REG - GRIT Investment Trst - Annual Financial Report
30/06/2022 16:00
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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
(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 £488,000 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 £488,352. This, along with the issue of
£100,000 convertible unsecured loan notes and placing of shares raising
£125,893, 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
YEAR ENDED 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 £39,520,012 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 £4,850,000 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 £193,000. The company is expected to
place shares on the London Stock Exchange and anticipate raising £3,000,000
of which £550,000 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: £40,000 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: £nil
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: £nil
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 £488,000 (2020: nil) in
the period under review; and incurred costs of £391,000 (2020 - £466,000).
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
£200,000 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 £59,950 (2020: £181,125).
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
Name Standard Additional contracted services Total Standard Additional contracted services Total
fee
fee
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 £19,950
Martin Lampshire £30,000
Stephen Roberts £10,000
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
INDEPENDENT AUDITOR'S REPORT
INDEPENDENT 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 £5,100 (2020: £6,800)
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 £3,570 (2020: £4,760) 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 £255 (2020: £340), 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
(http://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
YEAR ENDED 31 DECEMBER 2021
Year ended Year ended
31 December 2021
31 December 2020
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'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
YEAR ENDED 31 DECEMBER 2021
For the year ended 31 December 2021 Share Share Capital Revenue Other Total
capital
premium
reserve
reserve
reserve
account
deficit
£'000
£'000
£'000
£'000
£'000 £'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
Notes 2021 2020
£'000
£'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
YEAR ENDED 31 DECEMBER 2021
Year ended Year ended
31 December
31 December
2021
2020
Notes £'000 £'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 (825) (2)
and After Taxation
_____ _____
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
YEAR ENDED 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 £609,000.
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
£'000
£'000
£'000
£'000
£'000
£'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 £99,000. The balance due to
Peterhouse, for all services provided, at the year-end was £107,000.
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
£'000
£'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 £3,637,946 (2020: £3,734,946) which have not been recognised
as a deferred tax asset, and non-trade loan relationship deficits of £876,151
(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
£'000
£'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 Level 3 2021 2020
Listed overseas
Listed
£'000
Total
Total
£'000
in UK
£'000
£'000
£'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.
Gains/(Losses) on Investments 2021 2020
£'000
£'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
£'000
£'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 £100,000 convertible
unsecured loan notes of £1 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 £599,202 convertible
unsecured loan notes of £1 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
£'000
£'000
Convertible Unsecured Loans £100,000 100 -
Convertible Unsecured Loans £599,202 599 -
Other reserves - equity portion on initial recognition (68) -
_____ _____
631 -
Other interest expense 29 -
_____ _____
Convertible unsecured loan liability 660 -
_____ _____
8. Share Capital
2021 2021
Shares
£'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 (£609,000) (£900,000)
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
£'000
£'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
£'000
£'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 2021 2020 2020
Number of
Percentage
Number of
Percentage
ordinary shares issued
held
ordinary shares 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 £59,950 (2020: £251,541) 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 £0.01 shares
into 50,357,414 ordinary £0.0025 shares and 50,357,414 deferred £0.0075
shares. Of the 50,357,414 ordinary £0.0025 shares, these were consolidated
into 5,035,741 ordinary £0.025 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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