TIDMMPL
RNS Number : 7270Q
Mercantile Ports & Logistics Ltd
30 June 2022
30 June 2022
Mercantile Ports & Logistics Limited
("MPL", the "Group" or the "Company")
Final Results
Mercantile Ports & Logistics Limited (AIM: MPL), which is
operating and developing out its port and logistics facility in
Navi Mumbai, Maharashtra, India, is pleased to announce its
preliminary results for the year ended 31 December 2021.
Chairman's Statement
2021 was another year of progress for MPL but one which,
inevitably, was hampered by COVID-19. The coal jetty handled volume
cargo for the first time and a number of new contracts were signed.
However, the second wave of the pandemic that hit India in the
early part of 2021 was much harsher than the first one. The
resulting restrictions imposed in the country and around the world
had a cascading effect on our business, setting our customer
acquisition strategy behind schedule and impacting cargo
volumes.
Despite the challenges that were faced, much was achieved during
the year, with construction starting on a new warehousing
facilities, which continued into early 2022. Our cornerstone
customer, Tata Daewoo, delivered the first blocks of the Mumbai
Trans Harbour Link, which had been constructed at the Facility. We
were proud to have played our part in this achievement and we look
forward to continuing to perform under this contract.
With COVID-19 restrictions currently behind us, India's economic
and business environment has rebounded with vigour. India does seem
to be a bright spot in the global economy, with growth outpacing
most of Western Europe, the US and China. Our facility in Karanja
will undoubtedly benefit from this, both in terms of handling cargo
for the development of the region as well as increased handling of
raw materials such as cement, steel, sand, fertilizer and coal.
The Company enhanced its business development team during the
period and this additional resource is delivering results, with
momentum expected to continue during the course of 2022.
The Company is pleased to report that it is in early stage
discussions with a number of large shipping lines to handle
containers at its port. This development is welcomed and will
ensure over time both stable and predictable revenue streams. The
facility's location is well placed to handle containers both from a
road logistics perspective as well as by barge transportation.
Contracts for container cargo provide predictable and long term
revenue and the Company is hopeful of being able to announce
progress in this regard during FY 2022.
The Board was extremely pleased to announce the culmination of
months of negotiations with its consortium of banks to restructure
the Company's outstanding debt in June 21. The highlight of the
restructuring was the c.400 basis point reduction in the interest
rate of the debt, in addition to a defined moratorium of the
payment of the interest and principal amounts. This was a
significant achievement by the Company and demonstrated that the
Company's existing lenders recognise the lower risk nature of the
business and the significant opportunities available for the
Company to pursue. However, one of the Board's principal priorities
for 2022 is to further enhance the terms of its debt facility
further, to better reflect progress that the business has made. The
Company is working with a number of international brokers to
facilitate this.
To further strengthen the capital structure of the Company, MPL
embarked on a fund raise in the second half of 2021amounting to
GBP9.5 mn (net of cost). The Board was extremely pleased that the
majority of its existing institutional investors participated in
the placing, with Hunch Ventures, our largest investor,
demonstrating its support for the Company by increasing its
shareholding in the offering to 29%.
I was delighted to welcome Dmitri Tsvetkov to the board of MPL.
Dmitri joined as a non-executive director and Chairman of the Audit
Committee bringing public company experience to MPL and his
position of as CFO of another Indian listed Company on AIM will
further strengthen MPL's reporting and finance functions.
Jeremy Warner Allen
Chairman
Mercantile Ports & Logistics Limited
29 June, 2022
Operational Review
Indian Economy
After a dramatic second wave in 2021, the pandemic is steadily
receding.
The momentum that the Company had demonstrated came to a halt in
early 2021 as the Delta variant caused a sharp increase in COVID-19
cases and fatalities. Restrictions were imposed and India endured
one of the most comprehensive lockdowns in the world. However, with
the vaccine rollout starting in January, India demonstrated
enormous resilience and, by end-September 2021, more than half of
the eligible population had been given at least one vaccination and
at mid-November, more than one of four of the population was fully
vaccinated.
Synopsis of current status
With COVID-19 receding, the recovery began gaining momentum and
GDP is projected to grow at 9.4% in fiscal year (FY) 2021-22 before
reverting to 6.9% in FY 2022-23 and 6.2% in FY 2023-24. (Source:
https://www.oecd.org/economy/india-economic-snapshot/ )
As is being seen across the globe, inflation is increasing, but
is expected to ebb as supply chain disruptions are overcome.
Operations Update
From an operations perspective, 2021 marked an inflection point
for MPL. In September 2021, with the waning of the second wave of
the COVID-19 pandemic, MPL commenced the handling of significant
and regular volumes of cargo under new contracts that were signed
during the course of 2021. The Karanja facility was able to
demonstrate its ability to be a 24X7 facility with the commencement
of night navigation (berthing / de-berthing of vessels at night).
With all key aspects of port and logistics operation, including
vessel navigation, yard operations and transportation, being
carried out in a seamless manner, successfully handled over 295,000
MT of coal in the September 2021 - March 2022 period. Whilst volume
of coal handled during this period, was somewhat lower than
expected on account of the third wave of the pandemic in December
2021 / January 2022, it is pleasing that this part of the Facility
is operating well and we expect to increase volumes during FY
2022.
The port received positive feedback from its customers regarding
the overall efficiency of operations and appreciation for the fact
that no demurrage was incurred by any customer over this period.
MPL continues to strengthen its business development and operations
team, including on the container side of the business as it
prepares to start handling containers during the course of 2022.
New contracts are in discussion with a number of customers in a
variety of cargo, including, with a large fertilizer company, a
large French multinational for handling of construction material, a
steel manufacturer, regional traders for multiple commodities and
container handlers. In addition, the Company is in discussions with
an international Logistics company interested in establishing a
warehousing zone at Karanja Port.
Going Concern
Post the COVID-19 Pandemic outbreak in CY 2020 & 2021, the
Board has assessed the Group's ability to operate as a going
concern for the next 12 months from the date of signing the
financial statements, based on the financial model which was
prepared as part of approving the 2022 budget.
The Directors considered the cash forecasts prepared for
Eighteen months from 1 January 2022 up to 30 June 2023, together
with certain assumptions for revenue and costs, to satisfy
themselves of the appropriateness of the going concern used in
preparing the financial statements.
Regarding financing, the group had capital GBP4.78 million cash
balance as at 31 December 2021, additional line of unsecured credit
from Hunch Ventures amounting to GBP4.5 million to mitigate funding
risk as well as ensuring continuity in business. The company will
use the cash generated from operations to manage the projected
costs until June, 2023 of GBP 3.33 million.
The Directors also took account of the principal risks and
uncertainties facing the business referred to above, a sensitivity
analysis on the key revenue growth assumption and the effectiveness
of available mitigating actions.
A range of mitigating actions within the control of management
has been assumed, including a reduction in all non-essential
services.
The Group continues to closely monitor and manage its liquidity
risk. In assessing the Group's going concern status, the Directors
have taken account of the financial position of the Group,
anticipated future utilization of available fund, its capital
investment plans and forecast of gross operating margins as and
when the operations commence.
Based on the above indications, after taking into account the
past impact of COVID-19 on the Group's future trading, the
Directors believe that it remains appropriate to continue to adopt
the going concern in preparing the financial statements.
Based on the above, the Board of Directors believe that the
Group has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
Conclusion
The port is well on its way to ramp up capacity utilization to
achieve its targeted revenues and diversify its commodity mix
towards handling a wider variety of bulk cargo as well as
containers.
The Indian economy remains on a steady path to recovery, with
businesses reverting to pre-COVID-19 levels of trade. With the
level of containerization in India remaining far below the global
average, and overall port capacity in the country remaining short
of demand, the business case for a port & logistics facility
like Karanja continues to stay robust.
Through the course of 2022, MPL will look to deepen its
engagement with existing and new customers for incremental volumes
as well as diversify its product / commodity mix towards revenue
and margin accretive business of containers.
Consolidated Statement of Comprehensive Income
for the Year ended 31 December 2021
Notes Year ended Year ended
31 Dec 31 Dec
21 20
GBP000 GBP000
CONTINUING OPERATIONS
Revenue 5 1,801 745
Cost of sales 6 (307) (48)
1,494 697
Administrative Expenses 7 (8,373) (4,944)
----------- -----------
OPERATING LOSS (6,879) (4,247)
Finance Income 8(a) 40 104
Gains from extinguishment of debt 8(a) 5,408 --
Finance Cost 8(b) (4,576) (1,976)
----------- -----------
NET FINANCING COST 872 (1,872)
----------- -----------
LOSS BEFORE TAX (6,007) (6,119)
Tax (expense)/Income for the year 9 (14) (456)
----------- -----------
Loss FOR THE YEAR (6,021) (6,575)
=========== ===========
Loss for the year attributable to:
Non-controlling interest (5) (11)
Owners of the parent (6,016) (6,564)
----------- -----------
LOSS FOR THE YEAR (6,021) (6,575)
=========== ===========
Other Comprehensive (Loss)/income:
Items that will not be reclassified subsequently
to profit or (loss)
Re-measurement of net defined benefit liability 24 8 (4)
Items that will be reclassified subsequently
to profit or (loss)
Exchange differences on translating foreign
operations (673) (6,161)
----------- -----------
Other comprehensive expense for the year (665) (6,165)
----------- -----------
Total comprehensive expense for the year (6,686) (12,740)
=========== ===========
Total comprehensive expense for the year attributable
to:
Non-controlling interest (5) (11)
Owners of the parent (6,681) (12,729)
----------- -----------
(6,686) (12,740)
=========== ===========
Earnings per share (consolidated):
Basic & Diluted, for the year attributable *(0.231p) *(0.345p)
to ordinary equity holders 11
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2021
Notes Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Assets
Property, plant and equipment 12(a) 131,344 131,343
Intangible asset 12(b) 4 4
----------- -----------
Total non-current assets 131,348 131,347
----------- -----------
Trade and other receivables 13 18,484 18,771
Cash and cash equivalents 14 4,783 3,895
----------- -----------
Total current assets 23,267 22,666
Total assets 154,615 154,013
=========== ===========
Liabilities
Non-current
Employee benefit obligations 17 43 33
Borrowings 18 39,932 34,729
Lease liabilities payable 20 1,562 1,716
Non-current liabilities 41,537 36,478
----------- -----------
Current
Employee benefit obligations 17 449 198
Borrowings 18 1,037 4,074
Current tax liabilities 19 415 384
Lease liabilities payable 20 795 694
Trade and other payable 20 10,171 14,512
----------- -----------
Current liabilities 12,867 19,862
----------- -----------
Total liabilities 54,404 56,340
=========== ===========
Net assets 100,211 97,673
=========== ===========
Equity
Stated Capital 16 143,851 134,627
Retained earnings 16 (16,402) (10,394)
Translation Reserve 16 (27,237) (26,564)
----------- -----------
Equity attributable to owners
of parent 100,212 97,669
----------- -----------
Non-controlling Interest (1) 4
----------- -----------
Total equity 100,211 97,673
=========== ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year ended 31 December 2021
Notes Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax (6,007) (6119)
Non cash flow adjustments 22 5,174 2,020
----------- -----------
Operating (loss)/profit before working
capital changes (833) (4,099)
Net changes in working capital 22 (4,686) 1,661
----------- -----------
Net cash used in operating activities (5,519) (2,438)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Used in purchase of property, plant
and equipment (2,107) (8,390)
Finance Income 8 19 73
Net cash used in investing activities (2,088) (8,317)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
From issue of additional shares 16 9,224 --
From borrowing 984 2,678
Repayment of bank borrowing Principal (641) --
Interest paid on borrowing (810) (1,520)
Repayment of leasing liabilities
principal (96) (845)
Interest payment on leasing liabilities (131) (188)
Net cash from financing activities 8,530 125
----------- -----------
Net change in cash and cash equivalents 923 (10,630)
Cash and cash equivalents, beginning
of the year 3,895 14,823
Exchange difference on cash and
cash equivalents (35) (298)
----------- -----------
Cash and cash equivalents, end
of the year 4,783 3,895
=========== ===========
Consolid ated St atement of Changes in Equity
for the Year ended 31 December 2021
Stated Translation Retained Other Non- controlling Total
Capital Reserve Earnings Components Interest Equity
of equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------- ------------ ---------- ------------ -----------------
Balance at
1 January 2021 134,627 (26,564) (10,394) -- 4 97,673
Issue of share capital 10,102 -- -- -- -- 10,102
Share Issue cost (878) -- -- -- -- (878)
--------- ------------ ---------- ------------ ----------------- ---------
Transaction with owners 143,851 (26,564) (10,394) -- 4 106,897
--------- ------------ ---------- ------------ ----------------- ---------
Loss for the year -- -- (6,016) -- (5) (6,021)
Foreign currency translation
difference for foreign
operations -- (673) -- -- -- (673)
Re-measurement of net defined
benefit liability -- -- -- 8 -- 8
Re-measurement of net defined
benefit liability transfer
to retained earning -- -- 8 (8) -- --
Total comprehensive income
for the year -- (673) (6,008) -- (5) (6,686)
--------- ------------ ---------- ------------ ----------------- ---------
Balance at
31 December 2021 143,851 (27,237) (16,402) -- (1) 100,211
========= ============ ========== ============ ================= =========
Balance at
1 January 2020 134,627 (20,403) (3,826) -- 15 110,413
Issue of share capital -- -- -- -- - --
Share Issue cost -- -- -- -- - --
--------- ------------ ---------- ------------ ----------------- ---------
Transaction with owners 134,627 (20,403) (3,826) -- 15 110,413
--------- ------------ ---------- ------------ ----------------- ---------
Loss for the year -- -- (6,564) -- (11) (6,575)
Foreign currency translation
difference for foreign
operations -- (6,161) -- -- -- (6,161)
Re-measurement of net defined
benefit liability -- -- -- (4) -- (4)
Re-measurement of net defined
benefit liability transfer
to retained earning -- -- (4) 4 -- --
--------- ------------ ---------- ------------ ----------------- ---------
Total comprehensive income
for the year -- (6,161) (6,568) -- (11) (12,740)
--------- ------------ ---------- ------------ ----------------- ---------
Balance at
31 December 2020 134,627 (26,564) (10,394) -- 4 97,673
========= ============ ========== ============ ================= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Mercantile Ports & Logistics Limited (the "Company") was
incorporated in Guernsey under The Companies (Guernsey) Law, 2008
with registered number 52321 on 24 August 2010. Its registered
office and principal place of business is 1st Floor, Tudor House,
Le Bordage Rd, Guernsey GY1 1DB. It was listed on the Alternative
Investment Market ('AIM') of the London Stock Exchange on 7 October
2010.
The consolidated financial statements of the Company comprise of
the financial statements of the Company and its subsidiaries
(together referred to as the "Group"). The consolidated financial
statements have been prepared for the year ended 31 December 2021,
and presented in UK Sterling (GBP).
The principal activities of the Group are to develop, own and
operate a port and logistics facilities. As of 31 December 2021,
the Group had 63 (Sixty-three) (2020: 59 (Fifty-Nine))
employees.
2. SIGNIFICANT ACCOUNTING POLICIES
a) BASIS OF PREPARATION
The consolidated financial statements have been prepared on a
historical cost basis except where otherwise stated. The
consolidated financial statements of the Group have been prepared
in accordance with International Financial Reporting Standards
("IFRS") and interpretations as adopted by the European Union and
also to comply with The Companies (Guernsey) Law, 2008.
Going Concern
The financial statements have been prepared on a going concern
basis as the Group has adequate funds to enable it to exist as a
going concern for the near future. The Group has nearly finished
the construction work at site and the Directors believe that they
will have sufficient equity, sanctioned credit facilities from
lenders and headroom in the capital structure for managing the
balance work as well as Port operations at the Facility.
The Directors considered the cash forecasts prepared for the
eighteen months ending 30(th) June, 2023, together with certain
assumptions for revenue and costs, to satisfy themselves of the
appropriateness of the going concern basis used in preparing the
financial statements.
Regarding financing, the group has GBP4.78 million cash balance
as at 31 December 2021 and GBP0.70 million of FITL drawdown on its
revised Rupee term loan facility of INR 475.57 crore. Under the
original terms of the loan facility the company was to start
repayment of the principal amount from June 2020, which was revised
to September, 2020 subsequently due to Covid 19 Lockdown vide RBI
circular dated 6th August, 2020 the principal repayment has been
deferred for a period of 24 months and now to commence from Oct.
2022 quarter onwards. The directors believe that the debt providers
will continue to support the Group thereafter.
A range of mitigating actions within the control of management
were assumed, including reductions in the Directors and all staff
salary by 35% from May 2020 until July 2021, as necessary reduction
in all non-essential services.
In line with relief measures provided by the RBI to borrowers
impacted by Covid-19 related distress, the lenders on 11 June 2021
sanctioned OTR (One Time Restructuring) scheme and implemented the
same effective from Jun'21. Salient features of the OTR are as
below:
1. Interest on term loan for a period March 2020 to August 2020 was converted in to Term Loan
2. Deferment of commencement of principal repayment by 24 months (October'2020 to October'2022)
3. Reduction in interest rate by c.400 bps (from 13.45% to 9.5%)
4. Moratorium on interest payments from Jan 2021 to Feb'2022
There is additional line of credit of GBP4.5 million from Hunch
Ventures, to provide additional headroom for the Company's
operations, the draw down is available from July 2022 to 31
December 2023, and repayment will start within 24 month from the
draw down date and repayment can be extended mutually by both the
parties.
Based on the above, the Board of Directors believe that the
Group has adequate resources to continue in operational existence
for the near future. Accordingly, they continue to adopt the going
concern basis in preparing the financial statements.
(b) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the results of
the Company and entities controlled by the Company (its
subsidiaries) up to 31 December 2021. Subsidiaries are entities
over which the Company has the power to control the financial and
operating policies. The Company obtains and exercises control
through holding more than half of the voting rights. The financial
statements of the subsidiaries are prepared for the same period as
the Company using consistent accounting policies. The fiscal year
of (Karanja Terminal & Logistics Private Limited) KTPL ends on
March 31 and its accounts are adjusted for the same period as a
Company for consolidation.
Amounts reported in the financial statements of subsidiaries
have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Non-controlling interest
Non-controlling interest, presented as part of equity, represent
the portion of a subsidiary's profit or loss and net assets that is
not held by the Group. The Group attributes total comprehensive
income or loss of subsidiaries between the owners of the parent and
the non-controlling interests based on their respective ownership
interest.
(c) LIST OF SUBSIDIARIES
Details of the Group's subsidiaries which are consolidated into
the Company's financial statements are as follows:
Subsidiary Immediate Country of % Voting Rights % Economic
Parent Incorporation Interest
Karanja Terminal Mercantile
& Logistics (Cyprus) Ports & Logistics
Ltd Limited Cyprus 100.00 100.00
Karanja Terminal Mercantile
& Logistics Private Ports & Logistics
Limited* Limited Cyprus 5.53 5.53
Karanja Terminal Karanja Terminal
& Logistics Private & Logistics
Limited* (Cyprus) Ltd India 94.25 94.25
* Financial year end for KTLPL is April to March, as same is
governed by Companies Act 2013, but for preparing group financials
we have considered January to December period.
(d) FOREIGN CURRENCY TRANSLATION
The consolidated financial statements are presented in UK
Sterling (GBP), which is the Company's functional currency. The
functional currency for all of the subsidiaries within the Group is
as detailed below:
Karanja Terminal & Logistics (Cyprus) Ltd (KTLCL) - Euro
Karanja Terminal & Logistics Private Limited (KTLPL) -
Indian Rupees
Foreign currency transactions are translated into the functional
currency of the respective Group entity, using the exchange rates
prevailing at the date of the transactions (spot exchange rate).
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the retranslation of monetary items
denominated in foreign currency at the year-end exchange rates are
recognised in the Consolidated Statement of Comprehensive
Income.
Non-monetary items are not retranslated at year-end and are
measured at historical cost (translated using the exchange rates at
the transaction date).
In the Group's financial statements, all assets, liabilities and
transactions of Group entities with a functional currency other
than GBP are translated into GBP upon consolidation.
On consolidation, the assets and liabilities of foreign
operations are translated into GBP at the closing rate at the
reporting date. The income and expenses of foreign operations are
translated into GBP at the average exchange rates over the
reporting period. Foreign currency differences are recognised in
other comprehensive income in the translation reserve. When a
foreign operation is disposed of, in part or in full, the relevant
amount in the translation reserves shall be transferred to the
profit or loss in the Consolidated Statement of Comprehensive
Income.
(e) REVENUE RECOGNITION
Revenue arises mainly from the provision of services relating to
use of the port by customers, including use of the port,
loading/unloading services, storage and land rental.
To determine whether to recognise revenue, the Group follows a
5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance
obligations
5. Recognising revenue as an when performance obligation(s) are
satisfied.
The total transaction price for a contract is allocated amongst
the various performance obligations based on their relative
standalone selling prices. The transaction price for a contract
excludes any amounts collected on behalf of third parties.
Revenue is recognised either at a point in time or over time,
when (or as) the Group satisfies performance obligations by
transferring the promised goods or services to its customers.
The Group recognises contract liabilities for consideration
received in respect of unsatisfied performance obligations and
reports these amounts as other liabilities in the statement of
financial position. Similarly, if the Group satisfies a performance
obligation before it receives the consideration, the Group
recognises either a contract asset or a receivable in its statement
of financial position, depending on whether something other than
the passage of time is required before the consideration is due.
Invoicing for services is set out in the contract.
The group does not believe there are elements of financing in
the contracts. There are no warranties or guarantees included in
the contract.
The specific recognition criteria described below must also be
met before revenue is recognised.
Port operation and logistics services
Revenue from port operation services including cargo handling,
storage, other ancillary port and logistics services are measured
based upon cargo handled at rates specified under the contract and
charged on per metric tonne basis.
The performance obligation is satisfied using the output method;
this method recognises revenue based, on the value of services
transferred to the customer, for example, quantity of cargo loaded
and unloaded and/or transported.
Revenue is recognized in the accounting period in which the
services are rendered and completed till reporting date.
Management determines if there are separate performance
obligations from which customer are being able to benefit from, for
example, barging, stevedoring or transportation.
Each of these services are distinct from the other. Customer may
choose one or more of these distinct services and revenue
recognition would be based on per metric tonne basis on
satisfaction of each service obligation.
Income from long term leases
As a part of its business activity, the Group sub-leases land on
long term basis to its customers. Leases are classified as finance
lease whenever the terms of lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are
classified as operating lease. In some cases, the Group enters into
cancellable lease / sub-lease transaction agreement, while in other
cases, it enters into non-cancellable lease / sub-lease agreement.
The Group recognises the income based on the principles of leases
as set out in IFRS 16 "Leases" and accordingly in cases where the
land lease / sub-lease agreement are cancellable in nature, the
income in the nature of upfront premium received / receivable is
recognised on operating lease basis i.e. on a straight line basis
over the period of lease / sub-lease agreement / date of memorandum
of understanding takes effect over lease period and annual lease
rentals are recognised on an accrual basis.
Interest income
Interest income is reported on an accrual basis using the
effective interest method.
(f) Borrowing cost
Borrowing costs directly attributable to the construction of a
qualifying asset are capitalised during the period of time that is
necessary to complete and prepare the asset for its intended use.
Other borrowing costs are expensed in the period in which they are
incurred and reported under finance costs.
(g) EMPLOYEE BENEFITS
i) Defined contribution plans (Provident Fund)
In accordance with Indian Law, eligible employees receive
benefit from Provident Fund, which is a defined contribution plan.
Both the employee and employer make monthly contributions to the
plan, which is administrated by the government authorities, each
equal to the specific percentage of employee's basic salary. The
Group has no further obligation under the plan beyond its monthly
contributions. Obligation for contributions to the plan is
recognised as an employee benefit expense in the Consolidated
Statement of Comprehensive Income when incurred.
ii) Defined benefit plans (Gratuity)
In accordance with applicable Indian Law, the Group provides for
gratuity, a defined benefit retirement plan (the Gratuity Plan)
covering eligible employees. The Gratuity Plan provides a lump sum
payment to vested employees, at retirement or termination of
employment, and amount based on respective last drawn salary and
the years of employment with the Group. The Group's net obligation
in respect of the Gratuity Plan is calculated by estimating the
amount of future benefits that the employees have earned in return
for their service in the current and prior periods; that benefit is
discounted to determine its present value. Any unrecognised past
service cost and the fair value of plan assets are deducted. The
discount rate is a yield at reporting date on risk free government
bonds that have maturity dates approximating the term of the
Group's obligation. The calculation is performed annually by a
qualified actuary using the projected unit credit method. When the
calculation results in a benefit to the Group, the recognised asset
is limited to the total of any unrecognised past service cost and
the present value of the economic benefits available in the form of
any future refunds from the plan or reduction in future
contribution to the plan.
The Group recognises all re-measurements of net defined benefit
liability/asset directly in other comprehensive income and presents
them within equity.
iii) Short term benefits
Short term employee benefit obligations are measured on an
undiscounted basis and are expensed as a related service provided.
A liability is recognised for the amount expected to be paid under
short term cash bonus or profit-sharing plans if the Group has a
present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation
can be estimated reliably.
(h) Leases
As lessee, the Group assesses whether a contract contains a
lease at inception of the contract. The Group recognises a
right-of-use asset and corresponding lease liability in the
statement of financial position for all lease arrangements where it
is the lessee, except for short-term leases with a term of twelve
months or less and leases of low value assets. For these leases,
the Group recognises the lease payments as an operating expense on
a straight-line basis over the term of the lease.
The lease liability is initially measured at the present value
of the future lease payments from the commencement date of the
lease. The lease payments are discounted using the interest rate
implicit in the lease or, if not readily determinable, the asset
and company specific incremental borrowing rates. Lease liabilities
are recognised within borrowings on the statement of financial
position. The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the
carrying amount to reflect the lease payments made. The Group
re-measures the lease liability, with a corresponding adjustment to
the related right-of-use assets, whenever:
-- The lease term changes or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
re-measured by discounting the revised lease payments using a
revised discount rate;
-- The lease payments change due to the changes in an index or
rate or a change in expected payment under a guaranteed residual
value, in which case the lease liability is re-measured by
discounting the revised lease payments using an unchanged discount
rate;
-- A lease contract is modified, and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is re-measured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of modification.
The right-of-use assets are initially recognised on the SOFP at
cost, which comprises the amount of the initial measurement of the
corresponding lease liability, adjusted for any lease payments made
at or prior to the commencement date of the lease, any lease
incentive received and any initial direct costs incurred, and
expected costs for obligations to dismantle and remove right-of use
assets when they are no longer used. Right-of-use assets are
recognised within property, plant and equipment on the statement of
financial position. Right-of-use assets are depreciated on a
straight-line basis from the commencement date of the lease over
the shorter of the useful life of the right-of-use asset or the end
of the lease term.
The Group enters into lease arrangements as a lessor with
respect to some of its time charter vessels. Leases for which the
Group is an intermediate lessor are classified as finance or
operating leases by reference to the right-of-use asset arising
from the head lease. Income from operating leases is recognised on
a straight-line basis over the term of the relevant lease. Amounts
due from lessee under finance leases are recognised as receivables
at the amount of the Group's net investment in the leases. Finance
lease income is allocated to accounting periods so as to reflect a
constant periodic rate of return on the Group's net investment
outstanding in respect of these leases.
(i) INCOME TAX
Tax expense recognised in profit or loss comprises the sum of
deferred tax and current tax not recognised in other comprehensive
income or directly in equity. Current income tax assets and/or
liabilities comprise those obligations to, or claims from, fiscal
authorities relating to the current or prior reporting periods,
that are unpaid at the reporting date. Current tax is payable on
taxable profit, which differs from profit or loss in the financial
statements. Calculation of current tax is based on tax rates and
tax laws that have been substantively enacted by the end of the
reporting period.
Deferred tax
The accounting for income tax are accounted under the asset and
liability method, which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements. Under
this method, we determine deferred tax assets and liabilities on
the basis of the differences between the financial statement and
tax bases of assets and liabilities by using enacted tax rates in
effect for the year in which the differences are expected to
reverse. The effect of a change in tax rates on deferred tax assets
and liabilities is recognized in income in the period that includes
the enactment date.
Deferred tax assets are recognized to the extent that Management
believes that these assets are more probable than not to be
realized. In making such a determination, it considers all
available positive and negative evidence, including future
reversals of existing taxable temporary differences, projected
future taxable income, tax-planning strategies, and results of
recent operations. If it is determined that it would be able to
realize the deferred tax assets in the future in excess of the net
recorded amount, the necessary adjustment would be made to the
deferred tax asset valuation allowance, which would reduce the
provision for income tax.
(j) FINANCIAL ASSETS
The Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual provisions of the
financial instrument.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires .
Classification and Classification and initial measurement of
financial assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the transaction
price in accordance with IFRS 15, all financial assets are
initially measured at fair value adjusted for transaction costs
(where applicable).
Financial assets, other than those designated and effective as
hedging instruments, are classified into the following
categories:
-- amortised cost
-- fair value through profit or loss (FVTPL)
-- fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any
financial assets categorised as FVOCI.
The classification is determined by both:
-- the entity's business model for managing the financial
asset
-- the contractual cash flow characteristics of the financial
asset.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash
flows
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Group's cash and cash
equivalents, trade and most other receivables fall into this
category of financial instruments as well as listed bonds that were
previously classified as held-to-maturity under IAS 39.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses - the 'expected
credit loss (ECL) model'. This replaces IAS 39's 'incurred loss
model'. Instruments within the scope of the new requirements
included loans and other debt-type financial assets measured at
amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under IFRS 15 and loan commitments and some
financial guarantee contracts (for the issuer) that are not
measured at fair value through profit or loss.
(k) FINANCIAL LIABILITIES
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely the
same under IFRS 9 compared to IAS 39, the Group's financial
liabilities were not impacted by the adoption of IFRS 9. However,
for completeness, the accounting policy is disclosed below.
The Group's financial liabilities include borrowings, trade and
other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs unless the Group
designated a financial liability at fair value through profit or
loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives and
financial liabilities designated at FVTPL, which are carried
subsequently at fair value with gains or losses recognised in
profit or loss (other than derivative financial instruments that
are designated and effective as hedging instruments).
All interest-related charges and, if applicable, changes in an
instrument's fair value that are reported in profit or loss are
included within finance costs or finance income.
(l) PROPERTY, PLANT AND EQUIPMENT
Items of property, plant and equipment are measured at cost less
accumulated depreciation and impairment losses.
The Group is in the process of constructing its initial project;
the creation of a modern and efficient port and logistics facility
in India. All the expenditures directly attributable in respect of
the port and logistics facility under development are carried at
historical cost under Capital Work in Progress as the Board
believes that these expenses will generate probable future economic
benefits. These costs include borrowing cost, professional fees,
construction costs and other direct expenditure. After
capitalisation, management monitors whether the recognition
requirements continue to be met and whether there are any
indicators that capitalised costs may be impaired.
Cost includes expenditures that are directly attributable to the
acquisition of the asset and income directly related to testing the
facility is offset against the corresponding expenditure. The cost
of constructed asset includes the cost of materials,
sub-contractors and any other costs directly attributable to
bringing the asset to a working condition for its intended use.
Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
Parts of the property, plant and equipment are accounted for as
separate items (major components) on the basis of nature of the
assets.
Depreciation is recognised in the Consolidated Statement of
Comprehensive Income over the estimated useful lives of each part
of an item of property, plant and equipment. For items of property,
plant and equipment under construction, depreciation begins when
the asset is available for use, i.e. when it is in the condition
necessary for it to be capable of operating in the manner intended
by management. Thus, as long as an item of property, plant and
equipment is under construction, it is not depreciated. Leasehold
improvements are amortised over the shorter of the lease term or
their useful lives.
Depreciation is calculated on a straight-line basis.
The estimated useful lives for the current year are as
Assets Estimated Life of assets
Lease hold Land Development Over the period of Concession
Agreement by Maharashtra Maritime
board (MMB) .
Marine Structure, Dredged Channel Over the period of Concession
Agreement by Maharashtra Maritime
board (MMB) .
Non Carpeted road other than RCC 3 Years
Office equipment 3-5 Years
Computers 2-3 Years
Computer software 5 Years
Plant & machinery 15 Years
Furniture 5-10 Years
Vehicles 5-8 Years
Depreciation methods, useful lives and residual value are
reassessed at each reporting date.
Gains or losses arising on the disposal of property, plant and
equipment are determined as the difference between the disposal
proceeds and the carrying amount of the assets are recognised in
profit or loss within other income or other expenses.
Impairment of Property, Plant and Equipment
Internal and external sources of information are reviewed at the
end of the reporting period to identify indications that the
property, plant and equipment may be impaired. When impairment
indicators exist the management compares the carrying value of the
property, plant and equipment with the fair value determined as the
higher of fair value less cost of disposal or value in use, also
refer note 3.
Property, plant and equipment is stated at cost, net of
accumulated depreciation and/or impairment losses, if any. There is
currently no impairment of property, plant and equipment.
(m) Trade receivables and payables
Trade receivables are financial assets at amortised costs,
initially measured at the transaction price, which reflects fair
value, and subsequently at amortised cost less impairment. In
measuring the impairment, the Group has applied the simplified
approach to expected credit losses as permitted by IFRS9. Expected
credit losses are assessed by considering the Group's historical
credit loss experience, factors specific for each receivable, the
current economic climate and expected changes in forecasts of
future events. Changes if any in expected credit losses are
recognised in the Group income statement.
Trade payables are financial liabilities at amortised cost,
measured initially at fair value and subsequently at amortised cost
using an effective interest rate method.
(n) Advances
Advances paid to the EPC contractor and suppliers for
construction of the facility are categorised as advances and will
be offset against future work performed by the contractor.
(o) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and bank
deposits that can easily be liquidated into known amounts of cash
and which are subject to an insignificant risk of changes in
value.
(p) Stated capital and reserves
Shares have 'no par value'. Stated capital includes any premiums
received on issue of share capital. Any transaction costs
associated with the issuing of shares are deducted from stated
capital, net of any related income tax benefits.
Foreign currency translation differences are included in the
translation reserve. Retained earnings include all current and
prior year retained profits.
(q) New standard and interpretation
There are no accounting pronouncements, which have become
effective from 1 January 2021 that have a significant impact on the
Group's consolidated financial statements.
(r) Standards, amendments and interpretations to existing
standards that are not yet effective and have not been adopted
early by the group
Following new standards or amendments that are not yet effective
and have been issued by the IASB which are not applicable or have
material impact on the Group.
-- IFRS 17 Insurance Contracts
-- Amendments to IFRS 17 Insurance Contracts (Amendments to IFRS 17 and IFRS 4)
-- References to the Conceptual Framework
-- Proceeds before Intended Use (Amendments to IAS 16)
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020 Cycle
(Amendments to IFRS 1, IFRS 9,IFRS 16, IAS 41)
-- Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
-- Deferred Tax related to Assets and Liabilities from a Single Transaction
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The following are significant management judgements in applying
the accounting policies of the Group that have the most significant
effect on the financial statements.
Recognition of income tax liabilities
The group continues to retain the provision of tax liability for
the assessment year 2011-12 & 2012-13 in as the matter is sub
judice with the court in India. This includes interest on the
provision up through December 2021.
In light of a recent ITAT judgement pronounced in favour of the
Group for AY 2013-14, 2014-15 & 2015-16, the Group has
accordingly estimated that the tax liability for those years is not
likely to be paid to income tax department. The pronouncement
applies to identical matters for all subsequent years. Hence the
Group has reversed Income tax provision for AY 2013-14 onwards in
December 2019. The Income tax department has preferred an appeal in
higher court. In light of uncertainty of the outcome, the Group has
disclosed this under the heading of contingent liability in note
25.
Impairment Review
At the end of each reporting period, the board is required to
assess whether there is any indication that an asset may be
impaired (i.e., its carrying amount may be higher than its
recoverable amount). As at 31 December, 2021, the carrying value of
the port under construction is GBP131.35 million. The Value in use
has been calculated using the present value of the future cash
flows expected to be derived from the port. As the port is, still
under construction this has included the costs to completion plus
the anticipated revenues and expenses once the port becomes
operational.
The key assumptions as at 31 December 2021 behind the discounted
cash flow are:
-- Construction outflow of GBP2.96 Million, shall be utilized if
requirement arises for additional reclamation basis demand for the
same.
-- Cash-flow projections have been run until 2059, the length of the lease of the land.
-- The revenue capacity comprises of lease rentals, bulk and
project cargo, which depends on the volume in Metric Ton.
-- The company expect to commence its CFS container business
with initial 16,000 container in year 1 which gradually increase
27,500 and 35,000 in year 2 & 3 and peaks out at year 7 to
74,000.
-- Inflation 5%.
-- Utilization rate at 10% in 2022, 20% in 2023, 30% in 2024.
-- Revenue for each activity/service provided by Karanja Port
(to its customers) is calculated by multiplying Throughput per
annum with Tariff rates for each activity/service.
-- Assumptions on costs are what we will incur to provide each
activity/service. These Direct costs have been apportioned on the
basis total costs expected to be incurred divided by Cargo
throughput for that Commodity.
-- The costs are set based on margins of 50-55%, based on margin of similar ports.
-- Pre-tax rate derived from weighted average cost of capital (WACC) 17%
The group has carried out sensitivity analysis on our discounted
cash flow analysis. If revenues in our model were to decrease by 20
%, there would be an impairment of GBP4.3 million. If the discount
rate used in the model were 3% higher, than there would also be an
impairment of GBP2.4 million.
While the company has obtained the approval to build out a
further 200 Acres of Land and develop a further 1,000 meters of
waterfront, the costs and future income flow associated with this
second phase of construction project have not been considered in
the current review. The impairment review is based on the current
project, being the completion and operation of the multi-purpose
site being developed over 100 acres of land with a sea frontage of
1,000 meters.
4. SEGMENTAL REPORTING
The Group has only one operating and geographic segment, being
the project on hand in India and hence no separate segmental report
presented.
5. REVENUE FROM OPERATION
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Cargo handling income 710 322
Lease income 1,091 423
----------- -----------
1,801 745
=========== ===========
The Company has given certain land portions on operating lease.
These lease arrangement is for a period 40 months. Lease is
renewable for further period on mutually agreeable terms.
The total future minimum lease rentals receivable at the SOFP
date is as under:
Payments falling due As on As on
31 Dec 21 31 Dec 21
INR in million GBP million
2022 148.95 1.49
2023 102.81 1.02
2024 26.66 0.27
2025 9.6 0.10
Fifth year and above 57.60 0.58
---------------- -------------
Total 345.62 3.46
================ =============
6. COST OF SALES
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Wharf-age expense 72 11
Other operation expense 235 37
307 48
=========== ===========
7. ADMINISTRATIVE EXPENSES
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Employee costs 577 571
Directors' remuneration and fees 423 489
Operating lease rentals 13 10
Foreign exchange gains/loss 84 464
Depreciation 3,132 1,777
Other administration costs 4,144 1,633
----------------- -----------------
8,373 4,944
----------------- -----------------
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Interest on bank deposits 40 104
----------------- ---------------
Gain from extinguishment of debt* 5,408 --
----------------- ---------------
8. (a) FINANCE INCOME
* During the financial year, group has received sanction from
lenders for one-time restructuring (OTR) of loan. The Management
has OTR has been tested for debt Modification under IFRS 9. The
revised cash out flow discounted at original EIR 13.45% resulted in
net gain of GBP 5.41 million.
8. (b) FINANCE EXPENSES
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Interest on term loan* 1,977 1,636
Interest others 2,599 340
----------- -----------
4,576 1,976
=========== ===========
* Interest on the term loan is capitalized against assets under
construction up to March 2021. As major construction work is
completed and assets under construction transferred into service,
the capitalization of interest ceased on that part and interest
expensed out to the profit and loss account from April 2021
onwards.
The capitalization rate used to determine the amount of
borrowing costs to be capitalized is the weighted average interest
rate applicable to the entity's general borrowings during the year,
in this case 13.45% up to 10 June 2021 and 9.5% effective from 11
June 2021 (2020 - 13.54%).
9. INCOME TAX
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Loss Before Tax (6,007) (6,119)
Applicable tax rate in India* 26.00% 22.88%
------------------- -------------------
Expected tax credit (1,562) (1,400)
Adjustment for non-deductible losses
of MPL & Cyprus entity against income
from India 994 402
Adjustment for non-deductible expenses 568 998
Interest provision on outstanding tax
liability (14) (456)
(14) (456)
=================== ===================
*Considering that the Group's operations are presently based in
India, the effective tax rate of the Group of 26.00% (prior year
22.88%) has been computed based on the current tax rates prevailing
in India. In India, income earned from all sources (including
interest income) are taxable at the prevailing tax rate unless
exempted. However, administrative expenses are treated as
non-deductible expenses until commencement of operations.
Based on the recent judgement from the Income Tax tribunal in
favour of the company the provision for the period from 2013 to
2017 have been reversed and interest provision for outstanding tax
liability for year 2011 & 2012 are made.
The Company is incorporated in Guernsey under The Companies
(Guernsey) Law 2008, as amended. The Guernsey tax rate for
companies is 0%. The rate of withholding tax on dividend payments
to non-residents by companies within the 0% corporate income tax
regime is also 0%. Accordingly, the Company will have no liability
to Guernsey income tax on its income and there will be no
requirement to deduct withholding tax from payments of dividends to
non-resident shareholders.
In Cyprus, the tax rate for companies is 12.5% with effect from
1 January 2014. There is no tax expense in Cyprus.
Due to uncertainty, that Indian entity will generate sufficient
future taxable income to offset business losses incurred to realise
deferred tax assets, the management has therefore not recognised
the Deferred Tax Asset amounting to INR: 47.88 crore (GBP4.77
million)
10. AUDITORS' REMUNERATION
The following are the details of fees paid to the auditors,
Grant Thornton UK LLP and Indian auditors, in various capacities
for the year:
Year ended Year ended
31 Dec 31 Dec 20
21
GBP000 GBP000
Audit Fees
Fees payable to the auditor for the audit
of the Group's financial statements 130 107
Non-audit service:
Interim Financial Statement Review 9 9
Non -audit services 80 -
219 116
----------- -----------
Audit fees related to prior year overruns during the year amount
to GBP 7,210 (2020: GBP23,278).
11. EARNINGS PER SHARE
Both basic and diluted earnings per share for the year ended 31
December 2021 have been calculated using the loss attributable to
equity holders of the Group of GBP6.02 million (prior year loss of
GBP6.56 million).
Year ended Year ended
31 Dec 21 31 Dec 20
Loss attributable to equity holders GBP(6,016,000) GBP(6,564,000)
of the parent
Weighted average number of shares
used in basic and diluted earnings
per share 26,000,334 19,050,221
EARNINGS PER SHARE
Basic and Diluted earnings per share (0. 231p) (0.345p)
On 9th September 2021 The group has successfully completed fund
raise by placing 2,244,947,810 new Ordinary Shares at a price of
0.45 pence per share. Also on 13 September 2021 group has
consolidated its share capital by way of issuing 1 share for every
100 shares held hence earning per share of comparative period is
adjusted accordingly.
12 (a). PROPERTY, PLANT AND EQUIPMENT
Details of the Group's property, plant and equipment and their
carrying amounts are as follows:
Computers Office Furniture Vehicles Plant Port Right of Capital Total
Equipment & Asset use Work in
Machinery Progress
Asset
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ---------- ----------- ---------- --------- ----------- -------- --------- ---------- --------
Gross
carrying
amount
Balance 1 Jan
2021 41 136 262 577 25 50,214 1,733 80,801 133,789
Net Exchange
Difference (1) (1) (2) (3) (1) (352) (12) (566) (938)
Additions 2 13 19 12 -- -- -- 4,051 4,097
Transfers
from CWIP ^ -- 387 66 -- 23 59,661 -- (60,137) --
Disposals -- -- -- -- -- -- -- -- --
Balance 31
Dec 2021 42 535 345 586 47 109,523 1,721 24,149 136,948
--------
Depreciation
Balance 1 Jan
2021 (30) (69) (64) (320) (3) (1,725) (235) -- (2,446)
Net Exchange
Difference (2) (1) -- 2 1 (29) 2 -- (27)
Charge for
the year (4) (45) (27) (44) (2) (2,914) (95) -- (3,131)
Disposals -- -- -- -- -- -- -- -- --
Balance 31
Dec 2021 (36) (115) (91) (362) (4) (4,668) (328) -- (5,604)
--------
Carrying
amount 31
Dec
2021 6 420 254 224 43 104,855 1,393 24,149 131,344
-------------- ---------- ----------- ---------- --------- ----------- -------- --------- ---------- --------
^ During the year company has capitalized an additional 22 acres
of land, 340 meter of jetty and various support infrastructure cost
and accordingly GBP 60,137 thousand has been transferred from CWIP
to under various head i.e. Port Asset GBP 59,661 thousand, plant
and machinery GBP 23 thousand, Furniture GBP 66 thousand and office
equipment GBP 387 thousand.
The Group has leased various assets including land and
buildings. As at 31 December 2021, the net book value of recognised
right-of use assets relating to land and buildings was GBP 1.39
million (2020: GBP 1.49 million). The depreciation charge for the
period relating to those assets was GBP 0.09 million (2020: GBP
0.15 million).
Amounts recognised in the statement of income are detailed
below:
Particular GBP000 GBP000
31 Dec 2021 31 Dec 2020
Depreciation on right-of-use
assets 95 152
----------------- -----------------
Interest expense on lease liabilities 175 188
----------------- -----------------
Expense relating to short-term
leases 13 9
----------------- -----------------
Expense relating to low-value
leases 1 1
----------------- -----------------
284 350
----------------- -----------------
Computers Office Furniture Vehicles Plant Port Right of Capital Total
Equipment & Asset use Work in
Machinery Progress
asset
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- --------
Gross
carrying
amount
Balance 1 Jan
2020 52 136 244 492 27 39,404 2,771 90,909 134,035
Net Exchange
Difference (3) (8) (15) (30) (2) (2,419) (170) (5,582) (8,229)
Additions -- 8 5 124 - - -- 8,731 8,868
Disposals -- -- -- (9) -- -- (868) -- (877)
Transfers
from CWIP ^ -- -- 28 -- -- 13,229 -- (13,257) --
Transfer from
computer
to software (8) -- -- -- -- -- -- -- (8)
-------------- ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- --------
Balance 31
Dec 2020 41 136 262 577 25 50,214 1,733 80,801 133,789
-------------- ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- --------
Depreciation
Balance 1 Jan
2020 (38) (42) (26) (290) (1) (329) (201) -- (927)
Net Exchange
Difference 5 4 3 20 -- 91 19 -- 142
Charge for
the year (5) (31) (41) (51) (2) (1,487) (159) -- (1,776)
Disposals -- -- -- 1 -- -- 106 -- 107
Transfer from
computer
to software 8 -- -- -- -- -- -- -- 8
-------------- ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- --------
Balance 31
Dec 2020 (30) (69) (64) (320) (3) (1,725) (235) -- (2,446)
-------------- ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- --------
Carrying
amount 31
Dec
2020 11 67 198 257 22 48,489 1,498 80,801 131,343
-------------- ---------- ---------- ---------- --------- ---------- ---------- --------- ---------- --------
^ During the previous year company has capitalized additional 23
acres of land and capitalization of port is done on above line.
* During the previous year company has capitalized CWIP to
amounting to 13,257 thousand under various head i.e. Port Asset
13,229 thousand, Furniture 28 thousand.
Assets provided as security
-- The following asset are provided as security for lease
liability payable as described in Note 20:
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Vehicles 224 257
------------ ------------
224 257
------------ ------------
The vehicles, which are free from incumbrancer, will also form a
part of hypothecation towards securitisation of debt
All other immovable and movable property with a carrying value
of GBP 131,124,000 (2020: GBP132,097,000) is under hypothecation in
favour of the "Term lenders".
The Port facility being developed in India has been hypothecated
by the Indian subsidiary as security for the bank borrowings
(revised borrowing limit sanctioned as per OTR is INR 475.57 crore
(GBP47.41 million) (2020 INR 480 crore (GBP48.19 million)) for part
financing the build out of the facility.
The borrowing costs in respect of the bank borrowing for
financing the build out of facility are capitalised for portion of
port, which are still under construction under Capital Work in
Progress until March 2021. During the year the Group has,
capitalised borrowing cost of GBP0.86 million (2020: GBP4.18
million) and borrowing cost expensed out of GBP4.08 million (2020:
GBP 1.33 million).
The Indian subsidiary has estimated the total project cost of
INR 1,404 crore (GBP138.10 million) towards construction of the
port facility. Out of the aforesaid project cost, the contract
signed with the major contractor is INR1,048 crores (GBP103.08
million). As of 31 December 2021, the contractual amount (net of
advances) of INR 1.26 crores (GBP0.13 million) is still payable.
There were no other material contractual commitments.
Karanja Terminal & Logistics Private Limited (KTPL), the
Indian subsidiary has received revised sanction in the month of
June 2021 as per OTR scheme of a Rupee term loan of INR 475.57
crore (GBP47.41 million) for part financing the port facility. The
Rupee term loan has been sanctioned by three Indian public sector
banks and the revised loan agreement was executed on 10 June 2021.
As at 10 June 2021, the original term loan agreement was amended
extending the tenure of the loan with repayment commencing from
October2022 -December 2022 quarter, post implementation of one-time
restructuring.
12 (b). Intangible Asset
Intangible
Asset -
Asset
Software
Software
GBP000
----------------------------- -----------
Gross carrying amount
Balance 1 Jan 2021 13
Exchange Difference (1)
Additions 2
Disposals --
Balance 31 Dec 2021 14
-----------
Depreciation
Balance 1 Jan 2021 (9)
Exchange Difference --
Charge for the year (1)
Disposals --
----------------------------- -----------
Balance 31 Dec 2021 (10)
----------------------------- -----------
Carrying amount 31 Dec 2021 4
----------------------------- -----------
Intangible
Asset -
Asset
Software
Software
GBP000
------------------------------------------------------- -----------
Gross carrying amount
Balance 1 Jan 2020 6
Exchange Difference (1)
Transfer from computer to software group (regrouping) 8
Additions --
Disposals --
Balance 31 Dec 2020 13
-----------
Depreciation
Balance 1 Jan 2020 (1)
Exchange Difference 1
Transfer from computer to software group (regrouping) (8)
Charge for the year (1)
Disposals --
------------------------------------------------------- -----------
Balance 31 Dec 2020 (9)
------------------------------------------------------- -----------
Carrying amount 31 Dec 2020 4
------------------------------------------------------- -----------
13. TRADE AND OTHER RECEIVABLES
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Deposits 2,493 2,177
Advances
- Related Party 3,612 --
- Others 12,077 16,338
Accrued Interest of fixed deposits 2 5
Accrued Income 16 --
Debtors
- Related Party 107 107
- Prepayment 134 91
- Others 43 53
----------- -----------
18,484 18,771
----------- -----------
Advances include payment to EPC contractor of GBP7.09 million
(2020: GBP10.16 million) towards mobilisation advances and quarry
development. These advances will be recovered as a deduction from
the invoices being raised by the contractor over the contract
period. The debtors - other include trade receivable other GBP Nil
million (2020: GBP0.05million) which is past due for 30 days'
management estimate that amount is fully realisable hence no
provision for expected credit loss is made for the same amount.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade and other receivable. To measure expected
credit losses on a collective basis, trade and other receivables
are grouped based on similar credit risk and aging. The assets have
similar risk characteristics to the trade receivables for similar
types of contracts.
The expected loss rates are based on the Group's historical
credit losses experienced. The historical loss rates are then
adjusted to reflect current and forward-looking information, any
known legal and specific economic factors, including the credit
worthiness and ability of the customer to settle the
receivables.
The group renegotiations or modifications of contractual cash
flows of a financial asset, which results in de-recognition, the
revised instruments are treated as a new or else the group
recalculates the gross carrying amount of the financial asset.
14. CASH AND CASH EQUIVALENTS
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Cash at bank and in hand 4,571 2,299
Deposits* 212 1,596
----------- -----------
4,783 3,895
----------- -----------
Cash at bank earns interest at floating rates based on bank
deposit rates. The fair value of cash and short-term deposits is
GBP4.78 million (2020: GBP3.89 million).
Included in cash and cash equivalents is GBP0.74 million (2020:
GBP2.43 million) that is within a bank account in the name of Hunch
Ventures (Karanja), as a result of the 2018 and 2021 share sale.
The Company is the beneficiary of the account. During the year, we
have been able to draw money out of this account to cover working
capital throughout the year.
*Deposit are placed under lien against Bank Guarantees issued by
bank on behalf of the group to various Government Authorities and
the Debt Service Reserve (DSR) as per the loan agreement with
lenders.
The Management policy is to invest available cash on hand in
short-term or deposit account of, Government banks and private
banks with credit ratings of AAA and above.
15. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Risk Management
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risk), credit risk and liquidity risk. The Board of Directors
carries out risk management.
(a)Market Risk
(i)Translation risk
Foreign currency risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market foreign exchange rates. The Company's functional
and presentation currency is the UK Sterling (GBP). The functional
currency of its subsidiary Karanja Terminal & Logistics Private
Limited (KTLPL) is INR and functional currency of Karanja Terminal
& Logistics (Cyprus) Ltd.
The exchange difference arising due to variances on translating
a foreign operation into the presentation currency results in a
translation risk. These exchange differences are recognised in
other comprehensive income. As a result, the profit, assets and
liabilities of this entity must be converted to GBP in order to
bring the results into the consolidated financial statements. The
exchange differences resulting from converting the profit and loss
account at average rate and the assets and liabilities at closing
rate are transferred to the translation reserve.
While consolidating the Indian subsidiary accounts the group has
taken closing rate of GBP 1: INR 100.3014 for SOFP items and for
profit and loss item GBP 1: INR101.6676
This balance is cumulatively a GBP27.31m loss to equity (2020:
GBP26.12m loss). This is primarily due to a movement from
approximately 1:70 to 1:100 between 2010 to 2013 and the
translation reserve reaching a loss of GBP21.6m at 31 December 2013
and further increase in translation reserve from GBP21.6m to
GBP27.31m due to appreciation of GBP against INR during the period
2018 to 2021. The closing rate at 31 December 2021 was GBP1: INR
100.30, hence as compared to the translation loss reported between
2018-19, the same is insignificant in 2021. With the majority of
funding now in India this risk is further mitigated. During 2021,
the average and year-end spot rate used for INR to GBP were 100.30
and 101.67 respectively (2020: 99.60 and 95.14).
Translation risk sensitivity
The Group's exposure to the risk of changes in foreign exchange
rates relates primarily to the cash and cash equivalents available
with the Indian entity and INR denominated balance of MPL in India
amounting to INR 106.12 million (GBP1.06 million) as on reporting
date (prior year INR 97.88 million (GBP0.983 million)). In
computing the below sensitivity analysis, the management has
assumed the following % movement between foreign currency (INR) and
the underlying functional currency GBP:
Functional Currency 31 Dec 2021 31 Dec 2020
(GBP)
INR +- 10% +- 10%
The following table details the Group's sensitivity to
appreciation or depreciation in functional currency vis-à-vis the
currency in which the foreign currency cash and cash equivalents
and borrowing are denominated:
Functional currency GBP GBP
(depreciation by10%) (appreciation
by 10%)
GBP000 GBP000
Cash and cash
equivalent
31 December 2021 117.56 (96.19)
31 December 2020 379.18 (310.24)
Borrowing
31 December 2021 (5,144.55) 4,209.18
31 December 2020 (4,311.47) 3,527.57
If the functional currency GBP had weakened with respect to
foreign currency (INR) by the percentages mentioned above, for year
ended 31 December 2021 then the effect will be change in profit and
equity for the year by GBP4.11 million (2020: GBP3.93 million). If
the functional currency had strengthened with respect to the
various currencies, there would be an equal and opposite impact on
profit and equity for each year. This exchange difference arising
due to foreign currency exchange rate variances on translating a
foreign operation into the presentation currency results in a
translation risk.
(ii) Interest rate risk
Interest rate risk is the risk that the future cash flows of a
financial instrument will fluctuate because of changes in market
interest rates. The Group's exposure to the risk of changes in
market interest rates relates primarily to the Group's long-term
debt obligations with floating interest rates.
During the year KTPL has successfully done One Time
Restructuring (OTR) of a rupee term loan of INR 475.57 crore
(GBP47.41 million) for part financing the build out of its
facility. The Group has commenced the drawdown of its sanctioned
bank borrowing as of the reporting date. The present composite rate
of interest from all lender and type of borrowing varies from 7.95%
to 10.50% based on respective banks MCLR (2021: 7.35%) and remains
effective as on the SOFP date
The base rate set by the bank may be changed periodically as per
the discretion of the bank in line with Reserve Bank of India (RBI)
guidelines. Based on the current economic outlook and RBI Guidance,
management expects the Indian economy to enter a lower interest
rate regime as moderating inflation will allow the RBI and thus the
banks may lower its base rate in the coming quarters.
Interest rate sensitivity
At 31 December 2021, the Group is exposed to changes in market
interest rates through bank borrowings at variable interest rates.
The exposure to interest rates for the Group's money market funds
is considered immaterial.
The following table illustrates the sensitivity of profit to a
reasonably possible change in interest rates of +/- 1% (2020: +/-
1%). These changes are considered to be reasonably possible based
on observation of current market conditions. The calculations are
based on a change in the average market interest rate for each
period, and the financial instruments held at each reporting date
that are sensitive to changes in interest rates. All other
variables are held constant.
Year Profit for the Year Equity, net of tax
GBP000 GBP000
---------------------- ---------------------
+1% -1% +1% -1%
------------------ ------------ -------- ------------ -------
31 December 2022 (461) 461 (314) 314
------------------ ------------ -------- ------------ -------
31 December 2023 (447) 447 (331) 331
------------------ ------------ -------- ------------ -------
31 December 2024 (412) 412 (305) 305
------------------ ------------ -------- ------------ -------
31 December 2025 (368) 368 (272) 272
------------------ ------------ -------- ------------ -------
31 December 2026 (299) 299 (221) 221
------------------ ------------ -------- ------------ -------
31 December 2027 (218) 218 (161) 161
------------------ ------------ -------- ------------ -------
31 December 2028 (130) 130 (96) 96
------------------ ------------ -------- ------------ -------
31 December 2029 (38) 38 (28) 28
------------------ ------------ -------- ------------ -------
31 December 2030 - - - -
------------------ ------------ -------- ------------ -------
31 December 2031 - - - -
------------------ ------------ -------- ------------ -------
(b) Credit risk
Credit risk is the risk that a counterparty fails to discharge
an obligation to the Group. The Group's maximum exposure (GBP15.63
million (2020: GBP15.38 million)) to credit risk is limited to the
carrying amount of financial assets recognised at the reporting
date.
The group determines credit risk by checking a company's
creditworthiness and financial strength both before commencing
trade and during the business relationship at initial recognition
and subsequently. Customer credit risk is managed by the Company's
established policy, procedures and control relating to customer
credit risk management. Credit quality of a customer is assessed
based on an extensive evaluation and individual credit limits are
defined in accordance with this assessment.
The Group's policy is to deal only with creditworthy
counterparties. The Group has no significant concentrations of
credit risk.
The Group considers default to be when there is a breach of any
of the terms of agreement.
The Group writes off a financial asset when there is no
realistic prospect of recovery and all attempts to recover the
balance have been exhausted. An indication that all credit control
activities have been exhausted and where the asset due is greater
than 365 days old or where there are insolvency issues relating to
the Trade and other receivables.
The Group does not concentrate any of its deposits in one bank.
This is seen as being prudent and credit risk is managed by the
management having conducted its own due diligence. The balances
held with banks are on a short-term basis. Management reviews
quarterly bank counter-party risk on an on-going basis.
(c) Liquidity risk
Liquidity risk is the risk that the Group might be unable to
meet its financial obligations. Prudent liquidity risk management
implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed
credit facilities KTLPL has tied-up rupee term loan of INR 480
crore (47.86 million) which was revised vide OTR sanctioned by
consortium bank on 11 June 2021 to INR 475.57 crore (GBP47.41
million) out of which INR 464.41 crore (GBP46.30 million) are
disbursed and GBP4.78 million as at December 2021 of cash reserves
which can be used for financing the build out of its facility.
The Group's objective is to maintain cash and demand deposits to
meet its liquidity requirements for 30-day periods at a minimum.
This objective was met for the reporting periods. Funding for build
out of the port facility is secured by sufficient equity,
sanctioned credit facilities from lenders and the ability to raise
additional funds due to headroom in the capital structure.
As at 29 September 2017 the agreement was amended extending the
tenure of the loan for 13 years and 6 months with repayment
beginning at the end of June 2020 to ensure additional headroom.
However, due to the Covid 19 pandemic impact on business, the
Reserve Bank of India had instructed all financial institutions to
provide relief by way of reduction in the Rate of interest, as well
as considering One Time Restructuring (OTR) of the term loan along
with interest due and defer the same for a further period of two
years.
The Group manages its liquidity needs by monitoring scheduled
contractual payments for build out of the port facility as well as
forecast cash inflows and outflows due in day-to-day business.
Liquidity needs are monitored and reviewed by the management on a
regular basis. Net cash requirements are compared to available
borrowing facilities in order to determine headroom or any
shortfalls. This analysis shows that available borrowing facilities
are expected to be sufficient over the lookout period.
As at 31 December 2021, the Group's non-derivative financial
liabilities have contractual maturities (and interest payments) as
summarized below:
Principal payments Interest payments
INR in
Payment falling due Crore GBP000 INR in Crore GBP000
---------- --------- ------------- -------
Within 1 year 10.40 1.04 44.36 4.42
1 to 5 year's 202.04 20.14 145.95 14.55
After 5 year's 251.97 25.12 36.94 3.68
---------- --------- ------------- -------
Total 464.41 46.30 227.25 22.65
---------- --------- ------------- -------
The present composite rate of interest ranges from 7.95% to
10.50% and closing exchange rate has been considered for the above
analysis. Principal and interest payments are after considering
future drawdowns of term loans.
In addition, the Group's liquidity management policy involves
considering the level of liquid assets necessary to meet the
funding requirement; monitoring SOFP liquidity ratio against
internal requirements and maintaining debt financing plans. As a
part of monitoring SOFP liquidity ratio, management monitors the
debt to equity ratio and has specified optimal level for debt to
equity ratio of 1:1.
Financial Instruments
Fair Values
Set out below is a comparison by category of carrying amounts
and fair values of the entire Group's financial instruments that
are carried in the financial statements.
(Carried at amortised cost)
Year ended Year ended
Note 31 Dec 21 31 Dec 20
GBP000 GBP000
Financial Assets 2
Cash and Cash Equivalents 14 4,783 3,895
Loan and receivables 13 4,263 584
----------- ---------------
9,046 4,479
=========== ===============
Financial Liability
Borrowings 18 40,969 38,803
Trade and other payables 20 12,529 16,922
Employee benefit obligations 17 492 231
----------- ---------------
53,990 55,956
=========== ===============
The fair value of the Group's financial assets and financial
liabilities significantly approximate their carrying amount as at
the reporting date.
The carrying amount of financial assets and financial
liabilities are measured at amortised cost in the financial
statements are a reasonable approximation of their fair values
since the group does not anticipate that the carrying amounts would
be significantly different from the values that would eventually be
received or settled.
16. EQUITY
16.1 Issued Capital
The share capital of MPL consists only of fully paid ordinary
shares of no par value. The total number of issued and fully paid
up shares of the Company as on each reporting date is summarised as
follows:
Particulars Year ended Year ended
31 December 21 31 December 20
------------------------------ ---------------------------
No of shares GBP000 No of shares GBP000
---------------- -------- ---------------- --------
Shares issues and fully paid:
Beginning of the year 1,905,022,123 134,627 1,905,022,123 134,627
Addition in the year# 2,244,947,810 10,102 -- --
Share issue cost -- (878) -- --
Reduction of old shares due to
consolidation of shares# (4,149,969,933) -- -- --
1 New shares issued for every 100
shares # 41,499,699 -- -- --
---------------- -------- ---------------- --------
Closing number of shares 41,499,699 143,851 1,905,022,123 134,627
----------------------------------- ---------------- -------- ---------------- --------
The stated capital amounts to GBP143.85 million (2020: GBP134.63
million) after reduction of share issue costs. Holders of the
ordinary shares are entitled to receive dividends and other
distributions and to attend and vote at any general meeting. During
the year the Company has allotted 2,244.95 million (prior year Nil)
equity shares to various institutional and private investors, by
way of a rights issue.
# During the year the company has raised GBP10.1 million (GBP9
million after costs) in August 2021 via subscription, share placing
and Primary Bid. Proceeds of the fund raise are expected to be
utilized for business development, servicing new and existing
contracts, and debt servicing and general working capital
requirements. During the year the company has consolidated its
share capital by way of issuing 1 share for every 100 shared
held.
16.2 Other Components of Equity
Retained Earnings
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Opening Balance (10,394) (3,826)
Addition during the year (6,016) (6,564)
Re-measurement of net defined benefit liability 8 (4)
----------- -----------
Closing balance (16,402) (10,394)
----------- -----------
Accumulated losses of GBP 16.40 million (2020: GBP10.40 million)
include all current year retained profits.
Translation Reserve
Year ended Year ended
31 Dec 31 Dec 20
21 GBP000
GBP000
Opening Balance (26,564) (20,403)
Addition during the year (673) (6,161)
----------- -----------
Closing balance (27,237) (26,564)
----------- -----------
The translation reserve of GBP 27.24 million (2020: GBP26.56
million) is on account of exchange differences relating to the
translation of the net assets of the Group's foreign operations
which relate to subsidiaries, from their functional currency into
the Group's presentational currency being Sterling.
17. EMPLOYEE BENEFIT OBLIGATIONS
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Non- Current
Pensions - defined benefit plans 43 33
----------- -----------
43 33
----------- -----------
Current
Wages, salaries 446 191
Pensions - defined benefit plans 3 7
449 198
----------- -----------
18. BORROWINGS
Borrowings consist of the following:
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Non-Current
Bank loan (refer note 26) 39,932 34,729
----------- -----------
39,932 34,729
----------- -----------
Current
Bank loan (refer note 26) 1,037 4,074
1,037 4,074
----------- -----------
Borrowing
Karanja Terminal & Logistics Private Limited (KTPL), the
Indian subsidiary, has obtained a term loan facility of INR 480
crore (GBP48.19 million). The Rupee term loan has been sanctioned
by four Indian public sector banks and the loan agreement was
executed on 28 February 2014. Due to the merger of Syndicate bank
with Canara bank and the takeover of Vijaya bank by Bank of Baroda,
three lenders sanctioned the current lending. On 29 September 2017
the terms of sanction were amended, extending original tenure of
the loan to 13 years and 6 months with repayment commencing from
the end of June 2020.
In view of the extension of lockdown and continuing disruption
on account of COVID -19, the group has applied for one time
restructuring plan as approved by RBI with the lender. The lender
principally approved invoking the Resolution Plan and subsequently
signed the Inter Creditor Agreement (ICA). On 10 June 2021, the
Group has received final approval from lender for restructuring of
term loan. The Salient features of OTR scheme are as follow:
a. Interest on term loan for the March 2020 to August 202. has been converted to term loan
b. Reduction in the rate of interest of principal term loan, from 13.45% to 9.5%;
c. Moratorium on Interest repayment for the period January 2021
to February 2022 and same will be converted to FITL;
d. Deferment of principal term loan repayment for a period of 24
months. Principal Repayment commencing from 31 October 2022
quarter.
e. Interest on FITL to is 10.50%.
Due to above change in terms and condition of original loan,
resulted in substantial debt modification. The group has calculated
present value of outstanding principal and interest as on the
modification date and derecognised old loan resulting in gain of
INR: 53.61 crore (GBP5.27million) on extinguishment of old loan.
For a new loan, the grouped has calculated effective interest rate
of 12.41%.
KTLPL has utilised the Rupee term loan facility of INR 464.41
crore (GBP46.30 million) (2020: INR 386.47 crore (GBP38.80
million)) as at the reporting date.
The Port facility is hypothecated as security with lenders for
the bank loan availed by the group for construction of the port
facility.
19. current tax liabilities
Current tax liabilities consist of the following:
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Duties & taxes 59 8
Provision for Income Tax 356 376
Current tax liabilities 415 384
----------- -----------
The carrying amounts and the movements in the Provision for
Income Tax account are as follows:
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Carrying amount 1 January 2,344 2,034
Interest provision on outstanding tax liability 14 456
Exchange difference (16) (146)
----------- -----------
Carrying amount 31 December 2,342 2,344
Taxes paid (1,986) (1,968)
----------- -----------
356 376
----------- -----------
The Group recognises liabilities for anticipated tax issues
based on estimates of whether additional taxes will be due. Where
the outcome of assessment by the Income Tax department on these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax provisions in the
period in which such determination is made. The Group discharges
the tax liability based on income tax assessment.
Based on recent judgement from the Income Tax tribunal in favour
of the company the provision for the period from 2013 to 2017 has
been reversed in earlier year statement of comprehensive income and
has made interest provision in current year for outstanding tax
liability of 2011 & 2012.
Due to uncertainty, that Indian entity will generate sufficient
future taxable income to offset business losses incurred to realise
deferred tax assets, the management has therefore not recognised
the Deferred Tax Asset amounting to INR: 47.88 crore (GBP4.77
million)
20. TRADE AND OTHER PAYABLES
Trade and other payables consist of the following:
Year ended Year ended
31 Dec 31 Dec 20
21
GBP000 GBP000
Non-Current
----------- -----------
Lease liability (refer note 26) 1,562 1,716
----------- -----------
Current
Lease Liability - ( refer note 26) 795 694
----------- -----------
Sundry creditors 10,174 11,311
Interest (prepaid)/payable (3) 3,201
----------- -----------
10,171 14,512
----------- -----------
Future minimum lease payments at 31 December 2021 were as
follows
Minimum lease payments due
-------------------- ------------------------------------------------------------
Within 1 - 2 - 3 - 4 - After Total
1 year 2 3 4 5 5
Year Year Year Year Year
-------------------- -------- ------ ------ ------ ------ -------- --------
Lease payments 980 219 210 211 170 5,578 7,368
-------------------- -------- ------ ------ ------ ------ -------- --------
Finance charges (185) (176) (173) (168) (167) (4,142) (5,011)
-------------------- -------- ------ ------ ------ ------ -------- --------
Net present values 795 43 37 43 3 1,436 2,357
-------------------- -------- ------ ------ ------ ------ -------- --------
21. RELATED PARTY TRANSACTIONS
The consolidated financial statements include the financial
statements of the Company and the subsidiaries listed in the
following table:
Country Field Activity Type of
of Incorporation Ownership share
Name Interest Held
------------------------------ ------------------ --------------------- ---------- -----------
HELD BY The Company (MPL) Cyprus
:
Karanja Terminal & Logistics India Holding Company 100% Ordinary
(Cyprus) Ltd
Karanja Terminal & Logistics Operating 5.53% Ordinary
Private Ltd company -Terminal
Project
HELD BY Karanja Terminal
& Logistics (Cyprus) Ltd :
Karanja Terminal & Logistics India Operating 94.25% Ordinary
Private. Ltd company -Terminal
Project
The Group has the following related parties with whom it has
entered into transactions with during the year.
a) Shareholders having significant influence
The following shareholders of the Group have had a significant
influence during the year under review:
-- SKIL Global Ports & Logistics Limited, which is 100%
owned by Mr. Nikhil Gandhi, holds 2.37% of issued share capital as
at 31 December 2021 (as at 31 December 2020 - 5.16%) of Mercantile
Ports & Logistics Limited.
-- Lord Howard Flight holds 0.56% of issued share capital as on
31 December 2021 (as on 31 December 2020 - 0.74%) of Mercantile
Ports & Logistics Limited at the year end. Lord Howard Flight
had acquired additional shares of GBP0.04 million, (GBP0.03 million
in December 2020).
-- Jay Mehta holds 0.50% of issued share capital as on 31
December 2021 (as on 31 December 2020 - 0.50%) of Mercantile Ports
& Logistics Limited at the year end. Jay Mehta had acquired
additional shares of GBP0.05 million, (GBP0.001 million in December
2020)
-- John Fitzgerald holds 0.14% of issued share capital as on 31
December 2021 (as on 31 December 2020 - 0.30%) of Mercantile Ports
& Logistics Limited at the year end. John Fitzgerald had
acquired additional shares of Nil, (GBP0.001 million in December
2020)
-- Jeremy Warner Allen holds 1.25% of issued share capital as on
31 December 2021 (as on 31 December 2020 - 0.83 %) of Mercantile
Ports & Logistics Limited at the year end. Jeremy Warner had
acquired additional shares of GBP0.05 million, (GBP0.074 million in
December 2020)
-- Karanpal Singh via Hunch Ventures and Investment Limited
holds 28.48% of issued share capital as on 31 December 2021 (as on
31 December 2020 - 21.75%) of Mercantile Ports & Logistics
Limited at the year end. Karanpal Singh had acquired additional
shares of GBP 3.45 million (GBPNil in December 2020)
b) Key Managerial Personnel of the parent
Non-executive Directors
- Lord Howard Flight
- Mr. John Fitzgerald
- Jeremy Warner Allen
- Karanpal Singh
Executive Directors
- Mr. Nikhil Gandhi
- Mr. Jay Mehta (Managing Director)
c) Key Managerial Personnel of the subsidiaries
Directors of KTLPL (India)
- Mr. Nikhil Gandhi - Resigned on 16 April 2021
- Mr. Jay Mehta
- Mr. Mr. Rakesh Bajaj
- Mr. Alexander John Joseph
Directors of Karanja Terminal & Logistics (Cyprus) Ltd -
KTLCL (Cyprus)
- Ms. Andria Andreou
- Ms. Olga Georgiades
d) Other related party disclosure
Entities that are controlled, jointly controlled or
significantly influenced by, or for which significant voting power
in such entity resides with, directly or indirectly, any individual
or close family member of such individual referred above.
- SKIL Infrastructure Limited
- JPT Securities Limited
- KLG Capital Services Limited
- Grevek Investment & Finance Private Limited
- Carey Commercial (Cyprus) Limited
- Henley Trust (Cyprus) Limited
- Athos Hq Group Bus. Ser. Cy Ltd
- John Fitzgerald Limited
- KJS Concrete Private Limited
- Himangini Singh
e) Transaction with related parties
The following transactions took place between the Group and
related parties during the year ended 31 December 2020:
Nature of transaction Year ended Year ended
31 Dec 21 31 Dec
GBP000 20
GBP000
Athos Hq Group Bus. Ser.
Cy Ltd Administrative fees 14 14
----------- -----------
14 14
----------- -----------
The following table provides the total amount outstanding with
related parties as at year ended 31 December 2021:
Transactions with shareholder having significant influence
Nature of transaction Year ended Year ended
31 Dec 21 31 Dec
GBP000 20
GBP000
SKIL Global Ports & Logistics Limited
Debtors Advances 107 107
Hunch Ventures and Investment
Limited*
Advances recoverable in Advances 3,562 --
cash or in kind
Jay Mehta
Advances recoverable in Share Subscription 50 --
cash or in kind
3,719 107
----------- -----------
*At the time of the Placing and Subscription in August 2021, the
Company intended for the proceeds of the fundraising to be held in
the Company's bank account in Guernsey. The Subscription monies
from Hunch Ventures required Reserve Bank of India ("RBI") approval
in order to be remitted to Guernsey. However, at the time of the
Company's General Meeting on 9th September 2021, the Company
confirmed that it had directed Hunch Ventures to transfer the
Subscription monies to one of the Company's Indian bank accounts
and that was done.
Subsequently, the Board resolved that it did wish the funds to
be transferred to Guernsey and, as a result, requested that Hunch
Ventures pursue the "RBI approval" route once more. In pursuing
this, Hunch Venture's bank required the Subscription monies to be
transferred to Hunch Venture's account so that application could be
made for the funds to be moved to Guernsey.
The Company is able to rely on the support documentation to the
RBI process, put in place at the time of Hunch Ventures' original
investment in 2018. It should be noted that the Company continues
to have access to the Subscription monies and, since the period
end, has accessed these funds.
Given the time being taken to receive RBI approval, the Company
and Hunch Ventures have received advice on an alternative structure
to achieve the Company's desired treasury requirements, without the
requirement to receive RBI approval.
Transactions with Key Managerial Personnel of the
subsidiaries
See Key Managerial Personnel Compensation details as provided
below
Advisory services fee
None
Compensation to Key Managerial Personnel of the parent
Fees paid to persons or entities considered Key Managerial
Personnel of the Group include:
Year ended Year ended
31 Dec 31 Dec 20
21 GBP000
GBP000
Non-Executive Directors fees
- Jeremy Warner Allen 40 40
- Lord Flight 40 40
- John Fitzgerald 45 45
- Peter Mill 29 -
- Karanpal Singh - -
----------- -----------
154 125
----------- -----------
Executive Directors Fees
- Jay Mehta 89 95
- Andrew Henderson - 77
- Nikhil Gandhi 180 192
----------- -----------
269 364
----------- -----------
Total compensation paid to Key Managerial Personnel 423 489
----------- -----------
Compensation to Key Managerial Personnel of the subsidiaries
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Directors' fees
KTLPL - India - 6
KTLCL - Cyprus 3 3
---------------- -----------
3 9
---------------- -----------
Sundry Creditors
As at 31 December 2021, the Group had GBP3.25 million (2020:
GBP3.29 million) as sundry creditors with related parties.
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Grevek Investment & Finance Pvt Ltd 3,254 3,292
----------- -----------
3,254 3,292
----------- -----------
Ultimate controlling party
The Directors do not consider there to be an ultimate
controlling party.
22. CASH FLOW ADJUSTMENTS AND CHANGES IN WORKING CAPITAL
The following non-cash flow adjustments and adjustments for
changes in working capital have been made to profit before tax to
arrive at operating cash flow:
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Non-cash flow adjustments
Depreciation 3,132 1,777
Finance Income (16) (74)
Unrealised exchange (gain)/loss -- 13
Finance cost 4,459 321
Gain on modification of lease -- (34)
Re-measurement of net defined benefit liability (8) (4)
Advance written off* 3,000 --
Gain from extinguishment of debt (refer note (5,407) --
8(a))
Provision for Gratuity 14 16
Loss on sale of car -- 5
5,174 2,020
----------- -----------
Increase/(Decrease) in trade payables (668) 994
Increase/Decrease in trade & other receivables (4,018) 667
----------- -----------
(4,686) 1,661
----------- -----------
*Amount paid to contractor by way of shares, which was valued
GBP3 million were written off due to non-acceptance/confirmation by
contractor due substantial fall in price of shares.
23. CAPITAL MANAGEMENT POLICIES AND PROCEDURE
The Group's capital management objectives are:
-- To ensure the Group's ability to continue as a going concern
-- To provide an adequate return to shareholders
Capital
The Company's capital includes share premium (reduced by share
issue costs), retained earnings and translation reserve which are
reflected on the face of the Statement of Financial Position and in
Note 16.
24. EMPLOYEE BENEFIT OBLIGATIONS
a. Defined Contribution Plan:
The following amount recognized as an expense in statement of
profit and loss on account of provident fund and other funds. There
are no other obligations other than the contribution payable to the
respective authorities.
Year ended Year ended
31 Dec 21 31 Dec 20
GBP000 GBP000
Contribution to Provident Fund 8 8
Contribution to ESIC 1 1
----------- -----------
9 9
----------- -----------
b. Defined Benefit Plan:
The Company has an unfunded defined benefit gratuity plan. The
gratuity plan is governed by the Payment of Gratuity Act, 1972.
Under the Act, employee who has completed five years of service is
entitled to specific benefit. The level of benefits provided
depends on the member's tenure of service and salary at retirement
age. Every employee who has completed five years or more of service
gets a gratuity on departure at 15 days' salary (last drawn salary)
for each completed year of service as per the provision of the
Payment of Gratuity Act, 1972 with total ceiling on gratuity of INR
2 Million w.e.f from 20 Feb 2020 (2020: INR 2 million).
The following tables summaries the components of net benefit
expense recognised in the Consolidated Statement of Comprehensive
Income and the funded status and amounts recognised in the
Consolidated Statement of Financial Position for the gratuity
plan:
As at As at
Particulars 31 Dec 21 31 Dec 20
GBP000 GBP000
Statement of Comprehensive Income
Net employee benefit expense recognised in
the employee cost
Current service cost 12 9
Past service cost - -
Interest cost on defined benefit obligation 2 2
Total expense charged to loss for the period 14 11
Amount recorded in Other Comprehensive Income
(OCI)
Opening amount recognised in OCI
Re-measurement during the period due to :
Actuarial loss / (gain) arising from change (3) -
in financial assumptions
Actuarial (gain) / loss arising on account
of experience changes (5) 4
----------- -----------
Amount recognised in OCI (8) 4
Closing amount recognised in OCI (8) 4
=========== ===========
Reconciliation of net liability / asset
Opening defined benefit liability 40 29
Translation diff in opening balance - (2)
Expense charged to profit or loss account 14 11
Amount recognised in Other Comprehensive (Income)/expense (8) 4
Benefit Paid - (2)
----------- -----------
Closing net defined benefit liability 46 40
=========== ===========
Movement in benefit obligation and Consolidated Statement of
Financial Position
A reconciliation of the benefit obligation during the
inter-valuation period:
Particulars As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Opening defined benefit obligation 40 29
Translation diff in opening balance - (2)
Current service cost 11 9
Past service cost - -
Interest on defined benefit obligation 3 2
Re-measurement during the period due to :
Actuarial (gain) / loss arising on account
of experience changes (5) 4
Actuarial loss / (gain) arising from change (3) -
in financial assumptions
Benefits paid - (2)
----------- -----------
Closing defined benefit obligation liability
recognised in Consolidated Statement of Financial
Position 46 40
=========== ===========
Particulars As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Net liability is bifurcated as follows :
Current 3 7
Non-current 43 33
----------- -----------
Net liability 46 40
----------- -----------
25. CONTINGENT LIABILITIES AND COMMITMENTS
Particulars As at As at
31 Dec 21 31 Dec 20
GBP000 GBP000
Bank guarantee issued to Maharashtra Pollution
Control Board 30 30
----------- -----------
The Commissioner Of Customs - Jawaharlal Nehru
Custom House 100 100
----------- -----------
Capital Commitment not provided for (Net of
advances) 126 Nil
----------- -----------
The Income Tax Liability to the tune of INR
44.29 crores (amount is exclusive of any interest
or penalties) has been reversed in 2019 based
on the ITAT judgement. However, the Income
Tax department has filed an appeal and hence
the group considers this as Contingent in nature. 4,416 4,444
----------- -----------
26. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
ACTIVITIES
The changes in the Group's liabilities arising from financing
activities can be classified as follows:
Particulars Long-term Current Interest Leased Total
borrowing maturity on long liabilities
GBP000 of long term GBP000 GBP000
term borrowing
borrowing GBP000
GBP000
------------------------------------------------------- ----------- ----------- ----------- ------------ --------
1 January 2021 34,729 4,074 3,201 2,410 44,414
----------- ----------- ----------- ------------ --------
Cash-flows:
- Repayment (641) -- (810) (203) (1,654)
- Proceeds 984 -- -- -- 984
- Accrued during
period -- -- 4,980 168 5,148
----------- ----------- ----------- ------------ --------
Non-cash:
- Exchange difference (227) -- (51) (18) (296)
* Interest on term loan converted in to term loan 4,441 -- (4,441) -- --
* Interest on term loan converted to FITL 2,882 -- (2,882) -- --
* Gain on debt modification# (5,407) -- -- -- (5,407)
* Interest on term loan EIR adjustment# 134 -- -- -- 134
- Reclassification* 3,037 (3,037) - -- --
----------- ----------- ----------- ------------ --------
31 December 2021 39,932 1,037 (3) 2,357 43,323
======================================================= =========== =========== =========== ============ ========
*refer note 18 ( borrowings)
#refer note 8(a) ( finance income)
Particulars Long-term Current maturity Interest Leased Total
borrowing of long term on long liabilities
GBP000 borrowing term borrowing GBP000 GBP000
GBP000 GBP000
----------------------- ----------- ----------------- ---------------- ------------- --------
1 January 2020 36,096 2,646 387 3,390 42,519
----------- ----------------- ---------------- ------------- --------
Cash-flows:
- Repayment -- -- (2,766) (930) (3,696)
- Proceeds 2,678 -- 123 2,801
- Accrued during
period -- -- 5,839 -- 5,839
----------- ----------------- ---------------- ------------- --------
Non-cash:
- Exchange difference (2,416) (201) (259) (173) (3,049)
- Reclassification* (1,629) 1,629 -- --
----------- ----------------- ---------------- ------------- --------
31 December 2020 34,729 4,074 3,201 2,410 44,414
======================= =========== ================= ================ ============= ========
27. EVENTS SUBSEQUENT TO THE CONSOLIDATED STATEMENT OF FINANCIAL
POSITION DATE
The group has received additional line of unsecured credit from
Hunch Ventures amounting to GBP4.5 million to mitigate funding risk
as well as ensuring continuity in business
28. AUTHORISATION OF FINANCIAL STATEMENTS
The consolidated financial statements for the year ended 31
December 2021 were approved and authorised for issue by the Board
of Directors on 29 June 2022.
Enquiries:
Mercantile Ports & Logistics Jay Mehta
Ltd
C/O SEC Newgate
+44 (0)203 757 6880
Cenkos Securities plc Stephen Keys
(Nomad and Joint Broker) +44 (0)207 397 8900
Zeus Capital Limited John Goold (Corporate Broking)
(Joint Broker) +44 (0)203 829 5000
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END
FR SESESUEESELM
(END) Dow Jones Newswires
June 30, 2022 02:00 ET (06:00 GMT)
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