REG - Tirupati Graphite - Unaudited Half-Yearly Results
28/12/2023 07:00
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RNS Number : 9837X Tirupati Graphite PLC 28 December 2023
The information communicated within this announcement is deemed to constitute
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.
28 December 2023
Tirupati Graphite plc
('Tirupati' or the 'Company')
Unaudited Half-Yearly Results
Tirupati Graphite plc (TGR.L, TGRHF.OTCQX), the specialist flake graphite
company and supplier of the critical mineral for the global energy transition,
is pleased to announce its Interim Results for the six months ended 30
September 2023.
The Company is engaged in mining and processing flake graphite, the only key
battery mineral where the supply chain is dependent on a single nation across
the value chain from mining to final product.
The development of its two projects in Madagascar to a combined capacity of
30,000 tons per annum ("tpa") was completed at the start of the reporting
period, and the Company was engaged in ramping up production, creating markets
and increasing sales during the period. The Company also completed the
acquisition of Suni Resources SA ("Suni"), Mozambique to add the
construction-initiated Montepeuz and DFS-ready Balama Central projects in
Mozambique to its portfolio of assets, and further initiated studies for
optimisation of the proposed processing facilities to be built at these
projects using the lean, cost effective, and sustainable technologies
successfully used by the Company at its Madagascar projects.
Shishir Poddar, Executive Chairman of Tirupati Graphite, said:
"We feel proud of our achievements in the period under reporting. In spite of
very tight working capital conditions, it is a testament to the inherent
strengths of the Company and the team's expertise in graphite operations, that
we continued our ramp up to achieve significant year on year increases in
production and sales. During this initial phase we have designed and
implemented various improvements to increase the resilience of the operations,
control costs and reduce emissions.
"The completion of the acquisition of Suni adds two advanced development
projects in the north of Mozambique's renowned graphite producing region. We
are encouraged by the quality of these projects which underpin our long term
growth ambitions. Given the amount of work and investment in these assets we
believe they were acquired at a very attractive consideration. Given the
inbound interest already received for potential supply, we see the acquired
assets as driving the next key milestones in our corporate journey, especially
given the expected increases in demand for ex-China graphite and recent policy
interventions to fuel supply chain diversity. Despite which, graphite remains
the only key battery mineral where the supply chain is dependent on a single
nation across the value chain from mining to final product.
"As previously announced, we are exploring a variety of funding options that
will enable us to accelerate the production ramp-up and growth through 2024
and onwards, having laid a strong foundation to build a leadership position in
this critical material.
"Discussions are at an advanced stage and we are confident that the funds will
serve to unlock the Company's potential at a time when graphite consumers are
looking to urgently diversify and build resilience into their supply chains."
Highlights for the six-month period ending on 30 September 2023 ("H1FY24")
Operations in Madagascar
· Production ramp up continued at the Company's two flake graphite
projects in Madagascar, established in modules between January 2021 to March
2023 to produce:
o 12,000 tpa flake graphite capacity at Vatomina Project
o 18,000 tpa flake graphite capacity at Sahamamy Project
· Various process improvements made during development to manage
costs and emissions were tested and further improved, gaps identified, and
plans evolved to reach an effective output of nameplate capacity and enhance
the capacity further by 20%.
· 100 Kw Hydro Power Plant (HPP) commissioned and put in regular
operations at Sahamamy to reduce costs and emissions.
· Plans and studies completed and regulatory approvals applied for
to add a new 500 Kw HPP at Sahamamy to further lower long term costs and
emissions.
· Substantial growth achieved in production, marketing and sales
despite working capital limitations, including delayed receipt of VAT refunds.
Key operating and financial highlights
From Unaudited Consolidated Statement of Comprehensive Income
Six Months Ending 30 Sep 2023 30 Sep 2022
Cost of Production £2,366,299 £787,312
Quantity of Production (MT(1)) 4,508 MT 1,731 MT
Cost per MT of Production £525/MT £454/MT
Total Sales (MT) 4,785 MT 1,691 MT
Revenue from Sales £3,146,627 £1,165,195
Achieved Basket Price (per MT) US$827/£658 MT US$833/£689 MT
Gross Operating Profit £780,328 £377,883
Gross Operating Margins (per MT) £163/MT £223/MT
Gross Operating Margin on Sales (%) 25% 32%
Corporate and Administrative Costs £1,831,879 £1,010,774
Other Income £92,347 -
Gain on Bargain Purchase £9,562,407* -
EBIDTA £ 8,693,204 £ (632,891)
Depreciation £758,862 £793,173
EBIT £7,934,342 £(1,426,064)
1. MT = Metric Tonnes *Provisional, subject to Valuation on business
combination
· Revenue from sales increasing by 170% to £3,146,627 (H1FY23:
£1,165,195).
· Production increasing by 160% to 4,508 tons (H1FY23: 1,731 tons).
· Gross operating profits increased by 106% YoY to £780,328
despite enlarged workforce and establishment costs for enlarged capacity.
o As production and sales ramp up, the operating margins are expected to
improve with economies of scale and asset efficiency.
· A provisional non-cash gain of £9,562,407, subject to
independent third-party valuation, on Bargain Purchase resulting from the
acquisition of Suni Resources.
· Corresponding increase in Corporate and Administrative Costs
limited to 81% at £1,831,879 with added subsidiary and capacity growth
(H1FY23: £1,010,774).
From Unaudited Consolidated Statement of financial position
As at 30 Sep 2023 31 March 2023
Total non-current assets £28,828,389 £14,904,003
Net Current Assets £4,125,080 £3,837,717
Total non-current liabilities £2,799,604 £1,893,580
Total Equity £30,153,864 £16,848,140
· Total non-current assets increased by 93% to £28,828,389 (FY23:
£14,904,003) reflecting assets added upon acquisition of Suni.
· Total equity increased by 79% to £30,153,864 (FY23:
£16,848,140) reflecting gain on bargain purchase upon acquisition of Suni.
Mozambique Projects acquisition completed
· Acquisition of 100% of the equity of Suni Resources SA,
Mozambique, ('Suni") from ASX listed Battery Minerals Limited ("BAT")
completed.
· The Mineral Resource Estimates classified under JORC 2012 at the
projects acquired are as tabulated below:
Mozambique Group Total Mineral Resource
Project Deposit
Tonnes TGC Cont. Graphite
Mt % kt
Montepuez Elephant 76.9 7.3 5,620
Buffalo 42.6 9.5 4,050
Balama Central Lennox 21.9 10.2 2,230
Buffalo 11.0 10.2 1,120
Total 152.5 8.5 12,030
Of which combined Probable Ore Reserves are as below:
Tirupati Graphite Plc Mozambique Group Probable Ore Reserves
Project Mt Grade % TGC Contained Graphite Mt
Balama Central 19.66 11.06 2.17
Montepuez 42.19 9.27 3.91
Total 61.9 10.1 6.08
· Montepuez project mining license over 3,666.88 hectares valid up
to 22.02.2043 (and further renewable) is license to build to 100,000 tpa flake
graphite production in 2 stages of 50,000 tpa each.
· BAT initiated construction of 50,000 tpa first module. Planned
and executed investment position as acquired are as below:
Area BAT forecast Total Capex US$ Spent to Date US$ Remaining Capex US$
Process Plant and Power 28,129,000 4,160,000 23,969,000
Mining Equipment and Light vehicles 4,378,000 72,000 4,306,000
Camp Infrastructure and fit-out 3,108,000 3,108,000 0
Earthworks, Tailings Storage Facility and Water Storage 3,834,000 3,491,000 343,000
Buildings, offices and workshops 1,814,000 62,300 1,751,700
Owners costs 4,747,000 1,772,000 2,975,000
Pre-production costs 4,926,000 47,000 4,879,000
Freight 1,672,000 389,000 1,283,000
Total 52,608,000 13,101,300 39,506,000
Notes
1) The plan envisages outsourcing of execution of mining activities and
certain other logistic facilities that significantly reduced the total
investment and the Company believes this is a reasonable approach for many
reasons.
2) The Company has verified the assets created out of the amounts spent by BAT
prior to its acquisition and believes that development activities conducted by
the spend remain productive and substantially in order.
· In terms of studies under JORC 2012 standards, the operating
financial parameters of the planned first 50,000 tpa Montepuez project are
estimated as below:
OPEX for years 1 to 10 US$ PA US$/t conc
Mining 5,129,000 102.9
Processing 5,692,000 114.3
General and Administrative 2,545,000 30.7
Logistics 3,082,000 51.1
Maintenance 1,532,000 61.9
Total C1 cost 17,980,000 360.9
Notes:
1) Above table excludes Government Royalties.
2) Above table is based on average blended ore for 50,000 tpa production rate
and ore at an average rate of ~500,000tpa at 12% TGC resulting from targeted
mining of high grade ores in the first 10 years.
3) The above is subject to further reviews that the Company intends to
conduct.
· 1543.08 hectares Mining License Area of Balama Central project.
The project shares its east boundary with the Balama project of ASX listed
Syrah Resources Limited.
· The 2018 DFS promises compelling economics for the project
Licensed for development to a 58,000 tpa flake graphite facility with
estimated 27 years mine life.
· Future plans for the project development pathway are under
assessment by the Company as inbound inquiries continue and market dynamics
evolve.
· The Mozambique projects together lay the foundation for future
growth of the Company's operations, positioning it to benefit from the growing
EV ("Electric Vehicle") sector demand.
Key Market Highlights
· The Graphite markets remained subdued through substantial portion of
CY23 due to increased synthetic graphite capacity in China, impacting
consumption and prices of natural graphite in Lithium-ion battery sector and
also due to the impacts of the Energy Crisis on the conventional graphite
markets.
· However, the end of CY23 saw a turn to this situation specially
benefitting ex-China graphite producers.
· China produced >70% of the total consumption of natural graphite.
Additionally, graphite is the only key battery mineral where the supply chain
is dependent on a single nation across the value chain from mining to final
product for the cell.
· The Chinese government imposed restrictions on exports of graphite
from China, further highlighting the strategic importance of ex-China sources.
· This initial restrictions led to increased graphite prices from
December 2023 onwards, of c.4% as assessed by credible sources.
· The lack of clarity on these Chinese export restrictions, the ability
of one nation to control the supply chain of this classified critical mineral,
used not just for the energy transition but also other applications like steel
manufacturing, has resulted in graphite taking the centre stage in the current
global geopolitical scenario.
· In December 2023, the USA has issued new guidance that no EVs
manufactured in the USA using Chinese made components will be eligible for
full subsidies under the US$369Bn Inflation Reduction Act, nor will those EVs
that are made by companies with significant ties to the Chinese government or
produced with licensing agreement with a China based or Beijing-controlled
operator qualify.
Impact on Tirupati
· The Company is one of the handful of significant current producers of
graphite ex-China. The Company has received increased inquiries from around
the world for supplies of its products, including from OEMs and EV
manufacturers. The internal and external developments together during the
period give the Company a first mover opportunity with the advantage of having
a visible track record of its ability to produce this critical mineral at
substantial and growing scale, a competitive cost levels, and in accordance
with global Sustainability standards.
· The Company continued to realise basket prices near those achieved in
previous periods in HY23 even in subdued market conditions.
Future Market Outlook - The Energy Transition
Since the end of the reporting period, recent Graphite export restrictions
announced and implemented in China have resulted in some price increases for
small and fine flake graphite, as have some prices for traditional sectors
using larger flake types due to improving economic conditions in some
jurisdictions. This is expected to continue as the energy transition continues
its momentum globally and graphite demand is forecast by the likes of
Benchmark Minerals Intelligence to outstrip supply from 2025. Little
additional capacity outside China is currently forecast to become available to
serve the increased demand by that time.
In October, China announced the introduction of export restrictions on
Graphite products from 1 December 2023.
The deficit of graphite is expected to arise from demand coming a growing
number of battery manufacturing plants, or gigafactories, that are set to
finish construction, begin production and therefore grow the overall demand
for the competitively priced critical minerals such as the natural graphite
required for most battery chemistries. This future demand is expected to
provide strong moves in the pricing of small and fine flake graphite sizes
that are most commonly used for the energy storage and battery sectors. The
small and fine flake sizes make up the majority of the Company's Mozambique
project product baskets.
Electric vehicle uptake continues to grow across the world with China hitting
record monthly EV sales during the period despite the end of available
subsidies there, with EV sales in China growing 29% year on year. Elsewhere,
in North America, sales in the period grew 78% in North American and 34% on
average globally, and EVs look to continue to grow their market share which
will continue to increase demand for critical minerals such as natural
graphite.
The push to diversify supply chains to reduce economic dependence of certain
nations is acutely illustrated in the form of the current Graphite supply
chain. China alone dominates the Natural Graphite industry across its entire
value chain, from mining to advanced processing, retaining >75% of its
global value. The likes of the aforementioned graphite export restrictions,
and more rules and legislation being introduced in the rest of the world
whereby considerations of the provenance of raw materials are placed front and
centre as eligibility criteria for automotive manufacturers and OEMs to
receive sought after incentives under the likes of the US Inflation Reduction
Act and EU Critical Raw Materials Act to stimulate diversified supply chains
and boost security of supply, is therefore extremely relevant for natural
graphite as there are so few current producers outside China. The combined
factors above are further expected to result in upward price pressure for
graphite and substantial demand specially for ex-China graphite.
There is also a consensus forming that prices for material sourced from
outside China may attract a premium should the material conform to the highest
international standards of Sustainability.
The Company's focus has been on gaining ex-China market share in order to
establish its presence and position itself well for the future forecasted
demand that will arise for graphite from these ex-China markets to supply
anode, battery and automotive manufacturers in these same markets in the years
to come.
TG Markets and marketing developments
TG continued to spread its global footprint in developing markets both for its
current and future markets recording a significant increase in sales to the
United States of America while continuing to grow in Europe and Asia as
depicted in the table below:
USA Europe Asia Total
Half year ended 30 Sep 2023 £608,893 £432,142 £2,105,592 £3,146,627
Half year ended 30 Sep 2022 £398,120 £767,075 £1,165,195
The current order book and engagements remains sufficient for the Company to
sell its growing production in the immediate term and the company remains in
standby mode to activate increased business with its existing customers and
with those it has achieved qualification.
The company has also engaged with key players in the ex-China EV sector, both
automakers and manufacturers of EV batteries or anodes looking to secure their
flake graphite needs and is at various stages of prospective business
development with different companies. These stages include entering into
Non-Disclosure Agreements, General Supply Terms and Conditions Agreements,
providing information about the Company's projects and product samples for
approval. Negotiations on possible offtake agreements are ongoing though the
current subdued markets remain a challenge to address future price basis and
the Company remains conscious in its approach towards possible future price
trends as the markets turn from oversupply to shortfall. The Company believes
that the geopolitical uncertainties driven policy evolution, progress of
construction of various battery projects and resultant imminent shortage of
ex-China flake graphite products used in the battery space shall help it
secure prudent offtake arrangements on the back of its successful developments
at Madagascar and prospects of the Mozambique assets and remains well prepared
for expeditious development of additional capacities at appropriate time under
appropriate market arrangements.
To date, the Company has strategically been gaining market share for itself
supplying customers outside of China and all sales have been made to consumers
outside China. The urgency with which legislation and incentives are evolving
in the rest of the world provide the Company with a significant opportunity to
be at the forefront of natural graphite supply for the global energy
transition. As an advanced, low-cost, ex-China current producer it is staged
to serve markets that are set to grow at speed and scale in the coming years.
As a result, the Company would like to accelerate its development to further
position itself for further significant business development
Future Outlook and Strategy
In line with evolving markets, the Company remains focussed on its
step-by-step approach to targeting the following
· Considering an average head grade of c.3% across the two
Madagascar projects, the Company will add two pre-concentrate units and ramp
up production and sales in Madagascar to steady state of 2,000 tons per month
in the minimum possible time.
· Simultaneously, further work will be done to enhance the
effective production and sales rate to 3,000 tons per month by adding further
two PCU's and enhancing Vatomina FCU capacity to 18,000 tpa.
The Company is extensively engaged on various options to meet the related
capital requirements to achieve its targets as it continues its efforts to
ramp up production and sales within its current resources.
· Targeting a total production of 104,000 tpa across its projects
by establishing the next 18,000 tpa module in Madagascar, and first 50,000 tpa
module at Montepuez.
· Extensive new ex-China battery capacities are expected to come
online by 2025 and inbound inquiries justify the developments above.
· Add further capacities in sync with markets remaining flexible on
location.
· The Company has engaged with DFIs ("Development Finance
Institutions") for project finance arrangements for the development of the
larger new capacities.
Enquiries:
Tirupati Graphite Plc
Puruvi Poddar - Chief of Corporate & Business Development admin@tirupatigraphite.co.uk (mailto:admin@tirupatigraphite.co.uk)
+44 (0) 20 39849894
Optiva Securities Limited (Joint Broker)
Ben Maitland - Corporate Finance +44 (0) 20 3034 2707
Holly Ritson - Corporate Broking +44 (0) 20 3981 4173
Shard Capital Partners LLP (Joint Broker)
Isabella Pierre - Corporate Broking +44 20 71869927
Damon Heath - Corporate Broking +44 20 7186 9950
FTI Consulting (Financial PR)
Ben Brewerton / Nick Hennis / Lucy Wigney +44 (0) 20 3727 1000
tirupati@fticonsulting.com
MANAGEMENT'S CONDENSED REPORT
The Company remains engaged in its areas of focus, flake graphite, an
important constituent of the energy transition economy and the largest single
component of EV batteries by weight. The Company continued to focus on
ramping up production at its two projects in Madagascar, and having completed
the acquisition of Suni Resources, it initiated assessments for furthering
market engagement, financing and development of its new projects.
Graphite has a set of unique properties and therefore a diversity of
applicable end-uses, 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 saw the Company's production ramp up at its newly
developed projects, though remained slower than the company is capable of,
primarily an effect of working capital limitations. At the start of the
period, when the Company had completed its stage 1 development, it was left
with c.250,000 cash to manage its production ramp up for a potential upwards
of £ one million monthly revenues, operating at a remote location in an
underdeveloped nation, with negligible internal resources for inputs.
The Company remains engaged with capital markets for arranging its financing
needs. The highlights of the period, provide an account of various aspects of
the reporting period and a detailed account of the Company's activities was
contained in the Directors Report accompanying the Annual Report FY2023. The
Company remains focussed on ramping up production at the currently established
30,000 tons capacity, achieving profitability, and progressing its business to
make the most of the energy transition.
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
28 December 2023
Unaudited Consolidated Statement of Comprehensive Income
For the half-year ended 30 September 2023
Notes 2022
2023
£ £
Continuing operations
Revenue 5 3,146,627 1,165,195
Other Income* 9,744,754 -
Cost of Sales 6 (2,366,299) (787,312)
Depreciation of Operating Assets (744,598) (778,202)
Gross profit / (loss) 9,780,484 (400,319)
Administrative expenses 7 (1,846,143) (1,025,745)
Operating gain / (loss) 7,934,342 (1,426,064)
Finance costs 8 (169,012) (58,474)
Gain / (Loss) before income tax 7,765,330 (1,484,538)
Income tax - -
Gain / (Loss) for the year attributable to owners of the Company 7,765,330 (1,484,538)
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (283,153) 221,713
Total comprehensive gain / (loss) for the year attributable to the Group 7,482,177 (1,262,825)
Earnings per share attributable to owners of the Company Pence per share Pence per share
From continuing operations:
Basic and Diluted 9 7.26 (1.71)
The accompanying accounting policies and notes are an integral part of these
finance
*Note:
On 3 April 2023 the Company reported completion and gained control of Suni
Resources SA as at 1 April 2023. The acquisition has resulted in a Provisional
Gain on "Bargain Purchase" of GBP 9,652,407 in terms of International
Financial Reporting Standards 3, as adopted by the UK on "Business
Combination", subject to independent third party valuation. The Company
intends to undertake a valuation process with external valuers, and the amount
of gain is subject to its outcome. Please refer note 3 for further detailed
explanation.
Unaudited Consolidated and Company Statement of Financial Position
As at 30 September 2023
Notes Group Company
Sep 2023 March 2023 Sep 2023 March 2023
£ £ £ £
Non-current assets
Investments in subsidiaries 11 - - 12,377,420 3,921,348
Property, plant and equipment 12 25,112,819 11,198,437 - -
Deferred tax 22 72,528 74,046 - -
Deposits 33,341 32,455 - -
Intangible assets 10 3,609,701 3,599,065 40,970 40,970
Total non-current assets 28,828,389 14,904,003 12,418,390 3,962,318
Current assets
Inventory 14 1,314,798 1,386,558 - -
Trade and other receivables 13 6,032,723 4,755,629 19,721,423 21,213,389
Cash and cash equivalents 125,437 289,338 33,093 130,340
Total current assets 7,472,958 6,431,525 19,754,516 21,343,729
Current liabilities
Trade and other payables 15 3,347,878 1,684,808 1,960,635 735,440
Borrowings 17 - 909,000 - 909,000
Total current liabilities 3,347,878 2,593,808 1,960,635 1,644,440
Net current assets 4,125,080 3,837,717 17,793,881 19,699,289
Non-current liabilities
Borrowings 17 2,771,500 1,862,500 2,771,500 1,862,500
Other payables 15 28,104 31,080 - -
Total non-current liabilities 2,799,604 1,893,580 2,771,500 1,862,500
NET ASSETS 30,153,864 16,848,140 27,440,771 21,799,107
Equity
Share capital 18 2,674,169 2,536,195 2,674,169 2,536,195
Share premium account 26,705,061 24,462,976 26,705,061 24,462,976
Warrant reserve 19 116,065 116,065 116,065 116,065
Foreign exchange reserve (2,440,732) (2,157,579) - -
Deferred Equity Consideration 3,443,489 3,443,489
Retained losses (344,188) (8,109,518) (5,498,013) (5,316,129)
Equity attributable to owners of the Company 30,153,864 16,848,140 27,440,771 21,799,107
TOTAL EQUITY 30,153,864 16,848,140 27,440,771 21,799,107
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 £ 181,883 (2023: £1,032,736).
The accompanying accounting policies and notes are an integral part of these
financial statements.
Unaudited Consolidated Statement of Changes in Equity
For the half-year ended 30 September 2023
Attributable to the owners of the company
Share capital Share premium Foreign exchange reserve Share warrants reserve Deferred Equity consideration Retained Losses TOTAL
EQUITY
£ £ £ £ £ £ £
Balance at 1 April 2022 21,73,497 1,99,75,356 (776,208) 1,30,557 - (5,756,006) (15,747,196)
Loss for the period - - - - - (1,484,538) (1,484,538)
Other Comprehensive Income: Exchange translation loss on foreign operations - - 2,21,713 - - - 2,21,713
Total comprehensive income for the year: - - 2,21,713 - - (1,484,538) (1,262,825)
Transactions with owners
Shares issued
Balance at 30 September 2022 2,173,497 19,975,356 (554,495) 1,30,557 - (7,240,544) 14,484,371
Balance at 1 April 2023 2,536,195 24,462,976 (2,157,579) 116,065 - (8,109,518) 16,848,140
Loss for the year - - - - - 7,765,330 7,765,330
Other Comprehensive Income: Exchange translation loss on foreign operations - - (283,153) - - - (283,153)
Total comprehensive income for the year: - - (283,153) - - (1,887,077) 7,482,177
Transactions with owners
Shares issued 137,974 2,242,084 - - - - 2,380,058
Other Transactions - - - - 3,443,489 - 3,443,489
Balance at 30 September 2023 2,674,169 26,705,061 (2,440,732) 1,16,065 3,443,489 (344,188) 30,153,864
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 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.
Unaudited Company Statement of Changes in Equity
For the half-year ended 30 September 2023
Attributable to equity shareholders
Share capital Share premium Retained Losses Deferred Equity consideration Warrant Reserve TOTAL
EQUITY
£ £ £ £ £ £
Balance at 1 April 2022 2,173,497 19,975,356 (4,297,866) - 130,557 17,981,543
Loss for the period - - (530,029) - - (530,029)
Total comprehensive income: - - - - - -
Transactions with owners
Shares issued - - - - - -
Balance at 30 September 2022 2,173,497 19,975,356 (4,827,895) - 130,557 17,451,514
Balance at 1 April 2023 2,536,195 24,462,976 (5,316,129) - 116,065 21,799,107
Loss for the year - - (181,883) - - (181,883)
Total comprehensive income:
Transactions with owners
Shares issued 137,974 2,242,084 - - - 2,380,058
Other Transactions - - - 3,443,489 - 3,443,489
Balance at 30 September 2023 2,674,169 26,705,061 (5,498,013) 3,443,489 116,065 27,440,771
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 year and
prior years.
Share warrant reserve - Represents reserve for equity component of warrants
issued as per IFRS 2 share-based payments.
Unaudited Consolidated Statement of Cash Flows
For the half-year ended 30 September 2023
2023 2022
£ £
Cash used in operating activities
Loss for the year 7,765,330 (1,484,538)
Adjustment for:
Gain on bargain purchase (9,652,407) -
Depreciation 758,862 793,173
Finance costs 169,012 58,474
Working capital changes:
Increase/(decrease) in inventories 71,760 (455,682)
Increase/(decrease) in receivables (1,560,247) 1,713,412
Increase/(decrease) in payables 1,663,070 500,879
Increase/(decrease) in DTA & Other assets 632 (10,858)
Taxes paid - -
Net cash from/(used in) operating activities (783,988) 1,114,860
Cash flows from investing activities:
Purchase of tangible assets (14,673,244) (3,626,178)
Acquisition of Suni Resources 9,641,771 -
Advance for Capital Assets - 2,906
Net cash (used in) investing activities (5,031,473) (3,623,272)
Cash flows from financing activities*
Proceeds from Shares issued (net of costs) 2,380,058 -
Proceeds from issue of Convertible loan notes (net of costs) 1,862,500
Deferred equity 3,443,489 -
Lease Liability (2,976) 1,799
Finance cost (169,012) (58,474)
Net cash from financing activities 5,651,560 1,805,825
Net (decrease)/increase in cash and cash equivalents (163,901) (702,587)
Cash and cash equivalents at beginning of period 289,338 1,534,023
Cash and cash equivalents at end of period 125,437 831,436
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).
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 Condensed Management
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 save and except the reporting related to business
combination from acquisition of Suni Resources SA:
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 Condensed
Management Report. 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 Condensed Management Report. In addition, the Annual Report
for the Financial Year April 2022 to March 2023 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 challenges that came on its way successfully finding solutions
as has been reported by the Company on a continued basis.
For the period under reporting, the Company achieved 170% growth in revenues
and 106% increase in operating gross profits and is engaged in ramping up
production so as to reach a level of breakeven monthly production and sale
that is estimated to be about 1000 to 1200 tons per month as against current
levels of 700-800 tons per month and is engaged in raising funds for meeting
its working capital needs as also for further developments.
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. In the meantime, 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 during the period
under reporting, the Company continues to produce, sell and realise sale
proceeds within its available resources. The Company is engaged to explore
possible routes to ease its liquidity position including realising VAT
refunds, banking facilities at subsidiary level and, in the meantime, 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, ability to raise finance for 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 Company may
consider other options at its disposal given extensive base of Assets in its
Balance Sheet.
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.
Gain on "Bargain Purchase"
The Company had completed the acquisition of Suni Resources on 1(st) April
2023, for which on consolidation company has recorded the excess difference
between Net assets and purchase consideration as Gain on "Bargain Purchase"
per the standard of IFRS 3 - "Business Combinations". The detailed working of
the same is given below:
Particulars Amount GBP
1 Purchase consideration:
Cash paid 1,662,426
Equity issued 2,380,058
Deferred Equity consideration 3,443,489
(A) 7,485,974
2 Net assets of Suni:
Net Equity 5,642,261
Inter-company loans 11,496,120
(B) 17,138,381
Gain on Bargain Purchase (B-A) 9,652,407
The net assets that the Company has acquired against the net equity and inter
company liabilities are as below:
Deployment of Funds: Amount GBP
Property Plant & Equipment 14,556,013
Trade & Other Receivables 3,481,695
Cash & Cash Equivalents 79,086
Trade & Other Payables (978,413)*
Net Assets 17,138,381
*includes amount owed to the Company paid prior to completion for creating
fixed deposit against bank guarantee
The Company believes that there is no significant impairment in the assets
held by Suni Resources and has provisionally accounted for the gain on bargain
purchase for the unaudited financial results subject to further verification
and valuations.
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.
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 amortized 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 30 September 2023. We are pleased to
report that as of 30 September 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.
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 £3,609,701 as
at 30 September 2023 (31(st) March 2023: £3,599,065). 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 1,496,733 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:
Half year ended 30 Sep 2023 USA Europe Asia Total
Revenue from external customers 608,893 432,142 2,105,592 3,146,627
Timing of recognition:
At a point in time 608,893 432,142 2,105,592 3,146,627
Half year ended 30 Sep 2022 Europe Asia Total
Revenue from external customers 398,120 767,075 1,165,195
Timing of recognition:
At a point in time 398,120 767,075 1,165,195
Following customers constituted more than 10% of the revenue, their respective
share of revenue is mentioned below:
Half year ended Half year ended
30 Sep 2023 30 Sep 2022
£ £
Customer A 821,651 292,414
Customer B 492,231 291,275
Customer C 404,838 279,629
Revenues of approximately £ 1,718,719 (2022: £863,319) are derived from 3
customers who each account for greater than 10% of the group's & company's
total revenues.
6. Cost of Sales
Half year ended Half year ended
30 Sep 2023 30 Sep 2022
£ £
Mining & Processing costs 1,747,311 626,902
Human Resources costs 355,964 290,280
Logistics utilities & plant admin costs 231,399 173,419
(Increase) / Decrease in inventory of inputs 31,625 (303,289)
Total 2,366,299 787,312
7. Expenses by Nature
Half year ended Half year ended
30 Sep 2023 30 Sep 2022
£ £
The following items have been included in arriving at operating loss
Depreciation on non-operating assets 14,264 14,971
Net foreign exchange gain 26,389 35,798
PR/IR Expenses 37,600 55,777
Professional Fees 280,272 71,911
Insurance 15,620 -
Director Emoluments 243,108 177,242
Management Salary 265,606 233,083
Other Admin Expenses:
Corporate Level 217,770 311,352
Subsidiary Level (includes Suni Resources SA) 745,514 125,611
8. Finance Cost
Half year ended Half year ended
30 Sep 2023 30 Sep 2022
£ £
Interest Expense 169,012 58,474
9. 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 Half year ended
30 Sep 2023 30 Sep 2022
Continuing operations:
Gain / (Loss) attributable to equity holders of the Company (£) 7,765,330 (1,484,538)
Weighted average number of ordinary shares in issue 106,966,712 86,939,832
Loss per share (pence) 7.26 (1.71)
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.
10. Intangible Assets
Group
Cost £
At 1 April 2023 3,599,065
Impairment -
Forex Change 10,636
At 30 September 2023 3,609,701
Accumulated amortisation
At 1 April 2023 -
Charge for the year -
At 30 September 2023 -
Net book value
At 1 April 2023 3,599,065
At 30 September 2023 3,609,701
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 30 September 2023.
11. Investments
Company Shares in group undertaking
Cost £
At 1 April 2023 3,921,348
Addition 8,456,073
At 30 September 2023 12,377,420
Net book value
At 1 April 2022 3,921,348
At 30 September 2023 12,377,420
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 and are beneficial holdings.
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
Suni Resources
Registered: AV JULIUS NYERERE 4000 ED. SOLAR, Mozambique
Nature of business: Graphite mining extraction
%
Class of share Holding
Ordinary shares 100
12. Property, Plant and Equipment
Group Plant and Machinery Infrastructure & Fixtures* Assets under construction Total
£ £ £ £
Cost
At 1 April 2023 8,536,528 4,727,205 226,634 13,490,367
Additions 32,805 - 144,183 176,988
Assets acquired on Suni acquisition - 1,307,637 13,423,442 14,731,079
Restatements - (137,915) - (137,915)
Reclassification 305,138 65,679 (370,817) -
At 30 September 2023 8,874,471 5,962,606 13,423,442 28,260,519
At 1 April 2023 1,874,020 417,910 - 2,291,930
Assets acquired on acquisition - 175,083 - 175,083
Depreciation 472,729 207,958 - 680,687
At 30 September 2023 2,346,749 800,951 - 3,147,700
Carrying amount
As at 1 April 2023 6,662,508 4,309,295 226,634 11,198,437
As at 30 September 2023 6,527,722 5,161,655 13,423,442 25,112,819
Note: Infrastructure & fixtures includes mine development assets Sep 2023:
£1,448,776 (31 Mar 2023: £1,492,474) and right of use assets Sep 2023: £
56,883 (Mar 2023: £58,599)
13. Trade and Other Receivables
Group Company
30 September 2023 31 30 September 2023 31
March 2023 March 2023
£ £ £ £
Trade receivables 746,635 710,600 746,635 710,600
Advance for Capex 287,039 287,039 287,039 287,039
VAT Refunds 3,083,972 1,058,832 32,824 7,451
Fixed Deposits 1,876,969
Other debtors 38,108 50,209 32,083 -
Prepayments - 16,424 - 16,424
Amounts owed by group undertakings - - 18,909,881 17,559,350
Advance for Acquisitions* - 2,632,525 - 2,632,525
6,032,722 4,755,629 19,721,443 21,213,389
*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 30 September 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 746,635 - - - -
Loss allowance - - - - -
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 - - - - -
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 30 September 2023 & 31 March 2023.
14. Inventories
Group
30 September 2023 31
March 2023
Cost and net book value £ £
Raw materials and consumables 1,120,958 457,997
Finished and semi-finished goods 193,840 928,561
1,314,798 1,386,558
15. Trade and Other Payables
Current:
Group Company
30 31 30 September 2023 31
September 2023 March 2023 March 2023
£ £ £ £
Trade payables 1,693,879 1,084,991 357,645 243,500
Social security and other taxes 14,658 48,913 3,797 -
Advance from customers 628,196 - 628,196 -
Accruals 1,064,102 550,994 970,996 491,940
3,347,878 730,869 1,960,635 315,207
In the Directors' opinion, the carrying amount of payable is considered a
reasonable approximation of fair value.
Non-current:
Group Company
30 31 30 September 2023 31
September 2023 March 2023 March 2023
£ £ £ £
Lease liability 28,104 31,080 - -
28,104 31,080 - -
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.
16. 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.
17. 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
30 31
September 2023 March 2023
Within one year - 909,000
Between 2 and 5 years 2,771,500 1,862,500
2,771,500 2,771,500
Following table denotes changes in borrowings:
30 31
September 2023 March 2023
Opening Balance as on 1(st) April 2,771,500 1,009,000
Issued during the year - 1,862,500
Redeemed/Converted during the year - (100,000)
Closing Balance as on 31(st) March 2,771,500 2,771,500
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.
18. Share Capital
30 September 2023 30 September 2023 31 March 2023 31 March 2023
Number £ Number £
Allotted, called up and fully paid
Ordinary shares of 2.5p each 1,069,66,712 2,674,169 1,01,447,768 2,536,195
Shares were issued during the year as follows:
Cost of issue (£) Number of shares issued
Shares issued on acquisition of Suni Resources - 5,518,944
01 April 2023
- 5,518,944
19. Share based Payments & Warrant Reserve
During the first two years after incorporation of the Company on 20 April
2017, 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. These represent the current outstanding
Warrants in issue.
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 30 September 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
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 5,44,6104
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:
30 31
September 2023 March 2023
Opening Balance as on 1(st) April 5,913,348 6,630,491
Issued during the year - -
Exercised during the year - -
Expired during the year (467,244) (717,143)
Closing Balance as on 30 September 2023 5,446,104 5,913,348
In half-year ended 2024, 444,444 warrants issued to CLN investors and 22,800
to brokers have expired.
20. 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 30 September 31 March 31 March
2023 2023 2023 2023
and hierarchy £ £ £ £
Financial assets
Cash and cash equivalents (a) 125,437 125,437 289,338 289,338
Loans and receivables, net of impairment (a) 6,032,723 6,032,723 4,755,629 4,755,629
Total at amortised cost 6,158,160 6,158,160 5,044,967 5,044,967
Financial liabilities
Trade and other payables (a) 3,347,878 3,347,878 1,684,808 1,684,808
Borrowings and provisions (a) 2,771,500 2,771,500 2,771,500 2,771,500
Lease Liabilities (a) 28,104 28,104 31,080 31,080
Total at amortised cost 6,147,482 6,147,482 4,487,388 4,487,388
Fair value of financial assets and liabilities for the company
Valuation, Book value Fair value Book value Fair value
Methodology 30 September 30 September 31 March 31 March
2023 2023 2023 2023
and hierarchy £ £ £ £
Financial assets
Cash and cash equivalents (a) 33,093 33,093 130,340 130,340
Loans and receivables, net of impairment (a) 19,721,423 19,721,423 21,213,389 21,213,389
Total at amortised cost 19,754,516 19,754,516 21,343,729 21,343,729
Financial liabilities
Trade and other payables (a) 1,960,635 1,960,635 735,440 735,440
Borrowings and provisions (a) 2,771,500 2,771,500 2,771,500 2,771,500
Total at amortised cost 4,732,135 4,732,135 3,506,940 3,506,940
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
30 September 2023.
The Group considers its maximum exposure to be:
30 September 31 March
2023 2023
£ £
Financial assets
Cash and cash equivalents 125,437 289,338
Loans and receivables, net of impairment 6,032,723 4,755,629
6,158,160 5,044,967
The company considers its maximum exposure to be:
30 September 31 March
2023 2023
£ £
Financial assets
Cash and cash equivalents 33,093 130,340
Loans and receivables, net of impairment 19,721,423 21,213,389
19,754,516 21,343,729
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 2023 amount cash flows or less months years years
£ £ £ £ £ £
Non-derivative financial liabilities
Trade and other payables 3,347,878 - 3,347,878
Borrowings 2,771,500 - - - 2,771,500 -
Lease Liability 28,104 - - - - -
31 March 2023
Non-derivative financial liabilities
Trade and other payables 1,684,808 - 1,684,808
Borrowings 2,771,500 - - - 2,771,500 -
Lease Liability 31,080 - - - - -
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 2023 amount cash flows or less months years Years
£ £ £ £ £ £
Non-derivative financial liabilities
Trade and other payables 1,960,635 - 1,960,635
Borrowings 2,771,500 - - - 2,771,500 -
31 March 2023
Non-derivative financial liabilities
Trade and other payables 735,440 - 735,440
Borrowings 2,771,500 - - - 2,771,500 -
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 MZN MGA USD MZN MGA
30 September 30 30 31 March 31 March 31 March
2023 September September 2023 2023 2023
2023 2023
£ £ £ £ £ £
Cash and cash equivalents 35,938 23,100 64,263 66,652 - 158,386
Trade & other receivables 1,065,756 3,492,247 1,485,377 997,639 - 1,101,590
Trade & other payables (985,842) 16171 (1,403,414) (243,500) - (949,368)
Net Exposure 115,852 3,531,518 146,226 820,791 - 310,608
Company USD USD
30 September 31 March
2023 2023
£ £
Cash and cash equivalents 30,957 66,040
Loans to subsidiaries 15,585,294 15,153,109
Trade & other receivables 7,927,859 6,060,281
Trade & other payables (906,590) (578,315)
Net Exposure 22,637,520 20,701,115
21. Related Party Transactions
PranaGraf Materials and Technologies Private Limited ("PG") (Formerly known as
Tirupati Speciality Graphite Private Limited) is an entity incorporated in
India. The Company is connected to it in that both Shishir Poddar and Hemant
Poddar were directors and shareholders of PG during the period.
· Revenue earned during the period amounted to £821,651 (Sep 2022
- £ 291,275) and;
· The Company purchased consumables of £349,973 (Sep 2022:
£742,757); and
· incurred service fees of £127,392 (Sep 2022: £ 138,204) towards
back office services received
· incurred reimbursement of expenses of £32,015 (Sep 2022:
£98,009) towards travel and other expenses for the executives of the Company
during the period.
At period end, a net amount £180,044 (Sep 2022 - £151,377) was receivable
from PG with none overdue.
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 period.
At period end, an amount of £287,039 (Sep 2022: £Nil) was receivable from HV
being advance paid for long lead machinery purchase. During the period the
Company purchased proprietary graphite processing machinery and spares of
£Nil (Sep 2022: £861,368) from HV.
22. Deferred Tax Assets
30 September 31 March
2023 2023
Brought forward DTA 74,076 75,242
Created/(reversed) during the year - -
Forex (1,548) (1,196)
Carried forward DTA 72,528 74,076
23. Events after the Reporting Period
· In October the Company held an online presentation for current and
prospective investors on the Investor Meets Company platform, and held its AGM
in London, UK at which, all resolutions were passed.
· In October, China announced the introduction of export restrictions
on Graphite products from 1 December 2023.
· The Company appointed Mr Murat Erden as a new Non-executive Director
to the Board in October.
· The Company appointed Shard Capital as its joint broker in November.
· The Company issued the Tranche 2 Consideration shares to Battery
Minerals Limited under the terms of its acquisition agreement.
· The Company continued discussions with various potential lenders and
it has structured an instrument for raising convertible debt of up to
£6,000,000 for meeting its working capital and investment needs for ramping
up production and sales at its Madagascar projects.
· The Company continued its work to optimise the studies for the
development of the first 50,000tpa stage of its recently acquired fully
permitted and construction-ready Montepuez project in Mozambique, and is
targeting a further update early in the next quarter.
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