Armadale Capital Plc
Annual Report and Accounts
31 December 2021
Armadale Capital Plc
Contents
Officers and Professional Advisers ............................................................................................................. 3
Strategic Report ......................................................................................................................................... 4
Directors’ Report ...................................................................................................................................... 10
Independent Auditor’s Report ................................................................................................................. 16
Consolidated Statement of Comprehensive Income ............................................................................... 22
Consolidated Statement of Financial Position ......................................................................................... 23
Company Statement of Financial Position ............................................................................................... 24
Consolidated Statement of Changes in Equity ......................................................................................... 25
Company Statement of Changes in Equity .............................................................................................. 26
Consolidated Statement of Cash Flows ................................................................................................... 27
Company Statement of Cash Flows ......................................................................................................... 28
Notes to the financial statements ........................................................................................................... 29
Notice of Annual General Meeting .......................................................................................................... 52
Page | 2
Officers and Professional Advisers
Directors
Nicholas Johansen – Chairman
Matt Bull
Secretary
Timothy Jones
Registered office
I Arbrook Lane
Esher
Surrey, KT10 9EG
Nominated Adviser and Broker
finnCap Ltd
1 Bartholomew Close
London EC1A 7BL
Auditors
James Cowper Kreston
Reading Bridge House
George Street
Reading
RG1 8LS
Solicitors
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
Registrars
Share Registrars Limited
3 Millennium Centre
Crosby Way
Farnham
Surrey GU9 7XX
Armadale Capital Plc
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Armadale Capital Plc
Strategic Report
For the year ended 31 December 2021
Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects
in Africa and the development of the long‐life low‐cost Mahenge Liandu Graphite Project in Tanzania is
pleased to announce its Final Results for the Year Ended 31 December 2021.
Operational and Corporate Highlights for Period Ending 31 December 2021
Significant progress made in delivering key accretive milestones in advancing the Mahenge Liandu
Graphite Project in Tanzania
1.
2.
3.
In January 2021, the Company reported on the CSIRO (Australia's Commonwealth Scientific and
Industrial Research Organisation) test work which confirmed natural flake graphite from
Mahenge graphite project as a premium quality product with the exceptionally high purity and
characteristics required for use in lithium‐ion batteries.
In March 2021, the Environmental and Social Impact Assessment ('ESIA') was formally granted
by National Environment Management Council ('NEMC') of Tanzania.
In September 2021, the Company announced the formal confirmation and receipt of the Mining
Licence (ML/007744/2020) for the Mahenge Graphite Project from the Tanzanian Ministry of
Energy and Minerals. The Mining Licence provides the Company with exclusive development
and mining rights over the graphite resources within the 8.54km2 Mining Licence and is a major
de‐risking milestone for investors. The mining licence was granted for an initial 10‐year term
which can be extended. Should it be extended, it would cover the initial 15‐year mine life
utilising only 25% of the estimated Resource.
4. 1st phase of Front‐End Engineering Design Studies undertaken by Chinese EPCM Xinhai Mineral
EPC completed with positive results received confirming a premium quality high purity graphite
concentrate, also suitable for the battery anode market and can be produced from Mahenge
using conventional plant as outlined in the Company's existing Definitive Feasibility Study. This
included metallurgical a test work programme which further confirmed the efficacy of the
Company's intended process flow sheet and helped ratify project economics.
5. The main focus going forward is gaining project development finance and binding off take
agreements to bring the project to production.
6. In December 2021, the Company appointed Mr. Greg Entwhistle as Project Director. Over the
past five years, Mr Entwistle has specialised in the emerging graphite sector in East Africa
consulting to several groups that are advancing projects towards production. Mr Entwhistle
brings considerable skills and experience to expedite progress of the Group’s Mahenge Graphite
project towards commissioning production.
Post Period End
1.
In February 2022 the Company applied for three incremental exploration licences which are
prospective for graphite mineralisation and materially enhance the Mahenge Liandu
Project's exploration potential.
2. Ongoing review of quoted portfolio, where the Directors believe there are opportunities for
capital gains
3. Continue to actively review other exciting investment opportunities.
Page | 4
Armadale Capital Plc
Strategic Report (Continued)
For the year ended 31 December 2021
During the year under review, Armadale continued to operate as a diversified investing group 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;
and
• passively managed investments where the Company has a minority investment, typically in a
quoted company, and does not have management control.
Currently, the Company’s key actively managed investment is the Mahenge Liandu Graphite Project in
Tanzania. At present, the Company is actively marketing the Project to potential industry partners and
end users (offtakers) of graphite products. The Company is also pursuing a range of potential options
relating to development finance for the project
PASSIVELY MANAGED INVESTMENTS
Mine Restoration Investments Limited (‘MRI’), South Africa
The shares in MRI are being carried at Nil market value (2020: Nil) as MRI shares were suspended from
trading on the Johannesburg Stock Exchange. The MRI shares continued to be suspended throughout
the year.
Quoted Portfolio
The Company has a small portfolio of quoted investments, valued at £150,000 on 16 May 2022,
principally in resource companies where the Directors believe there are opportunities for capital gain.
The Company continues to keep its portfolio under review. The Company’s strategy with its quoted
portfolio is to gain exposure in projects that have the potential to create short to medium term returns
for the Company as well as diversify the Company’s exposure to a broader range of commodities while
being able to enter and exit the position with minimal cost and time.
SUSTAINABLE DEVELOPMENT
The Company is committed to sustainable development and conducting its business ethically. Given that
the Company invests in the mining industry, one of its key focuses is on maintaining a high level of health
and safety, environmental responsibility, and support for 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:
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Armadale Capital Plc
Strategic Report (Continued)
For the year ended 31 December 2021
• Although reducing throughout the year under review, the COVID‐19 pandemic continues to
have risks for the Group in terms of its ability to travel to and from its projects and ability for
key personnel to access its projects. As previously reported, the impact of the COVID‐19
pandemic on the project is so far minimal as the Company’s site activities were substantially
completed in 2019.
• Through the Mahenge Liandu Graphite Project the Group is very exposed to graphite. Graphite
is a relatively new commodity whose market is being driven by demand in renewable energy.
The Company believes it is thus vulnerable to changing global energy policies.
• 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 project 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
its control. The mining regulation changes
government policies which are outside
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 changes to
evaluate and mitigate sovereign risks.
• The Group is exposed to gold as the holder of a royalty on gold production from its previously
held gold project. The Group’s potential future royalty stream will be affected by fluctuations in
the prevailing market price of gold and to variations of the US dollar in which gold sales will be
denominated.
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.
Page | 6
Armadale Capital Plc
Strategic Report (Continued)
For the year ended 31 December 2021
The Directors regularly monitor such risks and will take actions as appropriate to mitigate them. The
Group manages its risks by seeking to ensure that it complies with the terms of its agreements, and
through the application of appropriate policies and procedures, and via the recruitment and retention
of a team of skilled and experienced professionals.
Key Performance Indicators
The Group’s current key performance indicators (‘KPIs’) are the performance of its underlying
investments, measured in terms of the development of the specific projects they relate to, the increase
in capital value since investment and the earnings generated for the Group from the investment. The
Directors consider that it is still too early in the investment cycle of any of the investments held, for
meaningful KPIs to be given.
Success is also measured through the identification and investment in suitable additional opportunities
that fit the Group’s investment objectives.
Section 172 Statement
Section 172(1): A director of a company must act in the way he considers, in good faith, would be most
likely to promote the success of the company for the benefit of its members as a whole, and in doing so
have regard (amongst other matters) to —
Section 172(1) (b) the interests of the company's employees,
Company’s Comment: While the Company is largely staffed by contractor employees (rather than direct
employees of the Company), the directors consider that continuing active work on the Mahenge Liandu
Graphite Project to be in the best interest of such staff to utilise their skills and develop their local
communities. The board seeks regular feedback from its key stakeholders (including staff and advisers)
to ensure that the corporate culture of the Company remains highly ethical in terms of our Company’s
values and behaviours.
Section 172(1) (c) the need to foster the company's business relationships with suppliers, customers
and others,
Company’s Comment: The directors ensure that suppliers are available and meeting commitments and
there is good communication with staff as a key requirement for high levels of engagement. This is done
by periodic and ad‐hoc briefings and discussions.
Reasons to engage shareholders are to meet regulatory requirements and understand shareholder
sentiments on the business, its prospects and performance of management.
This is done by regulatory news releases, keeping the investor relations section of the website up to
date, annual and half‐year reports and presentations and AGM.
Page | 7
Armadale Capital Plc
Strategic Report (Continued)
For the year ended 31 December 2021
Section 172(1) (d) the impact of the company's operations on the community and the environment,
Company’s Comment: The Company’s activities impact communities in the places where we operate
and elsewhere. The Company engages communities with employment / business development
arrangements within guidelines. Through preparation and compliance with environmental and social
management plans, which include the regulatory requirements for the Company on its Mahenge Liandu
Graphite Project, the directors ensure that wherever possible its activities have a positive impact on the
community and avoid adverse environmental impacts.
The Company has engaged the services of a local manager in Liandu who provides information to the
community about our intended project activities and is responsible for managing local affairs and
feedback to the Company.
Section 172(1) (e) the desirability of the company maintaining a reputation for high standards of
business conduct, and
Company’s Comment: The directors consider standards of business conduct in all dealings of the
Company. The members of the board have a collective responsibility and obligation to promote the
interests of the Company and are collectively responsible for defining standards of business conduct
which includes corporate governance arrangements. The board provides strategic leadership for the
Company and operates within the scope of our corporate governance framework and sets the strategic
goals for the Company.
Section 172(1) (f) the need to act fairly as between members of the company.
Company’s Comment: The board takes feedback from a wide range of shareholders (large and small)
and endeavours at every opportunity to pro‐actively engage with all shareholders (via regular news
reporting‐RNS) and engage with any specific shareholders in response to particular queries they may
have from time to time. The board considers that its key decisions during the year have impacted equally
on all members of the Company.
Board
In March 2021, Ms Amne Suedi and Mr Steve Mahede resigned from the Board as non‐executive
Directors and the Company wishes them well in the future. The Board is actively considering potential
replacements for former Board members with a focus on a potential appointment of a UK based Board
member.
Financial Results
For the year ended 31 December 2021 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 £0.333 million (2020: £0.196 million) for the year ended 31
December 2021. Expenditure on the Mahenge Liandu project during the year amounted to £0.272
million (2020: £0.662 million), which was capitalised as additional exploration and evaluation assets.
Page | 8
Armadale Capital Plc
Strategic Report (Continued)
For the year ended 31 December 2021
Funds raised during the year amounted in total to £1,279,000 of which £850,000 came from a placing
of shares and £429,000 came from the exercise of warrants and options. Other share issues during the
year were in respect of loan note conversions.
At 31 December 2021, the Group had cash of £886,000 (2020: £252,000 ) and no debt finance
(2020: loan notes of £577,000 ). At 16 May 2022, following the exercise of further warrants and options,
the Group had cash of £1,942,000.
Outlook
The year under review shows that Mahenge Liandu continues to represent an exciting opportunity for
the Group. As identified in the going concern note to the Directors’ Report, the Company’s ability to
achieve its strategy with respect to the project is dependent on the further fundraising. The Directors
continue to keep other investment opportunities, in line with the Group’s investment objectives, under
review, which the board believe could deliver significant value to shareholders.
Nicholas Johansen
Director
20 May 2022
Page | 9
Armadale Capital Plc
Directors’ Report
For the year ended 31 December 2021
The Directors submit their report and the financial statements of Armadale Capital Plc (‘Armadale’ or
the ‘Company’) for the year ended 31 December 2021.
Results and dividends
The financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the United Kingdom. The loss of the Group for the year ended 31 December
2021 was £333,000 (2020, £196,000). 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
concluded that no impairment charge is required (2020, £nil) in the year.
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 is included in the Strategic
Report.
Directors
The following Directors have held office during the year:
Nicholas Johansen
Matt Bull
Emmanuel S Mahede (resigned 31 March 2021)
Anne Suedi (resigned 31 March 2021)
Page | 10
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2021
Directors’ interests
Directors’ interests, including family interests, in the Ordinary Share capital, were as follows:
N Johansen
M Bull
31 December
2021
No:
2,012,122
39,931,011
31 December
2020
No:
2,012,122
27,612,311
Directors’ interests, including family interests, in Warrants to subscribe for Ordinary Shares in the
Company were as follows:
M Bull
M Bull
(2.2p warrants)
(3p warrants)
Substantial shareholdings
31 December
2021
No:
7,852,273
1,666,667
31 December
2020
No:
7,852,273
1,666,667
At 16 May 2022 the Company was aware of the following interests in 3% or more of the issued share
capital of the Company:
Interactive Investor Services Nominees
Hargreaves Lansdown Nominees
HSDL Nominees
Matt Bull
Barclays Nominees
JIM Nominees
Kabunga Holdings Pty Ltd
Lawshare Nominees
Vidacos Nominees
16.8%
13.8%
11.5%
8.1%
7.6%
6.0%
5.9%
4.6%
3.9%
Page | 11
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2021
Issue of Shares
Details of Ordinary Shares issued during the year are set out in note 17 to the financial statements.
Shares under option or issued on exercise of options and warrants to subscribe for shares
Shares held under option and warrants to subscribe for shares are detailed in notes 18 and 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
N Johansen
ES Mahede
A Suedi
M Bull
G Hall
2021
£’000
30
22
8
69
-
2020
£’000
29
29
26
33
11
The Remuneration of Directors is determined by the Board within the limits set out in the Articles of
Association of the Company.
Page | 12
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2021
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 United Kingdom. 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 United Kingdom, 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 Group 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.
Page | 13
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2021
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 2021, the Group had cash of £886,000 (2020, £252,000) and no debt finance (2020,
convertible loan notes of £577,000).
Since the year end, the Company has received £1,296,000 as a result of warrant exercises and 44.3
million warrants remain outstanding. Of these, 25.4 million are exercisable at 3p per warrant and will
expire on 30 September 2022 if not exercised. Given the Company’s current share price, it is reasonable
to expect that the majority of these warrants will be exercised, potentially generating £763,000. The
other 18.9 million outstanding warrants are exercisable at 7p and expire in May 2024.
As was announced on 3 September 2021, the Company has received its mining licence granting it
exclusive development and mining rights over the graphite resources. This represented a major
derisking milestone.
At 16 May 2022, the Company had cash of approximately £1,942,000 and listed investments with a
traded value of approximately £99,000 together with warrants to acquire further shares with a value,
net of the subscription cost, of £51,000. The Directors have prepared a cash flow forecast for the next
twelve months which shows that the cash in hand together with expected further receipts is sufficient
to meet current commitments in respect of exploration expenditure and corporate overheads for a
period of at least twelve months, after which further fundraising will be required.
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 further fundraising. Against the background of the encouraging
progress with the Mahenge Liandu graphite project and the Company’s history of raising funds through
the issue of equity, the Directors consider that there is a reasonable expectation that the required
capital will be raised. However, there are currently no binding agreements in place. Should the Directors
be unable to raise sufficient funds, the Company may be unable to realise its assets and discharge its
liabilities in the normal course of business.
These factors indicate the existence of a material uncertainty which may cast 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.
Page | 14
Armadale Capital Plc
Directors’ Report (continued)
For the year ended 31 December 2021
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 Strategic Report.
Events after the balance sheet date
Since the year end, the Company has received notices of exercise in respect of 48.9 million warrants to
subscribe for Ordinary Shares in the Company, raising cash of £1,296,000.
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
By order of the Board
Timothy Jones
Secretary
20 May 2022
Page | 15
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc
For the year ended 31 December 2021
Opinion
We have audited the financial statements of Armadale Capital Plc (the ‘Parent Company’) and its
subsidiaries (together, the ‘Group’) for the year ended 31 December 2021 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 United
Kingdom 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 2021 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 United Kingdom;
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 related to going concern
We draw attention note 2.2 to the financial statements which explains that the Parent Company’s and
the Group’s ability to continue as a going concern is dependent on 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. Our opinion is not modified in respect
of this matter.
We considered going concern to be a key audit matter based on our assessment of the risk and the
effect on our audit.
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Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued)
For the year ended 31 December 2021
How the scope of our audit responded to the risk:
•
•
•
•
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 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.
An overview of the scope of our audit
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (‘ISAs
(UK and Ireland)’). We designed our audit by determining materiality and assessing the risks of material
misstatement in the financial statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in all our audits we also
addressed the risk of management override of internal controls, including evaluating whether there is
evidence of bias by the directors that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial statements as a whole, taking into account our understanding of the Group and
its environment, the accounting processes and controls, and the industry in which the Group operates.
We planned our work to include sufficient work in respect of the parent company and the subsidiaries
to enable us to provide an opinion on the consolidated financial statements.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of
our resources and effort, are identified in the Key audit matters section below. We have also set out
how we tailored our audit to address these specific areas in order to provide an opinion on the financial
statements as a whole, and any comments we make on the results of our procedures should be read in
this context. This is not a complete list of all risks identified by our audit.
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Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued)
For the year ended 31 December 2021
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.
Going concern
See relevant section above.
Carrying value of exploration and evaluation assets
The exploration and evaluation assets of the Group represent the key assets on the Group’s statement
of financial position.
There are a number of estimates and judgements used by management in assessing the Exploration and
Evaluation assets for indicators of impairment under accounting standards. These estimates and
judgements are set out in note 2.10, note 2.13 and note 3 to the financial statements and the
subjectivity of these estimates along with the material carrying value of the assets make this a key audit
area.
How the scope of our audit responded to the risk:
We considered the indicators of impairment applicable to the Mahenge Liandu 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 discussed the progress of the project and the progress of the relevant licence applications
with management and the directors
• We reviewed relevant documentation pertaining to the above
• We reviewed the appropriateness of the costs capitalised in accordance with IFRS 6:
‘Exploration for and Evaluation of Mineral Resources’.
• We made specific inquires of management and reviewed market announcements which
confirmed the plan to continue investment in the Mahenge Liandu project subject to sufficient
funding being available, as disclosed in note 2.2
• We have reviewed the adequacy of disclosures provided within the financial statements in
relation to the impairment assessment against the requirements of the accounting standards.
Key observations:
Based on our work we concur with management’s conclusion that no impairment was required and
consider the disclosures included in the financial statements to be appropriate.
Page | 18
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued)
For the year ended 31 December 2021
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decision of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the results
of our work.
Based on our professional judgement we determined materiality for the consolidated financial
statements as a whole to be £120,000 and for the parent company financial statements to be £120,000
based upon 2% of net assets.
We consider net 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.
We agreed with the board that we would report to them all individual audit differences identified during
the course of our audit in excess of £6,000. We also agreed to report differences below these thresholds
that, in our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the annual report and accounts, 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and 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.
Page | 19
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued)
For the year ended 31 December 2021
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 Statement of directors’ responsibilities the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view,
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. 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.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non‐compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the
events and transactions reflected in the financial statements, as we will be less likely to become aware
of instances of non‐compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud
involves intentional concealment, forgery, collusion, omission or misrepresentation.
Page | 20
Armadale Capital Plc
Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued)
For the year ended 31 December 2021
The specific procedures for this engagement that we designed and performed to detect material
misstatements in respect of irregularities, including fraud, were as follows:
• Enquiry of management around actual and potential litigation and claims;
• Enquiry of management to identify any material instances of non‐compliance with laws
and regulations;
• Reviewing financial statement disclosures and testing to supporting documentation to assess
compliance with applicable laws and regulations;
• Performing audit work to address the risk of irregularities due to management override of
controls, including testing of journal entries and other adjustments for appropriateness,
evaluating the business rationale of significant transactions outside the normal course of
business and reviewing material financial reporting judgements and accounting estimates
for evidence of bias.
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.
Alan Poole BA (Hons) FCA (Senior Statutory Auditor)
For and on behalf of James Cowper Kreston
Statutory Auditors
Reading Bridge House
George Street
Reading
RG1 8LS
20 May 2022
Page | 21
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Armadale Capital Plc
Administrative expenses
Share based payment charges
Change in fair value of derivative
Change in fair value of investments
Operating loss
Finance costs
Loss before taxation
Taxation
Loss after taxation
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities
Total comprehensive loss attributable to the equity
holders of the parent company
Loss per share attributable to the equity holders of the
parent company
Basic and diluted loss per share
Note
12
6
9
2021
£’000
(330)
‐
‐
8
(322)
(11)
(333)
‐
(333)
(61)
(394)
Pence
10
(0.07)
2020
£’000
(378)
‐
37
176
(165)
(31)
(196)
‐
(196)
39
(157)
Pence
(0.04)
The notes on pages 29 to 51 form part of the financial statements.
Page | 22
Consolidated Statement of Financial Position
At 31 December 2021
Assets
Non-current assets
Exploration and evaluation assets
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Shares to be issued
Share option and warrant reserve
Foreign exchange reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Loans
Total Liabilities
Armadale Capital Plc
Note
11
12
13
17
20
20
20
20
20
14
15
2021
£’000
4,727
138
4,865
150
886
1,036
5,901
3,275
23,906
286
925
66
(22,636)
5,822
79
‐
79
2020
£’000
4,417
282
4,699
121
252
373
5,072
3,207
22,348
286
762
127
(22,406)
4,325
170
577
747
Total equity and liabilities
5,901
5,072
The notes on page 29 to 51 form part of the financial statements.
Approved by the Board and authorised for issue on 20 May 2022
Signed on behalf of the Board
M Bull
Director
N Johansen
Director
Page | 23
Company Statement of Financial Position
At 31 December 2021
Armadale Capital Plc
Assets
Non-current assets
Investments
Other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Shares to be issued
Share option and warrant reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Loans
Total liabilities
Note
12
13
13
17
20
20
20
20
14
15
2021
£’000
1,738
3,460
5,198
136
562
698
2020
£’000
1,882
2,781
4,663
112
218
330
5,896
4,993
3,275
23,906
286
925
(22,553)
5,839
57
‐
57
3,207
22,348
286
763
22,273
4,331
85
577
662
Total equity and liabilities
5,896
4,993
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 £383,000 (2020:
£217,000) has been included in the financial statements of the parent company.
The notes on pages 29 to 51 form part of the financial statements.
Approved by the Board and authorised for issue on 20 May 2022
Signed on behalf of the Board
M Bull
Director
N Johansen
Director Company Registration No. 5541602
Page | 24
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Share
Capital
Share
Premium
Shares to
be issued
£’000
3,140
£’000
21,037
£’000
286
-
-
-
68
‐
‐
68
-
-
-
1,311
‐
‐
1,311
-
-
-
‐
‐
‐
‐
Share
Option and
Warrant
Reserve
£’000
661
-
-
-
240
‐
(139)
101
At 1 January 2020
Loss for the period
Other comprehensive loss
Total comprehensive loss for the
year
Issue of shares and warrants
Release on conversion of loan
notes
Transfer on exercise of warrants
Total other movements
At 31 December 2020
3,208
22,348
286
762
Loss for the period
Other comprehensive loss
Total comprehensive loss for the
year
Issue of shares and warrants
Transfer on exercise of warrants
Total other movements
‐
‐
67
‐
67
‐
‐
1,558
‐
1,558
‐
‐
‐
‐
‐
‐
‐
266
(103)
163
Armadale Capital Plc
Foreign
Exchange
Reserve
Retained
Earnings
Total
£’000
88
£’000
(22,400)
£’000
2,812
(196)
39
(157)
1,619
51
0
1,670
(196)
‐
(196)
‐
51
139
190
(22,406)
4,325
(333)
‐
(333)
‐
103
103
(333)
(61)
(394)
1,891
‐
1,891
-
39
39
‐
‐
‐
‐
127
‐
(61)
(61)
‐
‐
‐
At 31 December 2021
3,275
23,906
286
925
66
(22,636)
5,822
The notes on pages 29 to 51 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 and warrant
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 historical acquisition
cumulative charge recognised under IFRS 2 in respect of share‐based
payment awards
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
Page | 25
Armadale Capital Plc
Company Statement of Changes in Equity
For the year ended 31 December 2021
Share
Capital
Share
Premium
Shares to
be issued
£’000
3,140
£’000
21,037
£’000
286
-
-
68
‐
‐
68
-
-
1,311
‐
‐
1,311
-
-
‐
‐
‐
‐
Share
Option and
Warrant
Reserve
£’000
661
-
-
240
‐
(139)
101
Retained
Earnings
Total
£’000
(22,246)
(217)
(217)
‐
51
139
190
£’000
2,878
(217)
(217)
1,619
51
‐
1,670
At 1 January 2020
Loss for the period
Total comprehensive loss for the
year
Issue of shares and warrants
Release on conversion of loan
notes
Transfer on exercise of warrants
Total other movements
At 31 December 2020
3,208
22,348
286
762
(22,273)
4,331
Loss for the period
Total comprehensive loss for the
year
Issue of shares and warrants
Transfer on exercise of warrants
Total other movements
‐
‐
67
‐
67
‐
‐
1,558
‐
1,558
‐
‐
‐
‐
‐
‐
‐
266
(103)
163
(383)
(383)
‐
103
103
(383)
(383)
1,891
‐
1,891
At 31 December 2021
3,275
23,906
286
925
(22,553)
5,839
The notes on pages 29 to 51 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 and warrant
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 historical acquisition
cumulative charge recognised under IFRS 2 in respect of share‐based
payment awards
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
Page | 26
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Cash flows from operating activities
Loss before taxation
Adjustment for:
Change in fair value of derivative
Change in fair value of investments
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 issues
Proceeds from loan (Note 15)
Loan repayment
Interest paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The notes on pages 29 to 51 form part of the financial statements.
Armadale Capital Plc
2021
£’000
2020
£’000
(333)
‐
(8)
11
(330)
1
(39)
(368)
(399)
152
(247)
1,249
‐
‐
‐
1,249
634
252
886
(196)
(37)
(176)
31
(378)
11
(7)
(374)
(689)
‐
(689)
1,246
50
(50)
(27)
1,219
156
96
252
Page | 27
Company Statement of Cash Flows
For the year ended 31 December 2021
Cash flows from operating activities
Loss before taxation
Adjustment for:
Impairment charge
Change in fair value of derivative
Change in fair value of investments
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 issues
Proceeds from loan (Note 15)
Loan repayment
Interest paid
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The notes on pages 29 to 51 form part of the financial statements.
Armadale Capital Plc
2021
£’000
(383)
170
‐
(8)
11
(210)
6
(28)
(232)
(825)
152
(673)
1,249
‐
‐
‐
1,249
344
218
562
2020
£’000
(217)
177
(37)
(176)
31
(222)
(62)
1
(283)
(806)
‐
(806)
1,246
50
(50)
(27)
1,219
130
88
218
Page | 28
Armadale Capital Plc
Notes to the financial statements
For the year ended 31 December 2021
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 United Kingdom.
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 2021, the Group had cash of £886,000 (2020, £252,000) and no debt finance
(2020, convertible loan notes of £577,000).
Since the year end, the Company has received £1,296,000 as a result of warrant exercises and
44.3 million warrants remain outstanding. Of these, 25.4 million are exercisable at 3p per warrant
and will all expire on 30 September 2022 if not exercised. Given the Company’s current share
price, it is reasonable to expect that the majority of these warrants will be exercised, potentially
generating £763,000. The other 18.9 million outstanding warrants are exercisable at 7p and
expire in May 2024.
As was announced on 3 September 2021, the Company has received its mining licence granting it
exclusive development and mining rights over the graphite resources. This represented a major
derisking milestone.
At 16 May 2022, the Company had cash of approximately £1,942,000 and listed investments with
a traded value of approximately £99,000 together with warrants to acquire further shares with a
value, net of the subscription cost, of £51,000. The Directors have prepared a cash flow forecast
for the next twelve months which shows that the cash in hand together with expected further
receipts is sufficient to meet current commitments in respect of exploration expenditure and
corporate overheads for a period of at least twelve months, after which further fundraising will
be required.
Page | 29
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2.2. Going Concern (continued)
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 further fundraising. Against the background
of the encouraging progress with the Mahenge Liandu graphite project and the Company’s history
of raising funds through the issue of equity, the Directors consider that there is a reasonable
expectation that the required capital will be raised. However, there are currently no binding
agreements in place. Should the Directors be unable to raise sufficient funds, the Company may
be unable to realise its assets and discharge its liabilities in the normal course of business.
These factors indicate the existence of a material uncertainty which may cast 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. Acquisitions of exploration licences
The acquisition of the Group’s exploration projects was principally the acquisition of mining
licences effected through non‐operating corporate structures. As the structures do not represent
businesses, it is considered that the transactions do not meet the definition of business
combinations. Accordingly each transaction is accounted for as the acquisition of an asset. When
future consideration for shares is contingent, the fair value of the contingent shares at the
acquisition date is recognised as part of the cost of the asset. The probability of the contingent
events being satisfied is included in the calculation of the fair value of the contingent shares. The
fair value of the contingent shares is also recognised in equity as at the acquisition date and is not
subsequently revalued.
Page | 30
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2.
Accounting policies (continued)
2.5. Foreign currencies
The individual financial statements of each Group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For the
purpose of the consolidated financial statements, the results and financial position of each Group
entity are expressed in pounds sterling, which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
Transactions in currencies other than the entity’s functional currency (foreign currencies) are
recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each
reporting period, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non‐monetary items carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the date when the fair value was determined.
Non‐monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated. Exchange differences are recognised in profit or loss in the period in which they
arise. On disposal of foreign subsidiaries, accumulated exchange movements arising in the
revaluation of overseas assets and liabilities are released from foreign exchange reserve to the
profit and loss account.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the
Group’s foreign operations are expressed in Pounds using exchange rates prevailing at the end of
the reporting period. Income and expense items are translated at the average exchange rates for
the period, unless exchange rates fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are
recognised in other comprehensive income.
2.6. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, with a maturity date of less than
three months from inception.
2.7. Share‐based payments
IFRS 2 ‘Share‐based Payment’ requires the recognition of equity‐settled share‐based payments at
fair value at the date of grant and the recognition of liabilities for cash‐settled share based
payments at the current fair value at each reporting date.
The Group provides benefits to employees and service providers (including senior executives) of
the Group in the form of share based payments, whereby employees render services in exchange
for shares or rights over shares (equity‐settled transactions).
Where the equity‐settled transactions are share options their cost is measured by reference to
the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by using a Black‐Scholes model.
Page | 31
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2. Accounting polices (continued)
2.7. 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.
2.8. Warrants
Warrants issued as part of financing transactions in which the holder receives a fixed number of
shares on exercise of the warrant are fair valued at the date of grant and recorded within the
warrant reserve. Fair value is measured by the use of the Black Scholes model. On expiry or
exercise, the fair value of warrants is credited to reserves as a change in equity.
Page | 32
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2. Accounting polices (continued)
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.
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.
Page | 33
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2.
Accounting polices (continued)
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
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 subsidiary companies and joint ventures 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.
All other investments are measured at fair value with changes recognised in the statement of
comprehensive income.
2.12. 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.
Page | 34
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2.
Accounting polices (continued)
2.12. Impairment of assets (continued)
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 profit or loss, 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 profit or loss.
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 profit or loss, unless the
relevant asset is carried at a re‐valued amount, in which case the reversal of the impairment loss
is recognised in other comprehensive income.
2.13. 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. Loans and receivables are assessed at each
reporting date to determine a loss allowance under the expected credit loss model.
2.14. 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.
Page | 35
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2.
Accounting polices (continued)
2.14. Financial liabilities and equity instruments issued by the Group (continued)
Financial liabilities
Financial liabilities are recognised when the Company and Group become party to a financial
liability. Under IFRS 9, where there is a non‐substantial modification of financial liabilities an
immediate gain or loss on modification is recognised in the profit and loss account. This gain or
loss is equal to the difference between the present value of cash flows under the original and
modified terms discounted at the original effective interest rate.
Financial liabilities represent trade payables and borrowings.
Convertible loan notes
As detailed in note 15, the loan notes issued in 2016 are classified as a compound financial
instrument in accordance with the requirements of IFRS 9. 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
comprehensive income and included within finance expenses. When conversion occurs the
associated equity element is released direct to retained earnings.
As detailed in notes 15 and 16, the conversion option in the loan notes issued in 2019 is classified
as a derivative instrument because the holders have alternative conversion options. The
derivative element is fair valued at inception and reported separately in current liabilities. Its fair
value is then redetermined at each balance sheet date and the gain or loss on revaluation taken
to profit and loss account. The amount attributed to derivative at inception is charged over the
life of the loan note to the statement of comprehensive income and included within finance
expenses. When conversion occurs, the derivative and liability element are transferred to equity.
2.15. New accounting standards
Certain new standards, amendments and interpretations to existing standards have been
published that are relevant to the Company’s activities and are mandatory for the Company’s
accounting periods beginning on 1 January 2021. These include:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest rate benchmark reform
The above standards had no material impact on the Group’s financial statements.
Page | 36
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
2.
Accounting polices (continued)
2.15. New accounting standards (continued)
A number of new and amended accounting standards and interpretations have been published
that are not mandatory for the Group’s accounts for the year ended 31 December 2021 and
they have not been adopted early. These standards, which are detailed below, are not expected
to have a material impact on the Group’s consolidated financial statements:
Amendments to IAS 1: Classification of liabilities as current or non‐current
Amendments to IAS 1: Disclosure of accounting policies
Amendments to IAS 12: Deferred tax related to assets/liabilities arising from a single transaction
Amendments to IAS 16: Property, plant and equipment; and
Amendments to IAS 37: Provisions, contingent liabilities and contingent assets
3.
Significant judgements and sources of estimation uncertainty
In preparing the annual financial statements of the Group, management is required to make
estimates and assumptions that affect the amounts represented in the annual financial
statements and related disclosures. Use of available information and the application of
judgement are inherent in the formation of estimates. Actual results in the future could differ
from these estimates which may be material to the annual financial statements. The Directors
consider that the significant sources of estimation uncertainty relate to the value of the Group’s
exploration assets, to share based payment charges and to the accounting treatment of
compound financial instruments.
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 graphite deposits and should the
development not be achieved, an impairment of these assets would arise. At the year end, the
Directors having taken into consideration the progress made on the project in respect of
environmental approval and metallurgical test results, were of the opinion that there were no
indicators of impairment in respect of the Mahenge project.
Page | 37
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
3.
Significant judgements and sources of estimation uncertainty (continued)
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 graphite deposits and should the
development not be achieved, an impairment of these investments would arise.
Management has assessed the intercompany loans in line with IFRS 9 with the calculation of
expected credit losses considered a key judgement. The assessment of the expected credit losses
is included in Note 13 along with the key assumptions and estimates.
Convertible loan notes
The Company has issued convertible loan notes, the terms of which provide the holders with
alternative bases of conversion. The Directors are required to value the derivative element of the
loan notes which requires them to make judgements on the relative likelihood that each basis of
conversion will apply and then to assess the variable inputs for the Black‐Scholes model that is
used to perform the valuation.
4.
Financial risk management
Policy
The Group and Company regularly monitor the cash position to ensure liabilities can be met. The
policies on other financial risks are set out below.
Financial risk factors
The risk in relation to financial assets is considered to be minimal and is managed on a day‐to‐day
basis.
The Group and Company is exposed to liquidity risk, currency risk and capital risk management
arising from the financial instruments it holds. The Company has receivables from its subsidiaries
as disclosed in note 14. The recovery of these receivables is dependent on whether the mining
projects are successful and they are not expected to be recovered in the short term. The risk
management policies employed by the Group and Company to manage these risks are discussed
below:
Page | 38
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
4.
Financial risk management (continued)
Policy
The Group and Company regularly monitor the cash position to ensure liabilities can be met. The
policies on other financial risks are set out below.
Financial risk factors
The risk in relation to financial assets is considered to be minimal and is managed on a day‐to‐day
basis.
The Group and Company is exposed to liquidity risk, currency risk and capital risk management
arising from the financial instruments it holds. The Company has receivables from its subsidiaries
as disclosed in note 14. The recovery of these receivables is dependent on whether the mining
projects are successful and they are not expected to be recovered in the short term. The risk
management policies employed by the Group and Company to manage these risks are discussed
below:
Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. The
Group and Company manages liquidity risk by maintaining adequate reserves and banking
facilities, by monitoring cash flows and managing the maturity profiles of financial assets and
liabilities within the bounds of contractual obligations.
Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in
foreign exchange rates. Currency risk arises when future commercial transactions and recognised
assets and liabilities are denominated in a foreign currency that is not the relevant Company’s
functional currency. The Group is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US and Australian 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 15.
Interest rate risk
The interest rate on current debt is fixed.
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.
Page | 39
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
4.
Financial risk management (continued)
Commodity risk
The value of the Group’s exploration and evaluation assets is principally exposed to graphite. The
value of the projects is vulnerable to fluctuations in the prevailing market price of this commodity.
Other market price risk
The Group holds some strategic equity investments in other companies as shown in note 12. The
Group and Company believe that exposure to market price risk from this activity is acceptable.
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 Group’s total credit risk amounts to
the total of the sum of receivables and cash. At the year‐end this amount was £1,086,000 (2020 ‐
£373,000).
The parent Company financial statements include amounts due from subsidiaries as disclosed in
Note 13. The credit risk associated with these receivables has been disclosed as a key estimate
and judgement as 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.
Financial instruments by category
The Group’s financial instruments consist of cash and cash equivalents, trade and other
receivables, borrowings, trade payables and accruals and convertible loan notes. Financial
instruments are initially recognised at fair value with subsequent measurement depending on
classification. 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, save for listed investments and derivative liabilities which are recognised at fair value.
Page | 40
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
4.
Financial risk management (continued)
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 project in Tanzania amounting to £4,727,000 (2020: £4,417,000).
6.
Loss before tax
This is stated after charging:
Directors’ emoluments ‐ fees
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
and after crediting:
Change in fair value of investments
Change in fair value of derivative
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
2021
£’000
129
2020
£’000
127
25
3
8
‐
23
2
176
37
2021
2020
3
5
£’000
£’000
Wages and salaries (including Directors)
141
156
Company
Wages and salaries (including Directors)
50
47
Of the Group wages and salaries £69,000 (2020: £52,000) has been capitalised as exploration
and evaluation expenditure.
Page | 41
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
8.
Remuneration of Directors of the Company
Aggregate emoluments
129
127
The Directors of the Group and Company are considered to be the key management personnel.
9.
Taxation
Continuing operations
Current Tax
2021
£’000
2020
£’000
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% (2020:
19%)
Effects of :
Gains not taxable
Losses carried forward not recognised as a deferred
tax asset
UK Corporation tax
2021
£’000
2020
£’000
(333)
(196)
(63)
(2)
65
‐
(37)
(41)
78
‐
A deferred tax asset of approximately £2,279,000 (2020: £1,667,000) has not been recognised
owing to the uncertainty over the timing of future recoverability. The Group has total carried
forward tax losses of £9,113,000 (2020: £8,772,000).
Page | 42
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
10.
Loss per share
The calculation of total loss per share is based on a loss of £333,000 (2020: £195,000), and on
505,019,431 Ordinary Shares (2020: 443,889,719), being the weighted average number of
Ordinary 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 and warrants to subscribe for 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
Additions
At 31 December
2020
£’000
4,417
38
272
4,727
2019
£’000
3,705
50
662
4,417
Included in additions are capitalised finance costs of £24,000 (2020: £74,000).
As production has not commenced, no amortisation was charged during the year, in accordance
with the Group’s accounting policy.
12. Investments
Non-current asset investments - Group
Fair value
At 1 January 2020
Increase in fair value
At 31 December 2020
Disposals
Decrease in fair value
At 31 December 2021
Listed
investments
£’000
106
176
282
(111)
(33)
138
Page | 43
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
12.
Investments (continued)
Non-current asset investments - Company
At 1 January 2020
Increase in fair value
At 31 December 2020
Disposals
Decrease in fair value
At 31 December 2021
Subsidiaries
(at cost)
£’000
1,600
‐
1,600
‐
‐
1,600
Listed
Investments
(at fair value)
£’000
106
176
282
(111)
(33)
138
Total
£’000
1,706
176
1,882
(111)
(33)
1,738
The listed investment acquired in 2019 comprised 2 million common shares of Forum Energy
Metals Corp, incorporated in Canada and listed on the Toronto Stock Exchange. During the year,
529,500 of these shares were sold, realising a profit on original cost of £137,000.
The subsidiary companies are:
Name and nature of business
Registered Office
Graphite Advancements Pty Ltd
(intermediate holding company)
Armadale Graphite Pty Ltd
(intermediate holding company)
Graphite Advancements (Tanzania)
Limited* (mining project operator)
Battery Graphite Resources Limited†
(mining project operator)
Water Utilities Limited
(in process of dissolution)
216 St Georges Terrace, Perth,
WA 6000, Australia
216 St Georges Terrace, Perth,
WA 6000, Australia
PO Box 105589, Dar es Salaam,
Tanzania
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
100
Ordinary
100
*Held through Graphite Advancements Pty Ltd
† Held through Armadale Graphite Pty Ltd
Under the terms of acquisition of Netcom Global Inc, a former subsidiary company, further
Ordinary Shares in the Company are potentially to be issued to the vendors as follows:
• up to 160 million (now 1.07 million*) Shares to be issued upon the completion of two key
milestones (the “Milestone Shares”):
• 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.
Page | 44
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
12.
Investments (continued)
The Directors assessed a 100% likelihood of the first milestone being achieved and a 50%
likelihood of the second 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.
The conditions applying to the 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 17 for more details on share consolidation and restructure
13.
Trade and other receivables
Group
Other receivables
Total current receivables
Company
Amounts owed by group undertakings
Provision for impairment
Other receivables
Total current receivables
Mahenge Liandu Graphite Project
2021
£’000
150
150
4,325
(865)
3,460
136
3,596
2020
£’000
121
121
3,476
(695)
2,781
112
2,893
The provision against the intercompany loans arises from the application of the expected credit
loss model under IFRS 9. The loans to the subsidiary companies are repayable on demand. As the
subsidiaries do not have sufficient current assets to repay the loans, the loans will be classified as
stage 3 of the expected credit loss model. In the current year £170,000 (2020: £178,000) has been
recognised under the expected credit loss model resulting in an accumulated provision of
£865,000 (2020: £695,000).
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.
Page | 45
Notes to the financial statements (continued)
For the year ended 31 December 2021
14.
Trade and other payables
Group
Trade payables
Other creditors and accruals
Company
Trade payables
Other creditors and accruals
All trade and other payables are due within three months.
15.
Loans
Group and Company
Armadale Capital Plc
2021
£’000
22
57
79
6
51
57
2020
£’000
100
70
170
33
52
85
Loan
10% Notes
(Issued
2016)
£’000
£’000
10%
Notes
(issued
2019)
£’000
Total
£’000
At 1 January 2020
‐
522
345
867
Drawn down
Converted
Accrued interest
Accretion of liability
Interest paid
Capital repaid
At 31 December 2020
Accrued interest
Converted
At 31 December 2021
50
‐
5
‐
(5)
(50)
‐
‐
‐
‐
‐
‐
55
‐
‐
‐
577
35
(612)
-
‐
(371)
17
31
(22)
‐
‐
‐
‐
-
50
(371)
77
31
(27)
(50)
577
35
(612)
‐
Page | 46
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
15.
Loans (continued)
10% Notes (issued 2016)
The 10% Loan Notes issued on 11 July 2016 were part of the consideration for the acquisition of
Graphite Advancements Pty Ltd (see note 12). The Loan Notes are unsecured, accrue 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 issued share capital of the Company. On 11 July 2017,
the loan notes matured. 4,343,724 Ordinary Shares of nominal value 0.1p were issued at a share
price of 2p. All other loan notes were extended by the holders. The Company exercised its right
to convert all the remaining loan notes together with the associated accrued interest into
Ordinary Shares in the Company.
10% Notes (issued 2019)
On 30 October 2019, the Company announced the issue of a new £400,000 convertible 10% loan
note with a maturity date of 6 November 2020. Holders were able at any time up to the 11th
trading day prior to maturity, to convert their notes at a fixed price of 3p per share and all holders
chose to do so. Accordingly, the alternative conversion option whereby, in the final ten trading
days, holders would have been able to convert at a price per share set at 90% of the Volume
Weighted Average Share Price of the previous 10 trading days ceased to apply.
Under IFRS 9, the option to convert constitute an embedded derivative which had to be
separated from the underlying obligation on the basis of its fair value, which value had to be
reassessed at each accounting date (see note 16). The remaining liability element had to be
restored to its original face value by means of accretion charged over the life of the notes. All
remaining notes together with accrued interest were converted during the year ended 31
December 2020.
Loan
On 30 October 2019, the Company agreed the terms of a new 12 month facility of £300,000
which may be drawn down in whole or in part, at any time. If an amount were drawn down an
additional 10% was added to the amount drawn and this became the amount to be repaid. There
were no other charges and no facility fee. The lender had conversion options on the same terms
as the 2019 loan note holders. The loan and accrued interest were repaid in full in 2020.
Page | 47
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
16. Derivative liability
Group and Company
At 1 January 2020
Decrease in fair value
Converted
At 31 December 2020 and 31 December 2021
£’000
119
(37)
(82)
‐
17. Share capital
Ordinary Shares
of 0.01p/0.1p each*
£’000
Number
Deferred Shares
of 0.14p each
Deferred Shares
of 1.4p each
Total
Number
£’000
Number
£’000
£’000
403,563,230
404
1,531,374,350
2,144
42,260,533
592
3,140
24,444,444
30,469,356
13,333,329
471,810,359
18,888,889
17,369,430
30,592,250
24
31
13
472
19
17
31
‐
‐
‐
‐
‐
‐
‐
‐
24
31
‐
1,531,374,350
‐
2,144
‐
42,260,533
‐
592
13
3,208
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
19
17
31
538,660,928
539
1,531,374,350
2,144
42,260,533
592
3,275
At 1 January 2020
Issue of shares:
Placings
On exercise of
warrants
On conversion of loan
notes
At 31 December 2020
Issue of shares:
Placings
On exercise of
warrants
On conversion of loan
notes
At 31 December 2021
*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.
On 28 May 2021, 18,888,889 Ordinary Shares were placed at 4.5p per share raising £850,000.
During the year warrants to subscribe for 17,369,430 Ordinary Shares were exercised raising
£429,000 in total. Details of warrants are in note 18.
On 6 August 2021, all remaining 10% loan notes (issued 2016) together with accrued interest were
converted into 30,592,250 Ordinary Shares at the rate of one share for every 2p of debt.
Page | 48
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
18. Warrants to subscribe for Ordinary Shares
In connection with the placing of Ordinary Shares in February 2019, 72,297,728 warrants to
subscribe for Ordinary Shares in the Company were issued (one for each share placed) at a price
of 2.2p per share with a life to expiry of three years. Outstanding unexercised warrants have,
since the year end, reached their expiry date and lapsed.
In connection with the placing of Ordinary Shares in September 2019, 27,777,778 warrants to
subscribe for Ordinary Shares in the Company were issued (one for each share placed) at a price
of 3.0p per share with a life to expiry of three years.
In connection with the placing of Ordinary Shares in April 2020, 24,444,444 warrants to subscribe
for Ordinary Shares in the Company were issued (one for each share placed) at a price of 3.25p per
share with a life to expiry of two years. Outstanding unexercised warrants have, since the year
end, reached their expiry date and lapsed.
In connection with the placing of Ordinary Shares in May 2021, 18,888,889 warrants to subscribe
for Ordinary Shares in the Company were issued (one for each share placed) at a price of 7.0p per
share with a life to expiry of three years.
A summary of outstanding warrants is as follows
February 2019
Warrants
(2.2p)
72,538,979
‐
(29,469,356)
43,069,623
‐
(12,536,098)
30,533,525
September
2019
Warrants
(3.0p)
27,777,778
‐
‐
27,777,778
‐
(1,499,999)
26,277,779
April 2020
Warrants
(3.25p)
April 2021
Warrants
(7.0p)
‐
24,444,444
‐
24,444,444
‐
(3,333,333)
21,111,111
‐
‐
‐
‐
18,888,889
‐
18,888,889
Total
100,316,757
24,444,444
(29,469,356)
95,291,845
18,888,889
(17,369,430)
96,811,304*
At 1 January 2020
Issued
Exercised
At 31 December 2020
Issued
Exercised
At 31 December 2021
* representing 17.9% (2020: 20.2%) of the issued share capital of the Company
The estimated fair value of the May 2021 warrants, calculated using the Black‐Scholes model, was
£266,000. This amount was charged to the share premium account to recognise the cost of issuing
the warrants.
The inputs to the model were as follows:
Share price
Subscription price
Expected volatility
Risk free rate of interest
Expected dividend yield
Expected life
4.5p
7.0p
67%
0.16%
0%
3 years
Expected volatility was determined by reference to the historical volatility of the Company’s share
price.
Page | 49
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
19.
Share based payment arrangements
A summary of outstanding options is as follows:
Exercise
price
At 1
January
2020
Exercised
Lapsed
At 31 December 2020
and 31 December
2021
3p
4p
4p
5p
2.2p
2p
15p
15p
250,000
250,000
250,000
250,000
5,000,000
‐
‐
‐
‐
‐
1,000,000
(1,000,000)
66,667
300,000
‐
‐
(250,000)
(250,000)
(250,000)
(250,000)
‐
‐
‐
‐
‐
‐
‐
‐
5,000,000
‐
66,667
300,000
Directors
ES Mahede
Granted
10.08.16
Granted
10.08.16
N Johansen
Granted
18.10.16
Granted
18.10.16
P Johnson
Granted
11.03.19
W Frewen
Granted
21.07.16
Consultants
Granted
01.10.13
Granted
19.11.14
7,366,667
(1,000,000)
(1,000,000)
5,366,667*
The number of options and their exercise prices have been adjusted for the effects of the share
capital sub‐division on 28 June 2013 and the share capital consolidation and reorganisation on 22
June 2015
*representing 1.00% (2020: 1.33%) 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 3p (2020:3p).
The Johnson options have a life of three years from the date of grant (and have accordingly
expired since the year end). The consultant options have a life of 10 years. All options are time
based with no other conditions.
Page | 50
Armadale Capital Plc
Notes to the financial statements (continued)
For the year ended 31 December 2021
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 25 and 26.
21.
Related party transactions
In respect of the Company, amounts, net of provisions, due from subsidiary undertakings were
£3,460,000 (2020: £2,781,000), the movement being amounts lent to the subsidiaries less an
increase in provisions.
22. Ultimate controlling party
There was no ultimate controlling party during the year.
23.
Subsequent events
Since the year end, the Company has received notices of exercise in respect of 48.9 million
warrants to subscribe for Ordinary Shares in the Company, raising cash of £1,296,000.
Page | 51
Armadale Capital Plc
Notice of Annual General Meeting
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 Suite 11, Level 2, 23 Railway Road, Subiaco, Western Australia 2016 on 20 June 2022 at 17.00
AWST (10:00 BST) 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.
As a result of the ongoing coronavirus global pandemic and the measures put in place to restrict public
gatherings and all but essential travel, for the safety of our shareholders, our advisers and the general
public, attendance at the Annual General Meeting in person will not be possible and shareholders,
proxies and corporate representatives will not be permitted entry. Shareholders are encouraged to
vote by proxy in advance of the meeting following the procedure set out below. Voting at the meeting
will be carried out by way of a poll so that proxy votes can be taken into account. The results of the poll
will be announced as soon as practicable after the meeting.
ORDINARY BUSINESS
1. To receive the report of the Directors and the audited financial statements of the Company for
the year ended 31 December 2021.
2. To reappoint Matt Bull as a Director of the Company, who resigns by rotation and offers himself
for reappointment under the Articles of Association of the Company.
3. To reappoint James Cowper Kreston 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
4. 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
£200,000 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 | 52
Armadale Capital Plc
SPECIAL RESOLUTION
5. 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 £200,000;
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
20 May 2022
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.
Page | 53
Armadale Capital Plc
Appointment of proxies
2.
If you are a member of the Company at the time set out in note 1 above, whether or not you are
able to attend the meeting, you may use the enclosed form of proxy to appoint a proxy to exercise
all or any of your rights to attend, speak and vote at the Meeting and you should have received a
proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out
in these notes and the notes to the proxy form.
3. A proxy does not need to be a member of the Company but must attend the Meeting to represent
you. Details of how to appoint the Chairman of the Meeting or another person as your proxy using
the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your
behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and
give your instructions directly to them.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached
to different shares. You may not appoint more than one proxy to exercise rights attached to any
one share. To appoint more than one proxy, please contact the registrars of the Company, Share
Registrars Limited on 01252 821 390.
5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation
of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain
from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks
fit in relation to any other matter which is put before the Meeting.
Appointment of proxy using hard copy proxy form
6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or
withhold their vote.
To appoint a proxy using the proxy form, the form must be: completed and signed;
sent or delivered to Share Registrars Limited at 3 Millennium Centre, Crosby Way, Farnham, Surrey,
GU9 7XX or by email to voting@shareregistrars.uk.com; and received by Share Registrars Limited
no later than 48 hours (excluding non‐business 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 first named 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.
Page | 54
Armadale Capital Plc
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 3 Millennium Centre, Crosby Way, Farnham, Surrey,
GU97XX or by email to voting@shareregistrars.uk.com. In the case of a member which is a company,
the revocation notice must be executed under its common seal or signed on its behalf by an officer
of the Company or an attorney for the Company. Any power of attorney or any other authority
under which the revocation notice is signed (or a duly certified copy of such power or authority)
must be included with the revocation notice.
In either case, the revocation notice must be received by Share Registrars Limited no later than 48
hours (excluding non‐business 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 16 May 2022 the Company’s issued share capital comprised 587,529,895 Ordinary Shares. Each
Ordinary Share carries the right to one vote at a general meeting of the Company and, therefore,
the total number of voting rights in the Company as at 16 May 2022 is 587,529,895.
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.
Page | 55
Armadale Capital Plc
CREST members and, where applicable, their CREST sponsors or voting service providers should note
that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any
particular messages. Normal system timings and limitations will therefore apply in relation to the
input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member or sponsored member or has appointed a
voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s)
take(s)) such action as shall be necessary to ensure that a message is transmitted by means of CREST
by any particular time. In this connection, CREST members and, where applicable, their CREST
sponsors or voting service providers are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
Page | 56