Armadale Capital Plc
Annual Report and Accounts
31 December 2018
Armadale Capital Plc
Contents
Officers and Professional Advisers ............................................................................................................. 3
Strategic Report ......................................................................................................................................... 4
Directors’ Report ...................................................................................................................................... 16
Independent Auditor’s Report ................................................................................................................. 22
Consolidated Statement of Comprehensive Income ............................................................................... 28
Consolidated Statement of Financial Position ......................................................................................... 29
Company Statement of Financial Position ............................................................................................... 30
Consolidated Statement of Changes in Equity ......................................................................................... 31
Company Statement of Changes in Equity .............................................................................................. 32
Consolidated Statement of Cash Flows ................................................................................................... 33
Company Statement of Cash Flows ......................................................................................................... 34
Notes to the financial statements ........................................................................................................... 35
Notice of Annual General Meeting .......................................................................................................... 63
Form of Proxy ........................................................................................................................................... 68
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Armadale Capital Plc
Officers and Professional Advisers
Directors
Emmanuel S Mahede
Nicholas Johansen
Paul Johnson (appointed 11 March 2019)
Secretary
Timothy Jones
Registered office
I Arbrook Lane
Esher
Surrey, KT10 9EG
Nominated Adviser and Joint Broker
finnCap Ltd
60 New Broad Street
London EC2M 1JJ
Joint Broker
SI Capital Limited
46 Bridge Street
Godalming
Surrey
GU17 1HL
Auditors
BDO LLP
55 Baker Street
London W1U 7EU
Solicitors
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
Registrars
Share Registrars Limited
Craven House
West Street
Farnham
Surrey GU9 7E
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Armadale Capital Plc
Strategic Report
For the year ended 31 December 2018
HIGHLIGHTS
• Notable progress advancing the Mahenge Liandu Graphite Project in Tanzania.
o Completed Scoping Study highlighting a potential NPV of US$349m and IRR of 122%
o On track to deliver DFS Q4 2019 and commence production 2021
o First off-take MOU signed and discussions underway with other potential customers
o Engaged in discussions to secure project level funding mandate
• Post period end, in January 2019 signed agreement to sell non-core Mpokoto Project to focus
on primary value driver, whilst retaining upside exposure
• Ongoing review of quoted portfolio, where the Directors believe there are opportunities for
capital gains
• Continue to actively review other exciting investment opportunities
• Post period end, Board strengthened with the appointment of Paul Johnson as a Non-executive
Director
During the year under review, Armadale continued to operate as a diversified investing company
focused on natural resource projects in Africa. To this end, its 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.
Currently, its key actively managed investment is the Mahenge Liandu Graphite Project in Tanzania.
With its large, high-grade open cut resource, and having completed a Scoping Study that highlighted a
potential NPV of US$349m and IRR of 122%, the Company is on track to commence production at the
Project during the course of 2021. This is timely given that global need for graphite is set to accelerate
driven by demand for spherical graphite from the new energy sector as well as emerging demand for
expandable graphite used in products such as fire proof insulation. Notably, the strength of the market
was highlighted when, post period end, the Company signed its first off-take MOU. The Company is also
currently reviewing other potential markets and customers within this space.
Additionally, the Company continued to actively review other investment opportunities with a view to
targeting investments with similar quality and potential as Mahenge Liandu.
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
ACTIVELY MANAGED INVESTMENTS
Mahenge Liandu Graphite Project, Tanzania (‘Mahenge Liandu’ or the ‘Project’)
The Company continued to deliver encouraging results at its 100% owned Mahenge Liandu Graphite
Project during 2018. The Project is located in a highly prospective region with a high-grade JORC
compliant indicated and inferred mineral resource estimate announced February 2018 of 51.1Mt at
9.3% total graphite content (‘TGC’), including 38.7Mt Indicted at 9.3% and 12.4Mt at 9.1% TGC, making
it one of the largest high-grade resources in Tanzania. Work to date has demonstrated Mahenge
Liandu’s potential as a commercially viable deposit with significant tonnage, high-grade coarse flake and
near surface mineralisation (implying a low strip ratio) contained within one contiguous ore body.
The focus of activities was the commencement of a Definitive Feasibility Study (‘DFS’) based on the
results of a Scoping Study that was completed in March 2018. The study was based on a throughput of
400,000 tpa over a 32-year mine life and showed the Project has robust economics and warrants further
development. The Company believes the timing of the planned mine development will coincide with
growing opportunities in the graphite market with strong outlook for increased graphite demand from
the burgeoning lithium ion battery, expandable graphite, as well as traditional graphite markets.
Tonnage (Mt)
Cutoff TGC (%)
Average TGC (%)
Inferred
Indicated
Total
12.4
38.7
51.1
3.3
3.5
3.5
9.1
9.3
9.3
Table 1. Mahenge Liandu Resource Statement
Project Location & Licences
The Mahenge Project is located in the Morogoro region, Ulanga district, Tanzania close to existing
transport infrastructure. It is 10km south of the Mahenge township and about 76km via a well-
maintained dirt road to Ifakara after which it is 400km by sealed road from Dar-es-Salaam port. Other
operators in the region include Blackrock Mining Limited and Kibaran Resources Limited, which have
similar product purity and resource grades.
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Strategic Report (continued)
For the year ended 31 December 2018
Location of Mahenge Liandu Prospect
Armadale Capital Plc
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
Project Geology
The prospect is situated within the pan African Mozambique belt, which is the orogenic belt resulting
from activities taking place in the Neoproterozoic time. The belt extends along the eastern border of
Africa from Ethiopia through Kenya and Tanzania. The orogenic event resulted in a complex series of
geological events including the rifting system. The belt consists of high-grade mid-crustal rocks with a
Neoproterozoic metamorphic overprint. It is divided into the Western Granulite and Eastern Granulite.
The deposit is situated in the Eastern Granulites. The belt has undergone retrograde metamorphism
which resulted in the present upper amphibolite metamorphic facies in the Project area.
Systematic drilling indicated the existence of broad, shallow to steep dipping schists overlaying granitic
gneisses/gneiss. The gneisses are underlaid by marble units. The graphitic schists form alternating
compositional layering, with quartz being the content that differentiates these units. High grade
graphite schists (graphite schist) have a lower composition of quartz. Medium to low grade graphite
schists (quartz graphite schist) have a higher visual quartz percentage. The marble unit likely forms the
base of the sequence (there has not been drilling done beyond the marble unit).
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
The drilling results have been very consistent with the structural measurements taken during the
mapping programme which suggested gentle to steep dipping to the south and south-southwest. The
mineralisation remains open in all directions.
Typical Mahenge Liandu cross section showing mineralised units
Scoping Study
During 2018, a Scoping Study was completed for Mahenge Liandu, which included the completion of a
mine optimisation study, infill drilling and the resource upgrade. The results of the Scoping Study were
announced in March 2018.
Drilling
Drilling in 2018 comprised a diamond drilling programme completed with eight holes for a total of 489m
and 18 RC holes. All holes intersected wide intervals of high-grade mineralisation from surface with up
to 67m thickness. The 2018 drilling aimed at infill drilling the existing pattern to upgrade the resource
classification, extend the available resources and better define the mineralised units laterally within the
deposit. The drilling targeted a higher-grade zone within the deposit and drilling was concentrated in
the northern part of the tenement. A map of all the drilling completed to date is shown below.
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Strategic Report (continued)
For the year ended 31 December 2018
1 Mahenge Liandu drill hole locations
Armadale Capital Plc
Process Description
The Scoping Study was based on a processing plant designed to treat 400,000 tpa of ore. The ore will be
two-stage crushed, followed by grinding in a rod mill, with graphite recovered by flotation. The process
includes separation of graphite into coarse and fine concentrates at an intermediate stage, followed by
inter-stage re-grind milling and flotation to improve liberation and product purity. The flotation
concentrate will then be then dewatered by filtration, dried, and bagged.
Results of the Scoping Study
The Scoping Study confirmed the combination of high graphite feed grade and coarse flake high purity
graphite product and provided highly robust and compelling economics for the Mahenge Liandu Project.
The Scoping Study, based on a 400,000 tpa throughput, had following key economics:
• Producing an average of 49,000 tpa of high-quality graphite products for a 32-year mine life
• The near surface nature of the deposit produced a low strip ratio of approximately 1:1 for the
life of the mine
• The Project has a low operating cost of US$408/t and is based on an average life of mine grade
of 12.5% Total Graphitic Carbon (‘TGC’)
• The Project has a pre-tax IRR of 122% and NPV of US$349m with a low development capex of
US$35m
• The maximum drawdown during the construction of the Project is US$34.9m and the after-tax
payback period is 1.2 years
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
• There remains significant scope to further improve returns, with staged expansions as the
current mine plan is based on approximately 25% of the total resource
Summary of Project Financial Performance
Financial Performance Summary
Project Life
Units
(years)
LOM
31.8
Total LOM Net Revenue
(US$ M, real)
1,977.7
Total LOM EBITDA
(US$ M, real)
1,196.0
Total LOM Net Cash Flows Before Tax
(US$ M, real)
1,134.7
Total LOM Net Cash Flows After Tax
(US$ M, real)
794.3
NPV @ 10.0% - before tax
(US$ M, real)
348.7
NPV @ 10.0% - after tax
(US$ M, real)
239.1
IRR - before tax
IRR - after tax
(%, real)
122.5%
(%, real)
89.3%
Project Capital Expenditure
(US$ M, real)
34.9
Payback Period - after tax - from 1st ore
(years)
1.2
The Scoping Study results validate the Directors’ long held confidence in the commercial potential and
economic value of the Mahenge Project. The Definitive Feasibility Study that is currently underway is
based on the same parameters giving the Company confidence that the Project will continue to show
excellent returns and will allow it to proceed to a decision to mine in 2020 provided project development
funding can be secured.
Exploration and Development Programme
Definitive Feasibility Study
The DFS for Mahenge Liandu commenced in Q2 2018 and is expected to be complete by Q4 2019. The
study will focus on defining graphite product quality with a wide diameter diamond core drilling
programme aimed at generating samples for marketing.
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
The following activities are being carried out to support the study:
• A diamond drilling programme to obtain samples for metallurgical test work and marketing
• Product marketing towards the goal of obtaining binding offtake agreements. The first MOU secured
covering 60% of planned production was signed in February 2019
• Environmental and social studies covering the Project area and completion of a Relocation Action
Plan (‘RAP’) for the people who may be impacted through the development of the Project
• Granting of a mining permit
• A geotechnical drilling programme to define the final pit wall design
• Calculation of Proved and Probable Reserves
•
Finalisation of production flowsheets and final plant design parameters
Environmental and Social Studies
During August 2018, the Company announced the completion of field work for Environmental and Social
baseline surveys and the Company has finalised the Environmental Social Impact Assessment (‘ESIA’)
and Relocation Action Plan (‘RAP’) for submission to the National Environment Management Council
(‘NEMC’).
To help increase local engagement in the Project area, the Company has appointed a community liaison
officer who will aid understanding of the impact and benefits of mining in the region. Further
information in respect of this work of will be provided as progress is made.
Product Marketing and Offtake Partners
In February 2019, the Company announced a MOU with the Matrass Group, a China based graphite
mining and processing company, for high quality graphite products produced at Mahenge Liandu. This
includes a proposed offtake of 30,000tpa of graphite concentrate for an initial five-year term at a price
to be agreed based on the Chinese benchmark for the quality of the graphite produced, representing
over 60% of average target annual production. The test work programme aimed to progress the MOU
to a binding agreement is underway.
Discussions with other potential offtake partners for the remaining 19,000tpa of graphite concentrate
are progressing positively.
The graphite market continues to strengthen with several Tanzanian based graphite projects securing
binding offtakes over recent months. The rapid expansion of the electric vehicle market is expected to
continue to drive this growth.
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
Project Level Financing
The Company is engaged in discussions to secure a project level funding mandate. Further details in
respect of this element will be provided as material developments occur.
Mining Lease Application
Reflecting the progress of work to date, the Company expects to submit its application for a mining lease
in August 2019.
Front End Engineering Design
Following completion of the DFS, the Company expects to commence the Front-End Engineering Design
(‘FEED’) work programme in December 2019. The FEED process is a detailed technical project planning
phase undertaken prior to the commencement of construction and used as a basis to secure project
construction bids.
Project Construction
Subject to a successful and timely completion of the aforementioned preparatory work, suitable project
level financing and receipt of relevant regulatory permits and licences, the Company expects to
commence the construction phase in Q2 2020.
Production
Based on current estimates and assuming a construction phase of 10 months the first production would
be achieved from the Mahenge Liandu Project around Q1 2021.
Mpokoto Gold Project, DRC (‘MPOKOTO’)
The Mpokoto Project was the subject of a joint venture agreement with Kisenge Mining Pty Ltd (‘Kisenge
Mining’) throughout the year under review and, as such, was considered a non-core investment asset
of Armadale.
After the year under review, on 11 January 2019, Armadale entered into final formal sale agreement
with African Royalty Company Pty Limited (a related company to Arrow Mining Pty Ltd) for the sale of
the Mpokoto Gold Project.
This agreement crystallises the value of the Mpokoto Project with a company capable of obtaining the
funding to bring the mine into production.
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
The transaction allows Armadale to focus on advancing its primary value driver, the high-grade Mahenge
Liandu Graphite Project in Tanzania, whilst ensuring the Company retains exposure to the development
upside of the Mpokoto Project.
Arrow Mining will take over the operations on the Mpokoto Project and is obliged to pay Armadale a
1.5% royalty on gold sales achieved once in production.
PASSIVELY MANAGED INVESTMENTS
Mine Restoration Investments Limited (‘MRI’), South Africa
The shares in MRI are being carried at Nil market value (2017: Nil) as MRI shares were suspended from
trading on the Johannesburg Stock Exchange.
Quoted Portfolio
The Company has a small portfolio of quoted investments, principally in resource companies where the
Directors believe there are opportunities for capital gain. The Company continues to keep its portfolio
under review.
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 known 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.
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
• The impact of Brexit on companies operating in the UK is still being monitored. Thus far Brexit
has not impacted 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. The mining regulation changes in Tanzania
are still being evaluated, however they seem to have minimal impact on investment in graphite
mining. The Group continues to monitor the implementation of the new changes to evaluate
and mitigate sovereign risks.
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.
• Engagement with local communities to ensure our activities provide value to the communities
where we operate.
• Alternative and continued funding activities with a number of options to secure future funding
to continue as a going concern.
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.
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Armadale Capital Plc
Strategic Report (continued)
For the year ended 31 December 2018
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.
Board
Post period end, in March 2019, Paul Johnson was appointed to the Board as a Non-executive Director.
Mr. Johnson is an experienced public company director and is a former Chief Executive Officer of natural
resource investing company Metal Tiger plc (LON:MTR). He has also previously held the roles of
Chairman at ECR Minerals plc (LON:ECR); Chief Executive Officer at China Africa Resources plc (now
Pembridge Resources plc - LON:PERE) and Metal NRG plc (LON:MNRG); and Non-executive Director at
Greatland Gold plc (LON:GGP), Papua Mining plc (now Rockfire Resources plc LON:ROCK) and Thor
Mining plc (LON:THR).
Mr. Johnson is the Chief Executive Officer of Value Generation Limited, a family investment and advisory
company focused on the natural resource and related fintech sectors. He is also Executive Director of
African Battery Metals plc (LON:ABM) an AIM quoted exploration and development company focused
on battery metal projects in Africa.
Financial Results
For the year ended 31 December 2018 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 £0.648 million (2017: £6.177 million) for the year ended 31 December
2017.
The Directors successfully negotiated the sale of the Mpokoto Project and recognise an impairment
charge of £0.194 million based on the reassessment of the carrying value of the Project to nil. Other
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Armadale Capital Plc
than this, the loss comprises the administrative expenses associated with operating a public company
and finance costs.
Funds raised during the year amounted in total to £0.85 million of which £0.65 million came from a
placing of shares and £0.2 million from the initial drawdown of a new loan facility of £0.4 million. Other
share issues during the year were in respect of loan note conversions and the discharge of certain
consultants’ invoices.
At 31 December 2018, the Group had cash of £44,000 (2017: £65,000) and debt of £677,000 (2016:
£634,000).
Since the year end, a further £0.964 million has been raised from a placing of shares and the balance of
the new loan facility, £0.2 million, remains available for drawdown. The Group is in discussions with
third parties which may provide project level financing for the development of the Mahenge Liandu
Project. Furthermore, and dependant on the working capital requirements at project level, and
considering working capital needs in respect of corporate operations, the Group considers it will have
access to adequate additional financing as and when required from new equity issues and additional
loan facilities. As a result, 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 the Company will
continue in operational existence for the foreseeable future.
Outlook
Looking to the future, with its clear development path to production commencing with the execution of
the DFS currently underway, the Directors believe that Mahenge Liandu represents an exciting
opportunity for the Group. Furthermore, other notable investment opportunities are under review,
which the board believe could replicate this success and deliver significant value to shareholders.
Emmanuel S Mahede
Director
23 May 2019
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Armadale Capital Plc
Directors’ Report
For the year ended 31 December 2018
The Directors submit their report and the financial statements of Armadale Capital Plc (‘Armadale’ or
the ‘Company’) for the year ended 31 December 2018.
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
2018 was £648,020 (2017, £6,177,014). 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
recognised an impairment charge of £194,401 (2017, £5,726,445) in the year which has reduced the
carrying value of the exploration and evaluation of assets (net of associated liabilities) relating to the
Mpokoto project to nil (2017, £194,401), being their estimated realisable value based on a binding
disposal agreement.
The Directors do not recommend the payment of a dividend (2017: £nil).
Corporate governance
As an AIM company, Armadale Capital Plc is required to adopt a recognised Corporate Governance Code
and the Company has chosen to apply the Quoted Companies Alliance (“QCA”) Corporate Governance
Code.
The Company has published its compliance with each of the 10 principles of the QCA Code on the
Company’s website, including reasons for departure with certain principles.
The website disclosures can be found at: http://armadalecapitalplc.com/corporate_governance.
Business review
A review of the Group’s operations and plans for the future of the business are included in the Strategic
Report.
Directors
The following Directors have held office during the year:
Emmanuel S Mahede
Nicholas Johansen
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Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2018
Directors’ interests
Directors’ interests, including family interests, in the Ordinary Share capital, were as follows:
ES Mahede
N Johansen
Directors also hold options over Ordinary Shares as follows:
ES Mahede
N Johansen
Substantial shareholdings
31 December
2018
31 December
2017
No:
1,750,000
2,012,122
No:
1,000,000
800,000
31 December
2018
31 December
2017
No:
No:
500,000
500,000
500,000
500,000
At 16 May 2019 the Company was aware of the following interests in 3% or more of the issued share
capital of the Company:
Name
Kabunga Holdings
HSDL Nominees
SVS Nominees
Matt Bull
Vidacos Nominees
Barclays Nominees
Hargreaves Lansdown Nominees
Interactive Investor Services Nominees
Pershing Nominees
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13.1%
10.1%
8.5%
7.4%
7.0%
6.3%
5.5%
4.9%
3.5%
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2018
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 19 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
ES Mahede
N Johansen
W Frewen
2018
£’000
2017
£’000
55
45
-
30
30
7
The Remuneration of directors is determined by the Board within the limits set out in the Articles of
Association of the Company.
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Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2018
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.
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Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2018
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 the Company will continue in
operational existence for the foreseeable future.
At 31 December 2018, the Group had cash of £44,310 and borrowings of £677,470 comprising
convertible loan notes of £472,399 due July 2019 and a loan of £205,071 due October 2019. In respect
of the convertible loan notes, the Noteholders have confirmed their willingness to extend the Notes for
a further period of 12 months on the same terms, although there are no legally binding extensions in
place.
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 together with Group
overheads, the Company raised £795,275 through a share placing.
At 17 May 2019, the Company had cash of approximately £124,000. The directors have prepared a cash
flow 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 three 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 significant material uncertainty which may cast 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.
20 | P a g e
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2018
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
that
making appropriate enquiries of fellow Directors and of the Company’s auditors
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.
for
On behalf of the Board
Timothy Jones
Secretary
23 May 2019
21 | P a g e
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc
For the year ended 31 December 2018
Opinion
We have audited the financial statements of Armadale Capital Plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2018 which comprise the consolidated
statement of comprehensive income, the consolidated and company statements of financial position,
the consolidated and company statements of changes in equity, the consolidated and company
statements of cash flows, and notes to the financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements
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.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2018 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the Group and the Parent Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty relating to going concern
We draw attention note 2.2 to the financial statements which explains that the Parent Company’s ability
to continue as a going concern is dependent on the extension and/or conversion of existing loan notes
and further fundraising. These conditions indicate the existence of a material uncertainty which may
cast significant doubt over the Parent Company’s and the Group’s ability to continue as a going concern.
The financial statements do not include any adjustments that would result if the Parent Company or the
Group was unable to continue as a going concern. Our opinion is not modified in respect of this matter.
22 | P a g e
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (continued)
For the year ended 31 December 2018
We considered going concern to be a Key Audit Matter based on our assessment of the risk and the
effect on our audit. We performed the following work in response to this key audit matter:
• We reviewed the Directors’ forecasts to assess the Parent Company’s and Group’s ability to
meet their financial obligations as they fall due within the period of twelve months from the
date of approval of the financial statements
• We reviewed the assumptions and inputs in the cash flow forecast to assess whether these were
in line with our understanding of the company’s operations and other information obtained by
us during the course of the audit
• We assessed whether the forecast overhead expenditure was consistent with budgets and prior
year actual expenditure. We performed a mechanical check on the cash flow forecast model
prepared by management.
• We confirmed committed spend by agreeing to licence agreements and we agreed the cash
position to recent bank statements
• We challenged the Directors’ expectation that sufficient funds may be secured by reviewing the
potential funding options available to the Company and considering the past success the
Company has had in raising equity and debt finance.
• We reviewed the disclosure included within the financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In addition to the matter described in the material uncertainty related to
going concern section, we have set out the other key audit matters below.
Carrying value of exploration assets
The exploration and evaluation assets of the group represent the key assets on the group’s statement
of financial position.
Management performed an impairment indicator review to assess whether there were any indicators
of impairment for the Mahenge Liandu exploration asset and whether impairment was appropriate. No
impairment of the asset was recognised.
23 | P a g e
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (continued)
For the year ended 31 December 2018
Given the inherent judgement involved in the assessment of impairment indicators and the carrying
value of the exploration and evaluation assets, we considered the carrying value of exploration and
evaluation assets to be a significant risk for the audit.
How we addressed the matter:
We considered the indicators of impairment applicable to exploration asset, including those indicators
identified in IFRS 6: ‘Exploration for and Evaluation of Mineral Resources’ and reviewed management’s
assessment of these indicators. The following work was undertaken:
•
•
We reviewed the license documentation to confirm the exploration permits are valid, and
confirmed the dates of expiry
We made specific inquires of management and reviewed market announcements, budgets
and plans which confirmed the plan to continue investment in the Mahenge Liandu project
subject to sufficient funding being available, as disclosed in note 2.
•
We reviewed the Scoping Study and did not identify any indicators of impairment.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluation of and
evaluating the effect of misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic decisions of reasonable users that
are taken on the basis of the financial statements. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on
the financial statements as whole.
Group materiality was based on 1.5% of total assets and was set at £49,000 (2017 - £50,000). Parent
Company materiality was based on 1.5% of total assets, limited to 90% of group materiality, and set at
£44,000 (2017 £40,000).
We consider total assets to be the financial metric of the most interest to shareholders and other users
of the financial statements, given the Group’s status as an exploration entity in natural resources
development and therefore consider this to be an appropriate basis for materiality.
The group audit focused on the Group’s three significant components. Whilst materiality for the
financial statements as a whole was set, these components of the Group were audited to a lower level
of materiality, being 1.5% of total assets of the component, limited to 90% of group materiality.
24 | P a g e
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (continued)
For the year ended 31 December 2018
Performance materiality is the application of materiality at the individual account or balance level set
at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds materiality for the financial statements as a whole.
Performance materiality was set at 75% (2017: 75%) of the above materiality levels, at the higher end
of the threshold due to the low risk of aggregation of misstatements within the group.
We agreed with the audit committee that we would report to the committee all individual audit
differences identified during the course of our audit in excess of £1,000 (2017: £2,500). We also agreed
to report differences below these thresholds that, in our view, warranted reporting on qualitative
grounds.
An overview of the scope of our audit
Armadale Capital Plc is a company registered in the UK and listed on the Alternative Investment Market
Exchange. BDO LLP was responsible for the audit of all components of the group including the group
consolidation.
The audit team performed a full scope audit on all significant components of the group, including the
parent company, with all non-significant components being subject to analytical procedures.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the annual report, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
25 | P a g e
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (continued)
For the year ended 31 December 2018
Opinions on other matters prescribed by the Companies Act 2006
Armadale Capital Plc
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the 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 in relation to which 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.
•
•
•
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and
for such internal control as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists.
26 | P a g e
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (continued)
For the year ended 31 December 2018
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Jack Draycott (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
23 May 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
27 | P a g e
Armadale Capital Plc
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
Other administrative expenses
(392,945)
(399,938)
Note
2018
£
2017
£
Operating loss
Finance costs
Loss before taxation
Taxation
(392,945)
(399,938)
(17,459)
(410,404)
-
(44,478)
(444,416)
-
6
9
Loss for the year from continuing operations
(410,404)
(444,416)
Loss from discontinued operations, net of tax
14
(237,616)
(5,732,598)
Loss after taxation
(648,020)
(6,177,014)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities
83,407
(771,989)
Total comprehensive (loss) / income attributable to the
equity holders of the parent company
(564,613)
(6,949,003)
Loss per share attributable to the equity holders of the
parent company
Basic and diluted total loss per share
Basic and diluted loss per share from continuing
operations
10
10
Pence
(0.23)
(0.14)
Pence
(2.58)
(0.19)
The notes on pages 35 to 62 form part of the financial statements.
28 | P a g e
Consolidated Statement of Financial Position
At 31 December 2018
Assets
Non-current assets
Exploration and evaluation assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Non-current assets classified as held for sale
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Shares to be issued
Share option reserve
Foreign exchange reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Loans
Liabilities directly associated with non-current assets
classified as held for sale
Non-current liabilities
Long term borrowings
Total Liabilities
Total equity and liabilities
Armadale Capital Plc
Note
2018
£
2017
£
11
12
13
14
18
20
20
20
20
20
15
16
14
17
3,192,999
973
3,193,972
2,384,036
6,705
2,390,741
53,486
44,310
97,796
128,011
225,807
54,563
65,163
119,726
322,412
442,138
3,419,779
2,832,879
3,038,605
20,569,844
286,000
94,884
421,252
(22,129,940)
2,280,645
333,653
677,470
1,011,123
128,011
2,980,211
19,720,193
286,000
94,884
337,845
(21,481,920)
1,937,213
133,619
431,406
565,025
128,011
1,139,134
693,036
-
1,139,134
202,630
895,666
3,419,779
2,832,879
The notes on page 35 to 62 form part of the financial statements.
Approved by the Board and authorised for issue on 23 May 2019
Signed on behalf of the Board
N Johansen
Director
ES Mahede
Director
29 | P a g e
Company Statement of Financial Position
At 31 December 2018
Assets
Non-current assets
Investments
Other receivables
Current assets
Investments held for disposal
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Shares to be issued
Share option reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Loan notes
Non-Current liabilities
Long term borrowings
Total liabilities
Armadale Capital Plc
Note
2018
£
2017
£
12
13
12
13
18
20
20
20
20
15
16
17
1,600,973
1,394,461
2,995,434
1,606,705
972,544
2,579,249
-
13,439
4,240
17,679
194,401
43,750
10,809
248,960
3,013,113
2,828,209
3,038,605
20,569,844
286,000
94,884
(21,753,522)
2,235,811
2,980,211
19,720,193
286,000
94,884
(20,953,744)
2,127,544
99,832
677,470
777,302
-
777,302
66,629
431,406
498,035
202,630
700,665
Total equity and liabilities
3,013,113
2,828,209
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 £605,270 (2017:
£6,006,511) has been included in the financial statements of the parent company.
The notes on pages 35 to 62 form part of the financial statements.
Approved by the Board and authorised for issue on 23 May 2019
Signed on behalf of the Board
ES Mahede
Director
N Johansen
Director Company Registration No. 5541602
30 | P a g e
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
At 1 January 2017
Loss for the year
Other comprehensive loss
Total comprehensive loss for
the year
Issue of shares
Expenses of issue
Share based payment charges
Transfer on conversion of loan
notes
Total other movements
Share
Capital
Share
Premium
£
2,946,587
-
-
-
£
19,009,592
-
-
-
Shares
to be
issued
£
286,000
-
-
-
33,624
-
-
-
771,501
(60,900)
-
-
33,624
710,601
-
-
-
-
-
Share
Option
Reserve
£
85,850
-
-
-
-
-
9,034
Armadale Capital Plc
Loan
Note
Reserve
£
37,500
-
-
-
Foreign
Exchange
Reserve
£
1,109,844
-
(771,989)
(771,989)
Retained
Earnings
Total
£
(15,342,406)
(6,177,014)
-
(6,177,014)
£
8,132,957
(6,177,014)
(771,989)
(6,949,008)
-
-
-
-
(37,500)
9,034
(37,500)
-
-
-
-
-
-
-
-
805,125
(60,900)
9,034
37,500
-
37,500
753,259
At 31 December 2017
2,980,211
19,720,193 286,000
94,884
Loss for the year
Other comprehensive loss
Total comprehensive loss for
the year
Issue of shares
Expenses of issue
Total other movements
-
-
-
-
-
-
58,394
-
58,394
905,106
(55,455)
849,651
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
337,845
(21,481,920)
1,937,213
-
83,407
83,407
-
-
-
(648,020)
(648,020)
83,407
(648,020)
(564,613)
-
-
-
963,500
(55,455)
908,045
At 31 December 2018
3,038,605
20,569,844
286,000
94,884
-
421,252
(22,129,940)
2,280,645
The notes on pages 35 to 62 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
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
31 | P a g e
At 1 January 2017
Loss for the year
Total comprehensive loss for
the year
Issue of shares
Expenses of issue
Share based payment
charges
Transfer on conversion of
loan notes
Total other movements
At 31 December 2017
IFRS 9 Adjustment to
intercompany debt
At 1 January 2018
Loss for the year
Total comprehensive loss for
the year
Issue of shares
Expenses of share issue
Share based payment
charges
Transfer on conversion of
loan notes
Total other movements
Company Statement of Changes in Equity
For the year ended 31 December 2018
Armadale Capital Plc
Share
Capital
Share
Premium
Shares to
be issued
£
2,946,587
-
£
19,009,592
-
£
286,000
-
33,624
-
-
771,501
(60,900)
-
-
-
-
33,624
710,601
-
-
-
-
-
-
Share
Option
Reserve
£
85,850
-
-
-
-
9,034
-
9,034
2,980,211
19,720,193
286,000
94,884
Loan
Note
Reserve
37,500
-
-
-
-
-
Retained
Earnings
Total
£
(14,984,733)
(6,006,511)
(6,006,511)
£
7,380,796
(6,006,511)
(6,006,511)
-
-
-
805,125
(60,900)
9,034
(37,500)
(37,500)
37,500
-
37,500
753,259
-
(20,953,744)
(194,508)
2,127,544
(194,508)
2,980,211
19,720,193
286,000
94,884
-
(21,148,252)
1,933,036
58,394
-
905,106
(55,455)
-
-
-
-
58,394
849,651
-
-
-
-
-
-
-
-
-
-
At 31 December 2018
3,038,605
20,569,844
286,000
94,884
The notes on pages 35 to 62 form part of the financial statements.
(605,270)
(605,270)
(605,270)
(605,270)
-
-
-
-
-
963,500
(55,455)
-
-
908,045
(21,753,522)
2,235,811
-
-
-
-
-
-
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
32 | P a g e
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
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
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Cash flows from operating activities
Loss before taxation
Adjustment for:
Depreciation
Impairment charge
Share based payment charge
Shares issued in settlement of liabilities
Finance costs
Changes in working capital
Receivables
Payables
Net cash used in operating activities
Cash flows from investing activities
Expenditure on exploration and evaluation assets
Sale of listed investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share placement
Issue costs
Proceeds from loan (Note 18)
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The notes on pages 35 to 62 form part of the financial statements.
Armadale Capital Plc
2018
£
2017
£
(648,020)
(6,177,014)
-
194,401
-
-
17,459
(436,160)
1,077
98,048
(337,035)
1,806
5,726,445
9,034
67,500
44,478
(327,751)
(36,133)
72,101
(287,577)
(224,095)
5,732
(218,363)
(548,766)
-
(548,766)
560,000
(25,455)
-
534,545
(20,853)
65,163
44,310
650,753
(60,900)
200,000
789,851
(50,698)
115,861
65,163
33 | P a g e
Company Statement of Cash Flows
For the year ended 31 December 2018
Cash flows from operating activities
Loss before taxation
Adjustment for:
Share based payment charge
Impairment charge
Shares issued in settlement of liabilities
Finance costs
Changes in working capital
Receivables
Payables
Net cash used in operating activities
Cash flows from investing activities
Advances to subsidiaries
Sale of listed investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from share placement
Issue costs
Proceeds from loan (Note 18)
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The notes on pages 35 to 62 form part of the financial statements.
Armadale Capital Plc
2018
£
2017
£
(605,270)
(6,006,511)
-
404,808
-
12,708
(187,754))
30,311
33,203
(124,240)
9,034
5,730,587
67,500
44,478
(154,912)
(36,894)
(20,078)
(211,884)
(422,606)
5,732
(416,874)
(668,037)
-
(668,037)
560,000
(25,455)
-
534,545
(6,569)
10,809
4,240
650,751
(60,900)
200,000
789,851
(90,070)
100,879
10,809
34 | P a g e
Armadale Capital Plc
Notes to the financial statements
For the year ended 31 December 2018
1.
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 1 Arbrook Lane, Esher, Surrey, KT10 9EG. 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 the Company will continue in
operational existence for the foreseeable future.
At 31 December 2018, the Group had cash of £44,310 and borrowings of £677,470 comprising
convertible loan notes of £472,399 due July 2019 and a loan of £205,071 due October 2019. In
respect of the convertible loan notes, the Noteholders have confirmed their willingness to extend
the Notes for a further period of 12 months on the same terms, although there are no legally
binding extensions in place.
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 together
with Group overheads, the Company raised £795,275 through a share placing.
At 17 May 2019, the Company had cash of approximately £124,000. The directors have prepared
a cash flow 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 three 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.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting policies (continued)
2.2 Going Concern (continued)
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.
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. Prior year restatement
In the consolidated statement of comprehensive income for the year ended 31 December 2017
there was a typographical error where the amount disclosed as the loss from discontinued
operations was £5,917,411 instead of £5,732,598. This arose from a printing error in note 15. This
has been subsequently corrected in the 2018 financial statements. The error did not impact the
loss figure in the consolidated statement of comprehensive income or the consolidated
statements of financial position.
2.5. 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 and is derecognised on disposal of the asset to which it
relates.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting policies (continued)
2.6. 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.
2.7. 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.
2.8. 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.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.8. Share-based payments (continued)
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.
2.9. 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.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2. Accounting polices (continued)
2.9. 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.
2.10. 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
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.10. Exploration and evaluation costs (continued)
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.
2.11. 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 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.
2.12. 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.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.13. 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.
2.14. 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.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.14. Impairment of assets (continued)
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.
2.15. Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held for sale when:
• They are available for immediate sale
• Management is committed to a plan to sell
•
It is unlikely that significant changes to the plan will be made or that the plan will be
withdrawn
• An active programme to locate a buyer has been initiated
• The asset or disposal group is being marketed at a reasonable price in relation to its fair
value, and
• A sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of:
• Their carrying amount immediately prior to being classified as held for sale in accordance
with the group's accounting policy; and
• Fair value less costs of disposal.
Following their classification as held for sale, non-current assets (including those in a disposal
group) are not depreciated.
The results of operations disposed during the year are included in the consolidated statement of
comprehensive income up to the date of disposal.
A discontinued operation is a component of the Group's business that represents a separate
major line of business or geographical area of operations or is a subsidiary acquired exclusively
with a view to resale, that has been disposed of, has been abandoned or that meets the criteria
to be classified as held for sale.
Discontinued operations are presented in the consolidated statement of comprehensive income
as a single line which comprises the post-tax profit or loss of the discontinued operation along
with the post-tax gain or loss recognised on the re-measurement to fair value less costs to sell or
on disposal of the assets or disposal groups constituting discontinued operations.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.16. 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.
2.17. 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 financial
liability.
Financial liabilities represent trade payables and borrowings.
Convertible loan notes
As detailed in note 16, the loan notes are 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 total proceeds 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
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.17. Financial liabilities and equity instruments issued by the Group (continued)
comprehensive income and included within finance expenses. When conversion occurs the
associated equity element is released directly to retained earnings.
2.18. New Accounting Standards adopted
The Group adopted the following revised or new IFRS standards that were effective from 1
January 2018. The impact of the standards on the Group’s accounting policies and financial
statements is discussed below:
IFRS 15 has replaced IAS 18 ‘Revenue’ and IAS 11 ‘Construction Contracts’. The core principle of
the standard is that an entity will recognise revenue at an amount that reflects the consideration
to which the entity expects to be entitled in exchange for transferring promised goods or services
to a customer. The Group performed an assessment of the impact of this accounting standard in
the prior year. As the Group has previously not had any revenue, there has been no impact on
the adoption of this standard.
IFRS 9 ‘Financial Instruments’ replaces the incurred loss model of IAS 39 ‘Financial instruments:
Recognition and Measurement’ with a model based on expected credit losses or losses on loans.
The standard requires entities to use an expected credit loss model for impairment of financial
assets. Under the new standard, the loss allowance for a financial instrument will be calculated
at an amount equal to 12 month expected credit losses or lifetime expected credit losses if there
has been a significant increase in credit risk of the financial instrument. In addition, the standard
introduces new requirements for the classification of financial assets and liabilities.
The impact of IFRS 9 has been assessed at a Group Level, and there is no material impact on the
consolidated results of the Group, as all financial instruments have been classified as amortised
cost and the expected credit losses of the group are minimal.
The adoption of IFRS 9 at a company level has been assessed. The expected credit loss model has
been applied to the intercompany loan receivable which is held at amortised cost. Please refer to
note 13 for the detail on the impact of this assessment as well as the assumptions used by
management. As the company has chosen not to restate comparatives in adopting IFRS 9, it has
recognised an adjustment of £194,506 to reduce intercompany receivables and a corresponding
debit to the deficit account in equity as at 1 January 2018.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
2.
Accounting polices (continued)
2.18. New Accounting Standards adopted (continued)
Changes in accounting standards:
The International Accounting Standards Board (IASB) has issued the following new and revised
standards, amendments and interpretations to existing standards that are not effective for the
financial year ending 31 December 2018 and have not been adopted early. The Group is currently
assessing the impact of these standards and, based on the Group’s current operations, does not
expect them to have a material impact on the financial statements.
Standards
New
IFRS 16 Leases
IFRS 17
Insurance Contracts
Amendments to Existing Standards
IFRIC 23 Uncertainty over Income Tax Treatments*
Annual Improvements to IFRSs (2015-2017 Cycle)*
* Not yet adopted by European Union
Effective Date
01-Jan-19
01-Jan-21
01-Jan-19
01-Jan-19
There is no impact of IFRS 16 as there are no lease agreements in place currently. The Group will
adopt the above Standards at the time stipulated by that Standard. The Group does not currently
envisage voluntary early adoption of any of the Standards.
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Notes to the financial statements (continued)
For the year ended 31 December 2018
3.
Significant judgements and sources of estimation uncertainty
Armadale Capital Plc
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 value of the
Group’s exploration assets.
The principal significant estimates and 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.
Exploration and evaluation assets
These represent the accumulated costs, including capitalised finance costs, (calculated as that
proportion of total finance costs that relates to the funding of exploration activity) and the
allocation of wages and salaries to the Group exploration 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. At the year
end, the directors were of the opinion that there was an indicator of impairment in respect of the
Mpokoto project, where sales negotiations are in progress at a price significantly below the
carrying value of the relevant net assets. In the opinion of the directors, the price under
negotiation best represents the value of the project. In arriving at the sale price for this purpose,
the directors have excluded those elements that are contingent on production being achieved,
which is regarded as uncertain. See Note 14 for details of the accounting treatment of the
Mpokoto project.
Impairment of investment in and debts owing by 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 was an impairment to the Mpokoto gold
project E&E asset as described in Note 14. Management have assessed the intercompany loan in
line with IFRS 9 with the calculation of expected credit losses considered a key judgment. The
assessment of the expected credit losses are included in Note 13 along with the key assumptions
and estimates.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
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 13. 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.
The Group’s loan notes as described in note 16, stated at their gross, contractual and
undiscounted amount of £472,399 were issued on 11 July 2016 with a conversion/payment date
of 11 July 2017 when issued, now extended to 11 July 2020.
The Group’s debt facility stated at its gross, contractual and undiscounted amount of £205,071 as
described in note 16 is repayable on 11 October 2019.
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 relevant company’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 loans
are denominated in GBP as disclosed in note 16.
The effect of a 10% strengthening of AUD in 2018 would result in a £6,000 reduction (2017:
£21,000) of the Group’s net assets.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
4.
Financial Risk Management (continued)
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.
Credit Risk
The group’s credit risk is primarily attributable to its cash balances. This risk is considered limited
because the group cash is held by reputable institutions. The groups total credit risk amounts to
the total of the sum of receivables and cash. At the year-end this amount was £97,796 (2017 -
£119,126).
The parent company financial statements include amounts due to subsidiaries as disclosed in
Note 13. The credit risk associated with these receivables has been disclosed as a key estimate
and judgement and discussed in Note 3.
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.
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Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
4.
Financial Risk Management (continued)
Financial Instruments by Category
The Group’s financial instruments consist of cash and cash equivalents, trade and other
receivables, borrowings, trade payables and accruals, loan term borrowings and convertible loan
notes. Financial instruments are initially recognized at fair value with subsequent measurement
depending on classification as described below. Classification of financial instruments depends on
the purpose for which the financial instruments were acquired or issued, their characteristics, and
the Company’s designation of such instruments.
The Group’s and Company’s financial instruments are all subsequently recognised at amortised
cost.
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 and impairments.
In terms of assets and liabilities, the only material items are the exploration and evaluation assets
relating to the Group’s projects in the Democratic Republic of Congo (“DRC”) and Tanzania.
Following a review by the directors, it has been determined that the value of the DRC project has
been impaired and accordingly a provision has been made to reduce its net carrying value to
estimated realisable value. The assets, net of impairment provision, attributable to each project
are as follows:
DRC (reported as assets held for disposal, Note 14)
Tanzania (reported as exploration and evaluations assets)
2018
£
-
3,192,999
3,192,999
2017
£
322,412
2,384,036
2,706,448
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Notes to the financial statements (continued)
For the year ended 31 December 2018
6.
Loss before tax
This is stated after charging:
Directors’ emoluments - fees
Depreciation
Auditors’ remuneration:
Fees payable to the Company’s auditors for the audit of
the Group and Company financial statements
Fees payable to the Company’s auditors for taxation
compliance services
Share based payment charge
Impairment of PPE
Impairment of exploration and evaluation assets
7.
Employees
The average monthly number of persons (including Directors)
employed by the Group and the Company during the year was:
Management
Employment costs
Group
Armadale Capital Plc
2018
£
100,000
-
2017
£
67,000
1,806
32,000
32,000
4,000
-
-
194,409
2,500
9,034
13,206
5,713,239
2018
2017
3
3
£
£
Wages and salaries (including directors)
112,000
78,500
Company
Wages and salaries (including directors)
12,000
78,500
50 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
The exploration and evaluation work on the Group’s projects is undertaken by third party consultants.
8.
Remuneration of Directors of the Company
Aggregate emoluments
100,000
67,000
Emoluments of Highest Paid Director
55,000
30,000
All Directors of the Group and Company are considered to be the key management personnel.
9.
Taxation
Continuing operations
Current Tax
2018
£
2017
£
Current tax on loss for the year
-
-
Continuing operations
Factors affecting the tax charge for the year
Loss on ordinary activities before taxation
Loss on ordinary activities before taxation multiplied
by standard rate of UK corporation tax of 19% (2017:
19.25%)
Effects of :
Temporary
carried
recognised as a deferred tax asset
difference
forward
not
Expenses disallowed
UK Corporation tax
2018
£
2017
£
(648,020)
(6,177,014)
(123,124)
(1,189,075)
46,050
77,074
-
99,882
1,089,193
-
A deferred tax asset of approximately £1,496,000 (2017: £1,419,000) has not been recognised
owing to the uncertainty over the timing of future recoverability.
51 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
10.
Loss per share
The calculation of total loss per share is based on a loss of £648,020 (2017: £6,177,014), and on
287,195,618 ordinary shares (2017: 239,228,310), being the weighted average number of shares
in issue during the year.
The calculation of loss per share from continuing activities is based on a loss of £410,404 (2017:
£444,416), and on 287,195,618 ordinary shares (2017: 239,228,310), 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
Cost
At 1 January
Exchange movements
Acquisition of licence in Tanzania (note 13)
Additions
Impairment and transfer to assets held for disposal
At 31 December
2018
£
2017
£
2,384,036
35,707
-
773,256
-
3,192,999
8,778,645
(751,721)
-
695,825
(6,338,713)
2,384,036
Included in additions are capitalised finance costs of £47,793 (2017: £13,018).
As production has not commenced, no amortisation was charged during the year, in accordance
with the Group’s accounting policy.
52 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
12.
Investments
Non-current asset investments - Group
Cost
At 1 January 2017 and 1 January 2018
Disposals
At 31 December 2018
Listed
investments
£
6,705
(5,732)
973
Non-current asset investments - Company
Cost
At 1 January 2017
Impairment
Transfer to investments held for disposal
At 31 December 2017
Disposals
At 31 December 2018
Subsidiaries
£
4,445,209
(2,650,808)
(194,401)
1,600,000
-
1,600,000
Listed
Investments
£
Total
£
6,705
-
-
6,705
(5,732)
973
4,451,914
(2,650,808)
(194,401)
1,606,705
(5,732)
1,600,973
An impairment was recognised in the prior year for the value of £2,650,808. Comparison of the
carrying value of the investment in the Mpokoto gold project with the potential selling price
indicated that an impairment in the value of the investment had occurred and, accordingly, an
impairment was recognised by reference to the potential selling price taking account only of those
elements of the selling price that would be receivable regardless of the future outcome of the
project, on the grounds that the future outcome was uncertain.
Investments held for disposal - Company
As explained in note 14, the board has determined that the value of the Mpokoto gold project
has been impaired. Accordingly, the value of the Company’s holdings in shares of Netcom Global
Inc. and Kisenge Limited has similarly been impaired. As the intention is to dispose of these shares,
they have been transferred from non-current to current assets, as follows
At 1 January
Transferred from non-current investments
Impairment
At 31 December
53 | P a g e
2018
£
194,401
-
(194,401)
-
2017
£
-
2,845,209
(2,650,808)
194,401
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
12.
Investments (continued)
The subsidiary companies are:
Name and nature of business
Registered Office
Netcom Global Inc.
(intermediate holding company)
Kisenge Limited
(intermediate holding company)
Cluff Mining Congo, SARL*
(mining project operator)
Mines D’Or de Kisenge, SARL*
(mining licence holder)
Pty
Graphite Advancements
(intermediate holding company)
Graphite Advancements (Tanzania)
Limited† (mining project operator)
Water Utilities Limited
(in process of dissolution)
555 Hunkins Waterfront
Plaza, Charleston, Nevis
171 Main Street, Road Town,
British Virgin Islands
34 Avenue de la Liberte,
Lubumbashi
Democratic Republic of Congo
34 Avenue de la Liberte,
Lubumbashi,
Democratic Republic of Congo
216 St Georges Terrace, Perth,
Ltd
WA 6000, Australia
PO Box 105589, Dar es Salaam,
Tanzania
171 Main Street, Road Town,
British Virgin Islands
Class of
shares
Ordinary
%
held
100
Ordinary
100
Ordinary
100
Ordinary
80
Ordinary
100
Ordinary
100
Ordinary
100
*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.
Since the end of the year, the interests in Netcom Global Inc. and Kisenge Limited have been
disposed of (see note 23 for details).
54 | P a g e
Notes to the financial statements (continued)
For the year ended 31 December 2018
12.
Investments (continued)
Armadale Capital Plc
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. Despite the subsequent disposal of Netcom Global Inc., the Company has retained the
obligation to issue the Milestone Shares should the conditions be fulfilled.
*refer to note 18 for more details on share consolidation and restructure
55 | P a g e
Notes to the financial statements (continued)
For the year ended 31 December 2018
13.
Trade and other receivables
Group
Other debtors and prepayments
Total current receivables
Company
Amounts owed by group undertakings
Opening provision for impairment
Restated through opening retained earnings
Increase in impairment in year
Total net non-current receivables
Other receivables
Total current receivables
Armadale Capital Plc
2018
£
2017
£
53,486
53,486
54,563
54,563
4,879,156
(3,079,779)
(194,508)
(210,408)
1,394,461
4,052,323
(3,079,779)
972,544
13,439
13,439
43,750
43,750
Mpokoto Gold Project
The provision is required to provide in full against amounts due from subsidiaries associated with the
Mpokoto gold project. In view of the impairment in the value of the project (see note 14) these
amounts are considered to be wholly irrecoverable.
Mahenge Liandu Graphite Project
The parent adopted IFRS 9 with a transition date of 1 January 2018 and has chosen not to restate
comparatives. As a result, the changes have been processed at the date of application and recognised
in the opening equity balances.
The increase in the loss allowance is a result of the application of the expected credit loss model
under IFRS 9. The loan to the subsidiary company is repayable on demand. As the subsidiary does
not have sufficient current assets to repay the loan, the loan will be classified as stage 3 of the
expected credit loss model.
As part of assessing the intercompany loan receivable, the Directors have considered the exploration
project risks provided in the competent persons report along with the cash flow scenarios for the
repayment of the loan. Notwithstanding the requirements of IFRS 9 in respect to the assessment of
the intercompany loan, the directors have identified no indicators of impairment in the Group
accounts and the project is highly prospective with significant upside potential.
56 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
14. Disposal group classified as held for sale
On 12 January 2018 the board announced that it had entered into non-binding heads of agreement
(“HOA”) with Weghsteen Capital Advice SA (“WCA”) to sell its interest in the Mpokoto gold project
for potential consideration of US$562,500 cash plus future royalty provisions.
Comparison of the carrying value of the assets relating to the Mpokoto gold project with the
potential selling price indicated that an impairment in the value of those assets had occurred and,
accordingly, in the prior year an impairment was recognised by reference to the potential selling
price taking account only of those elements of the selling price that would be receivable regardless
of the future outcome of the project, on the grounds that the future outcome was uncertain such
that the value of the contingent consideration was estimated at nil.
The sale to WCA did not proceed and, on 11 January 2019, the board announced that it had reached
formal agreement with African Royalty Company Pty Limited (“African Royalty”)to sell these
interests. Arrow Mining Pty Limited, a related company to African Royalty will take over the
operations on the Mpokoto Project for potential consideration of 1.5% royalty on gold sales
achieved once in production. Consistent application of the valuation principles indicates that
further impairment has occurred and a further amount has accordingly been provided.
57 | P a g e
Notes to the financial statements (continued)
For the year ended 31 December 2018
14. Disposal group classified as held for sale (continued)
The resulting assets and liabilities are as follows:
Assets held for sale
Exploration and evaluation assets
Cash
Liabilities held for sale
Provision
Armadale Capital Plc
2018
£
2017
£
128,011
-
128,011
320,902
1,510
322,412
128,011
128,011
In the statement of comprehensive income the following loss has been recognised:
Loss from discontinued operations
Impairment charge (PPE)
Impairment charge (E&E asset)
Other expenses
Basic and diluted loss per share from discontinuing
operations (pence)
2018
£
2017
£
-
194,401
43,215
237,616
13,206
5,713,239
6,153
5,732,598
(0.09)
(2.39)
An impairment loss of nil (2017, £13,206) has been recognised in the comprehensive statement
of income in order to impair the carrying value of the Group’s PPE to nil, as management is of the
opinion that the assets are obsolete.
An impairment loss of £194,401 (2017, £5,713,239) on the measurement of the disposal group to
fair value less cost to sell has been recognised and is included in the statement of comprehensive
income as a discontinued operation, in line with IFRS 5, as the project represents a major line of
business and a geographical area of operation, see below.
The fair value measurement is based on the disposal agreement and is categorised as a level 3
non-recurring fair value measurement.
The calculation of loss per share from discontinued activities is based on a loss of £237,616 (2017:
£5,723,598), and on 287,195,618 ordinary shares (2017: 239,228,310), being the weighted
average number of shares in issue during the year.
58 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
14. Disposal group classified as held for sale (continued)
The statement of cash flows includes the following amounts relating to discontinued operations:
Operating activities
Net cash from discontinued operations
15.
Trade and other payables
Group
Trade payables
Other creditors and accruals
Company
Trade payables
Other creditors and accruals
2018
£
2017
£
(7,725)
(7,725)
(4,347)
(4,347)
2018
£
234,272
99,381
333,653
2017
£
54,697
78,922
133,619
43,516
56,316
99,832
7,581
59,048
66,629
All trade and other payables are due within three months.
16.
Loans
Group and Company
Balance 1 January
Transfer from non-current
Accrued interest
Interest paid
Accretion of liability
Converted
Balance 31 December
2018
Loan
£
-
202,630
20,038
(17,597)
-
-
205,071
2018
10% Notes
£
431,406
-
40,993
-
-
472,399
2018
Total
431,406
202,630
61,031
(17,597)
-
-
677,470
2017
10% Notes
£
450,237
-
48,184
19,859
(86,874)
431,406
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 at the option of the company 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.
59 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
16.
Loans (continued)
On 11 July 2017 the 2017 loan notes matured, 4,343,724 shares of nominal value 0.1p were
issued at a share price of 2p. All other loan notes were extended by the holders for a period of
12 months to 11 July 2018 and have since been extended again for a further period of 12 months.
The loan was advanced under the terms of a £400,000 facility contracted on 11 October 2017.
The loan bears interest at 10% per annum and is repayable by 11 October 2019. The balance of
the facility may be drawn by the company at any time in tranches of not less than £50,000.
17.
Loan (non-current)
Group and Company
At 1 January
Advances in year
Accrued interest
Transferred to current (see note 16)
18. Share capital
2018
£
202,630
-
-
(202,630)
-
2017
£
-
200,000
2,630
-
202,630
Ordinary Shares
of 0.01p/0.1p each*
Number
£
Deferred Shares
of 0.14p each
Deferred Shares
of 1.4p each
Total
Number
£
Number
£
£
At 1 January 2017
211,016,310
211,016
1,531,374,350 2,143,923
42,260,533 591,648
2,946,587
Issue of shares:
For cash
On conversion of loan
notes
To settle liabilities
At 31 December 2017
26,030,000
26,030
4,343,724
4,344
-
-
-
-
-
-
-
-
26,030
4,344
3,250,000
244,640,034
3,250
244,640
-
-
1,531,374,350 2,143,923
-
-
42,260,533 591,648
3,250
2,980,211
Issue of shares:
For cash
At 31 December 2018
58,394
303,034
58,393,941
303,033,975
-
-
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
In April 2018, 58,393,941 ordinary shares were issued for cash at 1.65 pence per share raising
£963,500 before expenses of £55,455.
-
-
1,531,374,350 2,143,923
58,394
3,038,605
60 | P a g e
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
19.
Share based payment arrangements
No options over Ordinary Shares in the Company were granted during the year (2017, nil).
A summary of outstanding options is as follows:
Exercise
price
Held at 1
January 2017
Expired
2p
4p
Directors
W Frewen
Granted 21.07.16
Granted 21.07.16
ES Mahede
Granted 10.08.16
Granted 10.08.16
N Johansen
Granted 16.10.16
Granted 16.10.16
Consultants
Granted 01.10.13 15p
Granted 19.11.14 15p
2p
4p
2p
4p
Held at 31
December 2017
and 31 December
2018
-
-
250,000
250,000
250,000
250,000
-
-
-
-
(200,000)
(100,000)
(2,300,000)
66,667
300,000
1,366,667*
1,000,000
1,000,000
(1,000,000)
(1,000,000)
250,000
250,000
250,000
250,000
266,667
400,000
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 0.45% (2017, 0.56%) of the issued share capital of the company
All the outstanding options held at the year-end were exercisable at a weighted average exercise
price of 6p (2017:6p).
The Mahede and Johannsen options have a life of four years from the date of grant. The
consultant options have a life of 10 years. All options are time based with no other conditions.
The average contractual life of options held is 62 months (2017: 74 months).
Page | 61
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2018
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 29 and 30.
21. Related party transactions
In respect of the Company, amounts, net of provisions, due from subsidiary undertakings were
£1,394,462 (2017 - £972,544), 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 11 January 2019 the Company announced that it had entered into a formal sale agreement
with African Royalty Company Pty Limited (“African Royalty”) for the sale of the Mpokoto Gold
Project. A related company to African Royalty, Arrow Mining Pry Limited, will take over the
operations and is obliged to pay to the Company a 1.5% royalty on gold sales achieved once in
production.
On 27 February 2019, the Company placed 72,297,728 Ordinary Shares of 0.1p at a price of 1.1p
to raise £795,275 before expenses. Each financing share has an attached warrant to subscribe for
a further new ordinary share at a price of 2.2p with a life to expiry of 3 years from admission of
the financing shares.
24. Notes to the group and company statement of cash flows
At 1 January 2018
Interest paid
Non-cash flows
Interest charged
At 31 December 2018
Loan
£
202,630
(17,597)
20,038
205,071
10% Notes
£
431,406
-
Total
£
634,036
(17,597)
40,993
472,399
61,031
677,470
Page | 62
Notice of Annual General Meeting
Armadale Capital Plc
ARMADALE CAPITAL PLC
1 Arbrook Lane, Esher, Surrey, KT10 9EG
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Armadale Capital Plc (‘the Company’) will be
held at St Brides Partners Limited, 4th Floor, Salisbury House, London Wall, London EC2M 5QQ on 27
June 2019 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 4 and as a
special resolution in the case of Resolution 5.
ORDINARY BUSINESS
1. To receive the report of the Directors and the audited financial statements of the Company for
the year ended 31 December 2018.
2. To reappoint Paul Johnson as Director of the Company who having been appointed since the
last Annual General Meeting resigns and offers himself for reappointment under the Articles
of Association of the Company.
3. To reappoint Nicholas Johansen as a Director of the Company, who resigns by rotation and
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
£250,000 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 | 63
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)
(b)
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;
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 £250,000;
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:
1 Arbrook Lane
Esher, Surrey, KT10 9EG
23 May 2019
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
Page | 64
Armadale Capital Plc
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.
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 cut-off time for receipt of proxy appointments (see above) also apply in
relation to amended instructions; any amended proxy appointment received after the relevant cut-
off 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.
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Armadale Capital Plc
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. At 23 May 2019 the Company’s issued share capital comprised 375,331,704 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 23 May 2019 is 375,331,704
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
(available via
euroclear.com/CREST).
instructions, as described
the CREST Manual
for such
in
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 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
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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.
Armadale Capital Plc
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Armadale Capital Plc
Form of Proxy
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 27 June 2019 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 2017.
2. To re-elect Paul Johnson 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 £250,000.
Special Resolution
6. To authorise the Directors to allot relevant securities up to a
maximum nominal amount of £250,000.
Signature
Date
Full Name
Address
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Armadale Capital Plc
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.
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