REG - RiverFort Global Opp - Final Results
18/06/2024 07:00
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RNS Number : 7830S RiverFort Global Opportunities PLC 18 June 2024
For immediate
release
18 June 2024
RiverFort Global Opportunities plc ("Riverfort" or the "Company")
Financial Statements
for the year ended 31 December 2023
RiverFort Global Opportunities plc, the investment company listed on AIM, is
pleased to announce its audited final results for the year ended 31 December
2023 (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
Duncan Vasey/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.
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
CHAIRMAN'S STATEMENT
HIGHLIGHTS
· Successful redemption of the Company's debt and equity linked
portfolio for cash
· Cash balance of circa £1.1 million at the period end, rising to
a current balance of circa £2.6 million through the partial redemption of its
debt and equity linked portfolio for £2.15 million
· Net asset value of 0.68 pence per share at the period end
compared to a pre suspension price of 0.22 pence per share
· Profitable partial realisation of the Company's investment in
Smarttech247 Group plc ("Smarttech247")
· Currently pursuing an opportunity to become a listed operating
company in the wellness sector and generate additional value for stakeholders
INTRODUCTION
We are pleased to report our results for the year to 31 December 2023 for the
Company.
REVIEW OF THE YEAR
During H1 2023, the Company made a limited number of investments and focused
on accumulating and preserving cash given the difficult prevailing economic
background. At the start of H2 2023, demand for the Company's capital
increased with an improvement in investment terms and a number of investments
were therefore made, principally into companies in which the Company had
previously successfully invested.
However, as the year progressed, the share price of certain of its investments
such as Smarttech247 and Mindflair plc ("Mindflair") decreased,
notwithstanding the positive underlying performance of these companies. This
was primarily due to a weakness in the market for technology companies.
In December 2023, the Company announced that it had been informed by one of
its investments, Emergent Entertainment Ltd ("Emergent"), that this company
was engaging with insolvency advisers and, in January 2024, this company
entered voluntary liquidation.
At the same time, certain investments within the Company's debt and equity
linked portfolio started to struggle which became more apparent post year
end. Valoe OYJ, a Finnish company specialising in photovoltaic technology,
entered into restructuring proceedings in Finland on 22 January 2024.
Gaussin SA, a technology company that designs and assembles zero emission
smart vehicles, had also just announced that it expected to report a
significant shortfall in sales for 2023 putting further pressure on its share
price and liquidity.
The events referred to above, combined with the results of the full year end
impairment review of the portfolio, resulted in a significant reduction in the
value of the investment portfolio.
Against this background, the Board has been conscious that small investment
companies listed on AIM have become increasingly less attractive to investors
and that the Company's share price has continued to trade at a significant
discount to its underlying net asset value. The Board had therefore already
embarked on a review of various options for the Company to provide better
value and returns for its shareholders.
The conclusion reached in early 2024, was to first generate cash by initially
redeeming part of its outstanding debt and equity linked portfolio.
Historically, the Company made the majority of its investments by way of
participation certificates in RiverFort Global Opportunities PCC Limited ("RGO
PCC"), a Gibraltar based fund and so cash from this portfolio was realised by
effectively redeeming these participation certificates.
An opportunity was then identified where, subject to shareholder approval, RGO
would become a focused operating business by acquiring the trading assets of
S-Ventures plc ("SVEN"), a company listed on the AQSE Growth Market and active
in the wellness sector, for circa £3.5 million in new shares in RGO. For the
15 months to 31 December 2023, SVEN expects the group to generate gross
revenue from continuing operations of around £21.6 million and EBITDA of £1
million. The company is led by Scott Livingston who has a successful track
record of managing and developing brands in the wellness sector.
The Board believes that the proposed acquisition represents an exciting
opportunity and would enable RGO to become an operating business with
attractive potential for growth and the creation of shareholder value. RGO
would bring additional funding to SVEN's operations and provide them with an
AIM listing and better access to capital. Going forward, the enlarged group
would continue to improve its existing businesses, taking advantage of
economies of scale and consolidation of infrastructure to support their
growth. At the same time, the Board believes that there are a number of
interesting acquisition opportunities available which would benefit from the
team's expertise and existing infrastructure and enable the enlarged group to
further scale its operations.
The redemption of the debt and equity linked portfolio attracted a further
reduction in the year end portfolio valuation by circa £1 million due to a
lack of liquidity of this portfolio and its inherent risk which has
subsequently been borne out by certain post period end events in connection
with investments in this portfolio. A cash consideration of £2.15 million
was received for the redemption of this portfolio in March 2024 and whilst
certain of these transactions took place post period end, the overall
financial impact has been included in the financial position of the Company as
at the year end in order to provide a clear starting position for the Company
as it moves forward into 2024. Furthermore, the advisory contract with
RiverFort Global Capital Limited has been terminated as there is now no need
for this arrangement and it will save significant costs.
Currently, the Company comprises cash plus a small number of investments,
principally in listed companies such as Smarttech247 and Mindflair and a loan
to S-Ventures and therefore is very well positioned to embark on a new
strategy. Furthermore, post year end the Company disposed of part of its stake
in Smarttech247, to provide it with additional cash funds going forward.
OUTLOOK AND STRATEGY
2023 has clearly been a difficult year in terms of investment performance
given the events that have taken place within its investment portfolio,
however, the Company is now very well positioned, with a significant cash
balance and listed assets, to embark on a new direction which we firmly
believe will be beneficial for all stakeholders. We are currently actively
progressing the acquisition of the trading assets of S-Ventures and will
provide further updates for shareholders in due course.
Philip Haydn-Slater
Non-Executive Chairman
17 June 2024
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
Introduction
The Company is an investing 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. Since the year
end, the debt and equity linked portfolio has been redeemed and the Company is
focused on becoming an operating company in the wellness sector through the
potential acquisition of S-Ventures plc.
For the year to 31 December 2023, the Company made a loss from continuing
operations of £5,342,542 (2022: loss £866,430). The net asset value of the
Company as at 31 December 2023 was £5,245,196 (2022: £10,587,738),
representing a decrease compared to the previous year as explained in the
Chairman's Statement.
The Company's investment portfolio at 31 December 2023 is divided into the
following categories:
Category Cost or valuation (£000)
2023 2022
Debt and equity-linked debt investments 2,150 3,612
Equity and other investments 2,005 3,427
Pre IPO investments 200 1,067
Cash resources 1,062 958
Total 5,417 9,064
Debt and equity linked portfolio
During the year, the Company continued to invest in and realise cash from this
portfolio. As referred to in the Chairman's Statement, this portfolio has
struggled during 2023 with a number of impairments required at the period end.
In early 2024 it was decided to look at the possibility of revising the
Company's strategy to become an operating company and therefore this portfolio
was redeemed to realise cash. Given the subsequent redemption of this
portfolio in 2024, its value at the period end was reduced to the subsequent
redemption value.
The Company now comprises cash plus a small number of investments, principally
in listed companies such as Smarttech247 and Mindflair and therefore is very
well positioned to embark on a new strategy.
Also, post period end, a new investment was made in SVEN in the form of a £1
million loan repayable in 12 months with a 20% coupon.
Equity and other portfolio
At the year end, the Company's equity portfolio comprised the following:
Company Description Value of investment Value of investment
2024 2023
£000 £000
Smarttech247 Group plc A cyber security company listed on AIM 1,605 2,293
MindFlair plc An investment company listed on AIM 344 937
Other Various small holdings and warrants in listed companies 56 197
Total 2,005 3,427
At the end of 2022, 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 reduced during the year to 21 pence
per share as at the period end, however, this still represented an uplift
compared to the level at which the investment was initially made into this
company. Recent full year and interim results of Smarttech247 have
demonstrated positive growth by this company with a number of new contracts
with leading companies being won.
Since the year end, around half of the Company's shareholding in Smarttech247
has been profitably sold due to demand from new investors.
During the period, Pires Investments plc changed its name to Mindflair plc
("Mindflair"). This company continues to invest in AI focused technology
investments through three separate venture capital funds managed by Sure
Valley Ventures which are cornerstoned by Enterprise Ireland and the British
Business Bank. Furthermore, this company also had a significant investment
in Emergent that filed for liquidation during 2024. This, combined with the
fact that the technology sector has generally struggled during the year, has
resulted in a disappointing share price performance for Mindflair. However,
this company has some exciting investments in its portfolio and certain
realisations are expected in the short to medium term.
Pre IPO investments
The Company's principal investment in this category was Emergent. Emergent
was focused on becoming a next-generation entertainment company, bringing
audiences and storytellers together by harnessing emerging
technologies. Whilst in the earlier part of 2023, the management team had
been working on reducing the company's cost base and had revised its 2023
revenue forecasts upwards, as the year progressed trading deteriorated. Then
in December 2023, the Company announced that Emergent was engaging with
insolvency advisers and expected shortly to be placed into liquidation which
then took place on 10 January 2024 with a resolution to voluntarily wind up
the company. This investment has therefore been provided for in full.
Cash resources
At the year end the Company had cash resources of £1.1 million. Since then, a
combination of the redemption of the debt and equity linked portfolio,
settlement of fees with the Company's investment advisor, the sale of around
half of its shareholding in Smarttech247 and the making of a £1 million loan
to S-Ventures has increased this balance to a current value of around £2.6
million.
Income breakdown 2023 2022
£000 £000
Investment income 391 1,167
Net loss from financial instruments at FVTPL (4,673) (1,450)
Net foreign exchange (losses)/gains on other financial instruments (45) 90
Total loss (4,327) (193)
Administration costs (366) (319)
Investment advisory fees (624) (413)
Other gains and losses (26) 59
Operating loss (5,343) (866)
Investment income derived 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 impairing and
redeeming the investment portfolio.
A significant operating loss was recognised during the year as a result of the
impairment of certain assets as described earlier, the write off of the
Company's investment in Emergent and the redemption of the debt and equity
linked portfolio.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
COMPANY STATISTICS 31 December 31 December Change %
2023 2022
Net asset value £5,245,000 £10,588,000 -50%
Net asset value - fully diluted per share 0.68p 1.35p -50%
Closing share price 0.39p 0.75p -48%
Net asset value premium to the share price 74% 82% -11%
Market capitalisation £3,024,000 £5,816,000 -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 2023 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 2023:
• Commitment to developing and applying high standards of
corporate governance
• The making of further investments to generate returns for the
Company and its shareholders.
• The potential revision of the Company's strategy in order to
create more value for 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 now comprise mainly cash 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 2025 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
17 June 2024
DIRECTORS' REPORT
The Directors present their annual report on the affairs of the Company,
together with the audited financial statements for the year ended 31 December
2023.
PRINCIPAL ACTIVITIES
The Company's principal activity is that of an investment company focused on
making investments in a number of sectors including the natural resources,
technology and healthcare sectors.
RESULTS AND DIVIDENDS
The Company made a loss after taxation of £5,342,542 (2022: loss £866,430).
It is not expected that a dividend will be declared for 2023 (2022: £Nil).
The key performance indicators are shown in the Strategic Report.
DIRECTORS AND DIRECTORS' INTERESTS
The Directors of the Company, together with their beneficial interests in the
shares of the Company at the end of the year, are listed below. All served
on the Board throughout the year, unless otherwise stated. There is a
qualifying third party indemnity provision in force for the benefit of the
Directors and officers of the Company.
Percentage 31 December 31 December
of issued 2023 2022
share capital
P Haydn-Slater 2.58% 20,000,000 20,000,000
N Lee 0.59% 4,601,470 4,601,470
Ms A van Dyke - - -
A Nesbitt 0.13% 1,000,000 1,000,000
SUBSTANTIAL INTERESTS
The Company is aware that as at 17 June 2024, the following, other than the
Directors shown above, held in excess of 3% of the issued share capital of the
Company:
Number of Percentage of
ordinary shares issued share capital
Premier Miton Group plc 115,751,211 14.93%
Cannacord Genuity Group Inc (discretionary clients) 115,500,000 14.90%
RiverFort Global Capital Ltd 37,545,600 4.84%
DB Value Investments 34,500,000 4.45%
Shakoor Capital Limited 31,500,000 4.06%
Rulegate Nominees Limited 26,500,000 3.42%
James Lewis 24,295,454 3.13%
CORPORATE GOVERNANCE
The Board recognises its responsibility for the proper management of the
Company and is committed to maintaining a high standard of corporate
governance. Further details with regard to corporate governance are set out
in the Corporate Governance Report.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading and controlling
the Company. The Board is responsible for approving Company policy and
strategy. It meets regularly and has a schedule of matters specifically
reserved to it for decision. Management supplies the Board with appropriate
and timely information and the Directors are free to seek any further
information they consider necessary. All Directors have access to advice
from the Company Secretary and independent professionals at the Company's
expense. Training is available for new Directors and other Directors as
necessary.
The Board currently consists of four directors, the Investment Director,
Nicholas Lee and three non-executive directors, Amanda van Dyke, Andrew
Nesbitt and Philip Haydn-Slater. Each Director appointed by the Board since
the last AGM holds office until the next AGM and is then eligible for
reappointment. Furthermore, one third of Directors who were directors at the
time of the two immediately preceding AGMs and who did not retire at such
meetings, retire from office by rotation and are then eligible for
reappointment.
Given the size of the Board, there is no separate nomination committee. All
Director appointments are approved by the Board as a whole.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to
the publication of an annual report and an interim report, there is regular
dialogue with shareholders and analysts. The Annual General Meeting is
viewed as a forum for communicating with shareholders, particularly private
investors. Shareholders may question the Chairman and other members of the
Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Company's system of
internal control and for reviewing the effectiveness of these systems. The
risk management process and systems of internal control are designed to manage
rather than eliminate the risk of the Company failing to achieve its strategic
objectives. It should be recognised that such systems can only provide
reasonable and not absolute assurance against material misstatement or loss.
The Company has well established procedures which are considered adequate
given the size of the business.
POST YEAR END EVENTS
On 22 March 2024, the Company announced an investment in S-Ventures plc
("SVEN") in the form of a £1 million secured loan for a period of 12 months
carrying a fixed return of 20% and the redemption of its debt and
equity-linked portfolio for £2.15 million in cash. In addition, the Company
has signed a non-binding term sheet and is advancing discussions that may lead
to the acquisition of 100% of the assets and liabilities (the "Business") of
SVEN ("Proposed Acquisition").
The Proposed Acquisition will constitute a reverse takeover ("RTO") under the
AIM Rules for Companies (the "AIM Rules") as, inter alia, the Proposed
Acquisition will fundamentally change the Company from an Investing Company
into an operating business and therefore, in accordance with Rule 14 of the
AIM Rules, will require application to be made for the enlarged share capital
to be readmitted to AIM ("Admission"), the publication of an AIM admission
document ("Admission Document") and approval by the shareholders of the
Company at a general meeting. Also, in accordance with Rule 14 of the AIM
Rules, trading in the Company's ordinary shares of 0.01 pence each
("Ordinary Shares") were suspended on AIM from 7.30 am on 22 March 2024,
until the publication of the Admission Document or an announcement that the
Proposed Transaction is not proceeding.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the report of the directors and
the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors are required by the AIM Rules of the London
Stock Exchange to prepare financial statements in accordance with UK adopted
international accounting standards. Under company law, the directors must not
approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs and profit or loss of the company
for that period.
In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently
· make judgments and accounting estimates that are reasonable and
prudent
· state whether they have been prepared in accordance with UK
adopted international accounting standards, subject to any material departures
disclosed and explained in the financial statements
· prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions.
The Company is compliant with AIM Rule 26 regarding the Company's website.
PROVISION OF INFORMATION TO THE AUDITOR
So far as each of the directors are aware at the time this report was
approved:
· there is no relevant audit information of which the Company's
auditor is unaware: and
· the directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information and to
establish that the Company's auditor is aware of that information.
AUDITORS
The auditors, PKF Littlejohn LLP have indicated their willingness to continue
in office, and a resolution that they be re-appointed will be proposed at the
annual general meeting.
This report was approved by the Board on 17 June 2024 and signed on its
behalf.
Nicholas Lee
Investment Director
17 June 2024
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2023
2023 2022
Note £ £
CONTINUING OPERATIONS:
Investment income 4 391,151 1,167,379
Net loss from financial instruments at FVTPL 5 (4,672,874) (1,449,703)
Foreign exchange (losses)/gains on other financial instruments 6 (45,154) 89,703
TOTAL OPERATING LOSS (4,326,877) (192,621)
Administrative expenses 7 (365,715) (318,933)
Investment advisory fees 8 (624,243) (413,746)
Other gains and losses 9 (25,707) 58,870
LOSS BEFORE TAXATION (5,342,542) (866,430)
Taxation 12 - -
LOSS FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME (5,342,542) (866,430)
EARNINGS PER SHARE 13
Basic earnings per share (0.689p) (0.112p)
Fully diluted earnings per share (0.689p) (0.112p)
STATEMENT OF FINANCIAL POSITION FOR THE YEAR
ENDED 31 DECEMBER 2023
2023 2022
Note £ £
NON-CURRENT ASSETS
Financial asset investments 15 2,205,372 5,952,814
2,205,372 5,952,814
CURRENT ASSETS
Financial asset investments 2,150,000 2,152,879
Trade and other receivables 16 729,347 1,854,870
Cash and cash equivalents 17 1,062,338 958,135
TOTAL CURRENT ASSETS 3,941,685 4,965,884
TOTAL ASSETS 6,147,057 10,918,698
CURRENT LIABILITIES
Trade and other payables 19 901,861 330,960
901,861 330,960
NET ASSETS 5,245,196 10,587,738
EQUITY
Share capital 20 77,540 77,540
Share premium account 20 1,568,353 1,568,353
Share options reserve 201,034 201,034
Retained profits 3,398,269 8,740,811
TOTAL EQUITY 5,245,196 10,587,738
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
ENDED 31 DECEMBER 2023
Share Share premium Retained Total
capital profits equity
Share options reserve
£ £ £ £ £
BALANCE AT 1 JANUARY 2022 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
Total comprehensive income - - - (5,342,542) (5,342,542)
BALANCE AT 31 December 2023 77,540 1,568,353 201,034 3,398,269 5,245,196
STATEMENT OF CASH FLOWS FOR THE YEAR
ENDED 31 DECEMBER 2023
2023 2022
Note £ £
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before taxation (5,342,542) (866,430)
Adjustments for:
Profit on disposal of trading investments - (8,315)
Fair value loss on trading investments 4,672,874 1,458,018
Foreign exchange losses/(gains) on other financial instruments 45,154 (89,703)
Operating cash flow before working capital changes (624,514) 493,570
Decrease/(increase) in trade and other receivables 1,125,523 (667,280)
Increase/(decrease) in trade and other payables 570,901 (2,192,440)
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 1,071,910 (2,366,150)
INVESTING ACTIVITIES
Purchase of investments (3,690,590) (3,544,340)
Disposal of investments 15 - 27,316
Debt instrument repayments 15 2,768,037 5,033,776
NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES (922,553) 1,516,752
FINANCING ACTIVITIES
Dividend payment 14 - (294,653)
NET CASH USED IN FINANCING ACTIVITIES - (294,653)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 149,357 (1,144,051)
Cash and cash equivalents at the beginning of the year 958,135 2,012,483
Effect of foreign currency exchange on cash (45,154) 89,703
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 17 1,062,338 958,135
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2023
GENERAL INFORMATION
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 2022.
GOING CONCERN
The Company's assets now comprise mainly cash and quoted securities. Since
the year end, the Company's cash resources have continued to increase as a
result of the redemption of the debt and equity linked portfolio and the sale
of circa half of the Company's stake in Smarttech247 Group plc. The Company
has prepared cash forecasts to June 2025 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. For the current year, the value has been based
on the value achieved when the portfolio was redeemed.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
Adoption of new and revised standards and interpretations
In the current year, the following new and revised standards have been adopted
· Amendments to IAS 1 Disclosure of Accounting Policies
· Amendments to IAS 8 Definition of Accounting Estimates
· Amendments to IAS 12 Deferred Tax Related to Assets and
Liabilities arising from a Single Transaction
· Amendments to IAS 12 International Tax Reform
Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations which have not been applied in these financial
statements were in issue but not yet effective:
· Amendments to IAS 1 Classification of Liabilities as Current or
Non-current effective from 1 January 2024
· Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements
effective from 1 January 2024
· Amendments to IAS 21 Lack of Exchangeability effective from 1
January 2025
· Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture (deferred indefinitely)
· Amendment to IFRS 16 Leases Lease Liability in a Sale and
Leaseback effective from 1 January 2024
The Company does not expect these to have a significant impact on the
financial statements. This list excludes any standards or amendments which are
expected to have no relevance to 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 2023 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.
· 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
2023 2022
£ £
Structured finance fees 211,696 288,232
Other interest receivable 179,455 879,147
391,151 1,167,379
5 NET LOSS ON INVESTMENTS
2023 2022
£ £
Net realised gains on disposal of investments - 8,315
Net movement in fair value of investments (4,589,673) (1,818,234)
Net foreign exchange (loss)/gain on investments (83,201) 360,216
Net loss on investments (4,672,874) (1,449,703)
A cash consideration of £2.15 million was received for the partial redemption
of the debt and equity linked portfolio in March 2024 and, whilst certain of
these transactions took place post period end, the overall financial impact
has been included in the financial position of the Company as at the year end
in order to provide a clear starting position for the Company as it moves
forward into 2024.
6 FOREIGN EXCHANGE LOSSES ON OTHER FINANCIAL INSTRUMENTS
2023 2022
£ £
Exchange (loss)/gain on foreign currency cash balances (45,154) 89,703
(45,154) 89,703
7 ADMINISTRATIVE EXPENSES
2023 2022
£ £
Loss for the year has been arrived at after charging:
Wages and salaries 148,362 126,785
Professional and regulatory expenses 121,498 124,330
Audit and tax compliance 62,460 43,200
Other administrative expenses 33,395 24,618
Total administrative expenses as per the statement of comprehensive income 365,715 318,933
AUDITOR'S REMUNERATION
During the year the Company obtained the following services from the Company's
auditor:
2023 2022
£ £
Fees payable to the Company's auditor for the audit of the Company's financial 46,200 39,000
statements
Fees payable to the Company's auditor and its associates for other services:
Other services relating to taxation - 4,200
46,200 43,200
8 INVESTMENT ADVISORY FEES
The charge of £624,243 (2022: £413,746) is payable to the Company's
investment adviser, RiverFort Global Capital Limited.
9 OTHER GAINS AND LOSSES
2023 2022
£ £
Currency exchange differences (25,707) 58,870
(25,707) 58,870
10 DIRECTORS' EMOLUMENTS
2023 2022
£ £
Aggregate emoluments 144,167 124,000
Social security costs 4,195 2,785
Share based payment expense - -
148,362 126,785
Name of director Salaries Bonuses Total Total
and fees 2023 2022
£ £ £ £
P Haydn-Slater *50,000 - 50,000 50,000
N Lee 52,000 - 52,000 52,000
A van Dyke 22,000 - 22,000 22,000
A Nesbitt 20,167 - 20,167 -
144,167 - 144,167 124,000
*P Haydn-Slater's remuneration of £50,000 was invoiced by Musgrave Financial
Ltd, a company controlled by him. In 2022, £48,000 of his remuneration was
invoiced by Musgrave Financial Ltd
11 EMPLOYEE INFORMATION
2023 2022
£ £
Wages and salaries 94,167 76,000
Consultancy fees 50,000 48,000
Social security costs 4,195 2,785
Share based payment expense - -
148,362 126,785
Average number of persons employed:
2023 2022
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
2023 2022
£ £
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:
2023 2022
£ £
Loss before tax from continuing operations (5,342,542) (866,430)
Loss before tax multiplied by rate of corporation tax in the UK of 19% (2022: (1,015,083) (164,622)
19%)
Expenses not deductible for tax purposes 630 1,415
Added to tax losses brought forward 1,014,453 163,207
Total tax - -
Unrelieved tax losses of approximately £9,460,000 (2022: £4,125,000) 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.
2023 2022
£ £
(Loss)/profit attributable to equity holders of the Company:
(Loss)/profit from continuing operations (5,342,542) (866,430)
(Loss)/profit for the year attributable to equity holders of the Company (5,342,542) (866,430)
Weighted average number of ordinary shares in issue for basic earnings 775,404,187 775,404,187
Weighted average number of ordinary shares in issue for fully diluted earnings 809,204,187 809,204,187
EARNINGS PER SHARE
BASIC AND FULLY DILUTED:
- Basic earnings per share from continuing and total operations (0.689)p (0.112)p
- Fully diluted earnings per share from continuing and total operations (0.689)p (0.112)p
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
2023 2022 2023 2022
Pence Pence £ £
Amounts recognised as distributions to shareholders in the year
Final dividend - 0.038p - 294,653
- 0.038p - 294,653
15 FINANCIAL ASSET INVESTMENTS
All financial asset investments are designated at fair value through profit
and loss ("FVTPL")
2023 2022
£ £
At 1 January - fair value 8,105,693 11,072,148
Purchase of investments designated at FVTPL 3,690,590 3,544,340
Equity investment disposals - (27,316)
Debt security repayments (2,768,037) (5,033,776)
Net gain on disposal of investments - 8,315
Movement in fair value of investments (4,589,673) (1,818,234)
Net foreign exchange (loss)/gain on debt securities (83,201) 360,216
At 31 December - fair value 4,355,372 8,105,693
Current Non-current
2023 2022 2023 2022
£ £ £ £
Categorised as:
Level 1 - Quoted investments - - 2,005,372 3,306,909
Level 2 - Unquoted investments 2,150,000 2,152,879 - 1,459,539
Level 3 - Unquoted investments - - 200,000 1,186,366
2,150,000 2,152,879 2,205,372 5,952,814
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.
A cash consideration of £2.15 million was received for the partial redemption
of the debt and equity linked portfolio in March 2024 and, whilst certain of
these transactions took place post period end, the overall financial impact
has been included in the financial position of the Company as at the year end
in order to provide a clear starting position for the Company as it moves
forward into 2024. At the year end, this portfolio was therefore classified
as current assets.
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
2023 2022
£ £
Brought forward 1,186,366 2,893,040
Transfer to Level 1 investments - (1,203,465)
Movement in fair value (986,366) (502,699)
Carried forward 200,000 1,186,366
The above movement includes a write down of the value of the holding in
Emergent Entertainment Limited which entered liquidation early in 2024.
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
2023 2022
MindFlair plc 13.9% 20.9%
Smarttech247 Group plc 6.2% 6.2%
16 TRADE AND OTHER RECEIVABLES
2023 2022
£ £
Other receivables 721,056 1,371,797
Prepayments and accrued income 8,291 483,073
729,347 1,854,870
The Directors consider that the carrying amount of other receivables is
approximately equal to their fair value.
17 CASH AND CASH EQUIVALENTS
2023 2022
£ £
Cash and cash equivalents 1,062,338 958,135
The Directors consider the carrying amount of cash and cash equivalents
approximates to their fair value.
TRADE AND OTHER PAYABLES
18
2023 2022
£ £
Trade payables 56,063 86,608
Other payables - 2,727
Accrued expenses 845,798 241,625
901,861 330,960
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 2022
Ordinary shares of 0.1p each 775,404,187 77,540 1,568,353
At 31 December 2022 and 2023 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 2023 and their weighted average
exercise price are as follows:
2023 2022
Weighted average exercise price Weighted average exercise price
Number Pence Number Pence
Outstanding at 1 January 33,800,000 1.00 33,800,000 1.00
Granted - - - -
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 (2022: £Nil).
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 2023 and their weighted average
exercise price are as follows:
2023 2022
Weighted average exercise price Weighted average exercise price
Number Pence Number Pence
Outstanding at 1 January 96,470,587 3.40 96,470,587 3.40
Lapsed (96,470,587) 3.40 - -
Outstanding at 31 December - - 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 £1,789,416 (2022:
£2,329,932) comprising cash and cash equivalents and other receivables.
The ageing profile of trade and other receivables was:
2023 2022
Total book value Total book value
£ £
Current 721,056 1,371,797
Overdue for less than one year - -
721,056 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 2023 31 Dec 2022 31 Dec 2023 31 Dec 2022
£ £ £ £
US Dollars 365,543 2,339,313 - 61,941
Euro 33,345 1,757,271 - 589,135
Canadian Dollars - 309,458 - -
Australian Dollars - 495,623 - 56,299
Swiss Francs - 20,228 - -
398,888 4,878,066 - 707,375
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 2023 31 Dec 2022
£ £
US Dollars 18,277 113,868
Euro 1,667 58,407
Canadian Dollars - 15,473
Australian Dollars - 21,966
Swiss Francs - 1,011
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 £221,000 (2022: £403,000).
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:
2023 2022
£ £
FINANCIAL ASSETS:
Cash and cash equivalents at amortised cost 1,062,338 958,135
Financial assets at fair value through profit or loss 2,205,372 8,105,693
Other receivables at amortised cost 721,056 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:
2023 2022
£ £
Trade and other payables 56,063 89,335
23 RELATED PARTY TRANSACTIONS
The compensation payable to Key Management personnel comprised £144,167
(2022: £124,000) 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
2023 or 31 December 2022.
25 POST YEAR END EVENTS
Post year end events are set out in the Directors' Report.
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 2023
or 2022 but is derived from these financial statements. The financial
statements for the year ended 31 December 2022 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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