Riverfort Regulatory News (RGO)

RiverFort Global Opportunities plc

+44 20 3368 8978

Philip Haydn-Slater, Non-executive Chairman

Nicholas Lee, Investment Director

Nominated Adviser

+44 20 7628 3396

Beaumont Cornish

Roland Cornish/Felicity Geidt

Joint Broker

+44 20 7186 9950

Shard Capital Partners LLP

Damon Heath/ Erik Woolgar

Joint Broker

+44 20 7562 3351

Peterhouse Capital Limited

Lucy Williams

Category

Cost or valuation (£000)

2022

2021

Debt and equity-linked debt investments

3,612

5,807

Equity and other investments

3,427

2,562

Pre IPO investments

1,067

2,703

Cash resources

958

2,012

Total

9,064

13,084

Company

Description

Value of investment

£000

Smarttech247 Group plc

A cyber security company listed on AIM

2,293

Pires Investments plc

An investment company listed on AIM

937

Other

Various small holdings and warrants in listed companies

197

Total

3,427

Income breakdown

2022

2021

£000

£000

Investment income

1,167

1,801

Net (loss)/gain from financial instruments at FVTPL

(1,450)

680

Net foreign exchange gains/(losses) on other financial instruments

90

(12)

Total (loss)/income

(193)

2,469

Administration costs

(319)

(715)

Investment advisory fees

(413)

(594)

Other gains and losses

59

(120)

Operating (loss)/profit

(866)

1,040

COMPANY STATISTICS

31 December

2022

31 December

2021

Change %

Net asset value

£10,588,000

£11,749,000

-10%

Net asset value - fully diluted per share

1.35p

1.49p

-9%

Closing share price

0.75p

1.45p

-48%

Net asset value premium to the share price

82%

3%

+79%

Market capitalisation

£5,816,000

£11,243,000

-48%

STATEMENT OF COMPREHENSIVE INCOME

F FOR THE YEAR ENDED 31 DECEMBER 2022

2022

2021

Note

£

£

CONTINUING OPERATIONS:

Investment income

4

1,167,379

1,801,432

Net (loss)/gain from financial instruments at FVTPL

5

(1,449,703)

680,286

Foreign exchange gains/(losses) on other financial instruments

6

89,703

(12,272)

TOTAL OPERATING (LOSS)/INCOME

(192,621)

2,469,446

Administrative expenses

7

(318,933)

(715,195)

Investment advisory fees

8

(413,746)

(593,990)

Other gains and losses

9

58,870

(120,249)

(LOSS)/PROFIT BEFORE TAXATION

(866,430)

1,040,012

Taxation

12

-

-

(LOSS)/PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME

(866,430)

1,040,012

EARNINGS PER SHARE

13

Basic earnings per share

(0.112p)

0.140p

Fully diluted earnings per share

(0.112p)

0.138p

STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2022

2022

2021

Note

£

£

NON-CURRENT ASSETS

Financial asset investments

15

5,952,814

8,105,633

5,952,814

8,105,633

CURRENT ASSETS

Financial asset investments

15

2,152,879

2,966,515

Trade and other receivables

16

1,854,870

317,539

Cash and cash equivalents

17

958,135

2,012,483

4,965,884

5,296,537

TOTAL ASSETS

10,918,698

13,402,170

CURRENT LIABILITIES

Trade and other payables

18

330,960

1,653,349

330,960

1,653,149

NET ASSETS

10,587,738

11,748,821

EQUITY

Share capital

19

77,540

77,540

Share premium account

19

1,568,353

1,568,353

Share options reserve

201,034

201,034

Retained profits

8,740,811

9,901,894

TOTAL EQUITY

10,587,738

11,748,821

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

£

£

£

£

£

BALANCE AT 1 JANUARY 2021

67,893

-

-

9,172,043

9,239,936

Total comprehensive income

-

-

-

1,040,012

1,040,012

Share issue

9,647

1,568,353

-

-

1,578,000

Grant of share options

-

-

201,034

-

201,034

Dividend payment

-

-

-

(310,161)

(310,161)

BALANCE AT 31 December 2021

77,540

1,568,353

201,034

9,901,894

11,748,821

Total comprehensive income

-

-

-

(866,430)

(866,430)

Dividend payment

-

-

-

(294,653)

(294,653)

BALANCE AT 31 December 2022

77,540

1,568,353

201,034

8,740,811

10,587,738

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2022

2022

2021

Note

£

£

CASH FLOWS FROM OPERATING ACTIVITIES

Investment income received

500,099

1,195,653

Operating expenses paid

(1,026,445)

(1,091,429)

NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES

(526,346)

104,224

INVESTING ACTIVITIES

Purchase of investments

(5,384,144)

(9,618,440)

Disposal of investments

15

27,316

493,332

Debt instrument repayments

15

5,033,776

5,730,944

NET CASH USED IN INVESTING ACTIVITIES

(323,052)

(3,394,164)

FINANCING ACTIVITIES

Proceeds from share issues

-

1,578,000

Dividend payment

14

(294,653)

(310,161)

NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES

(294,653)

1,267,839

NET DECREASE IN CASH AND CASH EQUIVALENTS

(1,144,051)

(2,022,101)

Cash and cash equivalents at the beginning of the year

2,012,483

4,046,856

Effect of foreign currency exchange on cash

89,703

(12,272)

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

17

958,135

2,012,483

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

1

RiverFort Global Opportunities plc is a public limited company, limited by shares, incorporated in England and Wales. The shares of the Company are listed on the Alternative Investment Market (AIM). The address of its registered office is Suite 39, 18 High Street, High Wycombe, Buckinghamshire, HP11 2BE.

The Company's principal activities are described in the Directors' Report.

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.

The Company's financial statements have been prepared in accordance with UK adopted international accounting standards and in accordance with the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost convention, as modified by financial assets and financial liabilities (including derivative instruments) measured at fair value through profit or loss. The measurement basis is more fully described in the accounting policies below.

The financial statements are presented in pounds sterling (£) which is the functional currency of the Company. The comparative figures are for the year ended 31 December 2021.

GOING CONCERN

The Company's assets comprise mainly cash, debt securities and quoted securities. Since the year end, the Company's cash resources have continued to increase and the Company has prepared cash forecasts to June 2024 that show that the Company has sufficient cash resources for the foreseeable future. Accordingly, the Directors believe that as at the date of this report it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management's knowledge and experience of the amounts, events or actions. Actual results may differ from such estimates. 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In certain circumstances, where fair value cannot be readily established, the Company is required to make judgements over carrying value impairment and evaluate the size of any impairment required.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company holds investments that have been designated as held for trading on initial recognition. Where practicable the Company determines the fair value of these financial instruments that are not quoted (Level 3), using the most recent bid price at which a transaction has been carried out (see accounting policy note, "Valuation of financial asset investments"). These techniques are significantly affected by certain key assumptions, such as market liquidity. Other valuation methodologies such as estimated net asset value may be used and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.

The Company also holds unquoted share warrants as level 3 investments. The fair values of these warrants have been obtained using the Black Scholes valuation model and applying a 75% discount to allow for the warrants being untraded derivatives with the underlying securities being traded on junior markets. This model makes certain assumptions relating to the volatility of the underlying Company's share price which are applied in the calculation of the fair value of the warrants. The volatility is measured based on the volatility of the share price of the underlying share over the 12 months prior to the issue of the warrants.

CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

New standards, amendments and interpretations adopted by the Company

The Company has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2022:

· Amendments to IAS 16: Property, Plant and Equipment

· Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts

· Annual Improvements to IFRS Standards 2018-2020: The pronouncement contains amendments to four International Financial Reporting Standards (IFRSs) as result of the IASB's annual improvements project:

· IFRS 1 First-time Adoption of International Financial Reporting Standards

· IFRS 9 Financial Instruments

· IFRS 16 Leases - Lease incentives

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2022 and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Company.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.  

REVENUE RECOGNITION

INVESTMENT INCOME

Interest on fixed interest debt securities, designated at fair value through profit or loss, is recognised in the statement of comprehensive income using the effective interest rate method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability.

Other structured finance fees are recognised on the date of the relevant agreement. Income may be recognised at a point in time or over the time. Over time revenue recognition is proportional to progress towards satisfying a performance obligation by transferring control of promised services to a customer. Income which does not qualify for recognition over time is recognised at a point in time when the service is rendered. The Company has no material receivables and contract liabilities from contracts with customers as non-refundable up-front fees are not charged to customers upon commencement of contracts with customers.

Bank deposit interest is recognised on an accruals basis.

FOREIGN CURRENCY TRANSLATION

The functional and presentation currency of the Company is Sterling. Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to debt securities and equity investments denominated in currencies other than Sterling and measured at FVTPL are also presented in the income statement within Operating income. All other foreign exchange gains and losses are presented on a net basis in the income statement within 'Other gains and losses".

SHARE BASED PAYMENTS

The Company operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense and credited to the share option reserve within equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Options that lapse before vesting are credited back to income. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and, if applicable, share premium when the options are exercised.

CURRENT AND DEFERRED TAX

Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Temporary differences include those associated with shares in subsidiaries and joint ventures and are only not recognised if the Company controls the reversal of the difference and it is not expected for the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the statement of financial position date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited to equity in which case the related deferred tax is also charged or credited directly to equity.

SEGMENTAL REPORTING

The accounting policy for identifying segments is based on internal management reporting information that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors.

In identifying its operating segments, management generally follows the Company's service lines which represent the main products and services provided by the Company. The Directors believe that the Company's continuing investment operations comprise one segment.

FINANCIAL ASSETS

The Company's financial assets comprise investments, cash and cash equivalents and loans and receivables, and are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

FINANCIAL ASSETS INVESTMENTS

CLASSIFICATION OF FINANCIAL ASSETS

The Company holds financial assets including equities and debt securities. The classification and measurement of financial assets at 31 December 2022 is in accordance with IFRS 9.

On the initial recognition, the Company classifies financial assets as measured at amortised cost or FVTPL. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: 

· It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

· its contractual terms give rise on specific dates to cash flows that are Solely Payments of Principal and Interest (SPPI).

All other financial assets of the Company are measured at FVTPL.

BUSINESS MODEL ASSESSMENT

In making an assessment of the objective of the business model in which a financial asset is held, the Company considers all of the relevant information on how the business is managed, including:

· the documented investment strategy and the execution of this strategy in practice. This includes whether the investment strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realised cash flows through the sale of the assets;

· how the performance of the portfolio is evaluated and reported to the Company's management;

· the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

· how the investment advisor is compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cashflows collected

IFRS 9 subsection B4.1.1-B4.1.2 stipulates that the objective of the entity's business model is not based on management's intentions with respect to an individual instrument, but rather determined at a higher level of aggregation. The assessment needs to reflect the way that an entity manages its business.

The company has determined that it has two business models.

· Held-to-collect business model: this includes cash and cash equivalents, balances due from brokers and other receivables. These financial assets are held to collect contractual cash flows.

· Other Business model: this includes structured finance products, equity investments, investments in unlisted private equities and derivatives. These financial assets are managed and their performance is evaluated, on a fair value basis with frequent sales taking place in respect to equity holdings.

VALUATION OF FINANCIAL ASSET INVESTMENTS

Investment transactions are accounted for on a trade date basis. Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction cost. Financial asset investments are categorised as either Level 1, Level 2 or Level 3 investments as set out in Note 15. The fair value of Level 1 financial asset investments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. The valuation of Level 2 and Level 3 financial asset investments are set out in note 15. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the consolidated statement of comprehensive income as "Net gains/(losses) on investments". Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments include forward currency contracts. Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivatives are recognised immediately in the statement of comprehensive income. The company is engaged in hedging activities of its foreign exchange risk. The company does not apply hedge accounting. Given the low level of trading activity, the Company has estimated that any valuation adjustments are not material and has therefore not incorporated these into the fair value of derivatives.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. They are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method.

OTHER RECEIVABLES

Other receivables from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method. 

IMPAIRMENT OF FINANCIAL ASSETS

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

A provision for impairment is made when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. Impaired debts are derecognised when they are assessed as uncollectible.

FINANCIAL LIABILITIES

The Company's financial liabilities comprise trade payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Company becomes a party to the contractual provisions of the instruments.

TRADE PAYABLES

Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.

EARNINGS PER SHARE

Earnings per share are calculated by dividing the profit or loss for the year after tax by the weighted average number of shares in issue and is measured in pence per share.

EQUITY

Equity comprises the following:

· "Share capital" represents the nominal value of equity shares.

· "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

· "Capital redemption reserve" represents the nominal value of shares repurchased or redeemed by the Company.

· Share option reserve represents the value of share options granted but not exercised.

· "Retained losses" represents retained losses.

3

SEGMENTAL INFORMATION

The Company is organised around business class and the results are reported to the Chief Operating Decision Maker according to this class. There is one continuing class of business, being the investment in junior listed and unlisted companies.

Given that there is only one continuing class of business, operating within the UK no further segmental information has been provided.

4

INVESTMENT INCOME

2022

2021

£

£

Structured finance fees

288,232

727,089

Other interest receivable

879,147

1,074,343

1,167,379

1,801,432

5

NET (LOSS)/GAIN ON INVESTMENTS

2022

2021

£

£

Net realised gains on disposal of investments

8,315

372,378

Net movement in fair value of investments

(1,818,234)

242,873

Net foreign exchange gain on investments

360,216

65,035

Net (loss)/gain on investments

(1,449,703)

680,286

6

FOREIGN EXCHANGE LOSSES ON OTHER FINANCIAL INSTRUMENTS

2022

2021

£

£

Exchange gain/(loss) on foreign currency cash balances

89,703

(12,272)

89,703

(12,272)

7

ADMINISTRATIVE EXPENSES

2022

2021

£

£

Loss for the year has been arrived at after charging:

Wages and salaries

126,785

210,023

Share based payments

-

201,034

Professional and regulatory expenses

124,330

218,436

Audit and tax compliance

43,200

35,616

Other administrative expenses

24,618

50,086

Total administrative expenses as per the statement of comprehensive income

318,933

715,195

AUDITOR'S REMUNERATION

During the year the Company obtained the following services from the Company's auditor:

2022

2021

£

£

Fees payable to the Company's auditor for the audit of the Company's financial statements

39,000

30,000

Fees payable to the Company's auditor and its associates for other services:

Other services relating to taxation

4,200

-

43,200

30,000

8

INVESTMENT ADVISORY FEES

The charge of £413,746 (2021: £593,990) is payable to the Company's investment adviser, RiverFort Global Capital Limited.

9

OTHER GAINS AND LOSSES

2022

2021

£

£

Currency exchange differences

58,870

(120,249)

58,870

(120,249)

10

DIRECTORS' EMOLUMENTS

2022

2021

£

£

Aggregate emoluments

124,000

199,000

Social security costs

2,785

11,023

Share based payment expense

-

201,034

126,785

411,057

Name of director

Salaries

and fees

Bonuses

Total

2022

Total

2021

£

£

£

£

P Haydn-Slater

*50,000

-

50,000

75,000

N Lee

52,000

-

52,000

102,000

A van Dyke

22,000

-

22,000

22,000

A Nesbitt

-

-

-

-

124,000

-

124,000

199,000

11

EMPLOYEE INFORMATION

2022

2021

£

£

Wages and salaries

76,000

166,000

Consultancy fees

48,000

33,000

Social security costs

2,785

11,023

Share based payment expense

-

201,034

126,785

411,057

Average number of persons employed:

2022

2021

Number

Number

Office and management

3

3

COMPENSATION OF KEY MANAGEMENT PERSONNEL

There are no key management personnel other than the Directors of the Company.

12

INCOME TAX EXPENSE

2022

2021

£

£

Current tax - continuing operations

-

-

The tax on the Company's profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to profits of the Consolidated entities as follows:

2022

2021

£

£

Profit/(loss) before tax from continuing operations

(866,430)

1,040,012

Profit/(loss) before tax multiplied by rate of corporation tax in the UK of 19% (2021: 19%)

(164,622)

197,602

Expenses not deductible for tax purposes

1,415

38,667

Added to/(use of) tax losses brought forward

163,207

(236,269)

Total tax

-

-

Unrelieved tax losses of approximately £4,125,000 (2021: £3,962,000) remain available to offset against future taxable trading profits. No deferred tax asset has been recognised in respect of the losses as recoverability is uncertain.

13

EARNINGS PER SHARE

The basic earnings per share is based on the loss for the year divided by the weighted average number of shares in issue during the year. The weighted average number of ordinary shares for the year assumes that all shares have been included in the computation based on the weighted average number of days since issue.

2022

2021

£

£

(Loss)/profit attributable to equity holders of the Company:

(Loss)/profit from continuing operations

(866,430)

1,040,012

(Loss)/profit for the year attributable to equity holders of the Company

(866,430)

1,040,012

Weighted average number of ordinary shares in issue for basic earnings

775,404,187

741,044,800

Weighted average number of ordinary shares in issue for fully diluted earnings

775,404,187

751,278,700

EARNINGS PER SHARE

BASIC AND FULLY DILUTED:

- Basic earnings per share from continuing and total operations

(0.112)p

0.140p

- Fully diluted earnings per share from continuing and total operations

(0.112)p

0.138p

14

DIVIDENDS

2022

2021

2022

2021

Pence

Pence

£

£

Amounts recognised as distributions to shareholders in the year

Final dividend

0.038p

0.040p

294,653

310,161

0.038p

0.040p

294,653

310,161

15

FINANCIAL ASSET INVESTMENTS

All financial asset investments are designated at fair value through profit and loss ("FVTPL")

2022

2021

£

£

At 1 January - fair value

11,072,148

7,158,104

Purchase of investments designated at FVTPL

3,544,340

11,028,551

Equity investment disposals

(27,316)

(2,063,849)

Debt security repayments

(5,033,776)

(5,730,944)

Net gain on disposal of investments

8,315

372,378

Movement in fair value of investments

(1,818,234)

242,873

Net foreign exchange gain on debt securities

360,216

65,035

At 31 December - fair value

8,105,693

11,072,148

Current

Non-current

2022

2021

2022

2021

£

£

£

£

Categorised as:

Level 1 - Quoted investments

-

-

3,306,909

2,372,323

Level 2 - Unquoted investments

2,152,879

2,966,515

1,459,539

2,840,270

Level 3 - Unquoted investments

-

-

1,186,366

2,893,040

2,152,879

2,966,515

5,952,814

8,105,633

The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. 

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the company for Level 1 financial asset investments are explained in the accounting policy note, "Valuation of financial asset investments". The valuation of Level 2 and Level 3 financial assets are explained on the following page.

Investments categorised as current are debt securities repayable by 31 December 2023.

LEVEL 2 FINANCIAL ASSET INVESTMENTS

Level 2 financial asset investments comprise debt securities valued by reference to their principal value, less appropriate allowance where there is a doubt as to whether the principal amount will be fully repaid in accordance with the contractual terms of the obligation.

LEVEL 3 FINANCIAL ASSET INVESTMENTS

Reconciliation of Level 3 fair value measurement of financial asset investments

2022

2021

£

£

Brought forward

2,893,040

375,863

Purchase of investments

-

2,402,153

Transfer to Level 1 investments

(1,203,465)

-

Movement in fair value

(502,699)

115,024

Carried forward

1,186,366

2,893,040

The Company's level 3 investments include a number of unquoted share warrants. which have been valued using the Black-Scholes valuation model, discounted by 75% to allow for there being no trading market for the warrant instruments and the underlying shares are quoted on the London Stock Exchange's secondary Alternative Investment Market.

The company's pre-IPO investments principally comprise shares in Emergent Entertainment plc (previously known as Pluto Digital plc) which are valued at the price of the last fund raise.

In line with the investment strategy adopted by the Company, Nicholas Lee is on the board of the following investee companies:

% held by the Company

2022

2021

Pires Investments plc

20.9%

19.2%

Smarttech247 Group plc

6.2%

-

16

TRADE AND OTHER RECEIVABLES

2022

2021

£

£

Other receivables

1,371,797

-

Prepayments and accrued income

483,073

317,539

1,854,870

317,539

17

CASH AND CASH EQUIVALENTS

2022

2021

£

£

Cash and cash equivalents

958,135

2,012,483

18

TRADE AND OTHER PAYABLES

2022

2021

£

£

Trade payables

86,608

41,942

Other payables

2,727

969,753

Accrued expenses

241,625

641,654

330,960

1,653,349

19

SHARE CAPITAL

Number of Ordinary Shares

Share Capital Ordinary shares

Share premium

£

£

ISSUED AND FULLY PAID:

At 1 January 2021

Ordinary shares of 0.1p each

678,933,600

67,893

-

Issue of shares

96,470,587

9,647

1,630,353

Share issue costs

-

-

(62,000)

At 31 December 2021 and 2022

775,404,187

77,540

1,568,353

20

SHARE OPTIONS AND WARRANTS

OPTIONS

On 12 February 2021, the Company granted 16,900,000 options each to Philip Haydn-Slater and Nicholas Lee. The share options have an exercise price of 1.00p per share and will vest as to 50% on grant and 50% upon the Company's volume weighted average share price being 1.50 pence or greater (being 50% above the Exercise Price) for a period of 10 consecutive days. The options have a 10 year term from the date of grant.

The fair value of the share options at the date of grant was calculated by reference to the Black-Scholes model. The significant inputs to the model in respect of the options granted in the year were as follows:

Grant date

12 Feb 2021

Share price at date of grant

1.25p

Exercise price per share

1.00p

No. of warrants

33,800,000

Risk free rate

0.9%

Expected volatility

78.8%

Expected life of warrant

10 years

Calculated fair value per share

0.59478p

Outstanding at 1 January

33,800,000

1.00

-

-

Granted

-

-

33,800,000

1.00

Outstanding at 31 December

33,800,000

1.00

33,800,000

1.00

Outstanding at 1 January

96,470,587

3.40

-

-

Issued

-

-

96,470,587

3.40

Outstanding at 31 December

96,470,587

3.40

96,470,587

3.40

21

RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Company's risk management is coordinated by the Board of Directors and focuses on actively securing the Company's short to medium term cash flows by minimising the exposure to financial markets.

The main risks the Company is exposed to through its financial instruments are credit risk, foreign currency risk, liquidity risk, market price risk and operational risk.

CAPITAL RISK MANAGEMENT

The Company's objectives when managing capital are:

· to safeguard the Company's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

· to support the Company's growth; and

· to provide capital for the purpose of strengthening the Company's risk management capability.

The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. The Company is not subject to externally imposed capital requirements.

CREDIT RISK

The Company's financial instruments that are subject to credit risk are cash and cash equivalents and loans and receivables. The credit risk for cash and cash equivalents is considered negligible since the counterparties are reputable financial institutions. The credit risk for loans and receivables is mainly in respect of short term loans, made on market terms, which are monitored regularly by the Board.

The Company's maximum exposure to credit risk is £2,329,932 (2021: £2,029,573) comprising cash and cash equivalents and other receivables.

The ageing profile of trade and other receivables was:

2022

2021

Total book value

Total book value

£

£

Current

1,371,797

-

Overdue for less than one year

-

-

1,371,797

-

LIQUIDITY RISK

Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Company manages this risk through maintaining a positive cash balance and controlling expenses and commitments. The Directors are confident that adequate resources exist to finance current operations.

FOREIGN CURRENCY RISK

The Company invests in financial instruments and enters into transactions that are denominated in currencies other than its functional currency, primarily in US dollars (USD). Consequently, the Company is exposed to the risk that the exchange rate of its currency relative to other foreign currencies may change in manner that has an adverse effect on the fair value of the future cashflows of the Company's financial assets denominated in currencies other than the GBP.

The Company's policy is to use derivatives to manage its exposure to foreign currency risk. The instruments used are foreign currency forward contracts. The Company does not apply hedge accounting.

The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Assets

Liabilities

31 Dec 2022

31 Dec 2021

31 Dec 2022

31 Dec 2021

£

£

£

£

US Dollars

2,339,313

3,216,128

61,941

-

Euro

1,757,271

1,185,685

589,135

1,079,034

Canadian Dollars

309,458

535,106

-

477,704

Australian Dollars

495,623

1,028,669

56,299

132,325

Swiss Francs

20,228

658,389

-

129,213

4,878,066

6,623,977

707,375

1,818,276

The following table details the Company's sensitivity to a 5 per cent increase and decrease in GBP against other currencies. 5 per cent is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in the foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 5 per cent change in the foreign currency exchange rates. A positive number below indicates an increase in profit and other equity where GBP weakens 5 per cent against the relevant currency. For a 5 per cent strengthening of GBP against the relevant currency, there would be a comparable impact on the profit and other equity, and the balances below would be negative.

Effect on Profit and Loss

31 Dec 2022

31 Dec 2021

£

£

US Dollars

113,868

160,806

Euro

58,407

5,332

Canadian Dollars

15,473

2,870

Australian Dollars

21,966

44,817

Swiss Francs

1,011

26,459

INTEREST RATE RISK

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk is mitigated by the Company only entering into fixed rate interest agreements, therefore detailed analysis of interest rate risk is not disclosed.

MARKET PRICE RISK

The Company's exposure to market price risk mainly arises from potential movements in the fair value of its investments. The Company manages this price risk within its long-term investment strategy to manage a diversified exposure to the market. If each of the Company's equity investments were to experience a rise or fall of 10% in their fair value, this would result in the Company's net asset value and statement of comprehensive income increasing or decreasing by £403,000 (2021: £508,000).

Exposure to market price risk also arises in respect of the Company's investments in debt securities which are mainly denominated in US Dollars.

The Company's strategy for the management of market risk is driven by the Company's investment objective, which is focused on deploying its capital in investments that provide both income and downside protection. It is expected that the Company will deliver returns to shareholders through a combination of capital growth and dividend income.

The Company's market risk is managed on a continuous basis by the Investment Advisor in accordance with the policies and procedures in place. The Company's market positions are monitored on a quarterly basis by the board of directors.

OPERATIONAL RISK

Operational Risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology and infrastructure supporting the Company's activities with financial instruments, either internally within the Company or externally at the Company's service providers such as cash custodians/brokers, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of investment management behaviour.

The Company's objective is to manage operational risk so as to balance the limiting of financial losses and damage to its reputation with achieving its investment objective of generating returns to shareholders.

The primary responsibility for the development and implementation of controls over the operational risk rests with the board of directors. This responsibility is supported by the development of overall standards for the management of operational risk, which encompasses the controls and processes over the investment, finance and financial reporting functions internally and the establishment of service levels with various service providers, in the following areas:

- Appropriate segregation of duties between various functions, roles and responsibilities;

- Reconciliation and monitoring of transactions

- Compliance with regulatory and other legal requirements;

The directors' assessment of the adequacy of the controls and processes at the service providers with respect to operational risk is carried out via ad hoc discussions with the service providers. Substantially all the of the assets of the Company are held by Barclays Bank UK and Shard Capital Brokers. The bankruptcy or insolvency of the Company's cash custodian/brokers may cause the Company's rights with respect to the securities or cash and cash equivalents held by cash custodian/ broker to be limited. The board of directors' monitors capital adequacy and reviews other publicly available information of its cash custodian/broker on a quarterly basis.

22

FINANCIAL INSTRUMENTS

The Company uses financial instruments, other than derivatives, comprising cash to provide funding for the Company's operations.

CATEGORIES OF FINANCIAL INSTRUMENTS

The IFRS 9 categories of financial asset included in the statement of financial position and the headings in which they are included are as follows:

2022

2021

£

£

FINANCIAL ASSETS:

Cash and cash equivalents

958,135

2,012,483

Financial assets at fair value through profit or loss

8,105,693

11,072,148

Other receivables

1,371,797

-

FINANCIAL LIABILITIES AT AMORTISED COST:

The IFRS 9 categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:

2022

2021

£

£

Trade and other payables

89,335

1,011,695

23

RELATED PARTY TRANSACTIONS

The compensation payable to Key Management personnel comprised £124,000 (2021: £199,000) paid by the Company to the Directors in respect of services to the Company. Full details of the compensation for each Director are provided in the Directors' Remuneration Report.

Nicholas Lee's directorships of companies in which Riverfort Global Opportunities plc has an investment are detailed in Note 15.

24

Contingent LIABILITIES AND CAPITAL COMMITMENTS

There were no contingent liabilities or capital commitments at 31 December 2022 or 31 December 2021.

25

POST YEAR END EVENTS

There have been no post year end events.

26

ULTIMATE CONTROLLING PARTY

The Directors do not consider there to be a single ultimate controlling party.