Interim Results

RNS Number : 2931C

Emmerson PLC

28 September 2018

 

Emmerson Plc / Ticker: EML / Index: LSE / Sector: Mining

28 September 2018

Emmerson Plc ("Emmerson" or the "Company") 

Interim Results for the six-month period to 30 June 2018

Emmerson Plc, the Moroccan focused potash development company, is pleased to announce its interim results for the six-month period ended 30 June 2018. 

Highlights

·     Re-admitted to trading on the London Stock Exchange Standard Market having raised gross proceeds of £6 million in an oversubscribed placing following the successful acquisition of 100% of the share capital of Moroccan Salts Limited ("MSL")

·     Obtained full ownership of the Khemisset Potash Project in northern Morocco ("Khemisset"):

o  Large potash JORC compliant Resource of 311Mt at 10.2% K₂0

o  Expediated development pathway targeting the construction of a low capex, high-margin mine - targeted delivery of Scoping Study in Q1 2019 with globally-recognised mining engineering firm Golder Associates appointed to oversee its delivery

o  Located in one of the fastest growing potash consuming countries and continents worldwide, and close to premium end markets

o  Proximate to established infrastructure including a network of high-quality toll roads, electricity distribution and deep-water ports

·     Proven Board and management team with extensive experience in the potash sector - strengthened further by the appointment of mining veteran Mark Connelly in July 2018

·     Undertook a 60-line kilometre seismic survey over 10 lines at the Khemisset Project, with the interpretation of the collected data (reported post period end) indicating that no major faulting exists in the area, which is positive for underground mining

Post-Period End

·     Significant exploration upside confirmed by the definition of a significant JORC-compliant Exploration Target of 264-616 million tonnes at an average grade of 5.0-14.0% K₂O covering 87km², potentially doubling existing mine life

·     Preliminary design and cost estimates for the mine access component of the Scoping Study completed:

o  Mining horizon proposed to be accessed by twin declines constructed using underground mining machinery, which can later be used in mining production

o  Direct capital cost estimate of mine access approximately US$35 million including 30% contingency which equates to an estimated capital cost saving of over US$1 billion relative to average Canadian potash mine development

Hayden Locke, CEO of Emmerson, commented: 

"Since re-admitting to trading in June, we have been focused on the rapid development of the Khemisset potash project.  Work completed to date has supported the Board's confidence in the potential of Khemisset to be a low-cost, high-margin mining operation.  The completed seismic survey has demonstrated the project's favourable geology and the recently completed mine design and cost estimate has confirmed that access to mineralisation can be achieved at an extremely low-cost relative to our peers.  I look forward to updating shareholders further as we continue to progress towards the delivery of the Scoping Study in Q1 2019."

Chairman's Statement

It is the opinion of the Board that there are two vital factors to consider in potash development: the capital cost to get to production; and the location of the asset relative to high-priced customer markets.  These two factors are what attracted us to the Khemisset Project and are why we believe that we have provided our shareholders with exposure to a company-making asset following Emmerson's successful reverse takeover of Moroccan Salts Limited which is the 100% owner of the highly prospective Khemisset potash project. Khemisset already has a large JORC compliant resource and significant exploration upside, which we believe is capable of supporting a mine with greater than 20 years' life. Most importantly, we believe Khemisset has the potential to become a low capital cost and high margin potash mine.

Potash is a bulk commodity, like coal or iron ore, and therefore project location and access to end markets is key in determining total operational costs.  Khemisset's location in Northern Morocco gives Emmerson a sustainable competitive advantage over its producing peers.  Morocco is favourably located to service four key markets for potash in the Atlantic corridor including Europe, Brazil and the US as well as the rapidly growing African markets. Morocco currently has no potash production in-country but is also one of the fastest growing potash consuming countries in the world, a trend which is expected to continue. 

While nearly 70% of global potash is produced in locations very remote from end markets with limited infrastructure, Khemisset is approximately 90km from Morocco's capital Rabat, and is close to the significant regional town of Khemisset, meaning the project benefits from high quality established infrastructure including a network of toll roads, ports and an easily accessible electricity distribution grid.  Looking ahead, the project's close proximity to deep-water ports will significantly reduce transportation costs of the potash product, further improving the project's economics, especially when comparing to Emmerson's Canadian peers.

In line with our low capex expectations for Khemisset, we recently announced the completion of the design and capital cost estimates for the mine access portion of the Scoping Study. This showed an estimated capital cost saving, relative to our Canadian peers, of over US$1bn. Following the completion of a seismic programme, we have also been able to confirm that the project is likely to be amenable to simple, conventional, underground mining methods. These points further enhance our view that Khemisset has the potential to be a low capital cost development. The indication of limited faulting will also positively impact the overall mine design, resulting in lowered overall mining costs per tonne of ore and lower general design risk. 

The project itself already boasts a large JORC Resource Estimate (2012) of 311.4 million tonnes at 10.2% K₂O inherited when we acquired the asset in June.  Since then we have been able to demonstrate the even larger-scale potential of this project having defined a significant JORC-compliant Exploration Target, which ranges from 264-616 million tonnes.  We are looking forward to commencing drilling in 2019 with a view to unlocking this substantial potential and extending the expected mine life well beyond 20 years.

Having raised £6 million on our re-admission to the LSE in June, with a significantly oversubscribed placing which saw us add a number of high net worth investors to our register, we were able to hit the ground running in terms of development of the project.  The Company is now focused on delivering a scoping study in Q1 2019 that we hope will be able to confirm the compelling technical and economic potential of the Khemisset project. We have appointed globally-recognised independent mining engineering firm, Golder Associates, to oversee this process.  The completion of the various technical components of the study promises a high volume of quality news flow in the upcoming months as we release them ahead of the completion of the Scoping Study. 

We believe that we are in the right location with the right project and, crucially, we are developing Khemisset at the right time.  With a rapidly increasing global population, the United Nations forecasts that by 2050 our planet will have to feed an additional 2.4 billion people.  To keep pace with this rapid growth, worldwide food production will have to increase by an estimated 60-70% and this will be impossible without the utilisation of fertilisers.  We are targeting the production of muriate of potash ("MOP"), which is the most important potassium bearing fertiliser product in the world, accounting for roughly 95% of global demand.  As demand increases it is anticipated that this will continue to place positive pressure on the potash price which has seen a significant improvement in the last 12 months.  Regardless of this positive momentum, the Board is confident that Khemisset has the potential to be economically viable even if potash prices defy expectations and return to recent low levels.

Not only do we have a project that ticks the boxes and has garnered strong local support, demonstrated at the very well attended stakeholder day we hosted in Khemisset, but we also have a fantastic team in place to deliver on our objectives.  In July, we bolstered our already strong Board of Directors with the appointment of mining industry veteran Mark Connelly as Chairman of Emmerson.  He has been instrumental in the development, construction, delivery and commissioning of multiple large-scale mines in Africa and has worked with our CEO Hayden Locke at Papillion Resources, taking it from a small cap company right through to its sale to B2Gold in 2014 for over US$600 million.  We are delighted to have him on board and look forward to working with him as we progress Emmerson up the development curve and accelerate towards production.

I would like to take this opportunity to welcome our new shareholders and thank them, as well as our existing shareholders, for their support of Emmerson.  This has been a transformational period for your Company, and with an exciting project in tow with high-impact newsflow expected in the near-term ahead of the delivery of our Scoping Study I look forward to updating you further in the coming months as we deliver on our defined development path at Khemisset.  

Ed McDermott

27 September 2018

For further information, please visit www.emmersonplc.com, follow us on Twitter (@emmerson_plc), or contact:  Hayden Locke Emmerson Plc Tel: [phone] Edward McDermott James Biddle Roland Cornish Beaumont Cornish Limited Financial Adviser Tel: [phone] Jeremy King Optiva Securities Limited Broker Tel: [phone] Lottie Wadham Gaby Jenner St Brides Partners Ltd Financial PR/IR Tel: [phone]

Notes to Editors

Emmerson's primary focus is on developing the Khemisset Potash Project located in Northern Morocco.  The project has a large JORC Resource Estimate (2012) of 311.4Mt @ 10.2% K₂O and significant exploration potential with an accelerated development pathway targeting a low capex, high margin mine.  Khemisset is perfectly located to capitalise on the expected growth of African fertiliser consumption whilst also being located on the doorstep of European markets. This unique positioning means the project will receive a premium netback price compared to existing potash producers. The need to feed the world's rapidly increasing population is driving demand for potash and Emmerson is well placed to benefit from the opportunities this presents.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

Condensed Consolidated Statement of Comprehensive Income for the six month period ended 30 June 2018

		6 months ended 30 Jun 2018	6 months ended 30 Jun 2017	12 months ended 31 Dec 2017
		(Unaudited)	(Unaudited)	(Unaudited)
	Notes	£'000	£'000	£'000
Administrative fees and other expenses	4	(540)	(74)	(232)
Project expenses		(32)	(10)	(33)
Share based expense	9	(151)	-	-
Gain on exchange differences		137	17	-
Operating loss		(586)	(67)	(265)
Finance income		-	-	16
Finance cost	10	(157)	-	(86)
Share based payment on reverse acquisition	3	(698)	-	-
Loss before tax		(1,441)	17	(70)
Income tax		-	-	-
Loss for the period attributable to equity owners		(1,441)	(67)	(335)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange gain/(loss) on translating foreign operations		29	(92)	(135)
Total comprehensive income attributable to equity owners		(1,412)	(159)	(470)
Earnings per share (pence)	5	(0.44)	(0.03)	(0.14)

Condensed Consolidated Statement of Financial Position
as at 30 June 2018

		30 June 2018	31 Dec 2017	30 June 2017
		(Unaudited)	(Unaudited)	(Unaudited)
	Notes	£'000	£'000	£'000
Non-current assets
Intangible assets	6	2,601	2,304	2,345
Other non-current assets		2	1	2
Total non-current assets		2,603	2,305	2,347
Current assets
Trade and other receivables		67	8	7
Cash and cash equivalents		4,891	417	75
Total current assets		4,958	425	82
Total assets		7,561	2,730	2,429
Current liabilities
Trade and other payables	7	346	767	940
Convertible loans	10	-	785	-
Total current liabilities		346	1,552	940
Net assets		7,215	1,178	1,489
Shareholders equity attributable to equity owners
Share capital	8	8,265	1,391	1,391
Share reserves	9	151	1,227	1,227
Reverse acquisition reserve	3	1,651	-	-
Translation reserve		(108)	(137)	(94)
Retained earnings		(2,744)	(1,303)	(1,035)
Total equity		7,215	1,178	1,489

Condensed Consolidated Statement of Changes in Equity

	Share Capital £'000	Share reserve £'000	Reverse Acquisition reserve £'000	Retained earnings £'000	Translation reserve £'000	Total equity £'000
Balance as at 1 January 2017	1,391	1,227	-	(968)	(2)	1,648
Loss for the period	-	-	-	(67)	-	(67)
Other comprehensive income:
Exchange loss on translating foreign operations	-	-	-	-	(92)	(92)
Total comprehensive income	-	-	-	(67)	(92)	(159)
Balance as at 30 June 2017	1,391	1,227	-	(1,035)	(94)	1,489
Balance as at 1 January 2018	1,391	1,227	-	(1,303)	(137)	1,178
Loss for the period	-	-	-	(1,441)	-	(1,441)
Other comprehensive income:
Exchange gain on translating foreign operations	-	-	-	-	29	29
Total comprehensive income	-	-	-	(1,441)	29	(1,412)
Issue of shares held in share reserve	1,227	(1,227)	-	-	-	-
Transfer to reverse acquisition reserve	(2,618)	-	2,618	-	-	-
Recognition of Emmerson Plc equity at reverse acquisition	967	-	117	-	-	1,084
Issue of shares for acquisition of subsidiary	1,084	-	(1,084)	-	-	-
Issue of shares for cash	7,338	-	-	-	-	7,338
Share issue costs	(1,124)	-	-	-	-	(1,124)
Issue of share options and warrants	-	151	-	-	-	151
Total contributions by and distributions to equity owners recognised directly in equity	6,874	(1,076)	1,651	-	-	7,449
Balance as at 30 June 2018	8,265	151	1,651	(2,744)	(108)	7,215

Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2018

	Notes	6 months ended 30 June 2018	6 months ended 30 June 2017	12 months ended 31 Dec 2017
		(Unaudited)	(Unaudited)	(Unaudited)
		£'000	£'000	£'000
Cash flows from operating activities
Loss before tax		(1,441)	(67)	(335)
Finance cost		157	-	86
Share based payment		151	-	-
Reverse acquisition expense	3	698	-	-
Changes in working capital
Increase in trade and other receivables		(59)	-	(2)
Increase/(decrease) in trade and other payables		(421)	34	2
Net cash flows used in operating activities		(915)	(33)	(249)
Cash flows from investing activities
Exploration expenditure	6	(99)	(68)	(107)
Cash acquired on acquisition	3	177	-	-
Deferred consideration paid		-	-	(150)
Net cash flow generated from/(used in) investing activities		78	(68)	(257)
Cash flows from financing activities
Shares issued (net of issue costs)	8	5,254	-	-
Convertible loan note issued (net of issue costs)	10	-	-	703
Net cash flow generated from financing activities		5,254	-	703
Increase/(decrease) in cash and cash equivalents		4,417	(101)	197
Cash and cash equivalents at beginning of period		417	176	176
Foreign exchange on cash and cash equivalent		57	-	44
Cash and cash equivalents at end of period		4,891	75	417

Notes to the Condensed Consolidated Financial Statements for the six month period ended 30 June 2018 

 

1.   General information

Emmerson Plc (the "Company") is a company incorporated and domiciled in the Isle of Man, whose shares were admitted to the Standard Listing segment of the Main market of the London Stock Exchange on 15 February 2017.

The principal activity of the Group is the exploration, development and exploitation of a potash development project in Morocco.

2.   Basis of preparation

2.1 General

The Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 Interim  Financial Reporting as adopted by the EU.  The Condensed Consolidated Financial Statements for the six months ended 30 June 2018 are unaudited and have not been reviewed by the Group's auditor, and do not include all of the information required for full annual financial statements.

They should be read in conjunction with the Company's annual financial statements for the period ended 31 December 2017 and the "Historical Financial Information of the MSL Group" contained in Part VIII of the Company's Placing and Re-Admission Document dated 9 May 2018.  The principal accounting policies applied in the preparation of the Condensed Consolidated Financial Statements are unchanged from those disclosed in those statements. These policies have been consistently applied to each of the periods presented. The Company's accounting policy for the Reverse Take Over (the "RTO") of Moroccan Salts Limited ("MSL") is described in Note 3.

The financial information of the Group is presented in UK Sterling, which is also the functional currency of the Company and has been prepared under the historical cost convention. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).

 

2.2 Basis of consolidation

The Condensed Consolidated Financial Statements comprise the financial statements of the Company, of MSL and MSL's subsidiaries (the "MSL Group") which the Company acquired in the RTO on 4 June 2018. For accounting purposes, MSL is deemed to have acquired the Company, as described in Note 3.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Please refer to note 3 for information on the consolidation of Emmerson Plc.

 

2.3 Comparative figures

In accordance with the RTO accounting policy whereby MSL is treated as the acquirer, the comparative figures for 31 December 2017 and 30 June 2017 are those of the MSL Group, and being prior to the RTO do not include the results of the Company.

The MSL financial statements have been translated in to Pound Sterling in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard requires that assets and liabilities be translated using the exchange rate at period end, and income, expenses and cash flow items are translated using the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for the period). The foreign exchange differences on translation of MSL are recognised in other comprehensive income.

 

2.3 Going concern

The Directors have reviewed the Group's ongoing activities and have a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, they have adopted the going concern basis in preparing the Interim Financial Statements.

 

2.4 Future changes in accounting policies

The directors have reviewed the IFRS standards in issue which are effective for annual accounting periods ending on or after the stated effective date. In their view, none of these standards would have a material impact on the financial reporting of the Group.

 

2.5 Segment reporting and cyclicality

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

The Directors are of the opinion that the Group is engaged in a single segment of business being the exploration activity of potash in one geographical area, being Morocco.

The interim results for the six months ended 30 June 2018 are not necessarily indicative of the results to be expected for the full year ending 31 December 2018. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.

3.   Reverse acquisition

On 4 June 2018, the Company acquired the entire issued share capital of MSL, a private company incorporated in the British Virgin Islands, by way of a share for share exchange.  MSL acted as the ultimate holding company for four wholly owned Moroccan subsidiaries.  MSL Minerals SARL is a wholly owned subsidiary of MSL.  MSL Minerals SARL is the shareholder of three further Moroccan subsidiaries, being:

-     Unisalts SARL:

-     JMS SARL; and

-     Mine de Centre SARL

Although the transaction resulted in MSL becoming a wholly owned subsidiary of the Company, the transaction constitutes a reverse acquisition as the previous shareholders of MSL own a substantial majority of the Ordinary Shares of the Company and two out of four members of the Board of Directors of the Company are MSL shareholders and management.  

In substance, the shareholders of MSL acquired a controlling interest in the Company and the transaction has therefore been accounted for as a reverse acquisition. As the Company previously had no investment activities and was engaged in acquiring MSL and raising equity financing to provide the required funding for the operations of the acquisition and re-listing on the main market of the LSE, it did not meet the definition of a business according to the definition in IFRS 3. Accordingly, this reverse acquisition does not constitute a business combination and was accounted for in accordance with IFRS 2 "Share-based Payment" and associated IFRIC guidance. The difference between the equity value given up by the MSL shareholders and the share of the fair value of net assets gained by the MSL shareholders is charged to the statement of comprehensive income as a share based payment on reverse acquisition, and represents in substance the cost of acquiring a main market LSE quoted listing.

In accordance with reverse acquisition accounting principles, these consolidated financial statements represent a continuation of the consolidated statements of MSL and its subsidiaries and include:

a. The assets and liabilities of MSL and its subsidiaries at their pre-acquisition carrying amounts and the results for both periods; and

b. The assets and liabilities of the Company as at 30 June 2018 and it's results from 4 June 2018 to 30 June 2018.

On 4 June 2018, the Company issued 333,333,333 ordinary shares to acquire all 2,820 shares of MSL.

On 4 June 2018, the investment of Moroccan Salts Limited in the Company was valued at £1,084,000 (not including the £6,000,000 cash placing proceeds on the same date).

Because the legal subsidiary, MSL, was treated as the accounting acquirer and the legal Parent Company, Emmerson Plc, was treated as the accounting subsidiary, the fair value of the shares deemed to have been issued by MSL was calculated at £1,084,000 based on an assessment of the purchase consideration for a 100% holding in Emmerson Plc.

The fair value of net assets of Emmerson Plc was £386,000 (not including the £6,000,000 cash placing proceeds on the same date). The difference between the deemed cost and the fair value of the net assets acquired therefore amounts to £698,000 and has been expensed in accordance with IFRS 2 as a Share based payment to profit or loss.

The reverse acquisition reserve that arose from the reverse takeover is made up as follows:

	£'000
Pre-acquisition losses of Emmerson Plc¹	(581)
MSL share capital at acquisition²	2,618
Investment in Emmerson Plc³	(1,084)
Reverse acquisition expense⁴	698
	1,651

The movement on the reverse acquisition reserve is as follows:

1)      Elimination of pre-acquisition reserves of Emmerson Plc as at 4 June 2018.

2)      MSL had issued share capital of US$ 3,201,000, equivalent to £2,618,000, as at 4 June 2018.  As these financial statements present the capital structure of the legal parent entity, the equity of MSL is eliminated.

3)      The Company issued 333,333,333 shares, valued at £1,084,000 for the entire issued capital of MSL. 

4)      The reverse acquisition expense represents the difference between the value of the equity issued by the Company, and the deemed consideration given by MSL to acquire the Company.

4.   Administrative fee and other expenses

	6 months ended 30 Jun 2018	6 months ended 30 Jun 2017	12 months ended 31 Dec 2017
	(Unaudited)	(Unaudited)	(Unaudited)
	£'000	£'000	£'000
Wages and salaries	76	48	113
Travel and accommodation	57	6	36
Professional fees	62	13	28
Accountancy fees	23	5	13
Technical services	-	2	12
Consultancy fees	309	-	26
Legal fees	-	-	2
Bank charges	1	-	1
Sundry	12	-	1
Total	540	74	232

5.   Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

	6 months ended 30 Jun 2018	6 months ended 30 Jun 2017	12 months ended 31 Dec 2017
	(Unaudited)	(Unaudited)	(Unaudited)
	£'000	£'000	£'000
Earnings
Loss from continuing operations for the period attributable to the equity holders of the Company	(1,441)	(67)	(335)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted earnings per share
	329,036,037	231,442,079	231,442,079
Basic and diluted earnings per share (pence)	(0.44)	(0.03)	(0.14)

The weighted average number of shares is adjusted for the impact of the reverse acquisition as follows:

- Prior to the reverse takeover, the number of shares is based on MSL, adjusted using the share exchange ratio arising on the reverse takeover; and

- From the date of the reverse takeover, the number of share is based on the Company

The potential number of shares which could be issued following the exercise of options and warrants currently outstanding amounts to 53,888,332 (See note 9). Dilutive earnings per share equals basic earnings per share as, due to the losses incurred, there is no dilutive effect from the subsisting share options and warrants.

6.   Intangible assets

The intangible assets consist of capitalised exploration and evaluation expenditure, including the cost of acquiring the one mining license and 39 research permits held by the Company's subsidiaries. The potash properties are currently unproved reserves. Once properties are have been classified as proved reserves, they will be transferred from intangible assets to tangible assets, and amortised over the life of the area according to the rate of depletion of the economically recoverable costs.

	30 Jun 2018	30 Jun 2017	31 Dec 2017
	(Unaudited)	(Unaudited)	(Unaudited)
	£'000	£'000	£'000
Cost:
At the beginning of the period	2,304	2,483	2,483
Additions	99	68	107
Exchange differences	198	(206)	(286)
As at end of period	2,601	2,345	2,304

 

7.   Trade and other payables

	30 Jun 2018	30 Jun 2017	31 Dec 2017
	(Unaudited)	(Unaudited)	(Unaudited)
	£'000	£'000	£'000
Deferred consideration	-	940	767
Other payables	346	-	-
	346	940	767

The deferred consideration represented the balance payable by MSL for the purchase of its Moroccan subsidiaries, and was extinguished in full during 2018 prior to the RTO.

8.   Share capital

Movements during the period in the issued share capital of MSL and the Company respectively are summarised below.

MSL	Number of shares	US$'000	£'000 equivalent
Brought forward at 1 January 2018	1,958	1,701	1,391
Issued as deferred consideration for the MSL subsidiaries and to various consultants/partners	862	1,500	1,227
Exchanged for shares in Company in RTO	2,820	3,201	2,618

Company	Number of shares	£'000
Brought forward at 1 January 2018	48,183,344	1,133
Less share issue costs		(166)
		967
Shares issued for cash	200,000,000	6,000
Shares issued in exchange for MSL shares	333,333,333	1,084
Shares issued to consultant Max Capital Private Ltd	14,500,000	435
Shares issue for convertible loan notes (see note 10)	30,115,708	903
Less share issue costs*	-	(1,124)
Exchanged for shares in Company in RTO	626,132,385	8,265

*The share issue costs of £1,124,000 included non-cash costs of £378,000.  The net cash received from the shares issued for cash was therefore £5,254,000.

9. Warrants and options

On 4 June 2018 and in conjunction with the RTO, the Placing and Re-Admission of the Company to the London Stock Exchange, the Company granted the following share options and warrants, all with an exercise price of 3 pence.  The options vest in four equal portions on the date of grant, and on the 6, 12 and 18 month anniversaries.

	Number issued	Expiry of option period
Share options
Hayden Locke (director)	12,000,000	5 years
Robert Wrixon (director)	6,000,000	5 years
Ed McDermott (director)	6,000,000	5 years
Consultants	7,500,000	5 years
Others	11,000,000	5 years
Total	42,500,000
Warrants	1,054,999	3 years
Warrants	10,333,333	2 years
Total options and warrants	53,888,332

The cost arising on the date of grant, applying a Black Scholes calculation, amounts to £151,000.

10. Convertible loan notes

On 30 August 2017 the Moroccan Salts Limited adopted a deed poll establishing unsecured convertible loan notes.  A total of US$950,000 of loan notes were subscribed for during 2017. They were convertible into ordinary shares at a discount of 25% to the share price paid on issue of new shares as part of an IPO/RTO, and accordingly they were entitled to receive shares in the Company with a value of US$1,266,667.  Applying the exchange rate at the date of the issue of the Placing Document and a placing price of 3 pence per Ordinary Share, on 4 June the loan notes were converted into 30,115,708 Emmerson Plc Ordinary Shares with a value of £903,471.

The finance cost recorded in the Statement of Comprehensive Income represents the increase in value of the loan notes from the date of grant up to conversion into Ordinary Shares.

11. Events after the reporting date

There were no significant subsequent events.

 

END

 

 

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