Medcaw Investments Plc - Audited Financial Results for the Year Ended 31 December 2023
(“Medcaw” or the “Company”)
Audited Financial Results for the Year Ended
Medcaw is please to announce the publication of the audited results for the year ended
Chairman’s Statement
It is my pleasure to submit the Chairman’s Statement for the Company covering the twelve-month period to
During the period, 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 agreeing to acquire 100% of
AML is a public limited company incorporated in
Under AML’s stewardship the geological inventory at Kenticha has grown from circa 47mt of lithium oxide (Li2O) at a grade of around 0.8%; to 85.6mt at 0.98% Li2O plus a further 50Mt Exploration Target (at similar grade). By world standards, Kenticha is considered to be in the top 3-4 largest undeveloped hard rock lithium projects in the world, with an estimated economic life of in excess of 40 years (based on prevailing lithium-spodumene prices).
The Transaction has taken longer than was initially intended and this is due to the emergence of a dispute between AML and its 49% joint venture partner in the project -
Over the last seven months, notwithstanding that there has been no “on ground” activity at
The Transaction constitutes a reverse takeover under the Listing Rules. The Company requested its securities be suspended from trading with effect from
The Company and AML have engaged professional advisors and continue to work through diligence and documentation to complete the Transaction.
Additionally during the period, 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.
I would like to thank our shareholders, my fellow directors and our colleagues at Orana Corporate for their continuing patience and ongoing support.
Non-Executive Chairman
CONTACT:
For more information please visit: https://medcaw-invest.com/
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED
Year ended Year ended
31 December 2023 31 December 2022
Note £ £
Revenue - -
Administrative expenses 4 (562,260) (194,006)
Impairment 11 (157,759) -
Operating result (720.019) (194,006)
Finance income/(expense) 11 7,849 -
Loss before taxation (712,170) (194,006)
Income tax - -
Loss for the year and total comprehensive (712,170) (194,006)
loss for the year
Basic and diluted loss per Ordinary Share 8 (3.64) (1.90)
(pence )
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
The accompanying notes to the annual report form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT
As at 31 As at 31
December 2023 December 2022
Note £ £
ASSETS
Current assets
Cash and cash equivalents 9 371,484 643,872
Other current assets 10 140,323 187,160
Loan notes 11 - -
Total assets 511,807 831,032
Liabilities
Current liabilities
Trade & other payables 12 242,751 240,709
Total liabilities 242,751 240,709
Net assets 269,056 590,323
EQUITY AND LIABILITIES
Equity attributable to owners
Ordinary share capital 13 221,320 171,320
Share premium 13 1,005,110 679,110
Share based payment reserve 14 14,903 -
Accumulated losses (972,277) (260,107)
Total equity and liabilities 269,056 590,323
The accompanying notes to the annual report form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
Ordinary share Share based Retained
capital Share premium payment earnings Total equity
reserve
£ £ £ £ £
As at 31 97,500 137,100 - (66,101) 168,499
December 2021
Comprehensive
loss for the
year
Loss for the - - - (194,006) (194,006)
year
Total
comprehensive - - - (194,006) (194,006)
loss for the
year
Transactions
with owners
Ordinary
shares issued 73,820 603,712 - - 677,532
during year
Share issue - (61,702) - - (61,702)
costs
Total
transactions 73,820 542,010 - - 615,830
with owners
As at 31 171,320 679,110 - (260,107) 590,323
December 2022
Comprehensive loss for the year Loss for the year - - - (712,170) (712,170) Total comprehensive loss for the - - - (712,170) (712,170) year Transactions with owners Warrants issued during year - - 14,903 - 14,903 Ordinary shares issued during year 50,000 350,000 - - 400,000 Share issue costs - (24,000) - - (24,000) Total transactions with owners 50,000 326,000 14,903 - 390,903 As at 31 December 2023 221,320 1,005,110 14,903 (972,277) (269,056)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
Notes Year ended 31 December Year ended 31 December
2023 2022
£ £
Cash flows from operating
activities
Loss before income tax (712,170) (194,006)
Adjustments for:
Impairment 11 157,759
Share based payments 14 14,903 9,422
Adjustments for changes in
working capital:
Decrease in trade and (140,323) -
other receivables
Decrease in trade and 1,241 152,675
other payables
Interest income (7,849) -
Net cash used in operating (686,439) (31,909)
activities
Cash flows from financing
activities
Cash received from issue 563,160 475,282
of Ordinary Shares 1
Net cash inflow from 563,160 475,282
financing activities
Cash flows from investing
activities
Loan notes 11 (149,109) -
Net cash inflow from (149,109) -
investing activities
Net (decrease)increase in (272,388) 443,373
cash and cash equivalents
Cash and cash equivalents 643,872 200,499
at beginning of year
Cash and cash equivalents 371,484 643,872
at end of year
1 In 2023 £187,160 of IPO funds were received by the Company
The accompanying notes on pages 23 to 35 form part of these financial statements
1. General Information
The Company was incorporated on
The address of its registered office is Eccleston Yards, 25 Eccleston Place London SW1W 9NF
The principal activity of the Company is to pursue one or more acquisitions.
The Company listed on the
1. Accounting policies
The principal accounting policies applied in preparation of these financial statements are set out below. These policies have been consistently applied unless otherwise stated.
2.1 Basis of preparation
The principal accounting policies applied in the preparation of the Financial Statements are set out below. These policies have been consistently applied to the year presented, unless otherwise stated.
The Company Financial Statements have been prepared in accordance with
The Company Financial Statements are presented in £ unless otherwise stated.
2.2 Going concern
The Company’s business activities, together with facts likely to affect its future operations and financial and liquidity positions are set out in the Chairman’s Statement and the Strategic Report.
The Company’s financial statements have been prepared on the going concern basis, which contemplates that the Company will be able to realize its assets and discharge liabilities in the normal course of business. Despite this, there can be no assurance that the Company will either achieve or maintain profitability in the future and financial returns arising therefrom, may be adversely affected by factors outside the control of the Company.
The Company has had recurring losses in the current year and prior period, and its continuation as a going concern is dependent on the Company’s ability to successfully fund its operations by obtaining additional financing from equity injections or other funding.
This indicates that a material uncertainty exists that may cast significant doubt over the Company’s ability to continue as a going concern.
Whilst acknowledging this material uncertainty, the directors consider it appropriate to prepare the consolidated financial statements on a going concern basis for the following reasons:
-- The Company may reasonably expect to maintain continued support from
shareholders and other financiers that have supported the Company’s
previous capital raising to assist with meeting future funding needs;
and
-- All outgoing and expenditure can be suspended until the sufficient
completion of a capital raise.
The financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern. The auditors have made reference to going concern by way of a material uncertainty within their report.
2.3 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and demand deposits with banks and other financial institutions.
2.4 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.
Equity-settled share-based payments are credited to a share-based payment reserve as a component of equity until related options or warrants are exercised or lapse.
Retained losses includes all current and prior year results as disclosed in the income statement.
2.5 Foreign currency translation
The financial statements are presented in Sterling which is the Company’s functional and presentational currency.
Transactions in currencies other than the functional currency are recognised at the rates of exchange on the dates of the transactions. At each reporting date, monetary assets and liabilities are retranslated at the rates prevailing at the balance sheet date with differences recognised in the Statement of comprehensive income in the year in which they arise.
2.6 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and recognition of financial assets and liabilities.
a) Classification
The Company classifies its financial assets in the following measurement categories:
-- those to be measured subsequently at fair value (either through OCI or
through profit or loss);
-- those to be measured at amortised cost; and
-- those to be measured subsequently at fair value through profit or loss.
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
b) Recognition
Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Company commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
c) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.
d) Impairment
The Company assesses, on a forward-looking basis, the expected credit losses associated with any debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
2.7 Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received net of any direct issue costs.
2.8 Share based payments
The Group issues equity-settled share based payments to certain advisors.
Equity-settled Share based payments are measured at fair value at the date of grant.
Fair value is measured using an appropriate options pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The fair value determined at the grant date of the equity-settled Share based payments is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Group’s estimate of the shares that will eventually vest.
Where the terms of an equity-settled transaction are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in value of the transaction as a result of the modification, as measured at the date of the modification.
Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction and designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated as if they were a modification of the original transaction, as described in the previous paragraph.
2.9 Taxation
Tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
2.10 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected.
Estimation of fair value of warrants issued in the year
The fair value of the warrants issued during the period have been calculated using a Black Scholes model which requires a number of assumptions and inputs, see Note 14 below.
2.11 New standards and interpretations not yet adopted
At the date of approval of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases have not yet been adopted by the
______________________________________________________________________________ |Standard |Effective date |Overview | |___________________________|_____________________|____________________________| | | |The standard has been | | | |amended to clarify that the | | | |classification of | | | |liabilities as current or | | | |non-current should be based | | | |on rights that exist at the | | | |end of the reporting period.| | | | | | | |In order to conclude a | | | |liability is non-current, | |Amendments to IAS 1 | |the right to defer | | | |settlement of a liability | |Classification of |1 January 2024 (early|for at least 12 months after| |Liabilities as Current or |adoption permitted) |the reporting date must | |Non-current | |exist as at the end of the | | | |reporting period. | | | | | | | |The amendments also clarify | | | |that (for the purposes of | | | |classification as current or| | | |non-current), settlement is | | | |the transfer of cash, the | | | |entity’s own equity | | | |instruments (except as | | | |described below), other | | | |assets or services. | |___________________________|_____________________|____________________________| | | |The amendments have been | | | |made to clarify: | | | | | | | |- when a currency is | |Amendments to IAS 21 – Lack|1 January 2025 (early|exchangeable into another | |of Exchangeability |adoption permitted) |currency; and | | | | | | | |- how a company estimates a | | | |spot rate when a currency | | | |lacks exchangeability. | |___________________________|_____________________|____________________________|
1. Segmental analysis
The Company manages its operations in one segment, being seeking a suitable investment. The results of this segment are regularly reviewed by the board as a basis for the allocation of resources, in conjunction with individual investment appraisals, and to assess its performance.
1. Operating Loss
Operating loss for the company is stated after charging:
Year ended Year ended
31 December 2023 31 December 2022
£ £
Directors’ fees 108,000 2,454
Professional Fees (Legal & accounting) 364,949 86,845
Listing expenses 65,983 104,707
Other administrative expenses 28,184 -
Insurance 27,418 -
VAT provision written back (32,274) -
562,260 194,006
1. Directors’ and Employees
The average number of persons employed by the Company (including executive directors) during the year year ended
Year ended Year ended
No of employees
31 December 2023 31 December 2022
Management 3 3
3 3
The aggregate payroll costs of these persons were as follows:
£ £
Wages and salaries 108,000 2,454
108,000 2,454
Year ended Year ended
31 December 2023 31 December 2022
£ £
Fees to directors 108,000 2,454
108,000 2,454
1. Auditor’s Remuneration
Year ending 31 Year ending 31
December 2023 December 2022
£ £
Fees payable to the Company’s auditor for the 35,000 35,000
audit of the Company
Corporate Finance Fees - 15,000
35,000 50,000
1. Taxation
As at 31 As at 31
December 2023£ December 2022£
A reconciliation of the tax charge / credit
appearing in the income statement to the tax that
would result from applying the standard rate of
tax to the results for the year is:
Loss per accounts (712,170) (194,006)
Tax credit at the standard rate of corporation tax (135,312) (36,861)
in the UK of 19%
Adjustment for items disallowable for tax - -
Tax losses for which no deferred tax is recognised 135,312 36,861
Tax expense recognised in accounts - -
The Company has total carried forward losses of £815,418 (2022: £ 260,107). The taxed value of the unrecognised deferred tax asset is £156,249 (2022: £49,420) and these losses do not expire. No deferred tax assets in respect of tax losses have been recognised in the accounts because there is currently insufficient evidence of the timing of suitable future taxable profits against which they can be recovered.
1. Earnings per share
The calculation of the basic and diluted earnings per share is calculated by dividing the profit or loss for the year by the weighted average number of ordinary shares in issue during the year.
31 December 2023 31 December 2022
£ £
Loss attributable to shareholders of Medcaw (712,170 (194,006)
Investments Plc
Weighted number of ordinary shares in issue 19,563,414 10,236,324
Basic & dilutive earnings per share from (3.64 (1.90)
continuing operations - pence
There is no difference between the diluted loss per share and the basic loss per share presented. Share options and warrants could potentially dilute basic earnings per share in the future but were not included in the calculation of diluted earnings per share as they are anti-dilutive for the year presented. See note 13 for further details.
1. Cash and cash equivalents
As at As at
31 December 2023 31 December 2022
£ £
Cash at bank 371,484 643,872
371,484 643,872
1. Other current assets
As at 31 December 2023 As at 31 December 2022
£ £
IPO Funds - 187,160
Prepayments 36,100 -
VAT 104,223 -
140,323 187,160
1. Loan note
As at 31 December 2023 As at 31 December 2022
£ £
Loan note 149,109 -
Interest receivable 7,849 -
Provision for doubtful debts (157,759)
- -
On 23
rd
1. Trade and other payables
As at 31 December 2023 As at 31 December 2022
£ £
Trade payables 97,297 203,256
Accruals 145,454 37,453
242,751 240,709
1. Share capital and share premium
Ordinary Shares Share Share Premium Total
Capital
£ £ £
Issue of ordinary shares 1 1,011,275 10,113 30,338 40,451
IPO shares 2 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
Issue of ordinary shares 3 5,000,000 50,000 350,000 400,000
Share issue costs - - (24,000) (24,000)
At 31 December 2023 22,132,095 221,320 1,005,110 1,226,430
1
On 9
th
2
On admission to the Standard List of the LSE on 21
st
3
On 6
th
The share premium represents the difference between the nominal value of the shares issued and the actual amount subscribed less; the cost of issue of the shares, the value of the bonus share issue, or any bonus warrant issue.
The Company has only one class of share. All ordinary shares have equal voting rights and rank pari passu for the distribution of dividends and repayment of capital.
1. Share based payments reserve
2023 2022
£ £
Opening balance - -
Broker warrants 41 -
Advisor warrants 14,862 -
Adviser warrants - -
At 31 December 14,903 -
The fair value of the services received in return for the warrants granted are measured by reference to the fair value of the warrants granted. The estimate of the fair value of the warrants granted is measured based on the Black-Scholes valuations model. Measurement inputs and assumptions are as follows:
Broker Advisor Adviser
Issue date 06/07/2023 06/07/2023 01/9/2023
Time to expiry 2 2 3
Share price at date of issue of warrants 5p 5p 5p
Exercise price 8p 4p 32p
Expected volatility 18.4% 18.4% 18.4%
Risk free interest rate 4.3% 4.3% 4.3%
Warrants
As at 31 December 2023
Number of
Weighted average exercise price
warrants
Brought forward at 1 January 2023 4p 4,000,000
Granted in year 26p 9,712,500
Vested in year 26p 9,712,500
Outstanding at 31 December 2023 20p 13,712,500
Exercisable at 31 December 2023 20p 13,712,500
The weighted average time to expiry of the warrants as at
1. Financial Instruments and Risk Management
Principal financial instruments
The principal financial instruments used by the Company from which the financial risk arises are as follows:
31 December 2023 31 December 2022
£ £
Financial Assets at amortised cost
Cash and cash equivalents 371,484 643,872
Loan note - -
371,484 643,872
Financial Liabilities at amortised cost
Trade and other payables 97,297 240,709
Accruals 145,454 37,453
242,751 278,162
The financial liabilities are payable within one year.
General objectives and policies
Per the Directors report the overall objective of the Board is to set policies that seek to reduce risk as far as practical without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are:
Policy on financial risk management
The Company’s principal financial instruments comprise cash and cash equivalents, loan receivables, trade and other payables. The Company’s accounting policies and methods adopted, including the criteria for recognition, the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are set out in note 2 – “Accounting Policies”.
The Company does not use financial instruments for speculative purposes. The carrying value of all financial assets and liabilities approximates to their fair value.
Derivatives, financial instruments and risk management
The Company does not use derivative instruments or other financial instruments to manage its exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties. The Company’s exposure and the credit ratings of its counterparties are monitored by the Board of Directors to ensure that the aggregate value of transactions is spread amongst approved counterparties.
The Company applies IFRS 9 to measure expected credit losses for its loan receivables, these are regularly monitored and assessed. Loans aresubject to an expected credit loss provision when it is probable that amounts outstanding are not recoverable as set out in the accounting policy. Due to the inherent uncertainty in the recoverability of the loan to AML the Company has raised a provision against the full amount and an impairment charge has been recorded.
The Company’s principal financial assets are cash and cash equivalents and a loan note. Cash equivalents include amounts held on deposit with financial institutions. The loan note is an unsecured loan accruing interest at 10% per annum. The loan is repayable upon demand by the lender and can be converted into shares in AML subject to certain milestones not being met. As at reporting date the loan has not been converted to equity
The credit risk on liquid funds held in current accounts and available on demand is limited because the Company’s counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
No financial assets have indicators of impairment.
The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets recorded in the financial statements.
Liquidity risk
During the
In managing liquidity risk, the main objective of the Company is to ensure that it has the ability to pay all of its liabilities as they fall due. The Company monitors its levels of working capital to ensure that it can meet its liabilities as they fall due.
The table below shows the undiscounted cash flows on the Company’s financial liabilities as at
Total Within 2 months Within 2-6 months
£ £ £
At 31 December 2023
Trade payables 97,297 97,297 -
Accruals 145,454 145,454 -
Total Within 2 months Within 2-6 months
£ £ £
At 31 December 2022
Trade payables 203,256 203,256 -
Accruals 37,454 37,454 -
Capital management
The Company considers its capital to be equal to the sum of its total equity. The Company’s objective when managing its capital is to ensure it obtains sufficient funding for continuing as a going concern. The Company funds its capital requirements through the issue of new shares to investors.
1. Related Party Transactions
Provision of services
During the year £107,225 (2022: £12,670 was incurred for the provision of administrative and corporate accounting services from
1.Ultimate Controlling Party
As at
1. Capital Commitments
As at
1. Subsequent events
There have been no subsequent of events after
