TIDMGRIT
RNS Number : 7868X
GRIT Investment Trust PLC
28 April 2023
For immediate release 28 April 2023
GRIT Investment Trust plc
("GRIT" or "Company")
Annual Report and Financial Statements for the year ended 31
December 2022
The Directors are pleased to announce the audited results of the
Company for the year ended 31 December 2022.
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
Richard Lockwood
Chairman
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 has been its 25% equity
interest in and loans to Anglo-African Minerals plc ("AAM") located
in Guinea. However, it has become clear that following a military
coup d'etat in Guinea in 2021, the prospect of selling AAM is
extremely unlikely. Due to 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.
Net Liabilities
At 31 December 2022 your Company had net liabilities equivalent
to 3.36p deficit per share, compared to 12.10p deficit per share at
which the Company's net liabilities stood at 31 December 2021
(restated).
Board of Directors
The directors who served during the year were:
Martin Lampshire
Richard Arthur Lockwood
Malcolm Alec Burne
Creditors
The Company's Voluntary Arrangement creditors ("CVA") from 2019,
inherited by the current Board, have to date been paid 76% of the
amounts due to them. This has been achieved, despite the inability
to raise any sale proceeds from AAM.
Outlook
The continuing war in Ukraine, high levels of global inflation
and subdued economic conditions continue to have a detrimental
effect in equity markets.
At the beginning of last year the Board engaged in a process to
seek regulatory approval for the publication of a prospectus and
also the internal authorisation as, or the external appointment of,
an Alternative Investment Fund Manager ("AIFM"). However, due to
the difficulties completing this process and the poor sentiment
towards the resource sector, the re-establishment of the Company as
a resource focused investment trust was not achievable. An
announcement was therefore made on 16 September 2022, that the
Company had withdrawn both its AIFM and the prospectus application.
The Board therefore took the decision to seek a "Reverse Takeover"
(RTO) by the acquisition of a business which enables the Company to
achieve an appropriate relisting on a public market.
It is envisaged that the announcement of any such proposed
transaction would result in the suspension of the Company's shares
from trading on the Official List. If an RTO transaction can be
achieved the Board believes it will provide a platform for the
future growth of the Company and a positive outcome for
shareholders.
Richard Lockwood
Chairman
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 has previously engaged in
discussions with several parties for the sale of the company.
However, due to a number of factors including the coup d'état in
Guinea, there was a lengthy delay in the due diligence process in
the latter stages of a proposed sale. It is clear that any
realisation from the sale of AAM is now extremely unlikely and the
Board continue to make full provision against both its investment
in AAM's shares and its loans to AAM.
STRATEGIC REVIEW
YEARED 31 DECEMBER 2022
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 2022. 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") was
initially established as an investment trust, seeking 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 was established as a self-managed
investment trust run by its Board taking all major decisions
collectively.
Investment objective
GRIT's investment objective was 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 were listed/quoted on a relevant exchange.
Investment policy
GRIT's investment policy was established to diversify its
investments across a number of companies, with a range of natural
resource assets, in jurisdictions globally. There were no
restrictions as to the commodity classes and geographical regions
into which GRIT could invest. However, as it has not been possible
for the Company to achieve ongoing AIFM authorisation the Company
announced on 16 September 2022 that it is seeking a "Reverse
Takeover" (RTO) by the acquisition of a business which enables the
Company to achieve an appropriate listing on a public market.
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 2022 amount to approximately GBP193,000.
There are currently outstanding GBP370,137 Convertible Unsecured
Loan Notes and it is expected that these will be converted in to
shares during the current financial year. In addition to the
Company's existing cash resources, it is anticipated further funds
will be raised through the capital markets which will adequately
cover company expenditure to at least the end of 2024. 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 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 subject
to a successful "Reverse Takeover" (RTO).
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 prospect of a suitably attractive Reverse Takeover together
with a probable fund raise, gives the Company optimism 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 and working capital.
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
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
Richard Arthur Lockwood
Malcolm Alec Burne
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: GBP10,000
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 1.23% of the
issued share capital as at 27 April 2023.
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 1.23% of the
issued share capital as at 27 April 2023.
REPORT OF THE DIRECTORS
The Directors present their Annual Report and the audited
financial statements for the year ended 31 December 2022.
Results
The Company had gains on the sale of investments of GBPNil
whereas in the previous period had gains on the sale of investments
of GBP488,000; and incurred costs of GBP212,000 (2021 -
GBP391,000).
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 2022 there were 15,196,857 ordinary shares of
2.5p 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 26 April 2023, 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:
Number
Ordinary shares held % held
Philip J Milton & Company Plc 3,029,241 16.64
Richard Edwards 2,032,224 11.17
Peel
Hunt
LLP 1,032,047 5.67
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 gas 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
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
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 seek 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
27 April 2023
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 2022. 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
27 April 2023
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
2022 (and, for comparative purposes those who served in the twelve
months ended 31 December 2021) 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 2022 was GBP10,000 (2021:
GBP52,950). 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.
2022 2021
Additional Additional
Standard contracted Standard contracted
Name fee services Total fee services Total
Martin Lampshire 10,000 - 10,000 30,000 - 30,000
Richard Lockwood - - - - - -
Malcolm Alec Burne - - - - - -
Unpaid Fees
As at 31 December 2022 ex-Directors' fees remained unpaid, as
follows:
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 and Unsecured Convertible Loan Notes (CULNS) as at 31
December 2022.
Save as disclosed, there has been no change in the ordinary
share holdings of the Directors from 31 December 2022 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 27
April 2023.
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 2022 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 2022 and of its loss 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 the company incurred a net loss of GBP155,000 during
the year ended 31 December 2022 and, as of that date, the company's
cash position was GBP66,000 with current liabilities exceeding
total assets by GBP510,000. Although within the net liability
position, GBP445,000 of the balance relates to convertible loan
notes that will ultimately have no cash implications on conversion,
the current cash position is insufficient to fund the company's
working capital requirements as well as its reverse takeover
transaction strategy. Consequently, the company will require a cash
injection either through equity raisings or other financial
arrangements to fund its activities. Whilst cash inflows of
GBP360,000 are expected, no firm agreements are currently in place
for GBP300,000 of that balance. As noted 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 going concern assessment and
associated cashflow forecast for the period of twelve months from
the date of the approval of the financial statements;
-- Ensuring the mathematical accuracy of the cash flow forecasts;
-- Agreeing key inputs of the cashflow forecast to underlying supporting documentation;
-- Discussing the future plans, committed costs and the
availability of funding with the directors;
-- Assessing and challenging the key assumptions applied to ensure reasonability;
-- Agreeing cash balances to the opening working capital position;
-- Stress-testing the cash flow forecasts; and
-- Assessing the reasonability of the cashflow forecast against post year end performance.
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 as a whole was set at
GBP22,000 (2021: GBP5,100) determined with reference to an average
of benchmarks of 7% of net assets and 3% of adjusted loss before
tax (2021: 1.5% of expenses). As the company is an investment
trust, net assets are used to fund the directors investment
strategy and the adjusted loss before tax benchmark creates a
leaner investment vehicle for recapitalisation, with the loss in
the year impacting the company's ability to do so. As such, we
consider these two benchmarks as the most appropriate benchmarks.
The percentages applied to these benchmarks have been selected to
bring into scope all significant classes of transactions, account
balances and disclosures relevant for the shareholders, and also to
ensure that matters that would have a significant impact on the
results were appropriately considered.
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Performance materiality was set at GBP17,600 (2021:
GBP3,570) being 80% (2021: 70%) of the materiality for the
financial statements as a whole. In determining performance
materiality, we considered the number and quantum of identified
misstatements in the prior year audit, management's attitude to
correcting misstatements identified and our cumulative knowledge of
the company and their environment.
We agreed to report to the directors any corrected or
uncorrected identified misstatements exceeding GBP1,100 (2021:
GBP255), as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
Our approach to the audit
In designing our audit, we determined materiality as above and
assessed the risk of material misstatement in the financial
statements. In particular, we tailored the scope of our audit to
ensure that we performed sufficient audit work to be able to give
an opinion on the financial statement as a whole, taking into
account the cash shell nature of the company. We looked at areas
involving significant accounting estimates and judgement by the
directors such as the valuation of investments. We considered, as
part of our work on going concern, future events that are
inherently uncertain. We also addressed the risk of management
override of internal controls, including evaluating whether there
was evidence of bias by management that represented a risk of
material misstatement due to fraud. Our audit was performed from
our London office with regular contact with management and the
directors throughout the audit.
This, in conjunction with additional supplementary procedures
performed, gave us appropriate evidence for our opinion on the
company financial statements.
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 meet 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 10 and 13-14]; and
-- The section describing the work of the Board acting as the
audit committee [set out on page 13].
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the 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, industry research and application of
cumulative audit knowledge.
We determined the principal laws and regulations relevant to the
company in this regard to be those arising from the FCA Listing
Rules, the Companies Act 2006, the Association of Investment
Companies Code of Corporate Governance anti-bribery and anti-money
laundering regulations 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:
o Holding discussions with management and considering whether
there were any known or suspected instances of non-compliance with
laws and regulations or fraud;
o Reviewing board meeting minutes;
o Reviewing Regulatory News Service (RNS) announcements; and
o Reviewing legal and regulatory correspondence and legal
expenses.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, the potential for management bias
in relation to the valuation of investments. We challenged the
assumptions made by management in their assessment of the valuation
of investments and ensured that there were adequate disclosures
included in the respective notes and accounting policies.
-- As in all of our audits, 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 four years, covering the years ended 31 December 2019
to 31 December 2022.
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 acting as 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
27 April 2023
GRIT INVESTMENT TRUST PLC INCOME STATEMENT
YEARED 31 DECEMBER 2022
Year ended Year ended
31 December 2022 31 December 2021
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses) on investments 6 - - - - 488 488
Other income 3 96 - 96 - - -
Other expenses 2 (212) - (212) (391) - (391)
______ ______ ______ _____ ______ ______
Net Gain/(Loss) before Finance
Costs and Taxation (116) - (116) (391) 488 97
Interest payable and similar
charges (39) - (39) - - -
______ ______ ______ _____ ______ ______
Net Gain/(Loss) on Ordinary
Activities before Taxation (155) - (155) (391) 488 97
Taxation on ordinary activities 4 - - - - - -
______ ______ ______ _____ ______ ______
Net Gain/(Loss) Attributable
to Equity Shareholders (155) - (155) (391) 488 97
______ ______ ______ _____ ______ ______
Gain/(Loss) per Ordinary
Share 5 (2.35p) - (1.91p) (0.86p) 1.08p 0.22p
______ ______ ______ _____ ______ ______
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 2022
Share Revenue
Share premium Capital reserve Other
For the year ended 31 December capital account reserve deficit reserve Total
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2021 504 36,922 (32,697) (5,406) 68 (609)
Loss on ordinary activities
after taxation - - - (155) - (155)
___ ______ ______ _____ _____ ___
Total comprehensive income
for the year - - - (155) - (155)
Shares issued during the
year 254 - - - - 254
Equity component of CLN - - - - - -
___ ______ ______ _____ _____ ___
Balance at 31 December
2022 758 36,922 (32,697) (5,561) 68 (510)
___ ______ ______ _____ _____ ___
For the year ended 31 December
2021
Balance at 31 December 2020 420 36,880 (33,185) (5,015) - (900)
Loss on ordinary activities
after taxation - - 488 (391) - 97
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)
___ ______ ______ _____ _____ _____
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 2022
2022 2021
Notes GBP'000 GBP'000
Current Assets
Investments 6 - -
Other receivables 7 140 -
Cash at bank 8 66 488
___ ___
206 488
Creditors : amounts falling due within
one year
Trade and other payables 9 (271) (437)
Convertible Unsecured Loans 10 (445) (660)
___ ___
Net Liabilities (510) (609)
___ ___
Capital and Reserves
Called up share capital 11 758 504
Share premium 36,922 36,922
Capital reserve (32,697) (32,697)
Revenue reserve (5,561) (5,406)
Other reserve 10 68 68
______ ______
Equity Shareholders' Funds Deficit (510) (609)
______ ______
Net Deficit per Share 12 (3.36p) (12.10p)*
______ ______
The financial statements were approved by the Board of Directors
and authorised for issue on 27 April 2023
and were signed on its behalf by:
Richard Lockwood
Chairman
The accompanying notes are an integral part of the financial
statements.
*Restated
GRIT INVESTMENT TRUST PLC CASH FLOW STATEMENT
YEARED 31 DECEMBER 2022
Year ended Year ended
31 December 31 December
2022 2021
Notes GBP'000 GBP'000
Operating Activities
Profit/(Loss) before taxation (155) 97
(Profit)/Loss on investments 6 - (488)
Other interest expense 10 39 29
(Increase) in receivables (140) -
(Decrease) in payables (166) (463)
_____ _____
Net Cash Outflow from Operating Activities
Before
and After Taxation (422) (825)
_____ _____
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
____ ____
(Decrease)/Increase in Cash in the Year (422) 488
Net cash at the start of the year 488 -
____ ____
Net Cash at the End of the Year 66 488
____ ____
The accompanying notes are an integral part of the financial
statements.
GRIT INVESTMENT TRUST PLC NOTES TO THE FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2022
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) "for Investment
Trust Companies and Venture Capital" issued in July 2022 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 now effective. The following are newly issued
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 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 , IFRS 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
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 the assumption
that there exists some material uncertainty on a going concern
basis. However, the directors, supported by recent cashflow
forecasts, believe that the Company will be able to meet its
obligations as they fall due for at least the next twelve months
from the date of the signing of 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 loss for the year and as at 31 December 2022, had net
current liabilities of GBP510,000.
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 6.
A summary of the principal accounting policies which have been
applied to all periods presented in
(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 (g) 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
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
(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
2022 2022 2022 2021 2021 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Directors' fees 10 - 10 59 - 59
Auditors' remuneration 27 - 27 30 - 30
Other costs 175 - 175 302 - 302
____ ____ ____ ____ ____ _____
212 - 212 391 - 391
____ ____ ____ ____ ____ _____
Since 1 September 2019 secretarial and administration services
have been provided by Peterhouse Capital Limited. During the period
the total fees payable to Peterhouse for these services were
GBP18,000. The balance due to Peterhouse, for all services
provided, at the year-end was GBP17,000.
3. Other income
2022 2021
GBP'000 GBP'000
Other income - VAT refunded 96 -
___ ___
96 -
___ ___
4. Tax on Ordinary Activities
Reconciliation of Tax Charge/(Credit)
A reconciliation of the current tax charge/(credit) is set out
below:
2022 2021
Total Total
GBP'000 GBP'000
Gain/(Loss) on ordinary activities before
taxation (155) 97
_____ _____
Corporation tax at standard rate 19 %
(2021: 19%) (29) 18
_____ _____
Effects of:
Losses carried forward on which no deferred
tax asset is recognised 29 -
Excess management expenses - (18)
_____ _____
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 2022 the Company had surplus management expenses
of approximately GBP4,186,528 (2021: GBP 3,637,946 ) which have not
been recognised as a deferred tax asset, and non-trade loan
relationship deficits of GBP876,151 (2021: GBP876,151).
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.
5. 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
2022 2021
Revenue return (2.35p) (0.86p)
Capital return - 1.08p
______ ______
Total return (2.35)p 0.22p
______ ______
Number Number
Weighted average ordinary shares in issue 6,608,626 45,298,679
_________ _________
6. Investments
2022 2021
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 2022 2021
overseas in UK Level 3 Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening book cost - - - - 5,036
Opening fair value adjustment - - - - (5,036)
____ ____ ____ ____ ______
Opening valuation - - - - -
Sales - proceeds - - - - (488)
Sales - realised loss - - - - (1,702)
Fair value adjustment - - - - 2,190
____ ____ ____ ____ ______
Closing Valuation - - - - -
____ ____ ____ ____ ______
Closing book cost - - - - 2,846
Closing fair value adjustment - - - - (2,846)
____ ____ ____ _____ ______
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.
2022 2021
Gains/(Losses) on Investments GBP'000 GBP'000
Realised gains on sale - 488
Movement in fair value - -
_____ _____
Gains/(Losses) on Investments - 488
_____ _____
During the year the Company did not incur any transaction costs
on purchases or sales.
7. Other receivables: Amounts falling due within one year
2022 2021
GBP'000 GBP'000
Prepayments 2 -
VAT 138 -
___ ___
140 -
___ ___
8. Cash and cash equivalents
2022 2021
GBP'000 GBP'000
CVA account 30 30
Bank account 36 458
___ ___
66 488
___ ___
9. Creditors: Amounts falling due within one year
2022 2021
GBP'000 GBP'000
Trade Creditors 145 126
Directors' Loan - 60
Accruals 40 58
Other Creditors 86 193
___ ___
271 437
___ ___
10. 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 December 2023.The notes
have no interest payable, and the conversion price is 15p per
Ordinary Share.
The second category, GRIT has outstanding GBP345,173 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 December 2023. The notes have no interest payable,
and the conversion price is 2.5p per Ordinary Share.
It is expected that both categories of convertible unsecured
loan notes will be converted in to shares before the end of
2023.
2022 2021
GBP'000 GBP'000
Convertible Unsecured Loans GBP100,000 100 100
Convertible Unsecured Loans GBP345,173 345 599
Other reserves - equity portion on initial recognition (68) (68)
_____ _____
377 631
Other interest expense 68 29
_____ _____
Convertible unsecured loan liability 445 660
_____ _____
11. Share Capital
2022 2022
Shares GBP'000
Allotted, called up and fully paid
Total issued and deferred ordinary shares of
2.5p each as at 31 December 15,196,857 758
_________ _____
During the year the shares were consolidated from GBP0.0025 per
share to GBP0.025 per share. Part of the Convertible unsecure loan
notes were also converted during the year, resulting in an issue of
additional share capital of 10,161,166.
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.
12. Net Liability Value per Ordinary Share
2021
2022 Restated
Net liability value per share (3.36 p) (12.10p)
Net liabilities attributable at end of period (GBP510,000) (GBP609,000)
Ordinary shares of 2.5p (2021: 1p) each in issue
at end of period 15,196,857 5,035,741
_________ _________
13. 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 6) 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:
2022 2021
GBP'000 GBP'000
Financial Instruments
At amortised cost
Cash at bank and on deposit 66 488
___ ___
66 488
___ ___
Financial Liabilities
At amortised cost
Other creditors 271 437
Convertible Unsecured Loan 445 660
___ ___
716 1,097
___ ___
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 2022 nor at 31 December
2021.
The Company had no foreign currency exposure at 31 December
2022, neither at 31 December 2021.
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.
2022 2021
GBP'000 GBP'000
Cash and cash equivalents 66 488
___ ___
As at 31 December 2022 and 31 December 2021 the Company held 3
per cent or more of issued share capital of the following
companies:
2022 2021
Number of 2022 Number of 2021
ordinary shares Percentage ordinary shares Percentage
issued held issued held
Anglo African Minerals
plc 444,648,075 25.4% 444,648,075 25.4%
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.
14. 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.
There were fees of GBP10,000 (2021: GBP59,950) due to past
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.
15. Post Balance Sheet Events
A VAT refund totalling GBP98,794 was received from HMRC post
year end.
A total of GBP75,036 convertible unsecured loan notes were
converted and 3,001,438 ordinary shares issued on 13 April
2023.
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END
FR SEFEFWEDSEFL
(END) Dow Jones Newswires
April 28, 2023 02:00 ET (06:00 GMT)
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