Preliminary Results
11 June, 2019
Mercantile Ports & Logistics Limited
(the "Company" or "MPL")
Preliminary results for the year ended 31 December 2018
Mercantile Ports & Logistics (AIM: MPL), which is developing a modern port and logistics facility in Mumbai, India, is pleased to announce its preliminary results for the year ended 31 December 2018. These are set out below.
Highlights
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· |
Inauguration ceremony took place on 8 March 2019 and first revenue generated from customer cargo operations |
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· |
All customs approvals now received and customs IT connections established |
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· |
MMB granted lease extension from 30 to 50 years |
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· |
MMB granted approval to develop additional 200 acres of land and 1000 meters of waterfront |
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· |
Completion of £29.8 million fund raise |
Nikhil Gandhi, Executive Chairman of MPL, commented: "2018 was a year of progress and that has continued into 2019. Customers have been secured and the inauguration ceremony, alongside our first revenue generating cargo movement, were important milestones.
With a growing economy and a settled political backdrop which is supportive of infrastructure development and the Company, I am excited about the prospects for MPL."
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Enquiries: |
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MPL |
Jay Mehta |
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C/O Newgate Communications |
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+44 (0)20 3757 6880 |
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Cenkos Securities plc |
Stephen Keys |
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+44 (0)20 7397 8900 |
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Newgate Communications |
Adam Lloyd/Fiona Norman |
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(Financial PR) |
+44 (0)20 3757 6880 |
Chairman's Statement
2018 was an important year for MPL with further progress made on the ground and Hunch Ventures and Investment Limited ("Hunch Ventures") taking a 21.75% shareholding in the Company as part of the equity fundraise in December.
This endorsement, along with the support shown from institutional shareholders and directors, who all further invested, raised c.£29.8m, enabling the Company to manage its own future cashflow and not be reliant on additional drawdowns from the Indian banks lending under consortium. We are fully focused on our maiden project, the development of a world class multipurpose terminal and logistics facility at Karanja creek within Mumbai Harbour (the "Facility").
2018 was a year when milestones were achieved. Since our first test vessel docked in November, management has been focused on preparing for commercial operations commencing in H1 2019. Following the funding, the official inauguration ceremony took place on 8 March. This event was presided over by the Honourable Chief Minister of Maharashtra and attendees included the Honourable Minister of Fisheries Development, Mr. Mahadev Jankar, the Honourable Minister of State for Ports, Mr. Ravindra Chavan, the Principal Secretary (Ports) and the Vice Chairman of the Maharashtra Maritime Board, along with other state government officials, dignitaries and existing contracted and potential customers of the Facility.
During the Ceremony, the Chief Minister emphasised his support for Karanja as a key part of the port and logistics led development in Maharashtra, India's most industrialised state. The Company also welcomed Mr Jankar's comments in his address, which identified the Facility as being considered for investment by his ministry as an international marine hub, given its proximity to one of the largest fishing centres in the State.
The ceremony followed assurances that the full customs approval process would be concluded shortly, and that process has now been concluded. This coincided with the Company's first revenue generated from customer cargo operations, discharging steel products for one of India's leading steel producers. Whilst initially small, this operation took place after a successful trial and is another proud milestone for the Company, demonstrating the increasing interest major industrial businesses have in the Facility.
During the course of 2018, we were pleased to welcome Karanpal Singh to the Board. Mr. Singh is the promoter of Hunch Ventures and has a wealth of experience across a range of sectors including Steel, Iron Ore, Gold Mining, Power Production and Cement manufacturing. Hunch Ventures focuses on growth opportunities and has followed the development of the Karanja. At the same time Mr. Warner Allen also joined the Board following a successful career in the city of London as an adviser to growth companies across multiple sectors.
Management is evaluating which types of business it should prioritise, as potential customers have varying merits such as speed of implementation, price, infrastructure required and length of contract. The Facility has been designed to be flexible in the type of cargo that it can handle and store and the Board is delighted that this strategy has given the Company multiple options in order to maximise value for shareholders as the Facility matures.
During 2018, the Company was pleased to announce that its wholly owned subsidiary, Karanja Terminal and Logistics Private Limited ("KTPL"), had received notification from the Maharashtra Maritime Board that its lease over the land had been extended from 30 to 50 years. In addition, the MMB has also granted KTPL the approval to develop an additional 200 acres of land and 1000 meters of waterfront.
During 2019, we have been delighted to host our Non-Executive Directors, our Nomad and both existing and potential institutional investors at the site. These visits have involved a tour of the site and meetings with our engineering team and also with contracted and potential customers, with a view to us demonstrating the work that has been completed and the opportunities available to the Company. We are always proud to show off our site and extend a warm invitation to any other interested parties.
The future looks positive for MPL in the context of a positive macro-economic backdrop and a strong partnership with Maharashtra Maritime Board ("MMB"). We have a re-energized board and a successful strategic investor that shares our vision. These are exciting times for MPL.
Nikhil Gandhi
Executive Chairman
Mercantile Ports & Logistics Limited
10 June, 2019
Operational Review
Status of the Project
The Group has made significant progress in completing its goal of constructing and operating the port and logistics Facility at Karanja Creek near Navi Mumbai, India.
One side of the 400 metre general cargo jetty is capable of receiving vessels and the separate 200 meter bulk berth is nearly complete. Approximately 100 acres of land have been reclaimed, with approximately another 15 acres of reclamation material on site, meaning that there is significantly more than the 50 acres of back up land reclaimed as is required to enable the Facility to carry out commercial operations. Covered storage facilities, currently being planned, will be completed in consultation with contracted customers and their requirements.
The Facility now has a fenced custom bond area, a brand new operational office block, a six lane gated complex and furnished operating work spaces for Custom officers and other port users.
As previously reported, the customs approval process took longer than originally envisaged and there were some IT integration issues with the customs' systems. Whilst this was frustrating and delayed the start of commercial operations, the Company is pleased to report that all approvals had been received and that KTPL have received confirmation from the Ministry of Finance for the customs jurisdiction to be under Jawaharlal Nehru Customs House. This is extremely beneficial as it enables KTPL to have seamless container handling operations between the Facility and Jawaharlal Nehru Port Trust ("JNPT"), India's largest and busiest container handling port. Jawaharlal Nehru Customs House is the biggest Customs House in the country in terms of containers handled, documents filed, and revenue generated.
Operational trials had previously been carried out by the Group itself and before the end of 2018, the Facility handled cargo for immediate onward transportation for one of India's most prominent steel manufacturers on a trial basis. This trail was successful and is shortly expected to result into a contract being agreed with this customer becoming our third contracted partner.
Whilst the customs delay was the principal factor in larger scale cargo movements not taking place when hoped, the Group is pleased with the level of visibility it has over its future revenues. As previously reported, the Group has signed contracts with two customers, which together envisage growing volume to 6 million tonnes of cargo in the third year of operations. In addition, the Group is in discussions to secure a number of contracts, including one of India's largest fertilizer companies, one of India's most prominent steel manufacturers (which has already conducted trials at the Facility) a cement company and with a large fly ash distributor. This is alongside the discussions that continue with other interested parties and the encouragement from MMB for agreements to be reached with JNPT, to help relieve congestion.
The Directors consider the Facility to be well-aligned with Indian government policy. In addition, the Directors believe that the Facility is ideally situated to benefit from some of the significant infrastructure projects that are taking place near the site. In particular, projects that have commenced or are proposed, include the US$2.7bn Mumbai Trans Harbour Link, the US$2.5bn Navi Mumbai Airport, JNPT's US$1.3bn Fourth Terminal and the Navi Mumbai Digital City, which is expected to attract significant investment. Each of these projects will require enormous quantities of steel, cement and other materials, and the Directors expect the Facility to play a major part in the logistics for the construction of some or all of these projects.
The Group has been delighted with the support that it has received from MMB and in particular the extension of its lease of the Project Land to 2059. Whilst the Directors' immediate focus is on completing the build out of the Company's Facility to 200 acres, the Directors are proud to have received permission from MMB to extend the Facility to 400 acres, with 2,000 meters of sea frontage, which the Directors intend to pursue in the future. The Facility is now operational and the focus is on attracting, contracting and moving cargo in volume. Whilst a small volume of cargo has been handled already, the Directors expect larger volumes to be handled, post the monsoon, in September. The reclamation of land will continue this year and next year in parallel with the pipeline of new business coming on stream. We believe that the lease extension is a significant endorsement from the key government organisation responsible for the maritime economy and illustrates the confidence that MMB has in MPL. The decision of the MMB comes on the back of significant interest in the Facility from a wide range of shipping and cargo businesses. The current Indian government's Sagarmala initiative supports port led development as a key driver of Indian economic development and MPL is proud to be an important contributor to the delivery of the Indian Prime Minister's flagship policy.
Marketing Update
The Company's marketing efforts continued in the early part of 2019, with two large potential contracts in negotiation and diligence stage. The Company expects to make further announcements in relation to new contract wins throughout 2019. In preparation for the ramping-up of commercial operations and to maximise the Company profile and marketing ability, in 2019 we have added to our advisory panel. I am pleased to welcome Mr Rajeev Ranjan Sinha to our panel. Mr Sinha has served as Principal Secretary (Ports) to the Government of Maharashtra and also served as Deputy Chairman of Mumbai Port Trust and Chief Executive Officer of the Maharashtra Maritime Board. I am looking forward to working closely with him and benefitting from his significant experience and expertise in the port sector.
Conclusion
2018 was a year of progress and preparing for the future in terms of building the Facility, strengthening the board and management team, securing customers and developing a healthy pipeline to deliver on the promise of a professional and profitable port and logistics facility. Karanja lies at the heart of India's trading gateway and, with India's macro story still conducive to Karanja's growth, the Board sees enormous opportunities available to the Company. Everyone involved in this project recognises the strategic ambition of the Indian government and our customers. We are proud to be working with all our stakeholders to deliver on this vision.
Jay Mehta
Managing Director
Mercantile Ports & Logistics Limited
10 June, 2019
Financial Review
In December the Company raised an additional £29.82 million from investors, giving us the security to address the general banking constraints in India.
The successful fundraise has meant that any delay to the drawdown of the Company's banking facilities in the future will not have an impact on the Group.
As at 31 December, following the payment of outstanding liabilities, the Company had cash resources of £21.4 million including an £8.3m debtor in the form of a promissory note/bank guarantee from Hunch Ventures, as payment of the Subscription Price from India to the Company's bank account in Guernsey which requires the approval of the Reserve Bank of India ("RBI"), with the flow of funds happening following that approval. As announced on 29 March 2019, in order to ensure that there is no doubt about Hunch's commitment to the project, Hunch transferred £8.3 million to an Escrow Account controlled by the Company's wholly owned subsidiary, pending approval from the RBI. This process is expected to conclude shortly and further announcements will be made in due course.
As at 31 December 2018, MPL and its subsidiaries (the "Group") had cash resources of £13.1 million (with a further £8.3 million held in Escrow) and £20.5 million of undrawn banking facilities. The Group continues to be in compliance with the terms of its banking facilities, and the Company continues to review its future debt refinancing options.
The Company was pleased that the impairment review performed indicated that the Value in Use of the port, once completed, has been calculated as being higher than the final expected cost of the completed port.
Management are confident that they will be able to optimise MPL's capital structure in the next 12 months, including securing access to debt capital on better terms. The Company believes that it will achieve this based on the majority of construction risks having been eliminated and regulatory risks having been successfully dealt with. In addition, the Group has signed contracts with end users and a healthy pipeline of customers that have signalled to move from Memorandum of Understanding ("MoU") to documentation stage.
Shareholder engagement
This year's AGM will be held in Guernsey on Thursday, 11 July 2019.
Andrew Henderson
CFO
Mercantile Ports & Logistics Limited,
10 June, 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2018
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Year ended |
Year ended |
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31 Dec 18 |
31 Dec 17 |
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Notes |
£000 |
£000 |
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CONTINUING OPERATIONS |
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Revenue |
|
- |
- |
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|
|
|
|
|
|
|
- |
- |
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Administrative Expenses |
5 |
(3,296) |
(3,416) |
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|
|
|
|
|
OPERATING LOSS |
|
(3,296) |
(3,416) |
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Finance Income |
6 |
13 |
11 |
|
Finance Cost |
|
- |
- |
|
|
|
|
|
|
NET FINANCING INCOME |
|
13 |
11 |
|
|
|
|
|
|
LOSS BEFORE TAX |
|
(3,283) |
(3,405) |
|
Tax expense for the year |
7 |
- |
- |
|
|
|
|
|
|
LOSS FOR THE YEAR |
|
(3,283) |
(3,405) |
|
|
|
|
|
|
Loss for the year attributable to: |
|
|
|
|
Non-controlling interest |
|
(5) |
(1) |
|
Owners of the parent |
|
(3,278) |
(3,404) |
|
|
|
|
|
|
LOSS FOR THE YEAR |
|
(3,283) |
(3,405) |
|
|
|
|
|
|
Other Comprehensive Income/(expense): |
|
|
|
|
Items that will not be reclassified subsequently to profit or (loss) |
|
|
|
|
Re-measurement of net defined benefit liability |
24 |
4 |
- |
|
Items that will be reclassified subsequently to profit or (loss) |
|
|
|
|
Exchange differences on translating foreign operations |
|
(2,218) |
(2,785) |
|
|
|
|
|
|
Other comprehensive expense for the year |
|
(2,214) |
(2,785) |
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|
|
|
|
|
Total comprehensive expense for the year |
|
(5,497) |
(6,190) |
|
|
|
|
|
|
Total comprehensive expense for the year attributable to: |
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|
|
|
Non-controlling interest |
|
(5) |
(1) |
|
Owners of the parent |
|
(5,492) |
(6,189) |
|
|
|
|
|
|
|
|
(5,497) |
(6,190) |
|
|
|
|
|
|
Earnings per share (consolidated): |
|
|
|
|
Basic & Diluted, for the year attributable to ordinary equity holders |
9 |
(0.006p) |
(0.008p) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
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|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
Notes |
£000 |
£000 |
|
Assets |
|
|
|
|
Property, plant and equipment |
10 |
131,257 |
123,985 |
|
|
|
|
|
|
Total non-current assets |
|
131,257 |
123,985 |
|
|
|
|
|
|
Trade and other receivables |
11 |
26,169 |
15,315 |
|
Cash and cash equivalents |
12 |
13,113 |
5,423 |
|
Total current assets |
|
39,282 |
20,738 |
|
|
|
|
|
|
Total assets |
|
170,539 |
144,723 |
|
|
|
|
|
|
Equity |
|
|
|
|
Stated Capital |
14 |
134,627 |
106,763 |
|
Retained earnings |
14 |
(3,772) |
(498) |
|
Translation Reserve |
14 |
(14,958) |
(12,740) |
|
|
|
|
|
|
Equity attributable to owners of parent |
|
115,897 |
93,525 |
|
|
|
|
|
|
Non-controlling Interest |
|
11 |
16 |
|
|
|
|
|
|
Total equity |
|
115,908 |
93,541 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Non-current |
|
|
|
|
Employee benefit obligations |
15 |
3 |
- |
|
Borrowings |
16 |
33,831 |
34,934 |
|
|
|
|
|
|
Non-current liabilities |
|
33,834 |
34,934 |
|
|
|
|
|
|
Current |
|
|
|
|
Employee benefit obligations |
15 |
58 |
36 |
|
Borrowings |
16 |
59 |
23 |
|
Current tax liabilities |
17 |
7,341 |
7,417 |
|
Trade and other payables |
18 |
13,339 |
8,773 |
|
|
|
|
|
|
Current liabilities |
|
20,797 |
16,249 |
|
|
|
|
|
|
Total liabilities |
|
54,631 |
51,183 |
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
170,539 |
144,723 |
|
|
|
|
|
The consolidated financial statements have been approved and authorized for issue by the Board on 10 June, 2019.
Nikhil Gandhi
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
|
|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
Notes |
£000 |
£000 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
Loss before tax |
|
(3,283) |
(3,405) |
|
Non cash flow adjustments |
20 |
59 |
(1,559) |
|
|
|
|
|
|
Operating (loss)/profit before working capital changes |
|
(3,224) |
(4,964) |
|
Net changes in working capital |
20 |
(13) |
770 |
|
|
|
|
|
|
Net cash from operating activities |
|
(3,237) |
(4,194) |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
Purchase of property, plant and equipment |
10 |
(8,420) |
(31,752) |
|
Proceeds from sale of fixed asset |
|
5 |
- |
|
Finance income |
6 |
13 |
11 |
|
|
|
|
|
|
Net cash used in investing activities |
|
(8,402) |
(31,741) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
Issue of Share Capital |
14 |
19,552 |
3,000 |
|
Reversal of share issue cost |
|
- |
49 |
|
Proceeds from new borrowing |
|
(44) |
2,630 |
|
|
|
|
|
|
Net cash from financing activities |
|
19,508 |
5,679 |
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
7,869 |
(30,256) |
|
Cash and cash equivalents, beginning of the year |
|
5,423 |
35,697 |
|
Exchange differences on cash and cash equivalents |
|
(179) |
(18) |
|
|
|
|
|
|
Cash and cash equivalents, end of the year |
|
13,113 |
5,423 |
|
|
|
|
|
The notes pages shown below part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
|
|
|
|
|
Other |
Non- |
|
|
|
Stated |
Translation |
Retained |
Components |
controlling |
Total |
|
|
Capital |
Reserve |
Earnings |
of equity |
Interest |
Equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Balance at |
106,763 |
(12,740) |
(498) |
- |
16 |
93,541 |
|
1 January 2018 |
|
|
|
|
|
|
|
Issue of share capital |
29,820 |
- |
- |
- |
- |
29,820 |
|
Share issue cost |
(1,956) |
- |
- |
- |
- |
(1,956) |
|
|
|
|
|
|
|
|
|
Transactions with owners |
134,627 |
(12,740) |
(498) |
- |
16 |
121,405 |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
(3,278) |
- |
(5) |
(3,283) |
|
Foreign currency translation |
- |
(2,218) |
- |
- |
- |
(2,218) |
|
differences for foreign |
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
|
Re-measurement of net |
- |
- |
- |
4 |
- |
4 |
|
defined benefit liability |
|
|
|
|
|
|
|
Re-measurement of net |
- |
- |
4 |
(4) |
- |
- |
|
defined benefit liability |
|
|
|
|
|
|
|
transfer to retained earning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive |
- |
(2,128) |
(3,274) |
- |
(5) |
(5,497) |
|
income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
134,627 |
(14,958) |
(3,772) |
- |
11 |
115,908 |
|
31 December 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
103,714 |
(9,955) |
2,905 |
- |
17 |
96,681 |
|
1 January 2017 |
|
|
|
|
|
|
|
Issue of share capital |
3,049 |
- |
- |
- |
- |
3,049 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
106,763 |
(9,955) |
2,905 |
- |
17 |
99,730 |
|
|
|
|
|
|
|
|
|
Loss for the year |
- |
- |
(3,404) |
- |
(1) |
(3,424) |
|
Foreign currency translation |
- |
(2,785) |
- |
- |
- |
(2,785) |
|
differences for foreign |
|
|
|
|
|
|
|
operations |
|
|
|
|
|
|
|
Total comprehensive |
- |
(2,785) |
(3,404) |
- |
(1) |
(6,209) |
|
income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
106,763 |
(12,740) |
(498) |
- |
16 |
93,541 |
|
31 December 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Mercantile Ports & Logistics Limited formerly known as SKIL 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 Martello Court, Admiral Park, St. Peter Port, Guernsey GY1 3HB. 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 comprises 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 2018, and are presented in UK Sterling (£).
The principal activities of the Group are to develop, own and operate a port and logistics facilities. As of 31 December 2018, the Group had 57 (Fifty seven) (2017: 51 (Fifty one) 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") as adopted by the European Union and also to comply with The Companies (Guernsey) Law, 2008
Going Concern
The financial statements have been prepared on a going concern basis as the Group has adequate funds to enable it to exist as a going concern for the foreseeable future. The Group has continued the construction work at site and the Directors believe that they will have sufficient equity, sanctioned credit facilities from lenders and headroom in the capital structure for the construction of the Facility. The assumptions are based on the port becoming operational within the conceivable future and using revenue generated to help fund the future costs.
As part of the review the Directors have performed sensitivity analysis flexing a number of key variables, including the exact date and speed of on boarding new customers, one off associated costs as the port gears up and becomes operational and the effects of final Capex spending. The Directors have also considered covenant compliance for the bank loan to identify any forecast breaches of the financial ratio covenants under various scenarios.
The review has been greatly assisted by the £29.8m equity fundraise in November 2018. This gives the Group the financial flexibility to deliver the completed port and build up operational income to part finance working capital requirements.
The Group closely monitors and manages its liquidity risk in assessing the Group's going concern status. The Directors have taken account of the financial position of the Group, anticipated future utilisation of available bank facilities, its capital investment plans and forecast of gross operating margins as and when the operations commence, stress testing as explained above. Based on the above, the Board of Directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
(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 2018. Subsidiaries are all entities over which the Company has the power to control the financial and operating policies. The Company obtains and exercises control through holding more than half of the voting rights. The financial statements of the subsidiaries are prepared for the same period as the Company using consistent accounting policies. The fiscal year of (Karanja Terminal & Logistics Private Limited KTPL ends on March 31 and its accounts are adjusted for the same period as the Company for consolidation.
Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Non-controlling interests
Non-controlling interests, 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 interests.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
(c) List of subsidiaries
Details of the Group's subsidiaries which are consolidated into the Company's financial statements are as follows:
|
Subsidiary |
Immediate Parent |
Country of |
% Voting |
% Economic |
|
|
|
Incorporation |
Rights |
Interest |
|
Karanja Terminal & Logistics |
Mercantile Ports & Logistics Limited |
Cyprus |
100.00 |
100.00 |
|
(Cyprus) Ltd |
|
|
|
|
|
|
|
|
|
|
|
Karanja Terminal & Logistics Private |
Karanja Terminal & Logistics |
India |
99.75 |
99.75 |
|
Limited |
(Cyprus) Ltd |
|
|
|
|
|
|
|
|
|
|
*Mercantile Ports (Netherlands) BV |
Mercantile Ports & Logistics Limited |
Netherlands |
100.00 |
100.00 |
|
|
|
|
|
|
* Mercantile Ports (Netherlands) BV was incorporated on 19th April 2017, in Netherlands jurisdiction.
(d) Foreign currency translation
The consolidated financial statements are presented in UK Sterling (£), 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 Mercantile Ports (Netherlands) BV - Euro
Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates 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 is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made.
Interest income:
Interest income is reported on an accruals basis using the effective interest method.
The Group is in the process of constructing its initial project, the creation of a modern and efficient port and logistics Facility in India. The Group currently does not have any material revenue from operations of its core business activity.
(f) Borrowing costs
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 in finance costs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
(g) Employee benefits
i) Defined contribution plans (Provident Fund)
In accordance with Indian Law, eligible employees receive benefits from Provident Fund, which is a defined contribution plan. Both the employee and employer make monthly contributions to the plan, which is administrated by the government authorities, each equal to the specific percentage of employee's basic salary. The Group has no further obligation under the plan beyond its monthly contributions. Obligation for contributions to the plan is recognised as an employee benefit expense in the Consolidated Statement of Comprehensive Income when incurred.
ii) Defined benefit plans (Gratuity)
In accordance with applicable Indian Law, the Group provides for gratuity, a defined benefit retirement plan (the Gratuity Plan) covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, and amount based on respective last drawn salary and the years of employment with the Group. The Group's net obligation in respect of the Gratuity Plan is calculated by estimating the amount of future benefits that the employees have earned in return of 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 terms 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 remeasurements 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
Finance leases
The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments.
A corresponding amount is recognised as a finance lease liability. The corresponding finance lease liability is reduced by lease payments net of finance charges. The interest element of lease payments represents a constant proportion of the outstanding capital balance and is charged to profit or loss, as finance costs over the period of the lease.
Operating leases
All leases other than finance leases explained above are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.
(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 enacted or substantively enacted by the end of the reporting period.
Deferred tax
Income taxes are accounted for 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Deferred tax assets are recognised to the extent that management believe that these assets are more probable than not to be realized. In making such a determination, we consider 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 management determine that the company would be able to realize its deferred tax assets in the future in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
(j) Financial assets
The Group has adopted IFRS 9 from 1st January 2018 and Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets categorised as FVOCI.
The classification is determined by both:
• the entity's business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments as well as listed bonds that were previously classified as held-to-maturity under IAS 39.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. This replaces IAS 39's 'incurred loss model'. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
(k) Financial liabilities
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely the same under IFRS 9 compared to IAS 39, the Group's financial liabilities were not impacted by the adoption of IFRS 9. However, for completeness, the accounting policy is disclosed below.
The Group's financial liabilities include borrowings, trade and other payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
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 |
|
Office equipment |
3-5 Years |
|
Computers |
2-3 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 and 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.
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 categorised as loans and receivables, measured initially at fair value and subsequently at amortised cost using an effective interest rate method, less an allowance for impairment. An allowance for impairment is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
(o) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits that are readily convertible 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 adopted during the year
During the calendar year the Company has adopted IFRS 9 "Financial Instrument "and IFRS 15 "Revenue recognition". There is no material impact on the group financial as a result of the above standards.
(r) Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the group
A number of new standards, amendments to standards and interpretations are not effective for annual periods beginning 1 January 2018, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt this standard early.
IFRS 16 Leases (effective from 1 January 2019)
IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease, SIC-15 Operating lease incentives and SIC-27 Evaluating the substance of transaction involving the legal form of lease.
The new standard requires the lessee to recognise the operating lease commitment on the balance sheet. The Group, as a lessee, has substantial operating leases and commitments as disclosed in note 22. The standard would require future lease commitments to be recognised as a liability, with a corresponding right of use asset. This will impact the EBITDA and debt to equity ratios of the Group. In addition, depending on the stage of lease, there would be a different pattern of expense recognition on leases. Currently, lease expenses are recognised in cost of sales, however, in future the lease expense would be an amortisation charge and finance expense.
The Group is in the process of collating its leases and computing the impact.
3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The following are significant management judgments in applying the accounting policies of the Group that have the most significant effect on the financial statements.
Recognition of income tax liabilities
In light of a recent court judgement, there is a possibility that the Group will not be expected to pay income tax in India on interest income due to the availability of pre-operating losses nevertheless, Full liability has been provided for income tax based on the assumption that the interest income will be taxed in full. However, no accrual has been made for tax related interest or penalties on the non-payment of Indian income tax until we have certainty on the tax position.
Impairment Review
At the end of each reporting period, the Board is required to assess whether there is any indication that an asset may be impaired (i.e. its carrying amount may be higher than its recoverable amount). As at 31 December the carrying value of the port which is still under construction is £130.99 Million. The value in use has been calculated using the present value of the future cash flows expected to be derived from the port. As the port is still under construction this has included the costs to completion plus the anticipated revenues and expenses once the port becomes operational. The key assumptions behind the discounted cash flow as at 31 December 2018 are:
• Construction outflow to get the asset in a state to start generating income.
• Cash flow projections have been run until 2059. This is the length of the lease of the land.
• The revenue capacity is a product of the area available to store and stack containers and jetty capacity.
• Inflation 4%.
• Utilisation rate at 12% in 2019, 30% in 2020, 39% in 2021 & 45% by 2022.
• Revenue based on current comparable market rates.
• The costs are set based on margins of 40-45%, based on margin of similar ports & CFS facilities.
• Discount Rate 13.25%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
While the Company has obtained the approval to build out a further 200 Acres of Land and develop a further 1,000 meters of waterfront, the costs and future income flow associated with this second phase of construction project have not been considered in the current review. The impairment review is based on the current project, being the completion and operation of the multi-purpose site being developed over 200 acres of land with a sea frontage of 1,000 meters.
4. SEGMENTAL REPORTING
The Group has only one operating and geographic segment, being the project on hand in India and hence no separate segmental report has been presented.
5. ADMINISTRATIVE EXPENSES
|
|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
|
£000 |
£000 |
|
Employee costs |
265 |
302 |
|
|
Directors' fees |
452 |
488 |
|
|
Operating lease rentals |
327 |
302 |
|
|
Foreign exchange gains/loss |
- |
4 |
|
|
Depreciation |
71 |
113 |
|
|
Other administration costs |
2,181 |
2,207 |
|
|
|
|
|
|
|
|
|
3,296 |
3,416 |
|
|
|
|
|
|
6. |
FINANCE INCOME |
|
|
|
|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
|
£000 |
£000 |
|
Interest on bank deposits |
13 |
11 |
|
|
|
|
|
|
|
|
|
13 |
11 |
|
|
|
|
|
|
7. |
INCOME TAX |
|
|
|
|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
|
£000 |
£000 |
|
Loss Before Tax |
(3,263) |
(3,405) |
|
|
Applicable tax rate in India* |
30.90% |
30.90% |
|
|
|
|
|
|
|
Expected tax credit |
(1,008) |
(1,052) |
|
|
Adjustment for non-deductible losses of MPL & Cyprus entity against income |
412 |
311 |
|
|
from India |
|
|
|
|
Adjustment for non-deductible expenses |
596 |
741 |
|
|
|
|
|
|
|
Actual tax expense |
- |
- |
|
|
|
|
|
|
*Considering that the Group's operations are presently based in India, the effective tax rate of the Group of 30.90% (prior year 30.90%) 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.
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.
In Netherland, the tax rate for companies is 20% with effect from 1 January 2018. There is no tax expense in Netherland.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
8. 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 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Audit Fees |
|
|
|
Interim |
9 |
15 |
|
Annual |
78 |
78 |
|
Site Visit Fees |
9 |
9 |
|
|
|
|
|
|
95 |
102 |
|
|
|
|
A fee of £56,650 was debited to Statement of Comprehensive Income for financial advisory services performed by Grant Thornton UK LLP during the year (2017: £Nil). The statutory audits of Karanja Terminal & Logistics Private Limited and Karanja Terminal & Logistics (Cyprus) Limited are conducted by other auditors, fees paid for these audits is £6,875 (2017: £3,000). Audit fees related to prior year overruns during the year amount to £58,436 (2017: £29,000).
9. EARNINGS PER SHARE
Both basic and diluted earnings per share for the year ended 31 December 2018 have been calculated using the loss attributable to equity holders of the Group of £3.3 million (prior year loss of £3.4 million).
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
Loss attributable to equity holders of the parent |
£(3,278,000) |
£(3,404,000) |
|
Weighted average number of shares used in basic and diluted earnings per share |
516,141,290 |
412,620,439 |
|
EARNINGS PER SHARE |
|
|
|
Basic and Diluted earnings per share |
(0.006p) |
(0.008p) |
|
|
|
|
10. PROPERTY, PLANT AND EQUIPMENT
Details of the Group's property, plant and equipment and their carrying amounts are as follows:
|
|
|
Office |
|
|
Capital Work In |
|
|
|
Computers |
Equipment |
Furniture |
Vehicles |
Progress |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Gross carrying amount |
|
|
|
|
|
|
|
Balance 1 Jan 2018 |
40 |
58 |
35 |
510 |
123,647 |
124,290 |
|
Net Exchange Difference |
(1) |
(2) |
(1) |
(15) |
(3,616) |
(3,635) |
|
Additions |
1 |
2 |
- |
11 |
10,958 |
10,972 |
|
Disposals |
- |
- |
- |
(32) |
- |
(32) |
|
|
|
|
|
|
|
|
|
Balance 31 Dec 2018 |
40 |
58 |
34 |
474 |
130,989 |
131,595 |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
Balance 1 Jan 2018 |
(30) |
(24) |
(16) |
(235) |
- |
(305) |
|
Net Exchange Difference |
1 |
1 |
- |
7 |
- |
9 |
|
Charge for the year |
(6) |
(9) |
(3) |
(53) |
- |
(71) |
|
Disposals |
- |
- |
- |
29 |
- |
29 |
|
|
|
|
|
|
|
|
|
Balance 31 Dec 2018 |
(35) |
(32) |
(19) |
(252) |
- |
(338) |
|
|
|
|
|
|
|
|
|
Carrying amount 31 Dec 2018 |
5 |
26 |
15 |
222 |
130,989 |
131,257 |
|
|
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
|
|
|
Office |
|
|
Capital Work In |
|
|
|
Computers |
Equipment |
Furniture |
Vehicles |
Progress |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Gross carrying amount |
|
|
|
|
|
|
|
Balance 1 Jan 2017 |
33 |
36 |
25 |
279 |
94,936 |
95,309 |
|
Net Exchange Difference |
(1) |
(1) |
(1) |
(6) |
(2,762) |
(2,771) |
|
Additions |
8 |
23 |
11 |
237 |
31,473 |
31,752 |
|
|
|
|
|
|
|
|
|
Balance 31 Dec 2017 |
40 |
58 |
35 |
510 |
123,647 |
124,290 |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
Balance 1 Jan 2017 |
(23) |
(18) |
(12) |
(145) |
- |
(198) |
|
Net Exchange Difference |
1 |
1 |
1 |
3 |
- |
6 |
|
Charge for the year |
(8) |
(7) |
(5) |
(93) |
- |
(113) |
|
|
|
|
|
|
|
|
|
Balance 31 Dec 2017 |
(30) |
(24) |
(16) |
(235) |
- |
(305) |
|
|
|
|
|
|
|
|
|
Carrying amount 31 Dec 2017 |
10 |
34 |
19 |
275 |
123,647 |
123,985 |
|
|
|
|
|
|
|
|
The net exchange difference on the Group's property, plant and equipment's carrying amount is a loss of £3.64 million (prior year gain of £2.77 million). The net exchange difference on the Group's property, plant and equipment carrying amount is on the account of the foreign exchange movement.
a) Net Book Value of assets held under Finance Lease
KTLP's vehicles are held under finance lease arrangements. The Net Book Value of assets held under finance lease arrangements are as follows:
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Vehicles |
222 |
275 |
|
|
|
|
|
|
222 |
275 |
|
|
|
|
The Port Facility being developed in India has been hypothecated by the Indian subsidiary as security for the bank borrowings (borrowing limit sanctioned INR 480 crore (£54.21 million) (2017 INR 480 crore (£55.84 million)) for part financing the build out of the Facility.
The borrowing costs in respect of the bank borrowing for financing the build out of Facility are capitalised under Capital Work in Progress. During the year the Group has capitalised borrowing cost of £4.58 million (prior year £4.58 million).
The Indian subsidiary has estimated the total project cost of INR1,404 crore (£158.56 million) towards construction of the port Facility. Out of the aforesaid project cost, the contract signed with the major contractor is INR1,048 crores (£118.35 million). As of 31 December 2018, the contractual amount (net of advances) of INR 104.13 crores (£11.76 million) is still payable. There were no other material contractual commitments.
Karanja Terminal & Logistics Private Limited (KTPL), the Indian subsidiary has received sanction of a Rupee term loan of INR 480 crore (£54.21 million) for part financing the port Facility. The Rupee term loan has been sanctioned by four Indian public sector banks and the loan agreement was executed on 28 February 2014. As at 29 September 2017 the agreement was amended extending the tenure of the loan for 13 years and 6 months with repayment beginning at the end of June 2020.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
11. TRADE AND OTHER RECEIVABLES
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Deposits |
3,699 |
2,227 |
|
Advances |
14,082 |
12,999 |
|
Debtors |
|
|
|
- Related Party |
72 |
72 |
|
- Prepayment |
26 |
17 |
|
- Others |
8,290 |
- |
|
|
|
|
|
|
26,169 |
15,315 |
|
|
|
|
Advances include payment to EPC contractor of £11.70 million (prior year £12.5 million) towards mobilisation advances and quarry development. These advances will be recovered as a deduction from the invoices being raised by the contractor over the contract period.
12. CASH AND CASH EQUIVALENTS
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Cash at bank and in hand |
13,101 |
5,081 |
|
Deposits |
12 |
342 |
|
|
|
|
|
|
13,113 |
5,423 |
|
|
|
|
Cash at bank earns interest at floating rates based on bank deposit rates. The fair value of cash and short-term deposits is £13.11million (prior year £5.42 million).
13. 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. Risk management is carried out by the Board of Directors.
(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 (£). The functional currency of its subsidiary Karanja Terminal & Logistics Private Limited (KTLPL) is INR and functional currency of Karanja Terminal & Logistics (Cyprus) Ltd and Mercantile Ports (Netherlands) BV is Euro.
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 88.5488 for balance sheet items
and for profit and loss item GBP 1: INR 90.9678
This balance is cumulatively a £14.96m loss to equity (2017: £12.74m loss). This is mainly due to a movement from approximately 1:70 to 1:100 between 2010 to 2013 and the translation reserve reaching a loss of £21.6m at 31 December 2013. This resulted in a significant loss to the GBP value of the Indian entity net assets. The closing rate at 31 December 2018 was 1:88, hence the loss in the reserve is not as significant as in 2013-15. With the majority of funding now in India this risk is further mitigated. During 2018 the average and year end spot rate used for INR to GBP were 90.97 and 88.55 respectively (2017: 90.91 and 83.46).
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 of INR 8.43 million (£0.095 million) as on reporting date (prior year INR 94.87 million (£1.10 million)). In
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
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 2018 |
31 Dec 2017 |
|
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 are denominated:
|
Functional Currency (£) |
£ (depreciation by 10%) |
£ (appreciation by 10%) |
|
|
£000 |
£000 |
|
31 December 2018 |
10.58 |
(8.66) |
|
31 December 2017 |
122.63 |
(100.33) |
|
|
|
|
If the functional currency GBP had weakened with respect to foreign currency (INR) by the percentages mentioned above, for year ended 31 December 2018 then the effect will be change in profit and equity for the year by £0.0106 million (prior period £0.124 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.
KTPL has successfully tied-up a rupee term loan of INR 480 crore (£54.21 million) for part financing the build out of its Facility. The Group has commenced the drawdown of its sanctioned bank borrowing as of the reporting date. The rate of interest on the bank borrowing is a floating rate linked to the bank base rate with an additional spread of 375 basis points (2017: 375 bp). The present composite rate of interest is 13.20% (2017: 13.20%).
The base rate set by the bank may be changed periodically as per the discretion of the bank in line with Reserve Bank of India (RBI) guidelines. Based on the current economic outlook and RBI Guidance, management expects the Indian economy to enter a lower interest rate regime as moderating inflation will allow the RBI and thus the banks to lower its base rate in the coming quarters.
Interest rate sensitivity
At 31 December 2018, 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% (2017: +/- 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.
|
|
Profit for the Year |
|
Equity, net of tax |
|
|
|
£000 |
|
£000 |
|
|
Year |
+1% |
-1% |
+1% |
-1% |
|
31 December 2028 |
- |
- |
- |
- |
|
31 December 2027 |
(2) |
2 |
1 |
1 |
|
31 December 2026 |
(48) |
48 |
(31) |
31 |
|
31 December 2025 |
(116) |
116 |
(75) |
75 |
|
31 December 2024 |
(185) |
185 |
(120) |
120 |
|
31 December 2023 |
(256) |
256 |
(166) |
166 |
|
31 December 2022 |
(323) |
323 |
(210) |
210 |
|
31 December 2021 |
(377) |
377 |
(245) |
245 |
|
31 December 2020 |
(418) |
418 |
(272) |
272 |
|
31 December 2019 |
(215) |
215 |
(140) |
140 |
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
(b) Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group's maximum exposure (£22.47 million) to credit risk is limited to the carrying amount of financial assets recognised at the reporting date. The Group's policy is to deal only with creditworthy counterparties. The Group has no significant concentrations of credit risk.
The Group does not concentrate any of its deposits in one bank or a non-banking finance company (NBFC). This is seen as being prudent. Credit risk is managed by the management having conducted its own due diligence. The balances held with NBFC's and banks are on a short-term basis. Management reviews quarterly NAV information sent by NBFC's and monitors bank counter-party risk on an on-going basis.
(c) Liquidity risk
Liquidity risk is the risk that the Group might be unable to meet its financial obligations. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities KTLPL has tied-up rupee term loan of INR 480 crore (£54.21 million) and c.£20M as at December 2018 of cash reserves which can be used for financing the build out of its Facility.
The Group's objective is to maintain cash and demand deposits to meet its liquidity requirements for 30-day periods at a minimum. This objective was met for the reporting periods. Funding for build out of the port Facility is secured by sufficient equity, sanctioned credit facilities from lenders and the ability to raise additional funds due to headroom in the capital structure.
As at 29 September 2017 the agreement was amended extending the tenure of the loan for 13 years and 6 months with repayment beginning at the end of June 2020 to ensure additional headroom.
The Group manages its liquidity needs by monitoring scheduled contractual payments for build out of the port Facility as well as forecast cash inflows and outflows due in day-to-day business. Liquidity needs are monitored and reviewed by the management on a regular basis. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.
As at 31 December 2018, the Group's non-derivative financial liabilities have contractual maturities (and interest payments) as summarized below:
|
|
Principal payments |
|
Interest payments |
|
|
Payment falling due |
INR in Crore |
£000 |
INR in Crore |
£000 |
|
Within 1 year |
- |
- |
50.16 |
5,514 |
|
1 to 5 years |
185.25 |
20,921 |
163.68 |
17,993 |
|
After 5 years |
194.75 |
21,994 |
44.23 |
4,863 |
|
|
|
|
|
|
|
Total |
380.00 |
42,914 |
258.07 |
28,370 |
|
|
|
|
|
|
The present composite rate of interest of 13.20% and closing exchange rate has been considered for the above analysis. Principal and interest payments are after considering future drawdowns of term loans.
In addition, the Group's liquidity management policy involves considering the level of liquid assets necessary to meet the funding requirement; monitoring balance sheet liquidity ratio against internal requirements and maintaining debt financing plans. As a part of monitoring balance sheet liquidity ratio, management monitors the debt to equity ratio and has specified optimal level for debt to equity ratio of 1:1.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
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 |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
Note |
£000 |
£000 |
|
Financial Assets |
|
|
|
|
Cash and Cash Equivalents |
12 |
13,113 |
5,423 |
|
Loan and receivables |
11 |
10,743 |
15,315 |
|
|
|
|
|
|
|
|
23,856 |
20,738 |
|
|
|
|
|
|
Financial Liability |
|
|
|
|
Borrowings |
16 |
33,890 |
34,957 |
|
Trade and other payables |
18 |
13,340 |
8,773 |
|
Trade and other payables |
15 |
61 |
8,36 |
|
|
|
|
|
|
|
|
47,291 |
43,766 |
|
|
|
|
|
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.
14. EQUITY
14.1 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:
|
|
Year ended |
|
Year ended |
|
|
|
31 December 18 |
|
31 December 17 |
|
|
Particulars |
No of shares |
£000 |
No of shares |
£000 |
|
Shares issued and fully paid: |
|
|
|
|
|
Beginning of the year |
414,017,699 |
106,763 |
384,017,699 |
103,714 |
|
Addition in the year |
1,491,004,424 |
27,864 |
30,000,000 |
3,049 |
|
(net of share issue cost) |
|
|
|
|
|
|
|
|
|
|
|
Closing number of shares |
1,905,022,123 |
134,627 |
414,017,699 |
106,763 |
|
|
|
|
|
|
The stated capital amounts to £134.63 million (prior year £106.76 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 1,491 million equity shares to various institutional and private investors, by way of a placing, open offer and subscription.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
14.2 Other Components of Equity
Retained Earnings
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Opening Balance |
(518) |
2,905 |
|
Addition during the year |
(3,258) |
(3,423) |
|
Re-measurement of net defined benefit liability |
4 |
- |
|
|
|
|
|
Closing balance |
(3,772) |
(518) |
|
|
|
|
Retained earnings of £(3.77) million (prior year £0.50 million) include all current year retained profits.
Translation Reserve
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Opening Balance |
(12,740) |
(9,955) |
|
Addition during the year |
(2,218) |
(2,785) |
|
|
|
|
|
Closing balance |
(14,958) |
(12,740) |
|
|
|
|
The translation reserve of £14.96 million (prior year £12.74 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.
15. EMPLOYEE BENEFIT OBLIGATIONS
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Non-Current |
|
|
|
Pensions - defined benefit plans |
3 |
- |
|
|
|
|
|
|
3 |
- |
|
|
|
|
|
Current |
|
|
|
Wages, salaries |
36 |
36 |
|
Pensions - defined benefit plans |
22 |
- |
|
|
|
|
|
|
58 |
36 |
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
16. BORROWINGS
Borrowings consist of the following:
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Current |
|
|
|
Vehicle loan |
59 |
23 |
|
|
|
|
|
|
59 |
23 |
|
|
|
|
|
Non-Current |
|
|
|
Bank loan |
33,705 |
34,720 |
|
Vehicle loan |
126 |
214 |
|
|
|
|
|
|
33,831 |
34,934 |
|
|
|
|
Borrowing
Karanja Terminal & Logistics Private Limited (KTPL), the Indian subsidiary has tied-up a rupee term loan of INR 480 crore (£54.21 million). The Rupee term loan has been sanctioned by four Indian public sector banks and the loan agreement was executed on 28 February 2014. On 29 September 2017 the terms of sanction was amended, extending the tenure of the loan for 13 years and 6 months with repayment commencing from the end of June 2020.
The repayment schedule is as follows:
|
|
Repayment amount |
|
|
Payment falling due |
INR in Crore |
£000 |
|
Within 1 year |
- |
- |
|
1 to 5 years |
185.25 |
20,920 |
|
After 5 years |
194.75 |
21,994 |
|
|
|
|
|
Total |
380.00 |
42,914 |
|
|
|
|
The rate of interest will be a floating rate linked to the Canara bank base rate (9.40%) (2017: 9:40%) with an additional spread of 375 basis points. The present composite rate of interest is 13.20%. The borrowings are secured by the hypothecation of the port Facility and pledge of its shares. The carrying amount of the bank borrowing is considered to be a reasonable approximation of the fair value.
KTLPL has utilised the Rupee term loan facility of INR 298.45 crore (£33.71 million) (prior year INR 298.45 crore (£34.72 million)) as of the reporting date.
17. CURRENT TAX LIABILITIES
Current tax liabilities consist of the following:
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Duties & taxes |
192 |
52 |
|
Provision for Income Tax |
7,149 |
7,365 |
|
|
|
|
|
Current tax liabilities |
7,341 |
7,417 |
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
The carrying amounts and the movements in the Provision for Income Tax account are as follows:
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Carrying amount 1 January |
7,365 |
7,585 |
|
Exchange difference |
(216) |
(220) |
|
|
|
|
|
Carrying amount 31 December |
7,149 |
7,365 |
|
|
|
|
The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final 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 on the basis of income tax assessment.
18. TRADE AND OTHER PAYABLES
Trade and other payables consist of the following:
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Current |
|
|
|
Sundry creditors* |
12,692 |
8,381 |
|
Interest payable |
647 |
392 |
|
|
|
|
|
|
13,339 |
8,773 |
|
|
|
|
*Sundry creditors are purely in nature of material and services availed for port construction.
19. RELATED PARTY TRANSACTIONS
The consolidated financial statements include the financial statements of the Company and the subsidiaries listed in the following table:
|
|
|
|||
|
HELD BY The Company (MPL): |
|
|
|
|
|
Karanja Terminal & Logistics (Cyprus) Ltd |
Cyprus |
Holding Company |
100% |
Ordinary |
|
Mercantile Port (Netherlands) BV |
Netherland |
Subsidiary Company of MPL |
100% |
Ordinary |
|
HELD BY Karanja Terminal & Logistics |
|
|
|
|
|
(Cyprus) Ltd: |
|
|
|
|
|
Karanja Terminal & Logistics Pvt. Ltd |
India |
Operating Company - |
99.75% |
Ordinary |
|
|
|
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 5.16% of issued share capital as at
31 December 2018 (as at 31 December 2017 - 10.32%) of Mercantile Ports & Logistics Limited. Nikhil Gandhi through SKIL Global Ports & Logistics Limited had acquired additional shares of £1.11 million, in December 2018.
• Pavan Bakhshi holds 0.61% of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.39%) of Mercantile Ports & Logistics Limited at the year end. Pavan Bakhshi had acquired additional shares of £0.20 million, in December 2018. Pavan Bakhshi resigned as a director during the year.
• Peter Jones holds 0.05% of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.05%) of Mercantile Ports & Logistics Limited at the year end. Peter Jones resigned as a director during the prior year.
• James Sutcliffe holds Nil % of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.002%) of Mercantile Ports & Logistics Limited at the year end. James Sutcliffe resigned as a director during the prior year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
• Lord Howard Flight holds 0.20% of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.30%) of Mercantile Ports & Logistics Limited at the year end. Lord Howard Flight had acquired additional shares of £0.06 million, in December 2018.
• Jay Mehta holds 0.28% of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.074%) of Mercantile Ports & Logistics Limited at the year end. Jay Mehta had acquired additional shares of £0.10 million, in December 2018.
• John Fitzgerald holds 0.03% of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.063%) of Mercantile Ports & Logistics Limited at the year end. John Fitzgerald had acquired additional shares of £0.04 million, in December 2018.
• Andrew Henderson holds 0.03% of issued share capital as on 31 December 2018 (as on 31 December 2017 - 0.015%) of Mercantile Ports & Logistics Limited at the year end. Andrew Henderson had acquired additional shares of £0.01 million, in December 2018.
• Jeremy Warner Allen holds 0.40% of issued share capital as on 31 December 2018 (as on 31 December 2017 - Nil %) of Mercantile Ports & Logistics Limited at the year end. Jeremy Warner Allen had acquired additional shares of £0.15 million, in December 2018.
• Karanpal Singh via Hunch Ventures and Investment Limited holds 21.75% of issued share capital as on 31 December 2018 (as on 31 December 2017 - Nil %) of Mercantile Ports & Logistics Limited at the year end. Karanpal Singh via Hunch Ventures and Investment Limited had acquired additional shares of £8.29 million, in December 2018. Cash amount outstanding as at December 2018 £ 8.31 million.
b) Key Managerial Personnel of the parent
Non-executive Directors
- Lord Howard Flight
- Mr. John Fitzgerald
- Jeremy Warner Allen (appointed on 7 December 2018)
- Karanpal Singh (appointed on 7 December 2018)
Executive Directors
- Mr. Nikhil Gandhi (Chairman)
- Mr. Pavan Bakhshi (Managing Director - resigned on 13 December 2018)
- Mr. Jay Mehta (Director and from 13 December 2018 appointed as Managing Director)
- Mr. Andrew Henderson
c) Key Managerial Personnel of the subsidiaries
Directors of KTLPL (India)
- Mr. Pavan Bakhshi (Resigned on 16 December 2018)
- Mr. Jay Mehta
- Mr. Jigar Shah
- Mr. Nikhil Gandhi (Chairman)
- Mr. M L Meena (Appointed on 20 December 2018)
Directors of Karanja Terminal & Logistics (Cyprus) Ltd - KTLCL (Cyprus)
- Mr. Pavan Bakhshi (resigned on 16 December 2018)
- Ms. Andria Andreou
- Ms. Olga Georgiades
- Mr. Andrew Henderson (alternate director to Pavan Bakhshi)
d) Other related party disclosure
Entities that are controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual or close family member of such individual referred above.
- SKIL Infrastructure Limited
- JPT Securities Limited
- KLG Capital Services Limited
- Grevek Investment & Finance Private Limited
- Carey Commercial (Cyprus) Limited
- Henley Trust (Cyprus) Limited
- Athos Hq Group Bus. Ser. Cy Ltd
- Henderson Accounting Consultants Limited
- John Fitzgerald Limited
- KJS Concrete Private Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
e) Transaction with related parties
The following transactions took place between the Group and related parties during the year ended 31 December 2018:
|
|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
Nature of transaction |
£000 |
£000 |
|
Athos Hq Group Bus. Ser. Cy Ltd |
Administrative fees |
22 |
18 |
|
|
|
|
|
|
|
|
22 |
18 |
|
|
|
|
|
The following table provides the total amount outstanding with related parties as at year ended 31 December 2018:
Transactions with shareholder having significant influence
|
|
|
Year ended |
Year ended |
|
|
|
31 Dec 18 |
31 Dec 17 |
|
|
Nature of transaction |
£000 |
£000 |
|
SKIL Global Ports & Logistics Limited |
|
|
|
|
Debtors |
Advances |
72 |
72 |
|
Hunch Ventures and Investment Limited |
|
|
|
|
Debtors |
Share subscription |
8,287 |
- |
|
KJS Concrete Pvt Ltd |
|
|
|
|
Debtor |
Repayment of Advance |
770 |
|
|
|
|
|
|
|
|
|
9,129 |
72 |
|
|
|
|
|
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 to be Key Managerial Personnel of the Group include:
|
Year ended |
Year ended |
|
31 Dec 18 |
31 Dec 17 |
|
£000 |
£000 |
|
Non Executive Directors' fees |
|
|
|
|
- |
Peter Jones |
- |
45 |
|
- |
James Sutcliffe |
- |
40 |
|
- |
Jeremy Warner Allen |
3 |
- |
|
- |
Lord Flight |
40 |
40 |
|
- |
John Fitzgerald |
45 |
17 |
|
|
|
|
|
|
|
|
88 |
142 |
|
|
|
|
|
|
Executive Directors' fees |
|
|
|
|
- Pavan Bakhshi |
175 |
175 |
|
|
- Jay Mehta |
99 |
107 |
|
|
- Andrew Henderson |
90 |
64 |
|
|
|
|
|
|
|
|
|
364 |
346 |
|
|
|
|
|
|
Total compensation paid to Key Managerial Personnel |
452 |
488 |
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Compensation to Key Managerial Personnel of the subsidiaries
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Directors' fees |
|
|
|
KTLPL - India |
99 |
107 |
|
KTLCL - Cyprus |
3 |
3 |
|
|
|
|
|
|
102 |
110 |
|
|
|
|
Sundry Creditors
As at 31 December 2018, the Group had £2.65 million (prior year £0.11 million) as sundry creditors with related parties.
|
|
Year ended |
Year ended |
|
|
31 Dec 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Grevek Investment & Finance Pvt Ltd |
2,645 |
114 |
|
|
|
|
|
|
2,645 |
114 |
|
|
|
|
Ultimate controlling party
The Directors do not consider there to be an ultimate controlling party.
20. 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 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Non-cash flow adjustments |
|
|
|
Depreciation |
71 |
113 |
|
Finance Income |
(13) |
(11) |
|
Unrealised exchange loss |
1 |
- |
|
Decrease in Non-Controlling Interest |
- |
(1) |
|
Decrease in Current Tax Liabilities |
- |
(1,660) |
|
|
|
|
|
|
59 |
(1,559) |
|
|
|
|
|
Increase/(Decrease in trade payables |
3,714 |
(3,094) |
|
Increase in other payables |
- |
100 |
|
Increase/Decrease in trade & other receivables |
(3,727) |
3,764 |
|
|
|
|
|
|
(13) |
770 |
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
21. 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 on Financial Position and in Note 15.
22. FINANCE LEASE
KTLPLs vehicles are held under finance lease arrangements. As of 31 December 2018, the net carrying amount of the vehicles is £0.22 million (2016: £0.28 million).
Finance lease liabilities are secured by the related assets held under finance leases. Future minimum finance lease payments at 31 December were as follows:
|
|
Minimum lease payments due |
|
|
|
|
|
within 1 year |
1 to 5 years |
after 5 years |
Total |
|
|
£000 |
£000 |
£000 |
£000 |
|
31 December 2018 |
|
|
|
|
|
Lease payments |
76 |
147 |
- |
223 |
|
Finance charges |
(17) |
(21) |
- |
(38) |
|
|
|
|
|
|
|
Net present values |
59 |
126 |
- |
185 |
|
|
|
|
|
|
|
31 December 2017 |
|
|
|
|
|
Lease payments |
221 |
76 |
- |
297 |
|
Finance charges |
(38) |
(23) |
- |
(61) |
|
|
|
|
|
|
|
Net present values |
183 |
53 |
- |
236 |
|
|
|
|
|
|
23. OPERATING LEASE
The Group has entered into a 50 years lease agreement with the Maharashtra Maritime Board for the development of a port and logistics Facility in India.
|
Payments falling due |
Future minimum lease payments |
Future minimum lease payments |
|
|
outstanding on 31 Dec 18 |
outstanding on 31 Dec 17 |
|
|
£000 |
£000 |
|
Within 1 year |
352 |
273 |
|
1 to 5 years |
1,154 |
989 |
|
After 5 years |
6,869 |
3,299 |
|
|
|
|
|
Total |
8,375 |
4,561 |
|
|
|
|
|
The future minimum lease payments are as follows: |
|
|
|
Payments falling due |
Future minimum lease payments |
Future minimum lease payments |
|
|
outstanding on 31 Dec 18 |
outstanding on 31 Dec 17 |
|
|
INR in Million |
INR in Million |
|
Within 1 year |
31 |
23 |
|
1 to 5 years |
102 |
85 |
|
After 5 years |
608 |
284 |
|
|
|
|
|
Total |
741 |
392 |
|
|
|
|
The annual lease rent is payable by KTLPL in INR. The exchange rate on the reporting date has been considered for deriving the GBP amount for future minimum lease payment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
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 18 |
31 Dec 17 |
|
|
£000 |
£000 |
|
Contribution to Provident Fund |
6 |
2 |
|
Contribution to ESIC |
1 |
- |
|
|
|
|
|
|
7 |
2 |
|
|
|
|
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 INR1 Million.
The following tables summaries the components of net benefit expense recognised in the Consolidated Statement of Comprehensive Income and the funded status and amounts recognised in the Consolidated Statement of Financial Position for the gratuity plan:
|
|
As at |
As at |
|
|
31 Dec 18 |
31 Dec 17 |
|
Particulars |
£000 |
£000 |
|
Statement of Comprehensive Income |
|
|
|
Net employee benefit expense recognised in the employee cost |
|
|
|
Current service cost |
6 |
19 |
|
Past service cost |
3 |
- |
|
Interest cost on defined benefit obligation |
1 |
- |
|
|
|
|
|
Total expense charged to loss for the period |
10 |
19 |
|
|
|
|
|
Amount recorded in Other Comprehensive Income (OCI) |
|
|
|
Opening amount recognised in OCI |
|
|
|
Remeasurement during the period due to: |
|
|
|
Actuarial (gain)/loss arising on account of experience changes |
(4) |
- |
|
|
|
|
|
Amount recognised in OCI |
(4) |
- |
|
|
|
|
|
|
|
|
|
Closing amount recognised in OCI |
(4) |
- |
|
|
|
|
|
Reconciliation of net liability/asset |
|
|
|
Opening defined benefit liability |
19 |
- |
|
Expense charged to profit or loss account |
10 |
19 |
|
Amount recognised in Other Comprehensive Income |
(4) |
- |
|
Benefit Paid |
- |
- |
|
|
|
|
|
Closing net defined benefit liability |
25 |
19 |
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
Movement in benefit obligation and Consolidated Statement of Financial Position A reconciliation of the benefit obligation during the inter-valuation period:
|
|
As at |
As at |
|
|
31 Dec 18 |
31 Dec 17 |
|
Particulars |
£000 |
£000 |
|
Opening defined benefit obligation |
19 |
- |
|
Current service cost |
6 |
19 |
|
Past service cost |
3 |
- |
|
Interest on defined benefit obligation |
1 |
- |
|
Re-measurement during the period due to: |
|
|
|
Actuarial (gain)/loss arising on account of experience changes |
(4) |
- |
|
Benefits Paid |
- |
- |
|
|
|
|
|
Closing defined benefit obligation liability recognised in Consolidated |
25 |
19 |
|
Statement of Financial Position |
|
|
|
|
|
|
|
|
As at |
As at |
|
|
31 Dec 18 |
31 Dec 17 |
|
Particulars |
£000 |
£000 |
|
Net liability is bifurcated as follows: |
|
|
|
Current |
3 |
- |
|
Non-current |
22 |
19 |
|
|
|
|
|
Net liability |
25 |
19 |
|
|
|
|
|
25. CONTINGENT LIABILITIES AND COMMITMENTS |
|
|
|
|
As at |
As at |
|
|
31 Dec 18 |
31 Dec 17 |
|
Particulars |
£000 |
£000 |
|
Bank guarantee issued to Maharashtra Pollution Control Board |
11 |
12 |
|
Capital Commitment not provided for |
8,544 |
15,195 |
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
26. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The changes in the Group's liabilities arising from financing activities can be classified as follows:
|
|
Long-term |
Short-term |
|
|
|
|
borrowing |
borrowing |
Leased liabilities |
Total |
|
Particulars |
£000 |
£000 |
£000 |
£000 |
|
1 January 2018 |
34,934 |
23 |
236 |
35,193 |
|
|
|
|
|
|
|
Cash-flows: |
|
|
|
|
|
- Repayment |
(29) |
(23) |
(51) |
(103) |
|
- Proceeds |
8 |
- |
- |
8 |
|
|
|
|
|
|
|
Non-cash: |
|
|
|
|
|
- Exchange difference |
(1,015) |
(1) |
- |
(1,016) |
|
- Reclassification |
(60) |
60 |
- |
- |
|
|
|
|
|
|
|
31 December 2018 |
33,830 |
59 |
185 |
34,074 |
|
|
|
|
|
|
|
1 January 2017 |
32,294 |
33 |
111 |
32,438 |
|
|
|
|
|
|
|
Cash-flows: |
|
|
|
|
|
- Repayment |
- |
(43) |
125 |
82 |
|
- Proceeds |
3,706 |
- |
- |
3,706 |
|
|
|
|
|
|
|
Non-cash: |
|
|
|
|
|
- Exchange difference |
(1,034) |
- |
- |
(1,034) |
|
- Reclassification |
(33) |
33 |
- |
- |
|
|
|
|
|
|
|
31 December 2017 |
34,934 |
23 |
236 |
35,193 |
|
|
|
|
|
|
27. EVENTS SUBSEQUENT TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATE
As at the date of signing there were no significant events to report
28. AUTHORISATION OF FINANCIAL STATEMENTS
The consolidated financial statements for the year ended 31 December 2018 were approved and authorised for issue by the Board of Directors on 10 June 2019.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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