TIDMGRIT
RNS Number : 0198G
Global Resources Investment Tst PLC
21 July 2021
For immediate release 21 July 2021
GLOBAL RESOURCES INVESTMENT TRUST PLC ("GRIT" or "the
Company")
Annual Audited Results for the year ended 31 December 2020
The Directors are pleased to announce the audited results of the
Company for the year ended 31 December 2020.
A copy of the Annual Report and Financial Statements will be
available for viewing at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The Annual Report and Financial Statements for 2020 will be
posted to shareholders together with the Annual Report and
Financial Statements for 2019.
Please note that page references in the text below refer to the
page numbers in the Annual Report and Financial Statements.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2012 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
For further information, please contact:
Global Resources Investment Trust Tel: +44 (0) 203 198
PLC 2554
Martin Lampshire
----------------------
Beaumont Cornish L imi t e d Tel: +44 (0) 207 628
3396
----------------------
Roland Cornish
Felicity Geidt
----------------------
Peterhouse Capital Limited Tel: +44 (0) 207 469
0930
----------------------
Lucy Williams
Duncan Vasey
----------------------
CHAIRMAN'S STATEMENT
Introduction
It is less than three months since the publication of my
statements in the 2019 Annual Report and in the 2020 Interim
Statement. As a result, this statement is rather more abbreviated
than usual.
Investments
The Company's principal investment remains its 25% equity
interest in and loans to Anglo-African Minerals plc ("AAM").
TerraCom Limited, which announced in February 2020 that it had
entered into a 'Binding Termsheet' for the purchase of AAM, has
been prevented by the coronavirus from completing its due diligence
process. Nevertheless, TerraCom's interest has not diminished and
is referred to in TerraCom's latest quarterly report, which can be
found at:
terracomresources.listedcompany.com/newsroom/20210503_2924-02370309-2A1295712.pdf.
Because of the long history of failed attempts to realise value
from the Company's investment in AAM, we continue to adopt a
prudent view and to reflect the Company's investment in and loans
to AAM at a nil value.
Siberian Goldfields Limited was entirely dormant throughout the
year under review but, as reported in the 2019 Annual Report, in
early 2021 the Company received and subsequently accepted an offer
for its shares in Siberian Goldfields (see note 13 to the financial
statements). The capital surplus of GBP488,000 resulting from this
sale will be recognised in the 2021 financial statements.
Net Assets
At 31 December 2020 your Company had net liabilities equivalent
to 2.14 pence per share, a deterioration of 123% from the 0.96p per
share at which the Company's net assets stood at 31 December
2019.
Board of Directors
There were no changes to the membership of the Board of
directors during 2020.
Creditors
As I did in the 2019 Annual Report, I should like to pay tribute
to creditors, who, recognising the Company's predicament, took a
pragmatic view and agreed to defer settlement in whole or in part
in order to allow the Company the opportunity to realise the value
of its investments, in the expectation that this will permit full
settlement of the Company's indebtedness to them. This stance was
also taken by your Board. Until the declaration of a first dividend
by the CVA Supervisor in May 2021, none of the Directors had
received any remuneration since October 2019.
In November 2020 it became clear to the Board that the sale of
the Company's shares in AAM and the repayment by AAM of its loan
from GRIT was unlikely to take place for the foreseeable future.
Accordingly, the Board proposed a Creditors' Voluntary Arrangement
('CVA') (described fully in the circular to shareholders dated 3
December 2020).
Simultaneously the Board re-negotiated the terms of a placing
first arranged in June 2020 to raise GBP125,893 from the issue of
new shares and a further GBP100,000 in the form of Convertible Loan
Notes. Creditors and shareholders approved the CVA and the issue of
the shares at meetings on 21 December 2020 and the funds were
received in early 2021.
The sale of the Company's shares in Siberian Goldfields
completed in April 2021, thus augmenting the funds available to the
CVA Supervisor and enabling him to pay a dividend of 76% of the
amounts due to the creditors which are the subject of the CVA. This
means that those creditors that the current Board assumed when
appointed in August 2019 have now been settled 84% of the amounts
due to them at that time.
Outlook
As I noted in my last report, the Company remains committed to
its investment policy in the natural resources sector, which is
having a resurgence, driven by macro-economic factors supporting
the gold price, combined with the needs for metals such as copper
and lithium by the ever-increasing market for electric and hybrid
'powertrains' in the automotive industry in place of pure
hydrocarbon combustion engines.
The Company has secured equity funding of a minimum of
GBP500,000, conditional only on the lifting of the suspension in
trading of the Company's shares. The publication of this Annual
Report and associated financial statements should enable this;
following which GRIT will be ready to begin a new chapter of its
existence.
James Normand
Chairman
20 July 2021
PORTFOLIO REVIEW
MCB Resources Limited
MCB Resources Limited ("MCB") is a copper/gold exploration
company, previously active on the Pacific island of Bougainville.
The Company has a residual holding of 500,000 ordinary shares in
MCB. MCB has experienced intractable problems with resuming its
exploration activity and, its listing on the ASX was cancelled on
26 February 2021 because it had failed to pay its annual listing
fee. Accordingly, full provision has been made in these financial
statements against the GBP28,000 at which these shares were
previously reflected in the Company's balance sheet.
Anglo-African Minerals plc
Anglo-African Minerals plc ("AAM") is an unlisted advanced
mineral exploration company, incorporated in Ireland, focused on
the progression of its bauxite mining projects located in the
Republic of Guinea, which hosts two-thirds of the world's bauxite.
Bauxite is the composite material that contains alumina, which is
the feedstock for aluminium. As already explained in the Chairman's
Statement, AAM is currently in advanced discussions for the sale of
the company to TerraCom Limited (as announced in February
2020).
However, due to the coronavirus pandemic, there has been a delay
in the due diligence process resulting from the inability to
complete a Guinea mine site visit. While there is no certainty on
the exact timing of this transaction, discussions between AAM and
TerraCom Limited continue and, we understand, remain positive. In
the light of the continuing uncertainties, the Company has, in the
interests of accounting prudence, continued to make full provision
against both its investment in AAM's shares and its loans to
AAM.
Siberian Goldfields Limited
Siberian Goldfields Limited ("SGL") is a private gold
development company, incorporated in the UK, which is looking to
develop and bring into production its wholly-owned Zhelezny Kryazh
Project ("ZK"), a gold/iron ore project located in the prospective
mineral region of Eastern Siberia.
Early in 2021 the Company received and accepted an offer for its
shares in SGL. The resultant surplus from the sale, amounting to
GBP488,000, which have been used by the CVA Supervisor to make an
interim payment to creditors, will be reflected in the 2021
financial statements.
STRATEGIC REVIEW
Introduction
This review is part of the Strategic Report being presented by
the Company under updated guidelines for UK-listed companies'
Annual Reports in accordance with the Companies Act 2006; and is
designed to provide information primarily about the Company's
business and results for the twelve months to 31 December 2020. It
should be read in conjunction with the Chairman's Statement on
pages 3 and 4, which provides a detailed review of the investment
activities for the period and outlook for the future.
Global Resources Investment Trust plc ("GRIT" or "the Company")
is an investment trust established to seek to exploit investment
opportunities in the junior mining and natural resource sectors. On
7 March 2014, GRIT conducted a share exchange issue through which
it acquired an initial portfolio in return for the issue of
ordinary shares. The initial portfolio comprised 41 companies and
had an aggregate value of GBP39,520,012 based on the share exchange
valuation and, pursuant to the share exchange issue, 39,520,012
ordinary shares were issued (credited as fully paid up) and were
admitted to trading on the London Stock Exchange's main market.
At launch, GRIT raised GBP4,850,000 through the issue of 9%
Convertible Unsecured Loan Stocks, which have since been
redeemed.
Business model
Global Resources Investment Trust is a self-managed investment
trust run by its Board, which takes all major decisions
collectively.
Investment objective
GRIT's investment objective is to generate medium and long-term
capital growth through investing in a diverse portfolio of
primarily small and mid-capitalisation natural resources and mining
companies, which are listed/quoted on a relevant exchange.
Investment policy
GRIT's investment policy is to diversify its investments across
a number of companies, with a range of natural resource assets, in
jurisdictions globally. There are no restrictions as to the
commodity classes and geographical regions into which GRIT may
invest. However, GRIT will invest and manage its assets in a way
which is consistent with its objective of spreading risk. GRIT will
adhere to the following investment restrictions:
-- GRIT may invest up to only 60 per cent. of its Gross Asset
Value (at the time of investment) in non-quoted, seed capital or
pre-IPO companies provided that at any one time such new
investments above a 15 per cent. limit will not be in more than two
companies, with an emphasis in such instances on potentially
large-scale assets that all have the ability to be brought into
production in the succeeding years;
-- GRIT will invest no more than 40 per cent. of its Gross Asset
Value in any one company (measured at the time of investment)
provided that at any one time such new investments above a 15 per
cent limit will not be in more than two companies, with an emphasis
in such instances on potentially large-scale assets that also have
the ability to bring them to production in the succeeding
years;
-- GRIT will not take legal or management control over investments in its portfolio;
-- GRIT will invest no more than 10 per cent., in aggregate, of
its Gross Asset Value in other listed closed-ended investment
funds;
-- Distributable income (if any) will be principally derived
from investments. GRIT will not conduct a trading activity which is
significant in the context of the activities of GRIT as a
whole;
-- GRIT will not enter into derivative transactions for
speculative purposes. GRIT does not expect to enter into any
hedging transactions, although it may do so for the purposes of
efficient portfolio management and to hedge against exposure to
changes in currency rates to the full extent of any such
exposure;
-- GRIT will not incur any debt beyond such amount that is
covered four times by the gross value of its investments at the
time of incurring such debt (i.e. a "4 to 1 cover ratio");
-- GRIT will manage the overall portfolio to ensure that there
is a spread of investments to provide diversification, with a
target of having between 4 and 8 different investments at any one
time;
-- GRIT will hold any uninvested funds in cash, cash equivalents
or other liquid instruments, with a view to maximising the returns
on any such funds.
STRATEGIC REVIEW
Going Concern and Outlook
As a result of the Company's operations being cash flow negative
since its inception, the Company has been required to dispose of
investment portfolio assets to generate the cash needed to finance
its operational costs.
The CVA has removed from the Company's balance sheet creditors
amounting to approximately GBP837,000. At the same time the Company
raised new equity funding totalling GBP226,000; with further
commitments of GBP500,000, conditional only on the lifting of the
suspension in trading in the Company's shares. On the strength of
this the Board has adopted a going concern accounting basis for
these financial statements.
Principal Risks and Uncertainties and Risk Mitigation
The sole objective of the retiring management team has been to
realise the value of the Company's remaining investments and to
minimise its administration expenses, with a view to restoring
liquidity to the Company and enabling it to re-set and re-launch
itself as an active Investment Trust.
A conventional report on risks and uncertainties and their
mitigation; on performance; and on Social, Community, Employee
Responsibilities and Environmental Policy is, therefore,
inappropriate to the Company's current position.
The financing arrangements put in place by the Board have
created the conditions for a fresh start for the Company. The
lifting of the suspension of trading in the Company's shares is now
the only action required for this fresh start to commence.
Viability Statement
Normally the Board would have considered a longer-term viability
in excess of the going concern period. However, this is not
currently considered relevant given the liquidity position, as
disclosed in the Going Concern and Outlook section above, whereby
further funds will be required to finance future trading
opportunities.
Section 172 Statement
The Directors believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
-- consider the likely consequences of any decision in the long term;
-- act fairly between the members of the Company;
-- maintain a reputation for high standards of business conduct;
-- consider the interests of the Company's employees;
-- foster the Company's relationships with suppliers, customers and others; and
-- consider the impact of the Company's operations on the community and the environment.
The Company's operations and strategic aims are set out
throughout the Strategic Review and in the Chairman's Statement,
and relationships with shareholders are also dealt with in the
Statement of Corporate Governance.
By Order of the Board
Peterhouse Capital Limited
Secretary
20 July 2021
BOARD OF DIRECTORS' GOVERNANCE REPORT
All of the Directors are non-executive and independent. The
Board fulfils the functions of the Nomination Committee and of the
Audit Committee. The Board maintains overall control over the
formulation of Company's investment policy and has overall
responsibility for the Company's activities.
The Directors who held office during the year and up to the date
of signing the financial statements were as follows:
Martin Lampshire
James Normand
Stephen Roberts
Martin Lampshire
Independent Executive Director
Experience: 20 years as a corporate broker in the smaller
companies' market, working primarily in London but also in Hong
Kong, Singapore and Dubai. Currently a non-executive director of
ValiRx plc and (since 28 April 2021) of Boston International
Holdings plc. Until 13 May 2021 Martin was also a non-executive
director of Cizzle Biotechnology Holdings PLC.
Remuneration: GBP40,000 p.a.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: None.
James Normand
Independent Non-Executive Chairman
Experience: Chartered Accountant, 45 years in the City,
previously Finance Director of Pathfinder Minerals plc
(AIM-listed), currently non-executive Chairman of All Active Asset
Capital Limited and a Director of Vela Technologies plc and a
non-executive Director of Ridgecrest plc (all AIM-listed).
Remuneration: GBP35,000 p.a.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: None.
Stephen Roberts
Independent Non-Executive Director
Experience: Former board positions include: Chairman of Xtrabio
B.V., Non-executive Director of Mining Investment Resources Plc and
Director of Grand Group plc China. Steve had a career in M&A
and advisory assignments in various sectors. He was previously a
senior member of the corporate finance teams at a number of
City-based brokers including Fairfax, Evolution Securities, Collins
Stewart and Charterhouse Securities.
Remuneration: GBP30,000 p.a.
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: None.
REPORT OF THE DIRECTORS
The Directors present their Annual Report and the audited
financial statements for the year ended 31 December 2020.
Results
The Company had no income in the period under review; and
incurred costs of GBP466,000 (2019 - GBP589,000). Additionally the
Company made provision for the diminution in value of its
investments of GBP28,000 (2019 - GBP1,248.000).
Principal Activity and Status
The Company is registered as a public limited company in terms
of the Companies Act 2006 (number: 8256031). It is an investment
company as defined by Section 833 of the Companies Act 2006. It
carries on the business of an investment trust and has been
approved as such by HM Revenue & Customs. The Company's shares
are eligible for inclusion in a New Individual Savings Account
('NISA').
Capital Structure
As at 31 December 2020 there were 41,962,512 ordinary shares of
one penny each in issue. The ordinary shares give shareholders the
entitlement to all of the capital growth in the Company's net
assets and to all the Company's income that is resolved to be
distributed.
Substantial Interests in Share Capital
At 16 July 2021, the only persons known to the Company who,
directly or indirectly, were interested in 3 per cent or more of
the Company's issued share capital were as follows:
Ordinary shares Number held % held
Philip J Milton 12,738,840 30.3
Mardassa Nominees Pty Limited 12,461,896 29.7
Gledhow Investments plc 4,668,132 11.1
Armstrong Investments Ltd 3,000,000 7.1
Some of the shareholdings listed above refer to funds managed on
behalf of clients of the groups named.
Financial Statements
The Directors' responsibilities regarding the financial
statements and safeguarding of assets are set out on page 11.
Annual General Meeting
A notice of the Annual General Meeting will be posted to
shareholders in due course.
Directors' Remuneration Policy and Report
Among the resolutions to be put to the Annual General Meeting as
ordinary business will be one approving the Directors' Remuneration
Policy. This vote is binding. It is also mandatory for listed
companies to put their Directors' Remuneration Report to an
advisory shareholder vote.
Induction and Training
New Directors appointed to the Board are required to have an
understanding of the Company pre-dating their appointment, which is
deepened and expanded through individual discussion and contact
with the other Directors and, in particular, participation at Board
meetings. Relevant training is available to Directors as
required.
Statement Regarding Annual Report and Accounts
Following a detailed review of the Annual Report and Accounts by
the Board (acting as the Audit Committee), the Directors consider
that, taken as a whole, it is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Company's performance, business model and strategy. In reaching
this conclusion, the Directors have assumed that the reader of the
Annual Report and Accounts has a reasonable level of knowledge of
the investment industry in general and investment trusts in
particular.
REPORT OF THE DIRECTORS
Disclosure of Information to the Auditor
The Directors confirm that, so far as each of the Directors is
aware, there is no relevant information of which the Company's
auditors are unaware and the Directors have taken all the steps
that they ought to have taken as Directors to make themselves aware
of any relevant audit information and to establish that the
Company's auditors are aware of that information.
Independent Auditor
PKF Littlejohn LLP has indicated its willingness to continue in
office. The Directors will place a Resolution before the Annual
General Meeting for the reappointment of PKF Littlejohn LLP as
independent auditor of the Company for the ensuing year and to
authorise the Directors to determine its remuneration.
Continuation Vote
In accordance with the Articles of Association an ordinary
resolution will be proposed at the Annual General Meeting for the
Company to continue as an investment trust.
Directors' Authority to Allot Shares
The Directors will be seeking authority to allot shares. A
resolution will, if passed at the Annual General Meeting, authorise
the Directors to allot (and grant subscription and conversion
rights over) new shares following the completion of the placing on
the lifting of the suspension of trading in the Company's shares
expected following the publication of the Annual Report.
A resolution will, if passed at the Annual General Meeting,
renew the Directors' existing power to make limited allotments of
shares for cash other than according to the statutory pre-emption
rights which require all shares issued for cash to be offered first
to all existing shareholders. This power applies to the allotment
of (and grant of subscription and conversion rights over) shares
following the completion of the placing on the lifting of the
suspension of trading in the Company's shares; and otherwise in
connection with an offer to holders of ordinary shares in
proportion to their existing shareholdings, but subject to
exclusions and other arrangements the Directors may consider
necessary.
A further resolution will allow the sale of treasury shares for
cash, on the same basis, without offering such shares first to all
existing shareholders. These authorities will continue in effect
until the earlier of 15 months from the date the resolutions are
passed and the conclusion of the Annual General Meeting in
2022.
Directors' Authority to Buy Back Shares
The Company did not purchase any shares for cancellation or to
hold in treasury during the year.
A further resolution will seek renewal of the Company's buy-back
authority. The renewed authority to make market purchases will be
in respect of a maximum of 14.99 per cent of the issued ordinary
shares of the Company on the date of the passing of the resolution.
The price paid for the shares will not be less than the nominal
value of 1p per share nor more than the higher of (i) 5 per cent
above the average middle market value of those shares for the five
business days before the shares are purchased and (ii) the higher
of the last independent trade and of the highest current
independent bid for any number of the Company's ordinary shares on
the trading venue where the purchase is carried out. This power
will only be exercised, if, in the opinion of the Directors, a
purchase would result in an increase in net asset value per share
and be in the interests of the shareholders as a whole. Any shares
purchased under this authority will be cancelled or held in
treasury. The Directors have no current intention of utilising this
authority. This authority will expire at the earlier of 15--months
from the date the resolutions were passed and the conclusion of the
Annual General Meeting of the Company.
By Order of the Board
Peterhouse Capital Limited
Secretary
20 July 2021
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the Company financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Company financial
statements for each financial year. Under that law they are
required to prepare the financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and applicable law and have
elected to prepare the financial statements on the same basis.
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 Company and of its profit or
loss for that period. In preparing the Company financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with
international accounting standards in conformity with the Companies
Act 2006;
-- assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
-- use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations or have no
realistic alternative but to do so.
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
its financial statements comply with the Companies Act 2006. They
are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility Statement of the Directors in respect of the
Annual Financial Report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company; and
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that they face.
We consider the annual report and accounts, taken as a whole,
are fair, balanced and understandable; and provide the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy.
On behalf of the Board
James Normand
Chairman
20 July 2021
STATEMENT OF CORPORATE GOVERNANCE
Introduction
The UK Listing Authority requires all listed companies to
describe how they have complied with the principles of the UK
Corporate Governance Code 2016 (the 'UK Governance Code'). which is
available on the Financial Reporting Council's website:
www.frc.org.uk. The UK Governance Code covers in particular the
annual re-appointment of Directors, Board diversity, external
evaluation, the Board's responsibilities in relation to risk, and a
clear explanation of business model and strategy.
The Association of Investment Companies also published a Code of
Corporate Governance, which is available on the AIC's website:
www.theaic.co.uk. The AIC Code addresses all of the principles set
out in Section 1 of the UK Governance Code as well as setting out
additional principles and recommendations on issues that are of
specific relevance to investment companies. The Company has adopted
the 2019 AIC Code.
Application of the Principles of the Codes
The Company has complied with the provisions of the AIC Code and
the UK Governance Code, except for the UK Governance Code
provisions relating to:
-- the role of the chief executive;
-- executive Directors' remuneration; and
-- the need for an internal audit function.
As indicated by the AIC Code, the above exceptions are not
believed to be applicable to a self-managed investment company.
The Board
The Board consists of two non-executive Directors and one
executive Director, all of whom are regarded as independent. Mr
Normand is Chairman and is responsible for leadership of the Board
and ensuring its effectiveness on all aspects of its role.
There are no relationships or circumstances which the Board
considers likely to affect the judgement of the independent
Directors.
The Board takes the view that independence is not compromised by
length of tenure and that experience and continuity can add
significantly to the Board's strength.
Since taking office the current Board has operated as a
three-man team; and virtually all actions taken and decisions made
have followed consultation between all the members of the
Board.
There is an agreed procedure for Directors to take independent
professional advice if necessary and at the Company's expense.
Nomination Committee
There have been no appointments to the Board since the current
members took office in 2019. Accordingly, since then there has been
no cause to form a Nominations Committee nor has one met.
Stewardship Code
The Financial Reporting Council ('FRC') published The UK
Stewardship Code--('Code') for institutional shareholders on 2 July
2010. The purpose of the Code is to enhance the quality of
engagement between institutional investors and companies to help
improve long-term returns to shareholders and the efficient
exercise of governance responsibilities.
The FRC is encouraging institutional investors to make a
statement of their commitment to the Code.
None of GRIT's investee companies has held a shareholders'
meeting during the period under review and so there has been no
occasion for votes to be cast. Nevertheless, the Board has been in
active consultation with members of the Board of GRIT's only active
investee company, Anglo-African Minerals plc, particularly in view
of its successive attempts to find a purchaser for the whole of its
issued share capital.
STATEMENT OF CORPORATE GOVERNANCE
Relations with Shareholders
The Directors place a great deal of importance on communication
with shareholders. The Annual Report and Accounts are widely
distributed to other parties who have an interest in the Company's
performance. Shareholders and investors may obtain up-to-date
information on the Company through the Company's website. The
Company responds to letters from shareholders on a wide range of
issues.
A regular dialogue is maintained with the Company's principal
shareholders. Reference to significant holdings in the Company's
ordinary shares can be found under 'Substantial Interests' on page
9.
All shareholders have the opportunity to put questions to the
Board at the Company's Annual General Meeting. The Company
Secretary is available to answer general shareholder queries at any
time throughout the year.
By Order of the Board
Peterhouse Capital Limited
Secretary
20 July 2021
REPORT OF THE AUDIT COMMITTEE
Composition of the Audit Committee
Because, during the period under review, the activity of the
Company has been confined to attempting the sale of its remaining
investments, there has been no cause to form or convene an Audit
Committee.
Review of Auditor
As part of its review of the scope and results of the audit,
during the year the Board considered and approved PKF Littlejohn
LLP's plan for the audit of the financial statements for the year
to 31 December 2020. PKF Littlejohn LLP issued an unqualified audit
report which is included on pages 18 to 22.
No non-audit services have been provided by PKF Littlejohn LLP
in the year.
As part of the review of auditor independence and effectiveness,
PKF Littlejohn LLP has confirmed that it is independent of the
Company and has complied with relevant auditing standards. In
appointing PKF Littlejohn LLP, the Board (in the absence of an
Audit Committee) took into consideration the standing, skills and
experience of the firm and the audit team; and remains satisfied
that PKF Littlejohn LLP continues to provide effective independent
challenge in carrying out its responsibilities.
Audit Tenure
Following professional guidelines, the audit Responsible
Individual rotates after five years. The current Responsible
Individual is in the second year of his appointment. PKF Littlejohn
LLP was appointed auditor in 2020 for the 2019 financial statements
and the Board recommends its continuing appointment. PKF Littlejohn
LLP's performance will continue to be reviewed annually, taking
into account all relevant guidance and best practice.
Internal Controls
The Board is ultimately responsible for the Company's system of
internal control and for reviewing its effectiveness. Following
publication of the Financial Reporting Council's 'Internal Control:
Revised Guidance for Directors on the Combined Code' (the 'FRC
guidance') the Board confirms that there is an ongoing process for
identifying, evaluating and managing the significant risks faced by
the Company. This process has been in place for the year under
review and up to the date of approval of this Annual Report and is
regularly reviewed by the Board and accords with the FRC
Guidance.
The Board has reviewed the effectiveness of the system of
internal control. In particular, it has overseen the process for
identifying and evaluating the significant risks affecting the
Company and policies by which these risks are managed. The
significant risks faced by the Company are as follows:
-- investment and strategy; market;
-- liquidity; sector; earnings;
-- financial sustainability; operational; and regulatory.
The key components designed to provide effective internal
control are outlined below:
-- Peterhouse Capital Limited ('Peterhouse') as Company
Secretary and Administrator prepares forecasts and management
accounts which allow the Board to assess the Company's activities
and review its performance;
-- the Board has agreed clearly defined investment criteria,
specified levels of authority and exposure limits. Reports on these
issues, including performance statistics and investment valuations
are reviewed regularly by the Board;
-- written agreements are in place which specifically define the
roles and responsibilities Board and, where applicable, other
third-party service providers;
-- the Board has considered the need for an internal audit
function but, given the limited nature of the activities during the
year, this was concluded as not currently required. This will
continue to be reviewed in the future.
REPORT OF THE AUDIT COMMITTEE
Internal Controls (continued)
Internal control systems are designed to meet the Company's
particular needs and the risks to which it is exposed. Accordingly,
the internal control systems are designed to manage rather than
eliminate the risk of failure to achieve business objectives and by
their nature can only provide reasonable and not absolute assurance
against mis-statement and loss.
The principal risks and uncertainties affecting the Company are
disclosed on page 7.
James Normand
Chairman of the Board of Directors
20 July 2021
DIRECTORS' REMUNERATION REPORT
Remuneration Committee
For the same reasons that there is not currently an Audit
Committee, neither is there a Remuneration Committee.
The Board has prepared this report in accordance with the
requirements of Section 421 of the Companies Act 2006. An ordinary
resolution for the approval of this Report will be put to the
members at the forthcoming Annual General Meeting. This Report has
been divided into separate sections for unaudited and audited
information.
Policy on Directors' Remuneration
The Board's policy is that the remuneration of Directors should
reflect the experience of the Board as a whole and be comparable to
that of other relevant investment trusts that are similar in size.
Moreover, the level of remuneration should be sufficient to attract
and retain the Directors needed to oversee properly the Company and
to reflect the specific circumstances of the Company, the duties
and responsibilities of the Directors and the value and amount of
time committed to the Company's affairs. The fees for the Directors
are determined within the limits set out in the Company's Articles
of Association. The present limit is GBP200,000 per annum in
aggregate and the approval of shareholders in a general meeting
would be required to change this limit. At the prevailing level of
Directors' fees, the aggregate amount payable to the Company's
Directors during the year to 31 December 2020 was GBP181,125.
Non-executive Directors are not eligible for bonuses, pension
benefits, share options, long-term incentive schemes or other
benefits.
New independent Directors are provided with a letter of
appointment. Any Director who has served on the Board for more than
nine years will offer himself for re-election annually. The
requirements for the retirement of Directors are also contained in
the Company's Articles of Association. There is no notice period
and no provision for compensation upon early termination of
appointment.
The terms of Directors' appointments provide that Directors are
obliged to retire by rotation and to offer themselves for re-
election by shareholders at least every three years after that.
Director Date of appointment Due date for re-election
Martin Lampshire 30 August 2019 AGM 2021
James Normand 30 August 2019 AGM 2021
Stephen Roberts 30 August 2019 AGM 2021
Annual Report on Directors' Remuneration
Directors' Emoluments (audited)
The Directors who served in the twelve months to 31 December
2020 (and, for comparative purposes those who served in the twelve
months ended 31 December 2019) were awarded the following fees.
2020 2019
-----------------------------
Name Standard Additional Total Standard Additional Total
fee contracted fee contracted
services services
----------------------- -------- ----------- ------ -------- -----------
James Normand 35,000 27,000 62,000 11,667 12,000 23,667
Martin Lampshire 40,000 33,000 73,000 13,333 6,000 19,333
Stephen Roberts 30,000 16,125 46,125 10,000 31,500 41,500
Simon Farrell - - - 20,000 - 20,000
Haruko Fukuda - - - 18,333 - 18,333
David ('Sam') Hutchins - - - 18,333 - 18,333
----------------------- -------- ----------- ------ -------- ----------- ------
As at 31 December 2020 a significant proportion of these fees
remained unpaid, as follows:
James Normand GBP79,833
Martin Lampshire GBP89,000
Stephen Roberts GBP82,708
The Company has not been able to obtain Directors' and Officers'
liability insurance.
DIRECTORS' REMUNERATION REPORT
Directors' Interests
Biographies of the Directors are shown on page 8.
No Directors who held office during the year held ordinary
shares or convertible loan stock in the Company as at 31 December
2020 or 31 December 2019.
There has been no change in the ordinary share holdings of the
Directors from 31 December 2020 up to the signing date.
Voting at Annual General Meeting
An ordinary resolution for the approval of this Directors'
Remuneration Report will be put to an advisory shareholder vote at
the forthcoming Annual General Meeting.
An ordinary resolution for the approval of the Directors'
Remuneration Policy will be put to a binding shareholder vote at
the forthcoming Annual General Meeting.
Approval
The Directors' Remuneration Report on pages 16 and 17 was
approved by the Board of Directors and signed on its behalf on 20
July 2021.
James Normand
Chairman of the Board of Directors
INDEPENT AUDITOR'S REPORT
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF GLOBAL RESOURCES
INVESTMENT TRUST PLC
Opinion
We have audited the financial statements of Global Resources
Investment Trust Plc (the 'company') for the year ended 31 December
2020 which comprise the Income Statement, the Statement of Changes
in Equity, the Balance Sheet and the Cash Flow Statement and notes
to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and
international accounting standards in conformity with the
requirements of the Companies Act 2006.
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2020 and of its loss for the year then
ended;
-- have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006; and
-- 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 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 public interest
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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the company's ability to
continue to adopt the going concern basis of accounting included a
review of the cash flow forecasts produced by the directors,
incorporating the funds raised subsequent to the year-end. The
review included challenge of the key assumptions contained within
the forecast with a focus on the projected contracted and committed
costs for 12 months following the signing of the financial
statements, together with the proposed fund raising following the
signing of the financial statements and re-admission of shares to
trading.
In respect of the costs, we have reviewed the cost base based on
our knowledge of the costs in the current year and knowledge over
long term fee arrangements derived from our audit. We have obtained
confirmation that the company has received unconditional funding
agreements, contingent only on the re-admission of shares to
trading on the London Stock Exchange. In addition, we have reviewed
all board minutes and other documentation as part of the audit to
confirm that there are no conditions which exist which would
indicate a material uncertainty in relation to going concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In relation to the entity's reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors' statement in the
financial statements about whether the director's considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
INDEPENT AUDITOR'S REPORT
Our application of materiality
Materiality for the financial statements was set at GBP6,800
(2019: GBP13,000) determined with reference to a benchmark of 1.5%
of gross assets. Gross assets are deemed the primary driver for an
investment trust Company. There were no revisions to the
materiality as the audit progressed. Performance materiality was
GBP4,760 (2019: GBP9,100).
We agreed to report to the Board any corrected or uncorrected
identified misstatements exceeding GBP340 (2019: GBP650), in
addition to other identified misstatements that warranted reporting
on qualitative grounds.
Our approach to the audit
As part of designing our audit, we determined materiality and
assessed the risk of material misstatement in the Financial
Statements. In particular, we looked at areas involving significant
accounting estimates and judgement by the directors and considered
future events that are inherently uncertain, such as the valuation
of investments. We also addressed the risk of management override
of internal controls, including among other matters consideration
of whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
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.
Key Audit Matter How the scope of our audit responded
to the key audit matter
Investments valuation, classification
and ownership (see Note 5)
=============================================================
The Company holds unquoted investments Our work in this area included:
that involve measurement factors * testing ownership of the investments;
such as recent transactions,
valuation benchmarks of comparable
entities and net assets of the * challenging management on the valuation basis adopted
investee. The choice of valuation and ensuring it complied with industry best practice
methodology, together with the and accounting standards;
absence of reliable information
for non-listed investments,
makes the valuation judgemental * ensuring that the carrying value of the investment is
and could result in a material not impaired, over and above that currently
misstatement. As a result, this recognised in the financial statements; and
is a key judgemental area that
our audit focuses on.
* ensuring that appropriate disclosures surrounding any
estimates and judgements made regarding their
valuation.
Based on the procedures performed,
we consider management's judgements
and investment valuation estimates
to be reasonable and the related
disclosures appropriate.
=============================================================
INDEPENT AUDITOR'S REPORT
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. 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.
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 course of 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 this gives rise to a material misstatement in the financial
statements themselves. 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 the part of the directors' remuneration report to
be audited has been properly prepared in accordance with 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the 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, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made;
-- we have not received all the information and explanations we require for our audit.
Corporate governance statement
The Listing Rules require us to review the directors' statement
in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the company's
compliance with the provisions of the UK Corporate Governance
Statement specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
-- Directors' statement with regards the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 7;
-- Directors' explanation as to its assessment of the entity's
prospects, the period this assessment covers and why the period is
appropriate as set out on page 7;
-- Directors' statement that they consider the annual report and
the financial statements, taken as a whole, to be fair, balanced
and understandable as set out on page 11;
-- Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks as set out on page
7;
-- The section of the annual report that describes the review of
the effectiveness of risk management and internal control systems
as set out on page 14; and
-- The section describing the work of the audit committee as set out on page 14.
INDEPENT AUDITOR'S REPORT
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the 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 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the company and the industry
in which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management and including consideration of known or
suspected instances of non-compliance with laws and regulations and
fraud.
-- We determined the principal laws and regulations relevant to
the company in this regard to be those arising from FCA Listing
Rules, Companies Act 2006, UK Corporate Governance Code,
Association of Investment Companies Code of Corporate Governance
and International Financial Reporting Standards.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the company with those laws and regulations. These procedures
included, but were not limited to: enquiries of management; review
of minutes of meetings; review of Regulatory News Service
announcements and correspondence.
-- We have discussed among the engagement team regarding how and
where fraud might occur and any potential indicators of fraud. We
then challenged the assumptions made by management in their
significant accounting estimate related to it (see key audit
matter).
-- We addressed the risk of fraud arising from management
override of controls by performing audit procedures which included,
but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the
business rationale of any significant transactions that are unusual
or outside the normal course of business.
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.
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.
INDEPENT AUDITOR'S REPORT
Other matters which we are required to address
We were appointed by the Directors on 3 April 2020 to audit the
financial statements for the year ended 31 December 2019 and
subsequent financial periods. Our total uninterrupted period of
engagement is two years, covering periods ended 31 December 2019 to
31 December 2020.
During the period, Welbeck Associates Limited provided trust
account services to the company. Up until October 2020 the trust
account was administered by a director of Welbeck Associates
Limited, who is also a partner of PKF Littlejohn LLP. This service
involved the transfer of funds held in the trust account in
accordance with the instructions of the company's directors.
We are satisfied that it does not meet the definition of
accounting services under the FRC Ethical Standard which would be
subject to an outright prohibition under the FRC Ethical Standard.
This is because they do not involve the maintenance of accounting
records nor do they involve the preparation of financial statements
or other subject matter.
Our safeguards in respect of this non-audit service have centred
on the fact that the partner was not involved in the audit
engagement in any capacity. The service did not involve making any
judgements. We confirm that this safeguard was applied and that it
enables us to conclude that our professional judgement and our
audit report are not affected by the provision of the trust account
service.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
David Thompson (Senior Statutory Auditor) 15 Westferry
Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
20 July 2021
INCOME STATEMENT
YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 2020 31 December 2019
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Losses on investments 5 - (28) (28) - (777) (777)
Other expenses 2 (466) - (466) (589) (471) (1,060)
______ ______ ______ _____ ______ ______
Net Loss before Finance Costs
and Taxation (466) (28) (494) (589) (1,248) (1,837)
Interest payable and similar - - - - - -
charges
______ ______ ______ _____ ______ ______
Net Loss on Ordinary Activities
before Taxation (466) (28) (494) (589) (1,248) (1,837)
Taxation on ordinary activities 3 - - - - - -
______ ______ ______ _____ ______ ______
Net Loss Attributable to
Equity Shareholders (466) (28) (494) (589) (1,248) (1,837)
______ ______ ______ _____ ______ ______
Loss per Ordinary Share 4 (1.11p) (0.07p) (1.18p) (1.40p) (2.97p) (4.37p)
______ ______ ______ _____ ______ ______
The total column of this statement represents the Company's
profit or loss account, prepared in accordance with IFRS.
All revenue and capital items in this statement derive from
continuing operations.
All of the gains and losses for the year are attributable to the
owners of the Company.
No operations were acquired or discontinued in the year.
A Statement of Other Comprehensive Income is not required as all
gains and losses of the Company have been reflected in the above
Income Statement.
The accompanying notes are an integral part of the financial
statements.
STATEMENT OF CHANGES IN EQUITY
YEARED 31 DECEMBER 2020
Share Revenue
Share premium Capital reserve
For the year ended 31 December capital account reserve deficit Total
2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2019 420 36,880 (33,157) (4,549) (406)
Loss on ordinary activities
after taxation - - (28) (466) (494)
___ ______ ______ _____ ___
Balance at 31 December 2020 420 36,880 (33,185) (5,015) (900)
___ ______ ______ _____ ___
For the year ended 31 December
2019
Balance at 31 December 2018 420 36,880 (31,909) (3,960) 1,431
Loss on ordinary activities
after taxation - - (1,248) (589) (1,837)
___ ______ ______ _____ _____
Balance at 31 December 2019 420 36,880 (33,157) (4,549) (406)
___ ______ ______ _____ _____
The revenue reserve represents the amount of the Company's
reserves distributable by way of dividend.
The accompanying notes are an integral part of the financial
statements.
BALANCE SHEET
AT 31 DECEMBER 2020
2020 2019
Notes GBP'000 GBP'000
Current Assets
Investments 5 - 28
Receivables 6 - 13
Cash at bank - 2
___ ___
- 43
Creditors : amounts falling due within
one year
Trade and other payables 7 (900) (449)
___ ___
Net Liabilities (900) (406)
___ ___
Capital and Reserves
Called up share capital 8 420 420
Share premium 36,880 36,880
Capital reserve (33,185) (33,157)
Revenue reserve (5,015) (4,549)
______ ______
Equity Shareholders' Funds Deficit (900) (406)
______ ______
Net Deficit per Share 9 (2.14p) (0.96p)
______ ______
The financial statements were approved by the Board of Directors
and authorised for issue on 20 July 2021 and were signed on its
behalf by:
James Normand
Chairman
The accompanying notes are an integral part of the financial
statements.
CASH FLOW STATEMENT
YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
Notes GBP'000 GBP'000
Operating Activities
Loss before taxation (494) (1,837)
Loss on investments 5 28 1,248
Decrease in receivables 13 10
Increase in payables 452 277
_____ _____
Net Cash Outflow from Operating Activities
Before
and After Taxation (2) (302)
_____ _____
Investing Activities
Sales of investments - 272
____ ____
Net Cash Inflow from Investing Activities - 272
____ ____
Decrease in Cash in the Year (2) (30)
Net cash at the start of the year 2 32
____ ____
Net Cash at the End of the Year - 2
____ ____
The accompanying notes are an integral part of the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2020
1. Accounting Policies
The Company is a public company limited by shares which is
incorporated in England. The registered office of the Company is 80
Cheapside, London EC2V 6EE.
The principal activity of the Company is to undertake the
business of an investment trust.
(a) Basis of accounting
The financial statements of the Company have been prepared in
accordance with international accounting standards in conformity
with the Companies Act 2006.
The financial statements have also been prepared in accordance
with the Statement of Recommended Practice (SORP) "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" issued in November 2014 and updated in February 2018 with
consequential amendments, to the extent that it is consistent with
IFRS.
The functional and reporting currency of the Company is pounds
sterling because that is the primary economic environment in which
the Company operates. The notes and financial statements are
presented in pounds sterling and are rounded to the nearest
thousand except where otherwise indicated.
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Income Statement
between items of a revenue and capital nature has been presented
alongside the Income Statement. Additionally, the net revenue of
the Company is the measure the Directors believe appropriate in
assessing its compliance with certain requirements set out in
Sections 1158 - 1159 of the Corporation Tax Act 2010.
There are no new Accounting Standards which came into effect on
1 January 2020 which are relevant to the Company's financial
statements. There are no new standards and interpretations issued
but not effective and not early adopted that are expected to have a
material impact on the Company.
Going Concern
For the reasons outlined in the Strategic Review, particularly
with regard to the CVA arrangement dated December 2020, the Board
has concluded that it is appropriate to prepare the financial
statements on a going concern basis. In assessing whether the going
concern assumption is appropriate, the Directors have taken into
account all relevant available information about the current and
future position of the Company, including the current level of
resources, additional funding raised based on investor commitments
and the level of contracted and committed expenditure over the
going concern period. The Company recorded a loss for the year and,
as at 31 December 2020, had net current liabilities of GBP900,000,
of which GBP836,000 had been assigned to the CVA Supervisor.
The Company meets its working capital requirements from its cash
and cash equivalents. To date, the Company has raised finance
through equity placings, receipt of convertible loans and the sale
of investments. At the date of approval of these financial
statements, the Company has received placing letters from investors
amounting to GBP500,000, conditional only on the restoration of
trading of the Company's shares to the London Stock Exchange. After
the payment of creditors not included in the CVA, the Company has
sufficient funds to meet its working capital needs for a period of
at least 12 months from the date of approval of these financial
statements. Further funding will be required either through equity
raisings or other financial arrangements to fund future
activities.
Having prepared forecasts based on current resources, the
Directors believe the Company has sufficient resources to meet its
obligations for a period of at least 12 months from the date of
approval of these financial statements. The financial statements do
not include the adjustments that would be required should the going
concern basis of preparation no longer be appropriate.
Critical accounting estimates and judgements
The preparation of the financial statements necessarily requires
the exercise of judgement both in application of accounting
policies which are set out below and in the selection of
assumptions used in the calculation of estimates. These estimates
and judgements are reviewed on an ongoing basis and are continually
evaluated based on historical experience and other factors.
However, actual results may differ from these estimates. The most
significant judgement concerns the valuation of unlisted
investments. This is described in note 1(b) with further analysis
provided in note 5.
A summary of the principal accounting policies which have been
applied to all periods presented in these financial statements is
set out below.
(b) Investments
Purchases or sales of investments are recognised on the date the
Company commits to purchase or sell the investments. Investments
are classified at fair value through profit and loss on initial
recognition with any resultant gain or loss recognised in the
Income Statement. Listed securities are valued at bid price or last
traded price, depending on the convention of the exchange on which
the investment is listed, adjusted for accrued income where it is
reflected in the market price. Unlisted investments are valued at
fair value by the Directors on the basis of all information
available to them at the time of valuation and in accordance with
the methodologies consistent with the International Private Equity
and Venture Capital Valuation guideline ("IPEV"). This includes a
review of the financial and trading information of the investee
company, covenant compliance and ability to repay interest and cash
balances. Where no reliable fair value can be estimated,
investments are carried at cost less any provision for
impairment.
Realised gains or losses on the disposal of investments and
permanent impairments in the value of investments are taken to the
capital reserve. Gains and losses arising from changes in the fair
value of investments are included in the Income Statement as a
capital item (see note (h) below).
(c) Income
Dividends receivable on equity shares are recognised as income
on the date that the related investments are marked ex-dividend.
Dividends receivable on equity shares where no ex-dividend date is
quoted are recognised as income when the Company's right to receive
payment is established. Fixed returns on non-equity shares are
recognised on a time apportioned basis so as, if material, to
reflect the effective interest rate on those instruments. Other
returns on non-equity shares are recognised when the right to the
return is established. The fixed return on a debt security is
recognised on a time apportioned basis so as to reflect the
effective interest rate on each such security.
Interest receivable (less any provision for doubtful receipt) is
recognised as it accrues.
(d) Taxation
The charge for taxation is based on net revenue for the period.
The tax effect of different items of income/gain and
expenditure/loss is allocated between capital and revenue on the
same basis as the particular item to which it relates.
Deferred tax is provided, using the liability method, on all
temporary differences at the balance sheet date between the tax
basis of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax liabilities are measured
at the tax rates that are expected to apply to the period when the
liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance sheet date.
Deferred tax assets are only recognised if it is considered more
likely than not that there will be suitable profits from which the
future reversal of underlying timing differences can be
deducted.
Because the Company intends each year to qualify as an
investment trust under Chapter 4 of Part 24 of the Corporation Tax
Act 2010 (previously s842 of the Income and Corporation Taxes Act
1988), no provision is made for deferred taxation in respect of the
capital gains that have been realised, or are expected in the
future to be realised, on the sale of fixed asset investments.
Based on the smaller portfolio of the Company, after taking
advice, it remains the position of the Board that the Company
continues to qualify under these rules.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses
are charged through the Income Statement as revenue items except as
follows:
-- expenses which are incidental to the acquisition of an
investment are included within the cost of the investment;
-- expenses which are incidental to the disposal of an
investment are deducted from the disposal proceeds of the
investment;
-- expenses where a connection with the maintenance or
enhancement of the value of the investments can be demonstrated are
aggregated with the cost of the related investments.
(f) Foreign currency
Transactions denominated in foreign currencies are recorded in
the local currency at actual exchange rates at the date of the
transaction. Overseas assets and liabilities denominated in foreign
currencies at the year-end are reported at the rates of exchange
prevailing at the year-end. Any gain or loss arising from a change
in exchange rates subsequent to the date of a transaction is
included as an exchange gain or loss in capital reserves. The
financial currency of the Company, being its statutory reporting
currency, is sterling.
(g) Finance costs
Finance costs are accounted for on an accruals basis. Finance
costs of debt, insofar as they relate to the financing of the
Company's investments or to financing activities aimed at
maintaining or enhancing the value of the Company's investments,
are allocated between revenue and capital in accordance with the
Board's expected long-term split of returns, in the form of income
and capital gains respectively, from the Company's investment
portfolio.
(h) Reserves
(a) Share premium - the surplus of net proceeds received from
the issuance of new shares over their par value is credited to this
account and the related issue costs are deducted from this account.
This reserve is non-distributable.
(b) Capital reserve - the following are accounted for in this reserve:
-- gains and losses on the realisation of investments;
-- realised and unrealised exchange differences on transactions of a capital nature;
-- capitalised expenses and finance costs, together with the related taxation effect; and
-- increases and decreases in the valuation of investments held.
This reserve is non-distributable.
(c) Revenue reserve - the net profit or loss arising in the
revenue column of the Income Statement is added to or deducted from
this reserve. This reserve, if positive, is available for paying
dividends.
(i) Segmental information
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment.
(j) Investments in Associates
As an Investment Trust, the Company considers that it is an
Investment Entity under IFRS and therefore investments which would
ordinarily be considered associates and require to be equity
accounted are accounted on a fair value basis in the Income
Statement.
2. Other expenses
2020 2020 2020 2019 2019 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Directors' fees 181 - 181 153 153
Auditors' remuneration 30 - 30 40 40
Provision against advances
to Anglo-
African Minerals plc - - - - 471 471
Other costs 255 - 255 396 - 396
____ ____ ____ ____ ____ _____
466 - 466 589 471 1,060
____ ____ ____ ____ ____ _____
Since 1 September 2019 secretarial and administration services
have been provided by Peterhouse Capital Limited. During the period
the total fees payable to Peterhouse these services were GBP96,000.
The balance due to Peterhouse at the year-end was GBP129,000.
3. Tax on Ordinary Activities
Reconciliation of Tax Credit
A reconciliation of the current tax credit is set out below:
2020 2019
Total Total
GBP'000 GBP'000
Loss on ordinary activities before taxation (494) (1,837)
_____ _____
Corporation tax at standard rate 19 %
(2019: 19%) (94) (349)
_____ _____
Effects of:
Non-taxable losses 5 147
Excess management expenses 89 202
_____ _____
Current year tax charge/(credit) - -
_____ _____
Due to the Company's status as an Investment Trust, and the
intention to continue meeting the conditions required to obtain
approval in the foreseeable future, the Company has not provided
for deferred tax on capital gains and losses arising on the
revaluation or disposal of investments.
At 31 December 2020 the Company had surplus management expenses
of approximately GBP2,742,000 (2019: GBP2,276,000) which have not
been recognised as a deferred tax asset.
4. Return per Ordinary Share
Return per ordinary share attributable to shareholders reflects
the overall performance of the Company in the year.
Year ended Year ended
31 December 31 December
2020 2019
Revenue return (1.11p) (1.40p)
Capital return (0.07p) (2.97p)
______ ______
Total return (1.18p) (4.37p)
______ ______
Number Number
Weighted average ordinary shares in issue 41,964,512 41,964,512
_________ _________
Details of ordinary shares issued subsequent to the year-end are
disclosed in Note 12.
5. Investments
2020 2019
Total Total
GBP'000 GBP'000
Investments listed/quoted on a recognised investment
exchange - 28
Unquoted investments - -
___ ___
- 28
___ ___
The whole of the value of investments is attributable to equity
shares.
The fair value of investments is assessed at each balance sheet
and all gains and losses arising from these assessments are
reflected in the capital section of the Income Statement.
International Financial Reporting Standard ("IFRS") "Financial
Instruments: Disclosures" requires an analysis of investments
valued at fair value, based on the reliability and significance of
information used to measure their fair value. The level is
determined by the lowest (that is the least reliable or
independently observable) level of input that is significant to the
fair value measurement for the individual investment in its
entirety as follows:
Level 1 - investments quoted in an active market;
Level 2 - investments whose fair value is based directly on
observable current market prices or indirectly being derived from
market prices;
Level 3 - investments whose fair value is determined using a
valuation technique based on assumptions that are not supported by
observable current market prices or based on observable market
data.
Level 1 Level 2 Level 3 2020 2019
Listed Listed Total Total
overseas in UK GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
Opening book cost 181 - 4,855 5,036 10,275
Opening fair value adjustment (153) - (4,855) (5,008) (8,727)
_____ ____ _____ ______ ______
Opening valuation 28 - - 28 1,548
Sales - proceeds - - - - (272)
Sales - realised losses - - - - (626)
Fair value adjustment (28) - - (28) (622)
_____ ____ _____ ______ ______
Closing Valuation - - - - 28
_____ ____ _____ ______ ______
Closing book cost 181 - 4,855 5,036 5,036
Closing fair value adjustment (181) - (4,855) (5,036) (5,008)
_____ ____ _____ _____ ______
Closing Valuation - - - - 28
_____ ____ _____ _____ ______
The gains and losses included in the above table have all been
recognised within losses on investments in the Income Statement on
page 23.
2020 2019
Losses on Investments GBP'000 GBP'000
Realised losses on sale - (626)
Movement in fair value (28) (622)
_____ _____
Losses on Investments (28) (1,248)
_____ _____
During the year the Company did not incur any transaction costs
on purchases or sales.
6. Debtors
2020 2019
GBP'000 GBP'000
Prepayments - 2
VAT recoverable - 11
___ ___
- 13
___ ___
7. Other Creditors
2020 2019
GBP'000 GBP'000
Other creditors and accruals 900 449
___ ___
8. Share Capital
2020 2020
Shares GBP'000
Authorised at 31 December
Ordinary shares of 1p each 100,000,000 1,000
__________ _____
Allotted, called up and fully paid
Total issued ordinary shares of 1p each as at
31 December 41,964,512 420
_________ _____
Capital management policies and procedures
The Company's capital management objectives are:
-- to ensure, as far as reasonably possible, that the Company
will be able to continue as a going concern; and
-- to maximise the capital return to its equity shareholders
through an appropriate balance of equity capital and loan
notes.
The Board monitors and reviews the broad structure of the
Company's capital on an ongoing basis. The Company has no
externally imposed capital requirements.
The capital of the Company is managed in accordance with its
investment policy detailed in the Strategic Review on page 6.
9. Net Liability Value per Ordinary Share
2020 2019
Net liability value per share (2.14 pence) (0.96 pence)
Net liabilities attributable at end of period (GBP900,000) (GBP401,000)
Ordinary shares of 1p each in issue at end of
period 41,964,512 41,964,512
_________ _________
10. Financial Instruments
The Company's financial instruments comprise its investment
portfolio, cash balances and debtors and creditors that arise
directly from its operations. As an investment trust the Company
holds a small portfolio of financial assets in pursuit of its
investment objective.
Listed fixed asset investments held (see note 5) are measured at
fair value. For listed securities this is either bid price or the
last traded price depending on the convention of the exchange on
which the investment is listed. Unlisted investments are valued by
the Directors on the basis of all the information available to them
at the time of valuation. The fair value of all other financial
assets and liabilities is represented by their carrying value in
the Balance Sheet shown on page 25.
The main risks that the Company faces arising from its financial
instruments are:
(i) market price risk, being the risk that the value of
investment holdings will fluctuate as a result of changes in market
prices caused by factors other than interest rate or currency rate
movements;
(ii) interest rate risk, being the risk that the future cash
flows of a financial instrument will fluctuate because of changes
in market interest rates;
(iii) foreign currency risk, being the risk that the value of
investment holdings, investment purchases, investment sales and
income will fluctuate because of movements in currency rates;
(iv) credit risk, being the risk that a counterparty to a
financial instrument will fail to discharge an obligation or
commitment that it has entered into with the Company; and
(v) liquidity risk, being the risk that the Company may not be
able to liquidate its investments to satisfy ongoing operational
requirements. The Company's operations have been cash flow negative
since its inception, with the Company relying on the sale of
investments to generate the cash needed to continue to operate.
The Company held the following categories of financial
instruments as at 31 December:
2020 2019
GBP'000 GBP'000
Financial Instruments
At amortised cost
Cash at bank and on deposit - 2
___ ___
Financial Liabilities
At amortised cost
Other creditors 900 449
___ ___
Market Price Risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held. It represents the potential
loss the Company might suffer through holding market positions in
the face of price movements. To mitigate the risk the Board's
investment strategy is to select investments for their fundamental
value. Stock selection is therefore based on disciplined
accounting, market and sector analysis, with the emphasis on long
term investments. The very focussed investment portfolio amplifies
the risk arising from factors specific to a country or sector. The
Executive Director actively monitors market prices throughout the
year and reports to the Board, which meets regularly in order to
consider investment strategy.
Investment and portfolio performance are discussed in more
detail in the Chairman's Statement and further information on the
investment portfolio is set out on page 5.
Since the value of the investment portfolio has been completely
provided against in these financial statements, a sensitivity
analysis is not possible.
Interest Rate Risk
Financial Assets
Bond and preference share yields, and their prices, are
determined by market perception as to the appropriate level of
yields given the economic background. Key determinants include
economic growth prospects, inflation, the Government's fiscal
position, short term interest rates and international market
comparisons. The Executive Director takes all these factors into
account when making any investment decisions as well as considering
the financial standing of the potential investee company.
Returns from bonds and preference shares are fixed at the time
of purchase, as the fixed coupon payments are known, as are the
final redemption proceeds. Consequentially, if a bond is held until
its redemption date, the total return achieved is unaltered from
its purchase date. However, over the life of a bond the market
price at any given time will depend on the market environment at
that time. Therefore, a bond sold before its redemption date is
likely to have a different price to its purchase level and a profit
or loss may be incurred.
Interest rate risk on fixed rate interest instruments is
considered to be part of market price risk as disclosed above.
Floating Rate
When the Company retains cash balances they are held in floating
rate deposit accounts. The benchmark rate which determines the
interest payments received on cash balances is the bank base rate
for the relevant currency for each deposit.
Fixed Rate
The Company held no fixed interest investments and had no fixed
interest liabilities at 31 December 2020 nor at 31 December
2019.
The Company had no foreign currency exposure at 31 December
2020. The exposure at 31 December 2019 was as follows:
Net current
Investments Cash assets Total
GBP'000 GBP'000 GBP'000 GBP'000
US Dollar - - - -
Australian Dollar 28 - - 28
____ ____ ____ ____
28 - - 28
____ ____ ____ ____
Credit Risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company. The Executive Director has in
place a monitoring procedure in respect of counterparty risk which
is reviewed on an ongoing basis. Since the value of the investment
portfolio has been completely provided against in these financial
statements, the Company had no credit risk at the year-end.
2020 2019
GBP'000 GBP'000
Cash and cash equivalents - 2
___ ___
As at 31 December 2020 and 31 December 2019 the Company held 3
per cent or more of issued share capital of the following
companies:
2020 2019
Number of 2020 Number of 2019
ordinary shares Percentage ordinary shares Percentage
issued held issued held
Anglo African Minerals
plc 444,648,075 25.4% 444,648,075 25.4%
Siberian Goldfields
Limited 250,010,000 6.05% 250,010,000 6.05%
These companies are not treated as associates as the policy
choice under IFRS is taken whereby they are not equity accounted as
GRIT considers itself as an investment entity and therefore
accounts for these investments on a fair value through profit and
loss basis.
Liquidity Risk
Since the value of the investment portfolio has been completely
provided against in these financial statements, the Company had no
measurable liquidity risk at the year-end.
11. Related Party Transactions
The Directors are considered related parties.
There are no transactions with the Board other than their
aggregated remuneration for services as Directors as disclosed in
the Directors'--Remuneration Report on pages 16 and 17 and as set
out in note 2 to the financial statements. None of the Directors
has any interest in the ordinary shares of the Company.
There were fees of GBP251,541 (2019: GBP82,541) due to current
Directors at the year-end (as noted in the Directors Remuneration
Report on page 16).
Martin Lampshire, a director, has a consultancy arrangement with
Peterhouse Capital Limited, the Company's Administrator and
Secretary. This arrangement is entirely independent of Mr
Lampshire's role as a director of the Company.
As a result of the Company holding more than 20% of the shares
in AAM, it is considered a related party. There were no
transactions with AAM during the year.
12. Post Balance Sheet Events
In February 2021, the Company placed 8,392,902 additional
ordinary shares at a price of 1.5 pence per share, raising
GBP125,893. Simultaneously it issued a convertible loan of
GBP100,000. The loan bears no interest and is repayable after 18
months if not converted before then into ordinary shares, also at
1.5 pence per share.
In April 2021 the Company sold its holding in Siberian
Goldfields Limited for GBP488,352, realising a surplus of the same
amount over the nil written down value at which it is stated in
these financial statements.
The funds from the issue of new shares and from the convertible
loan, together with the proceeds of sale of Siberian Goldfields,
were used in making a partial payment to creditors subject to the
CVA.
In July 2021 the Company conditionally raised a minimum of
GBP500,000 in new equity funds, subject only to the restoration of
trading in the Company's shares on the London Stock Exchange.
Status of information
In accordance with section 435 of the Companies Act 2006, the
directors advise that the financial information set out in this
announcement does not constitute the Group's statutory financial
statements for the year ended 31 December 2020 or 2019, but is
derived from these financial statements. The financial statements
for the year ended 31 December 2019 have been delivered to the
Registrar of Companies.
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