REG - Tirupati Graphite - Final Results FY23
03/08/2023 07:00
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RNS Number : 1267I Tirupati Graphite PLC 03 August 2023
03 August 2023
Tirupati Graphite plc
('Tirupati', 'TG' or the 'Company')
Final Results FY23
Tirupati Graphite plc, the specialist graphite producer and developer of
sustainable new age materials, is pleased to announce its Audited Final
Results for the year ended 31 March 2023 (FY23). A copy of the Annual
Report and Accounts will be available shortly on the Company's
website, www.tirupatigraphite.co.uk (http://www.tirupatigraphite.co.uk/) .
Operational and Development Highlights FY23
● Achieved key milestone at Madagascan graphite projects:
o Completed and commissioned 18,000tpa Sahamamy plant;
o Upgraded Vatomina's capacity to 12,000tpa.
● Achieved production and first sale of 97% purity flake graphite.
● Took various measures to mitigate the risks of severe weather
conditions, stabilise operations and reduce both costs in H2 FY23 and carbon
emissions per unit of production:
o Divided processing flow sheet into two parts, shifting the first leg of
processing, which removes c.90% of impurities from the ore to the mine pit
heads.
● Undertook extensive market development activities resulting in an
increase of the number of customers supplied across geographies.
● Improved gross profits and operating margins, setting the base to
achieve profitability at corporate level.
Summary of the operating results for the year are as detailed in table below:
Particulars Units FY23 FY22 YoY Change
Total Production Metric Tons (MT) 4,770 2,996 +59%
Mining & Processing costs £ 1,512,563 935,604 +62%
Human Resources costs £ 326,783 378,671 -14%
Logistics utilities & plant admin costs £ 368,061 308,278 +19%
(Increase) / Decrease in inventory £ (676,058) (485,357) +39%
Total Costs of Production (Excl. Depreciation) £ 1,531,349 1,137,196 +35%
Cost per MT of Production £ 321 380 -15%
Total Sales Volume MT 3,982 2,663 +50%
Total Revenues £ 2,890,010 1,645,308 +76%
Average Selling price per MT of Production US$ / £ per MT 875 / 726 841 / 618 +4% in US$ / +17% in GBP terms
Gross Profit before Depreciation £ 1,358,661 508,112 +167%
Gross Margin on Sales % 47% 31% +52%
● Operating margins up due to actions taken to mitigate weather
conditions and increasing capacity across Madagascan projects to 30,000tpa.
● Strict cost discipline meant focus was maintained on achieving the
higher capacity construction and commissioning alongside production from
reorganised operations.
● Management resources and teams on the ground worked efficiently
and trained local human resources to improve productivity.
● Grew operating margins - the Company believes it has reached the
operational stage where as the production ramp up is progressed it will
achieve profitability at corporate level.
● 76% increase in revenues versus 50% increase in quantity sold
reflects higher price realisation in US$ terms and impacts of GBP depreciation
against US$ during the year.
Outlook of Madagascar Operations
● Post year end, ramping up production and sales with a target to
achieve 75 - 80% of rated capacity at the earliest possible.
● Identifying and addressing gaps like adding additional standby
power generation and other facilities to minimise plant downtime and with a
target to reach 100% capacity utilisation at the earliest.
● Substantially progressed business growth during Q1 FY24 having
sold 2,772MT as compared to 3,982MT in whole of FY23,
● Growth at a more gradual pace than targeted impacted by cash
limitations due to:
o Considerable capital used to build capacity, undertake weather mitigation
work, complete the acquisition of Suni Resources, and build inventory of
spares and consumables for the expanded operations, more so as larger
corporate buyers need to be provided 60 to 90 days payment period from
shipment date.
o Overdue VAT refund of >GBP 1 million as at end of FY23 from the Tax
Department in Madagascar (received >GBP 1 million VAT refund for the
previous periods April 2022 to December 2022).
● In discussions with possible sources for post-sale credit
financing and in negotiations with certain customers for prepayments.
● Remains engaged to ramp up production and optimise capacity
utilisation to achieve consistent operating cash generation at corporate
level.
Capex Intensity and future capacity growth in Madagascar
Cumulative investments made in CAPEX by the Company across its two projects in
Madagascar up to 31 March 2023, depreciation accrued thereon, and net
depreciated book value of the CAPEX investments made are as tabulated below:
Head of CAPEX Total Investment (£) at Cost Accrued Depreciation (£) Net Book Value (£)
As at 31.03.2023 As at 31.03.2023 As at 31.03.2023
Property Plant & Equipment 8,536,528 1,874,020 6,662,508
Infrastructure 4,727,205 417,910 4,309,295
Asset under Construction 226,634 - 226,634
Total 13,490,367 2,291,930 11,198,437
● Applied resources to ensure it continues to increase its output
and sales.
● Any further major capacity build is planned to be progressed once
c.80% capacity utilisation at the current facilities is achieved.
● Continues to work on the opportunity of increasing the capacity at
Madagascar to 36,000 tons per annum as soon as practicable.
Snapshot of Consolidated Income Statement
Summary of the Group's consolidated income statement for the year ended 31
March 2023 is as follows:
Particulars FY23 (£) FY22 (£) YOY Change (%) Commentary
Revenues 2,890,010 1,645,308 76% Revenues grew due to increased production and sales
Cost of Sales (1,531,349) (1,137,196) 35% Cost of Sales grew at much lesser rate than revenue due to operational
efficiencies
Gross Profit (Excl. Dep) 1,358,661 508,112 167% Resulted in Gross Profit increase by 167%
Less Administrative Expenses (2,197,703) (1,774,581) 24% Admin expenses increased for corporate costs, fund raise costs and increased
management team size on the ground
EBITDA (839,042) (1,266,469) (34%) Resulted in improved EBITDA loss decrease
Less Depreciation (1,267,227) (565,079) 124% Increased due to additional Capex subjected to depreciation
EBIT (2,106,269) (1,831,548) 15% Negative EBIT increased by 15% due to increased depreciation
Less Finance Cost (251,641) (140,209) 79% Finance Costs increased due to new CLN issue
EBT (2,357,910) (1,971,757) 20% Resulted in increase in negative EBT by 20 %
Less Taxes (9,775) 48,271 Impact of Deferred tax and current tax provisions in Madagascar Subsidiaries
EAT (2,367,685) (1,923,486) 23% EAT loss increased by 23 %, due to increased depreciation
Loss per share (Basic) 2.59 pence 2.24 pence 16% Basic Loss per share increased by 16%
Loss per share (Diluted) 2.59 pence 2.24 pence 16% Diluted Loss per share increased by 16%
Highly favourable long term demand matrix
● The global push for climate action and energy transition is
resulting in increased consumption of flake graphite in energy storage
lithium-ion batteries used in EVs and other applications.
● Increasing consumption of flake graphite is reported in
applications like fire safety, thermal management and advanced materials and
composites, while consumption in conventional applications continues.
● Substantial global dependence for flake graphite on Chinese
sources has created greater interest in the consumer industry for non-Chinese
sources.
● The Company is not aware of any other new material production
having commenced during the year outside China.
● The Company continues to increase its markets across geographies
as is evident from its growing sales although remains a buyers' market at this
time.
● Non-Chinese battery capacities remain substantially in development
stage and expected to add new demand over the coming years.
Inorganic growth
● Completed the acquisition of Suni Resources SA ("Suni Resources") as
announced on 3 April 2023 from ASX listed Battery Minerals Limited as part
strategy to supply c.8% of global 2030 flake graphite demand, estimated to be
no less than 5 million tons by that time.
● Acquisition brings two advanced stage flake graphite projects in
Mozambique, which host c.150 million tons of JORC Compliant reserves and
resources containing c.12 million tons of flake graphite.
● Commenced work on further optimising the studies conducted by the
previous owners to advance the projects and incorporate the in-house
advantages and processing technologies used by the Company.
● The Montepuez project is also being evaluated for its Vanadium
resource which has the potential to present as an economic by-product and
further strengthen the project's economics.
● To further strengthen its presence in Madagascar, the Company
entered into a conditional agreement in September 2022 to acquire three mining
permits in Madagascar covering a total area of 31.25km2 and located in the
vicinity of its existing projects.
Downstream and Advanced Materials
● The sub-committee of the Board comprising the Independent NEDs is
continuing to look at the alternative options to meet the objective of
developing a downstream and advanced materials business within the Company
The Company plans to provide a more detailed update to the market once these
options have been fully evaluated.
Other Developments
● In Madagascar, continue to progress second phase of exploration
activities with an enhanced target of c.10,000 diamond core drilling to be
executed and acquired a second drilling rig for the purpose.
● Completed the construction of the maiden 100 kilo watt hydro power
plant in Sahamamy and generated its first power during the year, though
commercial use of power commenced only in June 2023.
● Continued restoration of mining areas where appropriate and plans
further developed for the larger mining areas for catering to current
operations.
● Continued to integrate environmentally friendly flake graphite
processing technologies for projects in Madagascar, generating sand as a
by-product, which remains in extensive use for its internal developments.
● Continued sustainability initiatives - further details to be
included in an updated Sustainability Report.
CHAIRMAN'S STATEMENT
I am pleased to present the sixth Annual Report of the Company to our
shareholders. Tirupati Graphite ('TG") has continued to evolve and expand,
helping to address the increasing demand for graphite, one of the key critical
minerals in the energy transition, especially for emerging supply chains
non-dependent on single nations. Amidst this wider market demand, value
creation remains core to our culture, and we continue to leverage our
extensive graphite expertise and key principles to drive sustainable value
across our stakeholder base.
We have now completed two full financial years since our ordinary shares were
admitted to trading on the standard segment of the main markets of The London
Stock Exchange ("LSE"). While we continued to evolve the development of our
projects in Madagascar, we have also sharpened our long term aims, targeting
circa 8% of the global flake graphite market by 2030, estimated to be circa
400,000 tpa, in the long-term as EV adaptation gains ground. The Company set
the base for this by completing the acquisition of two world class graphite
projects in Mozambique. Flake Graphite and its derivatives are essential
materials in technologies for achieving improved energy efficiency,
e-mobility, fire hazard safety, thermal management, and evolution of new age
materials. We recognise its importance as a material, its market demand
expectations, the economics that create a sound business model, and the
opportunities it presents us with.
We are pleased to report that our first stage of development to a capacity
that enables us to become a profitable Company at the Corporate level was
completed during the year under reporting and incorporated successful
operational innovations at our producing projects. The Company also
successfully completed the acquisition of Suni Resources S.A., incorporated in
Mozambique, post year end. Across its two projects, Suni holds a globally
significant resource base that sets an expanded foundation for our significant
ambitions as part of the global energy transition, with particular focus on
the electric vehicle segment.
It has been tireless efforts from the Board and management of the Company that
has led us to reach this stage and we will continue to build from here with
our step-by-step approach. Achieving the capacities, we have to date
significantly strengthened our standing as a company and our prospects for
growing further business moving forward. We will refine our capacity
development for a short period and assess the location options for our
near-term future capacity additions that will best fit the needs of our
growing business, whether in Madagascar or in Mozambique. In this period, it
is our target to fully optimise the outcomes of the capacities already created
and continue to develop deep relationships with markets of this critical
mineral.
Shishir Poddar
Chair
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
Notes 2022
2023
£ £
Continuing operations
Revenue 5 2,890,010 1,645,308
Cost of Sales 6 (1,531,349) (1,137,196)
Depreciation of Operating Assets (1,024,564) (482,641)
Gross profit 334,097 25,471
Administrative expenses 7 (2,440,366) (1,857,019)
Operating loss (2,106,269) (1,831,548)
Finance costs 9 (251,641) (140,209)
Loss before income tax (2,357,910) (1,971,757)
Income tax 10 (9,775) 48,271
Loss for the year attributable to owners of the Company (2,367,685)
(1,923,486)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (1,381,371) (361,662)
Total comprehensive loss for the year attributable to the Group (3,749,056) (2,285,147)
Earnings per share attributable to owners of the Company Pence per share Pence per share
From continuing operations:
Basic and Diluted 11 (2.59) (2.24)
The accompanying accounting policies and notes are an integral part of these
finance
Consolidated and Company Statement of Financial Position
As at 31 March 2023
Notes Group Company
2023 2022 2023 2022
£ £ £ £
Non-current assets
Investments in subsidiaries 13 - - 3,921,348 3,901,023
Property, plant and equipment 14 11,198,437 7,356,121 - -
Deferred tax 24 74,046 75,242 - -
Deposits 32,455 6,806 - -
Intangible assets 12 3,599,065 3,571,196 40,970 40,970
Total non-current assets 14,904,003 11,009,365 3,962,318 3,941,993
Current assets
Inventory 16 1,386,558 732,274 - -
Trade and other receivables 15 4,755,629 4,242,635 21,213,389 13,858,647
Cash and cash equivalents 289,338 1,534,023 130,340 1,505,410
Total current assets 6,431,525 6,508,932 21,343,729 15,364,057
Current liabilities
Trade and other payables 17 1,684,808 730,869 735,440 315,207
Borrowings 19 909,000 536,000 909,000 536,000
Total current liabilities 2,593,808 1,266,869 1,644,440 851,207
Net current assets 3,837,717 5,242,063 19,699,289 14,512,850
Non-current liabilities
Borrowings 19 1,862,500 473,000 1,862,500 473,000
Other payables 17 31,080 31,232 - -
Total non-current liabilities 1,893,580 504,232 1,862,500 473,000
NET ASSETS 16,848,140 15,747,196 21,799,107 17,981,843
Equity
Share capital 20 2,536,195 2,173,497 2,536,195 2,173,497
Share premium account 24,462,976 19,975,356 24,462,976 19,975,356
Warrant reserve 21 116,065 130,557 116,065 130,557
Foreign exchange reserve (2,157,579) (776,208) - -
Retained losses (8,109,518) (5,756,006) (5,316,129) (4,297,566)
Equity attributable to owners of the Company 16,848,140 21,799,107
15,747,196 17,981,843
TOTAL EQUITY 16,848,140 15,747,196 21,799,107 17,981,843
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 not to present the company statement of comprehensive
income.
The loss for the company for the year was £1,032,736 (2022: £1,400,141).
The accompanying accounting policies and notes are an integral part of these
financial statements.
The financial statements were approved by the Board of Directors on 02 August
2023 and signed on its behalf by:
Mr Shishir Poddar
Executive Chairman and Managing
Director
Company registration number: 10742540
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Attributable to the owners of the company
Share capital Share premium Foreign exchange reserve Share warrants reserve Retained losses TOTAL
EQUITY
£ £ £ £ £ £
Balance at 1 April 2021 1,871,084 10,426,988 (414,546) (3,832,520) 8,181,563
130,557
Loss for the period - - - - (1,923,486) (1,923,486)
Other Comprehensive Income: Exchange translation loss on foreign operations - - (361,662) - (361,662)
-
Total comprehensive income for the year: - - (361,662) (1,923,486) (2,285,148)
-
Transactions with owners
Shares issued 302,413 9,548,368 - - - 9,850,781
Balance at 31 March 2022 2,173,497 19,975,356 (776,208) (5,756,006) 15,747,196
130,557
Loss for the year - - - - (2,367,685) (2,367,685)
Other Comprehensive Income: Exchange translation loss on foreign operations - - (1,381,371) - - (1,381,371)
Total comprehensive income for the year: - - (1,381,371) - (2,367,685) (3,749,056)
Transactions with owners
Shares issued 362,698 4,487,302 - - - 4,850,000
Adjustment to Warrant Reserve - 319 - (14,492) 14,173 -
Balance at 31 March 2023 2,536,195 24,462,976 (2,157,579) 116,065 (8,109,518) 16,848,140
The accompanying accounting policies and notes are an integral part of these
financial statements.
Share capital - Represents the nominal value of the issued share capital.
Share premium account - Represents amounts received in excess of the nominal
value on the issue of share capital less any costs associated with the issue
of shares. During the year, £250,000 was adjusted as share issue expenses
against share premium reserves.
Retained losses - Represents accumulated comprehensive income for the year and
prior years excluding translation.
Foreign exchange reserve - Represents exchange differences arising from the
translation of the financial statements of foreign subsidiaries and the
retranslation of monetary items forming part of the net investment in those
subsidiaries.
Share warrant reserve - Represents reserve for equity component of warrants
issued as per IFRS 2 share-based payments.
Company Statement of Changes in Equity
For the year ended 31 March 2023
Attributable to equity shareholders
Share capital Share premium Share warrants reserve Retained losses TOTAL
EQUITY
£ £ £ £ £
Balance at 1 April 2021 1,871,084 10,426,988 (2,897,425) 9,531,204
130,557
Loss for the period - - - (1,400,141) (1,400,141)
Total comprehensive income: - - (1,400,141) (1,400,141)
-
Transactions with owners
Shares issued 302,413 9,548,368 - - 9,850,781
Balance at 31 March 2022 2,173,497 19,975,356 (4,297,566) 17,981,843
130,557
Loss for the year - - - (1,032,736) (1,032,736)
Total comprehensive income: - - - (1,032,736) (1,032,736)
Transactions with owners
Shares issued 362,698 4,487,302 - - 4,850,000
Adjustment to warrant reserve - 319 (14,492) 14,173 -
Balance at 31 March 2023 2,536,195 24,462,976 116,065 (5,316,129) 21,799,107
The accompanying accounting policies and notes are an integral part of these
financial statements.
Share capital - Represents the nominal value of the issued share capital.
Share premium account - Represents amounts received in excess of the nominal
value on the issue of share capital less any costs associated with the issue
of shares. During the year, £250,000 was adjusted as share issue expenses
against share premium reserves.
Retained losses - Represents accumulated comprehensive income for the year and
prior years.
Share warrant reserve - Represents reserve for equity component of warrants
issued as per IFRS 2 share-based payments.
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
2023 2022
£ £
Cash used in operating activities
Loss for the year (2,357,910) (1,971,757)
Adjustment for:
Depreciation 1,267,227 565,079
Convertible loan note costs ("CLN") 93,125 -
Share based payments expense - -
Lease interest 3,334
Finance costs 251,641 140,209
Unrealized Forex Loss / (Gain) (41,054) -
Working capital changes:
Increase/(decrease) in inventories (654,284) (271,181)
Increase/(decrease) in receivables (1,566,964) (547,603)
Increase/(decrease) in payables 861,019 285,596
Increase/(decrease) in DTA & Other assets (25,649) (10,723)
Taxes paid (319) -
Net cash from/(used in) operating activities (2,169,835) (1,810,380)
Cash flows from investing activities:
Purchase of tangible assets (2,797,818) (5,151,562)
Advance towards asset purchase** (2,632,525) (2,592,163)
Net cash (used in) investing activities (5,430,343) (7,743,725)
Cash flows from financing activities*
Proceeds from Shares issued (net of costs) 4,750,000 9,576,781
Proceeds from issue of Convertible loan notes (net of costs)(see below note) 1,769,375 -
Lease Liability (10,087) 7,368
Finance cost (168,496) (140,209)
Net cash from financing activities 6,341,111 9,436,572
Effects of exchange rates on cash and cash 14,382 -
equivalents
Net (decrease)/increase in cash and cash equivalents (1,244,685) (110,165)
Cash and cash equivalents at beginning of period 1,534,023 1,644,189
Cash and cash equivalents at end of period 289,338 1,534,023
The accompanying accounting policies and notes are an integral part of these
financial statements.
*For reconciliation of cash and non-cash items from financing activities refer
Note No. 19 (Convertible loan notes) & note 20 (share capital).
**Advance towards asset purchase is for advance paid towards acquisition of
Suni resources.
Note: Reconciliation of Convertible Loan Notes
2023 2022
£ £
Opening Balance as on 1(st) April 1,009,000 1,283,000
Issued during the year 1,862,500 -
Redeemed/Converted during the year (non cash item) (100,000) (274,000)
Closing Balance as on 31(st) March 2,771,500 1,009,000
Particulars 2023 2022
£ £
Amount Received from issue 1,862,500 -
Issue cost Paid against consideration (93,125) -
Net Amount received from issue 1,769,375 -
Company Statement of Cash Flows
For the year ended 31 March 2023
2023 2022
£ £
Loss for the year (1,032,736) (1,400,141)
Adjustment for:
Increase in inventories - 212,580
Share based payments - -
Unrealized Forex Loss / (Gain) 20,675 -
CLN issuance cost 93,125 -
Finance costs 251,641 140,209
Working capital changes:
Increase/(decrease) in receivables (87,712) (5,718,677)
Increase/(decrease) in payables 319,244 95,427
Net cash used in operating activities (435,763) (6,670,602)
Cash flows from investing activities:
Sale of tangible assets - 201,725
Advance towards asset purchase** (2,632,525) (2,592,163)
Loans to Subsidiaries (4,634,505) -
Investment in subsidiaries (20,325) (361,575)
Net cash (used in) investing activities (7,287,355) (2,752,013)
Cash flows from financing activities*
Shares issued 4,750,000 9,576,781
Proceeds from issue of convertible loan notes 1,769,375 -
Finance costs (168,496) (140,209)
Net cash from financing activities 6,350,879 9,436,572
Effects of exchange rates on cash and cash equivalents (2,831) -
Net (decrease)/increase in cash and cash equivalents (1,375,070) 13,956
Cash and cash equivalents brought forward 1,505,410 1,491,454
Cash and cash equivalents carried forward 130,340 1,505,410
*For reconciliation of cash and non-cash items from financing activities refer
Note No. 19 (Convertible loan notes) & note 20 (share capital).
**Advance towards asset purchase is for advance paid towards acquisition of
Suni resources.
The accompanying accounting policies and notes are an integral part of these
financial statements.
Note: Reconciliation of Convertible Loan Notes
2023 2022
£ £
Opening Balance as on 1(st) April 1,009,000 1,283,000
Issued during the year 1,862,500 -
Redeemed/Converted during the year (non cash item) (100,000) (274,000)
Closing Balance as on 31(st) March 2,771,500 1,009,000
Particulars 2023 2022
£ £
Amount Received from issue 1,862,500 -
Issue cost Paid against consideration (93,125) -
Net Amount received from issue 1,769,375 -
Notes to the Financial Statements
1. General Information
Tirupati Graphite plc (the "Company") is incorporated in England and Wales,
under the Companies Act 2006. The registered office address is given on
Company Information page.
The Company is a public company, limited by shares. On 14 December 2020 the
ordinary shares of the Company were admitted on the official list of the FCA
and to trading on the main market of the London stock exchange through
standard listing.
The principal activities of the Company and its subsidiaries (the "Group") and
the nature of the Group's operations are set out in the Strategic Report.
These consolidated financial statements are presented in pounds sterling since
that is the currency of the primary economic environment in which the Group
and Company operates.
2. Adoption of new and revised UK adopted IAS
New Standards
The Group and Company have adopted all recognition, measurement, and
disclosure requirements of IFRS, including any new and revised standards and
Interpretations of IFRS, in effect for annual periods commencing on or after 1
April 2022. The following IFRS or IFRIC interpretations were effective for the
first time for the financial year beginning 1 January 2022. Their adoption has
not had any material impact on the disclosures or on the amounts reported in
this financial information:
Standards/interpretations Description Effective from
IFRS 3 amendments Business Combinations 1 January 2022
IAS 16 amendments Property, Plant and Equipment 1 January 2022
IAS 37 amendments Provisions, Contingent Liabilities and Contingent Assets 1 January 2022
IFRS 9 amendments Annual Improvements to IFRS Standards 2018-2020 (fees in the 10 percent test 1 January 2022
for derecognition of financial liabilities).
Standards which are in issue but not yet effective:
At the date of authorisation of these financial statements, the following
Standards and Interpretation, which have not yet been applied in these
financial statements, were in issue but not yet effective.
Standard or interpretation Description Effective date
IAS 1 Amendments - Classification of Liabilities as Current or Non-current 1 January 2023
IAS 8 Amendments - Definition of Accounting estimate 1 January 2023
IAS 12 Amendments - Deferred Tax related to Assets and Liabilities arising from a 1 January 2023
Single Transaction
IAS 1 amendments and IFRS practice statement 2 Disclosure of accounting policies 1 January 2023
The Group and Company have not early adopted any of the above standards and
intends to adopt them when they become effective.
3. Significant Accounting Policies
Basis of Preparation
These consolidated financial statements have been prepared in accordance with
UK adopted international accounting standard (UK- adopted IAS) in conformity
with the requirements of the Companies Act 2006 and in accordance with the
requirements of the Companies Act 2006.
The financial statements have been prepared on the historical cost basis,
except for financial instruments that are measured at the fair values at the
end of the reporting period. Historical cost is generally based on the fair
value of the consideration given in exchange for goods and services.
The preparation of financial statements in conformity with UK-adopted IAS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements, are disclosed in Note 4.
The principal accounting policies adopted are set out on the following pages.
Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Business
Review and Strategic Report Sections. The financial position of the Group and
the Company, their cash flows and liquidity positions are contained in the
financial statements. The expected evolution of the business and significant
post year end events is also described in the business review and strategic
reports. In addition, the Annual Report discloses the Group's objectives,
policies and processes for managing its business and capital; its financial
risk management objectives; details of its financial instruments; and its
exposure to credit and liquidity risk.
Since its Initial Public Offering and admission for trading on the standard
segment of the London Stock Exchange, the company has executed development to
reach a capacity of 30,000 tons flake graphite production by end of the
reporting period and is engaged in ramping up production while selling its
produce globally. In the period the Company continued to produce and sell from
the created facilities and its annual revenues continue to grow. The Company
further reported positive operating gross cash margins throughout the period
and addressed any challenges that came on its way successfully finding
solutions as has been reported by the Company on a continued basis.
For the year under reporting, the Company achieved 47% operating margins at a
total production of 4,770MT clocking sales of 3982 tons and yielding revenue
of £2,890,010 up 76% over previous year whereas the new 18,000 tons capacity
was only commissioned at the end of the year. In the first quarter of the
current financial year, the Company achieved sales of 2772 tons which
represent c.70% of the quantity sold in the year under reporting and the
Company continues to ramp up its production and sales with a target to achieve
75-80% production and sales on the installed capacity. According to the
Company's estimates, it achieves positive operating cash flows at the
corporate level at an estimated 800-900 tons of sales per month.
The Company raised a total gross sum of £6,862,500 during the year by way of
capital raise activities, 1,862,500 by way of Convertible Loan Notes and
£5,000,000 by way of equity placing. Since admission in December 2020, the
Company had raised a sum of £16,000,000 up to 31 March 2022. Thus, the
Company has an established track record for raising funds for its development,
though it is not guaranteed that the Company will be able to raise funds
successfully in the future. However, the Company's current established
capacities and operations provide reasonable basis to assume that the Company
can continue to meet its costs and cash requirements at the consolidated level
with its revenues.
While the Company has been in a stringent cash position at the close of the
year under reporting, the Company continues to produce and sell and realise
sale proceeds increasing output step by step within its available resources.
The Company is also engaged to explore possible routes for financing its
receivables or by way of convertible debt to ease its liquidity position it
continues to manage its business within the available resources.
Taking in to account the comments above, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future, given its current resources, installed
capacities and operations, and growing sales and revenues which are expected
to add positive operating cash flows which the Company can use and leverage
for its future growth.
Were the Company unable to meet its cash flow needs from its current revenue
resources, the Company shall not hesitate from raising any gap funding and the
Board believes and has demonstrated that it has the ability to do so.
Therefore, the Company continues to adopt the going concern basis of
accounting in preparing the financial statements and is of the view that with
the development of the business and creation of capacities over the past few
years, it has attained the status that it shall remain a going concern for the
foreseeable future.
The Company notes that even though the Company has historically successfully
raised capital to meet its capital needs, there is no certainty that the
Company shall be able to raise funds over the next 12 months to meet its
obligations and/or needs if the situation so requires. Thus the auditors made
reference to include a material uncertainty in relation to going concern in
their audit opinion.
Basis of Consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated
financial statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
The Group consists of Tirupati Graphite plc and its wholly owned subsidiaries
Tirupati Madagascar Ventures and Etablissements Rostaing.
In the company financial statements, investments in subsidiaries are accounted
for at cost less impairment.
The consolidated financial statements incorporate those of Tirupati Graphite
plc and all of its subsidiaries (i.e. entities that the group controls through
its power to govern the financial and operating policies so as to obtain
economic benefits). Subsidiaries acquired during the year are consolidated
using the purchase method. Their results are incorporated from the date that
control passes.
All financial statements are made up to 31 March 2023. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the
group.
All intra-group transactions, balances, and unrealised gains on transactions
between Group companies are eliminated by accounting resulting foreign
exchange difference into Other Comprehensive Income and foreign exchange
reserve on consolidation.
Segment Reporting
The Group's chief operating decision makers are considered to be the Board and
senior management who have determined that as the Group has only Graphite
mining extraction activities in one region, Madagascar as all the activities
are closely linked and monitored as one operating and geographical segment.
Thus its Corporate Office in London, UK and the Company is not seen as a
separate reporting segment. Therefore results, assets and liabilities of the
operating segment are the same as presented in the Group's primary statements.
Previously Company reported segment information, relating to assets and
liabilities of the group's subsidiaries which the management has reassessed,
leading to the conclusion that such segment reporting is not relevant and
hence removed from the current report.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods or services supplied in
course of ordinary business, stated net of discounts, returns and value added
taxes. The Group recognises revenue in accordance with IFRS 15 at either a
point in time or over time, depending on the nature of the goods or services
and existence of acceptance clauses.
The Incoterms at which the Company conducts its sale of goods are Free on
Board (FOB) or Cost Insurance Freight (CIF) basis. Under these incoterms as
per Uniform Customs and Practices the point of transfer of risk and rewards
for the goods sold to the buyer is the port from which the goods are shipped.
Thus, the point of revenue recognised by the Company is the entry of goods
duly stuffed in containers and sealed at which point the charge of goods are
transferred to the prearranged shipping line who issue the relevant shipping
document as the goods are loaded on the ship.
Foreign Currencies
For each entity, the Group determines the functional currency, and items
included in the consolidated financial statements of each entity are measured
using that functional currency. The Group's financial statements are prepared
and presented in in Pounds sterling, which is its functional currency.
Foreign Currency Transactions
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Foreign exchange differences arising on
translation are recognised in profit or loss. The subsidiaries are accounted
into Madagascar local currency i.e., Malagasy Ariary. For the purpose of
consolidation, the year-end assets and liabilities are converted at closing
rate and all income statement items are converted using average rate for the
year. The difference arising on such is passed through Other Comprehensive
Income and Foreign Exchange Reserves.
Taxation
Income tax represents the sum of current tax and deferred tax.
Current tax
Current tax is based on taxable profit or loss for the year. Taxable profit or
loss differs from net profit or loss as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
A provision is recognised for those matters for which the tax determination is
uncertain, but it is considered probable that there will be a future outflow
of funds to a tax authority. The provisions are measured at the best estimate
of the amount expected to become payable. The assessment is based on the
judgement of tax professionals within the Company supported by previous
experience in respect of such activities and in certain cases based on
specialist independent tax advice.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of
intangible asset or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset is realised based on tax
laws and rates that have been enacted or substantively enacted at the balance
sheet date. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Assets Under Construction
All expenditure on the construction, installation or completion of
infrastructure facilities is capitalised as construction in progress within
"Assets Under Construction". Once production starts at a project that was
under construction, all assets included in "Assets Under Construction" are
transferred into "Property, Plant and Equipment". It is at this point that
depreciation/amortisation commences over its useful economic life.
Property, Plant and Equipment
Property, Plant and Equipment in the course of construction for production,
supply or administrative purposes, or for purposes not yet determined, are
carried at cost, less any recognised impairment loss. Costs includes
professional fees and, for qualifying assets, borrowing costs capitalised in
accordance with the Group's accounting policy. Depreciation of these assets,
on the same basis as other property assets, commences when the assets are
ready for their intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and
any recognised impairment loss. Depreciation is recognised so as to write off
the cost or valuation of assets (other than freehold land and properties under
construction) less their residual values over their useful lives, using the
straight-line method, on the following bases:
Plant and
machinery
10%-25% per annum
Infrastructure and
fixtures*
10%-25% per
annum
*It includes mine developments assets, furniture & fixtures land lease
assets, engineering centre and similar assets that are not included in Plant
and Machinery.
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes
in estimate accounted for on a prospective basis.
An item of Property, Plant and Equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. The gain or loss arising on the disposal or scrappage of an asset
is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in income.
Mining Exploration and Evaluation
The Company carries out exploration and evaluation activities whenever
required with the help of company's consultant and in house geologists to
determine if the exploration results returned during the period warrant
further exploration expenditure and have the potential to result in an
economic discovery. The amount of expenses incurred are towards pumping and
manpower which are small in amounts and company's charges the same to income
statement and does not recognise separate asset under IFRS 6, since company
finds it immaterial to show it as recoverable asset. During the year, amount
of £1,659 (2022: Nil) is charged to income statement in the nature of
research and development expenses.
Intangible assets recorded at fair-value on business combination
The Company acquired two entities located in Madagascar which are its current
operating assets. These assets are acquired as part of a business combination.
When a business combination results in the acquisition of an entity whose only
significant assets are its exploration asset and/or rights to explore, the
Directors consider that the fair value of the exploration assets is equal to
the consideration. Any excess of the consideration over the capitalised
exploration asset is treated in the form of intangible exploration asset. The
Company sees no reason for any impairment in the value of such intangible
exploration asset and thus carry's the same as an asset in its financials at
present. The Company will continue to assess this in its future financial
statements and if and when prudent, may consider reclassifying it to mine
development asset.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic
benefits are expected from use or disposal. Gains or losses arising from
derecognition of an intangible asset, measured as the difference between the
net disposal proceeds and the carrying amount of the asset, are recognised in
profit or loss when the asset is derecognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where applicable, direct labour costs and
those overheads that have been incurred in bringing the inventories to their
present location and condition. Cost is calculated using the weighted average
method. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs to be incurred in marketing, selling
and distribution.
Investments
Investments in subsidiaries are held at cost less any impairment.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Financial assets
Initial recognition and measurement
The Group applies IFRS 9 "Financial Instruments" and elected the simplified
approach method.
The Group classifies its financial assets in the following categories: loans
and receivables and fair value through profit and loss. The classification
depends on the nature of the assets and the purpose for which the assets were
acquired. Management determines the classification of its financial assets at
initial recognition and this designation at every reporting date.
Trade and Other Receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The principal
financial assets of the Company are loans and receivables, which arise
principally through the provision of goods and services to customers (e.g.,
trade receivables) but also incorporate other types of contractual monetary
assets. They are included in current assets, except for maturities greater
than twelve months after the balance sheet date. These are classified as
non-current assets.
The Group's loans and receivables comprise trade and other receivables and
cash and cash equivalents in the Consolidated Statement of Financial Position.
Financial assets are measured upon initial recognition at fair value plus
transaction costs directly attributable to the acquisition of the financial
assets, except for financial assets measured at fair value through profit or
loss ("FVTPL") in respect of which transaction costs are recorded in profit or
loss. Other financial assets are classified into the following specified
categories: financial assets as "at fair value through profit and loss"
and "loans and receivables". The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial
recognition. The financial assets are subsequently measured at amoritized cost
except for assets recognized at FVTPL.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short-term highly liquid investments with maturities of three
months or less. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a component of
cash and cash equivalents in the consolidated cash flow statement.
Financial assets - impairment
The Group assesses on a forward-looking basis the expected credit losses
associated with its instruments carried at amortized cost and FVTPL"). The
impairment methodology applied depends on whether there has been a significant
increase in credit risk. For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
Non-financial assets - impairment
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets, to determine whether there is any indication
that these assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated to determine the
extent of the impairment loss (if any). Provision is made for any impairment
and immediately expensed in the period.
The recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried
at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
Financial liabilities and equity instruments issued by the Group
Financial liabilities and 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 Group
after deducting all of its liabilities. Equity instruments issued by the Group
are recorded at the proceeds received, net of direct issued costs.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised costs, using the effective interest rate method.
Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group uses the definition of a
lease in IFRS 16.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term, unless the
lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Generally, the Group uses
its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by based on the rate at it
which has secured borrowing and makes certain adjustments to reflect the terms
of the lease and type of the asset leased. The lease liability is measured at
amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset or is recorded in
profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Borrowings
These financial liabilities are all interest bearing and are initially
recognised at amortised costs and include the transaction costs directly
related to the issuance. The transaction costs are amortised using the
effective interest rate method over the life of the liability.
Convertible Loan Notes are recorded at their issue price. Any interest due on
these CLNs is recorded on accrual basis. On conversion/redemption the face
value of converted CLNs is reduced from the total carried value. Interest at
12% p.a. is paid semi-annually. The Company has issued Convertible Loan note
during the year and in past. In reference to the Company's specific
circumstances and financial position, the convertibility offering within the
CLN's document is not assessable as a component in exchange of a lesser
coupon. The Company's policy on the conversion option provided to the CLN
subscribers was in exchange of not getting to the direct equity placement,
with conversion defined at a premium to the price of the Company's shares at
the time of issue of CLN's thus reducing possible dilution for its existing
shareholders. Thus, the equity component of CLN's is not accounted for as it
is not considered to be material to the financial statements.
Financial liabilities at Fair Value Through Profit or Loss ("FVTPL")
A financial liability is classified as at FVTPL if it is classified as
held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or
loss.
Other financial liabilities
Other financial liabilities are initially measured at fair value, net of
transaction costs. Other financial liabilities are subsequently measured at
amortised cost using the effective interest method, as set out above, with
interest expense recognised on an effective yield basis. The Company's Lease
Liability is recorded.
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 using
the Black-Scholes model. The fair value determined at the grant date is
expensed on a straight-line basis over the vesting period, based on the
estimate of shares that will eventually vest. A corresponding adjustment is
made to equity.
When the terms and condition 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 grant
date fair value of the original share-based payment. The share-based payment
expense is not adjusted if the modified fair value is less than the original
fair value.
Cancellations or settlements are treated as an acceleration of vesting and the
amount that would have been recognised over the remaining vesting period is
recognised immediately.
4. Critical Accounting Estimates and Judgements
The preparation of financial statements in conformity with UK adopted IAS
requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of sales and expenses during the reporting period. Although
these estimates are based on management's best knowledge of the amount, event
or action, actual results ultimately may differ from those estimates.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial period are discussed below.
a) Impairment of assets
The Company is required to test, on an annual basis, whether its non-current
assets have suffered any impairment. Determining whether these assets are
impaired requires an estimation of the value in use of the cash-generating
units to which the assets have been allocated. The value in use calculation
requires the Directors to estimate the future cash flows expected to arise
from the cash-generating unit and a suitable discount rate to calculate the
present value. Subsequent changes to the cash generating unit allocation or to
the timing of cash flows could impact on the carrying value of the respective
assets. The Company uses factors like estimated quantity of production and
sales, basket price, variable cost per ton, fixed costs, discounting rate and
working capital changes to judge the impairment of assets. The company has
done impairment testing taking in consideration for 10 years and not 5 years
as suggested by standard, because company believes it is in project
development stage and it will eventually take that sufficient time to explore
mine resources and get out economic benefit of it.
Production assets
In accordance with the accounting principles and standards followed by the
Company under the relevant standards, we have conducted an assessment of our
capital assets to determine if there are any indicators of impairment in the
carrying value of capital assets as at 31 March 2023. We are pleased to report
that as of 31 March 2023, there are no indications of impairment for our
capital assets.
Components of capital assets of the Company including exploration assets,
drilling and mining equipment, processing plant and equipment, Infrastructure
and project development etc and form a significant component of our balance
sheet. These play a vital role in generating current and future economic
benefits for the company. These assets have been valued appropriately,
considering their expected useful lives.
The total value of capital assets of the Company as at 31 March 2023 was as
below:
a. At Cost
: £
13,490,367
b. Book value :
£ 11,198,437
We regularly monitor various factors that could potentially affect the value
of our capital assets, such as changes in market conditions, technological
advancements, legal or regulatory changes, and physical damage. An assessment
of impairment of production assets has been carried out by the Company
considering whether the net losses of the Company have impaired its production
assets and whether the net present value of the production assets is lower
than its book value and has come to the conclusion that there is no impairment
in the value of its production assets.
Impairment of intangible assets
The intangible exploration assets of the Company relate to the excess of
consideration paid over the book value as acquired at the time of acquisition
of the assets the Company holds in Madagascar, which stood at £3,599,065 as
at 31 March 2023 (2022: £3,571,196). Such assets have an indefinite useful
life as the Group has a right to renew exploration licences and the asset is
only amortised once extraction of the resource commences. Management tests for
impairment annually whether exploration projects have future economic value in
accordance with the accounting policy stated in Note 3. The company holds c.33
square kilometres of flake graphite mining permits for forty years. Currently
the Company has reported mineral resource estimates for only about 30% of
identified mineral bearing zones. The Company sees no indictors of impairment
under IFRS6 as the licences remain valid and further exploration is planned.
The Companies net present value assessments in relation assets show
significant higher potential as compared to the Book Value of the assets.
Hence, the Company finds no justification for impairment to be charged.
Useful economic lives of property, plant and equipment
The annual depreciation charge for different asset classes under property,
plant and equipment are charged considering the relevant factors to that asset
class. For all asset classes depreciation is accounted for on the basis of
norms set under the local regulations which is in the range of 10 to 25%
depending on the asset type signifying useful life of 10 years or below. The
Company has no reasons to believe that the useful life of the assets is below
these. Thus, at the year end, Company assessed that there is no requirement of
changing the useful economic life of its assets.
In regard to Mine Development assets which is also a part of property plant
and equipment, this contains expenses relating to costs incurred for
determination of availability of graphite deposits, ore resources and expenses
related to developments of mining for the purpose of providing raw material to
the processing plants that have been set up by the Company at its projects.
The Company adapted an unconventional path for its development the gist of
which is as below:
a. Alongside continuation of exploration, it evolved a development path
utilising its internal expertise. This path envisaged modular development of
production capacities alongside continuation of graphite resources estimations
made under JORC 2012 standards.
b. In 2019, SRK consulting assessed the first set of activities
performed by the company for the purpose of resource determination and the CPR
defined resources in the projects under Inferred and Indicated categories.
c. According to conventional approach for development of mining
activities, this CPR was not enough for setting up mining and processing
facilities, but the Company preferred to commence development of the projects
on the back of its own expertise.
d. The development is also staged, and the capacities installed by the
Company to date are more of less 35% of the total that it intends to install
at these projects.
e. Given that the Company initiated production activities it prudently
preferred to account for amortisation of mine development assets.
f. Since no ore reserves are established by the CPR and ongoing investments
continue in Mine Development arena it is not in accordance with usual
practices that the Company could consider quantitative amortisation of the
costs incurred under the head.
g. The Company therefore preferred to assess what will be the minimum
worst-case life of mine on its operations and this was assumed as 10 years for
worst case scenario.
h. The Company therefore adopted a flat 10% annual rate of
Amortisation for the Mine Development Assets for the past years.
i. It is important to note that costs under this head will continue
to be incurred till such time that the Company continues its exploration
activities and will ultimately culminate into an updated Competent Person
Report engaged by the Company.
j. At this stage the Company may prudently consider to change its
method of amortisation of the Mine Development assets based on quantitative
considerations if it is so prudent to do.
Intragroup receivables
The Company assessed the recoverability of intragroup receivables, and it does
not require any impairment adjustment in current financial year. This on the
basis that the subsidiaries have remained in investment mode until end of this
year and it is only now that the opportunity to produce at a annual rate that
leads to profitability of the subsidiaries have been achieved. The Company
shall review this status further at the end of FY24 to assess further on
Intragroup receivables.
b) Provision for restoration costs
The Company makes good any provision for the cost of rehabilitating the
end-of-life production sites and related production facilities at the same
time as production. The rehabilitation costs are charged to the Income
statement as incurred. As is privy to the Group's environment and
sustainability initiatives management take note of the Environment Commitment
Book which underlines in-county regulations set out by the Malagasy
Government, and the environmental conditions within the mining permit, which
covers the Group's obligations towards restauration and rehabilitation. The
group has adopted a principle of ongoing rehabilitation activities. The
directors do not believe any further provision Is required because the project
areas in Madagascar are located within a moderately undulating area and the
Company's mine planning takes this into consideration the topographic
advantage. In addition, the nature of the deposit and pit design is such that
rehabilitation and restoration of mining areas is an ongoing and concurrent
activity undertaken by the Group. In line with the requirements of the
licence, they have already incurred costs relating to the construction of
anti-erosion infrastructures, dam cleaning, wall making, soil restoration and
some reforestation of areas.
Following limited and small-scale production to date, the Group's operations
after the year end will significantly increase and management will therefore
undertake another detailed analysis of their environmental and restoration
obligations following increased activity in line with its second
Sustainability Report which shall be formulated against the Global Reporting
Initiative (GRI) Index, one of leading industry benchmarks which has been
adopted by the Company. The Sustainability Report will provide deeper insights
on the various mechanisms and steps taken by the Company to meet their legal
obligations and improve the lives of people in some of the most deprived
regions and its workplaces, reduce environmental impacts and to have
environment friendly operations across the various legs of its business. The
Sustainability Report will also highlight the goals and targets set by the
Company for the longer-term and the green technologies developed by the
Company. Once this exercise is completed, management will review the
findings and assess whether any activities are to be performed in this
regard.
c) Recoverability of VAT
The Company has been regularly receiving VAT refunds generally in 3-6 months
of time and believes that the balance standing of GBP 1,058,832 in Trade and
other receivables will be recovered in due course. Hence there is no
requirement of writing off such assets.
d) Going Concern
The financial statements have been prepared on the basis that the Company
remains a going concern. The management's judgement are based on the Company's
current stage of development and estimated future cash flows from operation
and the ability of the Company to raise funds if the need so be. The auditors
have preferred to include a material uncertainty in relation to going concern
in their audit opinion.
e) Capitalisation of Costs for development
The Company does not employ any Engineering and Construction contractors for
development of its projects and conducts mine and infrastructure development
activities also using its in house resources including mining equipment fleet
and human resources. During the year the Company executed extensive
development activities across its projects along with operations of the
facilities that were completed. Adopting conservative principles for
capitalisation, the management uses its judgement for capitalisation of
reasonable part of those resources that are used in development activities.
5. Revenue from Contracts with Customers
The Group & the company derives revenue from the transfer of goods at a
point in time in the following major product lines and geographical regions:
2023 USA Europe Africa Asia Total
Revenue from external customers 40,289 717,786 36,024 2,095,912 2,890,010
Timing of recognition:
At a point in time 40,289 717,786 36,024 2,095,912 2,890,010
2022 USA Europe Asia Total
Revenue from external customers 34,000 224,033 1,387,275 1,645,308
Timing of recognition:
At a point in time 34,000 224,033 1,387,275 1,645,308
Following customers constituted more than 10% of the revenue, their respective
share of revenue is mentioned below:
2023 2022
£ £
Customer A 895,809 224,033
Customer B 471,867 488,330
Customer C 408,780 287,247
Customer D 339,710 430,429
Customer E 292,414 -
Revenues of approximately £ 2,408,580 (2022: £1,430,039) are derived from 5
customers who each account for greater than 10% of the group's & company's
total revenues.
6. Cost of Sales
2023 2022
£ £
Expenses included in Cost of Sales:
Mining & Processing Costs 1,512,563 935,064
Human Resource Costs 326,783 378,671
Logistics Utilities & Plan Admin Costs 368,061 308,278
(Increase)/Decrease in Inventory of Inputs (676,058) (485,357)
1,531,349 1,137,196
7. Expenses by Nature
2023 2022
£ £
The following items have been included in arriving at operating loss
Depreciation on other assets 242,663 565,079
Net foreign exchange gain (256,927) (95,171)
PR/IR Expenses 118,865 131,885
Professional Fees 223,460 124,454
Insurance 127,617 27,941
Director Emoluments 362,042 355,000
Management Salary 405,793 569,179
Brokerage 93,125 -
R&D Expenses 82,807 -
Other Admin Expenses 958,421 606,293
Auditor's remuneration has been included in arriving at operating loss as
follows:
Fees payable to the Company's auditor and their associates for the audit of 82,500 55,000
the Company and consolidated financial statements
Fees payable to the Company's auditor and its associates for other services: - -
Corporate finance services - -
8. Employee Information
The average monthly number of employees (including Executive Directors) was:
2023 2022
Number of employees for the year: 474 290
£ £
Wages & salaries (for the above employees) 1,088,599 1,118,892
Social security costs 90,123 40,485
Share based payments - -
1,178,722 1,159,377
Directors' remuneration and transactions
2023 2022
£ £
Directors' remuneration
Emoluments and fees (gross of capitalisation) 482,042 764,000
£ £
Remuneration of the highest paid director (gross of capitalisation):
Emoluments and fees 320,000 320,000
Payment in lieu of retirement benefits 30,000 30,000
Bonus - 264,000
Share based payments - -
Refer to Directors Remuneration Report for further information in respect of
Directors' remuneration.
9. Finance Cost
2023 2022
£ £
Interest Expense 251,641 140,209
10. Income Tax
2023 2022
£ £
Loss on ordinary activities before tax (2,357,910) (1,971,757)
Loss on ordinary activities multiplied by weighted average tax rate (459,792) (384,429)
Minimum tax in Madagascar 9,775 5,946
Tax on disallowed items 47,812 157,164
Tax losses carried forward (deferred tax not recognised) 411,981 173,048
Net tax (credit) / charge 9,775 (48,271)
Current tax charge 9,775 5,946
Deferred tax (credit)/charge - (54,217)
Net tax (credit)/ charge 9,775 (48,271)
The Group has tax losses available to be carried forward and used against
trading profits arising in future periods of £6,430,959 (2022: £4,371,054).
A deferred tax asset of £1,286,192(2022: £837,841) calculated at a weighted
average rate of 20% has not been recognised in respect of the tax losses
carried forward on the basis that there is insufficient certainty over the
level of future profits to utilise against this amount.
From 1 April 2023 the corporation tax rate increased to 25% for companies with
profits of
over £250,000. A small profits rate has also been introduced for companies
with profits of
£50,000 or less so that they will continue to pay corporation tax at 19%.
From this date
companies with profits between £50,000 and £250,000 will pay tax at the main
rate
reduced by a marginal relief providing a gradual increase in the effective
corporation tax
rate.
The Company is loss-making at present and an assessment of the impact of the
change in
future tax rates is not possible at this stage.
11. Earnings Per Share
Basic and diluted
Earnings per share is calculated by dividing the loss attributable to the
equity holders of the Company by the weighted average number of Ordinary
shares in issue during the period.
2023 2022
Continuing operations:
Loss attributable to equity holders of the Company (£) (2,367,685) (1,923,486)
Weighted average number of ordinary shares in issue 91,466,033 85,876,108
Loss per share (pence) (2.59) (2.24)
The Dilutive instruments like warrants & CLNs issued by the company are
resulting in anti-dilutive effect on EPS. Hence diluted EPS is shown as equal
to basic EPS following IFRS requirements.
12. Intangible Assets
Group
Cost £
At 1 April 2021 3,682,354
Additions -
Forex Change (111,158)
At 1 April 2022 3,571,196
Impairment -
Forex Change 27,869
At 31 March 2023 3,599,065
Accumulated amortisation
At 1 April 2021 -
Charge for the year -
At 1 April 2022 -
Charge for the year -
At 31 March 2023 -
Net book value
At 1 April 2021 3,682,354
At 1 April 2022 3,571,196
At 31 March 2023 3,599,065
Intangible assets comprise of excess of purchase consideration paid in the
acquisition of subsidiaries.
The projects in Madagascar have a current JORC compliant mineral ore resource
of 25.1 million tonnes which contains c.4% average grade of graphite content.
Further exploration across the two projects is ongoing. The company has
drilling resources to be explored and believes that an economic target will be
achieved in future years hence impairment is not recognised. The Directors
undertook an assessment of the following areas and circumstances that could
indicate the existence of impairment:
● The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
● No further exploration or evaluation is planned or budgeted
for;
● A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a commercial level
of reserves; or
● Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
Following their assessment, the Directors concluded that no impairment charge
was required at 31 March 2023.
13. Investments
Company Shares in group undertaking
Cost £
At 1 April 2021 3,539,448
Addition 361,575
At 1 April 2022 3,901,023
Addition 20,325
At 31 March 2023 3,921,348
Net book value
At 1 April 2021 3,539,448
At 1 April 2022 3,901,023
At 31 March 2023 3,921,348
The Company's investments at the Statement of Financial Position date in the
share capital of companies include the following:
Subsidiaries
Tirupati Madagascar Ventures
Registered: Lot II N 95 SB BIS E, Ambatobe, Antananarivo 103, Madagascar
Nature of business: Graphite mining extraction
%
Class of share Holding
Ordinary shares 98*
*Tirupati Resources Mauritius was liquidated on 28(th) May 2021 and the shares
have been transferred to Tirupati Graphite Plc. Balance 1% each is held by Mr.
Shishir & Mr. Hemant respectively on behalf of the company.
Establissements Rostaing
Registered: Lot II N 95 SB BIS E, Ambatobe, Antananarivo 103, Madagascar
Nature of business: Graphite mining extraction
%
Class of share Holding
Ordinary shares 95*
* Tirupati Resources Mauritius was liquidated on 28(th) May 2021 and the
shares are transferred to Tirupati Graphite Plc. Balance 5% is held by Mr.
Shishir on behalf of the Company
14. Property, Plant and Equipment
Group Plant and Machinery Infrastructure & Fixtures* Assets under construction Total
£ £ £ £
Cost
At 1 April 2021 1,985,574 411,795 1,119,742 3,517,111
Additions 3,305,123 1,593,029 - 4,898,152
Reclassification 487,713 - (487,713) -
At 1 April 2022 5,778,410 2,004,824 632,029 8,415,263
Additions 2,758,118 422,381 1,894,605 5,075,104
Reclassification - 2,300,000 (2,300,000) -
At 31 March 2023 8,536,528 4,727,205 226,634 13,490,367
At 1 April 2021 401,254 92,809 - 494,063
Depreciation 482,641 82,438 - 565,079
At 1 April 2022 883,895 175,247 - 1,059,142
Depreciation 990,125 242,663 - 1,232,788
At 31 March 2023 1,874,020 417,910 - 2,291,930
Carrying amount
As at 1 April 2022 4,894,515 1,829,577 632,029 7,356,121
As at 31 March 2023 6,662,508 4,309,295 226,634 11,198,437
Company Assets under construction Total
£
£
Cost £ £
At 1 April 2021 204,631 204,631
Transfer to Subsidiary (204,631) (204,631)
At 1 April 2022 - -
Additions
At 31 March 2023 - -
At 1 April 2021 - -
Depreciation - -
At 1 April 2022 - -
Depreciation - -
At 31 March 2023 - -
Carrying amount
As at 1 April 2022 - -
As at 31 March 2023 - -
Note: Infrastructure & fixtures includes mine development assets 2023:
£1,492,474 (2022: £737,396) and right of use assets 2023: £ 58,599 (2022:
£51,998)
15. Trade and Other Receivables
Group Company
2023 2022 2023 2022
£ £ £ £
Trade receivables 710,600 532,370 710,600 532,370
Advance for Capex 287,039 2,592,163 287,039 2,592,163
VAT Refunds 1,058,832 942,458 7,451 12,274
Other debtors 50,209 106,423 - 2,898
Prepayments 16,424 69,220 16,424 99,221
Amounts owed by group undertakings - - 17,559,350 10,619,721
Advance for Acquisitions* 2,632,525 - 2,632,525 -
4,755,629 4,242,634 21,213,389 13,858,647
*Note: Amounts advanced to Battery Minerals Limited in terms of agreements
entered into for securing placement of bank guarantee and payment of capital
gains tax so as to facilitate the approval for completing the acquisition.
Trade receivables are amounts due from customers for goods sold in the
ordinary course of business. They are generally due for settlement within
30-60 days and therefore are all classified as current. Trade receivables are
recognised initially at the amount of consideration that is unconditional. The
Group holds the trade receivables with the objective to collect the
contractual cash flows and therefore measures them subsequently at amortised
cost using the effective interest method. All sales of the company are in USD.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, trade receivables have
been grouped based on the days past due.
At 31 March 2023 Current More than 30 days More than 60 Days More than 90 days Total
£ £ £ £ £
Expected loss rate 0% 0% 0% 80% 0%
Gross trade receivables 710,600 - - - -
Loss allowance - - - - -
At 31 March 2022 Current More than 30 days More than 60 Days More than 90 days Total
£ £ £ £ £
Expected loss rate 0% 0% 0% 80% 0%
Gross trade receivables 532,370 - - - -
Loss allowance - - - - -
Trade receivables are provided for when there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery
include, amongst others, the failure of a debtor to engage in a repayment plan
with the Group, and a failure to make contractual payments for a period of
greater than 120 days past due. There are no significant known risks, and
therefore no provision is made as at 31 March 2022 & 31 March 2023.
16. Inventories
Group
2023 2022
Cost and net book value £ £
Raw materials and consumables 457,997 563,923
Finished and semi-finished goods 928,561 168,351
1,386,558 732,274
17. Trade and Other Payables
Current:
Group Company
2023 2022 2023 2022
£ £ £ £
Trade payables 1,084,991 548,906 243,500 188,534
Social security and other taxes 48,913 18,817 - -
Amounts due from group - - - -
Accruals 550,994 163,146 491,940 126,673
1,684,808 730,869 735,440 315,207
In the Directors' opinion, the carrying amount of payable is considered a
reasonable approximation of fair value.
Non-current:
Group Company
2023 2022 2023 2022
£ £ £ £
Lease liability 31,080 31,232 - -
31,080 31,232 - -
The Company has taken land on lease for Vatomina project for 18 years hence,
there is no current maturity.
Lease liability is recognized in accordance with requirements of IFRS 16. It
requires a lessee to recognise assets and liabilities for all leases with a
term of more than 12 months, unless the underlying asset is of low value. A
lessee is required to recognise a right-of-use asset representing its right to
use the underlying leased asset and a lease liability representing its
obligation to make lease payments.
Additional disclosure as per IFRS 16 is as follows:
Group
2023 2022
£ £
Addition in lease liability & ROU asset 6,601 21,521
Interest charged during the year 3334 6,590
Amortization of Right to use asset (Incl. in Infrastructure & fixtures) 2,643 1,955
18. Provisions and Commitments
No provisions have existed within the financial year or persist at year end.
As regard the Company's capital commitments, the ongoing development at its
projects are substantially completed and further developments will be made
post further funding arrangements. The acquisition of Suni Resources are
commitments to be satisfied in equity consideration.
19. Borrowings
The Company has issued two series 2019CLN's and 2022CLN's both carrying coupon
of 12% payable half yearly and convertible at the holders' option at issue
price as defined in the underlying instrument, key terms thereof being as
below:
Term CLN2019 CLN2022
Coupon 12% payable half yearly 12% payable half yearly
Maturity 3 years from issue date (verbally agreed to extend the maturity date to 31(st) 3 years from date of issue
December 2024 post yearend)
Conversion At the holders' option At the holders' option
Conversion Price £0.45 per ordinary share being the IPO fund raise price per ordinary share £0.60 for year 1
£0.75 for year 2
£0.90 for year 3
During FY23 the Company received conversion notice for £100,000 under the
2019CLN's which were converted into equity. The Company raised gross proceeds
of £1,862,500 under the 2022CLN with transaction cost incurred of £93,125
being incurred. The tables below summarise the balances on the closing date
and changes during the year. Optiva Securities Ltd is eligible to receive 5%
warrants of subscribed CLN2022 at issue price of 90p.
2023 2022
Within one year 909,000 536,000
Between 2 and 5 years 1,862,500 473,000
2,771,500 1,009,000
Following table denotes changes in borrowings:
2023 2022
Opening Balance as on 1(st) April 1,009,000 1,283,000
Issued during the year 1,862,500 -
Redeemed/Converted during the year (100,000) (274,000)
Closing Balance as on 31(st) March 2,771,500 1,009,000
The loan notes shall be redeemed by the Company, at any time after the first
anniversary of an Initial Public Offering up to the Maturity Date or by the
Noteholder or the Company, on the Maturity Date being 3 years from date of
issue.
Conversion can be made 15 Business Days after the date of completion of a
successful Initial Public Offering to convert all of the Notes outstanding
into fully paid Ordinary Shares at a price equal to the price per Share paid
by investors participating in the Initial Public Offering.
20. Share Capital
2023 2023 2022 2022
Number £ Number £
Allotted, called up and fully paid
Ordinary shares of 2.5p each 1,01,447,768 2,536,195 86,939,832 2,173,497
Shares were issued during the year as follows:
Cost of issue (£) Number of shares issued
Shares issued on conversion of CLNs on 03 Oct 2022 - 222,222
Shares issued from a placing on 05 Dec 2022 250,000 14,285,714
250,000 14,507,936
Note: The cost of issue of £ 250,000 was settled against consideration of
equity raised and it is debited to the share premium account. Optiva
Securities Ltd is eligible to receive 5% warrants to subscribe at issue price
of 35p per warrant for the transaction.
21. Share based Payments & Warrant Reserve
During the first two years after incorporation of the Company, with the
consent of its Board and senior management team, the Company adopted a minimal
approach to incentives and provided no bonuses to the executive management
team or the Board. However, to show the appreciation of the Company, the Board
was provided with an annual incentive package in the form of warrants to
subscribe for equity shares of the Company at a premium to the prices at which
Ordinary Shares have been subscribed when the Company raised equity in the
relevant period. The Company has also provided broker warrants to Optiva, on a
success basis, for the fundraising activities executed by it prior to
Admission.
All warrants are equity-settled, in accordance with IFRS 2, by award of
warrants to acquire ordinary shares or award of ordinary shares. The fair
value of these awards has been calculated at the date of grant of the award.
The fair value of the warrants granted was calculated using a Black-Scholes
model. Changes in the assumptions can affect the fair value estimate of a
Black-Scholes model.
Following are the key assumptions used to estimate the fair value of the
warrants issued:
a) Expected Volatility: 20%
b) Contractual Life of the warrant: 3 years
c) Risk free interest rate: 0.38% p.a.
Following warrants over ordinary shares have been granted by the Company and
are outstanding as on 31 March 2023:
Grant Date Number of warrants exercisable and outstanding
Expiry Date Exercise Price (£)
31 December 2017 31 December 2025 0.300 1,000,000
31 December 2018 31 December 2025 0.400 1,520,000
31 March 2019 31 March 2025 0.400 320,000
31 December 2019 31 December 2025 0.400 1,620,000
31 March 2020 31 March 2025 0.400 480,000
15 June 2020 15 June 2023 0.675 222,222
15 June 2020 15 June 2023 0.900 222,222
30 June 2020 30 June 2023 0.675 22,800
14 December 2020 14 December 2023 0.450 170,329
14 December 2020 14 December 2023 0.675 113,553
20 April 2021 20 April 2024 1.350 222,222
Total 5,913,348
The Company extended the expiry date of 4,940,000 warrants from 2022 to 2025
issued to Directors. This amounts to modification of terms of warrant under
IFRS 2 - Share Based Payments, the impact of such modification is not material
and therefore management has not accounted for such modification.
Optiva Securities Limited is eligible for issue of following share warrants
during the year, but these have not yet issued:
Eligibility Date Expiry Date Exercise Price (£) Eligible number of warrants
05 December 2022 05 December 2025 0.350 714,285
08 August 2022 08 August 2025 0.900 103,472
Total 817,757
The Company has not accounted for the warrants granted as they have not been
formally issued and the cost of such warrant is not material.
Following table denotes changes warrants outstanding:
2023 2022
Opening Balance as on 1(st) April 6,630,491 6,784,778
Issued during the year - 222,222
Exercised during the year - (376,509)
Expired during the year (717,143) -
Closing Balance as on 31(st) March 5,913,348 6,630,491
In FY23, 640,000 warrants issued to management executives and 77,143 to
brokers have expired.
Warrants issued to Number of warrants outstanding Warrant reserve
£
Brokers 528,904 16,138
Members of the Board & executive management 4,940,000 54,566
CLN Investors 444,444 45,361
Total 5,913,348 116,065
During the year, total of 640,000 warrants issued to management executives and
77,143 to brokers have expired for which £14,173 is reversed back to retained
earnings account and £319 is reversed back to Share premium account
respectively.
22. Financial Instruments
Financial risk management
The Group has exposure to the following risks from its use of financial
instruments:
● Capital risk management
● Market risk
● Credit risk
● Liquidity risk
● Currency risk
This note presents information about the Group's exposure to each of the above
risks, the Group's management of capital, and the Group's objectives, policies
and procedures for measuring and managing risk.
The Board of Directors has overall responsibility for the establishment and
oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities.
The Group Audit Committee oversees how management monitors compliance with the
Group's risk management policies and procedures and reviews the adequacy of
the risk management framework in relation to the risks faced by the Group.
Capital Risk Management
The Group manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders as well as sustaining the future development of the business. In
order to maintain or adjust the capital structure, the Group may adjust
dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The capital structure of the Group consists of net debt, which includes loans,
cash and cash equivalents, and equity attributable to equity holders of the
company, comprising issued capital and retained earnings.
Fair value of financial assets and liabilities for the group
Valuation, Book value Fair value Book value Fair value
Methodology 2023 2023 2022 2022
and hierarchy £ £ £ £
Financial assets
Cash and cash equivalents (a) 289,338 289,338 1,534,023 1,534,023
Loans and receivables, net of impairment (a) 4,755,629 4,755,629 4,242,635 4,242,635
Total at amortised cost 5,044,967 5,044,967 5,776,658 5,776,658
Financial liabilities
Trade and other payables (a) 1,684,808 1,684,808 730,869 730,869
Borrowings and provisions (a) 2,771,500 2,771,500 1,009,000 1,009,000
Lease Liabilities (a) 31,080 31,080 31,232 31,232
Total at amortised cost 4,487,388 4,487,388 1,771,101 1,771,101
Fair value of financial assets and liabilities for the company
Valuation, Book value Fair value Book value Fair value
Methodology 2023 2023 2022 2022
and hierarchy £ £ £ £
Financial assets
Cash and cash equivalents (a) 130,340 130,340 1,505,410 1,505,410
Loans and receivables, net of impairment (a) 21,213,389 21,213,389 13,858,647 13,858,647
Total at amortised cost 21,343,729 21,343,729 15,364,057 15,364,057
Financial liabilities
Trade and other payables (a) 735,440 735,440 315,207 315,207
Borrowings and provisions (a) 2,771,500 2,771,500 1,009,000 1,009,000
Total at amortised cost 3,506,940 3,506,940 1,324,207 1,324,207
Valuation, methodology and hierarchy
(a) The carrying amounts of cash and cash equivalents, trade and other
receivables, trade and other payables and deferred income, and Borrowings are
all stated at book value. All have the same fair value due to their short-term
nature.
Market risk
Market price risk arises from uncertainty about the future valuations of
financial instruments held in accordance with the Group's investment
objectives. These future valuations are determined by many factors but
include the operational and financial performance of the underlying investee
companies, as well as market perceptions of the future of the economy and its
impact upon the economic environment in which these companies operate.
Credit risk
Credit risk is the risk that counterparties to financial instruments do not
perform their obligations according to the terms of the contract or
instrument. The Group is exposed to counterparty credit risk when dealing with
its customers and certain financing activities.
The immediate credit exposure of financial instruments is represented by those
financial instruments that have a net positive fair value by counterparty at
31 March 2023.
The Group considers its maximum exposure to be:
2023 2022
£ £
Financial assets
Cash and cash equivalents 289,338 1,534,023
Loans and receivables, net of impairment 4,755,629 4,242,635
5,044,967 5,776,658
The company considers its maximum exposure to be:
2023 2022
£ £
Financial assets
Cash and cash equivalents 130,340 1,505,410
Loans and receivables, net of impairment 21,213,389 13,858,647
21,343,729 15,364,057
All cash balances are held with an investment grade bank who is our principal
banker. Although the Group has seen no direct evidence of changes to the
credit risk of its counterparties, the current focus on financial liquidity in
all markets has introduced increased financial volatility. The Group continues
to monitor the changes to its counterparties' credit risk.
Liquidity risk
Liquidity risk is the risk the Group will encounter difficulty in meeting its
obligations associated with financial liabilities as they fall due. The Board
are jointly responsible for monitoring and managing liquidity and ensures that
the Group has sufficient liquid resources to meet unforeseen and abnormal
requirements. The current forecast suggests that the Group has sufficient
liquid resources.
Available liquid resources and cash requirements are monitored using detailed
cash flow and profit forecasts these are reviewed at least quarterly, or more
often as required. The Directors decision to prepare these accounts on a going
concern basis is based on assumptions which are discussed in the going concern
note above.
The following are the contractual maturities of financial liabilities for the
group:
Carrying Contractual 6 months 6 to 12 1 to 2 2 to 5
31 March 2023 amount cash flows or less months years years
£ £ £ £ £ £
Non-derivative financial liabilities
Trade and other payables 1,684,808 - 1,684,808
Borrowings 2,771,500 - 909,000 - - 1,862,500
Lease Liability 31,080 - - - - -
31 March 2022
Non-derivative financial liabilities
Trade and other payables 730,869 - 730,869 - - -
Borrowings 1,009,000 - 116,000 420,000 473,000 -
Lease Liability 31,232 - - - - -
The following are the contractual maturities of financial liabilities for the
company:
Carrying Contractual 6 months 6 to 12 1 to 2 2 to 5
31 March 2023 amount cash flows or less months years years
£ £ £ £ £ £
Non-derivative financial liabilities
Trade and other payables 735,440 - 735,440
Borrowings 2,771,500 - 909,000 - - 1,862,500
31 March 2022
Non-derivative financial liabilities
Trade and other payables 315,207 - 315,207 - - -
Borrowings 1,009,000 - 116,000 420,000 473,000 -
Cash flow management
The Group produces an annual budget which it updates quarterly with actual
results and forecasts for future periods for profit and loss, financial
position and cash flows. The Group uses these forecasts to report against and
monitor its cash position. If the Group becomes aware of a situation in which
it would exceed its current available liquid resources, it would apply
mitigating actions involving reduction of its cost base. The Group would also
employ working capital management techniques to manage the cash flow in
periods of peak usage.
Currency risk
The Group operates internationally and is exposed to foreign exchange risk.
Foreign exchange risk arises from future commercial transactions and
recognised assets and liabilities denominated in a currency that is not the
functional currency of the relevant Group entity. The Group's primary currency
exposure is to US Dollar, which is the currency of all intra-group
transactions as well as denomination of selling price of the products. The
group also has some exposure to Malagasy ariary due to its operating
subsidiaries in Madagascar.
Considering the natural hedge available the Group currently doesn't hedge the
currency risk. The Group's and Company's exposure to foreign currency risk at
the end of the reporting period is summarised below. All amounts are presented
in GBP equivalent.
Group USD MGA USD MGA
2023 2023 2022 2022
£ £ £ £
Cash and cash equivalents 66,652 158,386 19,405 18,550
Trade & other receivables 997,639 1,101,590 3,127,431 1,003,709
Trade & other payables (243,500) (949,368) (188,534) (415,662)
Net Exposure 820,791 310,608 2,958,302 606,597
Company USD USD
2023 2022
£ £
Cash and cash equivalents 66,040 9,342
Loans to subsidiaries 15,153,109 9,797,683
Trade & other receivables 6,060,281 3,949,469
Trade & other payables (578,315) (224,937)
Net Exposure 20,701,115 13,531,557
Sensitivity Analysis
As shown in the table above, the Group is primarily exposed to changes in the
GBP:USD & GBP:MGA exchange rates. The table below shows the impact in GBP
on pre-tax profit and loss of a 10% increase/ decrease in the GBP to USD
exchange rate, holding all other variables constant. Also shown is the impact
of a 10% increase/decrease in the GBP to MGA exchange rate, being the other
primary currency exposure.
2023 Group Company
£ £
GBP:USD exchange rate increases by 10% 82,079 2,070,112
GBP:USD exchange rate decreases by 10% (82,079) (2,070,112)
GBP:MGA exchange rate increases by 10% 31,068 -
GBP:MGA exchange rate decreases by 10% (31,068) -
2022 Group Company
£ £
GBP:USD exchange rate increases by 10% 295,830 1,353,156
GBP:USD exchange rate decreases by 10% (295,830) (1,353,156)
GBP:MGA exchange rate increases by 10% 60,660 -
GBP:MGA exchange rate decreases by 10% (60,660) -
23. Related Party Transactions
PranaGraf Materials and Technologies Private Limited (Formerly known as
Tirupati Speciality Graphite Private Limited) is an entity incorporated in
India. The Company is connected to TSG in that both Shishir Poddar and Hemant
Poddar were directors and shareholders of TSG during the year. At year end, a
net amount £333,253 (2022 - £1,567,693) was receivable towards sale of goods
with none overdue. Revenue earned during the year amounted to £895,808 (2022
- £287,247), the Company purchased capital goods and consumables of
£1,764,805 (2022: £1,484,087), and incurred service fees of £290,287 (2022:
£235,795) towards back office services received. Reimbursement of expenses of
£204,220 (2022: £143,334 ) towards travel and other expenses for the
executives of the Company was made during the year.
Haritmay Ventures LLP (HV) is an entity incorporated in India and engaged in
manufacturing proprietary tailor-made flake graphite processing machinery and
equipment which the Company uses in its projects. The Company is connected to
HV in that Shishir Poddar is partner and shareholder of HV during the year. At
year end, a net amount of £287,039 (2022: £230,624) was receivable being
advance paid for long lead machinery purchase and the Company purchased
proprietary graphite processing machinery and spares of £861,368 (2022:
£1,132,398) during the year.
Optiva Securities Limited is an entity incorporated in the United Kingdom. The
Company is a stock brokerage firm connected to the Company being the sole
broker of the Company and Christian Gabriel St.John-Dennis was one of the
directors of the Company and holding a position with Optiva Securities Limited
during the year. At year end, the Company incurred brokerage and consultancy
fees, business development fees of £343,125 (2022 : £440,000) and brokerage
and consultancy fees prepaid of £ Nil (2022: £6,250)
24. Deferred Tax Assets
2023 2022
Brought forward DTA 75,242 21,182
Created/(reversed) during the year - 54,217
Forex (1,196) (157)
Carried forward DTA 74,076 75,242
25. Events after the Reporting Period
Acquisition of Suni Resources
On 1 April 2023 the Company completed the acquisition of Suni Resources SA a
private Company incorporated in Mozambique, which holds two advanced stage
graphite projects being:
(i) the Montepuez Project which holds the mining licence over an area of 3,667
hectares with JORC 2012 defined reserves & resources of almost 120 million
tons; plus
(ii) the Balama Central Project, which has a mining licence over 1,543
hectares with JORC 2012 defined mineral reserves and resources of 33 million
tonnes. Both projects have licences permitting build out to an annual
production of 100,000 and c.58,000 tons of flake graphite respectively.
Under the terms of the SPA and IP Assignment as varied, the total aggregate
consideration for the Acquisition is satisfied as follows:
· The issue of 10,046,556 TG ordinary shares of £0.025 each to BAT
covering a sum of AUD$9,750,000 (c.£5,284,500) at an issue price
of £0.526 per ordinary share in two equal tranches as follows:
o 5,023,278 TG ordinary shares of £0.025 each issued at Completion (the
"Tranche 1 Consideration Shares"); and
o 5,023,278 TG ordinary shares of £0.025 each to be issued on the eight
month anniversary of Completion (the "Tranche 2 Consideration Shares").
· Payment of a sum of AUD$5,428.14 in cash at Completion pursuant to the
SPA.
· The payment of a sum AUD$500,000 (c.£0.27 million) in cash paid by
the Company to BAT on 25 January 2023 pursuant to the IP Assignment.
· The issue of 2,018,944 ordinary shares of £0.025 each to BAT at
Completion covering a sum of AUD$994,571.86 (£539,058) at an issue price
of £0.267 per ordinary (the "IP Consideration Shares").
· Payment of a sum of AUD$2,375,000 (c.£1,260,150) that has been made
pursuant to the variations of the SPA to facilitate the payment of Capital
Gains Tax by BAT in connection with the disposal of Suni in consideration for
which Suni agreed:
o to a AUD$1,250,000 (c.£677,500) reduction in the value of Consideration
Shares to be issued as consideration under the SPA from AUD$11,000,000
(c.£5,962,000) to AUD$9,750,000 (c.£5,284,500);
o to the Company retaining the right to the VAT Refunds due to Suni for
historical spends by BAT and amounting to c.AUD$ 1.5 million (c.£810,000).
The Acquisition includes the entire equity capital of Suni (with 7,256 out of
241,868,268 of Suni shares in issue held by the Executive Chairman of the
Company as nominee on behalf of the Company to satisfy
local Mozambique requirements), shareholder debt advanced by Battery
Minerals Limited to Suni Resources S.A. and the Battery Technical Information.
Details of the assets acquired are set out below:
· Mining license over an area of 3,666.88 hectares for the Montepuez
Project vested with a JORC 2012 mineral reserves and resources totalling
119.60 million tons with license to build the project to 100,000 tons flake
graphite production per annum in 2 stages of 50,000 tons each.
· All infrastructure and assets on the ground at the construction
initiated Montepuez Project including, but not limited to, (i) 100 persons
base camp facilities, (ii) the developed construction site for setting up the
proposed processing facilities (iii) the well-constructed tailing dam, and
(iv) a mobile crusher unit with capacity sufficient for the first 50,000 tons
plant as per the Montepuez Graphite Implementation Project document.
· Mining license over an area of 1543.08 hectares for the Balama
Central Project vested with a JORC 2012 mineral reserves and resources
totalling 32.9 million tons and license to build the project to 58,000 tons
flake graphite production per annum.
· Fixed deposits with NED Bank pledged for the issue of Bank Guarantee
in connection with the Projects amounting to >c.£2 million including cash
remitted to Suni by the Company through BAT amounting c.£970,000 to cover
the bank guarantee issued for the Balama Central Project.
· All historical technical information on the projects.
· Rights to the VAT Refunds.
The amount advanced by the company to BAT prior to 31(st) March 2023 included
£970,000 now lying as fixed deposit with NED Bank thus now being an asset of
the company against which bank guarantee has been issued by NED bank towards
the Balma Central mining license.
Extension of maturity of 2019CLN's
The Company has in issue 900,900 2019CLN's in issue as at 31 March 2023. The
maturity of these were pegged at third anniversary from the date of issue and
conversion price pegged at £0.45 per ordinary share. The Company engaged with
its Brokers Optiva Securities Limited to agree to extending the maturity of
the 2019CLN's up to 31 December 2024 so that the Company conserves its
resources for its business being in formative stage and so that the investors
retain the opportunity to convert for a further period. Optiva has confirmed
that it has received consent from all holders of the 2019CLN's for the
extension and the Company has agreed to pay a fee of 2% to Optiva for the
arrangements. Accordingly, the maturity of 2019CLN's is now considered
extended to 31 December 2024.
ENDS
For further information, please visit https://www.tirupatigraphite.co.uk/
(https://www.tirupatigraphite.co.uk/) or contact:
Tirupati Graphite Plc
Puruvi Poddar - Chief of Corporate & Business Development admin@tirupatigraphite.co.uk
+44 (0) 20 39849894
Optiva Securities Limited (Broker)
Ben Maitland - Corporate Finance +44 (0) 20 3034 2707
Robert Emmet - Corporate Broking +44 (0) 20 3981 4173
FTI Consulting (Financial PR) +44 (0) 20 3727 1000
Ben Brewerton / Nick Hennis / Lucy Wigney tirupati@fticonsulting.com
About Tirupati Graphite
Tirupati Graphite Plc is a specialist flake graphite company and places a
special emphasis on "green" applications of flake graphite, including
renewable energy, energy efficiency, energy storage and thermal management and
is committed to ensuring its operations are sustainable as well.
The Company's operations include primary mining and processing in Madagascar,
where the Company operates two key projects, Sahamamy and Vatomina. With the
start of commercial production of its latest 18,000 tpa plant at Sahamamy in
March 2023, it now has an installed capacity of 30,000 tpa high-quality flake
graphite concentrate with up to 97% purity in Madagascar, planned to increase
to 84,000 tpa as per the Company's modular medium-term development plan.
On 3rd April 2023 the Company completed the acquisition of Suni Resources SA,
Mozambique, whose two main assets are (i) the Montepuez Project which holds
the mining licence over an area of 3,667 hectares with JORC 2012 defined
reserves & resources of almost 120 million tonnes; plus (ii) the Balama
Central Project, which has a mining license over 1,543 hectares with JORC 2012
defined mineral reserves and resources of 33 million tonnes. Both projects
have licenses permitting build out to an annual production of 100,000 and
58,000 tons of flake graphite respectively.
TG believes that the addition of these projects provides the Company with
sufficient resources to achieve its ambition of satisfying 8% of the estimated
global flake graphite demand - of around 5 million tons per annum - by 2030.
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