TIDMGRIT
RNS Number : 8901Q
GRIT Investment Trust PLC
30 June 2022
For immediate release 30 June 2022
GRIT Investment Trust plc
("GRIT" or "Company")
Annual Report and Financial Statements for the year ended 31
December 2021
The Directors are pleased to announce the audited results of the
Company for the year ended 31 December 2021.
A copy of the Annual Report and Financial Statements will be
available for viewing at the Company's website:
http://grinvestmenttrust.com/ and will be also uploaded onto the
National Storage Mechanism
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
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. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
For further information, please contact:
Enquiries:
GRIT Investment Trust plc
Martin Lampshire Tel: +44 (0)20 3198 2554
Peterhouse Capital Limited (Broker)
Lucy Williams/ Duncan Vasey Tel: +44 (0)20 7469 0930
CHAIRMAN'S STATEMENT
Investments
The Company's principal investment remains its 25% equity
interest in and loans to Anglo-African Minerals plc ("AAM") located
in Guinea. ASX listed-TerraCom Limited, had entered into a 'Binding
Termsheet' for the purchase of AAM but was prevented by the
coronavirus from completing its due diligence process. In September
2021 there was a military coup d'etat in Guinea which stalled
further discussions and the due diligence process.
As any immediate sale appears unlikely and 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.
In early 2021 the Company received and subsequently accepted an
offer for its shares in Siberian Goldfields (see note 12 to the
financial statements). The capital surplus of GBP488,000 resulting
from this sale is recognised in the current year.
Net Assets
At 31 December 2021 your Company had net liabilities equivalent
to 1.21p deficit per share, a decrease of 43% from the 2.14p
deficit per share at which the Company's net assets stood at 31
December 2020.
Board of Directors
The directors who served during the year were:
Stephen John Roberts (resigned on 2 August 2021)
James Patrick Normand (resigned on 22 October 2021)
Martin Lampshire
Richard Arthur Lockwood (appointed on 22 October 2021)
Malcolm Alec Burne (appointed on 22 October 2021)
Creditors
The sale of the Company's shares in Siberian Goldfields
completed in April 2021 realising a cash consideration GBP488,352.
This, along with the issue of GBP100,000 convertible unsecured loan
notes and placing of shares raising GBP125,893, enabled the CVA
Supervisor to pay a dividend of 76% of the amounts due to 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%.
In the interim statement for the six months ended 30 June 2021,
my predecessor, James Normand, outlined the changes in GRIT's
recent history and how the new management team will organise and
run the company, now known as GRIT Investment Trust Plc.
The war in Ukraine and the huge increase in inflation have
caused a major reaction in equity markets with perhaps the biggest
falls seen in the high-tech sectors. We are entering an era when
the emphasis will be on earnings and dividend yield as opposed to
increasing sales at all costs.
The new management believes that the natural resources sectors
represent sound value for money reflecting in many cases low PERs
and high yields. Value for money is very much the maxim in how we
shall base our investment policy with marketability being an
important consideration.
The new team has very considerable experience in fund management
and are confident they can offer shareholders a sound long term
investment portfolio.
Richard Lockwood
Chairman
30 June 2022
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, a full provision was made against the investment
value of these shares.
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. AAM was previously in discussions for
the sale of the company to Terracom Limited (as announced in
February 2020). However, due to the coronavirus pandemic and a
military coup d'état in Guinea there was a delay in the due
diligence process resulting from the inability to complete a Guinea
mine site visit. We understand discussions between AAM and Terracom
Limited are on hold and 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.
STRATEGIC REVIEW
YEARED 31 DECEMBER 2021
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 2021. It
should be read in conjunction with the Chairman's Statement on page
3, which provides a detailed review of the investment activities
for the period and outlook for the future.
Grit 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.
The Company changed its name to "Grit Investment Trust plc" on
10 January 2022.
Business model
Grit 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.
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
which as of 31 December 2021 amount to approximately GBP193,000.
The company is expected to place shares on the London Stock
Exchange and anticipate raising GBP3,000,000 of which GBP550,000
has been committed by the Board. 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 suspension on the trade of the Company's shares have been
lifted, and with the financing arrangements in place, in addition
to the expected fund raise, the Company is optimistic on its
future.
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
30 June 2022
BOARD OF DIRECTORS' GOVERNANCE REPORT
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 (resigned 22 October 2021)
Stephen Roberts (resigned 2 August 2021)
Richard Arthur Lockwood (appointed on 22 October 2021)
Malcolm Alec Burne (appointed on 22 October 2021)
Martin Lampshire
Director
Martin started his career in Lloyds Bank's Commercial Services
division in 1989 after completing the ACIB qualification. He has
over twenty years' experience in Corporate Broking, working for a
number of city based firms including Teather & Greenwood,
Charles Stanley, Hichens Harrison Stockbrokers and Daniel Stewart
Stockbrokers. He has assisted many companies in a variety of equity
raises including IPO's, secondary fundraisings, vendor and private
placings across a variety of sectors. He has also worked in a
number of overseas financial centres including Hong Kong,
Singapore, Kuala Lumpur and Dubai
Remuneration: GBP40,000 per annum
Shared Directorships with any other Trust Directors: None.
Shareholding in Company: None.
Richard Arthur Lockwood
Non-Executive Chairman
Richard has forged a successful career in fund management and
mining investment and was the founder of New City Investment
Management, of which he ran the specialist Geiger Counter Limited
Uranium Fund. Mr Lockwood was formerly a Director of AIM-listed
Kalahari Minerals which was acquired by CGNPC Uranium Resources Co.
Ltd. Formerly a mining investment partner for Hoare Govett and
McIntosh Securities he was involved in the development and
financing of several gold and base metals projects in Europe,
Australia and Africa. Mr Lockwood's intimate knowledge and
experience in the mining and uranium industries is an asset to the
Company during its current growth phase.
Remuneration: GBPnil
Shared Directorships with any other Trust Directors: None
Shareholding in Company: 223,611 shares equal to 4.44% of the
issued share capital as at 28 June 2022.
Malcolm Alec Burne
Executive Director
Malcolm is a former stockbroker and financial journalist with
The Financial Times. He has controlled and managed fund management,
venture capital and investment banking companies in London,
Australia, Hong Kong and North America. He has been a director of
more than 20 companies, many of which have been in the mineral
resource and gold exploration fields. In 1997, he founded Golden
Prospect plc and was executive chairman until 2007 when the company
changed its name to Ambrian Capital plc. In addition, he was
executive chairman of the Australian Bullion Company (Pty) Limited,
which at the time was Australia's leading gold dealer and member of
the Sydney Futures Exchange.
Remuneration: GBPnil
Shared Directorships with any other Trust Directors: None
Shareholding in Company: 223,611 shares equal to 4.44% of the
issued share capital as at 28 June 2022.
REPORT OF THE DIRECTORS
The Directors present their Annual Report and the audited
financial statements for the year ended 31 December 2021.
Results
The Company had gains on the sale of investments of GBP488,000
(2020: nil) in the period under review; and incurred costs of
GBP391,000 (2020 - GBP466,000).
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 2021 there were 50,357,414 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 28 June 2022, 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 1,273,814 25.28
Richard Lockwood 223,611 4.44
Malcolm Burne 233,611 4.44
Armstrong Investments Ltd 300,000 5.96
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 10.
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.
Energy and Carbon Usage
The Company has not disclosed information in respect of
greenhouse has emissions, energy consumption and energy efficiency
action as its energy consumption in the United Kingdom for the year
is lower than 40,000kWh.
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.
By Order of the Board
Peterhouse Capital Limited
Secretary
30 June 2022
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 UK
adopted international accounting standards 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 UK
adopted international accounting standards
-- 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, is
fair, balanced and understandable; and provides the information
necessary for shareholders to assess the Company's position and
performance, business model and strategy.
On behalf of the Board
Richard Lockwood
Chairman
30 June 2022
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 2018 (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;
-- independence of directors; 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
Company will seem to make appropriate independent appointments once
the restructuring of the Company is complete.
The Board
The Board consists of three Directors. The Directors are not
currently considered to be independent; Mr Lockwood 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 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
Malcolm Burne and Richard Lockwood joined the Board on 22
October 2021. At that time the Nominations Committee consisted of
James Normand and Martin Lampshire who, having reviewed the
respective experience and background of the two proposed directors,
considered them both valuable additions to the GRIT Board.
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
8.
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
30 June 2022
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 2021. PKF Littlejohn LLP issued an unqualified audit
report which is included on pages 17 to 21.
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 third 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.
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 6.
Richard Lockwood
Chairman of the Board of Directors
30 June 2022
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.
However, given the restructuring currently in process, the
Directors have agreed to take no remuneration until that process is
complete and the Company has implemented its investment policy.
New Directors are provided with a letter of appointment. Every
Director 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.
Annual Report on Directors' Remuneration
Directors' Emoluments (audited)
The Directors who served in the twelve months to 31 December
2021 (and, for comparative purposes those who served in the twelve
months ended 31 December 2020) were awarded the following fees and
have similar investment objectives and structures. Furthermore, 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 2021 was GBP59,950 (2020:
GBP181,125). Non-executive Directors are not eligible for bonuses,
pension benefits, share options, long-term incentive schemes or
other benefits.
The Company has not been able to obtain Directors' and Officers'
liability insurance.
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.
2021 2020
Additional Additional
Standard contracted Standard contracted
Name fee services Total fee services Total
James Normand 19,950 - 19,950 35,000 27,000 62,000
Martin Lampshire 30,000 - 30,000 40,000 33,000 73,000
Stephen Roberts 10,000 - 10,000 30,000 16,125 46,125
Richard Arthur - - - - - -
Lockwood
Malcolm Alec Burne - - - - - -
Unpaid Fees
As at 31 December 2021 a significant proportion of these fees
remained unpaid, as follows:
James Normand GBP19,950
Martin Lampshire GBP30,000
Stephen Roberts GBP10,000
Directors' Interests
Biographies of the Directors are shown on page 7.
Save as disclosed, Directors who held office in the year,
Richard Lockwood and Malcolm Burne, hold ordinary shares in the
Company as at 31 December 2021. No Directors held convertible loan
stock in the Company as at 31 December 2021.
Save as disclosed, there has been no change in the ordinary
share holdings of the Directors from 31 December 2021 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.
Approval
The Directors' Remuneration Report on pages 15 and 16 was
approved by the Board of Directors and signed on its behalf on 30
June 2022.
Richard Lockwood
Chairman of the Board of Directors
INDEPENT AUDITOR'S REPORT
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF GRIT INVESTMENT
TRUST PLC
Opinion
We have audited the financial statements of GRIT Investment
Trust Plc (the 'company') for the year ended 31 December 2021 which
comprise the Income Statement, the Statement of Changes in Equity,
the Balance Sheet, the Cash Flow Statement and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards.
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2021 and of its profit for the year then
ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; 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.
Material uncertainty related to going concern
We draw attention to note 1 in the financial statements, which
indicates that company is reliant on future funding in order to
continue as a going concern. As stated in note 1, these events or
conditions, along with the other matters as set forth in note 1,
indicate that a material uncertainty exists that may cast
significant doubt on the company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
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
obtaining and reviewing the management's going concern assessment
and associated cashflow forecast for the period off 12 months from
the date of the approval of the financial statements. We assessed
assumptions used and held discussions with management regarding
future plans, committed costs and the availability of funding.
In relation to the company's reporting on how it has 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 directors considered it appropriate to adopt the going
concern basis of accounting; and
-- the directors' identification in the financial statements of
the material uncertainty related to the entity's ability to
continue as a going concern over a period of at least twelve months
from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
Materiality for the financial statements was set at GBP5,100
(2020: GBP6,800) determined with reference to a benchmark of 1.5%
of expenses. Expenses are deemed the primary driver for the Company
in the current year as it seeks to recapitalise, seek additional
investment opportunities and reduce the cost base commensurate with
current levels of activity. All investments and investee
receivables held by the company are fully impaired. There were no
revisions to the materiality as the audit progressed.
Performance materiality was GBP3,570 (2020: GBP4,760) being 70%
of materiality. This reflects the low risk nature of the audit with
minimal transactions in the year.
We agreed to report to the Board any corrected or uncorrected
identified misstatements exceeding GBP255 (2020: GBP340), 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
Except for the matter described in the Material uncertainty
related to going concern section, we have determined that there are
no other key audit matters to communicate in our 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; or
-- we have not received all the information and explanations we require for our audit.
Corporate governance statement
We have reviewed 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 Code specified for our
review by the Listing Rules.
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 6;
-- Directors' explanation as to their assessment of the
company's prospects, the period this assessment covers and why the
period is appropriate set out on page 6;
-- Directors' statement on whether they have a reasonable
expectation that the company will be able to continue in operation
and meets its liabilities set out on page 6;
-- Directors' statement that they consider the annual report and
the financial statements, taken as a whole, to be fair, balanced
and understandable set out on page 10;
-- Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on page
6;
-- The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on pages 13-14; and
-- The section describing the work of the audit committee set out on pages 13.
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 UK-adopted international accounting 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 other applicable correspondence.
-- We have discussed among the engagement team regarding how and
where fraud might occur and any potential indicators of fraud. In
particular. we challenged the assumptions made by management in
their assessment of going concern (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.
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 three years, covering the periods ended 31 December
2019 to 31 December 2021.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the company and we remain independent of the
company in conducting our audit.
Our audit opinion is consistent with the additional report to
the Board.
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
30 June 2022
GRIT INVESTMENT TRUST PLC INCOME STATEMENT
YEARED 31 DECEMBER 2021
Year ended Year ended
31 December 2021 31 December 2020
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses) on investments 5 - 488 488 - (28) (28)
Other expenses 2 (391) - (391) (466) - (466)
______ ______ ______ _____ ______ ______
Net Gain/(Loss) before Finance
Costs and Taxation (391) 488 97 (466) (28) (494)
Interest payable and similar - - - - - -
charges
______ ______ ______ _____ ______ ______
Net Gain/(Loss) on Ordinary
Activities before Taxation (391) 488 97 (466) (28) (494)
Taxation on ordinary activities 3 - - - - - -
______ ______ ______ _____ ______ ______
Net Gain/(Loss) Attributable
to Equity Shareholders (391) 488 97 (466) (28) (494)
______ ______ ______ _____ ______ ______
Gain/(Loss) per Ordinary
Share 4 (0.86p) 1.08p 0.22p (1.11p) (0.07p) (1.18p)
______ ______ ______ _____ ______ ______
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.
GRIT INVESTMENT TRUST PLC STATEMENT OF CHANGES IN EQUITY
YEARED 31 DECEMBER 2021
Share Revenue
Share premium Capital reserve Other
For the year ended 31 December capital account reserve deficit reserve Total
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2020 420 36,880 (33,185) (5,015) - (900)
Profit/(Loss) on ordinary
activities after taxation - - 488 (391) - 97
___ ______ ______ _____ _____ ___
Total comprehensive income
for the year 420 36,880 (32,697) (5,406) - (803)
Shares issued during the
year 84 42 - - - 126
Equity component of CLN - - - - 68 68
___ ______ ______ _____ _____ ___
Balance at 31 December
2021 504 36,922 (32,697) (5,406) 68 (609)
___ ______ ______ _____ _____ ___
For the year ended 31 December
2020
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)
___ ______ ______ _____ _____ _____
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.
GRIT INVESTMENT TRUST PLC BALANCE SHEET
AT 31 DECEMBER 2021
2021 2020
Notes GBP'000 GBP'000
Current Assets
Investments 5 - -
Cash at bank 488 -
___ ___
488 -
Creditors : amounts falling due within
one year
Trade and other payables 6 (437) (900)
Convertible Unsecured Loans 7 (660) -
___ ___
Net Liabilities (609) (900)
___ ___
Capital and Reserves
Called up share capital 8 504 420
Share premium 36,922 36,880
Capital reserve (32,697) (33,185)
Revenue reserve (5,406) (5,015)
Other reserve 7 68 -
______ ______
Equity Shareholders' Funds Deficit (609) (900)
______ ______
Net Deficit per Share 9 (1.21p) (2.14p)
______ ______
The financial statements were approved by the Board of Directors
and authorised for issue on 30 June 2022 and were signed on its
behalf by:
Richard Lockwood
Chairman
The accompanying notes are an integral part of the financial
statements.
GRIT INVESTMENT TRUST PLC CASH FLOW STATEMENT
YEARED 31 DECEMBER 2021
Year ended Year ended
31 December 31 December
2021 2020
Notes GBP'000 GBP'000
Operating Activities
Profit/(Loss) before taxation 97 (494)
(Profit)/Loss on investments 5 (488) 28
Other interest expense 7 29 -
Decrease in receivables - 13
(Decrease)/Increase in payables (463) 452
_____ _____
Net Cash Outflow from Operating Activities
Before
and After Taxation (825) (2)
_____ _____
Investing Activities
Sales of investments 488 -
____ ____
Net Cash Inflow from Investing Activities 488 -
____ ____
Financing Activities
Issue of Shares 126 -
Convertible Unsecured Loans 699 -
____ ____
Net Cash Inflow from Financing Activities 825 -
____ ____
Increase in Cash in the Year 488 (2)
Net cash at the start of the year - 2
____ ____
Net Cash at the End of the Year 488 -
____ ____
The accompanying notes are an integral part of the financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2021
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 UK-adopted international accounting standards.
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.
Changes in accounting policy and disclosures
New standards or amendments and interpretations to existing
standards that are not yet effective. The following are newly
issued but not yet effective standards, interpretations and
amendments, Mandatory for accounting periods commencing on or after
1 April 2021
o IFRS 16 (amendment) Covid 19 Related Rent Concessions beyond
30 June 2021.
The following are newly issued but not yet effective standards,
interpretations and amendments, Mandatory for accounting periods
commencing on or after 1 January 2022:
o Annual Improvements to IFRS Standards 2018-2020 Cycle. Minor
amendments to IFRS , IRFS 9 and IAS 41
o IAS 16 (amendments) Property, Plant and Equipment : Proceeds
before Intended Use
o IAS 37 (amendment) Onerous Contracts : Costs of Fulfilling a
Contract
o IFRS 3 (amendments) Reference to Conceptual Framework
o IAS 1 (amendment) Classification of Liabilities as Current or
Non Current
o IAS 1 and IFRS Practice Statement 2 (amendments) Disclosure of
Accounting Policies
o IAS 8 (amendments) Definition of Accounting Estimates
o IAS 12 (amendments) Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
o IFRS 17 Insurance Contracts
There are no new Accounting Standards which came into effect on
1 January 2022 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.
(a) Basis of accounting (continued)
Going Concern
For the reasons outlined in the Strategic Review, particularly
with regard to the CVA arrangement and expected placing of shares
on the London Stock Exchange, the Board has concluded that it is
appropriate to prepare the financial statements on a going concern
basis which presumes that the Company will be able to meet its
obligations as they fall due for at the least the next twelve
months from the date of the signing the financial statements.
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, access to
finance, investor commitments and the level of contracted and
committed expenditure over the going concern period. The Company
recorded a profit for the year and, as at 31 December 2021, had net
current liabilities of GBP609,000.
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. 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 will be able to raise sufficient
finance 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) 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.
(g) 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.
(h) Segmental information
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment.
(i) Investments in Associates
As an Investment Trust, the Company considers that it is an
Investment Entity under UK-adopted International Accounting
Standards 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
2021 2021 2021 2020 2020 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Directors' fees 59 - 59 181 - 181
Auditors' remuneration 30 - 30 30 - 30
Other costs 312 - 312 255 - 255
____ ____ ____ ____ ____ _____
391 - 391 466 - 466
____ ____ ____ ____ ____ _____
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 GBP99,000.
The balance due to Peterhouse, for all services provided, at the
year-end was GBP107,000.
3. Tax on Ordinary Activities
Reconciliation of Tax Charge/(Credit)
A reconciliation of the current tax charge/(credit) is set out
below:
2021 2020
Total Total
GBP'000 GBP'000
Gain/(Loss) on ordinary activities before
taxation 97 (494)
_____ _____
Corporation tax at standard rate 19 %
(2020: 19%) 18 (94)
_____ _____
Effects of:
Non-taxable losses - 5
Excess management expenses (18) 89
_____ _____
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 2021 the Company had surplus management expenses
of approximately GBP3,637,946 (2020: GBP3,734,946) which have not
been recognised as a deferred tax asset, and non-trade loan
relationship deficits of GBP876,151 (2020: 876,151).
Factors that may affect future tax charges
The Finance Act 2021 enacted on 10 June 2021 confirmed an
increase in the UK rate of corporation tax to 25% from 19% from 1
April 2023.
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
2021 2020
Revenue return (0.86p) (1.11p)
Capital return 1.08p (0.07p)
______ ______
Total return 0.22p (1.18p)
______ ______
Number Number
Weighted average ordinary shares in issue 45,298,679 41,964,512
_________ _________
5. Investments
2021 2020
Total Total
GBP'000 GBP'000
Investments listed/quoted on a recognised investment
exchange - -
Unquoted investments - -
___ ___
- -
___ ___
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
Listed Listed 2021 2020
overseas in UK Level 3 Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening book cost 181 - 4,855 5,036 5,036
Opening fair value adjustment (181) - (4,855) (5,036) (5,008)
_____ ____ _____ ______ ______
Opening valuation - - - - 28
Sales - proceeds - - (488) (488) -
Sales - realised loss - - (1,702) (1,702) -
Fair value adjustment - - 2,190 2,190 (28)
_____ ____ _____ ______ ______
Closing Valuation - - - - -
_____ ____ _____ ______ ______
Closing book cost 181 - 2,665 2,846 5,036
Closing fair value adjustment (181) - (2,665) (2,846) (5,036)
_____ ____ _____ _____ ______
Closing Valuation - - - - -
_____ ____ _____ _____ ______
The gains and losses included in the below table have all been
recognised within gains/(losses) on investments in the Income
Statement on page 22.
2021 2020
Gains/(Losses) on Investments GBP'000 GBP'000
Realised gains on sale 488 -
Movement in fair value - (28)
_____ _____
Gains/(Losses) on Investments 488 (28)
_____ _____
During the year the Company did not incur any transaction costs
on purchases or sales.
6. Creditors: Amounts falling due within one year
2021 2020
GBP'000 GBP'000
Trade Creditors 126 28
Directors' Loan 60 -
Accruals 58 71
Other Creditors 193 801
_____ _____
437 900
___ ___
7. Convertible Unsecured Loans
GRIT issued two categories of convertible unsecured loan notes
with the following terms.
The first category, GRIT issued GBP100,000 convertible unsecured
loan notes of GBP1 each. The notes
are convertible into ordinary shares of the entity, at the
option of the holder, or repayable on 31 August
2022. The notes have no interest payable, and the conversion
price is 1.5 pence per Ordinary Share.
The second category, GRIT issued GBP599,202 convertible
unsecured loan notes of GBP1 each. The notes
are convertible into ordinary shares of the entity, at the
option of the holder, or repayable on 30 July 2022
2022. The notes have no interest payable, and the conversion
price is 0.25 pence per Ordinary Share subject to a capital
reorganisation.
2021 2020
GBP'000 GBP'000
Convertible Unsecured Loans GBP100,000 100 -
Convertible Unsecured Loans GBP599,202 599 -
Other reserves - equity portion on initial recognition (68) -
_____ _____
631 -
Other interest expense 29 -
_____ _____
Convertible unsecured loan liability 660 -
_____ _____
8. Share Capital
2021 2021
Shares GBP'000
Allotted, called up and fully paid
Total issued ordinary shares of 1p each as at
31 December 50,357,414 504
_________ _____
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 5.
9. Net Liability Value per Ordinary Share
2021 2020
Net liability value per share (1.21 pence) (2.1 pence)
Net liabilities attributable at end of period (GBP609,000) (GBP900,000)
Ordinary shares of 1p each in issue at end of
period 50,357,414 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 24.
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:
2021 2020
GBP'000 GBP'000
Financial Instruments
At amortised cost
Cash at bank and on deposit 488 -
___ ___
Financial Liabilities
At amortised cost
Other creditors 437 900
Convertible Unsecured Loan 660 -
___ ___
1,097 900
___ ___
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 4.
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
Fixed Rate
The Company held no fixed interest investments and had no fixed
interest liabilities at 31 December 2021 nor at 31 December
2020.
The Company had no foreign currency exposure at 31 December
2021, neither at 31 December 2020.
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 Directors have 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.
2021 2020
GBP'000 GBP'000
Cash and cash equivalents 488 -
___ ___
As at 31 December 2021 and 31 December 2020 the Company held 3
per cent or more of issued share capital of the following
companies:
2021 2020
Number of 2021 Number of 2020
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%
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. Details of the fee
arrangement with the Executive Director are included within the
Directors' Report under the heading Management Arrangements and are
disclosed in note 2.
There are no other transactions with the Board other than
aggregated remuneration for services as Directors as disclosed in
the Directors' Remuneration Report on pages 15 and 16, and as set
out in note 2 to the financial statements.
The Directors interests in the ordinary shares of the Company
are disclosed in the Board of Directors' Governance Report.
There were fees of GBP59,950 (2020: GBP251,541) due to current
Directors at the year-end.
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.
13. Post Balance Sheet Events
On 07 January 2022, GRIT sub-divided their 50,357,414 ordinary
GBP0.01 shares into 50,357,414 ordinary GBP0.0025 shares and
50,357,414 deferred GBP0.0075 shares. Of the 50,357,414 ordinary
GBP0.0025 shares, these were consolidated into 5,035,741 ordinary
GBP0.025 shares.
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 Company's statutory financial
statements for the year ended 31 December 2021 or 2020, but is
derived from these financial statements. The financial statements
for the year ended 31 December 2020 have been delivered to the
Registrar of Companies.
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END
FR FLFSSRSIIVIF
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June 30, 2022 10:47 ET (14:47 GMT)
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