, which is also the functional currency of the parent Company, and has been prepared under the historical cost convention. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).
2.4 Going concern
The Group's cash position at the date of this report is US$3.5 million. This
amount is sufficient to cover all committed expenditures for the twelve
months. Additional expenditures related to the development of the Khemisset
Project which are not committed and would not be covered by cash reserves
would need to be financed by fundraising in the future, however these
expenditures are discretionary, and the Directors are confident that any funds
could be raised from existing and new shareholders for such activities, which
would be value accretive to shareholders. Accordingly, the Directors have
adopted the going concern basis in preparing the Interim Financial Statements.
2.5 Segment reporting and cyclicality
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that
are subject to risks and returns that are different from those of segments
operating in other economic environments.
The Directors consider the Group is engaged in a single segment of business
being the exploration activity of potash in one geographical area, being the
Khemisset Project in Morocco.
The interim results for the six months ended 30 June 2023 are not necessarily
indicative of the results to be expected for the full year ending 31 December
2023. Due to the nature of the entity, the operations are not affected by
seasonal variations at this stage.
3. Administrative fee and other expenses
US$'000 6 months to 6 months to 12 months to
30 Jun 2023 30 Jun 2022 31 Dec 2022
(Unaudited) (Unaudited) (Audited)
Directors' fees 333 292 601
Travel and accommodation 35 61 99
Auditors' remuneration 32 34 48
Employment costs 404 298 627
Professional and consultancy fees 361 559 715
Other expenses 221 - 491
Total Administrative Expenses 1,386 1,244 2,581
4. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
US$'000 6 months to 6 months to 12 months to
30 Jun 2023 30 Jun 2022 31 Dec 2022
(Unaudited) (Unaudited) (Audited)
Earnings
Loss from continuing operations for the period attributable to the equity (1,635) (1,378) (3,198)
holders of the Company
Number of shares
Weighted average number of ordinary shares for the purpose of basic and
diluted earnings per share
1,016,540,028 915,425,829 939,716,598
Basic and diluted loss per share 0.16 cents 0.15 cents 0.34 cents
5. Intangible assets
The intangible assets consist of capitalised exploration and evaluation
expenditure, including the cost of acquiring the mining license and research
permits held by the Company's subsidiaries.
30 Jun 2023 30 Jun 2022 31 Dec 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Cost:
At the beginning of the period 18,607 13,555 13,555
Additions 520 2,934 5,052
Exchange differences 112 - -
As at end of period 19,239 16,489 18,607
6. Related party transactions
Directors' consultancy fees
Robert Wrixon is a Director of the Company and provided consulting services to
the Company. During the period, Robert Wrixon received fees of US$12k (year to
31 December 2022: US$71K). The amount outstanding as at period-end was US$ nil
(31 December 2022: US$ nil).
Hayden Locke is a Director of the Company and is a director of Benson Capital
Limited, which previously provided consulting services to the Company. During
the period, Benson Capital Limited received total fees of US$ nil (year to 31
December 2022: US$95k). The amount outstanding as at period end was US$ nil
(31 December 2022: US$9K).
7. Post-balance sheet events
Moroccan earthquake
On Friday 8 September 2023, a magnitude 6.8 earthquake struck Morocco. The
epicentre was located in the High Atlas mountains, approximately 70km south of
Marrakech. Emmerson's project and offices are located some distance away, and
were not affected directly.
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