TIDMMUST
RNS Number : 5058Y
Mustang Energy PLC
07 September 2022
Wednesday 7 September 2022
Mustang Energy PLC
Interim Condensed Financial Statements
Half Year to 30 June 2022
Mustang Energy PLC (the "Company"), announces its unaudited
interim results for the half year ended 30 June 2022.
Copies of this interim report will be made available on the
Company's website, www.mustangplc.com
ENQUIRIES
For further information, please visit www.mustangplc.com ,
follow us on Twitter @Mustang_Plc , or contact:
Mustang Energy PLC
Dean Gallegos, Managing Director
dg@mustangplc.com
+61 416 220 007
Interim Management Report
As you are aware, in March 2021 the Company announced a
Strategic Alliance and Placing to Acacia Resources Limited
("Acacia"). Acacia was established in 2012 with a current focus on
minerals involved in the energy transition process. The principal
purposes of the Placing and the Strategic Investment was for the
Company and Acacia to invest together in manufacturing assets
involved in the energy transition process with a focus on energy
storage and the battery value chain. Additionally, it is also the
intention to participate in the development of renewable energy
projects where there is scope to include stationary energy storage.
At the same time as the Placing Acacia also acquired existing
shares from two existing shareholders and as a result of the
Placing and these purchases became the Company's largest
shareholder with 24.03%.
In April 2021 the Company announced that it had entered into an
investment agreement dated 21 April 2021 (the "Investment
Agreement") where it agreed to acquire a 22.1% interest in VRFB
Holdings Limited ("VRFB-H") f or US$7.524 million ("Acquisition
(Stage 1)"), which was funded through the issue of US$8,000,000 10
per cent. unsecured convertible loan notes (the "CLNs") to certain
investors, including the Company's 24.03% shareholder Acacia.
VRFB-H owns a 50% interest in Enerox Holdings Limited ("EHL") with
EHL owning a 100% interest in Enerox GmbH ("Enerox").
Mustang's 22.1% investment into VRFB-H constitutes a reverse
takeover under the Listing Rules. As a result, the Company's shares
are suspended until the Company publishes a prospectus for the
readmission of the ordinary share capital of the Company to trading
on the London Stock Exchange.
Enerox is an Austrian-based vanadium redox flow battery
manufacturer. Bushveld Minerals Limited ("BMN") owns a 50.5%
interest in VRFB-H and Acacia owns the remaining 27.4%. Enerox has
invested more than 20 years of research and development into its
CellCube energy storage system. Their vanadium-based technology is
known to be state-of-the-art in the battery market and has already
deployed more than 130 systems / 23 MWh across 5 continents.
In July 2021 the Company was advised that a claim form had been
issued in the English High court by Garnet Commerce Limited
("Garnet") against VRFB-H and EHL. Garnet owns the remaining 50%
interest in EHL. Garnet's claim form sought declarations against
VRFB-H concerning an alleged breach of the joint venture agreement
in relation to EHL, in respect of the indirect investment into EHL
through VRFB-H by Mustang, as announced on 27 April 2021.
On 25 January 2022, the Company entered a loan agreement with
BMN pursuant to which BMN provided the Company with an unsecured
non-interest-bearing loan of US$220,000 (the "Loan"). The Loan is
repayable in full at any time on or prior to 31 December 2023 (the
"Repayment Date") and is repayable in any event if the Company
raises any debt or equity capital of no less than GBP1 million
(excluding any conversion of the CLNs into new MUST Shares) prior
to the Repayment Date. At the option of the Company, the Loan is
repayable either by way of a single repayment in cash or by the
issue of such number of new MUST Shares as is equal to the Loan
(the "Loan Shares"). The issue price of the Loan Shares is the
greater of GBP0.20 per MUST Share and the average volume-weighted
average price of a MUST Share for the consecutive 10 dealing days
ending on the dealing day immediately preceding the repayment date.
The Loan shall be waived in full if the Backstop is implemented
prior to the Repayment Date.
On 8 March 2022 the Company advised that VRFB-H had successfully
defended Garnet's claims. The judgment vindicated the position that
the investment by VRFB-H into EHL, funded as it was partly by an
investment by the Company, was permitted and did not violate any
agreements. Accordingly, the investment by Mustang into VRFB-H, and
the investment by VRFB-H into EHL, continues to remain effective.
The Company is now in the process of preparing a prospectus so as
to facilitate the relisting of the Company's shares.
On 28 March 2022 the parties to the Investment Agreement and as
subsequently amended and restated relating to the Company's
conditional purchase of shares in VRFB-H ("VRFB Share Purchase"),
including the Company, agreed to extend the longstop date to
satisfy the principal outstanding condition of the VRFB Share
Purchase, namely the publication by the Company of a prospectus and
the readmission of the ordinary share capital of the Company ("MUST
Shares") to listing and trading (together, "Readmission") by no
later than 31 July 2022 (the "Longstop Extension"). In turn, the
Longstop Extension was mirrored in the Company's convertible loan
note instrument (the "CLN Instrument") pursuant to which it issued
US$8 million 10% CLNs to certain investors (the "CLN Holders") such
that the maturity date of the CLNs was, as agreed between the
Company and the CLN Holders, extended to 31 July 2022 (or such
later date as may be agreed between the Company and the CLN
Holders) (the "Maturity Date").
Principal risks and uncertainties
The principal risks and uncertainties facing our business are
monitored on an ongoing basis. The board of directors have reviewed
the principal risks and uncertainties disclosed in the 2021 annual
report and concluded that they remain applicable for the second
half of the financial year. A detailed description of these risks
and uncertainties is set out on pages 18 to 19 of the 2021 annual
report.
Alan Broome, AM Chairman
6 September 2022
Statement of Directors' Responsibilities
The directors are responsible for preparing the interim
management report in accordance with applicable law and
regulations. The directors confirm that the interim condensed
financial information has been prepared in accordance with
International Accounting Standard 34 ('Interim Financial
Reporting') as endorsed for use in the United Kingdom.
The interim management report includes a fair review of the
information required by the Disclosure and Transparency Rules
paragraphs 4.2.7 R and 4.2.8 R, namely:
-- the interim condensed financial statements, which have been
prepared in accordance with applicable accounting standards, give a
true and fair view of the assets, liabilities, financial position,
and profit or loss of the issuer as required by DTR 4.2.4R; and
-- an indication of important events that have occurred during
the six months ended 30 June 2022 and their impact on the condensed
set of financial information; and
-- material related-party transactions during the six months
ended 30 June 2022 and any material changes in the related-party
transactions described in the Annual report and accounts 2021.
The interim management report was approved by the Board of
Directors and the above responsibility statement was signed on its
behalf by:
Dean Lloyd Gallegos
Director
Date: 6 September 2022
Condensed Statement of Comprehensive Income
6 month 6 month
period ended period ended
30 June 2022 30 June 2021
(unaudited) (unaudited)
Note GBP GBP
Administrative expenses (357,679) (134,903)
---------------- ----------------
Operating loss (357,679) (134,903)
Finance Costs (386,029)
Other gains 89,997 -
Loss on foreign exchange (113,121) -
Loss before taxation (766,832) (134,903)
Taxation -
---------------- ----------------
Loss for the period (766,832) (134,903)
Other comprehensive income for - -
the period
Total comprehensive loss for
the period attributable to the
equity owners (766,832) (134,903)
Loss per share from continuing
operations attributable to the
equity owners
Basic loss per share 2 (0.07) (0.01)
Diluted loss per share (0.07) (0.01)
(pence per share)
Condensed Statement of Financial Position
As at As at
30 June 2022 31 December 2021
(unaudited) (unaudited)
Note GBP GBP
Assets
Non-current assets
Property, plant and equipment 1,273 1,525
Investments 3 6,179,877 5,573,333
Total non-current assets 6,181,150 5,574,858
-------------- ------------------
Current assets
Trade and other receivables 4 16,618 13,117
Cash and cash equivalents 220,181 394,700
-------------- ------------------
Total current assets 236,799 407,817
Total assets 6,417,949 5,982,675
Equity and liabilities
Equity attributable to shareholders
Share capital 8 102,816 102,816
Share premium 9 810,219 810,219
Share based payments reserve 91,100 91,100
Retained deficit (2,170,969) (1,404,137)
Total equity (1,166,834) (400,002)
-------------- ------------------
Liabilities
Current liabilities
Trade and other payables 5 75,706 52,725
Borrowings 6 7,328,371 6,329,952
Total current liabilities 7,404,077 6,382,677
-------------- ------------------
Non-current liabilities
Borrowings 7 180,706 -
-------------- ------------------
Total liabilities 7,584,783 6,382,677
-------------- ------------------
Total equity and liabilities 6,417,949 5,982,675
Condensed Statement of Changes in Equity
Share based
Share premium payments
Share account reserve Retained Total
capital deficit equity
GBP GBP GBP GBP GBP
On 1 January 2021 (audited) 84,000 654,000 91,100 (501,513) 327,587
Period ended 30 June 2021
Total comprehensive loss
for the period - - - (134,903) (134,903)
Issue of share capital 18,816 169,344 - - 188,160
Balance as at 30 June 2021
(unaudited) 102,816 823,344 91,100 (634,416) 380,844
--------------- ---------------- --------------- --------------- ----------------
On 31 December 2021 102,816 810,219 91,100 (1,404,137) (400,002)
(audited)
Period ended 30 June 2022
Total comprehensive loss
for the period - - - (766,832) (766,832)
Balance as at 30 June 2022 102,816 810,219 91,100 (2,170,969) (1,166,834)
(unaudited)
--------------- ---------------- --------------- --------------- ----------------
Statement of Cash Flows
6 months to 6 months
to
30 June 2022 30 June
2021 (unaudited)
(unaudited)
Note GBP GBP
Cash flow from operating activities
Cash absorbed by operations 11 (337,947) (10,704)
---------------- --------------------
Cash flow from operating activities (337,947) (10,704)
Financing activities
Proceeds from issue of shares (net of
share issue costs) - 188,160
Proceeds from loans and borrowings 163,428 -
Net cash generated from financing activities 163,428 -
---------------- --------------------
Net decrease in cash and cash equivalents (174,519) (177,456)
---------------- --------------------
Cash and cash equivalents at beginning
of period 394,700 345,200
Cash and cash equivalents at end of
period 200,181 522,656
1 Notes to the interim financial statements
General information
Mustang Energy PLC (the "Company") is a Public Limited Company
incorporated and domiciled in England and Wales. The interim
condensed financial statements for the six months ended 30 June
2022. The address of the Company's registered office is 48 Chancery
Lane, c/o Keystone Law, London, WC2A 1JF. The interim condensed
financial statements of the Company were authorised for issue in
accordance with a resolution of the Directors on 5 September
2022.
The audited financial statements for the year ended 31 December
2021 are publicly available on the Company's website:
www.mustangplc.com. The interim condensed financial statements have
been prepared on a going concern basis.
1.1 Basis of preparation and statement of compliance
The interim condensed financial statements are for the six
months ended 30 June 2022 and have been prepared in accordance with
IAS 34 'Interim Financial Reporting'; the International Accounting
Standards endorsed for use in the United Kingdom ("IFRS"); on a
going concern basis and under the historical cost convention except
for revaluation of certain financial instruments.
The interim condensed financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. They do not include all of the information
required in annual financial statements in accordance with IFRS,
and should be read in conjunction with the financial statements for
the year ended 31 December 2021.
The condensed financial information for the year ended 31
December 2021 does not constitute the Company's statutory accounts
for that year, but is derived from those accounts. Statutory
accounts for the year ended 31 December 2021 have been delivered to
the Registrar of Companies. The auditors reported on those
accounts: their report was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under s498(2) or (3) of the Companies Act 2006.
The condensed financial information for the period ended 30 June
2022 have not been audited or reviewed in accordance with the
International Standard on Review Engagements 2410 issued by the
Auditing Practices Board.
1.2 Accounting policies, critical estimates and judgements
The accounting policies, methods of computation, critical
estimates and judgements followed in the interim condensed
financial statements are in accordance with those followed in
preparing the financial statements for the year ended 31 December
2021.
A number of amendments to IFRS became applicable for the current
reporting period. The Company did not have to change its accounting
policies or make retrospective adjustments as a result of adopting
these amended standards.
The preparation of the interim condensed interim financial
statements requires directors to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these judgements and estimates.
In preparing these interim condensed financial statements, the
significant judgements made by directors in applying the Company's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the audited financial
statements for the year ended 31 December 2021. As stated in the
Interim Management Report, despite holding a 22.1% interest, the
Company has not been able to exercise significant influence over
its investment in VRFB-H and thus the Company has not applied
equity accounting in preparing these interim condensed financial
statements. The Company's investment in VRFB-H continues to be
accounted for as a financial asset held at fair value through
profit or loss.
2 Loss per share
6 month 6 month
period ended period ended
30 June 2022 30 June
2021
GBP GBP
Number of shares
Weighted average number of ordinary shares
for basic earnings per share 10,281,600 9,330,033
--------------- ------------------------------
Weighted average number of ordinary shares
for diluted earnings per share 11,731,600 10,780,033
--------------- ------------------------------
Loss
Loss for the period from continued operations (766,832) (134,903)
------------- -------------
Loss for basic and diluted earnings per
share being net profit attributable to equity
shareholders of the company for continued
operations (766,832) (134,903)
------------- -------------
Loss per share for continuing operations
Basic loss per share (0.07) (0.01)
Diluted loss per share (0.07) (0.01)
---------- ----------
The share options and warrants are considered to be
anti-dilutive.
3 Investments
30 June 31 December
2022 2021
GBP GBP
Shares in unlisted entities 6,179,877 5,573,333
-------------------- ---------------------------
Movements in non-current investments
Shares in
unlisted investments
GBP
Cost or valuation
At 1 January 2022 5,573,333
Fair value adjustment due to changes in exchange rate 606,544
-----------------------------
At 30 June 2022 6,179,877
---------------------------
Carrying amount
At 30 June 2022 6,179,877
---------------------------
At 31 December 2021 5,573,333
---------------------------
The Directors of the Company consider the fair value of the
investment in VRFB-H at the reporting date to be equal to the
original cost of $7,524,000, translated at closing foreign exchange
rates, as the Directors estimate that has been no material change
in the fair value of the investment between the acquisition and the
reporting dates. The gain in the fair value due to changes in
exchange rates is included in profit or loss within exchange
losses
4 Trade and other receivables
30 June 31 December
2022 2021
GBP GBP
Other receivables 9,786 7,665
VAT recoverable 2,457 116
Prepayments 4,375 5,336
--------- ---------------
16,618 13,117
-------- ----------------
5 Trade and other payables
30 June 31 December
2022 2021
GBP GBP
Trade payables 25,606 693
Accruals 37,300 49,400
Other payables 12,000 -
Other taxation and social security 800 2,632
--------- ------------------
75,706 52,725
-------- --------
6 Current liabilities - Borrowings
30 June 31 December
2022 2021
GBP GBP
Convertible loan notes 7,328,371 6,329,952
----------- -------------
On 27 April 2021 the Company entered into an investment
agreement to acquire a 22.1% interest ("Investment Agreement"") in
VRFB-H for a consideration of US$7,524,000. The investment was
financed through the issue of US$8,000,000 convertible loan notes
("CLNs"), with surplus funds being used to pay associated costs and
working capital.
The principal terms of the CLNs, as at 31 December 2021, are
detailed below:
- The CLNs attract an interest rate of 10% per annum, payable in
cash or shares in the Company at the election of the Company;
- The CLNs are redeemable at par together with outstanding
accumulated interest on 28 January 2022 unless converted into
shares in the Company at the option of the Company;
- The CLNs are convertible into shares in the Company,
calculated by dividing the nominal value (and accrued interest, if
applicable) of the CLNs (using the average USD/GBP closing exchange
rate as shown on Bloomberg over the five trading days prior to
conversion) by 18 pence ("MUST Conversion Shares"), by no later
than 31 July 2021 (such date of conversion being the "Conversion
Date") and the publication of a prospectus by the Company and
readmission of the Company to listing and trading ("Readmission")
on the London stock exchange;
- The CLN holders will receive warrants to subscribe for new
shares in the Company (one warrant being issued for every two MUST
Conversion Shares held), exercisable at a price per share of
30 pence. The warrants have an expiry period of three years from
the Conversion Date;
- In circumstances where the Company is in default, the Company
is obliged to exercise a backstop mechanism, whereby BMN has agreed
to issue new ordinary shares in its capital ("BMN Shares") to CLN
holders in respect of the principal amount and accrued interest
under the CLNs (the "Backstop") in return for the Company: (i)
transferring to BEL all of the Company's shares in VRFB-H; and (ii)
paying a fee to BMN of an amount equal to 5% of the MUST Capital
Raise (including both principal and interest), to be satisfied by
the issue of new ordinary shares in the Company at a price of 20
pence per share (the "Backstop Fee"). In consideration of BMN
providing the Backstop, the Backstop Fee is payable in the event of
Readmission not occurring by the aforesaid date or immediately
prior to completion of Readmission.
- In the event of change of control of the Company, the CLNs and
accumulated interest become redeemable either in cash or in shares
in the Company at the option of the CLN holders via the conversion
process specified above.
The terms of the CLNs were amended during the period ended 30
June 2022 as follows:
1. The Backstop fee was reduced from 5% to 2%;
2. Call and put options were granted between the Company and BEL
which in substance allowed the Company to reverse the Backstop if
it was triggered and the court case was ultimately successful;
3. The Readmission Longstop Date of the CLN was extended to 31 July 2022; and
4. The Conversion Price was reduced from GBP0.20 to GBP0.18.
The terms of the CLN were amended further after the period end
as detailed in note 10.
The CLN is accounted for as a financial liability with an
embedded derivative representing the Company's option to convert
the CLN into shares.
The valuation of the embedded derivate is driven by unobservable
inputs such as the expected timing and probability of Readmission,
the Company's share price at Readmission as well as the expected
USD/GBP exchange rate. The value of the conversion derivate remains
GBPnil as at 30 June 2022 (Dec 2021: GBPnil) due to uncertainty
regarding the Readmission process.
As disclosed above, as at 30 June 2022 the terms of the CLN were
extended with the principal and accumulated interest becoming
redeemable at par on 28 August 2022. This represents a modification
of the financial liability, with a gain of GBP89,997 recognised in
other gains in profit or loss.
The movements in the carrying value of the CLN liability are
detailed below:
GBP
Balance at 1 January 2022 6,329,952
Interest charge 386,029
Gain on modification (89,997)
Foreign exchange difference 702,387
Balance at 30 June 2022 7,328,371
7 Non-current liabilities
Period ended Year ended
30 June 31 December
2022 2021
GBP GBP
Working capital loan 180,706 -
-------------- ----------------------
180,706 -
--------- --------------------
On 25 January 2022, the Company received a working capital loan
from BMN of US$220,000. The loan is repayable at the earlier of: 31
December 2023 or the Company raising GBP1 million of new funding.
The Company can redeem the loan at any time, either in cash or in
shares in the Company, valued at the higher of GBP0.20 or the
volume weighted average price on the preceding 10 trading days.
The option to convert the loan into Company shares is a
non-closely embedded derivative. The fair value of the derivative
at 25 January 2022 and 30 June 2022 is trivial and is thus deemed
to be GBPnil.
The loan is a financial liability carried at amortised cost with
an effective interest rate of nil.
The movements in the carrying value of the loan liability are
detailed below:
GBP
Balance at 1 January 2022 -
Inception 25 January 2022 163,428
Foreign exchange difference 17,278
Balance at 30 June 2022 180,706
8 Share Capital
Period ended Year ended
30 June 31 December
2022 2021
GBP GBP
Ordinary Share capital
Issued
10,281,600 (2021 - 10,281,600) Ordinary
shares of 1p each 102,816 102,816
-------------- ----------------------------
102,816 102,816
--------- ---------
The Ordinary shares have attached to them full voting rights,
dividend and capital distribution rights (including on a winding
up) but they do not confer any rights of redemption.
9 Share premium account
Period ended Year ended
30 June 31 December
2022 2021
GBP GBP
At the beginning of period 810,219 654,000
Issue of new shares - 150,444
Less directly attributable issue costs - (13,125)
Exercise of warrants - 18,900
-------------- --------------
At end of period 810,219 810,219
--------- ---------
10 Events after reporting date
On the 3 August 2022 the Company disclosed that it had entered
into a conditional agreement with Acacia to acquire its 27.4 per
cent. interest ("Acquisition (Stage 2)") in VRFB-H. The
consideration for the Acquisition (Stage 2) is US$10,548,945 to be
converted to GBP:GBP using an exchange rate of GBPGBP1.00/US$1.225
and to be satisfied by the proposed issue of 43,056,989 new
ordinary shares in the capital of the Company issued at 20 pence
each (the "Consideration Shares").
The Consideration Shares proposed to be issued to Acacia on
completion of the Acquisition (Stage 2), combined with Acacia's
existing shareholding in the Company, the shares proposed to be
issued as a result of the conversion of the US$2.3 million
principal amount of CLNs held by Acacia (together with accrued
interest thereon) and the exercise of certain options and warrants
held by Acacia (assuming that such options and warrants are
converted in full into MUST shares), will mean that Acacia will
hold in excess of 50% of the issued capital of the Company.
On the 2 September 2022 the parties to the Investment Agreement
agreed to amend the Longstop Extension and Maturity Date to the 28
October 2022. The Company was notified by a Noteholder of CLNs (the
"Redeeming Noteholder") with a principal amount of US$1.25 million
(and accrued and unpaid interest thereon) that it wishes to effect
the Backstop in respect of its CLNs (the "Backstop CLNs"). BMN
negotiated with the Redeeming Noteholder to acquire the Backstop
CLNs by the issue of BMN shares are currently in discussions to
finalise the arrangements to effect the Backstop CLNs.
11 Cash generated from operations
6 month 6 month
period ended period ended
30 June 2022 30 June
GBP 2021
GBP
Loss for the period after tax
Adjustments for:
Depreciation and impairment of property, (766,832) (134,903)
plant and equipment
Equity settled share-based payment expense
Fair value adjustment due to changes in 252 169
exchange rate - -
Foreign exchange movement on working capital (606,544) -
loan 17,278 -
Movements in working capital
Increase in trade and other receivables (3,501) (1,739)
Increase/(decrease) in trade and other payables 1,021,400 (125,769)
--------------- -----------------
(337,947) (10,704)
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END
IR FLFSRASIRIIF
(END) Dow Jones Newswires
September 07, 2022 02:00 ET (06:00 GMT)
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