TIDMBSRT
RNS Number : 9974V
Baker Steel Resources Trust Ltd
22 April 2016
BAKER STEEL RESOURCES TRUST LIMITED
(Incorporated in Guernsey with registered number 51576 under the
provisions of The Companies (Guernsey) Law, 2008 as amended)
22 April 2016
BAKER STEEL RESOURCES TRUST LTD
(the "Company")
Annual Report and Audited Financial Statements
For the year ended 31 December 2015
The Company has today, in accordance with DTR 6.3.5, released
its Annual Audited Financial Report for the year ended 31 December
2015. The Report is available via www.bakersteelresourcestrust.com
and will shortly be submitted to the National Storage
Mechanism.
Further details of the Company and its investments are available
on the Company's website www.bakersteelresourcestrust.com
Enquiries:
Baker Steel Resources Trust Limited +44 20 7389 8237
Francis Johnstone
Trevor Steel
Numis Securities Limited +44 20 7260 1000
David Benda (Corporate)
James Glass (sales)
HSBC Securities Services (Guernsey) Limited
Company Secretary + 44 (0)1481 717 851
DIRECTORS: Howard Myles (Chairman)
Edward Flood (deceased 15 October 2015)
Charles Hansard
Clive Newall
Christopher Sherwell
(all of whom are non-executive and independent)
REGISTERED OFFICE: Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey
Channel Islands
MANAGER: Baker Steel Capital Managers (Cayman) Limited
PO Box 309
George Town
Grand Cayman KY1-1104
Cayman Islands
INVESTMENT MANAGER:* Baker Steel Capital Managers LLP
34 Dover Street
London W1S 4NG
England
United Kingdom
STOCK BROKERS: Numis Securities Limited
10 Paternoster Square
London EC4M 7LT
United Kingdom
SOLICITORS TO THE COMPANY: Norton Rose Fulbright LLP
(as to English law) 3 More London Riverside
London SE1 2AQ
United Kingdom
ADVOCATES TO THE COMPANY: Ogier
(as to Guernsey law) Redwood House
St. Julian's Avenue
St. Peter Port
Guernsey GY1 1WA
Channel Islands
ADMINISTRATOR & COMPANY SECRETARY: HSBC Securities Services (Guernsey) Limited
Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey GY1 3NF
Channel Islands
*The Investment Manager was authorised as an Alternative
Investment Fund Manager ("AIFM") for the purposes of the
Alternative Investment Fund Managers Directive ("AIFMD") on 22 July
2014.
SUB-ADMINISTRATOR TO THE COMPANY: HSBC Securities Services (Ireland) Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
CUSTODIAN TO THE COMPANY: HSBC Institutional Trust Services (Ireland) Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
SAFEKEEPING AND MONITORING AGENT: HSBC Institutional Trust Services (Ireland) Limited
1 Grand Canal Square
Grand Canal Harbour
Dublin 2
Ireland
AUDITOR: Ernst & Young LLP
Royal Chambers
St. Julian's Avenue
St. Peter Port
Guernsey GY1 4AF
Channel Islands
REGISTRAR: Capita Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey GY2 4LH
Channel Islands
UK PAYING AGENT AND TRANSFER AGENT: Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
RECEIVING AGENT: Capita Asset Services
Corporate Actions
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
PRINCIPAL BANKER: HSBC Bank plc
8 Canada Square
London E14 5HQ
United Kingdom
CHAIRMAN'S STATEMENT
For the year ended 31 December 2015
Despite apparent green shoots in the mining sector at the
beginning of 2015, hopes for improved conditions were disappointed
as the bear market of the past five years continued unabated during
the year, amid fears of a slowdown in demand for metals, in
particular from China. This is illustrated by the Euromoney Global
Mining Index which fell 39.3% in Sterling terms during the year and
at 31 December 2015 was down 68.2% from the date of the Company's
first Net Asset Value (NAV) on 30 April 2010. By comparison, the
Company's NAV per share fell 25.4% during the year and has fallen
65.8% since 30 April 2010.
Mining shares have fallen in response to weak commodity prices
which in turn have fallen owing to concerns over the level of
global growth, and in particular the growth in China as it evolves
from an infrastructure-led to a consumer-led economy. Iron ore
companies continued to be hard hit with the price of iron ore
trading a little above US$40 per tonne at the year end, less than a
quarter of its price 5 years ago. The other main component of steel
manufacture, coking coal, has similarly been hard hit and massive
oversupply from the steel industry has seen dumping from Chinese
manufacturers onto the world market. Most other major commodities
have followed suit with copper down 26% and nickel down 42% during
2015.
One positive factor for the mining industry is that the two
thirds fall in the oil price over the past eighteen months has led
to a decrease in the operating costs of many mines where energy can
be a major component of overall costs. This, together with the
depreciation of the exchange rates of many producer economies, has
improved operating margins.
Although this downturn in the mining industry is as severe as
most people can remember, it should be borne in mind that mining is
a cyclical business and the current lack of investment in both
exploration and development is sowing the seeds for the next
upturn. The resultant reduced interest in mining by investors has
led to many stocks trading at large discounts to long-term value
or, in some cases, at a discount to cash as exemplified by one of
the Company's investments, Ivanhoe Mines, which sold half of one of
its three Tier 1 projects for C$571.5 million in cash at the end of
2015 but at year end was still only capitalised at C$475 million.
In markets such as these it is important for the Investment Manager
to proactively manage the portfolio to defend the latent value in
the Company's investee companies by assisting them to survive until
the market recovers and prevent others from acquiring them cheaply.
This is the strategy behind the Company's recent change to the
Articles of Association to allow it to make a further investment in
Polar Silver with a view to achieving greater control of the
asset.
During 2015 the Company adopted a new buy-back policy seeking to
address the large discount at which its shares trade. This
commenced in August 2015 with the repurchase of 700,000 shares. The
buy-back policy has been suspended whilst the Polar Silver offer is
in process as the Board may be in possession of price sensitive
information.
It is all but impossible to identify the precise bottom of any
bear market at the time, but we know from experience that when the
turn comes in the mining sector, the recovery is likely to be
sharp. One sub-sector that has shown signs of recovery is the gold
market with the gold price rising 18.9% during the first quarter of
2016 and the FTSE Gold Mines Index recovering 56.2% in Sterling
terms. The gold and precious metals sector has often been a lead
indicator for the general mining market and the Company's portfolio
is currently over 50% invested in precious metals.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
Finally I would like to pay tribute to Ed Flood, a director of
the Company at listing, who sadly passed away in October last year.
Despite battling with a long term illness, Ed continued to
contribute actively to the Company right until the end. He will be
sorely missed.
Howard Myles
Chairman
21 April 2016
INVESTMENT MANAGER'S REPORT
For the year ended 31 December 2015
Financial Performance
The audited undiluted Net Asset Value per Ordinary Share as at
31 December 2015 was 33.5 pence, a decrease of 25.4% in the year
and a decrease of 65.8% from the Company's first NAV per Ordinary
Share calculated on 30 April 2010. During the year the Euromoney
Global Mining 100 Index was down 39.3% (down 68.2% since 30 April
2010).
For the purpose of calculating the Net Asset Value per Ordinary
Share, unquoted investments are carried at fair value as at 31
December 2015 as determined by the Directors in accordance with the
methodology set out in note 3 and quoted investments are carried at
last quoted price as at 31 December 2015.
Net assets at 31 December 2015 comprised the following:
GBPm % net assets
Unquoted Investments 29.8 77.8
Quoted Investments 8.0 20.9
Net Cash Equivalents and
Accruals 0.5 1.3
----- -------------
38.3 100.0
Investment Update
Largest 10 Investments - 31 December 2015
Polar Silver Resources Ltd/Argentum 26.2%
Black Pearl Limited Partnership 18.5%
Metals Exploration Plc 11.0%
Bilboes Gold Limited 9.4%
Cemos Group plc (formerly Global Oil Shale
Group Limited) 9.1%
Ivanhoe Mines Limited 5.4%
Ironstone Resources Limited 5.1%
Gobi Coal & Energy Limited 3.7%
China Polymetallic Mining Company Limited 3.5%
Archipelago Metals Limited 2.7%
Other Investments 4.1%
Net Cash Equivalents and Accruals 1.3%
Largest 10 Investments - 31 December 2014
Black Pearl Limited Partnership 20.1%
Polar Silver Resources Ltd/Argentum 17.2%
Bilboes Gold Limited 14.5%
Ivanhoe Mines Limited 10.1%
Gobi Coal & Energy Limited 8.5%
Metals Exploration Plc 8.1%
Cemos Group plc (formerly Global Oil Shale
Group Limited) 6.6%
China Polymetallic Mining Company Limited 5.0%
Ironstone Resources Limited 4.7%
Ferrous Resources Limited 3.0%
Other Investments 2.8%
Net Cash Equivalents and Accruals (0.6%)
Investment Update
At the year end, the Company was fully invested, holding 19
investments of which the top 10 holdings comprised 94.6% of the
portfolio by value. The portfolio is well diversified both in terms
of commodity and geographical location of the deposits. In terms of
commodity, the portfolio is concentrated on the large liquid
markets of silver, gold, iron ore, coal, copper, platinum group
metals, nickel and oil. Its projects are located in Australia,
Canada, China, Democratic Republic of Congo, Indonesia, Mongolia,
Morocco, Norway, the Philippines, Russia, South Africa, USA and
Zimbabwe.
In February 2015, the Company increased its total assets by over
50%, through the acquisition of two portfolios of assets in
exchange for the issue of new shares in the Company. 90% of these
portfolios was in investments in which the Company already had an
interest and the largest investment which was not common to the
existing portfolio, Red 5 Limited, an Australian Stock Exchange
listed gold producer, was subsequently sold, being non-core.
The recovery in the mining market, of which there were signs at
the beginning of 2015, did not materialise during the year as
demonstrated by the Euromoney Global Mining Index falling 39.3% and
the FTSE Gold Mines Index falling 16.9% with the falls particularly
high in the second half of the year. The Company's valuation policy
for its unlisted investments takes into account general market
movements in comparable listed mining shares and, largely as a
result of this listed market weakness, the Net Asset Value per
share fell 25.4% during the year. The values of iron ore and coking
coal stocks were hit particularly hard following continued falls in
the iron ore price and the oversupply of steel, particularly from
China. Gobi Coal and Ironstone Resources were marked down 51% and
27% respectively during 2015.
Oil and energy was another badly-hit sector during 2015, with
the price of the benchmark Brent Crude falling 35% during 2015 and
off 67% since 30 June 2014. The Company has one investment in the
energy sector, Cemos Group plc (formerly Global Oil Shale Group
Limited) which has oil shale projects in Morocco and Australia. The
investment in Cemos demonstrates the importance of investing in
companies with good management as well as the quality of projects
that they hold. Rather than slowing down their activities in
response to the depressed oil price, the entrepreneurial management
of Cemos has changed the focus of its development of its Tarfaya
project in Morocco away from the production of oil and electricity
generation, towards exploiting the cement potential of the project.
The production of cement is highly energy intensive and the energy
content of the oil shale will ensure a low cement production cost
with a view to selling product throughout West Africa, where strong
demand has been identified.
Metals Exploration plc is a good example of some of the pitfalls
that mining companies have to contend with in developing their
projects. Despite constructing the Runruno gold mine in the
Philippines within budget it first suffered delays due to the
bureaucratic permitting procedures in the Philippines and then,
just as the final permits were being released, the mine was hit by
super typhoon Lando, which although not inflicting any major
structural damage, required Metals Exploration to suspend
activities and rehabilitate the area. Once in full production,
Runruno is scheduled to produce approximately 100,000 ounces of
gold per annum.
Current market sentiment towards the mining sector is
highlighted by Ivanhoe Mines Limited ("Ivanhoe") which is listed on
the Toronto Stock Exchange. Ivanhoe continued to move forward
strongly on all three of its main projects during 2015. In South
Africa it has commenced shaft sinking on its Platreef Project where
in the first phase it is planned to produce 433,000 ounces of
platinum, palladium, rhodium and gold per annum, plus 31 million
pounds of nickel and copper. In the Democratic Republic of Congo
("DRC"), Ivanhoe recently declared its first Mineral Resource
estimate for its Kipushi zinc-copper-germanium-lead-silver mine
with Measured and Indicated Mineral Resources totalling 10.2
million tonnes grading 34.9% Zinc containing 3.55 million tonnes of
Zinc and completed a transaction to sell 49.5% of the Kamoa Copper
Project for US$412 million (C$575 million) to Zijin Mining. Despite
its remaining stakes in these three Tier 1 mining projects, with a
market capitalisation of C$475 million at 31 December 2015 Ivanhoe
was trading at a significant discount to the cash receivable from
Zijin.
The sale of the Company's entire holding in Ferrous Resources
Limited for US$2.06 million, following a tender offer from Icahn
Enterprises Holdings L.P., was the Company's only significant
realisation during 2015.
In order to protect its interest in its largest investment, the
Prognoz Silver Project in Russia, which is held through convertible
loans to Polar Silver Resources Ltd. and its 100% subsidiary ZAO
Argentum ("the Polar Group"), the Company has amended its Articles
to allow it to make a further investment in the Polar Group. At the
date of this report negotiations with other Polar Group investors
are ongoing but the Company expects to make an offer to gain
control of the Polar Group in the second quarter of 2016.
Further details of each of these investments and the Company's
other significant holdings are provided below.
Description of Largest Investments at 31 December 2015
Polar Silver Resources Limited ("Polar Silver")
Polar Silver is a private company which holds a 50% indirect
interest in the Prognoz silver project ("Prognoz"), 444km north of
Yakutsk in Russia. The Company's investments are in the form of
shares in Polar Silver and loan notes in Polar Silver and its 100%
owned subsidiary, Argentum, both of which are convertible into
Polar Silver shares.
A NI 43-101 compliant report by independent consultant Micon
International Limited ("Micon") in July 2009, estimated an
Indicated Resource of 5.86 million tonnes of ore grading 773 g/t
silver containing 146 million ounces of silver and Inferred
Resources of 9.64 million tonnes of ore grading 473 g/t silver
containing 147 million ounces of silver at Prognoz. A NI 43-101
compliant preliminary economic assessment (PEA) by Micon envisages
a mine producing an average of 13 million ounces of silver per
annum over a 16 year mine life.
Black Pearl Limited Partnership ("Black Pearl")
Black Pearl is a special purpose vehicle formed to invest in the
Black Pearl beach placer iron sands project in West Java,
Indonesia. The Company's investment is in the form of a limited
partnership interest in Black Pearl. Black Pearl holds an
exchangeable loan note issued by a holding company of the mine
group, Rui Tong Limited.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The Black Pearl concession area is 15,000 ha of which 1,600 ha
has been drilled. Australasian Joint Ore Reserves Committee
("JORC") compliant Mineral Resources stand at 572 million tonnes
grading 10% iron. Black Pearl received the requisite export permit
following changes to the Indonesian mining regulations at the
beginning of December 2014 and made its first shipment of
concentrate later that month. Off-take agreements have been signed
with a number of Chinese steel mills for the full planned
production of 20 million tonnes per annum. Due to the new mining
regulations, the future for the project requires the further
beneficiation of the product within Indonesia. Negotiations are
ongoing for the Black Pearl project to form the base production for
an integrated steel production facility.
Metals Exploration plc ("Metals Exploration")
Metals Exploration is an AIM listed company which owns the
Runruno gold project in the Philippines. A JORC compliant report
estimated mineral resources of 1.39 million ounces of gold, and
25.6 million pounds of molybdenum with 1,050,000oz gold reporting
to the Measured and Indicated categories and 900,000oz gold within
the Mining Proven & Probable Reserve category. Development of
the Runruno mine was completed at the end of 2015. Commissioning of
the mine was delayed following damage caused by super typhoon
Lando. Remediation work was completed in early 2016 and awaits sign
off by the Philippine authorities before the mine can commence
production. Once in full production, the mine is scheduled to
produce approximately 100,000 ounces of gold per annum.
Bilboes Gold Limited ("Bilboes")
Bilboes is a private Zimbabwean based gold mining company which
owns four previously producing oxide mines in Zimbabwe. The oxide
mines produced 9,160 ounces of gold in 2015.
In addition Bilboes has JORC compliant Indicated Mineral
Resources of 29.3 million tonnes grading 2.12 g/t gold in the
underlying sulphide mineralisation and Inferred Mineral Resource of
30.0 million tonnes grading 2.03 g/t gold. Contained gold in the
combined Indicated and Inferred sulphide resources totals 3,964,000
ounces. The mineralisation is open along strike and at depth so
there is good potential for these mineral resources to be
increased. A pre-feasibility study is underway to investigate a
mine producing 100,000 to 200,000 ounces per annum, initially from
open pit.
Cemos Group plc ("Cemos") (formerly Global Oil Shale Group
Limited)
Cemos is a private cement and oil shale explorer and developer
whose key assets are the Tarfaya project in Morocco containing JORC
compliant Measured resources of 308 million barrels of shale oil
and the Julia Creek oil shale project in Queensland Australia which
has a JORC compliant Indicated Resource of 240 million barrels
published in May 2013 and an Inferred Resource of 1.9 billion
barrels of shale oil. Cemos is currently investigating the
feasibility of constructing a cement plant at Tarfaya utilising the
hydrocarbons from the oil shale as fuel for the process.
Ivanhoe Mines Limited (formerly Ivanplats Limited)
("Ivanhoe")
Ivanhoe is a company listed on the Toronto Stock Exchange which
holds the Kamoa copper project (47% owned) and Kipushi zinc mine
(68% owned) both in the Democratic Republic of Congo ("DRC") and
the Platreef nickel, platinum, palladium, copper and gold project
(64% owned) in South Africa.
The Kamoa Project is located in the Kolwezi District of Katanga
Province, the DRC's copper mining hub. A NI 43-101 compliant
report, using a 1% copper grade cut-off, estimated Indicated
Mineral Resources at 739 million tonnes grading 2.67% copper
containing 19.7 million tonnes of copper. The resource statement
also included 4.4 million tonnes of copper in Inferred Mineral
Resources providing combined contained copper of 24.1 million
tonnes, establishing Kamoa as the largest high-grade copper
discovery in Africa and one of the largest in the world.
The Platreef Project is located on the Northern Limb of the
PGM-bearing Bushveld Complex in South Africa. NI 43-101 compliant
Indicated Mineral Resources are estimated at 214 million tonnes
grading 4.1 g/t 4PE (platinum, palladium, gold and rhodium), 0.34%
nickel and 0.17% copper, at a 2.0 g/t 4PE cut-off grade and at a
cumulative, average true thickness of 24 metres. In addition, the
estimate included Inferred Mineral Resources of 415 million tonnes
grading 3.5 g/t 4PE, 0.33% nickel and 0.16% copper, at an average
true thickness of 18.0 metres. The combined Indicated and Inferred
Resources amount to 75.7 million ounces of 4PE. A pre-feasibility
study envisages a first phase development to produce 433,000 4PE
plus 31 million pounds of nickel and copper per annum.
The Kipushi zinc/polymetallic mine in the DRC previously
produced 60 million tonnes of ore at 11% zinc and 6% copper
together with 120 tonnes of germanium from 1925-1993. Measured and
Indicated Mineral Resources total 10.2 million tonnes grading 34.9%
Zinc containing 3.55 million tonnes of Zinc.
Ironstone Resources Limited ("Ironstone")
Ironstone is a private Canadian company which owns the Clear
Hills Iron Ore/Vanadium Project ("Clear Hills") in Alberta, Canada.
Clear Hills currently has Indicated Resources of 557.7Mt at 33.3%
iron and 0.2% vanadium and an Inferred Resource of 94.7Mt at 34.1%
iron.
In conjunction with pyrotechnology experts Hatch of Toronto,
Ironstone is developing a proprietary metallurgical process to
refine the ore into direct reduced iron. Once demonstrated
commercially, this process could be applied not only to Clear
Hills, but also to other significant iron ore deposits
globally.
Gobi Coal & Energy Limited ("Gobi")
Gobi is an emerging coking coal producer based in Mongolia,
which owns 100% of three open-cut coal development projects in
south western Mongolia. Gobi's projects contain approximately 322
million tonnes of JORC resources and include more than 500,000
hectares of tenements. Gobi's first project, Shinejinst, contains
approximately 95 million tonnes of JORC reserves and 229 million
tonnes of JORC resources and has completed site works in
anticipation of the start of production which will depend on a
recovery of the price of coking coal delivered to the
Mongolian/Chinese border. At full production, Shinejinst is planned
to produce approximately 5 million tonnes per annum of high
quality, semi-soft coking coal product.
Archipelago Metals Limited ("Archipelago")
Archipelago is an Australian private company which holds a 50%
joint venture interest in the Co Dinh chromite project in northern
Vietnam which holds estimated JORC compliant resources containing
3.9Mt chromite. A pre-feasibility study has suggested
pre-production capital costs of US$100 million for production
rising to a rate of approximately 300,000 tonnes of chromite
concentrate per annum with a mine life of 16 years. The partners
are currently negotiating a formal joint venture agreement
following which the mining licence will be issued and the partners
will seek to install a pilot plant on site.
China Polymetallic Mining Limited ("CPM")
CPM is a Chinese mining company listed on the Hong Kong Stock
Exchange. The Company's investment is via a special purpose
vehicle, F.S.B.S. Limited Partnership. CPM has a number of
development projects in the Yunan province of China. CPM's largest
mine, the Shizishan Mine has JORC compliant resources totalling 8.1
million tonnes grading 256 g/t silver, 9.4% lead and 6.0% zinc for
contained metal of 72 million ounces silver, 809,000 tonnes lead
and 508,000 tonnes zinc. In 2015 Shizishan produced 289,000 ounces
of silver, 3,679 tonnes lead and 3,087 tonnes zinc in concentrate.
CPM's second project, the Dakuangshan silver lead-zinc mine,
produced 35,000 ounces of silver, 764 tonnes lead and 1,450 tonnes
zinc in concentrate in 2015.
Baker Steel Capital Managers LLP
Investment Manager
STRATEGIC REPORT
Company Structure
The Company is a closed-ended investment company registered with
the Guernsey Financial Services Commission (the "Commission" or
"GFSC") under the Registered Collective Investment Scheme Rules
2015 (previously 2008). The Company is not authorised or regulated
as a collective investment scheme by the Financial Conduct
Authority. The Company is subject to the Listing Rules and the
Disclosure and Transparency Rules of the UK Listing Authority. The
Articles of the Company contain provisions as to the life of the
Company. At the Annual General Meeting ("AGM") falling in the year
2018 and at each third AGM convened by the Board thereafter, the
Board shall propose a special resolution which if passed will
require the Directors, within 6 months of the passing of the
special resolution, to submit proposals to shareholders that will
provide shareholders with an opportunity to realise the value of
their Ordinary Shares.
Role and Composition of the Board
The Board is the Company's governing body; it sets the Company's
strategy and is collectively responsible to shareholders for its
long-term success. The Board, which is comprised entirely of
independent Non-Executive Directors, is responsible for appointing
and subsequently monitoring the activities of the Manager and other
service providers to ensure that the investment objectives of the
Company continue to be met. The Board also ensures that the Manager
adheres to the investment restrictions set by the Board and acts
within the parameters set by it in any other respect. It also
identifies and monitors the key risks facing the Company.
Investment activities are predominantly monitored through
quarterly Board meetings at which the Board receives detailed
reports and updates from the Investment Manager, who attends each
Board meeting. Services from other key service providers are
reviewed as appropriate.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
In August 2015, recognising the discount to NAV at which the
Company's Ordinary Shares traded, the Board introduced a mechanism
whereby, beginning from the publication of the Company's Net Asset
Value as at 31 July 2015, the Company will on a monthly basis,
following publication of its monthly Net Asset Value, calculate the
aggregate net cash proceeds of disposals of investments over the
immediately preceding six month period. Subject to meeting solvency
requirements, if the Ordinary Shares are trading at a discount in
excess of 15 per cent to their Net Asset Value, the Board intends
to allocate at least 50 per cent. of such proceeds (less the
aggregate value of any Ordinary Shares already bought back during
the six month period) to buy back its own Ordinary Shares. As at 31
December 2015, the discount management mechanism is suspended until
the proposed acquisition of a majority interest in Polar Silver is
clarified as the Board may be in possession of price sensitive
information.
The Board continues to review the Company's ongoing charges to
ensure that the total costs incurred by shareholders in the running
of the Company remain competitive when measured against peers. An
analysis of the Company's costs, including management fees (which
are based on the market capitalisation of the Company), Directors'
fees and general expenses, is submitted to each Board meeting.
As at 31 December 2015, the Board comprised four Directors. The
Directors recognise the benefits of diversity in terms of gender
and ethnicity and will take these into account when considering
future appointments to the Board. However their principal criteria
will remain skills and experience with the objective of maximising
shareholder value.
Investment Management
The Manager was appointed pursuant to a management agreement
with the Company dated 31 March 2010 (the Management Agreement).
Under the Management Agreement, the Manager acts as manager of the
Company, subject to the overall control and supervision of the
Directors and was authorised to appoint the Investment Manager to
manage and invest the assets of the Company. The Manager is
responsible for the payment of the fees of the Investment Manager.
The Manager is a company incorporated in the Cayman Islands on 10
April 2002 with registration number 117030 and is an affiliate of
the Investment Manager.
Baker Steel Capital Managers LLP acts as Investment Manager of
the Company and was incorporated in England and Wales on 19
December 2001. It is authorised and regulated by the Financial
Conduct Authority in the United Kingdom. The Investment Manager is
a limited liability partnership with registration number OC301191
and is an affiliate of the Manager. The Investment Manager has been
appointed by the Company to act as its AIFM and is responsible for
the portfolio management and risk management of the Company. The
Investment Manager manages the Company in accordance with the
AIFMD. The Investment Manager is a specialist natural resources
asset management and advisory firm operating from its head office
in London and its branch office in Sydney. It has an experienced
team of fund managers covering the precious metals, base metals and
minerals sectors worldwide, both in relation to commodity equities
and the commodities themselves.
The Directors formally review the performance of the Investment
Manager on an annual basis and remain satisfied that the Investment
Manager has the appropriate resources and expertise to manage the
portfolio of the Company in the best interests of the Company and
its shareholders.
Investment Objective
The Company's investment objective is to seek capital growth
over the long-term through a focused, global portfolio consisting
principally of the equities, loans or related instruments, of
natural resources companies. The Company invests predominantly in
unlisted companies (i.e. those companies that have not yet made an
initial public offering ("IPO")) but also in listed securities
(including special situations opportunities and less liquid
securities) with a view to making attractive investment returns
through uplift in value resulting from development progression of
the investee companies' projects and through exploiting value
inherent in market inefficiencies and pricing anomalies.
Investment Policy
The core of the Company's strategy is to invest in natural
resources companies, predominantly unlisted, that the Investment
Manager considers to be undervalued and that have strong
fundamentals and attractive growth prospects. Natural resources
companies, for the purposes of the investment policy, are those
involved in the exploration for and production of base metals,
precious metals, bulk commodities, thermal and metallurgical coals,
industrial minerals, energy and uranium, and include single-asset
as well as diversified natural resources companies.
It is intended that unlisted investments be realised through an
IPO, trade sale, management repurchase or other methods.
The Company focuses primarily on making investments in companies
with producing and/or tangible assets such as resources and
reserves that have been verified under internationally recognised
standards for reporting, such as those of the Australasian Joint
Ore Reserves Committee ("JORC"). The Company may also invest from
time to time in exploration companies whose activities are
speculative by nature.
The Company has flexibility to invest in a wide range of
investments in addition to unlisted and listed equities and
equity-related securities, including but not limited to
commodities, convertible bonds, debt securities, royalties,
options, warrants and futures. Derivatives may be used for
efficient portfolio management, hedging and for the purposes of
obtaining investment exposure. The Company may also have exposure
from time to time to other companies within the wider resources and
materials sector, including services companies, transport and
infrastructure companies, utilities and downstream processing
companies.
The Company may take legal or management control of a company
from time to time. The Company may invest in other investment funds
or vehicles, including any managed by the Manager or Investment
Manager, where such investment would be complementary to the
Company's investment objective and policy.
Borrowing and Leverage
The Company may, at the discretion of the Investment Manager,
incur leverage for liquidity purposes by borrowing funds from
banks, broker-dealers or other financial institutions or entities.
The costs of leverage will affect the operating results of the
Company.
During the year, no leverage was used by the Company.
Investment Restrictions
There are no fixed limits on the allocation between unlisted and
listed equities or equity-related securities and cash although, as
a guideline, typically the Investment Manager will aim for the
Company to be invested over the long-term as follows:
-- between 40 and 100 per cent of the value of its gross assets
in unlisted equities or equity-related securities;
-- up to 50 per cent of the value of its gross assets in listed
equities or equity-related securities;
-- up to 10 per cent of the value of its gross assets in cash or cash-like holdings; and
-- typically in 10 to 20 core positions to provide adequate
diversification whilst retaining a focused core approach. Core
positions will typically be between 5 per cent and 15 per cent of
net asset value ("NAV") as at the date of acquisition.
The actual percentage of the Company's gross assets invested in
listed and unlisted equities and equity-related securities and cash
and cash-like holdings and the number of positions held may fall
outside these ranges from time to time. For example, listed
securities might exceed the above guideline following a significant
number of IPOs or in certain market conditions and likewise cash
balances may exceed the above guideline following the realisation
of one or more investments or following the issue of new equity in
the Company, pending investment of the proceeds.
The investment policy has the following limits:
-- Save in respect of cash and cash-like holdings awaiting
investment and except as set out below, the Company will invest or
lend no more than 20 per cent in aggregate of the value of its
gross assets in or to any one particular company or group of
companies, as at the date of the relevant transaction.
-- No more than 10 per cent in aggregate of the value of the
gross assets of the Company may be invested in other listed
closed-ended investment funds, except for those which themselves
have stated investment strategies to invest no more than 15 per
cent of their gross assets in other listed closed-ended investment
funds.
At an Extraordinary General Meeting of the Company on 4 January
2016, shareholders resolved to allow the Company to increase the
maximum investment in Polar Silver Resources Limited and / or any
company within its group (the Polar Silver Group) from 20% to 35%
of the NAV of the Company as at the date of the relevant
transaction.
Where derivatives are used for investment exposure, these limits
will be applied in respect of the investment exposures so
obtained.
The Company will avoid (a) cross-financing between the
businesses forming part of its investment portfolio and (b) the
operation of common treasury functions between it and the investee
companies.
When deemed appropriate, the Company may borrow up to 10 per
cent of NAV for temporary purposes such as settlement mis-matches.
Borrowings will not however be incurred for the purposes of any
Share repurchases.
The Investment Manager will not normally hedge the exposure of
the Company to currency fluctuations.
Any material change in the investment objective, investment
policy or borrowing policy will only be made with the prior
approval of holders of Ordinary Shares by Ordinary Resolution.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
In the event of any breach of the investment restrictions the
Investment Manager would report the breach to the Board and
shareholders would be informed of any corrective action required.
No breaches of these investment restrictions occurred during the
year ended 31 December 2015.
Performance
An outline of performance, market background, investment
activity and portfolio strategy during the year under review, as
well as outlook, is provided in the Chairman's Statement on page 3
and the Investment Manager's Report on pages 4-7.
Principal risks and uncertainties
A summary of the principal risks and uncertainties faced by the
Company is set out below.
Market and financial risks
Market risk arises from volatility in the prices of the
Company's underlying investments which, in view of the Company's
investment policy, are in turn particularly sensitive to commodity
prices. Market risk represents the potential loss the Company might
suffer through holding investments in the face of negative market
movements. The Board has set investment restrictions and guidelines
which are monitored and reported on by the Investment Manager on a
regular basis. Further details are disclosed in note 4 on pages 47
to 51.
The Company's investment activities also expose it to a variety
of financial risks including in particular foreign currency
risk.
Portfolio management and Performance risks
The Board is responsible for determining the investment strategy
to allow the Company to fulfil its objectives and also for
monitoring the performance of the Investment Manager which has been
delegated day to day discretionary management of the Company's
portfolio. An inappropriate strategy may lead to poor performance.
The investment policy of the Company allows for a highly focused
portfolio which can lead to a concentration of risk. To manage this
risk the Investment Manager provides to the Board, on an ongoing
basis, an explanation of the significant stock selection
recommendations and the rationale for the composition of the
investment portfolio. The Board mandates and monitors an adequate
diversification of investments, both geographically and sectorally,
in order to reduce the risks associated with particular sectors,
based on the diversification requirements inherent in the Company's
investment policy.
The Company invests in companies whose projects are located in
emerging markets. In such countries governments can exercise
substantial influence over the private sector and political risk
can be a significant factor. In adverse social and political
circumstances, governments have been involved in policies of
expropriation, confiscatory taxation, nationalisation, intervention
in the securities markets and imposition of foreign exchange
controls and investment restrictions. The Investment Manager and
the Board take into account specific political risks when entering
into an investment and seek to mitigate them by diversifying
geographically. The mining sector is currently out of favour with
investors and the Company currently trades at a significant
discount to its Net Asset Value.
The Company's ability to implement its investment policy depends
on the Investment Manager's ability to identify, analyse and invest
in investments that meet the Company's investment criteria. Failure
by the Investment Manager to find additional investment
opportunities meeting the Company's investment objective and to
manage investments effectively could have a material adverse effect
on the Company's business, financial condition, and results of
operations. The Company has no employees and, subject to oversight
by the Board, is reliant on the Investment Manager, which has
significant discretion as to the implementation of the Company's
operating policies and strategies. The Company is subject to the
risk that the Investment Manager will cease to be involved in the
management of any part of the Company's assets and that no suitable
replacement will be found. The Board regularly monitors the
performance of the Investment Manager and the Company's NAV
performance against its peers.
There is the risk that the market capitalisation of the Company
(on which the Investment Manger's fee is calculated) falls to such
extent that it will no longer be viable for the Investment Manager
to provide the services that it currently provides.
Risk of a vote to wind-up the Company
The Articles currently contain provisions for a Shareholder
resolution every three years on whether to discontinue the Company.
The next vote is due at the AGM in 2018. Should there be a
catastrophic loss of value in the Company's assets possibly as a
result of the risks above, or merely a change in sentiment towards
the mining sector generally by a sufficient proportion of
shareholders, there is the risk of shareholders voting to wind-up
the Company at that time. Because the Company's investments are
largely unlisted it could then take a protracted amount of time to
realise them or they might be sold at a discount to Fair Value if
an accelerated timetable is required.
The Board has conducted sensitivity tests of future income and
expenditure and the ability to realise assets, should assets fall
in value by over 50% by 2018. The Board has concluded that, even in
circumstances representing such further deterioration in markets,
it can remain viable until the discontinuation vote and should
there be a vote to continue, it can remain viable for at least a
year beyond. To understand the requirements of the Company's major
shareholders, the Investment Manager regularly liaises with the
Company's broker and meets major shareholders. The Chairman is
available to meet with shareholders should they express
concerns.
In the event of a winding up of the Company, Shareholders will
rank behind any creditors of the Company and, therefore, any
positive return for Shareholders will depend on the Company's
assets being sufficient to meet the prior entitlements of any
creditors.
Viability Statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code, published by the Financial Reporting Council in
September 2014 (the "Code"), the Directors have assessed the
prospects of the Company over the period until the discontinuation
vote at the AGM in June 2018 and, if shareholders decide the
Company should continue, one year beyond that. The Directors
consider that this is an appropriate timeframe to assess the
viability of the Company.
The Directors have considered each of the principal risks and
uncertainties detailed above individually and collectively and have
taken into account in particular the impact of the shareholder vote
on the viability of the Company.
The Company has already seen pressures from the fall in
commodity prices and a move by its share price to a wide discount
to its NAV, which itself has fallen significantly, albeit less than
the Euromoney Global Mining Index. These trends reflect the
underlying failure of the world's major economies to recover
strongly from the global financial crisis of 2007-8 and the
subsequent slowing down of growth of emerging markets, despite the
unprecedented stimulus policies followed by governments of the
major economies.
Notwithstanding this, it is a feature of closed-ended investment
companies such as BSRT that the greatest risk to viability is that
the investments lose value towards a point where the Board cannot
ensure that assets continue to exceed liabilities or where expenses
become excessive or cannot be met as they fall due.
In the case of the Company, which has no gearing, the Board has
conducted stress and sensitivity tests of future income and
expenditure and the ability to realise assets, and has concluded
that based on the listed assets held, even in circumstances
representing a further deterioration in value in excess of 50% of
net assets, the Company can remain viable over the period to the
2018 AGM and, if shareholders decide the Company should continue,
one year beyond that. The key factor in this assessment is that
currently the Company's greatest expense is the Investment
Management fee which is calculated on the market capitalisation of
the Company. Should net assets fall, market capitalisation would be
expected to fall in line, such that the costs of the Company would
also fall.
It is the view of the Directors that, considering shareholders
have already voted in 2015 to defer the next continuation vote
until 2018 and barring a catastrophic further fall in the mining
sector, there is currently no reason to suppose that the requisite
majority of shareholders will vote to wind up the Company.
As a result the Board of Directors concludes that the Company is
viable over the period of assessment.
Future Developments
The future performance of the Company depends upon the success
of the Company's investment strategy and on investors' view of
mining related investments as an asset class. Further comments on
the outlook for the Company are discussed in the Chairman's
statement on page 3 and the Investment Manager's Report on pages 4
to 7.
Signed on behalf of the Board of Directors by:
Howard Myles Christopher Sherwell 21 April 2016
BOARD OF DIRECTORS
The Board of Directors are presented below. Mr Sherwell was
appointed on 9 March 2010; all other Directors were appointed on 12
March 2010. The Board's view on tenure is that continuity and
experience are considered to add significantly to the strength of
the Board and, as such, no limit on the overall length of service
of any of the Company's Directors, including the Chairman, has been
imposed. The Directors consider that their independence has not
been impacted by their length of service.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
Howard Myles (aged 66): Howard Myles currently acts as a
non-executive director of a number of investment companies. Howard
was a partner in Ernst & Young from 2001 until 2007 and was
responsible for the Investment Funds Corporate Advisory team. He
was previously with UBS Warburg from 1987 to 2001. Howard began his
career in stockbroking in 1971 as an equity salesman and joined
Touche Ross in 1975 where he qualified as a chartered accountant.
In 1978 he joined W. Greenwell & Co. in the corporate broking
team and in 1987 moved to SG Warburg Securities where he was
involved in a wide range of commercial and industrial transactions
in addition to leading UBS Warburg's corporate finance function for
investment funds. He is a fellow of the Institute of Chartered
Accountants and of The Chartered Institute for Securities and
Investments.
Charles Hansard (aged 68): Charles Hansard has over 30 years'
experience in the investment industry as a professional and in a
non-executive capacity. He currently serves as a non-executive
director on a number of boards which include the Moore Capital
group of funds, AAA- rated Deutsche Bank Global Liquidity Fund, and
Electrum Ltd., a privately owned gold exploration company. He
formerly served as a director of Apex Silver Mines Ltd., where he
chaired the finance committee during its capital raising phase and
as chairman of the board of African Platinum Plc, which he led
through reorganisation and feasibility prior to its sale to Impala
Platinum. He commenced his career in South Africa with Anglo
American Corporation and Fleming Martin as a mining analyst. He
subsequently worked in New York as an investment banker for Hambros
before returning to the UK to co-found IFM Ltd., one of the
earliest European hedge fund managers. Charles holds a B.B.S. from
Trinity College Dublin.
Clive Newall (aged 66): Clive Newall graduated from the Royal
School of Mines, University of London, England in 1971 with an
honours degree in Mining Geology, and was awarded an MBA from the
Scottish Business School at Strathclyde University. He has worked
in mining and exploration throughout his career, having held senior
management positions with Amax Exploration Inc. and the Robertson
Group plc. Clive has been a director of a number of public
companies in the United Kingdom and Canada. He is the founder of
First Quantum Minerals Ltd and has been its President and a
director since its incorporation.
Christopher Sherwell (aged 68): Christopher Sherwell has worked
since 2004 as a senior Non-Executive Director based in Guernsey
with roles in the offshore finance industry and is a director of a
number of listed investment companies. Prior to January 2004,
Christopher was a Managing Director of Schroders' offshore
investment and private banking operations in the Channel Islands.
Christopher was previously Investment Director from 1993-2000 and
also served on the boards of various Schroder group companies and
funds during his period there. Prior to Schroders he worked at
Smith New Court as a research analyst specialising in asset
allocation for Asian markets. Christopher is a Rhodes Scholar with
degrees in science and in economics and politics. He has worked as
a university lecturer and was for sixteen years a journalist, most
of them working for the Financial Times.
DIRECTORS' REPORT
For the year ended 31 December 2015
The Directors of the Company present their sixth annual report
and the audited financial statements for the year ended 31 December
2015.
Principal activity and business review
Baker Steel Resources Trust Limited (the "Company") is a
closed-ended investment company with limited liability incorporated
on 9 March 2010 in Guernsey under the Companies (Guernsey) Law,
2008 with registration number 51576. The Company is a registered
closed-ended investment scheme registered pursuant to the
Protection of Investors (Bailiwick of Guernsey) Law, 1987, as
amended ("POI Law") and the Registered Collective Investment Scheme
Rules 2008 issued by the Guernsey Financial Services Commission
("GFSC"). On 28 April 2010 the Ordinary Shares and Subscription
Shares of the Company were admitted to the Official List of the UK
Listing Authority and to trading on the Main Market of the London
Stock Exchange.
Details of the Company's investment objectives and policies are
described in the Strategic Report.
Performance
In the year to 31 December 2015, the Company's NAV per Ordinary
Share decreased by 25.4% (2014: decrease of 27.6%). This compares
with a fall in the Euromoney Global Mining 100 Index (capital
return in Sterling terms) of 39.3% (2014: fall of 15.4%). A more
detailed explanation of the performance of the Company is provided
within the Investment Manager's Report on pages 4 to 7.
The results for the year are shown in the Statement of
Comprehensive Income on page 33 and 34 and the Company's financial
position at the end of the year is shown in the Statement of
Financial Position on page 32.
Dividend and dividend policy
During the year ended 31 December 2015 the Board introduced a
capital returns policy whereby, subject to applicable laws and
regulations, it will allocate cash for distributions to
shareholders. The amount to be distributed will be calculated
following publication of the Company's audited financial statements
for each year and will be no less than 15% of the aggregate net
realised cash gains (after deducting losses) in that financial
year. The Board will retain discretion for determining the most
appropriate manner to make such distribution which may include
share buybacks, tender offers and dividend payments.
Directors and their interests
The Directors of the Company who served during the year and
subsequently to the date of this report were:
Howard Myles (Chairman)
Edward Flood (deceased 15 October 2015)
Charles Hansard
Clive Newall
Christopher Sherwell
Biographical details of each of the Directors are presented on
page 13.
Each of the Directors is considered to be independent in
character and judgement, notwithstanding that they have each served
on the Board since the inception of the Company.
The Directors' interests in the share capital of the Company
were:
Number of Number of
Ordinary Shares Ordinary Shares
2015 2014
Edward Flood (deceased 15 October 2015) - 65,000
Christopher Sherwell 96,821 25,000
Clive Newall 25,000 25,000
Mr Sherwell had an indirect interest in the shares of the
Company through an investment in another Fund which is also managed
by the Manager. This investment was compulsorily redeemed in
February 2015 and Mr. Sherwell was issued with 71,821 Ordinary
Shares of the Company in exchange. There were no changes occurring
between year-end and one month prior to notice of the AGM for the
approval of the financial statements.
Each Director is asked to declare his interests at each Board
Meeting. No Director has any material interest in any other
contract which is significant to the Company's business.
Authorised Share Capital
The share capital of the Company on incorporation was
represented by an unlimited number of Ordinary Shares of no par
value. The Company may issue an unlimited number of shares of a
nominal or par value and/or of no par value or a combination of
both.
Issue of Shares
The Company was admitted to trading on the London Stock Exchange
on 28 April 2010. On that date, 30,468,865 Ordinary Shares and
6,093,772 Subscription Shares were issued pursuant to a placing and
offer for subscription and 35,554,224 Ordinary Shares and 7,110,822
Subscription Shares were issued pursuant to a Scheme of
Reorganisation of Genus Capital Fund.
In addition 10,000 Management Ordinary Shares were issued.
Following the exercise of Subscription Shares at the end of
September 2010, March 2011, March 2012, June 2012 and September
2012, a total of 119,444 Ordinary Shares were issued. The final
exercise date for the Subscription Shares was 2 April 2013. No
Subscription Shares were exercised at this time and all residual
Subscription Shares were subsequently cancelled.
Following in specie transactions on 28 June 2014 and 1 July
2014, a total of 5,561,243 Ordinary Shares were issued and
following in specie transactions on 25 February 2015 and 4 March
2015 40,196,071 Ordinary Shares were issued.
Of the 40,196,071 Ordinary Shares issued in 2015, 38,819,601
were issued to acquire two portfolios of investments with a total
value of GBP12.66 million and 1,376,470 to acquire 1,462,500
ordinary shares of Global Oil Shale for a consideration of GBP0.45
million. In addition the Company issued a total of 3,368,488 new
Ordinary Shares in respect of cash subscriptions under an Open
Offer to all shareholders for a consideration of GBP1,219,393.
On 14 August 2015 and 20 August 2015 the Company bought back
200,000 and 500,000 Ordinary Shares respectively, both at an
average price of 20 pence per share. The repurchased Ordinary
Shares are held in Treasury.
Following the transactions noted above the Company has a total
of 114,568,335 Ordinary and 10,000 Management Shares in issue as at
31 December 2015, of which 700,000 Ordinary Shares are held in
Treasury.
Significant Shareholdings
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
As at 31 March 2016 the Company has received notifications in
accordance with the FCA's Disclosure and Transparency Rule 5.1.2 R
of the following interests in 3% of more of the voting rights
attaching to the Company's issued share capital.
Number of % of Total
Ordinary Shareholder Ordinary Shares Shares in issue
State Street Nominees Limited* 16,000,000 13.88
Northcliffe Holdings* 14,614,398 12.68
Harewood Nominees Limited* 14,171,300 12.29
Capita Trustees Limited* 11,483,843 9.96
Vidacos Nominees Limited* 9,638,930 8.36
Nortrust Nominees Limited* 9,358,210 8.12
Bank of New York Nominees Limited* 8,904,871 7.73
* Custodian accounts held on behalf of individual shareholders.
These holdings are aggregated.
The Manager, Baker Steel Capital Managers (Cayman) Limited, had
a direct interest in 504,832 Ordinary Shares. The Investment
Manager, Baker Steel Capital Managers LLP had an interest in 10,000
Management Ordinary Shares at 31 December 2015 (31 December 2014:
10,000).
Following the introduction of the Discount Management Programme,
700,000 shares are held by the Company in the form of Treasury
Shares.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report
and financial statements in accordance with applicable Guernsey
law, Listing Rules, Disclosures and Transparency Rules, UK
Corporate Governance Code and generally accepted accounting
principles.
Guernsey Company Law requires the Directors to prepare financial
statements for each financial year which 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 year. In preparing these financial statements
the Directors should:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable;
- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and which enable the Directors to
ensure that the financial statements comply with the Companies
(Guernsey) Law, 2008. The Directors 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 confirm that to the best of their knowledge:
- the financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union ("EU") and give a true and fair view of the
assets, liabilities and financial position and profit or loss of
the Company;
- the Annual Report includes a fair review of the development
and performance of the business and position of the Company
together with the description of the principal risks and
uncertainties that the Company faces, as required by the Disclosure
and Transparency Rules of the UK Listing Authority;
- the Directors confirm that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Company's performance, business model and strategy.
Auditor Information
The Directors at the date of approval of this Report confirm
that, so far as each of the Directors is aware, there is no
relevant audit information of which the Company's auditor is
unaware and each Director has taken all the reasonable steps 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.
Going Concern
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that it has the
resources to continue in business for a period of 12 months
following the signing of these financial statements. The Company
had net current assets at 31 December 2015 of GBP513,780 and it
holds listed securities that can be realised to meet liabilities as
they become due. As at 31 December 2015, approximately 22.2% of the
Company's assets were represented by cash and unrestricted listed
and quoted investments. The Directors are not aware of any material
uncertainties that may cast significant doubt upon the Company's
ability to continue as a going concern.
Corporate Governance Compliance
The Board has considered the principles and recommendations set
out in the UK Corporate Governance Code (September 2014) (the "UK
Code") issued by the Financial Reporting Council (the "FRC"). The
UK Code is available in the FRC's website, www.frc.org.uk and the
Company has made its corporate governance practices publicly
available and these can be found at
www.bakersteelresourcestrust.com.
Throughout the year ended 31 December 2015, the Company has
complied with the recommendations of the UK Code and Guernsey
Financial Services Code of Corporate Governance ("GFSC Code"),
except as set out below.
The UK Code includes provisions relating to:
-- The role of the Chief Executive,
-- Executive Directors' remuneration
-- The requirement for a Senior Independent Director
-- Nomination, Remuneration and Management Engagement Committees
-- The requirement for an internal audit function
For the reasons set out in the Annual Report the Board considers
these provisions are not relevant to the position of the Company as
it is an externally managed investment entity. The Company has
therefore not reported further in respect of these provisions. The
Directors are all independent and non-executive and the Company
does not have employees, hence no Chief Executive is required for
the Company. The Board is satisfied that any relevant issues can be
properly considered by the Board.
There have been no other instances of non-compliance, other than
those noted above.
Details of the Company's corporate governance arrangements may
be found on its website bakersteelresourcestrust.com.
Operation and composition of the Board
-- Composition
The Board has no executive directors and has contractually
delegated responsibility for the management of the Company's
investment portfolio, the arrangement of custodial and cashflow
monitoring and oversight services and the provision of accounting
and company secretarial services. The Company has no employees.
-- Independence
The Board consists entirely of independent non-executive
Directors, of whom Howard Myles is the Chairman. Each of the
Directors confirms that they have no other significant commitments
that impact on their ability to act for the Company and its
shareholders.
-- Senior Independent Director
In view of its non-executive nature, the Board considers that it
is not necessary for a Senior Independent Director to be
appointed.
-- Appointment and re-election
The Company has a transparent procedure for the appointment and
re-election of the Directors. There are no service contracts in
place for the Directors.
The Directors do not retire by rotation at each AGM; instead
each director puts himself forward for re-election on an annual
basis at the AGM. The AGM also includes a resolution whereby
shareholders are able to approve the maximum cumulative
remuneration for the Board.
All the Directors are responsible for reviewing the size,
structure and skills of the Board and considering whether any
changes are required or new appointments are necessary to meet the
requirements of the Company's business or to maintain a balanced
Board. The Directors are not required to retire by rotation at each
annual general meeting of the Company.
-- Information and training
The Board receives full details of the Company's assets,
liabilities and other relevant information in advance of Board
meetings. Typically, the Board meets formally four times a year;
however, the Investment Manager and Company Secretary stay in more
regular, less formal contact with the Directors. Individual
Directors have direct access to the Company Secretary and may, at
the expense of the Company, seek independent professional advice on
any matter that concerns them in the furtherance of their duties.
New Directors will receive an induction from the Investment Manager
and Company Secretary on joining the Board, and all Directors
receive other relevant training as necessary.
-- Performance appraisal
The performance of the Board and the Audit Committee are
evaluated through a formal and rigorous assessment process led by
the Chairman. The performance of the Chairman is evaluated by the
other Directors.
-- Investment Manager assessment
The Investment Manager was appointed pursuant to an investment
management agreement with the Manager dated 31 March 2010 and which
was amended and restated, with the Company joining as a party, on
14 November 2014 (the Investment Management Agreement). The
Investment Manager is paid by the Manager and is not separately
remunerated by the Company. The Investment Management Agreement
pursuant to which the Company and the Manager have appointed the
Investment Manager is terminable by any party giving the other
parties not less than 12 months' written notice.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The Investment Manager prepares regular reports to the Board to
allow it to review and assess the Company's activities and
performance on an ongoing basis. The Board and the Investment
Manager have agreed clearly defined investment criteria, exposure
limits and specified levels of authority. The Board completes a
formal assessment of the Investment Manager on an annual basis. The
assessment covers such matters as the performance of the Company
relative to its peers and sector, the management of investment
relations and the reasonableness of fee arrangements. Based on its
assessment it is the opinion of the Board that the continuation of
the appointment of the Investment Manager is in the best interests
of shareholders of the Company.
-- Board meetings
The Board generally meets at least four times a year, at which
time the Directors review the management of the Company's assets
and all other significant matters so as to ensure that the
Directors maintain overall control and supervision of the Company's
affairs. The Board is responsible for the appointment and
monitoring of all service providers to the Company. Between these
quarterly meetings there is regular contact with the Investment
Manager. The Directors are kept fully informed of investment and
financial controls and other matters which are relevant to the
business of the Company and which should be brought to the
attention of the Directors. The Directors also have access to the
Company Secretary (through its appointed representatives who are
responsible for ensuring that Board procedures are followed and
that applicable rules and regulations are complied with) and, where
necessary in the furtherance of their duties, to independent
professional advice at the expense of the Company.
Attendance at the Board and Audit Committee meetings during the
year was as follows;
Audit Committee Ad hoc Committee
Board Meetings Meetings Meetings
He Held Attended Held Attended Held Attended
Howard Myles 4 4 4 4 5 3
Christopher Sherwell 4 4 4 4 5 4
Charles Hansard 4 4 N/A N/A 5 0
Clive Newall 4 4 4 4 5 0
Edward Flood 4 0 N/A N/A 5 3
In addition to formal meetings, all Directors contribute to a
significant ad hoc exchange of views between the Directors and the
Investment Manager on specific matters, in particular in relation
to developments in the portfolio.
The Directors are remunerated for their services at such rate as
the Directors determine provided that the aggregate amount of such
fees may not exceed GBP200,000 per annum (or such sum as the
Company in general meeting shall from time to time determine).
For the year ended 31 December 2015 the total remuneration of
the Directors was GBP133,037 (2014: GBP140,000), with GBP28,750
(2014: GBP35,712) payable at year end.
-- Relations with Shareholders
The Board believes that the maintenance of good relations with
shareholders is vital for the long-term prospects of the Company.
The Company's stockbrokers, Numis Securities Limited, and
Investment Manager are responsible for managing relationships with
shareholders and each provides the Board with feedback on a regular
basis that includes a shareholder contact report and any concerns
the shareholder has raised. The Chairman and the Board are also
available to meet with shareholders at the Company's Annual General
Meeting or otherwise.
-- General Meetings
All meetings of the Company, including the Annual General
Meeting, are held in Guernsey.
Committees
The Committees of the Board have formal Terms of Reference which
are available on the Company's webpage
http://www.bakersteelresourcestrust.com/corporate_governance.
-- Audit Committee
The Board has established an Audit Committee. The Audit
Committee meets at least three times a year and is responsible for
ensuring that the financial performance of the Company is properly
reported on and monitored and provides a forum through which the
Company's external auditor may report to the Board. The Audit
Committee operates within established terms of reference. The
Directors consider there is no need for an internal audit function
because the Company operates through service providers and the
Directors receive control reports on service providers.
Christopher Sherwell is Chairman of the Audit Committee.
-- Nomination, Remuneration and Management Engagement Committees
Given the size and nature of the Company and the fact that all
the Directors are independent and non-executive it is not deemed
necessary to form separate Nomination, Remuneration, and Management
Engagement Committees. The Board, as a whole, will consider new
Board appointments, remuneration and the engagement of service
providers. The Directors recognise the benefits of diversity in
terms of gender and ethnicity and will take these into account when
considering future appointments to the Board. However their
principal criteria will remain skills and experience with the
objective of maximising shareholder value.
The remuneration for the non- executive directors is capped by
shareholder resolution at the AGM. There is no differential for
payments of the non-executive directors except that the Chairman of
the Board and the Chairman of the Audit Committee each receive
additional payments for these roles.
Internal Controls
The Board has delegated the day to day responsibilities for the
management of the Company's investment portfolio, the provision of
depositary services and administration, registrar and corporate
secretarial functions including the independent calculation of the
Company's NAV and the production of the Annual Report and Financial
Statements which are independently audited.
Formal contractual agreements have been put in place between the
Company and providers of these services.
Even though the Board has delegated responsibility for these
functions, it retains accountability for these functions and is
responsible for the systems of internal control. At each quarterly
Board meeting, compliance reports are provided by the
Administrator, Company Secretary and Investment Manager.
The Company's risk matrix continues to be the core element of
the Company's risk management process in establishing the Company's
system of internal financial and reporting control. The risk matrix
is prepared and maintained by the Manager and reviewed regularly by
the Board which initially identifies the risks facing the Company
and then collectively assesses the likelihood of each risk, the
impact of those risks and the strength of the controls operating
over each risk. The system of internal financial and operating
control is designed to manage rather than to eliminate the risk of
failure to achieve business objectives and by its nature can only
provide reasonable and not absolute assurance against misstatement
and loss.
These controls aim to ensure that assets of the Company are
safeguarded, proper accounting records are maintained and the
financial information for publication is reliable. The Board
confirms that there is an ongoing process for identifying,
evaluating and managing the significant risks faced by the
Company.
This process has been in place for the year under review and up
to the date of approval of this Annual Report and Financial
Statements and is reviewed by the Board and is in accordance with
the Internal Controls: Revised Guidance for Directors on the
Combined Code issued by the FRC.
The Board therefore believes that the Company has adequate and
effective systems in place to identify, mitigate and manage the
risks to which it is exposed.
Internal Audit
The Company does not have an internal audit function; it
delegates to third parties most of its operations and does not
employ any staff. The Board will continue to review whether a
function equivalent to internal audit is needed.
Subsequent Events
At the Extraordinary General Meeting ("EGM") on 4 January 2016
shareholders passed a resolution to amend the Company's investment
policy in order to enable it to increase its existing investment in
the Polar Silver Group so that such investment may represent up to
35 per cent in aggregate of the value of the Company's gross assets
at the time of the relevant transaction. New Articles were adopted
at the same EGM which provided the Company with additional
flexibility with regard to the composition of the Board and the
location of future Board meetings.
On 10 February 2016 Polar Acquisition Limited ("PAL") was
incorporated. PAL is a wholly owned subsidiary of BSRT,
incorporated in the British Virgin Islands. PAL has been dormant up
to the date of this report.
Signed on behalf of the Board of Directors by:
Howard Myles Christopher Sherwell 21 April 2016
Report of the Audit CommitteE
For the year ended 31 December 2015
The function of the Audit Committee (the "Committee") as
described in its Terms of Reference is to ensure that the Company
maintains high standards of integrity in its financial reporting
and internal controls.
The Board, as a whole, including the Audit Committee members,
consider the nature and extent of the Company's risk management
framework and the risk profile that is acceptable in order to
achieve the Company's strategic objectives. As a result, it is
considered that the Board has fulfilled its obligations under the
Code.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The Audit Committee continues to be responsible for reviewing
the adequacy and effectiveness of the Company's on-going risk
management systems and processes. The Company's system of internal
controls, along with its design and operating effectiveness, is
subject to review by the Audit Committee through reports received
from all service providers.
In the event of any deficiencies or breaches reported, the Board
would consider the actions required to remedy and prevent
significant failings or weaknesses.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and
corruption policies of the Company. The Board receives a
confirmation from all service providers that there have been no
instances of fraud or bribery.
The Audit Committee considered the adequacy and security of the
arrangements of its service providers to raise concerns, in
confidence, about possible wrongdoing in financial reporting or
other matters. The Committee is satisfied it has the ability and
resources to investigate any such matters which may arise and to
follow up on any conclusion reached by such investigation.
The function of the Audit Committee (the "Committee") as
described in its Terms of Reference is to ensure that the Company
maintains high standards of integrity in its financial reporting
and internal controls.
The Audit Committee is appointed by the Board and all members
are considered to be independent both of the Investment Manager and
the external auditor. The Committee meets a minimum of three times
a year to discuss the Interim and Annual Report and Financial
Statements, the audit plan and engagement letter, and the Company's
risks, via discussion of its risk matrix. The Board is satisfied
that the Audit Committee is properly constituted with members
having recent and relevant financial experience, including one
member who is a chartered accountant.
Primary Areas of Judgement
As part of its review of the Company's financial statements, the
Audit Committee takes account of the most significant issues and
risks, both operational and financial, likely to impact on the
financial statements and the mitigating controls to address these
risks. The Audit Committee has determined that the key risk of
misstatement is valuation of investments for which there is no
readily observable market price. Such investments are recorded at
fair value which is the price that would be expected to be received
to sell an asset in an orderly transaction between market
participants at the measurement date. Significant judgements are
required in respect of the valuation of the Company's investments
for which there is no observable market price. The Company bases
most of its valuations on the most recent observable transactions
for each investment and other comparable companies and adjusts
these for changes in company specific performance and comparable
company performance for which there is observable data. This
performance information, by its nature, takes into account market
expectations of future commodity prices. Further information on the
Company's methodologies is provided in Note 3 to the financial
statements.
The risk is mitigated through the review by the Board of
detailed reports prepared by the Investment Manager on portfolio
valuation including valuation methodology, the underlying
assumptions and the valuation process. Corroborative evidence from
the audit process is also available.
The Investment Manager also provides information to the Board on
relevant market indices, recent transactions in similar assets and
other relevant information to allow an assessment of appropriate
carrying value having regard to the relevant factors.
The responsibility for ensuring that investments are carried at
fair value lies with the Board.
Through its meetings during the year ended 31 December 2015 and
its review of the Company's Annual Report and Financial Statements,
the Committee considered the following significant risks as well as
the principal risks and uncertainties described on pages 10 and
11.
Risk Considered How addressed
The accuracy of the Company's Annual Review of the Annual Report and Financial
Report and Financial Statements Statements, discussions with the
external auditor and meetings with
the auditor to understand the audit
approach and findings
Adequacy of the Company's accounting Consideration of the Company's risk
and internal controls systems matrix, taking account of the relevant
risks, the potential impact to the
Company and the mitigating controls
in place.
Valuation of the Company's investments, Reports received from the Investment
in particular the valuation of unquoted Manager providing background to the
investments investment valuations. The Investment
Manager reporting is then supported
by the independent auditor's review
of the investment valuations.
To review the effectiveness and independence The Committee has regular dialogue
of the external audit process with the external auditor both before
and during the audit process. The
auditor presents to the Committee
at both the engagement and audit
review stage, and confirms their
independence at each stage. The Committee
receives feedback from the Investment
Manager on the audit process and
any concerns or challenges faced.
The Audit Committee also provides a forum through which the
Company's auditor reports to the Board. The Board, not the Audit
Committee, approves all non-audit work carried out by the auditor
in advance and the fees paid to the auditor in this respect.
External Audit
The Company's external auditor is Ernst & Young LLP ("EY").
EY has been the Company's auditor since its incorporation in
2010.
During 2015, the Audit Committee reviewed the services provided
by the auditor, and the related fees, and concluded that it was not
necessary to conduct a competitive tender at that stage. However,
the Audit Committee does keep this matter under consideration and
is cognisant of the Corporate Governance provisions relating to
audit tenure.
The audit fees during the year were as follows:
2015 2014
Audit Fees
Audit Fees 49,500 42,800
Non audit Fees
Agreed Upon Procedures 7,400 7,250
FATCA review - 7,500
ISRE 2410 review - 17,500
Acquisition of additional
assets - 45,000
================== ========
7,400 77,250
================== ========
Total Fees 56,900 120,050
================== ========
The external auditor provides a planning report in advance of
the annual audit, a report on the annual audit and an Agreed upon
Procedures report in accordance with ISRS 4400 for the half year
financial statements. In the prior year, due to the Acquisition of
Additional Investments, the auditor issued an ISRE 2410 report. The
Audit Committee has an opportunity to question and challenge the
auditor in respect of each of these reports. Based on levels of
interaction with the auditor, and the assessment of auditor
reporting the Audit Committee is satisfied that the reappointment
of the external auditor should be proposed at the Annual General
Meeting of the Company.
The Audit Committee confirms that it has reviewed the non-audit
services provided by EY and received confirmation from EY that due
to the type of services provided there was no risk or any threat to
its independence and is satisfied that they do not compromise EY's
independence or objectivity. The Audit Committee is also satisfied
that fees for non-audit services are proportionate in relation to
the fees for audit services. In conclusion, the Audit Committee is
satisfied that EY remains independent. The Audit Committee has
assessed the effectiveness of the external auditors, considering
the audit planning, adherence to audit standards, competence of the
audit team and feedback from the Investment Manager and concluded
that it is appropriate to reappoint EY as external auditors.
Internal Audit
The Audit Committee believes that the Company does not require
an internal audit function because it delegates its day to day
functions to third party service providers although the Audit
Committee oversees these operations and receives regular reports in
this respect.
Risk Management and Internal Controls
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The Board is responsible for the Company's system of internal
controls and risk management. The Audit Committee has been
delegated the responsibility for reviewing the ongoing
effectiveness of the Company's internal controls and it discharges
its duties in this area by assessing the nature and extent of the
significant risks it is willing to accept in achieving the
Company's objectives and ensuring that effective systems of risk
identification, assessment and mitigation have been
implemented.
The Company delegates its day to day operations to third parties
and therefore relies on the internal control arrangements of its
outsourced service providers in respect of a number of key
controls. It is the Audit Committee's responsibility to ensure that
suitable internal control systems are implemented by the Company's
third party service providers and to review the effectiveness of
these controls on an ongoing basis.
The key risks faced by the Company, and the controls in place to
mitigate such risks, are set out in a Risk Matrix which is
regularly reviewed by the Board. The Risk Matrix identifies the
likelihood and severity of the impact of each identified risk
factor and the mitigating controls in place to minimise the
probability of such risks occurring. The Strategic Report outlines
the principal risks and uncertainties affecting the Company.
By their nature, the control mechanisms can only provide
reasonable rather than absolute assurance against misstatement or
loss. The Board seeks continual improvement in its internal
controls mechanisms. The Audit Committee is not aware of any
significant failings or weaknesses in the Company's internal
controls in the year under review.
Financial Reporting
The primary role of the Audit Committee in relation to financial
reporting is to review the annual Financial Statements with the
Administrator and the Investment Manager and assess their
appropriateness. It focuses in this respect, amongst other matters,
on:
-- the clarity of the disclosures in the financial reporting and
compliance with statutory, regulatory and other financial reporting
requirements;
-- the quality and acceptability of accounting policies and practices;
-- material areas where significant judgements have been applied
or where there has been discussion with the auditor; and
-- taken as a whole, whether the financial statements are fair,
balanced and understandable and provide shareholders with the
necessary information to assess the Company's performance and
strategy although the Board retains overall responsibility in this
respect.
Going Concern
The Audit Committee has made an assessment of the Company's
ability to continue as a going concern. Particular regard has been
given to the fact that the Company holds listed securities that can
if necessary be realised to meet liabilities as they become due; as
at 31 December 2015, approximately 22.2% of the Company's assets
were represented by cash and unrestricted quoted investments.
On the basis of its review, the Audit Committee is satisfied
that the Company has the resources to continue in business for a
period longer than 12 months from the date of signing these
financial statements and therefore is of the opinion that the
financial statements should be prepared on a going concern basis
and has accordingly recommended this opinion to the Board.
Christopher Sherwell
Audit Committee Chairman
21 April 2016
PORTFOLIO STATEMENT
AS AT 31 DECEMBER 2015
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Listed equity shares
Canadian Dollars
4,007,917 Aquila Resources Inc 337,937 0.88
557,818 BacTech Environmental Corporation 6,816 0.02
658,000 Buffalo Coal Corporation 9,649 0.02
5,703,059 Ivanhoe Mines Limited 1,700,456 4.44
1,248,175 Ivanhoe Mines Limited (restricted)* 372,163 0.97
Canadian Dollars Total 2,427,021 6.33
--------------- ---------
Great Britain Pounds
102,099,527 Metals Exploration Plc 4,211,606 10.99
Great Britain Pounds Total 4,211,606 10.99
--------------- ---------
United States Dollars
China Polymetallic Mining Company Limited
55,246,318 (CPM)* 1,353,279 3.53
(held via a vehicle which holds the shares
in CPM)
United States Dollars Total 1,353,279 3.53
--------------- ---------
Total investment in listed equity shares 7,991,906 20.85
--------------- ---------
Debt instruments
Canadian Dollars
250,500 Ironstone Resources Limited Loan Note 122,443 0.32
Canadian Dollars Total 122,443 0.32
--------------- ---------
United States Dollars
13,435,000 Argentum Convertible Note 9,109,710 23.76
440,000 Bilboes Holdings Convertible Loan Note 298,346 0.78
7,000,000 Black Pearl Limited Partnership 7,071,647 18.45
1,370,000 Polar Silver Convertible Notes 928,940 2.42
United States Dollars Total 17,408,643 45.41
--------------- ---------
Total investments in Debt instruments 17,531,086 45.73
--------------- ---------
*Classified as Level 2 (Refer Note 3)
Shares Investments Fair value % of Net
/Warrants/ GBP equivalent assets
Nominal
Unlisted equity shares and warrants
Australian Dollars
Burrabulla Corporation Limited (formerly
24,613,742 South American Ferro Metals Limited) - -
Australian Dollars Total - -
--------------- ---------
Canadian Dollars
4,000,000 Aquila Resources Inc Warrants 11/10/2016 - -
13,083,936 Ironstone Resources Limited 1,822,683 4.75
38,400 Ironstone Resources Limited Warrants 01/09/2016 - -
3,036,605 Ironstone Resources Limited Warrants 31/12/2016 - -
606,667 Ironstone Resources Limited Warrants 31/07/2017 6,467 0.02
143,143 Ironstone Resources Limited Warrants 22/02/2018 3,645 0.01
3,531,000 MagIndustries Corporation 224,372 0.58
500,000 Salmon River Resources Limited - -
Canadian Dollars Total 2,057,167 5.36
--------------- ---------
Great Britain Pounds
1,594,646 Celadon Mining Limited 143,518 0.37
Cemos Group plc (formerly Global Oil Shale
23,337,501 Group Limited) 3,500,625 9.13
Great Britain Pounds Total 3,644,143 9.50
--------------- ---------
Norwegian Krone
6,540,689 Nussir ASA 751,655 1.96
Norwegian Krone Total 751,655 1.96
--------------- ---------
United States Dollars
15,493,567 Archipelago Metals Limited 1,050,554 2.74
1,000,000 Archipelago Metals Limited Warrants 31/12/2016 145 -
451,445 Bilboes Gold Limited 3,299,822 8.61
4,244,550 Gobi Coal & Energy Limited 1,410,245 3.68
1,000,000 Midway Resources International 84,757 0.22
2,961 Polar Silver Resources Limited 2,008 0.01
United States Dollars Total 5,847,531 15.26
--------------- ---------
Total Unlisted equity shares and warrants 12,300,496 32.08
--------------- ---------
Financial assets held at fair value through
profit or loss 37,823,488 98.66
--------------- ---------
Other Assets & Liabilities 513,780 1.34
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
--------------- ---------
Total Equity 38,337,268 100.00
--------------- ---------
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BAKER STEEL
RESOURCES TRUST LIMITED
Our opinion on the financial statements
In our opinion:
-- Baker Steel Resources Trust Limited's (the "Company")
financial statements (the "financial statements") give a true and
fair view of the state of the company's affairs as at 31 December
2015 and of its loss for the year then ended;
-- the financial statements have been properly prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS"); and
-- the financial statements have been prepared in accordance
with the requirements of the Companies (Guernsey) Law 2008.
What we have audited
We have audited the financial statements of Baker Steel
Resources Trust Limited for the year ended 31 December 2015, which
comprise:
-- the statement of financial position as at 31 December 2015;
-- the statement of comprehensive income for the year ended 31 December 2015;
-- the statement of changes in equity for the year ended 31 December 2015;
-- the statement of cash flows for the year ended 31 December 2015; and
-- related notes 1 to 15 to the financial statements.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRS.
Overview of our audit approach
Risk of material misstatement
* Valuation of unquoted investments, including
unrealised gains/losses.
------------------------------ -----------------------------------------------------------------
Audit scope
* We performed an audit of the financial statements of
the Company for the year ended 31 December 2015.
------------------------------ -----------------------------------------------------------------
Materiality
* Overall materiality of GBP767k, which represents 2%
of net asset value.
------------------------------ -----------------------------------------------------------------
Our assessment of risk of material misstatement
We identified the risk of material misstatement described below
as that which had the greatest effect on our overall audit
strategy, the allocation of resources in the audit and the
direction of the efforts of the audit team. In addressing this
risk, we have performed the procedures below which were designed in
the context of the financial statements as a whole and,
consequently, we do not express any opinion on this individual
area.
Risk Our response to the risk What we concluded to the Audit
Committee
Valuation of unquoted investments The application of the discounted
(2015: GBP29,831,582; 2014: * We documented our understanding of the processes, cash flow ("DCF") method is the most
GBP24,626,399), including unrealised policies and methodologies used by management for commonly adopted approach
gains/(losses) valuing unquoted investments held by the Company and used by the industry for valuing
(2015: GBP6,657,970; 2014: performed walkthrough tests to confirm our unquoted mining assets as it reflects
(GBP4,838,369)) understanding of the systems and controls the risk associated
Refer to the Audit Committee Report implemented. with the expected cash flow profile
(page 21); Accounting policies in over the life of the mining asset.
Note 2 (page 37); and However, management used risk free
Note 3 to the Financial Statements * We carried out the following substantive investment discount rates and then applied a
The majority (79%: 2015, 76%: 2014) valuation procedures on a sample of unquoted 'haircut' to the calculated
of the carrying value of investments investments held by the Company. These substantive net present value of the project.
relate to the Company's procedures comprised of: We have applied a risk adjusted
holdings in unquoted investments, discount rate to recalculate the net
which are valued using different present value of unquoted
valuation techniques, as o agreeing the valuation per the financial statements back investments and concluded that the
defined in Note 3 (pages 41 to 46). to the models used by management; value determined by management is
The valuation is subjective, with a o testing the inputs to the models back to the independent within our estimated
high level of judgement and sources and evaluating whether range.
estimation linked to the all key terms of the unquoted investments had been Moreover, we have determined that the
determination considered in the application of the models; discount rates applied by management
of the values with limited market and in the Development
information available. o testing the mathematical accuracy of the calculations. Risk Adjusted Values ("DRAVs")
As a result, there is a risk of an * We engaged our own internal valuation experts to: calculations are at the lower end of
inappropriate valuation model being our estimated range. However,
applied, together with DRAV is not the primary determination
the risk of inappropriate inputs to o assist us to determine whether the methodologies used to of fair value used by management,
the model/calculation being value a sample of unquoted investments being a tool for assessing
selected. were in accordance with methods usually used by market recoverability of projects and loan
The valuation of the unquoted participants for these types of unquoted notes. We were able to utilise other
investments is the key driver of the investments; and corroborative data
Company's net asset value o use their knowledge of the market to assess and and inputs which resulted in
and total return. Incorrect corroborate management's market related normalised discount rates.
valuation could have a significant judgements and valuation inputs (including discount rates, It is recommended to adjust either
impact on the net asset value forward prices, production values the cash flows with identified
of the Company and therefore the and recent relevant transaction data) by reference to specific risks, or to use
return generated for shareholders. comparable transactions, and independently a risk adjusted discount rate.
compiled databases/indices. Other than the above, we have no
further matters to communicate in
respect of the use of Valuation
policies or methodologies for
unquoted investments.
No material misstatements were
identified in the valuation of
unquoted investments held by
the Company, and the associated
realised and unrealised gains/losses.
------------------------------------- --------------------------------------------------------------- --------------------------------------
The scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit
scope. Taken together, this enables us to form an opinion on the
financial statements.
Our application of materiality
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
This is the magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of the financial
statements. Materiality provides a basis for determining the nature
and extent of our audit procedures.
We determined materiality for the Company to be GBP767k (2014:
GBP643k), which is 2% (2014: 2%) of net asset value.
It was considered inappropriate to determine materiality based
on Company profit before tax as the primary focus of the Company is
the overall performance of investments held, which includes a
significant asset revaluation component. In addition, profit is not
a key metric reported upon by the Company, with the ability to make
dividend payments not limited by the profitability of the Company
in any particular period.
We believe that net asset value provides us with an appropriate
basis for audit materiality as net asset value is a key published
performance measure and is a key metric used by management in
assessing and reporting on the overall performance of the
Company.
During the course of our audit, we reassessed initial
materiality and noted no factors leading us to amend materiality
levels from those originally determined at the audit planning
stage.
Performance materiality
This refers to the application of materiality at the individual
account or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Company's overall control environment, our
judgement was that performance materiality was 50% (2014: 50%) of
our planning materiality, namely GBP383k (2014: GBP322k). We have
set performance materiality at this percentage, because in the
prior year we have identified audit differences which result in a
higher risk of misstatements in the current year.
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to them
all uncorrected audit differences in excess of GBP38k (2014:
GBP32k), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light
of other relevant qualitative considerations in forming our
opinion.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the 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 Company'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 financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 16, the directors are responsible for the
preparation of the 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 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.
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Matters on which we are required to report by exception
ISAs (UK and Ireland) We are required to report to you if, in our opinion, We have no exceptions to
reporting financial and non-financial information report.
in the annual report is:
* materially inconsistent with the information in the
audited financial statements; or
* apparently materially incorrect based on, or
materially inconsistent with, our knowledge of the
Company acquired in the course of performing our
audit; or
* otherwise misleading.
In particular, we are required to report whether we have
identified any inconsistencies between
our knowledge acquired in the course of performing the
audit and the directors' statement
that they consider the annual report and accounts taken
as a whole is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the entity's performance,
business model and strategy; and whether the annual
report appropriately addresses those matters
that we communicated to the audit committee that we
consider should have been disclosed.
---------------------------- ---------------------------------------------------------- ----------------------------
Companies (Guernsey) Law We are required to report to you if, in our opinion: We have no exceptions to
2008 reporting * proper accounting records have not been kept; or report.
* the financial statements are not in agreement with
the accounting records; or
* we have not received all the information and
explanations we require for our audit.
---------------------------- ---------------------------------------------------------- ----------------------------
Listing Rules review We are required to review: We have no exceptions to
requirements * The directors' statement in relation to going concern report.
set out on page 16, and longer-term viability, set
out on pages 11 and 12; and
* the part of the Corporate Governance Statement
relating to the Company's compliance with the
provisions of the UK Corporate Governance Code
specified for our review.
--------------------------- ------------------------------------------------------------ ---------------------------
Statement on the Directors' assessment of the principal risks
that would threaten the solvency or liquidity of the entity
ISAs (UK and Ireland) We are required to give a statement as to whether we have We have nothing material
reporting anything material to add or to draw to add or to draw
attention to in relation to: attention to.
* the directors' confirmation in the annual report that
they have carried out a robust assessment of the
principal risks facing the entity, including those
that would threaten its business model, future
performance, solvency or liquidity;
* the disclosures in the annual report that describe
those risks and explain how they are being managed or
mitigated;
* the directors' statement in the financial statements
about whether they considered it appropriate to adopt
the going concern basis of accounting in preparing
them, and their identification of any material
uncertainties to the entity's ability to continue to
do so over a period of at least twelve months from
the date of approval of the financial statements; and
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
* the directors' explanation in the annual report as to
how they have assessed the prospects of the entity,
over what period they have done so and why they
consider that period to be appropriate, and their
statement as to whether they have a reasonable
expectation that the entity will be able to continue
in operation and meet its liabilities as they fall
due over the period of their assessment, including
any related disclosures drawing attention to any
necessary qualifications or assumptions.
--------------------------- ------------------------------------------------------------ ---------------------------
David Robert John Moore, ACA
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
21 April 2016
Notes:
1. The maintenance and integrity of the Company web site is the
responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the web site.
2. Legislation in the Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
STATEMENT OF FINANCIAL POSITION
For the Year Ended 31December 2015
2015 2014
Notes GBP GBP
Assets
Cash and cash equivalents 9 562,101 94,217
Due from broker 3,720 -
Other receivables 77,361 93,294
Financial assets held at fair value through
profit or loss 3 37,823,488 32,347,828
Total assets 38,466,670 32,535,339
-------------- -------------
Equity and Liabilities
Liabilities
Directors' fees payable 11 28,750 35,712
Management fees payable 7,11 25,979 34,335
Administration fees payable 6 23,253 27,563
Audit fees payable 21,683 35,308
Legal fees payable - 167,806
Other payables 29,737 68,059
Total liabilities 129,402 368,783
-------------- -------------
Equity
Management Ordinary Shares 10 10,000 10,000
Ordinary Shares 10 80,557,984 66,945,285
Profit and loss account (42,230,716) (34,788,729)
Total equity 38,337,268 32,166,556
-------------- -------------
Total equity and liabilities 38,466,670 32,535,339
============== =============
Net Asset Value per Ordinary Share (in Pence)
- Basic and diluted 12 33.5 44.9
The financial statements on pages 32 to 57 were approved by the Board
of Directors on 21 April 2016 and signed on its behalf by:
Howard Myles Christopher Sherwell
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Year ended Year ended Year ended
2015 2015 2015
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 71,864 - 71,864
Other income 25,783 - 25,783
Net loss on financial assets at
fair value through profit or loss 3 - (6,625,328) (6,625,328)
Net foreign exchange loss - (6,474) (6,474)
Net income/(loss) 97,647 (6,631,802) (6,534,155)
----------- ------------ ------------
Expenses
Management fees 7,11 459,657 - 459,657
Legal fees 1,044 - 1,044
Directors' fees 11 133,037 - 133,037
Administration fees 6 86,416 - 86,416
Audit fees 44,103 - 44,103
Custody fees 58,283 - 58,283
Directors' expenses 7,750 - 7,750
Broker fees 48,194 - 48,194
Other expenses 8 69,348 - 69,348
Total expenses 907,832 - 907,832
----------- ------------ ------------
Net loss for the year (810,185) (6,631,802) (7,441,987)
=========== ============ ============
Net loss for the year per Ordinary
Share:
Basic and diluted (in pence) 12 (0.7) (6.0) (6.7)
In the year ended 31 December 2015 there were no gains or losses other than those recognised
above.
The Directors consider all results to derive from continuing activities.
The format of the Income Statement follows the recommendations of the 2014 AIC Statement of
Recommended Practice.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Year ended Year ended Year ended
2014 2014 2014
Revenue Capital Total
Notes GBP GBP GBP
Income
Interest income 77,998 - 77,998
Net loss on financial assets at
fair value through profit or loss 3 - (9,955,713) (9,955,713)
Net foreign exchange loss - (3,461) (3,461)
Net income/(loss) 77,998 (9,959,174) (9,881,176)
------------ ------------ -------------
Expenses
Management fees 7,11 472,295 - 472,295
Legal fees 168,185 - 168,185
Directors' fees 11 140,000 - 140,000
Administration fees 6 98,642 - 98,642
Audit fees 41,125 - 41,125
Custody fees 32,112 - 32,112
Directors' expenses 8,273 - 8,273
Acquisition of assets 50,275 - 50,275
Brokerage fees 27,806 - 27,806
Other expenses 8 82,489 - 82,489
Total expenses 1,121,202 - 1,121,202
------------ ------------ -------------
Net loss for the year (1,043,204) (9,959,174) (11,002,378)
============ ============ =============
Net loss for the year per Ordinary
Share:
Basic and diluted (in pence) 12 (1.5) (14.4) (15.9)
In the year ended 31 December 2014 there were no gains or losses other than those recognised
above.
The Directors consider all results to derive from continuing activities.
The format of the Income Statement follows the recommendations of the 2014 AIC Statement of
Recommended Practice.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Management
Ordinary Ordinary Treasury Profit and Profit and
Shares Shares Shares loss account loss account Year
(Revenue) (Capital) ended
GBP GBP GBP GBP GBP GBP
Balance as at 1 January
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
2014 10,000 64,767,056 - (5,438,874) (18,347,477) 40,990,705
Issue of Ordinary
Shares in specie - 2,178,229 - - 2,178,229
Net loss for the
year - - - (1,043,204) (9,959,174) (11,002,378)
Balance as at 31
December 2014 10,000 66,945,285 - (6,482,078) (28,306,651) 32,166,556
Issue of Ordinary
Shares for cash - 1,219,393 - - - 1,219,393
Issue of Ordinary
Shares in specie - 13,112,248 - - - 13,112,248
Expenses related
to issue of shares (578,450) (578,450)
Ordinary Shares held
as Treasury - - (140,492) - - (140,492)
Net loss for the
year - - - (810,185) (6,631,802) (7,441,987)
----------- ----------- ----------- --------------- --------------- -------------
Balance as at 31
December 2015 10,000 80,698,476 (140,492) (7,292,263) (34,938,453) 38,337,268
=========== =========== =========== =============== =============== =============
Note 10 10 10
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Year ended Year ended
2015 2014
Notes GBP GBP
Cash flows from operating activities
Net loss for the year (7,441,987) (11,002,378)
Adjustments to reconcile income for the year
to net cash used in operating activities:
Interest income (71,864) (77,998)
Net loss on financial assets at fair value through
profit or loss 3 6,625,328 9,955,713
Net (increase)/decrease in other receivables (3,964) 5,317
Net (decrease)/increase in other payables (239,381) 197,780
------------- -------------
(1,131,868) (921,566)
Interest received 88,041 6,133
Net cash used in operating activities (1,043,827) (915,433)
------------- -------------
Cash flows from investing activities
Purchase of financial assets at fair value through
profit or loss (2,455,778) (1,127,370)
Sale of financial assets at fair value through
profit or loss 3,467,038 1,659,525
------------- -------------
Net cash provided by investing activities 1,011,260 532,155
------------- -------------
Cash flows from financing activities
Proceeds from shares issued 10 1,219,393 -
Expenses related to issue of shares (578,450)
Payment for redemption of shares 10 (140,492) -
------------- -------------
Net cash provided by financing activities 500,451 -
------------- -------------
Net increase/(decrease) in cash and cash equivalents 467,884 (383,278)
Cash and cash equivalents at the beginning of
the year 94,217 477,495
Cash and cash equivalents at the end of the
year 9 562,101 94,217
============= =============
Supplemental disclosure of non-cash flow information
Purchase of financial assets at fair value through
profit or loss 10 (13,112,248) (2,178,229)
Issue of Ordinary Shares in specie 10 13,112,248 2,178,229
============= =============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. GENERAL INFORMATION
Baker Steel Resources Trust Limited (the "Company") is a
closed-ended investment company with limited liability incorporated
and domiciled on 9 March 2010 in Guernsey under the Companies
(Guernsey) Law, 2008 with registration number 51576. The Company is
a registered closed-ended investment scheme registered pursuant to
the POI Law and the Registered Collective Investment Scheme Rules
2015 issued by the Guernsey Financial Services Commission ("GFSC").
On 28 April 2010 the Ordinary Shares and Subscription Shares of the
Company were admitted to the Official List of the UK Listing
Authority and to trading on the Main Market of the London Stock
Exchange. The Company's Ordinary and Subscription Shares were
admitted to the Premium Listing Segment of the Official List on 28
April 2010.
The final exercise date for the Subscription Shares was 2 April
2013. No Subscription Shares were exercised at this time and all
residual/unexercised Subscription Shares were subsequently
cancelled.
The Company's portfolio is managed by Baker Steel Capital
Managers (Cayman) Limited (the "Manager"). The Manager has
appointed Baker Steel Capital Managers LLP (the "Investment
Manager") as the Investment Manager to carry out certain duties.
The Company's investment objective is to seek capital growth over
the long-term through a focused, global portfolio consisting
principally of the equities, or related instruments, of natural
resources companies. The Company invests predominantly in unlisted
companies (i.e. those companies which have not yet made an Initial
Public Offering ("IPO")) and also in listed securities (including
special situations opportunities and less liquid securities) with a
view to exploiting value inherent in market inefficiencies and
pricing anomalies.
Baker Steel Capital Managers LLP (the "Investment Manager") was
authorised to act as an Alternative Investment Fund Manager
("AIFM") of Alternative Investment Funds ("AIFs") on 22 July 2014.
On 14 November 2014, the Investment Manager signed an amended
Investment Management Agreement with the Company, to take into
account AIFM regulations. AIFMD focuses on regulating the AIFM
rather than the AIFs themselves, so the impact on the Company is
limited.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The financial statements have been prepared on
a historical cost basis except for financial assets at fair value
through profit or loss, which are designated at fair value through
profit or loss. The financial statements have been prepared on a
going concern basis.
The Company's functional currency is the Great Britain pound
Sterling ("GBP"), being the currency in which its Ordinary Shares
are issued and in which returns are made to shareholders. The
presentation currency is the same as the functional currency. The
financial statements have been rounded to the nearest GBP. The
Company invests in companies around the world whose shares are
denominated in various currencies. Currently the majority of the
portfolio is denominated in US Dollars but this will not
necessarily remain the case as the portfolio develops.
The Statement of Comprehensive Income is presented in accordance
with the Statement of Recommended Practice ("SORP") 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts' issued in November 2014 by the Association of Investment
Companies. The Company has voluntarily adopted the SORP and only
applied it to the Statement of Comprehensive Income, rather than to
the entire financial statements.
Income encompasses both revenue and capital gains/losses. For a
listed investment company it is necessary to distinguish revenue
from capital for the purpose of determining the distribution.
Revenue includes items such as dividends, interests, fees, rent and
other equivalent items. Capital is the return, positive or
negative, from holding investments other than that part of the
return that is revenue. The SORP provides guidance on the items
that should be recognised as capital/revenue. Where specific
guidance is not given an item is recognised in accordance with its
economic substance.
b) Significant accounting judgements and estimates
The preparation of the Company's financial statements requires
the Directors to make judgements, estimates and assumptions that
affect the reported amounts recognised in the financial statements
and disclosure of contingent liabilities. However, uncertainty
about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amount of the
asset or liability in future periods.
(i) Judgements
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
In the process of applying the Company's accounting policies,
the Directors have made the following judgements, which has the
most significant effect on the amounts recognised in the financial
statements:
Assessment as Investment Entity
As per IFRS 10, an entity shall determine whether it is an
investment entity. An investment entity is an entity that fulfils
the following criteria:
Ø It obtains funds from one or more investors for the purpose of
providing those investors with investment services.
Ø It commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income or both.
Ø It measures and evaluates the performance of substantially all
of its investments on a fair value basis.
The Company meets the above criteria in and is therefore
considered to be an investment entity and therefore all entities
that qualify as subsidiaries or associates are carried at fair
value through profit or loss.
Associates
The Directors consider that entities over which the Company
exercises significant influence, including where it holds more than
20% of the voting rights, should be considered as associates of the
Company and these are disclosed in Note 13 of the financial
statements.
Going Concern
As described in the Director's Report the Directors have
assessed the financial position of the Company and are satisfied
that it can continue in operation for a period exceeding 12 months
from the date of signing the financial statements, accordingly the
financial statements have been prepared on a going concern
basis.
(ii) Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets liabilities within the next financial year, are
discussed below. The Company based its assumptions and estimates on
parameters available when the financial statements were prepared.
However, existing circumstances and assumptions about future
developments may change due to market changes or circumstances
arising beyond the control of the Company. Such changes are
reflected in the assumptions when they occur. Please refer to Note
3 for further information.
Fair value of financial instruments
When the fair values of financial assets and financial
liabilities recorded in the statement of financial position cannot
be derived from active markets, their fair value is determined
using a variety of valuation techniques that include the use of
valuation models. The inputs to these models are taken from
observable markets where possible, but where this is not feasible,
estimation is required in establishing fair values. The estimates
include considerations of liquidity and model inputs related to
items such as credit risk, correlation and volatility. Changes in
assumptions about these factors could affect the reported fair
value of financial instruments in the statement of financial
position and the level where the instruments are disclosed in the
fair value hierarchy. The models are tested for validity by
calibrating to prices from any observable current market
transactions in the same instrument (without modification or
repackaging) when available. To assess the significance of a
particular input to the entire measurement, the Company performs
sensitivity analysis or stress testing techniques.
b) Financial assets at fair value through profit or loss
In accordance with IAS 39 the Company designates its investments
as at fair value through profit or loss, at initial recognition.
All derivatives are classified as held for trading and are included
in financial assets at fair value through profit or loss.
Designation of the investments in this way is consistent with the
Company's documented risk management policy and investment
strategy, and information about the investments is provided to the
Board on this basis.
Recognition and derecognition
The Company recognises financial assets and financial
liabilities on the date it becomes a party to the contractual
provisions of the instruments. Routine purchases and sales of
investments are accounted for on the trade date.
Financial assets at fair value through profit or loss are
initially recognised at fair value. Transaction costs are expensed
in the Statement of Comprehensive Income. Subsequent to initial
recognition, all financial assets at fair value through profit or
loss are re-measured at fair value. Gains and losses arising from
changes in fair value are recognised in the Statement of
Comprehensive Income in the year in which they arise.
A financial asset is derecognised when the Company no longer has
control over the contractual rights that comprise that asset. This
occurs when the rights are realised, expired or are surrendered. A
financial liability is derecognised when it is extinguished or when
the obligation specified in the contract is discharged, cancelled
or expired.
Financial assets may be acquired for a consideration in the form
of an issue of the Company's own shares.
A contract that will be settled by the entity (receiving or)
delivering a fixed number of its own equity instruments in exchange
for a fixed amount of cash or another financial asset is accounted
for as an equity instrument.
The cost of the assets acquired is determined as at the fair
value of the consideration given, being the fair value of the
equity instruments issued or the asset received, if that is more
easily measured, together with directly attributable transaction
costs on the transaction date.
Subsequent measurement
After initial recognition, investments are measured at fair
value, with unrealised gains and losses on investments recognised
in the Statement of Comprehensive Income. Investments are
derecognised on sale. Gains and losses on sale of investments are
recognised in the Statement of Comprehensive Income.
Determination of fair value
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The fair value for financial instruments traded in active
markets at the reporting date is based on their last quoted price
or binding dealer price quotations (bid price for long positions
and ask price for short positions), without any deduction for
transaction costs.
For all other financial instruments not traded in an active
market, fair value is determined by using appropriate valuation
techniques. Valuation techniques include: using recent arm's length
market transactions; reference to the current market value of
another instrument that is substantially the same; discounted cash
flow analysis and option pricing models making as much use of
available and supportable market data as possible. An analysis of
fair values of financial instruments and further details as to how
they are measured are provided in Note 3.
d) Other financial assets and liabilities
Other receivables, measured at amortised cost, include the
contractual amounts for settlement of trades and other obligations
due to the Company. Amount due to brokers, investment management
fees payable, directors' fees payable, audit fees payable,
administration fees payable and other payables represent the
contractual amounts and obligations due by the Company for
settlement for trades and expenses. Due to their short term
maturities, their amortised cost is a reasonable approximation of
fair value.
e) Interest income and expense
Bank interest income, interest income on convertible debt
instruments and interest expense are recognised on an accruals
basis based on the effective interest method.
f) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position
comprise cash balances held at banks. Cash and cash equivalents are
included in the financial statements at their principal amount.
g) Expenses
All expenses are recognised on an accruals basis.
h) Translation of foreign currencies
Foreign currency transactions during the year are translated
into Sterling at the rate of exchange ruling at the date of the
transaction. Assets and liabilities denominated in foreign
currencies are translated into Sterling at the rate of exchange
ruling at the Statement of Financial Position date. Exchange
differences including those arising from adjustment to fair value
of financial instruments during the year, are included in the
Statement of Comprehensive Income. The foreign exchange movements
relating to financial assets form part of the fair value movement
in the Statement of Comprehensive Income.
i) Segment information
The Directors are of the opinion that the Company is engaged in
a single segment of business: investing in natural resources
companies.
j) Net asset value per share
Net Asset Value per Ordinary Share disclosed on the face of the
Statement of Financial Position is calculated in accordance with
the Company's Prospectus by dividing the net assets of the Company
on the Statement of Financial Position date by the number of
Ordinary Shares (including the Management Ordinary Shares)
outstanding at that date.
k) New accounting pronouncements
The following amendments were applicable for the first time this
year but had no significant impact on the financial statements of
the Company.
- Amendment to IAS 24, 'Related Party Disclosures' (effective 1 July 2014)
- IFRS 8 Operating Segments - Amendments (effective 1 July
2014)
- IFRS 13 Fair Value Measurement - Amendments (effective 1 January 2015)
l) New accounting pronouncements not yet effective
At the date of authorisation of these financial statements, the
following standards and interpretations, which have not been
applied, were in issue but not yet effective. There are other
accounting pronouncements but the ones listed are most relevant to
the financial statements of the Company and are therefore expanded
on below.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
- IFRS 9 Financial Instruments - Amendments (effective 1 January
2018)
- A finalised version of IFRS 9 has been issued which replaces
IAS 39 Financial Instruments: Recognition and Measurement. The
completed standard comprises guidance on Classification and
Measurement, Impairment Hedge Accounting and Derecognition. IFRS 9
carries forward the derecognition requirements of financial assets
and liabilities from IAS 39.
- IFRS 10 Consolidated Financial Statements - Amendments (effective 1 January 2016)
Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce
clarifications to the requirements when accounting for investment
entities. The amendments also provide relief in particular
circumstances.
- IFRS 12 Disclosure of Interests in Other Entities - Amendments (effective 1 January 2016)
Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce
clarifications to the requirements when accounting for investment
entities. The amendments also provide relief in particular
circumstances.
- IAS 1 Presentation of Financial Statements Disclosure Initiative (effective 1 January 2016)
This amendment is designed to encourage entities to apply
professional judgement in determining what information to disclose
in their financial statements. For example, the amendments make
clear that materiality applies to the whole of financial statements
and that the inclusion of immaterial information can inhibit the
usefulness of financial disclosures. Furthermore, the amendments
clarify that entities should use professional judgement in
determining where and in what order information is presented in the
financial disclosures.
IFRS 9, 10, 11 and 12 have not yet been endorsed by the European
Union. The Board currently intends to adopt the standards on the
mandatory adoption dates. The Board anticipates that the adoption
of these standards and interpretations in the future period will
not have a material impact on the financial statements of the
Company.
3. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed
equity Unlisted
31 December 2015 shares equity shares Debt instruments Warrants Total
GBP GBP GBP GBP GBP
Financial assets at fair value through
profit or loss
Cost 17,010,213 25,904,903 13,764,242 21,826 56,701,184
Unrealised (loss)/gain (9,018,307) (13,614,664) 3,766,844 (11,569) (18,877,696)
Market value at 31 December 2015 7,991,906 12,290,239 17,531,086 10,257 37,823,488
============ ============== ================ ========= =============
Listed
equity Unlisted
31 December 2014 shares equity shares Debt instruments Warrants Total
GBP GBP GBP GBP GBP
Financial assets at fair value through profit
or loss
Cost 21,113,026 29,647,588 9,847,648 - 60,608,262
Unrealised (loss)/gain (13,417,194) (17,519,268) 2,650,151 25,877 (28,260,434)
Market value at 31 December 2014 7,695,832 12,128,320 12,497,799 25,877 32,347,828
============ ============== ================ ======== ============
The following table analyses net (losses)/gains on financial
assets at fair value through profit or loss for the years ended 31
December 2015 and 31 December 2014.
Year ended Year ended
2015 2014
GBP GBP
Financial assets at fair value through profit
or loss
Realised gain/( losses) on:
- Listed equity shares (4,035,152) (1,155,705)
- Unlisted equity shares (11,956,811) -
- Debt instruments (9,011) -
- Warrants (7,092) -
------------- ------------
(16,008,066) (1,155,705)
Movement in unrealised gains/(losses) on:
- Listed equity shares 1,856,871 (3,987,236)
- Unlisted equity shares 6,446,620 (6,725,004)
- Debt instruments 1,116,693 1,927,732
- Warrants (37,446) (15,500)
------------- ------------
9,382,738 (8,800,008)
Net loss on financial assets at fair value through
profit or loss (6,625,328) (9,955,713)
============= ============
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2015.
Quoted prices
in active Quoted market Unobservable
markets based observables inputs
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at fair
value through profit
or loss
Listed equity shares 6,266,464 1,725,442 - 7,991,906
Unlisted equity shares - - 12,290,239 12,290,239
Warrants - - 10,257 10,257
Debt instruments - - 17,531,086 17,531,086
------------- ------------------ ------------ -----------
6,266,464 1,725,442 29,831,582 37,823,488
============= ================== ============ ===========
The following table analyses investments by type and by level
within the fair valuation hierarchy at 31 December 2014.
Quoted prices
in active Quoted market Unobservable
markets based observables inputs
Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at fair
value through profit
or loss
Listed equity shares 3,785,431 3,910,401 - 7,695,832
Unlisted equity shares - - 12,128,320 12,128,320
Warrants 25,597 - 280 25,877
Debt instruments - - 12,497,799 12,497,799
------------- ------------------ ------------ ----------
3,811,028 3,910,401 24,626,399 32,347,828
============= ================== ============ ==========
It is the Company's policy to recognise a change in hierarchy
level when there is a change in the status of the investment, for
example when a listed company delists or vice versa, or when shares
previously subject to a restriction have that restriction released.
The transfers between levels are recorded either on the value of
the transaction (in the example of Ivanhoe below), the value of the
investment immediately after the event (in the example of
MagIndustries Corporation) or the carrying value of the investment
at the beginning of the financial year.
During the year ended 31 December 2015 there were releases of
previously "locked up" shares of Ivanhoe Mining Limited
("Ivanhoe"). The shares in Ivanhoe have been transferred from Level
2 to Level 1 as the locked up shares have been released. The total
number of Ivanhoe shares released during the year was 4,527,524
shares (average of 1,131,881 shares per quarter) equivalent to
GBP4,503,676. During January 2016, the final tranche of Ivanhoe
shares was released.
Burrabulla Corporation Limited (formerly South American Ferro
Metals Limited) has been transferred from Level 1 to Level 3 as it
is no longer listed. The value of the investment has been written
down to zero following it being placed into administration and
delisted.
The Company acquired 3,531,000 shares in MagIndustries
Corporation on 25 February 2015. At acquisition the investment was
classified as Level 1 due to its listing on the Toronto Stock
Exchange ("TSX"). On 19 August 2015 the company delisted from TSX
and is therefore reflected within level 3 investments based on its
value on delisting.
During the year ended 31 December 2014, the only transfer
between levels related to the release of the locked up Ivanhoe
shares, from Level 2 to Level 1. The total number of Ivanhoe shares
released during the year was 3,131,996 (average of 782,999 per
quarter) amounting to GBP2,371,125.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The table below shows a reconciliation of beginning to ending
fair value balances for Level 3 investments and the amount of total
gains or losses for the year included in net loss on financial
assets and liabilities at fair value through profit or loss held at
31 December 2015 and at 31 December 2014.
Debt
Unlisted instruments Warrants Total
Equities
GBP GBP GBP GBP
Opening balance 1 January
2015 12,128,320 12,497,799 280 24,626,399
Purchases of investments 6,893,464 3,925,604 21,826 10,840,894
Sales of investments* (1,318,043) - - (1,318,043)
Change in net unrealised
(losses)/gains 6,446,128 1,116,694 (11,849) 7,550,973
Realised losses (11,956,811) (9,011) - (11,965,822)
Transfer from Level 1
to 3 97,181 - - 97,181
-------------- ------------ ---------- -------------
Closing balance 31 December
2015 12,290,239 17,531,086 10,257 29,831,582
-------------- ------------ ---------- -------------
Unrealised gain/(losses)
on investments still held
at 31 December 2015 (17,585,378) 3,368,631 (11,569) (14,228,316)
============== ============ ========== =============
Debt
Unlisted Equities instruments Warrants Total
GBP GBP GBP GBP
Opening balance 1 January
2014 17,398,607 9,255,943 41,377 26,695,927
Purchases of investments 1,454,717 1,314,124 - 2,768,841
Change in net unrealised
(losses)/gains (6,725,004) 1,927,732 (41,097) (4,838,369)
Closing balance 31 December
2014 12,128,320 12,497,799 280 24,626,399
------------------ ------------ --------- -------------
Unrealised gain/(losses)
on investments still
held at 31 December
2014 (18,014,549) 2,251,939 280 (15,762,330)
================== ============ ========= =============
*The only significant sale during the year was Ferrous Resources
which was sold for GBP1,307,957. These proceeds represented a gain
of GBP354,767 against the 31 December 2014 book value, but the
investment had previously been written down substantially and a
loss of GBP11,876,647 was realised against acquisition cost.
In determining an investment's position within the fair value
hierarchy, the Directors take into consideration the following
factors:
Investments whose values are based on quoted market prices in
active markets are classified within Level 1. These include listed
equities with observable market prices. The Directors do not adjust
the quoted price for such instruments, even in situations where the
Company holds a large position and a sale could reasonably impact
the quoted price.
Investments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer
quotations or alternative pricing sources supported by observable
inputs, are classified within Level 2. These include certain
less-liquid listed equities. Level 2 investments are valued with
reference to the listed price of the shares should they be freely
tradeable after applying a discount for liquidity if relevant. As
Level 2 investments include positions that are not traded in active
markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability,
which are generally based on available market information. The
Company held such investments at 31 December 2015 amounting to
GBP1,725,442 (31 December 2014: GBP3,910,401).
Investments classified within Level 3 have significant
unobservable inputs. They include unlisted debt instruments,
unlisted equity shares and warrants. Level 3 investments are valued
using valuation techniques explained below. The inputs used by the
Directors in estimating the value of Level 3 investments include
the original transaction price, recent transactions in the same or
similar instruments if representative in volume and nature,
completed or pending third-party transactions in the underlying
investment of comparable issuers, subsequent rounds of financing,
recapitalisations and other transactions across the capital
structure, offerings in the equity or debt capital markets, and
changes in financial ratios or cash flows. Level 3 investments may
also be adjusted to reflect illiquidity and/or non-transferability,
with the amount of such discount estimated by the Directors in the
absence of market information.
Valuation methodology of Level 3 investments
The default valuation technique is of Latest Recent Transaction.
Where an unquoted investment has been acquired or where there has
been a material arm's length transaction during the past six months
it will be carried at cost unless there are changes or events which
suggest cost is not equivalent to fair value.
Where there has been no Latest Recent Transaction the primary
valuation driver is IndexVal. For each core unlisted investment,
the Company maintains a weighted average basket of listed companies
which are comparable to the investment in terms of commodity, stage
of development and location ("IndexVal"). IndexVal is used as an
indication of how an investment's share price might have moved had
it been listed. Movements in commodity prices are deemed to have
been taken into account by the movement of IndexVal.
A subsidiary driver of valuation is DRAV. The Investment Manager
also prepares discounted cash flow models for the Company's core
investments annually and also for significant new information and
decision making purposes when required. From these, Development
Risk Adjusted Values ("DRAVs") are derived. The computations are
based on consensus forecasts for long term commodity prices and
investee company management estimates of operating and capital
costs. The Investment Manager takes account of market, country and
development risks in its discount factors. The DRAVs are not a
primary determinant of Fair Value but are instead a tool that the
Investment Manager uses to evaluate potential investments as well
as to provide underlying valuation references for the Fair Value
already established.
The valuation technique for Level 3 investments can be divided
into four groups:
i. Transactions
Where there have been transactions within the past 6 months
either through a capital raising by the investee company or known
secondary market transactions, representative in volume and nature
and conducted on an arm's length basis, this is taken as the
primary driver for valuing Level 3 investments.
ii. IndexVal
Where there have been no known transactions for 6 months, at the
Company's half year and year end, movements in IndexVal will
generally be taken into account in assessing Fair Value where there
has been at least a 10% movement in IndexVal over at least a six
month period. The IndexVal results are used as an indication of
trend and are viewed in the context of investee company
progress.
iii. Warrants
Warrants are valued using a simplified Black & Scholes model
taking into account time to expiry, exercise price and volatility.
Where there is no established market for the underlying shares an
assumed volatility of 40% is used, due to the difficulty in
establishing a sensible volatility for unlisted shares without
giving distorted results.
iv. Convertible loans
Convertible loans are valued at principal plus accrued interest,
taking into account credit risk and the value of the conversion
aspect as related to the DRAV derived which relates to the
valuation of the sub-sector of the equity, except when there is a
clear path towards conditions for conversion such as an IPO, when
the equity value of the investment on conversion is also taken into
account when determining Fair Value.
Quantitative information of significant unobservable inputs -
Level 3
Range
2015 Unobservable (weighted
Description GBP Valuation technique input average)
Unlisted Equity 6,373,862 Recent Transactions Private transactions n/a
Unlisted Equity 4,710,067 IndexVal Change in IndexVal n/a
Unlisted Equity 1,206,310 Other Project Milestones n/a
Debt Instruments n/a
Argentum Convertible 10,038,650 Valued at par with Development n/a
& Polar Silver reference to credit risk discount
Loan Notes risk and value rate
on conversion
Black Pearl Limited 7,071,647 Valued at par plus Probability n/a
Partnership interest accrued weighting
with reference
to weighted average
of probabilities
of repayment
Other Convertible 420,789 Valued at par with Development n/a
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
Debentures/Loans reference to credit risk discount
risk rate
Simplified Black
Warrants 10,257 & Scholes Model Volatilities 40%
Range
2014 Unobservable (weighted
Description GBP Valuation technique input average)
Unlisted Equity 6,949,544 Recent Transactions Private transactions n/a
Unlisted Equity 5,034,154 IndexVal Change in IndexVal n/a
Unlisted Equity 144,622 Other Project Milestones n/a
Debt Instruments
Argentum Convertible 5,524,543 Valued at par with Credit Risk n/a
& Polar Silver reference to credit
Loan Notes risk and value on
conversion
Black Pearl Limited 6,469,037 Valued at par plus Credit Risk n/a
Partnership interest accrued
with reference to
credit risk and
value on conversion
Other Convertible 504,219 Valued at par Credit Risk n/a
Debentures/Loans
Simplified Black
Warrants 280 & Scholes Model Volatilities 40%
Information on third party transactions in unlisted equities is
derived from the Investment Manager's market contacts. The change
in IndexVal for each particular unlisted equity is derived from the
weighted average movements of the individual baskets for that
equity so it is not possible to quantify the range of such inputs.
A sensitivity of 70% has been used in the analysis above as this
was the greatest amount that IndexVal moved for any single
investment during any twelve month period since IndexVal was first
adopted. The valuation method for the equity investment in
Ironstone changed from IndexVal in 2014 to Recent Transaction in
2015. The valuation for Black Pearl changed from Valued at Par plus
interest with reference to credit risk and value on conversion to
valued at par plus interest accrued with reference to weighted
average of probabilities of repayment.
Sensitivity analysis to significant changes in unobservable
inputs within Level 3 investments
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 31 December
2015 are as shown below:
Description Input Sensitivity Effect on Fair
used* Value (GBP)
Unlisted Equity Change in IndexVal +/-70%(**) +/-8,603,167
Debt Instruments
Argentum Convertible Development risk +20%(***) nil
& Polar Silver discount rate
Loan Notes
Black Pearl Limited
Partnership Probability weighting +/-33% +/-1,823,228
Other Convertible Development risk +20% nil
Debentures/Loans discount rate
Warrants Volatility of 40% +/-20% +9,727/-7,387
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 31 December
2014 are as shown below:
Description Input Sensitivity Effect on Fair
used* Value (GBP)
Unlisted Equity Change in IndexVal +/-70% +/-8,489,824
Debt Instruments
Argentum Convertible
& Polar Silver
Loan Notes Credit Risk +20% -1,104,909
Black Pearl Limited
Partnership Credit Risk +20% -1,293,807
Other Convertible
Debentures/Loans Credit Risk +20% -100,844
Warrants Volatility of 40% +/-20% +1,862/-280
*The sensitivity analysis refers to a percentage amount added or
deducted from the input and the effect this has on the fair value.
The 70% sensitivity was used as this was the highest movement
observed for IndexVal for any investment since the commencement of
the technique.
** Where the recent transaction methodology is used, the change
in IndexVal is also referred to in ascertaining that the
transaction that occurred during the year still reflects fair
value.
***Of amount outstanding
The Company has not disclosed the fair value for financial
assets such as cash and cash equivalents and short-term receivables
and payables, because their carrying amounts are a reasonable
approximation of fair values.
4. RISK MANAGEMENT POLICIES AND DISCLOSURES
The Company's principal financial instruments comprise financial
assets, primarily unlisted equity investments and loans in natural
resources companies. The portfolio is concentrated on projects on
the large liquid commodity markets and diversified in terms of
geography. These investments reflect the core of the Company's
investment strategy.
The Company manages its exposure to key financial risks
primarily through diversification of geography and commodity, and
through technical and legal due diligence. The objective of the
policy is to support the delivery of the Company's core investment
objective whilst maintaining future financial security. The main
risks that could adversely affect the Company's financial assets or
future cash flows are market risk (comprising market price risk,
currency risk and interest rate risk), commodity price risk,
liquidity risk, concentration risk and credit risk.
The Company's financial liabilities principally comprise fees
payable to various parties and arise directly from its
operations.
Risk exposures and responses
The Company's Board of Directors oversees the management of
financial risks, each of which is summarised below.
a) Market risk
Market risk is the risk that the fair value of a financial
instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: market price risk,
currency risk and interest rate risk.
i. Market price risk
Market price risk is the risk that the fair value of future cash
flows will fluctuate because of changes in the market prices of the
Company's investment portfolio.
The following illustrates the sensitivity of the income to an
increase or decrease of 10% in the fair value of the Company's
investment portfolio. The level of change is considered to be
reasonably possible based on observations of current market
conditions in 2015. The sensitivity analysis assumes all other
variables are held constant.
The impact of a 10% decrease in the value of investments on the
net assets and income of the Company as at 31 December 2015 would
have been a decrease of GBP3,782,349 (31 December 2014:
GBP3,234,783). An increase of 10% would increase the net asset
value by GBP3,782,349 (31 December 2014: GBP3,234,783). In
practice, the actual results may differ from the sensitivity
analysis above and the difference could be material.
ii. Currency risk
The majority of the Company's financial assets and liabilities
are denominated in US Dollars. The functional currency of the
Company is Sterling. Currency risk is the risk that the value of
non-GBP denominated financial instruments will fluctuate due to
changes in foreign exchange rates. The table below shows the
currencies and amounts the Company was exposed to at 31 December
2015 and 31 December 2014.
31 December 2015
Currency Amount in Conversion rate Value % of net assets
local currency (based on GBP) GBP
CAD 9,555,380 0.4888 4,670,633 12.18
EUR (7,417) 0.7364 (5,462) (0.01)
GBP 8,313,023 1.0000 8,313,023 21.68
USD 36,291,022 0.6781 24,607,419 64.19
NOK 9,811,029 0.0766 751,655 1.96
----------- ---------------
38,337,268 100.00
----------- ---------------
ii. Currency risk (continued)
31 December 2014
Currency Amount in Conversion rate Value % of net assets
local currency (based on GBP) GBP
AUD 185,042 0.5252 97,181 0.30
CAD 9,157,075 0.5540 5,073,456 15.78
EUR (7,417) 0.7766 (5,760) (0.02)
GBP 4,590,042 1.0000 4,590,042 14.27
USD 34,928,536 0.6416 22,411,637 69.67
----------- ---------------
32,166,556 100.00
----------- ---------------
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
At 31 December 2015 and 31 December 2014, had any foreign
currencies strengthened by 10% relative to Sterling, with all other
variables held constant, total equity would have increased by the
amounts shown below.
2015 2014
Currency Value Value
GBP GBP
AUD - 9,718
CAD 467,063 507,346
EUR (546) (576)
USD 2,460,742 2,241,164
NOK 75,166 -
3,002,425 2,757,652
--------- ---------
A 10% decrease in foreign currencies relative to Sterling, with
all other variables held constant, would lead to a corresponding
decrease in the total equity by equal but opposite amounts as shown
in the above tables. The estimated movement is based on
management's determination of a reasonably possible change in
foreign exchange rates. In practice, the actual results may differ
from the sensitivity analysis above and the difference could be
material.
iii. Interest rate risk
Although the Company's financial assets and liabilities expose
it indirectly to risks associated with the effects of fluctuations
in the prevailing levels of market interest rates on its financial
position and fair value, it is subject to little direct exposure to
interest rate fluctuations as the majority of the financial assets
are equity investments or similar investments which do not pay
interest. For valuation purposes convertible loans all have fixed
interest rates and are treated more like quasi equity albeit with
higher ranking than equity. As such they are not directly exposed
to interest rates. Any excess cash and cash equivalents are
invested at short-term market interest rates which expose the
Company, to a limited extent, to interest rate risk and
corresponding gains/losses from a change in the fair value of these
financial instruments.
The table below summarises the Company's exposure to interest
rate risk. It includes the Company's assets and liabilities at fair
values, categorised by the earlier of contractual re-pricing or
maturity dates.
At 31 December 2015 Up to More than Non-interest
1 month 6 months bearing Total
Assets GBP GBP GBP GBP
Cash and cash equivalents 562,101 - - 562,101
Financial assets held at fair value through profit or loss 16,181,357 420,789 21,221,342 37,823,488
Receivables - - 81,081 81,081
Total Assets 16,743,457 420,789 21,302,423 38,466,670
============ ========= ============ ==========
Liabilities
Other liabilities - - 129,402 129,402
Total Liabilities - - 129,402 129,402
============ ========= ============ ==========
Interest rate sensitivity gap 16,743,457 420,789
============ =========
iii. Interest rate risk (continued)
At 31 December 2014 Up to More than Non-interest
1 month 6 months bearing Total
Assets GBP GBP GBP GBP
Cash and cash equivalents 94,217 - - 94,217
Financial assets held at fair value through profit or loss - 11,849,740 20,498,088 32,347,828
Receivables - - 93,294 93,294
Total Assets 94,217 11,849,740 20,591,382 32,535,339
======= ========== ============ ===========
Liabilities
Other liabilities - - 368,783 368,783
Total Liabilities - - 368,783 368,783
======= ========== ============ ===========
Interest rate sensitivity gap 94,217 11,849,740
======= ==========
Interest rate sensitivity
It is the opinion of the Directors that the financial
instruments of the Company are not materially exposed to interest
rate risk and accordingly no interest rate sensitivity calculation
has been provided in these financial statements.
b) Commodity price risk
The Company is exposed to the risk of fluctuations in prevailing
market commodity prices through its investment portfolio. Commodity
price risk is beyond the Company's control but will be mitigated to
a certain extent as a result of the Company's diversified portfolio
as long as commodity prices remain uncorrelated. It is not possible
to quantify within reasonable ranges the impact of commodity price
changes on the valuation of the Company's investments. However as
discussed in Note 3 to the financial statements, in general, long
term commodity price increases should give rise to an increase in
fair value of the Company's investments.
c) Liquidity risk
Liquidity risk is defined as the risk that the Company may not
be able to settle or meet its obligations on time or at a
reasonable price. The Company invests in unlisted equities for
which there may not be an immediate market. The Company seeks to
mitigate this risk by maintaining a cash and listed share position
which will cover its ongoing operational expenses.
The Company has the ability to incur borrowings of up to 10% of
its Net Asset Value but the Company's policy is to restrict any
such borrowings to temporary purposes only, such as settlement
mis-matches.
The table below analyses the Company's financial assets and
liabilities into relevant maturity groupings based on the remaining
period at the Statement of Financial Position date to the
contractual maturity date. The amounts in the table are the
contractual cash flows.
c) Liquidity risk (continued)
At 31 December 2015 Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Assets GBP GBP GBP GBP GBP GBP
Cash and cash equivalents 562,101 - - - - 562,101
Financial assets held at fair value
through profit
or loss 17,110,296 - 420,789 - 20,292,403 37,823,488
Receivables 20,799 - 60,282 - - 81,081
----------- ---------- ----------- --------- -------------- -----------
Total Assets 17,693,196 - 481,071 - 20,292,403 38,466,670
=========== ========== =========== ========= ============== ===========
Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Liabilities GBP GBP GBP GBP GBP GBP
Other payables
and accrued expenses 77,982 29,737 21,683 - - 129,402
----------- ---------- ----------- --------- -------------- -----------
Total Liabilities 77,982 29,737 21,683 - - 129,402
=========== ========== =========== ========= ============== ===========
Net assets attributable to shareholders 38,337,268
===========
At 31 December 2014 Less than More than No contractual
1 month 1-3 months 3-12 months 12 months maturity Total
Assets GBP GBP GBP GBP GBP GBP
Cash and cash equivalents 94,217 - - - - 94,217
Financial assets held at fair value
through profit
or loss 4,876,484 - 7,255,885 282,323 19,933,136 32,347,828
Receivables 16,835 - 76,459 - - 93,294
--------- ---------- ----------- --------- -------------- -------------
Total Assets 4,987,536 - 7,332,344 282,323 19,933,136 32,535,339
========= ========== =========== ========= ============== =============
Less than More than No contractual
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
1 month 1-3 months 3-12 months 12 months maturity Total
Liabilities GBP GBP GBP GBP GBP GBP
Other payables
and accrued expenses 97,610 235,865 35,308 - - 368,783
--------- ---------- ----------- --------- -------------- -------------
Total Liabilities 97,610 235,865 35,308 - - 368,783
========= ========== =========== ========= ============== =============
Net assets attributable to shareholders 32,166,556
===========
c) Credit risk
Credit risk is the risk that a counterparty will be unable to
pay amounts in full as they fall due. The Company has exposure to
credit risk in relation to its cash balances, Debt instruments,
Level 1 to 3 investments and trade receivables as stated in the
Statement of Financial Position. The maximum credit risk for the
Company is GBP38,466,670 (2014:GBP32,535,339).
As at 31 December 2015, the Company's financial assets exposed
to credit risk were held with the following weight:
Financial Assets Counterparty **Credit 2015
Rating % of net assets
Convertible debt instruments
- Convertible Loan Note ZAO Argentum NR* 23.76
- Convertible Loan Note Black Pearl Limited Partnership NR* 18.45
- Convertible Loan Note Polar Silver Resources Limited NR* 2.42
- Convertible Loan Note Bilboes Holdings NR* 0.78
- Loan Note Ironstone Resources Limited NR* 0.32
Cash and cash equivalents HSBC Bank plc AA- 1.47
Due from Brokers HSBC Bank plc AA- 0.01
Total 47.21
===============
As at 31 December 2014, the Company's financial assets exposed
to credit risk were held with the following weight:
Financial Assets Counterparty Credit 2014
Rating % of net assets
Convertible debt instruments
- Convertible Loan Note Black Pearl Limited Partnership NR* 20.11
- Convertible Loan Note ZAO Argentum NR* 15.16
- Convertible Loan Note Bilboes Holdings NR* 0.88
- Loan Note Ironstone Resources Limited NR* 0.43
- Convertible Loan Note Polar Silver Resources Limited NR* 2.01
- Unsecured Convertible Debenture Aquila Resources Inc NR* 0.26
Cash and cash equivalents HSBC Bank plc AA- 0.29
---------------
Total 39.14
===============
* No rating available
**As per Moody's
c) Concentration risk
The Company's current investment policy is to invest in natural
resources companies, both listed and unlisted, that the Investment
Manager considers to be undervalued and that have strong
fundamentals and attractive growth prospects which means that the
Company has significant concentration risk relating to natural
resources companies.
Concentration risks include, but are not limited to natural
resources asset category (such as gold) and geography. The Company
may at certain times hold relatively few investments. The Company
could be subject to significant losses if it holds a large position
in a particular investment that declines in value or is otherwise
adversely affected, including by the default of the issuer. Such
risks potentially could have a material adverse effect on the
Company's financial position, results of operations, business
prospects and returns to investors. The Company's investments are
geographically diverse reducing this aspect of concentration risk.
In terms of commodity, the portfolio is likewise diversified in the
large liquid markets of silver, gold, iron ore, coal, copper,
platinum group metals, nickel and oil to mitigate this aspect of
concentration risk.
5. TAXATION
The Company is a Guernsey Exempt Company and is therefore not
subject to taxation on its income under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989. An annual exemption fee of
GBP1,200 (2014: GBP600) has been paid.
6. ADMINISTRATION FEES
The Administrator, HSBC Securities Services (Guernsey) Limited,
is paid fees for acting as administrator of the Company at the rate
of 7 basis points of gross asset value up to US$250 million; the
rate reduces to 5 basis points of gross asset value above US$250
million. The Administrator is also reimbursed by the Company for
reasonable out-of-pocket expenses. These fees accrue and are
calculated as at the last business day of each month and paid
monthly in arrears.
The administration fees paid for the year ended 31 December 2015
were GBP84,416 (2014: GBP98,642) of which GBP23,253 (2014:
GBP27,563) was payable at 31 December 2015. HSBC Securities
Services (Ireland) Limited, the sub-Administrator, is paid a
portion of these fees by the Administrator.
The Administrator is also entitled to a fee for its provision of
corporate secretarial services provided to the Company on a time
spent basis and subject to a minimum annual fee of GBP40,000. The
Company is also responsible for any sub-administration fees as
agreed in writing from time to time, and reasonable out-of-pocket
expenses. The Administrator is also entitled to fees of EUR5,000
for preparation of the financial statements of the Company.
7. MANAGEMENT AND PERFORMANCE FEES
The Manager was appointed pursuant to a management agreement
with the Company dated 31 March 2010 (the "Management Agreement").
The Company pays to the Manager a management fee which is equal to
1/12th of 1.75 per cent of the total average market capitalisation
of the Company during each month. The management fee is calculated
and accrued as at the last business day of each month and is paid
monthly in arrears.
The Performance Period is each 12 month period ending on 31
December in each year (the "Performance Period"). The Manager may
in certain circumstances be entitled to be paid a performance fee
if the Net Asset Value at the end of any Performance Period exceeds
the Hurdle as at the end of the Performance Period. The performance
fee is subject to adjustments for any issue and/or repurchase of
Ordinary Shares.
The amount of the performance fee is 15 per cent of the total
increase in the Net Asset Value, if the Hurdle has been met, at the
end of the relevant Performance Period, over the highest previously
recorded Net Asset Value as at the end of a Performance Period in
respect of which a performance fee was last accrued, having made
adjustments for numbers of Ordinary Shares issued and/or
repurchased as described above. In addition, the performance fee
will only become payable if there have been sufficient net realised
gains.
There were no performance fees for the current or prior
period.
If the Company wishes to terminate the Management Agreement
without cause it is required to give the Manager 12 months prior
notice or pay to the Manager an amount equal to: (a) the aggregate
investment management fee which would otherwise have been payable
during the 12 months following the date of such notice (such amount
to be calculated for the whole of such period by reference to the
Market Capitalisation prevailing on the Valuation Day on or
immediately prior to the date of such notice); and (b) any
performance fee accrued at the end of any Performance Period which
ended on or prior to termination and which remains unpaid at the
date of termination which shall be payable as soon as, and to the
extent that, sufficient cash or other liquid assets are available
to the Company (as determined in good faith by the Directors),
provided that such accrued performance fee shall be paid prior to
the Company making any new investment or settling any other
liabilities; and (c) where termination does not occur at 31
December in any year, any performance fee accrued at the date of
termination shall be payable as soon as and to the extent that
sufficient cash or other liquid assets are available to the Company
(as determined in good faith by the Directors), provided that such
accrued performance fee shall be paid prior to the Company making
any new investment or settling any other liabilities.
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The management fee for the year ending 31 December 2015 was
GBP459,657 (2014: GBP472,295) out of which GBP25,979 (2014:
GBP34,335) was outstanding at the year end.
8. OTHER EXPENSES
2015 2014
TOTAL TOTAL
GBP GBP
Registrar fees 17,473 20,980
Listing fees 1,288 25,876
Board meeting expenses 19,044 8,311
Guernsey regulatory fees 3,205 3,165
Other regulatory fees 5,793 5,500
Marketing costs 1,140 855
Website expenses 405 270
Miscellaneous expenses 21,000 17,532
-------
69,348 82,489
======= =======
9. CASH AND CASH EQUIVALENTS
2015 2014
GBP GBP
Deposits at HSBC Bank plc 562,101 94,217
======== =======
10. SHARE CAPITAL
The share capital of the Company on incorporation was
represented by an unlimited number of Ordinary Shares of no par
value. The Company may issue an unlimited number of shares of a
nominal or par value and/or of no par value or a combination of
both.
The Company has a total of 114,568,335 (2014: 71,703,776)
Ordinary Shares in issue with 700,000 held in treasury. In
addition, the Company has 10,000 (2014: 10,000) Management Ordinary
Shares in issue, which are held by the Investment Manager.
On 28 August 2014, the Company agreed to subscribe for 1,462,500
Ordinary Shares of Cemos Group plc (formerly Global Oil Shale Group
Limited) for a consideration of GBP585,000. This consideration was
settled through the issue of 1,376,470 Ordinary Shares of the
Company at the unaudited net asset value of 42.5 pence per share on
27 February 2015. Under IFRS the consideration of this transaction
has to be valued based on listed price of 32.5 pence per share as
at 2 March 2015. Therefore the consideration for this transaction
is GBP0.45 million which is recognised in the financial
statements.
On 25 February 2015, the Company acquired two portfolios of
Investments with a total value of GBP16 million. This consideration
was settled through the issue of 30,468,522 new Ordinary Shares of
the Company based on the unaudited net asset value of 42.6 pence
per share on 18 February 2015 and 8,351,079 new Ordinary Shares of
the Company based on a 15% discount to this unaudited net asset
value. Under IFRS the consideration for this transaction has to be
valued based on listed price of 32.6 pence per Ordinary Shares of
the Company as at 23 February 2015. Therefore the consideration for
this transaction is GBP12.66 million which is recognised in the
financial statements. The fair values of the loan notes and shares
received were determined by reference to the valuation techniques
as outlined in Note 3.
In addition the Company issued a total of 3,368,488 new Ordinary
Shares in respect of cash subscriptions under the Open Offer to all
shareholders for a consideration of GBP1,219,393.
On 14 August 2015 and 20 August 2015 the Company bought back
200,000 and 500,000 Ordinary Shares respectively, both at an
average of 20 pence per share. The repurchased Ordinary Shares are
held in Treasury.
The above transactions had no impact on the profit or loss for
the current financial year, they did however impact the NAV per
share of the Company.
The Ordinary Shares are admitted to the Premium Listing segment
of the Official List.
Holders of Ordinary Shares have the right to receive notice of
and to attend and vote at general meetings of the Company. Each
holder of Ordinary Shares being present in person or by proxy at a
meeting will, upon a show of hands, have one vote and upon a poll
each such holder of Ordinary Shares present in person or by proxy
will have one vote for each Ordinary Share held by him.
Holders of Management Ordinary Shares have the right to receive
notice of and to attend and vote at general meetings of the
Company, except that the holders of Management Ordinary Shares are
not entitled to vote on any resolution relating to certain specific
matters, including a material change to the Company's investment
objective, investment policy or borrowing policy. Each holder of
Management Ordinary Shares being present in person or by proxy at a
meeting will, upon a show of hands, have one vote and upon a poll
each such holder of Management Ordinary Shares present in person or
by proxy will have one vote for each Management Ordinary Share held
by him.
Holders of Ordinary Shares and Management Ordinary Shares are
entitled to receive, and participate in, any dividends or other
distributions out of the profits of the Company available for
dividend and resolved to be distributed in respect of any
accounting period or other income or right to participate
therein.
The details of issued share capital of the Company are as
follows:
2015 2014
Amount No. of shares** Amount No. of shares**
GBP GBP
Issued and fully paid share
capital
Ordinary Shares of no par value* 80,708,476 115,278,335 66,955,285 71,713,776
(including Management Ordinary
Shares)
Treasury Shares 140,492 700,000 - -
The issue of Ordinary Shares during the year ended 31 December
2015 took place as follows:
Ordinary Shares Treasury Shares
No. of
Amount No. of shares** Amount shares
GBP GBP
Balance at 1 January 2015 66,955,285 71,713,776 - -
Issue of Ordinary Shares 13,753,191 43,564,559 - -
Buy-back of Ordinary Shares (140,492) (700,000) 140,492 700,000
----------- ---------------- ------------ ------------
Balance at 31 December 2015 80,567,984 114,578,335 140,492 700,000
=========== ================ ============ ============
The issue of Ordinary Shares during the year ended 31 December
2014 took place as follows:
Ordinary Shares Treasury Shares
No. of
Amount No. of shares** Amount shares
GBP GBP
Balance at 1 January 2014 64,777,056 66,152,533 - -
Issue of Ordinary Shares 2,178,229 5,561,243 - -
----------- ---------------- ------------------------ --------
Balance at 31 December 2014 66,955,285 71,713,776 - -
=========== ================ ======================== ========
* On 9 March 2010, 1 Management Ordinary Share was issued and on
26 March 2010, 9,999 Management Ordinary Shares were issued.
** Includes 10,000 Management Ordinary Shares
Capital Management
The Company regards capital as comprising its issued Ordinary
Shares. The Company does not have any debt that might be regarded
as capital. The Company's objectives in managing capital are:
-- To safeguard its ability to continue as a going concern and
provide returns to shareholders in the form of capital growth over
the long-term through a focused, global portfolio consisting
principally of the equities or related instruments of natural
resources companies;
-- To allocate capital to those assets that the Directors
consider are most likely to provide the above returns; and
-- To manage, so far as is reasonably possible, any discount
between the Company's share price and its NAV per Ordinary
Share.
The Company has continued to hold sufficient cash and listed
assets positions to enable it to meet its obligations as they arise
and the Investment Manager provides the Directors with reporting on
the activities of the investments of the Company such that they can
be satisfied with the allocation of capital.
As discussed in the Strategic Report, in August 2015 the Company
introduced a share buyback programme with the objective of managing
the discount the Company's shares trade at compared to its Net
Asset Value. The Company has repurchased 700,000 shares at an
average price of 20 pence per share through this programme and the
repurchased shares are held in Treasury. The scheme was suspended
in December 2015 pending the potential acquisition of a controlling
interest in Polar Silver.
As described in the Directors' Report on page 14, the Company
has a policy to distribute 15 per cent of net realised cash gains
after deducting losses during the financial year through dividends
or otherwise. The amount available for distribution will be
assessed following completion of the audit of the financial
statements.
The Company has authority to make market purchases of up to
14.99 Per Cent of its own Ordinary Shares in issue. A renewal of
such authority is sought from Shareholders at each Annual General
Meeting of the Company or at a General Meeting of the Company, if
required. Any purchases of Ordinary Shares will be made within
internal guidelines established from time to time by the Board and
within applicable regulations.
The Company is not subject to any externally imposed capital
requirements.
11. RELATED PARTY TRANSACTIONS
(MORE TO FOLLOW) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
The Directors' interests in the share capital of the Company
were:
Number of Number of
Ordinary Shares Ordinary Shares
2015 2014
Edward Flood (deceased 15 October 2015) - 65,000
Christopher Sherwell 96,821 25,000
Clive Newall 25,000 25,000
At 31 December 2014 Mr Sherwell had an indirect interest in the
shares of the Company through an investment in another Fund which
is also managed by the Manager. During February 2015, this
investment was compulsorily redeemed and Mr. Sherwell was issued
with 71,821 Ordinary Shares in the Company in exchange.
The Manager, Baker Steel Capital Managers (Cayman) Limited, had
an interest in 504,832 Ordinary Shares at 31 December 2015 (2014:
504,832).
The Investment Manager, Baker Steel Capital Managers LLP, had an
interest in 10,000 Management Ordinary Shares at 31 December 2015
(2014: 10,000).
Baker Steel Global Funds SICAV - Precious Metals Fund ("Precious
Metals Fund") had an interest in 7,669,609 Ordinary Shares in the
Company at 31 December 2015 (2014: NIL). These shares are held in a
custodian account with Citibank N.A. London. Precious Metals Fund
shares a common Investment Manager with the Company.
The Management fees and Directors' fees accrued for the year
were:
2015 2014
Management fees 459,675 472,295
Directors' fees 133,037 140,000
The Management fees and Directors' fees outstanding at the year
end were:
2015 2014
Management fees 25,979 34,335
Directors' fees 28,750 35,712
12. NET ASSET VALUE PER SHARE AND LOSS PER SHARE
Net asset value per share is based on the net assets of
GBP38,337,268 (31 December 2014: GBP32,166,556) and 114,578,335 (31
December 2014: 71,713,776) Ordinary Shares, being the number of
shares in issue at the year end. The calculation for basic and
diluted net asset value per share is as below:
31 December 2015 31 December 2014
Ordinary Shares Ordinary Shares
Net assets at the year end (GBP) 38,337,268 32,166,556
Number of shares 114,578,335 71,713,776
Net asset value per share (in pence)
basic and diluted 33.5 44.9
Weighted average number of shares 111,241,585 69,121,434
The basic and diluted loss per share for 2015 is based on the
net loss for the year of the Company of GBP7,441,987 and on
111,241,585 Ordinary Shares, being the weighted average number of
Ordinary Shares in issue during the year.
The basic and diluted loss per share for 2014 is based on the
net loss for the year of the Company of GBP11,002,378 and on
69,121,434 Ordinary Shares, being the weighted average number of
Ordinary Shares in issue during the year.
13. INVESTMENT IN ASSOCIATES
The interests in the below companies are for investment purposes
and they are deemed associates by virtue of the Company having the
right to appoint a non-executive director.
The Company holds a 21.7% interest in Bilboes Gold Limited; a
Company incorporated in Mauritius whose principal activity is the
development of gold mining projects in Zimbabwe.
The Company holds a 27.5% interest in Polar Silver Resources
Limited; a Company incorporated in the British Virgin Islands whose
principal activity is the development of gold mining projects in
Russia.
The Company holds a 25.8% interest in Cemos Group Limited, a
Company incorporated in Jersey, whose principal activity is the
development of oil shale projects in Morocco and Australia.
The Company holds a 16.4% interest in Ironstone Resources
Limited; a Company incorporated in Canada whose principal activity
is the development of iron ore projects in Canada.
14. SUBSEQUENT EVENTS
At the Extraordinary General Meeting ("EGM") on 4 January 2016,
shareholders passed a resolution to amend the Company's investment
policy in order to enable it to increase its existing investment in
the Polar Silver Group so that such investment may represent up to
35 per cent in aggregate of the value of the Company's gross assets
at the time of the relevant transaction. New Articles were adopted
at the same EGM which provided the Company with additional
flexibility with regard to the composition of the Board and the
location of future Board meetings.
On 10 February 2016 Polar Acquisition Limited ("PAL") was
incorporated. PAL is a wholly owned subsidiary of BSRT incorporated
in the British Virgin Islands. PAL has been dormant up to the date
of this report.
15. APPROVAL OF ANNUAL REPORT AND AUDITED FINANCIAL
STATEMENTS
The Annual Report and Audited Financial Statements for the year
end 31 December 2015 were approved by the Board of Directors on -21
April 2016.
Appendix - additional information
REMUNERATION DETAILS FOR INVESTMENT MANAGER'S STAFF
As noted earlier, under AIFMD, the Investment Manager received
approval to act as a full scope UK AIFM to the Company as of 22
July 2014. Pursuant to Article 22(1) of AIFMD, an AIFM must, where
appropriate for each AIF it manages, make an annual report
available to the AIF investors. The annual report must contain,
amongst other items, the total amount of remuneration paid by the
AIFM to its staff for the financial year, split into fixed and
variable remuneration including, where relevant, any carried
interest paid by the AIF, along with the aggregate remuneration
awarded to senior management and members of staff whose actions
have a material impact on the risk profile of the AIF.
For the year ended 31 December 2015 there was no fixed
remuneration paid to staff at the Investment Manager. Variable
remuneration amounted to GBP244,817. No carried interest was paid
by the Company. These figures represent the aggregate remuneration
paid to staff of the Investment Manager for the year ended 31
December 2015. The total remuneration of the individuals whose
actions have a material impact upon the risk profile of the AIFs
managed by the AIFM amounted to GBP244,817. An allocation in
relation to each AIF has not been provided, as this information
cannot be reliably determined and therefore is not readily
available.
The total AIFM remuneration attributable to senior management
whose actions have a material impact on the risk profile of the AIF
was GBP56,465 and the amount attributable to other Identified Staff
was GBP65,943. The remuneration figures reflect an approximation of
the portion of AIFM remuneration reasonably attributable to the
AIFs.
GLOSSARY OF TERMS
4PE - Platinum, Palladium, Gold and Rhodium
AIF - Alternative Investment Fund
AIFM - Alternative Investment Fund Manager
AIFMD - Alternative Investment Fund Managers Directive
BSRT - Baker Steel Resources Trust Limited
Code - UK Corporate Governance Code published by the Financial
Reporting Council in September 2014.
Commission - Guernsey Financial Services Commission
DRAVs - Development Risk Adjusted Values
DRC -- Democratic Republic of Congo
EU - European Union
EGM - Extraordinary General Meeting
FCA - Financial Conduct Authority
FRC - Financial Reporting Council
GFSC - Guernsey Financial Services Commission
g/t - Grams per tonne
IAS - International Accounting Standards
IFRS - International Financial Reporting Standards as adopted by
the European Union
Identified Staff - Members of staff whose actions have a
material impact on the risk profile of the AIF and who are not
categorised as senior management
IndexVal - Where there have been no known transactions for 6
months, at the Company's half year and year end, movements in
IndexVal will generally be taken into account in assessing Fair
Value where there has been at least a 10% movement in IndexVal over
at least a six month period. The IndexVal results are used as an
indication of trend and are viewed in the context of investee
company progress.
IPO - Initial Public Offering (stock market launch)
JORC - AUSTRALASIAN JOINT ORE RESERVES COMMITTEE
The Code for Reporting of Mineral Resources and Ore Reserves
(the JORC Code) of the Australasian Joint Ore Reserves Committee
(JORC) is widely accepted as a standard for professional reporting
of mineral resources and ore reserves. Mineral resources are
classified as 'Inferred', 'Indicated' or 'Measured', while ore
reserves are either 'Probable' or 'Proven'.
Mt - million tonnes
NI 43-101 - CANADIAN NATIONAL INSTRUMENT 43-101
Canadian National Instrument 43-101 is a mineral resource
classification instrument which dictates reporting and public
disclosure of information in Canada relating to mineral
properties.
PEA - Preliminary Economic Assessment
SORP - Statement of Recommended Practice issued by The
Association of Investments Companies dated November 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKDDDDBKBFQB
(END) Dow Jones Newswires
April 22, 2016 02:00 ET (06:00 GMT)
Baker Steel Resources (LSE:BSRT)
Historical Stock Chart
From Jun 2024 to Jul 2024
Baker Steel Resources (LSE:BSRT)
Historical Stock Chart
From Jul 2023 to Jul 2024
