RiverFort Global Opportunities plc
(formerly Paternoster Resources plc)
Financial Statements
for the year ended 31 December 2018
Company no: 269566
1
RiverFort Global Opportunities plc
COMPANY INFORMATION
DIRECTORS :
SECRETARY :
REGISTERED OFFICE :
P Haydn-Slater (Non-Executive Chairman)
N Lee (Investment Director)
A van Dyke
A Nesbitt
M Nicholson
Suite 12a
55 Park Lane
London
W1K 1NA
COMPANY REGISTRATION NUMBER :
00269566
REGISTRAR AND TRANSFER OFFICE :
BANKERS :
SOLICITORS :
INDEPENDENT AUDITOR :
NOMINATED ADVISOR:
JOINT BROKER:
JOINT BROKER:
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
Barclays Bank Plc
77 Albion Street
Leeds
LS1 5AW
Keystone Law Ltd
48 Chancery Lane
London
WC2A 1LF
PKF Littlejohn LLP
Registered Auditors
1 Westferry Circus
Canary Wharf
London
E14 4HD
Beaumont Cornish Limited
10th Floor
30 Crown Place
London
EC2A 4EB
Peterhouse Corporate Finance Limited
3rd Floor
New Liverpool House
15-17 Eldon Street
London
EC2M 7LD
Shard Capital Partners LLP
23rd Floor
20 Fenchurch Street
London
EC3M 3BY
2
RiverFort Global Opportunities plc
CONTENTS
REPORTS
Chairman's statement
Strategic Report
Report of the directors
Directors’ Remuneration Report
Corporate Governance Report
Independent Auditor's report
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
page
3
5
8
11
12
17
21
22
23
24
25
3
RiverFort Global Opportunities plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2018
INTRODUCTION
During the year ended 31 December 2018, the Company has continued to operate as an investment company.
FINANCIAL
For the year to 31 December 2018, the Company made a loss from continuing operations of £731,192 (2017: loss of
£1,135,685). The net asset value of the Company as at 31 December 2018 was £7,254,727 (2017: £2,448,769).
The Company’s investment portfolio at 31 December 2018 is divided into the following categories:
Category
Cost or valuation (£)
Debt and equity-linked debt investments
Equity investments
Other
Cash resources
Total
2,996,917
546,380
250.418
3,597,734
7,391,449
REVIEW OF THE YEAR
2018 has been an extremely busy year for the Company. During the year, the Board announced that the Company had
entered into an arrangement with RiverFort Global Capital Ltd (“RiverFort”), the specialist provider of capital to junior
companies whereby the Company would have the opportunity to invest in transactions arranged by RiverFort alongside
other co-investors. This arrangement was subsequently approved by shareholders in a general meeting on 8 June 2018.
The purpose of this arrangement was to provide greater access to investment opportunities, lower the volatility and risk
associated with pure equity investment and drive the development of cash income and returns for the Company. It also
enabled investors to gain access to the RiverFort investment strategy via a publicly listed vehicle.
Against this background, during the course of the year, the Company raised almost £6 million in new funds from a range
of new investors, both private and institutional, in order to have the capital available to deploy in the opportunities
arranged by RiverFort. By the end of the year, the Company held around £3 million in RiverFort-arranged investments.
At the same time, the Company’s equity portfolio has been reduced in order to lower the risk profile of the Company’s
investment portfolio.
As a result of these new investments, along with a focus on a reduction of costs, the Company’s results for the year have
significantly improved compared to the previous year.
Income breakdown
Investment income
Net loss from financial instruments at FVTPL
Total income
Administration costs
Other gains and losses
Operating profit
2018
£000
513
(929)
(416)
279
(35)
(731)
2017
£000
12
(812)
(800)
336
(1,136)
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RiverFort Global Opportunities plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2018
Investment income derives principally from the fees and interest income in relation to the RiverFort-arranged
investments. The net loss from financial instruments at FVTP represents the impact of valuing the investment portfolio
at fair value as described under the new IFRS 9 accounting policy. The principal contributor to this loss during 2018 was
the unrealised loss recorded on the investment in Plutus PowerGen plc, held within the Company’s existing equity
portfolio. This company’s share price decreased by almost 80% during 2018 and, as at the year end, the Company’s
holding was valued at £213,440.
In overall terms, these results clearly validate the Company’s focus on building its debt and equity-linked debt portfolio
and entering into the investment adviser agreement with RiverFort. Furthermore, these results have been achieved
against the background of the Company’s available investment funds only being partially invested over this period and
with a reduced cost base again for only part of the period.
The Company’s Board has also been strengthened with the addition of Andrew Nesbitt, a qualified mining engineer, with
over 20 years of experience in the natural resources sector and I joined the Board effective 1 January 2019. Towards
the end of the year, the Company changed its name to RiverFort Global Opportunities plc and expanded its investing
policy to include healthcare and technology.
More details of the company’s investing activities and investment portfolio are set out in the Strategic Report.
OUTLOOK AND STRATEGY
Going forward the Company is continuing to actively invest its capital in new opportunities and, to date, has now invested
around £5.5 million in RiverFort-arranged investments. There continues to be strong demand for funding from junior
listed companies which can deliver attractive investment returns. The Company still has a substantial cash balance to
deploy as a result of the return of principal from its investments, the generation of investment income and its fund-raising
activities. It is therefore particularly well placed to continue to build on the results for 2018 and grow its portfolio
significantly and rapidly by making investments that can generate income and capital growth whilst offering downside
protection. We firmly believe that 2019 will be another positive year for the Company.
Philip Haydn-Slater
Chairman
27 June 2019
5
RiverFort Global Opportunities plc
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The Directors present their Strategic Report on the Company for the year ended 31 December 2018.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
Introduction
The Company is an investment company listed on AIM. It is principally focused on investing in junior listed companies.
During the year, the Board announced that the Company had entered into an arrangement with RiverFort Global Capital
Ltd (“RiverFort”), the specialist provider of capital to junior companies whereby the Company would have the opportunity
to invest in transactions arranged by RiverFort alongside other co-investors. Returns are principally generated through a
combination of fees, interest and other equity linked or performance-based instruments. These transactions generally
take the form of debt or equity-linked debt investments and will enable the Company to de-risk its overall investment
portfolio and to generate regular cash income.
Debt and equity linked portfolio
During the year, the Company has been focused on building up this portfolio and as at the year end the value of these
investments amounted to £2,996,917. This portfolio principally comprised investments in the following companies:
Company
Jubilee Metals Group plc
Amur Minerals plc
EQTEC PLC
Lions Bay Capital Inc
Linkwood Holdings Limited
Artemis Resources Limited
Oil and gas company
Mining company
Mining company
Technology company
Healthcare company
AIM listed
AIM listed
AIM listed
TSXV listed
Private
ASX listed
AIM listed
AIM listed
AIM listed
AIM listed
AIM listed
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, a Gibraltar based fund advised by
RiverFort. 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.
Often as part of the Company’s investment, the investee company will issue warrants. The value of the warrants
attributable to the Company’s investments are calculate using the Black-Scholes option pricing model and the resulting
figure discounted by 75% to reflect the level of expected return associated with such holdings given their highly volatile
nature.
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RiverFort Global Opportunities plc
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
Equity portfolio
During the year, the Company has reduced the size of its equity portfolio in order to reduce the overall risk profile of its
investment portfolio. The Company has continued to do this into 2019. At the year end, the Company’s equity portfolio
comprised the following:
Company
Description
Plutus PowerGen plc
on
listed on AIM
A power company
development,
the
focused
construction and operation of flexible
electricity and gas power generation in
the UK
Pires Investments plc
An investment company listed on AIM
Other
Total
Various small holdings principally in
listed companies
Current value of
investment
£000
214
175
157
546
Since the year end, the majority of the holdings in the Other category above have been sold. Also, in February 2019, Pires
Investments plc raised some additional funds by way of a share placing at a price of 2.4 pence per share. The Company
invested in this fund raising in order to maintain its shareholding at 24.3%. The current share price of this company is 2.3
pence compared to the company’s net asset position of 3.5 pence per share as disclosed by the company at the end of
April 2019.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
COMPANY STATISTICS
31 December
2018
31 December
2017
Change %
Net asset value
£7,254,727
£2,448,769
+196%
Net asset value – fully diluted per share
Closing share price
Net asset discount to share price – fully diluted
0.11p
0.09p
18%
0.24p
0.13p
46%
Market capitalisation
£6,110,000
£1,322,000
-53%
-31%
-28%
+362%
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 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. Details of other financial risks and their management are given in Note 20 to the financial
statements.
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RiverFort Global Opportunities plc
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Company's financial risk management objectives and policies are set out in Note 20 to these financial
statements.
GOING CONCERN
The Company’s assets comprise mainly cash, debt securities and quoted securities. As at 20 June 2019, the Company
had cash resources of £2,036,000 and has prepared cash forecasts to June 2020 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
27 June 2019
8
RiverFort Global Opportunities plc
DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The Directors present their annual report on the affairs of the Company, together with the audited financial statements
for the year ended 31 December 2018.
CHANGE OF NAME
At the Company’s Annual General Meeting held on 26 October 2018, the shareholders agreed to change the name of
the Company to RiverFort Global Opportunities plc from Paternoster Resources plc.
PRINCIPAL ACTIVITIES
The Company’s principal activity is that of an investment company focused on making investments in the natural
resources, technology and healthcare sectors.
RESULTS AND DIVIDENDS
The Company made a loss after taxation of £731,192 (2017: loss of £1,135,685). The Directors do not propose a
dividend (2017: £nil).
The key performance indicators are shown in the Strategic Report.
DIRECTORS
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.
N Lee
Ms A van Dyke
A Nesbitt (appointed 21 February 2018)
Percentage
of issued
share capital
31 December
2018
31 December
2017
0.68%
46,014,706
16,014,706
−
−
0.15%
10,000,000
−
−
On 1 January 2019, Philip Haydn-Slater was appointed as Non-Executive Chairman. Prior to his appointment, he held
50,000,000 shares. Since his appointment, he has purchased a further 150,000,000 shares in the Company, bringing
his total holding to 200,000,000 shares, representing 2.95% of the issued share capital of the Company.
SUBSTANTIAL INTERESTS
The Company is aware that at 27 June 2019, the following, other than the Directors shown above, held in excess of
3% of the issued share capital of the Company:
Miton Group plc
Cannacord Genuity Group Inc
James Caird Investment Limited
RiverFort Global Capital Ltd
Nicholas Slater
GIS UK Limited
James Lewis
Spreadex Limited
Ashworth Global Investments
Sigma Broking Limited
Number of
ordinary shares
Percentage of
issued share capital
1,145,454,545
1,000,000,000
500,000,000
318,959,090
268,329,093
250,000,000
242,954,545
240,000,000
230,000,000
210,000,000
16.87%
14.73%
7.36%
4.69%
3.95%
3.68%
3.58%
3.53%
3.39%
3.09%
9
RiverFort Global Opportunities plc
DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
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 report
on Corporate Governance. .
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 supply 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 who was appointed as non-executive Chairman subsequent
to the year end. 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.
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RiverFort Global Opportunities plc
DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
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 International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”) and have also elected to prepare
the financial statements in accordance with IFRS as adopted by the EU. 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 applicable IFRSs as adopted by the European Union have been followed, 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.
AUDITORS
So far as each of the directors is 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.
POST YEAR END EVENTS
There were no material post year-end events
AUDITORS
PKF Littlejohn LLP, having expressed their willingness to continue in office, will be deemed reappointed for the next
financial year in accordance with section 487(2) of the Companies Act 2006 unless the Company receives notice
under section 488(1) of the Companies Act 2006.
This report was approved by the Board on 27 June 2019 and signed on its behalf.
M Nicholson
Secretary
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RiverFort Global Opportunities plc
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The remuneration of the directors has been fixed by the Board as a whole. The Board seeks to provide appropriate
reward for the skill and time commitment required so as to retain the right calibre of director at a cost to the Company
which reflects current market rates. Details of directors’ fees and of payments made for professional services rendered
are set out in Note 8 to the financial statements and details of the directors’ share options are set out in Note 10.
During the period, the following remuneration and other benefits were charged to the Company:
Name of director
N Lee
A van Dyke
A Nesbitt
SHARE OPTIONS
Salaries
£
57,334
24,333
−
81,667
Benefits
£
−
−
−
−
Total
2018
£
57,334
24,333
−
81,667
Total
2017
£
84,000
36,000
−
120,00
At 31 December 2017, Nicholas Lee held 42,000,000 share options. These share options were cancelled during the
year.
DIRECTORS’ SHAREHOLDINGS
As at 31 December 2018, the Directors had the following interests in the share capital of the Company:
N Lee
Ms A van Dyke
A Nesbitt (appointed 21 February 2018)
Percentage
of issued
share capital
31 December
2018
31 December
2017
0.68%
46,014,706
16,014,706
−
−
0.15%
10,000,000
−
−
Nicholas Lee
Director
27 June 2019
12
RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The Board recognises its responsibility for the proper management of the Company and is committed to maintaining
a high standard of corporate governance. The Directors recognise the importance of sound corporate governance
commensurate with the size and nature of the Company and the interests of its Shareholders. The Quoted Companies
Alliance has published the QCA Code, which includes a standard of minimum best practice for AIM companies, and
recommendations for reporting corporate governance matters. The Directors take into account the QCA Code, to the
extent they consider it appropriate and having regard to the size and resources of the Company.
The Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and corporate
actions. The Company holds Board meetings at least six times each financial year and at other times as and when
required.
ANTI-CORRUPTION AND BRIBERY POLICY
The Company has adopted an anti-corruption and bribery policy which applies to the Directors. It generally sets out
their responsibilities in observing and upholding a zero tolerance position on bribery and corruption in all the
jurisdictions in which the Company operates as well as providing guidance on how to recognise and deal with bribery
and corruption issues and the potential consequences. The Company expects all employees, suppliers, contractors
and consultants to conduct their day-to-day business activities in a fair, honest and ethical manner, be aware of and
refer to this policy in all of their business activities worldwide and to conduct business on the Company’s behalf in
compliance with it.
The Company has established a remuneration committee and an audit and compliance committee with formally
delegated duties and responsibilities.
AUDIT AND COMPLIANCE COMMITTEE
The Audit and Compliance Committee has primary responsibility for monitoring the quality of internal controls and
ensuring that the financial performance of the Company is properly measured and reported on. It receives and reviews
reports from the Company’s management and auditors relating to the interim and annual accounts and the accounting
and internal control systems in use throughout the Company. The Audit and Compliance Committee is responsible
for keeping under review the scope and results of the audit, its cost effectiveness and the independence and objectivity
of the auditors. It also has responsibility for public reporting and internal controls. The Audit and Compliance
Committee also monitors the Company’s compliance with the AIM Rules for Companies and ensures that procedures,
resources and controls are in place to ensure the Company’s compliance with the AIM Rules for Companies. The
members of the Audit and Compliance Committee are Philip Haydn-Slater and Amanda van Dyke.
RENUMERATION COMMITTEE
The Remuneration Committee reviews the performance of the Directors and makes recommendations to the Board
on matters relating to their remuneration and terms of employment. Under its terms of reference, it meets at least once
a year and is responsible for ensuring that the Directors are fairly rewarded (which extends to all aspects of
remuneration) for their individual contribution to the overall performance of the Company. The members of the
Remuneration Committee are Nicholas Lee and Andrew Nesbitt.
SHARE DEALING CODE
The Company has adopted a share dealing policy which sets out the requirements and procedures for the Board in
any of its AIM securities in accordance with the provisions of MAR and of the AIM Rules for Companies.
13
RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
COMPLIANCE WITH CORPORATE GOVERNANCE CODE
BACKGROUND
All members of the Board believe strongly in the value and importance of good corporate governance and in
accountability to all of the Company’s stakeholders. The statement below, explains the approach to governance, and
how the Board and its Committees operate.
Changes to the AIM Rules on 30 March 2018 required AIM companies to apply a recognised corporate governance
code by 28 September 2018.
The corporate governance framework which the Company operates, including board leadership and effectiveness,
board remuneration, and internal control is based upon practices which the Board believes are proportional to the
size, risks, complexity and operations of the business and is reflective of the group’s values. Of the two widely
recognised formal codes, we have therefore decided to adopt the Quoted Companies Alliance’s (“QCA”) Corporate
Governance Code for small and mid-size quoted companies (revised in April 2018 to meet the new requirements of
AIM Rule 26).
The QCA Code is constructed around ten broad principles and a set of disclosures. The QCA has stated what it
considers to be appropriate arrangements for growing companies and asks companies to provide an explanation
about how they are meeting the principles through the prescribed disclosures. We have considered how we apply
each principle to the extent that the Board judges these to be appropriate in the circumstances, and below we provide
an explanation of the approach taken in relation to each.
The following paragraphs set out the Company’s compliance with the ten principles of the QCA Code and reasons for
any non-compliance.
1. Establish a strategy and business model which promotes long-term value for shareholders
The Company is an investing company listed on AIM. Its principal focus is investing in both listed and unlisted junior
companies where it believes that it can make an attractive return for shareholders. This strategy has recently been
further developed by entering into a partnership with RiverFort Global Capital Limited, the specialist arranger of
funding solutions to listed and unlisted junior companies. The Company is focused on deploying its capital in
investments that provide both income and downside protection. Going forward it is expected that the Company will
deliver returns to shareholders through a combination of capital growth and dividend income.
2. Seek to understand and meet shareholder needs and expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders.
Shareholders have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition,
all shareholders are encouraged to attend the Company’s Annual General Meeting (“AGM”). Investors also have
access to current information on the Company though its website, www.riverfortglobalopportunities.com and via Philip
Haydn-Slater, Non-Executive Chairman who is available to answer investor relations enquiries and can be contacted
on info@rgo-plc.com
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognizes that the long-term success of the Company is reliant upon the efforts of its directors and
partners, and upon its contractors, suppliers and regulators. The Board has put in place a range of processes and
systems to ensure that there is close Board oversight and contact with its key resources and relationships.
14
RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
It is the responsibility of the Board to ensure investments are managed within acceptable margins of risk. The
Company’s investments are monitored on a regular basis which includes reviewing corporate developments and
financial performance. The Board also ensures that no one investment represents too great a concentration in the
investment portfolio. In addition to its other roles and responsibilities, the Audit and Compliance Committee (as set
out in the composition details in the Corporate Governance section of the Company’s website) is responsible to the
Board for ensuring that procedures are, being effectively implemented to identify, evaluate and manage the significant
risks faced by the Company. Within the scope of the annual audit, specific financial risks are evaluated in detail,
including in relation to foreign currency, interest rates, liquidity and credit.
The Directors have established procedures, for the purpose of providing a system of internal control. This includes
both the procedures referred to above and the preparation of financial information about the Company on a regular
basis. In addition, there are a range of Company policies that are reviewed at least annually by the Board. These
policies cover matters such as share dealing and insider legislation. The Board currently takes the view that an internal
audit function is not considered necessary or practical due to the size of the Company and the close day to day control
exercised by the Directors. However, the Board will continue to monitor the need for an internal audit function.
As noted in the Strategic Report in the Annual Report, the Board regularly reviews operating and strategic risks and
considers in such reviews financial and non-financial information including:
– a review of the business at each Board meeting, focusing on any new decisions/risks arising;
– the performance of investments;
– selection criteria of new investments; and
– reports prepared by third parties.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
The QCA Code requires that the boards of AIM companies have an appropriate balance between executive and non-
executive directors of which at least two should be independent.
The Board comprises, the Non-executive Chairman Philip Haydn-Slater. Investment Director Nicholas Lee, and two
Non-Executive Directors, Andrew Nesbitt and Amanda van Dyke. The Board is assisted by Miles Nicholson with respect
to financial accounting and Company Secretarial matters. The time commitment formally required by the Company is
an overriding principal that each director will devote as much time as is required to carry out the roles and responsibilities
that the director has agreed to take on. Biographical details of the current directors are set out within Principle Six below.
Executive and non-executive directors are subject to re-election intervals as prescribed in the Company’s Articles of
Association.
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 they can then offer themselves for re-
election. The letters of appointment of all directors are available for inspection at the Company’s registered office during
normal business hours.
The Directors receive fees for their services as directors which are approved by the Board, being mindful of the time
commitment and responsibilities of their roles and of current market rates for comparable organizations and
appointments.
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. Whilst, the Company does not have a specific CFO, the Investment Director is a
qualified accountant and therefore is able to provide sufficient financial oversight. Furthermore, financial information
is prepared on a regular basis by the Company’s third party accounting services provider thereby separating
preparation from review.
15
RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
The Board meetings are held as regularly as necessary given the Company’s levels of activity but with at least six
meetings held a year. It has established an Audit and Compliance Committee and a Remuneration Committee,
particulars of which appear hereafter. The Board agreed that appointments to the Board are made by the Board as a
whole and so has not created a Nominations Committee.
The Board retains full control of the Company with day-to-day operational control delegated to the Investment Director
and other Directors. The full Board meets on occasions it considers necessary.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
All four members of the board bring relevant sector experience and public markets experience and one member is a
chartered accountant. One director is female and three are male. The Board believes that its blend of relevant
experience, skills and personal qualities and capabilities is sufficient to enable it to successfully execute its strategy.
Philip Haydn-Slater, Independent Non-Executive Chairman
Philip has over 35 years of experience in stockbroking and commodities with a number of well-known stockbroking
firms. He spent eight years as Head of Corporate Broking at WH Ireland Limited in London, where he was responsible
for originating and managing equity transactions, including IPOs and secondary placings for corporate clients on AIM
and other international exchanges including the Australian and Canadian stock exchanges largely in the natural
resources sector. Philip has also worked in London and Sydney for various financial institutions including ABN Amro,
Bankers Trust, James Capel & Co and Bain Securities (Deutsche Bank) Sydney. More recently, given his wealth of
experience, he has acted as an independent director on the boards of a number of public and private companies.
Nicholas Lee, Investment Director
Nicholas read Engineering at St. John’s College, Cambridge and began his career at Coopers & Lybrand where he
qualified as a chartered accountant. He then joined Dresdner Kleinwort where he worked in their corporate finance
department advising a range of companies across a number of different sectors. When he left in 2009, he was a
Managing Director and Head of Investment Banking for Dresdner Kleinwort’s hedge fund/alternative asset manager
clients. Since then, Nicholas has been actively involved with AIM companies and is currently a director of a number
of AIM listed companies including, Pires Investments plc and Immotion Group plc.
Andrew Nesbitt, Non-Executive Director
Andrew is a qualified mining engineer and is a consultant to RiverFort Global Capital Limited, the specialist provider
of financing to the natural resources sector. He holds a BSc (Eng) Mining and an MBA and has over 20 years of
experience in the natural resources sector. He has held various production and technical roles with both De Beers
and Goldfields and has carried out a number of feasibility studies across the world with the leading technical consulting
group SRK. In addition, Andrew is also an experienced investor, having previously worked as a partner and portfolio
manager for Craton Capital Pty Limited, a global precious metals fund with over US$400 million of assets under
management.
Amanda van Dyke, Independent Non-Executive Director
Amanda van Dyke is currently a specialist fund manager at South River Asset Management. Amanda has previously
worked for Dundee Securities, Ocean Equities and GMP as a mining specialist in equity sales. She has an MBA and
an MA in international economics from SDA Bocconi. Amanda is also the chairman of Women in Mining (UK),
sponsored by Rio Tinto, Anglo American and Glencore.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Internal evaluation of the Board, its Committees and individual directors is important and will develop as the Company
grows in the future. The expectation is that Board reviews will be undertaken on an annual basis in the form of peer
appraisal, questionnaires and discussions to determine the effectiveness and performance in various areas as well
as the directors’ continued independence
16
RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
8. Promote a corporate culture that is based on ethical values and behaviours
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company
as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and
culture set by the Board will greatly impact all aspects of the Company as a whole. Therefore, the importance of sound
ethical values and behaviour is crucial to the ability of the Company to successfully achieve its corporate objectives.
The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that
the Company does. The Board assessment of the culture within the Company at the present time is one where there
is respect for all individuals, open dialogue within the Company and a commitment to best practice.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the
Board
The Board schedule provides for quarterly meetings and, in addition, meets ad-hoc as required. Notwithstanding the
above, the Board and its Committees receive appropriate and timely information prior to each meeting; a formal
agenda is produced for each meeting, and Board and Committee papers are distributed several days before meetings
take place. Any Director may challenge Company proposals and decisions are taken democratically after discussion.
Any Director who feels that any concern remains unresolved after discussion may ask for that concern to be noted in
the minutes of the meeting, which are then circulated to all Directors. Any specific actions arising from such meetings
are agreed by the Board or relevant Committee and then followed up by the Company’s management.
The Audit and Compliance Committee monitors the integrity of financial statements, oversees risk management and
control, monitors the effectiveness of the internal audit function and reviews external auditor independence. It also
ensures that the Company is compliant with its relevant regulatory requirements. Philip Haydn-Slater and Amanda
van Dyke are the members of this committee.
The Remuneration Committee reviews the Board’s remuneration on a regular basis. Nicholas Lee and Andrew Nesbitt
are the members of this committee.
Nominations to the Board are decided on by the Board as a whole and therefore the Company does not believe that
there is any need for a separate. Nominations Committee.
The Non-Executive Chairman has overall responsibility for corporate governance and in promoting high standards
throughout the group. He leads and chairs the Board, ensuring that committees are properly structured and operate
with appropriate terms of reference, ensures that performance of individual directors, the board and its committees
are reviewed on a regular basis, leads in the development of strategy and setting objectives, and oversees
communication between the group and its shareholders.
The Non-Executive Directors contribute independent thinking and judgement through the application of their external
experience and knowledge, scrutinise the performance of management, provide constructive challenge to the
executive directors and ensure that the group is operating within the governance and risk framework approved by the
Board.
The Company Secretary is responsible for providing clear and timely information flow to the board and its committees
and supports the board on matters of corporate governance and risk.
The Board has approved the adoption of the QCA Code as its governance framework against which this statement
has been prepared and will monitor the suitability of this code on an annual basis and revise its governance framework
as appropriate as the group evolves.
10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and
other relevant stakeholders
The Company communicates with shareholders through the Annual Report and Accounts, full-year and half-year
announcements, the AGM and one-to-one meetings with large existing or potential new shareholders. A range of
corporate information (including all Company announcements and presentations) is also available to shareholders,
investors and the public on the Company’s corporate website, www.riverfortglobalopportunities.com
17
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2018
Opinion
We have audited the financial statements of RiverFort Global Opportunities plc (the “Company”) for the year
ended 31 December 2018 which comprise the statement of comprehensive income, the statement of financial
position, the statement of changes in equity, the statement of cash flows, and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the company’s affairs as at 31 December 2018 and of its loss for the
year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report
to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
18
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2018
Key audit matter
How the scope of our audit responded to the key audit matter
Revenue recognition
In the current year the company had
generated new material revenue streams
being the structures finance fee income of
£394,869 and interest receivable of
£117,874.
There is a risk of incorrect revenue
recognition policy under IFRS.
Verification, classification and ownership of
Financial asset investments
At the year end, the company held financial
asset investments of £3,793,715 which is
made up of Equity investments, structured
finance investments and share warrants.
There is a risk that the financial asset
investments are classified and valued
incorrectly.
We reviewed the participation agreements in place in respect of
the structured finance investments and verified that the
origination fees and interest receivable reconcile with that
included within the financial statements;
We recalculated a sample of the effective interest rate
calculations to ensure they are in line with the terms of the loan
agreement and are fairly stated in the financial statements;
We documented our understanding of the revenue process and
procedures, and performed a walk-through test ensuring the
system ran in line as documented and in line with our
understanding of the business
We performed a post year end review of receipts to ensure the
total revenue disclosed in the financial statements is complete;
and
We discussed with management and adequately challenged the
estimates and assumptions made.
We verified ownership of the investments held during the period;
We reviewed the valuation methodology for each type of
investment held and ensure that the carrying values were
appropriately supported;
We tested that gains and losses charged through to the
statement of comprehensive income have been accounted for
and classified correctly;
We obtained a direct confirmation from the investment manager,
confirming all investments held at the year end;
We tested the disclosures made in the financial statements; and
We reviewed the accounting treatment of the loans and ensured
they are in line with IFRS.
Our application of materiality
Materiality for the Company financial statements as a whole was set at £118,000 (2017: £75,000).
This has been calculated as 1.5% of the benchmark of Gross Assets (2017: 3% of the benchmark of Gross
Assets), which we have determined, in our professional judgment, to be one of the principal benchmarks within the
financial statements relevant to members of the Company in assessing financial performance.
We report to the director’s all corrected and uncorrected misstatements we identified through our audit with a value
in excess of £5,900 (2017: £3,750), in addition to other audit misstatements below that threshold that we believe
warranted reporting on qualitative grounds.
19
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2018
An overview of the scope of our audit
Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of material misstatement,
aspects subject to significant management judgement as well as greatest complexity, risk and size.
The finance asset investments balance is highly material and incorporates both equity investments and structured
finance investments, which are new in the current year. We carried out a detailed review of the classification of the
financial assets as FVTPL and assessed the fair value of the instruments on a sample basis to ensure they are
materially stated in these financial statements. This also incorporated the review of the net income from financial
instruments at FVTPL.
We consider management override and related parties to be qualitatively material. Although it is not the
responsibility of the auditor to discover fraud, clearly any instances of fraud which we detect are material to the
users of the financial statements. We have tested manual and automated journal entries, with a focus on those
journal entries at year end. In addition, as part of our audit procedures to address this fraud risk, we assessed the
overall control environment and reviewed whether there had been any reported actual or alleged instances of
fraudulent activity during the year. For Related Parties, we have inquired with the client as the relevant related
parties. We have also assessed the Company’s procedures regarding related parties.
Other matter
The financial statements of the prior period were audited by the predecessor auditor. An unqualified opinion was
issued on 25 June 2018.
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the
financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 11, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
20
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2018
such internal control as the directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members
those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Eric Hindson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
27 June 2019
1 Westferry Circus
Canary Wharf
London E14 4HD
21
RiverFort Global Opportunities plc
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
CONTINUING OPERATIONS:
Net loss from financial instruments at FVTPL
Investment income
TOTAL INCOME
Administrative expenses
Other gains and losses
LOSS BEFORE TAXATION
Taxation
LOSS FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME
EARNINGS PER SHARE
Basic and fully diluted loss per share
2018
2017
Note
£
£
4
5
7
6
11
12
(929,412)
(811,467)
512,743
11,934
(416,669)
(799,533)
(278,707)
(336,152)
(35,816)
−
(731,192)
(1,135,685)
−
−
(731,192)
(1,135,685)
(0.018p)
(0.112p)
22
RiverFort Global Opportunities plc
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2018
NON-CURRENT ASSETS
Financial asset investments
CURRENT ASSETS
Financial asset investments
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Other financial liabilities
NET ASSETS
EQUITY
Share capital
Share premium account
Capital redemption reserve
Share option reserve
Retained losses
TOTAL EQUITY
Note
13
13
14
15
16
17
18
18
19
19
2018
£
2017
£
1,540,456
1,540,456
2,252,373
2,252,373
2,253,259
206,107
3,597,734
6,057,100
−
37,863
211,795
249,658
7,597,556
2,502,031
307,013
35,816
342,829
53,262
−
53,262
7,254,727
2,448,769
10,042,273
3,191,257
27,000
−
(6,005,803)
4,269,546
3,191,257
27,000
73,150
(5,112,184)
7,254,727
2,448,769
These Financial Statements were approved by the Board of Directors on 27 June 2019 and were signed on its behalf by:
N Lee
Director
Company number: 269566
The accompanying accounting policies and notes are an integral part of these financial statements.
23
RiverFort Global Opportunities plc
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
Share
capital
£
Share
premium
£
Other
reserves
£
Retained
losses
£
Total
equity
£
BALANCE AT 1 JANUARY 2017
4,269,546
3,191,257
100,150
(3,976,499)
3,584,454
Loss for the year and total
comprehensive expense
−
−
−
(1,135,685)
(1,135,685)
BALANCE AT 31 DECEMBER 2017
4,269,546
3,191,257
100,150
(5,112,184)
2,448,769
Loss for the year and total
comprehensive expense
Share option reserve transfer following
cancellation of options
−
−
−
−
(731,192)
(731,192)
−
(73,150)
73,150
−
Share issues
5,772,727
77,273
Share issue expenses
−
(77,273)
Transactions with owners
5,772,727
−
−
−
−
−
5,850,000
(235,577)
(312,850)
(235,577)
5,537,150
BALANCE AT 31 DECEMBER 2018
10,042,273
3,191,257
27,000
(6,005,803)
7,254,727
The accompanying accounting policies and notes are an integral part of these financial statements.
24
RiverFort Global Opportunities plc
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
Note
2018
£
2017
£
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Investment income
Net losses on investments
Unrealised loss on foreign currency contract
OPERATING CASH FLOWS BEFORE MOVEMENTS IN
WORKING CAPITAL
Decrease/(Increase) in trade and other receivables
Increase in trade and other payables
NET CASH USED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchase of investments
Disposal of investments
Debt instrument repayments
Investment income received
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Share issues
Share issue costs
NET CASH FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the year
5
4
17
14
16
13
13
13
18
18
(731,192)
(512,743)
929,412
35,816
(1,135,685)
(11,934)
811,467
−
(278,707)
(336,152)
14,963
10,805
(8,721)
10,892
(252,939)
(333,981)
(3,204,994)
783,975
193,211
329,536
(321,167)
206,844
−
11,934
(1,898,272)
(102,389)
5,850,000
(312,850)
5,537,150
−
−
3,385,939
(436,370)
211,795
648,165
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
15
3,597,734
211,795
The accompanying accounting policies and notes are an integral part of these financial statements.
25
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
1
GENERAL INFORMATION
RiverFort Global Opportunities plc is a public limited company incorporated in the United Kingdom. The
shares of the Company are listed on the Alternative Investment Market (AIM). The address of its registered
office is Suite 12a, 55 Park Lane, London, W1K 1NA. 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.
As in prior periods, the Company’s financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IFIRC interpretations (IFRS IC) as adopted by the European Union
and the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have
been prepared under the historical cost convention, as modified by financial assets and financial liabilities
(including derivative instruments) at fair value. 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 2017.
GOING CONCERN
The Company’s assets comprise mainly cash, debt securities and quoted securities. As at 20 June 2019, the
Company had cash resources of £2,036,000 and has prepared cash forecasts to June 2020 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.
26
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
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. These techniques are
significantly affected by certain key assumptions, such as market liquidity. Other valuation methodologies
such as discounted cash flow analysis assess estimates of future cash flows 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 and 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 2018:
IFRS 9 Financial Instruments;
IFRS 15 Revenue from contracts with customers;
•
•
• Annual improvements 2014-2016 cycle;
IMPACT OF ADOPTION OF IFRS 9
The classification and measurement requirements of IFRS 9 have been adopted with effect from the date of
initial application on 1 January 2018. However, the Company has chosen to take advantage of the option not
to restate comparatives. Therefore, the 2017 figures are presented and measured under IAS 39. The following
table shows the original measurement categories in accordance with IAS 39 and the new measurement
categories under IFRS 9 for the Company’s financial assets and financial liabilities as at 1 January 2018:
1 January 2018
Financial assets
IAS 39
classification
IAS 39
measurement
IFRS 9
classification
IFRS 9
measurement
£
£
Cash and cash equivalents
Loans and receivables
211,795
Amortised cost
211,795
Financial assets at fair
value through profit or loss
Held for trading at fair value
through profit or loss
2,252,373
Fair value through
profit or loss
2,252,373
Financial liabilities
Payables
Other financial liabilities
22,067
Amortised cost
22,067
27
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
REVENUE RECOGNITION
INVESTMENT INCOME
Dividend income from financial assets at fair value through profit or loss is recognised in the statement of
comprehensive income on an ex-dividend basis.
Interest on fixed interest debt securities, designated at fair value through profit or loss, is recognised using
the effective interest rate method. Other structured finance fees are recognised on the date of the relevant
agreement.
Bank deposit interest is recognised on an accruals basis.
FOREIGN CURRENCY TRANSLATION
In preparing the financial statements of the Company transactions in currencies other than the Company’s
functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was
determined.
Exchange differences are recognised in profit or loss in the period in which they arise.
28
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 now 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.
29
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
FINANCIAL ASSETS INVESTMENTS
CLASSIFICATION OF FINANCIAL ASSETS
The Company holds financial assets including equities and debt securities. On 1 January 2018, the
Company adopted IFRS 9 Financial Instruments (IFRS 9). IFRS 9 replaces the classification and
measurement models previously contained
in IAS 39 Financial Instruments: Recognition and
Measurement. The classification and measurement of financial assets at 31 December 2018 is in
accordance with IFRS 9 and the classification and measurement of financial assets at 31 December 2017
is in accordance with IAS 39 as the Group has not restated comparative information.
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: the 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. The fair value of the financial instruments 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 valuations
in respect of unquoted investments (Level 2 and Level 3 financial assets) are explained in note 13.
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.
30
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
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.
“Option reserve” represents the cumulative cost of share based payments.
“Retained losses" represents retained losses.
31
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
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
NET LOSS ON INVESTMENTS
Net realised (losses)/gains on disposal of investments
(19,764)
92,473
2018
£
2017
£
Net movement in fair value of investments
Net foreign exchange gain on investments
Net (loss) on investments
5
INVESTMENT INCOME
Structured finance fees
Deposit interest receivable
Other interest receivable
(964,582)
(903,940)
54,934
−
(929,412)
(811,467)
2018
£
394,869
−
117,874
512,743
2017
£
−
1,871
10,063
11,934
32
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
6
OTHER GAINS AND LOSSES
Unrealised loss on foreign currency contract
7
LOSS FOR THE YEAR
Profit for the year has been arrived at after charging:
Wages and salaries
Office rent
Stock Exchange fees
Share registrars’ fees
Nominated advisor fees
Corporate broking fees
Audit and tax compliance
Other legal and professional fees
Other administrative expenses
Net foreign exchange translation difference
2018
£
(35,816)
(35,816)
2018
£
87,612
8,740
22,158
5,101
27,400
24,000
27,304
49,258
36,433
(9,299)
2017
£
−
-
2017
£
131,329
27,792
11,399
3,451
33,830
24,000
14,100
51,935
38,316
−
Total administrative expenses as per the statement of comprehensive
income
278,707
336,152
AUDITOR’S REMUNERATION
During the year the Company obtained the following services from the Company’s auditor:
Fees payable to the Company’s auditor for the audit of the parent
company and the Company financial statements
Fees payable to the Company’s auditor and its associates for other
services:
Other services relating to taxation
2018
£
2017
£
24,000
12,000
3,304
27,304
2,100
14,100
33
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
8
DIRECTORS’ EMOLUMENTS
Salaries
£
Benefits
£
57,334
24,333
−
81,667
−
−
−
−
Aggregate emoluments
Social security costs
Name of director
N Lee
A van Dyke
A Nesbitt
9
EMPLOYEE INFORMATION
Wages and salaries
Social security costs
Average number of persons employed:
Office and management
2018
£
81,667
5,945
87,612
Total
2018
£
57,334
24,333
−
81,667
2018
£
81,667
5,945
87,612
2018
Number
2
2017
£
120,000
11,329
131,329
Total
2017
£
84,000
36,000
−
120,000
2017
£
120,000
11,329
131,329
2017
Number
2
COMPENSATION OF KEY MANAGEMENT PERSONNEL
There are no key management personnel other than the Directors of the Company.
34
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
10
SHARE BASED PAYMENTS
EQUITY-SETTLED SHARE OPTION SCHEME
The Company operates share-based payment arrangements to remunerate directors and key employees in
the form of a share option scheme. Equity-settled share-based payments are measured at fair value (excluding
the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period,
based on the Company’s estimate of shares that will eventually vest and adjusted for the effect of non-market
based vesting conditions.
On 26 October 2011, Nicholas Lee was granted options to subscribe for 28,000,000 new ordinary shares in
the Company at an exercise price of 0.32p per share. The options are exercisable for a period of ten years
from the date of grant, with one third becoming exercisable on the first, second and third anniversaries of the
date of grant respectively.
On 13 March 2012, Nicholas Lee was granted options to subscribe for 14,000,000 new ordinary shares in the
Company at an exercise price of 0.48p per share. The options are exercisable for a period of ten years from
the date of grant, with one third becoming exercisable on the first, second and third anniversaries of the date
of grant respectively. The fair value of these options was determined using the Black-Scholes option pricing
model and was £0.22p per option.
All remaining options were cancelled during the year. The deemed benefit of the options using the Black-
Scholes model was fully expensed in previous years so there has been no charge to the profit and loss account
in respect of their cancellation in the current year.
The significant inputs to the model in respect of the options granted in 2014, 2012 and 2011 were as follows:
Grant date share price
Exercise share price
No. of share options
Risk free rate
Expected volatility
Option life
Calculated fair value per share
2014
0.26p
0.26p
20,000,000
2.5%
50%
10 years
0.14p
2012
0.48p
0.48p
14,000,000
3%
40%
10 years
0.22p
2011
0.32p
0.32p
28,000,000
3%
40%
10 years
0.15p
The total share-based payment expense recognised in the income statement for the year ended 31 December
2018 in respect of the share options granted was £Nil (2017: £Nil).
Number of
options at
1 Jan 2018
9,333,334
4,666,667
9,333,333
4,666,667
9,333,333
4,666,667
42,000,000
Granted
in the year
Exercised
in the year
Cancelled
in the year
Number of
options at
31 Dec 2018
−
−
−
−
−
−
−
− 9,333,334
− 4,666,667
− 9,333,333
− 4,666,667
− 9,333,333
− 4,666,666
− 42,000,000
−
−
−
−
−
−
−
Exercise
price
Vesting
Date
Expiry
date
0.32p 26.10.2012
0.48p 13.03.2013
0.32p 26.10.2013
0.48p 13.03.2014
0.32p 26.10.2014
0.48p 13.03.2015
26.10.2021
13.03.2022
26.10.2021
13.03.2022
26.10.2021
13.03.2022
0.37p
35
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
11
INCOME TAX EXPENSE
Current tax – continuing operations
2018
2017
£
−
£
−
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:
2018
£
2017
£
Profit/(loss) before tax from continuing operations
(731,192)
(1,135,685)
Profit/(loss) before tax multiplied by rate of corporation tax in the UK of 19%
(2017: 19.25%)
Expenses not deductible for tax purposes
Offset against tax losses brought forward
Unrelieved tax losses carried forward
Total tax
(138,926)
(218,619)
1,182
−
2,728
−
137,744
215,891
−
−
Unrelieved tax losses of approximately £5,210,000 (2017: £4,485,000) 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.
12
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.
2018
£
2017
£
loss attributable to equity holders of the Company:
loss from continuing operations
(731,192)
(1,135,685)
loss for the year attributable to equity holders of the Company
(731,192)
(1,135,685)
Weighted average number of ordinary shares in issue for basic and fully
diluted earnings*
4,152,597,991 1,016,607,956
EARNINGS/(LOSS) PER SHARE
BASIC AND FULLY DILUTED:
- Basic (loss)/earnings per share from continuing and total operations
- Fully diluted (loss)/earnings per share from continuing and total operations
(0.018p)
(0.018p)
(0.112p)
(0.112p)
*No adjustment to earnings per share for fully diluted earnings has been made as the exercise of options
would be anti-dilutive.
36
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
13
FINANCIAL ASSETS
All financial assets are designated at fair value through profit and loss (“FVTPL”)
At 1 January – fair value
Acquisition of equity investments
Equity investment disposal proceeds
Net (loss)/gain on disposal of investments
Movement in fair value of investments
Acquisition of debt securities designated at FVTPL
Debt security repayments
Movement in fair value of debt securities
Net foreign exchange gain on debt securities
At 31 December – fair value
2018
£
2017
£
2,252,373
2,949,517
−
321,167
(983,975)
(206,844)
(19,764)
92,473
(651,836)
(903,940)
596,798
2,252,373
3,647,940
(193,211)
(312,746)
54,934
−
−
−
−
3,793,715
2,252,373
Current
2018
2017
Non-current
2018
£
2017
£
Categorised as:
Level 1 – Quoted investments
£
−
Level 2 – Unquoted investments
2,253,259
Level 3 – Unquoted investments
−
2,253,259
£
−
−
−
−
507,880
1,811,625
943,658
88,918
263,513
177,235
1,540,456
2,252,373
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 are explained in the accounting policy note, “Investments held
for trading”.
LEVEL 2 FINANCIAL ASSETS
Level 2 financial assets 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.
37
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
13
FINANCIAL ASSETS (continued)
LEVEL 3 FINANCIAL ASSETS
Reconciliation of Level 3 fair value measurement of financial assets
Brought forward
Disposal proceeds
Loss on disposals
Fair value of share warrants
Movement in fair value
Carried forward
2018
£
177,235
(200,000)
(100,000)
50,418
2017
£
392,149
−
−
−
161,265
(214,914)
88,918
177,235
The Company’s level 3 investments comprise shares in Eridge Capital Limited (“Eridge”) and a number of
unquoted share warrants. The shares in Eridge have been valued in line with the approximate net asset value
of Eridge. The share warrants 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.
In line with the investment strategy adopted by the Company, Nicholas Lee is on the boards of the following
investee companies:
Pires Investments plc
Eridge Capital Limited (resigned 30 June 2018)
14
TRADE AND OTHER RECEIVABLES
Other receivables
Prepayments and accrued income
% holding
2018
24.6%
7.7%
2017
24.8%
7.7%
2018
£
17,528
188,579
206,107
2017
£
20,816
17,047
37,863
The Directors consider that the carrying amount of other receivables is approximately equal to their fair value.
15
CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2018
£
2017
£
3,597,734
211,795
The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.
38
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
16
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued expenses
2018
£
2017
£
21,989
22,067
242,946
42,078
−
31,195
307,013
53,262
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
17
OTHER FINANCIAL LIABILITIES
Liability in respect of foreign exchange contract
2018
£
35,816
35,816
2017
£
−
−
On 1 November 2018 the Company entered into a forward contract for the sale and purchase of USD 2,900,000
for settlement on 31 January 2019. At 31 December 2018 the potential liability on the contract was £35,816.
18
SHARE CAPITAL
ISSUED AND FULLY PAID:
At 1 January 2017:
Number of shares
Deferred
Ordinary
Share capital
Deferred
£
Ordinary
£
Share
premium
£
Deferred shares of 9.9p each
32,857,956
3,252,938
Ordinary shares of 0.1p each
At 1 January and 31
December 2017
Issue of shares (see note
below)
1,016,607,956
1,016,608
3,191,257
32,857,956 1,016,607,956
3,252,938
1,016,608
3,191,257
5,772,727,270
5,772,727
−
At 31 December 2018
32,857,956 6,789,335,226
3,252,938
6,789,335
3,191,257
The deferred shares have restricted rights such that they have no economic value.
Share issues in year
On 18 January 2018, 772,727,270 new ordinary shares of 0.1p were issued for cash at 0.11p each as a
result of a placing, raising £850,000 before expenses which totalled £85,000.
On 26 June 2018, 4,500,000,000 new ordinary shares of 0.1p were issued for cash at 0.1p each as a result
of a placing, raising £4,500,000 before expenses which totalled £199,850.
On 31 October 2018, 500,000,000 new ordinary shares of 0.1p were issued for cash at 0.1p each as a result
of a placing, raising £500,000 before expenses of £28,000.
39
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
19
OTHER RESERVES
Balance at 1 January 2017 and 31 December 2017
Transfer to Profit and Loss account on cancellation of
options
Capital
redemption
reserve
£
27,000
Share
option
reserve
£
73,150
Total
Other
reserves
£
100,150
−
(73,150)
(73,150)
Balance at 31 December 2018
27,000
−
27,000
20
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 £3,615,262 (2017: £232,611) comprising cash and cash
equivalents and loans and receivables.
The ageing profile of trade and other receivables was:
Current
Overdue for less than one year
2018
Total book
value
£
17,528
−
17,528
2017
Total book
value
£
20,816
−
20,816
40
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
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:
US Dollars
Liabilities
Assets
31 Dec 2018 31 Dec 2017
£
£
31 Dec 2018 31 Dec 2017
£
£
*2,272,730
2,272,730
−
−
3,301,087
3,301,087
−
−
*This amount is in respect of a forward contract to be settled on 31 January 2019.
The following table details the Company’s sensitivity to a 5 per cent increase and decrease in GBP against the
US Dollar. 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
GBP/USD rate. 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 GBP/USD rate. 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.
Profit and loss
INTEREST RATE RISK
US Dollars
31 Dec 2018 31 Dec 2017
£
£
51,418
51,418
−
−
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.
41
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
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 £80,000 (2017: £225,000).
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, Shard Capital Brokers, Monex Europe. 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.
42
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
21
FINANCIAL INSTRUMENTS
The Company uses financial instruments, other than derivatives, comprising cash to provide funding for the
Company's operations.
CATEGORIES OF FINANCIAL INSTRUMENTS
The IFRS 9 categories of financial asset included in the statement of financial position and the headings in
which they are included are as follows:
FINANCIAL ASSETS:
Cash and cash equivalents
Financial assets at amortised cost
Financial assets at fair value through profit or loss
FINANCIAL LIABILITIES AT AMORTISED COST:
2018
£
2017
£
3,597,734
211,795
17,528
20,816
3,793,715
2,252,373
The IFRS 9 categories of financial liabilities included in the statement of financial position and the headings
in which they are included are as follows:
Trade and other payables
Liability under foreign currency exchange contract
22
RELATED PARTY TRANSACTIONS
2018
£
2017
£
264,935
22,067
35,816
−
The compensation payable to Key Management personnel comprised £81,667 (2017: £120,000) 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 Note 7.
Nicholas Lee’s directorships of companies in which Riverfort Global Opportunities plc has an investment
are detailed in Note 13.
23
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
There were no contingent liabilities or capital commitments at 31 December 2018 or 31 December 2017.
24
POST YEAR END EVENTS
There were no material post year-end events.
25
ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate controlling party.