TIDMGRIT
RNS Number : 0953E
Global Resources Investment Tst PLC
30 October 2015
To: RNS and the Channel Islands Securities Exchange Authority Limited
From: Global Resources Investment Trust plc
Date: 30 October 2015
The Chairman, Lord St John stated,
Introduction
The relative stability in the global commodity markets that I
referred to in my previous statement in April 2015 proved to be
short lived, with the summer seeing a return to volatile and
precipitous falls.
The junior resource sector again proved to be especially
vulnerable and illiquid.
On 31 July 2015, your Company announced that it had extended its
accounting period from 31 August to 31 December. The rationale
behind this move was to better align the Company's accounting
period with those of the majority of its investee companies and
also the payment periods attaching to its Convertible Unsecured
Loan Stock "CULS". Your Company is therefore presenting this second
interim report covering the period from 1 September 2014 to 31
August 2015.
Investment and Share Price Performance
At 31 August 2015 your Company's NAV was 39.5p, down 24.0% since
28 February 2015 and a total of 41.2% for the year since 31 August
2014. The NAV at the time of writing is 35.4p.
The Company's ordinary share price has continued to decline
faster than the NAV, falling 47.0% to 11.1p during the six month
period. This decline has continued and the share price is currently
5.75p, representing a discount to the prevailing NAV per share of
no less than 84%. The capitulation of investor sentiment in the
sector is perhaps illustrated by the magnitude of the spread at
which your Company's shares trade; the bid price is 4.0p and the
offer price 7.5p.
Within the investment portfolio itself all is not doom and
gloom, although there is no denying the funding problems that even
robust projects have found themselves suffering. You will find more
on this in the Investment Manager's Review and in the review of the
top ten investments.
Gearing and 9% Cumulative Unsecured Loan Stock 2018 ('CULS')
The Company issued GBP5 million nominal of CULS to provide
working capital. The CULS provide a degree of structural gearing
and the Company was 26.9% geared at 31 August 2015.
Under the terms of the CULS your Company gave an undertaking
that the cover ratio (being the ratio of the value of its
investment portfolio to the principal amount of the outstanding
CULS) must be at all times no less than 4:1. In October 2015, due
to the further fall in the NAV noted above, the ratio dropped below
this level.
The conversion of a total of GBP300,000 of the CULS in issue, at
an exercise price of 75p per share, by Resource Development
Partners Limited, which had the combined benefit of reducing your
Company's debt whilst providing a small boost to the NAV per share,
has seen the coverage ratio increase back above the minimum level.
At the time of writing, it is 4.0:1.
Outlook and Future Plans
When I wrote to you in April 2015 I said that we were
"considering several options both to support our portfolio of
companies and to pro-actively rationalise and consolidate the
portfolio in anticipation of a return to a growth cycle." The speed
and depth of the summer retreat has caused us to accelerate this
process and I expect to be writing to you shortly with proposals
for you to consider in connection with your Company's future.
Lord St John
Chairman
30 October 2015
Investment Manager's Review
The period under review has proved to be the most difficult for
the resource markets since the tail end of the 2000/01 commodity
bear market. While commodity prices are for the most part higher in
nominal terms than then, resource equities, especially the junior
stocks, have experienced considerably greater falls in many cases.
This is reflected in the 24.0% decline in the NAV over the half
year to 31 August 2015.
The dominant influence on the metal markets and resource
equities during the summer months was undoubtedly the negative
impact of the economic slowdown in China. The slump in the Shanghai
Index in June wiped $2trillion off the Chinese equity market and
had a severely depressing effect on bulk commodities, base metals
and precious metals. The oil market came under pressure as well, as
perceptions of a deal on Iran's nuclear programme heightened the
possibility of increased oil production, further depressing the
price.
The slowdown in demand from China, and its manufacturing sector
experiencing its largest decline in six years, resulted in the CRB
Index falling to a six year low in July. The associated Chinese
devaluation had an unsettling effect on all financial markets,
including commodities and currencies. Virtually all the gains from
the so-called commodity supercycle have been eroded since the 2008
peak. In such volatile markets most resource stocks came under
pressure, although many were already extremely depressed, trading
at or close to all time lows.
Amongst this market turmoil gold was a lone beneficiary, again
demonstrating its safe haven status, rising from under $1100 to
$1160, before giving up some of the gain. There was little response
from the stocks however, with the XAU gold mines index at an all
time low relative to the gold price. Taking advantage of the
depressed valuations there has been an increase in merger and
takeover activity in the small to mid size gold sector. During the
first half of the year there have been some fifteen gold company
deals, eight among producers, and seven among developers. At
current valuations it is easier, and in some cases cheaper, to
acquire resource ounces in the market, rather than through
exploration.
The fund has over forty per cent exposure to developing gold
companies all of which are making steady progress. Our largest
holding, Merrex, and its joint venture partner, Iamgold, reported
excellent results from the last phase of its 2015 drill programme,
and a maiden resource statement is expected before the year end.
IncaOne, which is processing high grade ore from the artisanal
miners in Peru, has embarked on an ambitious expansion programme to
acquire additional plants which will enable a significant increase
in production over the next 2-3 years. NuLegacy Gold has completed
its fifth phase of drilling in the Cortez trend in Nevada, to earn
a 70% working interest in the project from Barrick Gold. An initial
estimate of the resource is put at over 100m tonnes at an average
grade of 1g/t. More detailed comment can be found in the
accompanying notes on the larger holdings.
While some stability has returned to the mining market, the
economic outlook remains clouded. The Fed guessing game on US
interest rates continues, and the much anticipated increase will be
determined by a combination of US and Chinese economic data in the
coming months, with any increase being construed as positive.
The commodity breakdown of the portfolio shows little change
since the last report, although the gold weighting has increased
slightly primarily due to market movements. During the same period,
the percentage of unquoted holdings has increased significantly, as
in August the GXG Market ceased operations. Both Anglo African
Minerals and InCoR Holdings had previously been listed on the GXG
Market and consequently they are now classified as unquoted. Both
companies are reviewing their plans for re-listing on a recognised
stock exchange. In the meantime we continue to rationalise the
portfolio holdings and narrow the focus to those companies that
have quality projects with the capability of delivering positive
returns.
David Hutchins and Kjeld Thygesen
RDP Fund Management LLP
30 October 2015
Top Ten Review
Arakan Resources (19.4%)*
Through its subsidiary, Posit Coal, the company is looking to
develop and expand the Kara-Keche thermal coal deposit in the
Kyrgyz Republic, where it will establish a 50/50 joint venture with
the government. Against a difficult market environment, the company
is continuing to explore potential financing options to allow the
staged expansion of the Kara-Keche resource. This remains a large
scale project with strong economics and attractive payback. Arakan
also has four signed copper/gold exploration leases in Myanmar.
Anglo African Minerals (13.5%)*
AAM is looking to be amongst the world's leaders in the bauxite
industry, and currently owns the rights to 4 bauxite licences in
Guinea and is focused on developing its assets to provide near,
medium and long-term production. The company recently announced a
JORC compliant inferred mineral resource of 43 million tonnes for
its FAR deposit and a favourable scoping study based on a 3 million
tonne per annum bauxite export operation, which could be in
production within 18 months.
Alhambra Resources (12.7%)*
Canadian listed gold exploration/development company operating
in Kazakhstan, where it has a 100% working interest in the 2.4
million acre Uzboy Project, located in the prolific gold belt in
north central Kazakhstan, which hosts numerous world class gold
deposits. The company is continuing to try and arrange finance to
re-start a small scale heap leach project, while also reinstating
its exploration program. The deposit was previously explored during
the Soviet period and is reported to have a potential resource of
over 12 million ounces based on the Soviet C1 and C2 resource
categories.
Siberian Goldfields (11.9%)*
Private company developing the Zhelezny Kryazh gold and iron ore
deposit in the Chita region of Russia, where a significant high
grade resource has already been outlined and initial feasibility
studies completed. Significant progress has already been made
on-site with completion of a site office, assay labs and a mobile
screening and crushing complex and first production is
imminent.
Merrex Gold (11.9%)*
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October 30, 2015 12:25 ET (16:25 GMT)
The company is in joint venture with IAMGOLD Corporation on the
Siribaya Gold Project in Mali, West Africa, which is an advanced
stage exploration project with an indicated NI43-101 resource of
just over 300,000 ounces at 2.34 g/t. The Siribaya Project is on
the same geological trend and only 20 kilometres from Papillion
Resources project which was acquired by Canadian gold producer B2
Gold earlier this year. Recent drill results have continued to be
positive and a maiden resource statement is expected before year
end.
NuLegacy Gold (6.0%)*
A Canadian listed company, with a strong management team, that
has been formed with the objective of discovering Carlin-type gold
deposits in Nevada. The company has just recently announced that it
has now completed its earn-in to a 70% interest in the Iceberg gold
deposit in the Cortez gold trend in Nevada, by establishing a
threshold resource of 1.0+ million NI43-101 compliant ounces.
Tirex Resources (4.9%)*
Listed in Canada, Tirex is focused on mineral exploration and
development activities in Albania, where it has recently announced
that it has signed an agreement with the Albanian Geological Survey
to collaborate in the metallurgical studies of the zinc-rich copper
deposit at Koshai. This collaboration will include the re-opening
of the underground workings in Koshai. The company continues to
have the support and financial backing of the European Bank for
Reconstruction and Development ('EBRD').
Inca One Resources (3.3%)*
A Canadian mineral resource and ore processing company with a
gold milling facility in Peru, servicing government permitted
small-scale miners. The company's objective is to become the
'processor of choice' for the local miners, by offering long
lasting and reliable relationships and superior service. The
company announced commercial production earlier this year, and
already has significant expansion plans, which will require
additional funding.
InCoR Holdings (3.0%)*
InCoR Holdings is a venture capital and holding company in the
natural resource sector looking to identify and acquire developing
projects and distressed assets identified by its experienced
management team. The company was previously listed on the GXG
exchange, which closed earlier in the year. As a result, InCoR
Holdings is now unquoted. As at the end of September, InCoR
Holdings is no longer a top 10 holding.
Saturn Minerals (2.3%)*
An oil and gas, exploration and development company focused in
Saskatchewan, Canada. The Williston Basin, located in North Dakota,
Montana and Saskatchewan hosts some of the largest reserves of oil
and potash as well as significant reserves of coal and natural gas.
Since mid-2000, exploration and development of the central parts of
the basin has resulted in the basin becoming the second largest
oil-producing basin in North America. Saturn Minerals has a 95%
interest in over 370,000 acres of oil and gas rights in the
Northern Williston Basin, which are some of the largest oil and gas
permits in Saskatchewan. The company has completed initial seismic
programs on the permits and is currently planning the next stage of
exploration, which will include drilling.
* % of total investments as at 31 August 2015.
Enquiries:
RDP Fund Management LLP
David Hutchins
Tel +44 (0) 207 290 8541
Beaumont Cornish Limited
Roland Cornish
Tel: +44 (0) 207 628 3396
Felicity Geidt
Tel: +44 (0) 207 628 3396
R&H Fund Services Limited
Martin Cassels
Tel: +44 (0) 131 524 6140
Condensed Income Statement
Six months ended
31 August 2015
(unaudited)
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- --------- ----------
Losses on investments 3 - (4,456) (4,456)
Income 2 93 - 93
Investment management fee (138) - (138)
Other expenses (205) - (205)
----------------------------------------- -------- -------- --------- ----------
Net return before finance costs
and taxation (250) (4,456) (4,706)
----------------------------------------- -------- -------- --------- ----------
Interest payable and similar charges (227) - (227)
----------------------------------------- -------- -------- --------- ----------
Net return on ordinary activities
before taxation (477) (4,456) (4,933)
----------------------------------------- -------- -------- --------- ----------
Tax on ordinary activities - - -
----------------------------------------- -------- -------- --------- ----------
Net return attributable to equity
shareholders (477) (4,456) (4,933)
----------------------------------------- -------- -------- --------- ----------
Loss per ordinary share 4 (1.21)p (11.26)p (12.47)p
----------------------------------------- -------- -------- --------- ----------
Year ended
31 August 2015
(unaudited)
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- --------- ----------
Losses on investments 3 - (9,683) (9,683)
Income 2 (48) - (48)
Investment management fee (303) - (303)
Other expenses (472) - (472)
----------------------------------------- -------- -------- --------- ----------
Net return before finance costs
and taxation (823) (9,683) (10,506)
----------------------------------------- -------- -------- --------- ----------
Interest payable and similar charges (446) - (446)
----------------------------------------- -------- -------- --------- ----------
Net return on ordinary activities
before taxation (1,269) (9,683) (10,952)
----------------------------------------- -------- -------- --------- ----------
Tax on ordinary activities - - -
----------------------------------------- -------- -------- --------- ----------
Net return attributable to equity
shareholders (1,269) (9,683) (10,952)
----------------------------------------- -------- -------- --------- ----------
Loss per ordinary share 4 (3.21)p (24.47)p (27.68)p
----------------------------------------- -------- -------- --------- ----------
Year ended
31 August 2014
(audited)
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- --------- ----------
Losses on investments 3 - (10,117) (10,117)
Income 2 590 - 590
Investment management fee (204) - (204)
Other expenses (357) - (357)
----------------------------------------- -------- -------- --------- ----------
Net return before finance costs
and taxation 29 (10,117) (10,088)
----------------------------------------- -------- -------- --------- ----------
Interest payable and similar charges (213) - (213)
----------------------------------------- -------- -------- --------- ----------
Net return on ordinary activities
before taxation (184) (10,117) (10,301)
----------------------------------------- -------- -------- --------- ----------
Tax on ordinary activities - - -
----------------------------------------- -------- -------- --------- ----------
Net return attributable to equity
shareholders (184) (10,117) (10,301)
----------------------------------------- -------- -------- --------- ----------
Loss per ordinary share 4 (0.47)p (25.86)p (26.33)p
----------------------------------------- -------- -------- --------- ----------
Comparative figures for the six months ended 31 August 2014 are
not separately presented as the Company did not trade and received
no income and incurred no expenditure prior to 7 March 2014 and
therefore the figures for the year ended 31 August 2014 are
identical to the figures for the six months ended 31 August
2014.
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October 30, 2015 12:25 ET (16:25 GMT)
The 'total' column of this statement represents the Company's
profit and loss account, prepared in accordance with IFRS.
All revenue and capital items in this statement derive from
continuing operations. All of the loss for the period is
attributable to the owners of the Company.
No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required
as all gains and losses of the Company have been reflected in the
above Income Statement.
Reconciliation of Movement in Shareholders' Funds
Six months Year ended Year ended
ended
31 August 2015 31 August 31 August
(unaudited) 2015 (unaudited) 2014
GBP'000 GBP'000 (audited)
GBP'000
------------------------------ ---------------- ------------------- ------------
Opening equity shareholders'
funds 20,580 26,599 50
Losses on investments (4,456) (9,683) (10,117)
Net return attributable to
ordinary shareholders (477) (1,269) (184)
Issue of ordinary shares - - 39,520
Expenses of issue - - (2,670)
------------------------------ ---------------- ------------------- ------------
Closing equity shareholders'
funds 15,647 15,647 26,599
------------------------------ ---------------- ------------------- ------------
Condensed Balance Sheet
As at As at
31 August
31 August 2015 2014
(unaudited) (audited)
Notes GBP'000 GBP'000
Fixed assets
Investments 19,854 30,410
Current assets
Debtors 559 845
Cash at bank and on deposit 594 450
--------------------------------------- ------ ---------------- -----------
1,153 1,295
Creditors: amounts falling due within
one year (360) (256)
Net current assets 793 1,039
--------------------------------------- ------ ---------------- -----------
9% Convertible Unsecured Loan Stock
2017 5 (5,000) (4,850)
--------------------------------------- ------ ---------------- -----------
Net assets 15,647 26,599
--------------------------------------- ------ ---------------- -----------
Capital and reserves
Called up share capital 396 396
Share premium 6 36,504 36,504
Capital reserve 6 (19,800) (10,117)
Revenue reserve 6 (1,453) (184)
--------------------------------------- ------ ---------------- -----------
Equity shareholders' funds 15,647 26,599
--------------------------------------- ------ ---------------- -----------
Net asset value per share 7 39.54p 67.22p
--------------------------------------- ------ ---------------- -----------
Condensed Cash Flow Statement
Year ended Year ended
31 August 2015 31 August 2014
(unaudited) (audited)
GBP'000 GBP'000
Operating activities
Loss before finance costs and taxation (10,506) (10,088)
Loss on investments 9,683 10,117
Decrease / (increase) in other receivables 232 (791)
(Decrease) / increase in other payables (34) 157
-------------------------------------------- ---------------- ----------------
Net cash outflow from operating activities
before interest and taxation (625) (605)
Interest paid (469) (114)
Withholding tax paid (27) -
-------------------------------------------- ---------------- ----------------
Net cash outflow from operating activities (1,121) (719)
-------------------------------------------- ---------------- ----------------
Investing activities
Purchases of investments (470) (40,651)
Sales of investments 1,585 70
-------------------------------------------- ---------------- ----------------
Net cash inflow/ (outflow) from investing
activities 1,115 (40,581)
-------------------------------------------- ---------------- ----------------
Financing
Issue of ordinary shares - 39,570
Expenses of issue - (2,670)
Issue of CULS 150 4,850
-------------------------------------------- ---------------- ----------------
Net cash inflow from financing 150 41,750
-------------------------------------------- ---------------- ----------------
Increase in cash and cash equivalents 144 450
-------------------------------------------- ---------------- ----------------
Net cash at the start of the year 450 -
-------------------------------------------- ---------------- ----------------
Net cash at the end of the year 594 450
-------------------------------------------- ---------------- ----------------
Notes to the Condensed Financial Statements
1. Interim results
The unaudited condensed financial statements have been prepared
in accordance with International Accounting Standard 'IAS' 34
'Interim Financial Reporting' and the accounting policies set out
in the statutory accounts of the Company for the year ended 31
August 2014. The condensed financial statements do not include all
of the information required for a complete set of International
Financial Reporting Standards ('IFRS') financial statements and
should be read in conjunction with the financial statements of the
Company for the year ended 31 August 2014, which were prepared
under full IFRS requirements.
The Company has extended its accounting period to 31 December
2015. The Company therefore presents interim accounts for the
second interim period to 31 August 2015.
2. Income
Six months Year ended Year ended
ended 31 August 2015 31 August
31 August 2015 GBP'000 2014
GBP'000 GBP'000
--------------------------- ---------------- ---------------- -----------
Income from investments
Overseas interest 93 (48) 590
Total income 93 (48) 590
--------------------------- ---------------- ---------------- -----------
Total income comprises:
Fixed interest securities 93 (48) 590
93 (48) 590
--------------------------- ---------------- ---------------- -----------
Income for the year ended 31 August 2015 was in a net negative
position as a result of accrued interest income recognised in the
year ended 31 August 2014 relating to Alhambra Resources, Arakan
Resources, Siberian Goldfields and Archer Petroleum being
receivable in the form of shares rather than cash as initially
anticipated. The value of the shares to be received is expected to
be at a lower level than the cash receivable and therefore a
reduction to interest accrued on the securities was made to reflect
this change. The level of income earned for the six months ended 31
August 2015 was GBP132,000 (year ended 31 August 2015: GBP358,000)
and the write back of income accrued in relation to the year ended
31 August 2014 during the six months ended 31 August 2015 amounted
to GBP39,000 (year ended 31 August 2015: GBP406,000).
3. Losses on investments
Included within losses on investments for the six months ended
31 August 2015 were realised losses of GBP3,232,000 and unrealised
losses of GBP1,224,000. Included within losses on investments for
the year ended 31 August 2015 were realised losses of GBP3,567,000
and unrealised losses of GBP6,116,000.
4. Return per ordinary share
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October 30, 2015 12:25 ET (16:25 GMT)
The revenue loss per ordinary share for the six months ended 31
August 2015 is based on a net loss after taxation of GBP477,000 and
on a weighted average of 39,570,012 ordinary shares in issue during
the period.
The revenue loss per ordinary share for the year ended 31 August
2015 is based on a net loss after taxation of GBP1,269,000 (31
August 2014: GBP184,000) and on a weighted average of 39,570,012
(31 August 2014: 39,122,895) ordinary shares in issue during the
year.
The capital return per ordinary share for the six months ended
31 August 2015 is based on a net capital loss after taxation of
GBP4,456,000 and on a weighted average of 39,570,012 ordinary
shares in issue during the period.
The capital return per ordinary share for the year ended 31
August 2015 is based on a net capital loss after taxation of
GBP9,683,000 (31 August 2014: GBP10,117,000) and on a weighted
average of 39,570,012 (31 August 2014: 39,122,895) ordinary shares
in issue during the year.
5. 9% Convertible Unsecured Loan Stock 2017
Nominal value of
CULS
GBP'000
------------------------------------- -----------------
Opening balance at 1 September 2014 4,850
Issue of CULS 150
------------------------------------- -----------------
Balance at 31 August 2015 5,000
------------------------------------- -----------------
On 7 March 2014, the Company issued GBP4,850,000 9% Convertible
Unsecured Loan Stock 2017 ('CULS') and 4,850,000 warrants (for nil
consideration on the basis of one warrant for every GBP1 of CULS
subscribed). A further GBP150,000 CULS and 150,000 warrants were
issued on 28 November 2014.
On 30 October 2014, the Company's CULS were admitted to listing
on the Channel Islands Securities Exchange Authority Limited.
The CULS are convertible in amounts of multiples of GBP50,000
nominal of loan notes into ordinary shares at the option of the
holder of the CULS at the conversion price per ordinary share,
which for the period from 7 March 2015 (the first anniversary) to
the business day preceding the second anniversary is the higher
of:
(i) the 15-day Volume Weighted Average Price ('V WAP') for the
ordinary shares calculated on the first anniversary of the CULS
capped at GBP1.00 per ordinary share and
(ii) the sum of GBP0.75, from the first anniversary of the CULS
until the business day preceding the second anniversary of
CULS.
The 15-day V WAP based on the mid-market share price calculated
on the first anniversary was GBP0.2089. The conversion rate will
therefore be GBP0.75 for the year to 6 March 2016.
From 7 March 2016 (the second anniversary) until the redemption
of the CULS the conversion price per ordinary share will be the
higher of:
(i) the 15-day V WAP for the ordinary shares calculated on the
second anniversary of CULS capped at GBP1.00 per ordinary share
and
(ii) the sum of GBP0.50.
V WAP is the volume weighted average price and is a measure of
the average price within a time period.
Warrant instrument
The warrants are unlisted and are exercisable up to the fifth
anniversary of admission in amounts or multiples of 50,000 warrants
at GBP1.00 per ordinary share.
As at 31 August 2015, the Company had issued GBP5,000,000 CULS
and 5,000,000 warrants.
6. Reserves
Share Capital Revenue
premium reserve reserve
GBP'000 GBP'000 GBP'000
-------------------------------- ---------- ---------- ----------
Opening balance as 1 September
2014 36,504 (10,117) (184)
Losses on investments - (9,683) -
Retained net revenue expense
for the period - - (1,269)
At 31 August 2015 36,504 (19,800) (1,453)
-------------------------------- ---------- ---------- ----------
7. Net Asset Value per Ordinary Share
The net asset value per ordinary share is based on net assets of
GBP15,647,000 (31 August 2014: GBP26,599,000) and on 39,570,012 (31
August 2014: 39,570,012) ordinary shares, being the number of
ordinary shares in issue at the period end.
8. Related Party Transactions and fees paid to RDP Fund Management LLP
The Board of Directors is considered to be a related party. No
Director has an interest in any transactions which are, or were,
unusual in their nature or significant to the nature of the
Company.
Mr N Paris is an employee of LIM Advisors which is a manager of
LIM Asia Multi-Strategy Fund ('LIM'). LIM is the largest holder of
the Company's CULS and is authorised to appoint a director to the
Board to represent its interest. Mr N Paris is the representative
appointed on behalf of LIM.
The Directors of the Company received fees for their services.
Total fees for the six months to 31 August 2015 were GBP44,000
(year ended 31 August 2015: GBP87,000, year ended 31 August 2014:
GBP43,000) of which GBP17,000 (31 August 2014: GBP22,000) remained
payable at the period end.
RDP Fund Management LLP ('RDP') received GBP138,000 in relation
to the six months ended 31 August 2015 (year ended 31 August 2015:
GBP303,000, year ended 31 August 2014: GBP204,000) of which
GBP20,000 (31 August 2014: GBP50,000) remained payable at the
period end.
Since 31 August 2015, the Company has received a notification of
exercise in relation to the CULS from Resources Development
Partners Limited, a company related to the Investment manager. See
note 9 for details.
9. Post Balance Sheet Events
As disclosed in note 5, at 30 June 2015 the Company had issued
GBP5,000,000 nominal of 9% Convertible Unsecured Loan Stock. The
Company has given an undertaking that the coverage ratio (being the
ratio of the value of its investment portfolio to the principal
amount of the outstanding CULS) is at all times no less than 4:1.
As a result of the NAV issued on 8 October 2015, the coverage ratio
reduced to 3.8:1 and, accordingly, the Company was in breach of
this undertaking.
On 15 October 2015, the Company received a notification of
exercise from Resources Development Partners Limited, a company
related to the Investment Manager, to convert GBP250,000 of CULS
into equity. As a result of the conversion the Company issued
333,333 Ordinary Shares to Resources Development Partners Limited
at an issue price of GBP0.75 per share. Following the conversion of
the CULS, the coverage ratio increased to 4.04 and the Company was
no longer in breach of the coverage ratio undertaking.
As a result of the NAV announced on 23 October 2015, the cover
ratio again fell below the required level. On 29 October 2015, the
Company received a notification of exercise from Resources
Development Partners Limited to convert an additional GBP50,000 of
CULS into equity. As a result of the conversion the Company issued
66,667 Ordinary Shares to Resources Development Partners Limited at
an issue price of GBP0.75 per share. Following the conversion of
the CULS, the coverage ratio increased to 4.01 and the Company was
no longer in breach of the coverage ratio undertaking.
The Company has a ten day remedy period, from the date at which
it becomes aware of a breach of the required cover ratio, in which
to restore the cover ratio to 4 times, failing which, the CULS
holders have the ability to require the immediate repayment of the
CULS. Any such demand for immediate repayment could adversely
impact the Net Asset Value of the Company.
At 30 October 2015, following the conversion of the CULS and the
issue of the loan notes detailed above, the Company had 39,970,012
Ordinary Shares in issue and GBP4,700,000 nominal of 9% Convertible
Loan Stock.
The Company's NAV and coverage ratio will subsequently fluctuate
due to market movements, however, as at 29 October 2015, the latest
practicable date prior to the publication of this report, the
Company's NAV was 35.35 pence per Ordinary Share and the coverage
ratio was 4.01.
10. Accounts
The results for the six months ended 31 August 2015 and the year
ended 31 August 2015, which have not been reviewed by the Company's
auditors pursuant to the Auditing Practices Board guidance on
'Review of Interim Financial Information', constitute non-statutory
accounts in terms of Section 434 of the Companies Act 2006. The
latest published accounts which have been delivered to the
Registrar of Companies are for the year ended 31 August 2014; the
report of the auditors thereon was unqualified and did not contain
a statement under Section 498 of the Companies Act 2006. The
abridged financial statements shown above for the year ended 31
August 2014 are an extract from those accounts.
The second interim report and accounts for the period ended 31
August 2015 will be made available on the website www.grit.london.
Copies may also be obtained from the Company Secretary, R&H
Fund Services Limited, 15-19 York Place, Edinburgh, EH1 3EB.
Directors' Statement of Principal Risks and Uncertainties
The risks, and the way in which they are managed, are described
in more detail in the Strategic report contained within the Annual
Report and Financial Statements for the year ended 31 August 2014.
In the opinion of the Directors, other than the matter in relation
to the CULS discussed in note 9, the Company's principal risks and
uncertainties have not changed materially since the date of the
report and are not expected to change materially for the rest of
the Company's financial reporting period to 31 December 2015.
Statement of Directors' Responsibilities in respect of the
Interim Report
We confirm that to the best of our knowledge:
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