Unaudited Consolidated Statement of Cash Flows

For the half-year ended 30 September 2021

The accompanying accounting policies and notes are an integral part of these financial statements.

Notes to the Financial Statements

1.    General information

Tirupati Graphite plc (the "Company") is incorporated in England and Wales, under the Companies Act 2006. The registered office address is given on Company Information page.

The Company is a public company, limited by shares. On 14 December 2020 the Ordinary Shares of the Company were admitted on the official list of the FCA and to trading on the main market of the London stock exchange through standard listing.

The principal activities of the Company and its subsidiaries (the "Group") and the nature of the Group's operations is production of flake graphite, a critical material used in diverse applications. The half year period of the previous year was prior to admission and in that period, the Company's only operating and producing asset was a comparatively smaller scale, proof of concept plant at its Sahamamy project in Madagascar. Alongside its admission the Company raised equity capital to develop its various projects under its MTDP. Thus, there was a material change in the Company's activities during the six month period of the current year compared to the same period in the previous year. We have provided brief insights where relevant in the Notes to the Financial Statement to depict changes in the Company's activities.

These consolidated financial statements are presented in pounds sterling since that is the currency of the primary economic environment in which the Group and Company operates. 

2.    Significant accounting policies

Basis of preparation

The condensed consolidated interim financial statements for the six months ended 30 September 2021 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and presented in sterling. They do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements for the year ended 31 March 2021, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with the requirements of the Companies Act 2006. The report of the auditors on those financial statements was unqualified.

The financial statements have been prepared under the historical cost convention, except for the measurement to fair value certain financial and digital assets and financial instruments.

Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 30 March 2021.

Going concern

The financial position of the Group and the Company, their cash flows and liquidity positions are contained in the financial statements. In April 2021, the Company raised equity capital to adequately capitalise its development activities and in September 2021, the Company commissioned a second plant increasing its installed capacity fourfold from 3,000 tpa to 12,000 tpa. From the results of the operations, the Company believes that its capacity has increased to a level at which it shall become profitable as the new plant is debottlenecked and producing output is being ramped up to full capacity.

Further, the Company remains adequately funded for its investment needs for the next capacity expansion under construction being the second 18,000 tpa plant at Sahamamy in Madagascar, which is expected to complete and commission in Q2 2022.

Taking in to account the comments above, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, given its current cash resources, installed capacities and operations which now have broken the threshold for the Company to meet all its non-investment cash needs from revenues and additional capacities being built by the Company for which it remains fully funded and which when completed, are expected to add further additional operating cash flows.

ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

The Group has adopted all recognition, measurement and disclosure requirements of IFRS, including any new and revised standards and Interpretations of IFRS, in effect for annual periods commencing on or after 1 January 2021. The adoption of these standards and amendments did not have any material impact on the financial result of position of the Group.

At the date of authorisation of these financial statements, the following Standards and Interpretation, which have not yet been applied in these financial statements, were in issue but not yet effective:

The Group has not early adopted any of the above standards and intends to adopt them when they become effective.

3.    Segmental analysis

The Management believes, under IFRS 8 - "Segmental Information", the Group operated in three primary business segments in 2021, being Holding Companies Expenses, Mining Exploration and Development and Graphite Mining Extraction.

Segmentation by continuing businesses

Segment results

Segmentation by geographical area:

4.    Expenses by nature

Notes:

5.    Earnings per share

Basic and diluted

Earnings per share is calculated by dividing the loss attributable to the equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period.

Given the loss for the year, the diluted earnings per share was the same as basic earnings per share as this would otherwise be dilutive.

6.    Trade & Other Receivables

7.    Borrowings

During this period convertible loan notes ("CLN") worth £114,000 were converted into equity. Interest on the outstanding CLN's is chargeable at 12% per annum.

The CLN's may be redeemed by the Company, at any time after the first anniversary of the Initial Public Offering ("IPO") up to the Maturity Date or by the Noteholder or the Company, on the Maturity Date being the 31 May 2022.

Conversion of the CLN's can be made from 15 Business Days after the date of completion of the Company's IPO to convert the CLN's outstanding into fully paid Ordinary Shares at a price equal to the price per share paid by investors participating in the IPO.

8.    Share capital

Shares were issued during the year as follows:

9.    Financial instruments

Financial risk management

The Group has exposure to the following risks from its use of financial instruments:

This note presents information about the Group's exposure to each of the above risks, the Group's management of capital, and the Group's objectives, policies and procedures for measuring and managing risk.

The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

The Group Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders as well as sustaining the future development of the business. In order to maintain or adjust the capital structure, the Group may adjust dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The capital structure of the Group consists of net debt, which includes loans, cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital and retained earnings.

Fair value of financial assets and liabilities

Valuation, methodology and hierarchy

(a)  The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and deferred income, and Borrowings are all stated at book value. All have the same fair value due to their short-term nature.

Market risk

Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Group's investment objectives.  These future valuations are determined by many factors but include the operational and financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies operate. 

Credit risk

Credit risk is the risk that counterparties to financial instruments do not perform their obligations according to the terms of the contract or instrument. The Group is exposed to counterparty credit risk when dealing with its customers and certain financing activities.

The immediate credit exposure of financial instruments is represented by those financial instruments that have a net positive fair value by counterparty at 30 September 2021. The Group considers its maximum exposure to be:

All cash balances are held with an investment grade bank who is our principal banker. Although the Group has seen no direct evidence of changes to the credit risk of its counterparties, the current focus on financial liquidity in all markets has introduced increased financial volatility. The Group continues to monitor the changes to its counterparties' credit risk.

Liquidity risk

Liquidity risk is the risk the Group will encounter difficulty in meeting its obligations associated with financial liabilities as they fall due. The Board are jointly responsible for monitoring and managing liquidity and ensures that the Group has sufficient liquid resources to meet unforeseen and abnormal requirements. The current forecast suggests that the Group has sufficient liquid resources.

Available liquid resources and cash requirements are monitored using detailed cash flow and profit forecasts these are reviewed at least quarterly, or more often as required. The Directors decision to prepare these accounts on a going concern basis is based on assumptions which are discussed in the going concern note above.

The following are the contractual maturities of financial liabilities:

Cash flow management

The Group produces an annual budget which it updates quarterly with actual results and forecasts for future periods for profit and loss, financial position and cash flows. The Group uses these forecasts to report against and monitor its cash position. If the Group becomes aware of a situation in which it would exceed its current available liquid resources, it would apply mitigating actions involving reduction of its cost base. The Group employs working capital management techniques to manage the cash flow in periods of peak usage. 

Currency risk

The Group operates internationally and is exposed to foreign exchange risk. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the functional currency of the relevant Group entity. The Group's primary currency exposure is to US Dollar, which is the currency of all intra-group transactions as well as denomination of selling price of the products. The Group also has some exposure to Malagasy ariary due to its operating subsidiaries in Madagascar.

Considering the natural hedge available the Group currently doesn't hedge the currency risk. The Group's and Company's exposure to foreign currency risk at the end of the reporting period is summarised below. All amounts are presented in GBP equivalent.

Sensitivity Analysis

As shown in the table above, the Group is primarily exposed to changes in the GBP:USD & GBP:MGA exchange rates. The table below shows the impact in GBP on pre-tax profit and loss of a 10% increase/ decrease in the GBP to USD exchange rate, holding all other variables constant. Also shown is the impact of a 10% increase/decrease in the GBP to MGA exchange rate, being the other primary currency exposure.

10.  Related party transactions

Tirupati Carbons and Chemical Pvt Limited (TCCPL) is an entity incorporated in India. The Company is connected to TCCPL in that both Shishir Poddar and Hemant Poddar were both directors and shareholders of TCCPL during the year. At half-year end, included within debtors was an amount of Nil (Mar 2021: Nil) and revenue recorded for the period of Nil (Mar 2021: Nil) from TCCPL.

Tirupati Speciality Graphite Private Limited (TSG) is an entity incorporated in India. The Company is connected to TSG in that both Shishir Poddar and Hemant Poddar were both directors and shareholders of TSG during the year. At half year end, a net amount was receivable of £1,092,904 (Mar 2021 - £250,656) and revenue of £56,610 (Mar 2021 - £238,602) from TSG.

Haritmay Ventures LLP (HV) is an entity incorporated in India and engaged in manufacturing proprietary tailor-made flake graphite processing machinery and equipment which the Company uses in its projects. The Company is connected to HV in that Shishir Poddar is partner and shareholder of HV during the year. At year end, a net amount was receivable of £355,822 (Mar 2021 - £72,552) and revenue of Nil (Mar 2021 - Nil) from HV.

Optiva Securities Limited is an entity incorporated in the United Kingdom. The Company is a stock brokerage firm connected to the Company being the sole broker of the Company and Christian Gabriel St.John-Dennis one of the directors of the Company and holding a position with Optiva Securities Limited during the year. At year end, the Company incurred brokerage and consultancy fees, business development fees of £440,500 (Mar 2021- £378,402).

11.  Events after the reporting period

On 4^th November 2021 the Ordinary Shares of the Company commenced cross-trading on the OTCQX® Best Market ("OTCQX") in the United States ("U.S."), under the ticker symbol "TGRHF".