Armadale Capital Plc
Annual Report and Accounts
31 December 2016
3
4
11
15
17
18
19
20
21
22
23
24
43
47
Armadale Capital Plc
Contents
Officers and Professional Advisers
Strategic Report
Directors’ Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the financial statements
Notice of Annual General Meeting
Proxy Form
2 | Page
Officers and Professional Advisers
Directors
Emmanuel S Mahede
Nicholas Johansen
Secretary
Timothy Jones
Registered office
55 Gower Street
London WC1E 6HQ
Nominated Adviser and Joint Broker
finnCap Ltd
60 New Broad Street
London EC2M 1JJ
Joint Broker
Beaufort Securities Limited
131 Finsbury Pavement
London EC2A 1NT
Auditors
BDO LLP
55 Baker Street
London W1U 7EU
Solicitors
Ronaldsons LLP
55 Gower Street
London WC1E 6HQ
Registrars
Share Registrars Limited
Craven House
West Street
Farnham
Surrey GU9 7EN
Armadale Capital Plc
Page | 3
Armadale Capital Plc
Strategic Report
For the year ended 31 December 2016
During the year under review Armadale has continued to operate as a diversified investing company focused on
natural resource projects in Africa.
The Company’s investment portfolio is divided into two groups:
• Actively managed investments: where the Company has majority ownership of the investment
• Passively managed investments: where the Company has a minority investment, typically in a quoted
company, and does not have management control.
Actively Managed Investments:
Mpokoto Gold Project, DRC (“MPOKOTO”)
The Company obtained its initial interest in Mpokoto through the acquisition of Netcom Global Inc in November
2013.
In September 2016, the Company entered into a binding Heads of Agreement (‘HOA’) with African Mining Services
Pty Ltd (‘AMS’) to form a joint venture to develop and operate Mpokoto. The key items to this agreement are:
• An exclusive due diligence period of up to 90-days, during which AMS has management input and is generally
responsible for all project-related expenses.
• An initial ‘earn-in’ phase (‘Phase 1’) pursuant to which AMS can earn a 25% interest in Kisenge, by providing
funding and project-related services to the value of US$1.25m.
• A second ‘earn-in’ phase (‘Phase 2’) to apply, if AMS wishes to proceed, and Armadale does not source
third-party funding for Mpokoto, pursuant to which AMS could earn a further 60% interest in Kisenge
(total aggregate interest 85%) by funding the project through to commercial production. The definitive
feasibility study (DFS) estimated this cost at US$25m to include all associated expenditure and managing the
conduct of activities to reach the production stage.
• Phase 1 will focus on optimising the DFS, with a focus on reducing capital costs, accelerating the timeline to
production and expanding the existing JORC resource.
• Phase 2 will focus on the construction and bringing Mpokoto into commercial production.
AMS was later renamed Kisenge Mining Pty Ltd (KMP). In December 2016, KMP completed due diligence and elected
to exercise its option to proceed with the formation of a joint venture. This allowed the Company to concentrate its
efforts in the newly acquired Mahenge Liandu graphite project.
Mahenge Liandu Graphite Project, Tanzania “MAHENGE LIANDU”
The Company acquired Mahenge Liandu in south-east Tanzania (‘Liandu Project’) in July 2016 . This project provides
the Company with opportunities in the graphite market that will capitalise on the strong outlook for graphite from
the burgeoning battery and other markets.
4 | Page
Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2016
The acquisition was attractive owing to the following:
• Provided the Company with access to the highly prospective graphite market – global demand for commercial
graphite is expected to double within the next eight years
• Growth fuelled by developments in the energy storage industry – graphite is an essential component of the
modern lithium-ion battery, making it a key material in smart phones, tablets, laptops and electric cars
• Mahenge Liandu is located in an area of proven coarse flake, high grade graphite resources – ASX listed
Kibaran Resources Ltd (ASX:KNL) and Black Rock Mining Limited (ASX:BKT) have both identified and are
developing significant proven and valuable graphite projects immediately adjacent to Mahenge Liandu
• Results from previous sampling highlighted high grade mineralisation with results from seven previous
samples ranging from 12.8% - 24.0% Total Graphite Content (‘TGC’)
• Exploration drilling completed in December 2015 by the vendor had results that underpinned the licence
prospectivity: 10m at 6.54% TGC, 24m at 12.9% TGC and 5m at 21.5% TGC
• Mineralised trend about 1.6 km in strike length and up to 500m wide identified, which remains open at depth
Resources and Reserves – JORC resource statement
The Company commenced exploration work at Mahenge Liandu in July 2016 and drilling work began in September
2016. In December 2016, the Company announced a world class graphite discovery with a maiden JORC compliant
inferred mineral resource estimate of 40.9Mt @ 9.41% TGC. The results indicated:
• The Mahenge Liandu discovery has outstanding thick interceptions of high-grade coarse flake graphite
identified across the entire 2.5km mineralised strike area
• Strike remains open on three aspects – length, width and depth highlighting significant potential upside to
current resource
Laboratory test work conducted on graphite samples from Mahenge Liandu between January 2017 and April 2017
returned exceptional results on flake distribution, grade, purity and expandability. This is shown in tables 1 and 2
below:
Size (µm) Weight (%) TGC (%)
500 3.7 98.4
300 24.4 98.5
180 32.9 99.1
150 11.7 98.9
106 11.9 98.9
75 7.5 98.7
25 6.2 97.9
<25 1.7 88.4
Table2- Flake size and grade distribution for Mahenge Liandu Graphite sample
Page | 5
Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2016
The flake size distribution indicates 28.1% of Mahenge Liandu graphite in the jumbo and super jumbo categories and
all size fractions above 25 microns returns +97% TGC with a weighted average TGC grade across all size fractions of
98.5% TGC.
Expansion Expansion
Volume Volume
Flake Size (µm) Purity at 800 °C at 1000 °C
> 500 µm 99.93 440 cm³/g 480 cm³/g
> 300 µm 99.99 370 cm³/g 420 cm³/g
> 180 µm 99.98 300 cm³/g 380 cm³/g
> 106 µm 99.96 210 cm³/g 230 cm³/g
> 75 µm 99.94 165 cm³/g 170 cm³/g
< 75 µm 99.65 115 cm³/g
Table 1- Graphite Purity and Expandability Results
The achievements of 99.99% purity and expandability to 480 cm³/g show that the graphite from the Company’s
Mahenge Liandu Project graphite is suitable for a number of commercial applications including batteries and
expandable graphite.
Exploration Licences
The Company holds following exploration tenements for Mahenge Liandu:
• PL10846/2016 granted on 21/9/2016 expires 20/9/2020 area 7.34 square kilometres
• PL10840/2016 granted 21/9/2016 expires 20/9/2020 area 21.89 square kilometres
Exploration and Development Programme
During Q2 and Q3 2017, it is planned to infill drill the existing Inferred JORC Resource to upgrade the resource
category to Indicated. In addition, some of the drilling will be used to extend the size of the deposit by drilling down
dip of the existing areas of known mineralisation. Once completed, six diamond drill holes will be completed to
obtain samples for metallurgical test work and to produce representative concentrate samples for potential
customers.
A total of 2500 metres of RC drilling is planned, followed by a total of 300 metres of diamond drilling once RC drilling
programme has been completed. Final diamond hole location will be determined using the results of the RC drilling.
6 | Page
Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2016
The figure below shows the locations of the proposed exploration holes in relation to the previous drilling and the
geological mapping.
Location of Planned RC Drill and Diamond Drill Holes over the Geological Mapping
After completing this programme, the Company will be in a position to both increase the size of the resource and
move a substantial proportion of the resource into the Indicated Resource category. Further work programmes to
conduct Reserve estimates and more a detailed metallurgical test work programme will be required later in 2017 in
order to effectively progress the project.
Passively Managed Investments:
Mine Restoration Investments Limited (“MRI”), South Africa
During the year, the Company pursued its policy of disposing of MRI shares whenever an opportunity arose, but
there was little demand for the shares and only some £16,500 was realised. By the end of the year, the shares had
been suspended from trading on the Johannesburg Stock Exchange and MRI had become inactive. The directors
have concluded that the shares have a nil market value and have accordingly provided full impairment for the
remainder of the carrying value, resulting in a further impairment charge of £0.3 million.
Quoted portfolio
The Company has a small portfolio of quoted investments, principally in gold production companies where the
directors believe there are opportunities for capital gain. During the year the Company has sold certain investments
and continues to keep its portfolio under review.
Page | 7
Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2016
Funding Plan
The Company recently raised £650,000 in January 2017 through the placement of 26,030,000 new ordinary shares
to existing investors in UK and Australia. Funds raised will be used for working capital and for a portion of the
exploration work commenced for Mahenge Liandu.
It is expected that further funding will be required during the financial year.
Sustainable development
The Company is committed to sustainable development and conducting its business ethically. Given that the
Company invests in the mining industry, Armadale focuses on health and safety, being environmentally responsible,
and supporting the communities close to its investments.
Corporate Information
Principal risks and uncertainties
There are numerous risks associated with the mineral industry, especially in Africa. The Board regularly reviews the
risks to which the Group is exposed and endeavours to minimise them as far as possible. The following summary,
which is not exhaustive, outlines some of the risks and uncertainties currently facing the Group:
• The Group is exposed to two minerals namely gold and graphite. With gold, the Group is vulnerable to
fluctuations in the prevailing market price of gold and to variations of the US dollar, in which sales will be
denominated. Graphite is a relatively new commodity whose market is being driven by demand in renewable
energy. It is thus vulnerable to global energy policies.
• The impact of BREXIT on companies operating in the UK is unknown. Brexit may increase or impair the
Group’s ability to raise funds.
• The exploration for and development of mineral resources involves technical risks, infrastructure risks and
logistical challenges, which even a combination of careful evaluation and knowledge may not eliminate.
• There can be no assurance that the Group’s projects will be fully developed in accordance with current plans.
• Future development work and subsequent financial returns arising may be adversely affected by factors
outside the control of the Group.
• The availability and access to future funding within the global economic environment.
• The Group operates in multiple national jurisdictions and is therefore vulnerable to changes in government
policies which are outside its control.
Some of the mitigation strategies the Group applies in its present stage of development include, among others:
• Proactive management to reducing fixed costs.
• Rationalisation of all capital expenditures.
• Maintaining strong relationships with government (employing local staff and partial government ownership),
which improves the Group’s position as a preferred small mining partner.
• Alternative and continued funding activities with a number of options to secure future funding to continue
as a going concern.
8 | Page
Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2016
The Directors regularly monitor such risks and will take actions as appropriate to mitigate them. The Group manages
its risks by seeking to ensure that it complies with the terms of its agreements, and through the application of
appropriate policies and procedures, and via the recruitment and retention of a team of skilled and experienced
professionals.
Key performance indicators
The Group’s current key performance indicators (KPIs) are the performance of its underlying investments, measured
in terms of the development of the specific projects they relate to, the increase in capital value since investment and
the earnings generated for the Group from the investment. The Directors consider that it is still too early in the
investment cycle of any of the investments held, for meaningful KPIs to be given.
Success is also measured through the identification and investment in suitable additional opportunities that fit the
Group’s investment objectives. The acquisition of Mahenge Liandu graphite project is such success.
The graphic below shows the key achievements for the Mahenge Liandu Project and the objectives for the
remainder of 2017:
Outlook
Looking to the future, the positive early exploration results are very encouraging and the Directors consider that the
outlook for the project, and hence for the Group is positive.
Page | 9
Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2016
Financial results
For the year ended 31 December 2016 the Group did not earn any revenues as its business related solely to the
making of investments in non revenue producing resource projects and companies.
The Group made a loss after tax of £0.922 million (2015: £0.992 million) for the year ended 31 December 2016. The
administrative expenses relate principally to fundraising and to the costs of operating a public company.
The year’s most significant event was the acquisition of the Mahenge Liandu graphite project, which was financed
entirely by the issue of shares and loan notes. Other share issues during the year were in respect of loan note
conversions, the settlement of creditors and to raise cash of £0.97 million. Since the year end, a further
£0.651 million has been raised by a placement of shares.
As discussed above, trading in the shares of MRI has been suspended and the company has become inactive. In
these circumstances the board has concluded that the market value of its holding is nil and a further impairment
charge of some £0.3 million has been made. This is partially offset by gains on disposal and impairment releases in
respect of other listed investments.
At 31 December 2016, the Group had total assets of £9.1million (2015: £5.8 million), cash of £0.116 million
(2015: £0.161 million) and debt of £0.45 million, being the convertible loan notes issued during the year.
Emmanuel S Mahede
Director
31 May 2017
10 | Page
Armadale Capital Plc
Directors’ Report
For the year ended 31 December 2016
The Directors submit their report and the financial statements of Armadale Capital Plc (‘Armadale’ or the ‘Company’)
for the year ended 31 December 2016.
Results and dividends
The financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The loss of the Group for the year ended 31 December 2016 was £921,675
(2015, £991,512). As part of the process of preparing these accounts, the Directors are required to review the carrying
value of all its assets. As a result of this review the Directors have reduced the carrying value of the Company’s
shareholding in MRI to nil on the basis that trading in the shares has been suspended and its activities have ceased.
The Directors do not recommend the payment of a dividend (2015: £nil).
Business review
A review of the Group’s operations and management plans for the future of the business is included in the
Chairman’s Statement and the Strategic Report.
Directors
The following Directors have held office during the year:
Peter A Marks (resigned 29 September 2016)
Justin LG Lewis (resigned 29 September 2016)
Dr Andrew J Tunks (resigned 10 August 2016)
William Frewen (appointed 21 July 2016)
Emmanuel S Mahede (appointed 10 August 2016)
Nicholas Johansen (appointed 16 October 2016)
William Frewen resigned on 28 February 2017
Directors’ interests
Directors’ interests, including family interests, in the Ordinary Share capital, were as follows:
31 December 31 December
2016 2015
No: No:
W Frewen 1,000,000 –
ES Mahede 500,000 –
N Johansen 500,000 –
P A Marks – 277,969
JLG Lewis – 1,064,444
AJ Tunks – 333,335
Directors also hold options over Ordinary Shares as follows:
31 December 31 December
2016 2015
No: No:
W Frewen 2,000,000 –
ES Mahede 500,000 –
N Johansen 500,000 –
P A Marks – 666,666
JLG Lewis – 1,000,000
Page | 11
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2016
Substantial shareholdings
At 23 May 2017 the Company was aware of the following interests in 3% or more of the issued share capital of the
Company:
Name
Kabunga Holdings 12.3%
HSDL Nominees 10.3%
SVS Nominees 9.9%
Hargreaves Lansdowne Nominees 5.7%
Barclayshare Nominees 5.1%
Resource Corporate 4.8%
Pershing Nominees 4.7%
TD Nominees 3.6%
Issue of Shares
Details of Ordinary Shares issued during the year are set out in note 18 to the financial statements.
Shares under option or issued on exercise of options
Shares held under option are detailed in note 20 to the financial statements.
Indemnification of officers of the Company
During the financial year, the Company paid a premium in respect of a contract insuring the Directors against liability
when acting for the Company.
Remuneration of Directors
The directors received the following fees by way of remuneration
2016
Compensation
2016 for loss 2016 2015
fees of office Total Total
£’000 £’000 £’000 £’000
W Frewen 17 – 17 –
ES Mahede 22 – 22 –
N Johansen 21 – 21 –
P A Marks 40 56 96 50
JLG Lewis 36 56 92 37
AJ Trunks 14 11 25 12
The notice pay was satisfied by the issue of new ordinary shares in the company.
The Remuneration of directors is determined by the Board within the limits set out in the Articles of Association of
the Company.
12 | Page
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2016
Statement of Directors’ responsibilities
The Directors are responsible for preparing the strategic report, the annual report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the group [and company] financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of
the group and company and of the profit or loss of the group and company for that period. The directors are also
required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies
trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether the financial statements have been prepared in accordance with IFRS as adopted by the
European Union, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the company's website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors.
The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Going Concern
The financial statements have been prepared on the going concern basis as, in the opinion of the directors, there is
a reasonable expectation that the Group and Company will continue in operational existence for the foreseeable
future.
The Group had net current liabilities at 31 December 2016 of £668,830 including £450,000 of convertible loan notes
due July 2017. Based on correspondence with the loan note holders, the Company expects to be able to extend
58.5% of the notes for a further period of 12 months on the same terms. The remaining notes are expected to be
converted into Ordinary Shares under the terms of the governing deed subject to the condition that conversion does
not cause the note holder’s shareholding to exceed 29.9%, which at present it is not expected to exceed.
Since the end of the year, the Company has continued its appraisal operations at its Mahenge Liandu graphite
project. In order to fund this exploration and evaluation expenditure and to cover the net current asset deficit, the
Company raised £650,750 through the issue of 26,030,000 Ordinary Shares at 2.5p per share.
Page | 13
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2016
At 23 May 2017, the Company had cash of approximately £300,000. The directors have prepared a cashflow forecast
for the next twelve months which shows that the cash in hand is sufficient to meet current commitments in respect
of exploration expenditure and corporate overheads for a period of approximately 10 months.
The Company’s ability to continue as a going concern and to achieve its long term strategy of developing its
exploration projects is dependent on the extension and/or conversion of the loan notes and further fundraising. As
described above, the Directors expect to be able to convert or extend the existing loan notes, and against the
background of the encouraging initial results from the Mahenge Liandu graphite project and the Company’s history
of raising funds through the issue of equity, the directors also consider that the Company is likely to be able to raise
the required capital. However, there are currently no binding agreements in place. Should the Directors be unable
to raise sufficient funds and extend or convert the loan notes, the Company may be unable to realise its assets and
discharge its liabilities in the normal course of business.
These factors indicate the existence of a material uncertainty which may cast significant doubt over the Group’s and
Company’s ability to continue as a going concern. The financial statements do not include the adjustments that
would result if the Group or Company were unable to continue as a going concern.
Principal risks and uncertainties
The Group’s risks and use of financial instruments are described in Note 4 to the financial statements. Other risks
are described in the Chairman’s Statement and the Strategic Report.
Directors’ Confirmation
The Directors who held office at the date of approval of this Directors’ Report confirm that so far as each Director is
aware:
(a) there is no relevant audit information of which the Company’s auditors are unaware; and
(b) each Director has taken all the steps that ought to have been taken as a Director, including making
appropriate enquiries of fellow Directors and of the Company’s auditors for that purpose, in order to be
aware of any information needed by the Company’s auditors in connection with preparing their report and
to establish that the Company’s auditors are aware of that information.
On behalf of the Board
Timothy Jones
Secretary
31 May 2017
14 | Page
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc
For the year ended 31 December 2016
We have audited the financial statements of Armadale Capital Plc for the year ended 31 December 2016 which
comprise the consolidated statement of comprehensive income, the consolidated and company statement of
financial position, the consolidated and company statement of changes in equity, the consolidated and company
statement of cash flows and the related notes. The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s
(FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs
as at 31 December 2016 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – going concern
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the
disclosures made in note 2.2 to the financial statements concerning the Group’s ability to continue as a going
concern which is dependent on the Group’s ability to raise further funds and to convert or extend its existing loan
notes. Although the Directors believe that the Group will be able to secure the necessary funds and successfully
convert or extend its existing loan notes, there are currently no binding agreements in place. These conditions
indicate the existence of a material uncertainty which may cast significant doubt over the Group’s ability to continue
as a going concern. The financial statements do not include any adjustments that would result if the Group was
unable to continue as a going concern.
Page | 15
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (continued)
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’
report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Jack Draycott (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London, W1U 7EU
31 May 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
16 | Page
Armadale Capital Plc
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
2016 2015
Note £ £
Other administrative expenses (690,710) (616,062)
Impairment of investments 13 (301,047) (316,213)
Profit on disposal of investments 13 82,064 –
–––––––––– ––––––––––
Operating loss (909,693) (932,275)
Finance costs (11,982) (59,237)
–––––––––– ––––––––––
Loss before taxation 6 (921,675) (991,512)
Taxation 9 – –
–––––––––– ––––––––––
Loss for the year from continuing operations
attributable to the equity holders of the parent company (921,675) (991,512)
–––––––––– ––––––––––
–––––––––– ––––––––––
Loss after taxation (921,675) (991,512)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities 1,016,566 93,278
–––––––––– ––––––––––
Total comprehensive income/( loss) attributable to the
equity holders of the parent company 94,891 (898,234)
–––––––––– ––––––––––
–––––––––– ––––––––––
Loss per share attributable to the equity holders Pence Pence
of the parent company
Basic and fully diluted 10 (0.62) (1.91)
–––––––––– ––––––––––
–––––––––– ––––––––––
The notes on pages 22 to 42 form part of the financial statements.
Page | 17
Armadale Capital Plc
Consolidated Statement of Financial Position
At 31 December 2016
2016 2015
Note £ £
Assets
Non-current assets
Exploration and evaluation assets 11 8,778,645 4,923,190
Property, plant and equipment 12 16,437 23,694
Investments 13 6,705 56,605
–––––––––– ––––––––––
8,801,787 5,003,489
Current assets
Investment 13 – 322,708
Trade and other receivables 14 160,279 317,230
Cash and cash equivalents 115,861 160,938
–––––––––– ––––––––––
276,140 800,876
–––––––––– ––––––––––
Total assets 9,077,927 5,804,365
–––––––––– ––––––––––
–––––––––– ––––––––––
Equity and liabilities
Equity
Share capital 18 2,946,587 2,823,582
Share premium 20 19,009,592 16,585,413
Shares to be issued 20 286,000 286,000
Share option reserve 20 85,850 182,000
Loan note reserve 20 37,500 –
Foreign exchange reserve 20 1,109,834 93,278
Retained earnings 20 (15,342,406) (14,550,731)
–––––––––– ––––––––––
Total equity 8,132,957 5,419,542
–––––––––– ––––––––––
–––––––––– ––––––––––
Current liabilities
Trade and other payables 15 494,733 339,486
Loan notes 16 450,237 45,337
–––––––––– ––––––––––
944,970 384,823
–––––––––– ––––––––––
–––––––––– ––––––––––
Total equity and liabilities 9,077,927 5,804,365
–––––––––– ––––––––––
–––––––––– ––––––––––
The notes on page 24 to 42 form part of the financial statements.
Approved by the Board and authorised for issue on 31 May 2017
Signed on behalf of the Board
ES Mahede
Director
N Johansen
Director
18 | Page
Armadale Capital Plc
Company Statement of Financial Position
At 31 December 2016
2016 2015
Note £ £
Assets
Non-current assets
Investments 13 4,451,914 2,901,814
Other receivables 14 3,358,091 2,159,250
–––––––––– ––––––––––
7,810,005 5,061,064
–––––––––– ––––––––––
–––––––––– ––––––––––
Current assets
Investment 13 – 322,708
Trade and other receivables 14 6,856 153,495
Cash and cash equivalents 100,879 125,811
–––––––––– ––––––––––
107,735 602,014
–––––––––– ––––––––––
–––––––––– ––––––––––
Total assets 7,917,740 5,663,078
–––––––––– ––––––––––
–––––––––– ––––––––––
Equity and liabilities
Equity
Share capital 18 2,946,587 2,823,582
Share premium 20 19,009,592 16,585,413
Shares to be issued 20 286,000 286,000
Share option reserve 20 85,850 182,000
Loan note reserve 20 37,500 –
–––––––––– ––––––––––
Retained earnings 20 (14,984,733) (14,345,365)
–––––––––– ––––––––––
Total equity 7,380,796 5,531,630
–––––––––– ––––––––––
–––––––––– ––––––––––
Current liabilities
Trade and other payables 15 86,707 86,111
Loan notes 16 450,237 45,337
–––––––––– ––––––––––
536,944 131,448
–––––––––– ––––––––––
–––––––––– ––––––––––
Total equity and liabilities 7,917,740 5,663,078
–––––––––– ––––––––––
–––––––––– ––––––––––
The Company has taken advantage of the exemption conferred by section 408 of Companies Act 2006 from
presenting its own statement of comprehensive income. A loss after taxation of £769,368 (2015: £777,170) has been
included in the financial statements of the parent company.
The notes on pages 24 to 42 form part of the financial statements.
Approved by the Board and authorised for issue on 31 May 2017
Signed on behalf of the Board
ES Mahede
Director
N Johansen
Director
Company Registration No. 5541602
Page | 19
Armadale Capital Plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Share Loan Foreign
Share Share Shares to Option Note Exchange Retained
Capital Premium be issued Reserve Reserve Reserve Earnings Total
£ £ £ £ £ £ £ £
At 1 January 2015 2,562,914 14,807,570 286,000 1,610,361 – – (14,987,580) 4,279,265
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Loss for the year – – – – – – (991,512) (991,512)
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Other comprehensive income – – – – – 93,278 – 93,278
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total comprehensive
loss for the year 93,278 (991,512) (898,234)
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Issue of shares 260,668 1,911,395 – – – – – 2,172,063
Expenses of issue – (133,552) – – – – – (133,552)
Transfer on expiry of options – – – (1,428,361) – – 1,428,361 –
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total other movements 260,668 1,777,843 – (1,428,361) – – 1,428,361 2,038,511
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
At 31 December 2015 2,823,582 16,585,413 286,000 182,000 – 93,278 (14,550,731) 5,419,542
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Loss for the year – – – – – – (921,675) (921,675)
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Other comprehensive income – – – – – 1,016,566 – 1,016,566
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total comprehensive
income for the year – – – – – 1,016,566 (921,675) 94,891
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Issue of shares 123,005 2,540,790 – – – – – 2,663,795
Expenses of issue – (116,611) – – – – – (116,611)
Share based payment charges – – – 33,850 – – – 33,850
Transfer on expiry of options – – – (130,000) – – 130,000 –
Equity element of convertible
loan notes issued – – – – 37,500 – – 37,500
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
Total other movements 123,005 2,424,179 – (96,150) 37,500 – 130,000 2,618,534
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
At 31 December 2016 2,946,587 19,009,592 286,000 85,850 37,500 1,109,844 (15,342,406) 8,132,957
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
The notes on pages 24 to 42 form part of the financial statements.
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve
Share capital
Share premium
Shares to be issued
Share option reserve
Loan note reserve
Foreign exchange reserve
Retained earnings
Description and purpose
amount subscribed for share capital at nominal value
amount subscribed for share capital in excess of nominal value, net of allowable
expenses
value of share capital to be issued in connection with the acquisition of Netcom
cumulative charge recognised under IFRS 2 in respect of share-based payment
awards
equity element of convertible loan notes
gains/losses arising on re-translating the net assets of overseas operations into
sterling
cumulative net gains and losses recognised in the statement of comprehensive
income
20 | Page
Armadale Capital Plc
Company Statement of Changes in Equity
For the year ended 31 December 2016
Share
Capital
£
Share
Premium
£
Shares to
be issued
£
Share
Option
Reserve
£
Loan
Note
Reserve
£
Retained
Earnings
£
Total
£
At 1 January 2015
Loss for the year
Total comprehensive
loss for the year
Issue of shares
Expenses of issue
Transfer on expiry of options
Total other movements
At 31 December 2015
Loss for the year
Total comprehensive
loss for the year
Issue of shares
Expenses of issue
Share based payment charges
Transfer on expiry of options
Equity element of convertible
loan notes issued
Total other movements
At 31 December 2016
2,562,914
14,807,570
4,270,289
1,610,361
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
(777,170)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
(14,996,556)
(777,170)
286,000
–
–
–
–
–
–
–
–
–
–
–
(777,170)
260,668
–
–
1,911,395
(133,552)
–
(777,170)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
2,172,063
–
(133,552)
–
–
(1,428,361)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
2,038,511
(1,428,361)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
5,531,630
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
(769,368)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–
–
1,428,361
(14,345,365)
16,585,413
2,823,582
1,428,361
1,777,843
(769,368)
182,000
260,668
286,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(769,368)
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
2,663,795
(116,611)
33,850
–
2,540,790
(116,611)
–
–
–
–
33,850
(130,000)
–
–
–
130,000
123,005
–
–
–
(769,368)
–
–
–
–
–
–
–
–
–
–
–
–
–
123,005
37,500
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
2,618,534
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
7,380,796
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––
(14,984,733)
19,009,592
2,946,587
2,424,179
(96,150)
286,000
130,000
37,500
85,850
37,500
37,500
–
–
–
–
The notes on pages 24 to 42 form part of the financial statements.
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve
Share capital
Share premium
Shares to be issued
Share option reserve
Loan note reserve
Retained earnings
Description and purpose
amount subscribed for share capital at nominal value
amount subscribed for share capital in excess of nominal value, net of allowable
expenses
value of share capital to be issued in connection with the acquisition of Netcom
cumulative charge recognised under IFRS 2 in respect of share-based payment
awards
equity element of convertible loan notes
cumulative net gains and losses recognised in the statement of comprehensive
income
Page | 21
Armadale Capital Plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
2016 2015
£ £
Cash flows from operating activities
Loss before taxation (921,675) (991,512)
Adjustment for:
Depreciation 11,929 12,545
Unrealised foreign exchange differences – 48,549
Loan note accretion 5,471 34,490
(Profit)/loss on sale of investments (82,064) 24,335
Impairment of investment 301,047 316,213
Interest income – (49)
Share based payment charge 33,850 –
Shares issued in settlement of liabilities 327,050 165,250
Accrued interest payable 6,511 1,714
––––––––– –––––––––
(317,881) (364,130)
Changes in working capital
Receivables 21,951 415
Payables 155,247 60,412
––––––––– –––––––––
Net cash generated from/used in operating activities (140,683) (303,303)
––––––––– –––––––––
––––––––– –––––––––
Cash flows from investing activities
Expenditure on exploration and evaluation assets (1,046,408) (1,158,019)
Purchase of listed investments – (7,986)
Sale of listed investments 153,625 7,860
Interest received – 49
––––––––– –––––––––
Net cash used in investing activities (892,783) (1,158,096)
––––––––– –––––––––
––––––––– –––––––––
Cash flows from financing activities
Proceeds from share placement 1,105,000 1,502,994
Issue costs (116,611) (133,552)
Proceeds from issue of loan notes – 120,000
Repayment of loan notes – (80,619)
––––––––– –––––––––
Net cash from financing activities 988,389 1,408,823
––––––––– –––––––––
––––––––– –––––––––
Net decrease in cash and cash equivalents (45,077) (76,911)
Cash and cash equivalents at 1 January 2016 160,938 237,849
––––––––– –––––––––
Cash and cash equivalents at 31 December 2016 115,861 160,938
––––––––– –––––––––
––––––––– –––––––––
The notes on pages 24 to 42 form part of the financial statements.
22 | Page
Armadale Capital Plc
Company Statement of Cash Flows
For the year ended 31 December 2016
2016 2015
£ £
Cash flows from operating activities
Loss before taxation (769,368) (777,170)
Adjustment for:
Interest income – (49)
Share based payment charge 33,850 –
Loan note accretion 5,471 34,490
(Profit)/loss on sale of investments (82,064) 24,335
Impairment of investment 301,047 316,213
Shares issued in settlement of liabilities 327,050 165,250
Accrued interest payable 6,511 1,714
––––––––– –––––––––
(177,503) (235,217)
Changes in working capital
Receivables 38,300 120,194
Payables 596 13,777
––––––––– –––––––––
Net cash used in operating activities 138,607 (102,246)
––––––––– –––––––––
––––––––– –––––––––
Cash flows from investing activities
Acquisition of investments and advances to subsidiaries (1,028,339) (1,415,353)
Purchase of listed investments – (7,986)
Sale of listed investments 153,625 7,860
Interest received – 49
––––––––– –––––––––
Net cash used in investing activities (874,714) (1,415,430)
––––––––– –––––––––
––––––––– –––––––––
Cash flows from financing activities
Proceeds from share placement 1,105,000 1,502,994
Issue costs (116,611) (133,552)
Proceeds from issue of loan notes – 120,000
Repayment of loan notes – (80,619)
––––––––– –––––––––
Net cash from financing activities 988,389 1,408,823
––––––––– –––––––––
––––––––– –––––––––
Net decrease in cash and cash equivalents (24,932) (107,930)
Cash and cash equivalents at 1 January 2016 125,811 233,741
––––––––– –––––––––
Cash and cash equivalents at 31 December 2016 100,879 125,811
––––––––– –––––––––
––––––––– –––––––––
The notes on pages 24 to 42 form part of the financial statements.
Page | 23
Armadale Capital Plc
Notes to the financial statements
For the year ended 31 December 2016
1. Incorporation and principal activities
Country of incorporation
The Company was incorporated in the United Kingdom as Watermark Global Plc, a Public Limited Company, on
19 August 2005. The name of the Company was changed to Armadale Capital Plc on 2 July 2013. Its registered office
is 55 Gower Street, London WC1E 6HQ. The Company is domiciled in the UK.
2. Accounting policies
2.1. Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
The principal accounting policies are set out below.
2.2. Going Concern
The financial statements have been prepared on the going concern basis as, in the opinion of the directors,
there is a reasonable expectation that the Group and Company will continue in operational existence for the
foreseeable future.
The Group had net current liabilities at 31 December 2016 of £668,830 including £450,000 of convertible loan
notes due July 2017. Based on correspondence with the loan note holders, the Company expects to be able
to extend 58.5% of the notes for a further period of 12 months on the same terms. The remaining notes are
expected to be converted into Ordinary Shares under the terms of the governing deed subject to the
condition that conversion does not cause the note holder’s shareholding to exceed 29.9%, which at present
it is not expected to exceed.
Since the end of the year, the Company has continued its appraisal operations at its Mahenge Liandu graphite
project. In order to fund this exploration and evaluation expenditure and to cover the net current asset
deficit, the Company raised £650,750 through the issue of 26,030,000 Ordinary Shares at 2.5p per share.
At 23 May 2017, the Company had cash of approximately £300,000. The directors have prepared a cashflow
forecast for the next twelve months which shows that the cash in hand is sufficient to meet current
commitments in respect of exploration expenditure and corporate overheads for a period of approximately
10 months.
The Company’s ability to continue as a going concern and to achieve its long term strategy of developing its
exploration projects is dependent on the extension and/or conversion of the loan notes and further
fundraising. As described above, the Directors expect to be able to convert or extend the existing loan notes,
and against the background of the encouraging initial results from the Mahenge Liandu graphite project and
the Company’s history of raising funds through the issue of equity, the directors also consider that the
Company is likely to be able to raise the required capital. However, there are currently no binding agreements
in place. Should the Directors be unable to raise sufficient funds and extend or convert the loan notes, the
Company may be unable to realise its assets and discharge its liabilities in the normal course of business.
These factors indicate the existence of a material uncertainty which may cast significant doubt over the
Group’s and Company’s ability to continue as a going concern. The financial statements do not include the
adjustments that would result if the Group or Company were unable to continue as a going concern.
24 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.3. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern
the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement
of Comprehensive Income from the effective date of acquisition and up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are eliminated in full on consolidation.
2.4 Acquisitions of exploration licences
The acquisition of Netcom, Kisenge and Graphite Advancement, were principally the acquisition of mining
licences effected through non-operating corporate structures. As the structure does not represent a business,
it is considered that the transactions do not meet the definition of a business combination. Accordingly each
transaction is accounted for as the acquisition of an asset. Future consideration for shares is contingent and
is recognised as an asset or liability based on the valuation of the shares as at the date of acquisition.
Contingent future consideration for shares is not subsequently revalued.
2.5. Foreign currencies
The individual financial statements of each Group entity are presented in the currency of the primary
economic environment in which the entity operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial position of each Group entity are expressed in
pounds sterling, which is the functional currency of the Company and the presentation currency for the
consolidated financial statements.
Transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at
the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the
rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in
profit or loss in the period in which they arise.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s
foreign operations are expressed in Pounds using exchange rates prevailing at the end of the reporting
period. Income and expense items are translated at the average exchange rates for the period, unless
exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of
the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive
income.
2.6. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, with a maturity date of less than three months
from inception.
Page | 25
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.7. Share-based payments
IFRS 2 ‘Share-based Payment’ requires the recognition of equity-settled share-based payments at fair value
at the date of grant and the recognition of liabilities for cash-settled share based payments at the current fair
value at each reporting date.
The Group provides benefits to employees and service providers (including senior executives) of the Group
in the form of share based payments, whereby employees render services in exchange for shares or rights
over shares (equity-settled transactions).
Where the equity-settled transactions are share options their cost is measured by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by using a
Black-Scholes model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than market
conditions linked to the price of the shares of the Company, if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over
the period in which the performance and/or other service conditions are fulfilled, ending on the date on
which the relevant employees become fully entitled to the award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number
of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair
value at grant date. The profit and loss account charge or credit for a period represents the movements in
cumulative expense recognised as at the beginning and end of that period.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. However, if a new award is substituted
for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled
and new award are treated as if they were a modification of the original award. The dilutive effect, if any, of
outstanding options is reflected as additional share dilution in the computation of earnings per share.
Share based payments in respect of third party services are measured by reference to the value of services
provided and share price at the relevant date.
2.8. Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current Tax
The tax currently payable is based on taxable profit for the year. The Group’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
26 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.8. Taxation (continued)
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the manner in which the Group expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax and current tax assets and liabilities are offset when there is a legally enforceable right to set off
when they relate to income taxes levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate
to items that are recognised outside profit or loss (whether in other comprehensive income or directly in
equity), in which case the tax is also recognised outside profit or loss, or where they arise from the initial
accounting for a business combination. In the case of a business combination, the tax effect is included in the
accounting for the business combination.
2.9. Exploration and evaluation costs
Once an exploration licence or an option to acquire an exploration licence has been obtained, all costs
associated with exploration and evaluation are capitalised on a project-by-project basis pending
determination of the feasibility of the project. Costs incurred include appropriate technical and
administrative expenses and a pro-rata share of the Group’s finance costs but not general overheads. If a
mining property development project is successful, the related expenditures will be amortised over the
estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished,
a project is abandoned, or is considered to be of no further commercial value to the Company, the related
costs will be written off to the statement of comprehensive income in the period the impairment is identified.
Unevaluated mineral properties are assessed at reporting date for impairment in accordance with the policy
set out below. If commercial reserves are developed, the related deferred development and exploration costs
are then reclassified as development and production assets within property, plant and equipment.
Page | 27
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.10. Investments
Investments in the individual company accounts, including those in subsidiary companies, are stated at cost
less any provision for impairment, which is recognised as an expense in the statement of comprehensive
income in the period the impairment is identified.
In the Group accounts, equity investments are included on the balance sheet as assets available for sale at
fair value with value changes being recognised in other comprehensive income unless an impairment is
considered to be permanent in which case it is recognised in the statement of comprehensive income.
Associates in the Group accounts are recognised at cost less the Group’s share of profits or losses of the
associate.
2.11. Joint Arrangements
The group is a party to a joint arrangement when there is a contractual arrangement that confers joint control
over the relevant activities of the arrangement to the group and at least one other party. Joint control is
assessed under the same principles as control over subsidiaries.
The group classifies its interests in joint arrangements as either: (a) Joint ventures: where the group has rights
to only the net assets of the joint arrangement; (b) Joint operations: where the group has both the rights to
assets and obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers: (a) The structure of the
joint arrangement; (b) The legal form of joint arrangements structured through a separate vehicle; (c) The
contractual terms of the joint arrangement agreement; and (d) Any other facts and circumstances (including
any other contractual arrangements).
The Group accounts for its interests in joint operations by recognising its share of assets, liabilities, revenues
and expenses in accordance with its contractually conferred rights and obligations.
2.12. Plant, equipment and vehicles
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their
useful lives, using the straight-line method. The estimated useful lives and residual values are reviewed at
each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Plant, equipment and vehicles
3-10 years on a straight line basis
The depreciation cost relating to assets used in the development of mineral deposits is capitalised until the
deposit is bought into production.
28 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.13. Impairment of assets
At the end of each reporting period, the Directors review the carrying amounts of assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An
impairment loss is recognised immediately in the statement of comprehensive income, unless the relevant
asset is carried at a revalued amount, whereby impairment is first allocated to the revaluation reserve, to the
extent that it has been previously revalued, with any excess taken to the statement of comprehensive
income.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit)
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised
immediately in other comprehensive income, unless the relevant asset is carried at a re-valued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
2.14. Financial assets
Loans and receivables are recognised when the Company and Group become party to the contractual
provisions of the financial instrument.
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the recognition of interest would be
immaterial.
Page | 29
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.15. Financial liabilities and equity instruments issued by the Group
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received,
net of direct issue costs.
Financial assets
Financial assets comprise debtors and other investments.
Financial liabilities
Financial liabilities are recognised when the Company and Group become party to a loan.
Financial liabilities represent trade payables and borrowings.
Convertible loan notes
The loan notes may be converted into the Company’s shares and are therefore classified as a compound
financial instrument in accordance with the requirements of IAS 32. The debt element is calculated as the
present value of future cash flows assuming the loan notes are redeemed at the redemption date, discounted
at the market rate for an equivalent debt instrument with no option to convert to equity. The difference
between the cash payable on maturity and the present value of the debt element is recognised in equity. The
discount is charged over the life of the loan notes to the statement of comprehensive income and included
within finance expenses.
2.16. Standards issued but not in force
New interpretations and revised standards effective for the year ended 31 December 2016
There were no new standards issued in respect of the year ended 31 December 2016 that were relevant for
adoption by the Group.
Standards and interpretations in issue but not yet effective
A number of new standards and amendments to existing standards have been published which are
mandatory, but are not effective for the year ended 31 December 2016:
• IFRS 9 Financial instruments (effective 1 Jan 18);
• IFRS 15 Revenue from contracts with customers (effective 1 Jan 18);
• IFRS 16 Leases (effective 1 Jan 2019);
• IAS 12 (amended) Recognition of deferred tax asset for unrealised losses (effective 1 Jan 17);
• IAS 7 Disclosure initiative (effective 1 Jan 17); and
• IFRS 2 (amended) Classification and measurement of share based payment transactions (effective
1 Jan 18).
30 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
2. Accounting policies (continued)
2.16. Standards issued but not in force (continued)
The Group considers that the only Standard that may have any impact is IFRS 9. The new Standard will replace
existing accounting Standards in relation to Financial Instruments. It is applicable to financial assets and
liabilities and will introduce changes to existing accounting concerning classification, measurement and
impairment (introducing an expected loss method). The Group is currently assessing the impact of IFRS 9.
The Group is not revenue generating thus there is no impact of IFRS 15 as there are no revenue contracts in
place at this time.
The Group will adopt the above Standards at the time stipulated by that Standard. The Group does not at this
time anticipate voluntary early adoption of any of the Standards.
3. Significant judgements and sources of estimation uncertainty
In preparing the annual financial statements of the Group, management is required to make estimates and
assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of
available information and the application of judgement are inherent in the formation of estimates. Actual results in
the future could differ from these estimates which may be material to the annual financial statements. The directors
consider that the only significant source of estimation uncertainty relates to the number of shares to be issued in
respect of milestone achievements on the Mpokoto project (note 12).
The principal significant judgements are:
Going concern
The financial statements have been prepared on the going concern basis as, in the opinion of the directors, there is
a reasonable expectation that the Group will continue in operational existence for the foreseeable future, as
explained more fully in note 2.2.
Investment and debtors
At 31 December 2016 the Company held approximately 26% of the issued share capital of MRI, a South African listed
company. In the judgement of the Directors, the Company does not have significant influence over MRI as it does
not have any representation on the Board, nor does it have the power to appoint anyone to the Board. MRI is
therefore held as an investment.
Trading in the shares of MRI has been suspended and the company is not trading. Accordingly, in the opinion of the
directors, the market value of the shares is nil and full provision for impairment has been made.
Exploration and evaluation assets
These represent the accumulated costs, including capitalised finance costs, to the Group of its mineral projects.
Their commercial realisation is dependent upon the successful economic development of the gold and graphite
deposits and should the development not be achieved, an impairment of these assets would arise. As at the year
end the directors were of the opinion that there were no indicators of impairment.
Page | 31
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
3. Significant judgements and sources of estimation uncertainty (continued)
In addition, at the Company level:
Impairment of investment in subsidiaries
Investments in subsidiaries represent the accumulated costs that the parent Company has invested in its subsidiaries
to fund the mineral projects. The recovery of these investments is dependent upon the successful economic
development of the gold and graphite deposits and should the development not be achieved, an impairment of
these investments would arise. At the year end the directors were of the opinion that there were no indicators of
impairment.
4. Financial Risk Management
Policy
The Group and Company regularly monitor the cash position to ensure liabilities can be met.
Financial risk factors
The risk in relation to financial assets is considered to be minimal and is managed on a day-to-day basis.
The Group and Company is exposed to liquidity risk, currency risk and capital risk management arising from the
financial instruments it holds. The Company has receivables from its subsidiaries as disclosed in note 14. The
recovery of these receivables is dependent on whether the mining projects are successful and they are not expected
to be recovered in the short term. The risk management policies employed by the Group and Company to manage
these risks are discussed below:
Liquidity Risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. The Group and
Company manages liquidity risk by maintaining adequate reserves and banking facilities, by monitoring cash flows
and managing the maturity profiles of financial assets and liabilities within the bounds of contractual obligations.
Currency Risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange
rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a foreign currency that is not the Group’s functional currency. The Group is exposed to foreign
exchange risk arising from various currency exposures, primarily with respect to the South African Rand and the
US Dollar. The Group’s management monitors the exchange rate fluctuations on a continuous basis. The Group’s
convertible loan is denominated in GBP as disclosed in note 17.
Capital Risk Management
The Group and Company manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance. This is done through
the monitoring of cash flows.
The capital structure of the Group and Company consists of cash and cash equivalents, equity attributable to equity
holders of the parent, (comprising issued capital and reserves less accumulated losses) and loan notes.
Commodity risk
The value of the Group’s exploration and evaluation assets is principally exposed to two commodities, gold and
graphite. The value of the projects is vulnerable to fluctuations in the prevailing market price of these commodities.
32 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
4. Financial Risk Management (continued)
Fair value estimation
The fair values of the Group’s and Company’s financial assets and liabilities approximate to their carrying amounts
at the reporting date.
Non-current asset investments (excluding investments in subsidiaries at the Company level) are measured at fair
value. The fair value is based upon observable inputs and the level of the fair value hierarchy within the
measurement is categorised as Level 1. Current asset investments are measured at fair value and are categorised as
Level 2. There were no transfers between Level 1 and Level 2 for the year.
5. Segmental Information
Costs incurred in developing the Group’s exploration projects are capitalised in full, accordingly, the expenses
reported in the Consolidated Statement of Comprehensive Income solely represent central Group overheads.
In terms of assets and liabilities, the only material items are the exploration and evaluation asset relating to the
Group’s projects in the Democratic Republic of Congo (“DRC”) and Tanzania. The analysis of this asset is as follows
2016 2015
£ £
DRC 5,820,128 4,923,190
Tanzania 1,998,838 –
–––––––– ––––––––
7,818,966 4,923,190
–––––––– ––––––––
–––––––– ––––––––
6. Loss before tax
This is stated after charging:
2016 2015
£ £
Directors’ emoluments – fees 150,000 99,087
Directors’ emoluments – compensation for loss of office 123,000 –
Depreciation 11,929 12,545
Auditors’ remuneration:
Fees payable to the Company’s auditors for the audit of
the Group and Company financial statements 30,000 30,000
Fees payable to the Company’s auditors for taxation compliance services 2,450 5,197
Gain on disposal of investments (82,064) –
Share based payment charge 33,850 –
Impairment of investments 301,047 316,213
Page | 33
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
7. Employees
2016 2015
The average monthly number of persons (including Directors)
employed by the Group during the year was:
Group – management 3 3
Group – staff 9 12
–––––––– ––––––––
12 15
–––––––– ––––––––
–––––––– ––––––––
Company – management 3 3
Employment costs £ £
Group
Wages and salaries (including directors) 301,224 297,915
Payments in lieu of notice 123,000 –
Social security costs 22,511 11,914
–––––––– ––––––––
446,735 309,829
–––––––– ––––––––
–––––––– ––––––––
Company
Wages and salaries (including directors) 150,000 99,087
Payments in lieu of notice 123,000 –
–––––––– ––––––––
273,000 99,087
–––––––– ––––––––
–––––––– ––––––––
8. Remuneration of Directors of the Company
Aggregate emoluments 273,000 99,087
–––––––– ––––––––
–––––––– ––––––––
Emoluments of the Highest Paid Director 96,000 49,999
–––––––– ––––––––
–––––––– ––––––––
All Directors of the Group and Company are considered to be the key management personnel.
Of the total employment costs, a value of £273,735 has been capitalised within E&E asset additions in the year
ended 31 December 2016 (£210,742) for the year ended 31 December 2015).
9. Taxation
2016 2015
£ £
Continuing operations
Current Tax
Current tax on loss for the year – –
–––––––– ––––––––
–––––––– ––––––––
34 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
9. Taxation (continued)
2016 2015
£ £
Continuing operations
Factors affecting the tax charge for the year
Loss on ordinary activities before taxation (921,675) (991,512)
Loss on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 20% (2015: 20.25%) (184,335) (200,781)
Effects of:
Losses carried forward not recognised as a deferred tax asset 177,565 200,781
Expenses disallowed 6,770 –
–––––––– ––––––––
UK Corporation tax – –
–––––––– ––––––––
–––––––– ––––––––
A deferred tax asset of approximately £1,334,000 (2015: £1,179,000) has not been recognised owing to the
uncertainty over the timing of future recoverability.
10. Loss per share
The calculation of loss per share is based on a loss of £921,675 (2015, £991,512), and on 148,922,833 ordinary
shares (2015, 51,875,616 ), being the weighted average number of shares in issue during the year.
There is no difference between basic loss per share and diluted loss per share as the potential ordinary shares are
anti-dilutive.
The company has issued options over ordinary shares which could potentially dilute basic earnings per share in the
future.
11. Exploration and evaluation assets
Group 2016 2015
£ £
Cost
At 1 January 4,923,190 3,515,769
Exchange movements 959,679 42,817
Acquisition of licence in Tanzania (note 13) 1,607,736 –
Additions 1,288,040 1,364,604
––––––––– –––––––––
At 31 December 8,778,645 4,923,190
––––––––– –––––––––
––––––––– –––––––––
Included in additions are capitalised finance costs of £25,542 (2015, £131,958).
As production has not commenced, no amortisation was charged during the year, in accordance with the Group’s
accounting policy.
Page | 35
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
12. Property, plant and equipment
Group
Plant Equipment Vehicles Total
Cost £ £ £ £
At 1 January 2015 11,902 9,983 15,300 37,185
Exchange Movements 663 556 853 2,072
At 31 December 2015 12,565 10,539 16,153 39,257
Exchange movements 2,477 2,078 3,184 7,739
–––––––– –––––––– –––––––– ––––––––
At 31 December 2016 15,042 12,617 19,337 46,996
–––––––– –––––––– –––––––– ––––––––
Depreciation
At 1 January 2015 71 1,157 1,630 2,858
Exchange Movements 4 65 91 160
Charge for the year 298 4,796 7,451 12,545
–––––––– –––––––– –––––––– ––––––––
At 31 December 2015 373 6,018 9,172 15,563
Exchange Movements 73 1,186 1,808 3,067
Charge for the year – 5,387 6,542 11,929
–––––––– –––––––– –––––––– ––––––––
At December 2016 446 12,591 17,522 30,559
–––––––– –––––––– –––––––– ––––––––
Net book value
At 31 December 2016 14,596 26 1,815 16,437
–––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– ––––––––
At 31 December 2015 12,192 4,521 6,981 23,694
–––––––– –––––––– –––––––– ––––––––
–––––––– –––––––– –––––––– ––––––––
13. Investments
Non-current asset investments – Group
Listed investments
Cost £
At 1 January 2015 76,619
Additions 7,986
––––––––
At 31 December 2015 84,605
Disposals (77,900)
––––––––
At 31 December 2016 6,705
––––––––
Impairment
At 1 January 2015 46,500
Impairment (release) (18,500)
––––––––
At 31 December 2015 28,000
Impairment (release) (28,000)
––––––––
At 31 December 2016 –
––––––––
Net book value
At 31 December 2016 6,705
––––––––
––––––––
At 31 December 2015 56,605
––––––––
––––––––
36 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
13. Investments (continued)
Non-current asset investments – Company
In addition to the above investments, included within non-current asset investments in the Company’s statement of
financial position, is £4,445,209 (2015: £2,845,209) in relation to investments in its subsidiaries. Additions in the
year were £1,600,000 (2015: £nil). There were no disposals or impairment charges in the current or prior year.
2016 2015
Current asset investments – Group and Company £ £
At 1 January 2016 322,708 689,616
Disposals (21,661) (32,195)
Impairment charge for year (301,047) (334,713)
––––––––– –––––––––
Valuation at 31 December 2016 – 322,708
––––––––– –––––––––
––––––––– –––––––––
The Group has an interest of approximately 26% in MRI, a company involved in the processing of coal fines.
As there is an intention to sell the investment in MRI, it has been classified as a current asset investment. Trading in
MRI’s shares has been suspended and the company has become inactive. In the opinion of the directors, the market
value of the shares is nil and accordingly a further charge has been recorded in the year to reduce the value of the
investment to nil.
The subsidiary companies are:
Name and nature of business Registered Office Class of shares % held
Netcom Global Inc. 555 Hunkins Waterfront Ordinary 100
(intermediate holding company) Plaza, Charleston, Nevis
Kisenge Limited 171 Main Street, Road Town, Ordinary 100
(intermediate holding company) British Virgin Islands
Cluff Mining Congo, SARL* 34 Avenue de la Liberte, Ordinary 100
(mining project operator) Lubumbashi
Democratic Republic of Congo
Mines D’Or de Kisenge, SARL* 34 Avenue de la Liberte, Ordinary 80
(mining licence holder) Lubumbashi,
Democratic Republic of Congo
Graphite Advancements Pty Ltd 3 Queens Grove, Mount Ordinary 100
Claremont,
Western Australia 40010
Graphite Advancements (Tanzania) Limited† PO Box 105589, Dar es Salaam, Ordinary 100
Tanzania
Water Utilities Limited 171 Main Street, Road Town, Ordinary 100
(in process of dissolution) British Virgin Islands
* Held through Kisenge Limited
† Held through Graphite Advancements Pty Ltd
The interest of 20% in Mines d’Or de Kisenge, SARL not held by the Group is held by Entreprise Miniere de Kisenge-
Manganese SARL (“KMC”) a Congolese Government entity. KMC is entitled to participate in future revenues from
the project. As KMC was not required to contribute to its share of exploration and evaluation costs and no revenues
have yet been generated, there is no non-controlling interest to report in these financial statements.
Page | 37
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
13. Investments (continued)
In July 2016, the Company completed the acquisition of 100% of Graphite Advancements Pty Ltd (“GA”) which
through its subsidiary, Graphite Advancements (Tanzania) Limited, holds the exploration rights to the Mahenge
Liandu graphite project in Tanzania. Consideration for the acquisition was £1,600,000, satisfied by the issue of
57.5 million ordinary shares of 0.1p in the company and of £450,000 unsecured loan notes. As disclosed in the
accounting policies the acquisition of GA was accounted for as an asset acquisition rather than a business
combination and the value of the consideration paid was recognised by the Group as additions to exploration and
evaluation assets in note 11.
Under the terms of acquisition of Netcom Global Inc, completed on 15 November 2013, further ordinary shares in
the company were potentially to be issued to the vendors as follows:
i. 350 million (now 2.333 million) Ordinary Shares issued upon the grant of Exploration Licences for the
Mpokoto Project to the Company (the “Further Consideration Shares”). The Further Consideration Shares,
valued at 0.26p per share, were included as part of the cost of the investment in Netcom.
ii. up to 220 million (now 1.467 million) Ordinary Shares were to be issued upon the completion of three key
milestones (the “Milestone Shares”):
• 60 million (now 0.4 million) Ordinary Shares upon completion of a pre-feasibility study;
• 60 million (now 0.4 million) Ordinary Shares upon the delineation of a JORC reserve of at least 120,000
ounces of gold; and
• 100 million (now 0.667 million) Ordinary Shares upon the production of the first 5,000 ounces of gold
from the project.
The directors assessed a 100% likelihood of the first two milestones being achieved and a 50% likelihood of the third
milestone being achieved.
The value of the milestone shares was included as part of the cost of the investment in Netcom, valued at 0.26p per
share.
During 2014, the conditions applying to the Further Consideration Shares and the first tranche of Milestone Shares
were fulfilled and accordingly 410 million (now 2.733 million) Ordinary Shares in the Company were issued to the
vendors.
The conditions applying to the second and third tranche of Milestone Shares have not yet been fulfilled.
38 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
14. Trade and other receivables
2016 2015
Group £ £
Unpaid proceeds of share placing – 135,000
Other debtors and prepayments 160,279 182,230
––––––––– –––––––––
Total current receivables 160,279 317,230
––––––––– –––––––––
––––––––– –––––––––
Company
Amounts owed by group undertakings 3,358,091 2,159,250
––––––––– –––––––––
Total non-current receivables 3,358,091 2,159,250
––––––––– –––––––––
––––––––– –––––––––
Unpaid proceeds of share placing – 135,000
Other receivables 6,856 18,495
––––––––– –––––––––
Total current receivables 6,856 153,495
––––––––– –––––––––
––––––––– –––––––––
The company is also owed a debt of £998,000 secured on shares in MRI. In the opinion of the directors, the ability
of the debtor to repay the debt is seriously in doubt and accordingly the amount has been provided against in full.
15. Trade and other payables
2016 2015
Group £ £
Trade payables 144,366 178,599
Other creditors and accruals 350,367 160,887
––––––––– –––––––––
494,733 339,486
––––––––– –––––––––
––––––––– –––––––––
Company
Trade payables 27,795 30,361
Other creditors and accruals 58,912 55,750
––––––––– –––––––––
86,707 86,111
––––––––– –––––––––
––––––––– –––––––––
All trade and other payables are due within three months.
16. Loan notes
2016 2016 2015
10% Notes 12% Notes 12% Notes
Group and Company £ £ £
Balance 1 January – 45,337 200,000
Issued 450,000 – –
Transfer to loan note reserve (37,500) – –
Accrued interest 20,096 906 5,530
Accretion of liability 17,641 – –
Repaid – – (160,193)
Converted – (46,243) –
––––––––– ––––––––– –––––––––
Balance 31 December 450,237 – 45,337
––––––––– ––––––––– –––––––––
––––––––– ––––––––– –––––––––
Page | 39
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
16. Loan notes (continued)
The 10% Loan Notes were issued on 11 July 2016 as part of the consideration for the acquisition of Graphite
Advancements Pty Ltd (see note 13). The Loan Notes are unsecured, pay interest at 10% per annum, and are
convertible into Ordinary Shares at 2p per Ordinary Share, together with any interest owing. The Loan Notes convert
12 months from issue, or earlier at the option of the Company, provided such conversion does not result in the
holders owning more than 29.9% of the issue share capital of the Company. The liability component of the loan
notes was valued in accordance with the accounting policy set out in note 1 using an interest rate of 20%.
The 12% loan notes were issued on 8 June 2015 to fund the repayment of the convertible loan notes (see note 17).
The notes accrued interest at 12 per cent per annum and were repayable six months from the date of issue. The
remaining notes together with accrued interest were repaid in full on 29 February 2016 by conversion into Ordinary
Shares in the Company (see note 18).
17. Convertible loan notes (non-current)
2016 2015
Group and Company £ £
At 1 January – 216,570
Issued in year – –
Converted – (208,626)
Transfer from/(to) derivative liability – 41,416
Accretion on loan notes – 111,259
Repaid – (160,619)
––––––––– –––––––––
– –
––––––––– –––––––––
––––––––– –––––––––
18. Share capital
Ordinary Shares
of 0.01p/0.1p each*
Deferred Shares
of 0.14p each
Deferred Shares
of 1.4p each
Number £ Number £ Number
At 1 January 2015 4,189,901,168 418,991 1,531,374,350 2,143,923 –
Issue of shares 2,149,178,829 214,918 – – –
Consolidation and reorganisation (6,296,819,464) (591,648) – – 42,260,533
Issue of shares 45,750,000 45,750,000 – – –
At 31 December 2015 88,010,533 88,011 1,531,374,350 2,143,923 42,260,533
Issue of shares
For cash 45,000,000 45,000 – – –
In part consideration of acquisition
£
–
–
591,648
–
591,648
–
of subsidiary 57,500,000 57,500 – – –
On conversion of loan notes 1,541,434 1,541 – – –
To settle liabilities 18,964,343 18,964 – – –
––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
At 31 December 2016 211,016,310 211,016 1,531,374,350 2,143,923 42,260,533
––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––
–
–
–
–––––––––––
591,648
–––––––––––
–––––––––––
* The nominal value of each Ordinary Share was 0.01p until the consolidation and reorganisation of the share capital on 22 June 2015 and 0.1p
thereafter
40 | Page
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
19. Share based payment arrangements
3,000,000 options over Ordinary Shares in the Company were granted during the year (2015, nil).
A summary of outstanding options is as follows:
Held at Held at Held at
Exercise 1 January 1 January 31 December
price 2015 Expired 2016 Granted Expired 2016
Directors
PA Marks
Granted 01.10.13 15p 333,333 – 333,333 – (333,333) –
Granted 19.11.14 15p 333,333 – 333,333 – (333,333) –
JLG Lewis
Granted 01.10.13 15p 333,333 – 333,333 – (333,333) –
Granted 19.11.14 15p 666,667 – 666,667 – (666,667) –
W Frewen
Granted 21.07.16 2p – – – 1,000,000 – 1,000,000
Granted 21.07.16 4p – – – 1,000,000 1,000,000
ES Mahede
Granted 10.08.16 2p – – – 250,000 – 250,000
Granted 10.08.16 4p – – – 250,000 – 250,000
N Johansen
Granted 16.10.16 2p – – – 250,000 – 250,000
Granted 16.10.16 4p – – – 250,000 – 250,000
Consultants
Granted 11.02.08 100.5p 6,667 (6,667) – – – –
Granted 01.07.09 30p 13,333 (13,333) – – – –
Granted 01.10.13 15p 266,667 – 266,667 – – 266,667
Granted 19.11.14 15p 400,000 – 400,000 – – 400,000
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
*2,353,333 (20,000) 2,333,333 3,000,000 1,166,166 3,666,667*
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
The number of options and their exercise prices have been adjusted for the effects of the share capital sub-division
on 28 June 2013 and the share capital consolidation and reorganisation on 22 June 2015
* representing 1.73% of the issued share capital of the company
All of the outstanding options held at year end were exercisable at a weighted average exercise price of 5p
(2016:15p).
The following information is relevant in the determination of the fair value of the options granted during the year:
The inputs to the Black-Scholes model were as follows:
2016
Share price 2p to 3.12p
Exercise price 2p to 5p
Expected volatility 71%
Risk free rate of interest 1%
Expected dividend yield 0%
Expected life 4 years
Expected volatility was determined by reference to the historical volatility of similar listed entities.
Page | 41
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2016
20. Reserves
A description of the nature of each Reserve and a summary of movements are shown in the Statements of Changes
in Equity on pages 20 and 21.
21. Related party transactions
During the year payments of £30,000 (2015: £40,000) and £nil (2015: £40,000) were made to Henslow Pty Ltd and
Halcyon Corporate Pty Limited respectively for consultancy services. The services provided include fundraising and
corporate services, as well as the provision of additional time by Justin Lewis. Justin Lewis is a director of Henslow
Pty Ltd and Halcyon Corporate Pty Limited, There were no amounts outstanding in respect of these transactions at
31 December 2016 (2015, nil).
In respect of the Company, amounts due from subsidiary undertakings were £3,358,091 (2015: £2,159,250), the
movement being amounts lent to the subsidiaries.
22. Ultimate controlling party
There was no ultimate controlling party during the year.
23. Subsequent events
On 18 January 2017, the Company placed 26,030,000 Ordinary Shares of 0.1p at a price of 2.5p to raise £650,750
before expenses. On the same date, the company issued 1,250,000 ordinary shares to a service provider.
42 | Page
Armadale Capital Plc
Notice of Annual General Meeting
ARMADALE CAPITAL PLC
55, Gower Street, London WC1E 6HQ
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Armadale Capital Plc (‘the Company’) will be held at 55,
Gower Street, London WC1E 6HQ on 26 June 2017 at 11.00 am for the purpose of considering and, if thought fit,
passing the following Resolutions which will be proposed as ordinary resolutions in the cases of Resolutions 1 to 5
and as a special resolution in the case of Resolution 6.
ORDINARY BUSINESS
1. To receive the report of the Directors and the audited financial statements of the Company for the year ended
31 December 2016.
2. To reappoint Emmanuel S Mahede as a Director of the Company, who, having been appointed during the
previous 12 months, offers himself for reappointment under the Articles of Association of the Company.
3. To reappoint Nicholas Johansen as a Director of the Company, who, having been appointed during the
previous 12 months, offers himself for reappointment under the Articles of Association of the Company.
4. To reappoint BDO LLP as auditors of the Company to act until the conclusion of the next Annual General
Meeting and to authorise the Directors to determine the remuneration of the auditors.
SPECIAL BUSINESS
ORDINARY RESOLUTION
5. That in substitution for all existing and unexercised authorities, the directors of the Company be and they are
hereby generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006
(‘the Act’) to exercise all or any of the powers of the Company to allot Relevant Securities (as defined in this
Resolution) up to a maximum nominal amount of £150,000 provided that this authority shall, unless
previously revoked or varied by the company in general meeting, expire on the earlier of the conclusion of
the next Annual General Meeting of the Company or 15 months after the passing of this Resolution, unless
renewed or extended prior to such time except that the directors of the Company may before the expiry of
such period make an offer or agreement which would or might require Relevant Securities to be allotted after
the expiry of such period and the directors of the Company may allot Relevant Securities in pursuance of such
offer or agreement as if the authority conferred hereby had not expired. In this Resolution, “Relevant
Securities” means any shares in the capital of the Company and the grant of any right to subscribe for, or to
convert any security into, shares in the capital of the Company (“Shares”) but does not include the allotment
of Shares or the grant of a right to subscribe for Shares in pursuance of an employee’s share scheme or the
allotment of Shares pursuant to any right to subscribe for, or to convert any security into, Shares.
Page | 43
Armadale Capital Plc
SPECIAL RESOLUTION
6. That in substitution for all existing and unexercised authorities and subject to the passing of the preceding
Resolution, the directors of the Company be and they are hereby empowered pursuant to section 570 of the
Act to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authority conferred
upon them by the preceding Resolution as if section 561(1) of the Act did not apply to any such allotment
provided that the power conferred by this Resolution, unless previously revoked or varied by special
resolution of the Company in general meeting, shall be limited to:
(a) the allotment of ordinary shares of 0.1p each in the capital of the Company arising from the exercise
of options and warrants outstanding at the date of this Resolution;
(b) the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders
where the equity securities respectively attributable to the interest of all such shareholders are
proportionate (as nearly as may be) to the respective numbers of the ordinary shares held by them
subject only to such exclusions or other arrangements as the directors of the Company may consider
appropriate to deal with fractional entitlements or legal and practical difficulties under the laws of, or
the requirements of any recognised regulatory body in, any territory; and
(c) the allotment (otherwise than pursuant to subparagraphs (a) and (b) above) of equity securities up to
an aggregate nominal amount of £150,000;
and shall expire on the earlier of the date of the next Annual General Meeting of the Company or 15 months
from the date of the passing of this Resolution save that the Company may before such expiry make an offer
or agreement which would or might require equity securities to be allotted after such expiry and the directors
may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not
expired.
Registered Office:
55 Gower Street
London WC1E 6HQ
31 May 2017
By order of the Board
Timothy Jones
Company Secretary
Notes to the Notice of Annual General Meeting
Entitlement to attend and vote
1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members registered on
the Company’s register of members 48 hours before the time of the Meeting shall be entitled to attend and vote at the Meeting.
Appointment of proxies
2. If you are a member of the Company at the time set out in note 1 above, whether or not you are able to attend the meeting, you may use
the enclosed form of proxy to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the Meeting and you should
have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the
notes to the proxy form.
3. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the
Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your
proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your
instructions directly to them.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint
more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the registrars of the
Company, Share Registrars Limited on 01252 821 390.
5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution.
If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from
voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
Appointment of proxy using hard copy proxy form
6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote.
44 | Page
Armadale Capital Plc
To appoint a proxy using the proxy form, the form must be: completed and signed;
sent or delivered to Share Registrars Limited at The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR or by facsimile transmission to
01252 719 232; and
received by Share Registrars Limited no later than 48 hours (excluding nonbusiness days) prior to the Meeting.
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer
of the Company or an attorney for the Company.
Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority)
must be included with the proxy form.
Appointment of proxy by joint members
7. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the
most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s
register of members in respect of the joint holding (the firstnamed being the most senior).
Changing proxy instructions
8. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cutoff time for
receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after
the relevant cutoff time will be disregarded.
Where you have appointed a proxy using the hardcopy proxy form and would like to change the instructions using another hardcopy proxy
form, please contact Share Registrars Limited on 01252 821 390.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will
take precedence.
Termination of proxy appointments
9. In order to revoke a proxy instruction you will need to inform the Company using one of the following methods:
By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share Registrars Limited at The
Courtyard, 17 West Street, Farnham, Surrey GU9 7DR or by facsimile transmission to 01252 719 232. In the case of a member which is a
company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the Company or an attorney
for the Company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such
power or authority) must be included with the revocation notice.
In either case, the revocation notice must be received by Share Registrars Limited no later than 48 hours (excluding nonbusiness days) prior
to the Meeting.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph
directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend
the Meeting in person, your proxy appointment will automatically be terminated.
Issued shares and total voting rights
10. As at 23 May 2017 the Company’s issued share capital comprised 258,296,310 Ordinary Shares. Each Ordinary Share carries the right to one
vote at a general meeting of the Company and, therefore, the total number of voting rights in the Company as at • May 2017 is 258,296,310
Communications with the Company
11. Except as provided above, members who have general queries about the Meeting should email the Company Secretary, Timothy Jones, on
tim@timothyjones.co.uk (no other methods of communication will be accepted). You may not use any other electronic address provided
either in this notice of general meeting; or any related documents (including the chairman’s letter and proxy form), to communicate with
the Company for any purposes other than those expressly stated.
CREST
12. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the General
Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual.
CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s)
should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the
information required for such instructions, as described in the CREST Manual (available via euroclear.com/CREST).
The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously
appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID: 7RA36) by the latest time(s) for
Page | 45
Armadale Capital Plc
receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry
to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited
does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply
in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member
is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor
or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of CREST by any
particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in
particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
46 | Page
Armadale Capital Plc
Form of Proxy for use at the Annual General Meeting
ARMADALE CAPITAL PLC
(Registered in England and Wales with company number 5541602)
I, a Member of ARMADALE CAPITAL PLC (hereinafter referred to as ‘the Company’) and entitled to vote, hereby
appoint the Chairman, or _____________________________ as my proxy to attend and vote for me and on my
behalf at the Annual General Meeting of the Company to be held on 26 June 2017 at 11.00 am and at any
adjournment thereof.
(Please indicate below how you wish your votes to be cast. If the Form of Proxy is returned without any indication as
to how the proxy should vote on any particular matter, the proxy will vote as they think fit.)
Ordinary Resolutions
FOR
AGAINST
ABSTAIN
1 To receive the report of the Directors and the audited financial
statements of the Company for the year ended 31 December 2016.
2 To re-elect Emmanuel S Mahede as a Director.
3 To re-elect Nicholas Johansen as a Director.
4 To re-appoint BDO LLP as auditors of the Company and to authorise
the Directors to determine their remuneration.
Special Business
Ordinary Resolution
5 To authorise the Directors to allot relevant securities up to a
maximum nominal amount of £150,000.
Special Resolution
6 To authorise the Directors to allot relevant securities up to a
maximum nominal amount of £150,000.
Signature
Date
Full name
Address
#
Page | 47
Armadale Capital Plc
NOTES
1. Only holders of Ordinary Shares, or their duly appointed representatives, are entitled to attend and vote at the Meeting. A member so
entitled may appoint (a) proxy(ies), who need not be (a) member(s), to attend and vote on his/her behalf.
2. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint
more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the registrars of the
Company, Share Registrars Limited on 01252 821 390.
3. If you wish to appoint someone other than the Chairman of the Meeting as your proxy, please insert his/her name and delete “the Chairman
of the Meeting or”.
4. Please indicate how you wish your proxy to vote by deleting either for or against. Unless otherwise instructed the person appointed a proxy
will exercise his/her discretion as to how he/she votes or whether he/she abstains from voting on any particular resolution as he/she thinks
fit.
5. A corporation must seal this Form of Proxy or have it signed by an officer or attorney or other person authorised to sign on its behalf. Any
power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must
be included with this Proxy Form.
6. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of
the votes of the other joint holders. For this purpose seniority shall be determined by the order in which the names stand in the register of
members in respect of the joint holding.
7. Pursuant to regulation 41 of The Uncertificated Securities Regulations 2001, members will be entitled to attend and vote at the meeting if
they are registered on the Company’s register of members 48 hours before the time appointed for the meeting or any adjournment thereof.
8. To be valid this Form of Proxy must reach Share Registrars Limited, The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR or by facsimile
transmission to 01252 719 232 not later than 48 hours (excluding non-business days) before the time of the Meeting. Lodgement of a Form
of Proxy does not preclude a member from attending the Meeting and voting in person.
48 | Page
sterling 169275