REG-Medcaw Investments Plc: Half-year Report
29/09/2023 14:15
MEDCAW INVESTMENTS PLC
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE HALF YEAR PERIOD ENDED 30 JUNE 2023
CHAIRMAN’S STATEMENT
Operational Review
Following its successful listing on the Standard Main Market of the London
Stock Exchange, having raised £637,000 in December 2022, the company
commenced its search for a suitable acquisition target with the potential to
return real value to shareholders.
The directors reviewed several opportunities before, subsequent to the period
end, agreeing on 7th July 2023 to enter into a conditional implementation
agreement with Abyssinian Metals Limited ("AML"), a company incorporated in
Australia and developing the Kenticha lithium project located in Oromia State,
Southern Ethiopia. Subject to the Company being satisfied with technical,
legal, accounting, tax, financial, commercial and environmental due diligence
on AML the Company will consider making an offer to acquire up to 100% of the
entire issued share capital of AML.
The Proposed Acquisition constitutes a reverse takeover under the Listing
Rules. The Company is currently unable to provide full disclosure under
Listing Rule 5.6.15 in relation to AML and subsequently requested a suspension
of trading in its shares with effect from 7th July. The trading of the
Company’s shares will remain suspended until such time as a prospectus is
published in relation to the Proposed Acquisition.
Medcaw Investments will make an offer to AML shareholders to acquire up to
100% of the issued share capital of AML. Consideration will be made through
the issue of new shares in Medcaw to accepting shareholders of AML. The
Proposed Acquisition is conditional on approval by shareholders of Medcaw
Investments making a code-compliant offer for shares in Australia, which
requires a minimum of 51% acceptance followed by a reverse transaction on the
London Stock Exchange, which will be completed in due course.
The Proposed Acquisition remains subject, amongst other things, to completion
of customary due diligence, negotiation of transaction details, and admission
of the enlarged company on the London Stock Exchange and therefore, there is
no certainty that the Proposed Acquisition will complete.
Kenticha is a highly evolved, rare element, Lithium Caesium Tantalum (LCT)
pegmatite project comparable to other major rare-element pegmatites such as
Greenbushes, Tanco, Wodgina, Volta Grande and Altai No.3. Kenticha is a late
stage development asset which AML intends to develop with the production of
spodumene concentrate planned in stages, with near-term production through a
Dense Medium Separation (DMS) modular plant.
Recent progress of the Kenticha site includes initial camp construction to
accommodate the operating team and security personnel, provisions of services
to the local community, and civil works including roads, water, and power.
There have been discussions and provisional agreements with port authorities
for port access and freight forwarding arrangements, as well as mobilisation
of contractors and equipment for the start-up of operations including drilling
programmes which recently commenced. The construction and fabrication of the
DMS modular plant for the Stage 1 Near Term Production has been custom-built
in Johannesburg and is in the process of being packed up and shipped to
Ethiopia. It is anticipated that the Stage 1 (a) DMS will be in-situ at the
Kenticha site in August 2023 and commissioning will start thereafter with the
first SC5.5 being produced by the end of 2023.
Additionally, the Company raised gross proceeds of £400,000 via the issue of
a total of 5,000,000 new Ordinary Shares in the Company. These shares rank
pari passu with the existing Ordinary Shares in the Company. Alongside the
equity raise, 300,000 broker warrants at the placing price of 8p per share and
1,600,000 warrants at 4p were also issued to a third-party consultant for
transactional services.
Board Changes
Marcus Yeoman and Charles Wood were appointed directors of the Company with
effect from 3 March 2023. At the same time, Fungai Ndoro and Daniel Maling
resigned as directors of the Company. With effect from 17 April 2023, Marcus
assumed the role of Non-Executive Chairman, Charles Wood as Executive Director
and Sarah Cope as Non-Executive Director.
Financial Review
The Company incurred administrative expenses of £135,975 during the six
months to 30 June 2023. At the end of the period the Company had cash and
trade and other receivables of £533,730.
Outlook
The directors are working with the Company’s advisers on the acquisition of
AML and the re-admission of the Company’s shares to trading on the London
Stock Exchange with the aim of completing this transformational and value
enhancing transaction in as short a time frame as possible.
Principal Risks and Uncertainties
The principal risks and uncertainties for the remaining six months of the
financial year remain the same as those contained within the annual report and
accounts as at 31 December 2022.
Related Party Transactions
No related party transactions have taken place in the first six months of the
current financial year. There have been no changes in the related party
transactions described in the last annual report that could have a material
effect on the financial position or performance of the Company in the first
six months of the current financial year.
Statement of Directors’ Responsibilities
The directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom’s Financial Conduct Authority and
that the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
* an indication of important events that have occurred during the first six
months and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
* material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report.
Marcus Yeoman
Non-Executive Chairman
29 September 2023
Unaudited Unaudited Audited
6 months ended 30 June 2023 6 months ended 30 June 2022 12 months ended 31 Dec 2022
Note £ £ £
Revenue - -
Administrative expenses (135,975) - (194,006)
Operating result (135,975) - (194,006)
Finance income/(expense) - - -
Loss before taxation (135,975) - (194,006)
Income tax - - -
Loss for the period and total comprehensive income for the period (135,975) - (194,006)
Basic and diluted loss per ordinary share (pence) 3 (0.77) (-) (1.90)
Unaudited Unaudited Audited
As at 30 June 2023 As at 30 June 2022 As at 31 December 2022
Note £ £ £
ASSETS
Current assets
Other current assets 4 171,475 - 187,160
Cash and cash equivalents 362,255 220,499 643,872
Total assets 533,730 220,499 831,032
Liabilities
Current liabilities
Trade & other payables 5 79,382 32,000 240,709
Total liabilities 79,382 32,000 240,709
Net assets 454,348 188,499 590,323
EQUITY AND LIABILITIES
Equity attributable to owners
Ordinary share capital 6 171,320 102,500 171,320
Share premium 6 679,110 152,100 679,110
Accumulated losses (396,082) (66,101) (260,107)
Total equity 454,348 188,499 590,323
Ordinary share capital Share premium Retained earnings Total equity
£ £ £ £
Profit for the period - - (2,685) (2,685)
Total comprehensive income for the period - - (2,685) (2,685)
As at 31 December 2021 97,500 137,100 (66,101) 168,499
Profit for the period - - - -
Total comprehensive income for the period - - - -
Transactions with owners
Ordinary shares issued during period 5,000 15,000 - 20,000
Total transactions with owners 5,000 15,000 - 20,000
As at 30 June 2022 102,500 152,100 (66,101) 188,499
Comprehensive loss for the year
Loss for the year - - (194,006) (194,006)
Total comprehensive loss for the year - - (194,006) (194,006)
Transactions with owners
Ordinary shares issued during year 68,820 588,712 - 657,532
Share issue costs - (61,702) - (61,702)
Total transactions with owners 68,820 527,010 - 595,830
As at 31 December 2022 171,320 679,110 (260,107) 590,323
Comprehensive loss for the period
Loss for the period - - (135,975) (135,975)
Total comprehensive loss for the period - - (135,975) (135,975)
Transactions with owners
Ordinary shares issued during the period - - - -
Share issue costs - - - -
Total transactions with owners - - - -
As at 30 June 2023 171,320 679,110 (396,082) 454,348
6 months ended 30 June 2023 6 months ended 30 June 2022 12 months ended 31 Dec 2022
£ £ £
Cash flows from operating activities
Loss before income tax (135,975) - (194,006)
Adjustments for:
Share based payments - - 9,422
Increase in other receivables (21,565) - -
Decrease in other payables (161,327) - -
Net cash from operating activities (318,867) - 152,675
Cash flows from financing activities
Cash received from issue of ordinary Shares 187,250 20,000 475,282
Issue of loan (150,000) - -
Net cash inflow from financing activities 37,250 20,000 475,282
Net (decrease)/ increase in cash and cash equivalents (281,617) 20,000 443,373
Cash and cash equivalents at beginning of period 643,872 200,499 200,499
Cash and cash equivalents at end of period 362,255 220,499 643,872
1 General information
The Company was incorporated on 11 December 2020 as a public company in
England and Wales with company number 13078596 under the Companies Act,
2006.
The address of its registered office is Central Working Victoria Eccleston
Yards, 25 Eccleston Place London SW1W 9NF United Kingdom.
The principal activity of the Company is to pursue one or more acquisitions in
the natural resources field.
2 Accounting policies
IAS 8 requires that management shall use its judgement in developing and
applying accounting policies that result in information which is relevant to
the economic decision-making needs of users, that are reliable, free from
bias, prudent, complete and represent faithfully the financial position,
financial performance and cash flows of the entity.
2.1 Basis of preparation
The Interim Financial Statements of the Company are unaudited condensed
financial statements for the six month period ended 30 June 2023.
The accounting policies applied by the Company in these Interim Financial
Statements, are the same as those applied by the Company in its financial
statements and have been prepared on the basis of the accounting policies
applied for the financial year to 31 December 2022 which have been prepared in
accordance with IFRS as adopted by UK for. The Company Financial Statements
have been prepared using the measurement bases specified by IFRS each type of
asset, liability, income and expense.
The functional currency for the Company is determined as the currency of the
primary economic environment in which it operates. The functional and
presentational currency of the Company is Pounds Sterling (£).
The business is not considered to be seasonal in nature.
The comparative figures have been presented as the Company Financial
Statements cover the 6 month period ended 30 June 2022 and the 12 month
period ended 31 December 2022.
New standards, amendments and interpretations adopted
During the current period the Company adopted all the new and revised
standards, amendments and interpretations that are relevant to its operations
and are effective for accounting periods beginning on 1 January 2023. This
adoption did not have a material effect on the accounting policies of the
Company.
New standards, amendments and interpretations not yet adopted by the Company.
The standards and interpretations that are relevant to the Company, issued,
but not yet effective, up to the date of these interim Financial information
have been evaluated by the Directors and they do not consider that there will
be a material impact of transition on the financial information.
2.2 Going concern
The financial statements have been prepared on a going concern basis, which
assumes that the Company will continue in operational existence for the
foreseeable future.
The Company has based the going concern assumption on a base case, where any
proposed transaction does not take place meaning the entity has the ability to
meet its working capital requirements from existing cash . The existing cash,
including the amounts raised post year end, are sufficient to meet the working
capital requirements of the Company going forward when outgoings are reduced
to only committed costs. This includes applying mitigation measures to reduce
the cost base of the Company. As a result of this the directors believe that
the going concern assumption is appropriate.
Under the scenario that any proposed acquisition does take place the Company
would secure additional funding at IPO to ensure that all future capital
commitments would be able to be satisfied.
Taking these matters into consideration, the Directors consider that the
continued adoption of the going concern basis is appropriate having reviewed
the forecasts for the coming 12 months from the date of signing and the
financial statements do not reflect any adjustments that would be required if
they were to be prepared other than on a going concern basis.
2.4 Cash and cash equivalents
The Directors consider any cash on short-term deposits and other short-term
investments to be cash equivalents.
2.5 Financial assets and liabilities
Financial assets and financial liabilities are recognised when the Company
becomes a party to the contractual provisions of a financial instrument.
Financial assets and financial liabilities are offset if there is a legally
enforceable right to set off the recognised amounts and interests and it is
intended to settle on a net basis.
2.6 Earnings per Ordinary Share
The Company presents basic and diluted earnings per share data for its
Ordinary Shares. Basic earnings per Ordinary Share is calculated by dividing
the profit or loss attributable to Shareholders by the weighted average number
of Ordinary Shares outstanding during the period. Diluted earnings per
Ordinary Share is calculated by adjusting the earnings and number of Ordinary
Shares for the effects of dilutive potential Ordinary Shares.
2.7 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the share premium account, net of any
related income tax benefits.
Retained losses includes all current and prior period results as disclosed in
the income statement.
2.8 Critical accounting estimates and judgments
In preparing the Company Financial information, the Directors have to make
judgments on how to apply the Company’s accounting policies and make
estimates about the future. The Directors do not consider there to be any
critical judgments that have been made in arriving at the amounts recognised
in the interim financial information.
3 Loss per Ordinary Share
As at 30 June 2023 As at 30 June 2022 As at 31 Dec 2022
Basic loss per Ordinary Share
Earnings attributable to Shareholders (135,975) - (66,101)
Weighted average number of Ordinary Shares 17,132,095 9,894,444 9,589,610
Basic and diluted loss per share (pence) (0.79) - (0.69)
4 Trade and other receivables
As at 30 June 2023 £ As at 30 June 2022 £ As at 31 December 2022 £
Prepayments 21,475 - -
Other receivables 1 150,000 - -
IPO Funds - - 187,160
171,475 - 187,160
1- On 23rd June 2023 , Medcaw Investments (MCI) entered into an
agreement whereby MCI would provide a £150,000 unsecured loan to Abyssinian
Metals Limited (AML) to fund working capital requirements until such a time
that MCI acquired the full share capital of AML per the RNS on 7th July 2023.
The agreement is at arms length with interest accruing at 10% per annum. The
loan is payable on demand and is fully convertible into ordinary shares of AML
at the lenders discretion. 5 Trade
and other payables
As at 30 June 2023 £ As at 30 June 2022 £ As at 31 December 2022 £
Trade payables 40,928 - 203,256
Accruals 38,454 - 37,453
Convertible debt - 32,000 -
79,382 32,000 240,709
6 Share Capital
Ordinary Shares Share Capital Share Premium Total
£ £ £
At 31 December 2021 9,750,000 97,500 137,100 234,600
Issue of ordinary shares 3 500,000 5,000 15,000 20,000
At 30 June 2022 10,250,000 102,500 152,100 254,600
Issue of ordinary shares 511,275 5,113 15,338 20,451
IPO shares 6,370,820 63,707 573,374 637,081
Share issue costs - - ( 61,702 ) ( 61,702 )
At 31 December 2022 17,132,095 171,320 679,110 850,430
Movement in the period - - - -
At 30 June 2023 17,132,095 171,320 679,110 850,430
7 Warrants
As at 30 June 2023
Weighted average exercise price Number of warrants
Brought forward at 1 January 2023 4p 4,000,000
Granted in the period - -
Vested in the period - -
Outstanding at 30 June 2023 4p 4,000,000
Outstanding at 30 June 2023 4p 4,000,000
As at 31 December 2022
Weighted average exercise price Number of warrants
Brought forward at 1 January 2022 - -
Granted in year 4p 4,000,000
Vested in year 4p 4,000,000
Outstanding at 31 December 2022 4p 4,000,000
Exercisable at 31 December 2022 4p 4,000,000
The weighted average time to expiry of the warrants as at 31 December 2022
is 1.48 years
8 Related party transactions
There have been no material related party transactions in the period that
require disclosure.
9 Events subsequent to the reporting
date
Signing of conditional implementation agreement with Abyssinian Metals Limited
and Equity Fundraise
On 7th July 2023 Medcaw entered into a conditional implementation agreement
with Abyssinian Metals Limited ("AML"), a company incorporated in Australia
and developing the Kenticha lithium project located in Oromia State, Southern
Ethiopia. Subject to the Company being satisfied with technical, legal,
accounting, tax, financial, commercial and environmental due diligence on AML
the Company will consider making an offer to acquire up to 100% of the entire
issued share capital of AML.
Additionally the Company raised gross proceeds of £400,000 via the issue
of a total of 5,000,000 new Ordinary Shares in the Company. These shares
rank pari passu with the existing Ordinary Shares in the Company. Alongside
the equity raise 300,000 broker warrants at the placing price of 8p per
share and 1,600,000 warrants at 4p were also issued to a third-party
consultant for transactional services.
10 Financial commitments and contingent
liabilities
There were no financial commitments or contingent liabilities of the Company
as at 30 June 2023.
11 Ultimate controlling party
As at 30 June 2023, there was no ultimate controlling party of the Company.
Medcaw Interim June 2023 (https://mb.cision.com/Main/22525/3845046/2329157.pdf)
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