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2023 ReportArmadale Capital Plc Annual Report and Accounts 31 December 2023 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 .......................................................................................................... 51 Page | 2 Officers and Professional Advisers Directors Matt Bull Greg Entwistle Secretary Timothy Jones Registered office I Arbrook Lane Esher Surrey, KT10 9EG Nominated Adviser and Broker Cavendish Capital Markets Limited 1 Bartholomew Close London EC1A 7BL Auditors James Cowper Kreston Audit 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 Page | 3 Armadale Capital Plc Strategic Report For the year ended 31 December 2023 Armadale Capital plc (LON: ACP), the AIM quoted investment group primarily 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 2023. Operational and Corporate Highlights for Year Ended 31 December 2023 While it was a difficult year for the company and the graphite developers in general progress was made in delivering key accretive milestones in advancing the Mahenge Liandu Graphite Project in Tanzania 2. 1. Armadale is accessing its option to recommence the FEED study now that Blackrock Mining (ASX:BKT) have progressed project financing. This will allow the company to optimise the Definitive Feasibility Study, ensuring further de-risking of the production process. In Logistics, routes for the product were assessed to determine the optimum methods to ensure the final product will enter the market at the desired price level. In light of the advancement of regional infrastructure projects, Armadale are positioned to take advantage of future reductions in CAPEX and OPEX, with final results to be incorporated into an updated DFS. 3. The Group is continuing discussions with several potential financing partners regarding the debt and equity funding required for project development. Armadale remains committed to sourcing terms that would prove to be friendly to shareholders and reduce dilutionary risk. 4. The significantly improved market fundamentals for graphite concentrates has made a steady impact on the interest from stakeholders capable of providing long-term project finance. 5. Armadale continued to improve ESG credentials by continuing to collect environmental baseline data for the compliance of the mining lease, which will also assist in the design and planning of the proposed mining operations. 6. Through the year, the Company’s primary focus was on securing project development funding for the Mahenge Liandu Graphite project while advancing the permitting and local community engagement. Post Period End 1. The Company continues to collect environmental baseline data as is required for the compliance of the mining lease and to assist in the design and planning of the proposed mining operations. In addition, the base line data for temperature, pressure, wind, moon phase, humidity, solar radiation, rainfall and stream flow data assists the local community to have access to regional weather data for local planning requirements in the Mahenge region. Page | 4 Armadale Capital Plc Strategic Report (Continued) For the year ended 31 December 2023 2. Earn-in of the high-grade “Canyon Silver” project in Idaho, USA. This Silver-Lead-Zinc Project is located in the heart of a Silver producing district and provides Armadale with a pathway to reducing the dilutionary risk in developing Mahenge. 3. Logistics routes for the Mahenge Liandu product continue to be assessed to determine the optimum methods to ensure the final product will enter the market at the desired price level. 4. At Canyon silver work commenced to re-open Number 2 and Number 3 portals to directly access the historical mineralisation. This includes re-timbering, laying track and renovating the hoist room. Electrification, air and power line installation are also part of the re-opening process. 5. At the Canyon Silver Project historically trucked grades include hand sorted ore at 36 Oz/t (over 1,000 g/t) Ag, with 66% Pb and 10% Zn, in various prior truckloads. These historic hand sorted ore batches represent the possibility of a high-grade, simple operation to truck ore to nearby mills. 6. Addition of Greg Entwistle to the board. Greg’s addition to the board brings vast engineering experience to advance commercial production in a shareholder friendly manner. 7. Share subscription for £650,000 to procure Canyon Silver and advance Mahenge. This amount was raised in a challenging market and was Armadale’s first fundraise in over 3 years. £100,000 of the issue was subscribed for by the Executive Director, Matt Bull. 8. Ongoing review of quoted portfolio; the Directors are confident that there are opportunities for capital gains. Investments 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. In the 2023 year, 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. Passively managed investments The Company has a small portfolio of quoted investments, valued at £249,000 on 20 June 2024, 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. Page | 5 Armadale Capital Plc Strategic Report (Continued) For the year ended 31 December 2023 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: 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. Obtaining development funding for the project is a significant risk for the company and while some funding is becoming available to graphite developers there has been limited projects that have successfully commenced production over the last few years. 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 government policies which are outside its control. The mining regulation changes in Tanzania are still being evaluated, however they seem to have minimal impact on investment in graphite mining. The Group continues to monitor the implementation of the changes to evaluate and mitigate sovereign risks. Some of the mitigation strategies the Group applies in its present stage of development include, among others: Proactive management to reducing fixed costs. Rationalisation of all capital expenditures. Maintaining strong relationships with government (employing local staff and partial government ownership), which improves the Group’s position as a preferred small mining partner. Engagement with local communities to ensure our activities provide value to the communities where we operate. Page | 6 Armadale Capital Plc Strategic Report (Continued) For the year ended 31 December 2023 Alternative and continued funding activities with a number of options to secure future funding to continue as a going concern. The Directors regularly monitor such risks and will take actions as appropriate to mitigate them. The Group manages its risks by seeking to ensure that it complies with the terms of its agreements, and through the application of appropriate policies and procedures, and via the recruitment and retention of a team of skilled and experienced professionals. Provision for impairment As is explained in accounting policy note 2.12 to the financial statements, at each reporting period, the directors carry out a review of the carrying value of the Company’s assets to establish if there is any indication that the value may have become impaired. In the opinion of the directors, the continuing lack of certainty over the availability of the finance that will be needed to develop the Mahenge project together with the fall in the market value of the Company’s shares constitute indicators of a possible impairment in the carrying value of the project’s exploration and evaluation assets. Whilst the directors remain optimistic that the project will ultimately prove to be capable of profitable development, in light of these indicators of possible impairment, they have decided to make a provision for impairment of the assets and, in the absence of an independent valuation, they have provided in full against the exploration and evaluation costs of £5,377,000. If subsequent reviews indicate that the carrying value should be reinstated in part or in full, this provision will be released accordingly. 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 — Page | 7 Armadale Capital Plc Strategic Report (Continued) For the year ended 31 December 2023 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. 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 a policy of employing Tanzanians where possible in country. 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 as well as monitoring the weather and rainfall on site. 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. Page | 8 Armadale Capital Plc Strategic Report (Continued) For the year ended 31 December 2023 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 2024, Nicholas Johansen resigned as a director and Greg Entwhistle was appointed. The Board continues to consider potential replacements for other former Board members with a focus on a potential appointment of a UK based director. Financial Results For the year ended 31 December 2023 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 £6.2 million (2022: £0.206 million) for the year ended 31 December 2023, including the impairment provision of £5.4 million referred to above. Expenditure on the Mahenge Liandu project during the year amounted to £0.114 million (2022: £0.468 million) At 31 December 2023, the Group had cash of £45,000 (2022: £1,406,000) and no debt finance (2021: nil). At 27 June 2024 the Group had cash of £125,000 and investments worth £249,000 Outlook While the market conditions in the junior exploration sector have been difficult over the past year, the Company remains optimistic that the growth in the demand for graphite will continue to increase allowing the development of our flagship project. The Company notes increased investment activity and, in particular, the commencement of production at Walkabout Resources’ Tanzanian graphite project. Matt Bull Director 28 June 2024 Page | 9 Armadale Capital Plc Directors’ Report For the year ended 31 December 2023 The Directors submit their report and the financial statements of Armadale Capital Plc (‘Armadale’ or the ‘Company’) for the year ended 31 December 2023. 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 2023 was £5,886,000 (2022, £206,000). 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, as explained in the Strategic Report and in note 5 to the financial statements, the Directors have concluded that an impairment charge of £5,377,000 in respect of the exploration and evaluation assets is required (2022, £nil). Corporate governance As an AIM company, Armadale Capital Plc is required to adopt a recognised Corporate Governance Code and the Company has chosen to apply the Quoted Companies Alliance (“QCA”) Corporate Governance Code. The Company has published its compliance with each of the 10 principles of the QCA Code on the Company’s website, including reasons for departure with certain principles. The website disclosures can be found at: http://armadalecapitalplc.com/corporate_governance. Business review A review of the Group’s operations and plans for the future of the business is included in the Strategic Report. Directors The following Directors have held office during the year: Nicholas Johansen (resigned 24 April 2024) Matt Bull Greg Entwistle was appointed as a director on 24 April 2024. Page | 10 Armadale Capital Plc Directors’ Report (continued) For the year ended 31 December 2023 Directors’ interests Directors’ interests, including family interests, in the Ordinary Share capital, were as follows: N Johansen M Bull Substantial shareholdings 31 December 2023 No: 2,012,122 47,783,284 31 December 2022 No: 2,012,122 47,783,284 At 27 June 2024 the Company was aware of the following interests in 3% or more of the issued share capital of the Company: Interactive Investor Services Clients HSDL Clients Hargreaves Lansdown Clients Barclays Clients Matt Bull Vidacos Clients Aurora Clients Pershing Clients Lawshare Clients James Brearley Clients 19.2% 14.2% 13.1% 9.0% 8.1% 7.1% 5.1% 4.3% 3.5% 3.0% Issue of Shares No Ordinary Shares were issued during the year. 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 16 and 17 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. Page | 11 Armadale Capital Plc Directors’ Report (continued) For the year ended 31 December 2023 Remuneration of Directors The directors received the following fees by way of remuneration N Johansen M Bull 2023 £’000 32 101 2022 £’000 30 93 The Remuneration of Directors is determined by the Board within the limits set out in the Articles of Association of the Company. Issue of Shares No Ordinary Shares were issued during the year. 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 16 and 17 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. Page | 12 Armadale Capital Plc Directors’ Report (continued) For the year ended 31 December 2023 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 2023 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 2023, the Group had cash of £45,000 (2022, £1,046,000) and no debt finance (2022, nil). In March 2024, the company secured new equity finance of £650,000 of which £150,000 is yet to be received. At 27 June 2024, the Company had cash of £125,000, a possible further £150,000 which the Company hopes to receive from the equity placing and listed investments with a traded value of £249,000. 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 from the fundraising and cash that can be realised from listed investments should be 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. Should the remaining £150,000 not be received then further funds will be required in less than twelve months. The Company is considering options to JV or sell some of its assets to reduce ongoing expenditure and bring in additional funds to enable it develop the Company’s assets as planned. 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 significant potential of the Company’s investment projects 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 can 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 significant doubt over the Group’s and Company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group or Company were unable to continue as a going concern. Page | 14 Armadale Capital Plc Directors’ Report (continued) For the year ended 31 December 2023 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 On 24 April 2024, the Company announced: that it had entered into a binding heads of terms agreement to “earn-in” over 50% in Africo American Incorporated, the holding company of the Canyon Silver lead, zinc and silver exploration asset based in Norther Idaho, USA a subscription to raise £650,000 of which £150,000 remains outstanding. Further details of these events are set out in the Strategic Report. Directors’ Confirmation The Directors who held office at the date of approval of this Directors’ Report confirm that so far as each Director is aware: (a) there is no relevant audit information of which the Company’s auditors are unaware; and (b) each Director has taken all the steps that ought to have been taken as a director, including making appropriate enquiries of fellow Directors and of the Company’s auditors that purpose, in order to be aware of any information needed by the Company’s auditors in connection with preparing their report and to establish that the Company’s auditors are aware of that information. for By order of the Board Timothy Jones Secretary 28 June 2024 Page | 15 Armadale Capital Plc Independent Auditor’s Report to the Shareholders of Armadale Capital Plc For the year ended 31 December 2023 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 2023 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 2023 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 United Kingdom 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. Page | 16 Armadale Capital Plc Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued) For the year ended 31 December 2023 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. Page | 17 Armadale Capital Plc Independent Auditor’s Report to the Shareholders of Armadale Capital Plc (Continued) For the year ended 31 December 2023 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 enquires 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 reviewed and discussed the directors’ assessment of impairment. We 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 an 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 2023 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 £125,000 and for the parent company financial statements to be £100,000 based upon 2% of net assets, before impairment. 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 entity in natural resources development and investment, 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 £5,000. 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 2023 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 2023 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 Audit Statutory Auditors Reading Bridge House George Street Reading RG1 8LS 28 June 2024 Page | 21 Consolidated Statement of Comprehensive Income For the year ended 31 December 2023 Administrative expenses Change in fair value of investments Impairment of exploration and evaluation assets 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)/profit attributable to the equity holders of the parent company Note 11 5 5 8 Loss per share attributable to the equity holders of the parent company Basic and diluted loss per share 9 The notes on pages 29 to 50 form part of the financial statements. Armadale Capital Plc 2023 £’000 (386) (123) (5,377) (5,886) - (5,886) (359) (6,245) Pence (1.00) 2022 £’000 (309) 103 - (206) - (206) 252 46 Pence (0.04) Page | 22 Consolidated Statement of Financial Position At 31 December 2023 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 Total Liabilities Armadale Capital Plc Note 10 11 12 14 17 17 17 17 17 13 2023 £’000 - 942 942 20 45 65 1,007 3,324 25,153 286 276 (41) (28,079) 919 88 88 2022 £’000 5,483 562 6,045 150 1,046 1,196 7,241 3,324 25,153 286 362 318 (22,279) 7,164 77 77 Total equity and liabilities 1,007 7,241 The notes on page 29 to 50 form part of the financial statements. Approved by the Board and authorised for issue on 28 June 2024 Signed on behalf of the Board M Bull Director G Entwistle Director Page | 23 Company Statement of Financial Position At 31 December 2023 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 Total liabilities Armadale Capital Plc Note 11 12 12 14 17 17 17 17 13 2023 £’000 334 802 1,136 3 29 32 2022 £’000 1,769 4,426 6,195 126 650 776 1,168 6,971 3,324 25,153 286 276 (27,947) 1,092 76 76 3,324 25,153 286 362 (22,228) 6,897 74 74 Total equity and liabilities 1,168 6,971 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 £5,805,000 (2022: £238,000) has been included in the financial statements of the parent company. The notes on pages 29 to 50 form part of the financial statements. Approved by the Board and authorised for issue on 28 June 2024 Signed on behalf of the Board M Bull Director G Entwistle Director Company Registration No. 5541602 Page | 24 Armadale Capital Plc Consolidated Statement of Changes in Equity For the year ended 31 December 2023 Share Capital Share Premium Shares to be issued £’000 3,275 £’000 23,906 £’000 286 - - - 49 - 49 - - - 1,247 - 1,247 - - - - - - Share Option and Warrant Reserve £’000 925 - - - - (563) (563) Foreign Exchange Reserve Retained Earnings Total £’000 66 - 252 252 - - - £’000 (22,636) (206) - (206) - 563 563 £’000 5,822 (206) 252 46 1,296 - 1,296 At 1 January 2022 Loss for the year Other comprehensive income Total comprehensive income for the year Issue of shares and warrants Transfer on exercise and expiry of warrants Total other movements At 31 December 2022 3.324 25,153 286 362 318 (22,279) 7,164 Loss for the year Other comprehensive loss Total comprehensive loss for the year Transfer on exercise and expiry of warrants Total other movements - - - - - - - - - - - - - - - At 31 December 2023 3,324 25,153 286 - - - (86) (86) 276 - (359) (359) - - (5,886) - (5,886) (5,886) (359) (6,245) 86 86 - - (41) (28,079) 919 The notes on pages 29 to 50 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 2023 Share Capital Share Premium Shares to be issued £’000 3,275 £’000 23,906 £’000 286 - - 49 - 49 - - 1,247 - 1,247 - - - - - Share Option and Warrant Reserve £’000 925 - - - (563) (563) Retained Earnings Total £’000 (22,553) (238) (238) - 563 563 £’000 5,839 (238) (238) 1,296 - 1,296 At 1 January 2022 Loss for the year Total comprehensive loss for the year Issue of shares and warrants Transfer on exercise and expiry of warrants Total other movements At 31 December 2022 3,324 25,153 25,153 286 362 286 (22,228) 362 6,897 (22,228) 6,897 Loss for the year Total comprehensive loss for the year Transfer on exercise and expiry of warrants Total other movements - - - - - - - - - At 31 December 2023 3,324 25,153 286 (5,805) (5,805) (332) (332) 86 86 - - (22,947) 1,092 - (86) (86) 276 The notes on pages 29 to 50 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 2023 Cash flows from operating activities Loss before taxation Adjustment for: Impairment of exploration and evaluation assets Change in fair value of investments Bad debts written off Changes in working capital Receivables Payables Net cash used in operating activities Cash flows from investing activities Expenditure on exploration and evaluation assets Purchase of listed investments Sale of listed investments Net cash used in investing activities Cash flows from financing activities Proceeds from share issues Net cash from financing activities Net (decrease)/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 50 form part of the financial statements. Armadale Capital Plc 2023 £’000 2022 £’000 (5,886) 5,377 125 120 (264) 11 10 (243) (234) (663) 139 (758) - - (1,001) 1,046 45 (206) - (102) - (308) (11) 12 (307) (518) (411) 89 (840) 1,307 1,307 160 886 1,046 Page | 27 Company Statement of Cash Flows For the year ended 31 December 2023 Cash flows from operating activities Loss before taxation Adjustment for: Impairment charges Change in fair value of investments Bad debts written off Changes in working capital Receivables Payables Net cash used in operating activities Cash flows from investing activities Advances to subsidiaries Purchase of listed investments Sale of listed investments Net cash used in investing activities Cash flows from financing activities Proceeds from share issues Net cash from financing activities Net (decrease)/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 50 form part of the financial statements. Armadale Capital Plc 2023 £’000 (5,805) 5,534 4 120 (147) 2 3 (142) (310) (280) 111 (479) - - (621) 650 29 2022 £’000 (238) 241 (120) - (117) (1) 17 (101) (1,207) - 89 (1,118) 1,307 1,307 88 562 650 Page | 28 Armadale Capital Plc Notes to the financial statements For the year ended 31 December 2023 1. Country of incorporation The Company was incorporated in the United Kingdom as a Public Limited Company on 19 August 2005. 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 2023, the Group had cash of £45,000 (2022, £1,046,000) and no debt finance (2022, nil). In March 2024, the company secured new equity finance of £650,000 of which £150,000 is yet to be received. At 27 June 2024, the Company had cash of £125,000, a possible further £150,000 which the Company hopes to receive from the equity placing and listed investments with a traded value of £249,000. 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 from the fundraising and cash that can be realised from listed investments should be 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. Should the remaining £150,000 not be received then further funds will be required in less than twelve months. The Company is considering options to JV or sell some of its assets to reduce ongoing expenditure and bring in additional funds to enable it develop the Company’s assets as planned. 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 significant potential of the Company’s investment projects 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 can 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 significant doubt over the Group’s and Company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group or Company were unable to continue as a going concern. Page | 29 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 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. 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. Page | 30 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 2. Accounting policies (continued) 2.6. Foreign currencies (continued) For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are expressed in Pounds using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income. 2.7. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand, with a maturity date of less than three months from inception. 2.7. Share-based payments IFRS 2 ‘Share-based Payment’ requires the recognition of equity-settled share-based payments at fair value at the date of grant and the recognition of liabilities for cash-settled share based payments at the current fair value at each reporting date. The Group provides benefits to employees and service providers (including senior executives) of the Group in the form of share based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). Where the equity-settled transactions are share options their cost is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than market conditions linked to the price of the shares of the Company, if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or other service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The profit and loss account charge or credit for a period represents the movements in cumulative expense recognised as at the beginning and end of that period. Page | 31 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 2. Accounting polices (continued) 2.7. Share-based payments (continued) 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. 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. Page | 32 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 2. Accounting polices (continued) 2.9. Taxation Deferred tax (continued) Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax and current tax assets and liabilities are offset when there is a legally enforceable right to set off when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is included in the accounting for the business combination. 2.10. Exploration and evaluation costs Once an exploration licence or an option to acquire an exploration licence has been obtained, all costs associated with exploration and evaluation are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses and a pro-rata share of the Group’s finance costs but not general overheads. If a mining property development project is successful, the related expenditures will be amortised over the estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished, a project is abandoned, or is considered to be of no further commercial value to the Company, the related costs will be written off to the statement of comprehensive income in the period the impairment is identified. Unevaluated mineral properties are assessed at reporting date for impairment in accordance with the policy set out below. If commercial reserves are developed, the related deferred development and exploration costs are then reclassified as development and production assets within property, plant and equipment. Page | 33 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 2. Accounting polices (continued) 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. 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. Page | 34 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 2. Accounting polices (continued) 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 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. 2.15. New accounting standards There have been no significant changes in accounting standards effective for the year ended 31 December 2023. A number of amendments to accounting standards have been published that are not yet effective and have not been adopted early. These changes, which are listed below, are not expected to have a material impact on the Group’s consolidated financial statements: Effective for periods commencing on or after 1 January 2024: Amendment to IFRS 16 regarding the accounting for leases in respect of sale and leaseback transactions Amendments to IAS 1 “Presentation of Financial Statements” regarding the classification of current and non-current liabilities, and the classification of liabilities that are subject to covenants Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures” regarding supplier finance arrangements Page | 35 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 2. Accounting polices (continued) 2.15. New accounting standards (continued) Amendments to IAS 21 “The effects of changes in foreign exchange rates” to require reporting entities to take a consistent approach in assessing the exchangeability of currencies and the related disclosures. Amendments to IAS 12 “Income Taxes” regarding the impact international tax reform Page | 36 Notes to the financial statements (continued) For the year ended 31 December 2023 3. Significant judgements and sources of estimation uncertainty Armadale Capital Plc In preparing the annual financial statements of the Group, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. The Directors consider that the 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, the uncertainty over the availability of development finance and the fall in the Company’s share price, were of the opinion that there were indicators of impairment in respect of the Mahenge project. Accordingly, a full provision against the costs of exploration and evaluation has been made. 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. In view of the decision to provide for the impairment of the exploration and evaluation assets, full provision has been made in the parent company balance sheet against the cost of investment in the operating subsidiaries. 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. Page | 37 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 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: 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. 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 | 38 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 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 £65,000 (2022 - £1,196,000). 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 and trade payables and accruals. 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 | 39 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 4. Financial risk management (continued) Segmental information Costs incurred in developing the Group’s exploration projects are initially capitalised in full but have now been subject to a full provision for impairment. Accordingly, the expenses reported in the Consolidated Statement of Comprehensive Income represent central Group overheads and the amount provided in respect of impairment. In terms of assets and liabilities, the exploration and evaluation assets relating to the Group’s project in Tanzania amount, after provision for impairment, to £nil (2022: £5,483,000). Other than these, the only material asset category was the Group’s liquid and near liquid resources, being cash and listed investments, amounting to £987,000 (2022, £1,605,000). 5. 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 Change in fair value of investments Impairment of exploration and evaluation assets (see note 10) 6. Employees The average monthly number of persons (including Directors) employed by the Group and the Company during the year was: Management Employment costs Group 2023 £’000 133 2022 £’000 123 31 28 - 123 5,377 3 (103) - 2023 2022 3 3 £’000 £’000 Wages and salaries (including Directors) 148 136 Company Wages and salaries (including Directors) 148 77 Of the Group wages and salaries £133,000 (2022: £93,000) has been capitalised as exploration and evaluation expenditure. Page | 40 Notes to the financial statements (continued) For the year ended 31 December 2023 7. Remuneration of Directors of the Company Aggregate emoluments Armadale Capital Plc 2023 £’000 133 2022 £’000 123 The Directors of the Group and Company are considered to be the key management personnel. 8. Taxation Continuing operations Current Tax 2023 £’000 2022 £’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 the small profit rate of UK corporation tax of 19% (2022: 19%) Effects of : Losses not allowable Gains not taxable Losses carried forward not recognised as a deferred tax asset UK Corporation Tax 2023 £’000 2022 £’000 (5,886) (206) (1,118) 1,045 - 73 - (39) - (20) 59 - A deferred tax asset of approximately £2,411,000 (2022: £2,338,000) has not been recognised owing to the uncertainty over the timing of future recoverability. The Group has total carried forward tax losses of £9,808,000 (2022: £9,422,000). The headline rate of UK Corporation Tax increased to 25% from April 2023, though the rate for small profits (being £50,000 or less) remained at 19% Page | 41 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 9. Loss per share The calculation of total loss per share is based on a loss of £5,886,000 (2022: £206,000), and on 587,529,895 Ordinary Shares (2022: 587,529,895), 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. 10. Exploration and evaluation assets Group Cost At 1 January Exchange movements Additions Provision for impairment At 31 December 2023 £’000 5,483 (220) 114 (5,377) - 2022 £’000 4,727 288 468 - 5,483 As production has not commenced, no amortisation was charged during the year, in accordance with the Group’s accounting policy. As explained in the Strategic Report and in accounting policy note 2.12, at each reporting period, the directors carry out a review of the carrying value of the Company’s assets to establish if there is any indication that the value may have become impaired. In the opinion of the directors, the continuing lack of certainty over the availability of the finance that will be needed to develop the Mahenge project together with the fall in the market value of the Company’s shares constitute indicators of a possible impairment in the carrying value of the project’s exploration and evaluation assets. Whilst the directors remain optimistic that the project will ultimately prove to be capable of profitable development, in light of these indicators of possible impairment, they have decided to make a provision for impairment of the assets and, in the absence of an independent valuation, they have provided in full against the exploration and evaluation costs. If subsequent reviews indicate that the carrying value should be reinstated in part or in full, this provision will be released accordingly. Page | 42 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 11. Investments Non-current asset investments - Group Fair value At 1 January 2022 Additions Disposals Increase in fair value At 31 December 2022 Exchange movements Additions Disposals Decrease in fair value At 31 December 2023 Listed investments £’000 138 411 (52) 65 562 (19) 663 (84) (180) 942 Page | 43 Notes to the financial statements (continued) For the year ended 31 December 2023 Non-current asset investments - Company At 1 January 2022 Disposals Increase in fair value At 31 December 2022 Additions Disposals Decrease in fair value Provision for impairment At 31 December 2023 Armadale Capital Plc Subsidiaries (at cost) £’000 1,600 - - 1,600 - - - (1,600) - Listed Investments (at fair value) £’000 138 (52) 83 169 280 (72) (43) - 334 Total £’000 1,736 (52) 83 1,769 280 (72) (43) (1,600) 334 Page | 44 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 11. Investments (continued) 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) 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 Class of shares Ordinary % held 100 Ordinary 100 Ordinary 100 Ordinary 100 *Held through Graphite Advancements Pty Ltd † Held through Armadale Graphite Pty Ltd Following the decision to provide fully for the impairment of the exploration and evaluation assets in the consolidated statement of financial position, it was necessary to provide fully for impairment of the parent company’s investment in its subsidiaries. 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. 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 15 for more details on share consolidation and restructure Page | 45 Notes to the financial statements (continued) For the year ended 31 December 2023 12. 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 Armadale Capital Plc 2023 £’000 20 20 5,842 (5,040) 802 3 805 2022 £’000 150 150 5,532 (1,106) 4,426 126 4,552 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 £3,934,000 (2022: £241,000) has been recognised under the expected credit loss model resulting in an accumulated provision of £5,040,000 (2022: £1,106,000). 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 an indication of impairment of the exploration and evaluation assets in the Group accounts. Accordingly, provision has been made against the intercompany loans of an amount sufficient to reduce the net amounts receivable to the aggregate net assets, excluding exploration and evaluation expenditure, of the subsidiaries. Page | 46 Notes to the financial statements (continued) For the year ended 31 December 2023 13. 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. Armadale Capital Plc 2023 £’000 14 74 88 14 62 76 2022 £’000 8 69 77 8 66 74 14. Share capital At 1 January 2022 Issue of shares: On exercise of warrants At 31 December 2022 and 31 December 2023 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 £’000 538,660,926 539 1,531,374,350 2,144 42,260,533 592 3,275 48,868,969 587,529,895 49 588 - 1,531,374,350 - 2,144 - 42,260,533 - 592 49 3,324 *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. During the year ended 31 December 2022 warrants to subscribe for 48,868,969 Ordinary Shares were exercised raising £1,296,000 in total. Details of warrants are in note 16. Page | 47 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 15. 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 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. Outstanding unexercised warrants have reached their expiry date and lapsed. 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 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. Since the year-end, the outstanding unexercised warrants have reached their expiry date and lapsed. A summary of outstanding warrants is as follows February 2019 Warrants (2.2p) 30,533,525 (27,591,193) (2,942,332) September 2019 Warrants (3.0p) 26,277,779 (833,333) (25,444,446) April 2020 Warrants (3.25p) April 2021 Warrants (7.0p) 21,111,111 (20,444,443) (666,668) 18,888,889 - - Total 96,811,304 (48,868,969) (29,053,446) - - - 18,888,889 18,888,889* At 1 January 2022 Exercised Expired At 31 December 2022 and 31 December 2023 * representing 3.21% (2022: 3.21%) of the issued ordinary share capital of the Company Page | 48 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 16. Share based payment arrangements A summary of outstanding options is as follows: Lapsed At 1 January 2022 At 31 December 2022 Lapsed At 31 December 2023 5.000,000 (5,000,000) - - 66,667 300,000 - - 66,667 (66,667) 300,000 300,000 - - Former Director P Johnson Granted 11.03.19 Consultants Granted 01.10.13 Granted 19.11.14 5,366,667 (5,000,000) 366,667 (66,667) 3,366,667* 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 0.01% (2022: 0.57%) of the issued share capital of the Company The outstanding options held at the year-end were exercisable at a price of 15p (2022: 15p). The outstanding options have a life of 10 years and are time based with no other conditions. 17. 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. 18. Related party transactions In respect of the Company, amounts, net of provisions, due from subsidiary undertakings were £802,000 (2022: £4,426,000), the movement being amounts lent to the subsidiaries less an increase in provisions. 19. Ultimate controlling party There was no ultimate controlling party during the year. Page | 49 Armadale Capital Plc Notes to the financial statements (continued) For the year ended 31 December 2023 20. Subsequent events On 24 April 2024, the Company announced: that it had entered into a binding heads of terms agreement to “earn-in” over 50% in Africo American Incorporated, the holding company of the Canyon Silver lead, zinc and silver exploration asset based in Norther Idaho, USA a subscription to raise £650,000 Further details of these events are set out in the Strategic Report. Page | 50 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 Level 2, 23 Railway Road, Subiaco, Western Australia 6008 on 30 July 2024 at 16.00 AWST (9.00 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. ORDINARY BUSINESS 1. To receive the report of the Directors and the audited financial statements of the Company for the year ended 31 December 2023. 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 Greg Entwistle as a Director of the Company, who, having been appointed during the previous 12 months, offers himself for reappointment under the Articles of Association of the Company 4. To reappoint James Cowper Kreston Audit as auditors of the Company to act until the conclusion of the next Annual General Meeting and to authorise the Directors to determine the remuneration of the auditors. SPECIAL BUSINESS ORDINARY RESOLUTION 5. That in substitution for all existing and unexercised authorities, the Directors of the Company be and they are hereby generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006 (‘the Act’) to exercise all or any of the powers of the Company to allot Relevant Securities (as defined in this Resolution) up to a maximum nominal amount of £350,000 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. SPECIAL RESOLUTION 6. That in substitution for all existing and unexercised authorities and subject to the passing of the preceding Resolution, the Directors of the Company be and they are hereby empowered pursuant to section 570 of the Act to allot equity securities (as defined in section 560 of the Act) Page | 51 Armadale Capital Plc 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 £350,000; 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 28 June 2024 By order of the Board Timothy Jones Company Secretary Notes to the Notice of Annual General Meeting Entitlement to attend and vote 1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members registered on the Company’s register of members 48 hours before the time of the Meeting shall be entitled to attend and vote at the Meeting. Appointment of proxies 2. If you are a member of the Company at the time set out in note 1 above, whether or not you are able to attend the meeting, you may use the enclosed form of proxy to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form. 3. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them. 4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the registrars of the Company, Share Registrars Limited on 01252 821 390. 5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. Page | 52 Armadale Capital Plc 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 your vote. You can register your vote(s) for the Meeting either: • by visiting www.shareregistrars.uk.com, clicking on the “Proxy Vote” button and then following the on-screen instructions; • by post or by hand to Share Registrars Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey GU9 7XX using the proxy form accompanying this notice; • in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in note 12 below. In order for a proxy appointment to be valid the proxy must be received by Share Registrars Limited no later than 48 hours (excluding non-business days) prior to the Meeting. 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. 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. 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. Page | 53 Armadale Capital Plc Issued shares and total voting rights 10. At 27 June 2024 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 27 June 2024 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 & International Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual (available via euroclear.com/CREST). The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID: 7RA36) by the latest time(s) for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of CREST by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 200 Page | 54 Armadale Capital Plc You can register your vote(s) online for the Annual General Meeting at www.shareregistrars.uk.com Click on the “Proxy Vote” button and then follow the on-screen instructions User Name Access Code [Shareholder Name and address] FORM OF PROXY for use at the Annual General Meeting I/We, being a member of Armadale Capital plc (the ‘Company’), registered in England and Wales number 5541602, and entitled to vote hereby appoint the Chairman of the meeting or as my/our proxy to vote for me/us and on my/our behalf in the manner indicated below at the Annual General Meeting of the Company to be held on 30 July 2024 and at any adjournment thereof. Please indicate with an X in the appropriate space opposite each resolution how you wish your vote to be cast. Ordinary Resolutions FOR AGAINST ABSTAIN 1. To receive the report of the Directors and the audited financial statements of the Company for the year ended 31 December 2023. 2. To re-elect Matt Bull as a Director. 3. To re-elect Greg Entwistle as a Director 4. To re-appoint James Cowper Kreston Audit as auditors of the Company and to authorise the Directors to determine their remuneration. 5. To authorise the Directors to allot relevant securities up to a maximum nominal amount of £350,000. Special Resolution 6. To authorise the Directors to allot relevant securities up to a maximum nominal amount of £350,000. Signature Date Enter number of shares in relation to which your proxy is authorised to vote or leave it blank to authorise your proxy to act in relation to your entire holding Please also tick this box if you are appointing more than one proxy Please return this form to Share Registrars Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey GU9 7XX to arrive no less than 48 hours before the meeting (excluding non-business days). There is no need to return this form if you have voted online. Armadale Capital Plc NOTES 1. Only holders of Ordinary Shares, or their duly appointed representatives, are entitled to attend and vote at the Meeting. A member so entitled may appoint (a) proxy(ies), who need not be (a) member(s), to attend and vote on his/her behalf. 2. 3. 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. If you wish to appoint someone other than the Chairman of the Meeting as your proxy, please insert his/her name and delete “the Chairman of the Meeting or”. 4. Please indicate how you wish your proxy to vote by deleting either for or against. Unless otherwise instructed the person appointed a proxy will exercise his/her discretion as to how he/she votes or whether he/she abstains from voting on any particular resolution as he/she thinks fit. 5. A corporation must seal this Form of Proxy or have it signed by an officer or attorney or other person authorised to sign on its behalf. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with this Proxy Form. 6. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of the other joint holders. For this purpose seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding. 7. Pursuant to regulation 41 of The Uncertificated Securities Regulations 2001, members will be entitled to attend and vote at the meeting if they are registered on the Company’s register of members 48 hours before the time appointed for the meeting or any adjournment thereof. 8. To be valid this Form of Proxy must reach Share Registrars Limited not later than 48 hours (excluding non-business days) before the time of the Meeting. Lodgement of a Form of Proxy does not preclude a member from attending the Meeting and voting in person.
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