Medcaw Investments Plc - Half-year Report

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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 shares3

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