TIDMMPL
RNS Number : 4246E
Mercantile Ports & Logistics Ltd
29 June 2023
29 June 2023
Mercantile Ports & Logistics Limited
("MPL" or the "Company")
Full Year Results
Mercantile Ports & Logistics Limited (AIM: MPL) which is
operating and continuing to develop a port and logistics facility
in Navi Mumbai, Maharashtra, India, is pleased to announce its
preliminary results for the year ended 31 December 2022.
Chairman's Statement
2022 was the first full year of uninterrupted operation for
Karanja Port. The coal jetty handled almost 1.0 Mn MT of coal,
Memorandum of Undertakings ("MOUs") with JM Baxi and new contracts
were also signed.
Revenue achieved during the year 2022 was GBP4.8 Mn. That
momentum has continued with Q1 CY2023 revenue being GBP1.6 Mn, a
more than double the GBP0.77 Mn for Q1 of 2022.
Dry bulk traffic is a fundamental foundation for facilitating
infrastructure development in the region. Karanja Port is well
positioned to attract this bulk cargo.
We were proud of our performance for our first customer, Tata
Daewoo, throughout the year. Tata Daewoo will shortly deliver the
last few blocks of the Mumbai Trans Harbour Link, which has been
constructed at the Facility. We were proud to have played our part
in this achievement, but can also, look forward to using the
concrete paved land being vacated by them in the next few months,
which will be utilised for our container business operations. This
25 acre reinforced concreted land parcel can handle a throughput of
almost 0.4 Mn TEUs per annum. We expect to achieve this throughput
within 7 years, with there being a significant shift in the revenue
mix from bulk cargo to container cargo.
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 2023.
The Company is pleased to report that it is in early stage
discussions with a number of large shipping lines to handle
containers at the Facility. 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 2023.
One of the Board's principal priorities for 2022 was to further
enhance the terms of its debt Facility, to match the principal
repayment with the cash flows that the business will generate in
the next 2-3 years. Whilst that was not concluded during the year,
as announced in the Company's recent fundraising, the Board is
confident that this will be achieved.
The Company's original plan of making Karanja Port a hub for
container handling is expected to take a major step in becoming a
reality in 2023. The management worked in 2022 to get all approvals
in place for getting this done including allotment of JNPA
code.
The pick-up in Container handling business coupled with the
growing Bulk Cargo handling businesses will drive further
operational activity at the Port. The resulting increase in
revenues coupled with the submission of proposal to the current
lenders for restructuring of existing term debt to further 7 years
(including 2 years moratorium on principal repayment) as well as
moratorium on interest servicing for 12 months, will position the
company to move ahead on its path to deliver the shareholder
value.
On behalf of the Board, I should like to thank our investors for
their continued support, as MPL builds towards its goal of being a
key part of the logistics infrastructure in the region and a
successful profitable company.
Finally, I should like to thank all our employees for their
continued hard work during 2022.
Jeremy Warner Allen
Chairman
Mercantile Ports & Logistics Limited
29 June, 2023
Operational Review
Indian Economy
On 6 December, 2022, the World Bank revised its GDP growth
outlook for India for 2022-23 from 6.5% to 6.9%, (Source: India is
better positioned to navigate global headwinds than other major
emerging economies: New World Bank report
https://www.worldbank.org/en/news/press-release/2022/12/05/india-better-positioned-to-navigate-global-headwinds-than-other-major-emerging-economies-new-world-bank-report)
on the back of the economy's strong performance in Q2. The World
Bank went on to say that the nation was "well placed" to steer
through any potential global headwinds in 2023. The International
Monetary Fund (IMF) expects India to grow by 5.9% in FY 2023-24 and
by an average rate of 6.1% over the next five years.
Despite the global turmoil as a result of the dual shocks
emerging from COVID and the Ukraine-Russia war, the long-term
growth story of the Indian economy remains intact.
India emerged as the world's fifth-largest economy, overtaking
the United Kingdom (UK) in 2022. It is set to surpass Japan and
Germany to become the world's third-largest economy by 2029.
(Source: India to emerge third-largest economy of world by 2029;
Likely to surpass Germany by 2027, and Japan by 2029 (Source
:newsonair.gov.in)
However, capital investment, especially in the private sector,
has lagged so far. India is an attractive investment destination is
a point well emphasized.
Operations Update
From an operations perspective, 2022 was the first full year of
uninterrupted operations for the Port, with Karanja Port able to
handle over c1.0 Mn MT of Cargo. The Facility was able to
demonstrate its ability to be a 24X7 facility with the commencement
of night navigation enabling 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, the Facility successfully
handled over multiple types of cargo including coal, cement,
olivine flux, metal scrap during the period. The volume of coal
handled during this period, was in line with expectation and
achieved the volume expectation set with the customer.
The Facility 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 2023.
Karanja Port is being positioned as an evacuation alternative for
containers coming to Jawaharlal Nehru Port Authority ("JNPA"),
where currently, 6.0 Mn TEUs flow into JNPA. With the fourth
terminal of JNPA becoming active this year, the number of TEUs
flowing into JNPA is expected to increase to 9.0 - 10.0 mn TEUs in
the next 3-4 years. (Source: https://jnPort.gov.in/projects_ongoing
(10 million).
It is important to note that Karanja Port and JNPA have the same
customs jurisdiction, the Jawaharlal Nehru Customs House
(JNCH).
Further, the Facility has all other approvals in place
(including allotment of code by JNPA & its terminals) to make
the evacuation of TEUs, flowing into JNPA, from Karanja Port a
reality. This will include both (1) containers that need only
evacuation, storage and transportation - DPD containers the are
Full Container Load (FCL); (2) containers that are yet to undergo
Customs examination; and (3) containers that need to undergo
de-stuffing operations that are not FCL.
Karanja Port Container Terminal aspires to be one of the largest
container handling facilities in the state of Maharashtra and one
of the few with a waterfront.
Going Concern
Fiscal year 2022 was the first full year of uninterrupted
operations at the Facility. During the period from January 2022 to
December 2022 alone, the port handled bulk cargo volumes to the
tune of 1.2 Mn. MT. The Board has assessed the Group's ability to
operate as a going concern for the next 18 months from the date of
signing the financial statements, based on the financial model
which was prepared as part of approving the 2023 budget.
The Directors considered the cash forecasts prepared for
twenty-four months beginning from 1 January 2023 up to 31st
December 2024, together with certain assumptions for revenue and
costs, to satisfy themselves of the appropriateness of the going
concern used in preparing the financial statements.
The Group had considered the following inflows in the budget
model prepared to mitigate funding risk as well as ensuring
continuity in business:
a) GBP0.56 million cash balance as at 31 December 2022;
b) Additional line of unsecured credit from Hunch Ventures amounting to GBP4.5Mn;
c) Share subscription (balance) amount due from Hunch GBP1.1Mn;
d) The recent fund-raise of GBP8.2Mn (net of cost) which has
just been concluded and closed
e) Expected cash flows from operations through to December, 2024.
The Directors took into account the risks and uncertainties,
facing the business as set out on page 20, and a sensitivity
analysis on the key revenue growth assumption and the effectiveness
of available mitigating actions was carried out in the model.
The Indian subsidiary has been in discussion with its consortium
of banks for restructuring the existing debt facility. The
Directors are confident that a restructured debt facility will be
afforded to the company, that will include an increase in the term
of the loan by an additional 7 years as well as moratorium on
principal repayments for a period of 2 years and a moratorium on
interest payable for 12 months.
The existing consortium banks had previously restructured the
debt facility in 2021 as a relief owing to the Covid-19
pandemic.
Based on the above indicators, after taking into account the
recent fundraising and the renegotiation on the debt restructuring,
the Directors believe that it remains appropriate to continue to
adopt the going concern in preparing the forecasts.
However, the fact that the debt restructure has not been
completed to date represents the existence of a material
uncertainty which may cast significant doubt on the Group's ability
to continue as a going concern. The financial statements do not
include the adjustments that would result if the Group was unable
to continue as a going concern.
Conclusion
The Port is ramping up bulk cargo operations and is all set to
commence container cargo operations in 2023. It 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 and liquids.
The Indian economy is expected to remain buoyant. 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 Port continues to stay robust.
Through the course of 2023, MPL will look to deepen its
engagement with existing lenders on the one side and new and
existing customers for incremental volumes on the other side. The
focus will be to diversify its product / commodity mix towards
container and liquid business, delivering enhanced and growing
revenues through its container business.
Consolidated Statement of Comprehensive Income
for the Year ended 31 December 2022
Notes Year ended Year ended
31 Dec 31 Dec 21
22 GBP000
GBP000
-------------------------------------------- ------ ----------- -----------
CONTINUING OPERATIONS
Revenue 5 4,872 1,801
Cost of sales 6 (1,449) (307)
----------- -----------
Gross margin 3,423 1,494
Administrative expenses 7 (9,978) (8,373)
OPERATING LOSS (6,555) (6,879)
Finance income 8(a) 38 40
Gains from extinguishment of debt 8(a) -- 5,408
Finance cost 8(b) (5,543) (4,576)
----------- -----------
NET FINANCING COST (5,505) 872
----------- -----------
LOSS BEFORE TAX (12,060) (6,007)
Tax income /(expense) for the year 9 2,421 (14)
----------- -----------
Loss FOR THE YEAR (9,639) (6,021)
=========== ===========
Loss for the year attributable
to:
Non-controlling interest (18) (5)
Owners of the parent (9,621) (6,016)
----------- -----------
LOSS FOR THE YEAR (9,639) (6,021)
=========== ===========
Other Comprehensive (Loss)/income:
Items that will not be reclassified
subsequently to profit or (loss)
Re-measurement of net defined benefit
liability 24 1 8
Items that will be reclassified
subsequently to profit or (loss)
Exchange differences on translating
foreign operations 808 (673)
----------- -----------
Other comprehensive expense for
the year 809 (665)
----------- -----------
Total comprehensive expense for
the year (8,830) (6,686)
=========== ===========
Total comprehensive expense for the year
attributable to:
Non-controlling interest (18) (5)
Owners of the parent (8,812) (6,681)
----------- -----------
(8,830) (6,686)
=========== ===========
Earnings per share (consolidated):
Basic & Diluted, for the year attributable *(0.232p) *(0.231p)
to ordinary equity holders 11
*1. On 13 September 2021 group has consolidated its share by way
of issuing one new share for every hundred shares held.
2. The accompanying notes on page 56 to 90 form part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
Notes Year ended Year ended
31 Dec 31 Dec 21
22 GBP000
GBP000
Assets
Property, plant and equipment 12(a) 127,382 131,344
Intangible asset 12(b) 14 4
Non-current tax assets 19 (a) 2,108 --
------------ -----------
Total non-current assets 129,504 131,348
Inventory of traded goods 96 --
Trade and other receivables 13 14,110 18,484
Cash and cash equivalents 14 558 4,783
------------ -----------
Total current assets 14,764 23,267
Total assets 144,268 154,615
============ ===========
Liabilities
Non-current
Employee benefit obligations 17 53 43
Borrowings 18 39,165 39,932
Lease liabilities payable 20 1,611 1,562
Non-current liabilities 40,829 41,537
------------ -----------
Current
Employee benefit obligations 17 529 449
Borrowings 18 2,307 1,037
Current tax liabilities 19 (b) 17 415
Lease liabilities payable 20 817 795
Trade and other payable 20 8,388 10,171
------------ -----------
Current liabilities 12,058 12,867
------------ -----------
Total liabilities 52,887 54,404
============ ===========
Net assets 91,381 100,211
============ ===========
Equity
Stated Capital 16 143,851 143,851
Retained earnings 16 (26,022) (16,402)
Translation Reserve 16 (26,429) (27,237)
------------ -----------
Equity attributable to owners
of parent 91,400 100,212
------------ -----------
Non-controlling Interest (19) (1)
------------ -----------
Total equity 91,381 100,211
============ ===========
1. The accompanying notes on page 56 to 90 form part of these
consolidated financial statements.
2. The consolidated financial statements have been approved and
authorized for issue by the Board on 29 June, 2023.
Jay Mehta
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Year ended 31 December 2022
-----------------------------------------------------------------------------
Notes Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
------ ----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax (12,060) (6,007)
Non cash flow adjustments 22 11,748 5,149
----------- -----------
Operating (loss) before working
capital changes (312) (858)
Net changes in working capital 22 305 (4,669)
Taxes paid (85) --
----------- -----------
Net cash used in operating activities (92) (5,527)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Used in purchase of property, plant
and equipment (1,425) (2,107)
Finance Income 8 38 27
Net cash used in investing activities (1,387) (2,080)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
From issue of additional shares 16 -- 9,224
From borrowing -- 984
Subscription money received 2,452 --
Repayment of bank borrowing principal (881) (641)
Interest paid on borrowings (4,217) (810)
Principal repayment of lease liabilities (138) (96)
Interest payment on leasing liabilities
principal -- (131)
Net cash from financing activities (2,784) 8,530
----------- -----------
Net change in cash and cash equivalents (4,262) 923
Cash and cash equivalents, beginning
of the year 4,783 3,895
Exchange difference on cash and
cash equivalents 37 (35)
----------- -----------
Cash and cash equivalents, end
of the year 558 4,783
=========== ===========
The accompanying notes on page 56 to 90 form part of these
consolidated financial statements .
Consolid ated St atement of Changes in Equity
for the Year ended 31 December 2022
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 2022 143,851 (27,237) (16,402) -- (1) 100,211
Transaction with owners -- -- -- -- -- --
in their capacity as owners
--------- ------------ ---------- ------------ ----------------- --------
Loss for the year -- -- (9,621) -- (18) (9,639)
Foreign currency translation
difference for foreign
operations -- 808 -- -- -- 808
Re-measurement of net defined
benefit liability -- -- -- 1 -- 1
Re-measurement of net defined
benefit liability transfer
to retained earning -- -- 1 (1) -- --
Total comprehensive income
for the year -- 808 (9,620) -- (18) (8,830)
--------- ------------ ---------- ------------ ----------------- --------
Balance at
31 December 2022 143,851 (26,429) (26,022) -- (19) 91,381
========= ============ ========== ============ ================= ========
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
========= ============ ========== ============ ================= ========
The accompanying notes on page 56 to 90 form part of these
consolidated financial statements .
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 2022,
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 2022,
the Group had 44 (Forty-four) (2021: 47 (Forty-seven))
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
Fiscal year 2022 was the first full year of operations at the
facility. During the period from January 2022 to December 2022
alone, the port handled bulk cargo volumes to the tune of 1.2 Mn
MT. The Board has assessed the Group's ability to operate as a
going concern for the next 18 months from the date of signing the
financial statements, based on the financial model which was
prepared as part of approving the 2023 budget.
The Directors considered the cash forecasts prepared for
Twenty-four months effective from 1 January 2023 up to 31st
December 2024, together with certain assumptions for revenue and
costs, to satisfy themselves of the appropriateness of the going
concern used in preparing the financial statements.
The group had considered the following inflows in the budget
model prepared to mitigate funding risk as well as ensuring
continuity in business:
a) GBP0.56 million cash balance as at 31 December 2022;
b) Additional line of unsecured credit from Hunch Ventures amounting to GBP4.5Mn;
c) Share subscription (balance) amount due from Hunch GBP1.1Mn;
d) The recent fund-raise of GBP8.2Mn (net of cost) which has just been concluded and closed
e) Expected cash flows from operations through to December, 2024.
The Directors took into account the risks and uncertainties
facing the business referred to below, and a sensitivity analysis
on the key revenue growth assumption and the effectiveness of
available mitigating actions was carried out in the model.
The Indian subsidiary has been in discussion with its consortium
of banks for restructuring the existing debt facility. The
Directors are confident that a restructured debt facility will be
afforded to the company, that will include an increase in the term
of the loan by an additional 7 years as well as moratorium on
principal repayments for a period of 2 years and a moratorium on
interest payable for 12 months.
The existing consortium banks had previously restructured the
debt facility in 2021 as a relief owing to the Covid-19
pandemic.
Based on the above indicators, after taking into account the
recent fundraising and the renegotiation on the debt restructuring,
the Directors believe that it remains appropriate to continue to
adopt the going concern in preparing the forecasts.
However, the fact that the debt restructure has not been
completed to date represents the existence of a material
uncertainty which may cast significant doubt on the Group's ability
to continue as a going concern. The financial statements do not
include the adjustments that would result if the Group was unable
to continue as a going concern.
(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 2022. 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 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 India 7.08 7.08
Karanja Terminal Karanja Terminal
& Logistics Private & Logistics
Limited* (Cyprus) Ltd. India 92.70 92.70
* Financial year end for Karanja Terminal & Logistics
Private Limited ("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 mainly consists of services relating to use of the port
by customers and includes services such as hiring of land,
wharf-age, hiring of equipment, loading/unloading, stevedoring,
storage and from value added activities viz. trading which is
incidental to providing port services.
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. Recognizing revenue as and 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 including the
end to end value added services with respect to coal supply and
delivery 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.
Revenue from sale of traded goods
Revenue from sale of traded goods is recognized on transfer of
control to the customers, which is generally on dispatch of goods
and no significant uncertainty exists regarding the amount of the
consideration that will be derived from the sale of goods. Sales
are stated exclusive of Goods and Service Tax ("GST").
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 plan (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 plan (Gratuity)
In accordance with applicable Indian Law, the Group provides for
gratuity, a defined benefit 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 a lessee
The Company mainly has lease arrangements for converting the
waterfront into reclamation of land for construction of Port for
terminal and logistics operations. The land thus reclaimed consist
of the open space and also offices, warehouse spaces and
equipment.
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.
As a lessor
Lease income from operating leases where the Company is a lessor
is recognized in income on a straight-line basis over the lease
term unless a systematic basis more representative of the pattern
in which benefit from the use of the underlying asset is diminished
is suitable. The respective leased assets are included in the
balance sheet based on their nature.
Initial direct costs incurred in negotiating and managing an
operating lease are added to the cost of the leased asset and
recognized as an expense over the term on the same basis as the
lease income.
(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 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 Statement of Comprehensive Income.
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 2023 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)
-- Effective date of amendments on disclosure of accounting policies
-- Amendments to IAS 8 on accounting estimates
-- Amendments to IAS 12 on deferred tax related to Assets and
Liabilities from a single transaction.
-- Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
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
MPL group's Indian subsidiary had filed a writ petition in
Hon'ble High court for seeking relief against the order passed by
the Income Tax Appellate Tribunal (ITAT) for the two assessment
years 2011-12 and 2012-13, which was decided in favour of the
group's Indian subsidiary. As per these orders, the matter was sent
back to the files of Principal Commissioner of Income Tax (Appeals)
for re-adjudication following the ITAT orders for assessment years
2013-14 to 2015-16.
The Principal Commissioner of Income Tax (Appeals) vide its
order dated 20(th) March, 2023, issued an order in favour of the
Group's subsidiary for the assessment years 2011-12 and
2012-13.
By virtue of this order, the demand made by the Income tax
department at present is not recoverable. As such the order of the
Principal Commissioner of Income Tax (Appeals) is of a protective
nature, hence the management has decided to prudently reverse the
provisions and the interest accrued on the same for the subject
years.
However, since the Income tax department has preferred an appeal
in Supreme Court. In light of the uncertainty of the final outcome,
the Group has disclosed the same under the head of contingent
liability in note no 25.
Impairment Review
The Audit Committee considered the significant judgements,
assumptions and estimates made by management in preparing the
impairment review to ensure that they were appropriate. In
particular, the cash flow projections, port capacity, tariffs used,
margins, discount rates, inflation and sensitivity analysis were
reviewed. The Audit Committee also considered external market
factors to assess reasonableness of management assumptions.
The Committee also considered the valuation done by an
independent external expert valuer.
As per the valuation report, the value of the cash generating
unit (CGU) group (considering the discounting rate of 13.40%) was
determined to be GBP131.53 Mn.
The review did not result in any impairment during the year,
however there was minimal headroom in the calculation.
The group carried out sensitivity analysis on the following:
a) reduction in Revenue by 10%, the assets would be impaired by GBP 16.17 Mn.
b) reduction in EBIDTA by 10%, the assets would be impaired by GBP 11.70 Mn.
c) increase in the discounting rate by 1%, the assets would be impaired by GBP 11.20 Mn.
Considering the above sensitivity analysis, the group's asset
would be impaired.
Taking the above into account, together with the documentation
presented and the explanations given by management, the committee
is satisfied with the thoroughness of the approach and judgements
taken.
4. SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The Board of Directors of are identified as the Chief operating
decision maker. 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 22 31 Dec 21
GBP000 GBP000
----------- -----------
Sale of goods 561 --
Cargo handling income 1,968 710
Lease income 1,728 1,091
Other operating income 615 --
----------- -----------
4,872 1,801
=========== ===========
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 22 31 Dec 22
INR in million GBP million
2023 46.92 0.48
2024 9.60 0.10
2025 9.60 0.10
2026 9.60 0.10
Fifth year and above 48.00 0.49
---------------- -------------
Total 123.72 1.27
================ =============
6. COST OF SALES
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
------------------------- ----------- -----------
Wharf-age expense 411 72
Other operating expense 1,134 235
Changes in inventory (96) --
1,449 307
=========== ===========
7. ADMINISTRATIVE EXPENSES
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
----------------- -----------------
Employee costs 635 577
Directors' remuneration and fees 476 423
Operating lease rentals 9 13
Foreign exchange loss 68 84
Depreciation 6,231 3,132
Other administration costs 2,559 4,144
----------------- -----------------
9,978 8,373
----------------- -----------------
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
-------------- -----------------
Interest on bank deposits 38 40
-------------- -----------------
Gain from extinguishment of debt* -- 5,408
-------------- -----------------
8. (a) FINANCE INCOME
* During the previous year, Group had received sanction from
lenders for one-time restructuring (OTR) of loan. The Management
has tested the OTR 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 and was effected accordingly in 2021. The
corresponding effect of debt modification has been considered in
2022 financials.
8. (b) FINANCE EXPENSES
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
----------- -----------
Interest on term loan 4,726 1,977*
Interest others 817 2,599
----------- -----------
5,543 4,576
=========== ===========
* 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.
The lenders have reset the interest rate from 9.5% pa to 9.55%
p.a. on Term Loan and from 10.50% pa to 10.55% pa on FITL with
effect from June 2022.
9. INCOME TAX
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
-------------------- -------------------
Loss Before Tax (12,060) (6,007)
Applicable tax rate in India* 26.00% 26.00%
-------------------- -------------------
Expected tax credit (3,136) (1,562)
Reconciling items
Non-deductible losses of MPL and Cyprus
entities 320 994
Un-recognised deferred tax asset 2,025 --
Non-deductible expenses 791 568
Reversal of outstanding tax liability
and interest thereon pertaining to earlier
years 2,421 (14)
2,421 (14)
==================== ===================
* Considering that the Group's operations are presently based in
India, the effective tax rate of the Group of 26% (prior year 26%)
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.
MPL group's subsidiary had filed a writ petition in Hon'ble High
court for seeking relief against the order passed by the Income Tax
Appellate Tribunal (ITAT) for the two assessment years 2011-12 and
2012-13, which was decided in favour of the Group. As per these
orders, the matter was sent back to the files of Principal
Commissioner of Income Tax (Appeals) for re-adjudication following
the ITAT orders for assessment years 2013-14 to 2015-16.
The Principal Commissioner of Income Tax (Appeals) vide its
order dated 20(th) March, 2023, issued an order in favour of the
Group's subsidiary for the assessment years 2011-12 and
2012-13.
By virtue of this order, the demand made by the Income tax
department at present is not recoverable. As such the order of the
Principal Commissioner of Income Tax (Appeals) is of a protective
nature, hence the management has decided to prudently reverse the
provisions and the interest accrued on the same for the subject
years.
However, since the Income tax department has preferred an appeal
in Supreme Court, in light of the uncertainty of the final outcome,
the Group has disclosed the same under the head of contingent
liability in note no 25.
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 not recognised the Deferred
Tax Asset amounting to INR: 67.46 crore (GBP6.76 Mn.) (2021- INR:
47.88 crore (GBP4.77 Mn.).
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 21
22
GBP000 GBP000
----------- -----------
Audit Fees
Fees payable to the auditor for the audit of
the Group's financial statements * 171 130
Non-audit service:
Interim Financial Statement Review 10 9
Non -audit services 110 80
291 219
----------- -----------
* This includes prior year overruns charged during the year
aggregating to GBP 12,500 (2021: GBP 7,210).
11. EARNINGS PER SHARE
Both basic and diluted earnings per share for the year ended 31
December 2022 have been calculated using the loss attributable to
equity holders of the Group of GBP9.621 million (prior year loss of
GBP6.02 million).
Year ended Year ended
31 Dec 22 31 Dec 21
Loss attributable to equity holders GBP (9,621,000) GBP (6,016,000)
of the parent
Weighted average number of shares
used in basic and diluted earnings
per share 41,499,699 26,000,334
EARNINGS PER SHARE
Basic and Diluted earnings per share (0. 232p) (0. 231p)
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.
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 Capital Total
Equipment & Asset of use Work in
Machinery Progress
Asset
--------- --------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------- ----------- ---------- --------- ---------- --------- -------- ---------- ---------
Gross
carrying
amount
Balance 1 Jan
2022 42 535 345 586 47 109,523 1,721 24,149 136,948
Net Exchange
Difference 0 4 2 3 0 777 10 140 936
Additions 7 31 125 36 16 233 304 605 1,357
Transfers -- -- -- -- -- -- -- -- --
from
CWIP ^
Disposals -- -- -- -- -- -- -- -- --
Balance 31
Dec
2022 49 570 472 625 63 110,533 2,035 24,894 139,241
---------
Depreciation
Balance 1 Jan
2022 (36) (115) (91) (362) (4) (4,668) (328) -- (5,604)
Net Exchange
Difference (1) (1) (0) (2) (0) (26) (3) -- (33)
Charge for
the
year (4) (111) (23) (48) (4) (5,774) (258) -- (6,222)
Disposals -- -- -- -- -- -- -- -- --
Balance 31
Dec
2022 (41) (227) (114) (412) (8) (10,468) (589) -- (11,859)
---------
Carrying
amount
31 Dec 2022 8 343 358 213 55 1,00,065 1,446 24,894 127,382
-------------- ---------- ----------- ---------- --------- ---------- --------- -------- ---------- ---------
The Group has leased various assets including land and
buildings. As at 31 December 2022, the net book value of recognised
right-of use assets relating to land and buildings was GBP 1.45
million (2021: GBP 1.39 million). The depreciation charge for the
period relating to those assets was GBP 0.26 million (2021: GBP
0.09 million).
Borrowing costs capitalised during 2022 - Nil (2021: GBP
1,051).
Amounts recognised in the statement of income are detailed
below:
Particular GBP000 GBP000
31 Dec 2022 31 Dec 2021
Depreciation on right-of-use
assets 258 95
----------------- -----------------
Interest expense on lease liabilities 181 175
----------------- -----------------
Expense relating to short-term
leases 9 13
----------------- -----------------
Expense relating to low-value
leases 0 1
----------------- -----------------
448 284
----------------- -----------------
Computers Office Furniture Vehicles Plant Port Right Capital Total
Equipment & Machinery Asset of use Work in
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 4,051
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 -- -- -- -- -- -- -- -- --
Transfer from -- -- -- -- -- -- -- -- --
computer
to software
-------------- ---------- ----------- ---------- --------- ------------ -------- -------- ---------- --------
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 2021, 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).
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 22 31 Dec 21
GBP000 GBP000
Vehicles 214 224
------------ ------------
214 224
------------ ------------
The vehicles, which are free from encumbrances, will also form
as a subservient charge of hypothecation towards securitisation of
debt.
All other immovable and movable property with a carrying value
of GBP 127,172,000 (2021: GBP131,124,000) 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 outstanding as against the borrowing limit sanctioned in
2021 as per OTR is INR 462 crore [GBP46.32 million]. (2021: INR
475.57 crore (GBP47.41 million)) for part financing the build out
of the facility.
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 INR 1,049 crores (GBP105.21
million). As of 31 December 2022, the contractual amount (net of
advances) of INR 48.03 crores (GBP4.82 million) work is unexecuted.
There were no other material contractual commitments.
12 (b). Intangible Asset
Intangible
Asset -
Asset
Software
Software
GBP000
----------------------------- -----------
Gross carrying amount
Balance 1 Jan 2022 14
Exchange Difference 0
Additions 19
Disposals --
Balance 31 Dec 2022 33
-----------
Depreciation
Balance 1 Jan 2022 (10)
Exchange Difference (0)
Charge for the year (9)
Disposals --
----------------------------- -----------
Balance 31 Dec 2022 (19)
----------------------------- -----------
Carrying amount 31 Dec 2022 14
----------------------------- -----------
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
----------------------------- -----------
13. TRADE AND OTHER RECEIVABLES
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
----------- -----------
Deposits 1,442 2,493
Advances
- Related Party 1,160 3,612
- Others 10,483 12,077
Accrued Interest of fixed deposits 3 2
Accrued Income 126 16
Debtors
- Related Party 107 107
- Prepayment 102 134
- Others 687 43
----------- -----------
14,110 18,484
----------- -----------
Advances include payment to EPC contractor of GBP 7.29 million
(2021: GBP 7.09 million) towards mobilisation advances and quarry
development. These advances will either be recovered as a deduction
from the invoices being raised by the contractor over the contract
period or refunded.
The debtors - other include trade receivable other GBP 0.00
million (2021: GBP Nil million) 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 22 31 Dec 21
GBP000 GBP000
----------- -----------
Cash at bank and in hand 389 4,571
Deposits* 169 212
----------- -----------
558 4,783
----------- -----------
Cash at bank earns interest at floating rates based on bank
deposit rates. The fair value of cash and short-term deposits is
GBP0.56 million (2021: GBP4.78 million).
Included in cash and cash equivalents is GBP0.00 million (2021:
GBP0.74 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.
*Deposits 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.
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 99.7436 for SOFP items and for
profit and loss item GBP 1: INR 97.0625.
This balance is cumulatively a GBP26.43m loss to equity (2021:
GBP27.31m 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
GBP26.43m due to appreciation of GBP against INR during the period
2018 to 2022. The closing rate at 31 December 2022 was GBP1: INR
99.7436, hence as compared to the translation loss reported between
2018-19, the same is insignificant in 2022. With the majority of
funding now in India this risk is further mitigated. During 2022,
the average and year-end spot rate used for INR to GBP were 97.0625
and 99.7436 respectively (2021: 100.30 and 101.67).
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 39.99 million (GBP0.40 million) as on reporting
date (prior year INR 106.12 million (GBP1.06 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 2022 31 Dec 2021
(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 by 10%) (appreciation
by 10%)
GBP000 GBP000
----------------------- ---------------
Cash and cash
equivalent
31 December 2022 44.44 (36.36)
31 December 2021 117.56 (96.19)
Borrowing
31 December 2022 (5,135.92) 4,202.12
31 December 2021 (5,144.55) 4,209.18
If the functional currency GBP had weakened with respect to
foreign currency (INR) by the percentages mentioned above, for year
ended 31 December 2022 then the effect will be change in profit and
equity for the year by GBP4.17 million (2021: GBP4.11 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.
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 enable RBI and the banks
to lower the base rate in the near future.
Interest rate sensitivity
At 31 December 2022, 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% (2021: +/-
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 2023 (454) 454 (336) 336
------------------ ------------ -------- ------------ -------
31 December 2024 (424) 424 (314) 314
------------------ ------------ -------- ------------ -------
31 December 2025 (373) 373 (276) 276
------------------ ------------ -------- ------------ -------
31 December 2026 (305) 305 (226) 226
------------------ ------------ -------- ------------ -------
31 December 2027 (224) 224 (166) 166
------------------ ------------ -------- ------------ -------
31 December 2028 (135) 135 (100) 100
------------------ ------------ -------- ------------ -------
31 December 2029 (42) 42 (31) 31
------------------ ------------ -------- ------------ -------
31 December 2030 - - - -
------------------ ------------ -------- ------------ -------
31 December 2031 - - - -
------------------ ------------ -------- ------------ -------
31 December 2032 - - - -
------------------ ------------ -------- ------------ -------
(b) Credit risk
Credit risk is the risk that a counterparty fails to discharge
an obligation to the Group. The Group's maximum exposure (GBP 2.81
Mn (2021: GBP 9.05 Mn)) 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.
The Indian subsidiary which is currently availing the term loan
facility has again approached the current consortium of lenders for
a re-phasement of current Term Loan, Funded Interest Term Loan
(FITL) and Guaranteed Emergency Credit Line (GECL) for 14 years
including 2 years moratorium on the consolidated term debt due to
the cascading impact on the business of the Indian subsidiary due
to the relapse of Covid 19 pandemic.
The Group is in an advanced stage of negotiation with the
current consortium of lenders and is confident of obtaining a
favourable response from the lenders shortly.
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.
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.
Comparative working of the Group's non-derivative financial
liabilities have contractual maturities (and interest payments) as
summarized below:
As at 31(st) December 2022
Principal payments Interest payments
INR in
Payment falling due Crore GBP000 INR in Crore GBP000
---------- --------- ------------- -------
Within 1 year 23.01 2,307 43.27 4,339
1 to 5 years 316.00 31,681 131.78 13,212
After 5 years 74.65 7,484 1.82 182
---------- --------- ------------- -------
Total 413.65 41,472 176.87 17,733
---------- --------- ------------- -------
The present composite rate of interest ranges from 7.95% to
10.55% and closing exchange rate has been considered for the above
analysis.
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. The
current debt equity ratio with the lenders is 0.45 : 1.
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.
As at 31(st) December 2021
Principal payments Interest payments
INR in
Payment falling due Crore GBP000 INR in Crore GBP000
---------- --------- ------------- -------
Within 1 year 10.40 1,037 44.36 4,423
1 to 5 years 202.04 20,144 145.95 14,551
After 5 years 251.97 25,122 36.94 3,683
---------- --------- ------------- -------
Total 464.41 46,303 227.25 22,657
---------- --------- ------------- -------
The present composite rate of interest ranges from 7.95% to
10.55% and closing exchange rate has been considered for the above
analysis.
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. The
current debt equity ratio with the lenders is 0.45 : 1.
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 22 31 Dec 21
------------- ----------- ---------------
GBP000 GBP000
------------- ----------- ---------------
Financial Assets 2
Cash and Cash Equivalents 14 558 4,783
Trade and other receivables 13 2,252 4,263
----------- ---------------
2,810 9,046
=========== ===============
Financial Liability
Borrowings 18 41,472 40,969
Trade and other payables 20 8,388 10,171
Employee benefit obligations 17 582 492
----------- ---------------
50,442 51,632
=========== ===============
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 22 31 December 21
---------------------------- --------------------------
No of shares No of shares No of shares GBP000
------------- ------------- ---------------- --------
Shares issues and fully paid:
Beginning of the year 41,499,699 143,851 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 41,499,699 143,851
------------------------------- ------------- ------------- ---------------- --------
The stated capital amounts to GBP143.85 million (2021: GBP143.85
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 Nil (2021: 2,244.95 million)
equity shares to various institutional and private investors, by
way of a rights issue.
16.2 Other Components of Equity
Retained Earnings
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
Opening Balance (16,402) (10,394)
Addition during the year (9,621) (6,016)
Re-measurement of net defined benefit liability 1 8
----------- -----------
Closing balance (26,022) (16,402)
----------- -----------
Accumulated losses of GBP 28.41 million (2021: GBP16.40 million)
include all current year retained profits.
Translation Reserve
Year ended Year ended
31 Dec 31 Dec 21
22 GBP000
GBP000
Opening Balance (27,237) (26,564)
Addition during the year 808 (673)
----------- -----------
Closing balance (26,429) (27,237)
----------- -----------
The translation reserve of GBP 26.43 million (2021: GBP27.24
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 22 31 Dec 21
GBP000 GBP000
----------- -----------
Non- Current
Pensions - defined benefit plans 53 43
----------- -----------
53 43
----------- -----------
Current
Wages, salaries 523 446
Pensions - defined benefit plans 6 3
529 449
----------- -----------
18. BORROWINGS
Borrowings consist of the following:
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
----------- -----------
Non-Current
Bank loan (refer note 26) 39,165 39,932
----------- -----------
39,165 39,932
----------- -----------
Current
Bank loan (refer note 26) 2,307 1,037
2,307 1,037
----------- -----------
Borrowing
The Indian subsidiary which is currently availing the term loan
facility has again approached the current consortium of lenders for
a re-phasement of current term loan, Funded Interest Term Loan
(FITL) and Guaranteed Emergency Credit Line (GECL) for additional
seven years including two year moratorium on the consolidated term
debt due to the cascading impact on the business of the Indian
subsidiary due to the relapse of Covid 19 pandemic
The impact of favourable response from the lenders on the
proposal for re-phasement, will enable the group to manage its cash
flow and focus more on operational stability and growth.
19 (a). NON-CURRENT tax ASSETS
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
Income tax * 2,108 --
Non-current tax assets 2,108 --
----------- -----------
* The income tax pertains to self -assessment tax as well as
withholding taxes paid during various assessment years.
The major portion of the tax pertains to the amounts paid under
protest for the Assessment Year (AY) 2011-2012 (GBP0.45 Mn) and AY
2012-13 (GBP1.47 Mn). These amounts were deposited as a
precondition for filing appeals with the Income-tax authorities for
these years. The Company is contesting the demands and the
management believes that its position is likely to be upheld in the
appellate process.
(Refer Note 25 for disclosure of Contingent liabilities in
respect of these matters)
19 (b). current tax liabilities
Current tax liabilities consist of the following:
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
Duties & taxes 17 59
Provision for Income Tax -- 356
Current tax liabilities 17 415
----------- -----------
The carrying amounts and the movements in the Provision for
Income Tax account are as follows:
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
Carrying amount 1 January 2,342 2,344
Interest provision on outstanding tax liability -- 14
Less: Reversal of tax liability and interest
provision (2,354) --
Exchange difference 12 (16)
----------- -----------
Carrying amount 31 December -- 2,342
Income tax paid (net of provision) -- (1,986)
----------- -----------
-- 356
----------- -----------
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 the judgements passed by Income Tax Tribunal in favour
of the Indian Subsidiary for the assessment years 2013-14 to
2015-16, the Commissioner of Income Tax - CIT-(A) has relied upon
the ITAT judgement and issued order in favour of the Indian
subsidiary for the assessment years 2011-12 and 2012-13 as
well.
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: 67.46 crore (GBP6.76
million).
20. TRADE AND OTHER PAYABLES
Trade and other payables consist of the following:
Year ended
31 Dec Year ended
22 31 Dec 21
GBP000 GBP000
----------- -----------
Non-Current
----------- -----------
Lease liability (refer note 26) 1,611 1,562
----------- -----------
Current
Lease Liability - (refer note 26) 817 795
----------- -----------
Sundry creditors 8,400 10,174
Interest (prepaid) (12) (3)
----------- -----------
8,388 10,171
----------- -----------
Future minimum lease payments at 31 December 2022 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 1,006 245 247 202 188 5,593 7,441
-------------------- -------- ------ ------ ------ ------ -------- --------
Finance charges (189) (183) (175) (171) (167) (4,127) (5,013)
-------------------- -------- ------ ------ ------ ------ -------- --------
Net present values 817 62 72 31 20 1,426 2,428
-------------------- -------- ------ ------ ------ ------ -------- --------
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 7.08% Ordinary
Private Ltd company -Terminal
Project
HELD BY Karanja Terminal
& Logistics (Cyprus) Ltd :
Karanja Terminal & Logistics India Operating 92.70% 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 2022 (as at 31 December 2021 - 2.37%) of Mercantile
Ports & Logistics Limited.
-- Lord Howard Flight holds 0.56% of issued share capital as on
31 December 2022 (as on 31 December 2021 - 0.56%) of Mercantile
Ports & Logistics Limited at the year end.
-- Jay Mehta holds 0.50% of issued share capital as on 31
December 2022 (as on 31 December 2021 - 0.50%) of Mercantile Ports
& Logistics Limited at the year end.
-- John Fitzgerald holds 0.14% of issued share capital as on 31
December 2022 (as on 31 December 2021 - 0.14%) of Mercantile Ports
& Logistics Limited at the year end.
-- Jeremy Warner Allen holds 1.19% of issued share capital as on
31 December 2022 (as on 31 December 2021 - 1.19 %) of Mercantile
Ports & Logistics Limited at the year end.
-- Karanpal Singh via Hunch Ventures and Investments Private
Limited holds 28.48% of issued share capital as on 31 December 2022
(as on 31 December 2021 - 28.48%) of Mercantile Ports &
Logistics Limited at the year end.
b) Key Managerial Personnel of the parent
Non-executive Directors
- Lord Howard Flight
- Mr. John Fitzgerald
- Jeremy Warner Allen
- Karanpal Singh
- Peter Mills - Resigned with effect from 31 January 2022
- Amit Dutta - With effect from 11 January 2022
- Dmitri Tsvetkov - With effect from 1 February 2022
- Nikhil Gandhi
Executive Directors
- Mr. Jay Mehta (Managing Director)
c) Key Managerial Personnel of the subsidiaries
Directors of KTLPL (India)
- Mr. Jay Mehta
- Mr. Rakesh Bajaj
Directors of Karanja Terminal & Logistics (Cyprus) Ltd -
KTLCL (Cyprus)
- Ms. Andria Andreou
- Ms. Chrystalla Stavrou
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
- Grevek Investment & Finance Private 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 2022:
Nature of transaction Year ended Year ended
31 Dec 22 31 Dec
GBP000 21
GBP000
Athos Hq Group Bus. Ser.
Cy Ltd Administrative fees 13 14
----------- -----------
13 14
----------- -----------
The following table provides the total amount outstanding with
related parties as at year ended 31 December 2022:
Transactions with shareholder having significant influence
Nature of transaction Year ended Year ended
31 Dec 22 31 Dec
GBP000 21
GBP000
SKIL Global Ports & Logistics Limited
Debtors Advances 107 107
Hunch Ventures and Investment
Limited*
Advances recoverable in
cash or in kind Advances 1,110 3,562
Jay Mehta
Advances recoverable in
cash or in kind Share Subscription -- 50
1,217 3,719
----------- -----------
* 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 21
22 GBP000
GBP000
Non-Executive Directors fees
- Jeremy Warner Allen 40 40
- Lord Flight 40 40
- John Fitzgerald 45 45
- Peter Mills 3 29
- Karanpal Singh -- --
-
- Amit Dutta 34 --
- Dmitri Tsvetkov 42 --
----------- -----------
204 154
----------- -----------
Executive Directors Fees
- Jay Mehta 93 89
- Nikhil Gandhi 188 180
----------- -----------
281 269
----------- -----------
Total compensation paid to Key Managerial Personnel 485 423
----------- -----------
Compensation to Key Managerial Personnel of the subsidiaries
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
Directors' fees
KTLCL - Cyprus 3 3
---------------- -----------
3 3
---------------- -----------
Sundry Creditors
As at 31 December 2022, the Group had GBP3.29 million (2021:
GBP3.25 million) as sundry creditors with related parties.
Year ended Year ended
31 Dec 22 31 Dec 21
GBP000 GBP000
Grevek Investment & Finance Private Ltd 3,292 3,254
----------- -----------
3,292 3,254
----------- -----------
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 22 31 Dec 21
GBP000 GBP000
----------- -----------
Non-cash flow adjustments
Depreciation 6,231 3,132
Finance Income (38) (40)
Finance cost 5,543 4,459
Re-measurement of net defined benefit liability (1) (8)
Advance written off* -- 3,000
Gain from extinguishment of debt (refer note
8(a)) -- (5,408)
Provision for Gratuity 13 14
11,748 5,149
----------- -----------
Increase/(Decrease) in trade and other payables 247 (668)
Decrease/(Increase) in trade and other receivables 154 (4,001)
Increase in inventory (96) --
----------- -----------
305 (4,669)
----------- -----------
*Amount paid to contractor by way of shares, which was valued
GBP3 million were written off due to non-acceptance/confirmation by
contractor due to 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 22 31 Dec 21
GBP000 GBP000
Contribution to Provident Fund 12 8
Contribution to ESIC 2 1
----------- -----------
14 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 Mn. With effect from 20 Feb 2020 (2021: INR 2 Mn.).
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 22 31 Dec 22
GBP000 GBP000
Statement of Comprehensive Income
Net employee benefit expense recognised in
the employee cost
Current service cost 11 12
Interest cost on defined benefit obligation 3 2
Total expense charged to loss for the period 14 14
Amount recorded in Other Comprehensive Income
(OCI)
----------- -----------
Opening amount recognised in OCI
Re-measurement during the period due to :
Actuarial (gain) arising from change in financial
assumptions (4) (3)
Actuarial (gain) / loss arising on account
of experience changes 3 (5)
----------- -----------
Amount recognised in OCI (1) (8)
Closing amount recognised in OCI (1) (8)
=========== ===========
Reconciliation of net liability / asset
Opening defined benefit liability 46 40
Expense charged to profit or loss account 14 14
Amount recognised in Other Comprehensive (Income) (1) (8)
Closing net defined benefit liability 59 46
=========== ===========
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 22 31 Dec 21
GBP000 GBP000
Opening defined benefit obligation 46 40
Current service cost 11 11
Interest on defined benefit obligation 3 3
Re-measurement during the period due to :
Actuarial (gain) arising on account of experience
changes (4) (5)
Actuarial loss / (gain) arising from change
in financial assumptions 3 (3)
Closing defined benefit obligation liability
recognised in Consolidated Statement of Financial
Position 59 46
=========== ===========
Particulars As at As at
31 Dec 22 31 Dec 21
GBP000 GBP000
Net liability is bifurcated as follows :
Current 6 3
Non-current 53 43
----------- -----------
Net liability 59 46
----------- -----------
25. CONTINGENT LIABILITIES AND COMMITMENTS
Particulars As at As at
31 Dec 22 31 Dec 21
GBP000 GBP000
Bank guarantee issued to Maharashtra Pollution
Control Board towards issuing the consent to
operate the Port 30 30
----------- -----------
The Commissioner Of Customs - Jawaharlal Nehru
Custom House towards the collateral for acting
as a custodian of the Cargo handled at the
Port 100 100
----------- -----------
There is an ongoing arbitration proceeding 7,695 --
initiated by the Indian subsidiary with the
dredging sub-contractor for claiming damages
for non-performance under dredging contract
to the tune of 214 crores (GBP21.5 Mn) and
a counter claim made by the sub-contractor
for 76.75 crores (GBP7.69 Mn).
The matter is under arbitration act in the
jurisdiction of Mumbai. Based on the legal
opinion obtained, management is confident that
the outcome will be in favour of the Company.
The counter claim made by the sub-contractor
on the Company is considered as a contingent
liability.
----------- -----------
The Income tax liability to the tune of 44.29
crores (GBP4.44 Mn) (exclusive of any interest
or penalties) for the Assessment years 2013-14,
2014-15 and 2015-16 has been reversed in 2019
based on the Income Tax Appellate Tribunal
(ITAT) judgement.
For the Assessment years 2011-12 and 2012-13,
based on the decision awarded in favour of
the Indian subsidiary issued by the Principal
Commissioner of Income Tax (Appeals) vide the
order dated 20th March, 2023, the provisions
for these years has been reversed.
Cash outflows, if any, is determinable on receipt
of judgments pending at respective authorities. 6,822 4,416
----------- -----------
Estimated value of contracts in capital account
in relation to property, plant and equipment
remaining to be executed and not provided
for (net of advances) 4,815 126
----------- -----------
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 2022 39,932 1,037 (3) 2,357 43,323
----------- ------------ ------------ ------------- --------
Cash-flows:
* Repayment -- (881) -- (138) (1,019)
* Accrued during period -- -- 5,372 171 5,543
* Paid during the year -- -- (4,217) -- (4,217)
Non-cash:
* Exchange difference 239 -- (19) 38 258
* Interest on term loan converted to FITL 517 -- (517) -- --
* Interest on term loan EIR adjustment 628 -- (628) -- --
* Reclassification* (2,151) 2,151 -- -- --
----------- ------------ ------------ ------------- --------
31 December 2022 39,165 2,307 (12) 2,428 43,888
==================================================== =========== ============ ============ ============= ========
*refer note 18 ( borrowings)
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 (226) -- (51) (18) (295)
* 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# (5,408) -- -- -- (5,408)
* 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
----------- ----------- ----------- ------------ --------
27. EVENTS OCCURRING AFTER REPORTING PERIOD
The Covid-19 pandemic coupled with the Russia-Ukraine war spiked
inflationary pressure, forcing the central banks across the world
to hike their key lending rates. In FY23, the Reserve Bank of India
has hiked the repo rate several times. It has increased by 2.5 per
cent between May 2022 and February 2023.
The interest rate hikes in India were more of a response to the
rate hike by U.S. Fed increasing the Fed fund rate from 0.25% to
expected 5.25% by June of 2023. This coupled with the collapse of
Silicon Valley Bank in the U.S. heightened the fragile recovery in
the investor sentiment globally.
The Indian subsidiary has signed a contract with Customers for
handling container business.
The Group has also successfully closed the fund raise of GBP 8.2
Mn. (net of costs), comprising of 101,949,999 - placement shares,
195,000,000 - subscription shares and 4,529,661 retail shares
resulting in a total of 301,479,660 new ordinary shares.
28. AUTHORISATION OF FINANCIAL STATEMENTS
The consolidated financial statements for the year ended 31
December 2022 were approved and authorised for issue by the Board
of Directors on 29 June 2023.
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FR ZZGZVFLZGFZM
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