TIDMARCL
RNS Number : 4613S
Altus Resource Capital Limited
09 September 2010
PRELIMINARY ANNOUNCEMENT OF ANNUAL RESULTS
The directors announce the statement of results for the year ended 30 JUNE 2010
as follows:-
COMPANY OVERVIEW
OVERVIEW
Altus Resource Capital Limited ("ARCL" or the "Company") is a Guernsey
authorised, closed-ended investment company incorporated on 30 April 2009, which
listed on the Specialist Fund Market of the London Stock Exchange on 30 June
2009 and the Channel Islands Stock Exchange on 22 December 2009.
The Company is managed by Altus Capital Limited (the "Investment Manager") an
FSA authorised and regulated wholly-owned subsidiary of Altus Strategies
Limited.
The Company issued 26,000,000 ordinary shares at GBP1.00 per share on 30 June
2009 and a further 10,997,233 ordinary shares at GBP1.33 on 22 December 2009. On
2 August 2010 a further 2,722,336 ordinary shares were issued at GBP1.40.
INVESTMENT OBJECTIVES AND POLICY
The Company's objective is to realise capital growth from a concentrated
portfolio of junior resource equities and to generate a significant capital
return to shareholders.
The Company invests in companies engaged in the exploration, development and/or
mining of metals and minerals with a focus on companies that operate in the gold
sector. Portfolio companies will be predominantly, but not exclusively, listed
or quoted on either UK markets or other recognised stock exchanges including the
Canadian and Australian markets. They will typically be capitalised at less than
GBP100 million at the time of the Company's IPO on 30 June 2009, or less than
GBP250 million at the time of investment by the Company.
CHAIRMAN'S STATEMENT
I have pleasure in presenting the first Annual Report and Financial Statements
of Altus Resource Capital Limited for the period 30 April 2009 to 30 June 2010
(the "Period"). During the first year since its IPO on 30 June 2009, I am
delighted to report that Altus Resource Capital Limited has performed strongly
in what has been a volatile market.
The Company's audited Net Asset Value at the end of June 2010 was GBP49.7
million or 134.3 pence per share, an increase of 41.3% since launch on 30 June
2009. Over the last twelve months the Company has remained focused on investing
in junior resource equities with quality assets and proven management teams with
a 60% to 70% weighting towards gold. As a result of this focus, the Company has
benefited from the continued strength of the gold price, which continued to
break new highs during the year and reached an all time high of US$1,265 per
ounce during June 2010.
Equity markets, which rallied strongly during the second half of 2009,
experienced significant volatility during the first six months of 2010. The
outlook for the global economy remains uncertain. The Investment Manager
anticipates that the gold price will continue to perform strongly during the
coming two to three years, due to its safe haven investment properties,
increasing investment and jewellery demand from Asian and Middle Eastern
economies and supply side pressures due to a paucity of new good quality
discoveries. The Company therefore intends to maintain its focus on gold over
this period.
Following the success and growth of the Company and to ensure it is
appropriately positioned to take advantage of market opportunities going
forward, the Board has endorsed a number of changes to the Investment Policy and
Strategy. Specifically these changes are to amend the definition of Junior
Resource Equities to those with market capitalisations of less than GBP100 at
the time of the IPO or less than GBP250 million at the time of investment by the
Company. In addition, given the growth of the fund, the average number of
holdings has been increased from twenty to twenty five and the upper size limit
on investments increased from GBP3 million to GBP10 million. The Company's
Investment Policy and Strategy is set out in Appendix I.
The Directors have agreed that with effect from 1 July 2010 the Management Fee
payable to the Investment Manager will increase to 0.85% of NAV per annum. This
increase brings the investment management fee more in line with normal industry
practice, and to ensure the Investment Manager is sufficiently remunerated to
retain the high calibre personnel necessary to continue the Company's strong
performance.
Nick Falla
Chairman
INVESTMENT MANAGER'S REPORT
Financial Highlights and Investment Review by Altus Capital Limited
The audited net asset value of the Company increased to 134.3 pence per share
over the year to 30 June 2010, showing a 41.3% rise since the Company's launch
on 30 June 2009.
The Company benefited from its continued weighting towards gold with the price
per ounce rising 33.5% over the year and hitting an all time high of US$1,265
during June 2010. In addition to the 60% to 70% weighting towards gold, the
Company invested in exploration, development and mining companies exposed to a
range of other metals and minerals including platinum group metals, copper,
uranium, diamonds and industrial minerals.
The Company maintained a concentrated portfolio during the year, acquiring
positions in the market and through participating in new equity issues. Nine
investee companies were sold during the period. In addition to the equity
holdings, the Company has held commodity backed exchange traded funds (ETFs)
which provide exposure to the underlying commodity and cash-like liquidity. At
the end of the year the portfolio consisted of 28 equity holdings, a single ETF
and a net cash balance of GBP2.3 million or 4.6% of net asset value.
Markets, including junior resource equity markets, have been volatile during
2010. The Manager has therefore maintained a cautious approach to investing over
this period although has actively traded a number of the more liquid portfolio
positions in order to take advantage of market conditions.
OUTLOOK
As the Company enters its second year of operation, uncertainties about the
stability of the global economic recovery abound, with some market commentators
heralding the onset of worsening market conditions and possibly even a double
dip recession in some economies. Western economies continue to suffer from high
levels of national and public debt and global markets face inflationary
pressures caused by the unprecedented levels of capital injected through
economic stimulus packages. The euro, the dollar and sterling have continued to
weaken against the currencies of the best performing emerging nations and those
with a strong natural resource base (in particular Canada and Australia) who
were relatively unaffected by the credit and associated banking collapse.
Against this back drop gold should continue to perform strongly as a safe haven
investment.
Investment demand for gold has been growing. Central banks, who have been net
sellers of gold for the last two decades, have been reducing their gold sales
and they are expected to become net buyers, if not already. Retail investment
and jewellery demand from the Middle East and Asia has also seen strong growth
and this trend is expected to continue or indeed accelerate in-line with the
exponential rise in the number of affluent people in emerging Asian economies.
The Manager therefore anticipates continued strength in the gold price and will
maintain the focus of the portfolio on gold miners, developers and explorers for
the coming two to three years. Given the lack of liquidity and heightened
volatility of the junior resource markets over the last six months, the
disparity between the value of gold equities and the gold price which was
evident immediately after the credit crisis, has opened up again. It is
anticipated that this value gap will begin to close as liquidity returns to the
market during the second half of 2010 and junior gold equities are expected to
perform relatively well. In addition, a number of the investee companies within
the portfolio hold assets that are world-class and are expected to be of
strategic interest to the majors seeking to replenish their diminishing
reserves. It is therefore expected that the rate of M&A activity will continue
to increase and this in turn will help drive up the value of junior resource
equities.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company is focused on investing in junior resources companies and is
therefore
subject to the risks associated with concentrating its investments in this asset
class.
The performance of the Company will be affected by the performance of the
securities of investee companies and is thus subject to the sharp price
volatility of shares of companies principally engaged in activities related to
metals and minerals.
Historically the prices of the commodities have fluctuated significantly and are
affected by numerous factors which the Company cannot predict or control.
Political and economic conditions in metal and mineral producing countries may
have a direct effect on the mining and production of these metals and minerals,
and consequently, on their prices. In addition, the Company has invested, and
will continue to invest in companies with assets or operations in emerging or
developing markets and will consequently be exposed to various increased risks
associated with investing in such markets. Further details of risk can be found
in Note 14 of the Financial Statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
Responsibility Statement
The Directors confirm to the best of their knowledge and belief:
(a) This annual 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 the Company faces; and
(b) The financial statements, prepared in accordance with International
Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profits of the Company and performance of
the Company over the Period.
A description of important events which have occurred during the financial
period, their impact on the performance of the Company as shown in the financial
statements and a description of the principal risks and uncertainties facing the
Company is given in the Chairman's Statement, Investment Managers Report and the
notes to the financial statements and is incorporated here by reference.
There were no material related party transactions which took place in the
financial period.
Signed on behalf of the Board of Directors on 8 September 2010
Nick FallaRobert Milroy
Chairman
Director
DIRECTORS
Nicholas J Falla: Chairman (independent non-executive)
Nicholas Falla has had thirty years of experience in the finance industry
including fourteen years of experience in the commodity markets. He is
currently the Managing Director of Xocoatl Limited a private investment company
taking strategic proprietary positions in the commodities markets, Finance
Director of Pharma E Limited, a private pharmaceutical supplier, and
non-executive director of Close Assets Funds Limited a closed ended investment
company which provides a structured investment in the equities markets. Nick
was also a senior non-executive director of MW Tops Limited, a closed ended
investment company listed on the London Stock Exchange which has recently gone
into voluntary liquidation, whilst transferring its assets into another
investment vehicle. From 1993-2000 Nick worked as the financial controller for
Bank of Bermuda (Guernsey) Limited and from 2000 to 2002 he was their regional
controller for Europe. In addition he has acted as an interim financial director
for the Guernsey banking operation of Credit Suisse Guernsey Limited and has
worked on various finance and accounting based projects with companies such as
KPMG (Channel Islands) and the Blenheim Group. Nick trained as an accountant
with Turquands Barton Mayhew & Co in Guernsey.
David Gelber: Director (independent non-executive)
David Gelber began his career in trading in 1976 when he joined Citibank in
London. He has since held a variety of senior trading positions, in derivatives
in particular, working for Citibank, Chemical Bank and HSBC, where he was Chief
Operating Officer of HSBC Global Markets. In 1994 he joined ICAP, an
inter-dealer broker, as COO and assisted in implementing two mergers, first with
Exco Plc and then with Garban Plc. David remains a consultant to ICAP Plc.
Furthermore, David currently serves as a non-executive director on the board of
eSecLending, GlobeOp Financial Services SA and Walker Crips Group PLC. David is
also currently a non executive director of DDCAP Limited, a leading arranger of
Islamic banking transactions and of Exotix Limited, an investment banking
boutique specialising in illiquid bonds, loans, equities, structured finance,
capital raising and asset management. He is also currently a non-executive
director of Intercapital Private Group Limited, a holding company invested in
ICAP plc and CityIndex Limited, a spread-betting and contracts for difference
provider; David has a B.Sc in statistics and law from the University of
Jerusalem and an M.Sc in computer science from the University of London.
Robert Milroy: Director (independent non-executive)
Robert Milroy is a director of Corazon Fund Management Limited, a Guernsey
regulated investment management and stock-broking company. He has over 35 years
experience in the investment and mining and petroleum industries having
participated in various mining, oil exploration projects and financings in
Chile, Peru, Argentina, Ghana, Canada, USA, Mexico, Australia and Greenland. In
addition, for the last 12 years he was the Managing Director of Eagle Drilling
Inc., a firm that specialised in hard rock core drilling in Central and Western
Africa. Robert is also a noted speaker and financial author, having written
various editions of the Standard & Poor's Guide to Offshore Investment Funds.
Robert graduated with a Bachelor of Commerce (Honours) from the University of
Manitoba.
David Netherway: Director (non-executive)
David Netherway is a mining engineer with over 30 years of experience in the
mining industry and is the CEO of Shield Mining Ltd., an Australian listed
exploration company, which has recently been taken over by Gryphon Minerals Ltd.
David will be joining the Gryphon Board as part of the takeover. David was
involved in the construction and development of the Iduapriem, Siguiri and
Kiniero gold mines in West Africa and has mining experience in Africa,
Australia, China, Canada, India and the Former Soviet Union. David served as the
CEO of Toronto listed Afcan Mining Corporation; a China focused gold mining
company that was sold to Eldorado Gold in 2005. David has also held senior
management positions in a number of gold mining companies, including Golden
Shamrock Mines, Ashanti Goldfields and Semafo Inc. He is currently the Chairman
of GMA Resources plc and also the Chairman of African Aura Mining Inc. David is
the current non-executive Chairman of Altus Strategies and is thus not
considered an independent director of the Company.
DIRECTORS' REPORT
For the period ended 30 June 2010
The Directors present their report and financial statements of the Company for
the period from incorporation, 30 April 2009 to 30 June 2010.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The principal activity of the Company is to carry on business as an investment
company. The Directors do not envisage any change in these activities for the
foreseeable future.
STATUS
The Company is a closed-ended investment company and was incorporated with
limited liability in Guernsey on 30 April 2009 with registered number 50318. The
Company operates under the The Companies (Guernsey) Law, 2008 (the "Law") and
the Protection of Investors (Bailiwick of Guernsey) Law, 1987 as amended.
On 30 June 2009 the Company's Ordinary Shares were admitted to trade on the
Specialist Fund Market of the London Stock Exchange (the "SFM"). On 22 December
2009 the Company's Ordinary Shares were admitted to trade on the Channel Islands
Stock Exchange ("CISX").
The Company's management and administration takes place in Guernsey and the
Company had been granted exemption from income tax in Guernsey by the
Administrator of Income Tax. It is the intention of the Directors to continue to
operate the Company so that each year this tax-exempt status is maintained.
RESULTS AND DIVIDENDS
The results of the Company for the period are set out on page 23.
The Company aims to provide Shareholders with an attractive total return, which
is expected to comprise primarily capital growth although there is also
potential for distributions. The Company's investment objective and strategy
means that the timing and amount of investment income cannot be predicted.
Since the date of incorporation of the Company, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its share capital.
DIRECTORS
The Directors in office are shown on page 8 and 9. Further details of the
Director's responsibilities are given on page 14 and 15.
The interests of the Directors in the Ordinary shares of the Company as at the
date of this report are as follows:
+--------------------------------------+-+------------------------+
| | | Number of Ordinary |
| | | shares |
+--------------------------------------+-+------------------------+
| Nick Falla | | 20,000 |
+--------------------------------------+-+------------------------+
| David Gelber | | 50,000 |
+--------------------------------------+-+------------------------+
| Robert Milroy | | 20,000 |
+--------------------------------------+-+------------------------+
No changes took place in the interests of the directors between 30 June 2010 and
8 September 2010.
Other than the above share transactions, none of the Directors nor any persons
connected with them had a material interest in any of the Company's
transactions, arrangements or agreements during the period and none of the
Directors has or has had any interest in any transaction which is or was unusual
in its nature or conditions or significant to the business of the Company, and
which was effected by the Company during the reporting period save that David
Netherway is the non-executive chairman of Altus Strategies, the ultimate parent
of the Investment Manager, who owns 150,000 Ordinary Shares in the Company and
the non-executive chairman of GMA Resources plc in which the Company has an
exposure to.
At the date of this report, there are no outstanding loans or guarantees between
the Company and any director.
SUBSTANTIAL SHAREHOLDINGS
On 23 August 2010 the Company had been notified, in accordance with Chapter 5 of
the Disclosure and Transparency Rules with the following voting rights as a
shareholder of the Company:
+-------------------------------+--------+-----------+---------+
| | % of | Number | Nature |
| | total | of | of |
| | voting | ordinary | holding |
| | rights | share | |
+-------------------------------+--------+-----------+---------+
| Securities Services Nominees | 17.53 | 6,961,074 | Nominee |
| Limited -2300001 | | | |
+-------------------------------+--------+-----------+---------+
| Nortrust Nominees - GSYLENDA | 12.92 | 5,130,746 | Nominee |
+-------------------------------+--------+-----------+---------+
| The Bank of New York | 10.83 | 4,300,000 | Nominee |
| (Nominees) Limited | | | |
+-------------------------------+--------+-----------+---------+
| BNY (OCS) Nominees Limited | 9.90 | 3,931,908 | Nominee |
+-------------------------------+--------+-----------+---------+
| Nortrust Nominees Limited | 6.29 | 2,500,000 | Nominee |
+-------------------------------+--------+-----------+---------+
| HSBC Global Custody Nominees | 5.82 | 2,310,050 | Nominee |
| (UK) Limited -813764 | | | |
+-------------------------------+--------+-----------+---------+
| Chase Nominees Limited | 5.69 | 2,258,810 | Nominee |
+-------------------------------+--------+-----------+---------+
| Nortrust Nominees Limited - | 5.04 | 2,000,000 | Nominee |
| NTGSLEND | | | |
+-------------------------------+--------+-----------+---------+
NET ASSET VALUE
The net asset value of the Company's Ordinary shares as at 30 June 2010 was
134.28 pence per share.
MANAGEMENT AGREEMENT
The Board is responsible for the determination of the Company's investment
policy and has overall responsibility for the Company's day-to-day activities.
The Company has, however, entered into an Investment Management Agreement with
Altus Capital Limited (the "Investment Manager"), a wholly-owned, FSA regulated
subsidiary of Altus Strategies Limited. Prior to the 30 June 2010, the
Company's Investment Manager was Altus Asset Management Limited "AAM", a then
subsidiary of the Company. Following Altus Capital Limited's "ACL" FSA
authorisation, and in accordance with the arrangements put in place at the time
of the IPO AAM became a subsidiary of ACL. The Company's Investment Management
Agreement with AAM was novated in favour of ACL from 30 June 2010. The key
investment personnel remain unchanged. Under the Investment Management Agreement
the Investment Manager has overall responsibility for the discretionary
management of the Company's assets (including uninvested cash) in accordance
with the Company's investment objective and policy, subject to the overall
supervision of the Directors.
During the Period the Investment Manager received a management fee of 0.5% per
annum of the Company's NAV, calculated on the relevant quarterly accounting
date, subject to a minimum fee of GBP150,000 per annum. The directors agreed to
raise the management fee to 0.85% per annum of the Company's NAV from 1 July
2010. The Investment Manager is also entitled to a performance fee which is
payable at the end of the Company's second financial year. As no performance fee
was paid in the period under review, an amount of GBP1,206,471 was accrued as at
30 June 2010 as it is likely based on the current performance that a fee will be
payable on the second anniversary.
Under the terms of the Investment Management Agreement, the agreement may be
terminated by either party on 18 months' written notice.
The Board keeps under review the performance of the Investment Manager. In the
opinion of the Directors the continuing appointment of the Investment Manager on
the terms agreed is in the interest of shareholders as a whole. The reasons for
this view are that the investment performance of the Company is satisfactory
relative to the markets in which the Company invests.
ADMINISTRATION AGREEMENT
Under the terms of the Investment Management Agreement, the Manager is
responsible for, amongst other things, providing administration and secretarial
services to the Company. With the consent of the Company, the Manager has
delegated the provision of certain administrative and secretarial services to
Anson Fund Managers Limited (the "Administrator") pursuant to an Administration
Agreement. The Administrator carries out the general secretarial functions
required by The Companies (Guernsey) Law, 2008 and ensures that the Company
complies with its continuing obligations as a company listed on the SFM and the
CISX. The Administrator also carries out the Company's general administrative
functions such as the calculation of net asset value, calculating the
performance of the Company's investments and the maintenance of accounting
records. The Administration Agreement is terminable by either party on giving
not less than three months' written notice.
CORPORATE GOVERNANCE
STATEMENT OF COMPLIANCE WITH THE COMBINED CODE
The Company is committed to complying with the corporate governance obligations
which apply to Guernsey registered companies. As a Guernsey incorporated company
and under SFM rules, the Company was not, for the period under review, required
to comply with the Combined Code on Corporate Governance (the "Combined Code")
appended to the Listing Rules of the UK's Financial Services Authority.
However, the Directors place a high degree of importance on ensuring that high
standards of corporate governance are maintained and have therefore chosen
voluntarily to comply with the provisions of the Combined Code and the AIC Code
of Corporate Governance produced by the Association of Investment Companies to
the extent that they are considered relevant to the Company.
The Company has complied with the main principles set out in Section 1 of the
Combined Code, Section 1 includes provisions relating to:
- the role of the chief executive;
- executive directors' remuneration; and
- the need for an internal audit function;
for which the Company has chosen not to comply.
For the reasons set out in the preamble to the Combined Code, the Board
considers these provisions are not relevant to the Company's position, being an
externally managed investment company. The Company has therefore not reported
further in respect of these provisions.
The only other area of non-compliance was that the Board did not undertake a
formal performance evaluation of the Board, its committees or the individual
Directors during the year as required by provision A.6.1 of the Combined Code.
The Board decided that this would be undertaken once the first year of the
Company had been completed. Subject to non-compliance with aspects of Section 1
and A.6.1 the Company was in full compliance with the AIC Code of Corporate
Governance.
BOARD RESPONSIBILITIES
The Board comprises four Directors, who meet quarterly to consider the affairs
of the Company in a prescribed and structured manner. Three Directors are
independent of the Manager. Biographies of the Directors appear on pages 8 and
9 demonstrating the wide range of skills and experience they bring to the Board.
The Directors, in the furtherance of their duties, may take independent
professional advice at the Company's expense. The Directors also have access to
the advice and services of the Corporate and Shareholder Advisory Agent and the
Secretary through its respected appointed representatives who are responsible to
the Board for ensuring that Board procedures are followed and that applicable
rules and regulations are complied with. To enable the Board to function
effectively and allow Directors to discharge their responsibilities, full and
timely access is given to all relevant information.
No Director has a service contract with the Company, nor are any such contracts
proposed. Any Director who has held office at the two preceding general meetings
and did not retire from office shall be available for the re-election at the
same meeting.
The Chairman's other significant commitments include his appointments as Finance
Director of Phama E Limited, a private pharmaceutical supplier; a non-executive
director of Close Assets Funds Limited and Managing Director of Xocoatl Limited,
a private investment company. Until 31 August 2010 Nick was a senior
non-executive director of MW Tops Limited, a closed-ended investment company
which went into voluntary liquidation and rolled its assets into another
investment vehicle.
During the period ended 30 June 2010 the number of full Board meetings and
committee meetings attended by the Directors were as follows:
+------------------+------------+------------+--------------+
| Board of |Full Board | Audit |Remuneration |
| Directors | Meetings | Committee | and |
| | | | Management |
| | | | Engagement |
| | | | Committee |
+------------------+------------+------------+--------------+
| Nick Falla | 5 of 5 | 4 of 4 | 3 of 3 |
+------------------+------------+------------+--------------+
| David Gelber | 5 of 5 | 3 of 4 | 2 of 3 |
+------------------+------------+------------+--------------+
| Robert Milroy | 5 of 5 | 4 of 4 | 3 of 3 |
+------------------+------------+------------+--------------+
| David Netherway | 5 of 5 | N/A | N/A |
+------------------+------------+------------+--------------+
BOARD COMMITTEES
The Audit Committee is chaired by Robert Milroy and each of the other Board
members, with the exception of David Netherway, are members. The committee
meets at least twice a year and reviews, inter alia, the financial reporting
process and the system of internal control and management of financial risks
including understanding the current areas of greatest financial risk and how
these are managed by the Investment Manager, reviewing annual financial
statements, assessing the fairness of preliminary and interim statements and
disclosures and reviewing the external audit process. The committee is
responsible for overseeing the Company's relationship with the external
auditors, including making recommendations to the Board on the appointment of
the external auditors and their remuneration. The committee considers the
nature, scope and results of the auditor's work and reviews, and develops and
implements policy on the supply of any non-audit services that are to be
provided by the external auditors. It receives and reviews reports from the
Investment Manager and the Company's external auditors relating to the Company's
annual report and financial statements. The committee focuses particularly on
compliance with legal requirements, accounting standards and the Listing Rules
and ensures that an effective system of internal financial and non-financial
controls is maintained. The ultimate responsibility for reviewing and approving
the annual report and financial statements remains with the Board of Directors.
During the period the Audit committee met to consider the interim management
statements, the Report and Financial Information, the half-yearly financial
report to 31 December 2009 and Annual Report and Financial Statements and these
meetings were attended by all committee members.
The Remuneration and Management Engagement Committee is chaired by Robert Milroy
and each of the other Board members are members except David Netherway. The
committee meets at least twice a year and reviews, inter alia, the appointment
and remuneration of the Investment Manager and of other suppliers of services to
the Company as well as the fees of the Directors.
The Nomination Committee is chaired by Nick Falla and each of the other Board
members are members. The committee meets as and when it is deemed appropriate to
review, inter alia, the structure, size and composition of the Board and to
identify, nominate and recommend for approval of the Board, candidates to fill
board vacancies as and when they arise. As the Company is in its early stages it
has not been deemed appropriate for the Nomination Committee to formally meet.
No external search consultancy, nor open advertising campaign was used in the
appointment of the Chairman or the Non-Executive Directors.
INTERNAL CONTROL AND FINANCIAL REPORTING
The Board is responsible for establishing and maintaining the Company's system
of internal control which are reviewed for effectiveness on an annual basis.
Internal controls are designed to meet the particular needs of the Company and
the risks to which it is exposed, and by their very nature provide reasonable,
but not absolute, assurance against material misstatement or loss. The key
procedures which have been established to provide effective internal control are
as follows:
· Investment management is provided by ACL under the Investment Management
Agreement. The Board is responsible for setting the overall investment policy
and monitors the actions of the Investment Manager at regular Board meetings.
· Administration and company secretarial duties for the Company are
performed by Anson Fund Managers Limited.
· Custody of assets is undertaken by Anson Custody Limited and Royal Bank of
Canada (Channel Islands) Limited.
· The duties of investment management, accounting and the custody of assets
are segregated. The procedures of the individual parties are designed to
complement one another.
· The Directors of the Company clearly define the duties and
responsibilities of their agents and advisers. The appointment of agents and
advisers is conducted by the Board after consideration of the quality of the
parties involved; the Board monitors their ongoing performance and contractual
arrangements.
· The Directors of the Company regularly review the performance and
contractual arrangements with the Investment Manager, other agents and advisers.
· Mandates for authorisation of investment transactions and expense payments
are set out by the Board.
· The Board reviews detailed financial information produced by the
Investment Manager and the Administrator on a regular basis.
The Company does not have an internal audit department. All the Company's
management and administration functions are delegated to independent third
parties and it is therefore felt there is no need for the Company to have an
internal audit facility.
DIALOGUE WITH SHAREHOLDERS
All holders of shares in the Company have the right to receive notice of, and
attend, the general meetings of the Company, during which the Board and the
Investment Manager are available to discuss issues affecting the Company.
The primary responsibility for shareholder relations lies with the Investment
Manager and the Corporate and Shareholder Advisory Agent. However, the
Directors are always available to enter into dialogue with shareholders and the
Chairman is always willing to meet major shareholders as the Company believes
such communication to be important. The Company Directors can be contacted at
the Company's registered office.
GENERAL MEETING
The notice of the Company's forthcoming general meeting (the "GM") is set out on
pages 40.
GOING CONCERN
The Company's principal activities are set out on pages 1 and 10. The financial
position of the Company is set out on page 24. In addition, Note 14 to the
financial statements includes the Company's objectives, policies and processes
for managing its capital; its financial risk management objectives and its
exposures to credit risk and liquidity risk.
The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. Thus
they continue to adopt the going concern basis of accounting in preparing the
annual financial statements and that they have been prepared in accordance with
Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009,
published by the Financial Reporting Council.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with International Financial Reporting Standards and
applicable law.
The financial statements are required by law to give a true and fair view of the
state of affairs of the company and of the profit or loss of the company for
that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial statements;
and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
The Companies (Guernsey) Law, 2008. They 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.
DISCLOSURE OF INFORMATION TO AUDITORS
The Directors who held office at the date of approval of this Directors' Report
confirm in accordance with the provisions of Section 249 of the Law that, so far
as they are each aware, there is no relevant audit information of which the
Company's Auditors are unaware; and each Director has taken all the steps that
he ought to have taken as a Director to make himself aware of any relevant audit
information and to establish that the Company's Auditors are aware of that
information.
AUDITORS
Deloitte LLP have expressed their willingness to continue in office as Auditor.
A resolution proposing their reappointment will be submitted at the forthcoming
general meeting to be held pursuant to section 199 of The Companies (Guernsey)
Law, 2008.
Signed on behalf of the Board on 8 September 2010
Nick Falla Robert Milroy
Chairman Director
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ALTUS RESOURCE CAPITAL LIMITED
We have audited the financial statements of Altus Resource Capital Limited for
the period from 30 April 2009 (date of incorporation) to 30 June 2010 which
comprise the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Cash Flows, the Statement of Changes in Equity and
the related notes 1 to 16. These financial statements have been prepared under
the accounting policies set out therein.
This report is made solely to the company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. 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 auditors' 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.
Respective responsibilities of directors and auditors
The directors' responsibilities are for preparing the Annual Report, the
Directors' Report and the financial statements in accordance with applicable
Guernsey law and International Financial Reporting Standards ("IFRS's") as
adopted by the European Union and for being satisfied that the financial
statements give a true and fair view are set out in the Statement of Directors'
Responsibilities. Our responsibility is to audit the financial statements in
accordance with relevant legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and have been properly prepared in accordance with IFRS's as
adopted by the European Union and whether the financial statements have been
prepared in accordance with the Companies (Guernsey) Law, 2008. We also report
to you if, in our opinion, the company has not kept adequate accounting records,
or if we have not received all the information and explanations we require for
our audit.
We read the other information contained in the Annual Report as described in the
contents section and consider whether it is consistent with the audited
financial statements. We consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend to any further
information outside the Annual Report.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We are not required to review any Corporate Governance disclosures required by
The Listing Rules of the Financial Services Authority as the company has availed
itself of an exemption, as an overseas company, from the requirement to publish
a statement of compliance with The Combined Code.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
· the financial statements give a true and fair view of the state of
the company's affairs as at 30 June 2010 and of its net gains attributable to
shareholders for the period from 30 April 2009 to 30 June 2010;
· the financial statements have been properly prepared in accordance
with IFRS's as adopted by the European Union; and
· the financial statements have been prepared in accordance with the
Companies (Guernsey) Law, 2008.
John G Clacy FCA
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditors
Guernsey, Channel Islands
8 September 2010
Neither an audit nor a review provides assurance on the maintenance and
integrity of the website, including controls listed to achieve this and in
particular whether any changes have occurred to the financial information since
first published. These matters are the responsibility of the Directors but no
control procedures can provide absolute assurance in this area.
Legislation in Guernsey governing the preparation and dissemination of financial
information differs from legislation in other jurisdictions
STATEMENT OF COMPREHENSIVE INCOME
from the period from 30 April 2009 (date of incorporation) to 30 June 2010
+---------------------------------------+-------+----------+-------------+
| |Notes | | 30 Apr |
| | | | 2009 to |
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+-------+----------+-------------+
| | | | GBP |
+---------------------------------------+-------+----------+-------------+
| | | | |
+---------------------------------------+-------+----------+-------------+
| Net movement in unrealised | 7 | | 6,487,763 |
| appreciation on investments | | | |
+---------------------------------------+-------+----------+-------------+
| | | | |
+---------------------------------------+-------+----------+-------------+
| Realised gain on investments | 7 | | 6,100,329 |
+---------------------------------------+-------+----------+-------------+
| | | | |
| Operating income | 3 | | 154,945 |
+---------------------------------------+-------+----------+-------------+
| | | | |
+---------------------------------------+-------+----------+-------------+
| Operating expenses | 4 | | (1,959,978) |
+---------------------------------------+-------+----------+-------------+
| | | | |
+---------------------------------------+-------+----------+-------------+
| Net gain for the period attributable | | | 10,783,059 |
| to shareholders | | | |
+---------------------------------------+-------+----------+-------------+
| | | | |
+---------------------------------------+-------+----------+-------------+
| | | | |
+---------------------------------------+-------+----------+-------------+
| Earnings per share for the period | | | |
+---------------------------------------+-------+----------+-------------+
| - Basic and Diluted | 6 | | 0.34 |
+---------------------------------------+-------+----------+-------------+
In arriving at the results for the financial period, all amounts above relate to
continuing operations.
There is no other comprehensivee income for the period
STATEMENT OF FINANCIAL POSITION
as at 30 June 2010
+---------------------------------------+-------+----------+------------+
| |Notes | | 30 Jun |
| | | | 2010 |
+---------------------------------------+-------+----------+------------+
| | | | GBP |
+---------------------------------------+-------+----------+------------+
| NON-CURRENT ASSETS | | | |
+---------------------------------------+-------+----------+------------+
| Financial assets designated as at | | | |
| fair value through profit or loss | 7 | | 47,389,549 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| CURRENT ASSETS | | | |
+---------------------------------------+-------+----------+------------+
| Cash at bank | | | 3,716,991 |
+---------------------------------------+-------+----------+------------+
| Receivables | 8 | | 30,376 |
+---------------------------------------+-------+----------+------------+
| | | | 3,747,367 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| TOTAL ASSETS | | | 51,136,916 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| CURRENT LIABILITIES | | | |
+---------------------------------------+-------+----------+------------+
| Payables - due within one year | 9 | | 247,599 |
+---------------------------------------+-------+----------+------------+
| | | | 247,599 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| NON-CURRENT LIABILITIES | | | |
+---------------------------------------+-------+----------+------------+
| Payables - due after one year | 10 | | 1,206,471 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| TOTAL LIABILITIES | | | 1,454,069 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| NET ASSETS | | | 49,682,847 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| EQUITY | | | |
+---------------------------------------+-------+----------+------------+
| Share premium | 12 | | 38,899,788 |
+---------------------------------------+-------+----------+------------+
| Revenue reserve | | | 10,783,059 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| TOTAL EQUITY | | | 49,682,847 |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| | | | |
+---------------------------------------+-------+----------+------------+
| | | | Pence |
+---------------------------------------+-------+----------+------------+
| Net asset value per Ordinary Share | | | |
| based on 36,997,233 shares in issue | | | 134.28 |
+---------------------------------------+-------+----------+------------+
Signed on behalf of the Board on 8 September 2010.
Nick Falla Robert
Milroy
Chairman Director
STATEMENT OF CASH FLOWS
for the period from 30 April 2009 (date of incorporation) to 30 June 2010
+---------------------------------------+-------+----------+--------------+
| |Notes | | 30 Jun |
| | | | 2010 |
+---------------------------------------+-------+----------+--------------+
| | | | GBP |
+---------------------------------------+-------+----------+--------------+
| OPERATING ACTIVITIES | | | |
+---------------------------------------+-------+----------+--------------+
| Net gain for the period attributable | | | 10,783,059 |
| to shareholders | | | |
+---------------------------------------+-------+----------+--------------+
| Less: Unrealised appreciation on | 7 | | (6,487,763) |
| investments | | | |
+---------------------------------------+-------+----------+--------------+
| Less: Interest received | | | (35,350) |
+---------------------------------------+-------+----------+--------------+
| Add: Increase in payables | | | 1,315,945 |
+---------------------------------------+-------+----------+--------------+
| Less: Increase in receivables | | | (9,210) |
+---------------------------------------+-------+----------+--------------+
| Less: Realised gains on investments | 7 | | (6,100,329) |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| NET CASH OUTFLOW FROM OPERATING | | | (533,648) |
| ACTIVITIES | | | |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| INVESTING ACTIVITIES | | | |
+---------------------------------------+-------+----------+--------------+
| Interest received | | | 35,350 |
+---------------------------------------+-------+----------+--------------+
| Purchase of investments | 7 | | (59,969,393) |
+---------------------------------------+-------+----------+--------------+
| Sale of investments | 7 | | 25,284,894 |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| NET CASH OUTFLOW FROM INVESTING | | | (34,649,149) |
| ACTIVITIES | | | |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| FINANCING ACTIVITIES | | | |
+---------------------------------------+-------+----------+--------------+
| Proceeds from issue of shares | | | 40,667,020 |
+---------------------------------------+-------+----------+--------------+
| Issue costs | 12 | | (1,767,232) |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| NET CASH INFLOW FROM FINANCING | | | 38,899,788 |
| ACTIVITIES | | | |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| CASH AND CASH EQUIVALENTS AT | | | |
| BEGINNING OF PERIOD | | | - |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| Increase in cash and cash equivalents | | | 3,716,991 |
+---------------------------------------+-------+----------+--------------+
| | | | |
+---------------------------------------+-------+----------+--------------+
| CASH AND CASH EQUIVALENTS AT END OF | | | 3,716,991 |
| PERIOD | | | |
+---------------------------------------+-------+----------+--------------+
STATEMENT OF CHANGES IN EQUITY
for the period from 30 April 2009 (date of incorporation) to 30 June 2010
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| | Notes | | Share | | Share | | Accumulated | | |
| | | | Capital | | Premium | | Profits | | Total |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| | | | GBP | | GBP | | GBP | | GBP |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| Balance as at 30 | | | | | - | | - | | - |
| April 2009 | | | - | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| Net profit for | | | - | | - | | 10,783,059 | | 10,783,059 |
| the period | | | | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| Share issue | 12 | | - | | 40,667,020 | | - | | 40,667,020 |
| proceeds | | | | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| Issue costs | 12 | | - | | (1,767,232) | | - | | (1,767,232) |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | | | |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
| Balance as at 30 | | | | | | | | | |
| June 2010 | 12 | | - | | 38,899,788 | | 10,783,059 | | 49,682,847 |
+------------------+-------+----------+---------+----------+-------------+----------+-------------+----------+-------------+
NOTES TO THE FINANCIAL STATEMENTS
for the period from 30 April 2009 (date of incorporation) to 30 June 2010
1 GENERAL INFORMATION
Altus Resource Capital Limited is a closed-ended investment company incorporated
in Guernsey on 30 April 2009, which listed on the Specialist Fund Market of the
London Stock Exchange on 30 June 2009 and the Channel Islands Stock Exchange on
22 December 2009.
The principal activity of the Company is to realise capital growth from a
concentrated portfolio of junior resource equities and to generate a significant
capital return to shareholders.
2 ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are as follows:
(a) Basis of Preparation
The financial statements have been prepared in conformity with International
Financial Reporting Standards ("IFRS's") as adopted by the EU which comprise
standards and interpretations approved by the International Accounting Standards
Board ("IASB") and International Financial Reporting Interpretations Committee
("IFRIC"), together with applicable Guernsey law. The financial statements have
been prepared on a historical cost basis except for the measurement at fair
value of certain financial instruments.
The following Standards or Interpretations that are expected to affect the
Company have been issued but not yet adopted by the Company as shown below.
Other Standards or Interpretations issued by the IASB and the IFRIC are not
expected to affect the Company.
IAS 24 (revised November 2009) Related Party Disclosures effective for annual
periods beginning on or after 1 January 2011;
IAS 39 (revised July 2008) Financial Instruments: Recognition and Measurement
for annual periods beginning on or after 1 July 2009.
The Directors have considered the above and are of the opinion that these
Standards and Interpretations are not expected to have an impact on the
Company's financial statements except for the presentation of additional
disclosures and changes to the presentation of components of the financial
statements. These items will be applied in the first financial period for which
they are required.
(b) Going Concern
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. As discussed in the Directors' Report on page 18, the
Directors believe the Company is well placed to manage its business risks
successfully despite the current economic climate. Accordingly, the Directors
have adopted the going concern basis in preparing the financial information.
(c) Taxation
The Company has been granted exemption under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 from Guernsey Income Tax, and is charged an annual
fee of GBP600.
(d) Expenses
All expenses are accounted for on an accruals basis.
(e) Interest Income
Interest income is accounted for on an accruals basis.
(f) Cash and Cash equivalents
Cash at bank and short term deposits which are held to maturity are carried at
cost. Cash and cash equivalents are defined as call deposits, short term
deposits and highly liquid investments readily convertible to known amounts of
cash and subject to insignificant risk of changes in value. For the purposes of
the Statement of Cash Flows, cash and cash equivalents consist of cash and
deposits at bank.
(g) Share issue costs
The Share issue costs borne by the Company are recognised in the statement of
changes in equity, as the Company's Ordinary Shares have no fixed redemption
date.
(h) Investments
All investments and derivative financial instruments have been designated as
financial assets "at fair value through profit or loss". Investments are
initially recognised on the date of purchase at cost, being the fair value of
the consideration given, excluding transaction costs associated with the
investment. After initial recognition, investments are measured at fair value,
with unrealised gains and losses on investments and impairment of investments
recognised in the Statement of Comprehensive Income. Commissions paid on the
sale or purchase of investments are recognised in the Statement of Comprehensive
Income as incurred.
Fair value is the amount for which the financial instruments could be exchanged,
or a liability settled, between knowledgeable willing parties in an arms length
transaction. Fair value also reflects the credit quality of the issuers of the
financial instruments.
For investments actively traded in organised financial markets, fair value is
determined by reference to Stock Exchange quoted market bid prices as at the
close of business on the reporting date. If no quoted market bid price is
available as at the close of business on the reporting date, the last available
market bid price is used.
Valuations of unquoted trade investments are based on valuations provided to the
Company by Altus Capital Limited. These valuations are intended to be an
indication of the fair value of those investments, using valuation techniques
designed to reflect the best estimation of the price at which they could be
sold, even though there is no guarantee that a willing buyer might be found if
the Company chose to sell the relevant investment. The indicative fair values of
the investments are based on an approximation of the market value of the
investments. As the investments are not traded in an active market, the
indicative fair value is determined by using valuation techniques. Altus
Capital Limited uses a variety of methods and makes assumptions that are based
on market conditions existing at the reporting date. Different assumptions
regarding these factors, combined with different valuation techniques and models
used, could lead to different valuations of the financial instruments produced
by different parties.
Trade Date Accounting
All "regular way" purchases and sales of financial assets are recognised on the
"trade date", i.e. the date that the entity commits to purchase or sell the
asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of the asset within the time frame generally
established by regulations or convention in the market place.
(j) Segmental Reporting
The Directors are of the opinion that the Company is engaged in a single segment
of business, being the investment business and operates solely from Guernsey,
therefore no segmental reporting is provided.
3 OPERATING INCOME
+---------------------------------------+------+----------+------------+
| | | | 30 Apr |
| | | | 2009 to |
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+------------+
| | | | GBP |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| Bank interest | | | 35,350 |
+---------------------------------------+------+----------+------------+
| Loan interest income | | | 52,476 |
+---------------------------------------+------+----------+------------+
| Sundry income | | | 67,119 |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| | | | 154,945 |
+---------------------------------------+------+----------+------------+
4 OPERATING EXPENSES
+---------------------------------------+------+----------+------------+
| | | | 30 Apr |
| | | | 2009 to |
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+------------+
| | | | GBP |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| Company formation | | | 28,600 |
+---------------------------------------+------+----------+------------+
| Investment manager's fee | | | 223,596 |
+---------------------------------------+------+----------+------------+
| Performance fees | | | 1,206,471 |
+---------------------------------------+------+----------+------------+
| Accountancy fees | | | 5,870 |
+---------------------------------------+------+----------+------------+
| Administrator's fee | | | 42,039 |
+---------------------------------------+------+----------+------------+
| Registrar's fee | | | 6,448 |
+---------------------------------------+------+----------+------------+
| Directors' fees | | | 51,892 |
+---------------------------------------+------+----------+------------+
| Custody fees | | | 7,000 |
+---------------------------------------+------+----------+------------+
| Audit fees | | | 12,000 |
+---------------------------------------+------+----------+------------+
| Directors' and Officers' insurance | | | 11,767 |
+---------------------------------------+------+----------+------------+
| Annual fees | | | 10,114 |
+---------------------------------------+------+----------+------------+
| Printing and stationery | | | 1,500 |
+---------------------------------------+------+----------+------------+
| Bank interest and charges | | | 17,577 |
+---------------------------------------+------+----------+------------+
| Commissions paid | | | 147,680 |
+---------------------------------------+------+----------+------------+
| Corporate and shareholder advisory | | | 66,590 |
| fees | | | |
+---------------------------------------+------+----------+------------+
| Sponsor fees | | | 9,140 |
+---------------------------------------+------+----------+------------+
| Legal and professional fees | | | 6,619 |
+---------------------------------------+------+----------+------------+
| Sundry costs | | | 24,333 |
+---------------------------------------+------+----------+------------+
| Loss on foreign exchange | | | 80,742 |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| | | | 1,959,978 |
+---------------------------------------+------+----------+------------+
DIRECTORS' REMUNERATION
5 The Directors are paid GBP15,000 per annum, with the exception of
David Netherway who during the Period had waived his entitlement to
remuneration. From 1 July 2010 Mr Netherway's fee will no longer be waived and
his entitlement will be payable by the Company. In addition to GBP15,000 per
annum, Nicholas Falla receives an additional fee of GBP3,750 as Chairman and
Robert Milroy receives an additional fee of GBP3,000 as Chairman of the audit
committee.
6 EARNINGS PER SHARE
Earnings per Share is calculated by dividing the net gain for the period
attributable to shareholders (GBP10,783,059) by the weighted average number of
Shares in issue during the period (31,738,993). There are no dilutive
instruments and therefore basic and diluted earnings per Share are identical.
7 INVESTMENTS
+---------------------------------------+------+----------+--------------+
| FINANCIAL ASSETS DESIGNATED AS AT | | | TOTAL |
| FAIR VALUE THROUGH PROFIT OR LOSS | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+--------------+
| | | | GBP |
+---------------------------------------+------+----------+--------------+
| | | | |
+---------------------------------------+------+----------+--------------+
| Opening portfolio cost | | | |
+---------------------------------------+------+----------+--------------+
| | | | |
+---------------------------------------+------+----------+--------------+
| Additions - cost | | | 60,107,517 |
+---------------------------------------+------+----------+--------------+
| | | | |
+---------------------------------------+------+----------+--------------+
| Sales | | | (25,306,060) |
+---------------------------------------+------+----------+--------------+
| | | | |
+---------------------------------------+------+----------+--------------+
| Realised gain on investments | | | 6,100,329 |
+---------------------------------------+------+----------+--------------+
| | | | |
+---------------------------------------+------+----------+--------------+
| Unrealised appreciation on valuation | | | 6,487,763 |
| for the period | | | |
+---------------------------------------+------+----------+--------------+
| | | | |
+---------------------------------------+------+----------+--------------+
| Closing valuation | | | 47,389,549 |
+---------------------------------------+------+----------+--------------+
+---------------------------------------+------+----------+------------+
| Unrealised appreciation on valuation | | | 6,487,763 |
| carried forward | | | |
+---------------------------------------+------+----------+------------+
Investments held by the Company have been classified as Level 1, for those
investments that are quoted and are valued using quoted market bid prices and
Level 2, for those unquoted investments that are valued using standard modelling
techniques by Altus Capital Limited using observable inputs. This is in
accordance with the fair value hierarchy.
Details of the value of each classification are listed in the table below.
Values are based on the market value of the investments as at the reporting
date:
+-----------------------------------+----------+----------+------------+
| | Market | | Market |
| | Value | | Value |
+-----------------------------------+----------+----------+------------+
| | % | | GBP |
+-----------------------------------+----------+----------+------------+
| | | | |
+-----------------------------------+----------+----------+------------+
| Level 1 | 93.91% | | 44,503,981 |
+-----------------------------------+----------+----------+------------+
| Level 2 | 6.09% | | 2,885,568 |
+-----------------------------------+----------+----------+------------+
| | | | |
+-----------------------------------+----------+----------+------------+
| Total | 100.00% | | 47,389,549 |
+-----------------------------------+----------+----------+------------+
There have been no transfers between any of the levels of the fair value
hierarchy during the period under review.
8 RECEIVABLES
+---------------------------------------+------+----------+------------+
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+------------+
| | | | GBP |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| Prepayments | | | 9,210 |
+---------------------------------------+------+----------+------------+
| Broker debtors | | | 21,166 |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| | | | 30,376 |
+---------------------------------------+------+----------+------------+
The above carrying value of receivables is equivalent to its fair value.
9 PAYABLES
(amounts falling due within one year)
+---------------------------------------+------+----------+------------+
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+------------+
| | | | GBP |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| Accrued expenses | | | 109,475 |
+---------------------------------------+------+----------+------------+
| Broker creditors | | | 138,124 |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| | | | 247,599 |
+---------------------------------------+------+----------+------------+
The above carrying value of payables is equivalent to its fair value.
10 PAYABLES
(amounts falling due after one year)
+---------------------------------------+------+----------+------------+
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+------------+
| | | | GBP |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| Accrued expenses | | | 1,206,471 |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| | | | 1,206,471 |
+---------------------------------------+------+----------+------------+
The above carrying value of payables is equivalent to its fair value.
11 SHARE CAPITAL
+---------------------------------------+------------+----------+------------+
| Authorised | SHARES | | GBP |
+---------------------------------------+------------+----------+------------+
| | | | |
+---------------------------------------+------------+----------+------------+
| Unlimited number of Ordinary Shares | Unlimited | | - |
| of no par value | | | |
+---------------------------------------+------------+----------+------------+
| | | | |
+---------------------------------------+------------+----------+------------+
| | | | |
+---------------------------------------+------------+----------+------------+
| Issued | | | |
+---------------------------------------+------------+----------+------------+
| Date of issue | SHARES | | GBP |
+---------------------------------------+------------+----------+------------+
| | | | |
+---------------------------------------+------------+----------+------------+
| 29 June 2009 | 26,000,000 | | - |
+---------------------------------------+------------+----------+------------+
| 21 December 2009 | 10,997,233 | | - |
+---------------------------------------+------------+----------+------------+
| | | | |
+---------------------------------------+------------+----------+------------+
| Ordinary Shares in issue as at 30 | 36,997,233 | | - |
| June 2010 | | | |
+---------------------------------------+------------+----------+------------+
11 SHARE CAPITAL (continued)
Holders of Ordinary Shares are entitled to receive, and participate in, any
dividends out of income, other distributions of the Company available for such
purposes and resolved to be distributed in respect of any accounting period, or
other income or right to participate therein.
On a winding up, Ordinary shareholders are entitled to the surplus assets
remaining after payment of all the creditors of the Company.
Ordinary shareholders also have the right to receive notice of and to attend,
speak and vote at general meetings of the Company and each Member being present
in person or by proxy or by a duly authorised representative at a meeting shall
upon a show of hands have one vote and upon a poll each such holder present in
person or by proxy or by a duly authorised representative shall have one vote in
respect of every Ordinary Share held by him.
12 SHARE PREMIUM
+---------------------------------------+------+----------+-------------+
| | | | GBP |
+---------------------------------------+------+----------+-------------+
| | | | |
+---------------------------------------+------+----------+-------------+
| Premium on shares issued 29 June 2009 | | | 26,000,000 |
+---------------------------------------+------+----------+-------------+
| Premium on shares issued 21 December | | | 14,667,020 |
| 2009 | | | |
+---------------------------------------+------+----------+-------------+
| Issue costs | | | (1,767,232) |
+---------------------------------------+------+----------+-------------+
| | | | |
+---------------------------------------+------+----------+-------------+
| Share premium as at 30 June 2010 | | | 38,899,788 |
+---------------------------------------+------+----------+-------------+
Under IAS 32 Financial Instruments: Presentation, transaction costs of any
equity transaction are accounted for as a deduction from equity to the extent
they are incremental costs directly attributable to the equity transaction that
otherwise would have been avoided.
13 FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the Company's
operations; and
(b) Quoted and unquoted investment securities.
14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Company's financial instruments are market price
risk, credit risk, liquidity risk, interest rate risk, foreign exchange risk and
capital management risk. The Board regularly review and agrees policies for
managing each of these risks and these are summarised below:
(a) 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. The
Manager actively monitors market prices and reports to the Board as to the
appropriateness of the prices used for valuation purposes. A list of the top 10
investments held by the Company is shown in the Schedule of Top 10 Investments
on page 38.
If the value of the Company's investment portfolio were to increase by 30%, it
would represent a gain of GBP14,216,865. This would cause the net asset value
of the Company to rise by 28.62%.
If the value of the Company's investment portfolio were to decrease by 30%, it
would represent a decrease of GBP14,216,865. This would cause the net asset
value of the Company to fall by 28.62%.
(b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet a commitment that it has entered into with the Company. The
Directors receive financial information on a regular basis which is used to
identify and monitor risk.
It is Company policy not to invest more than 20% of the gross assets of the
Company in the securities of any one company or group at the time the investment
is made.
The Company has no significant concentration of credit risk, with exposure
spread over a large number of investments. At 30 June 2010 the Company's
largest exposure to a single investment was GBP4,004,066, which represents 8.45%
of the total market value of investments.
Investors should be aware that the prospective returns to Shareholders mirror
the returns under the investments held or entered into by the Company and that
any default by an issuer of any such investment held by the Company would have a
consequential adverse effect on the ability of the Company to pay some or all of
the entitlement to Shareholders. Such a default might, for example, arise on
the insolvency of an issuer of an investment.
The Company's financial assets exposed to credit risk are as follows:
+---------------------------------------+------+----------+------------+
| | | | 30 Jun |
| | | | 2010 |
+---------------------------------------+------+----------+------------+
| | | | GBP |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| Investments in equities / warrants / | | | 47,389,549 |
| loan notes | | | |
+---------------------------------------+------+----------+------------+
| Cash at bank | | | 3,716,991 |
+---------------------------------------+------+----------+------------+
| Receivables | | | 30,376 |
+---------------------------------------+------+----------+------------+
| | | | |
+---------------------------------------+------+----------+------------+
| | | | 51,136,916 |
+---------------------------------------+------+----------+------------+
The Company is exposed to credit risk in respect of its cash and cash
equivalents, arising from possible default of the relevant counterparty, with a
maximum exposure equal to the carrying value of those assets. The credit risk
on liquid funds is limited because the counterparties are banks with high credit
ratings assigned by international credit-rating agencies. The Company monitors
the placement of cash balances on an ongoing basis.
The Company invests its cash and cash equivalents with Royal Bank of Canada
(Channel Islands) Limited and Barclays Private Clients International Limited.
The investments of the Company are held in custody by Anson Custody Limited or
Royal Bank of Canada (Channel Islands) Limited. Bankruptcy or insolvency of the
Custodians may cause the Company's rights with respect to investments held by
the Custodians to be delayed. Investments held with Anson Custody Limited are
held in a Crest account maintained by Anson Registrars Limited in a sub-account
designated exclusively for the Company. This ensures that the investments are
ring fenced and will be protected should the Custodian become bankrupt or
insolvent.
(c) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in
realising assets or otherwise raising funds to meet financial commitments. The
Company's main financial commitment is its ongoing operating expenses.
The Investment Manager ensures that the Company has sufficient liquid resources
available to fulfil its operational plans and to meet its financial obligations
as they fall due.
The table below details the residual contractual maturities of financial
liabilities:
+----------------------------------+-----------+----------+------------+
| As at 30 June 2010 | 1-3 | | Over 1 |
| | months | | year |
+----------------------------------+-----------+----------+------------+
| | GBP | | GBP |
+----------------------------------+-----------+----------+------------+
| | | | |
+----------------------------------+-----------+----------+------------+
| Accrued expenses | 109,475 | | 1,206,471 |
+----------------------------------+-----------+----------+------------+
| Broker creditors | 138,124 | | - |
+----------------------------------+-----------+----------+------------+
| | | | |
+----------------------------------+-----------+----------+------------+
| | 247,599 | | 1,206,471 |
+----------------------------------+-----------+----------+------------+
(d) Interest Rate Risk
The Company holds cash in several bank accounts, the return on which is subject
to fluctuations in market interest rates.
Other than cash and cash equivalents and one of the investments, none of the
assets or liabilities of the Company attract or incur interest.
The following table details the Company's exposure to interest rate risks:
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| As at 30 June 2010 | Floating | | Fixed | | | | |
| | Less | | 3 | | Non-interest | | |
| | than 1 | | months | | bearing | | Total |
| | month | | - 6 | | | | |
| | | | months | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| | GBP | | GBP | | GBP | | GBP |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Assets | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Designated as at | | | | | | | |
| fair value through | | | | | | | |
| profit or loss on | | | | | | | |
| initial | | | | | | | |
| recognition: | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Investments | - | | 293,117 | | 47,096,432 | | 47,389,549 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Loans and | | | | | | | |
| receivables | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Prepayments | - | | - | | 9,210 | | 9,210 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Broker debtors | - | | - | | 21,166 | | 21,166 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Cash and cash | 3,716,991 | | - | | - | | 3,716,991 |
| equivalents | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Total Assets | 3,716,991 | | 293,117 | | 47,126,808 | | 51,136,916 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Liabilities | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Financial | | | | | | | |
| liabilities | | | | | | | |
| measured at | | | | | | | |
| amortised cost: | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Accrued expenses | - | | | | 1,315,945 | | 1,315,945 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Broker creditors | - | | | | 138,124 | | 138,124 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Total Liabilities | - | | | | 1,454,069 | | 1,454,069 |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
| Total interest | 3,716,991 | | 293,117 | | | | |
| sensitivity gap | | | | | | | |
+--------------------+-----------+----------+---------+----------+--------------+----------+------------+
Interest rate sensitivity
If interest rates had been 25 basis points higher and all other variables were
held constant, the Company's net gain attributable to shareholders for the
period ended 30 June 2010 would have increased by approximately GBP9,292 or
0.02% of Net Assets due to an increase in the amount of interest receivable on
the bank balances.
If interest rates had been 25 basis points lower and all other variables were
held constant, the Company's net gain attributable to shareholders for the
period ended 30 June 2010 would have decreased by approximately GBP9,292 or
0.02% of Net Assets due to a decrease in the amount of interest receivable on
the bank balances.
(e) Foreign Exchange Risk
A substantial proportion of the Company's portfolio is invested in overseas
securities and movements in exchange rates can significantly affect their
Sterling value. The Company does not normally hedge against foreign currency
movements affecting the value of the investment portfolio, but takes account of
this risk when making investment decisions.
The Company undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures
are managed by minimising the amount of foreign currency held at any one time.
The carrying amounts of the Company's foreign currency denominated monetary
assets at the reporting date are as follows:
+----------------------------------+-----------+----------+------------+
| | | | GBP |
+----------------------------------+-----------+----------+------------+
| | | | |
+----------------------------------+-----------+----------+------------+
| Australian Dollar | | | 1,726,837 |
+----------------------------------+-----------+----------+------------+
| Canadian Dollar | | | 157,170 |
+----------------------------------+-----------+----------+------------+
| | | | |
+----------------------------------+-----------+----------+------------+
| | | | 1,884,007 |
+----------------------------------+-----------+----------+------------+
(f) Capital Management
The investment objective of the Company is to provide shareholders with
attractive long term returns, expected to be in the form of capital, through a
diversified portfolio.
As the Company's Ordinary shares are traded on the Specialist Fund Market of the
London Stock Exchange ("SFM"), the Ordinary shares may trade at a discount to
their Net Asset Value per Share on occasion. However, in structuring the
Company, the Directors have given detailed consideration to the discount risk
and how this may be managed.
The Company monitors capital on the basis of the carrying amount of equity as
presented on the face of the statement of financial position.
15 RELATED PARTY TRANSACTIONS AND DIRECTORS BENEFICIAL INTERESTS
The Company is managed by Altus Capital Limited (the "Investment Manager") a
wholly-owned FSA authorised and regulated subsidiary of Altus Strategies
Limited. Altus Strategies Limited owns 150,000 shares (0.41%) in Altus Resource
Capital Limited.
The director David Netherway is a non-executive chairman of Altus Strategies
Limited, which as mentioned above, owns 150,000 shares (0.41%) in Altus Resource
Capital Limited. David Netherway is also a director of GMA Resources, whose
loan stock is invested in by the Company. The investment in GMA Resources
represents 3.11% of the market value of the Company's investments.
The director Nick Falla holds 20,000 shares (0.06%) in the Company.
The director David Gelber holds 50,000 shares (0.14%) in the Company. This is
held as part of a nominee trust holding in the Company.
The director Robert Milroy holds 20,000 shares (0.06%) in the Company.
Under the Investment Management Agreement, Altus Capital Limited is entitled to
receive fees of the greater of 0.5% per annum of the Company's Net Asset Value
or GBP150,000 per annum. This arrangement is subject to amendment at the
forthcoming General Meeting where it will be proposed to increase the fee to 1%
per annum of the Company's Net Asset Value. During the period the Company
incurred GBP223,596 of fees, of which GBP61,934 was outstanding at the period
end as shown in accrued expenses.
During the period the Company was charged travel expenses totalling GBP13,695 by
Altus Capital Limited, which amount was outstanding at the period end and is
included in accrued expenses.
The Investment Manager is also entitled to receive a performance fee (the
Performance Fee). The first component of the Performance Fee will be calculated
for the first time in respect of the financial accounting period first ending
following the second anniversary of the date of Admission. The fee is equal to
20% of the excess of the NAV per Share as at the end of the financial accounting
period (adjusted to account for dividends and returns of capital paid out during
the period and in respect of which the Manager has been paid or is to be paid
the second component of the Performance Fee) over the basic performance hurdle,
this being an amount equal to the Issue Price increased by 10% of the Issue
Price per annum up to the end of the relevant performance period. Thereafter
this fee shall be paid on an annual basis in respect of each financial period
subject to the basic performance hurdle and a high watermark having been
exceeded. The high watermark is the NAV at the end of the financial period in
respect of which the last Performance Fee was paid. If, however, the high
watermark is not exceeded for any consecutive period of three years it shall be
re-based to a value equal to the NAV as at the end of the third financial
period. The basic performance hurdle, as described above, must however still be
exceeded in order for this component of the performance fee to be payable.
The first component of the Performance Fee will be paid on a per Share basis,
multiplied by the time weighted average of the number of Shares in issue in the
relevant performance period (or since Admission in the first performance period)
(together, if applicable, with an amount equal to the VAT thereon). In the
event that there is a further issue of Shares, a redemption of Shares or other
capital reorganisation of the Company, the calculation of the performance fee
will be adjusted appropriately.
The second component of the Performance Fee is an amount equal to 20% of the sum
of all dividends, distributions and other returns of capital paid out to
Shareholders during the relevant performance period (but excluding redemptions
and share buy backs that are deemed distributions under the Companies Law),
subject to the performance hurdle having been satisfied.
The performance hurdle is the requirement that the NAV on the relevant
calculation date must exceed an amount equal to the Issue Price increased by 10%
of the Issue Price per annum up to the end of the relevant performance period.
At the end of the Company's second financial year, the Company will pay to the
Manager 80% of the performance fee. Where the performance hurdle has been
exceeded a performance fee will be accrued. However, as at 30 June 2010, no
performance fee has been paid, but a performance fee of GBP1,206,471 has been
accrued as it appears likely based on the current performance that the
performance hurdle will be exceeded.
Nimrod Capital LLP is the Company's corporate and shareholder advisory agent and
is entitled to receive fees of 0.15% of the Company's Net Asset Value per annum.
In addition Nimrod Capital LLP will receive the remaining 20% of the Performance
Fee, as per the Investment Manager, no performance fee was paid as at 30 June
2010. During the period the Company incurred GBP66,590 of costs, of which
GBP18,580 was outstanding at the period end as shown in accrued expenses.
16 EVENTS AFTER THE REPORTING PERIOD
On 2 August 2010, an additional 2,722,336 Ordinary Shares in the Company were
issued at a price of GBP1.4028 and admitted to trading on 3 August 2010.
TOP 10 INVESTMENTS IN SECURITIES AS AT 30 JUNE 2010
+--------------------------+------------+----------+------------+----------+------------+
| Investment | Cost | | Market | | 30 Jun |
| | | | Value | | 2010 |
| | | | | | Unrealised |
| | | | | | profit / |
| | | | | | (loss) |
+--------------------------+------------+----------+------------+----------+------------+
| | GBP | | GBP | | GBP |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Adamus Resources Limited | 2,656,440 | | 4,004,066 | | 1,347,626 |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Kenmare Resources Plc | 3,758,167 | | 3,527,878 | | (230,289) |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Gryphon Minerals Limited | 1,962,470 | | 3,493,641 | | 1,531,171 |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Perseus Mining Limited | 1,659,152 | | 3,176,278 | | 1,517,126 |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Greystar Resources | 2,981,252 | | 2,620,989 | | (360,263) |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| European Goldfields Com | 1,169,478 | | 2,566,240 | | 1,396,762 |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Banro Corporation Com | 2,629,124 | | 2,537,862 | | (91,262) |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Nevsun Resources Com | 1,700,235 | | 2,094,717 | | 394,482 |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Eastern Platinum Limited | 1,904,705 | | 1,971,321 | | 66,616 |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| Griffin Mining Limited | 1,993,325 | | 1,765,800 | | (227,525) |
+--------------------------+------------+----------+------------+----------+------------+
| | | | | | |
+--------------------------+------------+----------+------------+----------+------------+
| | 22,414,348 | | 27,758,790 | | 5,344,442 |
+--------------------------+------------+----------+------------+----------+------------+
Appendix 1 - Investment Policy and Strategy
INVESTMENT POLICY
The Company will invest in what it believes to be undervalued Junior Resource
Equities. The Junior Resource Companies that issue such equities will be engaged
in the exploration, development and/or mining of metals and minerals and
typically have market capitalisations of less than GBP100 million as at the time
of the Company's IPO on 30 June 2009 or less than GBP250 million as at the time
of investment by the Company. As some Junior Resource Companies will be new and
growing it is possible that Investee Companies will at the time of investment or
shortly thereafter be involved in special situations such as mergers or
restructurings.
The Company, as advised by the Investment Manager, anticipates the Junior
Resource Equities will be predominantly, but not exclusively, listed or quoted
on either UK markets (listed on the Main Market, a regulated market, or trading
on AIM, which is not a regulated market) or other recognised stock exchanges
including the Australian Stock Exchange, Johannesburg Stock Exchange, Toronto
Stock Exchange and TSX Venture Exchange of the Toronto Stock Exchange. As stated
below, the Company may also gain exposure to Junior Resource Equities by
investing in convertible debt securities, warrants and options that reference
Junior Resource Equities. There will be no restriction on the credit rating of
the convertible debt securities held by the Company. The Company may also invest
in royalties insofar as they are connected to an existing investment in an
Investee Company and subject to investments in such royalties not exceeding 10
percent of the Company's NAV.
Investments in private companies and larger listed or publically quoted
companies will only be considered where there is deemed to be significant latent
value and a desirable growth profile. The Company retains the flexibility to
invest in gold and other commodity ETFs to provide a relatively liquid exposure
to the underlying commodity. It is anticipated that the Company Portfolio will
contain approximately twenty five holdings, each representing between GBP0.5
million and GBP10 million. Typically, the Company will seek to acquire interests
of up to 10 percent in Investee Companies but retains the flexibility to acquire
larger positions. The aggregate investment in any one Investee Company will not
represent more than 20 percent of the Company Portfolio at the time of
investment.
The focus of the portfolio will be weighted towards Junior Resource Companies
that operate in the gold sector for the two years following the Company's IPO
Date. The balance of the portfolio will comprise investments in Junior Resource
Companies that focus on other commodities that the Company, as advised by the
Investment Manager, believes are undervalued and/or cash and ETFs.
The Company's policy is to remain fully invested at all times, save for the
Company retaining a cash position of a size sufficient to meet operating
expenses as described in Part II under the heading Ongoing, Annual Expenses.
The Company does not currently intend to engage in any hedging within its
portfolio. Any material change to the investment objective or investment policy
of the Company as set out in this document will be made only with the approval
of a majority of Shareholders (by voting rights) save that any change to the
Company's policy on hedging (to allow the occasional use of tactical hedging to
protect the Company against declines in the value of its portfolio positions as
a result of changes in currency exchange rates, certain changes in equity
markets, interest rates and other such events, including changes in gold prices)
may be made instead with the approval of the board of Directors of the Company.
The Board will review the investment policy on a continual basis together with
the Investment Manager, taking into account market conditions and the size of
the portfolio.
As stated above, Shareholder consent will be sought for any material change to
the investment policy.
Investment strategy
The Company's investment strategy has been and will continue to be to acquire
Junior Resource Equities:
- directly from existing shareholders seeking to reduce their exposure to a
particular Junior Resource Company or to the sector in general; or
- through the issue of new equity by the Investee Company, through private
placements; or
- through the purchase of convertible loan instruments, where the Company
retains the option to convert such instruments into Junior Resource Equities at
pre-agreed prices or in accordance with pre-agreed terms or events; or
- through the purchase of options or warrants that reference Junior Resource
Equities; or
- through the acquisition of shares on a stock exchange on which the
relevant securities are traded.
The Company, as advised by the Investment Manager, considers that the portfolios
of many institutional investors include holdings in Junior Resource Equities
which may comprise a fairly small percentage of their overall holdings. It may
not be economically viable for such institutions to commit the time and bear the
costs of becoming actively involved as a shareholder. The Company may provide
such institutions with an opportunity to:
- dispose of their non-core holdings and then recycle the proceeds in
accordance with their investment priorities; and
- rationalise their portfolios and thereby improve their portfolio
efficiency by focussing more resources on their core investments.
In light of the slowdown in the global economy, the initial investment focus at
the time of the IPO was weighted towards gold producers in the Junior Resources
Sector. This continues to be the investment focus. The Company, as advised by
the Investment Manager, expects gold to outperform other commodities and indeed
other asset classes over the coming two to three years and gold producers and
developers will offer the greatest leverage to a rising gold price. The Company,
as advised by the Investment Manager, anticipates that investments in gold
companies in the Junior Resources Sector will represent approximately 70 percent
of the Company Portfolio by value for the next two to three years.
Furthermore, given the paucity of capital available for exploration companies,
investments in the initial years will be focused on Junior Resource Companies
that are in production or are at the project development stage and which are
also either fully funded or are considered likely to be able raise future equity
and or debt finance. Exploration and other development companies may also be
considered if the Company, as advised by the Investment Manager, believes that
they are well financed or, given the quality of their assets, are likely to be
financeable in the future. Exploration companies include those undertaking
grassroots exploration and those in the process of defining a mineral resource.
Production companies are those with producing assets. Development companies are
considered to be those companies with a defined mineral resource under an
internationally recognised classification system, that are upgrading the
resource, determining the economic viability of the project or building a mine.
The Company, as advised by the Investment Manager, anticipates that production
and development companies will represent approximately 80 percent of the Company
Portfolio by value during the coming two to three years. Investments in
exploration companies will be made if the Company, as advised by the Investment
Manager, considers that their projects represent strategic or potentially
world-class assets that are either likely acquisition targets or which, if the
Investee Company elects to develop them alone, will be able to continue to raise
the necessary equity finance.
It is anticipated that the businesses and assets of approximately 75 percent of
the Investee Companies will be based in emerging markets, although there is no
limit on the proportion of assets so invested.
If and when the financial markets return to a degree of normality, investment
opportunities will be sought in Junior Resource Companies with exposure to a
more diverse range of commodities. The Company, as advised by the Investment
Manager, considers that the longer term fundamentals for commodities remain
robust driven by anticipated inflationary pressures, the anticipated (at least
partial) recovery of developed economies and demand from emerging BRIC
economies. Representing more than 40 percent of the world's population, the
Company, as advised by the Investment Manager, expects the industrialisation and
urbanisation of BRIC countries to support strong demand for commodities and
consequently commodity prices for at least the next decade, albeit after the
current global financial uncertainty has dissipated.
When the Investment Manager elects, and is able to, engage with an Investee
Company, it intends to adopt a constructive approach with the board and
management so as to encourage them to be active in the pursuit of enhanced value
and liquidity in their company's shares. Board representation may be sought with
larger shareholdings to ensure a closer scrutiny of the Investee Company's
activity. In addition, the Investment Manager will actively support and
encourage the Investee Company to consider corporate transactions where such
transactions create value and liquidity.
Where a different ownership and/or management structure would enhance value, the
Company may seek to initiate changes to capture such value. The Company may also
seek to modify existing capital structures and increase or decrease (as it
considers appropriate) leverage and/or seek divestiture or of certain businesses
of the Investee Company or combinations with other Investee Companies. The
Investment Manager must obtain the prior consent of the board of Directors of
the Company or a committee thereof prior to each occasion on which it exercises
or refrains from exercising any voting rights attaching to holdings in Investee
Companies with respect to (i) matters that might reasonably be considered to
have arisen out of any shareholder activist action and (ii) other corporate
actions initiated by or at the behest of the Investment Manager (whether acting
alone or in concert with one or more parties)
A long-term view will be taken with respect to realising value from investments.
It is anticipated that investments will be held for typically a two to three
year time period during which time the Investment Manager will continuously
review the portfolio in order to assess the most appropriate strategy for each
investment. It is anticipated that, whilst some investments may be considered
appropriate for sale in the shorter term, the majority will be held for a longer
period in order to enable their inherent value to be realised successfully. The
Company will adopt a flexible strategy in relation to each investment in order
to reflect external factors such as changes in market conditions or changes in
the circumstances of the investment.
Some investments may be sold into the market. The Company, as advised by the
Investment Manager, believes that other investments are likely to represent
acquisition targets and therefore a trade sale or corporate merger or takeover
would effect an exit.
By order of the Board
Altus Resource Capital Limited
Administrative Enquiries:
Anson Fund Managers Limited
Tel: +44 (0) 1481 722 260
Investment Manager:
Altus Capital Limited
Tel: +44 (0) 1235 511767
info@altus-cap.com
Shareholder Enquiries:
Nimrod Capital LLP
Tel: +44 (0) 20 3355 6855
info@nimrodcapital.com
E&OE - In Transmission
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLMFTMBAMBMM
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