REG - MicroSalt PLC - Final Year end Results and Notice of AGM
30/05/2024 07:30
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RNS Number : 4248Q MicroSalt PLC 30 May 2024
30 May 2024
MicroSalt PLC
("MicroSalt", "the Company" or the "Group")
Final Results for the year ended 31 December 2023
and Notice of Annual General Meeting
MicroSalt Plc, (AIM: SALT) a company commercialising a patented technology to
produce full-flavour low-sodium salt, is pleased to announce its first set of
full year results following the successful admission of the Company to the AIM
market of the London Stock Exchange in February 2024.
Highlights:
· 2023 marked significant progress for Microsalt's efforts with
larger-volume B2B customers and the launch of Microsalt® salt-shakers
· Initial purchase orders totalling 29 mT of Microsalt was received
from Customer B, the Mexican business of one of the largest beverage and snack
food companies in the world, who launched an existing popular product using
MicroSalt in their market in Q4 2023
· Partnership announced with Customer A, a US Fortune 500
pharmacy/food retailer, for the development and sale of low-sodium solutions
across the retailer's extensive line of private branded snack offerings. This
is expected to lead to placement of several of their snacks using MicroSalt®
in lieu of traditional salt, beginning with 800 stores in Q4 2023 with the
potential to expand across more than 7,000 store locations in the medium term
· FY 2023 revenue of US$ 0.6m (2022: US$ 0.6m) and net loss of US$
3.5m (2022: US$2.5m) reflecting efforts focused on R&D and preparation for
the launch of the first two major food manufacturing customers within the
Company's B2B solution
· 2024 set to be a key year where MicroSalt is expected to receive
recurring commercial volume purchase orders for its bulk product, whilst
acknowledging the rollout of MicroSalt across new and/or further B2B product
lines has been slower than hoped during the current year to date
· Strong pipeline with significant volume customer prospects at
advanced stages with a range of national and multi-national companies with
scope for MicroSalt to be nominated as a supplier on larger product lines once
established with these key customers
· Important R&D projects to be undertaken in 2024 focused on
three new iterations of MicroSalt to expand its effectiveness across
additional food formulas and environments
Rick Guiney, CEO of MicroSalt commented:
"This has been a transformational year for MicroSalt and with continued
evidence of the timeliness and essential nature of its products as it emerged
as a recognised and preferred choice for product reformulation globally. Our
geographic outreach is expanding all the time, now with inroads into Asia,
Australia, South Africa, the UK, Germany, Canada and Latin America with a
resultant boost to our sales pipeline. Furthermore, our consumer products
including SaltMe crisps and MicroSalt shakers have successfully provided a
low-sodium alternative for households worldwide, cementing our brand as an
essential, generation-spanning choice. I am delighted that we can look ahead
with the utmost confidence and in eager anticipation of further successes
awaiting us".
Notice of Annual General Meeting
The Annual General Meeting ("AGM") of MicroSalt Plc will be held at the
offices of Bird & Bird LLP, 12 New Fetter Lane, London EC4A 1JP on 21 June
2024 at 12.30 p.m. (British Summer Time). The annual report and the formal
notice of the 2023 AGM will be posted to shareholders on 30 May 2024.
The notice of AGM will be available to review on the Company's website at:
www.microsalt.co (http://www.microsalt.co)
For more information, please visit www.microsaltinc.co
(http://www.microsaltinc.co/) , follow on X @microSaltPLC or contact:
MicroSalt plc Via Flagstaff PR
Rick Guiney, CEO
Zeus (Nominated Adviser and +44 (0)20 3829 5000
Broker)
David Foreman / James Edis (Investment Banking)
Dom King (Corporate Broking), Rupert Woolfenden (Sales)
Flagstaff PR (Financial PR) +44 (0)20 7129 1474
Tim Thompson / Alison Allfrey / Anna Probert
microsalt@flagstaffcomms.com
Notes to Editors
MicroSalt® produces a patented full-flavour, low-sodium salt for food
manufacturers and consumers.
MicroSalt is a major potential disruptor in the food market, thanks to its
micron sized particles which deliver the same sense of saltiness to a wide
range of foods but with approximately 50% less sodium. Excess sodium
consumption is a significant contributor to cardiovascular disease and
MicroSalt's solution meets the rising demand for healthier alternatives to
traditional salt. The WHO has set a target for reducing global sodium intake
by 30% by 2025, which it estimates will save 7 million lives by 2030.
Each year, cardiovascular disease costs the UK £19 billion - if the average
salt intake was reduced by one gram per day, it has been estimated that 4,147
lives and £288 million would be saved each year in the UK. As a nation, the
UK consumes 183 million kilograms of salt each year, and 70% of the typical
person's sodium intake is hidden in processed foods.
Operational since 2018, MicroSalt uses a patent-protected technology which
helps create high barriers to entry within the reduced-sodium salt market.
The Directors believe that MicroSalt is well positioned to capture growth in
the low sodium market, which is expected to grow exponentially, and that there
is also scope to enter the larger salt market.
Chair's Statement
I am delighted to announce, on behalf of the Board, MicroSalt's first set of
full year results following the successful admission of the Company to the AIM
market of the London Stock Exchange in February 2024. I would like to take
this opportunity to thank our longer-term shareholders for their ongoing
support, in particular Tekcapital plc for their early-stage funding and
advice, and to welcome all our new shareholders. I would also like to thank
our employees, suppliers, customers, and everyone who has and is supporting
the business and in delivering its successful IPO.
Strategy
MicroSalt is a company focused on commercialising a patented technology to
produce full-flavour, low-sodium salt for food manufacturers and consumers.
The food industry is focused on developing and providing better-for-you
products that taste great and reduce sodium intake. The reason for this is
that excess sodium consumption contributes to cardiovascular disease, a
leading cause of premature death globally. To address this problem, MicroSalt
has developed a patented process for producing micron-sized salt crystals that
provide all of the flavour of salt with roughly half of the sodium for topical
food applications. MicroSalt has developed what we believe to be the world's
smallest edible salt crystals with its patented MicroSalt®. With MicroSalt®,
companies can make full flavour snacks and prepared meals with the same
saltiness as traditional foods yet with half of the sodium. MicroSalt®
dissolves faster, is all natural, non-GMO, Kosher and does not contain any of
the additives or salt substitutes found in other sodium reduction products.
Board and Governance
As a Board, we are committed to promoting the highest standards of corporate
governance and ensuring effective communication with shareholders. We remain
focused on ensuring the Company delivers on its long-term growth strategy and
is run in a sustainable and socially responsible manner with a strong level of
governance oversight from the Board of Directors.
Outlook
We are excited about 2024 as the year where we see MicroSalt receiving
recurring commercial volume purchase orders for its bulk product. The Group
currently has various significant volume customer prospects at advanced stages
with a range of national and multi-national companies. The nature and size of
these existing and potential customers businesses is that once MicroSalt has
been nominated as a supplier on one product line, we expect further
nominations across multiple other, and likely much larger product lines of
that customer.
We also anticipate more investment into growth of our MicroSalt® shakers and
its establishment as the generational salt used at home.
Judith Batchelar
Chair
Chief Executive Officer's statement
Introduction
The Company's mission is to reduce excess sodium consumption which
significantly contributes to hypertension and heart disease, by providing a
full-flavour salt with approximately 50% less sodium than traditional salt for
food manufacturers and consumers.
To achieve this, the Group has developed a patent protected and scalable
manufacturing process that produces a salt crystal that is approximately 100
times smaller than traditional salt. Due to its micron sized particles,
MicroSalt has improved adhesion to food (compared with traditional salt
crystals) and dissolves much faster on the tongue, thereby delivering the same
sense of saltiness as traditional snacks but using approximately half the
amount of sodium.
2023 was without doubt, a pivotal year for MicroSalt, marked by foundational
efforts and strategic growth. It was indeed a year of building-akin to
preparing a snowball before letting it roll downhill. As we promote our vision
of a healthier future through reduced sodium in today's diets, we are
discovering more and more possibilities and commercial opportunities.
Our leadership team's steadfast commitment has continually affirmed that our
products are timely and essential. In 2023, MicroSalt emerged as a recognised
and preferred choice for product reformulation globally. Our outreach
initiatives have extended across continents, with inroads in Asia, Australia,
South Africa, the UK, Germany, Canada, and Latin America, all of which have
boosted our sales pipeline. Moreover, our consumer products, including SaltMe
Potato Chips and MicroSalt Shakers, have successfully provided a low-sodium
alternative for households worldwide, cementing our brand as an essential,
generation-spanning choice.
By way of reminder, our primary B2B opportunities during 2023 existed with:
· Customer A, a US Fortune-500 pharmacy/food retailer;
· Customer B, the Mexican business of Customer C; and
· Customer C, one of the largest beverage/snack companies in the
world; and
· Customer D, one of the largest global bakery companies.
Looking ahead, we approach the future with utmost confidence and eagerly
anticipate the successes that await us.
Financial summary
The Company's revenue of US$0.6m (2022: US$0.6m) and net loss of US$3.5m
(2022: US$2.5m) are both reflective of efforts focused on R&D and
preparation for the launch of the first two major food manufacturing customers
within the Company's B2B solution. Translation of our B2B pipeline of
opportunities was always going to take time, but commercial purchase orders
were received from Customer B, with 29 mT of MicroSalt being delivered to them
in late 2023. Accordingly, most of the revenue in 2023 was D2C (Direct to
Consumer). With initial B2B orders received in the latter part of 2023 and
multiple other B2B opportunities in various stages of testing/customer
acceptance procedures, combined with IPO readiness preparation, the Company
did not invest significantly into its D2C sales throughout the year.
Inventories increased to US$0.6m (2022: US$0.2m), predominantly due to an
increase in raw materials, again in preparation for the expected bulk orders
from the Company's first two major food manufacturing B2B customers (Customers
A and B).
Trade and other receivables increased to US$1.3m (2022: US$0.2m),
predominantly due to US$0.7m of deferred costs in relation to the IPO being
included in prepayments at year end.
Trade and other payables increased to US$1.7m (2022: US$0.2m), predominantly
due to increases in trade payables and amounts owed to related parties.
Borrowings also increased to US$2.5m (2022: US$0.2m), predominantly due to
increases in convertible loan notes.
Operations summary
A key focus of the business during 2023 was of our larger-volume B2B
opportunities with a number of multinational FMCG companies and food
manufacturers. The majority of these opportunities have now passed through the
R&D phase as well as production testing and then consumer testing. In
particular, the Group is now an approved supplier of Customer B and Customer
C, which although separate entities, operate under the same group. Customer B
launched an existing popular product now using MicroSalt in the Mexican market
in the fourth quarter of 2023. In 2023, 29 mT of MicroSalt was delivered to
Customer B. Customer B also provided annualised volume targets, albeit on a
non-binding basis. Furthermore, the Company began negotiating a purchasing
agreement and joint development agreement with Customer C which is expected to
be executed in the second half of 2024.
Other selected milestones achieved during 2023 include:
• Partnership announced with Customer A for the development and
execution of low-sodium solutions across the retailer's extensive line of
private branded snack offerings. This will lead to placement of several of
their snacks using MicroSalt® in lieu of traditional salt, beginning with 800
stores in Q4 2023 with the potential to expand across more than 7,000 store
locations in the medium term;
• Agreement with supermarket chain, Giant Food of Maryland LLC, one
of the most respected food retailers in the mid-Atlantic United States, to
carry MicroSalt's new saltshakers across its 160 stores;
• Continued sales expansion of SaltMe! crisps and MicroSalt shakers
with new placements in over 400 additional U.S. retail stores.
• Agreement with US Salt LLC for the distribution and delivery of
MicroSalt's low-sodium solutions.
Sales and marketing
MicroSalt attended a number of US based and international food shows, which
has been the core focus of its sales and outreach efforts. In 2024, the
Company plans to attend at least 12 food shows globally, including events in
Frankfurt, Paris, Shanghai, Dubai, and Stockholm. These are in addition to the
major industry events in the US market The Company also invests actively into
brand awareness and social media campaigns relevant especially to its D2C
business. The Company also appointed the U.K. celebrity chef Jack Stein as a
Brand Ambassador.
Intellectual property
Subsequent to the year end, in May 2024 the United States Patent and Trademark
Office granted and issued MicroSalt's patent entitled 'Low Sodium Salt
Composition'.
Political/regulatory update
The World Health Organisation ("WHO") has set a target of reducing global
sodium intake by 30% by 2025, which it estimates will save 7 million lives by
2030. WHO research also found that every US$1 spent on sodium reduction
translates to US$12 in healthcare cost savings for treating cardiovascular
disease. Governmental pressure continues to increase with new regulations in
Canada for 2025. Additionally, local dieticians and purchasing authorities are
taking action, regardless of any legal mandates, to lower sodium.
Current trading and outlook
MicroSalt made significant progress in 2023, the rollout of MicroSalt across
new and/or further product lines across Customers A, B, C and D has been
slower than hoped during 2024 so far. However, this statement does not reflect
the significant progress regarding positive trials undertaken during this year
so far, or indeed the deepening of knowledge and relationships MicroSalt has
with our key B2B customers and target customers. Furthermore, we are
increasingly confident of announcing further commercial volume orders with
Customer B in particular, in the third quarter of 2024.
In addition to our focus on B2B sales of MicroSalt® to food manufacturing
companies where the Company has made substantial progress, MicroSalt has
launched its low sodium salt in saltshakers during 2023. Approximately 400
supermarkets now carry these better-for-you saltshakers. The Company also made
significant progress towards finalisation of its IPO on the AIM Market of the
London Stock Exchange, which completed in February 2024.
Beyond our primary focus on sales and marketing, I'm pleased to advise of
several other developments during 2024, including:
- New employees, namely a new UK sales manager and a US based
group financial controller;
- R&D projects focused on three new iterations of MicroSalt to
expand its effectiveness across various additional food formulas and
environments. We expect this should lead to entrance into additional markets
and potential applications for MicroSalt both short and long term.
These are just a taster of the developments of the Group we expect to continue
into the second half of 2024 and beyond.
Finally, I must recognise, on behalf of the Board, our sincere thanks to all
stakeholders in the business who have supported us and are making possible the
achievement of our mission and objectives. To that end, we note the strong
share price performance since IPO which recently enabled the Company to
exercise its right to call the outstanding warrants in the Company, granted at
the time of the IPO. In our opinion, the support of our shareholders is
justified, and whilst I would have liked to have announced further commercial
volume orders during the year to date, we are excited about 2024 as the year
where we see MicroSalt receiving recurring commercial volume purchase orders
for its bulk product.
Rick Guiney
Chief Executive Officer
Consolidated statement of profit or loss and other comprehensive income
Note Year ended Year ended
31 December 2023 31 December 2022
US$'000 US$'000
Revenue 4 574 638
Cost of sales (724) (441)
Gross (loss)/profit (150) 197
Other operating income 5 120 30
Administrative expenses (3,318) (2,639)
Operating loss (3,348) (2,412)
Finance expense 10 (131) (67)
Loss before taxation (3,479) (2,479)
Taxation 11 - -
Loss for the year (3,479) (2,479)
Loss for the year attributable to:
Owners of the parent (3,479) (1,940)
Non-controlling interests - (539)
(3,479) (2,479)
Other comprehensive income
Items that may or may not be recognised in profit or loss:
Foreign currency translation differences 6 -
Total comprehensive income (3,473) (2,479)
Total comprehensive loss attributable to:
Owners of the parent (3,473) (1,940)
Non-controlling interests 23 - (539)
(3,473) (2,479)
Loss per share for loss attributable to the owners
Basic and diluted loss per share (US$) 12 (0.39) (166.61)
Consolidated statement of financial position
Company Number 10061337 Note As at As at
31 December 2023 31 December 2022
US$'000 US$'000
Assets
Current assets
Inventories 15 568 208
Trade and other receivables 16 1,259 221
Cash and cash equivalents 17 117 91
Total current assets 1,944 520
Non-current assets
Property, plant & equipment 14 8 -
Intangible assets 13 321 147
Total non-current assets 329 147
Total assets 2,273 667
Liabilities
Current liabilities
Trade and other payables 18 1,745 165
Total current liabilities 1,745 165
Non-current liabilities
Borrowings 19 2,524 170
Total non-current liabilities 2,524 170
Total liabilities 4,269 335
Net (liabilities)/assets (1,996) 332
Equity
Share capital 20 73 -
Share premium 20 - 1,121
Share-based payment reserve 1,060 488
Capital contribution reserve 500 2,452
Accumulated losses (3,635) (3,999)
Translation reserve 6 -
(1,996) 62
Non-controlling interests 23 - 270
Total equity (1,996) 332
Consolidated statement of changes in equity
Note Share capital Share premium Share based payment reserve Capital contribution reserve Accumulated losses Translation reserve Total attributable to the company Non - controlling interests Total
equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2022 - 1,121 109 43 (2,059) - (786) 300 (486)
Loss for the year - - - - (1,940) - (1,940) (539) (2,479)
Transactions with owners
Issue of ordinary share capital 20 - - - - - - - 509 509
Capital contribution from ultimate controlling party - - - 2,409 - - 2,409 - 2,409
Share-based payments - - 379 - - - 379 - 379
At 31 December 2022 - 1,121 488 2,452 (3,999) - 62 270 332
Loss for the year - - - - (3,479) - (3,479) - (3,479)
Other comprehensive income - - - - - 6 6 - 6
Transactions with owners
Issue of ordinary share capital 20 73 2,452 - (2,452) - - 73 - 73
Capital contribution from ultimate controlling party - - - 500 - - 500 - 500
Cancellation of share premium - (3,573) - - 3,573 - - - -
Share-based payments 21 - - 572 - - - 572 - 572
Share exchange - - - - 270 - 270 (270) -
At 31 December 2023 73 - 1,060 500 (3,635) 6 (1,996) - (1,996)
Consolidated statement of cash flows
Year ended Year ended
31 December 2023 31 December 2022
US$'000 US$'000
Note
Cash flows from operating activities
Loss before income tax (3,479) (2,479)
Depreciation of property, plant and equipment 14 1 -
Amortisation of intangible assets 6 2
Share based payment expense 572 379
Finance expense 10 131 67
(2,769) (2,031)
(Increase) / decrease in inventories 15 (360) 24
Increase in trade and other receivables 16 (1,038) (76)
Increase in trade and other payables 18 1,580 111
Net cash used in operating activities (2,587) (1,972)
Cash flows from investing activities
Purchase of intangible assets 13 (180) (116)
Payments to acquire property, plant and equipment 14 (9) -
Net cash used in investing activities (189) (116)
Cash flows from financing activities
Issue of shares 73 -
Proceeds from borrowings 2,723 1,652
Investment by non-controlling interests - 509
Net cash from financing activities 2,796 2,161
Increase in cash and cash equivalents 17 20 73
Cash and cash equivalents at beginning of year 91 18
Effect of foreign exchange rate changes 6 -
Cash and cash equivalents at end of year 117 91
Notes to the consolidated financial statements
1. General information
MicroSalt Plc (the "Company") is a private company limited by shares and
registered and incorporated in England and Wales. The registered office is 12
New Fetter Lane, London, United Kingdom, EC4A 1JP.
The principal activity of the Company together with its subsidiary undertaking
(the "Group") is that of the development and sale of low sodium salt and snack
foods.
2. Accounting policies
2.1 Basis of preparation
The consolidated financial statements are for the year ended 31 December 2023.
They have been prepared in accordance with UK-adopted International Accounting
Standards ("IFRS"). The prior year consolidated information for year ended 31
December 2022 was included in the historical financial information in the
admission document to AIM, which was deemed to be the first-year accounts
under IFRS. The adoption of IFRS did not lead to changes in the recognition of
measurement of transactions or balances, and consequently no reconciliation
required under IFRS 1 was presented in the historical financial information.
These are the first company financial statements prepared under IFRS, the
adoption of IFRS did not lead to changes in the recognition of measurement of
transactions or balances, and consequently no reconciliation required under
IFRS 1 has been included.
The financial statements have been prepared under the historical cost
convention. The measurement bases and principal accounting policies of the
Group are set out below.
New standards, amendments and interpretations
Standards and interpretations adopted during the year
Information on new standards, amendments and interpretations that are relevant
to the Group annual report and accounts is provided below:
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - amendments to IAS 12
· Disclosure of Accounting Policies - amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimates - amendments to IAS 8
The Group did not have to change its accounting policies or make retrospective
adjustments as a result of adopting these new standards and amendments and
they did not have a material impact.
Standards, amendments and interpretations that are not yet effective
Certain new standards, amendments to standards, and interpretations which have
been issued by the IASB that are effective in future accounting periods that
the Group has decided not to adopt early. These standards, amendments or
interpretations are not expected to have a material impact on the Group.
2.2 Going concern
The Directors have assessed the ability of the Group to continue as a going
concern using cash flow forecasts. The Group meets its day to day working
capital requirements through financing provided by Tekcapital PLC primarily
via the issue of convertible loan notes and subsequent to the year end, cash
raised from the admission to AIM. The Directors are satisfied that there are
sufficient resources to continue in business for the foreseeable future and
for at least 12 months from the date of signing these financial statements.
Notes to the consolidated financial statements (continued)
2. Accounting policies (continued)
Furthermore, the Directors are not aware of any material uncertainties that
may cast significant doubt upon the Group's ability to continue as a going
concern. They are mindful of the ongoing conflict in Russia and Ukraine and
rising costs of inflation but are confident they have appropriate plans in
place to mitigate any such risk in relation to this. Therefore, the financial
statements continue to be prepared on the going concern basis.
2.3 Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" is a principle-based model of
recognising revenue from contracts with customers. The model comprises five
steps with revenue being recognised when control over goods and services are
transferred to the customer.
The Group's revenue consists of product sales. Revenue is recognised when the
Group delivers a product to the customer. Payment of the transaction price is
due immediately when the customer purchases the product and takes delivery or
in the case of certain business to business transactions on credit terms.
Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates and sales taxes or duty.
2.4 Basis of consolidation
The consolidated financial statements present the results of the Company and
its subsidiaries as if they form a single entity.
Profit or loss and each component of other comprehensive income are attributed
to the equity holders of the parent of the Group and to the non-controlling
interests, even if this results in the non-controlling interests having a
deficit balance. When changes in ownership in a subsidiary do not result in a
loss of control, the non-controlling shareholders' interests are initially
measured at the non-controlling interests' proportionate share of the
subsidiaries net assets. Subsequent to this, the carrying amount of
non-controlling interests is the amount of those interests at initial
recognition plus the non-controlling interests' share of subsequent changes in
equity.
When necessary, adjustments are made to the financial information of
subsidiaries to bring their accounting policies in line with the Group's
accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
2.5 Other operating income and grants
Other operating income represents all other income received by the Group. This
includes R&D Expenditure Credits which are a form of government grant.
Government grants are recognised at their fair value where there is a
reasonable assurance that the grant will be received, and the Group will
comply with all attached conditions. Government grants relating to costs are
deferred and recognised in the statement of profit or loss and other
comprehensive income over the period necessary to match them with the costs
that they are intended to compensate.
The grant income received has been accounted for in accordance with IAS 20
'Accounting for Government Grants and Disclosure of Government Assistance' and
is shown in other operating income in the statement of profit or loss and
other comprehensive income whilst research and development expenditure is
shown gross of grant income.
2.6 Finance expense
Finance expense comprises of interest payable on convertible loan notes which
are expensed in the period in which they are incurred and reported in finance
costs.
Notes to the consolidated financial statements (continued)
2 Accounting policies (continued)
2.7 Foreign currency translation
The functional currency of the Company is GB Pounds Sterling. For the purposes
of the consolidated Interim Financial Information, the results and financial
position of the Company and its subsidiary are presented in US Dollars which
is the Group's presentational currency.
Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the end of the
reporting period. All differences are taken to the statement of profit or loss
and other comprehensive income.
Exchange differences arising on the settlement of monetary items and on the
retranslation of monetary items are included in the statement of comprehensive
income for the period.
The assets and liabilities of the Group are expressed in US Dollars using
exchange rates prevailing at the balance sheet date. Income and expense items
are translated at the average exchange rates for the period. Exchange
differences arising, if any, are classified as other comprehensive income and
are transferred to the Group's translation reserve.
2.8 Current and deferred taxation
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the statement of comprehensive income, except that a charge
attributable to an item of income or expense recognised as other comprehensive
income or to an item recognised directly in equity is also recognised in other
comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws
that have been enacted or substantively enacted by the reporting date in the
UK where the Group operates and generates taxable income.
Deferred tax balances are recognised in respect of all temporary differences
that have originated but not reversed by the reporting date, except:
- The recognition of deferred tax assets is limited to the extent
that it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits; and
- Any deferred tax balances are reversed if and when all
conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences
except in respect of business combinations, when deferred tax is recognised on
the differences between the fair values of assets acquired and the future tax
deductions available for them and the differences between the fair values of
liabilities acquired and the amount that will be assessed for tax. Deferred
income tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
2.9 Property, plant and equipment
Items of property, plant and equipment are stated at historical cost less
accumulated depreciation.
Depreciation is provided at the following annual rates in order to write off
each asset over its estimated useful life.
Plant and equipment - 20 per cent straight-line
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
Notes to the consolidated financial statements (continued)
2. Accounting policies (continued)
2.10 Intangible assets
Intangible assets that are acquired by the Group are stated at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is charged to the administrative expenses in the statement of
profit or loss and other comprehensive income on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are
indefinite. Intangible assets with an indefinite useful life and goodwill are
systematically tested for impairment at each balance sheet date.
Intangible assets are amortised from the date they are available for use. The
estimated useful lives are as follows on a straight-line basis:
Intellectual property and patents - Length of the trademark/patent
The estimated useful lives are based upon management's best estimate of the
expected life of the asset. Useful lives are reconsidered if circumstances
relating to the asset change or if there is an indication that the initial
estimate requires revision.
2.11 Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their
present location and condition.
Weighted average cost is used to determine the cost of ordinarily
interchangeable items.
2.12 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short term
highly liquid deposits which are subject to an insignificant risk of changes
in value.
Notes to the consolidated financial statements (continued)
2. Accounting policies (continued)
2.13 Financial assets
The Group classifies its financial assets at amortised cost. Management
determines the classification of its financial assets at initial recognition.
The Group's financial assets held at amortised cost comprise trade and other
receivables and cash and cash equivalents in the consolidated statement of
financial position.
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They arise principally
through the provision of goods and services to customers (e.g. trade
receivables), but also incorporate other types of financial assets where the
objective is to hold their assets in order to collect contractual cash flows
and the contractual cash flows are solely payments of the principal and
interest.
They are initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue and are subsequently
carried at amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using the lifetime ECLs. During this process
the probability of the non-payment of the trade receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from
default to determine the lifetime ECL for the trade receivables. For trade
receivables, which are reported net; such provisions are recorded in a
separate provision account with the loss being recognised within
administrative expenses in the consolidated statement of comprehensive income.
On confirmation that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated provision.
2.14 Financial liabilities
The Group measures its financial liabilities at amortised cost. All financial
liabilities are recognised in the statement of financial position when the
Group becomes a party to the contractual provision of the instrument.
The Group's financial liabilities held at amortised cost comprise trade
payables and other short-dated monetary liabilities, and borrowings in the
consolidated statement of financial position.
Trade payables and other short-dated monetary liabilities are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest rate method.
Borrowings are initially recognised at fair value net of any transaction costs
directly attributable to the issue of the instrument. Such interest-bearing
liabilities are subsequently measured at amortised cost using the effective
interest rate method, which ensures that any interest expense over the period
to repayment is at a constant rate on the balance of the liability carried in
the consolidated statement of financial position.
For the purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on redemption, as well as
any interest or coupon payable while the liability is outstanding.
Unless otherwise indicated, the carrying values of the Group's financial
liabilities measured at amortised cost represents a reasonable approximation
of their fair values.
Notes to the consolidated financial statements (continued)
2. Accounting policies (continued)
2.15 Impairment of assets
Assets that are subject to depreciation or amortisation are assessed at each
reporting date to determine whether there is any indication that the assets
are impaired.
Where there is any indication that an asset may be impaired, the carrying
value of the asset is tested for impairment. An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs to sell and value in use. Non-financial assets that have been previously
impaired are reviewed at each reporting date to assess whether there is any
indication that the impairment losses recognised in prior periods may no
longer exist or may have decreased.
2.16 Equity instruments
Equity is the residual interest in the assets of the Company after deducting
all liabilities and comprises the following:
· "Share capital" represents the nominal value of equity
shares;
· "Share premium" represents the excess value of equity shares
above the nominal value;
· "Share-based payment reserve" represents the cumulative fair
value of options;
· "Capital contribution reserve" represents non-cash
contributions from equity holders;
· "Accumulated losses" represents retained earnings less
retained losses;
· "Translation reserve" represents the Cumulative gains and
losses on translating the net assets of the Company to the presentation
currency of the Group" and
· "Non-controlling interests" represents the cumulative net
profits/(losses) in relation to non-controlling interests.
2.17 Convertible loan notes
Convertible loan note instruments issued by the Group are assessed to whether
the transaction price relates to both the underlying financial instrument and
the warrants issued representing the same economic arrangement, and therefore
fair value of the whole arrangement. The Group assesses whether the underlying
financial instrument (loan notes) and the conversion feature should be
classified as a liability or equity instrument. As part of this assessment,
the Group considers whether the conversion feature is closely related to the
host contract, requiring a separate assessment of the host contract and the
conversion feature. It was determined that the conversion feature was not
closely related to the host contract, meeting the criteria for recognition as
a separate embedded derivative.
Loan note: It was determined that the Group does not have an unconditional
right to avoid delivering cash or another financial asset to settle the
contractual obligation, meeting the criteria to be recognised as a financial
liability.
Conversion feature: There is an obligation to convert the loan notes into
variable number of ordinary shares of MicroSalt Inc. on conversion events. The
conversion feature is at market price as there is no discount against future
equity placement offered. Therefore, the conversion feature is not a
derivative because the value of the conversion feature does not change in
response to the share price, and as such the conversion feature is a financial
liability.
Therefore, the fair value of the overall transaction price is initially
recognised as a financial liability and subsequently measured at amortised
cost.
Notes to the consolidated financial statements (continued)
2. Accounting policies (continued)
2.18 Share-based payments
Equity-settled share-based payments are measured at fair value at the date of
grant by reference to the fair value of the equity instruments granted. The
fair value determined at the grant date is expensed on a straight-line basis
over the vesting period with a corresponding adjustment to equity. The amount
recognised as an expense is adjusted to reflect the number of awards for which
the related service and non-market performance conditions are expected to be
met.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each statement of financial position
date so that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options that eventually vest. Market vesting
conditions are factored into the fair value of the options granted. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition.
The fair value of the award also takes into account non-vesting conditions.
These are either factors beyond the control of either party (such as a target
based on an index) or factors which are within the control of one or other of
the parties (such as the Group keeping the scheme open or the employee
maintaining any contributions required by the scheme).
When the terms and conditions of equity-settled share-based payments at the
time they were granted are subsequently modified, the fair value of the
share-based payment under the original terms and conditions and under the
modified terms and conditions are both determined at the date of the
modification. Any excess of the modified fair value over the original fair
value is recognised over the remaining vesting period in addition to the
fair value of the original share-based payment at date of grant.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires the use of certain
critical accounting estimates. It also requires the Group management to
exercise judgement and use assumptions in applying the Group's accounting
policies. The resulting accounting estimates calculated using these judgements
and assumptions will, by definition, seldom equal the related actual results
but are based on historical experience and expectations of future events.
Management believe that the estimates utilised in preparing the financial
statements are reasonable and prudent.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The judgements and
key sources of estimation uncertainty that have a significant effect on the
amounts recognised in the financial statements are discussed below:
Key accounting estimates and judgements
Share-based payments
In order to calculate the value of employee share options as required by IFRS
2, the Group makes estimates principally relating to the assumptions used in
its option-pricing model. This is a key estimate used to value the share
options in issue at the balance sheet date.
Notes to the consolidated financial statements (continued)
4. Revenue from contracts with customers
All Group revenue was generated from the sale of goods in the USA and
recognised at the date the goods were delivered. 4 customers make up 10% or
more of revenue in the period ended 31 December 2023 (2023: 3).
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Customer 1 132 159
Customer 2 107 -
Customer 3 66 180
Customer 4 29 145
5. Other operating income
31 Dec 31 Dec
2023 2022
US$'000 US$'000
R&D expenditure tax credit 48 23
Other income 72 7
120 30
6. Segmental reporting
Factors that management used to identify the Group's reportable segments:
The Chief Operating Decision Maker ("CODM") has been identified as the
Directors. The CODM reviews the Group's internal reporting in order to assess
performance and allocate resources. The CODM has determined that there is one
single operating segment, the development and sale of low sodium salt and
snack foods.
7. Operating loss
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Amortisation of intangible assets 6 2
Research and development expense 81 95
Trade debtor written off - 15
Share-based payment expense 572 379
Inventory recognised as an expense 81 441
Expected credit losses (3) 11
Notes to the consolidated financial statements (continued)
8. Auditors' remuneration
During the year the Group obtained the following services from the Group's
auditors:
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Fees payables for the audit of the Group and Company's annual accounts 45 -
Fees payables for all other pre-IPO non-audit services 208 -
253 -
9. Employees and directors
2023 2022
US$'000 US$'000
Wages and salaries 276 123
Social security costs 72 26
Share-based payment expense 572 379
920 528
The average monthly number of employees and Directors during the year was as
follows:
2023 2022
Number Number
Management and administration 5 3
5 3
Directors' remuneration is as follows:
2023 2022
US$'000 US$'000
Directors' emoluments, including salaries and fees 221 123
Social security costs 18 26
Share-based payment expense 572 262
811 411
Key management personnel include all of the Directors, who together have
authority and responsibility for planning, directing, and controlling the
activities of the Group's business. There are no key management personnel
other than the Directors of the Group.
The remuneration of the highest paid Director who served during the year was
Rick Guiney which consisted of base salary of US$150,000 (2022: US$150,000),
paid by MicroSalt Inc.
Notes to the consolidated financial statements (continued)
10. Finance expense
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Finance costs:
Interest on convertible loans 131 67
131 67
11. Taxation
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year
ended 31 December 2023 or for the year ended 31 December 2022.
Factors affecting the tax expense
The tax assessed for the year is lower than the standard rate of corporation
tax in the UK. The difference is explained below:
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Loss on ordinary activities before tax (3,479) (2,479)
Tax using the Group's domestic tax rates (817) (471)
Effects of:
Deferred tax adjustment - remeasurement of current year losses at future tax (52) -
rate
Unutilised tax losses carried forward 869 471
Total taxation credit - -
The main rate of UK corporation tax for the year ended 31 December 2022 and up
to 1 April 2023 was 19%. From 1 April 2023, the main rate of UK corporation
tax increased to 25%, resulting in an effective tax rate of 23.5% for the year
ended 31 December 2023.
Notes to the consolidated financial statements (continued)
12. Basic and diluted loss per share
Basic and diluted loss per share is calculated by dividing the result
attributable to equity holders by the weighted average number of ordinary
shares in issue. Loss per share is presented based on the number of shares
outstanding in the Company.
31 Dec 31 Dec
2023 2022
Loss used in calculating basic and diluted loss per share (US$) (3,479,000) (1,940,000)
Weighted average number of shares 8,895,498 11,643
Basic and diluted loss per share (US$) (0.39) (166.61)
The diluted earnings per share is identical to the basic loss per share as the
exercise of warrants and options would be anti-dilutive.
The weighted average number of shares for both periods presented has been
adjusted for the effect of the 3200:1 share subdivision and subsequent 1:520
share consolidation.
13. Intangible assets
Patent Trademark Total
US$'000 US$'000 US$'000
Cost
At 1 January 2022 38 - 38
Additions 116 - 116
At 31 December 2022 154 - 154
Amortisation
At 1 January 2022 5 - 5
Charge for the period 2 - 2
At 31 December 2022 7 - 7
Net book amount
At 31 December 2022 147 - 147
Cost
At 1 January 2023 154 - 154
Additions 149 31 180
At 31 December 2023 303 31 334
Amortisation
At 1 January 2023 7 - 7
Charge for the period 6 - 6
At 31 December 2023 13 - 13
Net book amount
At 31 December 2023 290 31 321
Notes to the consolidated financial statements (continued)
14. Property, plant and equipment
The Group had no items of property, plant and equipment in the year ended 31
December 2022.
Plant & equipment
Total
US$'000 US$'000
Cost
At 1 January 2023 - -
Additions 9 9
At 31 December 2023 9 9
Depreciation
At 1 January 2023 - -
Charge for the period 1 1
At 31 December 2023 1 1
Net book amount
At 31 December 2023 8 8
15. Inventory
2023 2022
US$'000 US$'000
Raw materials 279 15
Finished goods and goods for resale 289 193
568 208
Notes to the consolidated financial statements (continued)
16. Trade and other receivables
2023 2022
US$'000 US$'000
Trade receivables 224 116
Other receivables 307 80
Prepayments 728 25
1,259 221
Trade receivables are amounts due from customers for goods sold in the
ordinary course of business. They are generally due for settlement immediately
or within 30 days for certain credit customers and therefore are all
classified as current. Trade receivables are non-interest bearing. The
carrying amount of trade and other receivables approximates fair value.
Prepayments include US$690,000 of deferred costs in relation to the IPO of the
Company on AIM, which completed 1 February 2024.
Analysis of trade receivables based on age of invoices:
< 30 31 - 60 days past due 61 -90 days past due > 90 Total gross ECL Total net
days past due US$'000 US$'000 days past due US$'000 US$'000 US$'000
US$'000 US$'000
31 December 2023 145 10 44 33 232 (8) 224
31 December 2022 9 7 58 53 127 (11) 116
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses (ECL) which uses a lifetime expected loss allowance for all trade
receivables. The ECL balance has been determined as US$8,000 (2022: US$11,000)
based on historical data available to management in addition to forward
looking information utilising management knowledge. The ECL is based on 90% of
trade receivables over 60 days past due being recoverable and therefore an ECL
of 10% of trade receivables has been recognised. Based on the analyses
performed there is no material impact on the transition to ECL from previous
methods of estimating the provision for doubtful accounts.
17. Cash and cash equivalents
2023 2022
US$'000 US$'000
Cash at bank 117 91
117 91
Notes to the consolidated financial statements (continued)
18. Trade and other payables
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Amounts falling due in one year:
Trade payables 974 142
Other payables 667 1
Accruals 104 22
1,745 165
Other payables include amounts owed to related parties (see note 25).
19. Borrowings
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Current
Convertible loan notes 2,524 170
2,524 170
On 1 June 2022, the Group issued convertible loan notes ("CLNs") with a
principal amount of US$2,000,000 of which US$2,000,000 was drawn and
outstanding at 31 December 2023 (2022: US$141,000). The Group issued further
CLNs on 1 March 2023 and 1 October 2023, with principal amounts of
US$2,000,000 each, of which US$909,000 and US$Nil were drawn down at 31
December 2023, respectively.
The CLNs incur interest of 10% per annum and are repayable four years after
commencement or can be converted into ordinary shares of MicroSalt Inc. upon
certain conversion events at the option of the noteholder. During the year
ended 31 December 2023, US$500,000 (2022: US$409,000) was converted into
ordinary shares of MicroSalt Inc.
Notes to the consolidated financial statements (continued)
20. Share capital
31 Dec 31 Dec 31 Dec 31 Dec
2023 2023 2022 2022
Shares US$ Shares US$
Allotted, called up and fully paid
Opening number of £0.01 ordinary shares 1,892 26 1,892 26
Subdivision into £0.000003125 ordinary shares 6,052,508 - - -
Issue of ordinary share 1 - - -
Consolidation of shares into £0.001625 ordinary shares (6,042,758) - - -
Issue of ordinary shares 35,234,086 72,900 - -
Closing number of £0.001625 ordinary shares 35,245,729 72,296 1,892 26
All issues are for cash unless otherwise stated.
On 15 June 2023, the Company performed a share subdivision to issue 3,200 new
ordinary shares for every existing 1 share. Subsequently, on 30 September
2023, the Company performed a share consolidation to issue 1 share for every
existing 520 shares.
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Share premium
Opening balance 1,121 1,121
Issue of shares 2,452 -
Cancellation of share premium (3,573) -
Closing balance - 1,121
( )
On 29 June 2023, the Company cancelled the share premium account of the
Company, and the amount of the share premium account was transferred to
distributable reserves. The Cancellation of Reserve was carried out by way of
the solvency statement procedure under section 641(1)(a) of the Companies Act.
Notes to the consolidated financial statements (continued)
21. Share-based payments
The Group operates an equity settled share-based remuneration scheme for
employees. Options are granted for nil consideration and carry no dividend or
voting rights. The terms and conditions of the grants are detailed below:
Date of grant No. of options Vesting conditions Expected life of options Share price at grant date Expected option life Risk free interest rate
('000) Exercise price
1 January 2022 56,000 US$0.2500 Time-based(1) 3 years US$1.00 1 year 0.87%
24 February 2022 1,000,000 US$0.2500 Time-based(2) 4 years US$1.00 3 years 1.06%
1 August 2022 400,000 US$0.3225 Time-based(3) 3 years US$1.29 3 years 2.87%
27 October 2022 804,800 US$0.3225 Exit event(5) 3 years US$1.29 3 years 3.45%
18 November 2022 1,600,000 US$0.5450 Time-based(2) 5 years US$2.18 3 years 3.26%
(1)100% of the share options vest in one annual instalment 12 months after the
grant date.
(2)2.78% of the share options vest in equal monthly instalments over 36 months
from the grant date.
(3)33.33% of the share options vest 12 months after the grant date, 33.33% of
the share options vest 24 months after the grant date and the remaining 33.33%
of share options vest 36 months after the grant date.
(4)50% of the share options vest six months after the grant date and 50% of
the share options vest 12 months after the grant date.
(5)These options vest on an exit event, such as a sale, takeover or IPO.
The number of options and exercise price above have been adjusted for the
effect of a 3200:1 share subdivision and subsequent 1:520 share consolidation
which occurred in the year.
All options granted have an expected volatility of 80%.
On 30 September 2023, all of the options held with MicroSalt Inc. were
cancelled and reissued with the Company on the same terms as the existing
agreements. As such, the fair value of the options has not increased as a
result of the modification and therefore no adjustment has been made to
share-based payment expense in the year.
Details of the number of share options granted, exercised, lapsed and
outstanding at the end of each period as well as the weighted average exercise
prices in US$ ("WAEP") are as follows:
2023 2023 2022 2022
No. WAEP No. WAEP
Outstanding at the beginning of the year 6,710,684 0.37 1,969,884 0.07
Granted during the year - - 4,740,800 0.42
Outstanding at the end of the year 6,710,684 0.37 6,710,684 0.37
Exercisable at the end of the year 4,569,024 0.37 2,036,376 0.32
The number of share options and WAEP have been adjusted in both periods
presented for the effect of the 3200:1 share subdivision and subsequent 1:520
share consolidation.
Notes to the consolidated financial statements (continued)
22. Non-controlling interests
MicroSalt Inc. is a 91.75% owned subsidiary as at 31 December 2023 and had
historically been considered a material non-controlling interests ("NCI"). The
Company no longer considers the NCI to be material to the Company, and
therefore no NCI has been disclosed for the year ended 31 December 2023.
23. Financial instruments
The Group's financial instruments comprise cash and cash equivalents, trade
and other receivables, trade and other payables, accruals, and convertible
loan note liabilities, that arise directly from its operations.
Financial assets
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Trade receivables 232 116
Other receivables 990 80
Cash at bank 117 91
1,339 287
Financial liabilities
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Trade payables 974 142
Other payables 667 1
Accruals 104 22
Convertible loan note liabilities 2,524 170
4,269 335
The carrying values of the Group's financial liabilities measured at amortised
cost represents a reasonable approximation of their fair values.
Financial risk management
The Group is exposed through its operation to the following financial risks:
credit risk, interest rate risk, foreign exchange risk and liquidity risk.
Risk management is carried out by the Directors. The Group uses financial
instruments to provide flexibility regarding its working capital requirements
and to enable it to manage specific financial risks to which it is exposed.
The Group finances its operations through a mixture of debt finance, cash and
liquid resources and various items such as trade debtors and trade payables
which arise directly from the Group's operations.
a) Foreign exchange risk
The Group operates internationally and is exposed to currency risk arising on
cash and cash equivalents, receivables and payables denominated in a currency
other than the respective functional currencies of the Group entities, which
are primarily US Dollars and Sterling. The Group's manages foreign currency
risk by, where possible, settling liabilities denominated in a currency other
than its functional currency with cash already denominated in that currency.
Notes to the consolidated financial statements (continued)
23. Financial instruments (continued)
The carrying amounts of the Group's foreign currency denominated monetary
assets and monetary liabilities at the reporting date are as follows:
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Net foreign currency liabilities
GBP 208 -
Sensitivity analysis
A 10% strengthening of sterling against the Group's primary currencies at
31 December 2023 would have decreased equity and profit or loss by the
amounts shown below:
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Effect on equity 21 -
Effect on profit or loss 21 -
A 10% weakening of sterling against the Group's primary currencies at
31 December 2023 would have an equal but opposite effect on the amounts
shown above.
b) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows
associated with the instrument will fluctuate due to changes in market
interest rates. The Group's only interest-bearing borrowings are at a fixed
interest rate of 10%, therefore interest rate risk exposure for the Group is
minimal.
It is the Group's policy to settle payables within the credit terms allowed
and the Group does therefore not incur interest on overdue balances.
c) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. In order to minimise the risk, the Group endeavours only to deal
with companies which are demonstrably creditworthy and this, together with the
aggregate financial exposure, is continuously monitored. The maximum exposure
to credit risk is the carrying value of its financial receivables, trade and
other receivables and cash and cash equivalents as disclosed in the note
above.
The receivables age analysis is evaluated on a regular basis for potential
doubtful debts, considering historic, current and forward-looking information.
No impairments to trade receivables, have been made to date. Further
disclosures regarding trade and other receivables are provided within note 16.
Credit risk also arises on cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "B+" are accepted. Currently
the financial institution whereby the Group holds significant levels of cash
is JP Morgan Chase Bank, N.A. which is rated AA-.
Notes to the consolidated financial statements (continued)
23. Financial instruments (continued)
d) Liquidity risk
The Group seeks to maintain sufficient cash balances. Management review cash
flow forecasts on a regular basis to determine whether the Group has
sufficient cash reserves to meet future working capital requirements and to
take advantage of business opportunities.
A maturity analysis of the Group's total liabilities is shown below:
Group
31 Dec 31 Dec
2023 2022
US$'000 US$'000
Within 1 year:
Trade and other payables 1,641 143
Accruals 104 22
Later than 1 year and less than 5 years 1,745 165
Convertible loan note liabilities 2,524 170
After 5 years 2,524 170
Total including interest cash flows 4,269 335
Less: interest cash flows (131) (67)
Total principal cash flows 4,138 268
24. Related party disclosures
Key management personnel remuneration is disclosed in note 9 above.
Transaction amount Balance owed
Related party relationship Type of transaction 2023 2022 2023 2022
US$'000 US$'000 US$'000 US$'000
Tekcapital plc Convertible loan notes issued 2,723 1,652 2,524 170
Tekcapital Europe Ltd Related party loan 590 52 642 52
Notes to the consolidated financial statements (continued)
25. Changes in liabilities from financing activities
At 1 January Financing cash flows Non-cash changes At 31 December 2022
2022 US$'000 Interest US$'000 US$'000
US$'000 US$'000
Convertible loan notes 860 1,652 67 (2,409) 170
Total liabilities from financing activities 860 1,652 67 (2,409) 170
At 1 January Financing cash flows Non-cash changes At 31 December 2023
2023 US$'000 Interest US$'000 US$'000
US$'000 US$'000
Convertible loan notes 170 2,723 131 (500) 2,524
Total liabilities from financing activities 170 2,723 131 (500) 2,524
The non-cash changes in both years relate to capital contributions from the
ultimate controlling party.
26. Events after the reporting date
On 1 February 2024, the Company completed its IPO on the AIM Market of London Stock Exchange plc raising approximately £3.1m (US$3.9m).
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