RiverFort Global Opportunities plc
Financial Statements
for the year ended 31 December 2020
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 39
18 High Street
High Wycombe
Buckinghamshire
HP11 2BE
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
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Beaumont Cornish Limited
Building 3
566 Chiswick High Road
London
W4 5YA
Peterhouse Corporate Finance Limited
80 Cheapside
London
EC2V 6DZ
Shard Capital Partners LLP
23rd Floor
20 Fenchurch Street
London
EC3M 3BY
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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
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RiverFort Global Opportunities plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
HIGHLIGHTS
• Total income generated of £2,443,000
• Net profit generated of £1,497,000
• Net asset value of £9,240,000 – an increase of 17% since the beginning of the year
• Net asset value of 1.36 pence per share representing a 41% premium to the period end share price of 0.965 pence
• Substantial cash balance available for further investment
• Successful implementation of a capital reorganisation
• Increased investment in the technology sector, specifically providing exposure to the digital assets sector and cyber
security
• Payment of a dividend
INTRODUCTION
We are very pleased to report our results for the year to 31 December 2020. This period has been an extremely
active period for the Company and the Board is delighted with the results that have been achieved. We have:
•
•
•
recorded a second profitable year
commenced the payment of a dividend; and
the current share price is now significantly higher than the price at which new funds were raised in 2018.
We therefore believe that we have now successfully implemented the strategy that was announced by the Company
in 2018.
REVIEW OF THE YEAR
For the year to 31 December 2020, the Company made a profit from continuing operations of £1,497,305 (2019:
£623,690). The net asset value of the Company as at 31 December 2020 was £9,239,936 (2019: £7,878,417).
The Company has been actively deploying its investment capital by investing principally in listed junior companies
through debt and equity linked products. These investment structures lower volatility and risk and enable the Company
to drive profits and cash income. We believe that this is an attractive investment strategy and by investing in the
Company, investors are able to gain access to this investment strategy via a publicly listed vehicle. As at the end of the
year, the Company held around £5.1 million of its investment portfolio in this type of investment. During the year, the
Company has invested in companies such as Westminster Group plc, Invinity Energy Systems plc and Tanzanian Gold
Corporation such that, as at the period end, this part of the Company’s investment portfolio had investments in18 different
companies.
The Company’s principal equity investment comprises a shareholding in Pires Investments plc. This company is an
investment company listed on AIM focused on investing in next generation technology. This company has made
significant progress over the period, with its share price increasing by some 135% during the year.
As previously mentioned, the Company generally receives warrants in the companies that it invests in and during the
course of the year a number of these companies have increased in value. The potential value of this warrant portfolio
is not fully reflected in the Company’s net asset value and a return is only crystallised when the respective warrants are
exercised and sold.
The Company has also successfully implemented a capital reduction thereby enabling it to be in a position to pay a
dividend and, on 2 November 2020, a gross interim dividend of 0.02 pence per share was declared and paid. The
Company expects to pay a final dividend in line with the indication previously provided which is expected to amount to
0.04 pence per share.
The market has clearly recognised the improved performance and potential of the Company and this has been
demonstrated by the Company’s share price increasing from 0.75 pence at the start of the period to 0.96 pence at the
end and to 1.95 pence as at 7 June 2021.
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RiverFort Global Opportunities plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020
OUTLOOK AND STRATEGY
The Company has continued to generate attractive returns through investing generally by way of structured financings
which have the benefit of providing cash returns whilst providing downside protection. In recent months, we have also
taken the opportunity to invest in pre-IPO situations which, we believe, complements our investment strategy, particularly
given the current buoyant equity markets and enables us to maximise the returns to shareholders.
At the same time, the Board is seeing an increasing number of pre-IPO investment opportunities where there is the
potential to achieve gains between the pre-IPO stage and a listing or exit. The Company has already deployed capital in
this way as demonstrated by its recent investments in Pluto Digital Assets plc (“Pluto”) and Smarttech247. Pluto is a
technology company operating in the digital assets sector. Smarttech247 is an established profitable business operating
in the fast growing cyber security sector. Both companies are not only in exciting sectors but also have clear paths to
listings.
Furthermore, at this stage of an investee company’s development, valuations can be attractive, notwithstanding the
proximity to an exit or listing. The Board is therefore keen to be able to have additional funds to deploy in these
opportunities as well as to continue to invest in structured products in order to provide a balanced portfolio hence the
rationale for recently raising £1.6 million of new funds at a price in line with market from both new and existing
shareholders.
In summary, we believe that the results for 2020 demonstrate that the Company is continuing to make significant progress.
The current year has also started well and we look forward to a very positive 2021.
Philip Haydn-Slater
Non-Executive Chairman
7 June 2021
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RiverFort Global Opportunities plc
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The Directors present their Strategic Report on the Company for the year ended 31 December 2020.
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
Introduction
The Company is an investment company listed on the AIM market of the London Stock Exchange. It is principally focused
on investing in junior listed companies by way of debt or equity-linked debt investments. Returns are principally generated
through a combination of fees, interest and other equity linked or performance-based instruments. This investing strategy
enables the Company to reduce the risk and volatility normally associated with investing in junior companies solely by
way of equity, and to generate cash income and returns.
The Company’s investment portfolio at 31 December 2020 is divided into the following categories:
Category
Cost or valuation (£000)
Debt and equity-linked debt investments
Equity investments and other
Cash resources
Total
Debt and equity linked portfolio
2020
5,099
2,059
4,047
11,205
2019
4,349
849
2,624
7,822
During the year, the Company has been focused on building up its portfolio and, as at the year end, the value of these
investments amounted to £5.1 million, which comprised investments across 18 different companies including Jubilee
Metals plc, EQTEC plc, Tanzanian Gold Corporation, Westminster Group plc, Kodal Minerals plc, Infrastrata plc and
Invinity Energy Systems plc.
These investments principally generate income in the form of fees and interest. Investments are either made directly or
by way of participation certificates in RiverFort Global Opportunities PCC Limited (“RGO PCC”), a Gibraltar based fund.
These certificates are reference linked financial instruments that provide similar economic benefits to the holder as if they
were co-investing directly in the underlying investment. Whilst there is no direct security into the underlying investment,
the holder will benefit from the enforcement of any such security.
The period end cash balance included amounts that were due to RGO PCC at the year end in connection with the
investment made in Tanzanian Gold Corporation which was partly held by the Company on behalf of RGO PCC.
Equity and other portfolio
At the year end, the Company’s equity portfolio comprised the following:
Company
Description
Pires Investments plc
An investment company listed on AIM
Other
Total
Various small holdings
companies and warrants
in
listed
Current value of
investment
£000
1,591
468
2,059
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RiverFort Global Opportunities plc
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
In April 2020, Pires Investments plc (“Pires”) raised additional funds and the Company invested £207,000 in this fund
raising in order to maintain its shareholding. During the course of 2020, Pires has continued to invest in the next
generation technology sector and, during this period, Pires has made a number of new technology investments which are
doing well. As at the period end, the Company’s holding in Pires amounted to 26,149,993 shares and 10,364,200
warrants. During the period, the Pires share price has increased significantly and this has continued since the period end,
with the share price increasing to 9.2 pence as at 7 June 2021 compared to the period end share price of 6.25 pence.
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 calculated using the Black-Scholes option pricing model and the resulting
figure is discounted by 75% to reflect the level of expected return associated with such holdings given their highly volatile
nature. This balance is included within Other as set out in the table above.
Income breakdown
Investment income
Net gain from financial instruments at FVTPL
Net foreign exchange losses on other financial instruments
Total income
Administration costs
Investment management fees
Other gains and losses
Operating profit
2020
£000
1,251
1,476
(284)
2,443
(404)
(375)
(167)
1,497
2019
£000
889
128
(69)
948
(303)
−
(21)
624
Investment income derives principally from the fees and interest income in relation to our debt and equity linked debt
investments. The net gain from financial instruments at FVTPL represents the impact of valuing the investment portfolio
at fair value as required under IFRS 9.
The results for this year include a charge for investment advisory services by the Company’s Investment Adviser,
RiverFort Global Capital Limited. In previous years, these fees had been waived in exchange for an extension of the
investment adviser contract in order to allow the Company to build up its investment portfolio.
KEY PERFORMANCE INDICATORS
The key performance indicators are set out below:
COMPANY STATISTICS
Net asset value
Net asset value – fully diluted per share
Closing share price
Net asset value premium to the share price
Market capitalisation
31 December
2020
31 December
2019
Change %
£9,239,936
£7,878,417
1.36p
0.965p
41%
*1.16p
*0.750p
55%
+18%
+18%
+29%
£6,552,000
£5,092,000
+29%
*Adjusted for the 1 for 10 share consolidation which was approved by shareholders on 3 March 2020.
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RiverFort Global Opportunities plc
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
KEY RISKS AND UNCERTAINTIES
Investments in junior companies can carry a high level of risk and uncertainty, although the returns can be attractive. At
this stage there can be no certainty of outcome and the Company may have difficulty in realising the full value from its
investments in a forced sale. Furthermore, the Company limits the amount of each commitment, both as to the absolute
amount and percentage of the target company. Details of other financial risks and their management are given in Note
22 to the financial statements.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Details of the Company's financial risk management objectives and policies are set out in Note 22 to these financial
statements.
The current Covid-19 situation will continue to be monitored and is expected to evolve over time. The rapid development
and fluidity of the situation makes it difficult to predict its ultimate impact at this stage. However, due to the nature of the
Company's activities, the impact on the Company has been minimal, with continuing interest from junior companies for
our investment capital. Management will, however, continue to assess the impact of Covid-19 on the Company.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
S172 of the Companies Act 2006 requires the Board to promote the Company for the benefit of the members as a
whole. In particular, the requirements of s172 are for the Directors to:
Consider the likely consequences of any decision in the long term
Act fairly between the members of the Company
•
•
• Maintain a reputation for high standards of business conduct
•
•
•
Consider the interests of the Company’s employees
Foster the Company’s relationships with suppliers, customers and others and
Consider the impact of the Company’s operations on the community and the environment.
The Directors are collectively responsible for formulating the Company’s investment strategy, and during 2020 they have
continued to focus on implementing the investment strategy previously approved by shareholders in 2018 which has
resulted in a significant improvement in financial performance compared to previous years. The Board places equal
importance on all shareholders and strives for transparent and effective external communications, within the regulatory
confines of a listed company. The primary communication tool for regulatory matters and matters of material substance
is through the Regulatory News Service, (“RNS”). We also provide an environment where shareholders can interact with
the Board and management, ask questions and raise any concerns they may have. The Directors believe they have acted
in a way they consider most likely to promote the success of the Company for the benefit of its members as a whole, as
required by Section 172 (1) of the Companies Act 2006.
GOING CONCERN
The Company’s assets comprise mainly cash, debt securities and quoted securities. As at the year end, the Company
held a significant balance of cash. Furthermore, the Company has prepared cash forecasts to June 2022 that show that
the Company has sufficient cash resources for the foreseeable future. The Directors have also considered the impact of
Covid-19 and have concluded that, given the cash reserves in place and the level of the Company’s ongoing costs, there
are no material factors which are likely to affect the ability of the Company to continue as a going concern. 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
7 June 2021
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RiverFort Global Opportunities plc
DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The Directors present their annual report on the affairs of the Company, together with the audited financial statements
for the year ended 31 December 2020.
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 profit after taxation of £1,497,305 (2019: £623,690). In November 2020, the Company paid a
dividend of 0.02p per share and it is expected that a final dividend will be paid in line with the indication previously
provided which is expected to amount to 0.04 pence per share.
The key performance indicators are shown in the Strategic Report.
DIRECTORS AND DIRECTORS’ INTERESTS
The Directors of the Company, together with their beneficial interests in the shares of the Company at the end of the
year, are listed below. All served on the Board throughout the year, unless otherwise stated. There is a qualifying
third party indemnity provision in force for the benefit of the Directors and officers of the Company.
P Haydn-Slater
N Lee
Ms A van Dyke
A Nesbitt
SUBSTANTIAL INTERESTS
Percentage
of issued
share capital
31 December
2020
31 December
2019
2.95%
0.68%
−
20,000,000
20,000,000
4,601,470
4,601,470
−
−
0.15%
1,000,000
1,000,000
The Company is aware that at 7 June 2021, the following, other than the Directors shown above, held in excess of 3%
of the issued share capital of the Company:
Cannacord Genuity Group Inc (discretionary clients)
115,500,000
17.01%
Number of
ordinary shares
Percentage of
issued share capital
Premier Miton Group plc
RiverFort Global Capital Ltd
Shakoor Capital Limited
Spreadex Limited
James Lewis
Ashworth Global Investments
Sigma Broking Limited
97,867,897
37,545,600
31,500,000
27,252,853
24,295,454
23,000,000
21,000,000
14.1%
5.53%
4.64%
4.01%
3.58%
3.39%
3.09%
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RiverFort Global Opportunities plc
DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
CORPORATE GOVERNANCE
The Board recognises its responsibility for the proper management of the Company and is committed to maintaining
a high standard of corporate governance. Further details with regard to corporate governance are set out in the
Corporate Governance Report.
BOARD OF DIRECTORS
The Company supports the concept of an effective Board leading and controlling the Company. The Board is
responsible for approving Company policy and strategy. It meets regularly and has a schedule of matters specifically
reserved to it for decision. Management 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. Each Director appointed by the Board since the last AGM
holds office until the next AGM and is then eligible for reappointment. Furthermore, one third of Directors who were
directors at the time of the two immediately preceding AGMs and who did not retire at such meetings, retire from office
by rotation and are then eligible for reappointment.
Given the size of the Board, there is no separate nomination committee. All Director appointments are approved by
the Board as a whole.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to the publication of an annual report and an
interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed as a
forum for communicating with shareholders, particularly private investors. Shareholders may question the Chairman
and other members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Company's system of internal control and for reviewing the
effectiveness of these systems. The risk management process and systems of internal control are designed to manage
rather than eliminate the risk of the Company failing to achieve its strategic objectives. It should be recognised that
such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The
Company has well established procedures which are considered adequate given the size of the business.
POST YEAR END EVENTS
Further detail regarding events taking place after the year end are set out in note 26 to the accounts.
10
RiverFort Global Opportunities plc
DIRECTORS REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
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
accounting standards in conformity with the requirements of the Companies Act 2006. Under company law, the
directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs and profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently
• make judgments and accounting estimates that are reasonable and prudent
•
•
state whether they have been prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the
financial statements
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the
financial statements may differ from legislation in other jurisdictions.
The Company is compliant with AIM Rule 26 regarding the Company’s website.
PROVISION OF INFORMATION TO AUDITOR
So far as each of the directors are aware at the time this report was approved:
•
•
there is no relevant audit information of which the Company’s auditor is unaware: and
the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the Company’s auditor is aware of that information.
AUDITORS
The auditors, PKF Littlejohn LLP have indicated their willingness to continue in office, and a resolution that they be
re-appointed will be proposed at the annual general meeting.
This report was approved by the Board on 7 June 2021 and signed on its behalf.
Nicholas Lee
Investment Director
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RiverFort Global Opportunities plc
DIRECTORS’ REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The remuneration of the directors is 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. Further details of directors’ fees and of payments made for professional services rendered are set
out in Note 10 to the financial statements.
During the period, the following remuneration and other benefits were charged to the Company:
Name of director
P Haydn-Slater
N Lee
A van Dyke
A Nesbitt
Fees and
salaries
£
35,000
52,000
22,000
−
109,000
Bonus
£
17,500
26,000
−
−
43,500
Total
2020
£
52,500
78,000
22,000
−
Total
2019
£
35,000
52,000
22,000
−
152,500
109,000
Included in P Haydn-Slater’s remuneration is £23,000 (2019: £23,000) invoiced by Musgrave Merchant Ltd, a company
controlled by him.
PENSION CONTRIBUTIONS
No director has any pension entitlements.
SHARE OPTIONS
No director held any share options during the year.
DIRECTORS’ SHAREHOLDINGS
As at 31 December 2020, the Directors had the following interests in the share capital of the Company:
Percentage
of issued
share capital
31 December
2020
31 December
2019
2.95%
0.68%
−
20,000,000
20,000,000
4,601,470
4,601,470
−
−
0.15%
1,000,000
1,000,000
P Haydn-Slater
N Lee
Ms A van Dyke
A Nesbitt
Amanda van Dyke
Director
7 June 2021
12
RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
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. This committee
met once during the year in connection with the approval of the accounts for the year ended 31 December 2020.
REMUNERATION 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 Amanda van Dyke and Andrew Nesbitt. This committee met once during the year.
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 2020
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.
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 Company’s values. Of the two widely
recognised formal codes, it has been decided to adopt the Quoted Companies Alliance’s (“QCA”) Corporate
Governance Code for small and mid-size quoted companies.
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. The Board has considered how it
applies each principle to the extent that the Board judges these to be appropriate in the circumstances, and below is
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 been further
developed since 2018 by entering into a partnership with RiverFort Global Capital Limited, the specialist arranger of
funding solutions for 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. During the year, the
Company has continued to implement successfully this business model and has continued to experience demand for
its investment capital notwithstanding the current Covid-19 pandemic.
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 through its website, www.riverfortglobalopportunities.com and via
Nicholas Lee, Investment Director, who is available to answer investor relations enquiries and can be contacted on
nick.lee@rgo-plc.com
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises 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.
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RiverFort Global Opportunities plc
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
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 at 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 2020
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. Since the beginning of 2020, the Board has met four times with all Directors attending and the
Directors communicate regularly at other times.
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 junior companies. 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 Managing Director at ARCH Emerging Markets Partners Limited. Amanda has
previously worked for specialist fund manager at South River Asset Management, 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 2020
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 Company. 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 Company 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 Company 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 2020
Opinion
We have audited the financial statements of RiverFort Global Opportunities plc (the ‘company’) for the year ended 31
December 2020 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 significant
accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and
international accounting standards in conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the company’s affairs as at 31 December 2020 and of its profit for the
year then ended;
have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006; 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
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the
company’s ability to continue to adopt the going concern basis of accounting included a review of the directors’
statement in note 2 to the financial statements and review of the company’s budgets for the period of twelve months
from the date of approval of the financial statements, including checking the mathematical accuracy of the budgets and
discussion and challenge of significant assumptions used by the management.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for
a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements are free from material misstatement, we define
materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be changed or influenced. We also determine a level
of performance materiality which we use to assess the extent of testing needed, to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial
statements as a whole.
Materiality for the company financial statements as a whole was set at £225,000 (2019: £120,000). This has been
calculated based on 2% (2019: 1.5%) of Gross Assets, being the same basis as applied in the prior year. Using our
professional judgement, we have determined this to be the principal benchmark within the financial statements as it is
most relevant to stakeholders in assessing the financial performance of the company, based on the growth in the value
of the company’s investments.
We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce to
an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole. Performance materiality was set at £157,500 (2019: £84,000), being
70% of materiality for the financial statements as a whole respectively.
18
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
We agreed to report to those charged with governance all corrected and uncorrected misstatements we identified
through our audit with a value in excess of £11,250 (2019: £6,000). We also agreed to report any other misstatements
below that threshold that we believe warranted reporting on qualitative grounds.
Our approach to the 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 and size.
The financial asset investments balance is highly material and incorporates both equity investments and structured
finance investments. We carried out a detailed review of the classification of the financial assets as fair value through
profit and loss (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, including journal entries at year end. Additionally,
as part of our audit procedures to address 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. Our work on related
parties included assessment of the company’s procedures, as well as discussions with the directors.
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.
Key audit matter
Verification, classification and ownership of
Financial asset investments (Note 15)
How our scope addressed this matter
Our work in this area included:
At the year end, the company held non-current
and current financial asset investments of
£7,158,104,
Equity
investments, Structured Finance investments
and share warrants.
included
which
There is a risk that the financial asset
investments are classified and valued
incorrectly and are not owned by
the
company.
This matter was considered to be one of most
significance in the audit due to the size,
complexity and significance of estimates and
judgements required in valuing the financial
asset investments.
• Verifying ownership of the investments held at the year
end;
• Reviewing the valuation methodology for each type of
investment and ensuring that the carrying values were
appropriately supported;
• Validating that gains and losses charged through to the
Income have been
Statement of Comprehensive
classified and measured correctly;
• Obtaining direct confirmations of a sample of investments
held at the year end, and reconciling to the amounts due;
• Reviewing the disclosures presented in the financial
statements to ensure they are adequate and in line with
IFRS 9 requirements; and
• Reviewing the accounting treatment of the financial
assets and ensuring they are in line with IFRS.
19
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
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 contained within the annual report.
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. 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 course of 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 this
gives rise to a material misstatement in the financial statements themselves. 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 statement of directors’ responsibilities, 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 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.
20
RiverFort Global Opportunities plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RIVERFORT GLOBAL OPPORTUNITIES PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the company and the sector in which they operate to identify laws and
regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained
our understanding in this regard through discussions with management and application of cumulative audit
knowledge.
• We determined the principal laws and regulations relevant to the company in this regard to be those arising from
the Companies Act 2006.
• We designed our audit procedures to ensure that the audit team considered whether there were any indications
of non-compliance by the company with those laws and regulations. This is evidenced by our discussion of laws
and regulations with management, reviewing minutes of meetings of those charged with governance and review
of regulatory news.
• We also identified the risks of material misstatement of the financial statements due to fraud. Aside from the non-
rebuttable presumption of a risk of fraud arising from management override of controls, we did not identify any
significant fraud risks.
•
As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing
audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates
for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business or where the business rationale is not clear.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding
irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
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
Date 7 June 2021
15 Westferry Circus
Canary Wharf
London E14 4HD
21
RiverFort Global Opportunities plc
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
CONTINUING OPERATIONS:
Investment income
Net gain from financial instruments at FVTPL
Foreign exchange losses on other financial instruments
TOTAL OPERATING INCOME
Administrative expenses
Investment advisory fees
Other gains and losses
PROFIT BEFORE TAXATION
Taxation
PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME
EARNINGS PER SHARE
Note
2020
£
2019
£
1,251,681
1,476,201
889,095
127,960
(284,484)
(69,111)
2,443,398
947,944
(403,564)
(302,770)
(375,446)
−
(167,083)
(21,484)
1,497,305
623,690
−
−
1,497,305
623,690
4
5
6
7
8
9
12
13
Basic and fully diluted earnings per share
0.221p
0.092p
.
The accompanying accounting policies and notes are an integral part of these financial statements.
22
RiverFort Global Opportunities plc
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2020
NON-CURRENT ASSETS
Financial asset investments
CURRENT ASSETS
Financial asset investments
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
NET ASSETS
EQUITY
Share capital
Share premium account
Capital redemption reserve
Retained profits/(losses)
TOTAL EQUITY
Note
15
15
16
17
18
19
20
20
21
2020
£
2019
£
4,249,249
4,249,249
1,758,801
1,758,801
2,908,855
246,149
−
4,046,856
7,201,860
3,439,045
195,708
40,925
2,624,480
6,300,158
11,451,109
8,058,959
2,211,173
2,211,173
180,542
180,542
9,239,936
7,878,417
67,893
−
−
9,172,043
10,042,273
3,191,257
27,000
(5,382,113)
9,239,936
7,878,417
These Financial Statements were approved by the Board of Directors on 7 June 2021 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 2020
Share
capital
£
Share
premium
£
Other
reserves
£
Retained
profits
£
Total
equity
£
BALANCE AT 1 JANUARY 2019
10,042,273
3,191,257
27,000
(6,005,803)
7,254,727
Total comprehensive income
−
−
−
623,690
623,690
BALANCE AT 31 December 2019
10,042,273
3,191,257
27,000
(5,382,113)
7,878,417
Total comprehensive income
−
−
−
1,497,305
1,497,305
Capital reduction
Dividend payment
(9,974,380)
(3,191,257)
(27,000)
13,192,637
−
−
−
−
−
(135,786)
(135,786)
−
9,172,043
9,239,936
BALANCE AT 31 December 2020
67,893
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 2020
Note
2020
£
2019
£
CASH FLOWS FROM OPERATING ACTIVITIES
Investment income received
Operating expenses paid
NET CASH INFLOW FROM OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchase of investments
Disposal of investments
Debt instrument repayments
Settlement of forward currency contracts
NET CASH FROM/(USED IN) INVESTING ACTIVITIES
FINANCING ACTIVITIES
Dividend payment
NET CASH USED IN FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the year
Effect of foreign currency exchange on cash
15
15
14
1,178,181
(489,020)
888,676
(280,512)
689,161
608,164
(4,854,799)
2,562,113
3,405,246
(212,456)
(4,494,947)
123,770
2,935,611
(98,279)
900,104
(1,533,845)
(135,786)
(135,786)
−
−
1,453,479
(925,681)
2,624,480
3,597,734
(31,103)
(47,573)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
18
4,046,856
2,624,480
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 2020
1
GENERAL INFORMATION
RiverFort Global Opportunities plc is a public limited company, limited by shares, incorporated in England and
Wales. The shares of the Company are listed on the Alternative Investment Market (AIM). The address of its
registered office is Suite 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.
The Company’s financial statements have been prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006 and in accordance with the
requirements of the Companies Act 2006. The financial statements have been prepared under the historical
cost convention, as modified by financial assets and financial liabilities (including derivative instruments)
measured at fair value through profit or loss. The measurement basis is more fully described in the accounting
policies below.
The financial statements are presented in pounds sterling (£) which is the functional currency of the Company.
The comparative figures are for the year ended 31 December 2019.
GOING CONCERN
The Company’s assets comprise mainly cash, debt securities and quoted securities. Since the year end, the
Company’s cash resources have continued to increase and the Company has prepared cash forecasts to
June 2022 that show that the Company has sufficient cash resources for the foreseeable future. The directors
have also considered the impacts of Covid-19 and have concluded that there are no material factors which
are likely to affect the ability of the Company to continue as a going concern, as a result of the cash reserves
in place and given the Company’s ongoing costs. 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 2020
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 (see Note 15). These
techniques are significantly affected by certain key assumptions, such as market liquidity. Other valuation
methodologies such as estimated net asset value may be used and it is important to recognise that in that
regard, the derived fair value estimates cannot always be substantiated by comparison with independent
markets and, in many cases, may not be capable of being realised immediately.
The Company also holds unquoted share warrants as level 3 investments. The fair values of these warrants
have been obtained using the Black Scholes valuation model and applying a 75% discount to allow for the
warrants being untraded derivatives with the underlying securities being traded on junior markets. This model
makes certain assumptions relating to the volatility of the underlying Company’s share price which are applied
in the calculation of the fair value of the warrants. The volatility is measured based on the volatility of the
share price of the underlying share over the 12 months prior to the issue of the warrants.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
New standards, amendments and interpretations adopted by the Company
The Company has applied the following standards and amendments for the first time for its annual reporting
period commencing 1 January 2020:
• Definition of Material – Amendments to IAS 1 and IAS 8;
• Definition of a Business – Amendments to IFRS 3;
•
• Revised Conceptual Framework for Financial Reporting;
• Annual Improvements to IFRS Standards 2018-2020 Cycle; and COVID-19 related rent
Interest Rate Benchmark Reform – Amendments to IFRS 9, IAS 39 and IFRS 7;
concessions – amendments to IFRS.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are
not expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2021 and have not been applied in preparing these financial statements. None of
these are expected to have a significant effect on the financial statements of the Company.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have
a material impact on the Company.
27
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
INVESTMENT INCOME
Interest on fixed interest debt securities, designated at fair value through profit or loss, is recognised in the
statement of comprehensive income using the effective interest rate method. The effective interest rate is the
rate that exactly discounts the estimated future cash payments and receipts through the expected life of the
financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset
or liability.
Other structured finance fees are recognised on the date of the relevant agreement. Income may be
recognised at a point in time or over the time. Over time revenue recognition is proportional to progress
towards satisfying a performance obligation by transferring control of promised services to a customer.
Income which does not qualify for recognition over time is recognised at a point in time when the service is
rendered. The Company has no material receivables and contract liabilities from contracts with customers
as non-refundable up-front fees are not charged to customers upon commencement of contracts with
customers.
Bank deposit interest is recognised on an accruals basis.
FOREIGN CURRENCY TRANSLATION
The functional and presentation currency of the Company is Sterling. Foreign currency transactions are
translated into Sterling using the exchange rates prevailing at the dates of the transactions or valuation where
items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in other comprehensive income as
qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that
relate to debt securities and equity investments denominated in currencies other than Sterling and measured
at FVTPL are also presented in the income statement within Operating income. All other foreign exchange
gains and losses are presented on a net basis in the income statement within ‘Other gains and losses”.
28
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 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 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
FINANCIAL ASSETS INVESTMENTS
CLASSIFICATION OF FINANCIAL ASSETS
The Company holds financial assets including equities and debt securities. The classification and
measurement of financial assets at 31 December 2020 is in accordance with IFRS 9.
On the initial recognition, the Company classifies financial assets as measured at amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
•
•
It is held within a business model whose objective is to hold assets to collect contractual cash flows;
and
its contractual terms give rise on specific dates to cash flows that are Solely Payments of Principal
and Interest (SPPI).
All other financial assets of the Company are measured at FVTPL.
BUSINESS MODEL ASSESSMENT
In making an assessment of the objective of the business model in which a financial asset is held, the
Company considers all of the relevant information on how the business is managed, including:
•
•
•
•
the documented investment strategy and the execution of this strategy in practice. This includes
whether the investment strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial assets to the duration of any
related liabilities or expected cash outflows or realised cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Company’s management;
the risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;
how the investment advisor is compensated e.g. whether compensation is based on the fair value of
the assets managed or the contractual cashflows collected
IFRS 9 subsection B4.1.1-B4.1.2 stipulates that the objective of the entity’s business model is not based
on management’s intentions with respect to an individual instrument, but rather determined at a higher
level of aggregation. The assessment needs to reflect the way that an entity manages its business.
The company has determined that it has two business models.
• Held-to-collect business model: this includes cash and cash equivalents, balances due from brokers
and other receivables. These financial assets are held to collect contractual cash flows.
• Other Business model: this includes structured finance products, equity investments, investments in
unlisted private equities and derivatives. These financial assets are managed and their performance
is evaluated, on a fair value basis with frequent sales taking place in respect to equity holdings.
VALUATION OF FINANCIAL ASSET INVESTMENTS
Investment transactions are accounted for on a trade date basis. Assets are de-recognised at the trade
date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any
transaction cost. 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 14.
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 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments include forward currency contracts. Derivatives are initially recognised at
fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair
value. All derivatives are carried as assets when their fair value is positive and as liabilities when their fair
value is negative. Changes in the fair value of derivatives are recognised immediately in the statement of
comprehensive income. The company is engaged in hedging activities of its foreign exchange risk. The
company does not apply hedge accounting. Given the low level of trading activity, the Company has
estimated that any valuation adjustments are not material and has therefore not incorporated these into the
fair value of derivatives.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term,
highly liquid investments that are readily convertible into known amounts of cash and which are subject to
an insignificant risk of changes in value. They are initially recognised at fair value and subsequently at
amortised cost using the effective interest rate method.
OTHER RECEIVABLES
Other receivables from third parties are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method.
IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash flows of
the investment have been impacted.
A provision for impairment is made when there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows have been
affected. Impaired debts are derecognised when they are assessed as uncollectible.
FINANCIAL LIABILITIES
The Company’s financial liabilities comprise trade payables. Financial liabilities are obligations to pay cash
or other financial assets and are recognised when the Company becomes a party to the contractual
provisions of the instruments.
TRADE PAYABLES
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using
the effective interest rate method.
EARNINGS PER SHARE
Earnings per share are calculated by dividing the profit or loss for the year after tax by the weighted average
number of shares in issue and is measured in pence per share.
EQUITY
Equity comprises the following:
•
•
•
•
“Share capital” represents the nominal value of equity shares.
“Share premium” represents the excess over nominal value of the fair value of consideration received
for equity shares, net of expenses of the share issue.
“Capital redemption reserve” represents the nominal value of shares repurchased or redeemed by the
Company.
“Retained losses" represents retained losses.
31
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
3
SEGMENTAL INFORMATION
The Company is organised around business class and the results are reported to the Chief Operating
Decision Maker according to this class. There is one continuing class of business, being the investment in
junior listed and unlisted companies.
Given that there is only one continuing class of business, operating within the UK no further segmental
information has been provided.
4
INVESTMENT INCOME
Structured finance fees
Other interest receivable
5
NET GAIN/(LOSS) ON INVESTMENTS
2020
£
414,265
837,416
1,251,681
2019
£
392,080
497,015
889,095
2020
£
2019
£
Net realised gains/(losses) on disposal of investments
843,515
(474,890)
Net movement in fair value of investments
Net foreign exchange loss on investments
Net gain on investments
680,795
680,568
(48,109)
(77,718)
1,476,201
127,960
6
FOREIGN EXCHANGE LOSSES ON OTHER FINANCIAL INSTRUMENTS
Net loss on foreign currency forward contracts
Exchange loss on foreign currency cash balances
2020
£
2019
£
(253,381)
(21,538)
(31,103)
(47,573)
(284,484)
(69,111)
32
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
7
ADMINISTRATIVE EXPENSES
Profit for the year has been arrived at after charging:
Wages and salaries
Professional and regulatory expenses
Audit and tax compliance
Other administrative expenses
Total administrative expenses as per the statement of comprehensive
income
2020
£
2019
£
163,055
163,613
28,170
48,726
118,130
128,585
29,040
27,015
403,564
302,770
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
2020
£
2019
£
25,200
25,200
2,970
28,170
3,840
29,040
8
INVESTMENT ADVISORY FEES
The charge of £375,446 (2019: £Nil) is payable to the Company’s investment adviser, RiverFort Global
Capital Limited. In previous years, these fees had been waived in exchange for an extension of the
investment adviser contract in order to allow the Company to build up its investment portfolio prior to
incurring advisory fees.
9
OTHER GAINS AND LOSSES
Currency exchange differences
2020
£
2019
£
(167,083)
(167,083)
(21,484)
(21,484)
33
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
10 DIRECTORS’ EMOLUMENTS
Aggregate emoluments
Social security costs
Name of director
P Haydn-Slater
N Lee
A van Dyke
A Nesbitt
2020
£
152,500
10,555
163,055
Total
2020
£
52,500
78,000
22,000
−
2019
£
109,000
9,130
118,130
Total
2019
£
35,000
52,000
22,000
−
152,500
109,000
Salaries
and fees
£
*35,000
52,000
22,000
−
109,000
Bonuses
£
17,500
26,000
−
−
43,500
*£23,000 of P Haydn-Slater’s salary and fees was invoiced by Musgrave Merchant Ltd, a company controlled
by him.
11
EMPLOYEE INFORMATION
Wages and salaries
Consultancy fees
Social security costs
Average number of persons employed:
Office and management
2020
£
129,500
23,000
10,555
163,055
2020
Number
3
2019
£
86,000
23,000
9,130
118,130
2019
Number
3
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 2020
12
INCOME TAX EXPENSE
Current tax – continuing operations
2020
2019
£
−
£
−
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:
2020
£
2019
£
Profit/(loss) before tax from continuing operations
1,497,305
623,690
Profit/(loss) before tax multiplied by rate of corporation tax in the UK of 19%
(2019: 19%)
Expenses not deductible for tax purposes
Offset against tax losses brought forward
Unrelieved tax losses carried forward
Total tax
284,488
7,091
118,501
356
(291,579)
(118,857)
−
−
−
−
Unrelieved tax losses of approximately £3,977,000 (2019: £5,511,000) remain available to offset against
future taxable trading profits. No deferred tax asset has been recognised in respect of the losses as
recoverability is uncertain.
13
EARNINGS PER SHARE
The basic earnings per share is based on the loss for the year divided by the weighted average number of
shares in issue during the year. The weighted average number of ordinary shares for the year assumes that
all shares have been included in the computation based on the weighted average number of days since issue.
2020
£
2019
£
Profit/(loss) attributable to equity holders of the Company:
Profit/(loss) from continuing operations
1,497,305
623,690
Profit/(loss) for the year attributable to equity holders of the Company
1,497,305
623,690
Weighted average number of ordinary shares in issue for basic and fully
diluted earnings
678,933,600
678,933,600
EARNINGS PER SHARE
BASIC AND FULLY DILUTED:
- Basic earnings/(loss) per share from continuing and total operations
- Fully diluted earnings/(loss) per share from continuing and total operations
0.221p
0.221p
0.092p
0.092p
2019 comparative figures for the average number of shares in issue and earnings per share have been
adjusted for the share reorganisation in March 2020.
35
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
14
DIVIDENDS
Amounts recognised as distributions to
shareholders in the year
Interim dividend for 2020
2020
Pence
2019
pence
2020
£
2019
£
0.02p
0.02p
−
−
135,786
135,786
−
−
15
FINANCIAL ASSETS
All financial assets are designated at fair value through profit and loss (“FVTPL”)
At 1 January – fair value
Acquisition of investments designated at FVTPL
Equity investment disposals
Debt security repayments
Net gain/(loss) on disposal of investments
Movement in fair value of investments
Net foreign exchange loss on debt securities
At 31 December – fair value
Categorised as:
Level 1 – Quoted investments
Level 2 – Unquoted investments
Level 3 – Unquoted investments
2020
£
2019
£
5,197,846
3,793,715
5,877,989
4,335,552
(1,988,686)
(123,770)
(3,405,246)
(2,935,611)
843,515
680,795
(474,890)
680,568
(48,109)
(77,718)
7,158,104
5,197,846
Non-current
2019
£
2020
£
2019
£
−
1,706,712
609,704
Current
2020
£
−
2,908,855
3,439,045
2,166,674
1,110,166
−
−
375,863
38,931
2,908,855
3,439,045
4,249,249
1,758,801
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”.
36
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
15
FINANCIAL ASSETS (continued)
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.
LEVEL 3 FINANCIAL ASSETS
Reconciliation of Level 3 fair value measurement of financial assets
Brought forward
Movement in fair value
Carried forward
2020
£
38,931
336,932
375,863
2019
£
88,918
(49,987)
38,931
The Company’s level 3 investments comprise a number of unquoted share warrants. which have been valued
using the Black-Scholes valuation model, discounted by 75% to allow for there being no trading market for
the warrant instruments and the underlying shares are quoted on the London Stock Exchange’s secondary
Alternative Investment Market.
In line with the investment strategy adopted by the Company, Nicholas Lee is on the board of the following
investee company:
Pires Investments plc
16
TRADE AND OTHER RECEIVABLES
Other receivables
Prepayments and accrued income
% holding
2020
2019
18.2%
24.3%
2020
£
−
246,149
246,149
2019
£
19,547
176,161
195,708
The Directors consider that the carrying amount of other receivables is approximately equal to their fair value.
17
DERIVATIVE FINANCIAL ASSETS
Foreign currency forward contract
2020
£
−
2019
£
40,925
37
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
18
CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2020
£
2019
£
4,046,856
2,624,480
The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.
19
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accrued expenses
2020
£
2019
£
31,346
43,723
1,665,751
514,076
69,134
67,685
2,211,173
180,542
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
Trade payables and Other payables are all due within 6 months of the year end.
20
SHARE CAPITAL
ISSUED AND FULLY PAID:
At 1 January 2019 and 2020
Number of shares
Share capital
Deferred
Ordinary
Deferred
£
Ordinary
£
Share
premium
£
Deferred shares of 9.9p each
32,857,956
−
3,252,938
−
−
Ordinary shares of 0.1p each
−
6,789,335,226
−
6,789,335
3,191,257
32,857,956
6,789,335,226
3,252,938
6,789,335
3,191,257
Issue of shares
−
774
−
1
−
Share reorganisation
67,893,400
(6,110,402,400)
6,721,443
(6,721,443)
Capital reduction
(100,751,356)
(9,974,381)
(3,191,257)
32,857,956
6,789,336,000
3,252,938
6,789,336
3,191,257
Ordinary shares of 0.01p each
At 31 December 2020
−
−
678,933,600
678,933,600
−
−
67,893
67,893
−
−
On 4 March 2020 the shareholders approved a share reorganisation and capital reduction.
The share reorganisation involved a 4,000 for 1 share consolidation, followed by a subdivision of each
resulting share into 400 new ordinary shares of 0.01p and 40 deferred shares of 9.9p.
The capital reduction which followed involved the cancellation of all the deferred shares and the cancellation
of the share premium account.
The capital reduction was confirmed by the Court on 31 March 2020.
38
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
21
OTHER RESERVES
Balance at 1 January 2019 and 2020
Capital reduction
Balance at 31 December 2020
Capital
redemption
reserve
£
Total
Other
reserves
£
27,000
27,000
(27,000)
(27,000)
−
−
22
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 £4,046,856 (2019: £2,684,952) comprising cash and cash
equivalents and other receivables.
The ageing profile of trade and other receivables was:
Current
Overdue for less than one year
2020
Total book
value
£
−
−
−
2019
Total book
value
£
60,472
−
60,472
39
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
22
RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
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
Euro
Liabilities
Assets
31 Dec 2020 31 Dec 2019
£
£
31 Dec 2020 31 Dec 2019
£
£
1,074,487
2,300,000
4,847,200
3,391,429
−
−
152,196
−
1,074,487
2,300,000
4,999,396
3,391,429
The following table details the Company’s sensitivity to a 5 per cent increase and decrease in GBP against the
US Dollar and the Euro. 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 and GBP/Euro
rates. A positive number below indicates an increase in profit and other equity where GBP weakens 5 per cent
against the relevant currency. For a 5 per cent strengthening of GBP against the relevant currency, there would
be a comparable impact on the profit and other equity, and the balances below would be negative.
US Dollars
Euro
31 Dec 2020 31 Dec 2019
£
£
31 Dec 2020 31 Dec 2019
£
£
151,938
54,571
151,938
54,571
7,610
7,610
−
−
Profit and loss
INTEREST RATE RISK
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The risk is mitigated by the Company only entering into fixed
rate interest agreements, therefore detailed analysis of interest rate risk is not disclosed.
40
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
22
RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
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 £171,000 (2019: £63,000).
Exposure to market price risk also arises in respect of the Company’s investments in debt securities which
are mainly denominated in US Dollars.
The Company’s strategy for the management of market risk is driven by the Company’s investment objective,
which is focused on deploying its capital in investments that provide both income and downside protection. It
is expected that the Company will deliver returns to shareholders through a combination of capital growth and
dividend income.
The Company’s market risk is managed on a continuous basis by the Investment Advisor in accordance with
the policies and procedures in place. The Company’s market positions are monitored on a quarterly basis by
the board of directors.
OPERATIONAL RISK
Operational Risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the
processes, technology and infrastructure supporting the Company’s activities with financial instruments,
either internally within the Company or externally at the Company’s service providers such as cash
custodians/brokers, and from external factors other than credit, market and liquidity risks such as those
arising from legal and regulatory requirements and generally accepted standards of investment management
behaviour.
The Company’s objective is to manage operational risk so as to balance the limiting of financial losses and
damage to its reputation with achieving its investment objective of generating returns to shareholders.
The primary responsibility for the development and implementation of controls over the operational risk rests
with the board of directors. This responsibility is supported by the development of overall standards for the
management of operational risk, which encompasses the controls and processes over the investment,
finance and financial reporting functions internally and the establishment of service levels with various service
providers, in the following areas:
Appropriate segregation of duties between various functions, roles and responsibilities;
-
- Reconciliation and monitoring of transactions
- Compliance with regulatory and other legal requirements;
The directors’ assessment of the adequacy of the controls and processes at the service providers with respect
to operational risk is carried out via ad hoc discussions with the service providers. Substantially all the of the
assets of the Company are held by Barclays Bank UK and Shard Capital Brokers. The bankruptcy or
insolvency of the Company’s cash custodian/brokers may cause the Company’s rights with respect to the
securities or cash and cash equivalents held by cash custodian/ broker to be limited. The board of directors’
monitors capital adequacy and reviews other publicly available information of its cash custodian/broker on a
quarterly basis.
41
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
23
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:
2020
£
2019
£
4,046,856
2,624,480
−
60,472
7,158,104
5,197,846
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
24
RELATED PARTY TRANSACTIONS
2020
£
2019
£
1,697,097
112,857
The compensation payable to Key Management personnel comprised £152,500 (2019: £109,000) paid by
the Company to the Directors in respect of services to the Company. Full details of the compensation for
each Director are provided in the Directors’ Remuneration Report.
Nicholas Lee’s directorships of companies in which Riverfort Global Opportunities plc has an investment
are detailed in Note 15.
25
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
There were no contingent liabilities or capital commitments at 31 December 2020 or 31 December 2019.
42
RiverFort Global Opportunities plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
26
POST YEAR END EVENTS
In February and March 2021, the Company made two investments totalling around £1 million in Pluto Digital
Assets plc (“Pluto”). Pluto is a technology company that connects Web 3.0 decentralised technologies to the
global economy by investing in, incubating and advising digital asset projects based on decentralised
technologies, decentralised finance and networks such as Ethereum and Polkadot.
In February 2021, the company announced that it had agreed to grant 16.9 million share options each to
Nicholas Lee and Philip Haydn-Slater. The share options have an exercise price of 1p per share and will
vest as to 50 per cent. on grant and 50 per cent. upon the Company's volume weighted average share price
being 1.5p or greater (being 50 per cent. above the Exercise Price) for a period of 10 consecutive days. The
options have a 10 year term from 12 February 2021, the date of issue. Following the grant of these share
options, the total share options outstanding are 33,800,000 representing 4.98% of the Company's
678,933,600 ordinary shares in issue.
In May 2021, the Company announced that it had agreed to invest €1.4 million in Smarttech247 (a company
incorporated in the Republic of Ireland as Zefone Limited) a global artificial intelligence ("AI") based cyber
security cloud business that protects enterprises as they migrate to cloud-based IT operations (the
"Investment"). . Smarttech247 has over 100 technology partners (including Tanium and Crowdstrike) and
50 clients based in Europe and the USA. It is intended that the funding shall accelerate Smarttech247's
extension and roll-out of its AI-based cyber security product portfolio. The Investment is via a convertible
loan note and forms part of an overall fundraising by Smarttech247 of €2.5 million. The convertible loan note
carries a coupon of 5% and is expected to convert on a sale or listing of the company.
At the same time the Company announced that it had placed 96,470,587 new ordinary shares (the "Placing
Shares") to raise gross proceeds of £1.64 million in cash at a price of 1.7 pence per new ordinary share (the
"Placing Price. The purpose of the Placing is to provide funding both for the Investment and for other
investment opportunities. Placees also conditionally received one warrant for each ordinary share
subscribed for, exercisable at 3.4 pence for a period of two years from their date of issue (the "Warrants")
and expiring on the second anniversary of the date of issue. The issue of the Warrants is conditional on
shareholder authorities to be sought at the next Annual General Meeting.
27
ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate controlling party.