REG - MicroSalt PLC Tekcapital plc - Final Results Year Ended 31 December Notice of AGM
02/06/2025 07:00
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RNS Number : 9035K MicroSalt PLC 02 June 2025
MicroSalt PLC
("MicroSalt", the "Company" or the "Group")
Final Results for the year ended 31 December 2024 and Notice of Annual General
Meeting
2 June 2025
MicroSalt Plc (AIM: SALT) , a leading manufacturer of full-flavour natural
salt with approximately 50% less sodium, 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.
2024 was a foundational year for MicroSalt as we began receiving large,
recurring purchase orders for our bulk product in Q4 2024 and completed the
R&D for new patent pending product (MicroSalt Premium) designed for the
Quick Service Restaurants (QSR) and Fast Service Restaurants (FSR) sales
channels.
In late 2024, we established regular and repeating revenue with one of the
world's leading food and beverage companies across several countries (Mexico,
US, Canada) and an international seasoning and flavour supplier. This resulted
in Q1 2025 bulk sales exceeding total bulk sales in FY 2024.
Highlights include:
· Repeat purchase orders totalling 44mT (metric tonnes) of
MicroSalt were received from Customer 1, the Mexican business of one of the
largest beverage and snack food companies in the world. Most of this volume
occurred in Q4 and has continued on a monthly basis throughout 2025.
· Repeat purchase orders from the Canadian business unit of one of
the largest beverage/snack food companies in the world were received totalling
7.3 mT. Most of this volume occurred in Q4 and has continued on a monthly
basis throughout 2025.
· Repeat purchase orders were received from the US business unit of
one of the largest beverage/snack food companies in the world totalling 5.9mT.
Most of this volume occurred in Q4 and has continued monthly throughout 2025.
· Continued to build a 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.
Taken altogether, we are reaffirming the guidance of revenue of at least
US$2.5 million for FY 2025, representing almost 300% increase versus FY 2024,
with further growth expected. In Q1 2025, our bulk sales exceeded total bulk
sales made during FY 2024.
· R&D efforts delivered a patent pending product line extension
called MicroSalt Premium. This innovation specifically addresses the bulk
density of the MicroSalt base product to enhance its use in the QSR/FSR sales
channels. The French fry category alone is significant with over 2 billion
servings annually in the US, with the new revenue potential in the foodservice
channel with restaurants, hospitals, hotels, heartcare and single serve
packaging. The product is in final consideration for rollout with a top
international brand in Q3 of 2025.
· FY 2024 revenue of US$ 0.75m (2023: US$ 0.6m) reflects primarily
B2C sales, with a material ramp up in B2B sales commencing in Q4 2024 into
2025.
· The net loss of US$ 5.8m (2023: US$ 3.5m) reflects the one-off
nature of IPO costs ($1.3m), as well as what we also consider a non-recurring
R&D spend in 2024 related to the launch of Microsalt Premium in January
2025, and finally preparation for the launch of the first two major food
manufacturing customers within the Company's B2B solution. The Company also
expects significant improvement to its gross margins in 2025, as our sales mix
is becoming much more reliant on bulk sales at the expense of lower margin
consumer sales of its B2C products which made up most of our FY 2024 sales
mix.
Post-period end highlights
· In April 2025, we announced that total bulk sales in Q1 2025
reached 98mT (216,190 lbs.) setting a new Company record and
establishing three consecutive quarters of sales growth. Importantly, bulk
revenue in Q1 2025 represents 142% of the total bulk revenue for all of
2024. This includes shipments to existing markets of Canada, Mexico, United
States and newly opened markets in Great Britain and Belgium.
The launch of our MicroSalt Premium product line in January targeting the
quick service and fast service restaurant (QSR/FSR) market with a focus on
French fries, has been very well received and is already in final
consideration for rollout with a top international brand in Q3 of this year.
This further demonstrates the expanding footprint of MicroSalt's functionality
beyond just topical applications and into new markets such as cheese, peanut
butter, chicken breading and coatings.
· In February 2025, we took action to strengthen our balance sheet
ahead of an anticipated increase in orders through a successful and
oversubscribed fundraising of £2.3 million (c.US$2.9 million). The proceeds
of the Subscription are being used mainly to invest in inventory to satisfy
expected B2B customer demand in 2025 from leading snack manufacturers and
targeting the very significant "French fry" market with our MicroSalt Premium
product. The Company has already received positive early interest from a
leading global fast-food chain for application to a number of their products,
including French fries.
Rick Guiney, CEO of MicroSalt, commented:
"This has been a transformational year for MicroSalt. Following our successful
IPO, and with continued evidence of the timeliness and essential nature of
MicroSalt's products, we are now a recognised and preferred choice for product
reformulation globally.
"MicroSalt's progress is reflected in the material improvement in revenue
generation during Q4 2024 that continued into the early months of 2025, driven
by recurring orders from one of the world's largest snack food businesses. The
repeat nature of orders and the work undertaken to date to reformulate some of
the world's leading snack food brands provide us with clear revenue visibility
and the ability to reaffirm 2025 revenue guidance of at least $2.5 million.
"We are very excited about the growth of our MicroSalt products and its
ever-widening acceptance within the food manufacturing community. Our growth
story is now evidenced by growing sales volume, the number of topical
applications, and countries served. Continued regulatory support for lower
sodium food products acts as a catalyst to our growth both in the US and
across the globe in short and long term."
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 27 June
2025 at 12.30 p.m. (British Summer Time). The annual report and the formal
notice of the 2024 AGM will be posted to shareholders on 2 June 2025.
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 broker) +44 (0)20 3829 5000
David Foreman / James Edis (Investment Banking)
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.
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.
In 2024, we have established regular and repeating revenue with one of the
world's leading food and beverage companies across a number of countries
(Mexico, US, Canada) as well as an international seasoning and flavour
supplier. We have established an active B2B pipeline for future growth and we
have created a groundbreaking product innovation that is already opening up
significant additional revenue opportunities in 2025. Specifically, in 2024 we
focused on two key initiatives:
· Worked with existing and new B2B accounts on the rollout of bulk
Microsalt into a number of product lines across several international food
manufacturers. This included expanding our presence to include MicroSalt® on
additional food products within the same customer and to vertically integrate
into the seasoning and flavour manufacturers. Our go to market efforts have
extended across continents, with inroads in Asia, Australia, South Africa, the
UK, Germany, Canada, Latin America and South America, all of which have
boosted our already vibrant sales pipeline, and resulted in significant sales
volume increases in Q4 2024 and Q1 2025.
· Completed R&D and final testing of our new patent pending
product (Microsalt Premium) designed for the Quick Service Restaurants (QSR)
and Fast Service Restaurants (FSR) sales channels. Premium not only provides
entry into the foodservice segment including restaurants, hotels, hospitals,
healthcare and single serve packaging, it provides a foot hold into the entire
lower sodium efforts associated with the fast-food channel (Fries, bread,
cheese, chicken, etc). In the US alone, over 4.5 billion pounds of French
fries were consumed each year, with 2 billion orders from just the fast-food
industry.
This work resulted in our Q1 2025 bulk sales alone exceeding our 2024 B2B
sales. Total bulk sales in Q1 2025 reached 98mT (216,190 lbs.) setting a
new Company record and establishing three consecutive quarters of sales
growth.
Looking ahead, our future is extremely bright, as evidenced by growing sales
volume, an increased number of topical applications, expanded sales channels,
and countries served. Continued regulatory support for lower sodium food
products acts as a catalyst to our growth both in the US and across the globe
and safeguards the longevity of MicroSalt as a key component.
Financial summary
The Company's revenue of US$0.75m (2023: US$0.57m) and net loss of US$5.4m
(2023: US$3.5m) are reflective of the costs associated with the IPO ($1.3m),
R&D associated with the launch of the Premium product and preparation for
the launch of the first two major food manufacturing customers within the
Company's existing B2B solution.
This groundwork resulted in significant B2B sales volume increase in Q4 2024,
which continued well into 2025.
Accordingly, most of the revenue in 2024 was D2C (Direct to Consumer). With
initial B2B orders received in the latter part of 2024 and multiple other B2B
opportunities in various stages of testing, combined with IPO readiness
preparation, we expect bulk ingredient sales to become vast majority of our
sales mix in 2025 and beyond.
Inventories increased to US$0.7m (2023: US$0.6m), predominately 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
1, 2).
Trade and other receivables decreased to US$0.9m (2023: US$1.3m),
predominately due to IPO deferred costs included in 2023, which completed 1
February 2024.
Trade and other payables decreased to US$1.4m (2023: US$1.7m), predominately
due to payments to trade payables post IPO.
Borrowings also increased to US$2.7m (2023: US$2.5m), predominately due to
increases in the convertible loan notes and its interest issued by Tekcapital
Group to MicroSalt prior to the IPO.
Operations summary
A key focus of the business during 2024 was of our larger-volume B2B
opportunities with a number of multinational Fast-moving consumer goods (FMCG)
companies and food manufacturers. Several of these opportunities completed the
R&D, production and consumer testing phases. In particular, the Group was
an approved supplier of Customers 1 and 2, which although separate entities,
operate under the same group. Customer 1, (which has 80% of the Mexican snack
food market) launched three existing popular products using MicroSalt in Q3/Q4
for which 44 mT of MicroSalt were delivered. Customer 1 also provided
non-binding annualised volume targets, across a number of items and
geographies. Furthermore, the Company began negotiating a joint development
agreement along with additional item roll outs with Customer 2 which is
expected to be executed in the second half of 2025.
R&D efforts delivered a patent pending product line extension, MicroSalt
Premium. This innovation specifically addresses the bulk density of the
MicroSalt base product to enhance its use in the QSR/FSR sales channels. The
French fries category alone is significant with over 2 billion servings
annually in the US, with the new revenue potential in the foodservice channel
with restaurants, hospitals, hotels, heartcare and single serve packaging.
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 also attended shows and events in the UK, Canada, Germany, France and
Dubai. These are in addition to the major industry events in the US market.
These events provide venues for live demonstrations of MicroSalt and in person
exchanges with both new and existing prospects. This has resulted in an
extremely vibrant pipeline of pending sales successes while representing a
cross section of company sizes and geographies.
The Company also invested actively in brand awareness via social media
campaigns, LinkedIn, newsletters and customer educational pieces in order to
provide industry exposure to Microsalt and its capabilities. The Company also
appointed British celebrity chef Jack Stein as a Brand Ambassador. Post-period
end, the Company also added new sales executives to its team to service the
multitude of commercial opportunities in its pipeline.
Intellectual property
In May 2024 the United States Patent and Trademark Office granted and issued
MicroSalt's patent entitled 'Low Sodium Salt Composition'. The
Patent concerns the production of MicroSalt having claims directed to a
low-sodium salt that adheres better to foods than a traditional salt that is
not adhered to a carrier particle, and that is produced according to
MicroSalt's claimed improved production process. An additional patent has also
been applied for and is pending relative to the manufacturing process of
MicroSalt Premium.
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 across the UK, the EU, and Latin
America with new regulations in Canada for 2025 regulatory efforts.
Additionally, local dieticians and purchasing authorities are taking action,
regardless of any legal mandates, to lower sodium.
The US FDA has issued initial guidance on pending front of pack (F.O.P) labels
highlighted high, medium or low as it pertains to sodium, fat, and sugar. We
expect this will force all US based manufacturers to examine their respective
sodium levels with the understanding that high sodium levels will no longer be
isolated to the back of the package. Items labelled as high may also be
subject to further restrictions as governmental regulations continue, thereby
incentivising the food industry to provide healthier, lower sodium food.
Current trading and outlook
2024 was a pivotal year for MicroSalt, marked by foundational efforts and
strategic growth. It was a year of building 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 for 2025 and beyond.
· Q1 2025 total bulk sales reached 98mT (216,190 lbs.) setting a
new Company record and establishing three consecutive quarters of sales
growth. Importantly, bulk revenue in Q1 2025 represents 142% of the total
bulk revenue for all of 2024. This includes shipments to existing markets
of Canada, Mexico, United States and newly opened markets in Great
Britain and Belgium. The Company also expects significant improvement to its
gross margins in 2025, as the sales mix is becoming much more reliant on bulk
sales at the expense of lower margin consumer sales of its B2C products which
made up most of our FY 2024 sales mix.
· On 1 February 2025, the Company completed its second fundraise,
raising approximately £2.4m (US$3.1m). The proceeds of the fundraise are
being used mainly to invest in inventory to satisfy expected B2B customer
demand in 2025.
· The launch of our MicroSalt Premium product line in January 2025
targeting the quick service and fast service restaurant (QSR/FSR) market with
a focus on French fries, has been very well received and is already in final
consideration for rollout with a top international brand Q3 of this year.
· New sales staff were added to specifically address the
opportunity for MicroSalt Premium within QSR/FSR market.
The Group throughout 2024 and Q1 2025 has proven it is fundamentally strong in
its structure, financing, IP, market opportunity and product acceptance to
support our unequivocal belief in its future as a dominant supplier as the
world turns to lower sodium options.
Finally, I must recognise, on behalf of the Board, our sincere thanks to all
stakeholders in the business who have supported us and are making possible the
achievement of our mission and objectives.
Rick Guiney
Chief Executive Officer
2 June 2025
Consolidated statement of profit or loss and other comprehensive income
Note Year ended Year ended
31 December 2024 31 December 2023
US$'000 US$'000
Revenue 4 750 574
Cost of sales (1,188) (724)
Gross (loss)/profit (438) (150)
Other operating income 5 3 120
Administrative expenses (3,983) (3,318)
IPO Costs (1,430) -
Operating loss (5,848) (3,348)
Finance income 6 -
Finance expense 10 (289) (131)
Loss before taxation (6,131) (3,479)
Taxation 11 - -
Loss for the year (6,131) (3,479)
Loss for the year attributable to:
Owners of the parent (6,131) (3,479)
(6,131) (3,479)
Other comprehensive income
Items that may or may not be recognised in profit or loss:
Foreign currency translation differences 89 6
Total comprehensive income (6,042) (3,473)
Total comprehensive loss attributable to:
Owners of the parent (6,042) (3,473)
(6,042) (3,473)
Loss per share for loss attributable to the owners
Basic and diluted loss per share (US$) 12 (0.13) (0.39)
The notes on pages 11 to 30 form part of these financial statements
Consolidated statement of financial position
Company Number 10061337 Note As at As at
31 December 2024 31 December 2023
US$'000 US$'000
Assets
Current assets
Inventories 15 714 568
Trade and other receivables 16 872 1,259
Cash and cash equivalents 17 261 117
Total current assets 1,847 1,944
Non-current assets
Property, plant & equipment 14 200 8
Intangible assets 13 498 321
Total non-current assets 698 329
Total assets 2,545 2,273
Liabilities
Current liabilities
Trade and other payables 18 1,348 1,745
Total current liabilities 1,348 1,745
Non-current liabilities
Borrowings 19 2,746 2,524
Total non-current liabilities 2,746 2,524
Total liabilities 4,094 4,269
Net (liabilities)/assets (1,549) (1,996)
Equity
Share capital 20 99 73
Share premium 20 6,183 -
Share-based payment reserve 1,340 1,060
Capital contribution reserve 500 500
Translation reserve 95 6
Accumulated losses (9,766) (3,635)
Total equity (1,549) (1,996)
The financial statements were approved and authorised for issue by the Board
of Directors on 30 May 2025 and were signed on its behalf by:
Rick Guiney
Chief Executive Officer
The notes on pages 11 to 30 form part of these financial statements
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$'000
At 1 January 2023 - 1,121 488 2,452 (3,999) - 62 270 332
Loss for the year - - - - (3,479) 6 (3,473) - (3,473)
Transactions with owners
Issue of ordinary share capital 20 73 2,452 - (2,452) - - 73 - 73
Capital contribution from ultimate controlling party - - - 500 - - 500 - 500
Cancellation of share premium - (3,573) - - 3,573 - - - -
Share-based payments - - 572 - - - 572 - 572
Share-for-share exchange - - - - 270 - 270 (270) -
At 31 December 2023 73 - 1,060 500 (3,635) 6 (1,996) - (1,996)
Loss for the year - - - - (6,131) - (6,131) - (6,131)
Other comprehensive income - - - - - 89 89 - 89
Transactions with owners
Issue of shares 20 26 7,023 - - - - 7,049 - 7,049
Cost of share issue - (840) - - - - (840) - (840)
Share-based payments - - 280 - - - 280 - 280
At 31 December 2024 99 6,183 1,340 500 (9,766) 95 (1,549) - (1,549)
The notes on pages 11 to 30 form part of these financial statements
Consolidated statement of cash flows
Year ended Year ended
31 December 2024 31 December 2023
US$'000 US$'000
Note
Cash flows from operating activities
Proft (Loss) before income tax (6,132) (3,479)
Depreciation of property, plant and equipment 14 12 1
Amortisation of intangible assets 24 6
Share based payment expense 280 572
Loss/(gain) on foreign currency translation 89 -
Finance income (6) -
Finance expense 10 289 131
(5,444) (2,769)
(Increase) / decrease in inventories 15 (146) (360)
Increase in trade and other receivables 16 387 (1,038)
Increase in trade and other payables 18 (729) 1,580
Net cash used in operating activities (5,932) (2,587)
Cash flows from investing activities
Purchase of intangible assets 13 (201) (180)
Payments to acquire property, plant and equipment 14 (204) (9)
Interest received 6 -
Net cash used in investing activities (399) (189)
Cash flows from financing activities
Issue of shares 7,048 73
Proceeds from borrowings 23 267 2,723
Payment of share issue costs (840) -
Net cash from financing activities 6,475 2,796
Increase in cash and cash equivalents 17 144 20
Cash and cash equivalents at beginning of year 117 91
Effect of foreign exchange rate changes - 6
Cash and cash equivalents at end of year 261 117
The notes on pages 11 to 30 form part of these financial statements
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
These consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards ("IFRS").
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 which are effective in the current year
None of the standards which became effective during the period which are
applicable to the Group, have had a material impact.
Standards 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 cash raised from the admission to AIM and revenue
sales. On 1 February 2025, the Company completed its second raise on the AIM
Market of the London Stock Exchange, raising approximately £2.4m (US$3.1m) in
order to solidify its funding to continue its aggressive growth strategy
including R&D, sales support and production requirements. 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 profit and loss, 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
Computer equipment - 20 per cent straight-line
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each reporting 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 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. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
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 instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract
that evidences a 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.
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:
Critical judgements
Information about critical judgements that may have most significant effect on
recognition and measurement on assets, liabilities and expenses is provided
below:
Going Concern
The Group liabilities exceeded its assets as at 31 December 2024, mainly due
to the convertible loan notes (CLN) issued by Teckcapital for US$2,746,000.
Management knows that the CLN holder is our most significant shareholder which
considerably mitigates the risk associated with these CLN. The going concern
basis is being upheld by future cashflow forecasts which involves significant
management judgement.
Notes to the consolidated financial statements (continued)
Investment in subsidiary (company only)
The valuation of the investment in subsidiary is supported by the company
delivering on its future business plan. The future business plan is
underpinned by forecast cash flows which involve significant management
judgements. If the Group was to underperform the forecast performance of the
business plan, there is a risk that this balance might be impaired.
4. Revenue from contracts with customers
All Group revenue was generated from the sale of goods across North America
and recognised at the date the goods were delivered. 3 customers make up 10%
or more of revenue in the period ended 31 December 2024 (2023:1).
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Customer 1 209 -
Customer 2 157 107
Customer 3 122 -
5. Other operating income
31 Dec 31 Dec
2024 2023
US$'000 US$'000
R&D expenditure tax credit - 48
Other income 3 72
3 120
6. Segmental reporting
Factors that management used to identify the Group's reportable segments:
The Chief Operating Decision Maker ("CODM") has been identified as the
Directors. The CODM reviews the Group's internal reporting in order to assess
performance and allocate resources. The CODM has determined that there is one
single operating segment, the development and sale of low sodium salt and
snack foods.
7. Operating loss
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Amortisation of intangible assets 24 6
Research and development expense 247 81
Share-based payment expense 280 572
Inventory recognised as an expense - 81
Expected credit losses 14 (3)
Notes to the consolidated financial statements (continued)
8. Auditors' remuneration
During the year the Group obtained the following services from the Group's
auditors:
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Fees payables for the audit of the Group and Company's annual accounts 94 45
Fees payables for all other pre-IPO non-audit services 47 208
141 253
9. Employees and directors
2024 2023
US$'000 US$'000
Wages and salaries 670 276
Social security costs 227 72
Share-based payment expense 280 572
1,177 920
The average monthly number of employees and Directors during the year was as
follows:
2024 2023
Number Number
Management and administration 7 5
7 5
Directors' remuneration is as follows:
2024 2023
US$'000 US$'000
Directors' emoluments, including salaries and fees 433 221
Social security costs 184 18
Share-based payment expense 280 572
897 811
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$200,000 (2023: US$150,000),
paid by MicroSalt Inc.
Notes to the consolidated financial statements (continued)
10. Finance expense
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Finance costs:
Interest on convertible loans 289 131
289 131
11. Taxation
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year
ended 31 December 2024 or for the year ended 31 December 2023.
Factors affecting the tax expense
The tax assessed for the year is lower than the standard rate of corporation
tax in the UK. The difference is explained below:
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Loss on ordinary activities before tax (6,131) (3,479)
Tax using the Group's domestic tax rates (1,533) (817)
Effects of:
Deferred tax adjustment - remeasurement of current year losses at future tax - (52)
rate
Unutilised tax losses carried forward 1,533 869
Total taxation credit - -
The main rate of UK corporation tax for the year ended 31 December 2024 was
25%. On 1 April 2023, the main rate of UK corporation tax increased from 19%
to 25%, resulting in an effective tax rate of 23.5% for the year ended 31
December 2023.
No provision has been made for the 2024 deferred taxation as no taxable income
has been received to date, and the probability of future taxable income is
indicative of current market conditions which remain uncertain.
At the Statement of Financial Position date, the Directors estimate that the
Group has unused tax losses of US$9,763,000 (2023: US$7,096,000).
Losses may be carried forward indefinitely in accordance with the applicable
taxation regulations.
Notes to the consolidated financial statements (continued)
12. Basic and diluted loss per share
Basic and diluted loss per share is calculated by dividing the result
attributable to equity holders by the weighted average number of ordinary
shares in issue. Loss per share is presented based on the number of shares
outstanding in the Company.
31 Dec 31 Dec
2024 2023
Loss used in calculating basic and diluted loss per share (US$) (6,042,000) (3,479,000)
Weighted average number of shares 45,851,697 8,895,498
Basic and diluted loss per share (US$) (0.13) (0.39)
The diluted earnings per share is identical to the basic loss per share as the
exercise of warrants and options would be anti-dilutive.
The weighted average number of shares for both periods presented has been
adjusted for the effect of the 3200:1 share subdivision and subsequent 1:520
share consolidation.
13. Intangible assets
Patent Trademark Total
US$'000 US$'000 US$'000
Cost
At 1 January 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
Cost
At 1 January 2024 303 31 334
Additions 197 4 201
At 31 December 2024 500 35 535
Amortisation
At 1 January 2024 13 - 13
Charge for the period 24 - 24
At 31 December 2024 37 - 37
Net book amount
At 31 December 2024 463 35 498
Notes to the consolidated financial statements (continued)
14. Property, plant and equipment
Computer Equipment Plant & equipment
Total
US$'000 US$'000 US$'000
Cost
At 1 January 2023 - 9 9
Additions - - -
At 31 December 2023 - 9 9
Depreciation
At 1 January 2023 - 1 1
Charge for the period - - -
At 31 December 2023 - 1 1
Net book amount
At 31 December 2023 - 8 8
Cost
At 1 January 2024 - 9 9
Additions 23 181 204
At 31 December 2024 23 190 213
Depreciation
At 1 January 2024 - 1 1
Charge for the period 2 10 12
At 31 December 2024 2 11 13
Net book amount
At 31 December 2024 21 179 200
15. Inventory
2024 2023
US$'000 US$'000
Raw materials 226 279
Finished goods and goods for resale 488 289
714 568
Notes to the consolidated financial statements (continued)
16. Trade and other receivables
2024 2023
US$'000 US$'000
Trade receivables 492 224
Other receivables 245 307
Prepayments 135 728
872 1,259
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 as of December 31, 2023 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 2024 220 89 37 178 524 (22) 502
31 December 2023 145 10 44 33 232 (8) 224
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$11,000)
based on historical data available to management in addition to forward
looking information utilising management knowledge. The ECL is based on 90% of
trade receivables over 60 days past due being recoverable and therefore an ECL
of 10% of trade receivables has been recognised. Based on the analyses
performed there is no material impact on the transition to ECL from previous
methods of estimating the provision for doubtful accounts.
17. Cash and cash equivalents
2024 2023
US$'000 US$'000
Cash at bank 261 117
261 117
Notes to the consolidated financial statements (continued)
18. Trade and other payables
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Amounts falling due in one year:
Trade payables 1,196 974
Other payables 47 667
Accruals 105 104
1,348 1,745
Other payables include amounts owed to related parties (see note 25).
19. Borrowings
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Current
Convertible loan notes 2,746 2,524
2,746 2,524
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 2024 (2023: US$2,000,000). 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$267,000 (2023: US$909,000) and US$Nil (2023:
US$Nil) were drawn down at 31 December 2024, respectively.
The CLNs incur interest of 10% per annum and are repayable four years after
commencement or can be converted into ordinary shares of MicroSalt Inc. upon
certain conversion events at the option of the noteholder. During the year
ended 31 December 2024, US$Nil (2023: US$500,000) was converted into ordinary
shares of MicroSalt Inc.
Notes to the consolidated financial statements (continued)
20. Share capital
31 Dec 31 Dec 31 Dec 31 Dec
2024 2024 2023 2023
Shares US$ Shares US$
Allotted, called up and fully paid
Opening number of £0.01 ordinary shares for 2023 and £0.001625 ordinary
shares for 2024
35,245,729 72,926 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 12,971,405 25,671 35,234,086 72,900
Closing number of £0.001625 ordinary shares 48,217,134 98,597 35,245,729 72,926
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
2024 2023
US$'000 US$'000
Share premium
Opening balance - 1,121
Issue of shares 7,023 2,452
Cancellation of share premium - (3,573)
Cost of share issue (840) -
Closing balance 6,097 -
( )
On 1 February 2024, the company issued 7,871,423 shares at £0.43 per new
share; also on July 01, 2024, the company issued 4,799,981warrants at £0.473
per new share. The cost associated to the IPO process included legal,
financial and advisory services for about USD820,000.
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)
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%
30 April 2024 351,000 US$0.8804 Time-based(3) 3 years US$0.88 3 years 4.36%
(1)100% of the share options vest in one annual instalment 12 months after the
grant date.
(2)2.78% of the share options vest in equal monthly instalments over 36 months
from the grant date.
(3)33.33% of the share options vest 12 months after the grant date, 33.33% of
the share options vest 24 months after the grant date and the remaining 33.33%
of share options vest 36 months after the grant date.
(4)50% of the share options vest six months after the grant date and 50% of
the share options vest 12 months after the grant date.
(5)These options vest on an exit event, such as a sale, takeover or IPO.
The number of options and exercise price for the Options granted before 2023
have been adjusted for the effect of a 3200:1 share subdivision and subsequent
1:520 share consolidation which occurred in 2023.
All options granted have an expected volatility of 80%.
On 30 September 2023, all of the options held with MicroSalt Inc. were
cancelled and reissued with the Company on the same terms as the existing
agreements. As such, the fair value of the options did not increase as a
result of the modification and therefore no adjustment was made to share-based
payment expense in 2023.
Details of the number of share options granted, exercised, lapsed and
outstanding at the end of each period as well as the weighted average exercise
prices in US$ ("WAEP") are as follows:
2024 2024 2023 2023
No. WAEP No. WAEP
Outstanding at the beginning of the year 6,710,684 0.37 6,710,684 0.37
Granted during the year 351,000 0.88 - -
Outstanding at the end of the year 7,061,684 0.39 6,710,684 0.37
Exercisable at the end of the year 6,031,897 0.37 4,569,024 0.37
The number of share options and WAEP have been adjusted for the period 2023
for the effect of the 3200:1 share subdivision and subsequent 1:520 share
consolidation.
Notes to the consolidated financial statements (continued)
22. 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
2024 2023
US$'000 US$'000
Trade receivables 502 224
Other receivables 246 307
Cash at bank 261 117
1,009 648
Financial liabilities
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Trade payables 1,196 974
Other payables 47 667
Accruals 115 104
Convertible loan note liabilities 2,746 2,524
4,104 4,269
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)
22. 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
2024 2023
US$'000 US$'000
Net foreign currency liabilities
GBP 153 208
Sensitivity analysis
A 10% strengthening of sterling against the Group's primary currencies at
31 December 2024 would have decreased equity and profit or loss by the
amounts shown below:
31 Dec 31 Dec
2024 2023
US$'000 US$'000
Effect on equity 15 21
Effect on profit or loss 15 21
A 10% weakening of sterling against the Group's primary currencies at
31 December 2024 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.
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 is based on 90% of trade receivables over 60 days past due
being recoverable. 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)
22. 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
2024 2023
US$'000 US$'000
Within 1 year:
Trade and other payables 1,244 1,641
Accruals 115 104
Later than 1 year and less than 5 years 1,359 1,745
Convertible loan note liabilities 2,746 2,524
After 5 years 2,746 2,524
Total including interest cash flows 4,105 4,269
Less: interest cash flows (289) (131)
Total principal cash flows 3,816 4,138
The convertible loan notes issued by Tekcapital Group and its interests are
repayable US$2,189,000 in 2027 and US$557,000 in 2028.
23. Related party disclosures
Key management personnel remuneration is disclosed in note 9 above.
Transaction amount Balance owed
Related party relationship Type of transaction 2024 2023 2024 2023
US$'000 US$'000 US$'000 US$'000
Tekcapital plc Convertible loan notes issued (67) 2,723 2,746 2,524
Tekcapital Europe Ltd Related party loan (642) 590 - 642
Notes to the consolidated financial statements (continued)
24. Changes in liabilities from financing activities
At 1 January Financing cash flows Non-cash changes At 31 December 2023
2023 US$'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
At 1 January Financing cash flows Non-cash changes At 31 December 2024
2024 US$'000 Interest US$'000 US$'000
US$'000 US$'000
Convertible loan notes 2,524 267 289 (334) 2,746
Total liabilities from financing activities 2,524 267 289 (334) 2,746
The non-cash change in 2024 relates a balance due to the ultimate controlling
party that was settled by issue of convertible loan note. The non-cash change
in 2023 relates to the capital contributions from the ultimate controlling
party.
25. Events after the reporting date
On 1 February 2025, the Company completed its second raise on the AIM Market of the London Stock Exchange, raising approximately £2.4m (US$3.1m).
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