The accompanying notes on page 48 to 96 form part of these consolidated financial statements.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024

	Notes			Year ended 31 Dec 24 £000				Year ended 31 Dec 23 £000
Assets
Property, plant and equipment			11(a)	93,543			105,355
Intangible asset			11(b)	33			63
Total non-current assets				93,576			105,418
Current tax assets			19(a)	2,879			2,114
Inventory of traded goods				323			72
Trade and other receivables			12	13,296			16,339
Investments			13	180			173
Cash and cash equivalents			14	911			2,881
Total current assets				17,589			21,579
Total assets				111,165			126,997
Liabilities
Non-current
Employee benefit obligations			17	42			35
Borrowings			18	28,461			36,399
Lease liabilities payable			20	1,206			1,457
Non-current liabilities				29,709			37,891
Current
Employee benefit obligations			17	259			276
Borrowings			18	22,037			10,672
Current tax liabilities			19(b)	17			61
Lease liabilities payable			20	590			335
Trade and other payable			20	4,048			4,131
Current liabilities				29,951			15,475
Total liabilities				56,660			53,366
Net assets				54,505			73,631
Equity
Stated capital			16	152,354			152,354
Retained earnings			16	(65,846)			(47,217)
Translation reserve			16	(31,903)			(31,444)
Equity attributable to owners of parent				54,605			73,693
Non-controlling interest				(100)			(62)
Total equity				54,505			(73,631)

 

1.  The accompanying notes on page 48 to 96 form part of these consolidated financial statements.

2.  The consolidated financial statements have been approved and authorized for issue by the Board on 27 June 2025.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2024

 

	Notes			Year ended 31 Dec 24 £000				Year ended 31 Dec 23 £000
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax				(18,667)			(21,265)
Non cash flow adjustments			22	18,664			21,548
Operating profit/(loss) before working capital changes				(3)			283
Net changes in working capital			22	1,116			(224)
Taxes paid				(765)			(6)
Net cash used in operating activities				348			53
CASH FLOW FROM INVESTING ACTIVITIES
Used in purchase of property, plant and equipment (PPE)				518			(1,651)
Sale proceeds of PPE				25			6
Finance income			7(a)	34			25
Net cash used in investing activities				577			(1,620)
CASH FLOW FROM FINANCING ACTIVITIES
From issue of additional shares				--			5,640
Fund raise cost				--			(941)
Subscription money received (from the previous fund raise)				290			797
Repayment of bank borrowing principal				--			(99)
Repayment of borrowings				(3,094)			--
Interest paid on borrowings				--			(749)
Principal repayment on lease liabilities				(54)			(737)
Interest payment on leasing liabilities principal				(31)			(9)
Net cash from financing activities				(2,890)			3,902
Net change in cash and cash equivalents				(1,965)			2,335
Cash and cash equivalents, beginning of the year				2,881			558
Exchange difference on cash and cash equivalents				(5)			(12)
Cash and cash equivalents, end of the year				911			2,881

 

The accompanying notes on page 48 to 96 form part of these consolidated financial statements.

 

	Stated Capital   £000	Translation Reserve   £000	Retained Earnings   £000	Other components of equity £000	Non-controlling interest £000	Total Equity   £000
Balance at
1 January 2024	152,354	(31,444)	(47,217)	--	(62)	73,631
Transaction with owners	152,354	(31,444)	(47,217)	--	(62)	73,631
Loss for the year	--	--	(18,630)	--	(37)	(18,667)
Foreign currency translation difference for foreign operations	--	(459)	--	--	(1)	(460)
Re-measurement of net defined benefit liability	--	--	--	1	--	1
Re-measurement of net defined benefit liability transfer to retained earnings	--	--	1	(1)	--	--
Total comprehensive income for the year	--	(459)	(18,629)	--	(38)	(19,126)
31 December 2024	152,354	(31,903)	(65,846)	--	(100)	54,505
Balance at
1 January 2023	143,851	(26,429)	(26,022)	--	(19)	91,381
Issue of share capital	9,444	--	--	--	--	9,444
Share issue cost	(941)	--	--	--	--	(941)
Transaction with owners	152,354	(26,429)	(26,022)	--	(19)	99,884
Loss for the year	--	--	(21,222)	--	(43)	(21,265)
Foreign currency translation difference for foreign operations	--	(5,015)	--	--	--	(5,105)
Re-measurement of net defined benefit liability	--	--	--	27	--	27
Re-measurement of net defined benefit liability transfer to retained earnings	--	--	27	(27)	--	--
Total comprehensive income for the year	--	(5,015)	(21,195)	--	(43)	(26,253)
Balance at
31 December 2023	152,354	(31,444)	(47,217)	--	(62)	73,631

 

The accompanying notes on page 48 to 96 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 2024, and 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 2024, the Group had 46 (Forty-six) (2023: 45 (Forty-five)) 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.

Climate Change and its impact on Karanja Port

Introduction

Climate change poses a significant threat to global sea ports, which are critical nodes in international trade and transportation. The rising sea levels, increased frequency and intensity of storms, and shifting weather patterns associated with climate change present multifaceted challenges to port operations and infrastructure.

The company has anticipated following key impacts of climate change for its operational activity:

1.  Sea Level Rise:

-      Inundation of Port Facilities: Rising sea levels may inundate low-lying port areas, causing structural damage to port infrastructure such as berth, open and covered storage yard, storm water drains and road.

 

-      Increased Flooding: Higher Sea levels exacerbate the risk of flooding, particularly during high tides and storm surges, leading to operational disruptions and increased maintenance costs. This may lead to a significant downtime for revival and smooth operation.

2.         Extreme Weather Events:

-      Storm Surges: More frequent and severe storms can cause significant damage to port infrastructure, delay shipping schedules, and increase the risk of accidents and cargo loss. In 2020, Karanja Port was impacted severely by cyclone named "Nisarga" which led to financial loss of approximately 0.7 million (₹7 Crore). Similar natural catastrophic situations can be anticipated in future with major financial implication.

 

-      High Winds and Heavy Rainfall: These conditions can disrupt loading and unloading operations, damage cargo, and pose safety risks to port employees/workers. However, this is covered in the Port insurance.

3.         Temperature Changes:

-      Thermal Expansion: Higher temperatures cause thermal expansion of sea water, contributing to sea level rise, leading to additional maintenance cost.

4.         Infrastructure Stress:

-      Wear and Tear: Increased exposure to saltwater and extreme weather conditions accelerates the wear and tear on port infrastructure leading to increase in maintenance cost and significant stress to capital cost.

 

-      Adaptation and Resilience Costs: Ports need to invest in resilient infrastructure and adaptive measures, such as raising berth levels in future and improving drainage systems.

 

Karanja Port has adapted following strategies to mitigate the above anticipated challenges:

1.         Infrastructure Upgrade:

-      Elevating Structures: Raising the height of berth, ground level of open and covered storage yard and other critical infrastructure can help mitigate the risk of flooding.  This will increase the expected lifespan on the project and ROI.

 

-      Storm Surge Drainage: Constructing storm surge drainage can protect Karanja port from water logging or flood caused due to rising sea levels and storm surges.

2.         Operational Changes:

-      Flexible Scheduling: Emergency management plan for such extreme climate changes are already in place in Karanja Port for Implementing flexible scheduling of the operational vessels to compensate the delays caused by extreme weather and can help the port to maintain operational efficiency.

 

-      Enhanced Monitoring: The operations team is already vigilant and has adopted advanced weather forecasting and sea level monitoring systems to provide early warnings and improve preparedness for extreme events.

3.   Environmental and Regulatory Measures:

-      Adopting and complying to Environmental Regulations: Karanja Port is already complying with all the relevant environmental regulations and international guidelines to ensure that ports contribute to global climate mitigation efforts.

 

-      Sustainable Practices: Karanja Port has adopted sustainable practices, such as waste management, water stewardship, efficient use of power, optimum vessel and equipment operations to reduce emissions from port operations to help mitigate the port's environmental footprint.

4.  Collaborative Efforts:

-      Stakeholder Engagement: Karanja Port promotes involvement of internal and external stakeholders for example improvement of local community by preferring engagement of local contractors and candidates for employment. Out of the total staff strength, the company has employed 34% locals at the port currently and implementing the policies in the benefit of employees.

CONCLUSION

Since Karanja Port is on the frontline of climate change impacts, facing such significant challenges requires immediate and sustained action. MPL board has been in serious discussion internally to address this concern through strategic planning, infrastructure investment, and collaborative efforts. Karanja Port, can enhance its resilience to climate change and ensure the continuity of trade and transportation. Addressing these challenges proactively will be critical in safeguarding the economic and operational stability of the port. However, the Management has secured the port with a full coverage by ensuring the asset to mitigate from all risk of uncertainties and eventualities.

Going Concern

In determining the appropriate basis of preparation of the financial statements for the year ended 31

December 2024, the Directors are required to assess whether the Group has the ability to continue in operational existence for a period of at least 12 months from the date of approval of these financial statements. Following a detailed review of the Group's financial forecasts, cash flow models and trading position, the Board has concluded that the going concern basis of accounting remains appropriate in preparing these financial statements.

The year under review has been marked by sustained global geopolitical instability, including the ongoing Russia-Ukraine conflict and heightened tensions in the Middle East involving Israel, Palestine, and Lebanon. These developments have disrupted international shipping routes and contributed to elevated freight costs, which have had a direct impact on the Group's financial results for the year ended 31 December 2024.

The Board has assessed the Group's ability to continue in operation for a period of 18 months from the date of approval of the financial statements, through to 30 June 2026. This period of assessment aligns with the Group's internal budgetary process and reflects the seasonal nature of its port operations. In addition, the Directors have also reviewed detailed cash flow forecasts for the 24-month period from 1 January 2025 to 31 December 2026, which further supports the longer-term visibility of liquidity and funding. These forecasts reflect the operational ramp-up expected at Karanja Port which will contribute meaningfully to revenue from 2025 onwards.

 As at 31 December 2024, the Group held cash balances of £0.91 million. Since March 2023, however, the Group has been unable to meet its scheduled repayments of principal and interest on its term loan. Appropriate provisions have been recognised in the financial statements in respect of the unpaid amounts. An initial restructuring proposal, agreed in principle by the Group's lenders, could not be concluded favourably. As a result, a revised One Time Settlement (OTS) was formally submitted to the Group's lending consortium which consists of 3 banks, by the Indian subsidiary on 24 March 2025. Sanction has been received from the lead bank of the lending consortium, and approval from the remaining lenders is expected by end June 2025. Until full consent is received, however, there remains significant uncertainty around the timing and success of the OTS implementation.

The Directors have modelled a base case scenario reflecting expected growth in cargo volumes arising from the ramp-up in port activity under newly signed customer contracts. In addition, the Directors have modelled a severe but plausible downside scenario, which assumes a 20%-30% reduction in forecast revenue during the going concern period, and reflects the potential for delays in execution or underperformance of anticipated contracts. Both scenarios incorporate expected cash outflows relating to the OTS settlement, trade creditor payments, and other essential operating costs.

Under the severe downside scenario, a shortfall in available cash resources is projected within the going concern period. To address this risk, the Group has secured a £15.00 million unsecured line of credit from KJS Concrete Private Limited (a Hunch Ventures group company), available until 31 December 2027. This facility is intended to mitigate potential liquidity pressures and ensure continuity of operations even under adverse conditions.

The Directors have also considered other principal risks and uncertainties affecting the business and have performed sensitivity analysis on key assumptions, including revenue growth and cost inflation. As part of this assessment, management has identified mitigating actions under its control, such as extending payment terms with vendors, deferring discretionary expenditure, and maintaining a tight focus on core operational costs.

The Directors have determined that climate change is not expected to have a significant financial impact during the going concern assessment period.

In reaching their conclusion, the Directors have considered the Group's cash flow forecasts, capital requirements, availability of committed funding facilities, and the continued support of key stakeholders including lenders and shareholders. While a material uncertainty exists in relation to the successful conclusion of the OTS proposal, the availability of the committed line of credit and the Group's ability to implement mitigating actions provide a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

Accordingly, the Directors consider it appropriate to continue to adopt the going concern basis in preparing these 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 2024. 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 Parent	Country of Incorporation	% Voting Rights	% Economic Interest
Karanja Terminal & Logistics (Cyprus) Ltd	Mercantile Ports & Logistics Limited	Cyprus	100.00	100.00
Karanja Terminal & Logistics Private Limited*	Mercantile Ports & Logistics Limited	India	8.49	8.49
Karanja Terminal & Logistics Private Limited*	Karanja Terminal & Logistics (Cyprus) Ltd	India	91.30	91.30

 

Karanja Terminal & Logistics (Cyprus) Ltd is wholly owned subsidiary of Mercantile Ports and Logistics Limited. Karanja Terminal & Logistics (Cyprus) Ltd holds 91.30% shares, Mercantile Ports & Logistics Limited holds 8.11% shares in Karanja Terminal & Logistics Private Limited and the balance 0.22% (50,000 shares out of 23,321,176) is held by various other minority shareholders.

* 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 (£), 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 i.e. trading activities which is incidental to providing port services.

Revenue is measured based on the consideration to which the group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The group recognises revenue when it transfers control of a product or service to a customer.

Performance obligations are satisfied on handing over the land and / or equipment to the customer / lessee, completion of loading/unloading, stevedoring services, providing storage facilities and shipment of goods on customers' vehicle.

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.

Contract asset - The Group's recognises contract asset i.e. right to consideration in exchange for goods or services that the Group has transferred to a customer,

Contract liability - The Group's obligation to transfer goods and services to a customer for which the Group has received consideration (or the amount is due) from the customer.

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 ton 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. Amounts are invoiced based on the estimated arrival date of the vessel provided by the customer, and revenue recognised when the service is provided.

Management determines if there are separate performance obligations from which customer are being able to benefit from, for example, barging, stevedoring or transportation.

Performance obligations are considered on a contract-by-contract basis against the requirements of IFRS 15. For each service the customer can benefit from the good or service with "resources that are readily available to the customer". The nature of the promise to the customer is considered within the context of the individual customer contract and whether the promise to transfer a combined item of overall port services, which can vary on a per customer basis.

 

Revenue from sale of traded goods

Revenue from sale of traded goods i.e. coal is recognized on transfer of control to the customers, which is generally on dispatch of goods to the customer. The delivery is handled by the customer and therefore control is deemed to have been transferred to the customer at this point and is invoiced on delivery.

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 a short-term basis to its customers.

The head lease is not a short-term lease and thus the sublease must be classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the economic useful life of the underlying asset.

As a part of its business activity, the Group sub-leases land on a short-term basis to its customers. It is concluded that the subleases are an operating lease because none of the indicators for a finance lease in IFRS 16 are present.

The lease income is recognised from the sublease 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.

Amounts are invoiced as the service provided, on either a monthly or ad hoc usage basis depending on the customer.

 

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 capitalized 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) SHARE BASED PAYMENTS

The Group has entered into an equity-settled share-based arrangement with its service provider in 2023.

All services received in exchange for the grant of any share-based payment are measured at the fair value of services received. The service provider is rewarded with share-based payments, the number of shares issued in exchange for the services received based on the fair values of services.

All share-based payments is recognised as an expense in the Statement of Comprehensive Income with a corresponding credit to Share Capital up to the nominal value of the shares issued with any excess being recorded as Share Premium.

 

h) EMPLOYEE BENEFITS

ii) 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.

 

iii) 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.

 

iv) 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.

 

i) 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.

 

As a lessor

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 the Group classifies its leases as either operating or finance leases. The Group assessed whether it transfers substantially all the risks and rewards of ownership. Those assets that do not transfer substantially all the risks and rewards are classified as operating leases. The Group has currently not entered into any lease that is classified as finance lease.

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.

 

j) 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 income tax is being 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.

 

k) 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:

·      amortized 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 FVTPL or 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 IFRS 9.

 

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 IFRS 9'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.

 

l)  FINANCIAL LIABILITIES

Classification and measurement of financial liabilities

As the accounting for financial liabilities remains largely the same under IFRS 9, 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). In the periods presented, the corporation does not have any financial liabilities categorised as FVTPL or FVOCI.

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.

 

m) PROPERTY, PLANT AND EQUIPMENT

MPL's balance sheet contains significant property, plant and equipment, and right-of-use assets primarily comprising of assets relating to port, office, plant and machinery, vehicles and other movable assets. Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

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.

 The Indian subsidiary has constructed and developed the port which is now fully operational. The basic infrastructure is ready, however, depending on the specification of the customer and cargo dimension, the ground improvement etc. will be carried out and made worthy for operation and once complete will be accordingly transferred from Capital Work-in-Progress to Property, Plant and Equipment when the assets deemed ready to use. Hence, the Group has been prudently transferring the assets to Property, Plant and Equipment on the basis of utilisation of space for operations.

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.

 

Right-of-use assets:

Right-of-use assets, the cost is equivalent to the present value of the future lease payments relating the leased assets. This note also details nay additions and disposals during the year, and shows depreciation, which is an expense in the income statement to reflect the usage of these assets.

Right of use assets are initially measured at cost, which is an amount equal to the corresponding lease liabilities (present value of future lease payments) adjusted for any lease payments made at or before the commencement date, less any lease incentives received. (See  note on lease liabilities accounting policy).

Depreciation is calculated by estimating how many years the asset is expected to be in use, which is also known as the useful economic life (UEL) of the asset. The depreciation charge reduces the initial value of the assets over the time and spread evenly over their UELs. The value after deducting accumulated depreciation is known as the net book value.

No depreciation is charged during the course of construction  on the Port Assets. Depreciation is calculated for all other assets to write off the cost or valuation, less residual value, on a straight-line basis over the following expected UELs:

Useful economic lives

Assets	Estimates 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. Right-of-use assets depreciated over the shorter of the lease period and estimated useful life.

 

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, 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, "refer to the Critical Accounting Estimates section before Note 3 to the financial statements"..

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

MPL has a sole Cash Generating Unit (CGU) namely, Karanja Port in India since inception. The Port Assets are reviewed for evidence of a trigger for potential impairment at least annually or whenever events or circumstances indicate that the value on the balance sheet may not be recoverable. Impairment testing is performed on cash generating units (CGUs) which is the Port itself, this being the lowest level of separately identifiable cash flows.

An impairment loss is recognised as follows:

Description	Amount in £ million
Enterprise Value	95.03
Carrying Value of the CGU	(111.19)
Net Enterprise Value (Impairment)	(16.16)

 

From the above, it is evident that an impairment loss is recognised on the amount by which the asset's net book value exceeds its recoverable amount, the latter being the higher of the asset's fair value less cost to dispose and value in use. Value in use calculation is performed using cash flow projections, discounted at a post-tax rate, which reflects the asset specific risks and the time value of money.

Property, plant and equipment is stated at cost, net of accumulated depreciation and/or impairment losses, if any. Based on the impairment review performed the property, plant and equipment are impaired to the extent of £ 16.16 million, out of which the net impact of £6.77 million which is for the current year as provided in the accounts and as the balance £9.39 million was already been provided in the previous year.

When an impairment loss subsequently reverses, the carrying amount of the CGU is increased to the revised estimate of the recoverable amount, but ensuring the increased carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised for the CGU in prior years. A reversal of an impairment loss is recognised as a credit to the income statement when recovery of performance is considered reasonably certain.

 

n) TRADE RECIEVABLES 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.

 

o) 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.

 

p) 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.

 

q) SHARE 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.

 

r)  NEW STANDARD AND INTERPRETATION

There are no accounting pronouncements, which have become effective from 1 January 2024 that have a significant impact on the Group's consolidated financial statements.

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 S1 - General Requirements for Disclosure of Sustainability-related Financial Information

 

·      IFRS S2 - Climate-related Disclosures

 

CRITICAL ACCOUNTING ESTIMATE

a) Impairment

In line with the accounting policy, management assessed the value in use of the CGU when testing for impairment. This requires estimation of the present value of future cash flows expected to arise from the continuing operation of the CGU. These estimates require assumptions over various factors, in particular future sales, future margin performance and considering the consolidated costs. Each of these areas are critical in estimating the present value of future cash flows. Were there to be significant changes in these estimations, the amount recognised in respect of impairment during the year could be materially impacted, or impairment charges recognised in previous years may be reversed.

In contrast to past performance, the Indian subsidiary is now confident of ramping up its operations from 2025 onwards, as it managed to sign:

 

a)   Shiny Shipping & Logistics Pvt. Ltd. for Edible Oil discharging and distribution;

 

b)   Trial run conducted for Afcons Infrastructure Limited and advanced negotiations are under way to sign   a tentative contract which will be for a 24-30-month contract for hiring of land for fabrication and erection of Girders for Revas Port construction, at our Port;

The Directors are optimistic about the business potential at the port for the period 2025 onwards. The capacity utilisation of the port in essence drives the revenue and the EBIDTA generated by MPL through its CGU. The optimum utilisation of the Port capacity is the essence and a driving force which ramps up the revenue as well as the EBIDTA margin of the group. The CGU will be cash positive the moment capacity utilisation crosses more than 50% range. Impairment testing is performed on cash generating units (CGUs) which is the Port itself, this being the lowest level of separately identifiable cash flows.

An impairment loss is recognised as follows:

Description	Amount in £ million
Enterprise Value	95.03
Carrying value of CGU	(111.19)
Net Enterprise Value (Impairment)	(16.16)

 

Out of £16.16 million, the net impact of £6.77 million which is for the current year as provided in the accounts and as the balance £9.39 million was already been provided in the previous year.

Value in use calculation is performed using cash flow projections, discounted at a pre-tax post IFRS-16 rate, which reflects the asset specific risks and the time value of money.

The impairment review considers the VIU of the CGU compared to the carrying value in the first instance, and subsequently for fair value less cost to dispose if the VIU is lower than the carrying value. The VIU calculation is based on the remaining life of the Port assets i.e. the balance valid lease period using the latest forecast data to adjust the specific cash flows. The recoverable amounts of the impaired CGU are based on the VIU.

The growth rate and operating margins used in the estimate cash flows are based on the current contracts on hand as well as advanced negotiations with the current clients on their expansion of activities at Karanja port as follows:

 

1) Esquire Contract (Existing Customer):

a.   Increase in the estimated imports of coal for 2024 from 1.5 million MT to 2-2.5 million MT;

 

b.   Import of Silica Sand /Gypsum c.  Import of Steel

 

2) Two contracts signed with one of India's largest Oil & Gas company, summing up to £9.61million (₹105.9 crores) for an initial period of 36 months:

a.   Increasing the number of OSV vessels per month per berth.

 

b.   Increase the number of dedicated berths from 1 to 2 by 2026;

 

c.   Discussions underway for use of Karanja Port facilities for Rig repair and maintenance;

 

d.   Use of Karanja Port facilities by 3rd party vendors/ partners/contractors'/ associates for Oil & Gas sector operations;

 

e.   Storage and supply of consumables to OSVs;

 

f.    Supply of bunkers and Water supply to OSVs;

 

g.   Other allied services.

 

3)  Contract with Shiny Shipping & Logistics Pvt. Ltd. for an initial period of 36 months for discharging and distribution of Edible Oil to local markets with an estimated revenue generation of £1.40 million (₹14.94 crores).

 

4) Project Cargo (New customer)

The Indian subsidiary is also in advanced negotiations with Afcons Infrastructure Ltd for a space which was earlier occupied by Tata Daewoo Joint Venture, for constructing the new bridge from Uran to Revas Bridge for a period of 24-30 months.

 

5) Container Handling:

The container handling operations is expected to commence from Mid of 3rd quarter of 2025 which will also significantly contribute to the top line as well as the bottom Line.

 

The key assumptions used in the VIU calculation are;

-      A post-tax discount rate of 14.6% (2023: 13.5%) was calculated using the weighted average cost of capital (WACC). An assessment was made of the risks associated with the cash flows based on the forecast assumptions and a risk adjustment included in the WACC.

 

-      Port utilization estimated to peak at 79% by 2030 (driven by bulk and container cargo). It is important to note that this is a conservative assumption. In the current case, we have remained conservative and assumed peak capacity utilization around 75%.

 

-      The forecast assumes that port utilization will be 17% in 2024, 27% in 2025, 39% in 2026 and 50% in 2027. The expected sales growth as a result of increase in port utilization with a CAGR ranging between from 60% to 70% to 2028 with steady growth of 0-1% per annum thereafter.

Based on the impairment review carried out, the group recognised a net impairment of £ 6.77 million for the year.

In the VIU calculations, no specific impact has been included in respect of climate change as it is not expected to be materially different to the forecast assumptions during the forecast period.

Certain movable assets are expected to be replaced at the end of their UEL by those that have a lower impact on the environment. Cash outflows that are directly associated with CGUs have been included in the discounted cash flow modelling.

 

Sensitivities in the impairment modelling

The impairment model is prepared on very conservative assumptions. Generally, Ports operate at 100-110% of the installed capacity as peak capacity utilisation. In addition, ramp up in capacity utilisation is steep preponing cash flows at higher or peak capacity utilisation.

In case of MPL, not only the ramp up in capacity utilisation is assumed to be steady, but also the peak capacity utilisation is taken at 96% instead of 110% in the impairment model. To add to the conservative assumptions, the tariff revenue on handling per MT of cargo is also assumed to be in proportion with the G&A expenses on a year on year basis.

However, the below sensitivity analysis reflects a reasonably plausible alternative scenario for impairment evaluation.

Sensitivity Adjustment	Net Impairment Impact £ in million
Decrease in port utilisation by 2%	Additional Charge	-£3.67
Increase in port utilisation by 2%	Additional Release	£3.67
EBITDA decreased by 2%	Additional Charge	-£0.00
EBITDA increased by 2%	Additional Release	£0.00
G&A increased by 5%	Additional Charge	-£0.00
G&A decreased by 5%	Additional Release	£0.00
WACC increased by 50 bps	Additional Charge	-£3.89
WACC decreased by 50 bps	Additional Release	£3.89

 

The management exercised a sensitivity analysis on the financial model for the immediate future to ascertain the impact of increase/ decrease under various heads in the model:

 

i.          Port Capacity utilization:

Increase: Catalyst drivers for Revenues are majorly the Bulk Cargo and Container Cargo. Any increase in traffic at the Port will enhance the Port utilization, which will contribute to the improvement of business performance and thus release the charge on the impaired asset.

Decrease: Decrease in the Port Utilization capacity due to climate conditions, deferment of operations may adversely impact and thus increase the charge of impairment on the asset.

 

ii.         General & Administration Expense:

Increase: Major Cost contributing to G&A are the Cost of Personnel, Insurance, Professional Fees and Travel. The increase is cost depends on the economic situation and changes considering the inflation, beyond the assumed rate. This would further impair the asset proportionately.

Decrease: Any reduction due to better negotiations on the Insurance, Professional fees, Travel rates, would reduce the impact of impairment on the asset.

 

iii.        EBIDTA:

Increase: Revenue generated from land rentals, which is 100% margin business, will directly reduce & release the charge on the impairment of the asset and improve the EBIDTA margin.

Decrease: Increase in cost of operations such as equipment hire, stevedoring etc cost, if hiked, then would adversely impact the EBIDTA margin and would contribute and increase the impairment of asset.

 

iv.         Weighted Average Cost of Capital (WACC):

Increase: Increase in the WACC by 50 basis point will also contribute to additional charge on the impaired asset. This may occur if the Reserve Bank increases the REPO rate which will have direct impact on the rate of interest on the term debt.

Decrease: a decrease in the WACC by 50 basis point will release and reduce the charge on the impaired asset. This again depends solely on the market condition and Reserve bank policy.

 

b) Recognition of income tax assets in respect of tax

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. Therefore, the major portion of the tax pertains to the amounts paid under protest for the Assessment Year (AY) 2011- 2012 (£0.45 million) and AY 2012-13 (£1.47 million). These amounts were deposited as a precondition for filing appeals with the Income-tax authorities for these years.

The Principal Commissioner of Income Tax (Appeals) vide its order dated 20th March, 2023, issued an order in favour of the Group's subsidiary for the assessment years 2011-12 and 2012-13. In January, 2025, the Indian subsidiary received partial refund of Cir.£1million (₹10.19 crores) out of the Total refund due of £2.70 million (₹28.84 crores). The balance is expected to be released by first half of 2025. In addition, during the year 2024, the subsidiary also received refund of £0.02 million (₹1.45 crores).

Since the Income tax department has preferred an appeal in Supreme Court and in light of the uncertainty of the final outcome, there remains a risk over the amount recognised. However, the chances of appeal are considered remote and as such, on the basis of highly probable an asset was recognised in respect of the amount receivable.

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 status of open litigations for AY 2013-14 to AY 2015-16 remain unchanged during FY 2024 i.e., the matter is yet to be adjudicated and the outcome of appeal before Hon'ble Bombay High Court is pending.

 

3. 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 are 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.

 

4. REVENUE FROM OPERATION

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Sale of goods	1,410	1,456
Cargo handling income	2,178	1,683
Lease income	408	1,188
Other operating income	357	1,135
	4,352	5,462

 

Revenue from Sale of goods is "Point in time" and other revenue heads are "Over the time". Other operating income relates to income from dredging, coal handling and distribution income and wharf age.

Certain portions of the port have been designated for leasing portions. The lease has been classified as operating lease because it does not transfer substantially all the risks and rewards incident to ownership and it does not fulfil other conditions mentioned in IFRS 16 applicable to be classified as finance lease.

The major customer for sale of goods is Radha Krishna Trading Company, followed by Shree Shakti Coal Corporation.

Significant contributors to the Cargo Handling Income is Esquire Shipping & Trading Pvt. Ltd.

Nationwide Shipping Services, a registered vendor of Largest Oil & Gas company has contributed to the Offshore Supply Vessels (OSVs) operations at Karanja Port. As at the end of December2024, the total number of OSV vessels handled at Karanja Port is 88 Vessels since January 2024. Currently the Major Contributor to Lease Income is Esquire Shipping & Trading Pvt. Ltd.

The total future minimum lease rentals receivable at the SOFP date is as under:

Payments falling due	As on 31 Dec 24  INR in million	As on 31 Dec 24  £ million
2025	19.83	0.19
2026	19.83	0.19
2027	19.83	0.19
2028	19.83	0.19
Fifth year and above	39.66	0.37
Total	118.99	1.11

 

5. COST OF SALES

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Wharf age expense	412	479
Other operating expense	2,171	1,919
Changes in inventory	(253)	19
Total	2,330	2,417

 

6. ADMINISTRATIVE EXPENSES

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Employee costs	518	556
Directors' remuneration and fees	302	281
Foreign exchange loss	7	(3)
Provision for doubtful debts	26	--
Other administrative costs	1,988	2,432
Total	2,841	3,266

 

7.(a)  FINANCE INCOME

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Interest on bank deposits	34	25

 

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 £5.41 million and was affected accordingly in 2021. The recognized gain is spread over the remaining term of the modified debt using the effective interest method, and therefore has been considered in the 2024 financials.

 

7.(b)  FINANCE EXPENSES

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Interest on term loan	5,432	4,398
Interest others	1,859	1,827
Total	7,291	6,225

 

With regard to interest on term loan of £ 5.43 million, the actual interest paid during the period is Nil (£1.54 million - 2023).

The Indian subsidiary has submitted a proposal for One Time Settlement closer to the book value of total debt for consideration which is under process. Currently the Principal Term Loan repayment and interest accrued thereon are unpaid since March 2023 till date.

 

8.  INCOME TAX

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Loss Before Tax	(18,667)	(21,265)
Applicable tax rate in India*	26.00%	26.00%
Expected Tax Credit	(4,853)	(5,529)

 

Reconciling Items
Non-deductible losses of MPL and Cyprus entities	308	378
Un-recognised deferred tax asset on tax losses	4,545	5,151
	--	--

 

* 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 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. Therefore, the major portion of the tax pertains to the amounts paid under protest for the Assessment Year (AY) 2011-2012 (£0.45 million) and AY 2012-13 (£1.47 million). These amounts were deposited as a precondition for filing appeals with the Income-tax authorities for these years.

The Principal Commissioner of Income Tax (Appeals) vide its order dated 20th March, 2023, issued an order in favour of the Group's subsidiary for the assessment years 2011-12 and 2012-13. As such, as a result of a tax previous paid in respect of 2011-12 and 2012-13 is expected to be returned to the Indian subsidiary and as such an asset has been recognised of £2.1m. Since the Income tax department has preferred an appeal in Supreme Court and in light of the uncertainty of the final outcome, there remains a risk over the amount recognised and as such there was judgement taken that the amount was expected to be recovered.

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 status of open litigations for AY 2013-14 to AY 2015-16 remain unchanged during FY 2024-25 i.e., the matter is yet to be adjudicated and the outcome of appeal before Hon'ble Bombay High Court is pending. As such a contingent liability continues to be recognised in respect of amounts potentially due.

The Indian Subsidiary has received the refund order u/s. 264 read with section 260 of the Income Tax Act for the assessment year 2011-12 as well as 2024-25 vide the order dated 20 June 2023 totaling to £2.97 million (₹.31.52 crores).

Since the Income tax department has preferred an appeal in Supreme Court and 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.

As at 31st December 2024 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 (£ 11.15 million) (Gross tax losses: £ 24.02 million) (2023- (£ 5.43 million). (Gross tax losses: £ 20.9 million).

 

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Deferred tax liabilities	(307)	(1,886)
Offset against deferred tax assets	307	1,886
Deferred tax liabilities	--	--

 

As a result of amendments to IAS 12 'Deferred Tax related to Assets and Liabilities arising from a Single Transaction' deferred tax has been recognised in respect of IFRS 16 leases. In applying the standard at the beginning of the earliest comparative period presented, a deferred tax asset has been recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised resulting in an amendment to the amounts recognised at 31st December 2024.

 

9. AUDITOR'S REMUNERATION

The following are the details of fees paid to the auditors, McMillan Woods Audits Limited and Indian auditors, in various capacities for the year:

 

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Audit Fees
Audit fees payable to McMillan Woods Audits Limited for the Group accounts audit *	85	184
Audit fees payable to auditors of subsidiary companies**	8	7

 

Non-audit service
Interim Financial Statement Review	5	5
Total	98	196

 

* Audit Fees for MPL includes the additional fees charged during 2023 by Grant Thornton UK LLP in respect of the prior year audit aggregating to £ 15,000 (2022: £ 30,000).

** Audit fees for the Subsidiary companies for the year 2024: -

Indian entity is £6,542

Cyprus entity is £1,893

Total     £8,435

 

9. EARNINGS PER SHARE

Both basic and diluted earnings per share for the year ended 31 December 2024 have been calculated using the loss attributable to equity holders of the Group of £18.63 million (prior year loss of £21.22 million).

	Year ended 31 Dec 24 £000	Year ended 31 Dec 23 £000
Loss attributable to equity holders of the parent	(£18,629,522)	(£21,221,801)
Weighted average number of shares used in basic and diluted earnings per share	356,312,692	201,581,972

 

EARNINGS PER SHARE
Basic and Diluted earnings per share	(0.052p)	(0.105p)

 

The Group has successfully completed fund raise by private placement of 301,479,660 and 13,333,333 new Ordinary Shares on 28 June 2023 and 31 July 2023 respectively at a price of 0.03 pence per share.