Update on Calvet proposal, AGM, Interim Results

1 December 2016

Mercom Capital Plc

("Mercom" or "the Company")

Update on indicative proposal from Calvet International Limited

Notice of AGM

Interim Results

Update on indicative proposal from Calvet International Limited

The Company confirms that discussions with Calvet International Limited ("Calvet") regarding the Proposals set out in the announcement of 27 October 2016 are ongoing. These Proposals have been modified by Calvet in the following principal respects:

· cash fundraising of £5.0m at 20p per share from new investors ("New Investors") combined with the issuance of Warrants to the New Investors on a 1:2 basis exercisable at 80p per share, expiring 180 days after issue;

· issue to Mercom shareholders (on the register on the date of the General Meeting to be convened to approve the Proposals) of bonus warrants on a 1:4 basis exercisable at 80p per share, expiring 180 days after issue; and

· the Directors to sell all their shares (together with shares issued on exercise of their warrants, each of which has an exercise price of 5p per share) at 20p per share to the New Investors, with the Directors returning 2p per share to the Company.

There can be no certainty that the Proposals, as revised, will be finalised and supported by proposed new investors. In addition, the Proposals are subject to approval of Mercom shareholders in general meeting and so there can be no assurance that the Proposals will be approved. Further announcements will be made in due course.

Notice of AGM

The Company has today posted a circular to shareholders convening an annual general meeting to be held at 11.00 am on 5 January 2017 at the offices of Hill Dickinson LLP, The Broadgate Tower, 8th Floor, 20 Primrose Street, London, EC2A 2EW ("the AGM"). The circular will shortly be available to download from the Company's website www.mercomcapital.co.uk

Interim Results

The Company today announces its unaudited results for the six months ended 30 September 2016.

Chairman's Statement

I am pleased to present my Chairman's statement for Mercom Capital plc ("the Company") for the six month period ended 30 September 2016.

On 3 March 2016, shareholders approved an extension of the Company's investing policy to enable the Directors, in addition to making investments in the natural resources and energy sectors (with a focus on oil and gas), to make investments in the financial services and financial services technology (fintech) sectors, these being sectors in which the Board considers it has sufficient experience. Shareholders also approved a change in the Company's name to Mercom Capital Plc.

On 20 July 2016, the Company announced that it had successfully raised of a total of £302,500 in equity before expenses, to be used to increase working capital and finance additional investments. This achievement confirmed the market's confidence in our revised investing strategy.

No new investments were made during the six months to 30 September 2016, but shortly after the end of this period, on 17 October, the Company announced that it had entered into a binding agreement to invest £600,000 for a 16% interest in Mobile Wireless and Satellite SAPI (MOWISAT), a Mexican telecommunication company. This was an exciting new venture for the Company, which secured a holding in an extremely well-positioned operator with plans to be the first player with an offering that involves fintech solutions for unbanked communities in Mexico.

On 7 October 2016, the Board announced it was in discussions with Calvet International Limited ("Calvet") concerning proposals which, subject to shareholder approval at a general meeting of the Company, involve:

• A cash fundraising of approximately £11.7m at 18p per share with a small number of international investors, combined with the issuance of out of the money Warrants on a 1:2 basis;

• The adoption of a new bespoke Investing Policy to invest in established industry proven technology, media and internet businesses;

• A change of the Company's name to Monchhichi PLC; and

• The appointment of Simon Fry as Executive Chairman and Jean-Pascal Tranié as Senior Non-Executive Director of the Company.

While there can be no certainty at this point in time that any agreement will be reached with Calvet with regard to these proposals, the Company is clearly entering an exciting period of potential evolution in the second half of its fifth financial year.

Dr Patrick Cross

Chairman

30 November 2016

Condensed Interim Consolidated Statement of Comprehensive Income

For the six month period ended 30 September 2016

Condensed Interim Consolidated Statement of Financial Position

As at 30 September 2016

Approved by the Board on 30 November 2016

K Appleby

Director

Condensed Interim Consolidated Statement of Cash Flows

For the six month period ended 30 September 2016

Condensed Interim Consolidated Statement of Changes in Equity

For the 6 months ended 30 September 2016

Notes to Condensed Interim Consolidated Financial Statements

For the six month period ended 30 September 2016

1. BASIS OF PRESENTATION

Basis of presentation and statement of compliance

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 March 2016. These interim financial statements were authorised for issue by the Company's Board of Directors on 30 November 2016.

Basis of consolidation

The Group financial statements include the financial statements of the Company and its subsidiary undertaking Mercom Capital Canada Inc., a company incorporated in Canada. The results of subsidiary undertakings sold or acquired are included in the Consolidated Statement of Comprehensive Income up to, or from the date control passes. Intra group sales and profits are eliminated fully on consolidation.

Functional currency

The presentational and functional currency of the Group and Company is U.K. Sterling.

Significant accounting estimates and judgments

The preparation of these financial statements requires management to make judgments and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgments and estimates. The financial statements include judgments and estimates which, by their nature, are uncertain. The impacts of such judgments and estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognised in the period in which the estimate is revised and the revision affects both current and future periods.

Significant assumptions about the future and other sources of judgments and estimates that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

· Management's position that there are no income tax considerations required within these audited financial statements; and

· The carrying value of trade and other receivables.

Going concern

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assume that the Company will be able to realise its assets and discharge its liabilities in the normal course of operations. The Company has no current source of operating revenues and its capacity to operate as a going concern in the near-term will likely depend on its ability to continue raising equity or debt financing. There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realise on its assets and discharge its liabilities in the normal course of business, the net realisable value of its assets may be materially less than the amounts recorded in the Consolidated and Company Statements of Financial Position. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

2. SIGNIFICANT ACCOUNTING POLICIES

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2016. The following changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 March 2017.

Changes in accounting policies

The following new standards, amendments to standards or interpretations are mandatory for the Group for the first time for the financial year beginning 1 April 2016, but are not currently considered to be relevant to the Group (although they may affect the accounting for future transactions and events):

· IAS16 (Amended), 'Property, Plant and Equipment' and IAS 38 (Amended), 'Intangible Assets', issued in May 2014 and effective from 1 April 2016. These amendments clarify that a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate for property, plant and equipment. There is also a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate.

· IFRS11 (Amended), 'Joint Arrangements', effective for periods beginning on or after 1 April 2016 requires an acquirer of an interest in a joint operation in which the activity constitutes a business to apply all of the business combinations accounting principles in IFRS3 and all other IFRSs.

· IAS27 (Amended), 'Separate Financial Instruments', issued in August 2014 and effective 1 April 2016 permits investments in subsidiaries, joint ventures and associates to be optionally accounted using the equity method in separate financial statements.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1April 2016 and have not been early adopted:

· IFRS9, 'Financial Instruments', effective for periods commencing on or after 1 January 2018 but not yet adopted by the EU. This is final version of the project to replace IAS39 'Financial Instruments: Recognition and Measurement'.

· IFRS15, 'Revenue from Contracts with Customers', effective for periods commencing on or after 1 January 2018 but not yet adopted by the EU. This standard focuses on a principles based model which is to be applied to all contracts with customers.

· IFRS16, 'Leases', effective for periods commencing on or after 1 January 2019 but not yet adopted by the EU. The standard provides a single lessee accounting model, requiring lessees to recognise assets unless the lease term is twelve months or less or the underlying asset has a low value.

· IAS12 (Amended), 'Income Taxes', effective for periods commencing on or after 1 January 2017 but not yet adopted by the EU. This amendment relates to the recognition of deferred tax assets for unrealised losses and clarifies that estimations for future taxable profits exclude tax deductions arising from the reversal of temporary differences.

3. CAPITAL AND FINANCIAL RISK MANAGEMENT

The capital of the Group consists of shareholders' equity. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain optimal returns to shareholders and benefits for other stakeholders.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Group may attempt to issue new shares or debt, dispose of assets, or adjust the amount of cash and cash equivalents.

The investments in which the Group currently has an interest are in the exploration and evaluation stage; as such the Group is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Group will spend its existing working capital and raise additional amounts as needed. The Group will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable. There were no changes in the Group's approach to capital management during the period ended 30 September 2016. The Group is not subject to externally imposed capital requirements.

Credit risk

All the Group's cash and cash equivalents are held with well-known and established financial institutions. As such, management considers credit risk related to these financial assets to be minimal. The Group's maximum credit risk exposure is limited to the carrying value of its cash and subscriptions receivable. At 30 September 2016, the Group had no material amounts deemed to be uncollectible.

Commodity price risk

Commodity price risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in oil and natural gas commodity prices. The nature of the Group's operations will result in exposure to fluctuations in commodity prices. The Group is currently in its development stage and as such the exposure to fluctuations in commodity prices is not actively managed. In the future, the Group may use commodity price contracts to manage exposure to fluctuations in pricing.

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Group does not have a material exposure to this risk as there are no outstanding debt facilities.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they come due. The Group ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Group's reputation.

The Group utilises authorisation for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources.

Foreign currency risk

The Group is exposed to foreign currency fluctuations on its cash which is denominated in U.K. Sterling and Canadian Dollars.

4. SEGMENTAL REPORTING

5. INVESTMENTS

Other investments

The additions represent the investment in the following companies:

The accounting treatment of the investments in Lion Natural Resources Limited and NWT Coal Limited as available for sale financial assets and not as associates as detailed in note 1of the audited financial statements for the year ended 31 March 2016. These investments have been measured at cost less impairment as also detailed in note 1 of the audited financial statements for the year ended 31 March 2016 as it was not possible to reliably measure a fair value.

6. TRADE AND OTHER RECEIVABLES

7. TRADE AND OTHER PAYABLES

8. RELATED PARTY TRANSACTIONS AND BALANCES

The Group's related parties, as defined by International Accounting Standard 24 (revised), the nature of the relationship and the amount of transactions with them during the six months ended 30 September 2016 were as follows:

The Group was charged £12,000 (2015: £12,000) in consulting fees by CFO Advantage Inc., a company that is controlled by K. Appleby (Finance Director). As at 30 September 2016 the Group owed CFO Advantage Inc. £25,169 (31 March 2016: £28,396).

The Group was charged £12,000 (2015: £12,000) in consulting fees by Dr P.H. Cross (Non-executive Chairman). As at 30 September 2016, the Group owed Dr. P.H. Cross £28,000 (31 March 2016: £16,000).

The Group was charged £120,000 (2015: £120,000) in consulting fees by J. Zorbas (Chief Executive Officer. As at 30 September 2016, the Group owed J. Zorbas £151,000 (31 March 2016: £114,000).

9. SHARE CAPITAL

(i) The warrants were assigned a value of $17,122 using the Black Scholes option pricing model using the following assumptions: risk free interest rate 0.58%; expected volatility 109%; expected dividend yield of 0% and an expected life of 6 months. Expected volatility was based on the historical volatility of other comparable listed companies.

There were no options outstanding at 30 September 2016 and none issued during the six month period ended 30 September 2016.

10. LOSS PER ORDINARY SHARE

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of Ordinary shares in issue during the period.

Diluted loss per share is calculated by adjusting the weighted average number of Ordinary shares in issue to assume the conversion of all dilutive potential Ordinary shares at the start of the period. The Group's dilutive potential Ordinary shares arise from warrants. In respect of the warrants a calculation is performed to determine the number of shares that could have been acquired at fair value, based upon the monetary value of the subscription rights attached to the outstanding warrants. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the warrants.

There were no potentially dilutive warrants as the exercise price exceeded the average market price of the Ordinary shares during the period. Any potentially dilutive Ordinary shares would have been anti-dilutive because the Group was loss-making.

11. EVENTS AFTER THE REPORTING DATE

(a) The Company agreed to invest £600,000 for a 16% interest in Mobile Wireless and Satellite SAPI ("MOWISAT"), a newly established Mexican company in the financial technology and payments industry. MOWISAT intends to be the first provider of fintech solutions for unbanked communities in Mexico which it plans to deliver as a mobile virtual network operator ("MVNO"). To that end, MOWISAT has executed a Letter of Intent to offer such services on an exclusive basis through a nationwide commercial and retail distribution network with over 25,000 outlets with a reach of approximately 40 million people in rural areas as well as the outskirts of every major city in Mexico. MOWISAT plans to deploy its financial services offering as described below in the first quarter of 2017. In due course, the Company will launch in similar rural markets in other countries of Latin America.

(b) The Company and Calvet International Limited ("Calvet") have entered into non-binding heads of terms which amongst other things provide, subject to shareholder approval at a general meeting of the Company, for:

· Cash fundraising of approximately £11.7m at 18p per share with a small number of international investors combined with the issuance of out of the money Warrants on a 1:2 basis;

· Adoption of a new bespoke Investing Policy to invest in established industry proven technology, media and internet businesses;

· Change of Company's name to Monchhichi PLC; and

· Appointments of Simon Fry as Executive Chairman and Jean Pascal Tranié as Senior Non-Executive Director of the Company (the "Proposals").

12. ULTIMATE CONTROLLING PARTY

In the opinion of the Directors, there is no ultimate controlling party.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

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