REG - Mercantile Ports&Log - Interim Results
30/09/2022 07:01
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RNS Number : 2544B Mercantile Ports & Logistics Ltd 30 September 2022
30 September 2022
Mercantile Ports & Logistics Limited
("MPL", the "Group" or the "Company")
Interim Results
Mercantile Ports & Logistics (AIM: MPL), which is operating and continuing
to develop a modern port and logistics facility in Navi Mumbai, Maharashtra,
India, announces its interim results for the period ended 30 June 2022.
Summary of key points during and post period:
· Group revenue of £1.91 million (June 2021: £0.85 million).
· Loss for 30 June 2022 £6.52 million (June 2021: £3.40 million)
· Management remains comfortable with market expectations
· Net asset value as at 30 June 2022 £97.86 million (June 2021: £91.25
million)
· Total assets of £154 million (June 2021: £148 million), a debt to
equity ratio of 0.47 (June 2021: 0.47) and cash of £2.01 million at 30 June
2022 (June 2021: £ 1.68 million).
Jeremy Warner Allen, Executive Chairman of MPL said, "2022 has seen the first
full nine months of uninterrupted operations at MPL's Karanja facility and our
business model has started to prove itself. So far this year we have handled
800,000 tons of cargo (2021 c.227,000 tonnage) through contracted agreements
and spot market demand which includes multiple commodities including coal,
steel, cement, olivine flux and project cargo. We are also busy with
negotiations with other prospective customers which are expected to boost the
top line of the Group."
Jay Mehta, CEO of MPL stated, "These financial results show an all-round
performance aligned to a clearer business strategy. The Group is expecting
further strong operational and financial performance in H2 2022, which is
extremely pleasing and does, I believe, show that our strategy is working."
Enquiries:
Mercantile Ports & Logistics Limited Jay Mehta
C/O SEC Newgate
+44 (0)203 757 6880
Cenkos Securities plc Stephen Keys
(Nomad and Broker) +44 (0)207 397 8900
SEC Newgate Isabelle Smurfit/ Elisabeth Cowell
(Financial PR) +44 (0)203 757 6880
mpl@secnewgate.co.uk (mailto:mpl@newgatecomms.com)
Chairman's Statement
2022 has seen the first full nine months of uninterrupted operations at MPL's
Karanja facility and our business model has started to prove itself. So far
this year we have handled 800,000 tons of cargo (2021 c.227,000 tons) through
contracted agreements and spot market demand and the cargo has been diverse
including multiple commodities including coal, steel, cement, olivine flux and
project cargo.
Having secured customers that wish to utilize our facilities for bulk cargoes
and products, management's focus has been, and continues to be on increasing
margins by providing additional volume and services to new and existing
customers. We are pleased to report that MPL has been successful in receiving
the necessary Government permissions to handle containers. This will allow our
facility at Karanja to receive containers directly from JNPT enabling
customers to avoid lengthy delays in transportation bottlenecks. Services will
include stuffing and de stuffing of containers, groupage and other logistical
operations. This is an important development for the company, and is in
accordance with our plans to begin to service a market, which is significantly
bigger than bulk cargo. We would expect to derive our first revenues from this
initiative over the next 6-8 months.
Revenues for H1 2022 were GBP 1.91 mn, versus GBP 0.85 mn for H1 2021, which
clearly demonstrate the operational momentum gained over the past 12 month
period. We expect such momentum and capacity utilization to continue to grow
through the rest of this year and beyond. MPL continues to work with the State
Government towards enhancing its rail connectivity. Whilst a rail terminal is
being constructed c. 3.5km from our port, management is in active discussions
with the authorities for support to extend a spur to our complex, which would
provide a very valuable service to our customers. The Federal Government has
initiated a new logistics policy and has announced the development of 8
Multimodal Logistics Parks (MMLP's) across the State in partnership with the
State Government. MPL believes that its strategic location, at Karanja, is
well suited for developing a profitable MMLP and is actively pursuing a
partnership with the State.
As part of MPL's marketing initiatives, Jay Mehta, CEO, was a speaker at a
recent conference on Coastal shipping which was attended by 500 delegates from
the port, shipping and logistics sectors. This has resulted in a number of new
business opportunities for our Karanja Facility. In addition, we have
strengthened our business development team, as we continue to see business
opportunities from contracted and spot customers as Karanja increasingly
becomes part of Mumbai's logistical infrastructure. India and its economy is
predicted to meet its growth expectations this year and remains one of the few
economies that should achieve this. This provides a good backdrop within
which our Karanja facility can operate. Looking forward to the final quarter
of 2022, our Port and logistic utilization will continue to increase, and
therefore we remain comfortable in meeting our revenue expectations for this
financial year, with the one proviso of commercial activity not being affected
by disruptions, which fall outside of management's control. Finally, on behalf
of the board, I should like to thank our staff, management, and customers for
their continuing hard work and support.
At the time of the Placing and Subscription in August 2021, and as set out in
the circular at the time, the Subscription by Hunch Ventures constituted a
related party transaction under the AIM Rules. It has been concluded that the
process set out in the Company's 2021 Annual Results and pursued to transfer
the funds to Guernsey constitutes a separate related party transaction. The
independent directors, having consulted with its Nominated Adviser, consider
that the terms of that transaction are fair and reasonable insofar as its
shareholders are concerned. The Company confirms that the Subscription monies
are now held in a bank account controlled by a Group company.
Jeremy Warner Allan, Chairman
Mercantile Ports & Logistics Limited
29 September 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2022
Note
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 Dec 2021
£000 £000 £000
CONTINUING OPERATIONS
Revenue 1,913 850 1,801
Operating costs (606) (84) (307)
Administrative expenses (4,521) (2,171) (8,373)
Operating loss before depreciation 2 (228) (324) (3,747)
2
Depreciation (2,986) (1,081) (3,132)
OPERATING LOSS (3,214) (1,405) (6,879)
Finance income 22 29 40
Gains from extinguishment of debt -- -- 5,408
Finance cost (3,323) (2,031) (4,576)
NET FINANCING COST (3,301) (2,002) 872
LOSS BEFORE TAX (6,515) (3,407) (6,007)
Tax expense for the period (25) - (14)
LOSS FOR THE PERIOD (6,540) (3,407) (6,021)
Loss for the period attributable to:
Non-controlling interest (13) (7) (5)
Owners of the parent (6,527) (3,400) (6,016)
(6,540) (3,407) (6,021)
Loss for the period / year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
Re-measurement of net defined benefit liability - - 8
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations 5 4,190 (3,018) (673)
Other comprehensive loss for the period / year 4,190 (3,018) (665)
Total comprehensive loss for the period / year (2,350) (6,425) (6,686)
Total comprehensive loss for the period / year attributable to:
Non-controlling interest (13) (7) (5)
Owners of the parent (2,337) (6,418) (6,681)
(2,350) (6,425) (6,686)
Loss per share (consolidated):
Basic & Diluted, for the period attributable to ordinary equity holders (£0.157p) (£0.002p) (£0.231p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Note Period ended Period ended Year ended
30 June 2022 30 June 2021 31 Dec 2021
£000 £000 £000
Assets
Property, plant and equipment 8 135,332 129,145 131,344
Intangible asset 20 4 4
Total non-current assets 135,352 129,149 131,348
Trade and other receivables 9 16,380 17,605 18,484
Cash and cash equivalents 2,010 1,679 4,783
Total current assets 18,390 19,284 23,267
Total assets 153,742 148,433 154,615
Liabilities
Non-current
Employee benefit obligations 3 7 43
Borrowings 7 42,097 42,306 39,932
Lease liabilities payables 1,569 1,580 1,562
Non-current liabilities 43,669 43,893 41,537
Current
Employee benefit obligations 440 330 449
Borrowings 7 1,865 447 1,037
Current tax liabilities 404 403 415
Leases Liabilities payable 798 767 795
Trade and other payables 8,705 11,345 10,171
Current liabilities 12,212 13,292 12,867
Total liabilities 55,881 57,185 54,404
Net assets 97,861 91,248 100,211
Equity
Share capital and share premium 143,851 134,627 143,851
Retained earnings (22,929) (13,794) (16,402)
Translation reserve (23,047) (29,582) (27,237)
Equity attributable to owners of parent 97,875 91,251 100,212
Non-controlling interest (14) (3) (1)
Total equity and liabilities 97,861 91,248 100,211
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2022
Note 6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 Dec 2021
£000 £000 £000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax for the period / year (6,515) (3,407) (6,007)
Non cash flow adjustments 6 6,284 3,020 5,149
(231) (387) (858)
Net cash generated/used from operating activities
Net changes in working capital 6 810 (489) (4,669)
Net cash from operating activities 579 (876) (5,527)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (1,143) (1,082) (2,107)
Finance income 18 11 27
Net cash used in investing activities (1,125) (1,071) (2,080)
CASH FLOWS FROM FINANCING ACTIVITIES
From issue of additional shares - - 9,224
Proceeds from borrowing (net) - 992 984
Repayment of bank borrowing principal (63) (640) (641)
Interest paid on borrowing (2,009) (522) (810)
Repayment of leasing liabilities principal (net) (179) (53) (96)
Interest payment on leasing liabilities (9) (24) (131)
Net cash (used in) / generated from financing activities (2,260) (247) 8,530
(2,806) (2,194) 923
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of the period 4,783 3,895 3,895
Exchange differences on cash and cash equivalents 33 (22) (35)
Cash and cash equivalents, end of the period 2,010 1,679 4,783
Note :
1) The adjustments and working capital movements have been combined in the
above Statement of Cash Flows.
Consolidated Statement of Changes in Equity
for the PERIOD ended 30 JUNE 2022
Stated Translation Retained Other Non- controlling Interest Total
Capital Reserve Earnings Components of equity Equity
£000 £000 £000 £000 £000 £000
Balance at 1 January 2021 134,627 (26,564) (10,394) -- 4 97,673
Issue of share capital 10,102 -- -- -- -- 10,102
Share Issue cost (878) -- -- -- -- (878)
Transactions with owners 143,851 (26,564) (10,394) -- 4 106,897
Loss for the period/year -- -- (6,016) -- (5) (6,021)
Foreign currency translation differences for foreign operations -- (673) -- -- -- (673)
-- -- -- 8 -- 8
Re-measurement of net defined benefit pension liability
Re-measurement of net defined benefit pension liability transfer to retained -- -- 8 (8) -- --
earning
Total comprehensive income for the year -- (673) (6,008) -- (5) (6,686)
Balance at 31 December 2021 143,851 (27,237) (16,402) -- (1) 100,211
Balance at 1 January 2022 143,851 (27,237) (16,402) -- (1) 100,211
Issue of share capital -- -- -- -- -- --
Transactions with owners 143,851 (27,237) (16,402) -- (1) 100,211
Loss for the period -- -- (6,527) -- (13) (6,540)
Foreign currency translation differences for foreign operations -- 4,190 -- -- -- 4,190
Total comprehensive income for the period -- 4,190 (6,527) -- (13) (2,350)
Balance at 30 June 2022 143,851 (23,047) (22,929) -- (14) 97,861
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. Reporting entity
Mercantile Ports & Logistics Limited (the "Company") was incorporated in
Guernsey under the Companies (Guernsey) Law 2008 on 24 August 2010. The
condensed interim consolidated financial statements of the Company for the
period ended 30 June 2022 comprises the financial statement of the Company and
its subsidiaries (together referred to as the "Group"). The Company has been
established to develop, own and operate port and logistics facilities.
2. General information and basis of preparation
The condensed interim consolidated financial statements are for 6 months'
period ended 30 June 2022 and are not for full year accounts. The condensed
interim consolidated financial statements are prepared under AIM 18
guidelines. They have been prepared on the historical cost basis. They do not
include all of the information required in annual financial statements in
accordance with International Financial Reporting Standards ("IFRS") as issued
by EU. The condensed interim consolidated financial statements are neither
audited in accordance with International Standards on Auditing (UK) nor
subject to review as per International Standard on Review Engagements (ISRE)
2410.
The condensed interim consolidated financial statements are presented in Great
British Pounds Sterling (£), which is the functional currency of the parent
company. The preparation of the condensed interim consolidated financial
statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these
estimates.
In preparing these, condensed interim consolidated financial statements, the
significant judgements made by management applying the Group's accounting
policies and the key sources of estimation uncertainty are the same as those
applied in the annual IFRS financial statements. "The Company is confident of
its ability to raise further funds to meet cost overruns, project enhancements
or working capital requirements. The Company's financing effort to date is
considered sufficient to enable the Company to fund all aspects of its
operations. As a result, the condensed interim consolidated financial
statements have been prepared on a going concern basis."
The condensed interim consolidated financial statements have been approved for
issue by the Board of Directors on 27(th) September, 2022.
Operating Loss before depreciation
The above information is presented separately in the statement of
comprehensive income as a supplementary information. This information is a
primary measure used by the executive management and the Board to assess the
financial performance of the Group, as it provides a more comparable
assessment of the Group's year on year performance. It may also be a key
metric used by the investor community to assess the performance of our
year-on-year operations.
3. Significant accounting policies
The interim financial statements have been prepared in accordance with the
accounting policies adopted in the Group's last annual financial statements
for the year ended 31 December 2021. The accounting policies have been applied
consistently throughout the Group for the purposes of preparation of these
interim financial statements.
New standards, amendments and interpretations to existing standards are
effective from January 1, 2022
There are no accounting pronouncements, which have become effective from 1
January 2022 that have a significant impact on the Group's interim condensed
consolidated financial statements.
4. Going Concern
The Directors have considered the application of the going concern basis of
accounting and believe that, for the foreseeable future, the Group will have
adequate resources to meet its liabilities as they fall due.
In making this assessment, the Directors have considered the current and
projected cash balance, borrowing facilities available, and anticipated future
utilisation of available funds, the Company's ability to control the variable
costs, group's capital investment plans and the projected operating
performance of the business for the 12 months post the signing of these
financial statements.
The group had a cash balance of £2.01 million as at 30 June 2022, and an
additional line of unsecured credit from Hunch Ventures amounting to £4.5
million to mitigate funding risk as well as ensuring continuity in business.
The company will use the cash generated from operations to manage the
projected costs until September 2023 of £ 3.33 million.
Based on the above, after considering the past impact of COVID-19 on the
Group's future trading, the Directors believe that it remains appropriate to
continue to adopt the going concern in preparing the financial statements.
5. Comprehensive income
The comprehensive loss for the period is calculated after crediting a gain of
£ 4.19 million, which arises on the retranslation of foreign operations to
Great British Pounds Sterling (£), which is the functional currency of the
Company. (INR/GBP exchange rate at 30 June 2022 of 95.96, 31 December 2021:
100.30 and 30 June 2021: 102.95 are used).
6. Cash flow adjustments and changes in working capital
The following non-cash flow adjustments and adjustments for changes in
working capital made to profit before tax to arrive at operating cash flow:
Period ended Period ended Year ended
30 Jun 2022 30 Jun 2021 31 Dec 2021
£000 £000 £000
Adjustments and changes in working capital
Depreciation 2,986 1,081 3,132
Finance income (18) (12) (40)
Unrealized exchange (loss)/gain 3 (8) --
Finance cost 3,309 1,956 4,459
Re-measurement of net defined benefit liability - - (8)
Advance written off - - 3,000
Gain from extinguishment of debt - - (5,408)
Provision for Gratuity 4 3 14
Loss on sale of Car - - --
6,284 3,020 5,149
Change in trade and other payables 829 (23) (668)
Change in trade and other receivables (19) (466) (4,001)
810 (489) (4,669)
7. Loan facility
Karanja Terminal & Logistics Private Limited (KTLPL), the Indian
subsidiary was sanctioned a term loan of INR.480 crores (£46.63 million) by 4
Indian public sector banks and the loan agreement was executed on 28th
February, 2014.
There has been a One Time Restructuring (OTR) Proposal, initiated by the Group
seeking relief under the Covid-19 Pandemic stress on the financial position of
the company. The lenders sanctioned the proposal on 10 June 2021. Outstanding
balance as at 30 June 2022 are as follows:
Particular Amount in Amount in
INR Crore £ Million
a) Term loan outstanding 365.24 38.06
b) Funded Interest Term Loan (FITL)* 47.22 4.92
c) Guaranteed Emergency Credit Line (GECL)# 9.38 0.98
Total borrowing (a+b+c) 421.84 43.96
Current 17.90 1.87
Non-current 403.94 42.10
Balance as at 30 June, 2022 421.84 43.96
* The interest on principal term loan for the period from January 2021 to
February 2022 (14 months) has been converted to Funded Interest Term Loan
(FITL).
# In calendar year ended Dec 2021, company has availed a GECL loan from a
public sector bank, which carries interest @7.95% p.a.
The OTR sanctioned by the term lenders extends principal repayment by 2 years
(repayment to commence from quarter of December 2022). The rate of interest on
Term loan was reduced from 13.45% to 9.55% and FITL carries interest @ 10.55%.
Repayment of schedule of above outstanding loan based on OTR sanction are as
follow:
Payment falling due Repayment amount
INR in Crore GBP in Million
Within 1 year 20.01 2.09
1 to 5 year's 235.02 24.49
After 5 year's 209.45 21.83
Total *464.48 *48.41
* Loan repayment is stated at gross amount, excluding gain on debt
modification £4.52 million (INR.42.64 crore).
The rate of interest will be a floating rate linked to the Canara bank base
rate (7.40%) with an additional spread of 215 basis points. The present
composite rate of interest is 9.55%. Above borrowings are secured by the
hypothecation of the port facility and pledge of its shares as well as a
personal guarantee by the Nikhil Gandhi. The carrying amount of the above bank
borrowing considered as a reasonable approximation of the fair value.
8. Property, plant and equipment
As at 30 June 2022, the carrying amount of facility yet to be capitalized was
£ 25.93 million (30 June 2021: £ 81.14 million) and part of port facility
was capitalised on 01 October 2021 was £ 60.14 million. The amount of
borrowing costs capitalised during the six months ended 30 June 2022 was £
Nil million (31 December 2021: £0.85 million).
The group intends to optimize its operations on land parcel of 70 acres
proportionate cost for same has been capitalized till date. The balance
additional reclaimed land of c. 30 acres is ready for being made available for
use by future customers subject to customized modifications including ground
strength requirement, surfacing etc.
The Group currently has excess surcharge material to the tune of approx. c.10
to 15 acres in possession, in case need arises for further reclamation the
same will first be utilized to serve additional demand for space by customers.
During the 6 months ended additions to property plant and equipment are £1.13
million and remaining impact of £6.02 million was on account of exchange
fluctuation as GBP became weaker against INR (INR/GBP exchange rate at 30
June 2022 of 95.96, 31 December 2021: 100.30)
Depreciation on the property plant and equipment is included in the
administrative expenses.
9. Trade and other receivables
Trade and other receivable consists of following:
Particular As at As at As at
30-Jun-22 30-Jun-21 31-Dec-21
£000 £000 £000
Trade receivable 404 246 150
Deposits 2,166 2,435 2,493
Other receivables* 13,810 14,924 15,841
16,380 17,605 18,484
* Other receivables include advances to suppliers, accrued
interest receivable and prepayments.
10. Event Subsequent to the reporting period.
There are no subsequent events post 30 June 2022 requiring disclosure in these
interim results.
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