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Longboat Energy PLC (LBE)

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Tuesday 23 March, 2021

Longboat Energy PLC

Full Year 2020 Results

RNS Number : 1121T
Longboat Energy PLC
23 March 2021
 

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

London, 23 March 2021  - Longboat Energy, established by the former management team of Faroe Petroleum plc to build a significant North Sea-focused E&P business, announces its full-year results for the period ended 31 December 2020.

 

Highlights

 

Financial Summary

·   which allows the Company ample headroom to continue to pursue its business development activities.

·

·

 

Business Summary

·

 

·

 

 Outlook

 

·

 

·

 

·

 

·

 

·

 

·

 

Helge Hammer, Chief Executive Officer of Longboat Energy commented:

"Longboat remains well-placed to transact. We have an experienced team with excellent relationships across the industry and we have the ability to absorb personnel as part of a transaction, if required. With a backlog of deals under way where sellers are under increasing pressure to exit assets, we believe there will be many value accretive opportunities for Longboat. We are also encouraged by good progress with the processes currently underway, a number of which we are participating in."

 

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

Simon Mensley

Ashton Clanfield




FTI Consulting (PR adviser)

Tel: +44 20 3727 1000

Ben Brewerton

Sara Powell

Ntobeko Chidavaenzi

[email protected]

 

 

 

 

Results

For the period to 31 December 2020, the Group's loss after taxation was £1,626,179

 

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.  In accordance with the AIM Rules for Companies, if the Company has not made an acquisition or has not substantially implemented its Investment Policy within 18 months of admission to the AIM market, which will occur on 28th May 2021, the Company is required to seek shareholder approval for its Investment Policy at the next Annual General Meeting of the Company and at each subsequent Annual General Meeting until such time as there has been an acquisition or the Investment Policy has been substantially implemented (such a resolution being referred to hereafter as a 'Continuation Vote').  The reliance on future shareholder approval constitutes a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

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.

 

 

Consolidated Statement of profit or loss

for the Period to 31 December 2020

 


Year


Period



ended


ended



31 December


31 December



2020


2019



audited


unaudited



Notes


£


£


GROUP



Revenue



-


-


Administrative expenses


(2,399,204)


(198,051)








Operating loss

6


(2,399,204)


(198,051)


Finance income

5


18,736


1,750









Loss before taxation


(2,380,468)


(196,301)


Income tax credit

8


754,289


-









Loss after tax



(1,626,179)


(196,301)

Other comprehensive income






Currency translation differences



524


25








Loss and total comprehensive income for the period



(1,625,655)


(196,276)








Loss per share

9


Basic


(16.26)


(9.52)

Diluted


(16.26)


(9.52)


The income statement has been prepared on the basis that all operations are continuing operations.

 


 

Statement of financial position

As at 31 December 2020

 


2020


2019



£


£


GROUP

Notes


audited


unaudited



Non-current assets


Property, plant and equipment

10


11,798


2,245









Current assets


Trade and other receivables

11


75,807


83,104


Current tax recoverable

18


777,823


-


Cash and cash equivalents


7,021,105


9,204,257










7,874,735


9,287,361









Total assets


7,886,533


9,289,606









Current liabilities



Trade and other payables

16


351,610


227,222










351,610


227,222









Net current assets


7,534,923


9,060,139









Non-current liabilities



Deferred tax liabilities

17


431


-









Total liabilities


352,041


227,222









Net assets


7,534,492


9,062,384









Equity



Called up share capital

12


1,000,000


1,000,000


Share premium account

13


7,808,660


7,808,660


Other reserves



450,000


450,000


Share based payment reserve

14


97,763


-


Currency translation reserve

15


549


25


Retained earnings



(1,822,480)


(196,301)








Total equity


7,534,492


9,062,384








 

 

The financial statements were approved by the board of directors and authorized for issue on 22 March 2021 and are signed on its behalf by:

 

 

Helge Hammer (Chief Executive Officer) Director

22 March 2021


Statement of changes in equity

for the Period 31 December 2020


Share capital

Share premium account

Share based payment reserve

Currency translation reserve

Other reserves

Retained earnings

Total



Notes

£

£

£

£

£

£

£



GROUP



Balance at 28 May 2019


-

-

-

-

-

-

-



Period ended 31 December 2019:


Loss and total comprehensive expense for the period


-

-

-

25

-


(196,301)

(196,276)

Issue of share capital


230,000

270,000

-

-

-

-

500,000


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)


















Balances at 31 December 2019


1,000,000

7,808,660

-

25

450,000


(196,301)

9,062,384



















Period ended 31 December 2020:


Loss and total comprehensive expense for the period


-

-

-

524

-


(1,626,179)

(1,625,655)

Credit to equity for equity settled share-based payments


-

-

97,763

-

-

-

97,763



















Balances at 31 December 2020

1,000,000

7,808,660

97,763

549

450,000


(1,822,480)

7,535,016



















Consolidated statement of cash flows

for the Period to 31 December 2020

 


2020


2019



Notes

£

£

£

£



GROUP



Cash flows from operating activities



Cash absorbed by operations

25


(2,164,648)


(60,711)


Tax paid


(23,533)


-









Net cash outflow from operating activities


(2,188,181)


(60,711)


Investing activities


Purchase of property, plant and equipment


(12,359)


(2,245)


Interest received


18,736


1,750









Net cash generated from/(used in) investing activities


6,377


(495)


Financing activities


Proceeds from issue of shares


-


9,258,660









Net cash generated from financing activities


-


9,258,660









Net (decrease)/increase in cash and cash equivalents


(2,181,804)


9,197,454



Cash and cash equivalents at beginning of year


9,197,479


-


Effect of foreign exchange rates


524


25









Cash and cash equivalents at end of year


7,016,199


9,197,479









Relating to:


Bank balances and short-term deposits


7,021,105


9,204,257


Bank overdrafts


(4,906)


(6,778)







 

 


Notes to the financial statements

for the Period to 31 December 2020

 

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 information set out herein does not constitute the Company's statutory financial statements for the year ended 31 December 2020, but is derived from the Company's audited financial statements. The auditors have reported on the 2020 financial statements and their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006 but did contain a material uncertainty in relation to going concern.

The 2020 Annual Report was approved by the Board of Directors on 22nd March 2021. The financial information in this statement is audited but does not have the status of statutory accounts within the meaning of Section 434 of the Companies Act 2006.

In 2019 the Company did not prepare consolidated financial statements as the subsidiary activity was immaterial and the Company therefore took advantage of the exemption under the Companies Act 2006 s405. Accordingly, BDO LLP's audit was in respect of the Parent Company financial statements only.  As such the 2019 Group comparatives are unaudited.

The financial statements of Longboat Energy plc and the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) in conformity with the requirements of the Companies Act 2006.

 

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 continue in 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.  

 

In accordance with the AIM Rules for Companies, if the Company has not made an acquisition or has not substantially implemented its Investment Policy within 18 months of admission to the AIM market,

which will occur on 28th May 2021, the Company is required to seek shareholder approval for its Investment Policy at the next Annual General Meeting of the Company and at each subsequent Annual General Meeting until such time as there has been an acquisition or the Investment Policy has been substantially implemented (such a resolution being referred to hereafter as a 'Continuation Vote').  The reliance on shareholder approval, which is not guaranteed, constitutes a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

3. 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.

 

Share-based payments (note 14)

Estimation was required in determining inputs to the share-based payment calculations including share price volatility as detailed in note 14.

 

Judgment was required in determining the point at which the Group and recipients had a shared mutual understanding of the terms of the awards made under the FIP.  Whilst the awards were legally granted in July 2020, the Board consider that IPO Admission Document provided such a shared mutual understanding given the detailed disclosure of the terms of the scheme.  Accordingly, the estimated fair value of the FIP award has been spread over the vesting period which commenced at IPO.  A charge of £96,396 (2019: nil) has been recorded which includes the one-month period relevant to the period ended 31 December 2019 as the charge of £7,973 was immaterial to that period.

 

 

4. Employees and directors

 

GROUP

 

The average monthly number of persons (including directors) employed by the group during the year was:

 

 


2020

2019

 


Number

Number

 


 


Executive Directors

2

2

 


Non-Executive Directors

4

4

 


Staff

2

1

 


 





 


 


Total

8

7

 


 





 

 

 


Their aggregate remuneration comprised:

 


 


2020

2019

 


£

£

 


 


Wages and salaries

646,485

52,163

 


Share based payment charge

97,763

-

 


Social security costs

82,826

6,504

 


Pension costs

41,782

3,447

 


 





 


 


868,856

62,114

 


 





 

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

5. Net finance income

 

GROUP

2020

2019


£

£

Interest income


Bank deposits

18,736

1,750







Total interest income for financial assets that are not held at fair value through profit or loss is £18,736 (2019: £1,750).

 

 

6. Operating Loss

 

  The loss before income tax is stated after charging:

 

GROUP

2020

2019


£

£

Operating loss for the period is stated after charging/(crediting):


Exchange losses/(gains)

28,037


(86,792)

Depreciation of property, plant and equipment

2,807

-

Group auditor remuneration

16,000

8,000

Other assurance services

16,000

-

Subsidiary audit fees

4,170

-

Share-based payments

97,763

-

Executive Director's remuneration

226,024

22,635

Non-Executive Director remuneration

230,541

21,145

Wages and salaries

150,719

8,383

Pensions and payroll taxes

124,608

9,951

Operating leases

96,519

9,500

 

 

7. Auditors' remuneration

 

GROUP

2020

2019

Fees payable to the group's auditor and associates:

£

£

 

 

 

For audit services

 

 

Audit of the financial statements of the group

36,170

8,000




During the prior year the auditor provided non-audit services of £15,000 in their role as Reporting Accountant in relation to the Company's Admission to AIM. No such services were provided in the current year.

 

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

8. Income tax

 


2020

2019

 



£

£

 



Current tax

 


UK corporation tax on profits for the current period

-

-

 


Foreign taxes and reliefs


(754,289)

-

 






 



(754,289)

-

 






 



 

 

The charge for the year can be reconciled to the loss per the income statement as follows:

 


2020

2019

 


£

£

 



Loss before taxation


(2,380,468)

(196,301)






 



Expected tax credit based on a corporation tax rate of 19.00% (2019: 19.00%)


(452,284)

(37,297)


Effect of expenses not deductible in determining taxable profit

29,421

8,321

 


Effect of overseas tax rates

(16,696)

-

 


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

-

363

 


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

-


(28,217)


Deferred tax not recognised

439,559

56,830

 


Foreign taxes and reliefs


(754,289)

-

 






 



Taxation credit for the period


(754,289)

-

 






 


 

Unused tax losses on which no deferred tax asset has been recognised as at 31 December 2020 was £1,288,521 (2019: £299,105) and the potential tax benefit was £439,559 (2019: £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.

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

9. Loss per share

 

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

Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the conversion of all dilutive potential ordinary shares. These are not included because they are anti-dilutive.

 


2020

2019

 


£

£

 

Number of shares


 

Weighted average number of ordinary shares for basic earnings per share

10,000,000

2,062,213

 






 


Earnings


 

Earnings for basic and diluted earnings per share being net profit attributable to equity shareholders of the group for continued operations


(1,625,655)

(196,301)

 






 


From continuing operations


(16.26)

(9.52)

 






 

 

10.  Property, plant and equipment

 


Computers


GROUP

£


Cost


Additions

2,245






At 31 December 2019

2,245


Additions

12,360






At 31 December 2020

14,605






Accumulated depreciation and impairment



At 31 December 2019

-


Charge for the year

2,807






At 31 December 2020

2,807






Carrying amount


At 31 December 2020

11,798






At 31 December 2019

2,245




 

  Notes to the financial statements

for the Period to 31 December 2020

 

11.  Trade and other receivables

 

2020

2019

 

GROUP

£

£

 

 

Taxes recoverable

22,161

45,060

 

Prepayments and other debtors

53,646

38,044

 

 

 

 

 

 

 

75,807

83,104

 

 

 

 

 

 

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

 

12.  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

 

13.  Share Premium Account


2020

2019


£

£



At the beginning of the year

7,808,660

-


Issue of new shares

-

7,808,660








At the end of the year

7,808,660

7,808,660


 

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

14.  Share-based payment reserve

 

The Group operates two share-based payment schemes. It operates a Founder Incentive Plan (FIP) under which awards are legally granted in the form of performance units to the participants which was detailed in the IPO Prospectus. Subject to the achievement of performance conditions, the FIP award may be converted into nil cost options over a number of shares on three measurement dates during the life of the FIP. The life of the FIP is five years from the date of the initial IPO, which was November 2019. There are two executive directors, one non-executive director, one non-employee, and one staff member who are members of the plan. The Group also operates a Long-Term Incentive Plan (LTIP) under which awards are legally granted in the form of performance units to the participants which was detailed in the IPO Prospectus. Subject to the achievement of performance conditions, the LTIP award may be converted into nil cost options over a number of shares on three measurement dates during the life of the LTIP. The life of the FIP is three years from the date of the aware being granted, which was September 2020.

 


2020

2019

 


£

£

 


At the beginning of the year

-

-

 


Credit to equity for equity-settled share-based payments

97,763

-

 


 






 


At the end of the year

97,763

-

 


 





 

Founder Incentive Plan

The Founder Incentive Plan has a five-year term, with awards granted on 3 July 2020. Under the FIP, awards are granted in the form of performance units to the participants. Subject to the achievement of performance conditions, the FIP award may be converted into nil cost options over a number of shares on three Measurement Dates during the life of the FIP. The value of the award is dependent on the extent to which the Measurement Total Shareholder Return (Measurement TSR) exceeds the Threshold Total Shareholder Return (Threshold TSR) at each Measurement Date. Measurement Dates will be on the third, fourth and fifth anniversaries of the IPO date.

 

The IFRS 2 'Share-based Payments' fair value of each performance share granted under the FIP is estimated as of the grant date using a Monte Carlo simulation model with weighted average assumptions as follows:

 


2020

2019

 


£

£

 


Weighted average share price at grant date

0.78

-

 


TSR performance

-

-

 


Expected volatility

50.44%

-

 


Risk free rate

(0.08)%

-

 


Dividends yield

0.00%

-

 


 





The expected share price volatility is based upon the share price volatility from the IPO to the Date of Grant.

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

14.  Share-based payment reserve (continued)

 

  Long Term Incentive Plan

The LTIP has a three-year term with the first award granted on 24 September 2020. Under the LTIP, awards are granted in the form of performance units to the participants. Subject to the achievement of performance conditions, the LTIP award may be converted into nil cost options over a number of shares on the vesting date. The value of the award is dependent on the extent of the growth of the TSR per annum at the Measurement Date.

 

The IFRS 2 'Share-based Payments' fair value of each performance share granted under the LTIP is estimated as of the grant date using a Monte Carlo simulation model with weighted average assumptions as follows:

 


2020

2019


£

£


Weighted average share price at grant date

0.885

-


TSR performance

-

-


Expected volatility

58.00%

-


Risk free rate

(0.10)%

-


Dividends yield

0.00%

-






The expected share price volatility is based upon the share price volatility from the IPO to the Date of Grant.

 

 

15.  Currency translation reserve

 


2020

2019

 


£

£

 


 


At the beginning of the year

25

-

 


Currency translation differences

524

25

 


 





 


 


At the end of the year

549

25

 


 





 


 


The currency translation reserve relates to the movement in translating operations denominated in currencies other than sterling into the presentation currency.

 

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

16.  Trade and other payables

 


2020

2019

 

GROUP

£

£


 

Trade payables

129,713

94,452

Accruals

115,309

63,877

Social security and other taxation

94,850

6,504

Other payables

11,738

62,389


 





 


 


351,610

227,222

 


 





 


 

 

17.  Deferred Tax

 

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

 



£


Deferred tax liability at 1 January 2019 and 1 January 2020

-


Deferred tax movements in current year

Differences in tax basis for depreciation in Norway

431





Deferred tax liability at 31 December 2020

431





Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.

 

 

 

18.  Current Tax Receivable

 


2020

2019


GROUP

£

£


Current tax receivable

777,823

-







 

Current tax receivable relates to a balance which is due to be refunded to the Group under the negative tax instalment regime which applies to oil and gas companies which are operating in Norway. This relates to expenses incurred in 2020 and is recoverable in 2021.

 

 

19.  Retirement benefit schemes

 

Defined contribution schemes

The Group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

 

The total costs charged to income in respect of defined contribution plans is £41,782 (2019: £3,447).

Notes to the financial statements

for the Period to 31 December 2020

 

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

Jonathan Cooper

Graham Stewart

Jorunn Saetre

Julian Riddick


 

300,000

125,000

150,000

25,000

100,000

 

In addition, the following conditional awards have been made to the Executive Directors and Company Secretary under the FIP which are expressed as a percentage of the total maximum potential award, being 10% of the Company's issued share capital:

 

Founder

Percentage entitlement of Initial Award pool

 Maximum percentage entitlement of growth in value from IPO

Maximum percentage of issued share capital


%

 %

Helge Hammer

23.5000%

3.525%

2.3500%

Graham Stewart

19.7500%

2.963%

1.9750%

Jonathan Cooper

19.1250%

2.869%

1.9125%

Julian Riddick

18.5000%

2.775%

1.8500%

 

 

 

The Company also recharged costs onto its subsidiary which totalled £436,141 during the year. At the year end, £10,253 was outstanding.

 

The Group does not have one controlling party.

 

 

Notes to the financial statements

for the Period to 31 December 2020

 

21.  Cash absorbed by operations

 


2020

2019



GROUP

£

£




Loss for the year after tax


(1,626,179)

(196,301)



Adjustments for:



Deferred tax


431

-



Corporation tax


(754,289)



Investment income


(18,736)

(1,750)


Depreciation and impairment of property, plant and equipment

2,807

-



Equity settled share-based payment expense

97,763

-




Movements in working capital:



Decrease/(increase) in trade and other receivables

7,192


(83,104)


Increase in trade and other payables

126,363

220,444










Cash absorbed by operations


(2,164,648)

(60,711)








 

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