REG - Keras Resources PLC - Interim Results
26/09/2024 07:00
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RNS Number : 7066F Keras Resources PLC 26 September 2024
Keras Resources plc / Index: AIM / Epic: KRS / Sector: Mining
26 September 2024
Keras Resources plc ('Keras' or the 'Company')
Interim Results
Keras Resources plc (AIM: KRS) announces its unaudited half year results for
the six months ending 30 June 2024.
Overview
· Conclusion of PhoSul Utah LLC joint venture ("Phosul JV"), the
acquisition of the property in Sutherland, 8 miles north of the town of Delta,
Utah ("Delta Facility") on 22 January 2024 and the transfer and construction
of all processing infrastructure from Spanish Fork to Delta;
· New integrated processing facility cold commissioned on 3 June
2024 and hot commissioning completed on 28 June 2024;
· Loss increased from £255,000 to £436,000 largely due to
increased non-capital items related to the move to the Delta Facility and the
exclusion of the extra-ordinary items in the comparable period in 2023;
· 28% increase in sales of 4,106 tons compared to period ended 30
June of 2023 of 3,190 tons;
· 2024 mining season has commenced with an estimated 7,500t to be
mined for the season;
· Long term fundamentals of the organic fertiliser marker remain
robust; and
· Move to produce PhoSul®, a direct application product in
addition to the existing dry rock phosphate fertiliser blend products
underpins the Company's trajectory to becoming North America's premier organic
phosphate producer.
Graham Stacey, Keras Chief Executive Officer, commented, "2024 has been a
transformative year for the Company with the move to the Delta Facility, the
Phosul JV and the strategic diversification of our product range to ensure we
are able to produce into the robust North American organic fertiliser market
with a direct application granular product. For the rest of the year,
operationally our focus will shift from infrastructure development to
commercial production growth and from a product development perspective we
will now focus on liquid organic product(s) with higher phosphate
availability, building on our research carried out in 2023."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under Article 7 of the Market
Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the
domestic law of the United Kingdom by virtue of the European
Union (Withdrawal) Act 2018 (as amended). Upon the publication of this
announcement via the Regulatory Information Service, this inside information
is now considered to be in the public domain.
**ENDS**
For further information please visit www.kerasplc.com
(http://www.kerasplc.com/) , follow us on Twitter @kerasplc or contact the
following:
Graham Stacey Keras Resources plc info@kerasplc.com
Nominated Adviser & Joint Broker SP Angel Corporate Finance LLP +44 (0) 20 3470 0470
Ewan Leggat / Caroline Rowe
Joint Broker Shard Capital Partners LLP +44 (0) 207 186 9900
Damon Heath / Erik Woolgar
CHAIRMAN’S REVIEW
I am pleased to provide an update on our progress since the last report and to
set out our outlook for the business going forward. The first half of 2024 has
been transformative for the Company with the conclusion of the PhoSul Utah LLC
joint venture ("Phosul JV"), the acquisition of the property in Sutherland, 8
miles north of the town of Delta, Utah ("Delta Facility") on 22 January 2024
and the transfer of all our processing infrastructure from Spanish Fork to
Delta.
The move to Delta has resulted in the Company running the business from a
stand alone, wholly owned property which has the under roof space to house the
newly constructed Integrated Granulator Plant ("Granulator Plant") and all
ancillary equipment, feed material and processed product. Prior to this move
the Company rented property in Spanish Fork which was subject to urban
encroachment and limited processing to day time operations. The Delta
Facility does not have such limitations and when at full production the
Company will run a 24 hour, three shift operation.
Underpinning the move to Delta, the Phosul JV agreement comprises a five year
50:50 joint venture between the Company's wholly owned subsidiary, Falcon Isle
Resources Corp ("FIR") and PhoSul LLC ("PhoSul"), a specialised organic soil
enhancement fertilizer company with granulator operations in Idaho, United
States ("US"). PhoSul and FIR have jointly funded the construction and
commissioning of the Granulator Plant, which will produce a PhoSul® granulate
comprising 80% of FIR's high grade organic rock phosphate from its Diamond
Creek mine. PhoSul® is currently being produced at the PhoSul LLC's
processing facility in Sugar City, Idaho. Current demand for the product
outweighs PhoSul's Idaho processing capacity so the JV's product will be
delivering into an established market with significant scope for growth in the
south western states. I firmly believe this transaction will prove to be one
of the key inflection points in the Company's trajectory to becoming the
premier, high grade, organic phosphate producer in North America.
Falcon Isle Resources Corp ("Falcon Isle")
Falcon Isle owns the fully permitted Diamond Creek phosphate mine ("Diamond
Creek") located on an 840-acre Federal Lease located approximately 75 miles
north-east of the recently acquired Delta Facility located in the farming town
of Sutherland, 8 miles north of the town of Delta, Utah. Historically Falcon
Isle produced dry, sized phosphate rock products for the North American
organic fertiliser market - with the Phosul JV now concluded and in operation,
the Company can now produce into the granulator market with the PhoSul®
formula as a direct application product rather than being a component of a
blended fertiliser.
On 28 June 2024 the Company announced that hot commissioning of the Granulator
Plant had commenced. Given the scale of what was required to transition from
an outsourced production and ownership model operating from three rental
facilities to the Company's wholly owned, fully integrated production facility
at Delta in just five months has been an outstanding achievement by the
project team as well as the Company's supportive funding partners.
FIR continues to produce organically certified 10 mesh and 50 mesh dry sized
products with total sales for H1 2024 of 4,106 tons, a 28% increase relative
to the 3,190 tons sold during the comparable period in 2023, and demonstrates
evidence of the increased traction that the Company's high grade certified
products are attracting in the organic market. It's key to note that at full
production, the JV is expected to increase FIR's quarterly sales of 50 mesh by
approximately 2,280 tons per quarter (a further 115% increase on the Q1 2024
sales -i.e. traditional sales plus sales to the JV), with 100% of the revenue
from 50 mesh sales to the JV attributable to FIR while also sharing 50% in of
the profit from the PhoSul® product produced from this material.
In addition our mining season at Diamond Creek, which takes place during the
summer season from May to November, is now well under way. This is expected
to be complete in late November and will provide sufficient feed material for
both Falcon Isle and the JV's needs until the 2025 mining season commences.
Nayéga Manganese Mine / Togo
Following the cooperation agreement signed with the Republic of Togo (the
"State") on 17 May 2023 ("Agreement") related to the Nayéga Manganese mine
("Nayéga") in Northern Togo, the Company advised, on 9 May 2024 that
activities have recommenced at Nayéga and the State, through its 100% owned
investment company Société Togolaise de Manganèse ("STM").
As per the 2023 Agreement, Keras has advisory and brokerage agreements with
the State where the Company will be paid an advisory fee of 1.5% of gross
revenue generated from the Nayéga mine for the provision of advisory services
for 3 years, and 6.0% of gross revenue generated from the Nayéga mine for the
provision of brokerage services for the lesser of 3.5 years or 900,000 tonnes
of beneficiated manganese ore produced and sold from Nayéga.
The Company continues to keep in close contact with the Togo Ministry of Mines
in its advisory role it agreed with the State in May 2023 and we look forward
to updating shareholders on progress in the near future.
Financial review
The results for the 6 months ended 30 June 2024 show a loss of £436,000
compared to loss of £255,000 in the six-month period ended 30 June 2023.
The increased loss was largely due to costs related to the transport of
inventory and other non-capital items to the Delta Facility and the exclusion
of extra-ordinary items (sale of intellectual property) in the comparable
period in 2023.
In January 2024 and May 2024 the Company issued convertible loans of £300,000
(at a conversion price of £0.04) and £597,805 (at a conversion price
£0.0275) respectively. On the same dates Falcon Isle issued Promissory
Notes of $350,000 (at a 7% per annum interest rate) and £597,805 (at an 8%
per annum interest rate) respectively.
As part of the May capital raise, Graham Stacey and I capitalised US$100,000
(GBP78,401) of outstanding fees each due from the Company on the same basis
(50% in the form of Convertible Loans and 50% in the form of Promissory
Notes).
The proceeds of the January funding were used to acquire the 8.4-acre Delta
Facility, now the hub of the US operations and the proceeds of the May funding
were used to pay the third tranche of US$800,000 of the cost of acquiring the
former minority interest in Falcon Isle plus $100,000 of the final severance
payment payable to the previous CEO of Falcon Isle, and for general working
capital.
The restructuring of the Company's short-term liabilities reduced the impact
of a pure equity raise and ensures that the Company can meet its current
obligations without negatively impacting the long-term growth profile at the
high-grade organic phosphate business in Utah, USA.
Outlook
The Company believes that the move (and the associated costs) to Delta are key
to the long-term success of the business, we remain very positive about both
the future of Diamond Creek and the fertiliser market macro-economic
conditions that underpin its future. We are mining an essential resource
that can create value, be part of the greener economy and contribute to a more
sustainable future. As a mining company we remain ever conscious of our
obligations and commitments in line with best environmental, social and
governance ("ESG") practice and will continue to take the initiative within
this area. Our JV with PhoSul LLC to produce granulated PhoSul® as a final
product rather than relatively lower value fertilizer blend constituents which
we have produced to date has further enhanced our position as an organic
producer marketing directly to organic farmers.
I would like to thank our shareholders for their ongoing support and I look
forward updating all stakeholders as we continue to build Keras and Diamond
Creek into the premier organic phosphate producer in the US.
Russell Lamming
Chairman
26 September 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 months to 30-Jun-24 6 months to 30-Jun-23 12 months to 31-Dec-23 (audited)
(unaudited) (unaudited) £'000
£'000 £'000
Revenue 556 397 916
Cost of production (420) (44) (386)
Gross profit 136 353 530
Profit on sale of intellectual property relating to Togo - 184 121
Loss on disposal of subsidiary (76)
Administrative and exploration expenses (492) (686) (842)
Loss from operating activities (356) (149) (267)
Finance income - - -
Finance costs (80) (106) (173)
Net finance costs (80) (106) (173)
Loss before taxation (436) (255) (440)
Taxation - - (6)
Loss for the period (436) (255) (446)
Other comprehensive income - items that may be subsequently reclassified to
profit or loss
Exchange translation on foreign operations 82 29 (245)
Total comprehensive loss for the period (354) (226) (691)
Loss attributable to:
Owners of the Company (436) (255) (475)
Non-controlling interests - - 29
Loss for the period (436) (255) (446)
Total comprehensive loss attributable to:
Owners of the Company (354) (226) (720)
Non-controlling interests - - 29
Total comprehensive loss for the period (354) (226) (691)
Earnings per share
Basic and diluted loss per share (pence) (0.54) (0.28) (0.863)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 7 3,425 3,418 3,404
Property, plant and equipment 8 1,244 372 346
Right of use asset 9 - 59 -
Investment in joint venture 32 - -
4,701 3,849 3750
Current assets
Inventory 10 468 660 621
Trade and other receivables 11 176 1,612 171
Cash and cash equivalents 1,168 39 185
1,813 2,311 977
Total assets 6,514 6,160 4,727
Equity
Equity attributable to owners of the Company
Share capital 12 801 797 801
Share premium 12 5,849 5,838 5,849
Other reserves 356 311 (2)
Retained deficit (3,901) (3,245) (3,465)
3,105 3,701 3,183
Non-controlling interests - (146) -
Total equity 3,105 3,555 3,183
Liabilities
Current liabilities
Trade and other payables 13 1,327 1,478 1,013
Lease liabilities - current 9 - 61 -
1,327 1,539 1,013
Non-current liabilities
Trade and other payables 13 566 1,066 531
Loans and borrowings 14 1,516 - -
2,082 1,066 531
Total liabilities 3,409 2,605 1,544
Total equity and liabilities 6,514 6,160 4,727
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share option/
warrant reserve Non-controlling interest
Share capital £'000 Share premium £'000 Exchange reserve Convertible loan notes reserve Retained deficits £'000
£'000 £'000 £'000 £'000 Total £'000 Total equity
£'000
Balance at 1 January 2024 (unaudited) 801 5,849 104 (106) - (3,465) 3,183 - 3,183
Loss for the period - - - - - (436) (436) - (436)
Other comprehensive income - - - 82 - - 82 - 82
Total comprehensive loss for the period - - 82 - (436) (354) - (354)
Issue of convertible loan notes - - - - 271 - 271 - 271
Share based payment transactions - - 5 - - - 5 - 5
Transactions with owners, recognised directly in equity - - 5 - 271 - 276 - 276
Balance at 30 June 2024 (unaudited) 801 5,849 109 (24) 271 (3,901) 2,834 - 2,834
Share option/
warrant reserve
Share capital Share premium £'000 Exchange reserve Retained Non-controlling interests Total
£'000 £'000 £'000 deficit Total £'000 equity
£'000 £'000 £'000
Balance at 1 January 2023 (unaudited) 797 5,838 102 180 (2,990) 3,927 (146) 3,781
Loss for the period - - - - (475) (475) 29 (446)
Other comprehensive income - - - (245) - (245) - (245)
Total comprehensive income for the period - - - (245) (475) (720) 29 (691)
Issue of ordinary shares 4 11 - - - 15 - 15
Share based payment transactions - - 2 - - 2 - 2
Disposal of subsidiary - - - (41) - (41) 117 76
Transactions with owners, recognised directly in equity 4 11 2 (41) - (24) 117 93
Balance at 31 December 2023 (unaudited) 801 5,849 104 (106) (3,465) 3,183 - 3,183
Share option/
warrant reserve Non-
Share capital Share premium £'000 Exchange reserve Retained deficit controlling interests Total
£'000 £'000 £'000 £'000 Total £'000 equity
£'000 £'000
Balance at 1 January 2023 (audited) 797 5,838 102 180 (2,990) 3,927 (146) 3,781
Loss for the period - - - - (255) (255) - (255)
Total other comprehensive income - - - 29 - 29 - 29
Total comprehensive loss for the period - - - 29 (255) (226) - (226)
Issue of ordinary shares - - - - - - - -
Share option expense - - - - - - - -
Acquisition of NCI without a change in control (note 15)
- - - - - - - -
Share based payment transactions - - - - - - - -
Transactions with owners, recognised directly in equity - - - - - - - -
Balance at 30 June 2023 797 5,838 102 209 (3,245) 3,701 (146) 3,555
(unaudited)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
30-Jun-24 30-Jun-23 31 -Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flows from operating activities
Loss from operating activities (436) (255) (446)
Adjustments for:
Depreciation and amortisation 2 61 139
Gain on sale of discontinued operations - - (121)
Loss on disposal of subsidiary - - 76
Impairment of assets held for sale - (184) -
Finance costs recognised 80 106 173
Equity-settled share-based payment transactions 5 - 2
(349) (272) (177)
Changes in:
- inventories 153 8 9
- trade and other receivables 5 (8) 10
- trade and other payables 271 174 (392)
Cash generating by/(used in) operating activities 80 (98) (550)
Interest paid (15) (9) (17)
Net cash by/(used in) operating activities 65 (107) (567)
Cash flows from investing activities
Acquisition of property, plant and equipment (897) - -
Acquisition on other investments (32) - -
Proceeds on disposal of discontinued operations - 1,279
Consideration for purchase of minority interest in subsidiary - - (272)
Net cash used in investing activities (929) - 1,007
Cash flows from financing activities
Net proceeds from issue of share capital - - 15
Issue of promissory and convertible loan notes 1,787 - -
Repayment of loans - - (357)
Payment of lease obligations - (61) (126)
Net cash flows from financing activities 1,787 (61) (468)
Net (decrease)/increase in cash and cash equivalents 923 (168) (28)
Cash and cash equivalents at beginning of period 185 207 207
Effect of foreign exchange rate changes 60 - 6
Cash and cash equivalents at end of period 1,168 39 185
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Reporting entity
Keras Resources plc (the "Company") is a company domiciled in England and
Wales. The unaudited condensed consolidated interim financial statements of
the Company as at and for the six months ended 30 June 2024 comprise the
Company and its subsidiaries (together referred to as the "Group") and the
Group's interests in associates and jointly controlled entities. The Group
currently operates as an explorer and developer.
2. Basis of preparation
(a) Statement of compliance
This condensed consolidated interim financial report has been prepared in
accordance with IAS 34 Interim Financial Reporting. Selected explanatory notes
are included to explain events and transactions that are significant to an
understanding of the changes in financial performance and position of the
Group since the last consolidated financial statements as at and for the
period ended 31 December 2023. This condensed consolidated interim financial
report does not include all the information required for full annual financial
statements prepared in accordance with International Financial Reporting
Standards.
This condensed consolidated interim financial report was approved by the Board
of Directors on 25 September 2024.
(b) Judgements and estimates
Preparing the interim financial report requires Management to make judgements,
estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing this condensed consolidated interim financial report, significant
judgements made by Management in applying the Group's accounting policies and
key sources of estimation uncertainty were the same as those that applied to
the audited consolidated financial statements as at and for the period ended
31 December 2023.
3. Significant accounting policies
The accounting policies applied by the Group in this condensed consolidated
interim financial report are the same as those applied by the Group in its
audited consolidated financial statements as at and for the period ended 31
December 2023.
4. Financial instruments
Financial risk management
The Group's financial risk management objectives and policies are consistent
with those disclosed in the audited consolidated financial statements as at
and for the period ended 31 December 2023.
5. Segment information
The Group considers that it operates in two distinct business areas, manganese
mining in West Africa and phosphate mining in Utah, USA. These business
areas form the basis of the Group's operating segments. For each segment,
the Group's CEO (the chief operating decision maker) reviews internal
management reports on at least a quarterly basis.
Operations ceased in the manganese segment of the Group during prior year
ended 31 December 2023. This was a result of the sale of the intellectual
property relating to this geographic region. As a result, an amount of
£1,412,077 was recognised within other receivables reflecting the amounts due
on the sale and an amount of £184,653 recognised as a gain on disposal within
operating profit.
Other operations relate to the group's administrative functions conducted at
its head office and by its intermediate holding company together with
consolidation adjustments.
Information regarding the results of each reportable segment is included
below. Performance is measured based on segment profit before tax, as
included in the internal management reports that are reviewed by the Group's
CEO. Segment results are used to measure performance as Management believes
such information is the most relevant in evaluating the performance of certain
segments relative to other entities that operate within the exploration
industry.
Information about reportable segments
For the six months ended 30 June 2024 (unaudited)
Other operations
Manganese £'000 Phosphate £'000 Total
£'000 £'000
External revenue - 556 - 556
Profit/(loss) before tax - (53) (383) (436)
Segment assets - 5,444 - 5,444
For the six months ended 30 June 2023 (unaudited)
Other operations
Manganese Phosphate £'000 Total
£'000 £'000 £'000
External revenue - 397 - 397
Profit/(loss) before tax - 141 (396) (255)
Segment assets - 4,689 1,471 6,160
5. Segment information (continued)
For the twelve months ended 31 December 2023 (audited)
Other operations
Manganese Phosphate £'000 Total
£'000 £'000 £'000
External revenue - 916 - 916
Profit/(loss) before tax 29 (3) (466) (440)
Segment assets - 4,646 81 4,727
Information about geographical segments:
For the six months ended 30 June 2024 (unaudited)
West US Other operations£'000 Total
Africa
£'000 £'000 £'000
External revenue - 556 - 556
Profit/(loss) before tax - (53) (383) (436)
Segment assets - 5,444 - 5,444
For the six months ended 30 June 2023 (unaudited)
West US Other operations£'000 Total
Africa
£'000 £'000 £'000
External revenue - 397 - 397
Profit/(loss) before tax - 141 (396) (255)
Segment assets - 4,689 1,471 6,190
5 Segment information (continued)
Information about geographical segments(continued)
For the 12 months ended 31 December 2023 (audited)
West US Other operations Total
Africa £'000
£'000 £'000 £'000
External revenue - 916 - 916
Profit/(loss) before tax 29 (3) (466) (440)
Segment assets - 4,646 82 4,728
6. Seasonality of operations
Mining at Falcon Isle takes place between May and November due to winter snow
cover at the mine site and on the approach road. The fertiliser produced is
used primarily during the planting and growing seasons, but sales by Falcon
Isle take place throughout the year.
7. Intangible assets
30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cost
Balance at beginning of period 3,464 3,613 3,613
Effect of movement in exchange rates 21 (145) (149)
Balance at end of period 3,806 3,468 3,464
Impairment losses
Balance at beginning of period 60 55 55
Amortisation - - 8
Effect of movement in exchange rates - (5) (3)
Balance at end of period 60 50 60
Carrying amounts
Balance at end of period 3,425 3,418 3,404
Balance at beginning of period 3,404 3,558 3,558
Intangible assets comprise the fair value of prospecting and exploration
rights.
8. Property, plant and equipment
Acquisitions and disposals
There were additions of £897,000 during the six months ended 30 June 2024. No
assets were acquired or disposed of in the comparative period.
9. Right of use asset
30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Balance at beginning of period - 121 -
Additions - - -
Depreciation - (59) -
Effects of movements in exchange rates - (3) -
- 59 -
Lease liability
£'000 £'000 £'000
Balance at beginning of period - 126 126
Principal reduction - (61) (126)
Finance cost - 2 9
Effects of movements in exchange rates - (6) (9)
- 61 -
Current portion - 61 -
Non-current portion - - -
- 61 -
10. Inventories
30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Phosphate 468 660 621
468 660 621
11. Trade and other receivables
30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Trade receivables 70 89 91
Other receivables 96 1,496 71
Prepayments 10 27 9
158 1,612 171
Trade receivables and other receivables are stated at their nominal values
less allowances for non-recoverability.
12. Share capital and reserves
Dividends
No dividends were declared or paid in the six months ended 30 June 2024 (six
months ended 30 June 2023: £nil, twelve months ended 31 December 2023:
£nil).
Convertible loan note reserve
The reserve for convertible loan notes comprises the amount allocated to the
equity component for the convertible notes issued by the group in 2024.
13. Trade and other payables
Current 30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Trade payables 433 510 238
Accruals 23 92 176
Other payables 239 247 6
Deferred consideration 633 629 593
1,327 1,478 1,013
Non-current 30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Deferred consideration 566 1,066 531
566 1,066 531
There is no material difference between the fair value of trade and other
payables and their book value.
14. Loans and borrowings
Non-current 30-Jun-24 30-Jun-23 31-Dec-23
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Promissory notes, repayable 2028
$350,000 7% secured notes i 277 - -
$762,500 8% unsecured notes ii 603 - -
Convertible loan notes, repayable 2028
£300,000 7% notes iii 227 -
£597,500 4% notes iv 409 - -
1,516 - -
i. On 22 January 2024, a secured 4-year promissory note of
$350,000 (£276,850) was issued by Falcon Isle. The note carries 7% interest
and is repayable after 4 years. Falcon Isle has the right to repay it, without
penalty, after 2 years. Interest is payable annually.
ii. On 28 May 2024, unsecured 4-year promissory notes totalling
US$762,500 (£603,138) were issued by Falcon Isle. The notes carry 8% interest
and are repayable after 4 years. Falcon Isle has the right to repay them,
without penalty, after 2 years. Interest is payable annually.
iii. On 22 January 2024, a 4-year convertible loan of £300,000 was
issued by the Company. It carries interest at 7% per annum and is convertible
into ordinary shares of £0.01p at a conversion price of £0.04 per share. The
loan note may be converted at any time by notice given by the holder, interest
will be rolled up and included with the amount being converted or paid at the
end of the 4-year loan period if not converted. The equity portion of the loan
is computed as £73,542 using market discount rate of 15.71%, recorded within
statement of changes in equity. Notwithstanding this, if not converted the
loan note is repayable at its nominal value of £300,000 if not converted.
iv. On 28 May 2024, 4-year convertible loan notes totalling
£597,805 were issued by the Company. They carry interest at 4% per annum and
are convertible into ordinary shares of £0.01p at a conversation price of
£0.0275 per share. The loan notes may be converted at any time by notice
given by the holders; interest will be compounded annually and included with
the amount being converted or paid at the end of the 4-year loan period if not
converted. The equity portion of the loan is computed as £197,020 using
market discount rate of 15.71%, recorded within statement of changes in
equity. Notwithstanding this, if not converted the loan note is repayable at
its nominal value of £597,805 if not converted.
15. Acquisition of non-controlling interest in Falcon Isle
In March 2022, the Group agreed to acquire the then outstanding 49% equity
interest in Falcon Isle, together with loans totalling $1,816,527 made by the
vendor to Falcon Isle, for total consideration of $3.2 million payable in four
annual tranches of $800,000 commencing on 1 July 2022. The first two
tranches have been paid. The third tranche, due on 1 July 2024, has been paid
since 30 June 2024 and is treated as a current liability. The final tranche
has been treated as a non-current liability.
16. Related party transactions
With the exception of $650,000, all the subscriptions for Promissory Notes
($1,012,500) and Convertible Loan Notes (£897,805) as set out in Note 14 were
made by related parties. Each of Russell Lamming and Graham Stacey, directors
of the Company, subscribed $100,000, divided equally between Unsecured
Promissory Notes and 4% Convertible Loan Notes. The balance was subscribed by
Christopher Grosso, a substantial Shareholder, and the Diane H. Grosso Credit
Shelter Trust, an associated party of Christopher Grosso.
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