TIDMARCL
RNS Number : 0395M
Altus Resource Capital Limited
11 September 2012
ANNOUNCEMENT OF ANNUAL RESULTS
The directors announce the statement of results for the year
ended 30 JUNE 2012 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 (the
"SFM") of the London Stock Exchange on 30 June 2009 and the Channel
Islands Stock Exchange (the "CISX") on 22 December 2009.
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's investment activities are managed by Altus Capital
Limited (the "Investment Manager") who report to the Board. The
Investment Manager is a 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 per share.
The group comprises the Company and its subsidiary Altus Global
Gold Limited (together the "Group") as detailed in Note 7 to the
Consolidated Financial Statements.
Altus Global Gold Limited is an authorised open-ended investment
company incorporated under the laws of Guernsey on 10 October 2011
with registered number 54069. It listed on the Channel Island Stock
Exchange on 1 November 2011.
Altus Global Gold Limited was established to realise capital
growth from a portfolio of gold and precious metals equities, with
the aim of generating a significant capital return to shareholders.
It invests in mid-tier and major gold and precious metals companies
with a focus on mid-tier producers.
The Company invested GBP5,000,000 in its subsidiary company
Altus Global Gold Limited in October 2011.
The financial year end of Altus Global Gold Limited is 30 June,
which is co-terminus with the financial year end of the
Company.
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 GBP500 million at the time of investment by the
Company.
Performance Statistics
Monthly performance 2011/12:
------------------------------------------------------------------------------------------------
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
ARC (NAV/Share) 4.9% -2.0% -12.2% 11.6% -4.3% -3.8% 9.7% -2.0% -8.4% -4.1% -5.5% -4.1%
Gold ($/oz) 8.2% 12.7% -11.2% 5.9% 1.2% -10.4% 11.1% -2.3% -1.7% -0.2% -6.3% 2.4%
FTSE Gold Mines
Index 4.2% 8.7% -11.7% 5.8% 3.4% -14.4% 9.0% -1.3% -12.3% -7.2% -5.3% 0.5%
S&P/TSX Gold
Index 2.9% 11.5% -7.4% -0.4% 6.3% -15.7% 8.4% -3.2% -9.1% -7.9% -4.2% -0.8%
CHAIRMAN'S STATEMENT
I have pleasure in presenting the Annual Report and Consolidated
Financial Statements of Altus Resource Capital Limited ("ARCL" or
the "Company") for the year ended 30 June 2012 (the "Year"). The
Company's Net Asset Value ("NAV") as announced on 30 June 2012 was
GBP60.7 million or GBP1.53 per Ordinary Share, a decline of 20.8%
over the Year but an increase of 60.8% since launch on 30 June
2009.
The Year has been marked by global political and economic
instability dominated by the on-going Eurozone crisis, the Arab
Spring and concerns over the sustainability of both China's
economic growth and the USA's economic recovery. Equity markets
were generally weak with the FTSE 100 Index losing 6.3% over the
Year whereas the "safe haven" investments of the dollar and gold
outperformed with the dollar index and the gold price gaining 9.9%
and 6.2% respectively. Despite the strength of the gold price, gold
equities significantly underperformed with the FTSE Gold Mines
Index and the S&P/ TSX Gold Index losing 21.9% and 20.7%
respectively. Base and bulk metals, coal and industrial minerals
all suffered in this weak market with the copper price losing
19.2%. The FTSE 350 Mining Index, consisting of large cap
diversified miners, fell 33.2% and the FTSE AIM Basic Resource
Index, composed of AIM listed junior mining equities, fell by
37.1%.
Against the backdrop, the Group's NAV has held up reasonably
well, out-performing the majority of indices and peers and the
Company's Ordinary Share price has traded at a premium to the NAV
over the year. With a defensive cash position (21% of assets under
management) and a focused portfolio, the Company is well-positioned
to weather further difficult markets, take advantage of
opportunities that arise and benefit from an anticipated closing of
the gold versus gold equity disconnect. In October 2011, the
Company seed financed Altus Global Gold Limited, a Guernsey
registered open-ended investment company focused on mid-tier gold
miners. It is anticipated that exposure to this vehicle will
provide the optimal exposure to the initial closing of the value
gap between gold and gold equities.
I would like to take this opportunity to thank you for your
on-going support of the Company in what have been unprecedented
times. We remain confident that the Company is well positioned to
deliver significant NAV growth over the coming years.
Nick Falla
Chairman
INVESTMENT MANAGER'S REPORT
Financial Highlights and Investment Review by Altus Capital
Limited
The last twelve months has been a challenging time for the
mining sector and junior resource equities in particular. The
majority of metals prices declined over the Year with gold being
one of the few metals to make gains with a rise of 6.2%. With fears
of a slowdown in the economic growth of China and the
sustainability of the economic recovery in the West, industrial
metal and mineral prices declined over the Year. The price of
silver, which has industrial uses but typically trades in line with
gold, declined by 20.8% over the Year (despite gold's 6.2% gain)
and the copper price, often seen as the bellwether metal, fell by
19.2%.
Metal Price at Price at % change
30/06/2011 30/06/2012 during
Year
-------------------------- -------------- --------------- ---------
Gold (US$/oz) 1,504 1,597 6.2%
-------------------------- -------------- --------------- ---------
Silver (US$/oz) 34.7 27.5 -20.8%
-------------------------- -------------- --------------- ---------
Platinum (US$/oz) 1,721 1,442 -16.2%
-------------------------- -------------- --------------- ---------
Palladium (US$/oz) 759 580 -23.6%
-------------------------- -------------- --------------- ---------
Copper (US$/t) 9,414 7,604 -19.2%
-------------------------- -------------- --------------- ---------
Zinc (US$/t) 2,342 1,843 -21.3%
-------------------------- -------------- --------------- ---------
Nickel (US$/t) 2,671 1,796 -32.8%
-------------------------- -------------- --------------- ---------
CRB US Spot Metals Index 1,036 820 -20.9%
-------------------------- -------------- --------------- ---------
Source: Bloomberg data
Equity markets were generally weak during the Year with mining
indices, and particularly junior mining indices, underperforming
commodity prices. Gold equities showed the most dramatic declines
relative to their underlying commodity with the FTSE Gold Mines
Index and the S&P/ TSX Gold Index losing 21.9% and 20.7%
respectively. The underperformance of gold equities may be
attributed to a number of factors:
-- Investors remain wary of equities following the financial crisis of 2008/ 2009;
-- the emergence of ETFs (exchange traded funds) enables
investors to gain direct exposure to gold without taking the
operating risks of holding mining equities;
a number of gold miners have under-delivered and others have
suffered from capital and operating cost escalation; and
-- gold price volatility increased significantly in late 2011
with the price spiking temporarily to over US$1,900 per ounce. This
increased volatility in the gold price coincided with the negative
trend suffered by gold equities as investors became less willing to
hold gold equities whilst commodity price volatility remained so
high.
With the price of industrial metals and minerals falling through
the Year, the diversified miners suffered significant declines. The
FTSE 350 Mining Index, which is dominated by BHP Billiton, Rio
Tinto, Anglo American, Xstrata and Glencore (constituting
approximately over 80% of the Index), fell by 33.2% over the
Year.
As is expected in weak markets, junior companies were generally
weaker than their more liquid large-cap counterparts. In the gold
sector the Market Vectors Junior Gold Miner ETF declined 44.3% and
in the junior diversified miners sector the FTSE AIM Basic
Resources Index and the ASX Small Cap Basic Resources Index
declined 37.1% and 32.5% respectively.
Metal Price at Price at % change
30/06/2011 30/06/2012 during
Year
------------------------------- ------------ ------------ ---------
FTSE Gold Mines Index 3,563 2,783 -21.9%
------------------------------- ------------ ------------ ---------
S&P/ TSX Gold Index 3,119 2,473 -20.7%
------------------------------- ------------ ------------ ---------
Market Vectors Gold Miner
ETF 54.6 44.8 -18.0%
------------------------------- ------------ ------------ ---------
Market Vectors Junior Gold
Miner ETF 34.5 19.2 -44.3%
------------------------------- ------------ ------------ ---------
FTSE 350 Mining Index 26,129 17,466 -33.2%
------------------------------- ------------ ------------ ---------
FTSE AIM Basic Resources
Index 7,999 5,034 -37.1%
------------------------------- ------------ ------------ ---------
ASX Small Cap Basic Resources
Index 5,507 3,717 -32.5%
------------------------------- ------------ ------------ ---------
Source: Bloomberg data
The Company retains its focus on junior resource equities and
has avoided the severe fall suffered by the rest of the market due,
in the Investment Manager's opinion, to a number of factors:
-- the portfolio remains concentrated with 22 holdings at the
end of the Year focussed on companies with strong management teams
and world-class assets. The market has become increasingly
unforgiving when companies (large and small) under-deliver
operationally. The focus on low risk situations that are
well-managed has meant the Company has avoided the most severe
market sell-offs;
-- the portfolio remains focused in companies that are in
production or fully-funded to production and therefore do not carry
significant financing risk. At the end of the Year 80% of invested
capital was focused on production and development stage
companies;
-- the portfolio continues to be actively traded with a number
of partial or full exits early in the Year when the weak market
increased the investee company's financing risk or when an investee
company failed to deliver operationally; and
-- a defensive cash position of 21.2% of assets under management
at the end of the Year enabling the Company to take advantage of
anomalous pricing in an increasingly illiquid and volatile market
and enable the Company to deploy rapidly into select situations
when sentiment to the market improves.
Outlook
The Investment Manager remains confident that the outlook for
the Company is positive supported by strong fundamentals for the
gold price and, over the longer term, for other commodities.
The gold price appears to have found a floor at US$1,550 per
ounce, with strong demand from central banks underpinning the
market. Retail investment demand continues to grow in China and
other emerging economies where the bourgeoning middle classes are
seeking both to preserve their newly created wealth and hedge
against inflation. With sovereign debt levels at unsustainable
levels in many Western economies, further quantitative easing
measures are likely to form part of the longer term solution and
would be a positive catalyst for the gold price. Meanwhile, gold
supply has remained relatively stable in recent years but with few
new world-class gold discoveries, producers will increasingly
struggle to replenish their reserves and maintain production
levels.
Other metals face similar pressures with supply-side deficits
forecast and a dearth of new discoveries in a number of the major
metals.
Demand for industrial metals and minerals continues to be
dominated by China and so prices are unlikely to strengthen
significantly until there is greater clarity on the sustainability
of the growth of China's economy.
The disconnect between gold equities and the gold price has
continued to widen over the Year despite many producers delivering
increasing operating margins and record cash flows.
Profit margin growth will be hard for miners to sustain
indefinitely, particularly with increasing oil and other input
costs and a volatile gold price, however with the gold price at the
current or higher levels, miners that control their costs will
continue to deliver extremely strong earnings. With declining
equity prices and enhanced earnings, many gold equities are trading
at record low valuation metrics.
The Philadelphia Gold and Silver Index, which is an index of
mid- to large-cap precious metals miners, is trading at its lowest
level relative to the gold price since its creation in 1984.
The Investment Manager believes that these valuations are
unusual and anticipates that the disconnect between gold and gold
equities will at least partially close over the short to medium
term. Increased dividends and M&A activity initiated by the
mid-tiers and majors in the first instance will drive value across
the sector. It is expected that the market will remain more
sceptical and discerning and only the better quality companies with
robust assets and proven management teams will be fully
re-rated.
The Investment Manager therefore intends to retain the Company's
focus on good quality junior resource companies with a strong
weighting towards gold producers and developers. The strong cash
position will be retained while market uncertainty prevails but
will be deployed opportunistically as and when market sentiment
improves or to take advantage of anomalous situations.
Investment Allocation
At 30 June 2012, the Group's assets were allocated in the
following proportions:
Asset Allocation by Commodity
Gold 56%
Bulk Minerals 12%
Base Metals 6%
Energy Minerals 4%
Diamonds 1%
Net cash 21%
--------
100%
--------
Asset Allocation by Development Stage
Production 36%
Development 28%
Exploration 11%
ETFs 4%
Net cash 21%
-----------
100%
-----------
Asset Allocation by Geography
Africa 32%
Europe 11%
North America 10%
South America 7%
Asia - Other 6%
Australasia 2%
Other (including ETFs) 11%
Net cash 21%
-------
100%
-------
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
CONSOLIDATED FINANCIAL STATEMENTS
Responsibility Statement
The Directors confirm to the best of their knowledge and
belief:
(a) This annual report includes or incorporates by reference a
fair review of the development and performance of the business and
the position of the Group together with a description of the
principal risks and uncertainties that it faces; and
(b) The Consolidated Financial Statements, prepared in
accordance with International Financial Reporting Standards, as
adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profits of the Group
and performance of the Group over the Year.
A description of important events which have occurred during the
Year, their impact on the performance of the Group as shown in the
Consolidated Financial Statements and a description of the
principal risks and uncertainties facing the Group is given in the
Chairman's Statement, Investment Manager's Report and the notes to
the Consolidated Financial Statements and is incorporated here by
reference.
There were no other material related party transactions which
took place in the Year other than those disclosed in note 16 to the
Consolidated Financial Statements.
Signed on behalf of the Board of Directors on 10 September
2012.
Nick Falla Robert Milroy
Chairman Director
DIRECTORS
Nicholas J Falla: Chairman (non-executive) (Age 55)
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
senior non-executive director of MW Tops Limited, a closed-ended
investment company listed on the London Stock Exchange which
entered into voluntary liquidation in September 2010, 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 (non-executive) (Age 64)
David Gelber began his career in trading in 1976 when he joined
Citibank in London. David 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 David joined ICAP, an
inter-dealer broker, as COO and assisted in implementing two
mergers, first with Exco plc and then with Garban. David currently
serves as a non-executive director on the boards of eSecLending LLC
in Boston, GlobeOp Financial Services SA in Luxembourg 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 assets. David 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 (non-executive) (Age 66)
Robert Milroy is Chairman of Milroy Capital Limited, a company
which invests in and manages various Mining and Energy related
projects. He is a director of Corazon Fund Management Limited, a
division of Collins Stewart Hawkpoint (CI) Limited, a Guernsey
regulated investment management and stock-broking company and was
previously the Managing Director and CIO of Corazon Fund Management
Limited (1996-2010), prior to its acquisition by Collins Stewart
Hawkpoint in 2010. He has over 40 years experience in the
investment, mining and petroleum industries having participated and
worked in various mining, oil exploration projects and financings
in Chile, Peru, Argentina, Ghana, Canada, USA, Mexico, Australia
and Greenland. In addition, he was the Managing Director of Eagle
Drilling Inc. for 13 years, a firm that specialised in hard rock
diamond core drilling in Central and Western Africa. Robert is also
a noted speaker and financial author of various publications
including the Standard & Poor's Guide to Offshore Investment
Funds. Robert graduated with a Bachelor of Commerce (Honours) from
the University of Manitoba and is a director on a number of Mining
and Energy related companies. Robert is also a director of Altus
Global Gold Limited.
David Netherway: (non-independent non-executive) (Age 59)
David Netherway is a mining engineer with over 35 years of
experience in the mining industry and until the takeover by Gryphon
Minerals Limited, was the CEO of Shield Mining Limited, an
Australian listed exploration company. David has now joined the
Gryphon Board. 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 Aureus Mining Inc,
Afferro Mining Inc and Kilo Goldmines Limited and a non-executive
director of Crusader Resources Limited and Altus Global Gold
Limited. David is the current non-executive chairman of Altus
Strategies Limited and is thus not considered an Independent
Director of the Company.
INVESTMENT MANAGER, ADMINISTRATOR AND SECRETARY
Investment 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 dated 22 June 2009, as amended by a
Deed of Amendment and Novation dated 30 June 2010, with Altus
Capital Limited (the "Investment Manager"), a wholly-owned, FSA
regulated subsidiary of Altus Strategies Limited. 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 Board.
The Investment Manager receives a management fee of 0.85% per
annum of the Company's NAV, calculated on the relevant quarterly
accounting date, subject to a minimum fee of GBP150,000 per annum.
In accordance with the Investment Management Agreement the
Investment Manager is also entitled to a performance fee which was
first payable on the second anniversary of the date of Admission
and is payable annually thereafter. During the Year the Investment
Manager was paid 80% of the performance fee accrued to 30 June
2011, being an amount of GBP5,055,901. No performance fee provision
has been made for the Company for the Year as the performance
hurdle has not been met. Further details of the calculation of the
performance fee can be found in Note 16 of the Consolidated
Financial Statements. Under the terms of the Investment Management
Agreement, the agreement may be terminated by either party on
eighteen months' written notice.
Administration Agreement
The Company entered into an Administration and Secretarial
Agreement dated 22 June 2009 with Anson Fund Managers Limited (the
"Administrator" or the "Secretary"). Under the terms of the
Administration and Secretarial Agreement, the Administrator is
responsible for providing administration and secretarial services
to the Company.
The Administrator carries out the general secretarial functions
required by The Companies (Guernsey) Law, 2008, as amended (the
"Law") and ensures that the Company complies with its continuing
obligations as a company with shares admitted to trading on the
Specialist Fund Market of the London Stock Exchange (the "SFM") and
the Channel Islands Stock Exchange ("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 and
Secretarial Agreement is terminable by either party on giving not
less than three months' written notice.
Review
The Board keeps under review the performance of the Investment
Manager and the Administrator and the powers delegated to them
both. In the opinion of the Board the continuing appointment of the
Investment Manager and the Administrator on the terms agreed is in
the interest of shareholders as a whole.
DIRECTORS' REPORT
The Directors present their report and Consolidated Financial
Statements of the Company for the Year.
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. A description of the
activities of the Company in the Year under review is outlined in
the Investment Manager's Report on pages 6 to 12.
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 Law
and the Protection of Investors (Bailiwick of Guernsey) Law, 1987
as amended.
The Company's Ordinary Shares were admitted to trade on the SFM
on 30 June 2009. On 22 December 2009 the Company's Ordinary Shares
were also admitted to trade on the 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 under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance 1989. 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 Group for the Year are set out on page
33.
The Group 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.
The Company did not declare any interim dividends during the
Year and the Directors do not propose the declaration of a final
dividend for the Year under review.
Directors
Further details of the Directors in office are shown on pages 14
and 15. Details of the Directors' responsibilities are given on
pages 23 and 24.
The interests of the Directors in the Ordinary Shares of the
Company as at 30 June 2012 were 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 in the
Ordinary Shares of the Company between 1 July 2012 and 10 September
2012.
Other than the above Ordinary 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 Year 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 Year save for the
following:
-- David Netherway is the non-executive chairman of Altus
Strategies Limited, the ultimate parent of the Investment Manager,
who owns 150,000 Ordinary Shares in the Company; and
-- David Netherway is a non-executive Director of Gryphon
Minerals Limited and the non-executive chairman of Kilo Goldmines
Limited, both companies in which the Company has an exposure.
At the date of this report, there are no outstanding loans or
guarantees between the Company and any Director.
Substantial Shareholdings
On 10 September 2012 the Company had been notified, in
accordance with Chapter 5 of the Disclosure and Transparency Rules
of the following substantial interests in the Company's share
capital:
Registered Holder % of Total Voting Number of Ordinary
Rights Shares
Securities Services Nominees
Limited a/c 2300001 17.53% 6,961,074
Nortrust Nominees Limited a/c
GSYLENDA 13.36% 5,307,922
State Street Nominees Limited
a/c OM04 11.63% 4,621,175
BNY (OCS) Nominees Limited 11.57% 4,594,708
HSBC Global Custody Nominee
(UK) Limited a/c 710239 5.83% 2,314,567
Chase Nominees Limited 5.04% 2,002,859
HSBC Global Custody Nominee
(UK) Limited a/c 813764 5.01% 1,988,896
Nortrust Nominees Limited 4.53% 1,801,154
Chase Nominees Limited a/c LENDNON 4.09% 1,625,000
Nortrust Nominees Limited a/c
TDS 3.32% 1,318,382
Net Asset Value ("NAV")
The consolidated NAV of the Company's Ordinary Shares as at 30
June 2012 was GBP1.53 per Ordinary Share.
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 the Investment Manager's Report on pages 6 to 12
and in Note 15 of the Consolidated Financial Statements.
Corporate Governance
Statement of Compliance with The UK Corporate Governance
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 Year under review, required to comply
with The UK Corporate Governance Code (the "Code") appended to the
Listing Rules of the UK's Financial Services Authority. However the
Board places 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 Code to the
extent that they are considered relevant to the Company.
The UK Corporate Governance Code is available on the following
website: www.frc.org.uk.
With effect from 1 January 2012 the Company was also required to
comply with the Guernsey Financial Services Commission Financial
Sector Code of Corporate Governance (the "Guernsey Code"). As the
Company complies with the Code it is deemed to meet the Guernsey
Code. The Board has undertaken to evaluate its corporate governance
compliance on an on-going basis.
Subject to the explanations below, the Board considers that it
has maintained procedures during the Year to ensure that it has
complied with the Code:-
-- As the Board is composed exclusively of non-executive
Directors, provisions relating to executive directors or the
position of chief executive are not applicable to the Company.
-- There is no Senior Independent Director which is not in
accordance with provision A.4.1 of the Code. Taking into account
for the size and nature of the Company and the fact there are three
Independent non-executive Directors on the Board this position is
not seen as necessary.
-- There is no internal audit function in the Company and the
requirement for this function is reconsidered on an annual basis.
The Board considers that as all of the Company's administration
functions have been delegated to independent third parties there is
no need for the Company to have an internal audit facility.
Evaluation
The Board carried out a performance evaluation of itself, its
Committees and each of the Directors as required by provision B.6.1
of the Code and is committed to this process being carried out
every year. As detailed in the Company's Annual Report and
Financial Statements for the year ended 30 June 2011, this process
was led by the Remuneration and Management Engagement Committee,
who engaged an independent external facilitator to assist with this
process. The external facilitator did not have any other connection
with the Company.
For the Year this process was led by the Remuneration and
Management Engagement Committee and the evaluation process
consisted of Directors completing a questionnaire to assess the
Board as a whole and the Chairman completing a questionnaire to
assess each Director individually. All questionnaires were designed
by an external facilitator.
The full Board discussed the results of the evaluation of the
Board and its Committees and concluded that there were no
significant points to raise and that each Director continues to
demonstrate their effectiveness and commitment to the Company.
Board Responsibilities
The Board comprises of four non-executive Directors, of whom
Nick Falla, David Gelber and Robert Milroy are determined to be
independent as they are independent of the Investment Manager.
Biographies of the Directors appear on pages 14 and 15,
demonstrating the wide range of skills and experience they bring to
the Board. The Board meets at least four times per year to consider
the business and affairs of the Company, at which meetings the
Directors review the Company's investments and all other important
issues to ensure control is maintained over the Company's affairs.
The Board also receives full management accounts for review at each
full Board meeting.
During the Year the number of full Board meetings and committee
meetings attended by the Directors were as follows:
Full Board Meetings Audit Committee Remuneration
and Management
Engagement Committee
---------------- -------------------- ---------------- ----------------------
Nick Falla 4 out of 4 2 out of 2 2 out of 2
---------------- -------------------- ---------------- ----------------------
David Gelber 4 out of 4 2 out of 2 2 out of 2
---------------- -------------------- ---------------- ----------------------
Robert Milroy 4 out of 4 2 out of 2 2 out of 2
---------------- -------------------- ---------------- ----------------------
David Netherway 3 out of 4 N/A N/A
---------------- -------------------- ---------------- ----------------------
No Director has a service contract with the Company, nor are any
such contracts proposed. Whilst there is no requirement under the
Company's Articles of Incorporation to retire by rotation the Board
has decided to adopt such practice as recommended by the Code. All
Directors shall retire and offer themselves for re-election at the
forthcoming general meeting of shareholders.
The Chairman's other significant commitments include his
appointments as Finance Director of Pharma 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.
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
their respective 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.
Board Committees
Audit Committee
Throughout the Year an Audit Committee has been in operation.
The Audit Committee is chaired by Robert Milroy and each of the
other Board members, with the exception of David Netherway, are
members. The Audit Committee operates within clearly defined Terms
of Reference, which are available from the Company's website or the
Secretary upon request, and provides a forum through which the
Company's external auditors report to the Board.
The Audit 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 half-yearly
and annual financial statements, assessing the fairness of
preliminary and interim statements and disclosures and reviewing
the external audit process. The Audit 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 Audit 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 consolidated financial statements.
The Audit 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 Year the Audit Committee met to consider the interim
management statements, the Annual Report and Financial Statements
to 30 June 2011 and the Half-yearly Financial Report to 31 December
2011 and these meetings were attended by all Audit Committee
members.
Remuneration and Management Engagement Committee
The Remuneration and Management Engagement Committee is chaired
by Robert Milroy and each of the other Board members are members
except David Netherway. The Remuneration and Management Engagement
Committee operates within clearly defined Terms of Reference, which
are available from the Company's website or the Secretary upon
request.
The Remuneration and Management Engagement 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.
Nomination Committee
The Nomination Committee, chaired by Nick Falla, comprises each
of the Directors. The Nomination Committee operates within clearly
defined Terms of Reference, which are available from the Company's
website or the Secretary upon request.
The Nomination 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. During the Year there were no changes to the
composition of the Board and therefore it had not been deemed
appropriate for the Nomination Committee to formally meet.
Internal Control and Financial Reporting
The Board is responsible for establishing and maintaining the
Company's system of internal controls which are reviewed for
effectiveness on an annual basis. The Board reviews not just
internal financial controls but all controls including operations,
compliance and risk management. Internal control systems are
designed to meet the particular needs of the Company and manage 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 Altus Capital Limited
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.
Dialogue with Shareholders
All holders of Ordinary 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 Nimrod Capital LLP, 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's
Directors can be contacted at the Company's registered office.
General Meeting
The notice of the Company's forthcoming General Meeting to be
held pursuant to section 199 of the Law is set out on page 60.
Anti-Bribery and Corruption
The Company adheres to the requirements of the Prevention of
Corruption (Bailiwick of Guernsey) Law, 2003. In consideration of
the recently enacted UK Bribery Act 2010 which came into force on 1
July 2011, the Board abhors bribery and corruption of any form and
expects all the Company's business activities to be undertaken,
whether directly by the Directors themselves or on the Company's
behalf by third parties to be transparent, ethical and beyond
reproach.
On discovery of any activity or transaction that breaches the
requirements of the Prevention of Corruption (Bailiwick of
Guernsey) Law, 2003 or the UK Bribery Act 2010, such discovery will
be reported to the relevant authorities in accordance with
prescribed procedures. The Company is committed to regularly
reviewing its policy and procedures to uphold good business
practice.
Going Concern
The Company's principal activities are set out on pages 1, 2 and
18. The financial position of the Group is set out on page 34. In
addition, Note 15 to the Consolidated 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, after making
reasonable enquiries, that the Group has adequate resources to
continue in operational existence for the foreseeable future as it
has a significant cash balance at the end of the Year and no debt.
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 Consolidated Financial Statements in accordance with
applicable law and regulations.
The Law requires the Directors to prepare financial statements
for each financial year. Under that Law the Directors are required
to prepare the financial statements in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. Under the Law the Directors must not approve
the accounts unless they are satisfied that they 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
Consolidated Financial Statements, International Accounting
Standard 1 requires that the Directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Consolidated Financial Statements comply with the Law. They are
also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey and the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Disclosure of Information to Auditor
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 Auditor is
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 Auditor is
aware of that information.
Auditor
Deloitte LLP has expressed its 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 Law.
Signed on behalf of the Board on 10 September 2012.
Nick Falla Robert Milroy
Chairman Director
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ALTUS RESOURCE
CAPITAL LIMITED
We have audited the Consolidated Financial Statements of Altus
Resource Capital Limited for the year ended 30 June 2012 which
comprise the Consolidated Statement of Financial Position, the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Cash Flows, the Consolidated Statement of Changes in
Equity and the related notes 1 to 16. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards ("IFRS") as
adopted by the European Union.
This report is made solely to the Company's shareholders, as a
body, in accordance with Section 262 of The Companies (Guernsey)
Law, 2008, as amended. Our audit work has been undertaken so that
we might state to the Company's shareholders those matters we are
required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the
Company's shareholders as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors'
Responsibilities on page 13, the Directors are responsible for the
preparation of the Consolidated Financial Statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the Consolidated Financial
Statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board's Ethical Standards for
Auditors.
Scope of the Audit of the Consolidated Financial Statements
An audit involves obtaining evidence about the amounts and
disclosures in the Consolidated Financial Statements sufficient to
give reasonable assurance that the Consolidated Financial
Statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Group's circumstances
and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
Directors; and the overall presentation of the Consolidated
Financial Statements. In addition, we read all the financial and
non-financial information in the annual report to identify material
inconsistencies with the audited Consolidated Financial Statements.
If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on the Consolidated Financial Statements
In our opinion the Consolidated Financial Statements:
-- give a true and fair view of the state of the Group's affairs
as at 30 June 2012 and of its loss for the year then ended;
-- have been properly prepared in accordance with IFRS as
adopted by the European Union; and
-- have been prepared in accordance with the requirements of The
Companies (Guernsey) Law, 2008, as amended.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where The Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept; or
-- the Consolidated Financial Statements are not in agreement
with the accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
John G Clacy FCA
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditors
Guernsey, Channel Islands
10 September 2012
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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended
30 June 2012
Year ended Year ended
30 Jun 2012 30 Jun 2011
Notes GBP GBP
Net movement in unrealised
(depreciation) / appreciation
on investments 8 (21,334,742) 3,779,477
Realised gains on investments 8 6,428,446 25,306,768
Operating income 3 315,103 560,540
Operating expenses 4 (1,437,940) (6,430,515)
----------------------------------- -----------------------------------
Net (loss) / gain for the
year (16,029,133) 23,216,270
----------------------------------- -----------------------------------
Other Comprehensive Income - -
----------------------------------- -----------------------------------
Total Comprehensive Income (16,029,133) 23,216,270
----------------------------------- -----------------------------------
Attributable to:
Owners of the Company (15,936,859) 23,216,270
Non-controlling interest 13 (92,274) -
----------------------------------- -----------------------------------
(16,029,133) 23,216,270
----------------------------------- -----------------------------------
Earnings per share for the
year - Basic and Diluted 6 (0.40) 0.59
----------------------------------- -----------------------------------
There are no recognised gains or losses for the year other than
those disclosed above.
In arriving at the results for the financial year, all amounts
above relate to continuing operations.
The notes on pages 37 to 56 form an integral part of these financial
statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June
2012
30 Jun 2012 30 Jun 2011
Notes GBP GBP
NON-CURRENT ASSETS
Financial assets designated
as at fair value through profit
and loss 8 47,525,971 59,605,055
CURRENT ASSETS
Cash and cash equivalents 13,893,566 23,083,865
Trade and other receivables 9 298,590 447,882
--------------------------- ----------------------------------
Unrealised Gain / (Loss) on investments 14,192,156 23,531,747
TOTAL ASSETS 61,718,127 83,136,802
--------------------------- ----------------------------------
CURRENT LIABILITIES
Trade and other payables 10 615,677 6,535,219
--------------------------- ----------------------------------
615,677 6,535,219
NET ASSETS 61,102,450 76,601,583
--------------------------- ----------------------------------
EQUITY
Share premium 12 42,602,254 42,602,254
Revenue reserve 18,062,470 33,999,329
--------------------------- ----------------------------------
Equity attributable to owners
of the Company 60,664,724 76,601,583
Non-controlling interest 13 437,726 -
TOTAL EQUITY 61,102,450 76,601,583
--------------------------- ----------------------------------
GAIN / (LOSS) CARRIED FORWARD
Pence Pence
Net asset value per Ordinary Share
Share based on 39,719,569 (2011: 39,719,569)
Capital shares in issue 153.83 192.85
--------------------------- ----------------------------------
The consolidated financial statements were approved and authorised
for issue by the Board on 10 September 2012.
Nick Falla Robert Milroy
The notes on pages 37 to 56 form an integral part of these
financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 30 June
2012
Year ended Year ended
30 Jun 2012 30 Jun 2011
Notes GBP GBP
OPERATING ACTIVITIES
Net (loss) / gain for
the year attributable
to shareholders (16,029,133) 23,216,270
Net movement in unrealised
depreciation /
(appreciation)
on investments 8 21,334,742 (3,779,477)
Interest received (113,692) (78,666)
(Decrease) / increase
in payables (6,338,662) 5,219,274
Increase in receivables (120,328) (23,534)
Realised gains on
investments 8 (6,428,446) (25,306,768)
Foreign exchange movements 146,968 (294,813)
NET CASH FLOW FROM
OPERATING
ACTIVITIES (7,548,551) (1,047,714)
----------------------------------------------- ----------------------------------------
INVESTING ACTIVITIES
Interest received 115,633 76,296
Purchase of investments (60,753,426) (65,216,474)
Acquisition of subsidiary 7 (5,000,000) -
Sale of investments 58,613,013 81,557,487
NET CASH FLOW FROM
INVESTING
ACTIVITIES (7,024,780) 16,417,309
----------------------------------------------- ----------------------------------------
FINANCING ACTIVITIES
Proceeds from issue of
shares in company 12 - 3,818,894
Proceeds from issue of
shares in subsidiary 5,530,000 -
Issue costs 12 - (116,428)
NET CASH FLOW FROM
FINANCING
ACTIVITIES 5,530,000 3,702,466
----------------------------------------------- ----------------------------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 23,083,865 3,716,991
(Decrease) / increase
in cash and cash
equivalents (9,043,331) 19,072,061
Effect of foreign exchange
rate changes (146,968) 294,813
CASH AND CASH EQUIVALENTS
AT END OF YEAR 13,893,566 23,083,865
----------------------------------------------- ----------------------------------------
The notes on pages 37 to 56 form an integral part of these
financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year
ended 30 June 2012
Share Share Premium Accumulated Non-controlling Total
Capital Profits interest
Notes GBP GBP GBP GBP GBP
Balance as
at 1 July
2011 - 42,602,254 33,999,329 - 76,601,583
Acquisition
of
Subsidiary - - - 530,000 530,000
Net loss for
the year - - (15,936,859) (92,274) (16,029,133)
Share issue
proceeds 12 - - - - -
Issue costs 12 - - - - -
Balance as
at 30 June
2012 - 42,602,254 18,062,470 437,726 61,102,450
----------------- --------------------- ----------------------- --------------------- ---------------------------
Share Share Premium Accumulated Non-controlling Total
Capital Profits interest
GBP GBP GBP GBP GBP
Balance as
at 1 July
2010 - 38,899,788 10,783,059 - 49,682,847
Net gain for
the year - - 23,216,270 - 23,216,270
Share issue
proceeds 12 - 3,818,894 - - 3,818,894
Issue costs 12 - (116,428) - - (116,428)
Balance as
at 30 June
2011 - 42,602,254 33,999,329 - 76,601,583
----------------- --------------------- ----------------------- --------------------- ---------------------------
The notes on pages 37 to 56 form an integral part of these
financial statements
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS for the year ended
30 June 2012
1 GENERAL INFORMATION
The consolidated financial statements incorporate the
financial statements of Altus Resource Capital Limited
(the "Company") and Altus Global Gold Limited (the "Subsidiary")
together known as (the "Group").
The Company is a closed-ended investment company incorporated
in Guernsey on 30 April 2009, which listed on the Specialist
Fund Market ("SFM") of the London Stock Exchange on 30
June 2009 and on the Channel Islands Stock Exchange ("CISX")
on 22 December 2009.
The principal activity of the Group 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 following significant accounting policies have been
applied consistently in dealing with items which are considered
material in relation to the Group's Consolidated Financial
Statements:
(a) Basis of Preparation
The consolidated financial statements have been prepared
in conformity with International Financial Reporting Standards
("IFRS") as adopted in the European Union 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 Group have been issued but not yet adopted
by the Group as shown below. Other Standards or Interpretations
issued by the IASB and the IFRIC are not expected to affect
the Group.
IFRS 7 Financial Instruments: Disclosures - Amendments
relating to the offsetting of assets and liabilities effective
for annual periods beginning on or after 1 January 2013
and interim periods within those periods.
IFRS 9 Financial Instruments - Deferral of mandatory effective
date of IFRS 9 and amendments to transition disclosures
effective for annual periods beginning on or after 1 January
2015.
IFRS 13 Fair value measurement - Original issue effective
for annual periods beginning on or after 1 January 2013.
IAS 1 Presentation of Financial Statements - Amendments
to revise the way Other Comprehensive Income is presented
effective for annual periods beginning on or after 1 July
2012.
IAS 32 Financial Instruments: Presentation - Amendments
relating to the offsetting of assets and liabilities effective
for annual periods beginning on or after 1 January 2014.
The Directors have considered the above and are of the opinion
that the above Standards and Interpretations are not expected
to have a material impact on the Group'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)
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its Subsidiary. The Company owns
90.41% of the shares in the Subsidiary and has the power to govern
the financial and operating policies of the Subsidiary so as to
obtain benefits from it's activities.
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions are eliminated
in preparing the consolidated financial statements.
Non-controlling interests in the Subsidiary are identified separately
from the Group's equity therein. The interests of non-controlling
shareholders are initially measured at the non-controlling interest's
proportionate share of the fair value of the Subsidiary's identifiable
net assets. Subsequent to acquisition, the carrying amount of
non-controlling interest is the amount of the interest at initial
recognition plus the non-controlling interest's share of subsequent
changes in equity. Total comprehensive income is attributed to
non-controlling interest even if this results in the non-controlling
interest having a deficit balance.
(c) Judgements and estimates
The preparation of financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results could differ
from such estimates.
The estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the
period in which the estimate was revised if the revision affects
only that period or in the period of the revision and future periods
if the revision affects both current and future periods.
The most critical judgements, apart from those involving estimates,
that management has made in the process of applying the Company's
accounting policies and that have the most significant effect
on the amounts recognised in the financial statements are the
functional currency of the Company (see note 2(d)(i)) and the
fair value of investments designated to be at fair value through
profit or loss (see note 2(e)(i)). The valuation methods/techniques
used by the Company in valuing financial instruments involve critical
judgements to be made and therefore the actual value of financial
instruments could differ significantly from the value disclosed
in these financial statements.
(d) Foreign currency
(i) Functional and Presentation Currency
The Company's investors are mainly from the UK, with the subscriptions
and redemptions of the Participating Redeemable Shares denominated
in Sterling. The primary activity of the Company is to realise
capital growth from a portfolio of gold and precious metals equities
with the aim of generating a significant capital return to Shareholders.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the Statement of Total
Comprehensive Income. Translation differences on non-monetary
financial assets and liabilities such as equities at fair value
through profit or loss are recognised in the Statement of Total
Comprehensive Income. The Company holds investments denominated
in Australian, Canadian and US Dollars at the reporting date,
and may enter into forward foreign currency contracts to hedge
the exchange rate risk arising from future cash flows on these
investments. As at 30 June 2012 no forward foreign currency contracts
were taken out.
(e) Financial Instruments
(i) Financial Assets
The classification of financial assets at initial recognition
depends on the purpose for which the financial asset was acquired
and its characteristics.
All financial assets are initially recognised at fair value. All
purchases of financial assets are recorded at trade date, being
the date on which the Company became party to the contractual
requirement of the financial asset.
The Company's financial assets are categorised as financial assets
at fair value through profit or loss. Unless otherwise indicated
the carrying amounts of the Company's financial assets approximate
to their fair values. Gains and losses arising from changes in
the fair value of financial assets classified as fair value through
profit or loss are recognised in the Statement of Total Comprehensive
Income.
A financial asset (in whole or in part) is derecognised either:
* when the Company has transferred substantially all
the risk and rewards of ownership;
* when it has not retained substantially all the risk
and rewards and when it no longer has control over
the asset or a portion of the asset; or
when the contractual right to receive cash flow has expired.
(ii) Financial Liabilities
The classification of financial liabilities at initial recognition
depends on the purpose for which the financial liability was issued
and its characteristics.
All financial liabilities are initially recognised at fair value
net of transaction costs incurred. All purchases of financial
liabilities are recorded on trade date, being the date on which
the Company becomes party to the contractual requirements of the
financial liability. Unless otherwise indicated the carrying amounts
of the Company's financial liabilities approximate to their fair
values.
Financial liabilities measured at amortised cost include other
short-term monetary liabilities, which are initially recognised
at fair value and subsequently carried at amortised cost using
the effective interest rate method.
A financial liability (in whole or in part) is derecognised when
the Company has extinguished its contractual obligations, it expires
or is cancelled. Any gain or loss on derecognition is taken to
the Statement of Comprehensive Income.
(f) Going concern
After making enquiries, the Directors have a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future. The Directors believe the
Group 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.
(g) Taxation
The Company and its Subsidiary have been granted exemption under
the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 from
Guernsey Income Tax, and each entity is charged an annual fee
of GBP600.
(h) Expenses
All expenses are accounted for on an accruals basis.
(i) Interest, Dividend and Bond Income
Interest, dividend and bond income is accounted for on an accruals
basis.
(j) 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.
(k) 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.
(l) Investments
All investments and derivative financial instruments have been
designated as financial assets "at fair value through profit
and 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.
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 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 Group by Altus Capital Limited (the "Investment
Manager"). 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 Group chose to sell the relevant
investment. The indicative fair values of the investments are
based on an approximation of the market level of the investments.
As the investments are not traded in an active market, the indicative
fair value is determined by using valuation techniques. The Investment
Manager 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 by different
parties.
(m) 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.
(n) Segmental Reporting
The Directors are of the opinion that the Group is engaged in
a single segment of business, being investment business and operates
solely from Guernsey, therefore no segmental reporting is provided.
3 OPERATING INCOME
Year ended Year ended
30 Jun 2012 30 Jun 2011
GBP GBP
Bank interest 113,692 78,666
Dividend income 78,270 23,164
Bond income 123,141 49,500
Sundry income - 107,817
Profit on foreign exchange - 301,393
315,103 560,540
--------------------------------- ----------------------------
4 OPERATING EXPENSES
Year ended Year ended
30 Jun 2012 30 Jun 2011
GBP GBP
Investment Manager's fees 593,912 682,243
Performance fees - 5,113,406
Accountancy fees 7,492 6,000
Administrator's fee 58,718 53,101
Registrar's fee 7,779 7,176
Directors' fees 129,420 66,729
Custody fees 34,188 25,580
Audit fee 32,938 23,972
Directors' and Officers' insurance 5,187 5,395
Annual fees 12,990 11,964
Printing and stationery 5,380 1,500
Bank interest and charges 9,014 9,595
Commissions paid 198,000 215,723
Corporate and Shareholder Adviser
fees 101,365 121,320
Sponsor fees 7,976 6,000
Legal and professional fees 13,212 -
Sundry costs 69,446 80,811
Loss on foreign exchange 150,923 -
1,437,940 6,430,515
--------------------------------- ----------------------------------
5 DIRECTORS' REMUNERATION
The Directors of the Company are paid GBP20,000 per annum.
In addition to GBP20,000 per annum, Nicholas Falla receives
an additional fee of GBP5,000 as Chairman and Robert Milroy
receives an additional fee of GBP3,000 as Chairman of the
audit committee.
The Chairman of the Subsidiary receives a fee of GBP18,000
per annum. Each other Director of the Subsidiary receives
a fee of GBP15,000 per annum.
6 EARNINGS PER SHARE
Earnings per Ordinary Share is calculated by dividing the
net loss for the year attributable to holders of Ordinary
Shares of the Company ('Shareholders') of GBP16,029,133
(2011: gain GBP23,216,270) by the weighted average number
of Ordinary Shares in issue during the year (39,719,569
(2011: 39,472,764)). There are no dilutive instruments and
therefore basic and diluted earnings per Ordinary Share
are identical.
7 SUBSIDIARIES
On 27 October 2011 the Company acquired 90.41% of the voting
equity of Altus Global Gold Limited (the "Subsidiary") for
a consideration of GBP5,000,000. The Subsidiary is an authorised
open-ended investment company with registered number 54069.
The Subsidiary was incorporated on 10 October 2011 and listed
on the Channel Island Stock Exchange ("CISX") on 1 November
2011. The Administrator of the Subsidiary is Praxis Group
and the Custodian is the Royal Bank of Canada. At the time
of the acquisition, the Subsidiary had no assets or liabilities
and had not commenced trading. Included in the Total Comprehensive
Income for the year attributable to the owners of the Company
is an amount of -GBP869,912 representing the Company's share
of the Subsidiary's loss for the year.
The Subsidiary was established to realise capital growth
from a portfolio of gold and precious metals equities, with
the aim of generating a significant capital return to shareholders.
The Subsidiary invests in mid-tier and major gold and precious
metals companies with a focus on mid-tier products.
The financial year end of the Subsidiary is 30 June, which
is co-terminus with the financial year end of the Company.
8 INVESTMENTS
TOTAL TOTAL
30 Jun 2012 30 Jun 2011
GBP GBP
Opening portfolio
cost 49,337,815 40,901,786
Additions - cost 61,172,546 65,078,350
Sales (58,345,334) (81,949,089)
Realised gains on
investments 6,428,446 25,306,768
Unrealised appreciation on
valuation brought forward 10,267,240 6,487,763
Movement in unrealised (depreciation)/appreciation
on valuation for the year (21,334,742) 3,779,477
------------------------ -------------------------
Closing valuation 47,525,971 59,605,055
------------------------ -------------------------
Unrealised (depreciation)/appreciation
on valuation carried forward (11,067,502) 10,267,240
------------------------ -------------------------
IFRS 7 requires the fair value of investments to be disclosed
by the source of inputs, using a three level hierarchy as
detailed below:
* Quoted prices(unadjusted) in active markets for
identical assets or liabilities (Level 1);
* Inputs other than quoted prices included in Level 1
that are observable for the asset or liability,
either directly (as prices) or indirectly (derived
from prices);
* Inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
(Level 3).
Investments held by the Group 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 the Investment Manager using observable inputs and Level
3 for the private equity investments that are valued at
purchase price, after taking account of foreign exchange
movements. 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 Value Market Value
30 Jun 2012 30 Jun 2011
GBP GBP
Level 1 38,549,814 54,276,800
Level 2 6,322,083 2,213,572
Level 3 2,654,074 3,114,683
Total 47,525,971 59,605,055
---------------------------- ----------------------------
The following table shows a reconciliation of all movements
in the fair value of financial instruments categorised within
Level 3 between the beginning and the end of the reporting
year:
30 Jun 2012 30 Jun 2011
GBP GBP
Opening portfolio cost 3,105,976 -
Additions - cost 322,373 3,105,976
Sales (44,701) -
Realised gain on investments 7,429 -
Unrealised appreciation on valuation 8,707 -
brought forward
Movement in unrealised (depreciation)
/ appreciation on valuation for
the year (745,710) 8,707
Closing valuation 2,654,074 3,114,683
---------------------------- ------------------------------------
There have been no transfers between Level 1 and Level 2
of the fair value hierarchy during the year under review.
9 TRADE AND OTHER RECEIVABLES
30 Jun 2012 30 Jun 2011
GBP GBP
Accrued income 138,854 25,459
Prepayments 14,647 9,655
Broker debtors 145,089 412,768
298,590 447,882
---------------------------- ------------------------------------
The above carrying value of receivables is equivalent to
its fair value.
10 TRADE AND OTHER PAYABLES
(amounts falling due within one 30 Jun 2012 30 Jun 2011
year)
GBP GBP
Trade creditors 136,161 -
Accrued expenses 60,396 6,535,219
Broker creditors 419,120 -
615,677 6,535,219
----------------------------- ----------------------------------
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 -
3 August 2010 2,722,336 -
Ordinary Shares in issue as at 39,719,569 -
30 June 2012 and 30 June 2011
----------------------- -----------------------------------
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, Shareholders are entitled to the
surplus assets
remaining after payment of all the creditors of the
Company.
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
2009 14,667,020
Premium on shares issued 3 August 2010 3,818,894
Issue costs (1,883,660)
Share premium as at 30 June 2012 and
30 June 2011 42,602,254
------------------------------------
Under IAS 32 'Financial Instruments: Presentation', transaction
costs of an 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 NON-CONTROLLING INTEREST
As detailed in note 7 above, the Subsidiary has a 9.59% non-controlling
interest.
GBP
Balance as at 1 July 2011 -
Acquisition of Subsidiary 530,000
Share of loss for the period (92,274)
Balance as at 30 June 2012 437,726
------------------------------------
14 FINANCIAL INSTRUMENTS
The Group's main financial instruments comprise:
(a) Cash and cash equivalents that arise directly from the
Group's operations; and
(b) Quoted and unquoted investment securities.
15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Group'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 Group may suffer through holding
market positions in the face of price movements. The
Investment 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 Group is shown in the Schedule
of Top 10 Investments on page 57.
If the value of the Group's investment portfolio were
to increase by 30%, it would represent a gain of GBP14,257,791
(2011: GBP17,881,517). This would cause the net asset
value of the Group to rise by 23.33% (2011: 23.34%).
If the value of the Group's investment portfolio were
to decrease by 30%, it would represent a decrease of
GBP14,257,791 (2011: GBP17,881,517). This would cause
the net asset value of the Group to fall by 23.33% (2011:
23.34%).
Some of the market price risk is mitigated by the Investment
Manager's use of various put and call options and ETFs.
(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 Group. The Directors receive
financial information on a regular basis which is used
to identify and monitor risk.
It is Group policy not to invest more than 20% of the
gross assets of the Group in the securities of any single
company or group at the time the investment is made.
15 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(b) Credit Risk (continued)
The Group has no significant concentration of credit risk,
with exposure spread over a large number of investments.
At 30 June 2012 the Group's largest exposure to a single
investment was GBP5,079,424 (2011: GBP5,529,295), which
represents 10.69% (2011: 9.28%) of the total market value
of the Group's investments.
Investors should be aware that the prospective returns to
Shareholders mirror the returns under the investments held
or entered into by the Group and that any default by an
issuer of any such investment held by the Group would have
a consequential adverse effect on the ability of the Group
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 Group's financial assets exposed to credit risk are
as follows:
30 Jun 2012 30 Jun 2011
GBP GBP
Investments in equities / warrants 47,525,971 59,605,055
Cash and cash equivalents 13,893,566 23,083,865
Trade and other receivables 298,590 447,882
61,718,127 83,136,802
------------------------- ----------------------------
The Group 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 Group monitors the placement of cash balances
on an ongoing basis.
The Group invests its cash and cash equivalents with Royal
Bank of Canada (Channel Islands) Limited, Barclays Private
Clients International and Lloyds TSB Offshore Limited.
The investments of the Group are held in custody by Anson
Custody Limited or Royal Bank of Canada (Channel Islands)
Limited ("RBCCI"). Bankruptcy or insolvency of the Custodians
may cause the Group'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 Group. This ensures that the investments
are ring fenced and will be protected should Anson Custody
Limited become bankrupt or insolvent.
RBCCI mitigate risk by using a subcustodian network comprising
top-rated and well respected counterparties. The custodian
network is monitored on an ongoing basis to ensure that
each one continues to meet RBCCI's stringent criteria.
(c) Liquidity Risk
Liquidity risk is the risk that the Group will encounter
difficulty in realising assets or otherwise raising funds
to meet financial commitments. The Group's main financial
commitment is its ongoing operating expenses.
The Investment Manager ensures that the Group 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 2012 1-3 months Over 1 year
GBP GBP
Trade creditors 136,161 -
Accrued expenses 60,396 -
Broker creditors 419,120 -
--------------------------- ------------------------------------
615,677 -
--------------------------- ------------------------------------
As at 30 June 2011 1-3 months Over 1 year
GBP GBP
Accrued expenses 6,535,219 -
--------------------------- ------------------------------------
(d) Interest Rate Risk
The Group holds cash in several bank accounts, the return
on which is subject to fluctuations in market interest rates.
Other than cash and cash equivalents, none of the assets
or liabilities of the Group, attract or incur interest.
The following table details the Group's exposure to interest
rate risks:
As at 30 June 2012:
Floating Non-interest
less than bearing
1 month Fixed Total
GBP GBP GBP GBP
Assets
Designated as
at fair value
through profit
or loss on initial
recognition:
Investments - 44,226,964 3,299,007 47,525,971
Loans and receivables:
Accrued income - 138,854 - 138,854
Prepayments - 14,647 - 14,647
Broker debtors - 145,089 - 145,089
Cash and cash
equivalents 13,893,566 - - 13,893,566
----------------------- -------------------------- -------------------- -----------------
Total Assets 13,893,566 44,525,554 3,299,007 61,718,127
----------------------- -------------------------- -------------------- -----------------
Liabilities
Financial liabilities
measured at
amortised cost:
Trade creditors - 136,161 - 136,161
Accrued expenses - 60,396 - 60,396
Broker creditors - 419,120 - 419,120
Total Liabilities - 615,677 - 615,677
----------------------- -------------------------- -------------------- -----------------
Total interest
sensitivity
gap 13,893,566
-----------------------
As at 30 June 2011:
Floating Non-interest Fixed Total
less than bearing
1 month
GBP GBP GBP GBP
Assets
Designated
as at fair
value through
profit or
loss on
initial
recognition:
Investments - 59,605,055 - 59,605,055
Loans and receivables: -
Accrued
income - 25,459 - 25,459
Prepayments - 9,655 - 9,655
Broker
debtors - 412,768 - 412,768
Cash and
cash
equivalents 23,083,865 - - 23,083,865
----------------------- -------------------------- -------------------- -----------------------
Total Assets 23,083,865 60,052,937 - 83,136,802
----------------------- -------------------------- -------------------- -----------------------
Liabilities
Financial
liabilities
measured
at amortised
cost:
Accrued
expenses - 6,535,219 - 6,535,219
Total
Liabilities - 6,535,219 - 6,535,219
----------------------- -------------------------- -------------------- -----------------------
Total
interest
sensitivity
gap 23,083,865
-----------------------
Interest rate sensitivity
If interest rates had been 25 basis points higher and
all other variables were held constant, the Group's net
gain attributable to Shareholders for the year ended
30 June 2012 would have increased by approximately GBP34,734
(2011: GBP57,710) or 0.06% (2011: 0.08%) 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 Group's net
gain attributable to Shareholders for the year ended
30 June 2012 would have decreased by approximately GBP34,734
(2011: GBP57,710) or 0.06% (2011: 0.08%) 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 Group's portfolio is invested
in overseas securities and movements in exchange rates
can significantly affect their Sterling value. The Group
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 Group 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 Group's foreign currency denominated
monetary assets at the reporting date are as follows:
30 Jun 2012 30 Jun 2011
GBP GBP
Australian Dollar 16,667,388 19,038,982
Canadian Dollar 18,235,685 30,678,201
US Dollar 11,178,251 4,353,339
Norwegian Krone 2,367,125 -
48,448,449 54,070,522
------------------------ ----------------------------------
The Group does not invest in Eurozone equities. The Company
does invest in the United Kingdom. The Investment Manager
does not consider that there is any increased risk to
the Group as a result of the Eurozone crisis and the directors
have considered whether the UK assets have suffered impairment
in value in the current economic climate.
(f) Capital Management
The investment objective of the Group 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 SFM,
the Ordinary Shares may trade at a discount to their Net
Asset Value per Share on occasion. However, in structuring
the Group, the Directors have given detailed consideration
to the discount risk and how this may be managed.
The Group monitors capital on the basis of the carrying
amount of equity as presented on the face of the Statement
of Financial Position.
16 RELATED PARTY TRANSACTIONS AND DIRECTORS BENEFICIAL INTERESTS
The Group is managed by the Investment Manager, a wholly-owned
FSA authorised and regulated subsidiary of Altus Strategies
Limited ('ASL'). ASL owns 150,000 Ordinary Shares (0.38%)
in the Company and 500,000 Ordinary Shares (9.04%) in
the Subsidiary.
The Director David Netherway is a non-executive chairman
of Altus Strategies Limited, which as mentioned above,
owns 150,000 shares (0.38%) in Altus Resource Capital
Limited. David Netherway is also non-executive chairman
of Kilo Goldmines Limited, whose equities and warrants
are invested in by the Group. The total investment in
Kilo Goldmines Limited represents 5.16% of the market
value of the Group's investments. David Netherway is
a director of Gryphon Minerals Limited, whose equity
was invested in by the Group. The total investment in
Gryphon Minerals Limited represents 2.74% of the market
value of the Group's investments.
The Director Nick Falla holds 20,000 Ordinary Shares
(0.05%) in the Company.
The Director David Gelber holds 50,000 Ordinary Shares
(0.13%) in the Company. This is held as part of a nominee
trust holding in the Company.
The Director Robert Milroy holds 20,000 Ordinary Shares
(0.05%) in the Company.
Under the Investment Management Agreement between the
Investment Manager and the Company, the Investment Manager
is entitled to receive fees of the greater of 0.85% per
annum of the Company's Net Asset Value or GBP150,000
per annum.
Under the Investment Management Agreement between the
Investment Manager and the Subsidiary, the Investment
Manager is entitled to receive fees of 1.5% per annum
of the Subsidiary's Net Asset Value, subject to the Total
Expense Ratio not exceeding 2%.
During the year the Group incurred GBP593,912 (2011:
GBP682,243) of fees, of which GBP128,215 (2011: GBP162,332)
was outstanding at the period end as shown in trade and
other payables.
The Investment Manager agreed to rebate the Company in
full for any management fees paid by the Subsidiary.
During the year no such fees had been received by the
Investment Manger from the Subsidiary.
During the year, the Group was charged travel expenses
totalling GBP50,363 (2011: GBP61,016) by the Investment
Manager.
The Investment Manager is also entitled to receive a
performance fee (the "Performance Fee"). The first component
of the Performance Fee was calculated for the first time
in respect of the financial accounting period first ending
following the second anniversary of the date of Admission
("the Calculation Period"). The fee is equal to 20% of
the excess of the NAV per Ordinary 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 will 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 Ordinary Share basis, multiplied by the time
weighted average of the number of Ordinary 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 Ordinary Shares, a
redemption of Ordinary 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 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 30 June 2011, a Performance Fee was due in respect
of the Company and during the current year, the Company
paid to the Manager 80% of the Performance Fee, being
an amount of GBP5,055,901. No Performance Fee provision
has been made by for the Company for the current year
as the performance hurdle has not been met. No Performance
Fee provision has been made for the Subsidiary for the
current year as the Calculation Period has not yet begun.
Nimrod Capital LLP is the Company's Corporate and Shareholder
Adviser and is entitled to receive fees of 0.15% of the
Company's Net Asset Value per annum. During the Period
the Group incurred GBP101,365 (2011: GBP121,320) of costs,
of which GBP22,626 (2011: GBP28,647) was outstanding
at the Period end as shown in accrued expenses.
In addition, during the Period, Nimrod Capital LLP received
the remaining 20% of the Performance Fee relating to
the year ended 30 June 2011, being an amount of GBP1,263,975.
No Performance Fee provision has been made by for the
Company for the current year as the performance hurdle
has not been met.
TOP 10 SECURITIES AS AT 30 JUNE 2012
30 Jun 2012
Investment * Cost Market Unrealised
Value profit / (loss)
GBP GBP GBP
Detour Gold Corporation 6,397,967 5,079,424 (1,318,543)
Northland Resources 3,000,000 4,952,829 1,952,829
Endeavour Mining Corporation
** 4,657,503 4,804,642 147,139
Perseus Mining Limited 3,672,117 4,432,457 760,340
Beadell Resources Limited 5,018,843 3,936,477 (1,082,366)
Cuco Resources Limited 3,068,704 2,654,075 (414,629)
Kilo Goldmines 3,156,064 2,452,185 (703,879)
Eldorado 765,617 2,173,780 1,408,163
Spdr Gold Trust 1,659,468 1,816,454 156,986
Eastcoal Inc 2,557,387 1,681,698 (875,689)
33,953,670 33,984,022 30,352
-------------------- ------------------------ ----------------------------
* Each line represents the amalgamated holdings in an entity
if the Group has holdings in more than one share class in
the same company.
** Note that during the year a share exchange took place
and the Group received 2,871,985 shares in Endeavour Mining
Corporation in exchange for 10,077,142 shares in Adamus Resources
Limited. The exchange took place at the fair value of the
shares in Adamus Resources Limited on the date of the transaction
and the fair value has been used as the initial cost of the
Endeavour Mining Corporation shares.
TOP 10 INVESTMENTS IN SECURITIES AS AT 30 JUNE 2011
30 Jun 2011
Investment * Cost Market Unrealised
Value profit / (loss)
GBP GBP GBP
Adamus Resources
Limited 3,165,769 5,529,295 2,363,526
Nevsun Resources
Com 3,212,096 4,657,290 1,445,194
Kenmare Resources 779,952 3,382,287 2,602,335
Perseus Mining Limited 2,548,220 3,378,175 829,955
Griffin Mining Limited 3,054,338 3,360,175 305,837
Banro Corporation
Com 2,158,124 3,336,265 1,178,141
Minera Irl Limited 3,899,341 3,196,369 (702,972)
Cuco Resources Limited 3,105,976 3,114,683 8,707
Bathurst Resources
Limited 928,161 2,818,128 1,889,967
European Goldfields
Com 797,158 2,583,180 1,786,022
23,649,135 35,355,847 11,706,712
-------------------- ------------------------ -----------------------------
* Each line represents the amalgamated holdings in an entity
if the Group has holdings in more than one share class in
the same company.
Key Information
Exchange: Specialist Fund Market of the LSE/ CISX
Ticker: ARCL/ ARC
Listing Date: 30 June 2009 / 22 December 2009
Fiscal Year End: 30 June
Base Currency: GBP
ISIN: GG00B54BPN15
SEDOL: B54BPN1
Country of Incorporation: Guernsey - Registration number
50318
Management and Administration
Registered Office
Altus Resource Capital Limited
Anson Place
Mill Court
La Charroterie
St Peter Port,
Guernsey, GY1 1EJ
Investment Manager
Altus Capital Limited
14 Station Road
Didcot
Oxfordshire, OX11 7LL
Placing and Corporate and Shareholder Advisory Agent
Nimrod Capital LLP
4 The London Fruit and Wool Exchange
Brushfield Street
London, E1 6HB
Principal Custodian
Anson Custody Limited
Anson Place
Mill Court
La Charroterie
St Peter Port
Guernsey, GY1 1EJ
Secretary and Administrator
Anson Fund Managers Limited
P.O. Box 405, Anson Place
Mill Court
La Charroterie
St Peter Port
Guernsey, GY1 3GF
Registrar
Anson Registrars Limited
PO Box 426, Anson Place
Mill Court, La Charroterie
St Peter Port
Guernsey, GY1 3WX
Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey, GY1 3HW
Custodian
Royal Bank of Canada (Channel Islands) Limited
Canada Court
Upland Road
St Peter Port
Guernsey GY1 3BQ
Board of Directors
Nick Falla (Chairman)
Robert Milroy
David Gelber
David Netherway
E&OE - In Transmission
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
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