TIDMRGO
RNS Number : 6628D
RiverFort Global Opportunities PLC
23 June 2023
For immediate release 23 June 2023
RiverFort Global Opportunities plc (the "Company")
Financial Statements
for the year ended 31 December 2022
RiverFort Global Opportunities plc, the investment company
listed on AIM, is pleased to announce its audited final results for
the year ended 31 December 2022 (extracts from which are set out
below) and that the financial statements will shortly be posted to
shareholders and made available on the website
www.riverfortglobalopportunities.com
For more information please contact:
RiverFort Global Opportunities
plc +44 20 3368 8978
Philip Haydn-Slater,
Non-executive Chairman
-----------------
Nicholas Lee, Investment
Director
-----------------
Nominated Adviser +44 20 7628 3396
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Beaumont Cornish
-----------------
Roland Cornish/Felicity
Geidt
-----------------
Joint Broker +44 20 7186 9950
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Shard Capital Partners
LLP
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Damon Heath/ Erik Woolgar
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Joint Broker +44 20 7562 3351
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Peterhouse Capital Limited
-----------------
Lucy Williams
-----------------
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018.
CHAIRMAN'S STATEMENT
HIGHLIGHTS
-- Investment income generated of GBP1,167,000
-- Net loss of GBP866,000 after adjustment of investment
values
-- Net asset value of GBP10,588,000 - a decrease of 10% against
the background of challenging markets
-- Net asset value of 1.35 pence per share compared to a current
share price of 0.675 pence
-- Focus on recovering cash from investments with a substantial
cash balance now available for further investment
-- Significant valuation uplift from investment in
Smarttech247
INTRODUCTION
We are pleased to report our results for the year to 31 December
2022 which has been another active period for the Company.
REVIEW OF THE YEAR
2022 was a difficult year for small cap listed companies and for
those companies with a technology focus. Whilst a significant gain
was achieved from the Company's investment in Smarttech247
notwithstanding this market backdrop, the Company has taken a
prudent view on the value of its portfolio and adjusted the value
of certain of its investments downwards to reflect the current weak
economic background. Whilst the Company has continued to generate
investment income for the year, the net impact of these non-cash
adjustments has, unfortunately, led to an overall loss for the
year.
During the year, the Company has continued to deploy its
investment capital by investing in listed junior companies through
debt and equity linked products, however, as the year has
progressed it has been more circumspect with an increasing focus on
accumulating and preserving cash given the worsening economic
background. As a result, as at the end of the year, the Company
held around GBP3.6 million of its investment portfolio in debt and
equity linked products which was down on the prior year reflecting
the focus on cash generation, At the period end, the Company held
cash balances of around GBP1 million which have since risen to
around GBP2.4 million as this cash-focus strategy has continued.
Going forward and given current market conditions, the Company
believes that the demand for its debt and equity linked investment
capital is increasing and investment terms improving so this
strategy means that it now has additional capital to invest at this
opportune time..
Prior to 2022, the Board had identified certain interesting
pre-IPO investment opportunities as attractive investments where it
could see the potential to achieve gains between the pre-IPO stage
and a listing or exit. It has two principal investments in this
area.
Smarttech247 Group plc ("Smarttech247") (AIM: S247) is an
established global artificial intelligence-based cybersecurity
business, specialising in automated managed detection and response.
It has a successful track record of revenue growth and
profitability and is positioned at the intersection of three major
cyber security growth markets: security threat incidents, growth of
cloud adoption and proliferation of cyber security data generation
that needs to be integrated. In May 2021, the Company invested
EUR1.4 million in Smarttech247 to help fund its expansion and
development.
On 15 December 2022, the company's shares were admitted to
trading on the London Stock Exchange's AIM market raising gross
proceeds of GBP3.7 million through a placing at a price of 29.66
pence per new ordinary share. Smarttech247's share price as at 20
June 2023 was 34.5 pence per share, representing approximately a
16% increase since listing and a significant uplift compared to the
level at which the investment was initially made. Recent full year
and interim results of Smarttech247 were positive for the company's
growth trajectory. The company is now included in the listed
investments category of the Company's portfolio analysis. The
investment in Smartech247 is currently valued at around GBP2.6
million.
Pluto Digital was a crypto technology and operations company
with a focus on decentralised finance and the metaverse (blockchain
gaming and NFTs). In October 2022, Pluto Digital announced a merger
with Maze Theory, a London-based digital entertainment studio, to
create Emergent Entertainment ("Emergent"). Emergent is focused on
becoming a next-generation entertainment company, bringing
audiences and storytellers together by harnessing emerging
technologies. Since then, the company has launched a VR game, Peaky
Blinders, and is making good progress on the development of its
Web3 game, Resurgence. In addition to this, the company is actively
discussing the co-development of a new game with a global games
publishing group and has been in ongoing conversations with
numerous leading organisations regarding upcoming projects. The
management team is also working on reducing the company's cost base
and has revised its 2023 revenue forecasts upwards.
The Company's other principal listed equity investment comprises
its shareholding in Pire s Investments plc ("Pires"). Pires is an
investment company listed on AIM focused on investing in next
generation technology and has been very active over the period. The
company has made a number of new investments, including into a new
Sure Valley Ventures venture capital fund alongside the British
Business Bank. In June 2022, Pires was the subject of a share for
share offer from Tern plc, on terms that equated to 8 pence per
Pires share, representing a 53.8% premium to the Pires share price,
based on the respective companies share prices just prior to the
announcement. Whilst this offer was accepted by the majority of the
Pires shareholders, the requisite percentage to effect a scheme of
arrangement was not achieved and so the offer lapsed. Since then,
the Pires share price has fallen significantly in line with the
technology sector. However, the recent investment portfolio update
issued by the company clearly demonstrates the progress that it is
continuing to make in terms of its investment strategy.
OUTLOOK AND STRATEGY
Whilst 2022 has been a difficult year, the Board believes that
it has managed to safely navigate its way through this period. It
has also achieved some excellent results such as the return on its
investment in Smarttech247. As markets improve as they undoubtedly
will, the Company is well placed to benefit and progress going
forward.
Philip Haydn-Slater
Non-Executive Chairman
22 June 2023
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
Introduction
The Company is an investment company listed on the AIM market of
the London Stock Exchange. It is focused on investing in junior
listed companies by way of debt or equity-linked debt investments.
Returns are principally generated through a combination of fees,
interest and other equity linked or performance-based instruments.
This investing strategy enables the Company to reduce the risk and
volatility normally associated with investing in junior companies
solely by way of equity, and to generate cash income and returns.
It also seeks to invest in exciting pre-IPO opportunities that are
attractively valued and where there is a clear path to a liquidity
event.
For the year to 31 December 2022, the Company made a loss from
continuing operations of GBP861,674 (2021: profit GBP1,040,012).
The net asset value of the Company as at 31 December 2022 was
GBP10,592,494 (2021: GBP11,748,821), representing a decrease
compared to the previous year as explained in the Chairman's
Statement.
The Company's investment portfolio at 31 December 2022 is
divided into the following categories:
Category Cost or valuation (GBP000)
2022 2021
-------------------- ----------------------
Debt and equity-linked debt investments 3,612 5,807
-------------------- ----------------------
Equity and other investments 3,427 2,562
-------------------- ----------------------
Pre IPO investments 1,067 2,703
-------------------- ----------------------
Cash resources 958 2,012
-------------------- ----------------------
Total 9,064 13,084
-------------------- ----------------------
Debt and equity linked portfolio
During the year, the Company has continued to both invest in and
realise cash from this portfolio and, as at the year end, the value
of these investments amounted to GBP3.6 million. The portfolio
currently includes over 20 companies such as Jubilee Metals plc and
Gaussin SA. As at 31 December 2022, the value of the total
portfolio was lower compared to the previous year due to a higher
balance being owed to the Company by RGO PCC compared to the
previous period and a lower amount being owed by the Company to RGO
PCC at the end of the previous period which are excluded from the
cash and investments figures in the table above, in addition to the
downward adjustments to certain of our investments.
These investments principally generate income in the form of
fees and interest. Investments are either made directly or by way
of participation certificates in RiverFort Global Opportunities PCC
Limited ("RGO PCC"), a Gibraltar based fund. These certificates are
reference linked financial instruments that provide similar
economic benefits to the holder as if they were co-investing
directly in the underlying investment. Whilst there is no direct
security into the underlying investment, the holder will benefit
from the enforcement of any such security.
Equity and other portfolio
At the year end, the Company's equity portfolio comprised the
following:
Company Description Value of
investment
GBP000
Smarttech247 Group A cyber security company
plc listed on AIM 2,293
------------------------------ ------------
Pires Investments An investment company listed
plc on AIM 937
------------------------------ ------------
Various small holdings
and warrants in listed
Other companies 197
------------------------------ ------------
Total 3,427
------------
Pires has continued to invest in next generation technology
during this period During 2022, the company invested in a new Sure
Valley Ventures ("SVV") fund ("SVV2"), alongside the British
Business Bank ("BBB") who have committed GBP50 million to the new
fund. SVV2 is being managed by the same team which, to date, has
been highly successful in achieving a number of cash realisations
from, and upward revaluations of, companies in the first SVV fund
("SVV1") .
Furthermore, the profit share arrangements within SVV2 are
designed to encourage the involvement of private investors
alongside the BBB, meaning that Pires and the other private
investors would expect to receive a significantly enhanced share of
the total return generated by the fund compared to industry
standard.
Also, during the period, Getvisibility, one of Pires'
investments that it holds both directly and via its holdings in
SVV1 and Sure Ventures plc, raised EUR10 million at a significantly
higher valuation compared to when Pires first invested. Pires'
direct stake in Getvisibility (including its recent additional
investment) is now valued at circa EUR1,500,000 or over 4 times its
total investment cost to date since it made its first
investment.
Getvisibility, is a leader in data visibility and control, using
state-of-the-art artificial intelligence ("AI") to classify and
secure unstructured information. Getvisibility also provides risk
and compliance assessments as well as enforcing protection on
sensitive data.
In June 2022, Pires was the subject of a share for share offer
from Tern plc, on terms that equated to 8 pence per Pires share,
representing a 53.8% premium to the Pires share price, based on the
respective companies share prices just prior to the announcement.
Whilst this offer was accepted by the majority of the Pires
shareholders, the requisite percentage to effect a scheme of
arrangement was not achieved and so the offer lapsed. Since then,
the Pires share price has fallen significantly in line with the
technology sector, however, the recent investment portfolio update
by the company clearly demonstrates the progress that it is
making.
As referred to in the Chairman's Statement, shares in
Smarttech247 Group plc ("Smarttech247") were admitted to trading on
the London Stock Exchange's AIM market raising gross proceeds of
GBP3.7 million through a placing at a price of 29.66 pence per new
ordinary share. Smarttech247's share price as at 20 June 2023 was
34.5 pence per share, representing approximately a 16% increase
since listing and a significant uplift compared to the level at
which the investment was initially made. Recent full year and
interim results of Smarttech247 are positive for the company's
growth trajectory. The company is now included in the listed
investments category.
Pre IPO investments
The Company's principal investment in this category is Pluto
Digital, which was a crypto technology and operations company with
a focus on decentralised finance and the metaverse (blockchain
gaming and NFTs). In October 2022, Pluto Digital announced a merger
with Maze Theory, a London-based digital entertainment studio, to
create Emergent Entertainment ("Emergent"). Emergent is focused on
becoming a next- generation entertainment company, bringing
audiences and storytellers together by harnessing emerging
technologies. Since then, the company has launched a VR game, Peaky
Blinders, and is making good progress on the development of its
Web3 game, Resurgence. In addition to this, the company is actively
discussing the co- development of a new game with a global games
publishing group and has been in ongoing conversations with
numerous leading organisations regarding upcoming projects. The
management team is also working on reducing the company's cost base
and has revised its 2023 revenue forecasts upwards.
Cash resources
The prior period end cash balance was higher due to higher
creditor balances at the year end. However, the Company still has a
significant cash balance available for investment which has
increased further since the year end to a current value of around
GBP2.4 million.
Income breakdown 2022 2021
GBP000 GBP000
-------- -------
Investment income 1,167 1,801
-------- -------
Net (loss)/gain from financial instruments
at FVTPL (1,450) 680
-------- -------
Net foreign exchange gains/(losses) on
other financial instruments 90 (12)
-------- -------
Total (loss)/income (193) 2,469
-------- -------
Administration costs (319) (715)
-------- -------
Investment advisory fees (413) (594)
-------- -------
Other gains and losses 59 (120)
-------- -------
Operating (loss)/profit (866) 1,040
-------- -------
Investment income derives principally from the fees and interest
income in relation to our debt and equity linked debt investments.
The net loss from financial instruments at FVTPL represents the
impact of valuing the investment portfolio at fair value as
required under IFRS 9. As previously mentioned, this figure
reflects the downward adjustment to the carrying values of certain
investments.
Administration expenses for 2022 were significantly lower than
the prior period due to the inclusion of a non-cash accounting
charge in relation to share based payments in that prior period.
Investment advisory fees were also lower, reflecting the lower
level of activity and size of balance sheet.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
COMPANY STATISTICS 31 December 31 December Change
2022 2021 %
------------------------------------- ------------- ------------- ------
Net asset value GBP10,588,000 GBP11,749,000 -10%
Net asset value - fully diluted per
share 1.35p 1.49p -9%
Closing share price 0.75p 1.45p -48%
Net asset value premium to the share
price 82% 3% +79%
Market capitalisation GBP5,816,000 GBP11,243,000 -48%
------------------------------------- ------------- ------------- ------
KEY RISKS AND UNCERTAINTIES
Investments in junior companies can carry a high level of risk
and uncertainty, although the returns can be attractive. At this
stage there can be no certainty of outcome and the Company may have
difficulty in realising the full value from its investments in a
forced sale. Furthermore, the Company limits the amount of each
commitment, both as to the absolute amount and percentage of the
target company.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Company's financial risk management objectives
and policies are set out in Note 21 to these financial
statements.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A
WHOLE
S172 of the Companies Act 2006 requires the Board to promote the
Company for the benefit of the members as a whole. In particular,
the requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long term
-- Act fairly between the members of the Company
-- Maintain a reputation for high standards of business conduct
-- Consider the interests of the Company's employees
-- Foster the Company's relationships with suppliers, customers and others and
-- Consider the impact of the Company's operations on the community and the environment.
The Directors are collectively responsible for formulating the
Company's investment strategy, and during 2022 they have continued
to focus on implementing the investment strategy previously
approved by shareholders in 2018.
In addition, the application of s172 requirements can be
demonstrated in relation to some of the key decisions made during
2022:
-- Commitment to developing and applying high standards of
corporate governance
-- The making of further investments that have generated
significant returns for the Company and its shareholders.
The Board places equal importance on all shareholders and
strives for transparent and effective external communications,
within the regulatory confines of a listed company. The primary
communication tool for regulatory matters and matters of material
substance is through the Regulatory News Service ("RNS"). We also
provide an environment where shareholders can interact with the
Board and management, ask questions and raise any concerns they may
have. The Directors believe they have acted in a way they consider
most likely to promote the success of the Company for the benefit
of its members as a whole, as required by Section 172 (1) of the
Companies Act 2006.
GOING CONCERN
The Company's assets comprise mainly cash, debt securities and
quoted securities. As at the year end, the Company held a
significant balance of cash. Furthermore, the Company has prepared
cash forecasts to June 2024 that show that the Company has
sufficient cash resources for the foreseeable future. Accordingly,
the Directors believe that as at the date of this report it is
appropriate to continue to adopt the going concern basis in
preparing the financial statements.
ON BEHALF OF THE BOARD
Nicholas Lee
Investment Director
22 June 2023
STATEMENT OF COMPREHENSIVE INCOME
F FOR THE YEARED 31 DECEMBER 2022 2022 2021
Note GBP GBP
--------------------------------------------------- ---- ----------- ---------
CONTINUING OPERATIONS:
Investment income 4 1,167,379 1,801,432
Net (loss)/gain from financial instruments
at FVTPL 5 (1,449,703) 680,286
Foreign exchange gains/(losses) on other financial
instruments 6 89,703 (12,272)
TOTAL OPERATING (LOSS)/INCOME (192,621) 2,469,446
Administrative expenses 7 (318,933) (715,195)
Investment advisory fees 8 (413,746) (593,990)
Other gains and losses 9 58,870 (120,249)
(LOSS)/PROFIT BEFORE TAXATION (866,430) 1,040,012
Taxation 12 - -
--------------------------------------------------- ---- ----------- ---------
(LOSS)/PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE
INCOME (866,430) 1,040,012
--------------------------------------------------- ---- ----------- ---------
EARNINGS PER SHARE 13
Basic earnings per share (0.112p) 0.140p
Fully diluted earnings per share (0.112p) 0.138p
--------------------------------------------------- ---- ----------- ---------
STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 31 DECEMBER 2022 2022 2021
Note GBP GBP
------------------------------------- ---- ---------- ----------
NON-CURRENT ASSETS
Financial asset investments 15 5,952,814 8,105,633
------------------------------------- ---- ---------- ----------
5,952,814 8,105,633
------------------------------------- ---- ---------- ----------
CURRENT ASSETS
Financial asset investments 15 2,152,879 2,966,515
Trade and other receivables 16 1,854,870 317,539
Cash and cash equivalents 17 958,135 2,012,483
------------------------------------- ---- ---------- ----------
4,965,884 5,296,537
------------------------------------- ---- ---------- ----------
TOTAL ASSETS 10,918,698 13,402,170
------------------------------------- ---- ---------- ----------
CURRENT LIABILITIES
Trade and other payables 18 330,960 1,653,349
330,960 1,653,149
------------------------------------- ---- ---------- ----------
NET ASSETS 10,587,738 11,748,821
------------------------------------- ---- ---------- ----------
EQUITY
Share capital 19 77,540 77,540
Share premium account 19 1,568,353 1,568,353
Share options reserve 201,034 201,034
Retained profits 8,740,811 9,901,894
------------------------------------- ---- ---------- ----------
TOTAL EQUITY 10,587,738 11,748,821
------------------------------------- ---- ---------- ----------
These Financial Statements were approved by the Board of
Directors on 22 June 2023 and were signed on its behalf by:
N Lee
Director
Company number: 269566
STATEMENT OF CHANGES
IN EQUITY
FOR THE YEARED
31 DECEMBER 2022
GBP GBP GBP GBP GBP
------------------------ ------- ---------- -------- ---------- -----------
BALANCE AT 1 JANUARY
2021 67,893 - - 9,172,043 9,239,936
Total comprehensive
income - - - 1,040,012 1,040,012
------------------------ ------- ---------- -------- ---------- -----------
Share issue 9,647 1,568,353 - - 1,578,000
Grant of share options - - 201,034 - 201,034
Dividend payment - - - (310,161) (310,161)
BALANCE AT 31 December
2021 77,540 1,568,353 201,034 9,901,894 11,748,821
Total comprehensive
income - - - (866,430) (866,430)
------------------------ ------- ---------- -------- ---------- -----------
Dividend payment - - - (294,653) (294,653)
BALANCE AT 31 December
2022 77,540 1,568,353 201,034 8,740,811 10,587,738
------------------------ ------- ---------- -------- ---------- -----------
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2022 2022 2021
Note GBP GBP
-------------------------------------------- ---- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Investment income received 500,099 1,195,653
Operating expenses paid (1,026,445) (1,091,429)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES (526,346) 104,224
-------------------------------------------- ---- ----------- -----------
INVESTING ACTIVITIES
Purchase of investments (5,384,144) (9,618,440)
Disposal of investments 15 27,316 493,332
Debt instrument repayments 15 5,033,776 5,730,944
NET CASH USED IN INVESTING ACTIVITIES (323,052) (3,394,164)
-------------------------------------------- ---- ----------- -----------
FINANCING ACTIVITIES
Proceeds from share issues - 1,578,000
Dividend payment 14 (294,653) (310,161)
NET CASH (USED IN)/GENERATED FROM FINANCING
ACTIVITIES (294,653) 1,267,839
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,144,051) (2,022,101)
Cash and cash equivalents at the beginning
of the year 2,012,483 4,046,856
Effect of foreign currency exchange
on cash 89,703 (12,272)
-------------------------------------------- ---- ----------- -----------
CASH AND CASH EQUIVALENTS AT THE
OF THE YEAR 17 958,135 2,012,483
-------------------------------------------- ---- ----------- -----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1 RiverFort Global Opportunities plc is a public limited company,
limited by shares, incorporated in England and Wales. The
shares of the Company are listed on the Alternative Investment
Market (AIM). The address of its registered office is Suite
39, 18 High Street, High Wycombe, Buckinghamshire, HP11 2BE.
The Company's principal activities are described in the Directors'
Report .
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of these financial statements are set out below. These policies
have been consistently applied throughout all periods presented
in the financial statements.
The Company's financial statements have been prepared in
accordance with UK adopted international accounting standards
and in accordance with the requirements of the Companies
Act 2006. The financial statements have been prepared under
the historical cost convention, as modified by financial
assets and financial liabilities (including derivative instruments)
measured at fair value through profit or loss. The measurement
basis is more fully described in the accounting policies
below.
The financial statements are presented in pounds sterling
(GBP) which is the functional currency of the Company. The
comparative figures are for the year ended 31 December 2021.
GOING CONCERN
The Company's assets comprise mainly cash, debt securities
and quoted securities. Since the year end, the Company's
cash resources have continued to increase and the Company
has prepared cash forecasts to June 2024 that show that the
Company has sufficient cash resources for the foreseeable
future. Accordingly, the Directors believe that as at the
date of this report it is appropriate to continue to adopt
the going concern basis in preparing the financial statements.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with
IFRS requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting year. These estimates and
assumptions are based upon management's knowledge and experience
of the amounts, events or actions. Actual results may differ
from such estimates.
Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
In certain circumstances, where fair value cannot be readily
established, the Company is required to make judgements over
carrying value impairment and evaluate the size of any impairment
required.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company holds investments that have been designated as
held for trading on initial recognition. Where practicable
the Company determines the fair value of these financial
instruments that are not quoted (Level 3), using the most
recent bid price at which a transaction has been carried
out (see accounting policy note, "Valuation of financial
asset investments"). These techniques are significantly affected
by certain key assumptions, such as market liquidity. Other
valuation methodologies such as estimated net asset value
may be used and it is important to recognise that in that
regard, the derived fair value estimates cannot always be
substantiated by comparison with independent markets and,
in many cases, may not be capable of being realised immediately.
The Company also holds unquoted share warrants as level 3
investments. The fair values of these warrants have been
obtained using the Black Scholes valuation model and applying
a 75% discount to allow for the warrants being untraded derivatives
with the underlying securities being traded on junior markets.
This model makes certain assumptions relating to the volatility
of the underlying Company's share price which are applied
in the calculation of the fair value of the warrants. The
volatility is measured based on the volatility of the share
price of the underlying share over the 12 months prior to
the issue of the warrants.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New standards, amendments and interpretations adopted by
the Company
The Company has applied the following standards and amendments
for the first time for its annual reporting period commencing
1 January 2022:
* Amendments to IAS 16: Property, Plant and Equipment
* Amendments to IAS 37: Provisions, Contingent
Liabilities and Contingent Assets - Onerous Contracts
* Annual Improvements to IFRS Standards 2018-2020: The
pronouncement contains amendments to four
International Financial Reporting Standards (IFRSs)
as result of the IASB's annual improvements project:
* IFRS 1 First-time Adoption of International Financial
Reporting Standards
* IFRS 9 Financial Instruments
* IFRS 16 Leases - Lease incentives
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected
to significantly affect the current or future periods.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning
after 1 January 2022 and have not been applied in preparing
these financial statements. None of these are expected to
have a significant effect on the financial statements of
the Company.
There are no other IFRSs or IFRIC interpretations that are
not yet effective that would be expected to have a material
impact on the Company.
REVENUE RECOGNITION
INVESTMENT INCOME
Interest on fixed interest debt securities, designated at
fair value through profit or loss, is recognised in the statement
of comprehensive income using the effective interest rate
method. The effective interest rate is the rate that exactly
discounts the estimated future cash payments and receipts
through the expected life of the financial asset or liability
(or, where appropriate, a shorter period) to the carrying
amount of the financial asset or liability.
Other structured finance fees are recognised on the date
of the relevant agreement. Income may be recognised at a
point in time or over the time. Over time revenue recognition
is proportional to progress towards satisfying a performance
obligation by transferring control of promised services to
a customer. Income which does not qualify for recognition
over time is recognised at a point in time when the service
is rendered. The Company has no material receivables and
contract liabilities from contracts with customers as non-refundable
up-front fees are not charged to customers upon commencement
of contracts with customers.
Bank deposit interest is recognised on an accruals basis.
FOREIGN CURRENCY TRANSLATION
The functional and presentation currency of the Company is
Sterling. Foreign currency transactions are translated into
Sterling using the exchange rates prevailing at the dates
of the transactions or valuation where items are re-measured.
Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the income statement,
except when deferred in other comprehensive income as qualifying
cash flow hedges and qualifying net investment hedges. Foreign
exchange gains and losses that relate to debt securities
and equity investments denominated in currencies other than
Sterling and measured at FVTPL are also presented in the
income statement within Operating income. All other foreign
exchange gains and losses are presented on a net basis in
the income statement within 'Other gains and losses".
SHARE BASED PAYMENTS
The Company operates an equity-settled, share-based compensation
plan. The fair value of the employee services received in
exchange for the grant of the options is recognised as an
expense and credited to the share option reserve within equity.
The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). Options
that lapse before vesting are credited back to income. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and,
if applicable, share premium when the options are exercised.
CURRENT AND DEFERRED TAX
Tax is recognised in the income statement, except to the
extent that it relates to items recognised directly in equity.
In this case the tax is also recognised directly in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company
operates and generates taxable income. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
Deferred income taxes are calculated using the liability
method on temporary differences. Deferred tax is generally
provided on the difference between the carrying amounts of
assets and liabilities and their tax bases. However, deferred
tax is not provided on the initial recognition of an asset
or liability unless the related transaction is a business
combination or affects tax or accounting profit. Temporary
differences include those associated with shares in subsidiaries
and joint ventures and are only not recognised if the Company
controls the reversal of the difference and it is not expected
for the foreseeable future. In addition, tax losses available
to be carried forward as well as other income tax credits
to the Company are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full, with no discounting.
Deferred tax assets are recognised to the extent that it
is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income.
Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective
period of realisation, provided they are enacted or substantively
enacted at the statement of financial position date. Changes
in deferred tax assets or liabilities are recognised as a
component of tax expense in the income statement, except
where they relate to items that are charged or credited to
equity in which case the related deferred tax is also charged
or credited directly to equity.
SEGMENTAL REPORTING
The accounting policy for identifying segments is based on
internal management reporting information that is regularly
reviewed by the chief operating decision maker, which is
identified as the Board of Directors.
In identifying its operating segments, management generally
follows the Company's service lines which represent the main
products and services provided by the Company. The Directors
believe that the Company's continuing investment operations
comprise one segment.
FINANCIAL ASSETS
The Company's financial assets comprise investments, cash
and cash equivalents and loans and receivables, and are recognised
in the Company's statement of financial position when the
Company becomes a party to the contractual provisions of
the instrument.
FINANCIAL ASSETS INVESTMENTS
CLASSIFICATION OF FINANCIAL ASSETS
The Company holds financial assets including equities and
debt securities. The classification and measurement of financial
assets at 31 December 2022 is in accordance with IFRS 9.
On the initial recognition, the Company classifies financial
assets as measured at amortised cost or FVTPL. A financial
asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
* It is held within a business model whose objective is
to hold assets to collect contractual cash flows; and
* its contractual terms give rise on specific dates to
cash flows that are Solely Payments of Principal and
Interest (SPPI).
All other financial assets of the Company are measured at
FVTPL.
BUSINESS MODEL ASSESSMENT
In making an assessment of the objective of the business
model in which a financial asset is held, the Company considers
all of the relevant information on how the business is managed,
including:
* the documented investment strategy and the execution
of this strategy in practice. This includes whether
the investment strategy focuses on earning
contractual interest income, maintaining a particular
interest rate profile, matching the duration of the
financial assets to the duration of any related
liabilities or expected cash outflows or realised
cash flows through the sale of the assets;
* how the performance of the portfolio is evaluated and
reported to the Company's management;
* the risks that affect the performance of the business
model (and the financial assets held within that
business model) and how those risks are managed;
* how the investment advisor is compensated e.g.
whether compensation is based on the fair value of
the assets managed or the contractual cashflows
collected
IFRS 9 subsection B4.1.1-B4.1.2 stipulates that the objective
of the entity's business model is not based on management's
intentions with respect to an individual instrument, but
rather determined at a higher level of aggregation. The assessment
needs to reflect the way that an entity manages its business.
The company has determined that it has two business models.
* Held-to-collect business model: this includes cash
and cash equivalents, balances due from brokers and
other receivables. These financial assets are held to
collect contractual cash flows.
* Other Business model: this includes structured
finance products, equity investments, investments in
unlisted private equities and derivatives. These
financial assets are managed and their performance is
evaluated, on a fair value basis with frequent sales
taking place in respect to equity holdings.
VALUATION OF FINANCIAL ASSET INVESTMENTS
Investment transactions are accounted for on a trade date
basis. Assets are de-recognised at the trade date of the
disposal. Assets are sold at their fair value, which comprises
the proceeds of sale less any transaction cost. Financial
asset investments are categorised as either Level 1, Level
2 or Level 3 investments as set out in Note 15. The fair
value of Level 1 financial asset investments in the balance
sheet is based on the quoted bid price at the balance sheet
date, with no deduction for any estimated future selling
cost. The valuation of Level 2 and Level 3 financial asset
investments are set out in note 15. Changes in the fair value
of investments held at fair value through profit or loss
and gains and losses on disposal are recognised in the consolidated
statement of comprehensive income as "Net gains/(losses)
on investments". Investments are initially measured at fair
value plus incidental acquisition costs. Subsequently, they
are measured at fair value. This is either the bid price
or the last traded price, depending on the convention of
the exchange on which the investment is quoted.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments include forward currency
contracts. Derivatives are initially recognised at fair value
on the date on which a derivative contract is entered into
and are subsequently remeasured at fair value. All derivatives
are carried as assets when their fair value is positive and
as liabilities when their fair value is negative. Changes
in the fair value of derivatives are recognised immediately
in the statement of comprehensive income. The company is
engaged in hedging activities of its foreign exchange risk.
The company does not apply hedge accounting. Given the low
level of trading activity, the Company has estimated that
any valuation adjustments are not material and has therefore
not incorporated these into the fair value of derivatives.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and
which are subject to an insignificant risk of changes in
value. They are initially recognised at fair value and subsequently
at amortised cost using the effective interest rate method.
OTHER RECEIVABLES
Other receivables from third parties are initially recognised
at fair value and subsequently carried at amortised cost
using the effective interest rate method.
IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at FVTPL, are assessed
for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after
the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted.
A provision for impairment is made when there is objective
evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the
estimated future cash flows have been affected. Impaired
debts are derecognised when they are assessed as uncollectible.
FINANCIAL LIABILITIES
The Company's financial liabilities comprise trade payables.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Company becomes
a party to the contractual provisions of the instruments.
TRADE PAYABLES
Trade payables are initially measured at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
EARNINGS PER SHARE
Earnings per share are calculated by dividing the profit
or loss for the year after tax by the weighted average number
of shares in issue and is measured in pence per share .
EQUITY
Equity comprises the following:
* "Share capital" represents the nominal value of
equity shares.
* "Share premium" represents the excess over nominal
value of the fair value of consideration received for
equity shares, net of expenses of the share issue.
* "Capital redemption reserve" represents the nominal
value of shares repurchased or redeemed by the
Company.
* Share option reserve represents the value of share
options granted but not exercised.
* "Retained losses" represents retained losses.
3 SEGMENTAL INFORMATION
The Company is organised around business class and the results
are reported to the Chief Operating Decision Maker according
to this class. There is one continuing class of business,
being the investment in junior listed and unlisted companies.
Given that there is only one continuing class of business,
operating within the UK no further segmental information
has been provided.
4 INVESTMENT INCOME
2022 2021
GBP GBP
-------------------------- --------- ---------
Structured finance fees 288,232 727,089
Other interest receivable 879,147 1,074,343
1,167,379 1,801,432
--------------------------------------------- --------- ---------
5 NET (LOSS)/GAIN ON INVESTMENTS
2022 2021
GBP GBP
---------------------------------------------- ----------- -------
Net realised gains on disposal of investments 8,315 372,378
Net movement in fair value of investments (1,818,234) 242,873
Net foreign exchange gain on investments 360,216 65,035
Net (loss)/gain on investments (1,449,703) 680,286
----------------------------------------------------------------- ----------- -------
6 FOREIGN EXCHANGE LOSSES ON OTHER FINANCIAL INSTRUMENTS
2022 2021
GBP GBP
----------------------------------------------------- -------- ----------
Exchange gain/(loss) on foreign currency
cash balances 89,703 (12,272)
89,703 (12,272)
------------------------------------------------------------------------ -------- ----------
7 ADMINISTRATIVE EXPENSES
2022 2021
GBP GBP
----------------------------------------------- ------- -------
Loss for the year has been arrived at
after charging:
Wages and salaries 126,785 210,023
Share based payments - 201,034
Professional and regulatory expenses 124,330 218,436
Audit and tax compliance 43,200 35,616
Other administrative expenses 24,618 50,086
Total administrative expenses as per the
statement of comprehensive income 318,933 715,195
------------------------------------------------------------------ ------- -------
AUDITOR'S REMUNERATION
During the year the Company obtained the following services
from the Company's auditor:
2022 2021
GBP GBP
----------------------------------------------- ------- -------
Fees payable to the Company's auditor
for the audit of the Company's financial
statements 39,000 30,000
Fees payable to the Company's auditor
and its associates for other services:
Other services relating to taxation 4,200 -
----------------------------------------------- ------- -------
43,200 30,000
------------------------------------------------------------------ ------- -------
8 INVESTMENT ADVISORY FEES
The charge of GBP413,746 (2021: GBP593,990) is payable
to the Company's investment adviser, RiverFort Global Capital
Limited.
9 OTHER GAINS AND LOSSES
2022 2021
GBP GBP
------------------------------ ------ ---------
Currency exchange differences 58,870 (120,249)
58,870 (120,249)
------------------------------------------------- ------ ---------
10 DIRECTORS' EMOLUMENTS
2022 2021
GBP GBP
-------------------------------------------------- ------- ---------
Aggregate emoluments 124,000 199,000
Social security costs 2,785 11,023
Share based payment expense - 201,034
126,785 411,057
---------------------------------------------------------------------- ------- ---------
Salaries Total Total
Name of director and fees Bonuses 2022 2021
GBP GBP GBP GBP
------------------ ------- --------- ---------- ------- -----------
P Haydn-Slater *50,000 - 50,000 75,000
N Lee 52,000 - 52,000 102,000
A van Dyke 22,000 - 22,000 22,000
A Nesbitt - - - -
124,000 - 124,000 199,000
---------------------------------------------- --------- ---------- ------- -----------
* GBP48,000 of P Haydn-Slater's salary and fees was invoiced by
Musgrave Financial Ltd, a company controlled by him.
11 EMPLOYEE INFORMATION
2022 2021
GBP GBP
-------------------------------------- ---------------------- ----------------------
Wages and salaries 76,000 166,000
Consultancy fees 48,000 33,000
Social security costs 2,785 11,023
Share based payment expense - 201,034
126,785 411,057
---------------------------------------------------------- ---------------------- ----------------------
Average number of persons employed:
2022 2021
Number Number
-------------------------------------- ---------------------- ----------------------
Office and management 3 3
---------------------------------------------------------- ---------------------- ----------------------
COMPENSATION OF KEY MANAGEMENT PERSONNEL
There are no key management personnel other than the Directors
of the Company.
12 INCOME TAX EXPENSE
2022 2021
GBP GBP
------------------------------------------------ ---------- --------
Current tax - continuing operations - -
------------------------------------------------ ---------- --------
The tax on the Company's profit before tax differs from
the theoretical amount that would arise using the weighted
average rate applicable to profits of the Consolidated entities
as follows:
2022 2021
GBP GBP
------------------------------------------------ ---------- -----------
Profit/(loss) before tax from continuing
operations (866,430) 1,040,012
-------------------------------------------------------------------- ---------- -----------
Profit/(loss) before tax multiplied by
rate of corporation tax in the UK of 19%
(2021: 19%) (164,622) 197,602
Expenses not deductible for tax purposes 1,415 38,667
Added to/(use of) tax losses brought forward 163,207 (236,269)
Total tax - -
-------------------------------------------------------------------- ---------- -----------
Unrelieved tax losses of approximately GBP4,125,000 (2021:
GBP3,962,000) remain available to offset against future
taxable trading profits. No deferred tax asset has been
recognised in respect of the losses as recoverability is
uncertain.
13 EARNINGS PER SHARE
The basic earnings per share is based on the loss for the
year divided by the weighted average number of shares in
issue during the year. The weighted average number of ordinary
shares for the year assumes that all shares have been included
in the computation based on the weighted average number
of days since issue.
2022 2021
GBP GBP
--------------------------------------------- ----------- -----------
(Loss)/profit attributable to equity holders
of the Company:
(Loss)/profit from continuing operations (866,430) 1,040,012
----------------------------------------------------------------- ----------- -----------
(Loss)/profit for the year attributable
to equity holders of the Company (866,430) 1,040,012
----------------------------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
in issue for basic earnings 775,404,187 741,044,800
Weighted average number of ordinary shares
in issue for fully diluted earnings 775,404,187 751,278,700
----------------------------------------------------------------- ----------- -----------
EARNINGS PER SHARE
BASIC AND FULLY DILUTED:
- Basic earnings per share from continuing
and total operations (0.112)p 0.140p
- Fully diluted earnings per share from
continuing and total operations (0.112)p 0.138p
----------------------------------------------------------------- ----------- -----------
Diluted earnings per share are the same as basic earnings per
share as all options currently issued are antidilutive in the
current year.
DIVIDS
14
2022 2021 2022 2021
Pence Pence GBP GBP
------------------------------------ ----------- ---------- -------- -----------
Amounts recognised as distributions
to shareholders in the year
Final dividend 0.038p 0.040p 294,653 310,161
---------------------------------------------------------- ----------- ---------- -------- -----------
0.038p 0.040p 294,653 310,161
---------------------------------------------------------- ----------- ---------- -------- -----------
15 FINANCIAL ASSET INVESTMENTS
All financial asset investments are designated at fair value
through profit and loss ("FVTPL")
2022 2021
GBP GBP
----------------------------------------------------- ----------- -----------
At 1 January - fair value 11,072,148 7,158,104
Purchase of investments designated at FVTPL 3,544,340 11,028,551
Equity investment disposals (27,316) (2,063,849)
Debt security repayments (5,033,776) (5,730,944)
Net gain on disposal of investments 8,315 372,378
Movement in fair value of investments (1,818,234) 242,873
Net foreign exchange gain on debt securities 360,216 65,035
At 31 December - fair value 8,105,693 11,072,148
------------------------------------------------------------------------- ----------- -----------
Current Non-current
2022 2021 2022 2021
GBP GBP GBP GBP
------------------------------- --------- --------- ----------- -----------
Categorised as:
Level 1 - Quoted investments - - 3,306,909 2,372,323
Level 2 - Unquoted investments 2,152,879 2,966,515 1,459,539 2,840,270
Level 3 - Unquoted investments - - 1,186,366 2,893,040
--------------------------------------------------- --------- --------- ----------- -----------
2,152,879 2,966,515 5,952,814 8,105,633
--------------------------------------------------- --------- --------- ----------- -----------
The table of investments sets out the fair value measurements
using the IFRS 7 fair value hierarchy. Categorisation within
the hierarchy has been determined on the basis of the lowest
level of input that is significant to the fair value measurement
of the relevant asset as follows:
Level 1 - valued using quoted prices in active markets for
identical assets.
Level 2 - valued by reference to valuation techniques using
observable inputs other than quoted prices included within
Level 1.
Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data.
The valuation techniques used by the company for Level 1
financial asset investments are explained in the accounting
policy note, "Valuation of financial asset investments".
The valuation of Level 2 and Level 3 financial assets are
explained on the following page.
Investments categorised as current are debt securities repayable
by 31 December 2023.
LEVEL 2 FINANCIAL ASSET INVESTMENTS
Level 2 financial asset investments comprise debt securities
valued by reference to their principal value, less appropriate
allowance where there is a doubt as to whether the principal
amount will be fully repaid in accordance with the contractual
terms of the obligation.
LEVEL 3 FINANCIAL ASSET INVESTMENTS
Reconciliation of Level 3 fair value measurement of financial
asset investments
2022 2021
GBP GBP
----------------------------------------- ------------------ --------------
Brought forward 2,893,040 375,863
Purchase of investments - 2,402,153
Transfer to Level 1 investments (1,203,465) -
Movement in fair value (502,699) 115,024
----------------------------------------- ------------------ --------------
Carried forward 1,186,366 2,893,040
----------------------------------------- ------------------ --------------
The Company's level 3 investments include a number of unquoted
share warrants. which have been valued using the Black-Scholes
valuation model, discounted by 75% to allow for there being
no trading market for the warrant instruments and the underlying
shares are quoted on the London Stock Exchange's secondary
Alternative Investment Market.
The company's pre-IPO investments principally comprise shares
in Emergent Entertainment plc (previously known as Pluto
Digital plc) which are valued at the price of the last fund
raise.
In line with the investment strategy adopted by the Company,
Nicholas Lee is on the board of the following investee companies:
% held by the Company
2022 2021
----------------------------------------- ------------------ --------------
Pires Investments plc 20.9% 19.2%
Smarttech247 Group plc 6.2% -
----------------------------------------- ------------------ --------------
16 TRADE AND OTHER RECEIVABLES
2022 2021
GBP GBP
------------------------------- --------- -------
Other receivables 1,371,797 -
Prepayments and accrued income 483,073 317,539
--------------------------------------------------- --------- -------
1,854,870 317,539
--------------------------------------------------- --------- -------
The Directors consider that the carrying amount of other
receivables is approximately equal to their fair value.
17 CASH AND CASH EQUIVALENTS
2022 2021
GBP GBP
-------------------------- ------- ---------
Cash and cash equivalents 958,135 2,012,483
---------------------------------------------- ------- ---------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
TRADE AND OTHER PAYABLES
18
2022 2021
GBP GBP
----------------- ------- ---------
Trade payables 86,608 41,942
Other payables 2,727 969,753
Accrued expenses 241,625 641,654
--------------------------------------- ------- ---------
330,960 1,653,349
--------------------------------------- ------- ---------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
Trade payables and Other payables are all due within 6 months of
the year end.
19 SHARE CAPITAL
Number of Share Capital
Ordinary Ordinary
Shares shares Share premium
GBP GBP
----------------------------- ----------- --------------- ---------------
ISSUED AND FULLY PAID:
At 1 January 2021
Ordinary shares of 0.1p each 678,933,600 67,893 -
Issue of shares 96,470,587 9,647 1,630,353
Share issue costs - - (62,000)
------------------------------------------------- ----------- --------------- ---------------
At 31 December 2021 and 2022 775,404,187 77,540 1,568,353
------------------------------------------------- ----------- --------------- ---------------
20 SHARE OPTIONS AND WARRANTS
OPTIONS
On 12 February 2021, the Company granted 16,900,000 options
each to Philip Haydn-Slater and Nicholas Lee. The share options
have an exercise price of 1.00p per share and will vest as
to 50% on grant and 50% upon the Company's volume weighted
average share price being 1.50 pence or greater (being 50%
above the Exercise Price) for a period of 10 consecutive days.
The options have a 10 year term from the date of grant.
The fair value of the share options at the date of grant was
calculated by reference to the Black-Scholes model. The significant
inputs to the model in respect of the options granted in the
year were as follows:
Grant date 12 Feb 2021
Share price at date of
grant 1.25p
Exercise price per share 1.00p
No. of warrants 33,800,000
Risk free rate 0.9%
Expected volatility 78.8%
Expected life of warrant 10 years
Calculated fair value per
share 0.59478p
The share options outstanding at 31 December 2022 and their
weighted average exercise price are as follows:
2022 2021
Weighted average Weighted average
ex e rcise exercise price
price
Number Pence Number Pence
------------------------- -------------- ---------------- -------------- ----------------
Outstanding at 1 January 33,800,000 1.00 - -
Granted - - 33,800,000 1.00
Outstanding at 31
December 33,800,000 1.00 33,800,000 1.00
------------------------- -------------- ---------------- -------------- ----------------
The fair value of the share options recognised as an expense in
the income statement was GBPNil (2021: GBP201,034).
WARRANTS
On 10 May 2021, the Company issued 96,470,587 warrants to
the subscribers for a private placing, exercisable for a period
of 2 years at 3.4p per share.
The share warrants outstanding at 31 December 2022 and their
weighted average exercise price are as follows:
2022 2021
Weighted average Weighted average
ex e rcise exercise price
price
Number Pence Number Pence
------------------------- -------------- ---------------- -------------- ----------------
Outstanding at 1 January 96,470,587 3.40 - -
Issued - - 96,470,587 3.40
Outstanding at 31
December 96,470,587 3.40 96,470,587 3.40
------------------------- -------------- ---------------- -------------- ----------------
21 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed to a variety of financial risks which
result from both its operating and investing activities.
The Company's risk management is coordinated by the Board
of Directors and focuses on actively securing the Company's
short to medium term cash flows by minimising the exposure
to financial markets.
The main risks the Company is exposed to through its financial
instruments are credit risk, foreign currency risk, liquidity
risk, market price risk and operational risk.
CAPITAL RISK MANAGEMENT
The Company's objectives when managing capital are:
* to safeguard the Company's ability to continue as a
going concern, so that it continues to provide
returns and benefits for shareholders;
* to support the Company's growth; and
* to provide capital for the purpose of strengthening
the Company's risk management capability.
The Company actively and regularly reviews and manages its
capital structure to ensure an optimal capital structure
and equity holder returns, taking into consideration the
future capital requirements of the Company and capital efficiency,
prevailing and projected profitability, projected operating
cash flows, projected capital expenditures and projected
strategic investment opportunities. Management regards total
equity as capital and reserves, for capital management purposes.
The Company is not subject to externally imposed capital
requirements.
CREDIT RISK
The Company's financial instruments that are subject to
credit risk are cash and cash equivalents and loans and
receivables. The credit risk for cash and cash equivalents
is considered negligible since the counterparties are reputable
financial institutions. The credit risk for loans and receivables
is mainly in respect of short term loans, made on market
terms, which are monitored regularly by the Board.
The Company's maximum exposure to credit risk is GBP2,329,932
(2021: GBP2,029,573) comprising cash and cash equivalents
and other receivables.
The ageing profile of trade and other receivables was:
2022 2021
Total Total book
book value value
GBP GBP
---------------------------------------- --------------- -------------
Current 1,371,797 -
Overdue for less than one year - -
1,371,797 -
---------------------------------------- --------------- -------------
LIQUIDITY RISK
Liquidity risk arises from the possibility that the Company
might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Company manages this risk through maintaining a positive
cash balance and controlling expenses and commitments. The
Directors are confident that adequate resources exist to
finance current operations.
FOREIGN CURRENCY RISK
The Company invests in financial instruments and enters
into transactions that are denominated in currencies other
than its functional currency, primarily in US dollars (USD).
Consequently, the Company is exposed to the risk that the
exchange rate of its currency relative to other foreign
currencies may change in manner that has an adverse effect
on the fair value of the future cashflows of the Company's
financial assets denominated in currencies other than the
GBP.
The Company's policy is to use derivatives to manage its
exposure to foreign currency risk. The instruments used
are foreign currency forward contracts. The Company does
not apply hedge accounting.
The carrying amounts of the Company's foreign currency denominated
monetary assets and monetary liabilities at the reporting
date are as follows:
Assets Liabilities
-------------------------- -----------------------
31 Dec 31 Dec 31 Dec 31 Dec
2022 2021 2022 2021
GBP GBP GBP GBP
------------------------ ------------ ------------ ---------- -----------
US Dollars 2,339,313 3,216,128 61,941 -
Euro 1,757,271 1,185,685 589,135 1,079,034
Canadian Dollars 309,458 535,106 - 477,704
Australian Dollars 495,623 1,028,669 56,299 132,325
Swiss Francs 20,228 658,389 - 129,213
4,878,066 6,623,977 707,375 1,818,276
------------------------ ------------ ------------ ---------- -----------
The following table details the Company's sensitivity to
a 5 per cent increase and decrease in GBP against other
currencies. 5 per cent is the sensitivity rate used when
reporting foreign currency risk internally to key management
personnel and represents management's assessment of the
reasonably possible change in the foreign exchange rates.
The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation
at the year-end for a 5 per cent change in the foreign currency
exchange rates. A positive number below indicates an increase
in profit and other equity where GBP weakens 5 per cent
against the relevant currency. For a 5 per cent strengthening
of GBP against the relevant currency, there would be a comparable
impact on the profit and other equity, and the balances
below would be negative.
Effect on Profit
and Loss
31 Dec 31 Dec 2021
2022
GBP GBP
---------------------------------- -------------- --------------------
US Dollars 113,868 160,806
Euro 58,407 5,332
Canadian Dollars 15,473 2,870
Australian Dollars 21,966 44,817
Swiss Francs 1,011 26,459
----------------------------------- -------------- --------------------
INTEREST RATE RISK
Interest rate risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The risk is mitigated
by the Company only entering into fixed rate interest agreements,
therefore detailed analysis of interest rate risk is not
disclosed.
MARKET PRICE RISK
The Company's exposure to market price risk mainly arises
from potential movements in the fair value of its investments.
The Company manages this price risk within its long-term
investment strategy to manage a diversified exposure to
the market. If each of the Company's equity investments
were to experience a rise or fall of 10% in their fair value,
this would result in the Company's net asset value and statement
of comprehensive income increasing or decreasing by GBP403,000
(2021: GBP508,000).
Exposure to market price risk also arises in respect of
the Company's investments in debt securities which are mainly
denominated in US Dollars.
The Company's strategy for the management of market risk
is driven by the Company's investment objective, which is
focused on deploying its capital in investments that provide
both income and downside protection. It is expected that
the Company will deliver returns to shareholders through
a combination of capital growth and dividend income.
The Company's market risk is managed on a continuous basis
by the Investment Advisor in accordance with the policies
and procedures in place. The Company's market positions
are monitored on a quarterly basis by the board of directors.
OPERATIONAL RISK
Operational Risk is the risk of direct or indirect loss
arising from a wide variety of causes associated with the
processes, technology and infrastructure supporting the
Company's activities with financial instruments, either
internally within the Company or externally at the Company's
service providers such as cash custodians/brokers, and from
external factors other than credit, market and liquidity
risks such as those arising from legal and regulatory requirements
and generally accepted standards of investment management
behaviour.
The Company's objective is to manage operational risk so
as to balance the limiting of financial losses and damage
to its reputation with achieving its investment objective
of generating returns to shareholders.
The primary responsibility for the development and implementation
of controls over the operational risk rests with the board
of directors. This responsibility is supported by the development
of overall standards for the management of operational risk,
which encompasses the controls and processes over the investment,
finance and financial reporting functions internally and
the establishment of service levels with various service
providers, in the following areas:
* Appropriate segregation of duties between various
functions, roles and responsibilities;
* Reconciliation and monitoring of transactions
* Compliance with regulatory and other legal
requirements;
The directors' assessment of the adequacy of the controls
and processes at the service providers with respect to operational
risk is carried out via ad hoc discussions with the service
providers. Substantially all the of the assets of the Company
are held by Barclays Bank UK and Shard Capital Brokers.
The bankruptcy or insolvency of the Company's cash custodian/brokers
may cause the Company's rights with respect to the securities
or cash and cash equivalents held by cash custodian/ broker
to be limited. The board of directors' monitors capital
adequacy and reviews other publicly available information
of its cash custodian/broker on a quarterly basis.
22 FINANCIAL INSTRUMENTS
The Company uses financial instruments, other than derivatives,
comprising cash to provide funding for the Company's operations.
-------------------
CATEGORIES OF FINANCIAL INSTRUMENTS
The IFRS 9 categories of financial asset included in the
statement of financial position and the headings in which
they are included are as follows:
2022 2021
GBP GBP
------------------------------------------------ --------- ----------
FINANCIAL ASSETS :
Cash and cash equivalents 958,135 2,012,483
Financial assets at fair value through profit
or loss 8,105,693 11,072,148
Other receivables 1,371,797 -
------------------------------------------------ --------- ----------
FINANCIAL LIABILITIES AT AMORTISED COST:
The IFRS 9 categories of financial liabilities included
in the statement of financial position and the headings
in which they are included are as follows:
2022 2021
GBP GBP
------------------------------------------------ --------- ----------
Trade and other payables 89,335 1,011,695
-------------------------------------------------------------------- --------- ----------
23 RELATED PARTY TRANSACTIONS
The compensation payable to Key Management personnel comprised
GBP124,000 (2021: GBP199,000) paid by the Company to the
Directors in respect of services to the Company. Full details
of the compensation for each Director are provided in the
Directors' Remuneration Report.
Nicholas Lee's directorships of companies in which Riverfort
Global Opportunities plc has an investment are detailed
in Note 15.
24 Contingent LIABILITIES AND CAPITAL COMMITMENTS
There were no contingent liabilities or capital commitments
at 31 December 2022 or 31 December 2021.
25 POST YEAR END EVENTS
There have been no post year end events.
26 ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate
controlling party.
NOTE TO THE ANNOUNCEMENT
In accordance with Section 435 of the Companies Act 2006, the
directors advise that the information set out in this announcement
does not constitute the Company's statutory financial statements
for the year ended 31 December 2022 or 2021 but is derived from
these financial statements. The financial statements for the year
ended 31 December 2021 have been delivered to the Registrar of
Companies. The financial reporting framework that has been applied
in their preparation is applicable law and international accounting
standards in conformity with the requirements of the Companies Act
2006 and will be forwarded to the Registrar of Companies following
the Company's Annual General Meeting. The Auditors have reported on
these financial statements; their reports were unqualified and did
not contain statements under Section 498(2) or the Companies Act
2006.
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END
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June 23, 2023 02:00 ET (06:00 GMT)
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