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Longboat Energy PLC (LBE)

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Thursday 06 February, 2020

Longboat Energy PLC

Final Results for the Year ended 31 December 2019

RNS Number : 1285C
Longboat Energy PLC
06 February 2020
 

 

 

 

6 February 2020

                                                                          Longboat Energy plc                                

("Longboat Energy", "the Company" or "Longboat")

 

Final Results for the Year ended 31 December 2019

Longboat Energy, established by the former management team of Faroe Petroleum plc to build a significant North Sea-focused E&P business, announces its preliminary results for the period from incorporation on 28 May 2019 to 31 December 2019.

 

Operational and strategy update

 

Since Longboat was admitted to AIM on 28 November 2019, the Directors' time and resources have been fully deployed in meeting the Company's investment objective to create a full-cycle North Sea E&P company in order to deliver value to shareholders. 

 

The Company's Board of Directors has excellent relationships across the North Sea oil and gas industry, which the Company intends to use in order to access attractive bi-lateral deal opportunities.

 

The Company is targeting an initial acquisition that will deliver near term cashflow as well as provide an appropriate platform upon which to achieve the Company's investment objectives. Initial acquisition targets are expected to be:

·    located offshore Norway and the UK or the wider EEA region;

·  producing and/or near producing assets, providing cash flows to fund organic growth with robust economics,   sustainable in a low oil price environment;

·   assets with identifiable upsides via organic growth through further field investment (infill drilling etc.), potential near-field exploration and with follow on opportunities to deliver a hub strategy;

·    assets with aligned partnerships where the Company can influence and optimise operations; and

·    assets where the management team's experience is valued by the other licence partners and the authorities and can be exploited to add value.

The North Sea oil and gas industry has been experiencing an extended period of significant consolidation and the assets that are being targeted are typically non-core to existing large E&P companies, and where the Directors believe that the investment objectives of the Company to create significant value can be met. The Company's investment objectives are intended to be achieved:

·    through geological expertise, technical knowledge and understanding in addition to deep experience across the E&P life cycle;

·    through cost reductions and targeted investments in the assets to be acquired; and

·    by focusing on assets that have the potential to provide material upside to Longboat Energy.

The Company aims to deliver value by applying the business model of growing production and reserves through value creative M&A combined with exploration. Longboat will focus on 'near field' exploration with access to infrastructure and de-risking through nearby discoveries.

 

 

 

 

The Company's Annual Report & Accounts to 31 December 2019 will be posted to shareholders in due course.

 

Helge Hammer, Chief Executive of Longboat Energy, said:

 

"We are currently evaluating a number of deal opportunities which may prove to be suitable acquisition candidates. A key objective for any acquisition will be a focus on investments where we believe we can facilitate growth and unlock inherent value.

 

"We look forward to updating the market on this process at the appropriate time."

Enquiries:

 

Longboat Energy

via FTI

Helge Hammer, Chief Executive Officer

 

Jon Cooper, Chief Financial Officer

 

 

 

Stifel (Nomad)

Tel: +44 20 7710 7600

Callum Stewart

Jason Grossman

Nicholas Rhodes

Ashton Clanfield

 

 

 

FTI Consulting (PR adviser)

Tel: +44 20 3727 1000

Ben Brewerton

Sara Powell

[email protected]

 

 

 

 

 

 

Results

The Company's loss after taxation for the period from incorporation to 31 December 2019 was £196,301. In the period to 31 December 2019, the Company recorded no revenue and incurred £198,051 of administrative and operating expenses. During the period the Company raised £10m (before transaction costs) by way of share issues, including £9.5m through the Company's Initial Public Offering as detailed in note 16 to the financial statements.  Transaction costs associated with share issues totalled £741,340. At the period end the Company held a cash balance of £9,201,692.

 

Dividends

It is the Board's policy that the Company should seek to generate capital growth for its shareholders but may recommend distributions at some future date when the investment portfolio matures, and production revenues are established and when it becomes commercially prudent to do so

Statement of going concern

The financial statements of Longboat Energy plc have been prepared on a going concern basis.

 

Outlook

The initial focus of the Directors is to identify, secure and finance a first acquisition that will deliver asset(s) that are able to meet the Company's investment criteria (including near term cashflow) as well as provide an appropriate basis to build on the Company's investment objectives. In parallel, the Board will continue to focus on seeking additional opportunities for generating shareholder returns in the medium and long-term beyond the first acquisition.

 

 

 

 

 

Statement of losses

for the Period 28 May 2019 to 31 December 2019

 

 

Notes

Period

28 May 19 to 31 Dec 19

£

 

 

 

CONTINUING OPERATIONS

Revenue

 

-

Administrative expenses

 

(198,051)

Other operating expenses

 

-

OPERATING LOSS

 

(198,051)

Finance income

7

1,750

LOSS BEFORE INCOME TAX

8

(196,301)

Income tax

10

-

LOSS FOR THE PERIOD

 

(196,301)

Basic

11

(9.52)

Diluted

 

(9.52)

 

All profits and losses arise from continuing activities.

 

There were no items of other comprehensive income in the period therefore no statement of comprehensive income has been prepared.

 

Statement of financial position

As at 31 December 2019

 

 

Notes

31 Dec 19

£

 

 

 

ASSETS

NON-CURRENT ASSETS

 

 

Property, plant and equipment

12

2,245

Investments

13

2,540

 

 

4,785

CURRENT ASSETS

 

 

Trade and other receivables

15

83,104

Cash and cash equivalents

 

9,201,692

 

 

9,284,796

TOTAL ASSETS

 

9,289,581

EQUITY

SHAREHOLDERS' EQUITY

 

 

Called up share capital

16

1,000,000

Share premium

17

7,808,660

Other reserves

17

450,000

Retained earnings

17

(196,301)

TOTAL EQUITY

 

9,062,359

LIABILITIES

 

 

CURRENT LIABILITIES

 

 

Trade and other payables

18

227,222

TOTAL LIABILITIES

 

227,222

TOTAL EQUITY AND LIABILITIES

 

9,289,581

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 5 February 2020 and are signed on its behalf by:

 

 

Helge Hammer Director

5 February 2020

 

Statement of changes in equity

for the Period 28 May 2019 to 31 December 2019

 

 

Called up share capital

Share premium

Other reserves

Retained earnings

Total equity

£

£

£

£

£

 

On incorporation

1

-

-

-

1

Issue of share capital

                   229,999

270,000

-

-

499,999

Share buy-back and cancellation of share premium

(180,000)

(270,000)

450,000

-

-

Initial Public Offering

950,000

8,550,000

-

-

9,500,000

Costs of share issue

-

(741,340)

-

 

(741,340)

Total comprehensive expense

-

-

-

(196,301)

(196,301)

Balance at 31 December 2019

1,000,000

7,808,660

450,000

(196,301)

9,062,359

 

 

Statement of cash flows

for the Period 28 May 2019 to 31 December 2019

 

 

Notes

Period 28 May 19

to 31 Dec 19

£

 

 

 

Loss before income tax

 

(196,301)

Finance income

7

(1,750)

 

 

 

Increase in trade and other receivables

15

(83,104)

Increase in trade and other payables

18

220,444

Cash absorbed by operations

 

(60,711)

Cash flows from investing activities

 

 

Purchase of tangible fixed assets

12

(2,245)

Purchase of fixed asset investments

13

(2,540)

Intercompany Loan

 

       -

Interest received

 

1,750

Net cash used in investing activities

 

(3,035)

Cash flows from financing activities

 

 

 

Share issue (net of issue costs)

17

 9,258,660

Net cash from financing activities

 

9,258,660

Increase in cash and cash equivalents

 

9,194,914

Cash and cash equivalents at beginning of period

 

-

Cash and cash equivalents at end of period

 

9,194,914

 

 

 

Relating to:

 

 

Bank balances and short-term deposits

 

9,201,692

Bank overdrafts

 

(6,778)

 

 

9,194,914

 

Notes to the financial statements

for the Period 28 May 2019 to 31 December 2019

 

1. Statutory information

 

Longboat Energy plc is a public limited company, limited by shares, registered in England and Wales. The company's registered number is 12020297 and registered office address 5th Floor, One New Change, London, England, EC4M 9AF

2. Accounting policies Basis of preparation

The financial statements of Longboat Energy plc and the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the European Union and in accordance with the Companies Act 2006.

 

The financial information for the year ended 31 December 2019 set out in this announcement does not constitute the Company's statutory financial statements for the year ended 31 December 2019 but is extracted from the audited financial statements. The statutory financial statements for 2019 will be delivered to the Registrar of Companies in due course.

 

The auditors have reported on the financial statements for the year ended 31 December 2019 and their report was unqualified. The report did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the International Accounting Standards Board and as endorsed for use in the European Union, and with those parts of the Companies Act 2006 applicable to companies preparing their accounting under IFRS, this announcement does not itself contain sufficient information to comply with IFRSs.

 

The principal accounting policies adopted in the preparation of the financial information in this announcement are set out in the Company's full financial statements for the year ended 31 December 2019.

 

The financial statements have been prepared on the historical cost basis.

 

Going concern

The directors, having made due and careful enquiry and preparing forecasts, are of the opinion that the company has adequate working capital to execute its operation over the next 12 months. The directors, therefore, have made an informed judgement, at the time of approving the financial statements, that there is a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. As a result, the directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.

 

Property, plant and equipment

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life.

 

Computer Equipment                                                                 33.33% straight line

 

Financial instruments

A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and liabilities comprise non-derivative and derivative receivables and payables.

 

Classification: Financial assets

The Company classifies financial assets in the following measurement categories:

§ financial assets subsequently measured at fair value (either through other comprehensive income or through profit or loss), and

§ financial assets measured at amortised cost.

 

The Company has no financial assets subsequently measured at fair value through other comprehensive income or through profit or loss.

 

Classification depends on the business model used for managing financial assets and on the characteristics of the contractual cash flows involved.

 

All financial assets held by the Company, have contractual cash flows representing solely the payment of principal and interest. The Company holds all these assets to collect the contractual cash flows. These assets are classified as held at amortised cost.

 

Classification: Financial liabilities

Financial liabilities other than derivatives are classified as measured at amortised cost. The Company has no derivatives.

 

Measurement on initial recognition

A financial asset or financial liability is initially measured at its fair value, plus, in the case of a financial asset or financial liability not subsequently measured at fair value through profit or loss, the transaction costs directly attributable to the acquisition of the asset or issuing of the liability.

 

Transaction costs of financial assets measured at fair value through profit or loss are recognised as an expense in the income statement.

 

The fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.

 

Subsequent measurement

The subsequent measurement of debt instruments depends on the classification of the financial asset or liability, described above.

 

Financial assets and liabilities measured at amortised cost are accounted for using the effective interest rate method. Interest income and expense is reported as financial income and expense. Gains or losses arising on the derecognition of the financial asset or liability are recognised directly in profit or loss as other operating income/expense together with foreign currency gains and losses.

 

Impairment

Trade receivables and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment.

 

The carrying amount is reduced by the expected lifetime losses. The Company does not hold other financial assets for which an expected credit loss would be material to record.

 

Taxation

Taxation, comprised of current and deferred tax, is charged or credited to the income statement unless it relates to items recognised in other comprehensive income or directly in equity. In such cases, the related tax is also recognised in other comprehensive income or directly in equity.

 

Current tax liabilities are measured at the amount expected to be paid, based on tax rates and laws that are enacted or substantively enacted at the balance sheet date.

 

Deferred tax is accounted for using the balance sheet liability method and is calculated using rates of taxation enacted or substantively enacted at the balance sheet date which are expected to apply when the asset or liability is settled.

 

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are only recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is not recognised in respect of investments in subsidiaries and associates where the reversal of any taxable temporary differences can be controlled and are unlikely to reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and there is an intention to settle the balances on a net basis.

 

Tax provisions are recognised when there is a potential exposure under changes to International tax legislation.

 

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

 

Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

- Leases of low value assets; and

- Leases with a duration of 12 months or less.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Company's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

On initial recognition, the carrying value of the lease liability also includes:

- amounts expected to be payable under any residual value guarantee;

- the exercise price of any purchase option granted in favour of the group if it is reasonable certain to assess that option;

- any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

 

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

- lease payments made at or before commencement of the lease;

- initial direct costs incurred; and

- the amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset.

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

Reserves

A description of each of the reserves follows:

 

Share capital

Share capital represents the nominal value of shares issued less the nominal value of shares repurchased and cancelled.

 

Share Premium

This reserve represents the difference between the issue price and the nominal value of shares at the date of issue, net of related issue costs and share premium cancelled.

 

Retained Earnings

Net revenue profits and losses of the Company which are revenue in nature are dealt with in this reserve.

 

 

Other reserve

Other reserves relate to the nominal value of share capital repurchased and cancelled.

 

3. Adoption of new and revised standards and changes in accounting policies

 

Standards issued but not yet effective

At the date of authorisation of these financial statements, the Company has not applied the following standards that have been issued but are not yet effective. The Company has not adopted any new or amended standards early.

 

 

Effective date:

IFRS 17

Insurance Contracts

1 January 2021

IFRS 10 and IAS 28 (Amendments)

Sale or Contribution of Assets between an Investors and its Associate or Joint Venture

No date set

IFRS 3 (Amendments)

Definition of a business

1 January 2020

IAS 1 and IAS 8 (Amendments)

Definition of material

1 January 2020

Conceptual Framework

Amendments to References to the Conceptual Framework in IFRS Standards

1 January 2020

In October 2018, the International Accounting Standards Board (Board) issued Definition of a Business (Amendments to IFRS 3) to make it easier for companies to decide whether activities and assets they acquire are a business or merely a group of assets. The amendments:

·      confirmed that a business must include inputs and a process, and clarified that:

-     the process must be substantive; and

-     the inputs and process must together significantly contribute to creating outputs.

·      narrowed the definitions of a business by focusing the definition of outputs on goods and services provided to customers and other income from ordinary activities, rather than on providing dividends or other economic benefits directly to investors or lowering costs; and

·      added a test that makes it easier to conclude that a company has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets.

The amendment is effective for periods beginning on or after 1 January 2020. It has yet to be endorsed for application in the European Union. Given the acquisition strategy of the Company these amendments may have a significant impact on the accounting treatment for future acquisitions.

 

Other changes to standards, interpretations and amendments issued but not yet effective are not expected to have a material impact on the Company financial statements.

 

4.  Critical accounting estimates

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

Cost allocation

In accordance with IFRS the costs of the IPO that involves both issuing new shares and a stock market listing was accounted for as follows:

·        Incremental costs that are directly attributable to issuing new shares should be deducted from equity (net of any income tax benefit)

·        Costs that relate to the stock market listing, or are otherwise not incremental and directly attributable to issuing new shares, have been recorded as an expense in the statement of comprehensive income.

Judgment was required in assessing the nature of certain costs such as legal and professional fees to determine the extent to which such costs were attributable to the new shares issued or the listing and management assessed the underlying nature of the services in assessing the allocation.

 

5. Employees and directors

 

 

£

Wages and salaries

52,163

Social security costs

6,504

Other pension costs

3,447

 

62,114

 

The average number of employees during the period was as follows:

 

 

 

Number

Executive Directors

 

2

 

4

Staff

 

1

 

 

7

 

6. Directors remuneration

 

The emoluments of the individual Directors for the period are included in wages and salaries and were as follows:

 

 

 

Salary

£

Pension

£

Total

£

Executive Directors

 

 

 

 

Helge Hammer

 

12,575

1,397

13,972

Jonathan Cooper

 

10,060

1,118

11,178

 

 

 

 

 

Non-executive Directors

 

 

 

 

Brent Cheshire

 

5,216

-

5,216

Katherine Roe

 

4,471

-

4,471

Jorunn Saetre

 

3,726

-

3,726

Graham Stewart

 

7,732

-

7,732

 

 

 

 

 

Total

 

43,780

2,515

46,295

 

The Executive Directors entered into service agreements with the Company on 28 November 2019, the date of Admission to AIM.

 

Pursuant to letters of appointment dated 28 November 2019, the Non-executive Directors of the Company were appointed as of that date and on an ongoing basis. Each Non-executive Director is entitled to an annual fee, including in respect of any service on any Board committee.

 

As stated at the time of Admission to AIM, the Remuneration Committee will, at the time of making the first acquisition, undertake an executive salary benchmarking exercise for the purposes of determining what shall constitute a competitive market salary and pension contribution for the Executive Directors.

 

 

7. Net finance income

 

 

 

 

£

Finance Income

 

 

 

1,750

 

 

 

 

8. Loss before income tax

 

  The loss before income tax is state after charging:

                                                                                                         

 

 

£

 

Administrative expenses

Auditor remuneration

 

8,000

Executive Director's remuneration

 

22,635

Wages

 

8,383

Pensions

 

3,447

Social security

 

6,504

Operating leases

 

9,500

Non-Executive Director remuneration

 

21,145

 

 

9. Auditors' remuneration

 

 

£

 

 

Fees payable to the Company's auditors for the audit of the Company's accounts

8,000

 

During the period the auditor provided non-audit services of £15,000 in their role as Reporting Accountant in relation to the Company's Admission to AIM.

 

10. Income tax

 

Analysis of tax expense

No liability to UK corporation tax arose for the period.

 

Unused tax losses on which no deferred tax has been recognised as at 31 December 2019 was £299,105 and the potential tax benefit will be £56,830. Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised.

 

Reconciliation of tax charge

 

Loss on ordinary activities before taxation

(196,301)

 

 

Tax on loss on ordinary activities at standard CT rate of 19.00%

(37,297)

Effects of:

 

Expenses not deductible for tax purposes

8,321

Adjust closing mainstream unrecognized deferred tax to average rate of 19.00%

363

Adjust closing ring fence unrecognized deferred tax to average rate of 19.00%

(28,217)

Deferred tax not recognised

56,830

Tax charge/(credit) for the period

-

 

 

11. Loss per share

 

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted loss per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares of which there are currently none in issue. 

 

Reconciliations are set out below.

 

 

 

 

 

Loss

£

Weighted average number of shares

 

Per share amount

p

Basic and diluted LPS

 

 

 

 

Loss attributable to ordinary shareholders

 

(196,301)

2,062,213

(9.52)

 

 

 

 

 

 

12. Property, plant and equipment

 

 

 

 

 

Computer

equipment

£

COST

 

 

 

 

Additions

 

 

 

2,245

At 31 December 2019

 

 

 

2,245

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

At 31 December 2019

 

 

 

2,245

 

 

 

 

 

 

No depreciation was charged in the period ended 31 December 2019 due to assets being purchased part way through December 2019. Depreciation will be charged from the first full month of ownership.

 

13. Investments

 

 

 

 

 

Shares in company undertakings

£

COST

 

 

 

 

Additions

 

 

 

2,540

At 31 December 2019

 

 

 

2,540

 

 

 

 

 

NET BOOK VALUE

 

 

 

 

At 31 December 2019

 

 

 

2,540

 

 

 

 

 

 

The Company or the company's investments at the Statement of Financial Position date in the share capital of companies include the following:

 

Subsidiary

 

Longboat Energy Norge AS (company number 924 186 720), with a registered office at c/o Kluge Advokatfirma, Laberget 24, 4020, Stavanger, Norway. The company was incorporated on 5 December 2019.

 

 

Holding

 

%

 

Class of shares:

 

 

Ordinary

100.00

 

 

The company has taken advantage of the exemption under the Companies Act 2006 s405 not to consolidate this subsidiary as it has been dormant from the date of incorporation and is not material for the point of giving a true and fair view.

 

14. Financial risk management

 

The Company is exposed to financial risks through its various business activities. In particular, changes in interest rates exchange rates can have an effect on the capital, financial and revenue situation of the Company. In addition, the Company is subject to credit risks.

 

The Company has adopted internal guidelines, which concern risk control processes and which regulate the use of financial instruments and thus provide a clear separation of the roles relating to operational financial activities, their implementation and accounting, and the auditing of financial instruments. The guidelines on which the Company's risk management processes are based are designed to ensure that the risks are identified and analysed across the Company. They also aim for a suitable limitation and control of the risks involved, as well as their monitoring.

 

The Company controls and monitors these risks primarily through its operational business and financing activities.

 

Credit Risks

The credit risk describes the risk from an economic loss that arises because a contracting party fails to fulfil their contractual payment obligations. The credit risk includes both the immediate default risk and the risk of credit deterioration, connected with the risk of the concentration of individual risks. For the Company, credit and default risks are concentrated in the financial institutions in which it places cash deposits.

 

The Company's policy is to place its cash with reputable clearing banks. The Company's cash is deposited with one bank with a credit rating of AA-.

 

Notwithstanding existing collateral, the amount of financial assets indicates the maximum default risk in the event that counterparties are unable to meet their contractual payment obligations. The maximum credit default risk amounted to £9,254,796 at the balance sheet date, of which £9,201,692 was cash on deposit at banks.

 

Liquidity Risks

Liquidity risk is defined as the risk that a company may not be able to fulfil its financial obligations. The Company manages its liquidity by maintaining cash and cash equivalents sufficient to meet its expected cash requirements to implement its investment policy. In the event that there is a risk that the cash required to follow the investment policy is greater than the Company's liquid resources, the Company would seek confirmation of the continuation of the policy and the raising of further financing at a shareholder general meeting.

 

At 31 December 2019, the Company has cash on deposit of £9,201,692.

 

Market Risks

Interest Rate Risks

Interest rate risks exist due to potential changes in market interest rates and can lead to a change in the fair value of fixed-interest bearing instruments, and to fluctuations in interest payment for variable interest rate financial instruments.

 

 

The Company is exposed to interest rate risk on cash held on deposit at banks. Interest income for the period to 31 December 2019 was £1,750. These accounts are maintained for liquidity rather than investment, and the interest rate risk is not considered material to the Company.

 

Currency Risks

The Company operates in the UK, incurs expenses predominantly in sterling and NOK, and holds cash in sterling and NOK. The Company incurs some expenditure in foreign currency when the investment policy requires services to be obtained overseas and when its NOK balances are retranslated into GBP at period ends. The foreign exchange risk on these costs is not considered material to the Company. 

 

15. Trade and other receivables

 

 

 

£

VAT recoverable

 

45,060

Prepayments

 

38,044

 

 

83,104

The directors consider that the carrying amount of trade and other receivables approximates to their fair value.

 

16. Called up share capital

 

Allotted and issued ordinary shares of ten pence each ('Ordinary Shares'):

 

Number

Class

Nominal value

£

 

10,000,000

 

Ordinary

 

£0.10

 

1,000,000

 

Share capital history over the period:

 

·      On incorporation on 28 May 2019, one subscriber share with a nominal value of £1.00 was issued

·      On 3 September 2019 the subscriber share of £1.00 was subdivided into 10 Ordinary Shares and a further 999,990 Ordinary Shares were issued at par

·      On 23 October 2019 1,000,000 Ordinary Shares were issued at par

·      On 25 November 2019 300,000 Ordinary Shares were issued at a premium of 90p per Ordinary Share and from the total Ordinary Shares in issue (2,300,000 Ordinary Shares), 1,800,000 Ordinary Shares were repurchased, cancelled and transferred to other reserves leaving 500,000 Ordinary Shares in issue with total subscription monies of £500,000 (which was carried out in order to ensure that the founders' subscription price for Ordinary Shares was equal to the price paid by the new subscribers in the initial public offering i.e. £1.00 per share).

·      On 25 November 2019 a capital reduction was undertaken to convert £270,000 of share premium to other reserves.

·      On 28 November 2019 9,500,000 Ordinary Shares were allotted to the new subscribers at a premium of 90p per Ordinary Share

 

 

17. Reserves

 

Company

Retained earnings

£

Share premium

£

Other reserves

£

Total

£

Deficit for the period

(196,301)

-

-

(196,301)

Cash share issue / IPO

-

8,550,000

450,000

9,000,000

Costs of share issue

-

(741,340)

-

(741,340)

 

(196,301)

7,808,660

450,000

8,062,359

 

 

 

 

 

  

 

18. Trade and other payables

 

 

 

£

 

Current:

 

 

Trade creditors

 

94,452

Social security and other taxes

 

6,504

Other creditors

 

62,389

Accrued expenses

 

63,877

 

 

227,222

 

The directors consider that the carrying amount of trade payables approximates to their fair value

 

19. Leasing agreements

 

Minimum lease payments fall due as follows:

 

Company

 

Non-cancellable operating leases

£

 

 

 

 

 

Within one year

 

 

 

45,600

 

The leases have a term of less than 12 months.

 

20. Related party transactions

 

Members of the Board of Directors are deemed to be key management personnel. Key management personnel compensation for the financial period is the same as the Director remuneration set out in note 6 to the accounts.

 

Directors' and the Company Secretary's interests in the shares of the Company, including family interests, were as follows:

 

 

 

Ordinary shares

Helge Hammer

 

                           300,000

Jonathan Cooper

 

                           125,000

Graham Stewart

 

                           150,000

Jorunn Saetre

Julian Riddick

 

25,000

100,000

 

There were no other transactions or balances with related parties in the period.

 


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