REG - Tirupati Graphite - Unaudited Half-Yearly Results
29/12/2022 07:00
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RNS Number : 1153L Tirupati Graphite PLC 29 December 2022
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inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this information is
considered to be in the public domain.
Thursday 29 December 2022
Tirupati Graphite plc
('Tirupati' or the 'Company')
Unaudited Half-Yearly Results
Tirupati Graphite plc (TGR.L, TGRHF.OTCQX), the specialist flake graphite
company, is pleased to announce its Interim Results for the six months ended
30 September 2022. The Company's operations include two primary graphite
mining and processing projects in Madagascar being developed in modules with
both projects in operation during the reporting period.
Highlights for the six-month period ending on 30 September 2022
· Operations and development at both Vatomina and Sahamamy projects
continued in spite of disruptions caused by exceptionally adverse weather
conditions in the period.
· 63% growth in production and 78% in sales were achieved during
the period compared to same period of the previous year (year on year 'YoY').
· Construction and Development continued across the two projects
with activities focussed on:
o Progressing development of Sahamamy 18,000 tpa new mining and processing
facilities alongside development of hydro power plant;
o Development and operationalisation of first 'pre concentrate' unit at the
mine pit head at the Vatomina project and start of construction of the second
pre concentrate plant; and
o Strengthening of road infrastructure throughout the Company's networks
across the two projects measuring c. 50 kilometres ("km").
· Addition in fixed assets for the period amounted to £3,869,417
representing investments made by the Company in the development of the 18,000
tpa plant and Hydro Power project in Sahamamy and investments in the Vatomina
plant and infrastructure across the two projects.
· The first pre concentrate plant constructed at Vatomina for
substantially eliminating ore transport was commissioned and successfully
integrated, paving the way for its adoption in future developments.
· To tide over the lower grade at Vatomina and increasing plant
capacity to 12,000 tpa, construction of a second pre concentrate plant was
commenced at Vatomina.
· Redevelopment of the 100-kilo watt Sahamamy hydro power plant was
completed and trial runs conducted. Integration of the plant with the power
supply system awaits certain corrections in the flow system.
· Extensive infrastructure strengthening for the c.50 km internal
and inter project connecting roads, bridges and culverts was commenced post
the rainy season and has now been completed.
· Key operational and financial highlights for the period are as
tabulated below:
Six Months Ending 30 Sep 2022 30 Sep 2021
Cost of Production £787,312 £255,193
Quantity of Production (MT(1)) 1,731 MT 1,060 MT
Cost per MT of Production £454/MT £241/MT
Total Sales (MT) 1,691 MT 950 MT
Total Revenues £1,165,195 £560,058
Achieved Basket Price (per MT) US$833/£689 MT US$819/£590 MT
Gross Profit £377,883 £304,865
Gross Margins (per MT) £223/MT £321/MT
Gross Margin on Sales (%) 32% 54%
Corporate and Administrative Costs £1,010,774 £1,141,387
EBIDTA £(632,891) £(836,522)
Depreciation £793,173 £172,853
Operating Profit/(Loss) £(1,426,064) £(1,009,375)
1. MT = Metric Tonnes
As at 30 Sep 2022 31 March 2022
Selected Balance Sheet
items
Cash and cash equivalents £831,436 £1,534,023
Net Assets £14,484,371 £15,747,196
· The revenue from sales during the period was £1,165,195 an
increase of 108% YoY.
· Gross Profit increased YoY from £304,865 to £377,883
representing an increase of 24%.
· The percentage of operating margins reduced from 54% to 32% YoY owing to
increased costs with increased capacities but lower capacity utilisation due
to adverse weather conditions and continued development activities with
conservative capitalisation of costs as per accounting standards and
guidelines.
· Administrative expenses reduced by 11% YoY from £1,141,387 to
£1,010,774 YoY.
· As an impact of increased operating profits and reduced
administrative costs the negative EBIDTA reduced by 24% from £836,522 to
£632,891.
· The Company raised a gross sum of £1,862,500 from the issue of
convertible loan note with a term of 3 years, convertible to Ordinary Shares
of £0.025 each of the Company ("Ordinary Shares") at a price of £0.60.
· The Company continued to progress activities for completion of the
acquisition of Suni Resources SA, a Mozambique subsidiary of Battery Minerals
first announced through the RNS dated 17 August 2021
(https://ir.wrendesign.agency/tirupati/regulatory-news/news/52) .
· The completion of the acquisition, which is substantially
advanced, will add two globally significant fully permitted Detailed
Feasibility Studies completed graphite deposits in Mozambique which will
materially increase the Company's JORC compliant mineral resource base by
c.152 million tonnes at 8.5% Total Graphitic Carbon ("TGC"). The acquisition
will include:
o the construction initiated 100,000 tpa (2x50,000 tpa) Montepuez Graphite
Project;
o the c.58,000 tpa Balama Central Graphite Project; and
o provision of medium and small flake graphite resources preferred for the
anode of lithium-ion batteries, to complement TG's Madagascan Jumbo and Large
flake projects.
Post period events & Future Outlook
· On 5 December 2022, the Company completed an oversubscribed capital
raise of £5,000,000 for funding the completion of acquisition of Suni
Resources SA and general working capital through the issue of 14,285,714
Ordinary Shares at an issue price of £0.35 per share.
· The construction of the second preconcentrate unit at Vatomina has
been completed, the unit commissioned and integrated with the final
concentrate unit from third week of December 2022.
· The 18,000 tpa Sahamamy facilities are in the final stages of
installation and commissioning with production ramp up expected to be complete
by end of January 2023, pushed back from end of December 2022 owing to delays
in final set of shipments for the plant.
· Graphite remains designated as a critical raw material by the UK,
USA and EU, being a key contributor to the green energy transition and
electrification of mobility.
· The global flake graphite market is forecast to grow multiple times
over the decade, by the likes of UBS, World Bank, Roskill, Benchmark Minerals
owing to energy transition and other green applications.
· According to forecasts from independent sources, with growth in
the EV sector, the consumption of flake graphite in mobility is expected to
become the largest consuming sector in 2023 leading to a supply gap in 2023.
· The overall strengthening of our operations alongside additional
capacity additions has laid the foundations for the Company to be a globally
significant ex China source for mineral flake graphite with further growth
under its capacity build-up plans.
· The Company will continue to stabilise its operations at the
capacity of 30,000 tpa over the next half year.
Shishir Poddar, Executive Chairman of Tirupati Graphite, said:
"We are pleased to report increasing production and sales in the period which
resulted in a reduction in negative EBIDTA, despite challenging circumstances
faced. The rapid action taken to address these challenges with innovative and
pragmatic solutions has laid the path for our continued progress.
"We are making good progress towards completion of the acquisition of Suni
Resources with all key obstacles now addressed. The projects are promising and
pave the way for us to extensively engage with the highest growth markets for
flake graphite.
"In 2021, the Electric Vehicles market more than doubled to above 6 million
passenger cars and the trend continued this year, with the number expected to
exceed 10 million. Clean hydrogen is gaining ground in other energy
applications and flake graphite is again one of the key ingredients for the
fuel cells that generate power using hydrogen. We believe the opportunities
are immense and we are one of only two listed companies outside China that has
taken a flake graphite project into production.
"As we progress further, we will continue to update the markets on our
progress towards our goal of building a globally significant flake graphite
source."
Enquiries:
Tirupati Graphite Plc admin@tirupatigraphite.co.uk (mailto:admin@tirupatigraphite.co.uk)
Puruvi Poddar - Chief of Corporate & Business Development +44 (0) 20 39849894
Optiva Securities Limited (Broker) +44 (0) 20 3034 2707
Ben Maitland - Corporate Finance +44 (0) 20 3981 4173
Robert Emmet - Corporate Broking
FTI Consulting (Financial PR) +44 (0) 20 3727 1000
Ben Brewerton / Nick Hennis / Kelly Smith / Karen Muperere tirupati@fticonsulting.com
https://www.tirupatigraphite.co.uk/ (https://www.tirupatigraphite.co.uk/)
MANAGEMENT'S CONDENSED REPORT
It is now just over two years since we achieved the feat of being a listed
entity with eyes on developing the Company's business in the field of flake
graphite, a critical mineral which our founders and management specialise in
and which is a key constituent to the energy transition economy.
Graphite has a set of unique properties thus a diversity of applications
including in electric vehicles, smartphones, metal forming, hydrogen power,
fire safety and many more. The energy transition economy is fast growing even
in the current slowdown and with flake graphite a key material in the
transition economy we have the opportunity to grow as we have planned.
The period under reporting was a challenging one, in as much as we were
engaged in building new capacities while streamlining existing ones in the
face of adverse weather conditions that played a destructive role. The Company
stood up to the challenges with smart decisions and dedicated efforts of the
team to insulate the Company's operation from such conditions in the future.
By the end of the period under reporting, we had implemented the split of our
process flow sheet with preconcentrate units being established at the mine
pithead, which removed 80 - 90% of the waste in the ore and the output being
pumped to the final processing unit, it eliminated the burden of transport of
Ore from the mine pithead to the processing plant. Prior to implementation of
the preconcentrate unit concept, the transport of Ore from the mine pit head
to the processing plant was one of the biggest challenges, especially as a
result of the adverse weather conditions. This bottleneck would have grown
with our capacities. For example, for production of 30,000 tpa would have
resulted in requirement for transport of c.2400 tons ore per day. Thus the
Company realigned its ongoing development to the 30,000 tons capacity setting
up preconcentrate plants at mine pithead.
The Company remains engaged with its eyes on the long-term goals and is
progressing the proposed acquisition of Suni Resources from Battery Minerals
Ltd., which will add the globally significant Montepuez and Balama Central
flake graphite projects to the Company's asset portfolio. The projects have
more than 10 times contained graphite as per the JORC 2012 resources and
reserves as compared to the Madagascan projects // Company, are licensed to
build >150,000 tons of flake graphite production and offer the opportunity
for us to reach our aim of producing c. 8% of global flake graphite forecast
demand by the turn of the decade.
To meet its business and development goals, the Company raised £1,862,500
through the issue of a convertible loan note with a term of 3 years,
convertible to Ordinary Shares at a price of £0.60, during the period. It has
further raised a sum of £5,000,000 through the issue of 14,285,714 Ordinary
Shares at an issue price of £0.35 per share for funding the completion of
acquisition of Suni Resources SA and general working capital. The funding
requirements for completion of the acquisition of Suni are fully met and the
Company is well placed in its capital requirements. With the operations in
Madagascar reaching the critical point we expect the future capacity
developments in Madagascar to be built using internal resources and leveraging
future earnings.
The proposed acquisition of Tirupati Speciality Graphite Private Limited has
remained pending, as announced on 11 July 2022 because:
· The acquisition requires the approval of the regulators in India
under The Foreign Exchange Management Act ("FEMA") since it classifies TG as
an Overseas Direct Investment ("ODI"); and
· It has now determined that the independent valuation report used
to establish the share swap ratio is no longer valid and a new report will
need to be undertaken in terms of FEMA requirements.
As such, the timing for obtaining regulatory approval and the consideration
for the proposed acquisition continues to remain uncertain. Furthermore, TSG
has advised the Company that it needs to explore alternative sources of
capital to maintain its development.
In response, the Company is considering a number of alternative options to
meet the objective of ensuring that TG is able to continue with its plans to
develop a downstream and advanced materials business.
These options include:
· continued pursuit of regulatory approval for the Proposed Acquisition
as its preferred option and in doing so, considering any revised valuation for
TSG and changes to the terms of the Proposed Acquisition to reflect this;
· exploring the possible participation in alternative investment
vehicles for investment in TSG as may be permissible with participation of TG
shareholders; and
· exploring possible commercial arrangements with TSG.
The Company, TSG and their respective advisors, remain engaged in working
through various possibilities and the Company will update the market on
further developments.
The highlights of the period and post period significant events have been
detailed above. The Company remains focussed on its goals continuing to
develop its flake graphite projects in Madagascar to 84,000 tons annual
production capacity in the medium term as it stabilises the currently
established 30,000 tons capacity and progress its business to make the most of
the energy transition economy as the world strives to progress towards a
greener world.
Your board and management remain aligned with the interests of shareholders
with no equity interest sold to date by any member.
Responsibility Statement
We confirm that to the best of our knowledge:
· the Interim Report has been prepared in accordance with
International Accounting Standards 34, Interim Financial Reporting, as adopted
by the UK; and
· gives a true and fair view of the assets, liabilities, financial
position and profit/loss of the Group; and
· the Interim Report includes a fair review of the information
required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the set of interim financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year.
· the Interim Report includes a fair review of the information
required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the
information required on related party transactions.
The Interim Report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by:
Shishir Poddar
Executive Chairman & Managing Director
27 December 2022
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the half-year ended 30 September 2022
Notes 2021
2022
£ £
Continuing operations
Revenue 6 1,165,195 560,058
Cost of Sales (787,312) (255,193)
Depreciation of Operating Assets (639,079) (172,853)
Gross profit (261,196) 132,012
Administrative expenses 7 (1,164,868) (1,141,387)
Operating loss (1,426,064) (1,009,375)
Finance costs 9 (58,474) (75,833)
Loss before income tax (1,484,538) (1,085,208)
Income tax - (25,943)
Loss for the period attributable to owners of the Company
(1,484,538) (1,111,151)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations 221,713 (372,931)
Total comprehensive loss for the period attributable to the Group (1,262,825) (1,484,082)
Earnings per share attributable to owners of the Company Pence per share Pence per share
From continuing operations:
Basic 11 (1.45) (1.71)
Diluted* 11 (1.45) (1.71)
*Note: 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.
The accompanying accounting policies and notes are an integral part of these
financials
Unaudited Condensed Consolidated and Company Statement of Financial Position
As at 30 September 2022
Notes Group Company
Sep 2022 Mar 2022 Sep 2022 Mar 2022
£ £ £ £
Non-current assets
Investments in subsidiaries 13 - - 3,921,348 3,901,023
Property, plant and equipment 14 10,432,365 7,356,121 268,842 -
Deferred tax 24 84,325 75,242 - -
Deposits 8,581 6,806 - -
Intangible assets 12 3,546,764 3,571,196 40,970 40,970
Total non-current assets 14,072,035 11,009,365 4,231,160 3,941,993
Current assets
Inventory 16 1,187,956 732,274 - -
Trade and other receivables 15 2,529,223 4,242,635 16,113,887 13,858,647
Cash and cash equivalents 831,436 1,534,023 638,072 1,505,410
Total current assets 4,548,615 6,508,932 16,751,959 15,364,057
Current liabilities
Trade and other payables 17 1,231,748 730,869 660,104 315,207
Borrowings 19 909,000 536,000 909,000 536,000
Total current liabilities 2,140,748 1,266,869 1,569,104 851,207
Net current assets 2,407,867 5,242,063 15,182,854 14,512,850
Non-current liabilities
Borrowings 19 1,962,500 473,000 1,962,500 473,000
Other payables 17 33,031 31,232 - -
Total non-current liabilities 1,995,531 504,232 1,962,500 473,000
NET ASSETS 14,484,371 15,747,196 17,451,514 17,981,843
Equity
Share capital 20 2,173,497 2,173,497 2,173,497 2,173,497
Share premium account 19,975,356 19,975,356 19,975,356 19,975,356
Warrant reserve 21 130,557 130,557 130,557 130,557
Foreign exchange reserve (554,495) (776,208) - -
Retained losses (7,240,544) (5,756,006) (4,827,895) (4,297,566)
Equity attributable to owners of the Company
14,484,371 15,747,196 17,451,514 17,981,843
TOTAL EQUITY 14,484,371 15,747,196 17,451,514 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 period was £530,029 (2021: £1,029,240).
The accompanying accounting policies and notes are an integral part of these
financial statements.
Unaudited Condensed Consolidated Statement of Changes in Equity
For the half-year ended 30 September 2022
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 - - - - (1,111,151) (1,111,151)
Other Comprehensive Income: Exchange translation loss on foreign operations - - (372,931) - (372,931)
-
Total comprehensive income for the Period: - - (372,931) (1,111,151) (1,484,082)
-
Transactions with owners
Issue of ordinary shares 284,111 9,357,389 - - - 9,641,500
Total Transactions with owners, recognized directly in equity: 284,111 9,357,389 - - 9,641,500
-
Balance at 30 September 2021 2,155,195 19,784,377 (787,477) (4,943,671) 16,338,981
130,557
Balance at 1 April 2022 2,173,497 19,975,356 (776,208) (5,756,006) 15,747,196
130,557
Loss for the period - - - - (1,484,538) (1,484,538)
Other Comprehensive Income: Exchange translation loss on foreign operations - - 221,713 - 221,713
-
Total comprehensive income for the Period: - - 221,713 (1,484,538) (1,262,825)
-
Transactions with owners
Shares issued - - - - - -
Transactions with Equity owners: - - -
- - -
Balance at 30 September 2022 2,173,497 19,975,356 (554,495) (7,240,544) 14,484,371
130,557
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.
Retained losses - Represents accumulated comprehensive income for the period
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.
Unaudited Condensed Company Statement of Changes in Equity
For the half-year ended 30 September 2022
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 - - - (1,029,240) (1,029,240)
Total comprehensive income: - - (1,029,240) (1,029,240)
-
Transactions with owners
Shares issued 284,111 9,357,389 - - 9,641,500
Total Transactions with owners: 284,111 9,357,389 - 9,641,500
-
Balance at 30 September 2021 2,155,195 19,758,356 (3,926,665) 18,143,464
130,557
Balance at 1 April 2022 2,173,497 19,975,356 (4,297,566) 17,981,843
130,557
Loss for the period - - - (530,029) (530,029)
Total comprehensive income: - - (530,029) (530,029)
-
Transactions with owners
Shares issued - - - - -
Total Transactions with Equity owners: -
- - - -
Balance at 30 September 2022 2,173,497 19,975,356 (4,827,895) 17,451,514
130,557
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.
Retained losses - Represents accumulated comprehensive income for the period
and prior years.
Share warrant reserve - Represents reserve for equity component of warrants
issued as per IFRS 2 share-based payments.
Unaudited Condensed Consolidated Statement of Cash Flows
For the half-year ended 30 September 2022
2022 2021
£ £
Cash used in operating activities
Loss for the period (1,484,538) (1,111,151)
Adjustment for:
Depreciation 793,173 172,853
Finance costs 58,474 75,833
Income tax - (25,943)
Working capital changes:
Increase in inventories (455,682) (4,591)
(Increase)/Decrease in receivables 1,713,412 (558,020)
Increase in payables 500,879 (268,020)
Increase/(Decrease) in DTA & Other assets (10,858) 2,093
Net cash used in operating activities (1,114,860) (1,716,946)
Cash flows from investing activities:
Purchase of tangible assets (3,626,178) (968,725)
Advance for Capital Assets 2,906 (2,035,930)
Net cash from investing activities (3,623,272) (3,004,655)
Cash flows from financing activities
Proceeds from Shares issued (net of costs) - 9,641,500
Proceeds /(redemption) from issue of Convertible loan notes 1,862,500 (114,000)
Finance cost (58,474) (75,833)
Increase / (decrease) in Lease & other long-term liability 1,799 37,859
Net cash from financing activities 1,805,825 9,489,526
Net increase in cash and cash equivalents (702,587) 4,767,925
Cash and cash equivalents at beginning of period 1,534,023 1,644,189
Cash and cash equivalents at end of period 831,436 6,412,114
The accompanying accounting policies and notes are an integral part of these
financial statements.
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 2021 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 International Accounting Standards as
adopted by UK (IFRSs)
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 2021. The adoption of these standards and amendments did not have any
material impact on the financial result of position of the Group and Company.
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 16 Amendments - Property, Plant and Equipment 1 January 2022
IAS 8 Amendments - Definition of Accounting Estimates 1 January 2023
IAS 1 Amendments - Disclosure of Accounting Policies 1 January 2023
IFRS Annual improvements to IFRS Standards 2018-2020 1 January 2022
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
international accounting standards 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 IFRS 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 financial position of the Group and the Company, their cash flows and
liquidity positions are contained in the financial statements. In December
2022, the Company raised equity capital to meet its financial obligations and
working capital requirements.
As at the end of the reporting period, the Company had commissioned and
brought in regular operations its first preconcentrate plant at Vatomina to
tide over the difficulties it faced during the period owing to adverse weather
conditions effecting its internal road network and resulting in lower than
expected production and sales. As at writing of this report the second
preconcentrate plant at Vatomina has been commissioned and brought in regular
operations thus enhancing its capacity at Vatomina to 12,000 tpa annual
capacity.
The Company has substantially completed its investment needs for the under
construction 18,000 tpa plant at Sahamamy in Madagascar, which is in the final
stages of installation, trials and commissioning and expected to be in
commercial production in the next quarter.
The Company's current cost structure substantially captures the costs of fixed
nature it is expected to incur with enlarged production from the 30,000 tpa
capacity it shall have operating from the next quarter. Additional costs for
additional production are directly variable costs like power, mining equipment
operations, packaging, logistics and similar variable costs. With the
additional 18,000 tpa capacity coming on stream and the Vatomina plant uprated
to 12,000 tpa capacity in regular operations the Company's revenues are
expected to substantially increase with significantly lesser increase in total
costs.
Taking in to account the comments above, the Directors have, at the time of
approving the financial statements, a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future, given its current cash resources, installed capacities and
operations.
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 period 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 Establissements Rostaing.
In the company financial statements, investments in subsidiaries, joint
ventures and associates 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 period are consolidated
using the purchase method. Their results are incorporated from the date that
control passes.
All financial statements are made up to 30 September 2022. 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 on consolidation.
Segment reporting
An operating segment is a component of the Group that engages in business
activity from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with the Group's other
components. All operating segments' operating results, for which discrete
financial information is available, are reviewed regularly by the Group's
Board to make decisions about resources to be allocated to the segment and
assess its performance. The Group reports on a three-segment basis - Holding
Companies Expenses, Mining Exploration and Development and Graphite Mining
Extraction.
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.
Revenue from the sale of goods is recognised when delivery has taken place and
the performance obligation of delivering the goods has taken place. The
performance obligation of products sold are transferred according to the
specific delivery terms that have been formally agreed with the customer,
generally upon delivery when the bill of lading is signed as evidence that
they have accepted the product delivered to them.
Foreign currencies
For the purposes of the consolidated financial statements, the results and
financial position of each Group company are presented in pounds sterling,
which is the functional currency of the Company. At balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at that date. Income and expense items
are translated at the average exchange rates for the period.
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 period. 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 periods 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
goodwill 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.
Current tax and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when they
relate to items that are recognised in other comprehensive income or directly
in equity, in which case, the current and deferred tax are also recognised in
other comprehensive income or directly in equity respectively. Where current
tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business
combination.
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, all assets included in
"Assets Under Construction" will be transferred into "Property, Plant and
Equipment". It is at this point that depreciation/amortisation commences over
its useful economic life.
Assets Under Construction are stated at cost. The initial cost comprises
transferred Mining Exploration and Evaluation assets, construction costs,
infrastructure facilities, any costs directly attributable to bringing the
asset into operation, the initial estimate of the rehabilitation obligation,
and, for qualifying assets, borrowing costs. Costs are capitalised and
categorised as construction in progress.
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
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.
Development costs
Expenditure on research activities is recognised as an expense in the period
in which it is incurred.
An internally-generated intangible asset arising from development (or from the
development phase of an internal project) is recognised if, and only if all of
the following conditions have been demonstrated:
● the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
● the intention to complete the intangible asset and use or sell it;
● the ability to use or sell the intangible asset;
● how the intangible asset will generate probable future economic
benefits;
● the availability of adequate technical, financial and other
resources to complete the development and to use or sell the intangible asset;
and
● the ability to measure reliably the expenditure attributable to
the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is
the sum of the expenditure incurred from the date when the intangible asset
first meets the recognition criteria listed above. Where no
internally-generated intangible asset can be recognised, development
expenditure is recognised in profit or loss in the period in which it is
incurred.
Subsequent to initial recognition, internally-generated intangible assets are
reported at cost less accumulated amortisation and accumulated impairment
losses, on the same basis as intangible assets that are acquired separately.
Mining Exploration and Evaluation
Mining Exploration and Evaluation costs are carried forward in respect of
areas of interest where the consolidated entity's rights to tenure are
current, and where these costs are expected to be recouped through successful
development into production from the area of interest or by sale or disposal
of the project. Alternatively, these costs are carried forward while active
and significant exploration and evaluation costs being incurred. Intangible
assets comprise of exploration costs purchased as part of the acquisition in
prior periods continuing in relation to the areas of interest and it is too
early to make reasonable assessment of the existence or otherwise of
economical production from the area of interest.
Costs incurred by the Company on behalf of its subsidiaries and associated
with exploration and evaluation activities are capitalised on a
project-by-project basis pending commencement of production from the
project. Costs incurred include appropriate technical and administrative
expenses but not general overheads. If the exploration and evaluation
activities lead to economic production from the project, the related
expenditures will be written-off over the estimated life of 10 years (useful
economic life) on straight line method.
Impairment reviews are carried out regularly by the Directors of the Company.
Where a project is abandoned, or is considered to be of no further commercial
value, the related costs will be written off to the Statement of Comprehensive
Income.
The recoverability of these costs is dependent upon the exploration and
evaluation activities successfully transitioning into production from the
project, the ability of the Group to obtain necessary financing to complete
the development of the project and derive future profitable production or
proceeds from the sale or disposal of the project.
Intangible assets (i.e. Exploration and evaluation assets) recorded at
fair-value on business combination
Exploration assets which are acquired as part of a business combination are
recognised at fair value in accordance with IFRS 3. 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 attributed to the fair value of the exploration asset.
Exploration and evaluation assets are recorded and held at cost
Exploration and evaluation assets are not subject to amortisation, as such at
the period-end all intangibles held have an indefinite life, but are assessed
annually for impairment. The assessment is carried out by allocating
exploration and evaluation assets to cash generating units ('CGU's'), which
are based on specific projects or geographical areas. The CGU's are then
assessed for impairment using a variety of methods including those specified
in IFRS 6. Whenever the exploration for and evaluation of mineral resources in
cash generating units does not lead to the discovery of commercially viable
quantities of mineral resources and the Group has decided to discontinue such
activities of that unit, the associated expenditures are written off to the
Income Statement.
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.
Loans and 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 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 fair value of the liability portion of a convertible bond is determined
using a market rate of interest rate for an equivalent non-convertible bond.
This amount is recorded as a liability on an amortised cost basis until
extinguished on conversion or maturity of the bonds. The remainder of the
proceeds is allocated to the conversion option. This is recognised and
included in shareholders' equity, net of income tax effects.
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 Fair Value
Through Profit or Loss ("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, including Goodwill, 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 obtaining interest
rates from various external financing sources 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 non-interest bearing (except borrowing
made through convertible loan notes) 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.
Financial liabilities at Fair Value Through Profit or Loss ("FVTPL")
Financial liabilities at FVTPL comprise of the Company's convertible loan
notes payable. Financial liabilities are classified as at FVTPL when the
financial liability is (i) contingent consideration that may be paid by an
acquirer as part of a business combination to which IFRS 3 applies, (ii) held
for trading, or (iii) it is designated as at FVTPL.
A financial liability is classified as held for trading if:
● it has been incurred principally for the purpose of repurchasing
it in the near term; or
● on initial recognition it is part of a portfolio of identified
financial instruments that the Company manages together and has a recent
actual pattern of short-term profit-taking; or
● it is a derivative that is not designated and effective as a
hedging instrument.
A financial liability other than a financial liability held for trading or
contingent consideration that may be paid by an acquirer as part of a business
combination may be designated as at FVTPL upon initial recognition if:
● such designation eliminates or significantly reduces a measurement
or recognition inconsistency that would otherwise arise; or
● the financial liability forms part of a group of financial assets
or financial liabilities or both, which is managed and its performance is
evaluated on a fair value basis, in accordance with the Company's documented
risk management or investment strategy, and information about the grouping is
provided internally on that basis; or
● it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and Measurement
permits the entire combined contract (asset or liability) to be designated as
at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or
losses arising on remeasurement recognised in profit or loss. The net gain or
loss recognised in profit or loss incorporates any interest paid on the
financial liability and is included in the 'other gains and losses' line item
in the income statement.
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.
Convertible Loan Notes (CLNs)
Convertible Loan Notes are recorded at their issue price and are carried at
their face value. 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 in June and
December.
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.
As a result of the increase in share price and the impact of the estimation of
share-based payments the Group has now recognised an expense for the
outstanding share options and warrants.
4. Critical accounting estimates and judgements
The preparation of financial statements in conformity with adopted IFRSs
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.
Intragroup receivables
The Company assessed the recoverability of intragroup receivables, and it does
not require any impairment adjustment in current financial period.
Production assets
The Group is required to perform an impairment review on its production
assets. The calculation is most sensitive to the following assumptions:
• Production volumes
• Sales volumes
• Graphite prices
• Operating overheads
• Inventory Estimated production volumes are based on the production
capability of the plant and estimated customer demand.
The directors have assessed the value of its production assets. In their
opinion there has been no impairment loss to these intangible assets in the
period.
Useful economic lives of property, plant and equipment
The annual depreciation charge for property, plant and equipment is sensitive
to changes in the estimated useful economic lives and residual values of the
assets, taking into account that the assets are not used throughout the whole
period due to the seasonality of the locations. The useful economic lives and
residual values are re-assessed annually. They are amended when necessary to
reflect current estimates, based on economic utilisation and the physical
condition of the assets. See note 14 for the carrying amount of the property
plant and equipment and note 3 for the useful economic lives for each class of
assets.
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 period 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.
5. Segmental analysis
The Management believes, under IFRS 8 - "Segmental Information", the Group
operated in three primary business segments in 2022, being Holding Companies
Expenses and Graphite Mining Extraction.
Segmentation by continuing businesses
Segment results
Half year ended 30 September 2022 Half year ended 30 September 2021 Year ended 31 March 2022
£ £ £
Revenue to external customers
Graphite Mining Extraction 1,165,195 560,058 1,645,308
(Loss) before income tax
Holding Companies Expenses (604,150) (729,334) (1,400,142)
Graphite Mining Extraction (880,388) (355,874) (571,615)
Net assets/(liabilities)
Holding Company Expenses 12,747,333 17,257,360 19,381,985
Graphite Mining Extraction 1,737,038 (918,379) (3,634,789)
Segmentation by geographical area:
Half year ended 30 September 2022 Half year ended 30 September 2021 Year ended 31 March 2022
Revenue to external customers £ £ £
UK 1,165,195 559,986 1,645,308
Madagascar - 72 -
(Loss) before income tax
UK (604,150) (1,400,142) (1,400,142)
Madagascar (880,388) (571,615) (571,615)
Net assets
UK 12,747,333 19,381,985 19,381,985
Madagascar 1,737,038 (3,634,789) (3,634,789)
6. Expenses by nature
Half year ended 30 September 2022 Half year ended 30 September 2021
£ £
The following items have been included in arriving at operating loss
Depreciation on other assets 154,094 -
Net foreign exchange loss 35,798 671
PR/IR Expenses 55,777 70,390
Professional Fees 71,911 52,084
Remuneration of Board & Management 410,325 438,704
7. Finance cost
Half year ended 30 September 2022 Half year ended 30 September 2021
£ £
Interest Expense 58,474 75,833
8. 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.
Half year ended 30 September 2022 Half year ended 30 September 2021
Continuing operations:
Loss attributable to equity holders of the Company (£) (1,262,825) (1,484,082)
Weighted average number of ordinary shares in issue 86,939,832 85,132,285
Loss per share (pence) (1.45) (1.71)
Half year ended 30 September 2022 Half year ended 30 September 2021
Diluted number of ordinary shares in issue
93,570,323 92,114,998
Given the loss for the period, the diluted earnings per share was the same as
basic earnings per share as this would otherwise be dilutive.
9. Intangible Assets
Group
Cost £
At 1 April 2022 3,571,196
Additions -
Forex Change (24,432)
At 30 September 2022 3,546,764
Accumulated amortisation
At 1 April 2022 -
Charge for the period -
At 30 September 2022 -
Net book value
At 1 April 2021 3,571,196
At 31 March 2022 3,546,764
Intangible assets comprise exploration and evaluation costs. Exploration and
evaluation assets are all internally generated, except for those acquired at
fair value as part of a business combination.
The projects in Madagascar have a current JORC compliant mineral resource of
25.1 million tonnes. Further exploration across the two projects is ongoing.
There are no JORC (Joint Ore Reserves Committee) or non-JORC compliant
resource estimates available to enable value in use calculations to be
prepared. The Directors therefore 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 30 September 2022
10. Investments
Company Shares in group undertaking
Cost £
At 1 April 2022 3,901,023
Addition 20,325
At 30 September 2022 3,921,348
Net book value
At 1 April 2021 3,901,023
At 30 September 2022 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*
*indirectly through Tirupati Resources Mauritius. 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 100*
* indirectly by Tirupati Resources Mauritius. Tirupati Resources Mauritius was
liquidated on 28(th) May 2021 and the shares are transferred to Tirupati
Graphite Plc
11. Property, plant and equipment
Group Plant and Machinery Infrastructure & Fixtures* Assets under construction Total
£ £ £ £
Cost
At 1 April 2022 5,778,410 2,004,824 632,029 8,415,263
Additions 2,616,413 192,855 1,060,149 3,869,417
At 30 September 2022 8,394,823 2,197,679 1,692,178 12,284,680
At 1 April 2022 883,895 175,247 - 1,059,142
Additions 639,079 154,094 - 793,173
At 30 September 2022 1,522,974 329,341 - 1,852,315
Carrying amount
As at 1 April 2022 4,894,515 1,829,577 632,029 7,356,121
At 30 September 2022 6,871,849 1,868,338 1,692,178 10,432,365
Company Assets under construction Total
£
£
Cost £
At 1 April 2022 - -
Additions 268,842 268,842
At 30 September 2022 268,842 268,842
At 1 April 2022 - -
Depreciation - -
At 30 September 2022 - -
Carrying amount
As at 1 April 2022 - -
As at 31 March 2022 268,842 268,842
12. Trade and other receivables
Group Company
30 September 2022 31 March 2022 30 September 2022 31 March 2022
£ £ £ £
Trade receivables 442,150 532,370 442,150 532,370
Advance for Capex 768,772 2,592,163 768,772 2,592,163
VAT Refunds 1,095,326 942,458 16,601 12,274
Other debtors 222,975 106,423 83,126 2,898
Prepayments - 69,220 - 99,221
Amounts owed by group undertakings - - 14,803,238 10,619,721
2,529,223 4,242,634 16,113,887 13,858,647
Trade receivables are amounts due from customers for goods sold in the
ordinary course of business. They are generally due for settlement within 30
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.
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 3 March 2022 & 30 September 2022.
13. Inventories
Group
30 September 2022 31 March 2022
Cost and net book value £ £
Raw materials and consumables 962,244 563,923
Finished and semi-finished goods 225,712 168,351
1,187,956 732,274
14. Trade and other payables
Current:
Group Company
30 September 2022 31 March 2022 30 September 2022 31 March 2022
£ £ £ £
Trade payables 990,498 548,906 514,610 188,534
Social security and other taxes 38,841 18,817 - -
Accruals 202,409 163,146 145,494 126,673
1,231,748 730,869 660,104 315,207
In the Directors' opinion, the carrying amount of payable is considered a
reasonable approximation of fair value.
Non-current:
Group Company
30 September 2022 31 March 2022 30 September 2022 31 March 2022
£ £ £ £
Lease liability 33,031 31,232 - -
33,031 31,232 - -
15. Provisions
No provisions have existed within the financial year or persist at year end.
16. Borrowings
In the half-year ended 30 September 2022, Interest on the convertible loan
note instrument ("CLN") is chargeable at 12%.
30 September 2022 31 March 2022
Within one year 909,000 536,000
Between 2 and 5 years 1,962,500 473,000
2,871,500 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.
17. Share capital
30 September 2022 30 September 2022 31 March 2022 31 March 2022
Number £ Number £
Allotted, called up and fully paid
Ordinary shares of 2.5p each 86,939,832 2,173,497 86,939,832 2,173,497
Shares were issued during the half-year as follows:
Cost of issue (£) Number of shares issued
- -
18. 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 30 September 2022 30 September 2022 31 March 2022 31 March 2022
and hierarchy £ £ £ £
Financial assets
Cash and cash equivalents (a) 831,436 831,436 1,534,023 1,534,023
Loans and receivables, net of impairment (a) 2,529,223 2,529,223 4,242,635 4,242,635
Total at amortised cost 3,360,659 3,360,659 5,776,658 5,776,658
Financial liabilities
Trade and other payables (a) 1,231,748 1,231,748 730,869 730,869
Borrowings and provisions (a) 2,871,500 2,871,500 1,009,000 1,009,000
Lease Liabilities (a) 33,031 33,031 31,232 31,232
Total at amortised cost 4,136,279 4,136,279 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 30 September 2022 30 September 2022 31 March 2022 31 March 2022
and hierarchy £ £ £ £
Financial assets
Cash and cash equivalents (a) 638,072 638,072 1,505,410 1,505,410
Loans and receivables, net of impairment (a) 16,113,887 16,113,887 13,858,647 13,858,647
Total at amortised cost 16,751,959 16,751,959 15,364,057 15,364,057
Financial liabilities
Trade and other payables (a) 660,104 660,104 315,207 315,207
Borrowings and provisions (a) 2,871,500 2,871,500 1,009,000 1,009,000
Total at amortised cost 3,531,604 3,531,604 1,324,207 1,324,207
Valuation, methodology and hierarchy
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
30 September 2022.
The Group considers its maximum exposure to be:
30 September 2022 31 March 2022
£ £
Financial assets
Cash and cash equivalents 831,436 1,534,023
Loans and receivables, net of impairment 2,529,223 4,242,635
3,360,659 5,776,658
The company considers its maximum exposure to be:
30 September 2022 31 March 2022
£ £
Financial assets
Cash and cash equivalents 638,072 1,505,410
Loans and receivables, net of impairment 16,113,887 13,858,647
16,751,959 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
30 September 2022 amount cash flows or less months years years
£ £ £ £ £ £
Non-derivative financial liabilities
Trade and other payables 1,231,748 - 1,231,748 - - -
Borrowings 2,871,500 - 436,000 473,000 - 1,962,500
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 -
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
30 September 2022 amount cash flows or less months years years
£ £ £ £ £ £
Non-derivative financial liabilities
Trade and other payables 660,104 - 660,104 - - -
Borrowings 2,871,500 - 436,000 473,000 - 1,962,500
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
30 September 2022 30 September 2022 31 March 2022 31 March 2022
£ £ £ £
Cash and cash equivalents 79,387 193,235 19,405 18,550
Trade & other receivables 1,210,922 1,218,575 3,127,431 1,003,709
Trade & other payables (514,610) (571,644) (188,534) (415,662)
Net Exposure 775,699 840,166 2,958,302 606,597
Company USD USD
30 September 2022 31 March 2022
£ £
Cash and cash equivalents 25,251 9,342
Loans to subsidiaries 14,803,238 9,797,683
Trade & other receivables 1,210,922 3,949,469
Trade & other payables (514,610) (224,937)
Net Exposure 15,524,801 13,531,557
19. Related party transactions
Tirupati Speciality Graphite Private Limited (TSG) 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
period end, a net amount was receivable of £768,772 (2021 - £221,176),
revenue of £291,275 (2021 - £56,610), Specialized machinery purchased of
£742,757 (2021: £578,736) from TSG.
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
period end, Specialized machinery purchased of £861,368 (2021: £160,384)
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 one of the
directors of the Company and holding a position with Optiva Securities Limited
during the year. At period end, the Company incurred brokerage and consultancy
fees, business development fees of £15,000 (2021 - £433,000).
20. Events after the reporting period
In December 2022, the company completed commissioning and integration of its
second pre concentrate plant in the Vatomina project enhancing the nameplate
capacity of the project to 12,000 tpa flake graphite production. The second
preconcentrate unit has been successfully integrated with the existing
operations without any significant difficulty and as of writing this report,
is in regular production.
On 5 December 2022, the company completed an oversubscribed placing of
14,285,714 new ordinary shares of £0.025 in the capital of the Company at a
placing price of at a price of £0.35 and raised gross proceeds of
£5,000,000 by way of an institutional and private placing. The Company
further agreed to vary the terms of its acquisition agreement for Suni
Resources SA from Battery Minerals Limited so as to facilitate the payment of
Capital Gains Tax by Battery Minerals as assessed by Governmental authorities
in Mozambique while maintaining the cost of acquisition to the Company.
On 25 November 2022 the Company appointed Mr. Douglas J Wright as a
Non-Executive Director on the Board of the Company.
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