REG - RiverFort Global Opp - Final Results
23/06/2023 07:00
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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
(http://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
Beaumont Cornish
Roland Cornish/Felicity Geidt
Joint Broker +44 20 7186 9950
Shard Capital Partners LLP
Damon Heath/ Erik Woolgar
Joint Broker +44 20 7562 3351
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 £1,167,000
· Net loss of £866,000 after adjustment of investment values
· Net asset value of £10,588,000 - 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 £3.6 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 £1
million which have since risen to around £2.4 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 €1.4 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 £3.7 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 £2.6 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 Pires 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 £861,674 (2021: profit £1,040,012). The net asset value of the
Company as at 31 December 2022 was £10,592,494 (2021: £11,748,821),
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 (£000)
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 £3.6 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
£000
Smarttech247 Group plc A cyber security company listed on AIM 2,293
Pires Investments plc An investment company listed on AIM 937
Other Various small holdings and warrants in listed 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 £50 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
€10 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 €1,500,000 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 £3.7 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 £2.4 million.
Income breakdown 2022 2021
£000 £000
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 £10,588,000 £11,749,000 -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 £5,816,000 £11,243,000 -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 2022 2021
F FOR THE YEAR ENDED 31 DECEMBER 2022
Note £ £
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 2022 2021
FOR THE YEAR ENDED 31 DECEMBER 2022
Note £ £
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 YEAR ENDED 31 DECEMBER 2022
£ £ £ £ £
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 2022 2021
FOR THE YEAR ENDED 31 DECEMBER 2022
Note £ £
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 END OF THE YEAR 17 958,135 2,012,483
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 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 (£) 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
£ £
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
£ £
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
£ £
Exchange gain/(loss) on foreign currency cash balances 89,703 (12,272)
89,703 (12,272)
7 ADMINISTRATIVE EXPENSES
2022 2021
£ £
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
£ £
Fees payable to the Company's auditor for the audit of the Company's financial 39,000 30,000
statements
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 £413,746 (2021: £593,990) is payable to the Company's
investment adviser, RiverFort Global Capital Limited.
9 OTHER GAINS AND LOSSES
2022 2021
£ £
Currency exchange differences 58,870 (120,249)
58,870 (120,249)
10 DIRECTORS' EMOLUMENTS
2022 2021
£ £
Aggregate emoluments 124,000 199,000
Social security costs 2,785 11,023
Share based payment expense - 201,034
126,785 411,057
Name of director Salaries Bonuses Total Total
and fees 2022 2021
£ £ £ £
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
*£48,000 of P Haydn-Slater's salary and fees was invoiced by Musgrave
Financial Ltd, a company controlled by him.
11 EMPLOYEE INFORMATION
2022 2021
£ £
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
£ £
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
£ £
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 (164,622) 197,602
19% (2021: 19%)
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 £4,125,000 (2021: £3,962,000) 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
£ £
(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.
DIVIDENDS
14
2022 2021 2022 2021
Pence Pence £ £
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
£ £
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
£ £ £ £
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
£ £
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
£ £
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
£ £
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
£ £
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 Ordinary Shares Share Capital Ordinary shares Share premium
£ £
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 exercise price Weighted average exercise 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 £Nil (2021: £201,034).
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 exercise price Weighted average exercise 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 £2,329,932 (2021:
£2,029,573) comprising cash and cash equivalents and other receivables.
The ageing profile of trade and other receivables was:
2022 2021
Total book value Total book value
£ £
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 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
£ £ £ £
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 2022 31 Dec 2021
£ £
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 £403,000 (2021: £508,000).
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.
CAT
EGO
RIE
S
OF
FIN
ANC
IAL
INS
TRU
MEN
TS
The
IFR
S 9
cat
ego
rie
s
of
fin
anc
ial
ass
et
inc
lud
ed
in
the
sta
tem
ent
of
fin
anc
ial
pos
iti
on
and
the
hea
din
gs
in
whi
ch
the
y
are
inc
lud
ed
are
as
fol
low
s:
2022 2021
£ £
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
IFR
S 9
cat
ego
rie
s
of
fin
anc
ial
lia
bil
iti
es
inc
lud
ed
in
the
sta
tem
ent
of
fin
anc
ial
pos
iti
on
and
the
hea
din
gs
in
whi
ch
the
y
are
inc
lud
ed
are
as
fol
low
s:
2022 2021
£ £
Trade and other payables 89,335 1,011,695
23 RELATED PARTY TRANSACTIONS
The compensation payable to Key Management personnel comprised £124,000
(2021: £199,000) 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 FR SEMESEEDSELMRecent news on Riverfort Global Opportunities
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