## River UK Micro Cap Limited
### (formerly River and Mercantile UK Micro Cap Investment Company Limited)
## Annual Report and Financial Statements
## For the year ended 30 September 2024
1
## The Company
## at a glance
## Contents
Financial highlights and
performance summary 3
Chairman’s statement 5 Purpose
Portfolio Manager’s report 7 River UK Micro Cap Limited (formerly River and Mercantile UK Micro
Cap Investment Company Limited) (the “Company”) is a closed-ended
Investment portfolio 23
investment company. Its purpose is to deliver high and sustainable
Strategic report 25
returns to investors by delivering the investment objective detailed
Statement of principal risks below.
and uncertainties 29
Investment objective
Section 172 statement and
The Company aims to achieve long term capital growth from investment
principal decisions 33
in a diversified portfolio of United Kingdom (“UK”) micro-cap companies,
Board members 35
typically comprising companies with a free float market capitalisation of
Directors’ report 37 less than £100 million at the time of purchase.
Directors’ statement of Investment strategy and policy
responsibilities 41
The Company’s investment strategy is to take advantage of the illiquidity
Board and committees 42
risk premium inherent in UK micro-cap companies and exploit fully the
AIFMD report 47 underlying investment opportunities in that area of the market to deliver
high and sustainable returns to Shareholders, in the form of capital gains.
Report of the Audit Committee 48
It is expected that the majority of the Company’s investible universe will
Directors’ remuneration report 51
comprise companies whose securities are admitted to trading on the
Independent auditor’s report 53 Alternative Investment Market of the London Stock Exchange. While it
is intended that the Company will be fully invested in normal market
Statement of comprehensive
conditions, the Company may hold cash or similar instruments.
income 57
About the Alternative Investment Fund Manager (“AIFM”)
Statement of financial position 58
Statement of changes in The AIFM of the Company, for the purposes of the AIFM Directive, is
shareholders’ equity 59 Carne Global AIFM Solutions (C.I.) Limited (“Carne” or the AIFM) which is
authorised and regulated by the Jersey Financial Services Commission.
Statement of cash flows 60
The AIFM provides an oversight and risk management function but
Notes to the financial statements 62
delegates portfolio management to River Global Investors LLP (formerly
Useful information for “River and Mercantile Asset Management LLP”). The AIFM is independent
shareholders (unaudited) 79 and has no legal ownership connection with River Global Investors LLP.
Company information 81
| Annual Report and Financial Statements 30 September 2024 2River UK Micro Cap Limited
## This year sees the tenth
## anniversary of River UK Micro
## Cap and as we enter our second
## decade, we expect to see a
## sustained recovery in smaller
## companies in the UK. Our
## portfolio companies stand to
## benefit from their own growth
## stories, plus an additional boost
## as valuations normalise.
About River Global Investors LLP the region of £100 million will best Management of your Company
(formerly River & Mercantile Asset position the Company to maximise
The Board of the Company
Management LLP) (the “Portfolio returns from a portfolio of micro-
comprises a majority of independent
Manager”) cap companies. Accordingly,
non-executive Directors with
the Directors operate a Capital
The Portfolio Manager is an active extensive knowledge of investment
Redemption Mechanism under
equity manager, specialising in matters, the regulatory and legal
which a portion of the Company’s
UK and global equity strategies framework within which the
share capital is redeemed
since its launch in 2006. Since Company operates, as well as the
compulsorily at the discretion of the
2014, it has been part of River and various roles played by investment
Company to return the NAV back to
Mercantile Group Limited (formerly companies in Shareholders’
around £100 million in order to:
River and Mercantile Group PLC) portfolios. The Board provides
(the “Group”). The Group is a • enable the Company to exploit oversight of the Company’s activities
subsidiary of AssetCo PLC. The fully the underlying investment and ensures that the appropriate
Portfolio Manager is authorised and opportunity and to deliver high financial resources and controls are
regulated by the Financial Conduct and sustainable returns to in place to deliver the investment
Authority. Shareholders, principally in the strategy and manage the risks
form of capital gains; associated with such activities. The
George Ensor, the appointed fund
Board actively supervises both the
manager, has been responsible • enable portfolio holdings to
AIFM and the Portfolio Manager in
for the Company’s portfolio since have a meaningful impact on the
the performance of their respective
February 2018. Please refer to page Company’s performance, which
functions.
8 for George’s biography. might otherwise be marginal
within the context of a larger
Capital redemptions and
fund; and
dividend policy
• ensure that the Company can
The Company is committed to
continually take advantage of the
achieving long term capital growth
illiquidity risk premium inherent in
and, where possible, returning
micro-cap companies.
such growth to Shareholders
throughout the life of the Company. The Company does not expect to
Furthermore, the Board believes pay dividends.
that a Net Asset Value (“NAV”) in
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

3

# Financial highlights and performance summary

## Ongoing charges$^{1}$

The ongoing charges for the year ended 30 September 2024 were 1.72% (30 September 2023: 1.71%), reflecting rising operational costs offset by rising average NAV of the Company compared to the prior year.

## Performance during the year

In the year ended 30 September 2024, the NAV total return$^{1}$ of the Company outperformed the Numis Smaller Companies plus Alternative Investment Market (“AIM”) (excluding Investment Companies) Index (the “Comparative Index”) by 0.78%, delivering a NAV total return$^{1}$ of 14.87%, compared to 14.10% posted by the Comparative Index (30 September 2023: outperformed the Comparative Index by 0.54%).

## NAV and share price

|   | 30 September 2024 | 30 September 2023  |
| --- | --- | --- |
|  NAV per Ordinary Share^{1} | £2.0348 | £1.7714  |
|  Ordinary Share price (bid price)^{2} | £1.7400 | £1.4200  |
|  Share price discount to NAV^{1} | (14.49)% | (19.84)%  |

### NAV per Ordinary share$^{1}$ Year ended 30 September

![img-0.jpeg](img-0.jpeg)

### Ordinary share price (bid price)$^{2}$ Year ended 30 September

![img-1.jpeg](img-1.jpeg)
| Annual Report and Financial Statements 30 September 2024 4 4River UK Micro Cap Limited

| NAV per Ordinary |  | Ordinary share |  | Share price |  |
| --- | --- | --- | --- | --- | --- |
|  | 1 |  | 2 |  | 1 |
| share |  | bid price |  | discount to NAV |  |


| +14.9% | +22.5% | -27% |
| --- | --- | --- |
| 30 Sept 2024: £2.0348 | 30 Sept 2024: £1.7400 | 30 Sept 2024: (14.49)% |
| 30 Sept 2023: £1.7714 | 30 Sept 2023: £1.4200 | 30 Sept 2023: (19.84)% |

### Performance since inception
NAV total return versus the Comparative Index from inception
Total return per share
Total return per index
0
0
0
50
0
-50
Dec Sept Sept Sept Sept Sept Sept Sept Sept Sept Sept
14 15 16 17 18 19 20 21 22 23 24
1
NAV total return from inception (net of all fees) was 7.71% on an annualised basis, outperforming
3
the Comparative Index total return of 5.38% (30 September 2023: outperformed the Comparative
Index by 4.44%).
### Capital redemptions
Since inception to 30 September 2024, the Company has exercised its Capital Redemption
Mechanism on five separate occasions, as detailed below, redeeming a total of 34,609,615 Ordinary
Shares and returning a total of £76,924,351 to Shareholders.
Redemption Number of Amount
Redemption price per Ordinary shares returned to
4
date Ordinary Share redeemed shareholders
9 June 2017 £1.7217 8,712,240 £14,999,864
1 December 2017 £1.9124 7,843,469 £14,999,850
27 July 2018 £2.1659 5,506,817 £11,927,215
250
29 January 2021 £2.5335 5,921,631 £15,002,452
20 7 May 2021 £3.0179 6,625,458 £19,994,970
Please refer to note 11 for full details of the Company’s redemption mechanism, including the
15
conditions required for the Company to be able to operate the Capital Redemption Mechanism.
10

| 1 These are Alternative Performance Measures. Refer to pages |  | 3 Source: Numis Securities Limited. |  |
| --- | --- | --- | --- |
|  | 79 to 80 for further details. | 4 Excludes the cost of each redemption; amounting to a total |  |
| 2 Source: Bloomberg. |  |  | of £33,008 across all redemptions. |

| Annual Report and Financial Statements 30 September 2024 5River UK Micro Cap Limited
## Chairman’s statement
### Overall, the last 12 months have been satisfying for the Company on
### a number of levels. Although not fulfilling some of the more bullish
### expectations from earlier in the year, I am pleased to report that
### the Company showed a share price performance of 23% and a NAV
### performance of 14.9%, outperforming our Comparative Index.
The UK is still dogged by confidence issues The rumours that some of these tax breaks
that are holding back valuations, particularly were to be removed or diluted by the
in the small and micro-cap markets. There incoming Government proved mostly true in
are ongoing questions around the efficacy of the recent Budget statement, and this affected
the AIM market, which is so important as the market sentiment in the latter months of this
venue to much of the Company’s investment reporting period, flattening performance.
strategy.
Although the new Labour Government was
In many ways, it seems perverse that the elected with a growth-led economic agenda,
UK’s high-growth economy is struggling to there are still questions about some of
be recognised for what it is. As a nation, we the unintended consequences of the new,
are market leaders in Fintech and building a proposed tax raising initiatives.
strong reputation in emerging technologies
The recent Autumn budget from Chancellor
such as artificial intelligence (“AI”) and
Rachel Reeves has at least clarified the
HealthTech as well as other high-growth
economic landscape going forward, as has
sectors.
the US election. These outcomes might be
These types of companies typically need unpopular, but the markets now have clarity.
strong incentives to locate and grow in the
UK and various attractive tax breaks have
been introduced to both entrepreneurs and
investors via the AIM market.
RMMC share price up 23% over the period
250
180 200 Trade volume (k)
150
160
100
200
140
50
120 0
Oct 24Sep 24Aug 24Jul 24Jun 24May 24Apr 24Mar 24Feb 24Jan 24Dec 23Nov 23Oct 23
Chart showing share price and trading volumes over this reporting period (1 October 2023 - 30 September 2024).
Source: River Global Investors.
Share price (GBX)
| Annual Report and Financial Statements 30 September 2024 6River UK Micro Cap Limited
### Chairman’s statement (continued)
Putting all this together, the Board believes
that there is a burgeoning opportunity to
invest in a portfolio of Britain’s brightest
growth stories.
The unprecedented low valuations of micro
and small cap firms are seen as a bargain
for our Portfolio Manager and for investors
looking to get on board the next growth cycle.
With a new Government, positive labour
market, inflation back at planned levels and
interest rates reducing, there are few reasons
to argue that smaller UK company valuations
shouldn’t rise strongly from their current
depressed values.
George Ensor, our Fund Manager at River
Global Investors LLP, highlights in much more
detail his approach to the market from pages
Anthony Leatham, Head of Investment Company Research at
7 to 22 of this newly designed report.
Peel Hunt presents the Association of Investment Companies
Which brings us neatly to some of the efforts Marketing Campaign of the Year to Lucy Draper of River
we have been making with shareholder Global and John Blowers, Chairman.
communications.
You will see from this document that we
have been working to make our writing more
concise, engaging and well-presented. This We will continue to focus on marketing, in
improvement will be reflected in everything order to increase the understanding of the
we do, including Regulatory News Service Company’s benefits for investors, both existing
announcements, monthly updates and and new, with a remit to increase demand for
reports, and financial statements. the Ordinary Shares of the Company.
We want to be evangelists for the great This drives liquidity, narrows share price
investment case offered by this Company and discounts and drives share price growth.
that starts with us telling a strong story.
The efforts of the Company were rewarded in
Back in January 2024, when the share price September 2024 when the AIC awarded us the
was low and the share price discount was Marketing Campaign of the Year award.
wide, we were one of a number of investment
As the Company enters its 11th year in
companies attracting the attention of activist
December 2024, I believe that we have ridden
investment firms.
the worst of the low company valuations that
The Board decided that we were going to have beset UK markets recently and we now
tell our story to the market through our look more clearly at a route to growth and
first ever marketing campaign, ahead of the further capital redemptions.
Continuation Vote in March of this year.
The campaign helped to rally both the share
price, and a narrowing of the discount to NAV.
The vote to continue the Company’s unique
John Blowers
positioning was backed by over 99% of voters
Chairman
– a resounding endorsement of the strategy
and achievements to date. 20 December 2024
| Annual Report and Financial Statements 30 September 2024 7River UK Micro Cap Limited
## Portfolio Manager’s report
### We believe the opportunity for this strategy is excellent. After a
### prolonged period of subdued performance for UK financial markets,
### large and small, and the UK economy, there is a breadth of data that
### supports fiscal and monetary easing and an improvement in economic
### growth. This is a great backdrop for small, and therefore micro-cap,
### future equity performance. Indeed, following a period of extreme
### underperformance over the last three years, smaller companies have
### started to outperform – a critical lead indicator for our own performance.
The chart below illustrates the size of the opportunity if the rotation into smaller companies
is sustained. In this environment, we would expect to deliver strong absolute and relative
performance over the next few years.
UK Small Cap relative to Large Cap, September 1990 to September 2024
90
80
70
60
50
2423222120191817161514131211100908070605040302010099989796959493929190
Source: River Global investors LLP, Bloomberg, Deutsche Numis. Data from 31 August 1990 to 30 September 2024. Chart shows
Numis Small Cap plus AIM ex Investment Trusts relative to UK All Share (both total return).
140
This Portfolio Manager Report is compiled with reference to the investment portfolio.
130 Therefore, all positions are calculated by reference to their official closing prices (as
opposed to the closing bid prices basis within the financial statements). The estimated
120
unaudited NAV is calculated on a daily basis utilising closing bid prices and is inclusive of
110 all estimated charges and accruals.
100
| Annual Report and Financial Statements 30 September 2024 8River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
## We believe, particularly given the
## depressed state of the UK equity
## and small-cap market, that an IRR of
## 12.4% confirms that the approach
## we are taking is absolutely in the
## interest of our shareholders.
## Fund manager:
## George Ensor
George Ensor graduated from Bristol
University with an Upper Second-Class
degree in Chemistry in 2008 before
joining Smith & Williamson Investment
Management as a graduate trainee
where he worked for five years as an
analyst and Private Client Investment
Manager.
George joined River Global Investors LLP
in March 2014 as a UK equity analyst and
is currently Portfolio Manager of the ES
R&M UK Listed Smaller Companies Fund
and River UK Micro Cap Limited. George
is a CFA charter holder.
| Annual Report and Financial Statements 30 September 2024 9River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
returns in environments where there is a positive “small
## UK economy outperforming
cap premium” (i.e. small companies outperforming large).
## expectations and setting up
Evidence of improvement in the UK domestic economy:
## strong case for micro-cap
• Mortgage approvals (65.6k in September) are in-line
## performance with the 10-year average and up 49% compared to
2
September 2023 (44.0k) .
In our 2023 report, we made the case that the UK
economy was outperforming expectations and that this • UK consumer confidence has been on an upward

| positive momentum, alongside cheap starting valuations, |  | trend over the last 12 months to a 23-month high |  |
| --- | --- | --- | --- |
| could support attractive future equity returns. Whilst |  | of -13 in August. The 10-year average is -15 and |  |
| equity returns have improved – the UK equity market, |  | the 5-year average is -25. Sentiment declined |  |
| UK smaller companies and our net asset value increased |  | in September to -20 ahead of the new Labour |  |
|  | 1 |  | 3 |
| by 13%, 14% and 15% | respectively – we are surprised | Government’s budget | . |

that the continuing recovery of the UK economy has
• The UK labour market is easing, unemployment
not led to a more sustained recovery in UK smaller
remains low. Recent data from the KPMG/Recruitment
companies’ performance.
and Employment Confederation survey, which is
We believe there is a strong case for a broadening out of a measure of demand relative to the availability of
equity market performance and a rotation from mega- workers, points to a “significant softening in wage
4
cap to small and micro-cap companies. The cycle of growth” . Three-month average regular earnings
underperformance of small and micro-cap companies growth dropped below 5% (4.9%) for the first time
that we have experienced as interest rates increased since June 2022. This is important given the impact of
from record low levels has not been specific to the UK wage growth in services inflation. Vacancies, at 841k,
and is not unusual. Below we justify our confidence in have just dropped below the pre-Covid peak (862k
the UK economy and explain why we believe this should as at October 2018). The data also shows a trend of
5
contribute to the outperformance of smaller companies declining working age inactivity .
looking forward. Our performance data, as illustrated in
• UK real wage growth remains positive at close to
the section below on long term performance, continues
+2% year on year (“YoY”), as has been the case since
to support the case for excellent absolute and relative
4
mid-2023 .
9,200
8,800
8,400
9,600
8,000
Jun-Aug 2024Jul-Sep 2023Aug-Oct 2022Sep-Nov 2021Oct-Dec 2020Nov-Jan 2020
Source: Panmure Liberum, ONS. 15 October 2024.
1 UK equity return is for the MSCI UK IMI Index in total return. 2 Bank of England
UK small cap is the Numis Smaller Companies Index incl AIM 3 Growth from Knowledge (GfK)
excl Investment Trust in total return. Time period is the twelve 4 Barclays UK Labour Market 7 October 2024.
months to the end of September 2024. 5 Office for National Statistics , October Labour Market Review
Working age inactivity, 000s
| Annual Report and Financial Statements 30 September 2024 10River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
• Peak gas prices expected for this winter are currently expressed through flows and demonstrated in valuation
104 pence, down 30% on the peak price expected for multiples – exaggerates the delta in relative earnings
this winter in September 2023. Lower gas prices are over the short-term, as equities are priced by the
6
akin to fiscal easing. marginal buyer or seller. As we will come back to discuss
in the section on long term performance, our micro-cap
• Monetary policy is easing. UK interest rates were 5.25%
strategy is geared to the small cap premium.
in September 2023 but were expected to increase
(peak expectations of 5.4% in February 2024) and to be UK smaller companies are more exposed to the
5.1% in September 2024. UK rates fell to 5% in August domestic economy (and therefore GBP and gas prices)
6
2024 and are expected to be 3.5% in twelve months. and typically more cyclical. They are more geared to
central bank base rates and, we would argue, longer
• Sterling has gained 11% against the US dollar over
duration (given the reason to own small caps is for
the last year and is sitting above the 5-year average of
higher growth). We therefore acknowledge some of the
6
$1.28 and in-line with the 10-year average of $1.33.
drivers of smaller companies’ underperformance over
• UK Services, Manufacturing and Construction project the last three years. We struggle to see that the same
management information systems for September reasons hold true today. With fundamentals that are
2024 of 52.4, 51.5 and 57.2, respectively, are all improving, the reverse of these factors should drive
7
indicative of expansion. future earnings growth at a higher rate for domestics,
cyclicals, and small caps. Despite this and an attractive
• UK was the fastest growing G7 economy in the first
valuation starting point, outperformance over the last
six-months of 2024 and forecasts for 2025 exceed
twelve months has been less than 1%.
8
both the US and the Eurozone .
Using FTSE 250 forecast earnings as a proxy for small
The most important driver of long-term equity
cap, the data below shows that the relative earnings
performance is earnings. It therefore stands to reason
argument should be a positive driver from today (even
that the growth rate of smaller company earnings
if 18% earnings growth three years out is improbable).
relative to large companies should correlate to relative
This would be a much more positive backdrop for both
performance. We should expect to see a positive
our absolute and relative performance.
small cap premium when smaller company earnings
outperform larger company earnings. Sentiment –
Earnings growth: global Earnings growth: UK
20% 20%
18.3%
17.2%
15.6%
16% 16%
13.7%
12.0%
11.6%
12% 10.3% 12%
9.4%
7.5% 7.5%
8% 8% 6.2%
4.7%

| 4% | 4% |
| --- | --- |
| 0% | 0% |
| Source: Bloomberg | Source: Bloomberg |

FTSE All Share FTSE 250 ex ICs MSCI ACWI MSCI World SmCap Source of charts: Numis Why Smaller Companies, Why Now? 17 September 2024.
6 Bloomberg, Data as of early October 2024
7 Bloomberg, S&P, October 2024
8 Berenberg Equity Strategy, 2 October 2024
Y+2Y+1NTM Y+2Y+1NTM
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

11

## Portfolio Manager's report (continued)

![img-2.jpeg](img-2.jpeg)

NAV per share at the end of September 2024 was 203.5 pence, a gain of 14.9% from the NAV per share of 177.1 pence at the end of September 2023. Our Numis Smaller Companies plus AIM ex Investment Trusts benchmark returned a gain of 14.1%, leaving relative performance for the year of +0.8%.

**Comments follow for each position that impacted relative performance by at least one percentage point ("ppt"):**

### Renold (+2.4 ppts)

Renold is a manufacturer of highly engineered industrial chains typically used in demanding environments in a broad range of end markets. Renold reported strong results through the period that raised market confidence in the group's ability to achieve sustainable double-digit margins underpinned by a highly engineered, relatively low cost but performance critical chain product and strong operating efficiencies. Robust cash conversion and deleveraging provides a solid foundation for inorganic growth which is key to driving the group's ambitions to consolidate a highly fragmented industry with high switching costs. With margins having recovered compared to the long-term track record and supported by both the organic and inorganic opportunity on which the company has begun to execute, we transitioned the investment case from Recovery to Growth in the period.

### Science in Sport (+1.5ppts)

Science in Sport is a manufacturer and distributor of performance nutrition products for athletes through their SiS and PhD brands. Whilst the industry is growing, it is highly competitive, which is a particularly relevant comment for direct-to-consumer ("DTC") ecommerce operations. Science in Sport distribute through DTC and via both online and offline retailers. The strategy under the prior management team was to invest in marketing to drive aggressive topline growth and, like many DTC businesses, acquiring users online became unprofitable which, alongside required capex investments, left the balance sheet overleveraged. The new management team reset commercial relationships, exiting unprofitable revenues and focussed on cash generation and profit. The balance sheet has been recapitalised through an equity raise in which we participated. Whilst we maintain our Growth investment case, these are key catalysts for improved operating and share price momentum that we look for in Recovery investment cases.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

12

## Portfolio Manager's report (continued)

### Serabi Gold (+1.3ppts)

Serabi Gold is a Brazilian gold exploration and production business which has struggled over the last few years given increasing costs and inconsistent operational performance. The acquisition of a second asset, Coringa, also put significant pressure on the balance sheet. Operational performance has improved as Coringa has contributed to gold production and we expect this contribution to accelerate over the next two years. A combination of strong gold prices and weakness in the Brazilian Real has delivered a substantial turnaround in financial performance and free cash generation.

### Venture Life (+1.2 ppts)

Venture Life has executed a value accretive buy-and-build strategy of self-care brands. Acquisitive strategies have had a tough time over the last few years as they are dependent on both a sensible market valuation for their equity and, typically, demand for equity that can be tapped to fund acquisitions. These two aspects have been absent for the last three years and so Venture Life sensibly focussed on organic growth and cash generation to pay down debt. Whilst not without challenge, the higher margin Brands division is delivering good organic growth which we do not believe is recognised in the valuation.

### Windward's (+1.1 ppts)

Windward's software-as-a-service solution ("SaaS"), underpinned by a unique and defensible AI based process provides high payback maritime data insights primarily to government and commercial customers. Post our initial purchase, Windward has issued several strong market updates which have driven mid-to-high teens consensus sales upgrades over the period. This accelerates the group's path to breakeven, with sustained profitability expected from next year which derisks our investment case. We share further comments on the investment case in the section on activity below.

### Supreme (+1.0 ppts)

Supreme outperformed consensus expectations driven primarily by its core vaping business. Although the UK government announced a proposed disposable

vape ban during the period, we believe the group is well prepared with its alternative forms of vaping (e.g. refillable pod system). Supreme deployed its strong balance sheet to acquire Clearly Drinks, a brand owner and manufacturer of specialised canned and bottled-at-source spring water, which was well received by the market. We think it is an attractive deal from both a strategic and financial perspective. It helps diversify the group's revenues with pro-forma non-vaping sales accounting for 40% of group sales. Supreme paid an attractive multiple of earnings and the deal is earnings enhancing before any potential synergies are considered. Clearly Drinks' manufacturing capacity appears to be well invested with significant free capacity. We expect strong synergy potential; for example, selling Clearly Drinks products to Supreme's already established customer relationships or developing Supreme's emergent activity in wellness and energy drinks.

Mergers and acquisitions ("M&A") were also a driver of performance with both **City Pub Group (+1.4 ppts)** and **Shanta Gold (+1.1 ppts)** being acquired in the period.

### Mind Gym (-1.1 ppts)

Mind Gym provides behavioural science solutions to corporates that are proven to deliver business improvements through a focus on addressing a number of universal human capital challenges. Mind Gym issued a profit warning at its interim trading update in October 2023 and fell short of market expectations at its subsequent trading update in April 2024 which was primarily due to a weaker than expected macro environment. Balance sheet and liquidity constraints resulted in the company paring back selected long-term growth investments. Given depressed margins, a depressed share price and a change of chief executive officer ("CEO"), we transitioned the position to a Recovery investment case (versus Growth previously). The valuation opportunity is compelling at 0.3x sales versus a 5-year average of 1.8x and a mid-term 15-20% margin target; however, we reduced our holding in the period to less than 0.5% of NAV at the period end, indicative of our concerns about the achievability of the company's medium-term targets.
| Annual Report and Financial Statements 30 September 2024 13River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
Manolete (-1.2 ppts) Inspecs (-1.8 ppts)
Manolete is a litigation funding business which acquires Inspecs is a vertically integrated eyewear solutions
cases from insolvency practitioners in return for a provider with a focus on mid-market brands that offers
share of any profitable outcome. Manolete moved its customers unrivalled supply chain transparency and
back into profits in their full year results to March 2024 product quality underpinned by its own manufacturing.
and reported progress for the first five months of their Inspecs issued a full-year trading update in January 2024
current financial year that show net cash receipts are that confirmed the group’s focus on margin recovery
tracking ahead again. This reported progress is at odds through extracting operational efficiencies is driving
with the share price performance which has been poor. margins in the right direction, however earnings were
The shares trade at a small premium to book value below expectations due to weaker than expected sales
which is a significant discount to the long-term price- growth. Soft European consumer demand notably in
to-book multiple and an attractive opportunity if the Germany and the loss of sales to GrandVision following
company returns to historic levels of growth and return- its acquisition by Essilor Luxottica were key factors. At
on-equity. We have a small position (1.2% of NAV) at the interim results, the company revealed that revenue and
end of the period and will wait for a clear improvement earnings – which were lower YOY – had benefited from
in momentum before looking to add to our position. elevated levels of ordering in the comparable period
as retailers secured inventory post-Covid, which was
not flagged in the prior year. Despite this, management
Ten Lifestyle (-1.6 ppts) held guidance, implying a stronger than usual second
half weighting. Valuation remains compelling at seven-
Ten Lifestyle’s technology enabled concierge proposition
times 2025 consensus earnings, on margins well below
aids their corporate customer, typically financial services,
management’s long-term target.
with retention – and therefore lifetime value – of high
value customers. The company – which prides itself on
an exceptional track record of contract retention – lost
a large (c.5.5% of revenue) long-standing contract with
Coutts following the leadership changes at the private
bank. The company has since been awarded a new
contract with an American financial services firm which
is larger than the lost contract but did come with a need
to raise capital to fund the working capital requirements
as this contract ramps up. We participated in the fund
raise and we believe our Growth investment case
remains intact.
| Annual Report and Financial Statements 30 September 2024 14River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
## Long term
## performance
## review
### We’ve extended the analysis that we shared with shareholders last year in the table
### overleaf which shows the annual NAV performance for each financial year since the
9
### Company’s initial public offering (“IPO”) in December 2014 .
The penultimate row of the table shows our performance
relative to our benchmark on the same basis while the
### Positive absolute and relative
last row shows our performance relative to the AIM All
### performance in eight out of
Share index which is a point we will come back to. The
### ten financial periods.
three middle rows provide context for the investment
backdrop in the period.
For example, for the 10-month period to the end
### Total return after all fees
of September 2015, we delivered absolute NAV
growth of 13% and we outperformed our benchmark
10
by 5%. There was a growth style bias in the market,
## 107.6%
UK interest rates were unchanged and Smaller
11
Companies outperformed.
### Outperformance
## 40.3%
9 Period to September 2015 is from IPO on 2 December 2014 and is therefore approximate a 10 month not 12-month period.
10 Measured as a composite of MSCI UK Value vs. MSCI UK Growth and Numis Small Cap Ex-Investment Trusts plus AIM vs AIM All Share.
11 Measured as Numis Smaller Companies Ex-Investment Trusts plus AIM vs UK All Share. Double signal means equal or greater than 10%.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

15

## Portfolio Manager's report (continued)

The intention of the data is to illustrate that the Company has delivered strong absolute and relative performance in a range of macro environments. We would highlight the following:

- Positive absolute and relative performance in eight out of ten financial periods.
- Total return after all fees of 107.6%.
- Outperformance of 40.3%.

- We have delivered positive absolute and relative returns in years with both Growth and Value style leadership and rising and falling interest rates.
- Unsurprisingly, positive absolute and relative performance has been most correlated with a positive smaller companies' premium. The smaller companies' premium was +0.7% for the most recent period.

|   | Sept 15* | Sept 16 | Sept 17 | Sept 18 | Sept 19 | Sept 20 | Sept 21 | Sept 22 | Sept 23 | Sept 24  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  NAV performance | 13% | 14% | 45% | 25% | -17% | 9% | 59% | -48% | 4% | 15%  |
|  Style bias | Growth | Growth | Value | Growth | None | Growth | Value | Value | Value | Value  |
|  Interest rates | Neutral | - | Neutral | + | + | - | Neutral | + | ++ | -  |
|  Small cap premium | ++ | - | + | - | -- | ++ | ++ | -- | -- | =  |
|  Relative performance | 5% | 4% | 24% | 22% | -10% | 12% | 14% | -21% | 1% | 1%  |
|  AIM relative performance | 10% | 0% | 21% | 14% | 2% | -2% | 29% | -14% | 12% | 11%  |

*10 months.

Source: River Global Investors LLP, BNP Paribas, Bloomberg.

The final row on the table above shows our performance relative to the AIM All Share index. AIM is seen as the key small company market in the UK with 610 companies on AIM with a total market capitalisation of £68 billion and an average of £111 million¹².

At the end of the year, all but three of our investments were AIM listed which represented 88% of the NAV. We would consider the performance of AIM to be a better measure of the performance of the smallest UK listed companies particularly as the FTSE Small Cap index

(excluding Investment Trusts) has just 107 constituents with a total market cap of £27.7 billion and an average market capitalisation of £259 million¹³. For reference, our benchmark has 1,006 constituents with a total market value of £222.1 billion and an average of £222 million¹³.

We have delivered strong outperformance relative to AIM both since inception and particularly over the last two years where our performance relative to our benchmark has been harder.

12 Peel Hunt Strategy, AIMing higher, 17 September 2024

13 Bloomberg, 25 October 2024
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

16

## Portfolio Manager's report (continued)

Our NAV performance and performance relative to our Numis Smaller Companies (including AIM and excluding investment trusts (NSCI AIM ex ICs)) is shown below.

We also include performance figures for AIM and the broader UK market (MSCI United Kingdom IMI).

![img-3.jpeg](img-3.jpeg)

We intend to return excess capital to shareholders when the Company's assets are in excess of £110 million. The last two capital returns were in 2021 with a total of £35 million returned.

The details to the right allow us to calculate a money-weighted return (or internal rate of return ("IRR")) which differs from the NAV performance calculations shown above as it incorporates the timings of the capital returns.

We believe, particularly given the depressed state of the UK equity and small-cap market, that an IRR of 12.4% confirms that the approach we are taking is absolutely in the interest of our shareholders.

|  Date | Cash flow (£mn) | Comment  |
| --- | --- | --- |
|  02/12/2014 | -50.6 | Initial Public Offer (IPO)  |
|  29/10/2015 | -19.5 | Additional equity offering  |
|  09/06/2017 | 15.0 | Shareholder capital return  |
|  01/12/2017 | 15.0 | Shareholder capital return  |
|  27/07/2018 | 11.9 | Shareholder capital return  |
|  29/01/2021 | 15.0 | Shareholder capital return  |
|  07/05/2021 | 20.0 | Shareholder capital return  |
|  30/09/2024 | 69.0 | NAV  |
|  **IRR** | **12.4%** |   |

Source: River Global Investors LLP, BNP Paribas
| Annual Report and Financial Statements 30 September 2024 17River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
## Activity
Seven new positions were initiated in the period: property within the wrapper. Whilst these complex SIPPs
are a smaller part of the market – ~£100 billion of assets
Windward 14
versus the total SIPP market at ~£500 billion – they are
deemed non-core by many existing administrators which
Windward’s SaaS solution underpinned by a unique
the company believes enables a value accretive buy and
and defensible AI based process provides high return
build strategy. We participated in the fund raise for the
on investment (“ROI”) insights on the maritime sector
first acquisition, InvestAcc, which will be the platform
primarily to government and commercial customers.
that will host SIPPs acquired in future deals. Whilst the
With an R&D budget that we believe is three to four
InvestAcc purchase was completed at 10x earnings,
times the size of its nearest competitor, Windward is
future deals will be cheaper (management are targeting
well positioned to capitalise on secular industry growth
5-8x) and have meaningful cost synergies to further
drivers – notably digital immaturity, the growing desire
reduce the multiple paid.
to automate increasingly complex compliance and
regulatory requirements and demand for improved
supply-chain visibility – and is on a clear path to
MPAC Group
profitability. Valuation at purchase was compelling with
the company trading on an undemanding multiple of MPAC Group is a capital light assembler and servicing
sales. The holding has performed well since acquisition provider for packaging and automation equipment with
as per the comments in the performance section above. a sticky blue-chip customer base primarily in the food &
beverage and healthcare sectors. It was purchased on
a self-help Recovery thesis – as there was evidence of
Marwyn Acquisition Company II margin recovery and improving cash conversion with a
net cash balance sheet providing downside protection
Marwyn Acquisition Company II – which post period end
– with scope for it to successfully transition to a Growth
has been renamed InvestAcc Group – is a buy and build
thesis. Results post purchase were slightly above
of self-invested personal pensions (“SIPP”) administration
expectations with a particularly strong performance in
businesses, specifically complex (or full) SIPPs for
the second half of the last year which showed margins
which there is a higher administrative burden given the
are no longer depressed versus history. As a result, we
inclusion of private company shares and commercial
have reclassified MPAC as Growth given the compelling
14 Company pathfinder
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

18

## Portfolio Manager's report (continued)

organic growth opportunity from retaining and growing business with existing blue-chip clients, where MPAC is today only selling part of its capability into a few divisions, broadening the customer base and new product innovations. With a strong net cash balance sheet and a fragmented competitive landscape, there is also potential for inorganic growth to create a turn-key solution which would increase scale, margins and returns.

### AOTI

AOTI develops medical devices for patients with chronic wounds. The statistics around diabetic foot ulcers are alarming – one third of diabetics will develop a diabetic foot ulcer in their lifetime, 50% of these will become infected and there is a c20% chance of amputation once infected. Treatment is a huge financial burden on society; in the US, the annual cost is equivalent to the cost of treating all cancer, with similar 5-year mortality rates. AOTI's at-home topical oxygen therapy has a strong value proposition, supported by a body of clinical and real-world data, as it significantly improves both patient outcomes and economics for payers relative to existing treatments. This has supported revenue growth in excess of 30% in the last two years. We expect rollout across the US, which is mix-accretive relative to the majority of historic sales into the Veterans Administration channel, to drive strong top line growth and margin expansion. We participated in the company's IPO as we felt the valuation offers attractive risk/reward if the company can scale effectively.

### Gear4Music

After tracking the shares for more than a year, we bought an initial position in Gear4Music in January 2024. The online retailer of musical instruments and equipment has delivered consistent market share gains since IPO, benefitting from channel shift from high street to online; however, the combination of a post-Covid normalisation and a series of strategic mishaps resulted in the shares falling from their peak of £10 in mid-2021 to below £1 by late 2022. Questions over the level of sustainable profitability – which is meaningful for assessing the business' ability to generate cash and deliver – kept us on the sidelines, with weak revenues and margin disappointments driving the recent downgrade cycle. There is now evidence of an inflection point – the business' ability to generate an improvement in gross

profit margins whilst destocking during a tough trading environment over their peak Christmas period helps to build confidence in the medium-term margin recovery opportunity (from 4.6% towards management's 8% EBITDA margin target) and deleveraging pathway. Whilst there is still some macro uncertainty, we believe this is discounted in the cheap valuation at which we initiated the position.

### Pebble Group

Pebble Group is a company we have followed since their IPO in December 2019 given our holding in our open-ended small cap fund. The company has two distinct divisions – albeit both are exposed to the use of promotional products. Brand Addition provides promotional products to large enterprise companies and is therefore geared into their marketing spend, which has disappointed largely due to the exposure to consumer and technology companies. Facilisgroup is a platform for small US promotional product distributors with a two-sided revenue model whereby customers pay a SaaS license fee to use the software and Pebble also receives a commission from a preferred list of suppliers that those same customers order products through. We purchased the shares at more than a 50% discount to their December 2019 IPO price despite a higher level of profits for either 2023 or forecast for 2024 than for 2019 and a stronger (net cash) balance sheet.

### Eagle Eye Solutions

The final position we added to the portfolio was Eagle Eye Solutions, omnichannel digital marketing platform which enables grocery and food retailers to offer personalised promotions. The company is building a track record of profitable and cash generative growth serving an impressive list of clients which include Morrisons, John Lewis and Pret A Manger. Organic growth has averaged +25% over the last five years and the outlook is strong, supported by the structural shift to personalisation (which generates a +200% ROI improvement versus mass promotion spend according to a BCG study)¹⁵ and expansion into the US, the largest promotions market globally. A growing sales pipeline and a conservative expectation set supports continued upgrade momentum, underpinning the current valuation which is attractive relative to SaaS peers.

15 https://www.bcg.com/publications/2021/personalized-offers-have-a-potential-70-billion-dollar-growth-opportunity
| Annual Report and Financial Statements 30 September 2024 19River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
## Portfolio
## positioning
### We are looking to build a portfolio of companies that have a clear opportunity to
### create shareholder value in one of three phases of the company lifecycle – Growth,
### Quality and Recovery.
When compared to the end of September 2023, we the exception of Gear4Music (Recovery) and Marwyn
have added 7ppts to Growth at the expense of Recovery Acquisition Company II (Quality), all of our new holdings
which is down 8ppts. The move is largely a reversal of were held as Growth investments at the end of the
the movement into Recovery in the prior year where period (as discussed, MPAC was acquired as Recovery
Recovery gained 7ppts at the expense of Growth. With and transitioned to Growth).
30/09/2023
53%
30/09/2024
46%
28%
27% 27%
60% 19%
50%
40%
0%
RecoveryQualityGrowth
30%
Source: River Global Investors LLP
20%
10%
| Annual Report and Financial Statements 30 September 2024 20River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
On one-year forward consensus forecast, 90% of the Our approach to integrating sustainability analysis into
portfolio is forecast to be free-cash flow profitable. If our fundamental research process is unchanged. We
we exclude our litigation funding businesses, Litigation believe that businesses that are managed with the
Capital Management and Manolete, and LendInvest for interest of all stakeholders in mind will compound higher
which free-cash flow is a result of investments (legal returns for shareholders over the medium term.
cases and mortgages), then that number increases to
The portfolio allocation across the four different
96% with just three free-cash consumptive holdings;
categories was similar to the previous year with 27% in
MaxCyte, MindGym and GetBusy.
S1 rated companies, 62% in S2 rated companies, 11%
We have always been cautious of leverage. Approximately in S3 rated companies and no S4 rated positions (2023:
75% of the portfolio is net cash and of the remaining 22% S1, 71% S2 and 7% S3).
25%, 10% has strong asset backing to support leverage.
Across the seven new positions, AOTI and Windward
For example, SigmaRoc has significant mineral reserves
are S1 rated, Gear4Music is S3 rated and the others are
and Capital has a fleet of almost 130 drilling rigs.
S2 rated.
Our latest Sustainability and Stewardship Policy is
available on our website (www.river.global/what-we-do/
sustainable-investing/stewardship).
A sustainable leader in its field and/or clear beneficiary of sustainability trends
## S1
Solid sustainability characteristics, with no clear impediment to value creation or share
## S2 price performance
Sustainability improvement required. Evidence of progress and/or engagement potential
## S3
Sustainability a clear barrier to value creation. No evidence of progress and/or low
## S4
likelihood of engagement success, including failed attempts.
| Annual Report and Financial Statements 30 September 2024 21River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
## Outlook
### The market is being priced on flows instead of fundamentals and the only capital owners
### that are currently taking advantage of this at any scale are the corporates buying back
### their own shares and private equity vehicles, which are on a M&A bonanza. There are
### exceptions, but it is hard to make the case that most acquisitions of UK listed companies
### are being completed at generous prices.
As noted above and counter to the prevailing negative to March 2018, the average outperformance of smaller
sentiment, data suggest UK economic fundamentals companies in the UK over the last five cycles has been
16
are improving and we are convinced in the logic that in excess of 50% . For context, smaller companies have
17
this should support the leadership of smaller company outperformed by just 5.6% since the low in October
earnings over the next cycle. 2023, which itself follows a remarkable 38% of relative
underperformance.
The upcoming Budget and subsequent Mansion House
speech will set the agenda for the new Labour Government. After several months of uncertainty, the changes to
Perhaps naïvely, we believe that this government has inheritance tax and capital gains tax announced at
recognised that growth is the only answer to our debt and the Budget were not as bad as feared. In fact, given
public services dilemma and revitalised domestic capital the various other inheritance tax changes, there is an
markets have a key role to play. argument that the 50% relief that prevails on qualifying
AIM listed companies is just as valuable as the prior
The rewards to be realised on a rotation in market
100% relief. Moreover, we now have certainty on a tax
leadership from defensive to cyclical, from international
relief that many investors have been concerned about
to domestic and from large-to-small are exciting and
since well before the most recent election. Whilst we
worth positioning for today. Prior cycles, as illustrated
are now in a higher capital gains tax regime which does
in the chart below, are as good an indicator as any
little to encourage equity investment, there is no longer
of the scale of the opportunity. Even excluding the
a motivation to accelerate the recognition of gains
exceptional period of performance from December 2008
16 Analysis of performance in 1992-1994, 1999-2000, 2001-2007, 2008 to 2018 and 2019 to 2021 and excluding the outperformance of
more than 150% for the 2008 to 2018 cycle. Source: River Global Investors LLP.
17 Bloomberg, 28 October 2024
| Annual Report and Financial Statements 30 September 2024 22River UK Micro Cap Limited
### Portfolio Manager’s report (continued)
which was a feature of the market prior to the Budget. minimum domestic equity allocation – may be needed.
Finally, there was little encouragement for listed equities The final report is due in 2025 and any positive signal
in Rachel Reeves’ maiden Mansion House Speech but around this could be significant for inflows into UK
the Interim Report of the Pensions Investment Review, equities.
which was published on the same day, illustrates that
the Government is concerned by the lack of domestic
George Ensor
investment by UK pension funds. The Government is
Fund Manager
using the next stage of the review to consider whether
further intervention – which would likely be a mandatory River Global Investors LLP
UK Small Cap flows, open-end funds % AuM
1.0%
0.5%
0.0%
AJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJDNOSAJJMAMFJ
2021 2022 2023 2024
Source: River Global Investors LLP, The IA.
Numis SC + AIM ex IT TR relative to All-Share TR: September 1990 to September 2024
All-Share TR +44%
Small Cap TR +5.6%
-38.4% relative Mar 07 to Dec 08
underperformance All-Share TR -25.6%
Small Cap TR -52.4%
Jun 94 to Jan 99 -26.4% relative
All-Share TR +122.1% underperformance
-16.0%
Small Cap TR +33.8% -15.5%
-88.3% relative
underperformance -12.3%
Sep 90 to Nov 92 -19.0% -15.5%
90 -14.6%
140
1.5% 80
Sep 21 to Oct 23
130
All-Share TR +6%

|  | 70 | Small Cap TR -32.1% |
| --- | --- | --- |
| 120 |  | -38.1% relative |
|  | 60 | underperformance |

110
50
100 2423222120191817161514131211100908070605040302010099989796959493929190
-0.5%
Source: River Global investors LLP, Bloomberg, Deutsche Numis. Data from 31 August 1990 to 30 September 2024.
-1.0%
-1.5%
-2.0%
-2.5%
| Annual Report and Financial Statements 30 September 2024 23River UK Micro Cap Limited
## Investment portfolio
The Investment Portfolio below details the Company’s holdings as at 30 September 2024, exclusive of cash and cash
equivalents (portfolio weightings are based on mid-prices).
Weight
Name Description (% of portfolio)
DF Capital Financials 6.9%
ActiveOps Information Technology 5.2%
Sigmaroc Materials 4.9%
Supreme Consumer Discretionary 4.9%
Kooth Health Care 4.7%
Windward Information Technology 4.3%
Venture Life Consumer Staples 4.0%
Litigation Capital Mgmt Financials 3.9%
Renold Industrials 3.9%
Science In Sport Consumer Staples 3.8%
Keystone Law Industrials 3.7%
Capital Limited Materials 3.7%
Marwyn Acquisition Financials 3.2%
1Spatial Information Technology 2.8%
Diaceutics Health Care 2.6%
Cake Box Holdings Consumer Staples 2.5%
Ten Lifestyle Industrials 2.4%
Inspecs Health Care 2.4%
HVIVO Health Care 2.3%
IG Design Group Consumer Discretionary 2.1%
Serabi Gold Materials 2.1%
GetBusy Information Technology 2.0%
Aquis Exchange Financials 1.9%
Netcall Information Technology 1.8%
Aoti Health Care 1.8%
Pebble Group Communication Services 1.7%
Gear4Music Consumer Discretionary 1.6%
Boku Information Technology 1.6%
Alpha Group Int’l Financials 1.3%
MaxCyte Health Care 1.2%
Manolete Partners Financials 1.2%
MPAC Group Industrials 1.2%
Flowtech Fluidpower Industrials 0.9%
Eagle Eye Solutions Communication Services 0.7%
LendInvest Financials 0.6%
Mind Gym Industrials 0.4%
Virgin Wines UK Consumer Staples 0.4%
Source: River Global Investors LLP
| Annual Report and Financial Statements 30 September 2024 24River UK Micro Cap Limited
### Investment portfolio (continued)
### Top ten holdings Sector breakdown
### as at 30 September 2024 as at 30 September 2024
## Financials 19.0%
### Total of
### portfolio
## 46.5% IT 17.7%
## Health care 15.0%

| DF Capital | 6.9% |
| --- | --- |
| ActiveOps | 5.2% |
| Sigmaroc | 4.9% |

## Industrials 12.5%

| Supreme | 4.9% |  |
| --- | --- | --- |
| Kooth | 4.7% |  |
| Windward | 4.3% | Materials 10.7% |
| Venture Life | 4.0% |  |
| Litigation Cap Mgt | 3.9% | Consumer staples 10.7% |
| Renold | 3.9% |  |
| Science in Sport | 3.8% |  |

### Consumer discretionary 8.6%
### Communication services 2.4%
| Annual Report and Financial Statements 30 September 2024 25River UK Micro Cap Limited
## Strategic report
This Strategic Report is designed to provide information Committee Chair. Also on 1 May 2024, Serena Tremlett
about the Company’s operation and results for the was appointed to the Board and took over the roles of
year ended 30 September 2024. It should be read in Remuneration and Nomination Committee Chair and
conjunction with the Chairman’s Statement and the Management Engagement Committee Chair from
Portfolio Manager’s Report which provides a detailed John Blowers.
review of investment activities for the year and an
outlook for the future.
### Company investment objective
The Company aims to achieve long term capital growth
### Corporate summary
from investment in a diversified portfolio of UK micro-
The Company was incorporated in Guernsey on 2 cap companies, typically comprising companies with a
October 2014, with registered number 59106, as a free float market capitalisation of less than £100 million
non-cellular company with liability limited by shares. at the time of purchase.
The Company is regulated by the Guernsey Financial
Services Commission (“GFSC”) as a registered closed-
### Company investment policy
ended collective investment scheme pursuant to the
Protection of Investors (Bailiwick of Guernsey) Law, 2020,
The Company invests in a diversified portfolio of UK micro-
as amended, and the Registered Collective Investment
cap companies. It is expected that the majority of the
Scheme Rules and Guidance, 2021 (“RCIS Rules”).
Company’s investible universe will comprise companies
whose securities are admitted to trading on AIM.
The Company’s share capital is denominated in Sterling
and each share carries equal voting rights.
While it is intended that the Company will be fully
invested in normal market conditions, the Company may
The Company’s Ordinary Shares are listed on the Equity
hold cash on deposit or invest on a temporary basis in a
Share (Commercial Companies) (ESCC) segment of the
range of high quality debt securities and cash equivalent
Official List as maintained by the Financial Conduct
instruments. There is no restriction on the amount of
Authority (“FCA”) and admitted to trading on the Main
cash or cash equivalent instruments that the Company
Market of the London Stock Exchange.
may hold and there may be times when it is appropriate
The Company changed its name from River and
for the Company to have a significant cash position
Mercantile UK Micro Cap Investment Company Limited
instead of being fully or near fully invested.
to River UK Micro Cap Limited, to align with that of its
The Company is not benchmark-driven in its asset
Portfolio Manager, with effect from 19 June 2024.
allocation.
### Significant events during the year Diversification
### ended 30 September 2024 The number of holdings in the portfolio will usually range
between 30 and 50. The portfolio is expected to be
Annual General Meeting held on 12 March 2024 broadly diversified across sectors and, while there are
no specific limits placed on exposure to any sector, the
On 12 March 2024, the Annual General Meeting was
Company will at all times invest and manage the portfolio
held. All resolutions proposed at the meeting were duly
in a manner consistent with spreading investment risk.
passed. This included the five-year Continuation Vote
and appointment of Grant Thornton Limited as the
Investment restrictions
Company’s auditor.
No exposure to any investee company will exceed 10%
Board and Committee changes of NAV at the time of investment.
On 11 March 2024, Andrew Chapman retired from the The Company may from time to time take sizeable
Board and John Blowers assumed the role of Chairman positions in portfolio companies. However, in such
of the Board. circumstances, the Company would not normally intend
to hold more than 25% of the capital of a single investee
On 1 May 2024, Charlotte Denton resigned from
company at the time of investment.
the Board and was replaced by Ted Holmes as Audit
| Annual Report and Financial Statements 30 September 2024 26River UK Micro Cap Limited
### Strategic report (continued)
Although the Company would not normally expect to in the form of capital gains in line with the Company
hold investments in securities that are unquoted, it may investment objective and policy.
do so from time to time but such investments will be
The Company pursues its investment strategy through
limited in aggregate to 10% of NAV.
the appointment of Carne as AIFM, whereby the AIFM
The Company may invest in other investment funds, has been given responsibility, subject to the supervision
including listed closed-ended investment funds, to gain of the Board, for the management of the Company in
investment exposure to UK micro-cap companies but accordance with the Company’s investment objective
such exposure will be limited, in aggregate, to 10% of and policy. In conjunction with the Board, the AIFM has
NAV at the time of investment. engaged the Portfolio Manager to manage the portfolio.
The Company depends on the diligence, skill, judgement
The Board reviews the industry and asset diversification
and business contacts of the Portfolio Manager’s
of the investment portfolio to ensure that holdings are in
investment professionals, in particular George Ensor, in
line with the investment restrictions and to monitor the
identifying investment opportunities which are in line
concentration risk of the investment portfolio. Refer to
with the investment objective and policy of the Company.
note 9 for further details regarding investment limits and
The Portfolio Manager attends all Board meetings at
risk diversification policies.
which the investment strategy and performance of the
As at 30 September 2024, the Company held 37 Company are discussed.
(30 September 2023: 41) investment holdings of which
none exceeded 10% of NAV at the time of investment.
### Key Performance Indicators (KPIs)
A portfolio listing is shown on page 23 which
demonstrates the spread of investment risk in
The Directors meet regularly to review performance and
accordance with the investment policy.
risk against a number of key measures. The Directors
considers the KPIs to be NAV total return and capital
Borrowing and gearing policy
returns. The KPIs are considered to be APMs, refer to
The Company does not normally intend to employ the Financial Highlights and Performance Summary on
gearing but at certain times it may be opportune to do pages 3 to 4 and the Alternative Performance Measures
so, for both investment and working capital purposes. on pages 79 to 80 for further details.
Accordingly, the Company may employ gearing up to a
maximum of 20% of NAV at the time of borrowing. As at
### Our approach to ESG
30 September 2024, the Company had no borrowings.
Our own direct environmental and social impact
Derivatives is minimal. The Company relies substantially on
outsourced service providers to carry out our business
The Company may use derivatives (both long and short)
activities. On an annual basis, we monitor the actions
for the purposes of efficient portfolio management
taken by our service providers regarding environmental
only. The Company will not enter into uncovered short
and social issues. This is monitored by the Management
positions.
Engagement Committee through an annual evaluation
Further information can be found in the Portfolio questionnaire completed by each service provider or
Manager’s Report which is incorporated within this on-site visits. This process is used to identify any areas
Annual Report on pages 7 to 22 for informational of concern which may expose the Company to risks,
purposes only. principally the ability of each service provider to properly
execute services to the Company and its shareholders.
A primary ESG impact area for the Company is its
### Investment strategy and approach
portfolio holdings. The Company does not exclude
The Company’s investment strategy is to take advantage any type of business from its universe of potential
of the illiquidity risk premium inherent in UK micro-cap investments; however the Portfolio Manager uses an
companies and exploit fully the underlying investment ESG lens on all potential investments (https://river.
opportunity in the UK micro-cap market to deliver high global/what-we-do/sustainable-investing/stewardship).
and sustainable returns to Shareholders, principally This lens is part of the S-PVT internal scoring used by
| Annual Report and Financial Statements 30 September 2024 27River UK Micro Cap Limited
### Strategic report (continued)
the Portfolio Manager when selecting investments for The Board is satisfied that, at the time of approving the
the portfolio. The Board regularly receives reports and financial statements, no material uncertainties exist that
interrogates the Portfolio Manager on how the portfolio may cast significant doubt concerning the Company’s
is split between each sustainability category, focusing ability to continue for the foreseeable future, being
specifically on how investments rated poorly (S3 and 12 months after the date of approval of the financial
S4) under the Portfolio Manager’s classification system statements. In addition, the Company’s holdings of cash
are being evaluated and engaged with to improve the and cash equivalents, the liquidity of investments and
Board’s assessment. the income deriving from those investments, means the
Company has adequate financial resources to meet its
liabilities as they fall due.
### Voting and engagement
At the 2024 Annual General Meeting, the Continuation
The Directors believe that it is important to monitor and
Vote was passed, approving the continuation of the
encourage improvement in the management practices
Company for another five years. The Board also
of the companies we invest in for all stakeholders whilst
considered the continuing impact of the current macro-
not compromising our objective of achieving strong
economic environment and the impact that ongoing
financial returns. The best way to create wealth for
geopolitical tensions may have on the Company, which
our Shareholders is to invest in companies that are
it believes have a minimal risk at this stage on the going
well managed and optimise returns to shareholders.
concern of the Company.
The Board delegates responsibility for this objective to
Therefore, the Board consider it appropriate to adopt
the Portfolio Manager and has approved the Portfolio
the going concern basis in preparing the financial
Manager’s approach to Voting and Engagement, details
statements.
of which can be found at https://river.global/what-we-do/
sustainable-investing/stewardship.
### Viability statement
### Future strategy
The Board carries out an annual assessment of the
Company’s current position and principal risks and
The Board continues to believe that the investment
uncertainties, as detailed on pages 29 to 32, combined
strategy and policies adopted are appropriate for and
with an assessment of the prospects of the Company to
are capable of meeting the Company’s purpose and
state that they have a reasonable expectation that the
investment objective.
Company will be able to continue in operation over the
The overall strategy remains unchanged and it is
period of their assessment.
the Board’s assessment that the AIFM and Portfolio
The Company has no fixed life. The Directors shall
Manager’s resources are appropriate to properly
propose one or more ordinary resolutions at every fifth
manage the Company’s investment portfolio in the
AGM that the Company continues as a closed-ended
current and anticipated investment environment.
investment company (the “Continuation Resolution”). The
Please refer to the Portfolio Manager’s Report for
last Continuation Resolution was proposed at the AGM
details regarding performance to date of the investment
on 12 March 2024 and was passed by the Company’s
portfolio and the main trends and factors likely to affect
Shareholders. The next Continuation Resolution will be
those investments.
proposed at the AGM in 2029.
The Company is intended to be a long-term investment
### Going concern vehicle, however, having considered the inherent
limitations of estimating the impact of future political
The Directors are required to satisfy themselves that
and macro-economic conditions on the Company, the
it is reasonable to assume that the Company is a going
Directors have decided to assess the viability of the
concern and to identify any material uncertainties to
Company over a period of five years that aligns with the
the Company’s ability to continue as a going concern
next Continuation Vote.
for at least 12 months from the date of approving the
financial statements.
| Annual Report and Financial Statements 30 September 2024 28River UK Micro Cap Limited
### Strategic report (continued)
The Company’s prospects are driven by its business In making this judgement, the Board has assessed that
model and strategy. The Company’s aim is to achieve the main risks to the long-term viability of the investment
long term capital growth from investment in a strategy of the Company are key global and market
diversified portfolio of UK micro-cap companies, uncertainties driven by factors external to the Company,
typically comprising companies with a free float market which in turn can impact on the liquidity and NAV of the
capitalisation of less than £100 million at the time of investment portfolio, and therefore risk the viability of
purchase. The Board, advised by the Portfolio Manager, the Company itself. A simulation has been designed to
believes that the impact on micro-cap companies when estimate the impact of these uncertainties on the NAV
the general economy returns to economic growth is of the Company at times of stress based on historical
particularly high and therefore based on a five-year performance data of the Company’s Comparative Index,
time horizon, the Board would expect rising valuation using techniques similar to the sensitivity analysis
metrics and enhanced returns. The Board acknowledges performed in note 9 – financial risk management.
that due to the global economic situation, the value of
Taking account of the Company’s current position,
the Company’s investments is depressed, but draws
principal risks and results of the simulation noted
attention to the fact that the Company has no gearing
above, the Board has a reasonable expectation that
and has appropriate cash levels to meet expenditure.
the Company will be able to continue in operation and
The Company’s investments are held on a recognised
meet its liabilities as they fall due over the period of
stock exchange and the portfolio is well diversified.
assessment.
The Board is mindful of the current political and
The Strategic Report was approved by the Board
economic environment and continues to monitor its
of Directors on 20 December 2024 and signed on its
impact on the Company. In this context, the Board’s
behalf by:
central case is that the prospects for economic activity
in the UK will remain such that the investment objective,
policy and strategy of the Company will be viable for the
foreseeable future through a period of at least five years John Blowers Ted Holmes
from the balance sheet date. Chairman Audit Committee Chair
| Annual Report and Financial Statements 30 September 2024 29River UK Micro Cap Limited
## Statement of principal risks and uncertainties
The table shows the post mitigation principal risks and uncertainties facing the Company and explains how we
mitigate them. Information on our risk management framework can be found on pages 48 to 50.
1 Investment (macroeconomic factors)
1 2 3 4
2 Geopolitical tensions
4
3 Liquidity
Major
4 Share price discount

|  |  | 1 2 |  |  | 5 | Reliance on the Portfolio Manager |
| --- | --- | --- | --- | --- | --- | --- |
|  | 6 |  |  | 3 |  |  |
| Moderate |  |  | 3 |  |  |  |
|  |  |  |  |  | 6 | Cyber security |

Impact

|  |  |  |  | 7 | Sustainable investment |
| --- | --- | --- | --- | --- | --- |
| 7 |  |  | 2 |  |  |
|  | 4 | 5 |  |  |  |

Low
Principal risk
1
Not
Movement from last year
significant
Rare Low Medium High
Probability
Impact: moderate
## 1.
The Company is exposed to market factors. The unrealised performance can be
### Investment
affected by the sentiment of the market, supply/demand of asset types, expectations on
### (macroeconomic
unemployment, and Gross Domestic Product growth.
### factors)
High interest rates, an inflationary macroeconomic environment and the threat of global
recession may drive down growth stocks especially, which would adversely affect the
underlying value of the Company’s investment portfolio, leading to an adverse impact on
Risk profile
the Company’s NAV.
unchanged
Mitigation
Probability
The Company is closed ended and has no leverage. It is well set up to ride out any
medium
short-term dislocations in pricing without being forced to liquidate investments at
technically distressed prices.
The skill and expertise of the Portfolio Manager allows the Company to be positioned
effectively in the event of macro events which impact the value of the Fund assets.
| Annual Report and Financial Statements 30 September 2024 30River UK Micro Cap Limited
### Statement of principal risks and uncertainties (continued)
Impact: moderate
## 2.
Along with other investment companies, the Company faces an increased and emerging
### Geopolitical
risk from the impact of global political unrest and rising geopolitical tensions, which
### tensions
potentially impacts the Company’s investment portfolio and the general sentiment towards
capital markets.
Risk profile
Mitigation
increasing
The Portfolio Manager will analyse stress scenarios and reposition the portfolio
accordingly.
Probability
medium
Impact: moderate
## 3.
The Company invests in a diversified portfolio of UK micro cap companies, typically
### Liquidity
comprising companies with a free float market capitalisation of less than £100 million at
the time of purchase. The relatively small market capitalisation of micro cap companies
can make the market in their shares illiquid. As a result of lower liquidity, prices of micro
Risk profile
cap companies tend to stick at one level, but can be at risk of sudden jumps in price
unchanged
when momentum of sentiment is strong enough and certain pools of investors are forced
to liquidate. As a consequence, the Company may not necessarily be able to realise its
Probability
investments within a reasonable period.
medium
Both the liquidity and valuation issues highlighted above may be totally out of sync with the
underlying investee company fundamentals. There can therefore be no guarantee that any
realisation of an investment will be on a basis which necessarily reflects the valuation of
that investment.
Mitigation
Risks within the portfolio are monitored by the AIFM, which holds monthly AIFM Risk
Committee meetings with the Portfolio Manager. Portfolio liquidity forms a key part
of these monthly discussions. The AIFM provides an update of the Risk Committee
meetings to the Board and the risks are discussed accordingly. The Portfolio Manager
also undertakes ongoing reviews of the underlying investee companies particularly those
whose businesses are impacted by the current macro environment.
| Annual Report and Financial Statements 30 September 2024 31River UK Micro Cap Limited
### Statement of principal risks and uncertainties (continued)
Impact: low
## 4.
The price of the Company’s shares may trade at a discount or premium relative to the
### Share price
underlying NAV of the Ordinary Shares.
### discount
There is a risk that shareholders become dissatisfied with a continuing discount to NAV
and seek further action.
Risk profile The Directors note that, in an environment where investment companies are trading at a
unchanged discount, there has been a growing trend towards activism.
Mitigation
Probability
high The Board monitors the Company’s share price discount or premium to the published
NAV and regularly consults with the Company’s brokers regarding share trading volumes,
significant buyers and sellers, and comparative data from the Company’s peer group.
In order to further manage the discount, the Board has developed a marketing plan to
broaden interest in the company’s Ordinary shares.
Since its inception the Company has operated the Redemption Mechanism to return
capital to investors which the Board understands Shareholders are still supportive of.
Further, the Board considers that in the current environment, selling portfolio investments
at depressed values in order to raise funds to buy back the Company’s own shares is not in
the best interests of investors and that the Redemption Mechanism remains the best tool
to manage the discount in the longer term.
Impact: low
## 5.
The Company is dependent on the expertise of a small team led by George Ensor to
### Reliance on
evaluate investment opportunities and to implement the Company’s investment objective
### the Portfolio
and investment policy.
### Manager
Mitigation
The Portfolio Manager has experienced investment professionals ready and available to
Risk profile
step in if required in the short term, should the lead manager be unavailable, and would
unchanged
hire a full time experienced and proven replacement lead manager, if necessary.
The Board and the AIFM continue to monitor and review the service and performance of
Probability
the Portfolio Manager.
high
Impact: moderate
## 6.
The incidence of cyber related events and attacks heightens the risk of inappropriate
### Cyber security
access to data leading to loss of sensitive information which may have a material adverse
effect on the Company’s financial condition, reputation and investor confidence.
Risk profile
Mitigation
unchanged
The Company’s service providers maintain cyber security policies. These are reviewed by
the AIFM as part of its oversight responsibilities and reported to the Board, including any
Probability
breaches of information security. Service providers perform regular testing of their cyber
low
security controls to ensure that they remain robust.
| Annual Report and Financial Statements 30 September 2024 32River UK Micro Cap Limited
### Statement of principal risks and uncertainties (continued)
Impact: low
## 7.
Investors are placing increased emphasis on ESG, including climate change, and the
### Sustainable
Board sees any failure by the Portfolio Manager to identify future potential issues within
### investment
the underlying portfolio in this area as a key risk which may lead to the Company’s shares
becoming less attractive to investors.
A failure to adopt a sustainable approach to environmental and social matters, or a failure
Risk profile
of governance is likely to adversely impact the Company’s performance.
decreasing
Mitigation
Probability
The Board believes that the adoption by the Portfolio Manager of a comprehensive
low
sustainable investment policy, in combination with the development of regular reporting to
the Board, allows the Company to mitigate this risk.
The Board has developed a strategy to engage with service providers across ESG matters
more generally.
The Company is a closed-ended investment entity and so its own direct environmental
and social impact is minimal. The Company does not exclude any types of business from
its universe of potential investments. However, the Portfolio Manager does deploy an
ESG lens on all potential investments and adopts a rigorous corporate ESG policy. The
Company, in common with most investment companies, relies substantially on outsourced
providers, including the Portfolio Manager. The Board believes therefore its focus should
be centred around governance, ensuring that appropriate ESG policies and a sustainable
investing approach is followed as well as monitoring and measuring the Company’s service
providers’ future progress towards ESG objectives. The Company also wants to ensure it
has a positive impact, for example minimising its carbon footprint. Both the Company and
its service providers are evolving their approach.
Refer to pages 26 to 27 for “ Our approach to ESG”.
### Other risks Risk
Taxation
Description
The Company invests in AIM listed shares. Any change to the tax status of those
shares, such as the reduction of inheritance tax (IHT) relief announced by the
Chancellor in the Autumn Budget, could reduce investor appetite for AIM listed shares
and make it harder to achieve the Company’s investment objectives.
| Annual Report and Financial Statements 30 September 2024 33River UK Micro Cap Limited
## Section 172 statement and principal decisions
Through adopting the AIC Code, the Board acknowledges its duty to comply with section 172 of the UK Companies
Act 2006 to act in a way that promotes the success of the Company for the benefit of its members as a whole, having
regard to (amongst other things):
a) consequences of any decision in the long-term;
b) the interests of the Company’s employees;
c) need to foster business relationships with suppliers, customers and others;
d) impact on community and environment;
e) maintaining reputation; and
f) act fairly between members of the Company.
The Board recognises its role in promoting the Company’s purpose of delivering on the investment strategy and in
promoting its core values of openness, challenge and respect in its interactions with all stakeholders.
Information on how the Board has engaged with its stakeholders and promoted the success of the Company in
regard to the above, is outlined below. The Company has no employees.
Stakeholder How the Board engages
Shareholders The Company would not exist without the capital of its Shareholders and its ongoing success
is dependent on their continued support. The Board therefore ensures that multiple lines
of communication with Shareholders are actively promoted. The Annual General Meeting
(“AGM”) ensures a forum in which the views of all Shareholders are sought by the Board
through the resolutions proposed and it is also an opportunity for Shareholders to question
the members of the Board face to face.
In addition, the Board requires Singer Capital Markets Advisory LLP as the Company’s
corporate broker (the “Corporate Broker”) to maintain communication with major
Shareholders and report back to the Board at quarterly meetings on the tenor and substance
of such communication. Since the Company’s inception, the Board has encouraged both the
Corporate Broker and the Portfolio Manager to meet directly with Shareholders both for the
purposes of communicating the Company’s strategy and performance as well as to listen
to the views of Shareholders. These views are reported back to the Board at their regular
meetings.
The Board has developed a multi-channel marketing strategy alongside the Broker and the
Portfolio Manager to target retail, adviser and institutional investors with a series of messages
suitable across all points on the investment cycle, at an affordable cost to the Company. The
Company has noted the positive effects of this marketing strategy during the year and is
pleased to note that the Company was awarded the ‘Best Marketing Campaign (Continuation
Vote)’ at the AIC Shareholder 2024 Communication Awards. Furthermore, the Chairman and
other Directors are available to meet with major Shareholders where such meetings would be
welcomed. The Company provides regular information updates to Shareholders, including the
daily NAV announcement to the markets and monthly portfolio updates.
| Annual Report and Financial Statements 30 September 2024 34River UK Micro Cap Limited
### Section 172 statement and principal decisions (continued)
Stakeholder How the Board engages
Service All key service providers report to the Board at every quarterly Board meeting, with
providers representatives of the service providers present to answer questions from Directors. In
accordance with the Company’s culture of openness, challenge and respect, the Chairman
actively encourages feedback from the Company’s service providers as appropriate to their
field of expertise. The Board, through its Management Engagement Committee, also seeks to
ensure that the terms of engagement are commercially equitable for each service provider.
The success of the Company is encouraged by forming stable partnerships with successful
and motivated advisers.
The wider The Board has developed a strategy to embed a responsible and realistic approach to ESG
community and related issues into its engagements with stakeholders, including how it delivers value to
the environment Shareholders. The Board continues to discuss with the Portfolio Manager how a responsible
sustainable investment approach integrates with the Company’s overall investment
philosophy and objective which is described in greater detail in the Portfolio Manager’s
Report. The Board engages with all its service provider stakeholders, on an annual basis,
to assess their impact on society and the environment. On the latest engagement with the
Company’s main service providers through questionnaires, which included ESG related
questions, there was no issues noted by the Board when reviewing responses.
Principal decisions
The table below sets out principal decisions taken by the Board during the year which have the greatest impact
on the Company’s long-term success. The Board considers the factors outlined under section 172 and the wider
interests of stakeholders as a whole in all decisions it takes on behalf of the Company.
Principal decision Stakeholder interests
Discount The Board regularly monitors the level of the discount of the share price to NAV per Ordinary
management Share, especially in relation to its peer group. However, the Board continues to believe that
the Capital Redemption Mechanism provides the most effective buyback mechanism in
the longer term. Notwithstanding this view, the Board continues to look for effective ways
to improve demand for and liquidity in the Company’s shares. To that end, the Board has
ensured that the Company had a marketing presence in a number of consumer-facing media,
including Trustnet and The Armchair Trader, with dedicated advertising, video and podcast
content to attract new investors. Given the trend for investment trusts to be attractive to UK
private investors, the Board are focusing their marketing and PR efforts at consumers in order
to boost liquidity.
Appointment of Following the resignation of Charlotte Denton, the Company recruited Serena Tremlett, a
Serena Tremlett Guernsey based Director, with the necessary skills and expertise.
Serena Tremlett was appointed as a Director on 1 May 2024. (Refer to page 36 for her
biography).
| Annual Report and Financial Statements 30 September 2024 35River UK Micro Cap Limited
## Board members

| John Blowers | Ted Holmes |
| --- | --- |
| Non-executive Chairman (Independent) | Non-executive Director (Independent) |
| Chairman of the Board (from 11 March 2024) . | Audit Committee Chair (from 1 May 2024). |
| Appointed 1 August 2022. | Appointed 26 September 2023. |
| John has been instrumental in the digital | Ted is currently on the board of the City of London |
| revolution in financial services for 34 years, with a | Investment Trust and a Director for Blue Ocean |
| series of key achievements. He was involved with | Investment Partners. |

the UK’s first digital fund platform at Interactive
Ted had a twenty-year career at UBS Asset
Investor and went on to design, build and run
Management. During that time, he worked as
several digital investment offerings for AMP, UBS
a managing director in both the Chicago office
and latterly for FE fundinfo.
(previously Brinson Partners) and London office
His skills revolve around strategic proposition (previously Phillips and Drew) in a variety of positions,
development and has a successful track record from analyst to European Head of Equities.
in sales & marketing roles in the investment
Prior to UBS, he worked for Ernst & Young where he
industry. Over the years, he has held a range of
earned his Certified Public Accountant license. He
CEO, MD and senior management roles in both
has an MBA from the University of Chicago Booth
multi-national and start-up businesses and is
School of Business and is a qualified Chartered
well-known in the UK investment and financial
Financial Analyst.
media community.
He is now managing director of financial Key relevant skills
information company Stockomendation Limited,
• 27 years of experience in investment management
which operates three websites including
(Chartered Financial Analyst)
Investegate.co.uk.
• Investment oversight
Key relevant skills
• Investment trust oversight and governance
• Marketing
• Qualified accountant, Certified Public Accountant
• Retail distribution (US CPA)
• Product design
| Annual Report and Financial Statements 30 September 2024 36River UK Micro Cap Limited
### Board members (continued)

| Mark Hodgson | Serena Tremlett |
| --- | --- |
| Non-executive Director (Independent) | Non-executive Director (Independent) |
| Appointed 2 October 2014. | Remuneration and Nomination Committee Chair |

and Management Engagement Committee Chair
Mark Hodgson is a Channel Islands fund director
(from 1 May 2024). Appointed 1 May 2024.
based in Jersey, with considerable experience in
the funds industry. He has a broad fund expertise Serena is a Guernsey-based company director and
covering a wide range of differing asset classes, consultant with over 25 years of experience in funds,
including real estate, infrastructure, credit and listed companies, company secretarial and regulatory
private equity. matters.
Mark joined Carne in April 2014 and is Head of the Serena was a co-founder and managing director of
Channel Islands Fund business. He has over 25 years Morgan Sharpe Administration Limited, a Guernsey
of financial services experience, with an extensive fund and corporate services administrator which
banking background. Mark spent over 20 years was established in April 2008 and then sold to Estera
with HSBC Global Bank where he gained in depth Group in 2017. Morgan Sharpe’s clients included
knowledge of credit, financial markets and complex listed companies and some of the biggest names in
Real Estate structures. private equity and real estate.
Mark moved to Jersey in 2006 to head up HSBC’s Prior to Morgan Sharpe, Serena was managing
Commercial Centre having full operational director of Assura Group’s Guernsey office and
responsibility for credit and lending within the company secretary to what was a FTSE 250 listed
jurisdiction, later moving to Capita Fiduciary Group in company at that time from 2006 to 2008. From 1996
2008 as Managing Director, acting as non-executive to 2006, she developed her funds career at Mourant
director on a number of fund boards. (Guernsey) Limited and Guernsey International Fund
Managers Limited.
Mark acts as a Non-Executive Director on a number
of high-profile fund boards based in Jersey, Guernsey Serena also holds the Institute of Directors Diploma
and Luxembourg. Mark is also a Fellow of the in Company Direction.
Institute of Directors and a qualified Chartered
Director. Key relevant skills
• Over 25 years of financial services experience,
Key relevant skills
primarily in Guernsey
• 28 years financial services experience, 20 years of
• Since 2001, has been a director of listed,
being the member of various boards
unlisted, and general partner companies in many
• Extensive fund risk management experience jurisdictions
across multiple asset classes
• Strength in corporate governance and Guernsey
regulation
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

37

![img-4.jpeg](img-4.jpeg)

The Directors present their annual report and the audited financial statements for the year ended 30 September 2024. The results for the year are set out in these accounts.

### Dividend policy

Details of the Company's capital redemptions are shown on page 4. The Company does not expect to pay dividends and no dividends have been declared or paid during the year (30 September 2023: none).

### Share capital

As at 30 September 2024, the Company had 33,897,954 (30 September 2023: 33,897,954) Ordinary Shares in issue.

### Borrowing limits

The Directors may, if they feel it is in the best interests of the Company, borrow funds up to a maximum of 20% of NAV at the time of borrowing. No borrowing facility is currently in place.

### Acquisition of own shares

To assist the Company in addressing any imbalance between the supply of and demand for Ordinary Shares and thereby assist in controlling the discount to NAV at which the Ordinary Shares may be trading, on 7 March 2024, the Company renewed general authority

to purchase in the market up to 14.99% of the Ordinary Shares in issue as at 7 March 2024. This authority expires on the date of the 2025 AGM. The Company did not purchase any shares in the market during the year.

The Directors will seek a renewal of this authority from Shareholders at the Company's AGM on 12 March 2025.

### Directors' shareholdings

As at 30 September 2024, the Directors held the following Ordinary Shares in the Company:

|  Director | Ordinary Shares held  |
| --- | --- |
|  John Blowers | 14,559  |
|  Mark Hodgson | 7,721  |
|  Ted Holmes | 22,970  |
|  Serena Tremlett | 3,432  |

Between 1 October 2024 and 20 December 2024, there were no shares purchased or sold by Directors.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

38

## Directors' report (continued)

### Shareholders' interests

In accordance with Chapter 5 of the Disclosure Guidance and Transparency Rules (which covers acquisition and disposal of major shareholdings and voting rights), the following Shareholders had an interest in the Company's issued share capital of more than 5% as at 30 September 2024.

|   | Percentage of total voting rights (%)  |
| --- | --- |
|  West Yorkshire PF | 9.81  |
|  River Global Investors LLP | 9.17  |
|  Hargreaves Lansdown Asset Management^{1} | 8.59  |
|  Evelyn Partners Investment Management LLP | 6.99  |
|  JP Morgan Securities plc | 6.21  |
|  Investec Wealth & Investment Ltd | 6.08  |
|  CG Asset Management | 5.58  |
|  Interactive Investor Services Ltd^{1} | 5.53  |
|  Asset Value Investors | 5.02  |

Between 1 October 2024 and 20 December 2024, the Company received two additional notifications for JP Morgan Securities plc, one on 27 November 2024 reducing its percentage of total voting rights to 5.99% and one on 13 December 2024 increasing its percentage of total voting rights to 6.46%.

### Audit tender

The Company underwent a full and robust audit tender process between March and September 2023, the result of which saw Grant Thornton Limited awarded the mandate to provide comprehensive audit and associated services commencing with the review of the Half Yearly Financial Report for the period ended 31 March 2024. The appointment of Grant Thornton Limited as Auditors to the Company, along with a resolution to authorise the Directors to determine their remuneration, was tabled and approved at the AGM held on 12 March 2024.

### Matters reserved for the Board

The Directors have adopted a set of reserved powers, which establish the key purpose of the Board and detail its major duties. These duties cover the following areas of responsibility:

- statutory obligations and public disclosure;
- approval of the investment policy;
- strategic matters and financial reporting;
- Board composition and accountability to Shareholders;
- risk assessment and management, including reporting, compliance, monitoring, governance and control;
- responsible for financial statements; and
- other matters having material effects on the Company

These reserved powers of the Board have been adopted by the Directors to demonstrate clearly the importance with which the Board takes its fiduciary responsibilities and as an ongoing means of measuring and monitoring the effectiveness of its actions.

The Portfolio Manager has the delegated power to make investment decisions on behalf of the Company within the framework of the investment objective and investment policy. The Board exerts oversight of the decisions of the Portfolio Manager both through the AIFM and by direct reporting at quarterly Board meetings. The Portfolio Manager provides written reports to the Board and a representative of the Portfolio Manager is present at every quarterly Board meeting to present the report and answer questions from the Board. In addition, the AIFM provides regular risk reporting on the Company's investment portfolio and the Portfolio Manager at each quarterly Board meeting.

1 These are investment platforms and do not control the voting rights.
| Annual Report and Financial Statements 30 September 2024 39River UK Micro Cap Limited
### Directors’ report (continued)
Voting policy on portfolio investments Disclosure of Information to the Auditor
The Portfolio Manager, in the absence of explicit Each of the Directors who were members of the Board
instructions from the Board, is empowered to exercise at the time of approving this Report confirms that:
discretion in the use of the Company’s voting rights in
• to the best of their knowledge and belief, there is no
relation to investee company meetings. Voting on the
information relevant to the preparation of their report
Company’s behalf is undertaken where practicable in
of which the Auditor was unaware; and
accordance with corporate governance policies, which
seek to maximise shareholder value by constructive • they have taken all steps a Director might reasonably
use of votes at investee company meetings and by be expected to have taken to be aware of relevant
endeavouring to use the Company’s influence as audit information and to establish that the Auditor
an investor with a principled approach to corporate was aware of that information.
governance.
Fair, balanced and understandable
Disclosures required under LR 9.8.4R
In assessing the overall fairness, balance and
The FCA’s Listing Rule 9.8.4R requires that the Company understandability of the Annual Report the Board
includes certain information relating to arrangements has performed a comprehensive review to ensure
made between a controlling shareholder and the consistency and overall balance.
Company, waivers of Directors’ fees, and long-term
incentive schemes in force. The Directors confirm that
there are no disclosures to be made in this regard.
Events after the Reporting Date
The increase in Director fees detailed in the Directors’
Remuneration Report was formally approved by the
Board on 3 October 2024.
| Annual Report and Financial Statements 30 September 2024 40River UK Micro Cap Limited
## Corporate governance statement
Introduction 1. Board leadership and purpose
The Company is listed on the London Stock
Purpose 1
Exchange and is therefore required to report
Strategy 1
on how the principles of the UK Corporate
Governance Code (the “UK Code”) have been
Values and culture 42
applied. Being an investment company, a
Shareholder and Stakeholder engagement 33-34
number of the provisions of the UK Code are
not applicable as the Company has no executive
2. Division of responsibilities
Directors or internal operations.
The Board considers that reporting against the Director independence 42
principles and provisions of the AIC Code, which
Board meetings 44
has been endorsed by the Financial Reporting
Council and the GFSC, provides more relevant Relationship with the Portfolio Manager 45
information to stakeholders. The AIC Code is
Management Engagement Committee 43
available on the AIC website www.theaic.co.uk.
It includes an explanation of how the AIC Code
3. Composition, succession and evaluation
adapts the principles and provisions set out in the
UK Code to make them relevant to investment Remuneration and Nomination Committee 43
companies.
Directors’ re-election 42
The Company has complied with all the principles
Board and Committee evaluation 43
and provisions of the AIC Code during the year
ended 30 September 2024, with the exception
4. Audit, risk and internal control
to appoint a senior independent director. It was
decided not to appoint a senior independent Audit Committee 43
director given the small size of the Board and
Emerging and principal risks 29-32
because all Directors have different qualities
and areas of expertise on which they lead. Any Risk management and internal control systems 48-49
concerns can be conveyed to the Chairman, or
Going concern statement 27
another Director if Shareholders do not wish to
raise concerns with the Chairman. Viability statement 27-28
Set out to the right is where stakeholders can
5. Directors’ remuneration report
find further information within the Annual Report
about how the Company has complied with the Directors’ remuneration report 51-52
various Principles and Provisions of the AIC Code.
| Annual Report and Financial Statements 30 September 2024 41River UK Micro Cap Limited
## Directors’ statement of responsibilities
The Directors are responsible for preparing the Annual So far as the Directors are aware, there is no relevant
Report and Financial Statements in accordance with the audit information of which the Auditor is unaware,
applicable laws and regulations. having taken all the steps they ought to have taken
to make themselves aware of any relevant audit
The Companies (Guernsey) Law, 2008 (the “Company
information and to establish that the Auditor is aware of
Law”) requires the Directors to prepare Financial
that information.
Statements for each financial year. The Directors
are required to prepare the Financial Statements in Each of the Directors who served during the year, who
accordance with IFRS Accounting Standards as issued by are listed on pages 35 and 36, confirms to the best of
the IASB and applicable law. their knowledge and belief that:
Under the Company Law, the Directors must not • the financial statements, which have been prepared in
approve the Financial Statements unless they are accordance with IFRS Accounting Standards as issued
satisfied that they give a true and fair view of the state of by the IASB, give a true and fair view of the assets,
affairs of the Company and its profit or loss for that year. liabilities, financial position and profit of the Company
as required by DTR 4.1.22R; and
In preparing those financial statements, the Directors
are required to: • the Annual Report (comprising the reports from pages
5 to 52) includes a fair review of the development and
• select suitable accounting policies and apply them
performance of the business during the year, and
consistently;
the position of the Company at the end of the year,
• make judgements and estimates that are reasonable together with a description of the principal risks and
and prudent; uncertainties that the Company faces, as required by
DTR 4.1.8R and DTR 4.1.9R.
• state whether applicable accounting standards have
been followed, subject to any material departures The Annual Report and financial statements, taken as
disclosed and explained in the financial statements; a whole, are fair, balanced and understandable and
provide the information necessary for Shareholders to
• assess the Company’s ability to continue as a going
assess the Company’s performance, position, business
concern, disclosing, as applicable, matters related to
model and strategy.
going concern; and
The Directors’ Report was approved by the Board of
• use the going concern basis of accounting unless
Directors on 20 December 2024 and signed on its
they either intend to liquidate the Company or to
behalf by:
cease operations or have no realistic alternative but
to do so.
The Directors are responsible for keeping proper
accounting records, which disclose with reasonable
John Blowers Ted Holmes
accuracy at any time the financial position of the
Chairman Audit Committee Chair
Company and to enable them to ensure that the
financial statements comply with Companies Law. 20 December 2024 20 December 2024
The Directors 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.
| Annual Report and Financial Statements 30 September 2024 42River UK Micro Cap Limited
## Board and committees
Values and culture the Company and Directors’ appointments may be
terminated at any time by one month’s written notice
The Directors recognise the purpose of the Company
with no compensation payable at termination upon
to deliver high and sustainable returns to Shareholders.
leaving office for whatever reason.
Delivery of the investment objective has been achieved
throughout its history through both investment
Directors’ re-election
capability and long held values of diversification,
innovation, adaptation and integrity. As required by the AIC Code, all Directors stand for
re-election by Shareholders annually, the next occasion
These values are underpinned by the culture the
being at the AGM to be held on 12 March 2025.
Board demonstrates in the way in which the Directors
interact with each other and with the Company’s Refer to pages 35 and 36 for biographies of each Director
service providers. Openness, challenge and respect are which demonstrates their professional knowledge
encouraged as key to developing and implementing the and breadth of investment, accounting, banking and
strategies that will deliver the Company’s objective. professional experience. The Board considers that there
is a balance of skills and experience within the Board and
The Board each of the Directors contributes effectively.
As at 30 September 2024, the Board consisted of the
Board diversity
following non-executive Directors:
The Board is currently made up of one female Director
• John Blowers, (Independent) – Chairman of the Board
and three male Directors. The Board has due regard
(from 11 March 2024). Appointed 1 August 2022.
for the benefits of experience and diversity in its
• Mark Hodgson. Appointed 2 October 2014. membership, including gender, and strives to achieve
the right balance of individuals who have the knowledge
• Ted Holmes, (Independent) - Audit Committee Chair
and skill set to maximise Shareholder return while
(from 1 May 2024). Appointed 26 September 2023.
mitigating the risk exposure of the Company.
• Serena Tremlett, (Independent) - Remuneration
The below table sets out the Board’s current
and Nomination Committee Chair and Management
composition. The below text compares this against the
Engagement Committee Chair. Appointed 1 May
targets prescribed by Listing Rule 9.8.6R (9)(a).
2024.
Number
The Board is chaired by John Blowers, who is
of senior
independent of the AIFM and the Portfolio Manager Number Percentage positions
and has been since the time of his appointment. The of Board of the on the
1
Director Members Board Board
Chairman is responsible for the leadership of the Board
and for ensuring its effectiveness in fulfilling its role.
Men 3 75% 2
All Directors are deemed independent, except for Mark
Hodgson, who whilst independent of the Portfolio Women 1 25% 0
Manager, is the Managing Director of the AIFM and is

| therefore not regarded as independent. The opinion | White British or | 4 100% 2 |
| --- | --- | --- |
| of the other Directors is that Mark Hodgson provides | other White (incl. |  |
| considerable and complementary expertise to the | minority-white groups) |  |

Board, particularly in the area of risk management, in
which the AIFM has a significant presence. It is noted that at present 25% of the individuals on
the Board are women, which is below the target of
The Board reviews the independence of all Directors
40% prescribed by Listing Rule 9.8.6R (9)(a). At present,
annually.
none of the Board members are from minority
Directors have agreed letters of appointment with the ethnic backgrounds, which is below the target of one,
Company. No Director has a service contract with prescribed by Listing Rule 9.8.6R (9)(a).
1 Senior positions are CEO, CFO, SID and Chair. The Company does not have executive management, nor a Senior Independent Director
and considers the Chair of the Board or the Audit Committee Chair to be senior roles.
| Annual Report and Financial Statements 30 September 2024 43River UK Micro Cap Limited
### Board and committees (continued)
During the year, the Board appointed Serena Tremlett as His membership of the Audit Committee is considered
a Director. The Board noted the diversity requirements, appropriate given the size of the Board.
but in such a small Board, the Company considers the
The report on the role and activities of this Committee
diversity of skill sets and experience to be of the utmost
and its relationship with the external auditors is set out
importance. After reviewing a number of different
in the Report of the Audit Committee on pages 48 to 50.
applicants, it was decided that Serena Tremlett had the
best skill set to complement the Board.
Management Engagement Committee
The Board are mindful of these requirements and
The Management Engagement Committee membership
alongside knowledge and expertise, they will be
comprises all the independent Directors and has been
considered when the Board next recruits.
chaired by Serena Tremlett since 1 May 2024.
Tenure policy The Management Engagement Committee carries out its
review of the Company’s advisers through consideration
The Board has adopted a policy on the tenure of its
of a number of objective and subjective criteria and
independent Directors that aligns with the AIC Code
through a review of the terms and conditions of the
of Corporate Governance and none of the three
advisers’ appointments with the aim of evaluating
independent Directors, including the Chairman of
performance, identifying any weaknesses and ensuring
the Board, will serve for more than nine years. The
value for money for the Company’s Shareholders.
Board has thus adopted a staged succession plan
that maintains a balance between the strength added On 3 October 2024, the Management Engagement
through continuity and experience as well as the Committee formally reviewed the performance of the
benefits of new members bringing fresh perspectives. Portfolio Manager and other key service providers to the
The Board will continue to assess annually each Board Company. During this review, no material weaknesses
member’s independence. were identified. Overall, the Management Engagement
Committee confirmed its satisfaction with the services
The Board considers that boards of investment
and advice received. The next review is expected be held
companies are more likely to benefit from a long
in September 2025.
association with a company in that they will experience a
number of investment cycles.
Remuneration and Nomination Committee
Committees The Remuneration and Nomination Committee
membership comprises all the independent Directors
The Board has established three committees, the Audit
and has been chaired by Serena Tremlett since 1 May
Committee, the Management Engagement Committee
2024.
and the Remuneration and Nomination Committee.
Board and Committee evaluation
All the independent Directors, namely, John Blowers,
Ted Holmes and Serena Tremlett (appointed 1 May The Remuneration and Nomination Committee
2024) have been appointed to all Committees. performs an annual internal evaluation of the Board, its
Committees and each Director. Due to diary conflicts of
Each committee operates within clearly defined terms
new Directors, this was last undertaken on 3 October
of reference and duties. The terms of reference for each
2024.
Committee have been approved by the Board and are
available in full on the Company’s website, The annual internal evaluation carried out by the
https://river.global/our-funds/fund-centre. Remuneration and Nomination Committee for the year
ended 30 September 2024 covered the performance
Audit Committee
of the Chairman and other Directors, their knowledge
The Audit Committee membership comprises all the and understanding of the Company, its investments and
independent Directors and has been chaired by Ted markets and confirmed that the Board and its individual
Holmes since 1 May 2024. His position is considered members had a good range of skills and competency.
appropriate given his recent and relevant financial The Directors were determined to have had effective
and industry experience. Mark Hodgson attends at and comprehensive Board meetings and to have had
the invitation of the Audit Committee but does not sufficient time to devote to matters relating to the
actively participate in the meetings. The Chairman of Company and its operations.
the Board is also a member of the Audit Committee.
| Annual Report and Financial Statements 30 September 2024 44River UK Micro Cap Limited
### Board and committees (continued)
Succession plan and financial information relating to the Company and
its portfolio of investments. The Chairman encourages
The Board’s succession plan seeks to ensure that no
open debate to foster a supportive and co-operative
independent non-executive Director serves on the
approach for all participants.
Board for longer than nine years and that the Board
is well balanced and refreshed from time to time by The Board applies its primary focus on the following:
the appointment of new directors with the skills and
• investment performance, ensuring that investment
experience necessary to replace those lost by Directors’
objectives and strategy of the Company are met;
retirements and to meet future requirements.
• ensuring investment holdings are in line with the
The Remuneration and Nomination Committee is com-
Company’s investment restrictions;
mitted to ensuring that any vacancies arising are filled by
the most qualified candidates who have complementary • review and monitoring financial risk management,
skills or who possess the skills and experience which fill operating cash flows and budgets of the Company;
any gaps in the Board’s knowledge or experience. and
Following the resignation of Charlotte Denton on 1 May • review and monitoring of the key risks to which
2024, the Board sought to recruit a Guernsey-resident the Company is exposed as set out in the Strategic
Director to the Board. On 1 May 2024, the Board Report.
announced the appointment of Serena Tremlett to the
At each relevant meeting the Board undertakes reviews
Board as a new independent non-executive Director.
of key investment and financial data, transactions and
performance comparisons, share price and NAV
Board meetings
performance, marketing and Shareholder communication
The Board meets regularly throughout the year strategies, peer group information and industry issues.
and a representative of the AIFM and the Portfolio
The Board considers the Company’s investment
Manager attends when the Board meets to review the
objectives, their continuing relevance and whether the
performance of the Company’s investments.
investment policy continues to meet those Company’s
The Portfolio Manager and AIFM, together with the investment objectives. The Board believes that the
Company Secretary, ensure that all Directors receive, in overall strategy of the Company remains appropriate.
a timely manner, all relevant management, regulatory
Attendance at scheduled meetings of the Board and its committees

|  |  |  | Management |  | Remuneration |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Audit | Engagement |  | and Nomination |  |  |
|  |  |  |  | 6 |  |  | 6 |
| Board | Committee |  | Committee |  |  | Committee |  |

Number of meetings during the 3 4 - -
2
year ended 30 September 2024
John Blowers 3/3 4/4 - -
3
Andrew Chapman 1/1 1/2 - -
4
Charlotte Denton 1/2 2/2 - -
Mark Hodgson 3/3 n/a n/a n/a
Ted Holmes 3/3 4/4 - -
5
Serena Tremlett 1/1 2/2 - -
There was one ad-hoc board meeting held during the year.
2 Attendance presented in the table is based on the number of 5 Serena Tremlett was appointed on 1 May 2024.
Board meetings held when a Director was part of the Board 6 Due to diary conflicts for new directors, the Board and
based on their date of retirement, resignation or appointment. committee meetings were moved from the year ended
3 Andrew Chapman retired on 11 March 2024. 30 September 2024 to 3 October 2024 which is outside of the
4 Charlotte Denton resigned on 1 May 2024. reporting period.
| Annual Report and Financial Statements 30 September 2024 45River UK Micro Cap Limited
### Board and committees (continued)
Service providers Having formally appraised the performance, investment
strategy and resources of the Portfolio Manager, the
The AIFM has delegated portfolio management of
Board has unanimously agreed that the interests of
the Company’s investment portfolio to the Portfolio
the Shareholders are best served by the continuing
Manager. The Board actively and continuously
appointment of the Portfolio Manager on the terms
supervises both the AIFM and the Portfolio Manager in
agreed.
the performance of their respective functions.
The Board believes that the portfolio management
The Company has appointed BNP Paribas S.A., Guernsey
fees are competitive with other investment companies
Branch (the “Administrator” and/or the “Company
with similar investment mandates. The key terms of the
Secretary”) to provide administration, custodian and
Investment Management agreement and the portfolio
company secretarial services.
management fee charged by the Portfolio Manager are
Each of these contracts was entered into after full and set out in note 4.
proper consideration by the Board of the quality and
cost of services offered, including the control systems Shareholder communications
in operation in so far as they relate to the affairs of
The main method of communication with Shareholders
the Company. Fees in relation to service providers are
is through the Half-Yearly and Annual Report which
considered on a regular basis.
aims to give Shareholders a clear and transparent
The Board receives and considers reports regularly understanding of the Company’s objectives, strategy
from both the Portfolio Manager and the AIFM, with and results. This information is supplemented by the
ad hoc reports and information supplied to the Board publication of the daily NAVs of the Company’s Ordinary
as required. The Portfolio Manager complies with the Shares on the London Stock Exchange via a Regulatory
Company investment limits and risk diversification Information Service.
policies and has systems in place to monitor cash
The Company’s website, https://river.global/our-
flow and the liquidity risk of the Company. The AIFM,
funds/fund-centre is regularly updated with monthly
Portfolio Manager and the Administrator also ensure
factsheets and provides further information about the
that all Directors receive, in a timely manner, all relevant
Company, including the Company’s financial reports and
management, regulatory and financial information.
announcements. The maintenance and integrity of the
Representatives of the AIFM, Portfolio Manager and
Company’s website is the responsibility of the Directors,
Administrator attend each Board meeting as required,
which has been delegated to the Portfolio Manager;
enabling the Directors to probe further on matters of
the work carried out by the auditors does not involve
concern.
consideration of these matters and, accordingly, the
The Directors have access to the advice and service of auditors accept no responsibility for any changes that
the corporate Company Secretary through its appointed may have occurred to the financial statements since they
representative who is responsible to the Board for were initially presented on the website. Legislation in
ensuring that Board procedures and applicable rules Guernsey governing the preparation and dissemination
and regulations are followed. The Board, the AIFM, of financial statements may differ from legislation in
Portfolio Manager and the Administrator operate in a other jurisdictions.
supportive, co-operative and open environment and
Information published on the internet is accessible
the Board will actively and continuously supervise both
in many countries with different legal requirements
the AIFM, Portfolio Manager and Administrator in the
relating to the preparation and dissemination of financial
performance of their respective functions.
statements and users of the Company’s website are
Performance of the Portfolio Manager responsible for informing themselves of how the
requirements in their own countries may differ from
The Board reviews on an ongoing basis the performance
those of Guernsey.
of the Portfolio Manager and considers whether the
investment strategy adopted is likely to achieve the
Company’s investment objective.
| Annual Report and Financial Statements 30 September 2024 46River UK Micro Cap Limited
### Board and committees (continued)
The Board believes that the AGM provides an This information can be found here: https://www.
appropriate forum for investors to communicate with trustnet.com/factsheets/T/KZFC/river-and-mercantile-uk-
the Board and encourages participation. The AGM will micro-cap-red-ord-npv.
be attended by members of the Board. There is an
Other communications
opportunity for individual Shareholders to question the
Directors at the AGM. The Directors welcome the views All substantive communications regarding any major
of all Shareholders and place considerable importance corporate issues are discussed by the Board taking
upon them. into account representations from the AIFM, Portfolio
Manager, Grant Thornton Limited (the “Auditor”), legal
In addition to the AGM and the monthly publication of
advisers, Corporate Brokers and the Company Secretary.
factsheets, the Board requires its Corporate Broker to
maintain regular contact with Shareholders, to co-
ordinate and facilitate meetings between Shareholders
and the Portfolio Manager and to report back to
the Board the views of investors expressed at those
meetings. The Chairman is always willing to meet with
Shareholders to discuss any questions or issues they
might have about the Company.
The Board have additionally committed to uprating
the information on the Company by contracting with
Trustnet, one of the UK’s premier fund data companies,
serving the private investor and professional adviser
markets. The live share price and discount information
is provided, plus ratings, historic performance data and
fund manager profiles.
| Annual Report and Financial Statements 30 September 2024 47River UK Micro Cap Limited
## AIFMD report
Alternative Investment Fund Manager Directive AIFM remuneration
(“AIFMD”)
The total fee paid to the AIFM by the Company for the
The Company (which is a non-EU AIF for the purposes of year ended 30 September 2024 is disclosed in note 5.
the AIFM Directive and related regimes in EEA member
The AIFM is not subject to the provisions of Article
states) has appointed the AIFM. The AIFM is authorised
13 of the AIFMD, which require the AIFM to adopt
by the Jersey Financial Services Commission to act as an
remuneration policies and practices in line with the
AIFM on behalf of alternative investment funds (“AIFs”) in
principles detailed in Annex II of the Directive. However,
accordance with the Financial Services (Jersey) Law 1998.
in accordance with Article 22 of the AIFM Directive and
The Company is registered with the GFSC, being the Article 107 of the AIFM Regulations, the AIFM must make
Company’s competent regulatory authority, as a non-EU certain disclosures in respect of the remuneration paid
Alternative Investment Fund (“AIF”), and the AIFM has to its staff.
registered with the UK FCA, under their relevant national
The AIFM has identified six staff as falling within the
private placement regime.
scope of the disclosure requirements (the “Identified
The AIFM has delegated portfolio management of the Staff”). These Identified Staff are senior management,
Company’s investment portfolio to the Portfolio Manager named as Designated Persons of the AIFM’s managerial
and the Board actively and continuously supervises both functions and members of the Board of Directors, risk
the AIFM and the Portfolio Manager in the performance and investment committees of the AIFM. All Identified
of their respective functions. Staff of the AIFM are employees of the Carne Group
and as such receive no separate remuneration for their
As the Company and the AIFM are non-EU domiciled,
role within the AIFM. Instead, they are remunerated
no depositary has been appointed in line with AIFMD.
as employees of other Carne group companies, with
However, BNP Paribas S.A., Guernsey Branch has been
a combination of fixed and variable discretionary
appointed to act as custodian.
remuneration, where the latter is assessed based on
The current risk profile of the Company and the their overall individual contribution in their role, with
risk management systems employed by the AIFM to reference to both financial and non-financial criteria
manage those risks and not directly linked to the performance of the staff
of specific business units or targets reached. The total
Information relating to the current risk profile of the
remuneration of the Identified Staff, in respect of AIFs
Company and the risk management systems employed
under management, for the year ended 31 March 2024
by the AIFM to manage those risks, as required under
was £198,033 (31 March 2023: £238,250) . Based on
paragraph 4(c) of Article 23 of the AIFMD, is set out in
the net asset value of the Company relative to the total
note 9 – Financial Risk Management. Refer to pages 29
assets under management of the AIFM, the portion of
to 32 for the Board’s assessment of the principal risks
this figure attributable to the Company was £6,614.
and uncertainties facing the Company.
There was no variable component to this remuneration
that is based on the performance of the Company and
Leverage
none of the AIFM’s Identified Staff can materially impact
The Company may employ gearing up to a maximum of the risk profile of the Company. The AIFM manages other
20% of NAV at the time of borrowing. The actual level of funds and has no staff other than the Identified Staff.
gearing at 30 September 2024 was nil% (30 September
2023: nil%).
Material changes to information
Article 23 of AIFMD requires certain information to
be made available to investors before they invest and
requires material changes to this information to be
disclosed in the annual report. There have been no
material changes to the information requiring disclosure.
| Annual Report and Financial Statements 30 September 2024 48River UK Micro Cap Limited
## Report of the Audit Committee
The Board has appointed an Audit Committee which of the external Auditor and to negotiate their
operates within clearly defined Terms of Reference, remuneration and terms of engagement on audit and
which are available on the Company’s website. non-audit work;
The Audit Committee includes all the Directors except • to meet regularly with the external Auditor to review
for Mark Hodgson, who attends at the invitation of the their proposed audit program and remit of work
Audit Committee but does not actively participate in the and the subsequent Audit Report and to assess the
meetings. Ted Holmes is the Audit Committee Chair, he effectiveness of the audit process; any issues arising
is independent of the AIFM and Portfolio Manager as from the audit with respect to accounting or internal
are all the other Directors that comprise the committee. controls systems and the level of fees paid in respect
All the Audit Committee’s members have recent and of audit and non-audit work; and
relevant financial and industry experience and the Audit
• to annually assess the external Auditor’s
Committee Chair is a qualified accountant and chartered
independence, objectivity, effectiveness, resources,
financial analyst. The Audit Committee has competence
and expertise.
relevant to the sector in which the Company operates.
Biographical information pertaining to the members
Internal controls and risk management systems
of the Audit Committee can be found in the Board
Members section of this Annual Report. The Board is responsible for ensuring that suitable
systems of risk management and internal control are
Role of the Committee implemented, including systems that include financial
controls to address financial risks, by the third-party
The Audit Committee assists the Board in carrying
service providers and keeping these systems under
out its responsibilities in relation to financial reporting
review to ensure their continuing adequacy.
requirements, risk management and the assessment of
internal financial and operating controls. It also manages The Directors have reviewed the BNP Paribas ISAE
the Company’s relationship with the external Auditor. 3402 report (on the description of controls placed in
operation, their design and operating effectiveness for
The Audit Committee’s main functions are:
the period from 1 April 2023 to 31 March 2024 on Fund
• to review and monitor the integrity, fairness, and Administration and the corresponding Bridging Letter up
balance of the financial statements of the Company to 30 September 2024 and are pleased to note that no
including its Half-Yearly Report and Annual Report significant issues were identified.
to Shareholders and any formal announcements
In accordance with the FRC’s Internal Control: Guidance
regarding its financial performance, together with
on Risk Management, Internal Control and Related
any significant financial reporting issues and areas of
Financial and Business Reporting, and the FRC’s
judgement contained within them;
Guidance on Audit Committees, the Board confirms that
• to advise the Board on whether the Annual there is an on-going process for identifying, evaluating
Report, taken as a whole, is fair, balanced, and and managing the significant internal control risks faced
understandable and provides the information by the Company.
necessary for Shareholders to assess the Company’s
As the Company does not have any employees it does
performance, position, business model and strategy;
not have a ‘whistleblowing’ policy in place, however the
• to review the adequacy and effectiveness of the Board has reviewed the whistleblowing procedures
Company’s financial reporting and internal control of the Portfolio Manager with no issues noted. The
policies and procedures with respect to the Company delegates its main administrative functions to
Company’s record keeping, asset management and third-party providers who report on their policies and
operations for the identification, assessment and procedures to the Board.
reporting of risks;
The Board believes that as the Company delegates its
• to consider and make recommendations to the day-to-day administrative operations to third parties
Board, to be put to Shareholders for approval at the (which are monitored by the Board), it does not require
AGM, in relation to the appointment, re-appointment an internal audit function.
and removal and the provisions of non-audit services
| Annual Report and Financial Statements 30 September 2024 49River UK Micro Cap Limited
### Report of the Audit Committee (continued)
The Audit Committee met on four occasions in the year The Audit Committee met with the Auditor prior to
under review and the members’ attendance record can the commencement of the audit and agreed an audit
be found on page 44 of this Annual Report. plan that would adopt a risk based approach. The
Audit Committee and the Auditor agreed that audit
Significant risks in relation to the financial procedures would be performed over the title to and
statements the existence of the Company’s investments and the
procedures in place at the Administrator and the
The Audit Committee views the valuation of the
Portfolio Manager in respect of the valuation of the
Company’s investments as a significant risk.
Company’s investment portfolio would be understood
There is a risk that the AIM listed investments are and evaluated.
not valued appropriately in accordance with the
Upon completion of the audit, the Audit Committee
requirements set out in IFRS 13 due to the nature of the
discussed with the Auditor the effectiveness of the audit
AIM market and the listed stocks not being highly liquid,
and considered the Auditor’s independence from the
or heavily traded.
Company since their appointment and throughout the
The Audit Committee reviews the regular reports from audit process.
the Portfolio Manager and Administrator regarding the
The significant risks regarding both fraud risk -
valuation of the investments and the Board reviews
management override of controls and valuation of
the NAV of the Company, together with the value and
the investment portfolio, were tracked through the
trading volumes of investments on a regular basis.
period and the Audit Committee challenged the work
The Committee also considered the implications of
performed by the Auditor to test management override
the current geopolitical tensions and the economic
of controls and in addition the audit work undertaken in
environment, on both the valuation and liquidity of the
respect of valuations of investments held.
investment portfolio and concluded that it remained
appropriate to estimate the fair value of the Company’s The Audit Committee was satisfied that during the audit
financial assets based on quoted prices (refer to note of the Annual Report for the year ended 30 September
2.3(c) for further details). 2024, there had been appropriate focus and challenge
on the significant and other key areas of audit risk and
In addition to the above, the AIFM holds monthly
the Audit Committee assessed the quality of the audit
risk committee meetings, where the Company’s risk
process to be good.
measurement framework is discussed, including market
risk, credit risk, counterparty risk, operational risk and During the year ended 30 September 2024, in addition
liquidity risk, in reference to the investment portfolio to the audit services in respect to the audit of the
and the Company performance thereof. The AIFM Company’s Annual Report, the Auditor provided non-
provides regular updates and risk meeting minutes to audit services in respect of the review of the Company’s
the Board and is also asked to attend Audit Committee Half-Year Report for the six months ended 31 March
meetings by the Audit Committee Chair to assist the 2024. No other non-audit services were provided during
Audit Committee in evaluating the appropriateness and the year ended 30 September 2024.
robustness of the valuation methodology applied to the
To safeguard the objectivity and independence of
investment portfolio.
the external Auditor from becoming compromised,
the Audit Committee has a formal policy governing
External audit process
the engagement of the Auditor to provide non-audit
Following a full and robust audit tender process in
services. The Auditor and the Directors have agreed that
2023, the Auditor was appointed at the AGM held on 12
all non-audit services require the pre-approval of the
March 2024 . The Audit Committee has direct access to
Audit Committee prior to commencing any work. Fees
the Company’s external auditor and provides a forum
for non-audit services will be tabled annually so that
through which the external auditor reports to the Board.
the Audit Committee can consider the impact on the
Representatives of the Auditor attend meetings of the
Auditor’s objectivity.
Audit Committee at least twice each year.
| Annual Report and Financial Statements 30 September 2024 50River UK Micro Cap Limited
### Report of the Audit Committee (continued)
The fees for the audit services were: £53,000 for to rotate the engagement leader responsible for the
the audit for the year ended 30 September 2024 Company’s audit every seven years. Michael Carpenter
(30 September 2023: £64,550) and the fees for non- is the engagement leader and this is his first year
audit services were £17,000 (30 September 2023: overseeing the audit of the Company.
£23,000) for the review of the Company’s Half-Yearly
The Committee reviews the objectivity and effectiveness
Report for the six months ended 31 March 2024.
of the audit process on an annual basis and considers
The Audit Committee has discussed the report provided whether the Company should put the audit engagement
by the Auditor and the Audit Committee is satisfied as to out to tender.
the independence of the Auditor.
This Report of the Audit Committee was approved by the
The Committee has reviewed the Auditor’s Board of Directors on 20 December 2024 and signed on
independence policies and procedures and considers its behalf by:
that they are fit for purpose.
Appointment and independence
The Audit Committee considers the reappointment Ted Holmes
of the Auditor, including the rotation of the audit Audit Committee Chair
engagement leader, and assesses their independence
on an annual basis. The external Auditor is required
| Annual Report and Financial Statements 30 September 2024 51River UK Micro Cap Limited
## Directors’ remuneration report
This report describes how the Board has applied the principles of the AIC Code relating to Directors’
remuneration. An ordinary resolution to approve the Directors’ remuneration report will be proposed at the
AGM on 12 March 2025.
Table of Directors’ remuneration
The fees paid to each director are detailed in the table below:

|  |  | Year ended |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 30 September |  |  | 30 September |  |  |
| Director Role(s) |  |  | 2024 |  |  | 2023 |

1
Andrew Chapman Chairman £20,324 £43,838
John Blowers Chairman (from 11 March 2024) £37,984 £27,787
2
Charlotte Denton Audit Committee Chair £20,288 £32,865
Ted Holmes Audit Committee Chair (from 1 May 2024) £31,535 £nil
Mark Hodgson Director £30,794 £28,181
3
Serena Tremlett Remuneration and Nomination Committee Chair £13,754 n/a
and Management Engagement Committee Chair
(from 1 May 2024)
No other remuneration or compensation was paid or is payable by the Company during the year to any of the
Directors and there has been no change to the Company’s remuneration policy as detailed below during the course
of the year.
No Director is entitled to receive any remuneration which is performance related.
Remuneration policy
The determination of the Directors’ fees is a matter for the Remuneration and Nomination Committee.
The Remuneration and Nomination Committee considers the remuneration policy annually to ensure that it
remains appropriately positioned. Members of this Committee will review the fees paid to the boards of Directors
of similar companies.
The Company’s policy is for the Directors to be remunerated in the form of fees, payable quarterly in arrears.
No Director has any entitlement to a pension, and the Company has not awarded any share options or long-term
performance incentives to any of the Directors.
Directors are authorised to claim reasonable expenses from the Company in relation to the performance of
their duties.
The Company’s policy is that the fees payable to the Directors should reflect the time spent by the Board on the
Company’s affairs and the responsibilities borne by the Directors and should be sufficient to enable high calibre
candidates to be recruited. The policy is for the Chairman and Audit Committee Chair to be paid a higher fee than the
other Directors in recognition of their more onerous roles and more time spent. The Remuneration and Nomination
Committee may recommend the amendments to the level of remuneration paid within the limits of the Company’s
Articles of Incorporation.
1 Andrew Chapman retired from the Board on 11 March 2024.
2 Charlotte Denton resigned from the Board on 1 May 2024.
3 Serena Tremlett was appointed to the Board on 1 May 2024.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

52

## Directors' remuneration report (continued)

On 12 October 2023, the Board approved an increase in the annual basic Director fees of 2.5% effective 1 January 2023.

In June 2024, a comprehensive review of annual Director fees against similar sized listed companies was performed for consideration by the Remuneration and Nomination Committee. It was proposed to revise annual Director fees with effect from 1 July 2024 as listed below:

|  Director | Role(s) | Effective 1 July 2024  |
| --- | --- | --- |
|  John Blowers | Chairman (from 11 March 2024) | £49,000  |
|  Ted Holmes | Audit Committee Chair (from 1 May 2024) | £41,000  |
|  Mark Hodgson | Director | £36,000  |
|  Serena Tremlett | Remuneration and Nomination Committee Chair and Management Engagement Committee Chair (from 1 May 2024) | £36,000  |

On 3 October 2024, the above proposal was approved by the Board effective 1 July 2024.

The Company's Articles of Incorporation limits the aggregate fees payable to the Board of Directors to a total of £165,000 per annum. The Company did not breach this limit for the year ended 30 September 2024.

### Advisers to the Remuneration and Nomination Committee

The Board has not sought the advice or services by any outside person, in respect of its consideration of the Directors' remuneration, although the Board reviews Directors' compensation in line with market trends. Ensuring Directors fees remain in line with the market is important during this period of Board refreshment to ensure that the Company continues to attract the most talented individuals

**Serena Tremlett**

Remuneration and Nomination Committee Chair

20 December 2024
| Annual Report and Financial Statements 30 September 2024 53River UK Micro Cap Limited
## Independent auditor’s report
### to the members of River UK Micro Cap Limited
Opinion Basis for opinion
We have audited the financial statements of River We conducted our audit in accordance with International
UK Micro Cap Limited, formerly known as River and Standards on Auditing (ISAs) and applicable law. Our
Mercantile UK Micro Cap Investment Company Limited, responsibilities under those standards are further
(the “Company”) for the year ended 30 September described in the ‘Auditor’s Responsibilities for the Audit
2024, which comprise the Statement of Comprehensive of the Financial Statements’ section of our report. We
Income, the Statement of Financial Position, the are independent of the Company in accordance with the
Statement of Changes in Shareholders’ Equity, the International Ethics Standards Board for Accountants’
Statement of Cash Flows and notes to the financial International Code of Ethics for Professional Accountants
statements, including material accounting policy (including International Independence Standards)
information. (IESBA Code), together with the ethical requirements
that are relevant to our audit of the financial statements
In our opinion the Company’s financial statements
in Guernsey, and we have fulfilled our other ethical
• give a true and fair view of the financial position of the
responsibilities in accordance with these requirements
Company as at 30 September 2024 and of its financial
and the IESBA Code. We believe that the audit evidence
performance and its cash flows for the year then
we have obtained is sufficient and appropriate to
ended;
provide a basis for our opinion.
• are in accordance with IFRS Accounting Standards
as issued by the International Accounting Standards
Board; and
• Comply with the Companies (Guernsey) Law, 2008.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period. 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.
The key audit matter How the matter was addressed in our audit
Valuation of financial assets held at fair Our procedures consisted of:
value through profit or loss (“investments”)
• We obtained an understanding of the processes, policies and
The entity’s investments are all Level methodologies, and controls concerning the valuation of quoted
1 investments. Per IFRS 13 Fair Value investments and confirmed our understanding by performing
Measurement (“IFRS 13”), the fair value of Level tests of the design and implementation of relevant controls
1 investments, such as those in micro-cap concerning the valuation.
companies, is derived from quoted prices in
• We assessed whether the fair value disclosures in the financial
active markets.
statements are appropriate, complete and in accordance with
The valuation of Level 1 quoted investments is the requirements of IFRS 13.
relatively straightforward. However, there is a
• We independently obtained an investment confirmation for all
likelihood of errors in determining the quoted
investments from The Bank of New York Mellon (International)
prices for these investments, particularly those
Limited (BNY Mellon) and compared the stated quantities and
involving micro-cap companies. This could
values to the Company’s accounting records.
result from the use of outdated quoted prices
or inappropriate quoted prices, e.g., the offer • We verified the quoted prices used by management against
price or mid-price, to determine the valuation independent sources, such as reputable stock exchanges or
of the investments. financial data providers.
| Annual Report and Financial Statements 30 September 2024 54River UK Micro Cap Limited
### Independent auditor’s report (continued)
The key audit matter How the matter was addressed in our audit
As such, we identified the valuation of quoted • We assessed whether the listed shares are actively trading

| investments as one of the most significant | and have correctly been classified as Level 1. This included |
| --- | --- |
| assessed risks of material misstatement due | considering trading volumes, bid-ask spreads, and the frequency |
| to error, with these being measured using | of transactions. |

the quoted price at year-end and there is
• We analysed historical price volatility for each investment to
a high risk that using the incorrect quoted
assess the risk of significant fluctuations that could impact the
price to value these investments at year-end
fair value and considered whether the valuation date price
could result in a material misstatement of the
reflected an outlier due to temporary market conditions.
financial statements and requires significant
audit attention. Our result:
Refer to the Audit Committee Report (pages Based on results obtained from procedures performed, we did not
48-50); Accounting policies in pages 64-65, and identify any material misstatements concerning the valuation of the
Note 8, Financial assets held at fair value through Investments in the period.
profit or loss, to the Financial Statements.
Other matters accordance with IFRS Accounting Standards as issued
by the International Accounting Standards Board, and
We draw attention to the fact that the financial
for such internal control as the Directors determine
statements of River UK Micro Cap Limited for the year
is necessary to enable the preparation of financial
ended 30 September 2023 were audited by another
statements that are free from material misstatement,
auditor who expressed an unmodified opinion on those
whether due to fraud or error.
financial statements on 5 December 2023.
In preparing the financial statements, the Directors
Other information are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable,
The Directors are responsible for the other information.
matters related to going concern and using the going
The other information comprises the information
concern basis of accounting unless the Directors either
included in the Annual Report but does not include the
intend to liquidate the Company or to cease operations,
financial statements and our auditor’s report thereon.
or have no realistic alternative but to do so.
Our opinion on the financial statements does not cover
the other information and we do not express any form Auditor’s responsibilities for the audit of the
of assurance conclusion thereon. financial statements
In connection with our audit of the financial statements, Our objectives are to obtain reasonable assurance
our responsibility is to read the other information and, about whether the financial statements as a whole
in doing so, consider whether the other information is are free from material misstatement, whether due to
materially inconsistent with the financial statements, fraud or error, and to issue an auditor’s report that
or our knowledge obtained in the audit or otherwise includes our opinion. Reasonable assurance is a high
appears to be materially misstated. If, based on the level of assurance but is not a guarantee that an audit
work we have performed, we conclude that there is a conducted in accordance with ISAs will always detect a
material misstatement of this other information, we are material misstatement when it exists. Misstatements can
required to report that fact. We have nothing to report in arise from fraud or error and are considered material if,
this regard. individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users
Responsibilities of the directors for the financial taken on the basis of these financial statements.
statements
As part of an audit in accordance with ISAs, we exercise
The Directors are responsible for the preparation of professional judgment and maintain professional
the financial statements that give a true and fair view in scepticism throughout the audit.
| Annual Report and Financial Statements 30 September 2024 55River UK Micro Cap Limited
### Independent auditor’s report (continued)
We also: reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats
• Identify and assess the risks of material misstatement
or safeguards applied.
of the financial statements, whether due to fraud
or error, design and perform audit procedures From the matters communicated with the directors, we
responsive to those risks, and obtain audit evidence determine those matters that were of most significance
that is sufficient and appropriate to provide a in the audit of the financial statements of the current
basis for our opinion. The risk of not detecting a period and are therefore the key audit matters. We
material misstatement resulting from fraud is higher describe these matters in our auditor’s report unless
than for one resulting from error, as fraud may law or regulation precludes public disclosure about the
involve collusion, forgery, intentional omissions, matter or when, in extremely rare circumstances, we
misrepresentations, or the override of internal determine that a matter should not be communicated in
control. our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
• Obtain an understanding of internal control relevant
interest benefits of such communication.
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
Use of our report
purpose of expressing an opinion on the effectiveness
of the Company’s internal control. This report is made solely to the Company’s members,
as a body, in accordance with section 262 of the
• Evaluate the appropriateness of accounting policies
Companies (Guernsey) Law, 2008. Our audit work
used and the reasonableness of accounting estimates
has been undertaken so that we might state to the
and related disclosures made by the Directors.
Company’s members those matters we are required
• Conclude on the appropriateness of the Directors’ use to state to them in an auditor’s report and for no other
of the going concern basis of accounting and, based purpose. To the fullest extent permitted by law, we do
on the audit evidence obtained, whether a material not accept or assume responsibility to anyone other
uncertainty exists related to events or conditions than the Company and the Company’s members as
that may cast significant doubt on the Company’s a body, for our audit work, for this report, or for the
ability to continue as a going concern. If we conclude opinions we have formed.
that a material uncertainty exists, we are required to
Matters on which we are required to report by
draw attention in our auditor’s report to the related
exception
disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion.
We have nothing to report in respect of the following
Our conclusions are based on the audit evidence
matters in relation to which the Companies (Guernsey)
obtained up to the date of our auditor’s report.
Law, 2008 requires us to report to you if, in our opinion:
However, future events or conditions may cause the
• proper accounting records have not been kept by the
Company to cease to continue as a going concern.
Company; or
• Evaluate the overall presentation, structure and
• the Company’s financial statements are not in
content of the financial statements, including the
agreement with the accounting records; or
disclosures, and whether the financial statements
represent the underlying transactions and events in a
• we have not obtained all the information and
manner that achieves fair presentation.
explanations, which to the best of our knowledge and
belief, are necessary for the purposes of our audit.
We communicate with the directors regarding, among
other matters, the planned scope and timing of the audit
and significant audit findings, including any significant
Michael Carpenter
deficiencies in internal control that we identify during
For and on behalf of Grant Thornton Limited
our audit.
Chartered Accountants
We also provide the directors with a statement that
St Peter Port
we have complied with relevant ethical requirements
Guernsey
regarding independence, and to communicate with
Date: 20 December 2024
them all relationships and other matters that may
| Annual Report and Financial Statements 30 September 2024 56River UK Micro Cap Limited
## We intend to return excess
## capital to shareholders when
## the Company’s assets are in
## excess of £110 million.
## The last two capital returns
## were in 2021 with a total of
## £35 million returned.
| Annual Report and Financial Statements 30 September 2024 57River UK Micro Cap Limited
## Statement of comprehensive income
### For the year ended 30 September 2024

|  |  | Year ended |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 30 September |  |  | 30 September |  |  |
| Notes |  |  | 2024 |  |  | 2023 |

£ £
Income
Investment income 3 624,554 818,176
Net gain on financial assets held at fair value through 8 9,473,024 2,468,544
profit or loss
Total income 10,097,578 3,286,720
Expenses
Portfolio management fees 4 (498,783) (458,720)
Operating expenses 5 (660,495) (625,709)
Foreign exchange (losses)/gains (8,240) 3,157
Total expenses (1,167,518) (1,081,272)
Profit before taxation 8,930,060 2,205,448
Taxation 2.9 - -
Profit after taxation and total comprehensive income 8,930,060 2,205,448
Basic and diluted profit per Ordinary Share 12 0.2634 0.0651
The Company has no items of other comprehensive income, and therefore the profit after taxation for the year is
also the total comprehensive income.
All items in the above statement are derived from continuing operations. No operations were acquired or
discontinued during the year.
The notes on pages 62 to 78 form an integral part of these financial statements.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

58

# Statement of financial position

As at 30 September 2024

|   | Notes | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- | --- |
|  **Non-current assets** | 8 | 66,668,888 | 59,625,665  |
|  Financial assets held at fair value through profit or loss |  |  |   |
|  **Current assets** |  |  |   |
|  Cash and cash equivalents |  | 1,769,894 | 415,330  |
|  Trade receivables – securities sold awaiting settlement |  | 680,187 | -  |
|  Prepayments |  | 8,073 | 8,234  |
|  Other receivables | 7 | 61,484 | 252,169  |
|  **Total current assets** |  | **2,519,638** | **675,733**  |
|  **Total assets** |  | **69,188,526** | **60,301,398**  |
|  **Current liabilities** |  |  |   |
|  Trade payables – securities purchased awaiting settlement |  | - | (52,843)  |
|  Other payables | 10 | (213,277) | (203,366)  |
|  **Total current liabilities** |  | **(213,277)** | **(256,209)**  |
|  **Net assets** |  | **68,975,249** | **60,045,189**  |
|  **Capital and reserves** |  |  |   |
|  Stated capital | 11 | - | -  |
|  Retained earnings |  | 68,975,249 | 60,045,189  |
|  **Equity Shareholders' funds** |  | **68,975,249** | **60,045,189**  |

The financial statements on pages 57 to 78 were approved and authorised for issue by the Board of Directors on 20 December 2024 and signed on its behalf by:

**John Blowers** Chairman

**Serena Tremlett** Director

The notes on pages 62 to 78 form an integral part of these financial statements.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

59

# Statement of changes in shareholders' equity

For the year ended 30 September 2024

|   | Stated capital £ | Retained earnings £ | Total £  |
| --- | --- | --- | --- |
|  Opening equity Shareholders' funds at 1 October 2023 | - | 60,045,189 | 60,045,189  |
|  Total comprehensive income for the year | - | 8,930,060 | 8,930,060  |
|  Closing equity Shareholders' funds at 30 September 2024 | - | 68,975,249 | 68,975,249  |

For the year ended 30 September 2023

|   | Stated capital £ | Retained earnings £ | Total £  |
| --- | --- | --- | --- |
|  Opening equity Shareholders' funds at 1 October 2022 | - | 57,839,741 | 57,839,741  |
|  Total comprehensive income for the year | - | 2,205,448 | 2,205,448  |
|  Closing equity Shareholders' funds at 30 September 2023 | - | 60,045,189 | 60,045,189  |

The notes on pages 62 to 78 form an integral part of these financial statements.
| Annual Report and Financial Statements 30 September 2024 60River UK Micro Cap Limited
## Statement of cash flows
### For the year ended 30 September 2024

|  |  | Year ended |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 30 September |  |  | 30 September |  |  |
| Notes |  |  | 2024 |  |  | 2023 |

£ £
Cash flow from operating activities
Profit after taxation and total comprehensive income 8,930,060 2,205,448
Adjustments to reconcile profit after taxation to
net cash flows:
Realised loss on financial assets held at fair value 8 4,030,780 7,993,136
through profit or loss
Unrealised gain on financial assets held at fair value 8 (13,503,804) (10,461,680)
through profit or loss
Purchase of financial assets held at fair value through 8 (16,110,533) (11,959,171)
1
profit or loss
Proceeds from sale of financial assets held at fair value 8 17,807,304 10,448,555
2
through profit or loss
Changes in working capital
Decrease/(increase) in other receivables and prepayments 7 190,846 (167,722)
Increase in other payables 10 9,911 67,147
Net cash generated from/(used in) operating activities 1,354,564 (1,874,287)
Net increase/(decrease) in cash and cash equivalents in 1,354,564 (1,874,287)
the year
Cash and cash equivalents at the beginning of the year 415,330 2,289,617
Cash and cash equivalents at the end of the year 1,769,894 415,330
1 Payables outstanding at 30 September 2024 relating to purchases of financial assets held at fair value through profit or loss amounted
to £nil (30 September 2023: £52,843).
2 Receivables as at 30 September 2024 relating to proceeds from sale of financial assets held at fair value through profit or loss
amounted to £680,187 (30 September 2023: £nil).
The notes on pages 62 to 78 form an integral part of these financial statements.
| Annual Report and Financial Statements 30 September 2024 61River UK Micro Cap Limited
| Annual Report and Financial Statements 30 September 2024 62River UK Micro Cap Limited
## Notes to the financial statements
### 1 General information
The Company was incorporated as a non-cellular company with liability limited by shares in Guernsey under The
Companies (Guernsey) Law, 2008 (the “Companies Law”) on 2 October 2014. It listed its Ordinary Shares on the
Equity Shares (Commercial Companies) (ESCC) segment (previously the ‘Premium segment’) of the Official List
as maintained by the FCA and was admitted to trading on the Main Market of the London Stock Exchange on 2
December 2014.
The Company has been regulated by the GFSC as a registered closed-ended collective investment scheme pursuant
to the Protection of Investors (Bailiwick of Guernsey) Law, 2020, as amended, and the RCIS Rules. The Company
registered number is 59106.
The Company’s registered address is BNP Paribas House, St Julian’s Avenue, St Peter Port, Guernsey, GY1 1WA
### 2 Material accounting polices
The material accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
a) Statement of Compliance
The financial statements have been prepared in accordance with the Companies Law and with IFRS Accounting
Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). The financial statements give
a true and fair view of the Company’s affairs and comply with the requirements of the Companies Law.
The financial statements have been prepared under a going concern basis. The Directors are satisfied that, at
the time of approving the financial statements, no material uncertainties exist that may cast significant doubt
concerning the Company’s ability to continue for the foreseeable future. The Directors consider it appropriate to
adopt the going concern basis in preparing the financial statements.
b) Basis of measurement
These financial statements have been prepared on a historical cost basis adjusted to take account of the
revaluation of financial assets held at fair value through profit or loss.
c) Functional and presentation currency
The Company’s functional currency is Pound Sterling, which is the currency of the primary economic environment
in which it operates. The Company’s performance is evaluated and its liquidity is managed in Pound Sterling.
Pound Sterling is therefore considered as the currency that most faithfully represents the economic effects of the
underlying transactions, events and conditions. The financial statements are presented in Pound Sterling.
d) Significant accounting assumptions, estimates and judgements
The preparation of the financial statements in conformity with IFRS, requires the Company to make judgements,
estimates and assumptions that affect items reported in the Statement of Financial Position and Statement
of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial
statements. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. Uncertainty about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or liabilities affected in future periods.
The Directors have used their judgement to determine that all financial assets held at fair value through profit or
loss are traded within an active market (note 2.3(c) below).
The Directors have determined that an active market exists for the Company’s financial assets, as all the
Company’s financial assets are quoted securities which are traded in active markets as at 30 September 2024. In
the opinion of the Directors, the quoted price for the financial assets as at 30 September 2024 is representative
of fair value.
| Annual Report and Financial Statements 30 September 2024 63River UK Micro Cap Limited
### Notes to the financial statements (continued)
2. Material accounting policies (continued)
2.1 Basis of preparation (continued)
e) New standards, amendments and interpretations
Standards and amendments to existing standards that became effective during the year are detailed below.
Effective for periods
beginning on or after
IAS 1 - Classification of liabilities as current or non-current and non-current liabilities 1 January 2024
with covenants
Amendments to IFRS 16 - Lease liability in a sale and leaseback 1 January 2024
Amendments to IAS 7 and IFRS 7- Supplier finance arrangements 1 January 2024
The amendments to IAS 1 in relation to classification of liabilities as current or non-current clarify how an entity
classifies debt and other financial liabilities as current or non-current in particular circumstances. The Directors
do not believe that the application of these amendments will have any impact on the Company’s audited financial
statements as not applicable to the Company.
The IFRS 16 amendments clarify how a seller-lessee subsequently measures sale and leaseback transactions
that satisfy the requirements in IFRS 15 to be accounted for as a sale. The Directors do not believe that the
application of these amendments will have any impact on the Company’s audited financial statements as not
applicable to the Company.
The amendments to IAS 7 and IFRS 7 add disclosure requirements, and signposts within existing disclosure
requirements, that ask entities to provide qualitative and quantitative information about supplier finance
arrangements. The Directors do not believe that the application of these amendments will have a material impact
on the Company’s audited financial statements.
During the year, a number of other amendments and interpretations became applicable for the current reporting
period, which are not relevant to the Company’s operations.
f) Standards, amendments and interpretations issued but not yet effective
Detailed below are new standards, amendments and interpretations to existing standards that have been issued
but are not yet mandatorily effective for the reporting period. They have not been early adopted by the Company:
Effective for periods
beginning on or after
Amendments to IAS 21 - Lack of exchangeability 1 January 2025
IFRS S1 General requirements for disclosure of sustainability-related financial To be determined
information and IFRS S2 climate-related disclosures
Amendments to the Classification and Measurement of Financial Instruments - 1 January 2026
Amendments to IFRS 9 and 7
IFRS 18 - Presentation and disclosure in financial statements 1 January 2027
Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets between an Optional
Investor and its Associate or Joint Venture
The amendments to IAS 21 contain guidance to specify when a currency is exchangeable and how to determine
the exchange rate when it is not. The Directors do not believe that the application of these amendments will have
a material impact on the Company’s audited financial statements.
The amendments to the classification and measurement of financial instruments (Amendments to IFRS 9 and
IFRS 7) aimed to address matters identified during the post-implementation review of the classification and
measurement requirements of IFRS 9 - Financial Instruments. The Directors do not believe that the application of
these amendments will have a material impact on the Company’s audited financial statements.
| Annual Report and Financial Statements 30 September 2024 64River UK Micro Cap Limited
### Notes to the financial statements (continued)
2. Material accounting policies (continued)
2.1 Basis of preparation (continued)
f) Standards, amendments and interpretations issued but not yet effective (continued)
IFRS 18 includes requirements for all entities applying IFRS Accounting Standards for the presentation and
disclosure of information in financial statements. The Directors do not believe that the application of this
amendment will have a material impact on the Company’s audited financial statements.
IFRS S1 and S2 sets out overall requirements with the objective to require an entity to disclose information about
its sustainability-related risks and opportunities that is useful to the primary users of general purpose financial
reports in making decisions relating to providing resources to the entity. The Directors will monitor the adoption
of these standards in the UK which is expected during 2025.
The amendments to IFRS 10 and IAS 28 seek to address an acknowledged inconsistency between the
requirements in IFRS 10 and those in IAS 28 (of 2011), in dealing with the sale or contribution of assets between
an investor and its associate or joint venture. The Directors do not believe that the application of these
amendments will have a material impact on the Company’s audited financial statements.
2.2 Foreign currency translations
Foreign exchange gains and losses resulting from the settlement of transactions in foreign currencies and from
the translation of monetary assets and liabilities at year end exchange rates to Pound Sterling are recognised in
the Statement of Comprehensive Income as foreign exchange gains or losses.
Non-monetary items such as financial assets held at fair value through profit or loss measured at fair value in a
foreign currency, are translated using exchange rates at the Statement of Financial Position date when the fair
value was determined. Effects of exchange rate changes on non-monetary items measured at fair value on a
foreign currency are recorded as part of the fair value gain or loss.
As at 30 September 2024, all financial assets held at fair value through profit or loss are held in Pound Sterling.
2.3 Financial instruments
Financial Assets
a) Classification
The Company classifies its investments in equity securities as financial assets held at fair value through profit
or loss as they are held for investment purposes. These financial assets are managed, and their performance is
evaluated on a fair value basis in accordance with the Company’s documented investment strategy.
The Company’s policy requires the Portfolio Manager and the Board of Directors to evaluate the information
about these financial assets on a fair value basis together with other related financial information. Furthermore,
these financial assets do not possess contractual cash flows. Financial assets also include cash and cash
equivalents as well as trade receivables and other receivables which are classified at amortised cost using the
effective interest rate method.
b) Recognition, measurement and derecognition
Purchases and sales of investments are recognised on the trade date – the date on which the Company commits
to purchase or sell the investment. Financial assets held at fair value through profit or loss are measured
initially at fair value. Transaction costs are expensed as incurred and movements in fair value are recorded in
the Statement of Comprehensive Income. Subsequent to initial recognition, all financial assets held at fair value
through profit or loss are measured at fair value.
| Annual Report and Financial Statements 30 September 2024 65River UK Micro Cap Limited
### Notes to the financial statements (continued)
2. Material accounting policies (continued)
2.3 Financial instruments (continued)
b) Recognition, measurement and derecognition (continued)
Cash and cash equivalents, trade receivables, other receivables and prepayments are classified at amortised cost.
These financial assets are initially recognised at fair value plus transaction costs and subsequently measured at
amortised cost.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the
Company has transferred substantially all risks and rewards of ownership.
c) Fair value estimation
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
As at 30 September 2024, the Company held investments in a diversified portfolio of UK micro-cap companies,
typically comprising companies with a free float market capitalisation of less than £100 million at the time of
purchase, whose securities are admitted to trading on AIM or the main market of the London Stock Exchange.
Investments are valued at fair value, which are quoted bid prices for investments traded in active markets.
Financial liabilities
a) Classification
Securities purchased awaiting settlement represent payables for investments that have been contracted for but
not yet settled or delivered on 30 September 2024. Financial liabilities include amounts due to brokers and other
payables which are held at amortised cost using the effective interest rate method.
b) Recognition, measurement and derecognition
Financial liabilities are recognised initially at fair value, net of transaction costs incurred and are subsequently
carried at amortised cost using the effective interest rate method. Financial liabilities are derecognised when the
obligation specified in the contract is discharged, cancelled or expires.
2.4 Investment income
Dividends receivable on equity shares are recognised as revenue for the period on an ex-dividend basis and net of
withholding taxes, as the withholding taxes are deducted at source and are not a tax on profits. Interest income and
expenses are recognised in the Statement of Comprehensive Income using the effective interest rate method.
2.5 Expenses
Expenses are recognised on an accruals basis and are recognised in the Statement of Comprehensive Income.
2.6 Cash and cash equivalents
Cash includes cash at bank. Cash equivalents are short term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of
changes in value.
| Annual Report and Financial Statements 30 September 2024 66River UK Micro Cap Limited
### Notes to the financial statements (continued)
2. Material accounting policies (continued)
2.7 Trade receivables and trade payables
Trade receivables and payables represent securities sold and securities purchased, respectively, that have been
contracted for but not yet settled or delivered on the Statement of Financial Position date.
These amounts are recognised initially at fair value and subsequently measured at amortised cost. At each period
end, the Company measures the loss allowance on trade receivables at an amount equal to the lifetime expected
credit losses if the credit risk has increased significantly since initial recognition. If, the credit risk has not increased
significantly since initial recognition, the Company will measure the loss allowance at an amount equal to 12-month
expected credit losses.
Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial
reorganisation and default in payments are all considered indicators that a loss allowance may be required. A
significant increase in credit risk is defined by the Directors as any contractual payment which is more than 30 days
past due.
2.8 Segmental reporting
The chief operating decision maker, which is the Board, is of the opinion that the Company is engaged in a single
segment being investment in UK micro-cap companies. The financial information used by the chief operating decision
maker to manage the Company presents the business as a single segment. Segment information is measured on the
same basis as that used in the preparation of the Company’s financial statements. The Company receives revenues
from the UK. The Company holds no non-current assets not listed in the UK.
2.9 Taxation
The Company has applied for and been granted exemption from liability to income tax in Guernsey under the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 as amended by the Director of Income Tax in Guernsey for
the current period. Exemption must be applied for annually and will be granted, subject to the payment of an annual
fee, which is currently fixed at £1,600 per applicant, provided the Company qualifies under the applicable legislation
for exemption.
It is the intention of the Directors to conduct the affairs of the Company so as to ensure that it continues to qualify
for exempt company status for the purposes of Guernsey taxation.
2.10 Share capital
Ordinary Shares are classified as equity in accordance with IAS 32 – “Financial Instruments: Presentation” as these
instruments include no contractual obligation to deliver cash and the Company is not obligated to apply the
redemption mechanism.
Costs directly attributable to the issue of new Ordinary Shares and redemption of existing Ordinary Shares are
shown in equity as a deduction from the proceeds.
Refer to note 11 for details regarding the redemption mechanism of Ordinary Shares.
| Annual Report and Financial Statements 30 September 2024 67River UK Micro Cap Limited
### Notes to the financial statements (continued)
2. Material accounting policies (continued)
2.11 Capital risk management
The Board only considers retained earnings as capital, which in turn, are the financial resources available to the
Company. The Company’s capital as at 30 September 2024 was £68,975,249 (30 September 2023: £60,045,189).
The Company’s objectives when managing capital are to:
• safeguard the Company’s ability to continue as a going concern;
• provide returns for Shareholders; and
• maintain an optimal capital structure to minimise the cost of capital.
The Board monitors the capital adequacy of the Company on an on-going basis and all three of the Company’s
objectives regarding capital management have been met. The Company has no imposed capital requirements.
### 3. Investment income

|  | Year ended |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- |
| 30 September |  |  | 30 September |  |  |
|  |  | 2024 |  |  | 2023 |

£ £
1
Dividend income 587,561 780,431
Bank interest 36,993 37,745
Total investment income 624,554 818,176
1 Net of withholding taxes of £19,366 (30 September 2023: £74,111).
### 4. Portfolio management and performance fees
On 3 November 2014, the Company signed an Investment Management Agreement (the “IMA”) with the AIFM and the
Portfolio Manager, whereby the AIFM delegated to the Portfolio Manager overall responsibility for the discretionary
management of the Company assets in accordance with the Company’s investment objective and policy.
The AIFM or the Portfolio Manager may voluntarily terminate the IMA by providing six months’ notice in writing. The
AIFM’s power to terminate the appointment of the Portfolio Manager under the IMA may only be exercised under
the direction of the Board and the AIFM has agreed to comply with the instructions of the Board as regards to any
proposed termination of the Portfolio Manager’s appointment.
Under the IMA, the Portfolio Manager is entitled to receive a base fee and performance fee. The Portfolio Manager
base fee is payable monthly in arrears at a rate of one-twelfth of 0.75% of NAV. During the year ended 30 September
2024, the Company incurred management fees expense of £498,783 (30 September 2023: £458,720).
A performance fee equal to 15% of the amount by which the Company’s NAV outperforms the total return on the
Comparative Index over a performance period will be payable to the Portfolio Manager upon a redemption.
The performance period is the period between two redemptions, being the first business day after the calculation
date, (referable to the earlier redemption (opening date)), and the end day of the calculation date (referable to the
later redemption (closing date)). The first opening date was the date of admission and in circumstances in which a
performance fee may be payable upon termination of this Agreement, the final closing date shall be the date in which
the agreement is terminated. The calculation date is the date determined by the Board for the calculation of the price
to be paid on any particular exercise of the redemption mechanism.
The performance fee is only paid when the Company implements the redemption mechanism as detailed in note 11.
During the year ended 30 September 2024, no performance fees were accrued or paid by the Company
(30 September 2023: nil).
| Annual Report and Financial Statements 30 September 2024 68River UK Micro Cap Limited
### Notes to the financial statements (continued)
### 5. Operating expenses

|  | Year ended |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- |
| 30 September |  |  | 30 September |  |  |
|  |  | 2024 |  |  | 2023 |

£ £
Administration fees 162,384 134,565
Directors’ fees 157,838 144,687
AIFM fees 58,000 58,000
Audit fees 53,000 64,550
Non-audit fees 17,000 23,000
Transaction fees 30,571 17,988
Broker fees 40,000 40,000
Custody fees 14,072 13,418
Registrar fees 27,236 27,882
Legal and professional fees 8,101 6,218
Listing fees 20,793 23,558
Regulatory fees 13,640 11,951
Insurance fees 6,265 6,390
Marketing fees 11,593 -
Sundry expenses 40,002 53,502
Total operating expenses 660,495 625,709
Non-audit fees
Non-audit fees incurred during the years ended 30 September 2024 and 30 September 2023 related to interim
review services performed by Grant Thornton Limited in the current year and PricewaterhouseCoopers CI LLP in the
prior year.
AIFM fee
The AIFM is entitled to an annual fixed fee of £58,000 per annum payable quarterly in arrears.
Custody fee
In its role as custodian, the Administrator is entitled to a fee payable by the Company on a transaction by transaction
and ad-valorem fee basis.
Registrar fee
The Company’s registrar is Computershare Investor Services (Guernsey) Limited. The registrar is entitled to an annual
maintenance fee plus disbursements.
Administration fee
The Administrator provides administrative, compliance oversight and company secretarial services to the Company.
Effective 1 July 2024, an updated fee schedule was implemented whereby the Administrator is entitled to an annual
fixed fee. Ad hoc services are chargeable for an agreed fee or on a time cost basis.
Broker fee
Singer Capital Markets Advisory LLP (“Singer”) provide corporate stockbroker and financial adviser services to the
Company, as the Company’s sole broker. Singer is entitled to a fee payable by the Company of £40,000 per annum.
| Annual Report and Financial Statements 30 September 2024 69River UK Micro Cap Limited
### Notes to the financial statements (continued)
### 6. Directors’ fees and interests
Directors’ fees are listed in the Directors’ Remuneration Report on pages 51 and 52.
No pension contributions were payable in respect of the Directors. Directors’ fees were increased post year end,
refer to note 15 for further details.
The Directors held the following number of Ordinary Shares in the Company:

| 30 September |  |  | 30 September |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  | 2024 |  |  | 2023 |
|  | Ordinary |  |  | Ordinary |  |
| Shares held |  |  | Shares held |  |  |

1
Andrew Chapman n/a 15,009
John Blowers 14,559 5,653
2
Charlotte Denton n/a 15,350
Ted Holmes 22,970 12,970
Mark Hodgson 7,721 7,721
3
Serena Tremlett 3,432 n/a
1 Andrew Chapman retired as a Director on 11 March 2024.
2 Charlotte Denton resigned as a Director on 1 May 2024.
3 Serena Tremlett was appointed as a Director on 1 May 2024.
### 7. Other receivables
30 September 30 September
2024 2023
£ £
Dividend receivable 61,422 252,144
Interest and other receivable 62 25
Total other receivable 61,484 252,169
The Directors believe that these balances are fully recoverable and therefore have not recognised any loss allowance
on 12-month expected credit losses.
| Annual Report and Financial Statements 30 September 2024 70River UK Micro Cap Limited
### Notes to the financial statements (continued)
### 8. Financial assets held at fair value through profit or loss
The Company has invested in a portfolio of UK micro-cap companies in line with its investment strategy. These
investments are comprised of companies whose securities are admitted to trading on the AIM, with a free float
market capitalisation of less than £100 million at the time of purchase.
Fair value hierarchy
IFRS 13 ‘Fair Value Measurement’ requires an analysis of investments valued at fair value based on the reliability and
significance of information used to measure their fair value.
The Company categorises its financial assets according to the following fair value hierarchy detailed in IFRS 13 that
reflects the significance of the inputs used in determining their fair values:
Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived
from prices). This category includes instruments valued using: quoted market prices in active markets for similar
instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or
other valuation techniques where all significant inputs are directly or indirectly observable from market data.
Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where
the valuation technique includes inputs not based on observable data and the unobservable variable inputs have a
significant effect on the instruments valuation. This category includes instruments that are valued based on quoted
prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect
differences between the instruments.
Financial assets Level 1 Level 2 Level 3 Total
£ £ £ £
30 September 2024
Financial assets held at fair value through profit 66,668,888 - - 66,668,888
or loss
30 September 2023
Financial assets held at fair value through profit 59,625,665 - - 59,625,665
or loss
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

71

## Notes to the financial statements (continued)

### 8. Financial assets designated at fair value through profit or loss (continued)

#### Financial assets held at fair value through profit or loss reconciliation

The following table shows a reconciliation of all movements in the fair value of financial assets capitalised within Level 1 to 3 between the beginning and the end of the reporting period:

|  30 September 2024 | Level 1 £ | Level 2 £ | Level 3 £ | Total £  |
| --- | --- | --- | --- | --- |
|  **Opening valuation** | **59,625,665** | **-** | **-** | **59,625,665**  |
|  Purchases during the year | 16,057,690 | - | - | 16,057,690  |
|  Sales proceeds during the year | (18,487,491) | - | - | (18,487,491)  |
|  Realised loss on financial assets held at fair value through profit or loss^{1} | (4,030,780) | - | - | (4,030,780)  |
|  Unrealised gain on financial assets held at fair value through profit or loss^{2} | 13,503,804 | - | - | 13,503,804  |
|  **Closing valuation** | **66,668,888** | **-** | **-** | **66,668,888**  |
|  Total net gain on financial assets for the year ended 30 September 2024 | 9,473,024 | - | - | 9,473,024  |

During the year ended 30 September 2024, there were no reclassifications between levels of the fair value hierarchy.

|  30 September 2023 | Level 1 £ | Level 2 £ | Level 3 £ | Total £  |
| --- | --- | --- | --- | --- |
|  **Opening valuation** | **56,027,223** | **-** | **-** | **56,027,223**  |
|  Purchases during the year | 11,578,453 | - | - | 11,578,453  |
|  Sales proceeds during the year | (10,448,555) | - | - | (10,448,555)  |
|  Realised loss on financial assets held at fair value through profit or loss^{3} | (7,993,136) | - | - | (7,993,136)  |
|  Unrealised gain on financial assets held at fair value through profit or loss^{4} | 10,461,680 | - | - | 10,461,680  |
|  **Closing valuation** | **59,625,665** | **-** | **-** | **59,625,665**  |
|  Total net gain on financial assets for the year ended 30 September 2023 | 2,468,544 | - | - | 2,468,544  |

During the year ended 30 September 2023, there were no reclassifications between levels of the fair value hierarchy.

Please refer to note 2.3 for valuation methodology of financial assets held at fair value through profit or loss.

As at 30 September 2024 and 30 September 2023, none of the investments held are illiquid in nature and on this basis are not subject to any special arrangements.

The carrying amount of the trade and other receivables/payables is a reasonable approximation of fair value because of its short-term nature.

1 Realised loss on financial assets held at fair value through profit or loss is made up of £6,487,854 gain and £(10,518,634) loss.

2 Unrealised gain on financial assets held at fair value through profit or loss is made up of £19,391,473 gain and £(5,887,669) loss.

3 Realised loss on financial assets held at fair value through profit or loss is made up of £2,586,526 gain and £(10,579,662) loss.

4 Unrealised gain on financial assets held at fair value through profit or loss is made up of £16,414,946 gain and £(5,953,266) loss.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

72

## Notes to the financial statements (continued)

### 9. Financial risk management

The Company's activities expose it to a variety of financial risks; market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk.

#### 9.1 Market risk

##### a) Price risk

Price risk is the risk that the Company's performance will be adversely affected by changes in the markets in which it invests.

As at 30 September 2024, the Company held investments in a diversified portfolio of UK micro-cap companies, comprising companies with a free float market capitalisation of less than £100 million at the time of purchase. The relatively small market capitalisation of micro-cap companies can make the market in their shares illiquid. Therefore, prices of UK micro-cap companies are often more volatile than prices of larger capitalisation stocks, and even small cap companies.

While the Company does not include any specific limits placed on exposures to any industry sector, the Company does have investment limits and risk diversification policies in place to mitigate market and concentration risk.

Investments limits in place include:

- the number of holdings in the investment portfolio will usually range from 30 to 50.
- no exposure in any investee company will exceed 10% of NAV at the time of the investment.

However, any significant event which affects a specific industry sector in which the investment portfolio has a significant holding could materially and adversely affect the performance of the Company. To mitigate market risk, the Board and Portfolio Manager actively monitor market prices throughout the financial period and meet regularly to consider investment strategy.

Please refer below for sensitivity analysis on the impact on the Statement of Comprehensive Income and NAV of the Company, if the fair value of the investments held at fair value through profit or loss at the year end increased or decreased by 25% (30 September 2023: 25%):

|  30 September 2024 Financial assets | £ | Increase by 25% £ | Decrease by 25% £  |
| --- | --- | --- | --- |
|  Financial assets held at fair value through profit or loss | 66,668,888 | 16,667,222 | (16,667,222)  |

|  30 September 2023 Financial assets | £ | Increase by 25% £ | Decrease by 25% £  |
| --- | --- | --- | --- |
|  Financial assets held at fair value through profit or loss | 59,625,665 | 14,906,416 | (14,906,416)  |

The Directors consider a 25% (30 September 2023: 25%) movement to be reasonable given their assessment of the volatility of the AIM market during the year ended 30 September 2024. The above calculations are based on the investment valuation at the Statement of Financial Position date and are not representative of the period as a whole and may not be reflective of future market conditions.

The Investment Manager's S-PVT scoring for sustainability is used to rate all the Company's investments from S1 to S4. Investments categorised S1 and S2 have solid sustainability characteristics, investments categorised S3 require sustainability improvement and investments categorised S4 would represent a sustainability barrier to value creation. The ESG risk for the Company is currently evaluated to be minimal from a financial materiality perspective. As at 30 September 2024, investments categorised S1 represent 26.9%, S2 represent 62.0% and S3 represent 11.1% of the Company's NAV. The Company does not hold any investments in the S4 category. Further details on the S-PVT scoring for sustainability can be found in the Portfolio Managers Report.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

73

## Notes to the financial statements (continued)

### 9. Financial risk management (continued)

#### 9.1 Market risk (continued)

##### b) Interest rate risk

Interest rate risk is the risk that the fair value of financial instruments and related income from cash and cash equivalents will fluctuate due to changes in market interest rates. The majority of the Company's interest rate exposure arises on the level of interest income receivable on cash deposits. As at 30 September 2024, the Company's cash and cash equivalents were £1,769,894 (30 September 2023: £415,330).

The Company did not have any borrowings during the year (30 September 2023: £nil).

Financial assets held at fair value through profit or loss are equity investments and therefore the valuation of these investments and income receivable is not directly exposed to interest rate risk.

##### Interest rate sensitivity analysis

If interest rates had changed by 100 basis points ("BP") (30 September 2023: 100 BP), considered to be a reasonable illustration based on observation of current market conditions, with all other variables remaining constant, the effect on the net profit for the year would be as detailed below:

|   | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- |
|  Increase of 100 BP (30 September 2023: 100 BP) | 17,699 | 4,153  |
|  Decrease of 100 BP (30 September 2023: 100 BP) | (17,699) | (4,153)  |

##### c) Foreign currency risk

Foreign currency risk is the risk that the values of the Company's assets and liabilities are adversely affected by changes in the values of foreign currencies by reference to the Company's functional currency, being Pound Sterling.

The Company has not been exposed to any material foreign currency risk during the year.

During the years ended 30 September 2024 and 30 September 2023, all transactions were in Pound Sterling, with the exception of several dividend income and cash transactions which were in USD. Although the Company does not pursue a policy of hedging such currencies back to Pound Sterling, it may do so from time to time, depending on market conditions. During the years ended 30 September 2024 and 30 September 2023 the Company did not enter into currency purchase spot contracts to mitigate the foreign currency exposure.

As at 30 September 2024, USD cash in the sum of $149,451 (30 September 2023: $230,412) was held and income receivable was $40,300 (30 September 2023: $37,050). Any reasonable change in foreign exchange rates will have an immaterial impact and therefore no sensitivity analysis has been provided.

#### 9.2 Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Board of Directors has in place monitoring procedures in respect of counterparty risk which is reviewed on an ongoing basis.

The Company's credit risk is attributable to its cash and cash equivalents, trade receivables – securities sold awaiting settlement and other receivables.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

74

## Notes to the financial statements (continued)

### 9. Financial risk management (continued)

#### 9.2 Credit risk (continued)

The Company's financial assets exposed to credit risk amounted to the following:

|   | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- |
|  Cash and cash equivalents | 1,769,894 | 415,330  |
|  Trade receivables – securities sold awaiting settlement | 680,187 | -  |
|  Other receivables (excluding prepayments) | 61,484 | 252,169  |
|  **Total assets** | **2,511,565** | **667,499**  |

All cash is placed with BNP Paribas S.A., Guernsey Branch. BNP Paribas S.A. is publicly traded with a credit rating of A+ (30 September 2023: A+) from S&P Global Ratings (formerly Standard & Poor's).

Credit risk of cash and custodian is mitigated by the Company's policy to only undertake significant transactions with leading commercial counterparties.

All transactions in listed securities are settled for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation.

The financial assets held at fair value through profit or loss are held by BNP Paribas S.A., Guernsey Branch, the Company's custodian, in a segregated account. In the event of bankruptcy or insolvency of the Administrator, in its role as the Company's custodian, the Company's rights with respect to the securities held by the custodian may be delayed or limited. The Company did not participate in stock lending during the year.

The Company measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward looking information in determining any expected credit loss. At 30 September 2024 and 30 September 2023, management consider the probability of default to be close to zero as the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12-month expected credit losses as any such impairment would be wholly insignificant to the Company.

#### 9.3 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties in realising assets or otherwise raising funds to meet financial commitments as and when these fall due for payment. Liquidity risk is monitored on an ongoing basis by the Board of Directors and Portfolio Manager to ensure that the Company maintains sufficient working capital in cash or near cash form to be able to meet the Company's ongoing requirements to pay accounts payable and accrued expenses.

In addition, the Company's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to ensure the Company remains a going concern. The Company's investments all comprise of investments in companies whose securities are admitted to trading on AIM. The Company would expect to be able to liquidate a sufficient number of investments within 7 days or less in the event cash was required to cover expenses.
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

75

## Notes to the financial statements (continued)

### 9. Financial risk management (continued)

#### 9.3 Liquidity risk (continued)

The tables below show the residual contractual maturity of the financial liabilities:

|  Maturity analysis of financial liabilities 30 September 2024 | Less than 3 months £ | 3 to 12 months £ | More than 1 year £ | Total £  |
| --- | --- | --- | --- | --- |
|  **Financial liabilities**  |   |   |   |   |
|  Other payables and accruals | (213,277) | - | - | (213,277)  |
|  **Total undiscounted financial liabilities** | **(213,277)** | **-** | **-** | **(213,277)**  |
|  Maturity analysis of financial liabilities 30 September 2023 | Less than 3 months £ | 3 to 12 months £ | More than 1 year £ | Total £  |
|  **Financial liabilities**  |   |   |   |   |
|  Trade payables – securities purchased awaiting settlement | (52,843) | - | - | (52,843)  |
|  Other payables and accruals | (203,366) | - | - | (203,366)  |
|  **Total undiscounted financial liabilities** | **(256,209)** | **-** | **-** | **(256,209)**  |

In accordance with Article 23(4) (a) and (b) of AIFMD Directive, the AIFM has assessed that the financial assets held at fair value through profit or loss held by the Company are not deemed to be illiquid in nature, and as such, are not subject to any special liquidity arrangements and that the AIF has no new arrangements in place for managing liquidity.

### 10. Other payables

|   | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- |
|  Portfolio management fees | 42,429 | 35,802  |
|  AIFM fees | 14,624 | 30,352  |
|  Audit fees | 44,500 | 64,550  |
|  Non-audit fees | 17,000 | 23,000  |
|  Directors' fees | 40,950 | 32,369  |
|  Administration fees | 48,459 | 10,000  |
|  Registrar fees | 1,000 | 967  |
|  Custody fees | 1,658 | 676  |
|  Sundry expenses | 2,657 | 5,650  |
|  **Total other payables** | **213,277** | **203,366**  |
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

76

## Notes to the financial statements (continued)

### 11. Share capital

#### Authorised

The authorised share capital of the Company is represented by an unlimited number of redeemable Ordinary Shares at no par value.

#### Allotted, called up and fully paid

|   | 30 September 2024 |   | 30 September 2023  |   |
| --- | --- | --- | --- | --- |
|   |  Number of Ordinary Shares | Stated capital £ | Number of Ordinary Shares | Stated capital £  |
|  Balance as the start of the year | 33,897,954 | - | 33,897,954 | -  |
|  Balance as the end of the year | 33,897,954 | - | 33,897,954 | -  |

Each holder of Ordinary Shares is entitled to attend and vote at all general meetings that are held by the Company. Each holder is also entitled to receive payment of a dividend should the Company declare such a dividend payment. Any dividends payable by the Company will be distributed to the holders of the Company's Ordinary Shares, and on the winding-up of the Company or other return of capital (other than by way of a repurchase or redemption of shares in accordance with the provisions of the Articles and the Companies Law), the Company's surplus assets, after payment of all creditors, will be distributed among the holders of the Company's Ordinary Shares.

The Board anticipates that returns to Shareholders will be made through the Company's redemption mechanism and therefore does not expect that the Company will pay any dividends.

No dividends have been declared or paid during the year (30 September 2023: nil).

#### Issuance of Ordinary Shares

No Ordinary Shares were issued during the year ended 30 September 2024 (30 September 2023: no Ordinary Shares issued).

#### Redemption mechanism

As the Company has been established as a closed-ended collective investment scheme, there is no right or entitlement attaching to the Ordinary Shares that allows them to be redeemed or repurchased by the Company at the option of the Shareholder.

The redemption mechanism allows the Board to redeem any number of shares at the prevailing NAV per share at the calculation date, (being the date determined by the Board for the calculation of the price to be paid on any particular exercise of the redemption mechanism), less the cost of redemption. This right will only be exercised in specific circumstances and for the purpose of returning capital growth.

Accordingly, assuming the NAV exceeds £100 million, the Directors intend to operate the redemption mechanism to return the NAV back to around £100 million in order to:

- enable the Company to exploit fully the underlying investment opportunity and to deliver high and sustainable returns to Shareholders, principally in the form of capital gains;
- enable portfolio holdings to have a meaningful impact on the Company's performance, which might otherwise be marginal within the context of a larger fund; and
- ensure that the Company can continually take advantage of the illiquidity risk premium inherent in micro-cap companies.
| Annual Report and Financial Statements 30 September 2024 77River UK Micro Cap Limited
### Notes to the financial statements (continued)
11. Share capital (continued)
Redemption mechanism (continued)
The Directors are not obliged to operate the redemption mechanism and will not do so if:
• calculation and publication of the NAV has been suspended; or
• the Directors are unable to make the solvency statement required by Guernsey law; or
• other circumstances exist that the Board believes make the operation of the redemption mechanism undesirable
or impracticable.
Redemptions will, subject to compliance with all applicable law and regulation, be carried out pro rata to a
Shareholder’s holding of Ordinary Shares, but all redemptions will normally be subject to a de minimis value to be
returned of approximately £10 million (before costs). The Company will not redeem fractions of shares.
Redemptions will be recognised against the retained earnings of the Company.
The price at which any Ordinary Shares are redeemed under the redemption mechanism will be calculated by
reference to unaudited NAV calculations. To the extent that any redemption takes place at a time when the Ordinary
Shares are trading at a significant premium to the prevailing unaudited NAV, Shareholders may receive an amount
in respect of their redeemed Ordinary Shares that is materially below the market value of those shares prior to
redemption.
In order to facilitate any redemptions, the Company may be required to dispose of assets within the investment
portfolio. There is no certainty of the price that can be achieved on such sales and any sale price could be materially
different from the carrying value of those assets. Consequently, the value received in respect of redeemed Ordinary
Shares may be adversely affected where the Company is not able to realise assets at their carrying values. In addition,
during any period when the Company is undertaking investment portfolio realisations, it may hold the sale proceeds
(which could, in aggregate, be a material amount) in cash, which could impact the Company’s returns, until the
redemption is implemented, and the cash is distributed to Shareholders.
Investors should note that the redemption mechanism has a specific and limited purpose, and no expectation or
reliance should be placed on the redemption mechanism being operated on any one or more occasions or as to
the proportion of Ordinary Shares that may be redeemed or as to the price at which they will be redeemed. The
redemption mechanism may also lead to a more concentrated and less liquid portfolio, which may adversely affect
the Company’s performance and value.
In the absence of the availability of the redemption mechanism, Shareholders wishing to realise their investment in
the Company will be required to dispose of their shares on the stock market. Accordingly, Shareholders’ ability to
realise their investment at any particular price and/or time may be dependent on the existence of a liquid market in
the shares.
### 12. Basic and diluted profit per Ordinary Share

|  | Year ended |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- |
| 30 September |  |  | 30 September |  |  |
|  |  | 2024 |  |  | 2023 |

£ £
Total comprehensive income for the year 8,930,060 2,205,448
Weighted average number of Ordinary Shares during the year 33,897,954 33,897,954
Basic and diluted earnings per Ordinary Share 0.2634 0.0651
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

78

## Notes to the financial statements (continued)

### 13. NAV per Ordinary share

|   | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- |
|  NAV | 68,975,249 | 60,045,189  |
|  Number of Ordinary Shares at year end | 33,897,954 | 33,897,954  |
|  NAV per Ordinary Share | 2.0348 | 1.7714  |

### 14. Related party disclosure

#### The AIFM

The AIFM is a related party and is entitled to an annual fixed fee as disclosed in note 5. Mark Hodgson is the Managing Director of the AIFM.

#### The Portfolio Manager

The Portfolio Manager is a related party and is entitled to management and performance fees as disclosed in note 4.

The Portfolio Manager and George Ensor held the following Ordinary Shares in the Company:

|   | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- |
|  Portfolio Manager | 3,109,578 | 3,140,230  |
|  George Ensor | 90,194 | 90,194  |

#### The Directors

The Directors are entitled to remuneration for their services and hold Ordinary Shares in the Company as disclosed in note 6.

All transactions between these related parties and the Company were conducted on terms equivalent to those prevailing in an arm's length transaction.

### 15. Material events after the Statement of Financial Position date

There were no events which occurred subsequent to the year end until the date of approval of the annual financial statements, which would have a material impact on the annual financial statements of the Company as at 30 September 2024.

The increase in Director fees detailed in the Directors' Remuneration Report was formally approved by the Board on 3 October 2024.

### 16. Controlling party

In the Directors' opinion, the Company has no ultimate controlling party.
| Annual Report and Financial Statements 30 September 2024 79River UK Micro Cap Limited
## Useful information for shareholders
### (unaudited)
### Alternative performance measures
In accordance with the European Securities and Markets Authority Guidelines on Alternative Performance Measures
(“APMs”) the Board has considered what APMs are included in the Annual Report and financial statements which
require further clarification. APMs are defined as a financial measure of historical or future financial performance,
financial position, or cash flows, other than a financial measure defined or specified in the applicable financial
reporting framework. APMs included in the financial statements, which are unaudited and outside the scope of IFRS
Accounting Standards, are deemed to be as follows:
### NAV per Ordinary share
The NAV per Ordinary Share is the value of all the Company’s assets, less any liabilities it has, divided by the total
number of Ordinary Shares.
### Performance since inception
The NAV total return measures how the NAV per Ordinary Share has performed on an annualised basis from the
original issuance of Ordinary Shares to 30 September 2024, taking into account capital returns. The Company has
not declared a dividend since inception.
The Board monitors the Company NAV total return against the Numis Smaller Companies plus AIM (excluding
Investment Companies) Index. Refer to page 4 for NAV total return vs Index total return analysis.
### Share price premium or discount to NAV
The NAV per share is the value of all the Company’s assets, less any payables it has, divided by the total number
of Ordinary Shares. The Company’s share price may be higher or lower than the NAV, the difference is known as
a premium or discount. The Company’s premium or discount to NAV is calculated by expressing the difference
1

| between the Ordinary Share bid price | and the NAV per share as a percentage of the NAV per share. |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | 30 September |  |  | 30 September |  |  |
|  |  |  |  | 2024 |  |  | 2023 |
|  |  |  | Ordinary |  |  | Ordinary |  |
|  |  |  |  | shares |  |  | shares |

NAV per share (A) £2.0348 £1.7714
1
Closing share price (B) £1.7400 £1.4200
Discount to NAV per share ((B-A)/A) (14.49)% (19.84)%
### Capital returns
The Board is committed to achieving long term capital growth and, where possible, returning such growth to
Shareholders throughout the life of the Company. Furthermore, the Portfolio Manager has advised the Board that it
believes that a NAV of £100 million (at current market levels although this may change over time) would best position
the Company to take advantage of a portfolio of micro-cap companies and the Capital Redemption Mechanism
is in place to prevent the NAV significantly exceeding this figure. Refer to note 11 for further details regarding the
redemption mechanism.
1 Source Bloomberg
River UK Micro Cap Limited | Annual Report and Financial Statements 30 September 2024

80

## Useful information for shareholders (unaudited) (continued)

### Ongoing charges

Ongoing charges are calculated based on actual costs incurred in the year excluding any non-recurring fees in accordance with the AIC methodology. Expense items have been excluded in the calculation of the ongoing charges figure when they are not deemed to meet the following AIC definition:

“Ongoing charges are those expenses of a type which are likely to recur in the foreseeable future, whether charged to capital or revenue, and which relate to the operation of the investment company as a collective fund, excluding the costs of acquisition/disposal of investments, financing charges and gains/losses arising on investments. Ongoing charges are based on costs incurred in the year as being the best estimate of future costs.”

Please refer below for a breakdown of the ongoing charges:

|   | 30 September 2024 £ | 30 September 2023 £  |
| --- | --- | --- |
|  Total expenses for the year: | 1,167,518 | 1,081,270  |
|  Expenses excluded from the calculation: |  |   |
|  Sundry expenses | (13,420) | (15,000)  |
|  Transaction fees | (30,571) | (17,988)  |
|  Foreign exchange gains | 8,240 | 3,157  |
|  **Total ongoing charges for the year** | **1,131,767** | **1,051,439**  |

The AIC’s methodology for calculating an ongoing charges figure is based on annualised ongoing charges of £1,131,767 (30 September 2023: £1,051,439) divided by average NAV in the period of £65,956,099 (30 September 2023: £61,456,997).

The AIC’s methodology for calculating average NAV for the purposes of the ongoing charges figure is to use the average of NAV at each NAV calculation date. On this basis the average NAV figure has been calculated using the daily NAVs over the years ended 30 September 2024 and 30 September 2023.

The ongoing charges ratio for the year ended 30 September 2024 was 1.72% (30 September 2023: 1.71%).
| Annual Report and Financial Statements 30 September 2024 81River UK Micro Cap Limited
## Company information
Board members
John Blowers Chairman
Mark Hodgson
Ted Holmes Audit Committee Chair, effective 1 May 2024
Serena Tremlett Remuneration and Nomination Committee Chair and Management
Engagement Committee Chair, effective 1 May 2024
Registered office
BNP Paribas House, St Julian’s Avenue, St Peter Port, Guernsey GY1 1WA
Portfolio Manager
1
River Global Investors LLP , 30 Coleman Street, London EC2R 5AL
AIFM
Carne Global AIFM Solutions (C.I.) Limited, Channel House, Green Street, St Helier, Jersey JE2 4UH
Corporate Broker
Singer Capital Markets Advisory LLP, One Bartholomew Lane, London EC2N 2AX
Solicitors to the Company (as to English law)
CMS Cameron McKenna Nabarro Olswang LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF
Advocates to the Company (as to Guernsey law)
Carey Olsen, P.O. Box 98, Carey House, Les Banques, St Peter Port, Guernsey GY1 4BZ
Custodian
2
BNP Paribas S.A., Guernsey Branch , BNP Paribas House, St Julian’s Avenue, St Peter Port, Guernsey GY1 1WA
Independent Auditor
3
Grant Thornton Limited , St James Place, St James Street, St Peter Port, Guernsey GY1 2NZ
Administrator and Company Secretary
1
BNP Paribas S.A., Guernsey Branch , BNP Paribas House, St Julian’s Avenue, St Peter Port, Guernsey GY1 1WA
Registrar
Computershare Investor Services (Guernsey) Limited, 2nd Floor, Lefebvre Place, Lefebvre Street, St Peter Port,
Guernsey GY1 2JP
1 Formerly River and Mercantile Asset Management LLP.
2 BNP Paribas S.A., Guernsey Branch is regulated by the GFSC.
3 Appointed 12 March 2024.
## www.river.global
River UK Micro Cap Limited
BNP Paribas
St. Julians House
St. Julians Avenue
St Peter Port
Guernsey GY1 1WA
T: +44 1481 750850
E: rmmccosec@bnpparibas.com